Category: Copyright

Will the EU Finally Hold Internet Giants Accountable?

Post author By Joshua Grove
Post date July 3, 2018

gold 3D copyright symbol On July 5th, the European Parliament will vote on a draft of the Copyright Directive for the Digital Single Market that has major implications for the future of copyright law in the European Union and beyond. At the center of the debate is Article 13, a provision that would require online platforms that feature user-generated content to screen uploads for infringing material. It’s a measure that represents a significant update to standards of accountability in the digital age, and it’s one that’s now necessary to combat the continual devaluation of creative works and to ensure the survival of essential creative ecosystems.

In the weeks and months leading up to the vote, advocates for Article 13’s defeat have become increasingly vocal in their opposition to the proposal. An overwhelming amount of those attacking Article 13 have resorted to fear-mongering and misinformed hyperbole. Detractors’ claims include everything from the ridiculous—insisting Article 13 will outlaw memes—to the clichéd—that efforts to impose platform accountability amount to censorship and will “break the internet.”

Fixing Outdated Safe Harbors and the YouTube Value Gap

Chief among opponents’ complaints is that Article 13 would destroy the safe harbors that guarantee platforms will not be liable for infringing content uploaded without their knowledge. At the turn of the century, the Digital Millennium Copyright Act in the US and E-commerce Directive in Europe included safe harbor immunities as a way to encourage the development of the internet and the companies that were leading the way in online innovation. But these protections were never meant to be sweeping get-out-of-jail-free cards that encourage platforms to ignore infringing activity.

What’s become clear is that the immunities granted to tech giants through safe harbors haven’t properly incentivized them to stop profiting from illegal activity. These once-nurtured companies are now the most powerful and wealthy entities in the world, and business models based on the unauthorized distribution of protected works must be challenged.

Making matters worse is the fact that mechanisms meant to give creators and copyright owners a way to fight infringement have fallen short. Notice and takedown is an ineffective weapon against the incessant uploading of unauthorized content, and safe harbors allow online intermediaries to repeatedly turn a blind eye to—and profit from—massive amounts of copyright infringement occurring on their platforms.

The failure of procedures like notice and takedown are nowhere more apparent than on YouTube, where the futility of artists’ efforts to fight infringement has led to an inability to be fairly compensated for the exploitation of their works. When YouTube rose to prominence as the most popular streaming platform in the world—offering up free illegal streams of thousands of popular songs and movies—copyright owners quickly realized the law left them powerless to hold YouTube accountable for being a clearinghouse of stolen creative works.

This lack of control for creators combined with YouTube’s market dominance has created a “value gap” which leaves artists in a lose-lose predicament where they must choose between the meager compensation YouTube offers and nothing at all. Furthermore, legitimate streaming platforms are forced to compete with YouTube’s enormous and popular black market. Sadly, efforts similar to the current campaign against the EU Copyright Directive have enabled this market dysfunction to persist for over a decade.

A Campaign of Misinformation

Despite the Copyright Directive’s effort to clarify safe harbor qualifications and correct a glaring inequality, opponents of Article 13 insist content filtering provisions will result in censorship and destroy the internet as we know it. It’s a campaign that is recycling the same scare tactics and wild assumptions that seem to arise whenever there is an attempt to inject accountability in cyberspace.

A recent article by a leading European IP law expert takes many of these accusations to task, pointing to language in Article 13 that ensures a balancing of rights and interests through the introduction of exceptions and limitations by Member States “irrespective of whether the value gap proposal is adopted or not.” Article 13 clarifies that systems to prevent misuse or undue limitations to the exercise of exceptions must be adopted by Member States to ensure fundamental rights and freedom of expression are not compromised. The inclusion of carve outs and provisions that empower Member States to prohibit any behavior approaching censorship renders these doomsday “end of the internet” allegations baseless.

Additionally, the article explains that the current legal framework developed by the Court of Justice of the European Union (CJEU) has already been moving towards addressing the value gap, and Article 13 “would not represent a dramatic shift from the way in which the law has developed up till now.” The article points out that safe harbor protections under Article 14 of the E-Commerce Directive are only available to passive service providers who act as true intermediaries, and that hosting services who make unauthorized communications to the pubic are already precluded from safe harbor immunity.

So why would organizations who support tech giants spread misinformation and falsehoods about the contents of Article 13 and its repercussions? Unfortunately, it’s a strategy they’ve employed again and again whenever there is an initiative to implement responsibility and accountability online. By taking a reasonable bill or legislative effort and painting it as an attack on fundamental rights and freedom of expression, they have been able to drum up hysteria and knee-jerk reactions from those who may not fully understand the issues. It’s a formula that has worked to defeat sensible reform in the past, but it must be called out for what it is.

Accountability and Respect for Creation

Artists and representatives of the creative industries have weighed in on the proposals, explaining that content filtering isn’t just about protecting their livelihoods, but ensuring that the next generation of creators can flourish in a system that values and respects their contributions. A recent article criticizing Article 13 complained that there is no incentive for the public to welcome the implementation of content filtering. But this argument misses the point. Increasing accountability for internet giants who profit from infringement is an opportunity for the public to show that it values creative works, artists, and those responsible for bringing creative content to consumers.

It’s also an opportunity for the public to hold accountable companies and organizations that routinely behave as if they are above the law. When it comes to issues of increased accountability for their actions, internet giants have been able to trick the public in the past with misinformation campaigns similar to the one being waged against the Copyright Directive, but there is a growing tide of frustration with these deceptive practices, and the public should wake up and demand change.

As the European Parliament goes to vote on the Copyright Directive, it’s essential that parliament members, stakeholders, and the public understand what’s at stake. Recent events around the world have challenged notions of what is expected from the tech giants that have become the gatekeepers of the digital age, and it’s past time that they face responsibility for enabling and profiting from the theft of creative works. The future of creativity depends on it.

Tags Article 13, copyright, Copyright Directive, digital single market, E-Commerce Directive, EU, European Parliament, Kevin Madigan, safe harbor, value gap

Despite Professors’ Misleading Rhetoric, CLASSICS is a Big Win for Everyone

Post author By Joshua Grove
Post date May 29, 2018

the word "copyright" typed on a typewriter By Matthew Barblan

America’s music industry is experiencing a historic moment. For the first time ever, stakeholders from across the industry have set aside their differences and come together to find a way to modernize our music licensing system. And what’s more, these diverse stakeholders—ranging from artists and record labels, to songwriters and music publishers, to the technology companies that distribute music throughout the country—have finally agreed on a framework for legislative reform. The resulting bill is the Music Modernization Act of 2018 (H.R. 5447, S. 2823, hereafter “MMA”), which passed the U.S. House of Representatives in April by a vote of 415-0 and is now under consideration in the U.S. Senate.

Nearly everyone sees the bill as the kind of win-win compromise that exemplifies lawmaking at its best. Nobody gets everything they want, but everyone gets something they need, and everyone is better off. Tech companies that distribute music will get relief from an uncertain patchwork of state laws for digital performances of pre-1972 sound recordings and from the difficulty of identifying the songwriters associated with millions of songs available on popular platforms like Spotify. Songwriters and music publishers will get a willing buyer/willing seller royalty rate for use of their songs that more closely resembles a rate negotiated in a free market, along with a brand new licensing collective to distribute royalties. Artists and record labels will get long-overdue recognition of the economic value of music recorded before 1972, which finally will be subject to the same federal licensing scheme for digital performances that applies to post-1972 sound recordings (and the licensing scheme, in turn, will be modified to create platform parity by applying the same royalty rate to all digital platforms).

Importantly, the public will get a healthier music ecosystem that spurs creativity by (1) giving artists and songwriters more confidence that the fruits of their labor will be protected and rewarded, and (2) giving technology platforms and others more confidence to distribute music without risking exposure to uncertain liabilities.

But not everyone is happy. Two weeks ago, a group of professors submitted a letter to the Senate Judiciary Committee complaining about the bill. Specifically, the professors take issue with the section of the bill that creates a federal right and a federal compulsory licensing scheme for the digital public performance of pre-1972 sound recordings. This section, titled Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society (CLASSICS), takes a small step towards correcting a historical injustice inflicted upon artists who recorded their songs before 1972. Unfortunately, instead of acknowledging the importance of correcting this injustice or exploring how CLASSICS will improve artist/songwriter/platform confidence in America’s music ecosystem, the professors make several misleading claims about CLASSICS and ultimately argue that it will harm the public.

This essay provides an important corrective.

The Misleading Term Extension Argument

In their letter to the Senate, the professors accuse CLASSICS of being an unjust extension of copyright term. One of the letter’s signatories—Professor Larry Lessig—further echoed this criticism in a high profile op-ed in Wired, lamenting that “the fight for [copyright] term extension has begun anew.”

It is deeply misleading to characterize CLASSICS as copyright term extension, and lawmakers and the public should not be fooled by this rhetorical ploy. The truth is that CLASSICS does nothing to extend the copyright term of pre-1972 sound recordings. That term is set by a combination of state law and Section 301(c) of the federal Copyright Act, which was enacted long ago and which CLASSICS would not change. Under the existing law of most states, the copyright term for pre-1972 sound recordings is perpetual, but Section 301(c) of the Copyright Act will step in to extinguish state law copyrights for pre-1972 sound recordings in February of 2067. This is the framework now, and this will continue to be the framework if CLASSICS is adopted as law.

CLASSICS does create a new federal cause of action that owners of pre-1972 sound recordings (secured under state copyright law) can use to protect their property from unjust exploitation. Specifically, CLASSICS protects pre-1972 sound recording copyright owners from unauthorized digital public performances of their works. But this new federal cause of action does not extend the copyright term of pre-1972 sound recordings. In fact, with respect to the new cause of action, CLASSICS actually shortens the applicable enforceability period by excluding sound recordings made before 1923. By contrast, when it comes to reproduction, distribution and other rights protected under state copyright law, sound recording copyright owners can sue infringers regardless of how old the sound recordings are.

Furthermore, since the new cause of action would not be retroactive and would not take effect until after the MMA is signed into law, the effective enforceability period for the CLASSICS cause of action will be less than 50 years. If the law takes effect in 2019, it would run for 48 years from 2019 to 2067. This modest enforceability period is a far cry from the “total term of protection of 144 years” that Professor Lessig claims the bill provides.

In this context, to call CLASSICS a copyright term extension defies logic. Rather, the bill would create a new cause of action—attached at the hip to already existing copyrights—that does nothing to affect the already-existing term for those copyrights.

The Misleading Statutory Limitations Argument

Unfortunately, the misleading criticism of CLASSICS does not end with claims of term extension. In the same letter, the professors complain that CLASSICS “arbitrarily exempts pre-1972 sound recordings from almost all the statutory copyright limitations that apply to other types of works.” As an example, the professors note that, under CLASSICS, pre-1972 sound recordings would not be subject to Section 114 of the Copyright Act.

But it takes only a cursory glance at the bill to see that CLASSICS squarely situates pre-1972 sound recordings within Section 114’s compulsory licensing scheme. While CLASSICS prevents digital distribution platforms from profiting off of pre-1972 recording artists’ hard work without providing any compensation in return, CLASSICS does not give pre-1972 sound recording copyright owners a right to negotiate license rates in a free market. Instead, just like for post-1972 sound recordings, digital platforms will still be able to publicly perform pre-1972 sound recordings by simply complying with the terms of the Section 114 license. In light of this, it is truly bizarre to see professors complaining that CLASSICS exempts pre-1972 sound recordings from Section 114.

It is equally bizarre to see Professor Lessig argue in his Wired op-ed that because “there is no registry of [pre-1972 sound recording] owners anywhere,” if CLASSICS were to become law “no public or non-profit website could even begin to bear the cost of assuring they were not committing a crime.” For one thing, the Section 114 compulsory license is not limited to private or for-profit entities, and it does not require the licensee to identify the particular pre-1972 sound recording copyright owner in order to take advantage of the license. CLASSICS also makes the digital public performance of pre-1972 sound recordings subject to the Copyright Act’s statutory limitations for uses by libraries, archives, and educational institutions—limitations that would not otherwise apply to pre-1972 sound recordings. In doing so, CLASSICS makes it easier, not harder, for public and non-profit institutions to publicly perform pre-1972 sound recordings without risking liability.

Additionally, despite Professor Lessig’s suggestion to the contrary, CLASSICS would not create any criminal penalties. Simply reading the first sentence of the first subsection of CLASSICS makes clear that the cause of action is limited to the civil remedies codified in Sections 502 through 505 of the Copyright Act. Unfortunately, once Professor Lessig’s op-ed was published, thousands of Wired readers were potentially misled into thinking that Congress was trying to create new criminal penalties through the MMA.

Furthermore, it is deeply misleading to characterize CLASSICS as “arbitrarily exempting” pre-1972 sound recordings from any of the Copyright Act’s statutory limitations. CLASSICS itself doesn’t include any such exemptions; rather, the Copyright Act’s failure to include pre-1972 sound recordings as federal copyrightable works in the first place is the source of any so-called “exemptions.” In fact, CLASSICS significantly increases the statutory limitations applicable to pre-1972 sound recordings. And far from doing so “arbitrarily,” CLASSICS applies the limitations that are most relevant to the digital public performance of pre-1972 sound recordings. The professors lament that CLASSICS doesn’t make pre-1972 sound recordings subject to the limitations in Section 119 of the Copyright Act. But why would it? Section 119 deals with “secondary transmissions of distant television programming by satellite.” It’s simply not relevant to the new cause of action that CLASSICS would create.

To assert that CLASSICS “arbitrarily exempts” pre-1972 sound recordings from the Copyright Act’s limitations ignores both the fact that CLASSICS provides no such exemptions in the first place and the fact that CLASSICS, for the first time, subjects pre-1972 sound recordings to the most significant limitation in the Copyright Act—statutory licensing.

The Misleading “Purpose of Copyright” Argument

The professors also argue that because CLASSICS “grants new federal protections to old works,” it “does nothing to incentivize the creation of new works,” and as a result it does not serve the purposes of copyright law. Professor Lessig echoes this argument in his Wired op-ed, stating that CLASSICS “has nothing to do with the constitutional purpose of ‘promot[ing] Progress’” because it is a “blatant a gift without any public return as is conceivable.” This argument is misleading for two reasons. First, it implies that the only purpose of copyright law is the direct incentive to create new works. And second, it assumes that giving new protections to old works necessarily does nothing to incentivize the creation of new works. Neither of these assumptions are reasonable.

It is baffling to see scholars of copyright law ignore the fact that copyright serves more than one purpose. Simply looking at the way that copyright operates in the creative industries reveals that in addition to incentivizing the creation of new works, copyright also incentivizes investment in the dissemination and curation of pre-existing works. After all, the public interest—or the “Progress of Science”—isn’t served by the mere existence of creative works. The public interest is served by the existence of creative works that people actually know about and consume—the books and songs and movies and works of art that change our lives and contribute to a flourishing human experience. Like other property rights, copyright is the underlying asset that secures crucial investments in commercializing, marketing, and distributing products (in this case creative works) so that the public actually gets to enjoy them.

By adding clarity to the legal status of digital public performances of pre-1972 sound recordings—and jettisoning an uncertain patchwork of state laws—CLASSICS makes it easier for businesses and other organizations to disseminate these works without facing potential liability under the laws of the various states. Yes, they’ll have to secure a license to do so, but by bringing digital performances of pre-1972 sound recordings into the framework of the Copyright Act, including the provisions of Section 114, CLASSICS also makes it much easier to secure that license than at present. As a result, CLASSICS serves the purposes of copyright by making it easier to license and disseminate pre-1972 sound recordings.

CLASSICS also serves the purposes of copyright by rewarding pre-1972 sound recording artists for their creative labors, the results of which enrich our musical culture to this day. By finally securing to pre-1972 sound recording artists exclusive rights to the digital public performance of their sound recordings, CLASSICS acknowledges that these artists deserve to own the fruits of their hard work, and that doing so will promote a stronger and healthier music ecosystem. Securing property rights to artists for the fruits of their creative labors—and thus facilitating the myriad transactions that enable a thriving creative economy—is a core part of an effective copyright system, and it clearly serves the purposes of copyright.

But even under a narrow theory that copyright’s only purpose is to incentivize the creation of new works, CLASSICS will also help in that effort. By preventing digital platforms from selling access to pre-1972 sound recordings without paying anything to the artists who recorded those songs, CLASSICS will demonstrate to all artists that Congress is capable of correcting injustices that result from unpredictable changes in technology. As a result, CLASSICS will give artists more confidence that the fruits of their creative labors won’t be wrongfully expropriated in the future, and that if new technology makes it possible to unfairly exploit their works without compensating them, there is at least a chance that Congress will change the law to correct the injustice. This confidence will spur more artists to use their time and money (not to mention their hearts and souls) to create new works.

Whether you take a broad view of copyright’s purpose that considers the way that copyright actually functions in the music industry, or a narrow view that focuses solely on new works incentivized, CLASSICS clearly serves the purposes of copyright law.

A Good Result for the Public

So where does the public fit into all of this? Reading the professors’ letter and Lessig’s op-ed, a lay observer might conclude that CLASSICS would rob the public of a precious resource without providing any benefit in return. That simply is not the case.

CLASSICS benefits the public in many ways. For starters, the public has an interest in treating people fairly. By preventing the unjust exploitation of artists who recorded their music before 1972, CLASSICS contributes to a society that rewards people for the fruits of their labor and that closes loopholes that allow multi-million dollar companies to profit off the backs of artists without compensating them. To the extent post-72 artists take note, CLASSICS further benefits the public by increasing artists’ confidence that the laws that govern the music industry will change over time to ensure the industry’s continuing health. CLASSICS also benefits the public by fostering a music ecosystem that enables companies and other organizations to invest in the dissemination of pre-1972 sound recordings without risking exposure to an uncertain patchwork of potential state law liability.

And what is the cost of these benefits? It’s simple. Just like for post-1972 sound recordings, if you want to digitally publicly perform pre-1972 sound recordings, you have to pay. And CLASSICS makes it easy to pay. Last I checked there wasn’t a public shortage of access to sound recordings from 1973 or later. There is simply no reason to believe that CLASSICS will hurt the public’s access to pre-1972 sound recordings.

Despite a few professors’ misleading rhetoric to the contrary, CLASSICS is a big win for everyone.

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, where he teaches copyright and trademark law.

Tags CLASSICS Act, copyright, Matthew Barblan, MMA, Music Modernization Act, public performance, recording artists, streaming

Debunking Criticism of the Copyright Small Claims Act

Post author By Joshua Grove
Post date November 21, 2017

Cross-posted from the Mister Copyright blog.

the word "copyright" typed on a typewriter It’s been six weeks since the Copyright Alternative in Small Claims Enforcement (CASE) Act (H.R.3945) was introduced to Congress by a bipartisan coalition of Representatives, and while there’s an abundance of support among politicians, creators, artists’ rights organizations, and the Copyright Office, some have been critical of the legislation. Although much of the pushback can be chalked up to certain groups who seemingly resist any effort to hold infringers accountable for misappropriation, it’s worth addressing some of the criticisms to show that they’re largely baseless.

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 aims to provide a venue for these often frustrated parties to address rampant infringement online, empowering a class of rights holders who have limited means and few opportunities for recourse. But some have argued that this system will be tilted in favor of claimants and unfairly burden respondents, and these critics are calling for the bill’s defeat.

One supposed problem with the CCB, according to its critics, is that the three-officer panels overseeing cases will be biased and favor the claimants and copyright owners. It’s a bold assumption, but unfortunately not surprising coming from organizations that routinely accuse the Copyright Office of being “pro-content” or “anti-user”—accusations that remain completely unsubstantiated.

Perhaps anticipating such charges, the CASE Act calls for a panel in which two of the three claims officers must have diverse copyright experience which includes representing the interests of both creators and content users. As Section 1401(b)(3)(A) on officer qualifications explicitly states:

Each Copyright Claims Officer shall be an attorney with no less than 7 years of legal experience. Two of the Copyright Claims Officers shall have substantial experience in the evaluation, litigation, or adjudication of copyright infringement claims and, between them, shall have represented or presided over a diversity of copyright interests, including those of both owners and users of copyrighted works.

The third claims officer is required to be an expert in alternative dispute resolution who also has substantial copyright law experience. Any fear that these officers will render decisions unfairly in favor of claimants is likely a reaction to the realization that the small claims system will finally hold accountable a large number of infringers who have previously flown under the radar.

Another criticism of the CASE Act is that due to appearance requirements and allegedly unfair notice procedures, the Copyright Claims Board will issue a disproportionate amount of default judgments against respondents and thereby violate due process and personal jurisdiction. However, Section 1405(g) establishes clear notice obligations of claimants, including proof of service within 90 days of receiving notice to proceed. Furthermore, there is no rule requiring parties to appear in-person before the Board in Washington, D.C. It’s anticipated that smaller claims will be electronically resolved, while larger disputes will be handled via video conferencing. Section 1405(c) clearly explains:

Proceedings before the Copyright Claims Board shall be conducted at the offices of the Copyright Claims Board without the requirement of in-person appearances by parties or others, and shall take place by means of written submissions and hearings and conferences accomplished via Internet-based applications and other telecommunications facilities.

Critics also claim default judgments would be difficult to overturn, despite section 1407(c) explicitly providing an opportunity to appeal determinations to the District Court of the District of Columbia. Additionally, Section 1407(c)(1)(c) allows for respondents to challenge default determinations “where it is established that the default or failure was due to excusable neglect.”

There have also been arguments that, at $30,000, the damages available to claimants are too high. But while it may seem like a big number compared to what’s available in other small claims courts, it is the absolute ceiling of available damages. The CCB has discretion to award up to $30,000, and that limit is much lower than what an infringer might be on the hook for in federal court.

Making these criticisms of the small claims initiative seem even more absurd is the fact that the proceeding will be completely voluntary, allowing respondents to opt out of the entire system if preferred. While it’s hoped that respondents will choose to resolve claims before the CCB—rather than risk a potentially worse fate in federal court—there is no obligation to participate if they see the process as unfair or burdensome.

The reality is that the notice requirements and damages available represent a system that is no more skewed towards claimants than any other adjudicatory proceeding. Arguments to the contrary reflect a resistance to a system that will finally hold accountable infringing behavior that, because of past difficulty to address it, has become routine in the digital age. It’s time to give small creators and copyright owners a realistic shot at protecting their works, and making the CASE Act law would lead the way in this long-overdue and worthy endeavor.

Tags CASE, CCB, copyright, Copyright Alternative in Small Claims Enforcement, Copyright Claims Board, Copyright Office, Kevin Madigan, smaill claims

CPIP Fall Conference Papers Highlight How Intellectual Property Rights Promote Global Prosperity

Post author By Joshua Grove
Post date November 17, 2017

2016 Fall Conference flyer By Alex Summerton

The George Mason Law Review has just published the papers from our Fourth Annual Fall Conference, Intellectual Property & Global Prosperity, which was held at Antonin Scalia Law School, George Mason University, in Arlington, Virginia, on October 6-7, 2016. The conference highlighted the importance of IP rights in the global marketplace and discussed how countries that leverage the availability of such protections enjoy creative, technological, and economic benefits far surpassing those that place less value on IP.

The newly-published papers are outlined below:

Kristina M. L. Acri, née Lybecker, Economic Growth and Prosperity Stem from Effective Intellectual Property Rights, 24 Geo. Mason L. Rev. 865 (2017)

Professor Kristina Acri of Colorado College discusses the importance of IP in incentivizing innovation by enabling firms to recuperate development expenditures. She explains how the static loss resulting from the patent system is far offset by the dynamic gains resulting from both increased innovation and public disclosure of knowledge. Acri identifies how countries employing strong IP regimes realize greater benefits in pharmaceutical innovations in the form of more available treatments and earlier implementation than countries with weaker protections. Furthermore, she highlights how robust IP systems encourage both revolutionary and incremental technology developments, promote domestic technology industries, and foster new employment opportunities for domestic labor forces.Key to this analysis are the fundamental economic forces that drive patented innovation. Acri discusses the importance of patents to innovator companies that must bear substantial fixed costs in the form of research and development, while generic competitors need only compete on negligible marginal costs with the innovators. She further explores how countries employing strong patent protections attract innovation businesses, as well as develop investment industries and educated workforces to support such innovation. Finally, Acri analyzes the positive correlation between a country’s rank as an innovative hot spot and the relative strength of its IP protections.

Walter G. Park, Averting a “Tripsxit” From the Global Intellectual Property System, 24 Geo. Mason L. Rev. 883 (2017)

Professor Walter Park of American University examines the benefits that developing countries can realize by implementing stronger IP right systems in the context of the globalized marketplace. He considers the effect the TRIPS Agreement has had on the relationship between developed and developing countries as a function of the grant rates for technologies originating from various countries and the balance of technology imports and exports. Park seeks to explain why certain countries have developed into technological powerhouses in the last few decades, while others have remained behind and lagged in technological production.Park looks at various factors that could have influenced, and in turn have been influenced by, these divergent development paths, such as trade practices, legal and sociological structure, and the flexibility that TRIPS gives member states to set their own schedules. He concludes that countries seeking to move themselves into modern economies can benefit greatly by examining and adjusting their IP regimes to encourage both domestic and foreign innovations and investment in the local territory.

Stan Liebowitz, The Case for Copyright, 24 Geo. Mason L. Rev. 907 (2017)

Professor Stan Liebowitz of the University of Texas explores several rationales for copyright, commenting on both economic and moralistic perspectives and discussing how, as a common misconception, many people fail to recognize that the property rights imparted by copyright truly enable economic returns. He focuses heavily on the economic case for copyright, seeking to dispel the myth that copyright is an economic monopoly. Liebowitz notes that popular works enjoy unusually high monopoly-like rents because they are uncommon and disproportionately successful as compared to unpopular works, not because they benefit from any economic monopoly imparted by copyright.Liebowitz discusses the concept of market-determined values of works in contrast to alternative systems such as centralized markets and patronage systems, and he concludes that these alternative systems lack the ability to incentivize the production of either high quality or high quantities of works. Finally, he explores the moral justifications for the remuneration of authors of successful works and discusses several alternative, although morally absurd, repugnant, or questionable, systems for securing payments for authors. Liebowitz posits that copyright enables markets to efficiently set the price of works and facilitates the determination of what society does and does not want produced.

Brett Danaher & Michael D. Smith, Digital Piracy, Film Quality, and Social Welfare, 24 Geo. Mason L. Rev. 923 (2017)

Professors Brett Danaher of Chapman University and Michael Smith of Carnegie Mellon University assess the impact of piracy of copyrighted works on the production, in terms of both quantity and quality, of artistic works, particularly films. They discuss the trade-offs of copyright enforcement versus piracy for consumers and producers, and they outline the expected welfare transfers that occur for both users who would and would not otherwise purchase the consumed media in the absence of piracy. Danaher and Smith also delve into the hidden impact that piracy and the non-enforcement of copyright laws have on markets that traditionally have relied on copyright.Danaher and Smith analyze the origination of high-quality works and examine how the rise of online piracy has caused a depression in the production of award-winning films in countries where copyright is laxly enforced. They further identify the collateral negative effects of the lack of copyright enforcement, including the frustration of attempts to secure funding for riskier projects. Danaher and Smith explain how this potentially robs the world of artistically meritorious, but financially unsafe, projects, thereby decreasing overall social welfare.

Kevin Madigan & Adam Mossoff, Turning Gold Into Lead: How Patent Eligibility Doctrine is Undermining U.S. Leadership in Innovation, 24 Geo. Mason L. Rev. 939 (2017)

CPIP Legal Fellow Kevin Madigan and Professor Adam Mossoff of George Mason University focus on recent developments at the Supreme Court that have made patenting high-technology inventions, particularly in the computer and biotechnology disciplines, more difficult and the consequential danger this poses to the United States’ position as a global innovation leader. They begin by reviewing the late-20th century jurisprudence that placed the U.S. in a position to be a technological force in the new millennium, especially with respect to the patentability of biotech and computer technology. Madigan and Mossoff then review more recent Supreme Court precedents that have led to a recession from a pro-patentability position while providing very little guidance on what could be patentable.Madigan and Mossoff go on to assess how this change in jurisprudence has resulted in a retreat from America’s position as a patent powerhouse. They point to cases where applications were rejected as unpatentable subject matter in the U.S. while the corresponding technologies were found to be patentable in Europe and China. Madigan and Mossoff also discuss the general trend of rejecting applications and invalidating patents with scant actual justification for why those applications and patents were patent ineligible. They conclude that data available from the last few years shows that the U.S. may be receding as a technological center since its patent laws have become unreliable for inventors and investors seeking protection.

Jiarui Liu, The Predatory Effects of Copyright Piracy, 24 Geo. Mason L. Rev. 961 (2017)

Professor Jiarui Liu of the University of San Francisco analyzes strategic behavior in copyright enforcement, particularly in countries that have not yet developed robust copyright industries and that have lessened incentive to invest in effective copyright policy. He discusses the phenomenon in China, where large copyright entities sometimes prefer pirating of their works to enforcement when they cannot expect any return for their work. As Liu explains, expecting the ability to develop a market and later determine how to recover payments for pirated copies, this lax enforcement of copyright policy results in a suppression of domestic industries that would compete with large entities.Liu outlines the reality of copyright enforcement in China, a lackluster effort on the part of the Chinese government that has led to rampant piracy of a wide range of copyrighted works. He explains how the piracy of software products, such as Microsoft Office, has stunted the development of new and competing technologies, a result implicitly approved by the market-dominant copyright owners. Liu compares this behavior of strategic non-enforcement to predatory pricing practices traditionally viewed as part of antitrust law, since it places the product into consumer hands at an initial loss in order to establish market dominance that will later enable the firm to exert monopoly power once its product has become the dominant force. Finally, Liu discusses possible mechanisms of corrective actions, both private and public, to combat non-enforcement as strategic behavior.

Tags 2016 Fall Conference, Adam Mossoff, Brett Danaher, copyright, George MasonLaw Review, Jiarui Liu, Kevin Madigan, Kristina Acri, Michael Smith, patent, Stan Liebowitz, Walter Park

Pulitzer Prize-Winning Author T.J. Stiles Makes the Case for Copyright

Post author By Joshua Grove
Post date October 30, 2017

a shelf full of books On October 12th and 13th, the Center for the Protection of Intellectual Property (CPIP) hosted its Fifth Annual Fall Conference at Antonin Scalia Law School in Arlington, Virginia. The event brought together scholars, industry professionals, and practicing attorneys to discuss recent developments in intellectual property law and to present meaningful policy reform proposals. In addition to panels and presentations of recent scholarship in IP, the conference featured a keynote address by the Pulitzer Prize-winning author and copyright advocate T.J. Stiles in which he discussed his career in writing and made an inspiring case for the rights of creators.

Watch the keynote here:

Stiles, whose works include the award-winning biographies Custer’s Trials: A Life on the Frontier of a New America and The First Tycoon: The Epic Life of Cornelius Vanderbilt, began his speech by detailing his various book projects over the course of his career and explaining how he writes about topics that personally interest and compel him—stories which others authors sometimes overlook. He also made clear from the start that though he writes for creative fulfillment, writing books is his job, and he relies on the money they make to live.

T.J. Stiles speaking on stage Speaking on the distinctions between academic and commercial publishing, Stiles explained that he relies on book sales to expand his audience. He noted that, as a biographer, his books are a unique combination of fact-filled scholarship and non-fiction, artistic prose. It’s a genre of writing that has a broad market, but one with a dwindling number of authors due to diminishing incentives.

Providing a stark overview of the state of the writing profession, Stiles pointed out that the number of full-time authors is down 30% from 2009, and that annual income for full-time authors has dropped from $25,000 to $17,500. Freelance journalist income has fallen from between $1 and $4 a word to between 25 cents and $1.25. Moreover, Stiles explained that, as an author, he is his own employee, and that he is responsible for costs that others may take for granted:

Meanwhile, while we’re struggling with these constraints on income, I’m paying my own health insurance, I am saving for retirement on my own. There is no matching contribution to a retirement fund, and I’m paying self-employment tax.

He also pointed out that, depending on the stage of a book project, his income can vary wildly. While some years his expenses and taxes can be covered by book proceeds and publishing partnerships, other years bring burdensome costs. And though the small royalty streams from his older books may seem to some insignificant, Stiles explained that they are used to cover his mortgage, car payments, and health insurance for a family of four.

Stiles spoke to the importance of controlling the rights in one’s work, noting that sometimes overlooked rights such as the right to perform (as it relates to the recording of audio books) can generate important licensing income. In addition to the costs of living he detailed earlier in his speech, this income is reinvested directly into his current or future projects by paying for research trips and other expenses.

Addressing rampant piracy in the digital age, Stiles noted that though illegal downloading doesn’t affect books as much as music and movies, the unauthorized copying and digitization of books through massive internet archiving projects is devaluing works of authorship and threatening the creative marketplace.

Stiles lamented that in addition to losing money from theft and misappropriation, creators are expected to police the Internet for infringement and enforce their rights on a case-by-case basis, a task that is virtually impossible. Stiles then compared this unrealistic expectation to a scenario in which a shopkeeper is expected to track down and arrest shoplifters, making a persuasive point about the absurdity of private copyright policing.

stack of books at T.J. Stiles speaking event Stiles warned that when authors lose control of their works, it chips away at the incentives that drive independent creation, thereby silencing important voices. This disregard for the rights of creators is part of a larger problem: the degradation of a social compact and understanding that we should pay for something that we want. It’s a troubling trend that could have disastrous consequences in an age when stolen content is available at the click of a mouse.

Cautioning against the embrace of certain large tech companies, Stiles explained that when digital platforms aggregate and distribute huge amounts of content, creators are separated from the income their works are generating. Platforms such as YouTube want to compile as much content as possible, pay as little as possible for it, and then turn a profit by inundating said content with advertisements. Stiles warned that this behavior skews price expectations and ultimately disincentivizes creators.

In closing, Stiles reiterated just how important copyright and creative control is to fostering individual voices:

I think it’s absolutely essential for our culture, for our knowledge, for just the sheer pleasure of living, to maintain these individual voices. But again, it’s our very individuality, our very disaggregation which provides our cultural value, which it also is the limiting factor on the economic, the financial value we get out of our work.

Though it may seem like an obvious construct, the fact that artists and creators rely on the income generated by their works to live is something that is all too often discounted in an era of endless content, and it’s one that needs repeating. T.J. Stiles’ story is one of success in writing, but it’s also a cautionary tale that shows how even acclaimed authors rely on copyright and control of their works to get by. Continuing to incentivize authors and creators and allowing them to make a living is more important now than ever before, and for T.J. Stiles, “that’s what copyright is all about.”

Tags 2017 Fall Conference, authors, books, copyright, keynote address, TJ Stiles

Stream Ripping Emerges as the New Face of Music Piracy

Post author By Joshua Grove
Post date September 5, 2017

Cross-posted from the Mister Copyright blog.

chrome 3D copyright symbol As formats change and advances in technology continue to transform the way we listen to music, new methods of pirating content are never far behind. What started with the analog dubbing and bootlegging of cassettes forty years ago evolved with the digital age into CD burning and MP3 sharing, eventually leading to a chaotic illegal downloading landscape at the turn of the century that would force the music industry to develop novel anti-piracy efforts and distribution models. Digital streaming services have since taken over as the preferred way to consume music, boasting over 100 million subscribers in 2016—a number that recently surpassed the total number of Netflix streaming video subscribers.

A Fast Growing Threat

Despite this substantial base of paying customers and affordable monthly subscription rates, many are choosing to bypass legitimate services by “ripping” songs from streaming platforms, which involves recording, converting, and saving songs to downloadable file. It sounds complicated, but the internet is teeming with free apps and programs that make the ripping process easy, and its popularity has prompted some in the industry to flag it the fastest growing form of music piracy.

Stream ripping has existed for about ten years, with the digital performance rights organization Sound Exchange recognizing its dangers in 2007. But, as a Billboard magazine article from the same year noted, “even the music industry concedes that the impact of stream ripping is minimal.” The article goes on to explain the inefficient nature of ripping software and the inability of users to search internet radio services—which were at the time were not yet on-demand—for their desired content. It was similar to listening to terrestrial radio with a blank cassette tape ready and waiting for the song you want to be played in order to record it. Needless to say, times have changed and now on-demand streaming services and advanced stream recording technology have made ripping a very real threat to copyright holders and creators.

A survey by the International Federation of the Phonographic Industry (IFPI) found that three in ten internet users had engaged in stream ripping over a six-month period in 2016. A similar 2016 study by MUSO, a leading content protection and piracy data specialist, measured a 60% increase in visits to stream ripping sites in one year from 2015 to 2016. This growing popularity is made more troubling by the fact that a predominantly younger audience is involved, with the IFPI survey finding that 49% of internet users between the ages of 16 and 24 regularly engage in stream ripping to acquire music. Though these numbers are already concerning, a forthcoming IFPI report is expected to show increases in stream ripping activity across the board.

Like most websites and programs that enable copyright infringement, ripping services make money from advertising based on the high levels of traffic they attract. And, nearly a year ago, a report from the RIAA estimated that traffic to the top 30 stream ripping sites topped 900 million in one month alone. It’s difficult to imagine that, in a year that has seen little progress in shutting down these ripping services, this number of monthly visitors wouldn’t have increased significantly. Making matters worse for artists and rights owners, unlike the illegal copies of songs or albums that permeate file sharing sights which can be identified and tagged to aid with takedown notices, these ripped versions are copied directly from the source, rendering them untraceable.

While different stream-ripping programs can record data from any number of streaming services, many developers have focused their attention on YouTube, where infringing content is rampant. Because YouTube is free and full of both licensed music videos and user generated content that often features unauthorized, full versions of copyrighted songs, it’s become an attractive destination for those who want to rip music but don’t want to pay to join a streaming service like Spotify or Apple Music.

YouTube-mp3.org

In 2016, a group of major record labels sued the operators of a stream ripping service based in Germany whose program was directed to the “rapid and seamless” copying of sound recordings from YouTube. YouTube-mp3.org is one of the most popular stream ripping tools available online, with 303.8 million visitors to its website in 2016 (making it the 141st most visited website globally). Users are attracted to its service not only because it’s free and doesn’t require an account, but because it’s incredibly easy to use. One simply pastes the YouTube URL in a search box and clicks a button that automatically converts the video’s audio track to an MP3 that can be stored on any number of devices.

According to the complaint, YouTube-mp3.org is guilty of direct, contributory, and vicarious copyright infringement, as well as inducement based on their blatant promotion of the stream ripping of copyright protected songs. Describing the nature of stream ripping in general, and YouTube-mp3.org specifically, the complaint warns:

“The scale of stream ripping, and the corresponding impact on music industry revenues, is enormous. Plaintiffs are informed and believe, and on that basis allege, that tens, or even hundreds, of millions of tracks are illegally copied and distributed by stream ripping services each month. And YTMP3, as created and operated by Defendants, is the chief offender, accounting for upwards of 40% of all unlawful stream ripping that takes place in the world.”

The complaint also alleges that YouTube-mp3.org circumvents technological protection measures (TPMs) that YouTube has implemented to prevent the very copying the program facilitates, thereby violating Section 1201(a) of the Copyright Act. Discussing the circumvention, the complaint explains:

“More specifically, Defendants’ service descrambles a scrambled work, decrypts an encrypted work, or otherwise avoids, bypasses, removes, deactivates, or impairs a technological measure without the authority of Plaintiffs or YouTube.”

The complaint looks to enjoin not only YouTube-mp3.org, but also all third parties—including web-hosting services and domain name registries—through which the Defendants infringe copyrights. As of the time of this post, the lawsuit had been stalled due to difficulties in serving the international defendants, but stake holders on all sides will continue to monitor the case closely.*

The Future of Music Piracy

According to the IFPI survey, stream ripping’s rapid growth has seen it bypass pirate site downloading and other forms of streaming as the most popular way to steal music. One reason for the shift to ripping may be the increasingly focused offensive against established torrent sites like the Pirate Bay and Kickass Torrents. But also contributing to the rise of ripping is the compatibility of the programs with mobile devices, which MUSO explains “is a key insight into the longer-term stream ripping trend.” The study identifies Brazil, Mexico, and Turkey as countries where mobile stream ripping is the most prevalent and connects this popularity to the quickly expanding smartphone markets. These accessible mobile interfaces provide a younger audience not only with the portability they want, but also with the ability to listen to music offline, which can be essential in countries with limited internet infrastructure.

Like the file sharing programs and torrent sites that came before it, stream ripping technology is not inherently illegal. But, like Grokster and IsoHunt, many of the most popular ripping services—which display prominently in Google search results for “stream ripping software”—were developed to facilitate piracy and are actively inducing copyright infringement. Also like these now defunct websites, YouTube-mp3.org tries to make the argument that it’s merely an intermediary and immune from liability based on 512(c) safe harbor provisions of the DMCA. On its website, YouTube-mp3.org claims that, “[d]ifferent from other services, the whole conversion process will be performed by our infrastructure and you only have to download the audio file from our servers.” By hosting the content on its own servers at the direction of a user, YouTube-mp3.org attempts to cast itself as a passive intermediary, and exposing it as a piracy-inducing bad actor is imperative to deter the development and promotion of similar services dedicated to copyright infringement.

With the music industry’s widespread commitment to the streaming model, ripping is a threat to legitimate services that must be confronted by both the creative industries and the platforms that distribute music. Thankfully, platforms like Soundcloud, Spotify, and YouTube have a stake in the fight against ripping, as they ultimately want users to watch videos and listen to music over and over on their websites where they are subject to advertisements, rather than steal content and leave. Whereas tech companies and platforms may not have had as much to lose when it came to file sharing and illegal downloading, stream ripping stands to affect not only rights owners, but also the tech industry that is increasingly involved in the creation and distribution of copyrighted content.

*On September 4, 2017, it was reported that the RIAA and Youtube-mp3.org had reached a settlement in which Youtube-mp3.org would shut down indefinitely, hand over its domain, and pay an undisclosed amount to the RIAA.

Tags copyright, copyright infringement, Google, stream ripping, YouTube

Mayweather v. McGregor Warrants Preemptive Anti-Piracy Efforts

Post author By Joshua Grove
Post date August 23, 2017

hand holding remote pointed towards a TV screen showing a sports game This Saturday, the world will be treated to one of the most hyped events in the history of sports when “The Notorious” Conor McGregor and Floyd “Money” Mayweather Jr. meet in Las Vegas to become (even more) rich while ostensibly also participating in a boxing match. The bout marks the first foray into boxing by a champion mixed martial artist—McGregor—at the height of his career, and is made even more compelling by the fact that he’ll be facing one of the greatest boxers of all time in Mayweather Jr.—albeit somewhat past his prime. The seemingly endless prefight activities have included an over-the-top press tour full of provocative trash talk, celebrity-attended training sessions, and a preventative effort by Showtime—the network airing the fight—to quash the inevitable flood of unauthorized streams that will pop up during what is predicted to be the most pirated event ever.

Last week, in response to concerns over lost revenue resulting from illegal feeds of a fight that is expected to take in close to a billion dollars, Showtime brought a preliminary injunction against over 40 websites affiliated with LiveStreamHDQ—a recurrent bad actor in unauthorized streaming—poised to broadcast illicit streams. In its complaint, the premium network targeted sites with blatant domain names such as mayweathervmcgregor.livestreamhdq.com and floydmayweathervconormcgregorfight.us, which Showtime alleges are engaged in “keyword stuffing” in an attempt to appear at the top of search engine results and draw as much traffic as possible to unauthorized streams. After review, District Judge Andre Birotte Jr. approved the injunction, prohibiting the websites from offering infringing content, and since then, it appears that at least some of the sites have backed away from their shameless promotion of free streams.

Preemptive strikes against anticipated copyright infringement are somewhat of a rarity, but they can be imperative when dealing with a short-lived yet furious demand for a marquee, live sporting event—especially one with a pay-per-view (PPV) price tag of nearly $100. In 2015, Showtime and HBO launched a “pre-piracy” offensive against two websites that had announced plans to stream the much-anticipated Mayweather v. Pacquiao boxing match. And while the threat of a lawsuit was successful in deterring the targeted websites, the fight was still subject to massive piracy through mobile live video streaming apps such as Periscope and Meerkat.

Despite their limited success, these proactive attempts to curb expected infringement have led some critics to accuse networks of censoring and site-blocking any website they choose for a theoretical crime that hasn’t yet occurred. But, as many of the same critics acknowledge, a clear provision in US copyright law allows for an infringement action before fixation takes place “[i]n the case of a work consisting of sounds, images, or both, the first fixation of which is made simultaneously with its transmission.” It’s an important distinction that represents lawmakers’ understanding of the unique concerns surrounding a live broadcast that loses most of its value immediately after its initial airing.

Section 411(c) of the Copyright Act provides that a copyright owner may bring an infringement action related to an unregistered work, and recover statutory damages for an unauthorized use, when the work is part of a live broadcast. Known as the “live broadcast exemption,” the Committee on the Judiciary explained that it “is intended to deal with the special situation presented by works that are being transmitted ‘live’ at the same time they are being fixed in tangible form for the first time,” such as “sporting events, concerts, theatrical presentations and news and public affairs programs.” The section goes on to list two requirements for obtaining statutory damages, including service of an “Advance Notice of Potential Infringement” at least 48 hours before the work is transmitted, and registration of the work within three months after its first transmission.

While it’s encouraging that Showtime’s injunction has already resulted in some of the targeted websites shutting down or offering links to legal viewing options, it’s likely that live-streaming apps will once again draw thousands of would-be paying customers towards unauthorized streams. Unfortunately, because of the massive paydays coming to McGregor and Mayweather, many who seek out illicit streams will justify the infringement by figuring it won’t hurt to take a few dollars out of their deep pockets. But as a recent article on MMA and boxing-related piracy points out, illegal feeds take money away from far less affluent athletes and from the organizations that make their careers possible.

Identifying and shutting down live streams that will inevitably appear (and reappear) via the likes of Periscope and Facebook Live is an uphill battle. Whereas Showtime’s injunction can address known infringing-enabling services and the websites they facilitate in the days and weeks leading up to the event, when the fight bell rings, it becomes impossible for the network and its affiliates to effectively play whack-a-mole with the surge of unauthorized streams.

As Ultimate Fighting Championship (UFC) CEO Lorenzo J. Fertitta explained in his testimony before the House Judiciary Committee nearly a decade ago, the content offered during PPV events is not only extremely valuable, but extremely perishable. Section 411(c) exists because once a popular event is over, the value is gone, and rights owners must have a way to combat potentially devastating infringement.

But Section 411 was enacted at a time when the current landscape of live-streaming app piracy (and the internet for that matter), could not have been anticipated. It’s a problem that requires attention not only from the rights holders and networks airing the events, but from the social media platforms that host the applications. Perhaps a Content ID system that would recognize and kill unauthorized streams of big ticket/PPV events is in order. But don’t expect the platforms to jump at the opportunity to implement such anti-piracy mechanisms, as they and their supporters are quick to label them ineffective and unconstitutional. Unfortunately, until a better system is put in place to supplement Section 411, every preeminent PPV fight will be predicted to be the most pirated event ever.

Tags copyright, copyright infringement, Judge Birotte, live broadcast exemption, live-stream, Mayweather, McGregor, pay-per-view, Section 411

Court Confirms the Obvious: Aiding and Abetting Criminal Copyright Infringement Is a Crime

Post author By Joshua Grove
Post date August 17, 2017

Cross-posted from the Law Theories blog.

closeup of a circuit board In July of 2016, a criminal complaint was filed in the Northern District of Illinois alleging that Artem Vaulin of the Ukraine was the mastermind behind the popular torrent site, Kickass Torrents (KAT). At the time, KAT was one of the largest pirate sites in the world, with an estimated 50 million unique visitors each month. The complaint charged Vaulin with several crimes, including criminal copyright infringement. The district court issued an arrest warrant for Vaulin and a seizure warrant for the various KAT domain names. Less than two weeks later, Vaulin was arrested in Poland and the KAT website was under the government’s control.

The government then secured an indictment charging Vaulin with sixteen counts, including eleven counts of aiding and abetting criminal copyright infringement for distributing pre-release movies, including The Butler, Deadpool, and X-Men: Apocalypse.[1] There was also one aiding and abetting criminal copyright infringement count for reproducing and distributing “at least ten copies . . . of one or more copyrighted works which had a total retail value of more than $2,500” during “the 180 days leading up to and including July 8, 2016[.]”[2] Two months after the indictment was handed down, Vaulin filed a memorandum in support of his motion to dismiss that made a rather extraordinary claim: Aiding and abetting criminal copyright infringement is not a crime.

The twelve aiding and abetting criminal copyright infringement counts in the indictment all point to Section 2 of Title 18, the federal aiding and abetting statute. Section 2(a) provides: “Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.” The idea behind Section 2(a) is simple: Those who help or encourage another to commit a federal crime, with the intent to aid in its commission, are guilty just as if they had committed the crime themselves. The statute does not create a separate crime; it instead permits someone to be convicted of a crime even if that person did not commit all of the acts constituting the elements of the crime. The indictment charged Vaulin with aiding and abetting because his KAT website merely provided torrent files that helped others to directly commit criminal copyright infringement.

Vaulin argued that “[s]econdary liability in civil copyright law is a common-law creation of judges, but it is not a federal crime enacted by Congress.” Incredibly, Vaulin never once mentioned Section 2(a)—the very statute that makes it a crime to aid and abet the commission of a federal crime and that he was charged with violating a dozen times over—in arguing that aiding and abetting criminal copyright infringement is not a crime. Vaulin also made no mention of binding Seventh Circuit precedent erasing any doubt that Section 2(a) applies to all federal crimes. In the late 1980s, a defendant challenged his aiding and abetting conviction on the ground that Section 2(a) did not apply. The Seventh Circuit, sitting en banc, rejected the argument: “The question is not whether section 2(a) is applicable—it always is.”[3]

The government’s brief in response to Vaulin’s motion to dismiss pointed out this obvious flaw: “And make no mistake, § 2 applies to all violations of the criminal code.” It noted that no court had ever held that aiding and abetting criminal copyright infringement is not a crime, even though “scores of defendants” had been charged and found guilty of that very crime. The government then rebutted the only plausible argument that aiding and abetting criminal copyright infringement is not a crime—despite the fact that Vaulin had not bothered to make it. Under the Copyright Act of 1909, Congress expressly included language criminalizing aiding and abetting criminal copyright infringement.[4] That language was removed in the Copyright Act of 1976, and the argument is that Congress thus decriminalized the act of aiding and abetting criminal copyright infringement.

At first blush, this argument makes some sense. Indeed, one district court suggested in dicta over two decades ago that “Congress revamped the Copyright Act by eliminating the crime of aiding and abetting copyright infringement.”[5] And one scholar recently posited that “the Copyright Act of 1976 eliminated the provisions for aiding and abetting introduced in 1909[.]”[6] Notably, neither the district court nor the scholar mentioned the federal aiding and abetting statute—Section 2(a)—and explained why it would not apply to criminal copyright infringement. Nor did they explain why nothing in the legislative history indicates that Congress intended to make criminal copyright infringement the one-and-only federal crime that people can aid and abet with impunity.

In context, the argument makes no sense. Why would Congress want to decriminalize aiding and abetting criminal copyright infringement, thus making it different from every other federal crime? And why would it make such a drastic change, reversing almost seven decades of precedent, yet say nothing in the legislative history? The trend since copyright infringement was first criminalized one century ago has been to expand both the conduct that constitutes criminal infringement and its sanctions. In the four decades since the 1976 Act was enacted, Congress has systematically enlarged the law of criminal copyright infringement.[7] Why would Congress work so diligently to broaden criminal copyright infringement while at the same time make it the only crime in the entire U.S. Code that one can aid and abet without liability?

As the government noted in its brief, numerous scholars—as well as the venerable Nimmer on Copyright treatise—have concluded that aiding and abetting does apply to criminal copyright infringement.[8] Congress removed the aiding and abetting language with the 1976 Act because it was redundant with Section 2(a). Congress did not make an enormous change to criminal copyright law and then neglect to mention it in the legislative history; Congress removed surplusage and then said nothing because the redundancy was self-evident and unremarkable. Indeed, as Deputy Assistant Attorney General Irwin Goldbloom reported to Congress in 1975: “The provision . . . for aiders and abettors has been removed, but these individuals will be liable to prosecution under 18 U.S.C. 2.”

In his brief replying to the government’s brief, Vaulin finally made the argument—in all-bolded text, no less—that the government had already rebutted: “But aiding and abetting was removed from the Copyright Act by Congress in 1976 thereby eliminating the crime.” Overemphasis notwithstanding, Vaulin’s brief yet again failed to mention Section 2(a), the very aiding and abetting statute he again insisted does not exist. Instead, Vaulin engaged in hand-waving about “inventing new crimes” and the “rule of lenity,” apparently in the hope that the district court would not notice the glaring omission. Curiously, Vaulin even cited the DOJ’s Prosecuting Intellectual Property Crimes manual, despite its hot tip to federal prosecutors that they “may, for strategic reasons, wish to bring accessory charges, such as aiding-and-abetting or inducement, 18 U.S.C. § 2[.]”

Needless to say, District Judge John Z. Lee spent little time rejecting Vaulin’s argument that the crime he had been charged with twelve times over does not exist. In fact, Judge Lee did not need to reach the issue at all since he had already found that Vaulin’s motion could be dismissed under the fugitive disentitlement doctrine. To Vaulin’s claim that secondary liability for copyright infringement only exists in the civil law context, Judge Lee noted that “the indictment does not charge Vaulin with common law secondary liability” and pointed to Section 2(a). To Vaulin’s claim that Congress intended to decriminalize aiding and abetting, Judge Lee stated that Section 2(a) “applies to every criminal offense” and that “there was no need to include language in the Copyright Act itself” criminalizing “aiding and abetting criminal infringement” since it “would have been redundant.”

Vaulin’s self-serving—and ultimately losing—argument that the crime of aiding and abetting criminal copyright infringement disappeared four decades ago despite nobody noticing until now aside, this case raises some interesting questions. The simple fact is that there is very little case law applying criminal copyright law in the internet context, much less cases turning on an aiding and abetting theory. However, what is uninteresting is the fact that aiding and abetting criminal copyright infringement is a crime. It is absurd to think that criminal copyright infringement is the one crime that Congress wants people to be free to aid and abet.

[1] The indictment specified that each count is “[i]n violation of Title 17, United States Code, Section 506(a)(1)(C) and Title 18, United States Code, Sections 2319(d)(1) and 2.” Section 506(a)(1)(C) makes criminal “willfully” infringing a copyright if committed “by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.” Section 2319(d)(1) establishes the crime as a felony, punishable by up to three years imprisonment and a fine.

[2] The indictment specified that this count is “[i]n violation of Title 17, United States Code, Section 506(a)(1)(A) and Title 18, United States Code, Sections 2319(b)(1) and 2.” Section 506(a)(1)(A) makes criminal “willfully” infringing a copyright if committed “for purposes of commercial advantage or private financial gain[.]” Section 2319(b)(1) establishes the crime as a felony, punishable by up to five years imprisonment and a fine.

[3] United States v. Pino-Perez, 870 F.2d 1230, 1233 (7th Cir. 1989).

[4] Section 28 provided: “[A]ny person who willfully and for profit shall infringe any copyright secured by this Act, or who shall knowingly and willfully aid or abet such infringement, shall be deemed guilty of a misdemeanor[.]”

[5] United States v. LaMacchia, 871 F. Supp. 535, 539 (D. Mass. 1994).

[6] Irina D. Manta, The Puzzle of Criminal Sanctions for Intellectual Property Infringement, 24 Harv. J.L. & Tech. 469, 481 (2011); see also Mary Jane Saunders, Criminal Copyright Infringement and the Copyright Felony Act, 71 Denv. U. L. Rev. 671, 674 (1994) (“The 1976 general revision to the Copyright Act continued the offense of criminal copyright infringement, but eliminated the crime of aiding and abetting infringement.”).

[7] See, e.g., Piracy and Counterfeiting Amendments Act of 1982, Pub. L. No. 97-180, 96 Stat. 91 (1982); Sentencing Reform Act of 1984, Pub. L. No. 98-473, 98 Stat. 1987 (1984); Copyright Felony Act of 1992, Pub. L. No. 102-561, 106 Stat. 4233 (1992); Anticounterfeiting Consumer Protection Act of 1996, Pub. L. No. 104-153, 110 Stat. 1386 (1996); No Electronic Theft (NET) Act of 1997, Pub. L. No. 105-147, 111 Stat. 2678 (1997); Digital Theft Deterrence and Copyright Damages Improvement Act of 1999, Pub. L. No. 106-160, 113 Stat. 1774 (1999); Artists’ Rights and Theft Prevention (ART) Act of 2005, Pub. L. No. 109-9, 119 Stat. 218 (2005); Prioritizing Resources and Organization for Intellectual Property (PRO IP) Act of 2008, Pub. L. No 110-403, 122 Stat. 4256 (2008).

[8] See, e.g., 5 Nimmer on Copyright § 15.01[A][2] (2017) (“Persons who knowingly and willfully aid or abet copyright infringement are subject to the same criminal penalties as apply to the principal.”); Benton Martin & Jeremiah Newhall, Criminal Copyright Enforcement Against Filesharing Services, 15 N.C. J. L. & Tech. 101, 108 (2013) (“Aiding and abetting criminal copyright remains a crime under § 2(a).”); James Lincoln Young, Criminal Copyright Infringement and a Step Beyond: 17 U .S.C. § 506 (1976), 60 Neb. L. Rev. 114, 124 (1981) (“The continued inclusion of such a provision in the new section 506(a) would have been merely superfluous[.]”); Note, The Criminalization of Copyright Infringement in the Digital Era, 112 Harv. L. Rev. 1705, 1722 n.39 (1999) (“The new Act removed references to aider and abettor liability. However, because such liability was still possible under the general provision treating aiders and abettors of any federal criminal offense as principals, this change appears to be simply a removal of surplusage.”).

Tags 1909 Act, 1976 Act, aiding and abetting, Artem Vaulin, criminal copyright infringement, criminal infringement, fugitive disentitlement doctrine, Judge Lee, KAT, Kickass Torrents, Kim Dotcom, Megaupload, secondary liability, Section 2, Section 506, seizure, Seventh Circuit

Judgment Against Sci-Hub is a Win for Authors and Publishers

Post author By Joshua Grove
Post date June 27, 2017

shelf full of books Last week, the United States Court for the Southern District of New York entered a default judgment against Sci-Hub, the Library Genesis Project (LibGen), and a number of related websites and site operators for the willful infringement of dozens of copyright-protected scholarly articles. The judgment comes two years after Elsevier—an international academic publishing company now part of RELX Group—brought suit against the websites and their operators for the unauthorized reproduction and distribution of numerous works to which Elsevier owns the copyright. In awarding the maximum in damages and making permanent a preliminary injunction against US domain name registries associated with the defendants, the decision is not only a win for authors and copyright owners, but represents a strong indictment against the infringement of scholarly works, no matter the purported public benefit.

Sci-Hub—dubbed by some as “the Pirate Bay for science”—was founded in 2011 by Alexandra Elbakyan, a Kazakhstani graduate student and computer programmer who created a website and search engine that bypassed publisher paywalls to collect and distribute copyright-protected academic articles and educational works. The website was unique in that it was one of the first to automate the process of overriding paywalls, eventually partnering with a Russia-based online repository of academic works known as Library Genesis, or LibGen, to store its catalog of both illicitly and legally obtained articles. To access databases such as Elsevier’s ScienceDirect portal, Elbakyan and her fellow operators claim that legitimate subscribers share their passwords, but also admit that passwords are obtained using the same phishing methods hackers use to steal personal and financial information.

Not surprisingly, like other websites that offer free and instant access to stolen content, Sci-Hub became extremely popular all over the world, with hundreds of thousands of download requests per day and a catalog of over 50 million papers. It wasn’t long before authors and copyright owners took notice, and in 2015, academic publishing company Elsevier filed a complaint against Sci-Hub, Elbakyan, LibGen, and a group of related websites and operators for copyright infringement and violations of the Computer Fraud and Abuse Act.

In response to the suit, Elbakyan took a defiant stance, arguing that Sci-Hub’s acts of copyright infringement are justified and making the brazen statement that “[a]ll content should be copied without restriction.” Instead of hiring an attorney, Elbakyan sent a letter to the court accusing Elsevier of operating “by racket” and asking why, like her website, it couldn’t just provide access to everything for free.

Perhaps in response to Elbakyan’s naivite, Tom Allen, then president of the Association of American Publishers (AAP), warned that in addition to the lost revenues to authors and publishers, pirating scholarly materials has a harmful effect on the quality of scientific publications and public health. He explained:

Scholarly publishers work to ensure the accuracy of the scientific record by issuing corrections and revisions to research findings as needed; Libgen typically does not. As a result, its repository of illegally obtained content poses a threat to both quality journal publishing and to public health and safety.

The response of Elbakyan and her supporters to the lawsuit has been a common contention that the academic nature of the content on Sci-Hub somehow elevates the unauthorized distribution above any copyright infringement liability. The “public good” or “public benefit” provided by Sci-Hub is repeatedly invoked, as if copying and distributing scholarly works is different than pirating other content such as music or movies. And while an academic article usually includes facts and ideas that have never been copyrightable, as a whole they are original works of expression—similar to documentary films or educational audio recordings.

Unfortunately, this irreproachable concept of the public good is currently influencing important copyright law decisions such as those related to transformative purpose fair use. In the high-profile Authors Guild v. Google case, proponents of the project repeatedly touted the public good that would come from the creation of a massive online index of books, and the Second Circuit cited this benefit when it ultimately found the unauthorized scanning of millions of copyrighted works to be fair use. It’s a trend that increasingly sees more illegal acts of appropriation deemed fair use because of an alleged public good that may or may not occur after the infringement, and it’s threatening to disrupt the copyright system.

Recognizing that acts of unauthorized reproduction can benefit the public but still be illegal infringement is an important part of understanding and maintaining a balanced approach to copyright and fair use. In a press release addressing the Sci-Hub judgment, current President and CEO of the AAP and former Register of Copyrights, Maria Pallante, praised the Court’s acknowledgment of this concept:

As the final judgment shows, the Court has not mistaken illegal activity for a public good. On the contrary, it has recognized the defendants’ operation for the flagrant and sweeping infringement that it really is and affirmed the critical role of copyright law in furthering scientific research and the public interest.

In its declaratory judgment, the Court awarded Elsevier a maximum $15 million in damages based on the intentional nature of the infringement of a representative sample of 100 works. Along with the maximum damages permitted by law, the judgment makes permanent a 2015 preliminary injunction that required U.S. domain name registries to suspend the defendants’ U.S.-administered domain names, which the AAP believes will be “a deterrent to those who support or do business with illegal operators.”

It’s worth noting that the judgment was entered against the defendants as a result of their failure to respond and it’s unclear whether it will affect Sci-Hub’s overall operation. Elbakyan and her associates remain defiant, pledging to keep Sci-Hub and its sister websites online by alternating between new and different domain names. It’s a practice that has kept pirate sites such as ExtraTorrent and the Pirate Bay alive despite efforts to shut them down, and remains an obstacle to those dedicated to fighting online infringement.

But regardless of whether Sci-Hub’s becomes another whack-a-mole pirate site, publishers, authors, and copyright owners should be encouraged by the Southern District’s recognition of illegal acts of infringement no matter the claims of supreme public good. Hopefully, more judges and lawmakers will make the same distinction and restore sense and stability back into the fair use and transformative purpose debates.

Tags copyright, RELX Group, Sci-Hub

Alliance for Creativity and Entertainment (ACE) Unites to Fight Online Piracy

Post author By Joshua Grove
Post date June 14, 2017

As digital piracy shifts away from torrent downloads and towards unauthorized streaming and theft-based extortion, stakeholders from all parts of the creativity community are reassessing their efforts to fight online infringement. This week, a global coalition of creators and leading on-demand entertainment services joined forces to better address the ever-evolving threat that piracy poses not only to artists and copyright owners, but to consumers and end users. Named the Alliance for Creativity and Entertainment (or ACE), the group brings together 30 industry leaders—including Amazon, HBO, Warner Bros., Netflix, Disney, Hulu, and the BBC—to maximize consumer experience while ensuring the vibrant creative ecosystem they support is not undermined by piracy.

In an opening press release, the Alliance describes the recent exponential growth of digital distribution models and the development of nearly 500 online services that provide consumers with a legitimate on demand viewing experience. And while these platforms have revolutionized the way consumers watch TV and movies, they’ve also added great value to a creative sector that is responsible for $1.2 trillion and 5.5 million jobs in the US alone.

Unfortunately, illicit websites—which sometimes offer pirated works within hours of release—remain a burden to the creative ecosystem and the artists and platforms that drive it. Despite encouraging efforts both in the US and abroad to disable some of the worst offenders, the constant game of cat and mouse with mirroring websites and the emergence of illicit streaming sites continue to frustrate the fight against piracy. According to the press release, in 2016 there were an estimated 5.4 billion downloads of pirated films and television shows and 21.4 billion total visits to illicit streaming websites that profit from the theft and unauthorized distribution of creative works.

To combat these enduring acts of infringement, ACE brings together creative companies from all over the world to combine resources and work in concert with seasoned antipiracy experts at organizations such as the Motion Picture Association of America (MPAA). Specifically, “ACE will conduct research, work closely with law enforcement to curtail illegal pirate enterprises, file civil litigation, forge cooperative relationships with existing national content protection organizations, and pursue voluntary agreements with responsible parties across the internet ecosystem.”

By reducing illegal online piracy, ACE will also work to eliminate the risks to consumers that so often accompany the illegitimate distribution of creative works. A recent study by the Digital Citizens Alliance found that one in three pirate sites expose users to infectious malware and that visitors to these pirate sites are 28 times more likely to encounter malware than visitors to legitimate websites. The serious threats posed to consumers by malware and viruses include not only identity theft and financial loss, but the complete immobilization of entire computer systems, as seen in the recent Wannacry attack.

With pirate site operators finding new ways to profit from the theft and distribution of creative works, it’s encouraging to see a unified and global effort dedicated to reducing piracy, supporting creators, and protecting consumers.

Tags copyright, copyright infringement, intellectual property, Kevin Madigan

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