Chile breaks new ground in regulating IP Liability

• Author: Rodrigo Lavados Mackenzie
• Position: Senior Associate, Sargent & Krahn
• Pages: 27-28

Liability of ISPs

ISPs often find they are inadvertently hosting or

transmitting content that infringes the copyright

of third parties. This can give rise to disputes

about the legal responsibility of ISPs in hosting

and using such information on their networks

and websites. With the enactment of its new IP

law, Chile became the first country in Latin

America to regulate ISP liability.

Under the amended IP law, ISPs are exempt from

liability if they remove infringing content as soon

as they learn of its existence. But to arrive at this

conclusion, it is necessary to determine, from a le-

gal viewpoint, the stage at which an ISP would be

deemed to know of the existence of violating

content. Under the new law, ISPs are considered

to know that such content is being transmitted or

hosted in their systems only after having received

legal notice.

Many authors and content owners are not satis-

fied that this goes far enough in protecting their

interests and would prefer that a private notifica-

tion system between copyright holders and ISPs

be used – such as that used in the U.S. – as it

would be much faster than relying on the courts.

Piracy

The need to strengthen the country’s legal frame-

work to better tackle piracy has been recognized

for some time, both at home and abroad. Chile’s

new IP law includes a number of modifications

that support the effective enforcement of copy-

right and the fight against piracy. These include:

A 20-fold increase in fines for copyright viola-

tions, in some cases rising to over US$100,000

for repeat offenders.

Jail terms of up to 10 years for those who im-

port, manufacture or acquire for distribution

copies of works reproduced without permis-

sion.

Strong penalties for those who collude to

commit copyright offenses.

Donating counterfeit or infringing copies to

charity should the right holder so choose (the

general rule being that such copies are de-

stroyed).

Using the legitimate retail value of the in-

fringed works as a parameter for establishing

compensation amounts. In civil proceedings,

the court may order the offender to pay an

amount corresponding to the profits resulting

from the offense, or a fixed sum of up to

US$100,000 per infringement.

Exceptions

On the question of exceptions to copyright,

which imply that certain uses of protected works

do not require authorization from copyright hold-

ers and are not financially compensated, the leg-

islature introduced several new statutory provi-

sions. These include:

CHILE BREAKS

NEW GROUND

in Regulating IP Liability

>>>

27

In early May, after three years of discussion and debate, the Chilean Parliament approved groundbreak-

ing changes to its intellectual property (IP) law in a move that is thought to be one of the most signifi-

cant copyright developments in Chile in the last 40 years.

In enacting the Intellectual Property Law (Law No. 20 435 which amends Law No. 17.336), Chile became

the first country in Latin America to regulate the liability of Internet Service Providers (ISPs). In so doing,

it also honored one of the commitments under its Free Trade Agreement with the United States. The new

law also strengthens the tools and penalties available for prosecuting copyright piracy. It clarifies and ex-

pands existing exceptions to copyright, such as the ability to quote the works of others, and introduces

new ones that facilitate access to works, especially for people with disabilities.

Finally, picking up on a recommendation made by the competition authorities, the new law establishes

a more inclusive mechanism for setting the tariffs charged by collecting societies. In this article, Mr.

Rodrigo Lavados Mackenzie, Senior Associate, Sargent & Krahn, reviews some of the most important

changes introduced.