Audrey Liao May 1 2023 Does the NCC's draft OTT legislation sufficiently protect IP rights? Lee and Li Attorneys at Law | Intellectual Property - Taiwan Audrey Liao Intellectual Property IntroductionFailure to control piracyTargeting social media platform services sharing user-generated content and featuring exchange of informationObligations of telecoms operators as provided in article 12 of draft ActPiracy prevention mechanism added by 2022 version of draft ActCommentIntroductionThe widely broadcasted FIFA World Cup Qatar 2022 matches once again drew attention to the legality of offering audiovisual services via set-top boxes. With the rise of streaming services via audiovisual platforms and the decline of cable TV, audiovisual equipment is now frequently paired with sources of content. In particular, the combination of set-top boxes (audiovisual equipment) and over-the-top (OTT) media services (sources of content) has become mainstream.While traditional media (eg, cable, broadcast and satellite TV) require a licence to operate, many countries have no laws to regulate OTT service providers. In Taiwan, the three broadcasting acts (the Radio and Television Act, the Cable Radio and Television Act, and the Satellite Broadcasting Act) and the Telecommunications Act now in force have no clear governing rules in place.This has led to discussion in recent years over whether to enact a specific law to regulate such service providers. The following issues have led to widespread concern:whether a specific OTT law would effectively curb piracy and infringement (eg, whether the audiovisual content offered by OTT service operators would be legitimately licensed by the copyright owners of audiovisual works, such as programmes and drama series); andwhether the draft of such an OTT law would afford sufficient protection to copyright owners.On 15 July 2020, the National Communications Commission (NCC) issued a draft of the Internet Audiovisual Service Management Act, often referred to as the "special OTT act" by the Taiwanese media. On 22 July of the same year, NCC announced the draft Act and sought to collect public opinions. On 25 May 2022, NCC passed the framework of the draft Act.Though well intentioned, the draft Act immediately sparked controversy. It fails to properly take into account the workings and regulatory requirements of IP infringement cases in practice. This article examines the issues raised.Failure to control piracySome have argued that the protection of owners of IP rights is a core aspect of the legislative purpose of the draft Act, so there should be a stronger focus on curbing piracy than on regulating legitimate operators. Yet, the measure designed to block telecoms operators, as provided in article 12 of the draft Act, applies only to OTT operators with funding from China, not to businesses infringing IP rights (eg, illegal websites offering audiovisual content that violates copyright). The draft Act claims to protect IP rights, but it contains barely any provisions to crack down on piracy. Naturally, this raises concerns over legislative imbalance.Targeting social media platform services sharing user-generated content and featuring exchange of informationMany IP infringement cases nowadays make use of video services via the Internet – the perpetrators may be OTT service providers or user-generated content (UGC) providers. Given the current trends on the Internet, UGC providers are even more likely to infringe IP rights. For this reason, some people have called for any video services provided via the Internet to be considered "internet audiovisual services" under article 3 of the draft Act. A lot of major businesses pay their content creators and dwarf OTT operators in terms of the number of users, market share and economy of scale. This raises the question of why businesses with a much greater scale are not being regulated; the draft Act claims to focus primarily on major players.Obligations of telecoms operators as provided in article 12 of draft ActArticle 12 of the draft Act stipulates that telecoms operators may not offer services to OTT service providers that have not obtained permission in accordance with the Act Governing Relations between the People of the Taiwan Area and the Mainland Area (the Cross-Strait Act). However, this raises a few issues:How can a telecoms operator determine whether its partner business is in violation of the Cross-Strait Act?Where the competent authority notifies a telecoms operator that it should block a certain party or adopt other necessary measures, how can a telecoms operator completely block the party if the party changes its internet protocol address? The Internet is an open platform and internet protocol addresses are dynamic in nature.If the party's internet protocol address contains other legitimate content and such content is also removed, can the contracted party subject to such damages seek redress from the telecom operator? Or is there a disclaimer clause as stipulated in the Copyright Act in place that enables "takedown upon notification"?It seems that supplementary measures are needed. Otherwise, the draft Act would in effect burden telecoms operators with the obligation of preliminary examination.Piracy prevention mechanism added by 2022 version of draft ActThe 2022 version of the draft Act changed the approach to regulation from voluntary registration to "behaviour management". A hierarchical obligation mechanism has also been adopted. To address the controversy over the 2020 version's insufficient piracy control, the 2022 draft Act introduces a new mechanism. Where a court has determined that an OTT service provider offers video content in violation of the Copyright Act and the provider has engaged in acts of infringement multiple times, the NCC may demand that it correct its improper business behaviour. In particular, the NCC may ask telecoms businesses and ISPs to block the provision of services.CommentAs the draft Act specifically claims to protect IP rights, it should have taken into account the nature of businesses and have clear provisions to strengthen the regulatory inadequacies of the Copyright Act or any other relevant regulations. In particular, where the obligations of telecoms operators are concerned, the legislature should ensure that telecoms operators cooperate in order to afford prompt protection to rights holders.With the prevalence of OTT services nowadays, copyright owners of audiovisual works invest a lot of time and resources to produce drama series and programmes. Unfortunately, dishonest OTT service providers have furnished consumers with illegal applications that allow them to watch such content for free, significantly reducing the profits earned by copyright owners. The draft Act fails to completely block the provision of unauthorised OTT services, prompting copyright owners to take legal actions where necessary in order to safeguard their rights and interests.For further information on this topic please contact Audrey Liao at Lee and Li Attorneys at Law by telephone (+886 2 2715 3300) or email ([email protected]). The Lee and Li website can be accessed at www.leeandli.com.