Andreas Dietl (mail/at/; Erich Moechel (me/at/ and René Pfeiffer (lynx/at/, Quintessenz

Implementation of the Directive

The Directive was implemented belatedly into Austrian law at the end of April 2003. The original schedule for the “Urheberrechtsnovelle[1] (Amending law on Copyright; see explanation below) to pass Parliament in autumn 2002 had to be postponed, due to a government crisis, which was followed by preliminary elections.

The first proposal of the Amending law on Copyright was published in September 2002. It got extensive comments and critiques from a variety of different groups and organisations who filed close to 40 in part lengthy documents to be taken into consideration by lawmakers. Input ranged from government institutions, various lobbies from IT and electronic entertainment industries, from consumer and data protection activists to composers, playwrights and other artists. The full list of all organisations along with their statements can be found on the web site of the Austrian Parliament[2].

The second proposal was made publicly available in March 2003. It passed Cabinet and was approved by the Parliament’s Justice Committee on April 8, 2003. On April 29, 2003 the proposed law passed the Austrian Parliament with a majority of votes. The revised Urheberrecht will come into force on July 1, 2003.

The notions of Copyright and Urheberrecht

It should be noted that the EU Directive uses the term “copyright”, whereas in Austria (as in Germany) the author's rights are covered by the “Urheberrecht”. German-language law systems distinguish between “Urheberrecht” (author’s right), which cannot be removed or sold and is therefore inalienably linked to the author, and derivative rights of exploitation (“Verwertungsrechte”). While the American copyright model is oriented towards distributors, the “Urheberrecht” was born out of a philosophical discussion dealing with a fair balance between authors, publishers and the public. Whether this was achieved is uncertain to us as the “Urheberrecht” derives historically from the 19th century habit to idolize the creative process as that of a genius prevailing.

The Austrian legislative process in general

The Austrian Ministry of Justice (Bundesministerium für Justiz) is responsible for first draft proposals. The first draft is published and passed to the Parliament’s Legal Affairs Committee (Justizausschuss) for review and alteration. The process is public, since the law text is publicly available. After passing the Legal Affairs Committee, the law is taken to Parliament for voting. In the case of the “Urheberrechtsnovelle”, this process broke up und came to a halt because it took the Conservative Party (ÖVP), after it had won the elections, more than three months to form a new government. During this interregnum there was not much of a public discussion about the Copyright Directive. There were just a few weeks left until the proposed date for the parliamentary debate.

Exceptions and limitations

New legal definitions of “public availability” and “private use”

Austrian legislation translates the term of “making publicly available” from Article 3 of the Copyright Directive and the WIPO treaties[3] in a rather peculiar way rather as Zurverfügungstellung, which is not only an ugly word that no stranger to the German language should ever try to pronounce, but also slightly off the original term; literally it means “to put at the disposition of the public”.  In accordance with the Directive and both treaties, section 18a, which has been newly introduced[4], states:

 Right to put at the disposition of the public

The author holds the exclusive right to put the work at the disposition of the public in a manner, be it wired or wireless, that members of the public may access it at times and places of their choice.

In various sections, the previous formula “for his own use” has been added to, making it “for his own private use”. This applies in particular to section 42, which states in subsection 4:

Every natural person may produce single copies of a work (…) for his own private use and neither for direct nor for indirect commercial ends.

In subsection 5 of the same section, it says:

A copy for one’s own or private use is not valid when the copy is produced with the aim of making the work available for the public with the help of the copy.

Although the term of “putting at the disposition of the public” is introduced in about a dozen sections of the amended law, and its antagonist, the term of “private use” in a few more, the law contains no clear definition to define the border line between public use, private use and the original term of “own use”, which lies somewhere in between the two. The only thing close to a definition is in section 42, subsection 5, where it now says “copies produced for own or private use may not be used to make the work accessible to the public”.

Regulations on private copies

Section 42 contains the regulations on private copies. In this section, the amending law introduces numerous limitations to the former provision, where it simply said:

Every person may produce single copies of a work for his own use.

In the future, such private copies will be explicitly allowed only in the following cases:

-          copies for private use and non-commercial purposes (subsection 4)

-          copies on paper or a similar matter for own use (subsection 1)

-          copies for own non-commercial research purposes (subsection 2)

-          analogue copies of current event news reports (subsection 3)

It is generally not allowed – in subsection 8 the law says “only with the consent of the rightsholder” – to copy whole books, whole magazines or sheet music; even when the copy is produced from another copy. There are however two exceptions to this ban: it is allowed to copy even whole works by transcribing them by hand, and it is allowed to produce copies of works that have not been published or are out of print. It must however be pointed out that unpublished and no more available works will in the digital world increasingly be available in electronic form only. In practice, therefore, the right to produce copies of such publications will be countered by copy protection, which will enjoy special privileges also in Austria (see below).

An entirely new provision, laid down in section 42d, concerns special rights for disabled persons: it is now explicitly allowed to copy and distribute copyrighted works for disabled people, who would otherwise have no or only limited access to those works. There must however be no commercial ends to doing so, which in effect will limit this right to charities. These again will have problems with the provisions in subsection 2, where it says the author has the right to an “appropriate compensation” for copies even under this regulation. In practice, anyone who has recourse to this right will have to walk a very thin line between the obligation not to act commercially on the one hand and the royalties he will have to pay on the other. Also, Austrian lawmakers have not introduced, as their German colleagues have, a regulation obliging rightsholders to lift copy protection mechanisms for the purpose of producing copies of a copyright work on a medium legible for disabled persons.

Consumer advocates as well as manufacturers of IT equipment consider a brief amendment in section 42b as especially problematic. It extends the obligation to pay lump-sum royalties from pieces of work that are broadcast to all pieces that are “put at the disposition of the public”.

In order to understand the likely effects of this provision, it is necessary to look briefly at the Austrian system of lump-sum royalties. Currently, everyone who buys a blank cassette or any other media, as well as everyone who buys a video recorder or any other recording device, pays, most of the time unknowingly – a certain percentage of the price, which is then redistributed to artists who are deemed the authors of the work. In fact, though, only a very small percentage of authors profits from these payments. In music-ridden Austria only about 350 composers of all kinds earn enough money to make a living, according to “Austro-Mechana" (Gesellschaft zur Wahrnehmung mechanisch-musikalischer Urheberrechte Gmbh). Those 350 get close to all of the funds coming in from copyright taxes on hardware, which are imposed on CD Burners and even satellite receivers, and on empty media. All in all there are about 10,000 composers in Austria currently, who earn little or nothing.

To extend this provision to pieces of work “put at the disposition of the public”, which means in general posted online, means mainly to impose the same kinds of royalties that buyers of videotape recorders already have to pay on the buyers of computer equipment also. Anxiously, Austrian computer dealers look to neighbouring Germany, where such a tax imposed on buyers of computers amounts to 30 Euro apiece. Possible effects, the industry is afraid, might include a slowdown in the spread of the Internet, a disadvantage for Austrian dealers in electronic equipment as compared to their competitors in other EU countries where no such tax exists, and, last but not least, a double burden imposed upon consumers, who will under Digital Rights Management schemes have to pay for the hardware they are using as well as for each single piece of work they want to have access to.

Copy regulations for public institutions

Section 42, Subsection 6 deals with provisions for schools and universities, who may produce copies of copyrighted works in the following cases:

-          copies for teaching purposes

-          copies on paper or a similar matter

According to subsection 7 of the same section, public archives and libraries, who were formerly simply allowed to produce copies for their own non-commercial ends, will have to observe some restrictions in the future. They may still produce copies on paper or a similar matter indiscriminately, but in contrast to the former regulation, copies on any other media may be produced only for non-commercial ends.  For all copies, the following conditions must apply:

-          one single copy may be produced of own pieces of work; this copy may be exhibited, lent or used under same provisions as the original

-          just like private persons, libraries and archives may produce single copies of works which have not been published or are out of print; the same provisions on exhibiting, lending and using the work apply to these copies as to the original work.

A deletion in Section 56c extends the right to screen feature films for educational purposes, which was formerly reserved to universities, to all schools.

Right to produce temporary copies

An amendment to section 15, subsection 1 extends the author’s exclusive right to produce copies from permanent copies to temporary. This passage raises concerns that software might be turned into a product for rent. Models of selling software by using licence schemes requiring the user to pay on a monthly or yearly basis already exist. Software licenses of this kind enable the software industry to force costly upgrades on their customers. Another concern deals with warranties. By choosing an adequate timeframe, software manufacturers could bypass warranty periods and elude bug fixing claims.

Technological protection measures

The Directive does not leave much room for interpretation on this issue, so Austria transposed the regulations on technological protection measures quite literally. Three new sections (90b, 90c and 90d) are being introduced into the Austrian copyright law, dealing with “protection for technical measures” (90c), “protection for computer programs” (90b) and “protection of labelling” (90d), where most of the provisions from the Directive’s Article 6 are packed into section 90c.

Much in the same way as the Directive, section 90(c)(2) of the Austrian law defines “effective copy protection measures” as follows:

(…) all technologies, devices and components that, in the normal course of their operation, are designed to prevent or limit the breaches of right specified in subsection 1, and which ensure achieving this protection objective.

As is the case with all other laws that transpose the EU Copyright Directive, the protection of copy protection measures means legal protection for weak technological solutions. In the future, easy-to-bypass protection mechanisms such as the CSS (Content Scrambling System) protection for DVDs or Sony’s Key2audio for music CDs will suffice, because they are protected by the law. The battleground shifts from the technical side to legal scenarios.

Not surprisingly, given the provisions in the EU Directive, the Austrian law does not contain any exceptions to the ban on circumventing copy protection, even for those copies that are explicitly allowed. As mentioned before, there is not even a provision obliging publishers to lift copy protection e. g. in order to produce copies for the use of disabled persons, as is the case in the German transposition of the Directive.

Section 90c, subsection 1 defines the cases in which these measures are legally protected against circumvention. The introduction of the term of “circumvention tools and services” is an Austrian particularity in the transposition of the EU Directive. The term is used to transpose the provisions contained in Article 6, paragraph 2, of the Directive and is defined as follows:

Devices, products or components or the provision of services

1.  which are part of a promotion, advertisement or marketing for the purpose of circumvention of effective technological measures,

2.  which have only a limited commercially significant purpose or use other than to circumvent effective technological measures,

3.  which are primarily designed, produced, adapted or performed for the purpose of enabling or facilitating the circumvention of effective technological measures

The law then defines three different ways of protection, one of which must be applied to gain legal protection. All three definitions are literally taken from the EU Directive, Article 6, paragraph 3, sentence 2:

1.                   by an access control measure,

2.                   by a protection mechanism such as encryption, scrambling or other transformation of the work or other subject-matter or

3.                   by a copy control mechanism.

These provisions in section 90c, subsection 3, apply to all kinds of electronic media, but not to computer programs, which are deemed literary works under the Austrian law (section 1, subsection 2). As subsection 3 actually limits the scope of this section to certain kinds of copy protection, excluding computer programs means opening to software publishers ways of preventing the use of their product even besides the aforementioned ones, which may e.g. become the case with web-based applications. The technological copy protection of computer programs is dealt with in a section of its own, section 90b:

The owner of an exclusive right to a computer program, who uses technological mechanisms for the protection of this program to prevent an infringement of this right, can sue for prevention of the unlawful circumstances when tools are issued or held for commercial purposes the sole purpose of which is to facilitate the unauthorized removal of these technical measures.

As compared to other national transpositions of the EU Directive, this provision has a relatively restricted focus. The expression “sole purpose” limits its scope to cracker tools such as serial number generators and the like, but does not extend to tools used e.g. for reverse engineering or decompiling, which may also used for testing self-written or open source programs. Additionally, the ban is only on distributing such tools and on having them with at least the intention to make money from them, whereas simple possession of these tools is not punishable.

Note, however, that commercial ends are not necessary to make distribution an offence. The use of such tools will normally fall under the provisions of section 90c, subsection 1, which does not exclude computer programs, and is therefore illegal, also. And in most cases, proprietary commercial software will come with an End User License Agreement that makes circumventing its copy protection illegal, also.

It remains to be clarified if the law covers the publication of security flaws and other problems in protection methods, which might allow access to media protected by these methods. Such was the case repeatedly in the past, and has under the U.S. Digital Millennium Copyright Act, the U.S. transposition of the WIPO treaties, led to the criminalisation of some computer experts. This affects anyone working in the field of digital security or even scientific publications. Since security experts frequently deal with bugs in software, the law may even affect the publication of security-relevant information. This could seriously hamper the successful full-disclosure mechanism and may lead to the degradation of software quality.

Enforcement and penalties

Civil law sanctions against infringers

In concordance with Austrian legal tradition, the main effect of these provisions is in the field of civil law, focussing on “prevention and elimination of the circumstances in contradiction with the law” (Section 90c, subsection 1 and, in the same words, section 82, subsection 1). Section 81 defines the rightsholder’s “right to damages”, which can also be claimed from a firm the infringer may work for and from a third person who has been acting as a intermediary. This does not mean, however, that breaches of copyright do not fall under criminal law. Sections 91 and 92, to be discussed below, provide for strict sanctions for infringements.

In addition to the “right to damages”, the rightsholder may also ask for “removal”, i. e. the destruction of all illicit copies as well as the means used for their production (tapes, films etc.). While copyright law up to the present said only means used “exclusively for the production of illegal copies” should be destroyed, the amended version says “exclusively or predominantly”, giving authorities the possibility to seize computing equipment used for the production or distribution of illicit copies, even if it was also used for other purposes.

New provisions also say that anyone who has been judged guilty of a copyright infringement has to provide information on all circumstances necessary for law enforcement (section 87a,; subsection 1), including the identity of any third persons involved in the production or distribution of the copies (Section 87b, subsection 2 and 3)

Criminal law sanctions against infringers

The new provisions protecting technological copy protection mechanisms (Section 90c), computer programs (Section 90b) and rights management information (section 90d) have been included in the catalogue of copyright infringements punishable with up to six months in jail or a fine of up to 360 daily income rates (section 91, subsection 1). Up to now, punishments this high were limited to offences of illicitly exploiting a work of art or literature. What is remarkable about this new provision is that it extends the possibility of prison sentences and very harsh financial fines to people who haven’t even financially profited from what they were doing; who were merely producing copies for their own use.

The national debate

Industry lobbies

The consumer electronics industry lobby (Fachverband der Elektro- und Elektronikindustrie), led by Hewlett Packard Austria, pressed hard for an abolition of the hardware taxation that compensates artists. Instead of these hidden computer and Internet taxes, industry wanted a complete shift towards a “Digital Rights Management” (DRM) model. In their own words, they are promoting a model where “people should pay royalties only for the music they really listen to”. Composers and artists opposed that, due to the present uncertainty regarding the possible introduction of DRM payment systems.

According to lobbyist IFPI (International Federation of the Phonographic Industry), 2002 was the first year during which more CDs have been burnt than bought in Austria. Music industry sales dropped by eight percent in 2002, and revenues went down from 283 to 260 Million Euro. During the first quarter of 2003, sales at Universal Music Austria showed an even a sharper drop – five percent less whereas the overall rate of people buying music CDs dropped by 10 percent.

The Austrian branch of IFPI was satisfied with the inclusion of a passage on the use of circumvention tools (sections 90b to 92[5]) with sentences of up to six months for the circumvention of those “copyright protection measures.”

Consumer advocates

Consumer advocates were not happy, as lawmakers proved unable to solve the basic dilemma: the right to produce a private copy of a legally bought CD or DVD versus copyright protection measures. The most common interpretation of the related passage in the new law is now that consumers have a right to copy their own music CDs, they are allowed to possess circumvention tools, but it is an offence to use them. The possession passage was included after network security experts and other white hat hackers had complained loudly about possible, severe restrictions on practising their craft.

Despite the frequent mention of artists endangered in general by the current alleged wave of music piracy, the music industry did not support artists strongly enough to force any changes according to their wishes. Only three days before the adoption of the “Urheberrechtsnovelle” the European Council of Artists filed a protest to the Austrian government claiming there had been no dialogue between artists and lawmakers at all. Any suggestions from artists had not been considered or commented upon.

Political parties

During the discussion of the law proposal there were different points of view from some party delegates. Johannes Jarolim of the opposition Social Democrat Party (SPÖ) criticised the protection of technical protection measures because consumers could not use the products in a “normal” way. Johann Maier (SPÖ) said that the law proposal meant the end of fair use for consumers and would only favour the industry’s position. Gabriela Moser (Green Party; formerly opposition, now junior partner in the government coalition) criticised the transition of the author-based Urheberrecht to American-style copyright. Maria Fekter (ÖVP; Conservative, in power before and after the elections) countered these arguments, stating that her adversaries tried to “legalize illegal copies” under the cloak of consumer rights. She asserted that the private copy would be untouched by the new law. Werner Miedl (ÖVP) claimed that the law aimed at “protecting the interests of artists from immense financial damage”. He referred to the allegedly rising number of copied CDs as a signal for the legislature to act. The SPÖ tried to change the proposal with regards to the copying of CDs, but found no majority for this request.

[3] Article 6 of the WIPO Copyright Treaty and Article 8 of the WIPO Performances and Phonograms Treaty

[4] The German transposition of the EU Directive uses “öffentliche Zugänglichmachung”, which is not nicer, but has the advantage of being a literal translation of the original term of public availability, first mentioned in the two WIPO treaties.

[5] The German language section and sub-section titles have been translated as follows: Paragraph – Section; Absatz – Subsection; Punkt - Item