Aardvark: Xtra's Dumbest Ever Move

This story appeared in the NZ Herald last week and showed how (in)valuable the Net can be to the film and other creative industries now that many off-shore productions are being shot here.
It's amazing isn't it?

A day's filming can be fired back to the USA over a high-speed internet connection in just an hour or two. There, the rest of the production crew can set to prodding, poking, editing and doing whatever else it takes to turn raw footage into the polished scenes we see at the movie theatre.

What could possibly go wrong?

The answer is "a hell of a lot" if the movie companies have chosen to use Xtra as their ISP; and it's all thanks to a little clause in the Telecom subsidiary's new Service Terms.

What's Yours Is Now Xtra's Too

According to this clause, all customers (including movie companies) who (or whose local production partners) use Xtra to shuffle their intellectual property (IP) about will discover that they're granting the ISP a "perpetual, royalty-free, non-exclusive, irrevocable, unrestricted, worldwide licence" to "use, copy, sublicence, redistribute, adapt, transmit, publish, delete, edit and/or broadcast, publicly perform or display" that material.

And have you seen that TV ad where a group of musicians use Telecom's high-speed Internet services to send music around the world? If the scenes depicted were real and they did this through Xtra, the ISP would now have a full right to do almost anything it wants with that music -- including broadcasting it, selling it or even giving it away -- with no payment to the artists involved.

If you don't believe me, just check Section 4 under the heading Our use of your intellectual property (screendump)

Yes, that's right -- if you use Xtra as your ISP, they can take any or all of the IP you send through their network and effectively do whatever they want with it (including earn a whole lot of money) -- without requesting your further permission, without advising you of their actions and without paying you a solitary cent for the privilege.
The first key phrase used is "By placing any content, software or anything else ("Materials") on our Websites or Systems".

That word " Systems " has an awfully broad scope and could be applied to every part of Xtra's network. For example, Xtra's mailserver is one of their "Systems" so if the strict letter of this agreement were to be upheld, Xtra gains a license to use all the email and any attachments you send.

Then there's the bit that says " including posting messages, uploading files, importing data or engaging in any other form of communication " -- which really covers just about anything you can do on the Net.

And it's not just copyrighted material that's included in Xtra's IP-grab...

Section 4 goes on to say that by placing any material on an Xtra [mailserver, proxy, cache, nttp spool or whatever] " System " you're giving granting them " the right to exploit all proprietary rights in any of the Materials including, but not limited to, rights under copyright, trade mark, service mark or patent laws under any jurisdiction worldwide "

So if you're an inventor and you send all or part a of a patent application to a colleague, partner or The IP Office of NZ using email or other Net-based communications methods that involve uploading the data to one of Xtra's "Systems" then you've just granted them the right to freely "exploit" that information for whatever purpose they see fit -- and that could include granting sublicenses to your competitors.

Now this is patently (groan!) ridiculous isn't it?

There are some other service providers have similar terms of service but even the likes of Yahoo *liberally* include the qualifying phrase "solely for the purpose for which such Content was submitted" in the relevant clauses (see section 8 of Yahoo's TOS).

I can only think of three possible reasons why Xtra would include such a blatantly unqualified and outlandish clause in its service terms:

1. They really do want to "exploit" their customers' IP without any restriction and they realise that this could have enormous commercial potential as another revenue stream.

2. Their lawyers are a bunch of idiots who ought to be disbarred for incompetence and have all their crayons confiscated for fear they'll start scribbling on the wallpaper.

3. The rogue Xtra tea-lady, whose incredibly stupid misdeeds I've mentioned in previous columns, has hacked her way into Xtra's website and is playing a late April Fool's joke on all of us.

Now I wonder which it is? Anyone care to hazard a guess?

Xtra Now Too Expensive For My Taste

As an author, writer, publisher and inventor, I have to say that unless they hire some real lawyers and revise section 4, I'll have no option but to cancel my Xtra account. It would be economic suicide for me to do otherwise. I can't afford to give away irrevocable, royalty-free licenses and sublicenses to anyone! Who can?

Wait for the Excuses

I have no doubt that right now the boys at Xtra are preparing a response that goes something like this:
"It is not our intention to gain unfair benefit from the intellectual property of our customers. The purpose of this clause was to simply protect us from claims of copyright, trademark or patent infringement where a customer publishes material on our website(s)"

To which my response would be: then why don't your Service Terms say this instead of making the outrageous demands they presently do?

Why doesn't Xtra qualify this portion of its Service Terms by using the words " solely for the purpose for which such Content was submitted "???? Without such a qualification, the only logical conclusion that can be drawn is that Xtra actually intends to repurpose customers' IP and make money from it.

To be fair, the *intent* of this clause is probably quite reasonable but the way it is worded means that it actually has an infinitely wider scope than is necessary just to provide the necessary protection (who's been drawing on the walls with their crayons when they should have been checking this document???)

To fix this mess, the word " Systems " ought to be struck from section 4 and a tighter definition provided. Likewise, that phrase " solely for the purpose for which such Content was submitted " must be added to give protection against Xtra repurposing their customers' data for their own profit.

We all know that today's column is a totally "over the top" reaction to a simple clerical oversight. After all, Telecom/Xtra would never enforce the *letter* of this clause as it stands -- any more than they'd force all ISPs to use an alternative numbering system when providing dial-up access or attempt to shirk their obligations under the Kiwi Share (oops, forget I said that).

Coincidence or Cunning Plan?

Is it mere coincidence that this IP-grab clause appears in Xtras Service Terms at almost exactly the same time that Telecom tries to convince the movie industry to use its services and launches a very expensive TV ad campaign promoting the use of Jetstream by successful musicians? Of course it is -- I mean, what else could it be???

Other ISPs

It wouldn't be fair to single-out Xtra if other local ISPs had similar clauses in their terms of service would it -- so I went looking.

A quick check of several other Kiwi ISPs' terms of service show none of this avarice, incompetence or stupidity. (Here are links to the relevant pages at Ihug, Clear.net.nz, Paradise/TelstraClear, Quik Internet, Orcon Internet)

If these ISPs are able to offer Net access, web hosting, newsgroup access, email and the like, without demanding irrevocable, royalty-free commercial rights to use their customers' IP for any purpose they choose, one can't help but wonder why Xtra can't do the same.

Watch The Exodus

I'm afraid Xtra's greed and/or stupidity is showing and I expect that any of their customers (especially those in the film or music industries) with IP to protect will be dropping Xtra like a hot potato unless this clause is reworked pretty damned smartly.. I also suspect that Web designers using Xtra for access or hosting might also be few and far between by the end of the week. After all, there is no shortage of good, *fair*, and honest ISPs out there who don't demand you give them unlimited royalty-free use of what may be your most valuable business asset as a condition of providing service.

Alternative Perspectives and Opinions

As always, Aardvark's "Right of Reply" is open to Xtra if they wish to explain themselves regarding this matter. Just use contact form and be sure and choose "for publication".

And of course if any Aardvark readers have an opinion on today's column or want to add something you're also invited to chip in and have your say.

SCOOP EDITOR'S NOTE: Supplemental Links… Xtra is far from the only Internet monlith to have attempted this nutty Intellectual Property theft. Thus far most other companies that have tried this trick have backed down following considerable public embarassment.

MSN Passport - All your bits are belong to us
http://slashdot.org/yro/01/04/03/1535244.shtml

Yahoo - Your House is My House
http://www.wired.com/news/technology/0,1282,20472,00.html

Yahoo - Keep Your Homestead
http://www.wired.com/news/politics/0,1283,20518,00.html

Yahoo Back Down - Sorta
http://slashdot.org/articles/99/07/01/1231224.shtml

ENDS

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