Category: Copyright

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Copyright Copyright Licensing

SONA and Songwriters Fight DOJ’s Misguided 100% Licensing Rule

Things are heating up in the lawsuit filed by Songwriters of North America and three of its members (SONA) challenging the new gloss of the Department of Justice (DOJ) on the 75-year-old consent decrees that govern the licensing practices of ASCAP and BMI, the two largest performance rights organizations (PROs). SONA sued the DOJ on September 13, 2016, questioning the DOJ’s reinterpretation of the consent decrees to require the PROs to license all of the works in their repertories on a 100% basis. As reported by Billboard yesterday, CPIP Senior Scholar & Director, Copyright Research and Policy Sandra Aistars is assisting SONA’s legal team at Gerard Fox Law PC in the litigation.

After completing a two-year review of the ASCAP and BMI consent decrees, the DOJ issued a statement on August 4, 2016, concluding that the decrees require the two PROs to offer only “full-work licenses.” On this view, the PROs would not be able to continue licensing the fractional interests in the musical compositions owned by the songwriters they represent. As the U.S. Copyright Office noted in early-2016, such fractional licensing is a “longstanding practice of the music industry.” Nevertheless, the DOJ claimed that the change “should not meaningfully disrupt the status quo in the licensing of public performance rights.”

This assertion was immediately challenged by the PROs. ASCAP President Paul Williams issued a statement that same day vowing to work with BMI “to overturn the DOJ’s decision” in both Congress and the courts. BMI filed a letter with District Judge Louis L. Stanton, who oversees BMI’s consent decree, announcing its intention to seek a declaration that the decree “does not require 100% licensing.” Six weeks later, Judge Stanton issued an opinion declaring that BMI’s consent decree “neither bars fractional licensing nor requires full-work licensing.” The victory was celebrated as a win for songwriters, and both ASCAP and BMI issued statements praising the decision. The DOJ has since appealed the issue to the Second Circuit.

In its complaint filed in the District of Columbia, SONA argues that the DOJ’s 100% licensing rule violates songwriters’ due process rights, both substantive and procedural, under the Fifth Amendment as well as the Administrative Procedures Act. Calling the DOJ’s rule “a dramatic departure from the status quo,” SONA points out that it will “limit and undermine the creative and economic activities” of songwriters by forcing them to “undertake the burdensome and potentially costly process of revisiting and amending their core business practices, private contracts, and collaborative relationships” in order to comply.

Arguing that the case should be dismissed, the DOJ challenges the standing of SONA to even invoke the court’s jurisdiction. The DOJ claims that any harm caused by the consent decrees is too speculative and remote to create an actual case or controversy, and it suggests that no songwriters have been deprived of any protected liberty or property interest under the Due Process Clause. In its opposition brief filed this past Tuesday, SONA strongly opposes that contention:

[P]laintiffs have alleged and will prove at trial that [the DOJ’s] new rule has caused immediate injuries and will cause imminent injuries to each plaintiff, thus establishing standing. Plaintiffs have also pleaded facts sufficient to show that the government’s action is interfering with their freedom to contract, freedom of association, and freedom of speech, and that the government has taken their valuable intellectual-property rights without compensation, thus violating plaintiffs’ substantive and procedural due-process rights.

Admonishing the DOJ’s “casual disregard for the welfare and livelihoods of America’s songwriters,” SONA points out that, under the DOJ’s new rule, songwriters will:

  • Be deprived of the ability to choose the PRO that will license their shares of coauthored works;
  • Be required to withdraw works from representation by ASCAP or BMI;
  • Have songs that they must license outside of the PRO system;
  • Need to cede administrative control over their copyrights, including the right to collect royalties, to unaffiliated third parties;
  • Be compelled to renegotiate existing contractual relationships on a song-by-song basis;
  • Be forced to consider whether they should decline to collaborate with creators who are not members of the same PRO; and
  • Have reason to consider withdrawing from ASCAP or BMI altogether.

    • Now that President Trump is in office, there is new leadership at the DOJ. Jeff Sessions was sworn in as the U.S. Attorney General earlier today, and Brent Snyder took over as acting director of the DOJ’s Antitrust Division less than three weeks ago. Just last week, the DOJ asked the Second Circuit for an extra 90 days to file its opening brief in its appeal of Judge Stanton’s ruling that the BMI consent decree does not require 100% licensing. According to the DOJ, the “requested extension is necessary to allow new leadership in the Department of Justice adequate time to familiarize themselves with the issues.” Perhaps there is hope that the DOJ will discontinue its misguided push for a 100% licensing rule that will inevitably threaten the livelihoods of songwriters.

    Categories
    Copyright

    IP Scholars Explain Why We Shouldn’t Use SurveyMonkey to Select Our Next Register of Copyrights

    Washington D.C. at nightIn a letter submitted to House Judiciary Committee today, nine IP scholars (organized by CPIP’s Sandra Aistars) express their support for the Committee’s proposal to modernize the Copyright Office. The letter identifies three major challenges facing the Copyright Office, including “(1) insufficient funds, staff, and infrastructure to efficiently perform its core functions; (2) operational impediments stemming from its integration with the Library of Congress; and (3) potential risk of constitutional challenges to its decision-making authority should the Office take on increased regulatory or adjudicatory responsibility.”

    The IP scholars laud the Committee’s recommendation that the Office be led by a principal officer of the government, nominated and confirmed like other senior government officials. The scholars also express their concern with the Library’s highly-unusual method of using a SurveyMonkey questionnaire to identify the knowledge, skills, and abilities required to run the Copyright Office.

    On December 16th, the newly-appointed Librarian solicited the public to “provide input to the Library of Congress on expertise needed by the Register of Copyrights.” The survey consists of the following three questions:

      1. What are the knowledge, skills, and abilities you believe are the most important for the Register of Copyrights?

     

      1. What should be the top three priorities for the Register of Copyrights?

     

    1. Are there other factors that should be considered?

    The survey then provides an area to upload additional comments and assures that the feedback “will be reviewed and will inform development of knowledge, skills and abilities requirements for the position.”

    While there may be benefits to soliciting public input on the knowledge, skills, and abilities a Register of Copyrights should embody, as the IP scholars’ letter points out, relying on a limited SurveyMonkey experiment discounts the guidance codified in Section 701(b) of the Copyright Act. Section 701(b) already lists the functions and duties of the Register of Copyrights, including:

    (b) In addition to the functions and duties set out elsewhere in this chapter, the Register of Copyrights shall perform the following functions:

     

    (1) Advise Congress on national and international issues relating to copyright, other matters arising under this title, and related matters.(2) Provide information and assistance to Federal departments and agencies and the Judiciary on national and international issues relating to copyright, other matters arising under this title, and related matters.

    (3) Participate in meetings of international intergovernmental organizations and meetings with foreign government officials relating to copyright, other matters arising under this title, and related matters, including as a member of United States delegations as authorized by the appropriate Executive branch authority.

    (4) Conduct studies and programs regarding copyright, other matters arising under this title, and related matters, the administration of the Copyright Office, or any function vested in the Copyright Office by law, including educational programs conducted cooperatively with foreign intellectual property offices and international intergovernmental organizations.

    (5) Perform such other functions as Congress may direct, or as may be appropriate in furtherance of the functions and duties specifically set forth in this title.

    Rather than crowd sourcing the job description, the Librarian should review the Copyright Act and consider candidates that would be best qualified to fulfill the explicit and established standards of 701(b).

    By handing this over to anyone willing to fill out a SurveyMonkey form, the Library of Congress is politicizing a process that shouldn’t be politicized. The letter warns that “[w]hile it is often laudable to seek public input on important issues of policy, an online survey seeking input on job competencies from any internet user is an inefficient and inappropriate approach for developing selection criteria for this important role, particularly where such minimal background is provided to survey-takers and where there appears to be no mechanism to encourage constructive comments.”

    As recently as April of last year, Fight for the Future incited an effort to spam the Copyright Office while it solicited comments regarding the DMCA notice and takedown process. Engaging in a campaign of misinformation, the advocacy group flooded the Office with automated “comments” that crippled the regulations.gov website during the last 48 hours of an important collection period. The Register’s selection process should not be handed over to Internet bullies and trolls.

    The next Register of Copyrights will have an immediate and lasting effect on the administration of copyright laws, and the Library of Congress should respect long-standing norms as well as Congress’s instructions as embodied in the Copyright Act. The IP scholars’ letter reiterates that the statutory obligations of Section 701(b) require certain competencies of a Register of Copyrights and ensures that “the successful candidate can meet the management and leadership expectations attendant to a senior executive officer position in the federal government.” This is an important process that deserves more serious consideration than a SurveyMonkey poll.

    Categories
    Copyright Uncategorized

    Librarians’ Contradictory Letter Reveals an Alarming Ignorance of the Copyright System

    U.S. Capitol buidlingOn December 14th, a group of librarians sent a letter to Congress explaining why they believe the Copyright Office should remain under the control of the Library of Congress. Written by University of Virginia Library’s Brandon Butler, the letter is a self-contradicting and uninformed response to recent recommendations on reform of the Copyright Office offered by leading members of the House Judiciary Committee. While the lawmakers’ report proposes overdue, sensible reforms to the framework of a department in need of modernization, the librarians’ letter favors a one-sided approach to reform and reveals a gross misunderstanding of how copyright law and the Copyright Office ensure public access to creative works.

    The Letter Embraces the Very Conflict It Claims to Reject

    The letter begins by criticizing another recent letter to Congress from former Registers of Copyright Ralph Oman and Marybeth Peters in which they question the recent firing of Register of Copyright Maria Pallante and discuss the urgent need for an independent Copyright Office. Butler takes issue with the former Registers’ suggestion that the Library of Congress and the Copyright Office have different priorities and distinguishable missions, insisting that if any tensions exist, they are a result of bias at the Copyright Office. Alleging that the former Registers and the Copyright Office are “on the side of authors and media companies,” Butler proclaims that libraries “in all their richness and complexity” truly serve the interest of all. It’s a nice-sounding theory, but unfortunately it’s completely inaccurate and soon contradicted by a palpable disregard for the rights of authors and creators.

    Claiming that librarians and the Library of Congress don’t subscribe to the theory of an adverse dichotomy between authors and the public, the letter then reinforces this theory by suggesting the scales should be tipped in favor of the public. In one paragraph, Butler endorses the “important balance between the short-term, private interests of authors and intermediaries, and the long-term interests of the public.” Curiously, just after he lauds this “important balance,” it is abruptly discarded as a reflection of “a narrow conception” and “inimical” priorities that cause an unproductive tension between the Office and the Library of Congress. Soon after describing libraries as the “fulcrum” upon which the balance of copyright and the public interest rests, the letter declares that “[we] reject this false dichotomy between copyright and the public interest.”

    Regardless of this hollow denunciation, it’s clear that Butler believes there is a conflict between the interests of authors and the interests of the public, as he preaches to it throughout the letter. After paying lip service to rising above tensions between copyright and the public interest, Butler distinctly pushes for a system that values libraries over creators and the rights in their works. Describing the “crucial parts” of the copyright system embraced by libraries and librarians, the letter lists “fair use, first sale, interlibrary loan,” and claims that “without them libraries as we know them in this country could not exist.” One might argue that more crucial to the existence of libraries are the creative works that line their stacks, but this reality doesn’t seem worth mentioning. In fact, Butler asserts that copyright law has a “fundamentally public-serving character,” contrary to the letter’s earlier emphasis on serving copyright owners, authors, and the public equally. After praising the balance, then rejecting it, the letter unequivocally elevates the importance of the access libraries provide over the contributions and rights of creators.

    The Letter Fails to Take into Account a Complex Creative Economy Based on Property Rights

    James Madison observed in Federalist No. 43 that “the public good fully coincides . . . with the claims of individuals.” The Founders of our country recognized that creative economies are built upon the property rights of authors and artists, and as CPIP’s recent policy brief on creative markets explains, they “had the foresight to recognize that the public ultimately benefits when this protection is secured by law.” Promoting the public interest by recognizing the importance of individual interests was a theory drawn from Adam Smith and his seminal The Wealth of Nations. In it, Smith explained that concerted efforts to benefit the public are often less effective—and less helpful to society—than uncoordinated individual efforts to pursue private interests, and that society benefits the most when individuals are empowered to create valuable goods and services by pursuing their own interests.

    Embodying these principles, copyright empowers authors and creators to pursue their own private interests by granting them exclusive property rights in their works. These same property rights support creative industries and provide significant benefits by playing a key role in facilitating the myriad transactions that contribute to a vibrant creative economy grounded in free market principles. Among other things, these property rights enable the division of labor, encourage product differentiation and competition, and spur investments in the development and distribution of creative works. Copyright not only incentivizes the creation of works, but also the commercialization of these works through further development, marketing, and distribution.

    Copyright’s intricate ecosystems are based on incentives that ensure the continued creation and distribution of original works of authorship, yet the librarians’ letter doesn’t seem to appreciate their significance or how they function. Butler dedicates much of the letter to emphasizing the importance of public access to copyrighted works, but access is only the final step in a complex system of investment, commercialization, and distribution of creative works. The librarians claim to “understand that copyright is a complex ecosystem,” but nothing in the letter validates this assertion. The only part of the creative economy they deem worth discussing is the end result of access, with all other imperative stages either not realized or ignored.

    The Librarians Are Oblivious to a Broken System

    Ending with a plea to Congress not to interfere with the current “relationship” between the Library of Congress and the Copyright Office, the letter claims the Library is in the best position to lead a desperately needed modernization initiative at the Office. It’s a bold claim, given that the Library stood by as the Office’s infrastructure became embarrassingly outdated and underfunded over the past twenty years. Before her untimely ouster, Register Pallante provided Congress with a perspective on copyright review that included a detailed list of deficiencies within the Office in need of improvement. Specifically, Pallante cited the diminishing number of fulltime employees and inadequate budget that have made it all but impossible to support growth and development at the Copyright Office:

    The Copyright Office budget is consistently in the neighborhood of $50 million, of which $30 million is derived from fees paid by customers for registration and other services. The Library’s overall budget for 2015 is approximately $630 million, inclusive of the Copyright Office. Without taking anything away from the important duties or funding deficiencies in the rest of the Library, the Copyright Office’s resources are inadequate to support the digital economy it serves.

    Pallante’s report goes on to discuss the serious information technology (IT) problems facing the Office, and to question the Library’s plan to address IT concerns by exerting more control over the Office’s departments and decisionmaking. The former Register was wise to question a plan that would give more control to an organization that has consistently failed to value or support the Copyright Office and its mission.

    Further demonstrating just how out of touch they are with the realities of the current copyright law landscape, an affiliated group of librarians recently professed their faith in the Digital Millennium Copyright Act (DMCA) safe harbor system that is undoubtedly failing creators, copyright owners, and the public. In comments submitted to the Copyright Office as part of its study on the effectiveness of Section 512 of the DMCA, the Library Copyright Alliance (LCA) makes the absurd claim that the “safe harbors are working exactly as the stakeholders and Congress intended.” But, just before this assertion, the comments accuse copyright owners of abusing the DMCA’s notice and takedown process, and suggest amendments to the DMCA are necessary “to curtail this abuse.” Not only are the LCA’s comments utterly contradictory, they ignore substantial evidence and testimony from dozens of interested parties that the DMCA needs to be reformed and updated.

    As CPIP highlighted in a recent examination of the state of the DMCA, the notice and takedown system has been largely ineffective in managing the ever-increasing amount of piracy, and courts continue to diminish service providers’ responsibility to cooperate with copyright owners to detect and deter infringement. The constant game of whack-a-mole with websites offering infringing content continues, and platforms such as YouTube are teeming with unauthorized works. Artist, creators and copyright owners have loudly voiced their frustration with the current system and called for reforms that better respect their rights. In the face of such obvious evidence of a broken system, to claim the DMCA is working exactly as intended speaks volumes of the librarians’ inability to recognize the reality of the situation.

    It’s Time for Change at the Copyright Office

    The House Judiciary Committee’s proposal on copyright reform is a response to years of listening “to the views and concerns of stakeholders from all sides of the copyright debate,” and it identifies modernization efforts that address the concerns of these interested parties. Since 2013, the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property and the Internet has conducted 20 copyright review hearings on the current state of copyright law which included testimony from 100 witnesses. In addition to the hearings, Committee Chairman Bob Goodlatte and Ranking Member John Conyers brought a copyright listening tour to Nashville, Silicon Valley, and Los Angeles where a wide range of creators, innovators, technology professionals, and users of copyrighted works had the opportunity to tell the Committee directly what changes they believe are needed to ensure U.S. copyright law evolves with the digital age.

    The resulting policy proposals reflect a broad acknowledgment by those who participated  in the review that the Copyright Office must be updated to keep up with the digital culture it serves. Two of the most important steps in this modernization effort identified by the Committee include requiring the Office to maintain an updated digital database and granting the Office autonomy with respect to the Library of Congress. If Brandon Butler and the signatories of his letter had their way, the Copyright Office would remain under control of an organization that has proven it is unable to help propel the Office into the 21st century. It’s not particularly surprising that librarians would want the Library of Congress to retain control over the Copyright Office, but an overwhelming majority of creators, copyright law experts, and lawmakers recognize that the Office needs to move forward, rather than remain trapped in the past.

    Categories
    Copyright Uncategorized

    Digital Single Market Must Protect the Rights of All Authors and Publishers

    Cross-posted from the Mister Copyright blog.

    a CD resting against a stack of booksIn 2015, the European Commission unveiled a plan to “create a free and secure digital single market” that would expand and standardize the EU’s digital economy for the benefit of consumers. The strategy was named the Digital Single Market and one of its objectives is to modernize the EU copyright framework to fit the digital age. But while the plan includes the preservation of the rights of creators such as film producers and musicians, publishers of scientific and academic materials are subject to a notable carve out that stands to rob them of the rights in their works. It’s a peculiar exclusion that has provoked both authors and publishers to demand a proposal that will ensure they receive the same treatment as their fellow creators, and it’s critical that the European Commission respond to form a comprehensive policy that upholds the rights of all authors and copyright owners.

    The Digital Single Market aims to break down regulatory barriers and unite 28 national markets into a single one that will enhance access to protected works by simplifying and speeding up the process for clearing rights. Though it sounds like a practical goal, the directive plans to do so through an expansion of exceptions to copyright that arbitrarily neglect the rights of some copyright owners. And while there may be a need to update copyright regulations in other industries, publishers and authors believe that the current legislative framework already strikes a sufficient balance that allows them to prosper while giving consumers a choice of works, accessible in a variety of ways at different prices.

    In a response to the Digital Single Market regulations, the International Association for Scientific, Technical and Medical Publishers (STM) notes that Recital 33 of the Directive on Copyright in the Digital Single Market expressly excludes scientific, technical, and medical publishers from a publisher’s related right. The protection granted by virtue of a new publishers’ related right in Article 11 also does not extend to STM publishers, an oversight STM calls “disappointing, unwarranted and potentially discriminatory.” STM also points out that the vague language of the Directive on Copyright fails to adequately recognize scientific publishers as rightsholders.

    The exclusion of these publishers represents a growing conviction that because scientific publications are used for educational and beneficial purposes, they should be subject to a broad fair use policy that allows for their distribution and reproduction free from copyright limitations. It’s a popular yet curious opinion that has been bolstered by digitalization projects like Google Books, which misappropriates the works of countless creators while claiming to build a resource that will benefit the public. But while the proliferation of educational texts is certainly a noble pursuit, the works should not be valued any less than other published materials and creative works that are afforded protections under the new directives.

    As the UK Publishers Association makes clear in its position paper on the Digital Single Market, publishers are essential to the “curation, presentation and dissemination of research, knowledge and teaching materials” that ensures present and future generations can learn from and build upon existing works. Publisher developed tools already enable efficient and speedy access to educational materials, and copyright directives that do not provide clear protection for rightsowners could upset the production and availability of these works. The authors and publishers of scientific, technical, and medical texts invest years of research and writing – not to mention money – to produce their work, and depriving them of the right to control and realize a return on their investment could threaten the creation of future works.

    The Publishers Association also maintains that while the Digital Single Market should apply to every European Union member, there is still a role for national markets with developed copyright mechanisms. Warning that not all aspects of a market can be homogenized, the Association affirms that different national cultures and languages treat copyright in specific ways, and that well-functioning licensing schemes which can operate across borders already exist. Essential in the development of a Digital Single Market is acknowledgement and respect for the national differences and cultural diversity that are the foundation of the success of the European Union.

    The inclusion of well-defined publisher’s related rights in the Digital Single Market directives is crucial to the protection of the rights of academic authors and publishers and to the overall viability of the market for scholarly works. Publishing has embraced the development of new technologies and platforms and already represents one of the success stories of the digital age. Any modifications to the copyright mechanisms that have allowed scientific, technological, and medical scholarship to flourish must clearly guarantee the rights of all authors and publishers, because without them, the future of the European creative culture is at risk.

    Categories
    Copyright Infringement Uncategorized

    Content Thief Turned Content Creator Rails Against Piracy

    Cross-posted from the Mister Copyright blog.

    cameraLast week, YouTube celebrity (yes, that’s a thing now) Olajide “JJ” Olatunji posted an expletive-filled tirade aimed at those illegally downloading his new movie “Laid in America.” After fans of Olatunji (aka KSI), whose YouTube page has over 14 million subscribers, began notifying him of the film’s availability on a number of illicit torrent sites, he lashed out at the people pirating the film, listing the many legal services offering his work, and explaining – in not so subtle terms – how illegally downloading the film hurts all who contributed to its creation. Some commenters were quick to point out that Olatunji himself used pirated software to create the very videos that made him famous. But while Olatunji readily admitted his outburst was somewhat hypocritical, the dramatic rant speaks to an important aspect of the nature of piracy: The extensive damage caused by the illegal downloading of creative works often isn’t appreciated by those unfamiliar with all that goes into producing them.

    Illegally downloading creative content online is all too easy. Unlike stealing a physical product from a store, there’s no need to stealthily conceal the merchandise, avoid security guards, or worry about magnetic security tags. A user can visit any number of torrent sites, simply click on a title, and wait for the work to download. The ease and perceived absence of repercussions for illegally downloading content has been perhaps one of the biggest impediments to quelling the massive amount of piracy that continues to saturate the Internet. Unfortunately, it’s a mindset that seems to be ingrained in a younger generation of Internet users: How could something so easy and consequence-free be bad?

    Even if some users realize that sharing pirated copies of music, movies, TV shows, or software is wrong and illegal, they often don’t understand why. A common narrative among those distributing illicit copies of copyrighted works is that movie studios or record labels are corrupt and already making enough money, and that illegally downloading a film or album won’t affect the entertainment business in the long run. Then there’s the exposure myth. It goes something like this: If I share this album with all my friends, the band will gain more fans and the fans will go see them live and buy their t-shirts. It’s a cute idea, but artists can’t live on exposure. Take their word for it here, here, and here.

    Others just don’t understand all that goes into making an album, show, or film. They believe that when they pay for a movie, the money goes to an already wealthy actor, musician, or big studio executive. While portions of the proceeds certainly do, the money is also paying the salaries of the hundreds and sometimes thousands of people behind the scenes, without whom the work could never be created. As Olatunji so eloquently clarifies:

    I’m not the only one that made this movie. There were hundreds, and hundreds, and hundreds of people that made this movie. Because it’s not just me you’re f*cking over. You’re f*cking over so many people. You’re f*cking over the producer, director, actors, people who did the music in the film, the cameramen, the lighting crew, the set crew. No, but seriously, it’s f*cking ridiculous.

    A seasoned anti-piracy advocate couldn’t have said it any better.

    The point is that the entertainment and copyright-based industry is larger and comprised of so many more components and workers than most realize. A 2014 report by the International Intellectual Property Alliance details the contribution copyright industries make to the United States GDP, quantifying the value at over 1.1 trillion dollars. The study found that copyright industries “make up an increasingly large percentage of value added to GDP; create more and better-paying jobs; grow faster than the rest of the U.S. economy; and contribute substantially to U.S. foreign sales and exports, outpacing many industry sectors.”

    Illegal distribution of copyrighted works threatens much more than the pocketbooks of successful artists and executives. The fact that proponents of a “free” Internet and those engaged in piracy either don’t realize or refuse to acknowledge the far-reaching effects of stealing creative works is troublesome. The passion of Olatunji’s appeal to his fans and those stealing his movie speaks volumes about the misconceptions surrounding piracy and how a little insight into the creative process can make things so clear. Respect for creative processes shouldn’t be an abstract concept, and if more creators and celebrities lend their voice to educating the public, art and entertainment will flourish.

    Categories
    Copyright Uncategorized

    Second Circuit Brings Some Sanity Back to Transformative Fair Use

    the word "inspiration" typed on a typewriterThe Second Circuit handed down an opinion in TCA Television v. McCollum earlier this week holding that a play’s inclusion of Abbott and Costello’s famous “Who’s on First?” routine was not transformative fair use. Given how expansive transformativeness has become lately, especially in the Second Circuit, the opinion is somewhat surprising. What’s more, it’s not clear that the appellate court even needed to reach the fair use issue since it held for the defendants on the alternate ground of lack of ownership. If anything, it appears that this particular panel of judges went out of its way to push back on—and bring some much-needed sanity to—transformative fair use doctrine in the Second Circuit.

    The play at issue, “Hand to God,” features an introverted boy named Jason who communicates through his alter ego sock puppet named Tyrone. In order to impress a girl, Jason and Tyrone perform over one minute of the “Who’s on First?” routine, with Jason as Abbott and Tyrone as Costello. The plaintiffs, including Abbott and Costello’s heirs, sent the defendants, producers and author of the play, a cease and desist letter. When the defendants refused to remove the scene from the play, the plaintiffs sued for copyright infringement. On the first fair use factor, which looks at the “purpose and character of the use,” the district court held that Jason/Tyrone’s almost-verbatim recitation of the heart of the “Who’s on First?” routine was “highly transformative”—so transformative that it was “determinative” of fair use.

    The standard for transformativeness, which comes from the Supreme Court’s opinion in Campbell v. Acuff-Rose, looks at “whether the new work merely ‘supersede[s] the objects’ of the original creation” or whether it “instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message[.]” The district court held that “Hand to God” used “Who’s on First?” for a different—and thus transformative—purpose, namely, to proffer a “darkly comedic critique of the social norms governing a small town in the Bible Belt.” While Abbott and Costello’s routine was standard vaudevillian fare, the district court reasoned that the play used it for a more dramatic purpose.

    The Second Circuit rejected the district court’s conclusion, pointing out that “the critical inquiry is whether the new work uses the copyrighted material itself for a purpose, or imbues it with a character, different from that for which it was created.” In other words, it’s not enough for “Hand to God” to have a different purpose than “Who’s on First?” The issue is whether “Hand to God” used “Who’s on First?” for a different purpose than Abbott and Costello used the routine. The Second Circuit held that it did not: “The Play may convey a dark critique of society, but it does not transform Abbott and Costello’s Routine so that it conveys that message.”

    The disagreement between the district court and the Second Circuit is subtle, yet important. The lower court determined that having Jason/Tyrone recite the “Who’s on First?” routine was transformative because it gave the audience a glimpse into Jason’s psyche. Whereas Jason is seemingly kind and soft-spoken on the surface, it becomes clear through his sock puppet persona Tyrone that there’s much murkiness beneath. And to the extent that Jason/Tyrone’s recitation of “Who’s on First?” is comedic, the district court thought that the “audience laughs at Jason’s lies, not, as the Plaintiffs claim, simply the words of the Routine itself.”

    By contrast, the Second Circuit held that this “reasoning is flawed in that what it identifies are the general artistic and critical purpose and character of the Play.” Moreover, the district court failed to identify how the “defendants’ extensive copying of a famous comedy routine was necessary to this purpose, much less how the character of the Routine was transformed by defendants’ use.” The Second Circuit’s approach here recognizes that fair use is premised upon necessity, that is, there needs to be a justification for copying the specific original work. In this case, the point of having Jason/Tyrone recite “Who’s on First?” was to demonstrate that Jason was lying when he later claimed to have written it. But that could have been accomplished by using any recognizable work.

    As the Second Circuit noted, “the particular subject of the lie—the Routine—appears irrelevant to that purpose.” And as such, the defendants’ use of “Who’s on First?” had “no bearing on the original work” and lacked the required “justification to qualify for a fair use defense.” This reasoning sounds very close to requiring the copyist to comment upon the original, a principle that, for better or worse, was rejected by the Second Circuit in Cariou v. Prince. Indeed, the appellate panel here mentioned Cariou, noting that, “although commentary frequently constitutes fair use, it is not essential that a new creative work comment on an incorporated copyrighted work to be transformative.” Nevertheless, the Second Circuit easily distinguished Cariou since there the artist at least changed the original work.

    The Second Circuit’s opinion is a refreshing reminder that, despite what some would prefer, not everything arguably-transformative is transformative fair use. If the defendants wanted to use a copyrighted work within the play, the proper course would have been to negotiate a license or to not use the work at all. And given the way “Who’s on First?” was used within the play, there was certainly no shortage of alternatives that could have sufficed. It’s also nice to see that some judges in the Second Circuit are skeptical of cases like Cariou, which the panel here referred to as “the high-water mark of our court’s recognition of transformative works.” The panel also rightfully noted that an overly-expansive view of transformativeness threatens a copyright owner’s exclusive right to prepare derivative works. And the fact that this push-back is coming from within the Second Circuit makes it all the more interesting.

    Categories
    Copyright Uncategorized

    WALA and Arts & Entertainment Advocacy Clinic Hosting Copyright Clinic and Panel

    cameraScalia Law’s Arts & Entertainment Advocacy Clinic and Washington Area Lawyers for the Arts (WALA) are hosting a Copyright Clinic and Panel on the evening of Tuesday, November 1st, 2016, at the law school.

    The event, which is free and open to the public, will give local artists, authors, and photographers the opportunity to join Arts & Entertainment Advocacy Clinic students and attorneys for a discussion on important copyright issues. The Clinic students and attorneys will answer questions on a range of issues, including the unauthorized use of photographs and the notice-and-takedown system under the Digital Millennium Copyright Act.

    If you would like to attend the event, please register here: Copyright Panel Registration. The event will be held from 7 P.M. to 8:30 P.M. in Hazel Hall, Room 215, of the Arlington campus at George Mason University. For directions, see http://www.law.gmu.edu/about/directions.

    We hope you will join us!

    Categories
    Copyright Internet Uncategorized

    Professors Mislead FCC on Basic Copyright Law

    U.S. Capitol buildingIn a letter submitted to the FCC late last week defending the Commission’s deeply flawed set-top box proposal,[1] a group of professors make an incredible claim: Everyone is perfectly free to distribute copyrighted works online however they please. No license? No problem! According to these professors, many of whom teach copyright law, copyright owners have no distribution right in cyberspace. If you think this sounds wrong, you’re right! This claim sounds ridiculous because it is ridiculous, and it’s simply amazing—and troubling—that professors would mislead the FCC in this way.

    The professors argue that a copyright owner’s “right to distribute encompasses the distribution of physical copies of a work, not electronic transmissions.” In support, they cite no case law whatsoever. There’s a good reason for this: None exists. The reality is that every single court that has ever considered this argument on the merits has rejected it. Time and again, this argument has been summarily dismissed by the courts. As the Nimmer on Copyright treatise puts it: “No court has held to the contrary on this issue[.]” Yet, the professors present this to the FCC as an accurate description of the law, with no equivocation whatsoever.

    In their defense, one can make a plausible argument that this follows from certain parts of the Copyright Act. And the professors do in fact cite these parts. They quote Section 106(3), which gives copyright owners the exclusive right “to distribute copies . . . of the copyrighted work to the public,” and Section 101, which says that “copies are material objects.” At first blush, one could question how it’s possible to distribute a “material object” online. Indeed, many academics have questioned this very thing. For example, one professor wrote in 2001 that “transmitting copyrightable works over a computer network such as the Internet do[es] not involve any transfer of such material objects.” On this view, transfers over digital networks are not distributions of material objects.

    While some academics may insist that this is the only way to interpret the Copyright Act, the reality is that the courts have uniformly interpreted it differently. Many courts have explicitly rejected the textual argument that there are no digital distributions, and many others have just assumed that such digital distribution rights exist. As the district court in Arista Records v. Greubel noted in 2006, despite “scholarly articles reflecting debate over the scope” of the distribution right, “the courts have not hesitated to find copyright infringement by distribution in cases of file-sharing or electronic transmission of copyrighted works.” The district court then cited opinions by the Supreme Court in New York Times v. Tasini, the Seventh Circuit in In re Aimster, and the Ninth Circuit in A&M Records v. Napster that applied the distribution right in cyberspace without even flinching.

    Perhaps the most in-depth analysis of the issue comes from London-Sire v. Doe, where District Judge Nancy Gertner held in 2008 that it “makes no difference that the distribution occurs electronically[.]” Judge Gertner reasoned that “[w]hat matters in the marketplace is not whether a material object ‘changes hands,’ but whether, when the transaction is completed, the distributee has a material object.” Even though the “distributee” has a different “material object”—the hard drive or other storage media where the file resides—Judge Gertner held that a digital distribution has taken place nonetheless. She warned that “an overly literal definition of ‘material object’ . . . ignores the phrase’s purpose in the copyright statutes.”

    Other courts have adopted this reasoning. For example, the district court in Capitol Records v. ReDigi cited London-Sire approvingly: “[T]he Court agrees that ‘[a]n electronic file transfer is plainly within the sort of transaction that § 106(3) was intended to reach [and] … fit[s] within the definition of ‘distribution’ of a phonorecord.’” The court then held that the distribution right exists in cyberspace: “Accordingly, the court concludes that . . . the sale of digital music files on ReDigi’s website infringes Capitol’s exclusive right of distribution.” Likewise, just last year, the district court in BMG v. Cox relied on London-Sire in holding that, “[n]ot only can electronic files be ‘material objects,’ but transferring files using a BitTorrent protocol satisfies the transactional element of distribution.”

    The fact is that courts have not wavered in finding that the distribution right applies online. As one district court said in 2012, “[i]n the electronic context, copies may be distributed electronically.” The point is so well-settled that it defies logic to claim otherwise, and it’s certainly consistent with other parts of the Copyright Act. For instance, Section 506(a)(1)(B) makes it a crime to “willfully” infringe by “distribution, including by electronic means[.]” And Section 115(c)(3)(A) creates a compulsory license “to distribute . . . by means of a digital transmission[.]” If digital distributions didn’t implicate the public distribution right, it wouldn’t be a crime to distribute “by electronic means,” and one wouldn’t need a license to distribute “by means of a digital transmission.”

    To claim that the “right to distribute encompasses the distribution of physical copies of a work, not electronic transmissions,” as the professors do, is simply wrong. There’s certainly an argument that can be made, but it’s not an accurate description of the law—which is how the professors present it. Everyone knows the distribution right exists online, and it’s industry practice to license digital distributions. Do you think iTunes and Amazon pay for distribution licenses because they just feel like it? It’s disturbing that professors would state without any qualification that electronic transmissions don’t implicate the distribution rights of copyright owners. And if they’re willing to say that, it makes you wonder what else they’re willing to say.

    [1] My colleagues and I have written extensively about the copyright concerns with the FCC’s set-top box proposal. See, for example, here, here, here, and here. The FCC now claims that a revised version of its proposal addresses these concerns, but the new language has not yet been released. Despite this fact, these professors claim that the yet-to-be-released proposal “does not interfere with any legitimate copyright interests of programmers, and that it is within the Commission’s authority to implement.” We’ll save our analysis of the new proposal for when the text itself is made available.

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    Copyright Infringement Trademarks Uncategorized

    Criminal Copyright Infringement is Crime of "Moral Turpitude"

    Cross-posted from the Law Theories blog.

    sheet musicThis past Friday, the Board of Immigration Appeals held that criminal copyright infringement constitutes a “crime involving moral turpitude” under immigration law. The Board reasoned that criminal copyright infringement is inherently immoral because it involves the willful theft of property and causes harm to both the copyright owner and society.

    The respondent, Raul Zaragoza-Vaquero, was indicted in 2012 for selling illicit CDs of popular artists including Justin Bieber, Lady Gaga, and Jennifer Lopez over a five-year period. After a three-day trial, the jury found Zaragoza-Vaquero guilty of criminal copyright infringement under Section 506(a)(1)(A), which makes it a crime to “willfully” infringe “for purposes of commercial advantage or private financial gain.” The crime was a felony under Section 2319(b)(1) because it involved the “reproduction or distribution, . . . during any 180-day period, of at least 10 copies or phonorecords, of 1 or more copyrighted works, which have a total retail value of more than $2,500.” Zaragoza-Vaquero was sentenced to 33 months in prison and ordered to pay $36,000 in restitution.

    Under immigration law, an alien who has been ordered removed from the United States may ask the Attorney General to cancel the removal order. However, there is an exception for “any alien convicted of . . . a crime involving moral turpitude,” in which case the Attorney General is powerless to cancel the removal. Zaragoza-Vaquero was ordered removed in early 2015, and the Immigration Judge pretermitted his application to have the removal order cancelled by the Attorney General. The Immigration Judge held that criminal copyright infringement is a “crime involving moral turpitude,” thus making Zaragoza-Vaquero ineligible for such cancellation. On appeal, the Board agreed, rejecting Zaragoza-Vaquero’s bid to have the Attorney General consider his removal.

    Even though crimes of “moral turpitude” have been removable offenses since 1891, Congress has never defined what the phrase means nor listed the crimes that qualify. That job instead has been left to immigration judges and the federal courts. In 1951, the U.S. Supreme Court noted that “crimes in which fraud was an ingredient have always been regarded as involving moral turpitude.” Indeed, many property crimes have been held to involve “moral turpitude” when committed willfully because there is the criminal intent to defraud the property owner of its rights. “Moral turpitude” has thus been found to exist in numerous crimes against property, including arson, burglary, embezzlement, extortion, blackmail, bribery, false pretenses, forgery, larceny, receiving or transporting stolen goods, and check or credit card fraud.

    Crimes against intellectual property have likewise been found to involve “moral turpitude.” For example, the Ninth Circuit held in 2008 that the use of counterfeit marks, in violation of state law, is “a crime involving moral turpitude because it is an inherently fraudulent crime.” The Ninth Circuit reasoned: “Either an innocent purchaser is tricked into buying a fake item; or even if the purchaser knows the item is counterfeit, the owner of the mark has been robbed of its value. The crime is really a species of theft. . . . The commission of the crime necessarily defrauds the owner of the mark, or an innocent purchaser of the counterfeit items, or both.”

    Similarly, the Board of Immigration Appeals held in 2007 that trafficking in counterfeit goods, in violation of federal law, is a crime of “moral turpitude.” The Board reasoned that the conviction required the federal prosecutor to prove that the defendant “intentionally trafficked” and “knowingly used a spurious trademark that was likely to confuse or deceive others.” Even though the statute did not require proof that the defendant had the specific intent to defraud, the Board held that such trafficking involved “moral turpitude” because it is “inherently immoral” to willfully exploit the property owner and the public.

    Turning back to Zaragoza-Vaquero, the Board defined “moral turpitude” as “conduct that shocks the public conscience as being inherently base, vile, or depraved, and contrary to accepted rules of morality and the duties owed between persons or to society in general.” The Board then noted that trafficking in counterfeit goods has been held to be a crime of “moral turpitude” because it involves (1) “theft of someone else’s property,” (2) “proof of intent to traffic,” (3) “societal harm,” and (4) “dishonest dealing and deliberate exploitation of the public and the mark owner.”

    Reasoning by analogy to these trafficking cases, the Board ultimately held that criminal copyright infringement “must also be a crime involving moral turpitude.” Criminal copyright infringement statutes “were enacted to protect a form of intellectual property,” and offenses “must be committed willfully, meaning that a defendant must voluntarily and intentionally violate a known legal duty not to infringe a copyright.” The Board noted that criminal copyright infringement “also involves significant societal harm,” since “piracy” has “harmed the film and recording industries, including actors, artists, and musicians.” It pointed to a recent report by the Government Accountability Office, which found that “intellectual property crimes cause negative effects on health, safety, and lost revenue.”

    The Board’s holding that criminal copyright infringement is a crime of “moral turpitude” thus extends the long line of cases finding that crimes against property are inherently immoral when the criminal intentionally defrauds the owner of its rights. While many will surely balk at the suggestion that there’s anything immoral about criminal copyright infringement, I think the Board reached the right conclusion—both in the moral and legal sense. A defendant such as Zaragoza-Vaquero, who for years willfully infringed for profit, has acted in a way that shocks the conscience and has shown a conscious disregard for the rights of others. And while prosecutors need not show the specific intent to defraud in securing such a conviction, the element of willfulness suffices to establish the intent to defraud the copyright owner of its property.

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    Copyright Copyright Licensing Copyright Theory Infringement International Law Internet Legislation Uncategorized WIPO

    European Union Draws a Line on Infringing Hyperlinks

    Cross-posted from the Mister Copyright blog.

    a gavel lying on a table in front of booksLast week, the European Court of Justice—the judicial authority of the European Union—issued an anticipated decision in the Sanoma hyperlinking case, declaring that commercial linking with knowledge of unauthorized content constitutes copyright infringement. The opinion comes after years of similar cases in Europe stirred debate over whether linking to pirated works was a ‘communication to the public’ and therefore infringing, and provides a sensible test that protects the works of authors and creators while ensuring the internet remains a bastion of free speech.

    Sanoma involved the popular Dutch news and gossip site GeenStijl, which ran an article in 2011 that included links to an Australian website where copyrighted Playboy magazine photos were made available. The photos were published on the Australian website without the consent of Sanoma, Playboy’s editor and copyright owner of the photos at issues, but taken down after the site was notified of their infringing nature. Despite similar notifications, GeenStijl refused to remove the hyperlinks and actually provided links to another website hosting the unauthorized photos after the Australian website took them down.

    Sanoma brought a copyright infringement claim against GS Media, which operates the GeenStijl website, and the Supreme Court of the Netherlands sought a preliminary ruling from the European Court of Justice on whether hyperlinks represent the communication of a work to the public. According to an earlier EU directive, any communication to the public of works protected by copyright must be authorized by the copyright owner. Due to the ubiquity of links and hyperlinks on the Internet, a ruling classifying them as communications to the public would have major ramifications for anyone linking to unauthorized content.

    In its judgment, the European Court of Justice found that the concept of ‘communication to the public’ requires individual assessment and laid out the following three factors that must be considered when determining whether a link or hyperlink qualifies.

    1) The deliberate nature of the intervention – According to the Court, “the user makes an act of communication when it intervenes, in full knowledge of the consequences of its actions, in order to give access to a protected work to its customers.”
    2) The concept of the ‘public’ covers an indeterminate number of potential viewers and implies a large number of people.
    3) The profit-making nature of a communication to the public – The Court explains that when hyperlinks are posted for profit, “it may be expected that the person who posted such a link should carry out the checks necessary to ensure that the work concerned is not illegally published.”

    Applying these criteria to Sanoma, the Court found that because GS Media runs a commercial website that makes money from advertising, it is undisputed that they posted the hyperlinks for profit, and that it is also undisputed that Sanoma had not authorized the publication of the photos. It also found that because they were notified by Sanoma and continued to repost links after the original source website took down the content, GS Media was aware of the infringing nature of the photos and “cannot, therefore, rebut the presumption that it posted those links in full knowledge of the illegal nature of that publication.” The Court concluded that by posting the links, GS Media therefor effected a ‘communication to the public.’

    The Court goes on to detail its desire to maintain a fair balance between the interest of copyright owners and authors and the protection of the interests and fundamental rights of Internet users, “in particular their freedom of expression and of information, as well as the general interest.” After providing the criteria for assessing whether a link qualifies as a communication to the public, the opinion emphasizes the important role hyperlinks play in the exchange and free flow of information over the internet, and clarifies that linking—even to unauthorized content—is not a communication to the public if there is no profit motive or knowledge of the infringing nature of the linked-to works. Even so, it’s important to note that not-for-profit hyperlinking may still be considered a communication to the public if the person posting the link knew or should have reasonably known that the content was posted without authorization.

    Perhaps most surprising about the Court’s decree is the relative approval by both copyright owners and supporters of the rights of those posting links. While it speaks to the reasonable approach the Court has taken in determining what qualifies as a communication to the public, it may also represent a hesitation to condemn or praise the order due to a significant ambiguity. It’s not entirely clear who carries the evidentiary burden of proving whether an individual knew or should have reasonably known certain content was posted on the Internet without authorization. If copyright owners and authors are forced to prove a user knew or should have known content was unauthorized every time they attempt to remove links that can appear online incessantly, it could render the new directives ineffectual in protecting creative works.

    Regardless of the uncertainly surrounding this burden of proof, the current test seems to strike a balance that holds commercial websites more accountable, while allowing for some flexibility for the general public. With debates over the effectiveness of notice and takedown intensifying in the United States, the EU’s decision on communications to the public should be recognized as workable approach to dealing with infringing hyperlinks. As the United States Copyright Office admits in its 2016 study on the making available right, jurisprudence in the US regarding offering access to content hosted elsewhere on the Internet through hyperlinking is less developed as some foreign jurisdictions. But the study acknowledges the progress made in the EU, and emphasizes the need to include ‘offers of access’ in the crucial making available right.

    Despite semantic differences, the EU and the US are both moving towards systems that will impose greater accountability for posting links to unauthorized works. The EU’s directive makes clear that commercial hyperlinking to unauthorized content is indeed a communication to the public and therefor copyright infringement, while ensuring that the free flow of information through general public linking will not be threatened and the Internet will remain unbroken. It’s an approach that represents the greater goals of copyright law around the world, and other jurisdictions should follow the lead of the EU when crafting copyright policies that address the intricacies of the Internet.