Introduction

Online copyright infringement of music and movie has become an important negative obstacle to entertainment industry. To cope with the problem, some countries have adopted an approach of graduated response system, also known as three strikes in many countries or six strikes in the U.S. It may suspend users' Internet access after a series of notices. China has the biggest population of Internet users in the world. And it is always criticized that Chinese people enjoy huge amount of information with copyright infringement through Internet, under limited copyright protection in Chinese copyright law and relevant regulations. It is both academically and practically significant to discuss whether a proposal to establish similar graduated response system in China was necessary.

ISPs' graduated response system is not desirable in China at current stage. On one hand, the graduated response system is a very new and immature approach around the world. Even in the developed countries adopting this system, there is strong protesting and criticizing for several reasons including inappropriately limit human right and liberty of speech. It negatively affects consumer welfare as high price may apply under higher bourdon for ISPs. Moreover, this system might be overlapped and conflicted with other legal regime related to ISP, including contributory liability and vicarious liability. On the other hand, China has its own reasons, legally and socially, to reject, the graduated response system. There is huge population of Internet user including high proportion of beginners in China, so to establish a similar system in China is much difficult than some small countries. And compared with some European countries and the U.S., there is smaller pressure from local copyright owners in China. It seems not necessary to change current law only under international pressure.

I. Overview of the development of ISPs' graduated response system around the world

Before discussing whether the graduated response system is a good approach, particularly for China, it is necessary to understand what the system exactly is. In this section, we try to analyze the commonly shared characters of the graduated response system around the world, and point out some special experience in different countries and regions.

1. Commonly shared characters

Generally the graduated response system is a very new approach to regulate online copyright infringement. And it deals with online copyright infringement, normally P2P (peerto- peer) music or movie sharing. Overview of the world, not many countries choose to adopt this approach. And these countries are normally rich developed countries in Europe or North America, for example France, the UK, the U.S. and Ireland, or some region having strong music and movie industry, for example, Taiwan and South Korea.

And to analyse structure of the graduated response system, a common procedure could be found. Firstly, the copyright owner rights holders monitor online illegal downloading activities and find the problem. Then the copyright owner report to the ISP about the infringements with IP address of the infringers. After that, an email is sent through an ISP to the account holder informing him or her of the infringements and of the consequences of continued infringement. Secondly, a certified letter is sent to the offending subscriber with similar content to the originating email message. And finally if the account holder repeatedly ignores the notices, a tribunal may take deterrent action, with the most severe sanctions reserved for a court. The ISP might be required to suspend Internet access of the infringer for a specified period of time, from two months to one year. Because there are three notices for the subscriber to stop the infringement, so the approach is also known as three strikes system.

And among all countries having the graduated response system, protest and criticism are accompanied. Although the legislations or agreements were established, the system was not accepted by all citizens in these countries. Details could be known through the discussion about France and the UK.

2. Special background in different countries

(1) Europe: Radicals of Copyright Protection, France, UK, Ireland

Some European countries could be known as forerunner of IPS' graduated response system, as they passed this system as legislation, more formal than the development in the U.S. Three countries might be most distinguished, France, the UK and Ireland. For France and the UK, as they are big developed countries with relatively big population, their experience might be guidance for some other countries. In both France and the UK, the procedure is very difficult to pass the legislation related to graduated response system. The Creation and Internet law in France is also understood as HADOPI law. When it was firstly proposed, the law was initially rejected by the Constitutional Council of France in 2009. The council consider there could be contravening the Constitution of France and Declaration of the Rights of Man and of the Citizen. After careful re-preparation of the wording, the HADOPI law was finally passed in France. Similarly, in the UK, the Digital Economy Act 2010 came into force on June 8th 2010. But at same time, strong protests and criticisms were raised.

Ireland also introduced the three strikes approach. Although the country is small with only 4 million citizens, it could be remarkable on IT/ IP law research, because Dublin is the European headcounters and research centers of many international high technology companies, including Microsoft, Apple and Dale. Recently, a case between Eircom and the Irish Recorded Music Association (IRMA) in the Irish High Court has become a typical case related to graduated response system. Under the judgment, the biggest Internet access service provider, Eircom, is required to process the three strikes to the copyright infringers. We are not surprising Ireland is one of first several countries to adopt the graduated response system. And I consider the enforcement of graduated response system in Ireland could be easy, as there are clear personal information registration and credit record for everyone. It is relatively easy to enforce a new policy in the small country with small number of population.

(2) U.S.: Voluntary Agreement of ISPs

The graduated response system in the U.S. was based on a voluntary agreement between ISPs and the movie and music businesses. So it is different from France and the UK; in these two European countries, three strikes system has been written in the law. The voluntary agreement has been joined by many major U.S. Internet providers, including AT&T, Verizon, Comcast, Cablevision and Time Warner Cable. However, this agreement is also supported by the U.S. administration. The intellectual property enforcement coordinator in the U.S., Victoria Espinel express the welcome to the agreement “we believe it will have a significant impact on reducing online piracy,” wrote on the White House blog.

Another important differentia is that there are not three strikes, but six strikes. There are three more notices sent to the infringing subscribers, so more chances for the subscribers to stop the inappropriate activities. However, the procedure seems complex, and someone argue that the ISP has no right to suspend the Internet service without judgment from the court, even if there are six notices.

II. Benefits and drawbacks of the graduated response system

As discussion above, although the three strikes approach was adopted by countries, there is strong criticism. Therefore, before applying it to China, it is important to evaluate the benefits and drawbacks of the approach. It is found that though the system could prevent copyright infringement to some extent, its drawbacks might be more significant than its benefits.

1. Benefits

The purpose of the graduate response system is to reduce the online copyright infringement. And according to some research, it could be considered successful. A research in the UK found that using the graduated response system, 70% of customers stopped infringing in the six-month period after receiving the first notice, with a further 16% stopping after the second notice. Although it might be doubted if the numbers of research result was exact, it is believe the graduate response system is useful for stopping online copyright infringement at least to some extent.

On the other hand, some scholars think the graduated response system helps the ISPs to avoid lawsuits and save the high costs of legal defense. But it seems not true. ISPs include both Internet content providers (ICPs) and Internet access providers (IAPs). As the 512 US dollars of the Copyright Act, and the EU E-Commerce Directive mainly regulate the liability to ICPs, known as the websites, not the Internet access service provider. AT&T, Verizon in the U.S. or Eircom in Ireland are normally not liable.

And law making is evaluating procedure of different legal value and seeking balance between the income and cost. If the cost is too big, it may be considered not appropriate even there are some benefits.

2. Drawbacks

(1) Human Right of Liberty, Freedom of Speech

The first argument against the graduated response system is human right. The freedom of thought and speech is very important in human right, supported by value of liberty. Value of liberty, or alternatively freedom should be highly evaluated according to clarification of legal value. There are four main legal values, including liberty, equality, efficiency and order. Liberty is the top ranked value, and is an important aim of law. The function of law is to protect freedom. John Locke pointed out that the aim of law is not to abolish or limit freedom, but to protect and expand freedom. And as the dominant theory in China, Karl Marx also considered freedom is the aim of law, and law cannot become a method to inhibit freedom. Analysing the graduated response system, the suspension of Internet is a serious offense to the freedom of thought and speech. As in the age of information, the Internet access is so important for expressing personal idea. And this expression should not be punished for light offence of copyright infringement.

Moreover, the digital right itself might be a kind of human right. Just as statement of Ma Ying-jeou, political leader in Taiwan, there is a new concept of digital right, mainly meaning access to the Internet. He considers if the government does not provide free Wi-Fi in public, it will be an infringement of digital right of the citizens. At that point, access to the Internet is so important. The suspension of Internet access is very harmful.

Lastly, the human right problem might be especially important in the U.S., because there is no law clearly regulating the graduated response system. The six strikes system in the U.S. is only based on private agreement between ISPs and movie and music industry, so it is arguable how could this agreement being allowed to infringe the fundamental human right in the U.S.

(2) Burden for ISP and Increase of the Price of Internet Access

The second consideration is the price of Internet access. There is a very big amount of money for the operation of the three strikes or six strikes system. According to the research by Professor Michael Geist in the UK, the expense to Internet providers alone could be very big number, at as much as 500 million pounds over ten years. This includes the costs of identifying infringing subscribers, notifying them, running call centers to contact, and buying in new equipment to manage the system. These activities are big burden for ISPs. And at the same time, it could be directly imagined the price of Internet access will be increased for this part of expense. And finally, consumers have to pay the money. The UK government estimates that 40,000 people could lose Internet access due to anticipated increases in subscriber fees. Therefore, the graduated response system is not good for the customer welfare.

(3) Conflict with current legal regime related to ISP

The U.S. Digital Millennium Copyright Act(the DMCA) has established a system protecting online copyright. But the graduated response system was not involved in the DMCA. It is not sure if it is necessary to establish a new system.

When copyright infringement happens, who should be liable for it? There might be three choices, including subscribers, the websites (ICPs) and the Internet access providers (IAPs). The graduated response system is a system asking IAPs to supervise the infringement of subscriber. But it might be not suitable to focus on both subscribers and IAPs. On one hand, for subscribers, although they are direct infringers, it is very difficult to find them. And even if the subscribers could be found, they may be too poor to pay the damage and fine. Suspending Internet access could only prevent the online copyright infringement, but cannot help to ask damage and fine. On the other hand, IAPs are not suitable to act as the supervisors or monitors on the Internet. And IAPs are normally not liable for subscribers’ copyright infringement.

The website should be more focused on for several reasons. Firstly, different from Internet access providers, websites have better ties to supervise the copyright infringing activities online. Secondly, the websites could be much richer than individual subscribers. So they may afford the damage and fine, if they are judged to be liable. And the DMCA has clear instructions of ICPs (mainly the websites) secondary liability and limitations on liability relating to materials online. And related remarkable cases have been accumulated. From Religious Tech. Ctr. v. Netcom On-Line Communication Servs., Inc, to A & M Records, Inc. v. Napster, Inc and then to MGM Studios, Inc. v. Grokster, Ltd. In MGM Studios, Inc. v. Grokster, Ltd, the court held that the Grokster distributed software, and promoted that software to infringe copyrights, so were liable for the resulting acts of infringement.

The websites are more suitable to have obligation of online supervision than the Internet access provider. And if they did not do that, they may be punished. Current system seems working well. Therefore, there might be not needed to have the graduated response system, as it serves the similar purpose as current system, fighting against online copyright infringement.

III. Graduated response system is not desirable in China

1. Legal reasons

Similarly as the U.S. and many European countries, China has established a system regulating ISPs, and this system mainly focuses on the websites, not the Internet access provider. It was very new and seems workable, although it might be not clear, sufficient and systematic. There is no direct clause on Chinese Copyright Law regulating the liability of ISPs. Currently courts deal with ISP’s cases using two administrative regulations and one judicial interpretation from the Supreme People’s Court. The two administrative regulations are listed as followings: the Regulation on Protection of the Right to Network Dissemination of Information (the Chinese Regulation) and the Method on Administrative Protection of Internet Copyright (the Chinese Method). And some remarkable cases has happened, including Universal Music Ltd. v. Beijing Baidu Network Technology Ltd., Universal Music Ltd.v. Beijing Alibaba Network Technology Ltd.(Yahoo! China). In these cases, the ISPs were punished, if they did not supervise the subscribers’ copyright infringement.

And up to now, Internet access provider, such as China Telecom and China Netcom, were never heard to be sued for copyright infringement, directly or indirectly. And it was not many cases against individual subscribers. Therefore, Chinese ISP law mainly focuses on the regulation of websites. The establishment of graduated response system will change current regulation. And two new systems might cause chaos of practice.

Therefore, the graduated response system seems not desirable in China. Alternatively, it might be more important to improve current legal system regulating ISPs in China. For example, following points could be greatly improved: to clearly write ISPs’ liability in Chinese Copyright Law, to clarify clearer contributory and vicarious liability of ISPs, to unify different standards of ISPs’ liability in different courts around China.

2. Social reasons

The main obstacle for China to establish the graduated response system is the huge population in the country with limited idea of IP protection. Firstly, the population in China is huge, and the number of Internet users in China is the biggest in the world. It will be highly impossible for China to adopt similar approach as Ireland, regarding the huge difference between the sizes of the countries. It will be extremely difficult for China Telecom and China Netcom to send notices to the extremely big amount of infringers in China.

Secondly, many Internet users are beginners with little idea and knowledge of copyright infringement. Uploading or downloading infringing music commonly happens in China. They might not understand the meaning of notices and continue uploading or downloading. If finally they are not to access the Internet, they will not understand and they may consider being treated unfairly.

Thirdly, the cost to establish the graduated response system in China is much bigger than that in many other countries. As there are a lot of people earn low salary in China, only a little increasing of Internet access fee will cause big problem.

Last but not least, considering the structure of international trade, IP law seems mainly to protect interests of developed countries. And compared with some European countries and the U.S., there is small pressure from local copyright owners in China. It seems not necessary to change current law only under international pressure. As a developing country, China needs copyright protection, but the standard might not to be too high. Possibly with the further development of China’s economy and education of IP idea among Chinese people, the standard could increase in the future. However, currently the graduated response system is not desirable in China.

Conclusion

Although the graduated response system might decrease the online copyright infringement, there are several main drawbacks caused. Suspending Internet access could be violation of human right, freedom of speech. And with further burden of ISPs, the price of Internet access will be increased, which negatively affect customer welfare. Also the graduated response system might overlap with pre-existed legal mechanism regulating on-line IP infringement. Regarding China’s special legal and social circumstance, the graduated response system is not desirable at current stage. In order to provide better copyright protection in such a big country, improvement of existed ISP legal mechanism is more important than rushing to establish a new graduated response system.

By Lou Hong, JSD Candidate & Senior Research Associate, School of Law, City University of Hong Kong and Gu Hongfei, Depute Chief Judge, IP Tribunal of Zhejiang Yuyao Reople's Court