Constitutional limits to Contracts

Constitutional principles and human rights have been examined by Lucie Guibault as applicable to private relationships, and therefore liable to have an impact on copyright user protection against abusive contract terms.460 _{Preliminarily she}

addressed the issue of the vertical or horizontal application of constitutional principles.

Constitutional principles are traditionally invoked to protect citizens against the State (vertical action), but more recently they have been used to protect citizens against other citizens (horizontal action). The horizontal action can be direct (when a citizen brings to court another citizen for the breach of a constitutional principle) or indirect (when a citizen acts against the State to obtain the application of a constitutional principle within a private litigation). In Europe the direct horizontal action of the constitutional principles is not obvious. The indirect action is mostly recognised, however.461 _According

to Guibault this is confirmed by European literature and by the case law of the European Court of Human Rights.462

In the US, the Bill of Rights protects citizens only against the State. As a general principle, in fact, the US Government tends not to intrude into private relationships. Therefore the real responsibility of the State in a case of violation of constitutional principles by a private citizen needs to be ascertained case by case.463 _{However, the issue}

of the direct application of the Constitution among citizens needs to take into account the possibility that a person can waive their constitutional rights. In Europe this is not possible. Only contractual arrangements that do not affect the essential content of constitutional rights are allowed. In the US, on the contrary, the waiver of constitutional principles is allowed, to enable self-governance. But in the case of waiver of fundamental rights the courts subject the validity of the assent to a strict scrutiny.464

In the US, constitutional principles on copyright, including the fundamental justification for copyright protection and freedom of expression (underpinning some instances of fair use) can be used to limit contracts on the basis of the Supremacy Clause preemption.

Patterson and Lindberg, for example, maintain that copyright has been invented firstly and mainly to enhance the learning process of the community at large.465 _{Copyright does so by promoting the}

circulation of culture and the transmission of knowledge.

460 Guibault 2002, at 152-175.

461 Guibault reports that in France there are two opposed doctrines on the direct horizontal working of constitutional rights, while in Germany the horizontal working is confirmed by Article 1 of the Constitution. Moreover the case law mostly recognises the indirect horizontal working. See Ibid.

462 According to Guibault the case law of the ECHR points to an indirect application of constitutional rights to private relationships. See Ibid.

463 Guibault 2002, at 295. 464 Guibault 173-184.

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Neil Netanel466 _{claims that copyright is a direct}

vehicle of democracy, by boosting exchange of ideas and communication of thoughts. All these authors maintain that if copyright law were applied by courts in such a way as to uphold and guarantee these fundamental copyright underpinnings, the balance between owners and users would be achieved.467

Guibault argues on this basis that she would expect a contract clause overturning copyright fundamental principles, founded on freedom of expression and the diffusion of culture, to be held null and void.468 _{But the real potential and scope}

of the constitutional preemption is unclear, and the outcome of case law addressing the above issues would be uncertain both in Europe and in the US.469 _{In practice, examining case law on}

freedom of expression, Guibault concludes that the courts decide on the basis of whether the restriction imposed by the owner is content-based or content-neutral.470 _{Content-based restrictions}

are very difficult to enforce because more obviously in breach of freedom of expression. In contrast content-neutral clauses are upheld if they satisfy a ‘substantial governmental interest.’471

Finally some commentators argue that, just like federal preemption, constitutional preemption also applies only to standard form contracts.472 _But

there is no case law confirming such a construct. In the case Goldstein v. California the Supreme Court held that states cannot use their legislation ‘to protect that which Congress intended to be free and free that which Congress had protected.’ But the case at hand refers to state legislation directly, and not to a contract.473

Conclusion

The above suggests that limiting contracts to protect the interests of copyright users can hardly be done effectively outside copyright legislation.474

466 Netanel 1996.

467 For an analysis of the solution to overreaching contracts through an interpretation of contract law in the light of copyright law itself see Derclaye 2006, at 188-211. The author argues, in essence, that a correct interpretation of existing copyright law and case law would provide an answer to the question of the overridability by contract of copyright exceptions

468 Guibault 2002 at 270. 469 Ibid.

470 See Netanel 2005. In the case of content-based restrictions, copyright legislation (including both exclusive rights and exceptions) impacts on works whose content is the reason why the rights are claimed. This normally occurs in cases where parody or criticism is called into play. In this case, Netanel argues, the scrutiny in the light of freedom of expression has to be strict. This means that freedom of expression can be identified also beyond the boundaries of copyright limits. In the case of content-neutral restrictions, copyright entitlements are claimed irrespective of the content of the work. One example could be the exception for private copying. In the case of content-neutral claims, Netanel claims it is not necessarily ‘a strict scrutiny’ on compliance with freedom of expression. This means that in this second case copyright exceptions have to be interpreted narrowly; i.e. their construct should not go beyond their boundaries. Strowel and Tulkens add that all issues regarding access are content-neutral, therefore they only require an intermediate scrutiny. This means that the in-built safety valves of copyright provide enough scrutiny for freedom of expression. See Strowel and Tulkens 2005.

471 Guibault 2002, at 296.

472 Karjala 1997, at 540 and De Werra 2003, at 271. 473 De Werra 2003, at 272.

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The InfoSoc Directive may be modified as a result of consultations following the Green Paper on ‘Copyright in the Knowledge Economy’475 _{and the}

moment is timely to introduce some provisions that would guarantee such results. Some of the questions in the Green Paper include: Should there be encouragement or guidelines for contractual arrangements between right holders and users for the implementation of copyright exceptions? Should some limits be made imperative?

Many academics and institutions have responded by suggesting the introduction of new provisions which would at least protect fundamental copyright limits from contracts and TPMs.476 _{It remains to be}

seen to what extent the EU legislature will listen to the calls from the above commentators.

Hitherto we have analysed the interplay between contracts and copyright exceptions. However, it is worth noting that electronic licences are typically directed towards millions of end-users who are very difficult to track down and to bring to justice in case of infringement. The difficulty in enforcing electronic licences would limit in practice the threat posed by contracts to copyright limits. However, the implementation of technological protection measures has provided unprecedented possibilities for effective self-enforcement.

3.5 DIGITAL RIGHTS MANAGEMENT