Copyright Protection in 2018

Because of the unbearable ease with which it is possible to copy and/or distribute software, films and music illegally, these industries are most vulnerable to pirating, and from this derives the clear need for their protection

The ability to realize the commercial potential of intellectual property and to enforce copyright protection is one of the central characteristics determining the quality of the intellectual property regime in different countries. The existence of an effective intellectual property regime is vital to the functioning of diverse economic and cultural branches including software, music, film, book publishing, design and related industries. These industries constitute the clearest expression of intellectual property, for all the products are the result of intellectual activity. Because of the unbearable ease with which it is possible to copy and/or distribute software, films and music illegally, these industries are most vulnerable to pirating, and from this derives the clear need for their protection. In addition, an intellectual property regime is measured by its enforcement of the law against counterfeit merchandise and trademarks.

The Legal Framework – The 2007 Copyright Law

About a decade ago, the 2007 Copyright Law went into effect, replacing the Mandatory Order from 1911. The law was intended to create, “the required balance between the need to create fair incentives for creation, by granting economic rights on works, and the need to enable the public to use works to advance culture and knowledge, all this while preserving freedom of expression and freedom of creativity, and ensuring free and fair competition.”[1]

In the ten years that have passed since the new law went into effect, the courts have been required to achieve the same balance between the need to compensate and provide incentives for creators, and the need to enable the public access to works for the purpose of advancing culture and knowledge and providing the possibility for fair competition.

In this chapter, we will survey the weaknesses that have been discovered in the law in light of far-reaching changes in the way consumers today consume copyright-protected content, in comparison to the early 2000s during which the law was discussed in Knesset committees and passed into law. In addition, we will assess the way the law has been interpreted by the courts in Israel in a series of industries and suggest how in our opinion the law should be corrected in order to maintain the balance upon which it is based.

Protecting Computer Software and Applications

Computer software is a copyright protected work.[2] Copyright provides protection for expression of an original creative idea, that was developed by the copyright holder, usually after great investment of resources and time including planning, specifications and writing the software code. Modern software requires the capability of communication with many other hardware and software applications. Therefore, the work of development becomes more and more complex over the years. Protection through monopoly on the product of the development process is therefore an important incentive for continued investment by software development companies.

Up until a number of years ago, Israel was termed in an uncomplimentary way, “a one-program country,” due to the proliferation of illegal software copies. Today, this phenomenon is in decline; according to one estimate, the rate of pirated software in Israel according to 2015 data stands at 29%,[3] a rate similar to the distribution of pirated software in Western Europe that is estimated at approximately 28%. This rate indicates the continuation of the steady decline in use of pirated software in Israel, a trend that has continued since 2006.

To understand the economic significance of effectively addressing pirated software, we note that according to the BSA organization, the organization responsible for the issue of copyright for software manufacturers, decreasing the distribution of pirated software from 30% in 2013 to 29% in 2015 resulted in excess economic activity in the software industry in Israel worth 16 million dollars.

As will be detailed below, software companies’ transition to cloud-based service platforms, alongside providing effective legal tools to combat the problem of pirating, is behind the steady decline in the rate of use of illegal software in Israel.

In the past,copyright protection for software focused on the right to “duplicate”[4] that was traditionally considered as the meaningful economic right given to the copyright holder. This right was mainly protected against physical copying of programs onto CDs and discs, and mainly for computer games and game consoles.

Today, with the transition to cloud services, fewer programs are physically copied, and the main violations are committed on online platforms, when a skilled user enables other users unauthorized access to programs that are copyright protected.

The solution that the Copyright Law provides for these kinds of violations is through a new right to “provide public access.”[5] Usually when an unauthorized entity breaks into a protected program and uploads a link to the program on a site that is accessible to the public or to other users, a number of violations have occurred: (1) copying/downloading a program to the computer for the purpose of breaking in is a violation of duplication rights. (2) Making a link to the breached program is a violation of the right to provide public access. (3) Running and using an unauthorized program requires temporary storage in the working memory of the computer (RAM) and creating a temporary copy is sufficient to constitute a violation of unauthorized duplication.[6]

Another important provision in the aspect of software protection is expanding the circle of violators to include indirect violators. An indirect violator is someone who makes commercial use of an infringing copy of a protected work.[7]

According to the law, possession of an infringing copy for commercial purposes with knowledge that it is an infringing copy is a contributory infringement of copyright. It is important to note that an infringing copy is not necessarily an illegal copy. A program whose license was obtained legally, but which was used in a manner that was not in accordance with the license terms, can be considered an infringing copy and its continued use constitutes infringement. In a legal verdict, it was determined that a company that provided technical support to users of a protected software indirectly violated the copyright.

“It is enough to possess an infringing copy of a program for commercial use to constitute an indirect violation according to article 48 (3) of the 2007 Copyright Law, that forbids ‘possession for commercial purposes’ of an ‘infringing copy,’ knowing that it is infringing.”[8]

In order to prove the existence of an indirect violation the copyright holder must prove the following cumulative conditions:

1. The existence of an infringing copy.
2. Forbidden commercial use of the infringing copy according to the article conditions.
3. Actual or constructive knowledge at the time that act was committed that it was an infringing copy.[9]

The cumulative conditions set by law constitute, in our opinion, a suitable balance between the need to make it possible for copyright holders to be repaid by those who benefit from the violation (even if the violation was not direct), and the need to protect those who come into possession of infringing copies without actual or constructive knowledge (an unwitting infringer).

As will be clarified below, this arrangement is not exhaustive and it requires amendments to the legislation and setting up a mechanism for “notice and take down”.

In order to prevent the existing lack of clarity in court rulings related to indirect violations, we recommend amending the law and adopting the permanent arrangement used in the United States[10] known as the “notice and take down” procedure.

According to the procedure that has been adopted in a number of court decisions in magistrate’s and district courts, the managers of a website are not responsible for civil wrongs committed on a site that they manage, if they were given direct notice of material suspected of infringement and they took it down within a reasonable period of time.[11]

Until the law is amended, we recommend that anyone who establishes or operates a website on which other users can share or upload content establish through their user agreement the rules for implementing a notice and take down procedure on the site. The existence of an organized procedure for the site can prevent claims of infringement or serve to distance the site owners from responsibility in the event that infringing content is inadvertently placed on their site.

The Music and Film Industry

Over the past decade, the music and film industries have also gone through technological changes of vast dimensions that derive from changes in content distribution platforms. The transition from distributing music and films on CDs, DVDs and tapes to consuming content online and on-demand (VOD), has changed the music and film industry and influenced the economic models of the content companies. Today most of the access to content is not through purchase but rather through licensing. In the past two years, significant players such as Netflix, Apple TV and Apple Music have begun to enter Israel, and for the first time, users from Israel can enjoy vast content at low cost accessible to all. Access to content today is through multi-channel broadcasting available from any location through mobile phones and tablets. Alongside the veteran companies Hot and Yes, new and significant content providers have entered the market such as Cellcom and Partner, who have increased the competition in the market and are expanding the cordless phenomenon – disconnection from cable or satellite disk infrastructure and transition to digital content on online platforms.

However, the change in technology has not escaped the attention of violators and they have also changed and improved their methods. Consumption of infringing content through the internet is practically at the level of a norm in Israel, and recently Israel was even ranked in tenth place in the world in the number of entries by users to sites with infringing content relative to the number of internet users. According to the data, on average each Israeli user enters sites that provide copyright infringing content 176.87 times (MUSO GLOBAL PIRACY REPORT 2016).

Despite the scope of the phenomenon, the law enforcement authorities are practically inactive in this subject and the legal ability to act against violators is quite limited.

Similar to what is done in other countries, the enforcement efforts that are made are directed not only towards direct violators (the person who created the infringing copy), but also towards those who make the infringing copy accessible to the public, that is, the site owners who supply access to infringing content and to internet service providers and various network mediators.

Copyright Bill (Amendment number 5), 2017

As of this writing, a proposed amendment is before the Knesset Economics Committee prior to its second and third reading in the full plenum. It is intended to create a balance between “the difficulties of enforcement experienced by copyright holders in the shadow of new technologies” and “the various rights and interests of third parties, such as internet users, intermediaries, and the general public.”[12]

The bill includes four central amendments:

1. Expansion of indirect infringement to the virtual world, thus performing an action on a work that was made available to the public without the permission of the copyright holder will be considered an indirect violation of copyright;
2. Regulation of the issuance of injunctions against third parties for the purpose of limiting access to internet sites whose main content is such that it constitutes direct infringement of copyright or that activity on it constitutes indirect infringement of copyright;
3. Establishing a process for exposing the identity of persons who perform actions on internet content;
4. Amending and adapting the criminal section of the copyright law to the technological era.

If the proposed amendments become law, they will resolve the lack of clarity in the court rulings on the matter of applications for injunctions to limit access to internet sites that allow access to infringing content.

In recent years, contradictory decisions have been made, sometimes by the same court, in the matter of the court’s authority to block access to sites that make infringing content accessible when the site owner is not known and the injunction is directed toward the internet service providers.

In an important ruling by (Retired) Senior Judge Gideon Ginat,[13] relief was granted against third parties, internet service providers in Israel, instructing them to block access to the unidown site, a platform for converting music content from YouTube to MP3 files for downloading.

The court held that granting relief against third parties was consistent with similar decisions in England, and that there was nothing preventing an application for injunction against internet service providers even if the matter was not regulated by law.

The Zera organization (Copyright on the Internet) and various production and broadcasting companies tried to leverage this decision and to block the internet site Popcorn Time, which provides a popular service for viewing films and other copyright protected content.

The Tel Aviv District Court (Judge Magen Eltuvia) rejected the request of the copyright holders in an intermediate proceeding for injunctions against internet service providers.[14] The court held that despite the decision in the Parpuri matter, that decision does not bind the court as a precedent. However, the court did implement as a precedent a previous decision of the Supreme Court in which it was ruled that injunctions should not be granted against third parties in cases where the injured party does not have direct cause against that third party.[15]

The copyright holders’ request to appeal to the Supreme Court was rejected.[16]

If the proposed amendment to the Copyright Law is accepted, this will support the approach of the Honorable (Retired) Judge G. Ginat. In the explanation of the amendments, it is clarified that “it is proposed to anchor in proposed article 53a a process for receiving an injunction for the purpose of limiting access to an internet site of which the main content is content that was published, broadcast or made available to the public in direct infringement of copyright, or of which the content is the product of indirect infringement.”

This amendment will make it possible for copyright holders to obtain relief through an injunction that will prevent access to an infringing site even if no action is taken against the site owner – the direct infringer.

An additional important amendment proposed in the framework of this bill is the establishment of a legal process to demand and receive identifying details of someone who exploits the anonymity of the internet for the purpose of committing acts of infringement.

In our opinion, this is an important amendment that can improve the situation of copyright holders who currently face a hopeless situation. Yet in our opinion an opportunity has been lost to complete the legal regulations with the establishment of an effective mechanism for “notice and take down” that can prevent litigation in many cases and save the costs involved in these processes.

Because of the viral nature of the internet, infringing content on the internet can spread like a “fire in thorns” and in a matter of a few hours or days void the economic rights that the copyright law grants to copyright holders. Thus, for example, mass distribution of a video through social media can prevent the content owners from enjoying their exclusive rights to determine the scope of making their work available to the public. Currently we are witnessing phenomena in which content that was created for the purpose of promoting a certain site or Facebook page is distributed hundreds and thousands of times by social media users and for all practical purposes the content owner loses the ability to control the distribution of the content and through it to promote his commercial activities. The immediate way in which we consume content is making litigation irrelevant in such cases.

Due to the inability of plaintiffs and defendants to receive relevant, speedy relief in the event of copyright infringement, new models of controlling protected content are being examined in Israel as well as in other countries. These include models that enlist internet service providers in the struggle against piracy through a “notice and take down” regime.

A notice and take down procedure is intended to provide a solution for situations in which unwitting users are liable to serve as a tool for distributing copyright protected content without having the level of knowledge required to implicate them for contributing infringement and without turning the entire community of internet users into copyright infringers against their will. A notice and take down procedure is based on the assumption that internet service providers are not aware of all the content distributed through them and they do not have the ability to prevent infringement of content prior to its distribution. However, from the moment that a content owner approaches the service provider to remove the content due to harm to intellectual property rights and/or other protected rights, the internet provider must remove the information and/or content within a reasonable time period and/or block access to it, and if the provider does not do this, they can be held responsible for secondary infringement of copyright.

A notice and take down procedure was “imported” into Israeli law through a ruling[17] that was influenced by American and European legislation that regulates this field (Electronic Digital Millennium Copyright Act 1998; Commerce Directive 2000). Implementation of the regulation in the matter of application of the procedure in Israel is exceedingly limited and currently there is no positive obligation that regulates the responsibility of site content managers to implement the procedure in Israel (Professor Niva Elkin-Koren and Dr. Sharon Bar-Ziv, Copyright Enforcement on the Internet: The Israeli Arena, July 2015).

An additional supplement that should be regulated by legislation is the creation of mechanisms to prevent abuse of copyright through regulation of exceptions and exemptions to the right such as the “private use exception.” The exception for private use that was established by the European Directive[18] allows a user who has a legal copy of protected content to copy or convert content that was legally acquired to other formats, without this being considered infringement, as long as it is for the person’s own private use. An example would be converting a song from a CD that was legally acquired to an MP3 file or another musical format that can be listened to on a mobile device. An exception for private use would constitute an appropriate balance between the need to protect the copyright holder from mass commercial infringement of protected content and the right of the public to access content.

Trademark Protection

Today, more so than in the past, the internet permits easy, quick and inexpensive access that sometimes connects between an infringing manufacturer and a potential importer who is interested in introducing into the local market products that imitate successful brands that are protected by copyright and/or trademark. The phenomenon of counterfeit trademarks in Israel is increasing and gaining momentum and threatens the business sector. Although the Customs Administration of the Tax Authority combats smuggling of counterfeit merchandise in the framework of its activities enforcing the laws on imports to Israel, it is unable to deal with the entire scope of the phenomenon.

The distribution of counterfeit products and the efforts to import merchandise that infringes on intellectual property rights into Israel harm both the owners of the intellectual property rights on these products and the Israeli economy, which loses revenue and tax payments.  Moreover, the main injured parties are the consumer public, who purchase, with their hard-earned money, counterfeit products that are liable to harm them and their health.

Which Products are Counterfeited?

The list is long and includes fashion, perfumes, pharmaceutical products, labels, shoes, alcoholic beverages, toys, etc.  

Enforcement Against Infringers

In accordance with Articles 200a of the Customs Ordinance [New Version], and Article 65 of the 2007 Copyright Law, Customs units at the ports and border crossings are authorized to delay merchandise that is suspected of violating trademarks or copyrights for a period of three days.

In accordance with Customs procedures, the Customs Apprehensions Unit is authorized to operate according to one of two methods that are known as the “short procedure” and the “long procedure”.

According to the short procedure that is executed in most cases in which the merchandise that is apprehended is a small quantity, or the cost of destroying the merchandise is negligible, the Apprehensions Unit contacts the copyright or trademark holder or their representative with a request to provide, within three business days (which can be extended for three additional business days), an opinion based on photographs of the merchandise or on samples, that the apprehended merchandise is indeed infringing merchandise. The Customs Authorities will destroy the merchandise at no additional expense if the copyright or trademark holder provides the aforementioned opinion and a letter of undertaking and indemnification to join as a defendant if the importer sues the Customs Authorities and it is found in a judicial ruling that the merchandise did not infringe legal rights.

In the event that the Customs Authority chooses to execute the long procedure, the copyright or trademark holder will be required to furnish bank guarantees in the amount set by the Customs Authority within three business days and to file a claim to the authorized court against the infringing importer within ten days. According to the accepted practice of the Customs Authority, in exchange for depositing the guarantees at the Customs Authority, they provide the importer’s details to the copyright or trademark holder for the purpose of conducting negotiations with the goal of making it unnecessary to file a claim. An agreement between the importer and the copyright or trademark holder requires the approval of the Customs branch of the Ministry of Finance.

Difficulties in Enforcement Against Importer Infringement

Despite the efforts of the Apprehension Units at the ports and land border crossings into Israel to prevent the importation of infringing products into Israel, many times the rights holders are prevented from acting against the infringers due to difficulty in enforcement and collections against infringers in Israel. The result is that the importer receives the infringing merchandise and is able to trade in it without limit or punishment.

This situation in which the criminal benefits is possible because, inter alia, because of a situation in which a great deal of infringing merchandise is imported by importers who are residents of Judea and Samaria who are not deterred by legal proceedings against them in Israel, and also because of the difficulties in execution of judgements against those found liable.

It must be remembered that when counterfeit merchandise of large scope is apprehended, the rights holder is required to deposit bank guarantees which can be worth tens of thousands of shekels, only in order to receive the details of the infringing importer. Only after he receives the details and he is already invested in the process is he able to evaluate the worthwhileness of compromise versus filing a claim.

This fact is exploited by many infringing importers. On more than one occasion an infringing importer estimates that the cost of storage and destruction of certain merchandise will be greater in comparison to the legal expenses and financial compensation that the rights holder expects to receive if he decides to file a claim against the importer. Therefore, the importer avoids conducting negotiations with the rights holder, with the goal of causing the rights holder to compromise and to himself pay for the destruction and storage. The result is that the rights holder who invested in developing the brand and reputation and in registering the trademark in Israel is forced to pay again and to pay a great deal in order to exercise his right to defend his rights.

In order to improve enforcement, several changes are recommended for adoption:

1. To amend the law such that importers who are apprehended as importers of infringing merchandise are required to deposit a bank guarantee with the Customs Authorities as a condition for future merchandise imports. This guarantee will be confiscated if the importer imports counterfeit merchandise in future.
2. To intensify the civilian and criminal enforcement against importers of counterfeit merchandise after the merchandise has entered Israel. The police and the Ministry of the Economy must allocate personnel to enable identification of counterfeit merchandise.
3. The level of punishments and compensation decreed by the courts against infringing importers should be raised.

[1] Explanation of Copyright Law bill, 2005, bill 196, 20.7.2005, p. 1116.

[2] In Article 1 of the 2007 Copyright Law, it is established that literary work includes, inter alia, computer software.

[4]Article 11(1) of the 2007 Copyright Law.

[5] Articles 11(5) and 15 of the 2007 Copyright Law.

[6] Civil case 2042-08 WeissComm vs. Tal-Yad Excellence et al/(2.4.2013) published in “Nevo”, paragraph 31, p. 26.

[7] Article 48 of the 2007 Copyright Law.

[8] Civil case 2042-08 WeissComm vs. Tal-Yad Excellence et al/(2.4.2013) published in “Nevo”, paragraph 31, p. 25.  

[9] Tony Greenman, Copyright, Green Man Publishers (second edition) 2009, pp. 669-670.

[10] The Digital Millennium Copyright Act (DMCA).

[11] Civil case (District court of Tel Aviv) 1559/05, Hemda Gilad vs. Netvision Ltd., p. 5 (unpublished, [published on “Nevo”] 23.7.2009).

[12] Copyright bill (amendment number 5) 2017, Government bills – 1164, 1.11.2017, explanations page 32.

[13] Civil case 33227-11-13, NMC United Entertainment Ltd. Vs. Bloomberg Inc., et al, 12/5/2015, published on “Nevo” (hereinafter Parpuri matter).

[14] Civil case (Tel Aviv) 37039-05-15 Zera (Copyright on the Internet) Ltd. Vs. John Doe et al, 1.7.2015, published in “Nevo”.

[15] Civil Appeal Authority 4447/07 Rami Mor vs. Barak ETC [1995] the company for Bezek International Services Ltd. 25.3.2010’ published in “Nevo” (hereinafter “Mor matter”).

[16] Civil Appeal Authority 5535/15 Zera (Copyright on the Internet) Ltd. Vs. John Doe et al, 24.9.2015, published in “Nevo”.

[17] Civil case (Magistrate’s Tel Aviv) 04/64045 “On the Table” Gastronomy Center vs. Ort Israel, Small Claims of 2007 (2) 15386; Civil Case (Magistrate’s Tel Aviv) 05/1559 Gilad vs. Netvision Ltd., Small Claims-Retrial 3392 (3) 2009; Tel Aviv District (Center) 09-08-567, A.L.Y.S. – Association to Protect Cinematographic Works (1993) Ltd. Vs. Rotter.Net Ltd., Small Claims-Retrial 5993 (3) 2011.

[18] Article 5(b) Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society.