New Copyright Law provides long-awaited overhaul

Copyrighted subject matter
Entitlement to copyright protection in Israel
Exclusive rights comprising copyright
Term of protection
Permitted uses
Author's moral rights
Determining ownership
Copyright infringement and penalties
Monetary remedies – statutory damages
Injunctions
Miscellaneous

The new Israeli Copyright Law is due to come into force later this month. It will replace the UK Copyright Act 1911, which has governed Israeli copyright law since the British mandate over Palestine, as well as most of the provisions of the mandatory Copyright Ordinance 1924. While both statutes have been amended over the years to address various legal and technological developments and Israel’s international undertakings, a comprehensive reform has long been awaited.

While the new law preserves many existing principles, it also introduces several important changes, mainly to address changes in technology that affect the use of copyrighted material. In particular, the law: 

• redefines the rights that fall within the scope of copyright, including the internet-inspired right to make a work available to the public and the permitted exemptions to a copyright owner’s prerogative, notably exemptions necessitated by technological needs;
• redefines the fair-use exception, widening it to become an open-ended, non-exhaustive list of permitted uses;
• provides that ownership of a commissioned work may now be determined based on the parties’ implied intention;
• changes the remedy of statutory damages, providing for a different scale of compensation awardable without proof of actual damage; and
• sets the criteria for judicial discretion in awarding statutory damages, in granting injunctive relief and in permitting “reasonable” infringement of an author’s moral right.

Copyrighted subject matter
As under the previous Copyright Act, the new law states that copyright subsists in an original literary, artistic, dramatic or musical work possessing some form of fixation. A phonogram (sound recording), which formerly enjoyed protection as if it were a musical work, is protected as a separate category under the new law. Copyright does not cover ideas, processes, implementation methods, data or mathematical concepts. Literary works for the purpose of copyright protection include, as formerly, computer programs and compilations. Artistic works include photographs (formerly in a sub-category with a shorter protection period) and works of architecture (which no longer require an artistic element in order to enjoy copyright protection). Designs are still excluded, unless they are neither used nor intended for use in industrial manufacturing. Maps and drawings, formerly protected as literary works, now fall within the scope of artistic works. Cinematic and television works are protected as dramatic works.

Entitlement to copyright protection
Copyright protects works first published in Israel or created by an Israeli national or resident, whether published or not. Publication in Israel includes simultaneous publication in Israel and other countries; publication is considered simultaneous if occurring within 30 days of first publication. In addition, a work of architecture or an artistic work incorporated in a building is also protected by Israeli copyright law if located in Israel; a cinematic work is protected if its producer has its business headquarters or residence in Israel at the time the film is made.

The new law distinguishes between phonograms (sound recordings) and other copyrighted works, which allows foreign phonograms to qualify for protection in Israel. Israeli copyright extends to a phonogram if its producer at the time of its making was an Israeli national or resident or, if a corporate entity, had business headquarters in Israel. However, copyright will also subsist in a phonogram with regard to copying, rental and making available to the public if the phonogram was first published in Israel. As under the previous law, the minister of justice may, by administrative order, limit copyright protection accorded to foreign works emanating from a country that does not accord proper protection to Israeli works, thus deviating from the principle of national treatment for foreign works.

Exclusive rights comprising copyright
The copyright owner has exclusive right to copy and to broadcast the copyrighted work, and to publish the previously unpublished work. A right previously not codified by statute is the right to make a work available to the public (ie, accessible to users at the time and place of their choice). Recognition of such right, in compliance with the World Intellectual Property Organisation (WIPO) Copyright Treaty 1996, has become essential given the development of the Internet. Other rights include: 

• the right publicly to perform a work (which applies to all but artistic works); 
• the right to make derivative works (which does not apply to phonograms); and
• the right of commercial rental of copies to the public (which applies to phonograms, cinematic works and computer programs). 

A potentially problematic exception excludes rental by public libraries or by the libraries of educational institutions from the definition of commercial rental.

Term of protection
The new law extends the duration of copyright protection – 70 years following the death of the author, or of the last surviving author among co-authors  – to photographs, formerly protected for 50 years following the creation of the negative. However, photographic works created before the new law comes into force will not benefit from this enhanced protection. Phonograms, as well as state-owned works, are protected for 50 years following their creation. However, for works entitled to protection due to their simultaneous publication in Israel or by force of the orders implementing international treaties, the duration of copyright shall not exceed the copyright term in the country of origin.

Permitted uses
Under the old law, a limited use of the copyrighted material for certain enumerated purposes (eg, research and criticism) was permitted without need for authorisation from the copyright owner, in line with the UK fair dealing exception. However, the scope of this exception has been expanded by case law so as to accommodate the US concept of ‘fair use’. The new law sets out an open-ended fair-use exemption, which lists the permitted purposes by way of example only, leaving the determination of further permitted uses to judicial discretion. Should the courts be willing to give a liberal interpretation to the scope of fair use, the fair-use defence may be significantly broader than under the prior law, which raises some concern for rights owners in Israel and abroad.

Further, the law significantly supplements specific exemptions to the copyright owner’s monopoly rights under the prior law. A number of these royalty-free permitted uses codify or clarify customary practice, such as the right to use a work in administrative or judicial proceedings or incidental use in a photograph, cinematic work or phonogram. Several more exemptions have been dictated by technological advancements. These include: 

• copying (and making derivative works of) software for back-up, maintenance, data security and interoperability; 
• recording for broadcast purposes; and 
• temporary copying for network communication transmission.

In addition, as under the previous law, copying previously recorded musical works is permitted subject to prescribed royalties, by way of compulsory licence. Recording or copying a work onto recordable media (other than media intended for computer use) for private non-commercial use remains permitted in accordance with the surviving provisions of the Copyright Ordinance 1924, royalties being payable to the collective societies on sales of recordable media.

Author's moral rights
While preserving the moral right of the author – to have the work attributed to the author and to have the work protected from derogatory treatment – as separate and distinct from copyright ownership, the new law gives the courts substantial discretion to allow exceptions, if reasonable. The moral right is available to authors of artistic, dramatic, musical and literary works, but does not cover computer programs or phonograms. The moral right is not assignable, but may be waived.

Determining ownership
Under the new law, the author is the first owner of the copyright in a work; a photograph also belongs to the author rather than, as formerly, to the owner of the film or the plate. Photographic works created before the new law comes into effect remain owned in accordance with the prior legal regime and do not revert to the author. With regard to portraits and family photographs, ownership is presumed to vest in whoever commissioned the work, unless otherwise agreed.

The presumption of initial ownership of a commissioned work has undergone a change. In contrast to the old act, which presumed the ownership of the author unless a written, signed assignment has been concluded, the new law states that ownership of a commissioned work may be determined not only through written contract, but also through implied contract. This change makes it even more advisable for parties to reach express agreement on the ownership of a commissioned work beforehand.

The new law follows the prior law in providing that copyright in works produced by an employee belong to the employer unless otherwise agreed, if made in the course of the employee’s work and (as clarified by the law) for the purpose of such work.

A heavier presumption exists in favour of state ownership; the State owns copyright in works created or commissioned by government employees due to and in the course of their work, unless otherwise agreed.

Copyright infringement and penalties
It is an infringement of copyright to do, or permit another to do, any of the acts exclusive to the rights owner without the latter’s permission. Further, sale or lease (including offering for sale or lease) of infringing copies, possessing them for a business purpose, distributing them on a commercial scale, displaying them to the public by way of trade or importing them other than for personal use, constitutes an indirect infringement of copyright. Such acts (except for importation) in respect of copies infringing the author’s moral right constitute indirect infringement. It is a condition of indirect infringement that the infringer knew or should have known that the copies are infringing. With regard to parallel importation, the new law specifically excludes copies lawfully made outside Israel with the copyright owner’s authorisation from the definition of infringing copies. It is also indirect infringement to make a place of public entertainment available for unauthorised performance of a work.

Infringement of copyright or moral right incurs liability in tort. Criminal liability is imposed for making, importing or possessing infringing copies for trade, for engaging in sale, lease or distribution of infringing copies, and for manufacturing or possessing equipment for making infringing copies for trade. With regard to end-user liability, possessing infringing copies will not constitute a tort unless done for a business purpose and will not be a criminal offence unless done for the purpose of trading in them.

The right to sue for copyright infringement vests in the rights owner or, with regard to a right exclusively licensed to another, the owner of an exclusive licence. A claim for infringement of a moral right can be brought by the author or, upon his or her death, by the author’s family.

In light of the changes introduced under the new statutory regime, the law specifically provides that there is no right of action for what constituted infringement under the prior law, but is no longer deemed an infringement under the new law.

Monetary remedies – statutory damages
With regard to remedies available to the aggrieved copyright owner, the new law has introduced a change in statutory damages awardable without proof of actual damage, under the prior regime confined within a narrow range between a minimum award of IS10,000 and a maximum of IS20,000. Under the new statutory regime, there is no minimum award of damages, while the maximum has been increased to IS100,000. This broader range leaves the court considerable flexibility in dealing with copyright infringement, having regard to such considerations as: 

• the scope, duration and gravity of the infringement; 
• the harm caused to the plaintiff and the profit reaped by the defendant; 
• the type of the defendant’s activity and the relationship between the parties; and 
• the defendant’s good faith.

While rights owners are no longer assured of compensation, the damages, if awarded, may be significantly higher than previously.

Further, in line with existing case law, the new law provides that, for the purpose of calculating statutory damages, infringing acts carried out as part of one single set of activities will be deemed to constitute a single infringement.

As under teh previous law, only an injunction, but no damages, may be available against an innocent infringer (ie, a person who, at the time of infringing the copyright or moral right, had no actual or constructive knowledge that the work was subject to copyright).

Injunctions
The new law gives the courts broad discretion in granting injunctions and is the only statute in Israel to state expressly that an injunction may be denied due to the balance of convenience, notwithstanding a showing of the plaintiff's prima facie right. Further, neither an injunction against the construction of a building involving copyright infringement nor a demolition order may be granted if its construction has already commenced.

Infringing copies may be ordered to be destroyed or otherwise disposed of or transferred to the plaintiff. If the plaintiff is likely to use the infringing copies, the court may order that the plaintiff compensate the defendant for the copies received; by contrast, under the prior law the plaintiff would have been regarded the owner of the infringing copies and no compensation would have been due. In the event that an infringing item is in the possession of a non-infringing party, the new law, although stating that such party will enjoy the protection of market overt if applicable, limits such protection to non-commercial use only. The rights owner may also give notice to the Customs Authority of actual or suspected infringement, requesting it to detain infringing goods.

Miscellaneous
The new law leaves the issue of private copying on recordable media (excepting media for computer use) under the purview of the Copyright Ordinance. Further, the new law does not provide remedies against the circumvention of technological protection measures for copyrighted works, required by the WIPO Copyright Treaty; anti-circumvention protection, if resolved upon, will be the subject of future legislation. The liability of internet service providers for copyright infringement is to be addressed in the forthcoming legislation on electronic commerce, which has been approved by the Israeli legislature at the first hearing.