As noted in our update in last month's issue, the Knesset (Israel's parliament) recently enacted the Copyright Law 2007 "Copyright Law", which establishes a comprehensive statutory copyright regime and replaces legislation enacted in 1911 and 1924. The new law will come into effect in May 2008. In addition to the changes in respect of copyright ownership and moral rights discussed in last month's update, other significant changes include:

• Permitted acts in respect of software. The Copyright Law expressly authorizes the holders of authorized copies of computer programs to perform the following actions:
  1. create backup copies, provided such copies are destroyed when they are no longer needed;
  2. copy computer programs for purposes of maintaining the computer program where required for use of such computer program;
  3. copy or create derivative works of computer programs for purposes of error correction, achieving interoperability with hardware or other software programs and other intended purposes, all to the extent necessary;
  4. copy or create derivative works of computer programs for purpose of examining, correcting or defending against data security breaches, to the extent necessary; and
  5. copy or create derivative works of computer programs for the purpose of obtaining information required for interoperability with other hardware or independently developed software.
     The Copyright Law does not indicate whether these actions are permitted only where not prohibited under licence or other applicable agreements, or whether the provisions described above are mandatory provisions that cannot be overridden by contract. While we continue to recommend that software licensors clearly specify in software agreements the scope of permitted copying and, where desired, prohibit creation of derivative works, such agreements should also stipulate that where restrictions on creation of derivative works are not enforceable under applicable law, ownership in derivative works will vest in the licensor and such works may be used only as expressly permitted under applicable law.
• Derivative works. Bringing Israel in line with the Berne Convention, the Copyright Law recognizes the right to create derivative works of literary, artistic, dramatic or musical works as the exclusive right of the copyright holder. Previously, this right was missing from Israeli statutes but was recognized in Israel by court decisions that adopted principles of foreign laws. This right is also applied to computer programs (subject to the restrictions described in the paragraph above), as the Copyright Law expressly recognizes computer programs as literary works.
• Fair use. Whereas the prior statutory framework designated a closed list of fair uses of copyrighted works, the Copyright Law provides an open list of fair uses, which includes independent study, research, critique, survey, journalistic report, quotation and instruction and examination by educational institutions. In addition, adopting the US approach, the Copyright Law dictates four factors to be considered in determining whether a use is fair. These factors are (1) the purpose and character of the use; (2) the nature of the work used, (3) the qualitative and quantitative extent of the work and its potential market; and (4) the effect of the use on the value of the work and its potential market. Other factors may be considered as well.
• File sharing. In an effort to combat illegal file sharing, the Copyright Law introduces a new exclusive right of copyright holders – "making the work available to the public". The Copyright Law defines this right as the performance of an act with a copyrighted work that enables the public to access the work at a time and place of their choice.
• Potential claimants. For the first time, exclusive licensees of a copyrighted works may bring infringement claims.
• Statutory damages. The Copyright Law increased the maximum statutory damages that may be awarded for infringement of copyright or moral rights without proof of injury to NIS100,000 $27,800) from NIS20,000 ($5,500), and eliminated the floor amount for such awards. In determining awards, courts may consider the scope, duration and severity of the infringement, damage caused, benefit derived by the infringer and the nature of the infringer's activities, the similarity of goods, the existence of good faith as well as other factors.

Yoheved Novogroder

Yigal Arnon & Co
22 Rivlin Street
Jerusalem 91000
Israel
Tel: +972 2 623 9200
Fax: +972 2 623 9236
barry@arnon.co.il
www.arnon.co.il