Indirect online infringement: a growing trend

In Japan, the issue of online copyright infringement has come before the courts in cases which have posed the question of whether online services allowing users to record television programmes online, or to download music and then transfer the files to mobile phones, violate copyright.

With such services, it is the user rather than the owner of the online service that eventually uses the copy of the television programme or music. However, the Japanese courts have tended to judge the online service owner as carrying out the copying, as it built, operated and maintained the system which allows the copying. Such actions by online services are known as ‘indirect copyright infringement’.

In the United States, the concept of contributory infringement is often used to deal with such situations. However, in Japan, this is not stipulated in the law and the enactment of such provisions is under consideration. Therefore, at present online service owners must analyse past court precedent in order to find out whether their service violates copyright.

Court criteria
Four cases set the precedent for indirect copyright infringement in relation to online recording services: Rokuga-net, Rokuraku, Maneki-tv and Yoridorimidori. The Myuta Case set the precedent in relation to music database transforming services.

All these decisions were based on considering two requirements in order to judge whether the online service owner violated copyright: 

• the degree of management and control by the business; and 
• whether the business makes a profit.

Such criteria were originally adopted by the courts in relation to the karaoke industry. The Supreme Court considered a case regarding who was infringing performing rights by using songs for karaoke - the karaoke club which provided the place and the facilities to make the profit, or the customers who actually sang karaoke. In that case, the Supreme Court held that the club had carried out acts of infringement under copyright law because:

• Employees of the club had encouraged customers to sing;
• The customers had sung songs chosen from the selection provided by the club and using karaoke machines operated by the club; and 
• the club provided the facilities for singing as part of its business and created the right atmosphere for a karaoke bar, attracting customers who favour that atmosphere and thus making a profit from those customers.

This reasoning has also been adopted by the courts in relation to online services, and it is becoming more conventional in Japan to make decisions using these criteria.

Management and control requirement
In order to decide whether a service meets the requirements for copyright infringement, the following points must be considered:

• whether the software or hardware needed for recording was developed by the online service owner;
• whether the online service owner operates and maintains the business itself;
• whether the hardware used for the system belongs to the online service owner;
• whether a user ID or password is needed to use the system; and
• whether the system can be controlled by the online service owner.

Profit requirement
Provided that the online service owner is established as a commercial enterprise (ie, a corporation), it will meet this requirement as it is operated for profit. Specifically, if the service earns usage fees from users, obtains advertising revenue from its website or obtains fees from system operation and maintenance, it will meet this requirement.

Conclusion
No matter how convenient and safe a service is for the users, the current situation makes it hard for business owners to establish new online services as the possibility of being accused of copyright infringement has increased. In order to combat this situation, a new system which will enable a limited right to use digital content online is to be set up, and a system that would pay part of the profits to the rights holder is under consideration.

Recent copyright law and precedent have focused more on protecting copyright owners, rather than the use of copyrighted works, resulting in unfavourable conditions for business owners. However, it is hoped that the introduction of a new system will benefit online service owners.