Month: April 2018

Categories
Patents

CPIP Scholars To Federal Circuit: Protect Innovation in the Life Sciences

Microscopic image of cellsLast week, a group of CPIP scholars—Chris Holman, David Lund, Adam Mossoff, and Kristen Osenga—filed an amicus brief in Natural Alternatives International v. Creative Compounds, a case currently on appeal to the U.S. Court of Appeals for the Federal Circuit. The amici ask the appellate court to correct the district court’s misapplication of the patent-eligibility test under Section 101 of the Patent Act since it threatens innovation in the life sciences.

The plaintiff-patentee, Natural Alternatives International or NAI, provides nutritional products, including proprietary ingredients and customized nutritional supplements, to its clients. NAI owns several patents relating to beta-alanine, a non-essential amino acid that delays the onset of muscle fatigue. The district court held that the claims were ineligible subject matter under the two-step Alice-Mayo test: the claims were directed to a natural phenomenon and lacked an inventive concept containing more than conventional, routine activity.

The amici point out that the district court’s overly-restricted view of patent-eligibility doctrine will dissuade the research and development of natural products that are beneficial for mankind. They note that the district court glossed over several predicate factual questions and failed to properly consider the claims as a whole. They conclude that the continued misapplication of the Section 101 analysis has resulted in legal uncertainty, undermining the innovation industries that rely on stable and effective patent rights.

The Summary of Argument is copied below, and the amicus brief is available here.

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SUMMARY OF ARGUMENT

The district court’s decision in Natural Alternatives International, Inc. v. Creative Compounds, LLC, No. 16-cv-02146-H-AGS, (S.D. Cal. Sept. 5, 2017) and Natural Alternatives International, Inc. v. Hi-Tech Pharmaceuticals, Inc., No. 16-cv- 02343-H-AGS, (S.D. Cal. Sept. 5, 2017), represent an improper application of 35 U.S.C. § 101. The parties in their briefs address the relevant innovation covered by Natural Alternatives’ patents, as well as the application of the Supreme Court’s and the Court of Appeals for the Federal Circuit’s § 101 jurisprudence. Here, amici offer additional insight concerning the legal and policy problems with the trial court’s decision. Specifically, amici contend that Natural Alternatives’ claims represent precisely how the patent system should reward discovery of a therapeutic use of a natural compound, and thus their invention should be eligible for patent protection. The Supreme Court has repeatedly emphasized that patents claiming new uses of known drugs or new applications of laws of nature are patent eligible, and these teachings properly applied provide patent eligibility for the kinds of claims at issue in this case. Assoc. for Molec. Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 594 (2013); Mayo Collaborative Servs v. Prometheus Labs., Inc., 566 U.S. 66, 87 (2012). The district court’s decision to the contrary conflicts with the Patent Act as an integrated statutory framework for promoting and securing innovation in the life sciences, as construed by this court as well as by the Supreme Court.

The Supreme Court has recognized that the plain meaning of the language of § 101 indicates that the scope of patentable subject matter is broad. See Diamond v. Chakrabarty, 447 U.S. 303, 315 (1980); Myriad at 577. This is why the Supreme Court consistently has held that “[t]he § 101 patent-eligibility inquiry is only a threshold test.” Bilski v. Kappos, 561 U.S. 593, 602 (2010). Accordingly, the “threshold test” of § 101 is necessarily followed by the more exacting statutory requirements of assessing a claim as a whole according to the standard of a person having skill in the art as to whether it is novel, nonobvious, and fully disclosed as required by the quid pro quo offered to inventors by the patent system. Id.

Unfortunately, courts have applied the two-step “Mayo/Alice test” from the Supreme Court’s recent § 101 cases in an unbalanced and legally improper manner. See Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014); Mayo, 566 U.S. at 66. These practices of the inferior courts include dissecting claims into particular elements and then construing these elements in highly generalized terms with no evidentiary support. Thus, as happened in this case, a district court all too often merely asserts a conclusory finding that the claim—actually, specific elements dissected out of the claim as a whole—covers ineligible laws of nature or natural products to conclude that a patented invention is ineligible.

The lower courts’ unduly stringent and restrictive patent eligibility test under the Mayo/Alice test produces results such as the district court’s decision in this case. This improper application of the Mayo/Alice test inevitably leads to § 101 rejections of patentable product and method inventions; here, the district court rejected an innovative invention in the biotechnology sector that the patent system is most certainly designed to promote. When a patent describes a discovery made by the inventor, even if that invention relates to a natural product or natural law, it should be possible to describe a particular application of that law or discovery that is patent eligible so as to reward the inventor for their efforts.

Furthermore, the improper treatment of the § 101 inquiry as primarily a question of law requiring no evidentiary findings whatsoever, especially when the parties expressly disagree as to what a person having skill in the art would consider routine or ordinary, allows courts to gloss over both what the claims are directed to and what importance limitations beyond the ineligible material may have. See Berkheimer v. HP Inc., 881 F.3d 1360, 1368-69 (Fed. Cir. 2018). This improper characterization of § 101 has sowed indeterminacy in patent eligibility doctrine, and has left inventors and companies in the innovation industries with little predictability concerning when or how courts will dissect claims and make conclusory assertions that they are patent ineligible under § 101.

The court in this case has an opportunity to more properly instruct the lower courts in the manner in which the § 101 analysis should be made, particularly with regard to the role of factual evidence in determining when a claimed application of a natural law or product is routine, well-understood, or conventional and when it is not and thus that the claimed invention is eligible for patenting.

To read the amicus brief, please click here.

Categories
Innovate4Health Innovation

CPIP and ITIF Release Innovate4Health Report on Role of IP in Solving Global Health Challenges

Innovate4HealthThis past Tuesday, CPIP and the Information Technology & Innovation Foundation (ITIF) released our joint report: Innovate4Health: How Innovators Are Solving Global Health Challenges. The report details 25 important healthcare innovations that are being created by and for people in the developing world, where some of the most urgent challenges remain. Each of these innovations is supported by a strong intellectual property system, and many would not be viable without the security provided by these rights.

The video from our release event this past Tuesday can be found here and is embedded below. The full Innovate4Health report can be found here, and the Executive Summary is copied below. The individual stories can also be found here on the project’s Medium website.

Innovate4Health: How Innovators Are Solving Global Health Challenges

Executive Summary

Many of the world’s biggest challenges are health challenges. The good news is that, more than ever, people are meeting these challenges with innovative solutions.

While we still face great difficulties, people all over the world live better than ever before thanks to innovation. New medicines prevent or alleviate disease. New devices diagnose problems, repair bodies, and overcome physical challenges. Still other inventions keep vaccines and medicines fresh and effective or ensure their authenticity. New business models help innovation to happen and ensure that it reaches those who need it.

Many of these innovations are secured by intellectual property rights, which support the ability of innovators to invent and bring solutions to market. Property rights, particularly intellectual property rights, foster the freedom of many hands and many minds to work on challenging problems. They put decisions in the hands of those closest to problems—innovators with knowledge of potential solutions and caregivers and consumers who understand their own needs best.

With just a bit of reflection, it becomes clear that innovation and the property rights that secure it are key to meeting global health problems. Sometimes, however, the blinding light of necessity makes it hard to see this fact. When people are in need, it is all too easy to grow impatient with the rights of innovators. When that happens, innovators get treated as an obstacle.

We think that better public policy would result from better understanding of how innovation can meet global health challenges. Our organizations, the Center for the Protection of Intellectual Property (CPIP) at George Mason University’s Antonin Scalia Law School and the Information Technology and Innovation Foundation (ITIF), both non-profit, non-partisan research organizations, have teamed up to tell the exciting story of how innovation is making the world healthier.

Our Innovate4Health initiative culminates with this report, profiling 25 original case studies showcasing how innovators, many in developing countries, are tackling life-sciences/healthcare innovation in their nations and across the broader developing world. The 25 case studies are organized into the six following themes:

  • Adapting healthcare interventions for environments where resources and infrastructure are challenging;
  • Providing affordable and robust tests for diagnosing diseases;
  • Improving HIV diagnosis and care;
  • Affordable interventions to meet basic needs in challenging environments;
  • Getting healthcare to the people in places where it’s hard for people to come to the healthcare;
  • Fostering health innovation in emerging economies.

Collectively the case studies tell a compelling and inspiring story of how entrepreneurs are creating IP-enabled life-sciences innovations that are helping to tackle some of the world’s toughest health issues.

To read the report, please click here.

Categories
Antitrust Patent Licensing

Department of Justice Recognizes Importance of Reliable Patent Rights in Innovation Economy

dictionary entry for the word "innovate"It is undeniable that the patent system has been under stress for the past decade, as courts, regulators, and even the Patent Office itself (as the newly confirmed Director Andrei Iancu has acknowledged) have sowed legal uncertainty, weakened patent rights, and even outright eliminated patent rights. This is why a series of recent speeches by Assistant Attorney General Makan Delrahim—head of the Antitrust Division at the Department of Justice—have signaled an important and welcome policy change from the past decade. It’s just one step, but it’s an important first step to restoring reliability and predictability to property rights in patents, which, as Director Iancu has also been saying in recent speeches, drives innovation and economic growth by promoting investments by inventors, venture capitalists, and companies in the new inventions that make modern life a veritable miracle today.

Delrahim’s speeches are important because one significant point of stress for the patent system and the innovation economy over the past decade has occurred at the intersection of antitrust law and the licensing of patents in standard setting organizations (SSOs). Many people are unaware of this particular issue, and it’s understandable why it flies under the radar screen. The technical standards set by SSOs are the things that make everything work, such as electrical plugs, toasters, and pencils, among millions of other products and services, but they are not obvious to everyday consumers who use these products. Also, antitrust law is a complex domain of lawyers, policy-makers and economists. Still, the patented innovation that comprises technical standards, such as 4G, WiFi, USB, memory storage chips, and other key features of our smart phones and computers, have been essential drivers of innovation in the telecommunications revolution of the past several decades.

In a series of recent speeches, Delrahim has signaled an important and welcome change from his predecessors in how antitrust law will be applied to patented technology that is contributed to the standards that drive innovation in the high-tech industry. Delrahim’s predecessors at the DOJ gave many speeches criticizing (and instigating investigations of) alleged “anti-competitive behavior” by patent owners on technical standards. The DOJ’s approach was one-sided, unbalanced, and lacked evidence confirming the allegations of anti-competitive behavior. Instead, Delrahim is emphasizing the key importance of promoting and properly securing to innovators the technology they create through their long-term, risky, and multi-billion-dollar R&D investments (as succinctly described in two paragraphs here about Qualcomm’s R&D in 5G by an official at the Department of Treasury).

Delrahim has announced that he will return to an evidence-based, balanced antitrust policy at the DOJ. He will not take action against innovators unless there is real-world evidence of consumer harm or proven harm to the development of innovation. The absence of such evidence is well known among scholars and policy-makers. In February 2018, for instance, a group of scholars, former government officials, and judges wrote that “no empirical study has demonstrated that a patent-owner’s request for injunctive relief after a finding of a defendant’s infringement of its property rights has ever resulted either in consumer harm or in slowing down the pace of technological innovation.” It’s significant that Delrahim has announced that the DOJ will constrain its enforcement actions with basic procedural and substantive safeguards long provided to citizens in courts, such as requiring actual evidence to prove assertions of harm. This guards against unfettered and arbitrary regulatory overreach against innocent owners of private property rights. This self-restraint is even more important when overreach negatively impacts innovation, which portends badly for economic growth and the flourishing lives we have all come to expect with our high-tech products and services.

For example, Delrahim has rightly recognized that “patent holdup” theory is just that—a theory about systemic market failure that remains unproven by extensive empirical studies. Even more concerning, “patent holdup” theory—the theory that patent owners will exploit their ability to seek injunctions to protect their property rights and thus “holdup” commercial implementers by demanding exorbitantly high royalties for the use of their technology—is directly contradicted by the economic evidence of the smart phone industry itself. The smart phone industry is one of the most patent-intensive industries in the U.S. innovation economy; thus, “patent holdup” theory hypothesizes that there will be higher prices, slower technological development, and less and less new development of products and services. Instead, as everyone knows, smart phones—such as the Apple iPhone and the Samsung Galaxy, among many others—are defined by rapidly dropping quality-controlled prices, explosive growth in products and services, and incredibly fast technological innovation. The 5G revolution is right around the corner, which will finally make real the promise of the Internet of Things.

In sum, Delrahim has repeatedly stated that antitrust officials must respect the equal rights of all stakeholders in the innovation industries—the inventors creating fundamental technological innovation, the rights of the companies who implement this innovation, and the consumers who purchase these products and services. This requires restraining investigations and enforcement actions to evidence, and not acting solely on the basis of unproven theories, colorful anecdotes, or rhetorical narratives developed inside D.C. by lobbyists and activists (such as “patent trolls”). This is good governance, which is what fosters ongoing investments in the R&D that makes possible the inventions that drives new technological innovation in smart phones and in the innovation economy more generally.

We will delve more deeply into the substantive issues and implications of Delrahim’s recent speeches in follow-on essays. Since his speeches have been delivered over the course of the past six months, we have aggregated them here in one source. Read them and come back for further analyses of these important speeches (and more speeches that will likely come, which we will keep adding to the list below):

  • November 10, 2017. In a speech at the University of Southern California, Gould School of Law, Assistant Attorney General Delrahim discussed why patent holdout is a bigger problem than patent hold-up. “[T]he hold-up and hold-out problems are not symmetric. What do I mean by that? It is important to recognize that innovators make an investment before they know whether that investment will ever pay off. If the implementers hold out, the innovator has no recourse, even if the innovation is successful.” He further noted that antitrust law has a role to play in preventing the concerted anticompetitive actions that occur during holdout.
  • February 1, 2018. In a speech at the U.S. Embassy in Beijing, Delrahim noted that the proper antitrust focus should be on protecting the innovative process, not “short-term pricing” considerations. With this focus, using antitrust remedies should be approached with “caution.”
  • February 21, 2018. In a speech at the College of Europe, in Brussels Belgium, Delrahim observed that antitrust enforcers have aggressively tried to police patent license terms deemed excessive, and “have strayed too far in the direction of accommodating the concerns of technology licensees who participate in standard setting bodies, very likely at the risk of undermining incentives for the creation of new and innovative technologies.” The real problem and solution he noted is that the “dueling interests of innovators and implementers always are in tension, but the tension is best resolved through free market competition and bargaining.”
  • March 16, 2018. In a speech at the University of Pennsylvania Law School, Delrahim expanded on his detailed remarks from his talk at USC by adding some historical context from the founding fathers. He also made the core point that “patent hold-up is not an antitrust problem,” noting that FRAND commitments from patent owners are part of the normal competitive process and are therefore appropriately policed by contract and common law remedies. He further describes the necessary impacts of having a right to exclude in the patent right, including that the “unilateral and unconditional refusal to license a patent should be considered per se”
  • April 10, 2018. In a keynote address at the LeadershIP Conference on IP, Antitrust, and Innovation Policy in Washington, D.C., Delrahim emphasized the harm that can occur when “advocacy positions lead to unsupportable or even detrimental legal theories when taken out of context.” He specifically noted that some advocacy about patent hold-up could undermine standard setting as “putative licensees have been emboldened to stretch antitrust theories beyond their rightful application, and that courts have indulged these theories at the risk of undermining patent holders’ incentives to participate in standard setting at all.”
Categories
Uncategorized

CLASSICS Act Provides Long Overdue Recognition for Legacy Recording Artists

By Matthew Barblan & Kevin Madigan

U.S. Capitol buildingOne of the oddities of US copyright law is that sound recordings—the way that our favorite songs are captured on media so that we can listen to them over and over again—were not protected under federal law until the early 1970s. Unfortunately, when the federal Copyright Act was finally amended in 1971 to incorporate sound recordings, copyright protection for sound recordings was not applied retroactively. As a result, artists who recorded music before February 15, 1972 (the effective date of the 1971 Sound Recording Amendment) have been unable to use federal copyright law to safeguard their valuable creative contributions to American music.

Next week, the House Judiciary Committee will mark up a legislative package that includes the CLASSICS Act (“CLASSICS” stands for Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society). The CLASSICS Act creates a digital public performance right for pre-1972 sound recordings, and in doing so addresses an inequity that has persisted for decades. By giving legacy artists the ability to protect and license the use of their sound recordings in modern distribution platforms, the CLASSICS Act represents an important first step in recognizing the hard-earned property rights of countless American artists who recorded their music before 1972.

With the markup of the CLASSICS Act fast approaching, it’s fitting to look back on the peculiar history of US copyright in sound recordings and trace the events that lead to the current inequitable state of affairs. This essay first examines how sound recordings have been treated by US copyright law over time, discussing the erstwhile promise and eventual shortcomings of enforcing digital public performance rights at the state level. The article then analyzes the CLASSICS Act and discusses how the bill represents important progress in fairly compensating and securing property rights to the myriad legacy artists whose recorded music continues to influence and inspire us in the twenty-first century.

A Longstanding Struggle for Recording Artists

Sound recordings have played a vital role in the development of American art since the late 19th century when luminaries such as Alexander Graham Bell and Thomas Edison revolutionized the fixation of sound. In addition to chronicling the rich evolution of musical genres from jazz to rock ‘n’ roll, sound recordings of folklore, radio broadcasts, speeches, and other spoken words make up an invaluable account of the American experience. But despite attempts by some of the first record companies in the early twentieth-century to secure federal copyright protection for sound recordings, the Copyright Act of 1909 only secured copyright protection to owners of the musical compositions that are the subjects of sound recordings, but not to sound recordings themselves.

The US Copyright Office’s 2011 report on pre-1972 sound recordings explains that, without federal copyright protection, administration of the infringement of sound recordings was left to the states through a patchwork of unfair competition laws and common law copyright. In the 25 years between 1925 and 1951, over 30 bills were introduced in Congress that would have extended some form of federal copyright protection to sound recordings, but as the Copyright Office report notes, none passed due to opposition “based on technical deficiencies and concerns about their constitutionality (both as to whether sound recordings were creative, and whether they were writings).”

It wasn’t until 1971—after years of review and an important study on sound recordings by former Register of Copyrights Barbara Ringer—that Congress passed the Sound Recording Amendment, which finally secured federal copyright protection for sound recordings. A key reason Congress acted in 1971 was the failure of state statutes and common law to adequately protect sound recordings in the face of an alarming rise in audio tape piracy. Copyright owners had become increasingly frustrated with having to rely on a hodgepodge of state unfair competition laws to protect their property rights against infringers, finding that even if they were successful, remedies were often limited. Additionally, the very validity of state law protection of sound recordings had been challenged in high profile cases by defendants who argued that any state law provision was preempted by federal law, despite the fact that no federal law existed to protect copyright in sound recordings.

The Sound Recording Amendment to the Copyright Act took effect on February 15, 1972, but it only secured copyright protection for sound recordings fixed on or after that date, and it omitted certain rights guaranteed to other works of authorship. The 1976 Copyright Act ultimately included sound recordings as protectable subject matter, but it too failed to secure copyright protection in pre-1972 sound recordings, and it also failed to provide sound recordings with the full scope of exclusive rights secured to other types of creative works. According to the Copyright Office’s 2011 report, it’s unclear why Congress didn’t address the issue of pre-1972 sound recordings a long time ago, but the report suggests that it was a mistake of not fully understanding the consequences of leaving these works (and artists) behind. Whatever the reason, for over 45 years since passing the 1971 Sound Recording Amendment, Congress has left pre-1972 sound recordings under the aegis of state law.

A Failure at the State Level

Left behind by the federal copyright revisions, pre-1972 sound recording owners and recording artists have long faced a web of inconsistent state criminal and civil laws. Making matters worse, many states simply do not have adequate statutes or common law causes of action to address the growing varieties of infringement that we see today, and it is often impossible to predict how courts will apply broad common law principles or unfair competition statutes to infringement claims.

The vague and varying nature of states’ protection of pre-1972 sound recordings has frustrated recording artists and copyright owners for many years, but the most vexing issue today involves digital public performances of these works. The Copyright Act was amended in 1995 to provide copyright protection for the public performance of sound recordings “by means of a digital audio transmission,” but like other federal copyright protections for sound recordings, pre-1972 sound recordings were not included. The struggles of the 1960’s-era rock band The Turtles in their high profile attempts to use state law to protect their sound recordings against digital public performance infringement provide an emblematic example of why state law is largely inadequate to protect the creative contributions of pre-1972 recording artists.

In 2013, Turtles members Flo & Eddie filed a class action suit against Sirius XM in California for infringement of millions of pre-1972 sound recordings, arguing the satellite broadcaster played the songs without permission and without paying royalties to the artists. After bringing suit in California, Flo & Eddie filed similar class action claims against satellite radio services in New York and Florida, setting up a showdown that would—for better or worse—bring additional clarity to the landscape of state law protection of sound recordings in the digital streaming age.

Despite early optimism and a conditional settlement agreement with Sirius, in 2016, the New York Court of Appeals (the highest court in the state) dealt a blow to Flo & Eddie when it ruled that New York state law did not protect public performances of pre-1972 sound recordings. Critics of the ruling pointed out that the opinion contains many logical flaws and that the court ruled in favor of Sirius mainly because of concerns over the potential disruption that a ruling in favor of Flo & Eddie would cause. In 2017, the Florida Supreme Court echoed the New York opinion, holding that Florida law doesn’t recognize public performance rights for recordings made before 1972. The Florida Supreme Court made no mystery of a chief reason for their finding, admitting that to find otherwise “would have an immediate impact on consumers beyond Florida’s borders and would affect numerous stakeholders who are not parties to this suit.”

The main remaining battleground for Flo & Eddie is the California Supreme Court, which has yet to rule on the issue, but regardless of the California outcome for Flo & Eddie, the New York and Florida cases have exposed the failure of state law to protect the creative property of legacy recording artists.

The CLASSICS Act

On July 19, 2017, Representatives Jerry Nadler (D-NY) and Darrell Issa (R-Calif.) introduced the Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society (CLASSICS) Act, and the bill is now scheduled to be marked up as part of a larger legislative package in the House Judiciary Committee during the week of April 9. According to Representatives Nadler and Issa, the bill aims to resolve “uncertainty over the copyright protections afforded to sound recordings made before 1972 by bringing these recordings into the federal copyright system and ensuring that digital transmissions of both pre- and post-1972 recordings are treated uniformly.” On February 8, 2018, a companion bill was introduced in the Senate, led by Senators Chris Coons (D-Del.) and John Kennedy (R-Louis.). At its core, the CLASSICS Act would take an important step to recognize and protect the creative labors of artists who recorded their songs before 1972, bringing them closer to being on equal footing with artists who recorded their songs after 1972.

The CLASSICS Act would amend Title 17 of the United States Code, adding a Chapter 14 titled “Unauthorized Digital Performance of Pre-1972 Sound Recordings.” Under the proposed language, “[a]nyone who, . . . without the consent of the rights owner, performs publicly, by means of a digital audio transmission, a sound recording fixed on or after January 1, 1923, and before February 15, 1972, shall be subject to the remedies provided in sections 502 through 505 [of the Copyright Act] to the same extent as an infringer of copyright.” In other words, copyright owners of pre-1972 sound recordings would finally be able to stop digital platforms from publicly performing their songs without permission or compensation. This would remedy the current injustice that allows digital platforms to profit from publicly performing hundreds of thousands of pre-1972 sound recordings without paying a penny back to the myriad artists who put their hearts and souls into creating those sounds.

To be clear, the CLASSICS Act does not create a true free market for the digital public performance of pre-1972 sound recordings. Like post-1972 sound recordings, pre-1972 sound recordings would still be subject to the statutory licensing provisions in Section 114 of the Copyright Act. Nonetheless, the leap from no payment at all to payment under the Section 114 statutory licensing provisions is a significant increase for legacy recording artists, and it at least puts them on the same playing field (with respect to digital public performance) as owners of post-1972 sound recordings. Furthermore, not every digital public performance of a sound recording qualifies for the Section 114 statutory license, and in those instances the CLASSICS Act would allow owners of pre-1972 sound recordings to benefit from the same free market that owners of post-1972 sound recordings enjoy.

In addition to creating a cause of action for unauthorized digital public performance of pre-1972 sound recordings, the CLASSICS Act would also preempt “any claim of common law copyright or equivalent right under the laws of any State arising from any digital audio transmission” of a pre-1972 sound recording. The proposed statutory language also ensures that the limitations on remedies available to copyright owners for fair use, uses by libraries, archives, and educational institutions would apply to unauthorized uses of a pre-1972 sound recording. And the proposed statutory language would subject the newly-created cause of action to Section 512 of the Copyright Act and would apply the same statute of limitations applicable to other actions under the Copyright Act.

While the CLASSICS Act would not provide pre-1972 sound recordings with all the same federal protections that apply to post-1972 sound recordings pursuant to Section 106 of the Copyright Act, by creating a federal cause of action for unauthorized digital public performance of pre-1972 sound recordings, the proposed bill would go a long way towards remedying the current unfair treatment of the creative contributions of legacy recording artists.

Conclusion

For too long, Congress and the states have neglected the property rights of recording artists responsible for some of the most celebrated sound recordings in the canon of American music. As digital streaming services flourish in part through the digital public performance of pre-1972 sound recordings, thousands of legacy artists are left uncompensated and unappreciated. The CLASSICS Act represents a significant first step towards recognizing and rewarding the hard work and achievements of these important musicians.

Matthew Barblan is Executive Director of the Center for the Protection of Intellectual Property and Assistant Professor of Law at Antonin Scalia Law School, George Mason University

Kevin Madigan is Assistant Director, Development & Research, at the Center for the Protection of Intellectual Property 

 

Categories
Uncategorized

CASE Act Set to Empower Creators and Impose Accountability

Cross-posted from the Mister Copyright blog.

U.S. Capitol buildingNext week, the Copyright Alternative in Small Claims Enforcement (CASE) Act is scheduled for markup before the House Judiciary Committee, promising long-overdue support for small creators and copyright owners in their fight against overwhelming infringement in the digital age. While the bill has bipartisan support and the backing of a wide array of individual creators, artist organizations, and the creative industries, some detractors are now raising questions of constitutionality in an attempt to interfere with the bill’s passage. But the constitutional argument is merely a meritless rhetorical refrain put forward to mask a steadfast resistance by certain companies to any effort to impose accountability for online infringement.

A product of years of advocacy on behalf of the creative community and a thorough report by the Copyright Office, The CASE Act would create a Copyright Claims Board (CCB) within the Copyright Office to hear claims brought by individual creators and copyright owners. It would provide a venue to address rampant copyright infringement online, empowering a class of creators who have limited means and few opportunities to protect their intellectual property. The idea of a routinely ignored group of artists and copyright owners finally having a venue to protect their rights has infringers and those who enable infringement spooked, and they’re struggling to defeat the CASE Act in any way they can.

A testament to the CASE Act’s sound provisions is the fact that its critics are left grasping for challengeable issues. One of their tactics has been to contest the constitutionality of an administrative Article I court that would render decisions affecting intellectual property rights. It’s actually somewhat of a crafty approach to impeding the bills advancement, if only because of the inevitable reaction that comes any time the word “unconstitutional” is uttered. But regardless of the strategic game being played, anyone willing to pay attention will see that the creation of a Copyright Claims Board is clearly constitutional and that arguments to the contrary are hollow.

Some critics claim that the establishment of an alternative dispute forum within an executive agency would violate Article III of the Constitution, arguing that because the cases involve private property rights, they must be heard by an Article III tribunal. It’s an unconvincing argument that ignores hundreds of years of Supreme Court analysis which confirms Congress’s right to create special tribunals that adjudicate a variety of disputes outside the federal court system. As my colleague, Sandra Aistars, explains in her detailed article on copyright small claims, examples of these non Article III courts or administrative agencies include Tax Courts, the Court of Federal Claims, the Social Security Appeals Council, and the Commodities Futures Trading Commission.

But what makes the constitutionality argument utterly groundless is the fact that participation in the small claims court would be voluntary. The Supreme Court has clearly held that a litigant’s right to an Article III decision-maker is violated only when the defendant is involuntarily forced to litigate before a non-Article III court. In Wellness International v. Sharif, the Supreme Court stated that “the court has never … h[e]ld that a litigant who has the right to an Article III court may not waive that right through his consent.”

In the procedure set forth by the CASE Act, those accused of infringement would be notified of a claim against them and have the ability to “opt out” of the process. The voluntary nature of the process adheres to Supreme Court precedent and is entirely consistent with Article III of the Constitution.

Critics of the CASE Act have also pushed for the small claims process to be “opt in,” rather than “opt out,” meaning that unless a defendant actively agrees to participate, the case cannot go forward. Essentially, a defendant could ignore any notice of a claim against them without consequence, drastically weakening the small claims process the CASE Act seeks to promote. It’s a brazen proposal, and it’s one that elevates a culture of casual misappropriation and disregard for small creators above a culture that promotes respect for the property rights of others.

The groups challenging the CASE Act represent tech companies that rely on the content and creative works of others to thrive, and the fight for the CASE Act has become a battle between these dominant entities and exploited creators. As these tech companies have consolidated wealth and power in ways few thought possible, they’ve garnered considerable influence in Washington, and they are working to shut down the first opportunity individuals and small businesses in the arts have to enjoy the fruits of their constitutionally guaranteed property right.

The tide is turning in the way we interact with technology and the internet and what we as a society expect from the companies that control our digital existence. Business models that enable companies to profit off intellectual property theft must be challenged. It’s not particularly surprising that these new global titans would resist efforts like the CASE Act that plan to inject accountability into cyber space, but let’s not be fooled by empty arguments aimed at distracting us from moving towards a greater respect for creators in the digital age.