CIRO/FOX: COMPETITION v COPYRIGHT PROTECTION IN THE DIGITAL AGE: [2006] E.I.P.R. 329 Competition v Copyright Protection in the Digital Age TONY CIRO AND MARK FOX ∗ Dr Tony Ciro, La Trobe University; Prof. Mark Fox, Indiana University Australia; Comparative law; Competition policy; Copyright circumvention devices; Digital technology; Infringement; United States; Video games Introduction The recent litigation involving Sony Music and tech- nological protection measures (‘‘TPMs’’) in Australia 1 highlights the tension that continues to simmer between copyright protection on the one hand and competition policy on the other. 2 A broad definition of TPM alters the balance between protecting private property rights in the digital arena via the Copyright Act and promoting public access to such works. The outcome in the Sony case has implications for competition policy in Australia. The perceived threat for competition for digital works with the advances in computer chip technology led to the competition watchdog, the Australian Competition and Consumer Commission (‘‘ACCC’’), 3 being granted special leave to * Dr Tony Ciro is a Barrister-at-Law and Senior Lecturer in Law, La Trobe University, Melbourne; Professor Mark Fox is Professor of Management & Entrepreneurship, Indiana University, South Bend. 1 Kabushiki Kaisha Sony Computer Entertainment v Stevens [2002] F.C.A. 906 (per Sackville J.); Kabushiki Kaisha Sony Computer Entertainment v Stevens [2003] F.C.A.F.C. 157 (Full Court Federal Court); Kabushiki Kaisha Sony Computer Entertainment v Stevens [2005] H.C.A. 58 (High Court of Australia). 2 The tension between intellectual property rights and competition law and policy has been the subject of much academic comment. See B. Canetti, ‘‘Microsoft Champions Intellectual Property Rights and Loses to European Union Competition Law: Proceedings under Article 82 of the EC Treaty Case ComP/C-3/37.792 Microsoft, March 24, 2004’’ (2004) Journal of Law, Technology and Policy 171. S. Genevaz, ‘‘Against Immunity for Unilateral Refusals to Deal in Intellectual Property: Why Antitrust Law Should Not Distinguish Between IP and Other Property Rights’’ (2004) 19 Berkeley Tech. L.J. 741; D. Gifford, ‘‘Antitrust’s Troubled Relations with Intellectual Property’’ (2003) 87 Minnesota Law Review 1695; R. Pitofsky, ‘‘Antitrust and Intellectual Property: Unresolved Issues at the Heart of the New Economy’’ (2001) 16 Berkeley Tech. L.J. 535; S. Son, ‘‘Selective Refusals to Sell Patented Goods: The Relationship Between Patent Rights and Antitrust Law’’ [2002] University of Illinois Journal of Law and Technology 109. 3 The ACCC is the regulatory authority charged with the responsibility of enforcing and policing competition law in be present in the proceedings. 4 An intellectual property system which favours private rights at the expense of public access will be a boon to copyright owners whose self-interests in preserving and enhancing economic value far exceeds the social benefits they provide to consumers. The purpose of this article is to explore the decisions in Sony v Stevens in all three courts: the Federal Court of Australia, the Full Court of Australia and, on appeal, to the High Court of Australia. The authors then examine the competition concerns raised by the litigation. The article further provides a comparison with laws in the United States which renders illegal the practice of overriding circumvention devices installed by copyright owners in their digital works. It is argued that since US laws are much more liberal relative to Australian law the potential in the United States for intellectual property abuse and anti-competitive behaviour by copyright owners exists to a much greater extent than would be the case in Australia. Sony v Stevens The dispute involved consideration of the scope of new anti-circumvention legislation in Australia which is designed to provide digital copyright owners enforcement rights for works that have been protected by circumvention devices. 5 The defendant, Mr Stevens, was sued by three Sony companies alleging that he infringed the registered trade marks of Sony Japan, that he had engaged in misleading or deceptive conduct in contravention of the Fair Trading Act 1987 (NSW), and was liable under s.116A of the Copyright Act 1968 (Cth). It was alleged by Sony that the defendant supplied and installed ‘‘mod chips’’ in Sony PlayStations for the purposes of allowing customers to play pirated Sony PlayStation software on Sony’s PlayStation consoles. Sony argued that the mod chips were tantamount to anti-circumvention devices which were capable of circumventing technological protection measures installed by Sony in the form of access codes and Boot ROMs. Federal Court of Australia In the first instance, Sackville J. held that the defendant had not infringed s.116A on the basis that mod chips were not anti-circumvention devices because the access Australia. The Trade Practices Act 1974 (Cth) is the primary law in Australia which establishes the rights and obligations of companies and certain individuals to comply with competition law. The ACCC has an active mandate to police and enforce the Trade Practices Act against any company and certain individuals who have been found in breach of the Act. The ACCC also has an active investigation and enforcement arm which is designed to investigate allegations of anticompetitive behaviour in Australian industries. 4 Kabushiki Kaisha Sony Computer Entertainment v Stevens, fn.1 above (FCA), granted the ACCC special leave as an ‘‘amicus curiae’’:- ibid., [2001] F.C.A. 1379. 5 In Australia, the term used by the legislation for anti- circumvention devices is ‘‘technological protection measure’’ (‘‘TPM’’): s.116A of the Copyright Act 1968 (Cth). [2006] E.I.P.R. ISSUE 6  SWEET & MAXWELL LIMITED [AND CONTRIBUTORS]