more on Ban planned on imports of Japanese CDs

[Dave Farber <dave () farber net>]

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Thu, 19 Feb 2004 13:39:53 +0000 (GMT)
From: Matthew Gream <matthew.gream () pobox com>
Subject: Re: [IP] Ban planned on imports of Japanese CDs
To: dave () farber net

With regard to CD-Now, foreign imports:

The UK Copyright Designs and Patents Act (CDPA) 1988, along with a number
of EU decisions on exhaustion of rights (mostly wrt. trade marks) seemed
to have set a clear precedent for making CD-Now's activites an
infringement of copyright. I could never understand how CD-Now thought
that they were going to succeed with their business model - comments by a
seasons IPR expert would be welcome. The following action after the
original case suggests that they were able to re-source from within the EU
at the same price anyway:

''The British Phonographic Industry (BPI) has won an injunction ordering
Internet retailer CD Wow to drop claims that it had been forced by the UK
record industry to raise CD prices.
At a hearing yesterday CD Wow's barrister "agreed with the Judge that CD
Wow had not had to increase prices and that whether or not CD Wow charged
more for CDs was a matter for the internet retailer alone," the BPI said
in a statement.
The BPI is the main trade association for the UK's record business. Last
month CD Wow stopped selling CDs imported from Hong Kong, following an
out-of-court settlement with the BPI. The company raised CD prices by £2
to £10.99, as a consequence.
But yesterday, Feb 3, it reduced prices back again to £8.99. In an email
to customers, the etailer said:
We've been working our little cotton socks off to source our chart albums
within the EU at the lowest possible price and cutting our margins even
more. There have been a few cutbacks in the office, I'm working out of the
YMCA and using an etch-a-sketch as my PC was sold.''
(http://www.theregister.co.uk/content/6/35335.html)

Looking at the CDPA 1988, we observe:

''22.    The copyright in a work is infringed by a person who, without the
licence of the copyright owner, imports into the United Kingdom, otherwise
than for his private and domestic use, an article which is, and which he
knows or has reason to believe is, an infringing copy of the work.''
(http://www.hmso.gov.uk/acts/acts1988/Ukpga_19880048_en_1.htm [nb: non
consolidated version])

This suggests that
- private individuals ordering with foreign retailers, where the point of
sale is in the foreign territory, are okay; and if the foreign retailer
does not actively sell into the local market, but only passively fulfills
orders, then this unlikely to cause liability for the foreign retailer.
- private carrying of counterfeit and otherwise infringing goods back into
the UK through customs seems to be safe, (did you recently enjoy a
vacation in a dubious jurisdiction - with the fringe benefit that your DVD
library is now 5 times larger ?).

With respect to the Amazon actions: it seems likely Amazon US is safe so
long as it satisfies the non-active selling requirement, so private UK
residents could order from Amazon US safely. However, this is subject to
any contractual export restrictions imposed upon Amazon US by the
copyright owners in the US, which could cause liability for the retailer.
I don't know whether there are any antitrust issues in such export
restraints. It is likely that Amazon UK would be at fault if it were
engaging in a CD-Now style business model, but I'm guessing that the lack
of high profile case against them means that they are doing the right
thing.

As a consumer, I don't like to pay for higher priced goods than I have to,
and don't like any exploitative territorial pricing, yet as a professional
I do see why these import restrictions are necessary for the copyright
holders in absence of effective international enforcement. Quite simply:
if there were no import controls, then how could I as a UK copyright
holder enforce my rights against a foreign counterfeiter who is doing a
great trade producing and shipping commercial quantities of my works back
into the UK. With import restrictions I can. You have strong guarantees
(even if they are not always the right guarantees :-)) regarding
enforcement within your own jurisdiction, but much weaker when you try to
pursue enforcement in another country when even the officials in that
country may be co-opting or turning a blind eye to the activities.

The EU competition authorities have set precedent for analysing these
sorts of territorial pricing restrictions in the case of EU member states.
In a case on the price of bananas that differed substantially between EU
member states, the authorities undertook quite a detailed unit cost
analysis to understand how the retailer could justify the pricing
differential: if it can't be fairly justified according to economic
factors, then there may be a problem. The authorities don't always get it
right, and the courts have ruled against the authorities at times. The
intention is to prevent abusive pricing practices. Now that's all fine and
dandy within the EU because the authorities can act with the backing of
the judicial system. On an international scale, I'd be interested to know
what the story is.

Matthew



Dave Farber said:
> Books next (textbooks) djf
>
>
> Delivered-To: dfarber+ () ux13 sp cs cmu edu
> Date: Wed, 18 Feb 2004 23:25:14 -0300
> From: Claudio Gutierrez <cgutierrez () improvement cl>
> Subject: Re: [IP] Ban planned on imports of Japanese CDs
> To: dave () farber net
>
>>This is the "intellectual property strategy" of Japan.
>
> also of the UK:
>
> CD settlement forces prices up...CD-Wow! had been accused of violating
> UK copyright law by importing cheaper CDs from outside Europe to the UK.
> http://news.bbc.co.uk/1/hi/entertainment/music/3416437.stm
>
> Online retailer Amazon is being investigated by the British record
> industry in a probe into cheap CDs....."If we find a net retailer is
> importing music from outside Europe, then they are infringing copyright
> law."
> http://news.bbc.co.uk/1/hi/entertainment/music/3380307.stm
>
>
>
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--
Matthew Gream
matthew.gream () pobox com
http://matthewgream.net

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