Category: Copyright

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Copyright Patents Trademarks

From Star Wars to La La Land: How Intellectual Property Fuels Films

The following post comes from Mandi Hart, a rising third-year law student at Antonin Scalia Law School, George Mason University, who worked as a video producer before going to law school.

cameraBy Mandi Hart

Movies are a first-love in America and around the world, and their production is made possible by the existence of intellectual property (IP) rights. Although most moviegoers may not recognize the vital role that IP plays in film, without it, screens would be dark. This post explains the critical role that copyright, trademark, and patents play in film production and financing.

Copyright is the Lifeblood of Movies

Copyright secures to creators certain exclusive rights in their original works of authorship, including rights of reproduction, distribution, public display, performance, and the creation of derivative works. These exclusive rights make it possible for creators and copyright owners to deploy their creative works as property rights in a free market.

Copyright’s exclusive right to distribute creative works is particularly important in the film industry. Distribution deals are essential to the filmmaking process, as many filmmakers finance the production of their movies by selling the exclusive right to distribute their film in a given territory. Distributors purchase these rights via a pre-sale, committing to pay a certain amount to the producer when the completed film is delivered in accordance with technical specifications. The pre-sale agreement serves as collateral for bank loans that provide actual cash for a film’s production. Once a film is completed and delivered, the payment from the distributor is then used to pay back the loan.

Without copyright, producers would have no distribution rights to sell in the first place, and without distribution deals, many producers wouldn’t be able to secure the funding necessary to make their movies.

Copyright also makes it possible for authors to option pre-existing works for adaptation into movies. An author or publisher can sell a film producer the right to create a derivative work from a novel, short story, play, or comic book. And films themselves might inspire derivative works—think of the breadth and popularity of Star Wars movies and shows today, 40 years after the original movie was released. Copyright not only protects the original creative works that often serve as the foundation for films, it also makes possible the many licensing deals that turn individual films into trilogies, series, or full-blown universes.

Copyright also fuels the music and sounds we hear in movies. From original scores and sound effects to the innumerable songs licensed for use in movies, copyright ensures that the people involved in the creation of movie sounds—whether artists, composers, or engineers—are incentivized and rewarded for their contributions.

By giving artists and creators a property right in the fruits of their artistic labor, copyright provides the foundation for the creation of movies as we know them today.

Trademark Helps Movies Get Made and Protects Their Brands 

Just as copyright protects several aspects of any given film, trademark helps establish and protect a movie’s brand while providing supplemental sources of financing. As studios move away from traditional film financing mechanisms due to economic recession, consolidation within the industry, and risk-aversion in credit markets, a growing number of producers are looking for new funding sources. Product placement has become an increasingly common source of financing, providing mutual benefit to producers and marketers.

Featuring recognizable brands in a film enables a producer to leverage the reputation and public perception of certain products to craft characters and settings. Indeed, a character may become identified with a particular brand or product—think James Bond driving an Aston Martin, ET eating Reeses Pieces, or Carrie Bradshaw wearing Manolo Blahnik. A product may even become a character itself, as with the Wilson volleyball in Castaway.

The inclusion of known brands lends authenticity to the world of the film and the characters inhabiting it. When Mia asks Sebastian to get the keys to her Prius from a valet in La La Land, and Sebastian sees nothing but Prius key fobs on the valet stand, more is communicated to the audience than just the type of car Mia drives. Viewers get a sense of the world in which Mia lives, her friends and associates, and her subculture and values.

And of course, Prius benefits from the connection with an acclaimed film that won multiple Academy awards. While product placement represents a creative choice, it is also a shrewd business move for producers in need of funds and marketers looking for more subtle promotional opportunities than the traditional hard-sell advertisement.

Additionally, trademark serves to protect merchandise and ancillary products created in connection with a film. Marketing trademark-protected clothing, toys, home appliances, bedding, wallpaper, and other film-related merchandise is another critical source of revenue for producers, particularly those hoping to build a film franchise. Just as copyright is central to film financing and content, trademarks make an increasingly vital contribution to production funding and the creation of on-screen worlds.

But Without Patented Technology, Films Wouldn’t Exist

In addition to copyright and trademark, patents also play an essential role in film. A patented invention—the kinetoscope—allowed individual, consecutive images imprinted onto film to be projected in order and at speeds capable of creating the illusion of movement. Thomas Edison, holder of the kinetoscope’s patent, began documenting the world around him and created the first microdocumentaries for exhibition to paying customers. Across the Atlantic, the Lumiere brothers also embraced the possibilities that early film technology offered, creating short fiction films, the most enduring of which, Trip to the Moon, is still watched to this day.

The original film technologies, to both capture and display moving images, gave birth to a new form of leisure and entertainment. In less than three decades an entire industry had been established to exploit the commercial value of film and to satisfy the growing public appetite for movies.

Sound recording and playback technology revolutionized the industry and were followed just a few years later by technicolor, the debut of which—in The Wizard of Oz—changed filmmaking forever. Patented technologies created, then upended, the film industry, and to this day provide the foundation upon which advancements in filmmaking and viewer experience are based.

Just as the development of VistaVision in the 1950s gave directors more onscreen real estate and enabled sweeping scenic compositions, the implementation of Dolby Surround Sound in the 1980s allowed composers and sound editors to weave rich sonic tapestries. Composers were able to create complex filmic symphonies, and sound editors could immerse the audience more deeply into the world of the film by literally enveloping them in the movie’s aural field.

The switch from analog to digital, and the integration of computer technology into filmmaking, allowed for special effects unlike anything seen before. Computer-generated images put an end to an era of hand-drawn animation and manual splicing, as entire worlds could be created and manipulated digitally. Today, the development of 3D and virtual reality technology are set to revolutionize the film industry, changing the way images are captured and exhibited. Add to the distribution mechanisms numerous exhibition platforms (laptop, tablet, cell phone, etc.), and it is obvious the central role that patented technology plays in film creation and consumption.

Conclusion

In any given film, copyright, trademark, and patent play crucial roles in crafting the story, securing financing, and translating script to screen. Copyright secures property rights in (and incentivizes the creation of) original films as well as adaptations of prior works, while trademark contributes to the development of setting and characters. As an industry founded on patented technology, filmmaking relies on the innovation made possible by a patent system that encourages and incentivizes inventors. Those who developed sound recording and transmission technology, technicolor, panoramic projection, and many other innovations at the heart of moviemaking could not—and would not—have done so without the assurance that they would own the fruits of their innovative labor.

Next time you settle into a plush reclining chair, as the lights dim and the trailers begin, think about all the intellectual property embedded in the story you watch play out on-screen, because without it, that story wouldn’t exist.

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Copyright

New CPIP Policy Brief: Open-Access Mandates and the Seductively False Promise of “Free”

the word "copyright" typed on a typewriterCPIP has published a new policy brief entitled Open-Access Mandates and the Seductively False Promise of “Free.” The brief, written by CPIP Legal Fellow Bhamati Viswanathan and CPIP Director of Academic Programs & Senior Scholar Adam Mossoff, exposes the lack of evidence or justification for the proliferating legal mandates by federal agencies that coerce authors and publishers to make their scholarly articles available for free to the world.

The Introduction to the policy brief is copied below:

Introduction

Federal agencies are increasingly mandating or proposing free public access for copyrighted works that report on federally-funded research. These “open-access mandates” compel scholars and researchers to make their articles or other writings freely available to billions of people around the world. Furthermore, many of the mandates also allow the public to modify these copyrighted works without the authors’ consent. Countless authors and publishers must comply with this legal mandate of “free.” Federal agencies—such as the Department of Education, the National Institutes of Health, and the Department of Energy—disburse billions annually in research grants. As a result, open-access mandates encompass millions of published articles, test-related materials (including those relating to standardized tests and testing services), and even computer software source code.

Open-access mandates have the potential to significantly harm the publishing industry. In 2015, the American publishing sector generated $27.78 billion in net revenue, representing 2.71 billion published works in electronic and print formats. This includes over 500,000 works in higher education, as well as learning materials for primary and secondary education. Works of scholarship, such as scientific research, also account for a significant share of revenue-generating materials. Unfortunately, open-access mandates are a direct threat to the business model that enables the multi-billion dollar market in scholarly and educational publishing to thrive.

Open-access mandates require publishers to place their works in government-operated repositories that are openly accessible and free of charge to users. But publishers typically invest hundreds of millions of dollars in building and supporting their own innovative and sophisticated systems for delivering copyrighted works to the public. Open-access mandates frustrate these efforts, effectively undermining publishers’ proven business models. Further, they force publishers to compete with government-run systems that need not be efficient, advanced, or profitable. By inserting the government as a competitor to private actors in the publishing sector, open-access mandates undermine publishers’ incentives to invest in both copyrighted works and effective systems for disseminating those works.

Open-access mandates also strike at the heart of copyright law by depriving publishers of their right to own and commercialize their copyrighted works as they see fit. U.S. copyright law secures to copyright owners fundamental property rights in their works; these rights cannot be eviscerated by administrative fiat. By forcing publishers to forfeit their rights to commercialize their copyrighted works, open-access mandates in works that report on federally-funded research are incompatible with fundamental principles of copyright law.

The publishing industry is built upon a business model that is proven, realistic, and robust. Moreover, the industry is constantly investing in innovation and improvement of its products and services. Proponents of open-access mandates seek to replace this model with an untested set of systemic changes. Yet they have not offered any evidence that the open-access model is viable and sustainable. Barring such evidence, open-access mandates should not be adopted.

Open-access mandates should be rejected as a prime example of regulatory overreach. In this paper, we address four reasons why this is the case:

  • Open-access mandates undercut publishers’ ability to invest in producing and distributing copyrighted works.
  • Open-access mandates contradict basic principles of copyright law.
  • Open-access mandates are the classic example of a solution in search of a problem: there is no evidence of a systemic market failure in scholarly publishing requiring a massive regulatory intervention.
  • Open-access mandates are based on untenable economic models.

We begin, however, by noting that while open-access mandates raise serious legal, policy, and economic concerns, the open-access model itself is unobjectionable when done on a voluntary basis.

To read the policy brief, please click here.

Categories
Copyright Legislation

Register of Copyrights Selection and Accountability Act is First Step Towards a Modern Copyright Office

U.S. Capitol buildingThe House Judiciary Committee today overwhelmingly approved the bipartisan Register of Copyrights Selection and Accountability Act by a vote of 27-1. Introduced last Thursday by Chairman Bob Goodlatte and Ranking Member John Conyers, Jr.—with the support of Senate Judiciary Committee Chairman Chuck Grassley, Ranking Member Dianne Feinstein, and Senator Patrick Leahy—the Act is the first legislative effort to follow a four-year review of U.S. Copyright law and aims to kick-start an overdue modernization of the United States Copyright Office (USCO).

Focusing on the selection process of the Register of Copyrights, the concise bill requires the Register to be nominated by the President of the United States and subject to confirmation by the U.S. Senate, rather than appointed and dismissed at the pleasure of the Librarian of Congress. Today’s markup saw the inclusion of an amendment that would create a panel—made up of the Speaker of the House, President Pro Tem of the Senate, House and Senate Majority and Minority Leaders, and the Librarian of Congress—tasked with submitting a list of three qualified nominees to the President, who would then nominate an individual subject to confirmation by the Senate. The bill reflects the need for greater stakeholder and Congressional input in the selection of a leader Congress looks to for expert advice and analysis on the copyright system, and it represents the first step in an unquestionably necessary Copyright Office modernization effort.

In 2013, the House Judiciary Committee began a comprehensive bipartisan review of the copyright system that included 20 hearings, testimony from over 100 witnesses, and a listening tour that invited input from copyright stakeholders across the country. According to the Committee, the goal of the review was “to determine whether the copyright laws are still working in the digital age to reward creativity and innovation.” In December 2016, the first policy proposal to come out of the review focused on Copyright Office modernization and stressed the need for information technology (IT) upgrades, the creation of advisory committees and a small claims system, and overall decision making autonomy.

The Copyright Office is currently part of the Library of Congress, a legislative government agency and the main research arm of the U.S. Congress. The Office’s budget and leadership are determined by the Library, which is able to make important decisions independent of any outside review or accountability. It’s a curious arrangement, different from most other federal agencies whose leadership is subject to the checks and balances of an executive nomination and Congressional confirmation process.

As former Registers of Copyrights Ralph Oman and Marybeth Peters point out in a recent letter to Congress, the Copyright Office’s residence in the Library of Congress is a largely the result of a historical accident from the late 19th century. In 1870, Librarian of Congress Ainsworth Rand Spofford convinced Congress that copies of works submitted for copyright registration should be deposited to the Library to help build its collection, and thus the Copyright Office came under the authority of the Library. But nearly 150 years later, the Library of Congress—due to its own unique mission and approach to copyright law—is not best positioned to oversee the operation of an agency in need of reform.

There’s no dispute that the Copyright Office is in need of a facelift. For years, the Office has been underfunded, understaffed, and undervalued, making growth and development with the digital age all but impossible. Before her unexpected ouster, Register Maria Pallante provided Congress with a Register’s Perspective on Copyright Review that included a detailed list of deficiencies within the Office in need of improvement. While Pallante is no longer leading the Copyright Office, her concerns were echoed by stakeholders during the review hearings and listening tour, and Congress has recognized the need to begin an extensive modernization effort.

The copyright system is vitally important to the U.S. economy. According to a 2016 report by the International Intellectual Property Alliance, core copyright industries contributed over $1.2 trillion to the U.S. GDP and employed more than 5.5 million U.S. workers. Despite unfounded claims that its role is “mundane” and leader inconsequential, the Copyright Office plays a central role in the copyright system by providing expert reports and advice to Congress on a variety of copyright-related issues. Section 701(b) of the Copyright Act charges the Register of Copyrights with a number of meaningful duties, and Congress regularly looks to the Register and the Office for input on the development of copyright law.

Making the Register a presidential appointee with the advice and consent of the Senate is necessary to ensure that all stakeholder concerns are addressed prior to confirmation and that the Register remains accountable to Congress. Since the unprecedented removal of Register Pallante in October, there is no permanent Register of Copyrights in place, and the current Librarian of Congress is taking a highly unusual internet survey-based approach to determine the qualities of the next Register. The direct line of communication to the USCO that Congress enjoyed in the past has been disrupted, and consequential decisions are being made with little accountability or regard for Congress’s important role in the process.

These troubling developments are evidence that the system needs to change, and it’s imperative the next Register be subject to the same processes used to select the leaders of equally important government agencies. Only when the value of the Copyright Office is recognized and its infrastructure and operations updated can the system begin to modernize and keep up with the creative culture it serves.

Categories
Copyright

Another Huge Setback in CloudFlare’s Quixotic Campaign to Protect Pirate Sites

the word "copyright" typed on a computerLast August, I wrote about CloudFlare’s “desperate new strategy” to protect MP3Skull, a notorious pirate site that was sued by various recording companies for copyright infringement. CloudFlare offers content delivery networking, web optimization, and other performance services for websites. The plaintiffs easily obtained a permanent injunction against MP3Skull when it didn’t even bother to respond to the suit. However, that didn’t stop MP3Skull from opening up shop under several new top-level domains using CloudFlare’s services. When the plaintiffs sent a copy of the injunction to CloudFlare and asked it stop servicing the sites, CloudFlare put up a fight.

CloudFlare has a history of supporting pirate sites. After Grooveshark was found liable for willful copyright infringement and shut down, CloudFlare was there to lend a helping hand to the copycat sites that later sprung up. The plaintiffs obtained a restraining order against the new sites, and they asked CloudFlare to not provide them with services. CloudFlare balked at the suggestion, arguing in the district court that it was not in cahoots with the enjoined defendants. The district court held that, under Rule 65, CloudFlare was indeed bound by the injunction against the copycat sites. By providing the copycats with numerous services, CloudFlare was in “active concert or participation” with the defendants.

Just as CloudFlare took the low-road with Grooveshark, it again decided to stand up for adjudicated pirates with MP3Skull. Once confronted with the injunction against MP3Skull, CloudFlare tried a new strategy. Instead of arguing that it wasn’t acting in concert with the enjoined defendants, it argued that it couldn’t be enjoined because of the DMCA. In particular, CloudFlare contended that since Section 512(j) controls injunctions against internet service providers, and since that standard was not applied here, it was not bound by the injunction. As I mentioned in my last post, this argument is ridiculous for one simple reason: CloudFlare is not being enjoined.

This past Thursday, District Judge Marcia G. Cooke of the Southern District of Florida easily shredded CloudFlare’s silly and self-serving argument: “CloudFlare contends that Section 512 of the Copyright Act (‘Section 512’) guides how the Permanent Injunction applies to it, not Rule 65(d) of the Federal Rules of Civil Procedure. I disagree.”

Judge Cooke agreed with CloudFlare that “Section 512 outlines rules for copyright infringement-related injunctions involving online service providers[.]” But she disagreed that Section 512(j) has anything to do with whether CloudFlare was bound by the injunction against MP3Skull under Rule 65. She noted that Section 512 “does not blunt a court’s power to enforce a permanent injunction involving non-parties such as CloudFlare that may be ‘in active concert or participation’ with Defendants.” Indeed, Judge Cooke stated that “[e]very injunction . . . automatically forbids non-parties” from aiding and abetting enjoined defendants.

This is clearly the correct result. The standards that apply when enjoining a service provider under Sections 512 have no applicability to the general rule that it’s contemptuous to aid and abet a defendant that has already been enjoined. Again, CloudFlare was not the party enjoined—only MP3Skull was enjoined. And even though Section 512(j) would apply if CloudFlare were being enjoined, that’s irrelevant to the issue of whether CloudFlare, or any other non-party, is bound by the injunction against MP3Skull.

Despite this huge loss for CloudFlare, Judge Cooke left open the possibility that it could continue its mission to protect the MP3Skull defendants. Since the parties did not brief the issue of whether CloudFlare is in “active concert or participation” with the defendants, Judge Cooke found that due process requires her to give CloudFlare a chance to argue that it is not. Given its past conduct, it seems likely that CloudFlare will vigorously argue that the services it provides don’t actually help its customers to do anything. Of course, given the Grooveshark defeat on this same issue, I don’t think Judge Cooke will waste too many pages rejecting CloudFlare’s next desperate attempt to protect pirate sites.

Categories
Copyright

Kodi Software Enabling Widespread Copyright Infringement

hand holding remote pointing at television showing a sports gameAwards season always seems to arrive with new stories about how piracy is affecting the film industry and the way we watch movies. Whether it’s a promotional screener that was stolen and uploaded to a torrent site, or the latest software that allows users to download or stream pirated content, the tales are reminders of the enduring problem of online copyright infringement.

This year, when talking to people (outside of the copyright law world) about whether they’d seen certain Oscar-nominated films, the same name kept coming up: Kodi. Specifically, users described downloading the Kodi app to an internet connected device, then adding “plug-ins” or “add-ons” that deliver an extensive library of streaming TV shows and movies, including Moonlight, La La Land, and other Best Picture nominees. Though Kodi’s controversial popularity in the UK has been well-chronicled of late, the software is now becoming the preferred way to stream pirated content in the US, and it’s particularly discouraging because while Kodi is not in itself an illegal service, it is blurring the lines of accountability and contributing to massive IP theft.

Billing its product as “open source home theater software,” Kodi is a free media player application that allows users to view streaming media, such as videos, music, podcasts, and videos from the internet on a variety of platforms. Its open source, cross-platform nature enables interaction with third-party devices designed to facilitate infringement by including add-ons that deliver pirated content. Sales of pre-programmed “Kodi boxes” have become widespread in the UK, mostly because of their incorporation of the illicit add-ons. Kodi box popularity is catching the attention of rights holders and broadcasters such as the BBC, Sky, and the Premier League, and the UK’s Intellectual Property Office (IPO) just announced an investigation into the boxes.

The group behind Kodi recently acknowledged its connection to piracy, and pledged a renewed effort to distance itself from copyright infringement by going after unauthorized uses of its “Kodi” trademark. Unfortunately, they made the same promise in 2014, and Kodi-related piracy has grown exponentially. It’s also interesting that Kodi is threatening to enforce its own IP rights in an attempt to get people to stop “dragging our name through the muck,” while they simultaneously disregard the rights of the countless creators and copyright owners whose works their software helps pirate. In the same announcement warning of the plan to curb unauthorized use of its trademark, Kodi Product Manager Nathan Betzen displays a lack of concern for other victims of infringement.

“Team Kodi maintains an officially neutral stance on what users do with their own software. Kodi is open source software, and as long as the GPL [General Public License] is followed, you are welcome to do with it as you like.”

In the United Kingdom, a concerted effort was just announced to go after the source and target the servers feeding the illicit streams to the Kodi add-ons. Initially obtained by the English Premier League—the top-tier football (or soccer) organization in the UK—a High Court injunction will allow the League to compel the largest ISPs in the country to block the actual source of pirated streams, rather than engage in website whack-a-mole. The strategy involves going “up the content tree” to attack the servers where the streams originate, and for the moment, it seems that the ISPs are willing to cooperate.

In the US, in lieu of acquiring pre-programmed Kodi boxes, users are downloading the Kodi software directly to laptop computers, Amazon Fire Sticks, or smart TVs, and adding the illicit add-ons themselves. It makes going after Kodi for infringement difficult because its product is essentially a media player and is not actually distributing or making copies of the movies and TV shows it streams. Like the VCR thirty years before it, Kodi is capable of non-infringing uses and is likely to claim that it has no control over the bad actors using their product to infringe.

But liability for copyright infringement can extend to those who facilitate theft under the theory of secondary liability, which includes both vicarious and contributory liability. Just last year, in BMG v. Cox, a federal judge upheld a $25 million penalty against ISP giant Cox Communications for contributory and willful copyright infringement. Despite arguing that its Internet service is just like the VCR in Sony v. Universal, and therefore should not be liable for infringing acts of its customers, Cox was found to have made a material contribution to the infringement simply by providing the means—also referred to as the “site and facilities”—for a user to infringe, and to have had knowledge of repeated instances of infringement. This combination of material contribution and knowledge satisfies the test for contributory infringement, and the District Court’s finding represents a clear assignment of accountability to those that turn a blind eye to piracy.

While Cox’s failure to act in the face of blatant, repeated infringement may represent a more egregious example of contributory infringement, one could argue that Kodi is similarly exposing itself to secondary liability. By providing software that facilitates extensive piracy, Kodi surely makes a material contribution to infringement, and the Kodi group is well aware that its product “has grown to become one of the most-used pieces of software through which people can stream, download and otherwise obtain copyright infringing content.”

Though Kodi is different than Cox’s Internet service in that once the software is downloaded, its decentralized architecture means Kodi has no ability to monitor or control what it’s used for, the Supreme Court has made clear in MGM v. Grokster that the decentralized nature of software is not enough to escape contributory liability. If Kodi’s primary use can be shown to be streaming infringing content, it could face the same fate as some other illicit streaming services such as Popcorn Time. Those behind Kodi know that contributory liability for open-source software is somewhat of a gray area of copyright law that allows their product to exist, but as the Kodi name becomes more and more synonymous with piracy, it may become harder to avoid accountability.

Categories
Copyright

Trusted Notifier Program Defended Against Misleading Rhetoric

a laptop screenOne year ago, domain name registry Donuts, Inc. and the Motion Picture Association of America (MPAA) entered into an agreement termed the Trusted Notifier Program in a joint effort to combat piracy. The voluntary initiative “introduced a new way to work towards mitigation of clear and pervasive cases of copyright infringement,” and according to Donuts’ one-year summary, has been a success for “rights owners, registrants and the public at large.”

While the program and similar voluntary agreements are not without their detractors, it’s important to separate good-faith criticism from misleading rhetoric. In an article posted this week, tech pioneer and Internet security expert Paul Vixie responds to a recent paper criticizing the Internet Corporation for Assigned Names and Numbers (ICANN), trade associations, and standards organizations for implementing a “privately ordered online content regulation.”

The rebuttal deconstructs University of Idaho Law Professor Annmarie Bridy’s paper piece by piece, exposing many of the claims as unsubstantiated or misleading. Among other things, Mr. Vixie’s article provides the following evaluations:

  • No evidence is offered in support of the claim that the sole or primary purpose of voluntary efforts such as the Trusted Notifier Program has been to develop a “large-scale program of privately ordered online content regulation.”
  • Claims that “less sophisticated and economically powerful” ICANN stakeholders take a backseat to rights-holder organization influence have been demonstrated to be false by the existence of new generic top-level domain (gTLD) programs.
  • No evidence is offered in support of the claim that copyright owners “appear to be laying the groundwork for a broad program of DNS-based enforcement, with the long-term goal of implementing a UDRP-like procedure for claims of piracy and counterfeiting that are wholly unrelated to any bad-faith or confusing use of domain names.”
  • The unregulated nature of the Internet has acted as a “stay out of jail free” card for millions of criminals, and some redress and balance is both inevitable and necessary.

In conclusion, Vixie notes that the Trusted Notifier Program represents the engagement of Internet industry stakeholders with rights-holder communities to create efficient takedown-related activities, which is exactly what the Internet technical community told rights holders they should pursue instead of SOPA. The article advises that “asking interested parties not to cooperate on matters of their aligned interest will never be effective. Notice and takedown, at scale, without borders, requires mutual cooperation. And that’s what the Trusted Notifier Program is meant to effect.”

March 27, 2017, update: Bridy’s response to Vixie’s post can be read here.

Categories
Copyright Uncategorized

CPIP’s Sandra Aistars & Scalia Law Alumnae Urge Federal Circuit to Protect Creators and Rein In Fair Use in Oracle v. Google

U.S. Capitol buildingOn February 17, 2017, CPIP Senior Scholar Sandra Aistars filed an amicus brief in Oracle v. Google, a copyright case currently before the Federal Circuit. Prof. Aistars worked in conjunction with Scalia Law alumnae Antigone Peyton and Jennifer Aktins of Cloudigy Law and third-year law student Rebecca Cusey to file the brief on behalf of 13 intellectual property scholars, including CPIP’s Matthew Barblan, Devlin Hartline, Sean O’Connor, Eric Priest, and Mark Schultz.

The amici urge the Federal Circuit to find that Google’s for-profit, verbatim copying of thousands of lines of Oracle’s copyrighted code was not fair use. They note that an overly broad application of the fair use defense “threatens the fundamental protections of copyright law,” and they argue that “the application of fair use in this case must be faithful to the underlying purposes of both copyright law and the fair use defense.” The amici point out that there would be “significant negative ramifications for all authors” if the Federal Circuit were to excuse Google’s copying of Oracle’s creative work for the purpose “of creating a competing commercial product.”

The amici conclude: “Expanding the fair use defense to excuse appropriation of software code for commercial gain will harm both creators and the public, as creators will have less incentive to develop new software. The public will not be well-served by policy that slows down the creative advancement of software. Nor will the public be well-served by an application of fair use that will gut copyright protection for other creative works by excusing a purely commercial copying of a creative work that harms the market for the original or its derivatives.”

To read the amicus brief, please click here.

Categories
Copyright

Shaping Fair Use to Promote Fair Markets

skyline with U.S. Capitol buildingHow does fair use policy in copyright law affect markets for the production and distribution of creative works? As we come to the end of Fair Use Week, it’s a good time to highlight a report by the Phoenix Center for Advanced Legal and Economic Public Policy Studies, titled “Fair Use in the Digital Age,” that offers interesting insights into how we can optimize fair use to promote fair markets. The report takes aim at stakeholders in the entertainment and media sectors who call for weaker copyright protections at a time when the creative industries are already being undercut by spiraling digital piracy that shows no signs of abating. The report creates an economic model that opens new vistas for economically sound fair use policy in high-production-cost creative industries. And its application would help judges and lawmakers approach fair use questions in a consistent and empirically sound manner, free from the rhetoric that swirls around much of today’s fair use debates.

The concept of “fair use” in the U.S. carves out exceptions and limitations to copyright’s exclusive property rights by allowing copyrighted works to be used in certain circumstances without permission or compensation. Some other countries—like Australia and New Zealand—have an analogous carve-out in the concept of “fair dealing.” U.S. copyright law sets out four factors that must be analyzed on a case-by-case basis to determine whether a particular use constitutes a fair use. In “fair dealing” countries, specific uses that are permitted are enumerated by statute. In theory, both fair use and fair dealing are subject to statutory construction and judicial interpretation, and can be given wide or narrow berth. In practice, though, proponents of the U.S. version argue that fair use offers greater “flexibility” to allow the use of copyrighted works without permission or compensation.

“Fair Use in the Digital Age” constructs an economic model of exceptions and limitations to copyright under fair use that focuses on the goal of incentivizing the creation of new works. The objective behind the report is to determine an “optimal” level of fair use (or fair dealing) – i.e., a level in which some appropriation can occur without significantly impairing the rights and returns of copyright owners. The report finds that “optimal” fair use should be more constrained when: (i) the cost of the original work is high; (ii) the size of the market for the original work is small; (iii) piracy and other forms of leakages—which reduce the market potential for the original work—are large; (iii) the cost of distributing secondary works is lower; (iv) small amounts of transformation matter a lot to consumers; and (vi) the fixed cost of producing  secondary works is smaller.

The report seeks to “analyz[e] fair use formally and rationally.” In so doing, it concludes that “much of the advocacy for broader exceptions in copyright law is misguided.” The report argues forcefully that the characteristics of digital technologies that fair use advocates look to when calling for expanded “flexibility” actually suggest that we should be reducing exceptions and limitations to copyright. This holds particularly true in smaller markets, which tend to have high rates of copyright misappropriation and higher enforcement costs. While calling for further research on the matter, the report marks a noteworthy step in analyzing fair use rationally and carefully, and offers a clear and reasonable economic model for keeping fair use well-determined, well-designed, and fair.

Categories
Copyright

Oracle v. Google: Expansive Fair Use Harms Creators

The following post comes from Rebecca Cusey, a third-year law student at Antonin Scalia Law School, George Mason University, and a movie critic at The Federalist.

Rebecca CuseyBy Rebecca Cusey

The fair use doctrine has expanded far beyond its purpose, according to an amicus brief filed this past Friday on behalf of 13 law professors in Oracle v. Google, a copyright case currently before the Federal Circuit. Scalia Law alumnae Antigone Peyton and Jennifer Aktins of Cloudigy Law worked in conjunction with CPIP Senior Scholar Sandra Aistars to file the brief, and I had the pleasure of helping them draft it.

While there are several related decisions for the court to make, the primary issue before the Federal Circuit is whether Google’s use of Oracle’s software code, known as an API, is excused by the fair use defense. This case is long and complex, as would be expected from two software giants battling over the use of important code. Phones don’t run themselves, after all, and there’s a huge, lucrative market.

In 2014, the Federal Circuit held that Oracle’s API code was copyrightable because it contained protectable, original expression. The court reasoned that the software code resembled a taxonomy instead of a system or method of operation, which would be unprotectable. The issue of functionality versus creativity was addressed, and the court found that the creative code in question was not precluded from copyright protection even though it was also functional.

The Federal Circuit remanded the case to the district court on the issue of whether the use of the API code was excused by the fair use defense. A jury found in May of 2016 that fair use did indeed excuse Google’s use of the protected code in its phones. Oracle now appeals this fair use finding to the Federal Circuit.

The amicus brief argues that the fair use defense does not cover Google’s use of the software code. The fair use doctrine was intended to balance the rights of creators to profit from and control their work with the public interest to be derived from critique, scholarship, and parody. In this case, there is no critique. Rather, Google seeks to sell a product using code it could have licensed but did not.

It matters, as all intellectual property matters, because the more we allow the fair use defense to expand and take money off of the table for creators, the more it destroys their incentive for creating original content in the first place. Why would a person or a company invest time, effort, and money in writing a song, developing a drug, or coding a program if someone else could simply take that song, drug, or code and sell it as their own? Fair use doesn’t excuse that, nor should it.

Although software code is complex and difficult to understand for the average person, there are no special rules in this area of copyright law, nor should there be. Just as copying a portion of a song and inserting it into one’s own song can be infringement, so too can taking a portion of code and selling it as part of one’s own product. Just as it takes creativity to use words to create a book, so too it takes creativity to create new and exciting code.

It may be obtuse to many people, but coding is a highly creative endeavor that brings astonishing and exciting products to market, products that have shaped and improved the world around us. It is in the interest of everyone, both software coders and society at large, that the incentive created by copyright to produce such advancement remains strong.

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Copyright

Can Copyright Help Fight Censorship in China?

cameraFree expression in China has long been a fraught concern for the entertainment industry. Last year, Chinese regulators forbade local companies from working on foreign films that could “harm national dignity and interest of China, cause social instability, or hurt the national feeling,” striking at the rapidly expanding Chinese post-production industry for Hollywood films. A further proposed regulation, now winding through China’s political—and politicized—approval process, demands “excellence in both professional skills and moral integrity” from the Chinese film business. As Chinese investors continue to acquire stakes in Hollywood studios and cinema chains, these regulations threaten to undermine global film producers striving to gain market share in China’s enormous entertainment sector.

China’s local film industry also stands to suffer from the new draft film laws, which codify the view of China’s top political advisors that movies need to be “more centered on the people, guided by core socialist values.” The national media regulator in China has already warned local entertainment and media programs not to “express overt admiration for Western lifestyles,” not to be overly commercial, and not to forget to inject communist values in their products. The results with respect to local production have been underwhelming: films with overtly communist messages have done poorly at the box office, while films that cater to audiences’ fascination with Western tastes and values remain hugely popular and in demand.

Chinese policy makers’ zeal for regulating and curtailing free expression seems unlikely to abate. Yet at the same time, Chinese audiences’ hunger for a broad array of expressive content, including works that openly embrace Western values and preferences, seems equally strong and unlikely to subside. Can this conundrum be resolved, or at least improved, anytime soon?

A fascinating paper by CPIP Senior Scholar Eric Priest offers a market-based analysis that gives hope for a way forward to gradual—and meaningful—liberalization and reform of the formal rules that govern China’s entertainment industry. Priest argues that copyright laws and practices can strengthen commercialization in the Chinese film industry, creating “complex interlocking power relations between the audience, producers, and censoring authorities.” The strength of market-backed private producers in this regime is considerable and creates leverage that can effectively push back against the authority of government censors. The concentrated strength and influence of private producers in China, underpinned and driven by market forces and economic realities, can provide a counterbalance to state censorship that Priest argues “will erode censorship practices and increase expressive diversity in Chinese media.”

Central to Priest’s analysis is the importance of copyright law as a tool for creating private property rights in original expression and thereby enabling private producers to create and commercialize new works. While many scholars argue that copyright law creates legal barriers around expressive works and thus works in parallel with state censorship, Priest argues quite the opposite. He contends that copyright bolsters private production of creative works, making it easier for film producers to push back against censors while offering popular market-based (rather than merely state-approved) creative content.

Priest’s analysis of the development of the Chinese film industry, and his exploration of the gradual way in which its state-mandated boundaries are being tested and slowly moved, is rich and detailed. He is careful to note the limits of even gradual market-based reform, pointing to films that have not been approved, sometimes for unclear reasons. Further, he recognizes that attempts by the Chinese government to allow a more open media while simultaneously seeking to maintain ideological control may create an irreconcilable dilemma for Chinese policymakers.

Priest suggests that a hardline turn is a possible outcome, but he argues that it would lead to a downturn in the Chinese film industry that would be unacceptable to Chinese authorities. He argues that Chinese censorship officials would be better off taking a “more organic, permissive, and experimental approach to censorship practice, while leaving the more restrictive formal laws intact as a baseline standard until circumstances warrant a change in formal laws.” As noted earlier, this does not appear to be the direction in which the government is currently headed, suggesting that other priorities—such as upholding socialist norms, embracing didacticism, and promoting authoritarian tenets—may remain the order of the day in China. But Priest takes the long view, and so should we: the film market will speak in China, and it will speak loudest when it is supported by market realities and the choices of the people it serves.