Intellectual Property Quarterly

2014

Japanese copyright law reform: introduction of the mysteriousAnglo-American fair use doctrine or an EU style divine intervention via

competition law?

Miya Sudo

Dr Simon Newman*

Subject: Competition law. Other related subjects: European Union. Intellectual property. Legalsystems

Keywords: Comparative law; Competition law; Copyright; EU law; Fair dealing; Japan; United States

Legislation: Copyright Act (Japan)

Case: Radio Telefis Eireann v Commission of the European Communities (C-241/91 P) [1995] AllE.R. (E.C.) 416; Times, April 17, 1995 (ECJ)

*I.P.Q. 40 Abstract

What reforms does Japanese copyright law 1 need in order to correct the failings of the currentsystem? The existing copyright regime is based on 19th-century civil law doctrine, but is refractedthrough a uniquely Japanese prism, a refraction that creates uniquely Japanese problems. This articlesets forth two possible solutions. The first is to introduce an open-ended general limitation clause,such as the American fair use system. 2 The second is to adopt an EU-style approach in which thelegislative body makes amendments of individual restriction provisions in a timely manner and, whennecessary, the judiciary applies national copyright law and competition law interactively to deal withany Magill -style conundrum. In this context, this article outlines the American fair use principle andthe United Kingdom’s fair dealing, and gives a general picture of the Japanese Copyright Act ’shistorical background and its distinctive character. It asserts that current Japanese copyright law iseffectively obsolete; its approach too rigid to deal effectively with new technologies. Current Japanesecopyright law stands in the way of innovation, stifling new modes of exploitation and creating chillingeffects. We investigate the contrasting manner in which the United States and the EU nationsapproach new technologies. Finally this article discusses the best way forward for the Japanesecopyright legal regime.

Introduction

It has been over 140 years since the modern concept of copyright was introduced to Japan fromEurope during the Meiji reforms,3 and over 110 years have passed since the very first Japanesecopyright law was made, based on a Continental European copyright framework.4 With the advent ofdigital technology the Japanese copyright regime, like others, has been facing tremendouschallenges. This article investigates the following problems with the current Copyright Act:

First, its scope is too restrictive to be compatible with a society where digital technology prevails.5 Inthis era the different means of "copying" have different characteristics. For example "caching" makesa *I.P.Q. 41 temporary copy in order to facilitate the performance of a computer, whereas"downloading" means to receive data which to be stored permanently, or at least more thantemporarily. Regarding the purposes for copying, some might be for private use and others might befor reverse engineering.

The Japanese Copyright Act has been forced to deal with a much expanded range of users’exploitation within the existing legal framework and paradigm.6 At present there is still no provisionwhich recognises reverse engineering and parody as exceptions to copyright. The Act has anexhaustive list of limitations on authors’ rights, without general fair use provisions such as in s.107 ofthe United States Copyright Act, and the common principle is that all such limitations have to benarrowly interpreted. Therefore countless kinds of acts which do not fit within the scope of permitted

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use are considered to be infringing activity.

The inadequacy of the current law leaves a myriad of such acts in a grey zone between infringing andnon-infringing activity.7 The number of acts in this grey zone seems to grow ever larger. On the onehand, in order to deal with illegal use the punishment for infringers is getting tougher and tougher onusers of protected works, pursuant to or even beyond the level of punishments stated in internationaltreaties.8 On the other hand, Japanese judges are obliged to rule on cases on the basis of anantiquated law. Therefore, in order to reach a conclusion which they believe to be right, some judgesend up applying somewhat artificial and strained interpretations of the provisions.9

Little thought is given to the obsolete legal system’s effects on innovation or public welfare, and this iscreating suppressive effects. The economic influence that each state’s copyright legal framework hason its relevant industries is getting stronger, especially in nations with large IP industries such as theUnited States, the United Kingdom and Japan. New technologies create new businesses.Conventional content such as songs, books and films are sold online. The content industries arebooming, having risen to the fifth largest export industry in Japan.10 Intangible assets are now animportant component of the economy. In addition, business sectors outside the creative industriesalso use copyrighted works through digital means. Digital transmission, display and analysis of datathrough copying are exploited for a more efficient service.

The incompatibility of the Copyright Act of Japan with the digital environment hinders new businessentrants. The rigid interpretation of the list of limitations on the authors’ rights does not give muchhope to those who want to start new businesses. In some highly controversial cases the Japanesecourts have driven venture companies such as an online storage service company and an onlinebookshop to bankruptcy by denying their business model and ruling their activities illegal.11

Since those rulings have repercussions on present and future businesses, the validity and influenceof the courts’ findings have been widely disputed in Japan. Consumers and companies have been leftin fear, not knowing for sure whether their acts are legal or not. This uncertainty harms the digitaleconomy because no company dares to make an investment in something for which they might besued. The antiquated Copyright Act has brought and will continue to bring undesirable effects into theIT and IP business world. Owing to the rigid copyright legal framework, small and medium-sizedventure companies especially cannot compete on a level playing field with foreign competitors.Furthermore, companies that cannot afford to wait until amendments are made may be compelled toshift their business from Japan to *I.P.Q. 42 places where they can do business legally.12 As acommon adage says: "Business continues to go where invited, and remains where appreciated."13

These problems have been left unsolved for a long time. It is true that the legislative body has acted.Numerous amendments have been made, nearly 20 specific amendments over the last 10 years orso.14 But the process of making an amendment is painfully slow. The average time it takes in order tomake one amendment is three years from when an issue is submitted to the competent committee. Itis hard to make provisions for each and every activity, and it will never be able to catch up with thespeed of changing technology.15 It should be noted that many of the amendments made recently areregarding the reinforcement of punishment for infringing acts,16 leaving the problems mentionedabove unsettled.

It has been clear since the advent of the information technology era that Japan has been struggling tocreate new business models and failing to produce competitive home grown IT companies.17 Someacademics and industries demanded that the legislative body should reform the copyright law in orderto alleviate these problems. Eventually, in 2008 the Government Headquarters for IP Strategy18

announced its idea to introduce a general copyright exemption provision, i.e. a general fair useclause.19 They also disclosed a plan named "Cool Japan" with an ambition to make the nation a globalleader in the content and IT industries.20 Nonetheless after many lengthy negotiations in thecommittee, which consisted of two conflicting interest groups and some academics,21 it ended up onlyin managing to make some narrow limitations on authors’ rights which had been long overdue.22 Theidea of providing the fair use provision, which garnered a lot of domestic attention, was stillborn.23

What was touted as a Japanese version of fair use vanished off the face of the earth in 2011.

Is the old fashioned Japanese copyright law hindering the expansion of new business andinnovation? We believe the answer is yes. What reform is appropriate? Should the plan to introduce afair use doctrine rest in peace for good? Should Japan look for an answer in the European Union’slegal framework, based as it is on the French legal system which Japan originally copied at theinception of its modernisation?

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The second section below outlines the Anglo-American fair use doctrine and UK fair dealing. The thirdsection explains the history of copyright in Japan from the pre-copyright era to the present day, andgoes on to examine the character of the Copyright Act of Japan. In the fourth section we examine itsinherent problems in the light of some major Japanese cases. In the fifth section we look at somecontroversial Japanese cases which demonstrate the chilling effects of the current regime. The sixthsection examines whether a general fair use doctrine would solve the problem, and also reflects onthe EU approach following Magill. In the concluding section we seek to determine which style ofapproach is appropriate for the Japanese copyright framework, and venture some opinions regardingreform of the law. *I.P.Q. 43

Fair use and fair dealing

The United Kingdom and the United States are the world’s major producers of copyright material.Despite their differences, these common law nations share a notion within their fair dealing and fairuse doctrines: a notion of permitting some uses of a copyright work which are considered to be fair.The United States has an open-ended general limitation provision on authors’ rights, called fair use,whereas the United Kingdom has an exhaustive list of categories of use which can fall into the scopeof fair dealing. While the UK system appears much narrower on its face, some of these categories arequite broadly applied, notably "Criticism and Fair Use", enough to be able to describe fair dealing as ageneral limitation. Japanese copyright law as it is currently applied does not really have such a notionof permitted use, even to the extent of the more limited UK fair dealing approach.

Fair use

Usually, the advancement and dissemination of copyrighted works does not conflict with the interestsof the authors. Copyright allows authors to have a monopoly over their works for a certain period, andthey get paid for their efforts. However, in some instances the authors’ monopolistic control over theirworks is a detriment to the public. In some of these specific circumstances, the authors’ exclusiverights must yield to a social need for access and use.24 The fair use doctrine evolved as one way toenable this.

According to the fair use principle embodied in s.107 of the US Copyright Act, any use that falls intothe categories set by the four criteria will be considered "fair", and thus non-infringing.

Titled "Limitations on exclusive rights: Fair Use", s.107 states:

"Notwithstanding the provisions of section 106 and 106A, the Fair Use of a copyrighted work,including such use by reproduction in copies or phonorecords or by other means specified in thatsection, for purposes such as criticism, comment, news reporting, teaching (including multiple copiesfor classroom use), scholarship, or research, is not an infringement of copyright. In determiningwhether the use made of a work in a particular case is a Fair Use the factors to be considered shallinclude

(1)

"the purpose and character of the use, including whether such use is of a commercialnature or is for non-profit educational purposes;

(2)

the nature of the copyrighted work;

(3)

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the amount and substantiality of the portion used in relation to the copyrighted work asa whole and

(4)

the effect of the use upon the potential market for or value of the copyrighted work

The fact that a work is unpublished shall not itself bar a finding of Fair Use if such finding is madeupon consideration of all the above factors."

The first factor examines whether the use is transformative and how transformative it is, in addition towhether it is for commercial purposes or not.

The second factor examines whether the copyrighted work deserves strong protection. The thirdfactor examines whether a substantial amount of the copyrighted work was used. The last factorexamines whether the use is financially detrimental to the right holders’ work or its potential market.

The application of these factors is up to the courts. How much of a transformation from the original isnecessary for a finding of non-infringement? What proportion taken from the original work indicates*I.P.Q. 44 infringing use? The guidelines are vague, leaving it wide open for the interpretation for allactors—the users, the right holders and the judiciary.25

This investigation operates as a multi-factor inquiry, and no single factor is dispositive.26 Theboundaries of these categories are meant to be inherently unclear, and have to be determined on acase-by-case basis in order to give flexibility. In the fair use doctrine this intentional flexibility allowsfor uncertainty, and this uncertainty allows for flexibility and breadth of application. This led to thecomment by Justice Blackmun referring to the fair use doctrine as "the most troublesome in the wholelaw of copyright".27 Yet he also regarded this principle positively, as enabling the law to adapt in achanging era. This flexibility allows the legislators and judges to have a narrower or widerinterpretation according to their views of what should be considered right.28 Thus the treatment of fairuse by US courts has changed over time. The intention of the US legislature and courts at a particulartime period can change the interpretation of fair use, and the system allows for this. While the courtscan have a wider interpretation if they want to accommodate new technology, they can also have anarrower interpretation if they want to give more protection to the right holders. Having said that,American fair use has an imperative. The imperative is that US courts should interpret the right of fairuse in light of both the Copyright Clause and the requirements of the US Constitution.29 Fair usedoctrine should be applied in a manner that takes the public interest into account. Basing its rootsupon the Statute of Anne, art.1, s.8, cl.8 of the Constitution of the United States of America 1789states the limited purpose of copyright law. It provides as follows:

‘The Congress shall have power to … promote the Progress of Science and useful Arts, by securingfor limited Times to Authors and Inventors the exclusive Right to their respective Writings andDiscoveries." 30

The language "useful Arts" in this article refers to scientific knowledge, while "Science" here meanssomething more like knowledge in general, including works of culture. Thus it indicates that theobjective of US copyright is to promote the progress of knowledge. In other words, by providingauthors with protection as an incentive to create works, the state advances and disseminates cultureand knowledge.31

With regard to the relationship between the fair use doctrine and the US Constitution, FirstAmendment "free speech" values are claimed to have been implanted by the Founding Fathers in theCopyright Clause of the original Constitution. Therefore the courts recognise that the right of fair useis protected directly by the public’s First Amendment right of access to information and ideas, andalso by a right to learn and to know.32

Justice Souter explained:

"From the infancy of copyright protection, some opportunities for Fair Use of copyrighted materials

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have been thought necessary to fulfil copyright’s very purpose, ‘to promote the Progress of Scienceand Useful Arts …’." 33

Likewise the US Supreme Court in Eldred v Ashcroft referred to fair use as one of copyright law’s"built-in free speech safeguards". *I.P.Q. 45 34

In order to understand the changes in how American fair use doctrine has been treated by the courts,we now go through its history. It has been nurtured for over 170 years already,35 and before the fairuse doctrine was introduced in the United States a similar approach had already been fostered in theearlier English jurisprudence.

An early fair use doctrine was arguably embedded in the Statute of Anne 1709/10 36 which uses anincentive-based justification for copyright in the Preamble: "the Encouragement of learning by vestingthe Copies of Printed Books in the Authors or Purchasers of such Copies". The first example of anEnglish fair use case is Gyles v Wilcox in 1740. In this case the defendant used parts of thecopyrighted work of the plaintiff. The court opines as follows, ruling for the defendant:

"[T]his must not be carried so far as to restrain persons from making a real and fair abridgment, forabridgments may with great propriety be called a new book,

because not only the paper and print, but the invention, learning, and judgment of the author is shewnin them, and in many cases are extremely useful …." 37

In the early English cases, whether or not the user had fairly used the protected work was importantto define the scope of copyright protection.38 Having inherited this fair use concept from thesecommon law cases, the US courts developed it. The first prominent American case that is said tohave created the American fair use doctrine is Folsom v Marsh.39 The principle was used in order todetermine whether the copyright holder’s rights were violated. In another 19th-century case,Lawrence v Dana,40 the court was of the opinion that the use of another’s expression constituted thenorm, and suppression of that use through copyright constituted the exception.41 Since copyright wasdeemed to be an exception to this right to use, the burden of proving infringement was laid on thecopyright holders.

However, the courts’ treatment of the fair use doctrine changed over time. Despite the fact that, at thetime of codification of this doctrine, the US Congress expressed its intention that fair use of acopyrighted work should not be an infringement of copyright, and the fair use provision defines thescope of a copyright holder’s right, the developing US jurisprudence deviated from Congress’soriginal intention. In Harper & Row Publishers, Inc v Nation Enterprises 42 the court declared fair useto be an affirmative defence.43 This declaration was followed by the Congressional affirmation in 1922that fair use was an affirmative defence, putting an end to the concept of fair use as of right.44

Looking back its history, it is clear that the Anglo-American fair use principle has weakened notably.At present the fair use doctrine is applied in exceptional circumstances as a defence for otherwiseinfringing acts. Furthermore, even within recent history the shift from a utilitarian, pro-public interest,theory to a Lockean property-based rationale can be observed in comparing the 1984 Sony case45

with Grokster in 2005. We will focus on this shift to a weaker fair use doctrine in the section "Fair usev Magill/IMS" below. *I.P.Q. 46

Fair dealing

As mentioned above, the American fair use doctrine was originally rooted in English jurisprudence,which had already nurtured the concept of fair use of copyright works for two centuries by the time theUK Copyright Act 1911 codified certain uses as "Fair Dealing". The Copyright, Designs and PatentsAct (CDPA) 1988 contains an extensive list of statutory defences in ss.28 –76 of Ch.3. Sections 29and 30 provide fair dealing defences in the following cases:

•

fair dealing with a literary, dramatic musical or artistic work, and the typographical

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arrangement of a published edition for the purpose of private research or study;

•

fair dealing with a work for the purpose of criticism or review;

•

fair dealing with a work (other than a photograph) for the purpose of reporting currentevents.

Hence fair dealing defences can be applied only when the purpose of use falls into the categoriesabove, whereas the US fair use provision §107 does not state restricted categories of purposes.Defendants must overcome these three criteria:

1.

the dealing must fall into an enumerated category;

2.

the dealing must be fair; and

3.

there must be sufficient acknowledgement (unless it is impossible for reasons ofpracticality or otherwise).

When determining what constitutes fair dealing, certain factors are to be considered. Lord Denningcommented on the scope of fair use in Hubbard v Vosper 46 as follows:

"You must consider first the number and extent of the quotations and extracts … Then you mustconsider the use made of them … Next you must consider the proportions. Other considerations maycome to mind also. But it must be a matter of impression."

Although substantiality is to be determined by a qualitative test, it appears from the above quotationthat it should be partially established by a quantitative test also.47 However, under certaincircumstances surrounding the use, the copying of a whole work can fall into the category of fairdealing. In short, it will be a matter of combining and weighting all relevant factors. The maindeterminable factors are: purpose, substantiality, proportion, motive, the nature of the used work andthe degree of prejudice the use causes to the copyright owner.

The courts have generally taken a broad interpretation of fair dealing when the purpose of the use isfor criticism or review, as in Pro Sieben Media and the Tabloid Tales cases, while recent courts havetaken a narrower approach to fair use in reporting, as in the Daily Telegraph ’s dispute with PaddyAshdown over its use of his diaries. Generally, finding fair dealing is a matter of weighing the relevantfactors according to a case-by-case scenario. Here, in the light of the purpose of this article, it shouldbe noted that neither the Gowers Review of Intellectual Property 48 nor the Hargreaves Report, DigitalOpportunity,49 recommended implementing the American fair use doctrine. It is arguable that the

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Anglo-American fair use doctrine is too culturally specific to be transposed into European law—and itis worth noting that the basic structure of the European legal system is very similar to that of Japan.*I.P.Q. 47

American and English cases dealing with new technology

With the advent of new consumer technologies that enabled wide-scale home copying, American andEnglish copyright law handled the cases involving these new technologies somewhat differently, butwith essentially the same results.

The Sony case

In Universal City Studios Inc v Sony Corp of America 50 Sony manufactured and sold the Betamaxhome video tape recorder (VTR), which was novel at the time. Universal City Studios owned thecopyrights to television programmes broadcast on public airwaves. Universal brought an actionagainst Sony for copyright infringement to the District Court in 1976. The plaintiffs alleged that VTRconsumers had been using Sony’s Betamax to record Universal’s copyrighted works, therebyinfringing the plaintiff’s copyright. They claimed that Sony was liable for such copyright infringementbecause Sony supplied the means used to infringe, knowing that infringement would occur. The courtstated that the principal use of the VCR was for "time shifting", that such non-commercial home userecording was a fair use and that access to free public information was a First Amendment publicinterest. It ruled that the use did not constitute copyright infringement.

The court went on to state that Sony could not be held liable as a contributory infringer even if homeuse of a VTR was considered to be an infringing use. Judge Ferguson drew an analogy from patentlaw, where manufactures of staple articles of commerce were not held liable for infringement merelybecause they supplied devices that could be used in infringing ways. Universal Studios appealed tothe Ninth Circuit and it reversed the decision. The court held that consumers who recordedcopyrighted material infringed the copyright holders’ right, even if it was non-commercial use,asserting that a use could be considered fair only when the use is productive. Thus it concluded thatSony was liable as a contributory infringer, dismissing the staple article theory. This case wasappealed to the Supreme Court. The court found for Sony, judging that the Betamax video recorderwas capable of a commercially substantial non-infringing use, and because of this Sony’s sale of it didnot constitute contributory infringement, on the ground that there was no evidence that Sonyencouraged infringement. The plaintiffs had failed to prove otherwise. What should be rememberedabout the "Sony rule" is that, although:

"[O]f all the taping actually done by Sony’s customers, only around 9% was of the sort the Courtreferred to as (specifically) authorised, the Court found that the magnitude of authorised programmingwas ‘significant’ and it also noted the significant potential for future authorised copying." 51

By finding this significant non-infringing use the court rejected the imposition of secondary liability. Inshort, the court:

"[R]ecognised copyright law is not intended to discourage or to control the emergence of newtechnologies including those that help information and disseminate information and ideas morebroadly and more efficiently." 52

It should be borne in mind that the motion picture industry grew to rely on the pre-recordedvideocassette market as a significant source of its income, the fear they had felt was subsequentlyproven unnecessary, and the court’s decision was vindicated. As Judge Ferguson said in the trial,although new technology *I.P.Q. 48 does bring uncertainty and change inducing fear, this fear maybe misplaced. This case shows how difficult it is to strike a good balance between protection ofmonopoly privilege and the advancement of new technology.53 It is worth mentioning that the way inwhich the court treated the fair use doctrine played a crucial part in the unusually prolongeddecision-making process at the Supreme Court. Justice Blackmun had formulated fair use doctrine asan affirmative defence. He was of the opinion that fair uses were only those that were productive andbeneficial to the public. He deemed home recording to be unproductive and not worth beingconsidered fair at the author’s expense. He claimed that the use should be found infringing unless theuser could prove that the use had no tendency to harm the market for or value of the copyrightedwork.54 When the Justices of the Supreme Court initially met to discuss the case, only one of them,

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Justice Stevens, was convinced that home recording was a fair use and that Sony was not liable forcontributory infringement. But at the outset the rest affirmed the decision of the Ninth Circuit. Owing toJustice Stevens’s efforts, one by one four other justices changed their opinions and stated theirdisagreement regarding the fair use formulation of Justice Blackmun. Finally five out of nine justicesfavoured Sony. It was a narrow majority, and a narrow victory for a new consumer technology.

This case shows that different judges take different approaches to the fair use doctrine, for exampleregarding who should bear the burden of proof. This is especially so in a case where new technologyis dealt with, because there is no established precedent. Fair use doctrine will not guarantee a safeharbour to the distributors of new technology.

The Amstrad case

In the UK House of Lords case CBS Songs Ltd v Amstrad Consumer Electronics Plc (1988) 55 thedefendant, Amstrad, was manufacturing, selling and advertising for sale a high-speed twin deck videotape recorder, with advertising making it clear that some copying required permission, and that therespondent had no authority to grant it. The claimants argued that because consumers of the productcould use this device to copy the plaintiff’s copyright protected works the sale of the productamounted to authorisation to the public on the part of Amstrad.

The existing copyright law of the time was the Copyright Act 1956. The plaintiff, CBS songs, basedtheir argument on s.21(3), which stated that an authorisation is a grant of the right to do an act. Italleged that the respondent’s sales and advertisements encouraged the public to commit an offence.The claimant also alleged that the manufacturer was liable under s.1(1) of the Act, which stated that acopyright owner has the exclusive right to authorise copying. In the light of this section, the questionwas which acts amounted to "authorisation", in other words whether Amstrad was authorisingcopyright infringement by supplying the twin-deck tape recording machines. The House of Lordslooked at the meaning of "authorise" for the purposes of the Act. It found that to "authorise" in s.1meant to grant or purport to grant to a third person the right to do the act complained of. Therefore theHouse of Lords concluded that the respondent did not authorise consumers to commit infringement ofcopyright, since it was made clear in the advertising that the respondent had no control over themachines once sold. As for joint infringement, the court ruled, echoing Sony, that since the machinescould be used both lawfully and unlawfully, Amstrad was not a joint infringer with persons who usedthe machine unlawfully. Furthermore the court ruled that there was no incitement to commit anoffence, and the defendant did not owe a duty to prevent or discourage or warn against infringementby others. *I.P.Q. 49

The US and UK case rulings above were based on different laws. The United Kingdom, which hasneither the broad US fair use doctrine, nor a personal use exception, drew a similar conclusionregarding secondary infringement by the distributors of new technology. What this means is thatcommon law courts can interpret relevant provisions flexibly with or without a fair use doctrine, andthis might be one reason why many large UK creative companies operate very successfully.

The history of both the VTR and the audio cassette recorder reminds us that emerging technologieswhich are initially demonised by the content industries may ultimately not be as detrimental asclaimed.

The feasibility of transposition

It might be difficult for the civil law regime of Japan to adopt such a highly ambiguous doctrine as fairuse. To adopt the broad American fair use doctrine might conflict with the Japanese system’s civillaw-derived principle that law must be codified and complete,56 in order to provide all citizens with anaccessible and written collection of the law. Having said that, the truth is that it is a matter of degree.The advantages of successfully adapting such a doctrine might outweigh the difficulties in so doing.The next section investigates whether the Japanese civil courts, which have been granted limitedauthority to interpret the law, can handle such a system without a case law, and whether theJapanese copyright regime has a rationale or objective similar to the ones laid down under theAmerican fair use principle.

Japanese copyright law

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This section explores the history of Japanese copyright law, especially from the pre-copyright era untilits accession to the Berne Convention, in order to understand what influenced it in its infancy.57

Although both the present Copyright Act 1971 and its predecessor the Copyright Act 1899 were saidto be copied from Continental European copyright law, the overall approach of Japanese copyrightshows some distinctively different characteristics from that of Continental Europe.

There are several well-known rationales for intellectual property rights, such as utilitarianincentive/reward, Lockean property rights, and Rousseau’s personality right of the author. TheAnglo-American fair use doctrine is based primarily on a utilitarian rationale. One of the authorities ofcopyright law, Moriyuki Kato, claims that the authors’ right in Japanese copyright law is not really anatural right at all, but solely a legal right.58 Another authority, Nakayama, rightly asserts that althoughthere are several famous traditions, the theories used for justification of the IP laws have changedover time.59

Most Japanese copyright books do not address theoretical justifications for copyright. Nor do theyexplain why a country with such a strong communitarian tradition should have adopted such a highlyindividualist author’s right/droit d’auteur system, a confluence which has resulted in such uncannyturns as corporations being held to possess moral rights60 in the corporation’s own copyrightworks—the legal group-entity of the company being treated as a Rousseauian auteur deserving ofdignity, respect, and thus a right of integrity over its copyright work. The reasons why the JapaneseAct does not stand on a particular rationale can be seen in its history. *I.P.Q. 50

A history of Japanese copyright law

The birth of the copyright law

Although type-set printing had been introduced to Japan from Korea and Europe in the late 16thcentury, by the middle of the 17th century it had effectively been replaced by woodblock printing oncemore.61 To own a woodblock of a book meant that the owner had an exclusive right to print and sellthat book. During the Edo period in 1723 an Ordinance was enacted that gave three stationers’unions a monopoly in printing62 —only members of these unions had the right to print books.Stationers kept the woodblocks, and it was not the author but the stationer who had the privilege topublish. With the end of the Edo (Tokugawa) period the Meiji Government ruled from 1867, andenacted the Publishing Ordinance in 1869.63 This ordinance provided for both the protection ofmarketing copyright and the regulation of publishers. Among its provisions it stated that those whopublished books, and those who translated foreign books, were granted an exclusive right to sellthroughout the author’s lifetime.64 Despite the fact that these provisions were just a minor part of theOrdinance, and the Government probably used the marketing copyright as a means of suppressingseditious books, these are considered to be the first true Japanese copyright provisions.

Yukichi Fukuzawa contributed to the birth of this first copyright provision.65 He was a well-knownchampion of the Lockean natural right theory. However, not many people know the fact that he wasthe owner of a publishing company and that he fought very hard against copyright infringement for hisown gain.66 His books were so popular that he suffered from wide-scale piracy.67 Fukuzawa explainedcopyright in his bestselling book Things Western, as follows:

"those who write or draw a picture should be granted an exclusive economic right and possession ofwoodblocks is a proof. Thus they make their works their property".68

Syoji Yamada argues that the "copyright" law Fukuzawa managed to establish was neither Englishcopyright based on the property right theory, nor French droit d’auteur based on the tradition whichclaims strong connection between authors and their works.69 What he propounded was an exclusivemarketing right for publishers (not for authors) to print and sell books. It is likely that Fukuzawa’sdefinition of *I.P.Q. 51 copyright was built on the background that he was not only a writer but also apublisher who was deeply concerned about pirated version of his books. It is likely that Fukuzawawas aware of the fact that copyright had been conferred not on stationers but on authors already atthat time in England.70 However, a person who was both an author and a publisher was satisfied aslong as the law granted the exclusive protection to stationers by prohibiting stationers from makingpirate copies.71 In this sense his copyright was similar to the stationers’ copyright in England in theearly 16th century.72

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Accession to the Berne Convention

Authors had to wait until the enactment of the old Copyright Act 1899 to be awarded copyrightprotection.73 After the seclusion policy (1639–1854), Japan opened its doors to the world in 1858.74

The Japanese had been isolated for a long time from the rest of the world, and were very keen onreading translations and learning new things. It is easy to imagine that at that time its market wasinundated with goods made out of unauthorised exploitation of foreign books, artifacts, industrialgoods and trade marks.75

The Berne Convention for the protection of Literary and Artistic Works 1886 was formulated with thepurpose of fostering harmonisation of copyright law. When the Japanese Government was askedabout its intention as to accession, it rejected the notion. Nobody in the cabinet could see anybenefits, but only loss from the Treaty.76 The following year in 1887 the copyright related part of thePublishing Ordinance 1869 became independent, as the Copyright Ordinance. This is said to be thefirst copyright legislation in Japan. In 1894 Great Britain offered to abolish her extraterritorialjurisdiction rights in exchange for Japan’s accession to the Paris Convention 77 and the BerneConvention. Japan took this chance to bring an end to the unequal treaty and made similar treatieswith other contracting countries in Europe.78

They had to make a new set of copyright provisions that would comply fully with the BerneConvention.79 In the minutes of the Imperial Diet proceedings (January 1899), interesting exchangesof discussion remain in the documents.80 When some members of the Parliament grilled the drafter ofthe Act, Mizuno, asking whether the new Copyright Act would contribute to the advance of culture, heresponded to the effect that it was necessary for the Government to make copyright law whichcomplied fully with the Berne Convention.81 He went on to insist that although the introduction of anauthors’ right would be detrimental than beneficial to the culture, there was no point of talking about itbecause promises had been made to sign the Convention before June 1899 in exchange for theabolishment of the extraterritorial jurisdiction rights. The proceeding was conducted in haste and asmany as 30 provisions were passed in a day.82 Against *I.P.Q. 52 this background, the CopyrightLaw was enacted in March 1899 and Japan joined the Berne Convention in July 1899.

This contrasts with the case of the United States in the 18th and 19th centuries. Just like Japan,piracy was abundant in the United States. It was such that it made Charles Dickens furious enough torender him a prominent champion for harmonisation of copyright laws.83 The United States was badlyin need of educational books, and the then government determined to raise the educational standardin America. The utilitarian theory which concerned more about useful knowledge in public thanauthors’ rights was widely supported. The Anglo-American fair use doctrine has been fostered underutilitarian and Lockean natural right rationales throughout its history.84

The present copyright law and its character

The Berne Convention was revised continually. Revisions were made in Brussels in 1948, inStockholm in 1967, and in Paris in 1971. After the initial enactment, the copyright law of Japan wasrevised and amended several times in order to expand the range of copyright protection and tofacilitate fair exploitation of works according to the international treaties.85 The 1899 Act wassuperseded by the present Copyright Act in 1971.

Objective of the copyright law of Japan

Article 1 of the Japanese Copyright Act states:

"The purpose of this Act is to provide for and to secure protection of the rights of authors … whilegiving due regard to the fair exploitation of these cultural products, and by doing so, to contribute tothe development of culture."

The ultimate purpose of the copyright law, "the development of culture", can be interpreted as "theexpansion of the situation where a wide variety of works are provided to the society" in a utilitariansense. However, back at the time of its enactment, because a government officer insisted that in art.1more emphasis had to be put on the part "to provide for, and secure protection of, the rights ofauthors"86 a rigid and restrictive interpretation of the limitations has become mainstream.

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Theory of the copyright law

The Copyright Act has very strong moral rights. They are even more strongly protected underJapanese copyright than under the Berne Convention.87 Section 1 of art.20(1) states that the authorshall have the right to maintain the integrity of his work and its title, and no distortion, mutilation, orother modification thereof shall be made against his intent,88 whereas the Berne Convention art.6bis(1) says:

"[T]he author shall have the right to claim authorship of the work and to object to any distortion,mutilation or other modification of, or other derogatory action in relation to, the said work, which wouldbe prejudicial to his honour or reputation. *I.P.Q. 53 "

According to the Convention the user’s action is considered to be an infringement only when it isprejudicial to the author’s honour or reputation. In contrast Japanese copyright law regards the user’saction as infringing whenever the use is against the author’s intent. Even if the users’ modification ofthe work is beneficial to the author, as long as the author does not like the use, the use is prima facieinfringement.89 Moreover, art.50 stipulates that the provisions of limitations on copyright (from arts 30to 49) shall not be construed as affecting the moral rights of an author.90 What this article means isthat moral rights are protected regardless of the fair use exceptions conferred by the Act. Forexample, although private use is supposedly allowed as an exception to copyright protection, addinga nose hair to a lady in a picture calendar in one’s own private room is, strictly speaking, an infringingact against the author’s moral right. Despite the fact that the Japanese copyright law has very strongmoral rights, which limit even private fair use, the rationale for such strong moral rights is not clear.91

In any case the existence of this strong moral right shows that Japanese copyright law uses acontinental European conception of the moral rights doctrine.

Having said that, before reaching a conclusion on what copyright rationale justifies the courts’ rulings,it is necessary to turn to art.15.92 Article 15 states that when a work is made by an employee in thecourse of his duties, the authorship belongs to the employer or the company for which the employeeworks. This strain of moral rights owned by companies cannot be easily reconciled with thecontinental European traditional personal rights theory from which moral rights originally stems. TheJapanese legislatures transposed economic efficiency into the romantic continental Europeancopyright law. This is the fate of copyright law adopted for political reasons, before having fosteredany real underlying philosophy.

Analysis of copyright litigation in Japan

Since digital technology has made the reproduction, dissemination and adaptation of works extremelyeasy, the possible modes of exploitation have increased greatly in number and diversity. Applying arigid interpretation of existing Japanese copyright law renders a very wide range of users’ actionsillegal, even if these uses of protected works are not detrimental to the authors.

Against this backdrop the Government ordered the Agency of Cultural Affairs to discuss the feasibilityof transposing the fair use system into the present law. After a lengthy discussion over a couple ofyears, the committee concluded that a general limitation clause would not be introduced to thecopyright law, at least not in the foreseeable future. One of the major matters discussed was whetherthere were cases where it was impossible to reach a finding which judges believe to be right withoutan application of the American type of the fair use doctrine—in other words, whether the courts weremanaging to reach the right conclusion flexibly, if necessary, not sticking to a rigid interpretation. Thecommittee raised examples of the cases and concluded that without the fair use system, courts werestill managing to rule by using several other methods. Hence they did not find it necessary tointroduce fair use, at the cost of the current law’s supposed predictability.

The cases show various paths taken by judges to avoid an overly strict interpretation of the law.These include relying on the "abuse of rights" provisions of the Civil Code,93 expanding aninterpretation of individual limitation clauses,94 applying a principle of the presumption of tacit consent,95 utilising the principle of exhaustion of rights, and others. We will now examine some of these cases.*I.P.Q. 54

Kaoru Matsuda and Shincyousya v Kumiko Takeuchi96 —the District Court’s refusal ofa rigid interpretation

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In this case Matsuda brought a copyright and moral rights infringement action to the Tokyo DistrictCourt against Takeuchi and Shincyousya (a publishing company), demanding injunction anddamages. The plaintiff alleged that Takeuchi abridged some of the content of Matuda’s book andquoted the abridgement in her book without his consent, infringing the plaintiff’s reproduction right(art.21),97 adaptation right (art.27)98 and the moral right of integrity over the work (art.20).99 Thecontroversial point was whether the user was allowed to quote an abridged version of the originalwork.

Article 32, one of the limitation clauses, addresses quotation, but does say whether the user canabridge and quote a work.100 Article 43(2) states that a user of a work can translate and quote it,101

while art.43(1) allows adaptation as a method of exploitation when a user exploits the work for otherpurposes such as private use (art.30) and (non-profit) school educational purposes (art.33). Sinceart.43(2) does not mention adaptation, it could be taken that adapting, and then quoting theadaptation, is not permissible.

The court ruled that it should be understood that to abridge a protected work and then quote theabridgement is allowed under arts 32 and 43. The judge stated that not only could quoting a workwithout abridging it amount to reproduction of a substantial amount of the work, but also this widerextent of exploitation is likely to be more detrimental to the authors, and to quote after abridging awork is a widespread custom. The court also found that to abridge a work and then quote theabridgement is in a way closer to the original work than quoting a translated work, and it is reasonableto understand that art.43(2) includes "abridgement" as a method of exploitation when a user quotes awork. In the case above, in order to reach a decision which the judge believed to be right, anexpansive interpretation of the relevant provisions was taken.

Isamu Noguchi Foundation Inc v Keio University (a school corporation)—the TokyoDistrict Court’s refusal to take a rigid interpretation102

In this case, the plaintiff, the Isamu Noguchi Foundation Inc brought an action against Keio Universityfor integrity right infringement. The university owned a room and two sculptures designed and madeby the late artist, Isamu Noguchi. The foundation alleged that dismantling the room and the sculpturesand moving them to other places would constitute an integrity right infringement, because it woulddamage the intended integrity of the combined room, sculptures, and surrounding garden.

The Tokyo District Court rejected the claim by the plaintiff in light of the fact that the plaintiff failed tosubmit prima facie evidence proving that the foundation inherited the moral right of the late IsamuNoguchi.103 However, the judge opined that while the room, surrounding garden, and sculptures werea *I.P.Q. 55 protected work as a whole under the copyright law, and moving them out to other placesin the university’s site might harm the intended artistic value by the late author, protected work whichincluded part of a building should be considered as a "building", and he inferred that this case shouldbe decided under art.20(2)(2), which allows for modification of such a protected work by means ofrebuilding and repairing. 104

A v Robert Whiting and Kadokawa Syoten105 —the Intellectual Property High Court’sdecision adhering to the rigid interpretation

In this case, the Intellectual Property High Court refused the infringers’ claim that the court shouldinfer that art.32(1) is applicable by way of analogy. The plaintiff, A, who was the wife of a late CIAagent, sued the defendants, Robert Whiting and Kadokawa Syoten (a publishing company), forinfringing exploitation of a snapshot of her late husband taken by the plaintiff in a book Robert wroteand Kadokawa Syoten published in Japan. The book was titled Tokyo Outsiders: Tokyo Underworld,and included a story about the late CIA agent.

The court held that art.32 should not be inferred to be applicable to a work that had not been madepublic because art.32106 states that it is applicable to a work that had already been made public. Thedefendant alleged that in the light of the necessity of exploitation of the picture in the non-fiction bookthe court should rule on this matter based on art.32(1) owing to the similarity.

The Intellectual Property Court found that, even if the snapshots were owned by several people andthere was the necessity of using the picture in the book it did not mean that art.32(1) should beinferred to be applicable in the case of the npublished work and held that the use of the snapshot as

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quotation in the defendants’ books infringes the copyright and moral right.

Thus, in the above case, the court rejected the defendants’ claim that art.32 should be applied byanalogy.

Opinions of proponents and opponents

Judging by the above cases, we can examine some of the contentions from proponents andopponents of the introduction of the fair use doctrine. First, some sceptics insist that the fair usesystem is unnecessary, because Japanese judges can manage to make the right judgments withoutthe fair use system by employing different ways, such as shown above.107 Admittedly, some Japanesejudges showed their capability of conveying a right decision within the present legal framework byavoiding a strict interpretation of limitation clauses. After all, these decisions are relatively minor andhave no significant impact on the real problems the obsolete copyright bears. The eminent problemsare chilling effects, denial of new products/service and a blocking of innovation. In such controversialcases involving new technology, courts always stick to a rigid interpretation (we will revisit thesecases in the next section). In this sense, the above cases fail to convince that the present Japaneselaw does not need reform. A mere showcase of judges’ ability of *I.P.Q. 56 reaching a right rulingwithout a stringent interpretation in relatively minor cases is not persuasive enough to deny thenecessity of reform. Equally, it does not convince us that the Japanese courts are ready to handle thefrustratingly ambiguous fair use doctrine.

Lastly, we agree to some extent with the proponents’ opinion that the present copyright regime hadalready been filled with uncertainty, because it is unfeasible to foresee whether a judge would takerigid interpretation or not.108 However, the uncertainty would be dwarfed by the uncertainty theAmerican fair use principle would cause in the civilian legal framework. In addition, the above casesare just a few of many, and in most cases the courts use rigid interpretations. The mainstreamperception of a creative industry is that the present law is pro-copyright and the courts interpretlimitations inflexibly.

Thus the real question is whether the introduction of the fair use principle can yield a good outcomefor future innovation while not unreasonably harming authors’ rights and whether it is worth the cost ofthe tremendous ambiguity it would bring. The fact that the legislative body is satisfied with theconclusions of the above cases indicates that they are not keen on changing the direction of thepresent copyright law, that is they do not want to change the current strong copyright stance.

Chilling effects in Japan

In November 2010, David Cameron, announcing the Review of IP and Growth, said:

"The founders of Google have said they could never have started their company in Britain … and theyfeel our copyright system is not as friendly to this sort of innovation as it is in the United States. Overthere, they have what is called ‘Fair Use’ provisions, which some people believe gives companiesmore breathing space to create new products and services." 109

Having read the comment above, one cannot help but wonder how the founders of Google wouldhave felt about the Japanese copyright system. Probably they would have seen it as much morehostile to this sort of innovation. Even the "unfriendly" UK copyright system legalised "caching" andtransient copying following the EU Directives of 2000 on Electronic Commerce and 2001 on Copyrightand Related Rights in the Information Society.110 Moreover, these Directives provide for limitations onthe secondary liability for copyright infringement of internet service providers. Conversely, the newprovision which legally allowed "caching" was added to the Japanese copyright law in 2009.111 Over15 years have passed since the advent of the search engine, and this period is referred as "the lost15 years" among academics.112 Meanwhile Japanese law has not yet adopted limitations for ISPs ontheir secondary liability for copyright infringement.

The incompetence of the antiquated copyright law was clearly exposed in this example, where theprocedural action taken by a search engine server was considered to be copyright infringement untilthe amendments were made in 2009. Search engines basically rely on these processes, trawling theinternet by means of an automated program, analysing and prioritising the information returned, andthen compiling a list of the information for the user. The server also caches the data requested to

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serve the data faster upon request. According to the Japanese copyright law, this caching is deemedas "copying", indexing and prioritising are considered as "editing", and providing a list to its users wasregarded as "distributing copied material to the public". Hence search engine companies had toacquire copyright holder’s consent *I.P.Q. 57 (the opt-in system) in order to make material availablein their search results. As a result of this, search engines run by Japanese companies were not ableto provide as attractive a service as their US competitors, which benefited from an opt-out system,and did not have to gain prior consent from copyright holders. It comes as no surprise that over 93per cent of search engine services in Japan are provided by US companies.113 Considering that thosewho own a site online usually make great efforts to index their links as close to the top of a searchresult page as possible, it was ironic that Japanese search engine companies had to employ an opt-inservice and as a result most of them went bankrupt in their infancy.

Of course search engine technology per se did not originate in Japan, and the incompetence of thedomestic copyright law framework should not be blamed as the sole reason for the demise ofdomestic search engine companies. Furthermore, copyright law is not the sole key to economicsuccess, and there are other factors such as brilliant talents, great resources, smart business modelsand so on. However, copyright law surely should not block the way of new business models and nipnew technology in the bud at the very inception of its development. Unfortunately that is exactly whathas been happening in Japan.

The Corseka case

The Japan Magazine Association threatened to sue Enigumo Inc for copyright infringement if they didnot immediately stop their online book shop service in September 2009. The association alleged thatthe online bookshop Corseka, run by Enigumo Inc, scanned the magazines, the authors’ rights ofwhich belonged to members of the association, without the right holders’ consent.114 Corseka boughtas many books as their customers ordered on their website, scanned them and provided the scannedcontents to their customers, enabling the customers to view the content immediately on screen oftheir computer with a web browser.

Only the customer who bought the magazine was able to view it on a computer screen they bought aspart of their service. The online site was equipped with DRM to prevent their customers fromdownloading, printing or copying the contents. The customer who bought a magazine was able tohave it sent to them by paying the delivery fee, as long as they requested it within 12 months. Inhindsight the business model was similar to the one currently run by Yahoo Japan’s Book Store.115

The Japan Magazine Association claimed that the infringing act of copying was done by Enigumo,even if their customers were the ones who had asked them to do so, and therefore it did not fall intothe scope of art.30 (private use exclusion clause). It also stressed that it was only the copyrightowners who could decide how to provide books. Enigumo announced its intention to negotiate thismatter with the association, aiming for an amicable reconciliation while continuing to sell books fromother publishers which welcomed the Corseka business. However, upon the failure of negotiation withthe association, the service provider decided not to fight in court, but to cease its business. It hadbecome difficult to continue their service since they were only able to sell books from a limitednumbers of publishers in October 2009.116

From the perspective of customers this service was novel and a convenient service because themagazine bought online did not take up any space in a house or need to be carried around to readoutside. The act of scanning a purchased book by the online bookshop and uploading it to allow apurchaser to read it was technically a violation of copyright. But if Enigumo could have successfullyassured the publishers that they would gain agreeable profits from online sales, and the publishershad agreed, the service could have survived, providing profits for both sides. However, the way thiscase ended sent a message to entrepreneurs that the business model of selling and scanning booksto be viewed online was a big taboo. Given the *I.P.Q. 58 result of, e.g., Mp3.com,117 it might be illadvised to jump to the conclusion that under American fair use the customer’s act would necessarilyhave been considered as non-infringing "space-shifting", and that the defendant’s company would nothave been found liable. Still, the consequence of this case is that any uses which fall outside thelimitation clauses are straightaway deemed as illegal, even if the use is not detrimental to the rightsholders, or is beneficial to the public welfare.

The Myuta case—JASRAC v Imagecity Inc118

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The plaintiff, JASRAC (the Japanese Society for rights of Authors, Composers and Publishers),119

brought a copyright infringement action to the Tokyo District Court against Myuta, an online storageservice company, alleging that Myuta infringed the authors’ right protected by art.21 (exclusive right ofreproduction) and art.23(1) (exclusive right of transmission).120 The defendant responded that theactor who reproduced the music data was not the defendant but the end-users themselves and theend-users are free to make a copy of the audio CDs they already own according to art.30 (private usepermitted as a limitation on authors’ rights).

Myuta provided the online storage service. The service worked as follows: at first the end-usersdownloaded software from Myuta’s online site. Then, through the downloaded software, the musicdata from audio CDs they owned was transformed into a file compatible with music players of mobilephones and uploaded to the Myuta server. Lastly, the end-users downloaded the music data from theMyuta server to their mobile phones.

On May 25, 2007, Tokyo District Court held that the primary infringer committing the infringement ofauthors’ reproduction right and transmission right was Myuta and not the end-users. The court foundthat the software and server provided by the defendant reproduced the data and hence the companyshould be held liable as a primary infringer.121

Regarding the transmission, it was argued whether the transmission was to the public or not.Although the defendant stressed that they employed an authorisation system which allowed only thecustomer who uploaded the data to download it, the court opined that the service could be used byanyone as long as they paid the charge, and concluded that this means the transmission should beconsidered to have made to the public.

Despite the fact that with the advent of new technology it became much easier to down load musicdata to mobile phones without such a service, the Myuta case still has ramifications now. It comes asno surprise that the commercial expansion of cloud computing is much slower in Japan, comparedwith other developed countries. Cloud-based storage services providing customers with functionalitysimilar to Myuta potentially present a substantial litigation risk. In view of the finding of the TokyoDistrict Court, the primary infringer of reproduction and transmission right would be the provider ofcloud computing.

Moreover the Japanese copyright regime does not provide internet service providers (ISPs) with "safeharbour" provisions, which limit the liability of online intermediaries for user infringement of intellectualproperty rights.122

It should be noted that in the US case Capital Records, Inc v MP3tunes, it was held that thedefendant’s products "space shift", which constituted fair use, and MP3tunes qualified for safeharbour protection *I.P.Q. 59 under the DMCA,123 making a good contrast with the ruling of theJapanese court in terms of online service providers’ legal positions.124 The difference in the legaltreatment for ISPs has ramifications for the future of online locker services. Thus, under the currentsituation in Japan, it is understandable that domestic cloud service providers are cautious aboutinvesting in this business. To avoid possible litigation cloud computing service providers mustnegotiate with interest groups such as JASRAC. As a consequence of the ruling the licensingsocieties have stronger negotiating power; the balance between users and right owners has tippedtowards the right holders.

The case of Maneki TV: NHK v Nagono Syouten Inc125

The plaintiffs, NHK (Japan Broadcasting Corp) and five other TV broadcasting companies, brought anaction for injunction to Tokyo District Court against Nagano Stouten Inc, which provided a servicecalled "Maneki TV". In this service its customers had their "Location Free" device stored in thepremises of the defendant and connected it with TV antenna and internet (wireless or wired) in orderto watch TV programmes on their computers with internet connection when they were travelling orresiding abroad.126 The plaintiffs alleged that the defendant infringed their neighbouring right ofmaking the programmes transmittable (art.2(9)(5), art.99(2)),127 and their copyright over transmissionto the public (art.23(1)).128

The points contended were: whether the accused was engaged in the act of enabling transmission ofthe plaintiffs’ TV programmes; whether the accused engaged in the act of transmitting the TVprogrammes to the public; and whether the plaintiff’s business was damaged by the act of the

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defendants. This electronic device, called "Location Free", is a common electronic product in theJapanese market.129 A user connects a "base station" which has a built-in tuner with the TV antennaoutlet and internet (normally at home.) This device streams live TV broadcasts. When the users wantto watch a TV programme outside, they select a TV programme and receive the streamed content inreal time on a computer screen with an internet connection. Content may only be streamed from onebase station to one computer at a time.

The Tokyo District Court ruled as follows: the device is owned and commanded by an end-user andaccording to the command the device streams content to one end-user, not to the public. Besides, thedevice is a common gadget and the defendant provided neither any special devices nor software thatthey created on their own. Moreover, the device is easy to be installed, requiring no special dealingsby the defendant. Thus the service provided by the defendant is simply a physical storage of the basestations. *I.P.Q. 60 Therefore the defendant was infringing neither the owners’ right of making theprotected works transmittable, nor their rights over transmission to the public.

The plaintiffs appealed to the Intellectual Property High Court, and the High Court affirmed thedecision by the Tokyo District Court. However, on appeal by the plaintiffs the Supreme Court reversedthe High Court’s finding of non- infringement.130 The Supreme Court opined as follows: even if thedevice only had the function to send content to one online address, the defendant was the actor whoenabled the transmission, by housing the device and connecting it to a TV antenna and the internet.Hence the defendant infringed the right holders’ exclusive right of making their works transmittable.As for the violation of rights of transmission to the public, judging by the fact that the defendant couldmake a contract with any member of the public, it is reasonable to consider that the base station wasan "automatic transmission server" (art.2(9)(5)) and that it was the accused who transmitted the TVprogrammes to the public using the device. Following the Supreme Court’s decision reversing theIntellectual Property High Court, the High Court ruled that the defendant infringed the exclusive rightsof making transmittable and of transmitting to the public.131

It is true that Nagano Syouten was making commercial profits by providing this Maneki service.Allowing contents to be viewed outside the local area might be substantially detrimental to theirconventional business model. But the broadcasting corporation was not licensing such a business.They did not sell much content to non-Japanese TV broadcasters. Moreover, the subscribers toManeki’s service paid the annual TV licence fee to NHK, because it was a condition of subscription tothe service. Therefore the effect of the defendant’s use upon the potential market or the value of thecopyrighted work seemed to have been minimal. In addition, if more people watched both the TVprogrammes and the commercials, and paid the annual TV licensing fee, it might be more beneficialfor the TV broadcasting companies and their sponsors.

Despite the fact that the Copyright Act has the objective of advancing culture by striking a balancebetween users and authors,132 the advance of culture was not on the list of the Supreme Court judges’concerns. It is clear that most weight was put on the benefits of established businesses; not oninnovation, new business models or the public interest. It would have been more convincing if thecourt were of the opinion that the public could gain so little benefit from the defendant’s businessmodel that it was not worth allowing its bad effects on the appellants’ business. If the attitude of thejudiciary towards where to draw the line of best balance were to stay unchanged, and it were to keepignoring the importance of innovation or the public interest, the Japanese courts would not be able tomake the most of a fair use system, and the introduction of the doctrine would not yield anything inthe future.

In the event, the respondent made a change to their service to legalise it (or, less charitably, to jumpthrough a legal loophole). Instead of physically connecting their products with the internet as theyused to do, in order to get rid of the activity which was deemed infringing each subscriber has tomake a contract with another ISP, and ask them to conduct the action of connecting. The service islegitimate now from the legal standpoint, but from the technical and financial standpoint it is notefficient. Is this what the plaintiffs wanted?

Leaving aside whether the ruling of the Supreme Court could be vindicated or not, it is clear thisinterpretation of the statute stands as the Supreme Court’s decision to address copyright issues in thecontext of cloud computing, and render cloud computing illegal. This is because cloud serviceproviders would be likely to be deemed as infringers, even if the transmission was made for theperson’s private *I.P.Q. 61 use. This creates a chilling effect, especially on venture capitalinvestments.133 Consequently, the history of the search engine is being repeated. In contrast, in a fewUS cases the courts reached different conclusions.

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The Cablevision case134 —Cartoon Network LP, LLLP v CSC Holdings, Inc

In this case the Court of Appeals reversed the District Court’s decision in Twentieth Century Fox FilmCorp v Cablevision System Corp 135 and validated Cablevision’s proposed remote storage digitalvideo recorder system (RS-DVR), which allowed cable subscribers to record TV programmes viacentralised digital video recorders.

The Second Circuit denied that the service the defendant provided constituted a direct infringement,on the grounds that copies produced by the RS-DVR system are made by the customers, andCablevision’s contribution to this reproduction by providing the system does not create direct liability.As far as the transmission right goes,136 the court found that the potential audience of a giventransmission means the persons capable of receiving it and each RS-DVR playback transmission ismade to a single subscriber using a single unique copy produced by that subscriber. The courtreached the decision that such transmissions are not performances to the public and thus do notinfringe any exclusive right of public performance. The plaintiff appealed.

Although Maneki and Cablevision’s services are completely different, two contended points aresimilar. One is about which one was a direct infringer, the service provider or its customer. Anotherone was whether the transmission between them should be interpreted as transmission to the public.However, the final ruling was quite the opposite.

The Japanese Supreme Court’s decision that service providers who provide remote computingservices should be held directly liable and that commercial transmission using the internet should beconsidered as transmission to the public will stand in the way of development of emerging technologyand the public interest to enjoy it. Although Japan has a civil law legal framework, the judicialinterpretation the Supreme Court indicated carries substantial weight. Another factor which createschilling effects is criminalisation of not only the direct infringers, but also contributory infringers suchas software developers. After several amendments, the amount of the maximum fine and the term ofimprisonment for copyright infringements by a private person are among the toughest in the world.137

It was unfortunate that the theft of information was treated more harshly than property theft despitethe fact the contours and parameters of infringement in copyright law are much vaguer.138 RecentlyJapanese enforcement has been gaining momentum, and has been aggressively prosecuting filesharers.139 Considering the nature of the P2P systems which are developed through the feedback ofend-users, the end-users might be the potential developers of new technology. The Japanese style ofcriminal enforcement will tend to deter such improvements. *I.P.Q. 62 140

The Winny case—Criminal Prosecutor v Isamu Kaneko

In the Winny case, the Kyoto prefectural police department (special force for IP related crimes)arrested and prosecuted a former researcher, Isamu Kaneko, who worked for the Information Scienceand Engineering Technology Department at Tokyo University, on a charge of copyright infringementin May 2004.141 He developed a decentralised P2P file called "Winny", and made it available online toothers for free in 2002. Subsequently the P2P file became a hugely popular tool. The police allegedthat he made improved versions of Winny accessible on his site, knowing that it was also used forinfringing acts, and hence he violated the Copyright Act art.113, which states that:

"the following acts are deemed to constitute acts of infringements … the act of distributing, orpossessing for the purpose of distributing … objects made by an act infringing … by a person who isaware of such infringement".

Notwithstanding his conviction in the Kyoto District Court, on appeal he was acquitted in the OsakaHigh Court on the grounds that he did not actively encourage anybody to use the file in an undueway, and the Supreme Court upheld the decision of the High Court and rejected the appeal by theprosecutors.142 In spite of the happy ending, the persistent pursuit, harsh investigation and severetreatment as a criminal by police for over seven years was so notorious that software developerswere put in fear of the possibility of being arrested. Not only may developers have no opportunity tocontrol infringing uses, but they are also in a weak position with no resources or organisation toprotect them.143 A chilling effect on developers of software was created, resulting in much lessinvestment, and discouragement of software development.144

Criminal enforcement against contributory infringers deters innovation, and consequently the socialwelfare of the the whole nation. The developers of neither Napster’s P2P program nor Grokster’s P2P

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program were prosecuted.145 The logic that the best way to protect authors’ rights is to eradicate theroot of a developing new technology is utterly wrong.

The Japanese copyright law regime seems to lack consideration for social welfare. The notoriouslytricky job of striking a good balance between the end-users and the right holders should not be left inthe hands of the police and criminal prosecutors. By making technology inventors into criminals, thistrend of hostile criminalisation nips innovation in the bud. Instead of such unproductive enforcementthe Government should rather employ civil remedies as a substitute for criminalisation.

In conclusion we would suggest that, in order to get out from this copyright cul de sac, an open clausefair use system which determines contentious matters on a case-by-case basis might be an option, away to keep the motivation of future scientists, entrepreneurs, researchers and developers, andespecially small and medium venture businesses, from vanishing completely.

Reverse engineering

It seems that the Japanese copyright regime lacks consideration for innovation. In the Sony vUniversal Studios case146 the court’s ruling provided entrepreneurs with the needed assurance thatproviding innovative and valuable technology to society would protect them from being sued forsecondary infringement. Similarly, in the Sega case the court noted that public benefit did not need tobe direct or tangible, but *I.P.Q. 63 might be raised because the challenged use served a publicinterest. It also stressed that it was precisely this growth in creative expression, based on thedissemination of other creative works and the unprotected ideas contained in those works, that theCopyright Act was intended to promote.147

At present the copyright law of Japan does not have a provision to allow reverse engineering ofcomputer programs for a legitimate purpose such as discerning interface information necessary forinteroperability.148 Under Japanese copyright law, computer programs are protected as a literary workand reverse engineering is prima facie illegal, because it involves reproduction and adaptation ofworks. The Japanese Copyright Act has a provision regarding the reproduction or adaptation of acomputer program. Article 47(2) stipulates:

‘The owner of a reproduction of a computer program work may make reproductions or adaptations ofsaid work if and to the extent deemed necessary for his own exploitation of said work on a computer…."(Emphasis added.)

Thus, this provision limits the conditions where reproduction and adaptation of computer programsare permitted only to situations where it is "to the extent deemed necessary for his own exploitation ofsaid work on a computer". In light of the language in this provision it is understood that decompilationfor the purpose of interoperability falls outside the scope of legitimate exploitation.149 Under thecurrent copyright law, reverse engineering to obtain interoperability is deemed illegitimate use.Therefore there has been a strong concern that the Japanese legal framework, which disfavoursinteroperability, creates chilling effects in the software industry.

Conversely, both the EU and the United States legally endorsed reverse engineering of computerprograms long ago. In Europe, Directive 91/250 explicitly provides reverse engineering withlegitimacy.150 Article 6 of the Directive allows decompilation for interoperability purposes, and recentlythe EU Court of Justice confirmed, in SAS Institute’s lawsuit with World Programming,151 thatcopyright protection does not extend to the software’s functionality, the programming language usedor the format of the data files used by the program. In the United States there are some cases inwhich the defendants claimed their act of reverse engineering was fair use, and the courts ruled thatthe reverse engineering was lawful exploitation according to the fair use doctrine. One such case wasSega.152 In this case the defendant Accolade reverse engineered program code in order to extractinterface information, and based on that information developed game software which was able to beoperated with the Sega game console. The Ninth Circuit ruled that the decompilation that wasnecessary to obtain interoperability may be permissible, and reverse engineering can be legitimateupon consideration of the four factors of the fair use system, per s.107 of the US Copyright Act.

Interoperability elements, i.e. interfaces, enable ancillary programs to be compatible with themainstream programs, and as a result of this new firms can enter the market. Therefore, if copyrightlaw does not allow competitors to obtain the interoperability through abstracting information code, thislack of interoperability creates a barrier to entry to the market, and the right holder can dominate the

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relevant market. Less or no competition in the market results in higher prices, less variety ofcompeting or complementary products and consequently less innovation. Moreover, since software isan important element of information technology, how software is regulated is hugely influential on theinformation society. *I.P.Q. 64 153

Unlike the situation in Japan, where competition is discouraged owing to the obsolete copyright law,these pro-interoperability policies of the EU and the United States have brought prosperity to both thesoftware industry and the public by allowing more entrants, more competition and more innovation.154

Regarding the approach taken by the EU and the United States, one notable difference in approachtaken by the courts to legitimise interoperability is that the United States has had more tools at handto deal with the matter. Whereas the United Kingdom is supposed to abide by the interpretation of theEuropean Court of Justice, the US courts could decide that a particular computer program interfacewas unprotected based on any of the idea/expression dichotomy, the unprotectable-fact principle orthe fair use doctrine.155 Especially in fields where frequent technical changes are taking place, aflexible fair use doctrine might be more efficient.156 It can efficiently take into account economic,technical and political variables at the time of decision-making.

Back in 1992, the two prominent US court cases Sega and Nintendo concluded that reverseengineering object code to discern the unprotectable ideas in a computer program was "fair use",157

while the EU adopted the 1991 Directive, art.6 of which allows reverse engineering for the purpose ofinteroperability. In 1993, in response to the above global trends, the Japanese Agency of CulturalAffairs formed an advisory committee to amend the copyright law in order to allow softwaredevelopers to decompile computer programs in line with US and EU policy towards reverseengineering.158

However, this move was met with a fierce objection from the US Government. The United States wastaking a protectionist approach for its world biggest computer software industry, and alleged that theattempt of the Japanese Government to relax its stringent law was adverse to the universal trend,despite the fact the US federal courts’ decision had just granted decompilation as a fair use undercertain circumstances.159 Consequently the Japanese Government backed down and gave up theplan to amend the law. Having been pressured from the US Government harshly, the JapaneseGovernment would have had no choice but to succumb to it.

Two decades later, although the Japanese legislative body acknowledges that the lack of a provisionwhich authorises decompilation for interoperability is causing chilling effects, it is still struggling tosolve this problem.160 They aimed to legislate in 2008 but failed. The discussion is still on going in theAdvisory Council.161 The point of contention is what scope of reverse engineering is to be allowed.162

Conflicts of interest block the pathway to amending legislation.

The technology of this area is like quicksilver. On one hand, a new method of decompilation is beingdeveloped, making it easier to achieve the aimed results, and this means less protection for software.On the other hand, a new method of DRM is also being developed, making it harder for software (orhardware) to be decompiled. The established software business feels that their products arevulnerable under the copyright law and new entrants feel it is too restrictive. It is hard to strike a finebalance between them with blanket provisions when the situation involves quick-changing technology.The fair use doctrine is *I.P.Q. 65 broader in its applicability and more effective in dealing withchange in a quicksilver technological environment, as it is not restricted to an interpretation oflegislation.163

However, this is not to say that specific closed end clauses are not feasible in this quick-changing era.As mentioned above, the EU managed to establish specific provisions for reverse engineering in1991.

Relaxing the strict copyright law in the field of information technology will allow more new businessentries and more competition. Accordingly this will lead to more finding in technological solutionswhich would otherwise be left dormant. Together with the general and open-ended limitation clause ofthe fair use system or the EU-style closed end limitation provision, the willingness of newcomers totake risks in new business will not be deterred. As far as the fair use doctrine is concerned, in order totake advantage of fair use, new business entrants have to have the courage to let the legitimacy oftheir activity be judged by the hand of the jurisdiction in light of the doctrine. Many American ISPssuch as Google did do so. This would involve a shift in power over the law, away from the legislatureand towards judgments in the hands of the judiciary.

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Fair use v Magill/IMS

This section explores two illustrative US and EU cases. These cases can give some guidanceregarding whether the obsolete Japanese copyright law should apply the fair use principle or the EUapproach towards monopoly in order to adapt itself to the new era and avoid the harming effects onnew businesses and beneficial technology.

With the ease of reproduction and dissemination through the internet, the copyright regime is facingthe most challenging job of striking the balance between supporting creativity by conferring copyrightprotection and promoting technological advance by limiting infringement liability. It is easy to find ashift from the utilitarian approach to the Lockean approach in recent cases. In Grokster 164 threeSupreme Court justices stated their concern that "the Sony rule", which is strongly technologyprotecting, was in practical effect modified or interpreted strictly by the other justices, who consideredthat 10 per cent of use by a new technology being legitimate was seen as a tiny proportion.165

Likewise, in the United Kingdom the court took a more restrictive approach in Sony v Ball 166 than inthe Amstrad case. The fair use doctrine is not immune to this global trend towards the Lockeantheory, and its strength has been getting weaker.

Fair use in the United States—Infinity Broadcasting Corp v Kirkwood167

The defendant, Kirkwood, did business providing a service which transmitted radio programmes fromdifferent cities via telephone to its telephone customers. The copyright holder, Infinity, operated aradio network and owned the copyrights to the broadcasts. On summary judgment, the district courtfound Kirkwood’s use to be fair use. On appeal, the Second Circuit reversed the district court, holdingthat the use did not constitute fair use.

The Second Circuit court stated that since fair use is an affirmative defence to a claim of infringement,the burden of proof should be on its proponent, and demanded the defendant prove an absence ofusurpation harm to Infinity. The last factor is unquestionably most crucial in analysing fair useavailability, as noted in Harper & Row.168 The court was of the opinion that although Infinity did notoperate commercial listening lines such as Kirkwood’s, and had no intention of doing such business,the defendant’s business *I.P.Q. 66 disrupted Infinity’s business model by removing Infinity’s controlover who should have access to such lines. The court concluded that the defendant failed to proveotherwise. The failure was dispositive in favour of the copyright holder.169

The introduction of this kind of weakened fair use doctrine, from what had once been understood as afree expression right, would not bring any change to Japanese copyright jurisprudence. TheJapanese cases mentioned above have a lot of similarities with this case in terms of the fact that theowner of the copyrighted content did not engage in the same kind of service, that they had nointention of starting such business in the future, and that their use was for a different but stillcommercial purpose. We are convinced that a weak fair use doctrine would not help such businesses,just as the Japanese courts currently do not.

The EU—Magill

Under the current legal framework in Japan, competition law and intellectual property law do notinteract. The United States is similar, but in the EU the two are highly interactive. In RTE and ITP vCommission and Independent Television Publications Ltd (Magill),170 the European Court of Justicemade it clear that under special circumstances a unilateral refusal to license by undertakings holdinga dominant position may amount to abusive behaviour, and the court may require a copyright holderto grant a licence to a third party.

Background to Magill

RTE, BBC and ITP had copyright over their stations’ programme listings under UK and Irish law. Theydistributed their stations’ daily listings free of charge to journals and newspapers, allowing them to bepublished for a day or two at a time, and each broadcaster published weekly guides of their ownprogramme schedules. Magill, an independent publisher, tried to publish comprehensive weekly TVprogramme listings which were unavailable at the time in Ireland and Northern Ireland. Thebroadcasters refused to license. Magill brought a complaint against these broadcasters to the

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European Commission, complaining about their refusal. The Commission ruled for Magill, finding thatRTE, ITP and the BBC abused their dominant positions by not granting licences to Magill to publishthe weekly programme listings.171

The General Court

The plaintiffs appealed to the General Court (Court of First Instance). The General Court said that themere exercise of the right per se did not give a dominant position to the right owners or constitute anabuse, but an exercise of their rights with an aim which contradicted the objectives of art.86 (nowart.102 TFEU)172 did constitute an abuse.

The court concluded that the applicants’ conduct could not receive the protection conferred by itscopyright in TV schedules. It also pointed out that the stifling of new products for which there was a*I.P.Q. 67 potential consumer demand, by not authorising a licence, was a failure to take consumerneeds into consideration.

The European Court of Justice

RTE and ITP appealed the judgment of the General Court to the European Court of Justice. In findingthe existence of their dominant positions, the ECJ reasoned that the television broadcasters had adominant position within the market because they practically had a monopoly on the essentialinformation about TV programmes since they were the only source of such information for a firm likeMagill, which wished to publish it together with other material. Regarding the existence of an abuse,the ECJ held that a bare refusal to grant licences was not in itself an abuse of a dominant marketposition. Nevertheless the court stated that abusive conduct in exceptional circumstances mayconstitute an abuse.

First, the court explained that the appellants were the only source of the indispensable basicinformation on programme scheduling for a weekly television guide that had potential consumerdemand, and by refusing to provide such information it prevented the appearance of a new product.Secondly, there was no justification for such refusal either in the activity of television broadcasting orin that of publishing television magazines. Lastly, the broadcasters reserved to themselves thederivative market of publishing weekly TV guides by eliminating all competition by disallowing others’access to the essential raw information. Hence the court concluded that the appellants’ conduct wasan abuse of a dominant position.

Magill has been controversial, being the first case in which refusal to license was held to be an abuse.173 Some were keen on criticising the judgment, alleging that the Magill ruling left right holders in fearthat they might be compelled to grant a licence to competitors.

Others tried to narrow the scope of the application of Magill. Colston asserts that one of the factors inthe "exceptional circumstances" of Magill was the fact that such information as TV scheduling is notcopyrightable in other EU Member States.174 Although the Magill court confirmed only in the"exceptional circumstances" refusal to license can amount to an abuse, it did not articulate what factormakes circumstances "exceptional". In the subsequent relevant case Oscar Bronner v Mediaprint,175

the ECJ decision carefully restricted the Magill doctrine and curbed its effect, by requiring it to beshown that access to a raw material was indispensable to carry on business in the market, whichmeant that there was no actual or potential substitute to it.

The EU—IMS Health

The IMS Health case,176 concerning the structure of pharmaceutical sales marketing reports, provedthat the Magill doctrine was still alive. The ECJ found that there was no objective justification for IMS’srefusal to license the structure to NDC, and that "exceptional circumstances" did exist in the case.Hence the ECJ ordered IMS to grant a compulsory licence of IMS’s system for reporting salesinformation to its competitor, NDC. The court stated that refusal to license by a dominant party thatwants to provide similar goods or services can give rise to an abuse under following conditions:

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•

the new products or services have a potential consumer demand and they are notoffered by the copyright owner;

•

refusal to grant a licence cannot be objectively justified; and *I.P.Q. 68

•

the refusal was such as to reserve the copyright holders’ dominant position byeliminating all competition in that market.

Although the IMS complained that NDC’s new product would compete with IMS’s product, not on thesecondary market but on the same market, the court decided there need not be two distinct markets,but that they could even be hypothetical.177 Some criticise that in IMS the ECJ erroneously wentbeyond Magill on this point.

Many criticise that because of the IMS doctrine, big firms cannot adequately protect their investmentand prevent competitors from reaping the benefits without contributing towards the cost.178

A Magill/IMS doctrine for Japanese copyright?

The firms in fear are only those in a monopolistic position or near-monopolistic situation. Only a smallnumber of firms should feel such fear because the doctrine is applied only in exceptionalcircumstances. Abuse can be found when all the boxes of the Magill /IMS criteria that constituteabuse are ticked. However, we hope that no more boxes will be added in the future, restricting theeffects of the doctrine. For example, the protected material should not be confined to any particularmaterial. As Forrester suggests, whether a refusal could constitute an abuse in a variety ofcircumstances should be judged on a case-by-case basis in a variety of circumstances.179 Copyrightconfers exclusive rights on copyright owners for as long as 70 years at most. Monopolistic firmsshould not prevent competition via the shield of copyright for such a long time.

As a result of the Magill and IMS cases, undertakings in a dominant position would be pressured tomake a bargain. If another licensee is in a situation of dependence, a dominant licensor is likely tohave to consider seriously whether their refusal to grant a licence to access to an essential materialconstitutes an abuse, because if so, he might be required to give a licence. Consequently, the Magill /IMS doctrine would reduce the number of market failures resulting from excessively priced rents ormere denial to reserve a monopoly.

The Japanese copyright regime can learn a lesson from these EU cases. This Magill /IMS doctrinewould allow more new businesses and new entrants and thus benefit the public. Through exploringthe history of technology, Lessig explains how a monopoly can have damaging effects on innovation.180 By adopting the EU attitude towards refusal to license and the willingness to order compulsorylicences as a remedy for market failure, the chilling effect on new businesses caused by the old lawcould be alleviated.

Some would say that the aim of the EU’s approach towards monopoly is to create a market. However,we see no reason not to explore the possibility of adopting this approach in Japan since we need nota static market but a thriving market, too. In reality, the Japanese pro-strong copyright regime may noteasily adopt this doctrine in the near future. We suggest that the "exceptional circumstances" criteriastated in the Magill and IMS cases should be established in law as a standard provision. By providingthis EU type of interactive functions for the relation between Japanese antitrust law and Japanesecopyright law, there would be more competition in relevant markets and this would, in return, bringmore new products and benefits to the public, while encouraging voluntary bargains. *I.P.Q. 69

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Conclusions

A "future-proof" legal system sounds very attractive! The legendary Sony rule was pro-technology. Itwas very effective in striking a fine balance between the competing values of supporting creativitythrough copyright protection and promoting technological innovation by limiting infringement liability.The court succeeded in striking a superb balance, and this ruling brought a win-win situation for bothusers and copyright holders. Thus it might seem that American fair use is the answer for the problemsof Japanese copyright law.

However, things are not so simple, after all. After a close examination, it turns out to be clear that thecommon law doctrine is frustratingly incompatible with the civil legal regime of Japan. Fair use isinherently vague, although that is why it is also very flexible and future-proof. They are two sides ofthe same coin. Adoption of the broad American fair use doctrine would be against the civil lawprinciple that the law should be codified and complete, providing all citizens with an accessible andwritten collection of the laws. Moreover, history tells us that the Japanese copyright regime had notfostered any fair use tradition when it enacted the first full-blown copyright law. In addition, it does nothave any conflicting imperative, while the American copyright regime has such imperatives as caselaw, the US Constitution and its solely utilitarian justification for US federal copyright law.

The US Constitution requires the fair use doctrine, and the existence of the doctrine requires thesupport of the Constitution. Conversely, if fair use were transposed into Japanese copyright law,judges would have nothing to base their reasoning on except vaguely framed factors in the fair useprovisions. This massive ambiguity might countervail the benefits it can bring.

Having said that, the truth is that it is a matter of degree. The doctrine might be able to offer moreadvantages than disadvantages, even in Japan. If it can create a future-proof and pro-technologycopyright, it might be worth introducing into copyright law at any expense. But the doctrine is verysusceptible to the pro-Lockean trend of treating copyright as an absolute property right. The recentUS cases tell us that it has already been significantly weakened. The principle, which was once abroad free speech right, has diminished into an affirmative defence. Thus, following Grokster, eventhe pro-technology "Sony rule" might now be on the verge of modification.

Even if Japan transposed the fair use principle into the present law now, it would not preventproblems such as chilling effects on emerging technology and new products. The fair use principle isa system which yields a different outcome depending on the way the courts and users treat it. In theSony case the fair use principle worked well because the court did not treat it as an affirmativedefence but as a users’ right, and Sony took a risk using the trial and error space offered by the fairuse mechanism. On the other hand the current Japanese copyright regime is putting more weight oncopyright protection, and such a regime would not be able to make use of the fair use principle as apro-technology system. The Government’s plan of introducing the fair use doctrine disappeared owingto the fear that it would weaken protection for copyright owners, but a fair use doctrine based on thecurrent pro-strong copyright idea would anyway have too narrow a scope to allow any significantexploitation to be categorised as fair use.

We turn now to the EU. Although the United Kingdom does not have the American fair use doctrine,the UK courts had embraced new technology in the Amstrad case. The EU has managed to allowcaching, putting a limitation on the secondary liability of ISPs in the E-Commerce Directive in 2000.181

Directive 91/250 and the Software Directive authorise reverse engineering. This makes a goodcontrast with the unbelievably slow progress of the Japanese legislative body. Japan should certainlylearn from the EU how to enact legislation more quickly.

Japan can learn from the Magill /IMS doctrine. The aim of this doctrine is to protect consumers, notcompetitors, by forcing the transfer of essential raw materials otherwise monopolised by the copyright*I.P.Q. 70 owners. Since it is to be applied only under exceptional circumstances it will notunreasonably harm the incentives of the general creators. Laws will not readily allow exploitation bythose who intentionally avoid making a bargain. Contrary to criticism by sceptics of the doctrine, theaim is not to turn courts into regulators. Rather, one of the most important benefits of the doctrine isthat it encourages parties to make a consensual bargain voluntarily in the market. While the ownerwould most likely license its material to the user for a price it thought appropriate, the user pays alicensing fee for the material up to the point that cost outweighs the net profits.

Copyright law is not just a vehicle to promote the economy. However, in order to embrace newtechnologies at the necessary rate, the Japanese copyright regime needs to change. The introduction

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of an open-textured fair use doctrine will not yield any positive result in Japan, at least for theforeseeable future. Now it is time to look to the place where copyright was born, and learn humbly.This interaction between copyright and competition law may be the key factor in striking the rightbalance in maintaining adequate incentives for copyright holders, while still encouraging the progressof vital new technologies.

Miya Sudo

Dr Simon Newman

I.P.Q. 2014, 1, 40-70

*. Westminster Law School, University of Westminster.

1. Cyosakuken Ho [Copyright Act] No.48 of 1970.

2. 17 USC §107.

3. Naoki Koizumi, Introduction to Intellectual Property, 2nd edn (Iwanami Shinsyo, 2010), p.2.

4. Chosakuken Ho [Copyright Act], Law No.39 of 1899—the first Japanese Copyright Statute.

5. Daisuke Yoshida, "Today’s Mission in Copyright System" (2009)1333 Jurist 102.

6. Nakayama Hironobu, Multimedia and Copyright(Iwanami Shinsyo, 1996), Ch.2.

7. Tatsuhiro Ueno, "Can the Japanese Version of Fair Use Change Business?" (June 15, 2009), Business Law Journal,http://www.businesslaw.jp/blj-online/interview/000090.htm [Accessed December 17, 2013].

8. Syoji Yamada notes: "The penal punishment for infringing acts in Japan is the strictest in the world." Syoji Yamada,"Why the Punishment of the Japanese Copyright Act is so harsh (Jinbunsyoin, 2011), p.53.

9. Tokyo District Court, October 27,1999, H11(ta)No.1018 254[Hanji] 1701 157;Tokyo High Court, February 18, 2002[Hanji]1786 136 In this case the judge denied infringement, basing the ruling on the reasoning that the substantivenature of the protected work was not able to be detected in the copied work.

10. Ministry of Economy, Trade and Industry of Japan, "Report on the Content Industry",http://www.meti.go.jp/report/downloadfiles/g100514b01j.pdf [Accessed December 17, 2013].

11. We examine these cases in the section "Chilling effects in Japan" below.

12. Nobuhiro Nakayma, "Expected result from the introduction of general Fair Use provision" in Kenkyukai, Copyright, TheLatest Trend of Fair Use (Daiichihouki, 2010), p.3.

13. Evan Kirk and Mark Wing, "European/U.S. copyright law reform: is a balance being achieved?" [2000] I.P.Q. 138.

14. Yamada, Why the Punishment of the Japanese Copyright Act is so harsh (2011), p.17.

15. Yuko Noguchi, Copyright in the Digital Age (Chikuma Shinsyo, 2010), p.72.

16. Several amendments are made in order to implement the WIPO Copyright Treaty.

17. See the Ministry of Economy, Trade and Industry, Acceleration and deepening in information society (2006),http://www.meti.go.jp/committee/materials/downloadfiles/g60726c04j.pdf [Accessed December 17, 2013].

18. The IP Strategy Headquarters of the Japanese Government, 2008/The Plan to Promote the Value of IntellectualProperty 2008.

19. The Government also claimed a lot of other factors as well. See the minutes of the specialist committee for the contentindustry, http://www.kantei.go.jp/jp/singi/titeki2/tyousakai/contents/dai3/3gijiroku.html [Accessed December 17, 2012].

20. The Intellectual Property Strategy office (Chiteki-zaisan senryaku-honbu) was established in the cabinet under art.24 ofthe Intellectual Property Basic Act with a bid to improve the current Japanese Copyright Act. The Ministry of Economy,Trade and Industry of Japan is promoting the "Cool Japan" strategy.

21. Yamada, Why the Punishment of the Japanese Copyright Act is so harsh (2011), p.71. Yamada claims that theformation of the law reform committee was ill conceived, consisting as it did of two opposing interest groups that madeit impossible to reach an agreement.

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22. The new provision allows incidental copying of protected works only when they are inseparable from the main objectand only when such copying comprises a small portion of the whole.

23. The Government gathered opinions especially from 43 interested organizations. See also The Japan Visual SoftAssociation, "The official claim against introducing general copyright exemption provision",http://www.jvanet.or.jp/news/news_081113.pdf [Accessed September 1, 2012].

24. Wendy J. Gordon, "Fair Use as Market Failure: a Structural and Economic Analysis of the Betamax Case and ItsPredecessors" (1982–83) 30 J. Copyright Soc’y U.S.A. 253, 256.

25. Darren Hudson Hick, "Mystery and Misdirection: Some Problems of Fair Use and Users’ Rights" (2008–09) 56 J.Copyright Soc’y U.S.A. 485, 488.

26. Richard J. Peltz, "Global Warming Trend? The Creeping Indulgence of Fair Use in International Copyright Law" (2009)17 Tex. Intell. Prop. L.J. 267, 275.

27. Sony Corp v Universal City Studio, Inc 464 U.S. 417, 475(1984) (Justice Blackmun J. dissenting).

28. Ned Snow, "Judges Playing Jury; Constitutional Conflicts in Deciding Summary Judgements" (2010) 44 U.C. Davis L.Rev. 483, 497–550.

29. Hon. Stanley F. Birch, "Copyright Fair Use: A Constitutional Imperative: The 36th Annual Donald C. Brace Lecture"(2006–07) 54 J. Copyright Soc’y U.S.A. 139.

30. U.S. Const. Art. I, section 8, cl.8. (interim citation omitted).

31. Hudson Hick, "Mystery and Misdirection" (2008–09) 56 J. Copyright Soc’y U.S.A. 485, 487.

32. Birch, "Copyright Fair Use: A Constitutional Imperative" (2006–07) 54 J. Copyright Soc’y U.S.A. 139.

33. Justice Souter in Campbell v Acuff-Rose Music, Inc 510 U.S. 569, 575 (1994).

34. Eldred v Ashcroft 537 U.S 186, 221(2003).

35. The fair use concept was created in Folsom v Marsh 9 F. Cas 342 (C.C.D. Mass. 1841).

36. 8 Anne c. 19 (1710).

37. Gyles v Wilcox (1740) 26 E.R. 489 at 489 (Ch.).

38. Ned Snow, "The Forgotten Right of Fair Use" (2011)62 Case W. Res. L. Rev. 136.

39. Folsom v Marsh 9 F. Cas. 342(C.C.D. Mass. 1841).

40. Lawrence v Dana 15 F. Cas. 26(C.C.D. Mass. 1869).

41. Snow, "The Forgotten Right of Fair Use" (2011) 62 Case W. Res. L. Rev. 136, 149.

42. Harper & Row Publishers, Inc v Nation Enterprises 471 U.S. 539(1985).

43. Snow, "The Forgotten Right of Fair Use" (2011) 62 Case W. Res. L. Rev. 136, 167.

44. Snow, "The Forgotten Right of Fair Use" (2011) 62 Case W. Res. L. Rev. 136, 168.

45. Sony Corp of America v Universal City Studio Inc 464 U.S. 417 (1984).

46. Hubbard v Vosper [1972] 2 Q.B. 84 CA (Civ Div) at 94.

47. David I. Bainbridge, Intellectual Property, 9th edn (Pearson, 2012), p.223.

48. HM Treasury, Gowers Review of Intellectual Property (December 2006),http://www.official-documents.gov.uk/document/other/0118404830/0118404830.pdf [Accessed December 17, 2013].

49. Ian Hargreaves, Digital Opportunity: A Review of of Intellectual Property and Growth (May 2011),http://www.ipo.gov.uk/ipreview-finalreport.pdf ‘a [Accessed December 17, 2013].

50. Universal City Studios v Sony 480 F. Supp.429, 432 (C.D. Cal. 1979); rev’d 659 F. 2d 963 (9th Cir. 1981); rev’d 464U.S. 417 (1984).

51. Justice Breyer, with whom Justice Stevens and Justice O’Connor join, concurring, "The Writ of Certiorari to the UnitedStates Court of Appeals for the Ninth Circuit", Grokster (June 27, 2005),http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=04-480 [Accessed December 17, 2013].

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52. "The Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit", Grokster (June 27, 2005),http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=04-480 [Accessed December 17, 2013].

53. Jessica Litman, "The Story of Sony v. Universal Studios: Mary Poppins Meets the Boston Strangler" (2006), p.4,http://wwwpersonal.umich.edu/~jdlitman/papers/storyofsony.pdf [Accessed December 17, 2013].

54. Litman, "The Story of Sony v. Universal Studios: Mary Poppins Meets the Boston Strangler" (2006), p.31,http://wwwpersonal.umich.edu/~jdlitman/papers/storyofsony.pdf [Accessed December 17, 2013].

55. CBS Songs Ltd v Amstrad Consumer Electronics [1987] 3 All E.R. 151 CA (Civ Div); aff’d [1988] A.C. 1013; see IainPurvis, "CBS Songs Ltd v Amstrad Consumer Electronics Plc" [1988] E.I.P.R. 345.

56. The Japanese system also seems to give less weight to the principle of purposive interpretation than do the Europeancivil law legal systems, making broad exceptions grounded in general principle difficult to implement.

57. Berne Convention for the Protection of Literary and Artistic Works.

58. Moriyuki Kato, Copyright Article Explication (revision, Copyright Information Centre, 1994), p.12.

59. Nobuhiro Nakayama, Copyright Law (Yuhikaku, 2007), p.14.

60. See subsection "Theory of the copyright law" below.

61. Although it seems that this change went backwards, there are several theories regarding reasons for the change. Thewidespread belief among experts on the Japanese literature is that it was due to the fact that the woodblocks came tobe treated as commodities among stationers. After composed types of typography were used for printing, they weredecomposed. Once they were broken up, the intangible content of the book disappeared. Therefore it was necessary tokeep the woodblock to prove you were a legitimate economic right holder. See Takashi Nakajima, "The Copy inWoodblock Era" (1997) 42(11) Japanese Literature pp.49-53.

62. The stationers’ unions existed in Kyoto, Osaka and Tokyo.

63. The aim of the enactment was in order to control publishing by giving an exclusive right of printing to registeredstationers and restrict undesired printing such as seditious books.

64. As Japan was a developing country the new government recognised the importance of reading and acquiringknowledge from Europe, and the translation of Western books was encouraged through giving them copyrightprotection as an incentive. It seems that there was no concern about necessity of taking permission from the originalauthors.

65. Fukuzawa (1835–1905) is a well-known educator, author, Samurai and Enlightenment thinker among the Japanese. Heis such a hero even now as to appear on the Japanese bank note of the highest denomination! He was the very firstperson who introduced the concepts of "copyright", "patent" and "insurance" to Japan in one of his books titled ThingsWestern, written in 1878 after his trips to Europe and the US.

66. Syoji Yamada, Copying and Creating in Japanese culture (Kadokawa Syoten, 2002), pp.120–126.

67. He wrote some petitions to the new Government asking to control other publishers selling pirated editions of his booksjustifying his claim on the copyright theory. He insisted that his publishing company was the legitimate right holder andhad the exclusive right to sell and copy the books.

68. He translated many books including a book titled Chamber’s Educational Course by John Hill Burton, took a partrelating to the rationale for copyright from the book, and inserted it into his own book without the English author’spermission! See bibliography of his book: Yukichi Fukuzawa, A Complete Collection of Yukichi Fukuzawa bibliography.He is still admired for having worked hard to spread the notion of copyright and the importance of copyright protection,which he had discovered on his trip to London.

69. Fukazawa wrote in his petition to the Ministry. He complained that "Those people who say that a publisher deprived oflegitimate economic interest by other publishers selling pirated editions should endure the despair and financialdetriment, and try to create even better books with even more creativity, are pseudo academics who do not know theprinciples of economy. In the Western world a saying goes: ‘time is money’. An exclusive copyright should be given tothose who spent their time, labour and money for their works. This is an economic principle". Yamada, Copying andCreating in Japanese culture (2002), pp.120–126.

70. The Statute of Anne enacted in 1709/10 made the author a part of the copyright equation.

71. Shigeo Oie, People who established the copyright, 2nd edn (Seibundou, 2005), pp.40–41.

72. By an act of 1529 the Stationers’ Company came to control printing in England. They had a monopoly in printing books.Only registered members could print and sell the books. This right became known as copyright.

73. Yamada said most of traditional Japanese culture advanced through copying each other. Yamada, Copying andCreating in Japanese culture (2002), pp.154–175. Despite the fact there was the Ordinance which allowed onlylegitimate publisher to sell books, it was a quite normal custom to copy anything.Masao Handa said: "It is a common

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tendency even now among the Japanese to copy other’s copyrightable works without any shame": Masao Handa,Copyright Law is Coming to a Turning Point (Hitotsubusya, 1994), p.299.

74. This was when Japan signed up for an unequal treaty with the US, UK, Holland, France and Russia, giving the Westernpowers extraterritorial jurisdiction over their citizens on Japanese territory.

75. The European countries which were suffering from copyright piracy were not able to rely on the Japanese governmentto make provisions to protect Western goods, because it was their own extraterritorial jurisdiction rights which placedtheir people and their goods outside the scope of Japanese law.

76. For a developing country it was considered very important to learn from Europe by copying anything and everything.

77. The Paris Convention for the Protection of Industrial Property.

78. The situation of piracy at that time must have been so bad that it made many European countries give up theirextraterritorial jurisdiction rights in exchange for Japan’s accession into the Paris and Berne Conventions.

79. After having decided to accede to the Convention, they had only one year to prepare the draft they had to pass the billof the new copyright law in the winter session in 1899.

80. Ministry of Home Affairs, Report of a reason for the enforcement of the Copyright Law 1898,http://kindai.ndl.go.jp/info:ndljp/pid/796623 [Accessed December 17, 2013].

81. Yamada, Copying and Creating in Japanese culture (2002), p.138.

82. Yamada, Copying and Creating in Japanese culture (2002), p.140.

83. Yamada, Copying and Creating in Japanese culture (2002), p.100.

84. Richard J. Peltz, "Global warming trend? The creeping Indulgence of Fair Use in International Copyright Law"(2008–09) 17 Tex. Intell. Prop. L.J. 267.

85. Japan ratified the International Convention for the Protection of Performers, Producers of Phonograms andBroadcasting Organizations in 1989. Japan is a contracting country of TRIPS, WCT and WPPT.

86. House of Representative Committee of Education, The minutes of the committee of 6 June 1969, p11; Hiroshi Saito,The Compendium of Copyright law, 2nd edn (Hitotsubusya, 1992), p.14.

87. Berne Convention art.6bis provides for the attribution right and integrity right.In an effort to harmonise European moralrights law, the Berne Convention was amended in 1928 and included a moral rights provision.

88. Cyosakuken Ho [Copyright Act of Japan] 1970 s.1(20)(1).

89. Yoshiyuki Tamura, Copyright Law Summary, 2nd edn (Yuhikaku, 2001), pp.435–436.

90. Chosakuken Ho [Copyright Act 1970] s.3 art.50.

91. Nakayama, Copyright Law (2007), pp.361–362.

92. Copyright Act 1970 art.15.

93. Civil Code art.2(3) prohibits the abusive exploitation of rights. Hanako Kono v Sukora and Aoba Syuppan, Tokyo DistrictCourt, February 23, 1996, H5(wa) No. 8372.

94. (Ex) A v Nagaoka Syoten Inc, Tokyo District Court, July 25, 2001, H 13 (wa) No.56.

95. (Ex) A v Kousa Netsugaku Kougyou Inc, Tokyo District Court, February 27, 2006, H 17(wa) No.1720.

96. Kaoru Matsuda and Shincyousya v Kumiko Takeuchi, Tokyo District Court, October 30, 1998, H 10(wa) No.6920,1674[Hanji] 132.

97. Article 21 of the Copyright Act of Japan provides: "Right of reproduction. The author shall have the exclusive right toreproduce his work."

98. Article 27 of the Copyright Act of Japan provides: "Right of translation, adaptation, etc. The author shall have theexclusive right to translate, arrange musically or transform or dramatize, cinematize, or otherwise adapt his work."

99. Article 20(1) of the Copyright Act of Japan provides: "Right to integrity. The author shall have the right to maintain theintegrity of his work and its title, and no distortion, mutilation or other modification thereof shall be made against hisintent."

100. Article 32 provides: "It shall be permissible to quote from and thereby exploit a work already made public, provided thatsuch quotation is compatible with fair practice and to the extent justified by the purpose of the quotation, such as newsreporting, critique or research."

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101. Article 43 provides: "When exploitation of a work is permitted under any of the items listed below, such exploitationmaybe done pursuant to the method and in accordance with the provisions set forth in each respective item below:

(1)

Article 30… Article 33… translation, arrangement, transformation, and adaptation

(2)

Article 31… Article 32 , 36 or 37…: translation." (Emphasis added.)

102. Isamu Noguchi Foundation Inc v Keio University, Tokyo District Court, June 11, 2003, H15 (yo) No.22031, 1840 HanreiJiho106.

103. Article 60 of the Japanese Copyright Act provides: "Even after the death of the author, no person who offers or makesavailable a work to the public may commit am act which would constitute an act of infringement upon the moral rights ofauthor if the author were alive; provided, however, that the foregoing shall not apply to such act where it is found to notbe against the will of the author in light of the nature and extent of the act as well as changes in social circumstancesand other conditions."Article 116(3) of Japanese Copyright Act provides: "[T]he author may designate by will the personto act on behalf of the bereaved family in making the demand …."

104. Article 20 states:

1.

"The author shall have the right to maintain the integrity of his work and its title, and no distortion,mutilation or other modification thereof shall be made against his intent.

2.

provision of the preceding paragraph shall not apply to any of the following modifications:

…

ii)

a modification of an architectural work by means of extension, rebuilding, repairing, orremodelling.

105. A v Robert Whiting and Kadokawa Syoten, Court of first instance, Tokyo District Court 2006, H18 (wa) No.5007: thesecond instance, Intellectual Property High Court, May 31, 2007, H19(ne) No.10003; the Intellectual Property HighCourt rejected a petition for appeal.

106. Article 32(1) provides: "It shall be permissible to quote from and thereby exploit a work already made public, providedthat such quotation is compatible with fair practice and to the extent justified by the purpose of the question, such asnews reporting, critique or research." (Emphasis added).

107. Subcommittee of the Advisory Council for Problems of the Copyright Law under the Agency of Cultural Affairs,"Intermediate Report on the Introduction of General Limitation Clauses" (April 2010), pp.62–63,http://www.bunka.go.jp/chosakuken/singikai/pdf/kenriseigen_matome_2204.pdf [Accessed December 17, 2013].

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108. Agency of Cultural Affairs, "Intermediate Report on the Introduction of General Limitation Clauses" (April 2010),pp.62–63, http://www.bunka.go.jp/chosakuken/singikai/pdf/kenriseigen_matome_2204.pdf [Accessed December 17,2013].

109. Quoted in Hargreaves, "Digital Opportunity: Review of Intellectual Property and Growth" (May 2011), p.44,http://www.ipo.gov.uk/ipreview-finalreport.pdf [Accessed December 17, 2013].

110. Directive 2000/31 on certain legal aspects of information society services, in particular electronic commerce, in theinternal market (E-Commerce Directive): art.13 "Caching".

111. Copyright Act of Japan art.47(6). It was enacted in 2009 and promulgated in 2010.

112. Iwao Kidokoro, "In view of the ruling of the supreme court regarding a ‘maneki’ litigation, domestic cloud system willdemise just like search engine companies did" (2011), http://agora-web.jp/archives/1257144.html [Accessed December17, 2013].

113. Ministry of Economy, Trade and Industry, "Deepening and Acceleration of Progress in Information Economy Society"(May 2006), http://www.meti.go.jp/committee/materials/downloadfiles/g60726c04j.pdf [Accessed December 17, 2013].

114. Noguchi, Copyright in the Digital Age (2011), p.93. See Japan Magazine Association,http://www.j-magazine.or.jp/index.html [Accessed December 17, 2013].

115. Yahoo Book Store, http://bookstore.yahoo.co.jp/ [Accessed December 17, 2013].

116. See http://www.corseka.jp/ [Accessed December 17, 2013].

117. MP3.com, Inc 92 F. Supp. 2d 349 (S.D.N.Y. 2000).

118. JASRAC v Imagecity Inc, Tokyo District Court, May 25, 2007, H 18(wa) No.10166. 1979 Hanrei Jiho100.

119. JASRAC is a licensing organisation.

120. Article 21 states: "(Right of reproduction): the author shall have the exclusive right to reproduce his work."Article 23provides: "(Rights of public transmission, etc.) (1) The author shall have the exclusive right to effect a publictransmission of his work (including, in the case of automatic public transmission, making his work transmittable). (2)Theauthor shall have the exclusive right to communicate publicly any work of his which has been publicly transmitted, bymeans of a receiving apparatus receiving such public transmission."

121. According the copyright law of Japan, there is no provision concerning "secondary copyright infringement".

122. E-Commerce Directive art.13 (caching), art.14 (hosting); Digital Millennium Copyright Act s.5.

123. Digital Millennium Copyright Act.

124. In Capital Records, Inc v MP3tunes, LLC, US District Court, August 22, 2011, MP3tunes was still held liable forcontributory copyright infringement.

125. NHK v Nagono Syouten Inc (Maneki TV), Tokyo District Court, June 20, 2008, H19 (wa) No.5765; aff’d, IntellectualProperty High Court 2008, H20 (ne) No.10059.

126. In the above service, the customers bought the device on their own and then sent it to the defendant. Like the TVlicensing system in the UK, every household is required to pay an annual TV licensing fee to NHK in Japan.

127. Article 2(9)(5) of the Copyright Act of Japan provides: "To make transmittable" means making an automatic publictransmission possible by any act of the acts set out below:

(a)

to record information on public transmission recording medium of an automatic public transmissionserver already connected with a telecommunications line that is provided for use by the public; toadd to such an automatic public transmission server, as a public transmission server, as a publictransmission recording medium thereof, a recording medium which stores information; to convert arecording medium that stores information into a public transmission recording medium of such anautomatic public transmission server. For the purpose of this item, ‘automatic public transmissionserver’ means a device which, when connected with a telecommunications line provided for use bythe public, functions to perform automatic public transmission of information which is either recordedon the device or is inputted into such automatic public transmission server, and in this item andbelow, ‘public transmission recording medium’ means such part of the recording medium of anautomatic public transmission server as is provided for automatic public transmission use."

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Article 99(2) states: "The broadcasting organization shall have the exclusive right to make transmittable its broadcastfollowing reception thereof or of wire-broadcasts made following reception of said broadcasts."

128. Copyright Act of Japan art.23.

129. Sony Location Free official site, http://www.sony.jp/products/Consumer/locationfree/ [Accessed December 17, 2013]. Inthis case, it was not argued whether Sony, which was a producer of this product, was infringing the copyrights of the TVbroadcasting corporations in the courts. As long as the user is using this device for their private use, it was consideredto be legitimate based on the exception clause art.30 (exception for private use). Probably the plaintiffs considered thatLocation Free had a substantial legitimate use.

130. Maneki TV, Supreme Court, January 18, 2011, H21 (jyu) No.653.

131. Maneki TV Intellectual Property High Court, January 3, 2012, H 23 (ne) No.10009.

132. Copyright Act of Japan art.1.

133. This chilling effect can be seen in France and Germany. See Josh Lerner, "The Impact of Copyright Policy Changes inFrance and Germany on Venture Capital Investment in Cloud Computing Companies", Computers and CommunicationIndustry Association,http://www.ccianet.org/CCIA/files/ccLibraryFiles/Filename/000000000642/eu%20cloud%20computing%20white%20paper.pdf[Accessed November 20, 2012].

134. Cartoon Network LP, LLLP v CSC Holdings, Inc 536 F. 3d 121(2d Cir. 2008),http://www.ca2.uscourts.gov/decisions/isysquery/339edb6b-4e83-47b5-8caa-4864e5504e8f/1/doc/07-1480-cv_opn.pdf[Accessed December 17, 2013].

135. Twentieth Century Fox Film Corp v Cablevision System Corp 478 F. Supp. 2d 607 (S.D.N.Y. 2007).

136. 17 USC §106(4).

137. The latest amendment regarding punishment was made in 2007. Article 119 of the Copyright Act of Japan provides: "Aperson who infringes on the copyright … shall be punishable by imprisonment with work for a term not more than tenyears of by a fine of not more than ten million Yen, or by both." Ten million yen is equivalent to £76,000 (according tothe exchange rate of December 3, 2012).

138. For property theft, the term of imprisonment is less than 10 years, which is the same duration. However, the fine is lessthan £3,800 (according to the exchange rate of December 3, 2012) (Criminal Law of Japan art.235).

139. Christopher Siebens, "Divergent Approaches to File-Sharing Enforcement in the United States and Japan"(2011–12) 52Va J. Int’l L. 155, 157.

140. Salil K. Mehra, "Software as Crime: Japan, the United States, and Contributory Infringement" (2004–05) 79 Tul. L. Rev.265, 309.

141. Criminal Prosecutor v Isamu Kaneko (Winny), Kyoto District Court, December 13, 2006, H 16 (wa) No.726.

142. Winny, Osaka High Court October 8, 2009, H19 (u) No.461; Supreme Court, December 9, 2011, H21(a) No.1900,http://www.courts.go.jp/search/jhsp0030?hanreiid=81846&hanreiKbn=02 [Accessed December 17, 2013].

143. Salil K. Mehra, "Software as Crime: Japan, the United States, and Contributory Infringement" (2004–05) 79 Tul. L. Rev.285., http://www.meti.go.jp/committee/materials/downloadfiles/g60726c04j.pdf [Accessed December 17, 2013].

144. Iwao Kidokoro, "Winny Case, decision of an Acquittal (1)-the Chilling Effect on development of new technology issignificant" (December 22, 2011), http://blogos.com/article/27591 [Accessed December 17, 2013].

145. A & M Records Inc v Napster, Inc 239 F. 3d 1004 (2001).

146. Sony v Universal Studios 464 U.S. 417, 78 L. Ed. 2d 574 (1984).

147. SEGA Enterprise Ltd v Accolade Inc 977 F. 2d 1510 (9th Cir. 1992); see [1993] E.I.P.R. 34 (citing Feist Publications Incv Rural Tel Serv. Co 499 U.S. 340(1991)).

148. Patent Act of Japan art.69(1) allows reverse engineering under certain circumstances.

149. Agency for Cultural Affairs, "The Minutes of the Advisory Council for Cultural Affairs Copyright Subcommittee for LegalProblems (No,7)" (August 20, 2008), http://www.bunka.go.jp/chosakuken/singikai/housei/h20_07/gijiroku.html[Accessed December 17, 2013].

150. Directive 91/250 on the legal protection of computer programs art.6; Directive 2009/24 on the legal protection ofcomputer programs.

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151. SAS Institute v World Programming Ltd (C-406/10) [2012] 3 C.M.L.R. 4.

152. Sega 977 F. 2d 1510 (9th Cir. 1992).

153. Ulla-Maija Mylly, "An Evolutionary Economics Perspective on Computer Program Interoperability and Copyright" (2010)41 International Review of Intellectual Property and Competition Law 284, 284.

154. Pamela Samuelson, "The Past, Present and Future of Software Copyright: Interoperability Rules in the European Unionand United States" [2012] E.I.P.R. 229, 234.

155. Samuelson, "The Past, Present and Future of Software Copyright" [2012] E.I.P.R. 229, 236.

156. Mylly, "An Evolutionary Economics Perspective on Computer Program Interoperability and Copyright" (2010) 41International Review of Intellectual Property and Competition Law 284, 303.

157. Atari Games Corp v Nintendo of America Inc 975 F. 2d 832, 843 (Fed. Cir. 1992).

158. Crystal D. Talley, "Japan’s Retreat from Reverse Engineering: An Unnecessary Surrender" (1996) 29 Cornell Int’l L.J.807, 807.

159. Rohan Mishra, "Reverse Engineering in Japan and the Global Trend Towards Interoperability", Murdoch UniversityElectronic Journal of Law (June 1997), http://www.murdoch.edu.au/elaw/issues/v4n2/mishra42.html [AccessedDecember 17, 2013].

160. Agency of Cultural Affairs, "Intermediate Report on the Introduction of General Limitation Clauses" (April 2010),http://www.bunka.go.jp/chosakuken/singikai/pdf/kenriseigen_matome_2204.pdf [Accessed December 2013].

161. Satoshi Ikemura, Annotation of the Copyright Law (Keisoushobou, 2010).

162. Agency for Cultural Affairs, "Intermediate Report on the Introduction of General Limitation Clauses" (April 2010),http://www.bunka.go.jp/chosakuken/singikai/pdf/kenriseigen_matome_2204.pdf [Accessed December 2013].

163. Mylly, "An Evolutionary Economics Perspective on Computer Program Interoperability and Copyright" (2010) 41International Review of Intellectual Property and Competition Law 284, 309.

164. Metro-Goldwyn-Mayer Studios Inc v Grokster Ltd 380 F. 3d 1154 (9th Cir. 2004).

165. Justice Breyer, "The Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit", Grokster (June 27,2005), http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=04-480 [Accessed December 17,2013].

166. Sony v Ball [2004] EWHC 1738 (Ch); [2005] E.C.C. 24.

167. Infinity Broadcasting Corp v Kirkwood 965 F. Supp. 553, 561 (S.D.N.Y. 1997), rev’d 63 F. Supp. 2d 420 (1999).

168. Harper & Row Publishers v Nation Enterprises 471 U.S. 539 (1985).

169. Snow, "The Forgotten Right of Fair Use" (2011) 62 Case W. Res. L. Rev. 136.

170. RTE, ITP and BBC v Commission (T-69/89) [1991] E.C.R. II-485, [1991] 4 C.M.L.R. 586, on appeal to the ECJ: RTEand ITP v Commission (C-241 and /91 P) [1995] E.C.R. I-743, [1995] 4 C.M.L.R. 718.

171. ITP [1991] E.C.R. II-575; RTE [1991] E.C.R. II-485; BBC [1991] E.C.R. II-535.

172. Treaty on the Functioning of the European Union art.102 (ex art.82(1) of the European Community Treaty) provides asfollows:

"Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of itshall be prohibited as incompatible with the common market insofar as it may affect trade between Member States.

Such abuse may, in particular, consist in;

a)

"directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

b)

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limiting production, markets or technical development to the prejudice of consumers;

c)

applying dissimilar conditions to equivalent transactions with other trading parties, thereby placingthem at a competitive disadvantage;

d)

making the conclusion of contracts subject to acceptance by the other parties of supplementaryobligation which, by their nature or according to commercial usage, have no connection with subjectof such contracts.

173. Ian S. Forrester, "Magill, ‘A Famous Victory’? Third Party Access to Intellectual Rights" (1998) 2 Int’l Intell. Prop. L. &Pol’y §35-1, 11.

174. Catherine Colston and Jonathan Galloway, Modern Intellectual Property Law, 3rd edn (Routledge, 2010), p.434.

175. Oscar Bronner GmbH v Mediaprint Zeitungs und Zeitschriften Vertag GmbH und Co KG (C-7/97) [1998] E.C.R. I-7991;[1999] 4 C.M.L.R. 112.

176. IMS Health GmbH & Co OHG v NDC Health GmbH & Co KG (C-418/01) [2004] E.C.R. I-5039; [2004] C.M.L.R. 28.

177. Melanie J. Reichenberger, "The Role of Compulsory Licensing in Unilateral Refusal to Deal: Have the United Statesand European Approaches Grown Further Apart After IMS?" (2005–06) 31 J. Corp. L. 549, 554.

178. Colston and Galloway, Modern Intellectual Property Law (2010), p.435.

179. Forrester, "Magill, ‘A Famous Victory’?" (1998) 2 Int’l Intell. Prop. L. & Pol’y §35-1, 11.

180. Lawrence Lessig, The Future of Ideas (Knopf Doubleday Publishing Group, 2002).

181. Directive 2000/31 on certain legal aspects of information society services, in particular electronic commerce, in theInternal Market.

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