Premium phone operators need a licence
OUT-LAW Radio, 22/03/2007
We discover that operators of now-controversial premium rate
phone quizzes will soon need lottery licences, and we find out when
it's OK for one game developer to copy another.
A text transcription follows.
This transcript is for anyone with a hearing impairment or who
for any other reason cannot listen to the MP3 audio file.
The following is the text spoken by OUT-LAW journalist Matthew
Magee.
Hello and welcome to OUT-LAW Radio, the weekly
podcast that keeps you up to date on all the twists and turns in
the world of technology law. Every week we bring you the
latest news and in depth features that help you to make sense of
the ever-changing laws that govern technology today.
My name is Matthew Magee, and coming up on
this week’s show we reveal that premium rate TV phone-ins will
soon need a lottery licence and we look at a court ruling that says
that some computer game copying is ok.
But first, the news.
- Discount music website loses six-year battle
with the music industry; and
- Google will anonymise searches after two
years.
A group of record labels has won its High
Court case against online music retailer CD WOW! which was
found to have infringed copyright and been in contempt of court
over an earlier order. CD WOW! imports CDs from Hong
Kong and was found to have sold to the UK discs which were only
licensed for sale in Asia. That was discovered by test
purchases made by music label trade body the British Phonographic
Industry (BPI).
That offence is called parallel importing and
involves a breach of copyright. CD WOW! had previously
promised to a court not to engage in parallel importing.
The High Court has found that it broke the
agreement and breached copyright law. It has ordered it to pay
a fine to the Crown and damages for copyright infringement and
legal costs to the record labels and the BPI.
Google will soon reduce the amount of
information it stores about its users and their searches. The
change to the search giant’s policy has been welcomed by privacy
activists. Google currently stores search terms along with the
internet protocol addresses which could be used at a later date to
help identify the people behind a query.
The company has said that it will now delete
the IP addresses after between 18 and 24 months. It will
continue to store the search information for as long it deems it
useful.
Google said that its decision was taken after
consultation with privacy groups in Europe and the US. The search
engine firm said that it was retaining logs for up to 24 months to
comply with data retention laws and that it may have to extend the
limit if other laws are passed which demand longer
retention.
That was this week’s OUT-LAW news
It started with Richard and Judy. It
spread to Ant and Dec’s Saturday Night Takeaway, did for phone-in
station ITV Play, and finally corrupted that beacon of
innocence and decency, Blue Peter. The premium rate phone line
scandal sweeping the world of television has been swift and
shocking.
Serious sums of money have been taken off
viewers who thought they were in with a chance of winning phone in
competitions. At up to a pound a time entries didn’t come cheap,
but viewers put their faith in broadcasters only to find that
despite presenters encouraging them to phone in in their thousands,
winners had already been chosen or the programmes were
pre-recorded.
But whatever the results of inquiries by
broadcast regulator Ofcom and premium rate phone regulator ICSTIS,
the landscape for competitions is about to change and
radically. OUT-LAW Radio has discovered that premium
phone operators will soon have to apply for lottery licences if
they are going to stay in business.
It is all down to new gambling legislation
which was passed in 2005 and comes into effect this
September. Julian Harris of Harris Hagan, a law firm
specialising in gambling law explains:
“The lottery is of three elements. Payment to
participate, questions which are based on chance rather than skill
and a prize at the end of it. So most of those competitions
because their skill and because there is no payment, they do not
constitute a lottery. So the actual competition that takes
part on the television is fine. The difficulty is in looking
at how you actually get to participate as a caller and the way the
law will look at those competitions is that the first part is a
separate event as it were and that is almost certainly a lottery
and the way in which of course they make their money is by the
fact, as you say, that they are premium rate phone lines and that
is where the income is generated.”
It is all down to the very technical
definition of what is and what is not a lottery in the new
legislation This is something which the old Act somewhat fudged,
but is made crystal clear in the new one. The Gambling
Commission has published its views on the matter and it says that
there are certain defining factors of a lottery: you are required
to pay to participate; prizes are awarded and the winner is chosen
entirely by chance.
Think of the cheesy late night call in quiz
shows typified by the now defunct ITV Play channel. Thousands
of callers pay premium rate phone line prices to answer a question
which is embarrassingly simple. Some are chosen at random for the
opportunity to answer the question on air and win a
prize. This, say some, is a lottery because the question is so
simple that it can never be considered a game of skill.
Scott Davis is founder and director of Million
2-1, a mobile phone and internet games company which does hold a
lottery licence.
“Currently if you look at a lot of the
services, they are generally operating in the realms of luck, you
know they are games of chance and any game of chance is technically
classified as a lottery and I think if you look at a lot of things
you know take the call TV shows at the moment, which are blatant
lotteries where you call in and you get selected to go on air
you're going to have to either give a real free route entry which
obviously questions the commercialisation of what is the point of
doing these shows or get a lottery licence and do them under the
correct legislation.”
It is unlikely that broadcasters or TV
production companies will be rushing to become lottery licence
holders. Davis explained that licences can cost up to £30,000
and there are other obstacles too.
“In terms of getting that lottery licence the
company goes under quite a lot of scrutiny so the people behind the
company the directors, shareholders have to fill in quite an
extensive form. The people behind the company are monitored so
things like bankruptcy if you have got any discrepancies that may
make you a less than desirable person you will not get the lottery
licence. You know you have to give a minimum of 20% to
support a good cause. If you are paying as a consumer £1 then
20p of that £1 will go to good causes.”
So what will they do? This is a fiercely
lucrative business. The now-axed ITV Play earned its parent company
£54 million in 2006. Voting revenues are a staple part of the
income for shows such as the X-Factor or Big Brother.
Well, programmers have two ways out. They
can get around the stipulation that if it is paid for it is a
lottery, or they can get around the fact that it is deemed not to
be a game of skill. Each though has its problems. Harris
explains:
“But I suppose you can say if you want to take
part in any of our programmes you know which take place for example
every Wednesday evening at 7.00 pm then write in with your phone
number and we will call you. I mean that would be one way of
doing it. I am not quite sure how practical that would
be. The other way would be to ensure that the first part of it
is also dealt with on the basis of skill with skill based questions
or alternatively not to charge for the initial phone call, but of
course, that is rather difficult because that is where the income
is generated. So I think that probably would not be a
practical route for them.”
The Gambling Commission said in its recent
consultation paper on the issue that many TV channels are currently
breaking the rules that will come in in September. This is what it
said:
“Good examples are the TV quiz shows on
dedicated channels which have sprung up in the last two or three
years. Commonly participants call to enter via a premium rate
telephone number or calls are connected and therefore all callers
have to pay for the premium rate call but only a limited and small
number are randomly selected to be put through to the studio to
attempt to answer the question asked or to complete a puzzle.
"All such channels will either have to stop
operating altogether or operate under the provisions relating to
lotteries, including the requirements to obtain a Gambling
Commission Licence and at least 20% of the proceeds must be
contributed to a good cause or ensure that they operate such that
they fall within the provisions relating to either prize
competitions or free draws.
"Prize competitions are those in which success
depends, at least in part, on the exercise of skill judgement or
knowledge by the participants. This distinguishes them from
lotteries, where success depends wholly on chance.”
The new rules will revolutionise the new
industry of premium rate competitions. Programmers will face
the prospect of either making competitions harder and thus
dissuading many people fom participating and losing income
or providing a genuinely free route to entry and risk losing
money that way. Whichever way the programme makers jump the
troubles premium rate operators face now look like they are just
the beginning.
A court has ruled that computer games
developers can sometimes copy elements from other people’s games
and not break the law. But a technology law expert has warned
against would-be copycats taking the Nova Games ruling as a
pilferer’s charter.
Nova Productions sued two other game
developers over the use of devices in games simulating pool that it
said breached copyright in its game which was called Pocket
Money. The Court of Appeal disagreed, saying that not every
piece of invention or skill is protected by copyright
law.
The case inhabits a long acknowledged grey
area of copyright law one where it is not quite clear to what
extent ideas can be copyrighted. Struan Robertson, a
technology lawyer with Pinsent Masons, the law firm
behind OUT-LAW explains:
“If you are looking for something that
displays a level of originality, if that is absent if something in
a particular game has been done elsewhere, it will be difficult to
assert copyright.”
Elements of games are very definitely
protected ruled the Appeal Court. Individual images and the actual
source code do receive protection and so do less tangible elements
such as plot.
In all, says Robertson, this should be viewed
as a welcome clarification but not as a green light for copycat
game development.
“What is really important here though is the
judge is not saying that parts of any game could be copied. He
is saying that you do not have copyright in general ideas but he is
not going so far as to say that you cannot protect some forms of
idea with copyright. Now, it is really difficult to take that
ruling and say in all circumstances whether something will and will
not infringe and certainly games developers would be unwise to
interpret this ruling as carte blanche to start copying other
games. That is certainly not what the judgment is saying.”
That is all we have time for this week.
Thanks for listening.
Why not get in touch with OUT-LAW Radio?
Do you know of a technology law story? We would love to hear from
you on radio@out-law.com.
Make sure you tune in next week; for now
goodbye.
OUT-LAW Radio was produced and
presented by Matthew Magee for international law firm Pinsent
Pasons. Gambling Commision extracts read by Claire
Dancer.
