Tag: copyright

Categories
Copyright Fair Use Supreme Court

Recap of the Supreme Court’s Google v. Oracle Opinion

a gavel lying on a desk in front of booksThe following post comes from Liz Velander, a recent graduate of Scalia Law and a Research Assistant at CPIP.

By Liz Velander

The Supreme Court finally reached a determination in the decade-long dispute between two of the biggest technology companies in the world, Google and Oracle. Many have long-awaited the Court’s decision in this case, as it had the potential to provide market certainty in the software industry through its copyrightability analysis. The Court ultimately declines to give that certainty by bypassing the copyrightability issue and choosing to base its holding on a fact-intensive fair use analysis. The Court does this so as to “not answer more than is necessary to resolve the parties’ dispute,” “given the rapidly changing technological, economic, and business-related circumstances.” It emphasizes that its holding is narrow, only applies to declaring code, and does not modify its prior cases on fair use. However, by framing its opinion this way, the Court provides new arguments for infringers to use in a fair use defense in the software sphere and beyond. For this reason, the Court’s decision is not as narrow as it sets out to be. It may lead to lower court decisions that broaden the fair use doctrine and limit the copyright protection given to software.

The Court’s decision broadens fair use by using the doctrine to loosen copyright protection for certain types of code, allowing for a more expansive reading of a “transformative use,” and giving great weight to the public benefit of the use. Before it engages in its fair use analysis, the Court states that “fair use can play an important role in determining the lawful scope of a computer program copyright, such as the copyright at issue here.” Fair use “can distinguish between expressive and functional features of computer code where those features are mixed.” It can also “focus on the legitimate need to provide incentives to produce copyrighted material while examining the extent to which yet further protection creates unrelated or illegitimate harms in other markets or to the development of other products.” The Court describes fair use as a “context-based check that can help to keep a copyright monopoly within its lawful bounds.”

To highlight the ability of fair use to accomplish these goals, the Court begins its analysis with the second statutory factor, “the nature of the copyrighted work.” The Court uses this factor to discuss issues that would have come up if it analyzed the copyrightability of Oracle’s material, such as the applicability of the merger doctrine. It then moves to “the purpose and character of the use,” where it adopts an expansive reading of what constitutes a “transformative use.” The biggest impact of the Court’s fair use analysis, however, will likely come from the great weight it gives to the public benefit of the use under the market effect factor. By using fair use to determine “the lawful scope of a computer program copyright,” the Court’s holding may inadvertently broaden the fair use doctrine.

The Nature of the Copyrighted Work

The Court begins its analysis with describing “the nature of the copyrighted work.” The copyright at issue protects a portion of Oracle’s Java SE platform, called declaring code. Java SE has three essential parts: (1) implementing code, (2) method calls, and (3) declaring code. Implementing code tells the computer how to execute the particular task the programmer asks it to perform. Method calls are commands that help the computer carry out the task by choosing the correct programs written in implementing code. The declaring code is how the method call actually locates and invokes the particular implementing code that it needs to instruct the computer how to carry out a particular task.

For each task, the specific method call entered by the programmer matches up with a specific declaring code inside Java SE. That declaring code provides both the name for each task and organizes them within Java SE’s library. In this sense, the declaring code and the method call form a link, allowing the programmer to draw upon the thousands of prewritten tasks, written in implementing code. Without that declaring code, the method calls entered by the programmer would not call up the implementing code.

In this case, Google did not copy the implementing code from Oracle’s Java SE platform; it copied the declaring code. The Court draws a “critical line” between the uncopied implementing code and the copied declaring code under this factor. On one hand is the innovative implementing code and on the other, user-centered declaring code. The Court explains that the writing of implementing code requires balancing considerations as to how quickly a computer can execute a task or the likely size of a computer memory. The Court says that this balancing is “the very creativity that was needed to develop the Android software for use not in laptops or desktops but in the very different context of smartphones.”

Declaring code, the Court says, embodies a different kind of “creativity” because it is user facing. It must be designed and organized in a way that is intuitive and understandable to developers so they can invoke it. As part of a user interface, declaring code differs from most computer code because “its use is inherently bound together with uncopyrightable ideas (general task division and organization) and new creative expression (Android’s implementing code).” For these reasons, the Court concludes that “the declaring code is, if copyrightable at all, further than are most computer programs (such as the implementing code) from the core of copyright.” Therefore, the Court finds that the second factor, “nature of the copyrighted work,” points in the direction of fair use.

The Purpose and Character of the Use

The Court explains that the inquiry into “the purpose and character” of the use turns in a large measure on whether the copying at issue was “transformative,” that is, whether it “adds something new, with a further purpose or different character.” The Court finds that, even though Google copied Oracle’s declaring code verbatim, its use was “transformative” because it furthered the development of software programs.

The Court explains that what Google did is known as “‘reimplementation,’ defined as the ‘building of a system . . . that repurposes the same words and syntaxes’ of an existing system.” Google “reimplemented” Oracle’s declaring code to allow programmers expert in the Java programming language to use the “task calling” system that they had already learned. By using the same declaring code, programmers using the Android platform can rely on the method calls that they are already familiar with to call up particular tasks. Then Google’s own implementing code carries out those tasks.

The Court concludes that Google’s copying was a transformative use. “Google’s purpose was to create a different task-related system for a different computing environment (smartphones) and to create a platform—the Android platform—that would help achieve and popularize that objective.” Such use is “consistent with the creative ‘progress’ that is the basic constitutional objective of copyright itself.” Therefore, the purpose and character of Google’s copying was transformative to the point at which this factor also weighs in favor of fair use.

The Amount and Substantiality of the Portion Used

 The Court says that the question here is whether the over 11,000 lines of code Google copied should be viewed in isolation or as one part of a considerably greater whole. On one hand, those lines of code amount to virtually all the declaring code needed to call up hundreds of different tasks. On the other hand, if one considers the entire set of software material in the Java SE platform, the quantitative amount copied was small (only 0.4 percent).

The Court decides to view Google’s copying as one part of a greater whole because the amount of copying was “tethered to a valid, and transformative, purpose.” It explains that Google did not copy the lines because of their creativity but because programmers had already learned to work with the Java SE platform, and it would have been difficult to attract programmers to build its Android smartphone system without them. It describes the portion of the declaring code used at “the key that [Google] needed to unlock the programmers’ creative energies. And it needed those energies to create and improve its own innovative Android systems.” For these reasons, the Court holds that this factor weighs in favor of fair use.

Market Effects

The fourth statutory factor focuses upon the “effect” of the copying in the “market for or value of the copyrighted work.” The Court explains that this requires a court to consider the copyright owner’s potential loss of revenue, the source of the loss, and the public benefits the copying will likely produce. As to the likely amount of loss, the Court states that Oracle was ill-positioned to enter the smartphone market, so the jury could have found that Android did not harm the actual or potential markets for Java SE. As to the source of the loss, the Court finds Android’s profitability has much to do with third parties’ (programmers’) investment in the Java programs and less to do with Oracle’s investment in creating the Java SE platform. It says that the Copyright Act does not protect third parties’ investment in learning how to operate a created work.

Finally, given programmers’ investments in learning the Java SE platform, to allow enforcement of Oracle’s copyright here would risk harm to the public by operating as a lock on innovation. “The result could well prove highly profitable to Oracle (or other firms holding a copyright in computer interfaces). But those profits could well flow from creative improvements, new applications, and new uses developed by users who have learned to work with that interface. To that extent, the lock would interfere with, not further, copyright’s basic creativity objectives.” The Court concludes that the uncertain nature of Oracle’s “ability to compete in Android’s market place, the sources of its lost revenue, and the risk of creativity-related harms to the public, when taken together, convince that this fourth factor—market effects—also weighs in favor of fair use.”

The Court ends its opinion by noting that “the fact that computer programs are primarily functional makes it difficult to apply traditional copyright concepts in that technical world.” While that is certainly true, the Court made its work more difficult by basing its opinion in fair use instead of analyzing the copyrightability of Oracle’s code in the first place.

Categories
Copyright Legislation

Professors Balganesh and Menell on “The Curious Case of the Restatement of Copyright”

The following post comes from Ryan Reynolds, a 3L at Scalia Law and Research Assistant at CPIP.

a gavel lying on a desk in front of booksBy Ryan Reynolds

In 2015, the American Law Institute (ALI) made the announcement that it would restate an area of law that is dominated by a detailed statute—the Restatement of Copyright. ALI’s Restatements have played an important role in the development of the law, with judges, lawmakers, and law students referring to them as important tools in understanding different bodies of law. In the nearly one hundred years since ALI’s formation, however, its Restatement projects have historically eschewed legal fields dominated by statutes, instead focusing on common law topics. Therefore, when ALI announced its plan to create a Restatement of Copyright, there were many who were skeptical of the project.

It is in this context that Professors Shyamkrishna Balganesh and Peter Menell provide insight in their forthcoming article in the Columbia Journal of Law & the Arts, Restatements of Statutory Law: The Curious Case of the Restatement of Copyright. While Profs. Balganesh and Menell support a Restatement of Copyright, they argue against ALI’s application of the traditional Restatement format to an area of law dominated by a detailed federal statute. They argue that such an application ignores the analytical mismatch between the traditional Restatement format and statutory domains that will create more confusion than clarity. To resolve this mismatch, Profs. Balganesh and Menell argue for several modest changes that would allow the project to serve as a template for future statutory Restatements.

Historical Origins of the “Mismatch”

Looking to the origins of ALI, Profs. Balganesh and Menell illustrate that, from the beginning, it purposely avoided areas of law principally governed by statutes. ALI’s conception of its core function then, as now, was to resolve the uncertainty and complexity of American law—which, at the time of ALI’s formation, was derived from judge-made law that lacked general agreements on legal principles. Therefore, ALI provided guidance to judges and those involved in the legal field with the first Restatements of the law. These Restatements distilled black-letter rules of law from the disparate court decisions across the country and were seen as clear statements of the law.

It is for this reason that, soon after ALI approved a Restatement of Business Associations, fear arose among its membership that it was a subject too steeped in statutory provisions to fit the Restatement model. To address this fear, then ALI Director William Draper Lewis prepared a report outlining a framework to adapt Restatements to statutorily dominated legal fields. At its core, this framework advocated for placing the statutory provisions of subjects governed by uniform statutory law front and center. To Mr. Lewis, the primary value of these Restatements would not consist in distilling black-letter rules of law but would instead be the clarification of interpretive principles, providing the relevant judicial and executive efforts surrounding the statutory text.

Despite Mr. Lewis’ efforts, however, ALI ultimately abandoned the project and never revisited the framework of Lewis’ report. Following this affair, ALI’s Restatements avoided direct engagement with fields dominated by statutory law, instead using model codes as an alternative. That changed in 2015 when ALI announced the Restatement of Copyright project.

The “Mismatch” in the Current Restatement Initiative

As Advisors on the Restatement of Copyright project, Profs. Balganesh and Menell take time to outline their experience and criticism of the project’s use of the traditional Restatement model to copyright law. Despite ALI initially indicating that the project would focus on common law features of the Copyright Act, the first circulated draft indicated that its scope had expanded to include federal statutory provisions. To create its distilled black-letter rules of law, Profs. Balganesh and Menell note that the draft paraphrased, condensed, and reworded the statutory provisions of the Copyright Act. These changes were such that the “lack of attention to the text, legislative history, and administrative context of copyright law . . . would not aid busy judges in identifying pertinent sources for interpreting statutory provisions.”

To illustrate their criticism of the mismatch, Profs. Balganesh and Menell provide an in-depth case study of ALI’s efforts to restate the Copyright Act’s distribution right. As they explain, the interpretation of the distribution right has been subject to significant interpretive controversy. With the rise of peer-to-peer file sharing in the early 2000s, the distribution right was the subject of massive litigation. While some courts interpreted a violation of the distribution right narrowly to require proof that sound recordings placed in a share folder were actually downloaded by a third party, other courts read it broadly so that merely “making available” a sound recording through a peer-to-peer network could constitute a violation. As argued by Profs. Balganesh and Menell, the legislative history of the Copyright Act demonstrates Congress’ intention for a broad reading of the distribution right. This legislative history was not considered by a court until the Tenth Circuit’s opinion in Diversy v. Schmidly, where the court held that the distribution right included liability for “making available” copyrighted works to the public. This same interpretation was also reached by the Copyright Office in a 2016 report prepared at the request of the House Subcommittee on Courts, Intellectual Property & the Internet.

At its core, Profs. Balganesh and Menell criticize ALI’s draft of the distribution right for not presenting faithfully all the pertinent interpretive sources and instead improperly stepping into the role of a judge by making an interpretive decision itself. Despite it’s claiming not to do so, Profs. Balganesh and Menell argue that the draft intentionally put aside a meaningful discussion of the legislative history to adopt an interpretation of the distribution right that rejected the “making available” approach to liability. Further, in its formulation of its black-letter law, the draft relied solely upon court decisions interpreting the statute prior to the Diversy decision, where the legislative history was not understood, and at no point presented the language of the statute itself. Despite their raising of these concerns to ALI, Profs. Balganesh and Menell state that ALI only “double[d] down,” committing to its textualist interpretation while “purporting not to take a position.”

Proposed Remedies for the “Mismatch”

To remedy the mismatch in the current project, Profs. Balganesh and Menell first propose that the Restatement should modify its perspective. In the traditional model, Restatements purport to speak from the perspective of an “excellent common-law judge.” When it is extended to statutory areas of law, however, Profs. Balganesh and Menell argue that this perspective is inappropriate. As statutory interpretation relies on the discretion of judges, a black-letter rule prescribing a singular interpretation of the statutory language steps beyond the role of a Restatement to only clarify the law. Profs. Balganesh and Menell propose that the Restatement should instead act to aid judges in exercising their discretion by providing them with a forthright explication of the materials that inform statutory interpretation, such as an overview of the relevant legislative history or interpretive approaches by other courts.

Second, Profs. Balganesh and Menell propose an update to the Restatement template. Keeping with the idea from Mr. Lewis’ report, Profs. Balganesh and Menell propose that the traditional black-letter law section of the Restatement be replaced with the actual and complete text of the statutory provisions. They then propose that the Restatement lay out sources of interpretation available to a judge in the context of the statute. Since interpretation begins with the text of the statute, placing the text front and center, then followed by relevant interpretive tools, respects the role of a judge while ultimately aiding in the interpretive exercise. Last, Profs. Balganesh and Menell propose reworking the preamble to the Restatement of Copyright as an objective primer to the history surrounding the Copyright Act’s formation. Due to the complex and unique history surrounding the Act’s evolution, Profs. Balganesh and Menell argue that such a preamble would allow an interpreter from the outset to see some of the relevant tools and sources that could be used in interpreting its provisions.

Categories
Copyright Damages

Ninth Circuit Narrows Copyright Owner’s Ability to Receive Multiple Statutory Damages Awards

The following post comes from Liz Velander, a recent graduate of Scalia Law and a Research Assistant at CPIP.

a gavel lying on a desk in front of booksBy Liz Velander

A recent Ninth Circuit ruling limits the amount a copyright owner can be awarded in statutory damages. In Desire v. Manna, the court found that the Copyright Act only lets owners collect a single award per infringing work in cases with joint and several liability. It held that the Act does not authorize multiple statutory damages awards where one infringer is jointly and severally liable with all other infringers, but the other infringers are not completely jointly and severally liable with one another. Its decision reduced the district court’s award of statutory damages from $480,000 to $150,000.

The facts of the case are as follows: Desire, a fabric supplier, purchased a floral textile design and registered it with the U.S. Copyright Office in June 2015. A few months later, Desire sold a few yards of fabric bearing the design to Top Fashion, which it used to secure a garment order from a clothing retailer. When Desire and Top Fashion later disagreed on the price for more fabric, Top Fashion took the design to rival supplier Manna. Manna then passed the design along to an independent designer, who in turn gave it to a textile manufacturer with instructions to modify it. Manna registered a copyright in the resulting altered design with the U.S. Copyright Office in December 2015.

Manna began selling fabric bearing the altered design to various manufacturers, which used it to create garments that they sold to various clothing retailers. Desire sued Manna, the manufacturers, and the retailers for copyright infringement. As alleged, Manna infringed Desire’s copyright by selling fabric bearing the altered design to the manufacturer defendants. The manufacturer defendants then each allegedly committed a separate ac of infringement in their sales to the individual retail defendants, who in turn allegedly committed acts of infringement in their sales to consumers. Desire did not allege that the manufacturer defendants infringed in concert, nor that the retail defendants acted in concert to infringe Desire’s copyright.

The district court granted partial summary judgment for Desire. It concluded that Desire owned a valid copyright entitled to broad protection and that there were no triable issues of fact as to Desire’s ownership of the initial design or Manna’s and others’ access to it. But there remained issues of triable fact as to whether the altered design was substantially similar to the original and whether defendants willfully infringed. The district court held that if Desire prevailed on these issues, the supplier would be entitled to seven statutory damages awards with joint and several liability imposed amongst Manna, the manufacturer defendants, and the retail defendants.

A jury returned a verdict for the plaintiff, finding that Manna, Top Fashion, and one other defendant, manufacturer ABN, willfully infringed the initial design, and that two other defendants, manufacturer Pride & Joys and retailer 618 Main, innocently infringed. Desire elected to claim statutory damages in lieu of actual damages, as permitted under 17 U.S.C. § 504(c)(1). Under § 504(c), a statutory damage award is limited to $30,000 for innocent infringement and $150,000 for willful infringement.

The jury awarded Desire statutory damages totaling $480,000 after two defendants settled. The district court divided liability under its pre-trial ruling as follows:

    1. $150,000 against Manna individually, for copying the design and distributing the fabric bearing the altered design to the manufacturer defendants.

 

    1. $150,000 against Manna and Top Fashion jointly and severally, for Top Fashion’s sale of infringing garments.

 

    1. $150,000 against Manna and ABN jointly and severally, for ABN’s sale of infringing garments.

 

    1. $20,000 against Manna and Pride & Joys jointly and severally, for ABN’s sale of infringing garments to 618 Main.

 

  1. $10,000 against 618 Main, Pride & Joys, and Manna jointly and severally, for 618 Main’s display and sale of infringing garments to consumers.

The parties appealed. The Ninth Circuit affirmed in part, reversed in part, and vacated the judgment awarding Desire multiple awards of statutory damages. The court began by affirming the district court’s determinations at summary judgment that Desire owned a valid copyright and that the original design was entitled to broad copyright protection. But the Ninth Circuit concluded that the district court erred by permitting multiple statutory damages awards.

The Ninth Circuit looked at the text of § 504(c)(1) to determine whether it authorizes multiple statutory damages awards where one infringer is jointly and severally liable with all other infringers, but the other infringers are not completely jointly and severally liable with one another. § 504(c)(1) permits an owner to recover “an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally.”

The Court concluded that the plain meaning of § 504(c)(1) precludes multiple awards of statutory damages when there is only one work infringed by a group of defendants that have partial joint and several liability among themselves through a prime tortfeasor that is jointly and severally liable with every other defendant. It reasoned that “an award” clearly means one award, and the use of the word “any” means that, if all infringers in the action were jointly and severally liable with at least one common infringer, then all defendants should be treated as one unit.

In this case, Manna was alleged to be the tortfeasor lynchpin. Because “‘an award’ clearly means one award,” and Manna was jointly and severally liable with every other defendant, Desire was entitled to only one statutory damage award per work. The court concluded that its interpretation was most consistent with the Copyright Act’s goal of providing adequate compensation for infringement without giving copyright owners a windfall. However, it acknowledged that its ruling could also run afoul of the purposes of the Act if a copyright owner decided to sue separate infringers in separate actions.

The court wrote in a footnote that “if Manna were not involved at all and Pride & Joys, ABN, and Top Fashion had independently infringed, there could be three awards, even though Pride & Joys, ABN, and Top Fashion were each jointly and severally liable with others in their separate distribution chains. . . . This view treats groups of jointly and severally liable defendants that are not jointly and severally liable with other groups identically to individually liable infringers.”

In a lengthy dissent, Judge Wardlaw disagreed with the majority’s interpretation of § 504(c)(1). She explained that the majority’s decision means “a copyright plaintiff can seek only one award of statutory damages when it joins in a single lawsuit members of independently infringing distribution chains that trace back to a common infringing source. But if the plaintiff brings separate lawsuits against each infringer, or it simply cuts the common source defendant at the top of the chain out of the case, a separate statutory damages award is available against each defendant.”

The majority ultimately decided that such risk was outweighed by the potential for disproportionate awards and the fact that multiple lawsuits could still be filed (and consolidated), regardless of the Court’s ruling on this point. “But even if we are wrong in our appraisal of the multiple-lawsuit risk, as our approach is the only one consistent with the text of Section 504(c)(1), it is not our job to reweigh the merits of several possible approaches.” Given the stark differences in the majority and the dissent regarding the language of § 504(c)(1), this decision could form the basis for further splits and result in an en banc or certiorari petition.

Categories
Copyright

Ninth Circuit Confirms: Fair Use Is an Affirmative Defense to Copyright Infringement

the word "copyright" written on a typewriterThe Ninth Circuit’s recent decision clarifying transformative fair use in Dr. Seuss v. ComicMix gives much to admire (see my deep dive into the opinion here). The court held that a mash-up of plaintiff Seuss’ Oh, the Places You’ll Go! (Go!) with a Star Trek theme—entitled Oh, the Places You’ll Boldly Go (Boldly)—by defendant ComicMix was not fair use since it merely repackaged the original work without new purpose, meaning, message, expression, or character—in other words, it utterly failed to be transformative. That holding should be welcome news for those who are concerned that the rule of the derivative right is being swallowed by the exception of transformativeness.

The Ninth Circuit also addressed another issue of central importance in the fair use doctrine, namely, whether fair use is an affirmative defense such that the burden is on the defendant to demonstrate the absence of likely market harm. That the burden issue even came up is itself remarkable, given the Supreme Court pronouncements and Ninth Circuit precedents on the matter. Nevertheless, this case presented a good vehicle for the Ninth Circuit to confirm that the burden of proving fair use remains with its proponent on each of the factors, including market harm. In this post, I’ll discuss the positions of the parties and the holdings of the courts on this important procedural aspect of fair use.

District Court Holds that Burden Is on Plaintiff to Show Likely Market Harm

One of the issues before the district court was whether Seuss had to show likely market harm under the fourth fair use factor. In its memorandum supporting its summary judgment motion, ComicMix acknowledged that it had the burden of proving fair use: “The proponent of fair use has the burden to show that it applies, because it is an affirmative defense.” However, it argued that, since Boldly is transformative, there is no presumption of market harm, and the “burdens on the fourth factor shift to the plaintiff” to “demonstrate a likelihood of potential harm.” Thus, while acknowledging that it ultimately held the burden of persuasion on market harm, ComicMix argued that Seuss had to produce evidence in order to win on this factor.

The Supreme Court discussed the presumptions and burdens of proof for market harm in Sony and Campbell. In Sony, the Court stated that “every commercial use of copyrighted material is presumptively . . . unfair,” such that, “[i]f the intended use is for commercial gain,” the “likelihood may be presumed” for market harm. And when the use is “for a noncommercial purpose, the likelihood must be demonstrated” with “a showing by a preponderance of the evidence that some meaningful likelihood of future harm exists.” ComicMix latched onto this statement that likely market harm must be demonstrated, despite its use being commercial, to argue that Seuss was required to make a showing on market harm. But that position is inconsistent with what the Court held later in Campbell.

The Supreme Court in Campbell walked things back significantly, explaining that the presumption from Sony only applies in the context of “verbatim copying of the original in its entirety for commercial purposes,” not in “a case involving something beyond mere duplication for commercial purposes.” When “the second use is transformative,” the Court continued, “market substitution is at least less certain, and market harm may not be so readily inferred.” The Court in Campbell thus distinguished verbatim, commercial copies (market harm presumed) and transformative, yet commercial, uses (no such presumption). Importantly, even though there was no presumption of market harm for the transformative use at issue, the Court placed the burden on the defendant to demonstrate an absence of market harm in order to succeed on that factor because “fair use is an affirmative defense.”

This understanding of who has the burden of proof on market harm must be understood in the context of the procedural posture. Fair use is only relevant once the plaintiff has made a prima facie showing of copyright infringement. If both Seuss and ComicMix were to fail in producing evidence on market harm, the factor might be neutral. But that neutrality would only hurt ComicMix—and not Seuss—since ComicMix is trying to overcome Seuss’ prima facie showing of infringement. The Supreme Court in Campbell drove this point home, holding that, in the absence of evidence, “it is impossible to deal with the fourth factor except by recognizing that a silent record on an important factor bearing on fair use disentitled the proponent of the defense . . . to summary judgment.” That “evidentiary hole,” the Court concluded, would need to “be plugged on remand” for the defendant to prevail.

In its opposition memorandum, Seuss started with the premise that ComicMix had the burden of proof on market harm: “As with all affirmative defenses,” ComicMix “bear[s] the burden of proof.” Suess argued that ComicMix could not carry its burden because it did “not offer a shred of admissible evidence about the relevant markets for Go!, derivatives of the [Seuss] Works, and Boldly.” Thus, both parties agreed that fair use is an affirmative defense, with ComicMix bearing the ultimate burden of persuasion on whether its use was fair. The only difference was whether, and to what extent, either party could or should have to demonstrate evidence of likely market harm or its absence.

Despite arguing in its memorandum that the burden of proof was on ComicMix, counsel for Seuss told a different story at the hearing on the motion. The court asked, “What burden, if any, does [Seuss] carry in establishing a likelihood of market harm in this case?” Seuss’ counsel responded that, assuming the use is transformative, there would be no presumption and that Seuss would then have to show market harm. The district court ultimately concluded that Boldly is “highly transformative,” and with Seuss’ concession during oral argument in hand, the court held that Seuss had the burden of introducing “[e]vidence of substantial harm to it . . . by a preponderance of the evidence.” After finding that Seuss “failed to introduce evidence tending to demonstrate that the challenged work will substantially harm the market for its Copyrighted Works,” the court held that the fourth fair use factor was neutral since “the harm to Plaintiff’s market remains speculative.”

Ninth Circuit Holds that Burden Is on Defendant to Show Absence of Market Harm

On appeal to the Ninth Circuit, the parties changed their tune somewhat. In its opening brief, Seuss argued that the district court erred by placing the burden on it to show likely market harm: “fair use is an affirmative defense, and its proponent must show absence of market harm even if the challenged use is transformative.” Moreover, Seuss claimed that since Boldly is nontransformative and commercial, there should be a presumption of market harm. But even if there is no such presumption, Seuss argued that ComicMix had the burden of “offering convincing proof that the plaintiff’s markets will not be harmed by the challenged work.” And, in a footnote, Seuss argued that any concession by its counsel during oral argument before the district court “would not control this Court’s resolution of a purely legal issue: who bears the burden of proof on the fourth factor.”

In its answering brief, ComicMix argued that Seuss’ “failure to present evidence of any negative market effect weighs in favor of fair use.” It contended that there is no presumption of market harm, even though Boldly is commercial, because that presumption does not apply when a work is transformative. As to which party held the burden of proof, ComicMix argued that fair use is not in fact an affirmative defense—a remarkable claim given the holding of Campbell and ComicMix’s contrary position in the district court. To support its argument, ComicMix cited the Ninth Circuit’s decision in Lenz as well as a pair of law review articles to conclude that, “while the proponent of a true affirmative defense generally bears the burden of proof as to all elements, for a standard defense like fair use, it suffices to show that the plaintiff failed to overcome it.”

The citation to Lenz is a puzzling one. The issue there was whether a copyright owner must consider fair use before sending a takedown notice under the Digital Millennium Copyright Act (DMCA). The copyright owner argued that fair use is not “authorized by the law” under the DMCA since it is an affirmative defense excusing conduct that would otherwise infringe. The Ninth Circuit disagreed, finding that this view conflates “an affirmative defense that is labeled as such due to the procedural posture of the case, and an affirmative defense that excuses impermissible conduct.” The court ultimately decided that fair use is “authorized by the law” as a statutory matter, even if it’s an affirmative defense as a procedural one. However, the court said nothing to the contrary about who bears the burden of proof on likely market harm in a context outside of the DMCA—like in overcoming a prima facie case of infringement in litigation over whether a use is fair.

The cites to the law review articles are equally perplexing as they both explicitly acknowledge that the burden of proof rests with the party claiming fair use. The first, Proving Fair Use: Burden of Proof as Burden of Speech by Ned Snow, acknowledges that, “[a]s an affirmative defense, fair use places the burden of proof on its proponent.” The thrust of the article is that, while “the defendant bears the burden of proof” for fair use, it would be better to shift that burden to the copyright owner because of free speech concerns. The second article, Fair Use: An Affirmative Defense? by Lydia Loren, likewise concedes that Campbell “[c]learly . . . placed the burden of producing evidence to support fair use on the defendant.” The article then argues that, as a normative matter, we should put that burden on the copyright owner. Neither of these articles provides any support for the point ComicMix sought to establish, i.e., that the burden of proof is on Seuss.

In assessing the fourth fair use factor, the unanimous Ninth Circuit panel sided with Seuss: “Having found that Boldly was transformative—a conclusion with which we disagree—the district court . . . erred in shifting the burden to Seuss with respect to market harm. That shifting, which is contrary to Campbell and our precedent, led to a skewed analysis of the fourth factor.” The court declined to hold that ComicMix’s nontransformative, commercial use raised a presumption of market harm, though it did recognize that market harm could be inferred from the circumstances. The court made quick work of ComicMix’s argument that fair use is not an affirmative defense and that the burden is on Seuss to show likely market harm: “Not much about the fair use doctrine lends itself to absolute statements, but the Supreme Court and our circuit have unequivocally placed the burden of proof on the proponent of the affirmative defense of fair use.” ComicMix’s argument went nowhere because “Campbell squarely forecloses” it.

To ComicMix’s argument that Lenz compels placing the burden of proving market harm on Seuss, the Ninth Circuit pointed out that Lenz “involved fair use in a different corner of the copyright law,” namely, the safe harbors under the DMCA. The question there was of statutory interpretation under the DMCA, and the analysis was explicitly limited to “that context.” Lenz changed nothing about the procedural burdens in other contexts: “In no way did we deviate from our characterization of fair use as an affirmative defense under § 107. To the contrary, in addition to clarifying that, unlike copyright misuse and laches, fair use is not an excuse to copyright infringement, we reiterated that ‘the burden of proving fair use is always on the putative infringer.’”

Turning to the merits, the Ninth Circuit held that it was ComicMix, “as the proponent of the affirmative defense of fair use,” that “must bring forward favorable evidence about relevant markets.” Given that ComicMix chose to argue instead that it didn’t have the burden of proof, there was only “scant evidence” to consider. ComicMix’s principal evidence was an expert report, but the court found that the “entire report is premised on Boldly being transformative, which it is not, and on the expert’s misunderstanding about fair use and U.S. copyright law.” But even accepting the report’s “methodology and conclusions,” the court found that it still “fails to account for key fourth-factor considerations,” including the fact that Boldly was “intentionally targeted and aimed to capitalize on the same graduation market as Go!” and that “Boldly would curtail Go!’s potential market for derivative works.” Having found that ComicMix failed to carry its burden, the court held that ComicMix’s fair use defense failed as a matter of law.

Conclusion

In Dr. Seuss v. ComicMix, the Ninth Circuit addressed important aspects of the fair use doctrine—and some novel arguments that flew in the face of settled precedent. Not only did the court rein in various overly broad notions of transformative use urged by ComicMix and its amici that would have further eroded a copyright owner’s exclusive right to make derivative works, but it also confirmed the fundamental holding of Campbell that fair use is an affirmative defense, with the burden of proof to show an absence of market harm falling squarely on the party claiming fair use. ComicMix attempted to sidestep its duty by claiming that there was none; it wanted the benefit of fair use without its burden. Thankfully, the Ninth Circuit emphatically rejected this approach as one that would “‘create incentives to pirate intellectual property’ and disincentivize the creation of illustrated books,” contrary to copyright’s constitutional goals.

Categories
Copyright

Ninth Circuit Clarifies Transformative Fair Use in Dr. Seuss v. ComicMix

a gavel lying on a desk in front of booksThis past Friday, the Ninth Circuit handed down its opinion in Dr. Seuss v. ComicMix, a closely watched transformative fair use case. The decision marks an important milestone in the development of the fair use doctrine, especially as applied to mash-ups—where two or more preexisting works are blended together to create a new work. However, the court’s careful explanation of what constitutes transformativeness is not limited to mash-ups, and it will surely be influential for years to come. In this post, I’ll look at the various views expressed by the parties, amici, and courts as to what it means for a use to be transformative, and I’ll explain how the Ninth Circuit’s new guidance on transformativeness reins in some of the overly broad positions that have been urged. This decision should be welcome news for those who worry that a copyright owner’s right to make derivative works has been excessively narrowed by ever-expanding notions of transformative use.

In Dr. Seuss v. ComicMix, the plaintiff, Dr. Seuss Enterprises L.P. (Seuss), was the assignee of the copyrights to the works by Theodor S. Geisel, the late author who wrote under the pseudonym “Dr. Seuss.” Seuss sued the defendants, ComicMix LLC and three individuals (collectively, ComicMix), for copyright infringement over, inter alia, ComicMix’s mash-up of Seuss’ iconic Oh, the Places You’ll Go! (Go!) with a Star Trek theme, entitled Oh, the Places You’ll Boldly Go! (Boldly). The Boldly mash-up featured slavish copies of the images and overall look and feel of Go!, but with the Seussian characters replaced with the crew of the Enterprise from Star Trek and the text and imagery reinterpreted for Trekkies.

ComicMix admitted that it copied Go! to create Boldly, and the issue on appeal was whether its use was fair. The district court held that it was fair use, finding in particular that ComicMix’s mash-up was “highly transformative.” After the decision was appealed to the Ninth Circuit, there were amicus briefs filed for both sides. Some argued that Boldly was transformative, and others argued that it was not. In the opinion for the unanimous Ninth Circuit panel by Judge McKeown, the court held that Boldly wasn’t transformative at all. This decision gives us what is perhaps the clearest explanation of what it means to be a transformative use to date by an appellate court. And the fact that it comes from the Ninth Circuit—the “Hollywood Circuit” as Judge Kozinski once called it—makes it all the more interesting and important.

The issue of transformativeness is primarily analyzed under the first fair use factor, i.e., the purpose and character of the use, but it also weighs heavily on the other three factors. If the use is transformative, courts often ignore the creativeness of the original work, give the copyist more leeway when assessing the amount and substantiality of the use, and overlook the copyist’s effect on the potential market for the original work. As some have observed, in a transformative use case, the fair use analysis tends to collapse into a single factor: Is the use transformative? Indeed, Jiarui Liu published a study last year showing that “transformative use appears to be nearly sufficient for a finding of fair use.” Once the dispositive decisions included in the study found transformative use, they eventually held that there was fair use 94% of the time.

District Court Finds Boldly Is “Highly Transformative”

In the district court, the parties filed cross-motions for summary judgment, with ComicMix claiming fair use. The court had assessed fair use earlier in the litigation when denying ComicMix’s motion to dismiss. There, the court rejected ComicMix’s contention that Boldly was a parody, reasoning that it did not comment on or criticize the original work. Parodies juxtapose the original work for comedic effect, and the necessity of referencing the original justifies the copying. However, the court found that there was no such juxtaposition here, instead noting that Boldly merely used the “illustration style and story format as a means of conveying particular adventures and tropes from the Star Trek canon.” Nevertheless, the court found that Boldly was “no doubt transformative” since it “combine[d] into a completely unique work the two disparate worlds of Dr. Seuss and Star Trek.” Even though many elements were copied, the court reasoned that Go! had been “repurposed” because ComicMix added “original writing and illustrations” that transformed its Seussian pages into “Star-Trek-centric ones.”

The district court ultimately denied the motion to dismiss as it had to take Seuss’ allegations of market harm in the complaint as true and there was no evidence to the contrary in the record. Lacking evidence of market harm, the court found a “near-perfect balancing of the factors” and held that ComicMix’s “fair use defense currently fails as a matter of law.” However, once the court turned to the summary judgment motions, it had a developed record from which to work. On market harm, the court placed the burden on Seuss—despite fair use being an affirmative defense—and found that it failed to demonstrate likely harm to Go! or its licensed derivatives. On the issue of transformativeness, the court adopted and then expanded on its reasoning when addressing the motion to dismiss.

Suess had asked the district court to reassess its fair use analysis given the intervening Federal Circuit decision in Oracle v. Google. In that case, it was not fair use when Google copied computer code verbatim and then added its own code. The court here distinguished Oracle, reasoning that ComicMix did not copy the text or illustrations of Go! verbatim. While ComicMix “certainly borrowed from Go!—at times liberally—the elements borrowed were always adapted or transformed,” and that made Boldly “highly transformative.” Furthermore, the court found that Go! and Boldly served different purposes, with the former aimed at graduates and the latter tailored towards Trekkies. And to Seuss’ argument that Boldly was a derivative work, the court responded that derivative works can be transformative and constitute fair use.

Strangely, when addressing the motion to dismiss and the summary judgment motions, the district court failed to cite the holding of Dr. Seuss v. Penguin Books—even though that binding precedent involved the same plaintiff making similar arguments about a similar mash-up (there, Dr. Seuss and the O.J. Simpson murder trial). In Penguin Books, the Ninth Circuit held that the accused mash-up, The Cat NOT in the Hat! A Parody by Dr. Juice, was neither parody nor fair use. Rather than ridiculing the Seussian style itself, the court held that it merely copied that style “to get attention” or perhaps “to avoid the drudgery in working up something fresh”—as the Supreme Court put it in Campbell v. Acuff-Rose. Indeed, because the mash-up failed to conjure up the substance of the original work by focusing readers instead to the O.J. Simpson murder trial, the court held that there was “no effort to create a transformative work with ‘new expression, meaning, or message’” as required by Campbell.

Amicus Briefs Offer Differing Views on Transformativeness

Once the case was appealed to the Ninth Circuit, amicus briefs were filed on both sides addressing the transformativeness issue. Some argued that Boldly epitomized transformative fair use, and others argued that it was the antithesis. It is difficult to exaggerate the doctrinal gulf between the views of these amici.

The Motion Picture Association (MPA) amicus brief, by Jacqueline Charlesworth, argued that ComicMix’s use was not transformative since it failed to comment on or add new meaning to Go! and instead merely used it as a vehicle to achieve the same purpose—entertaining and inspiring readers. Moreover, ComicMix admitted that it could have used a different book on which to base its mash-up, thus defeating any claim of necessity. The MPA brief explained that Boldly was indeed a derivative work (the district court had expressively reserved the point) as defined by the Copyright Act since it transformed or adapted a preexisting work. The district court had dismissed Suess’ argument that Boldly was a derivative work by pointing out that it transformed and adapted Go!, but the MPA brief called this “troubling logic” since it conflated derivativeness with transformativeness and presumably would make every derivative work a transformative fair use.

Peter Menell filed an amicus brief, joined by Shyam Balganesh and David Nimmer, taking issue with the district court’s “categorical determination” that mash-ups generally are “highly transformative” as it would “undermine[] the Copyright Act’s right to prepare derivative works.” The Menell brief argued that Boldly “might well strike a lay observer as clever, engaging, and even transformative in a common parlance sense of the term,” but this misunderstands the transformativeness inquiry, which turns on whether it “serves a different privileged purpose” such that it survives the “justificatory gauntlet.” The question was whether Boldly “merely supersede[d] the objects of the original” or instead used the copied material “in a different manner or for a different purpose.” Here, the Menell brief concluded, Boldly drew on Go!’s popularity to follow its same general entertaining purpose while adding little “new insight and understanding.”

Sesame Workshop filed an amicus brief by Dean Marks distinguishing transformativeness for derivative works from transformative use under the first fair use factor and arguing that the district court conflated the two. The Sesame brief explained that Boldly was only transformative in the fair use sense if it, per Campbell, added “something new, with a further purpose or different character” as “commentary” and provided “social benefit, by shedding light on an earlier work.” While Boldly did add new material, it did not add “any new meaning or message” or “provide any new insight or commentary on Go!.” It instead delivered “the exact same inspirational message” to appeal to Seuss’ “existing market.” The danger of the district court’s logic, the Sesame brief concluded, is that it “could stand for the proposition that all mash-ups constitute fair use, a holding that would greatly diminish the derivative work right.”

An amicus brief by Erik Stallman on behalf of a group of IP professors, including Mark Lemley, Jessica Litman, Lydia Loren, Pam Samuelson, and Rebecca Tushnet, took a broad view of transformative fair use, arguing that the district court properly did not require Boldly to criticize, comment on, or parody Go! itself. It also claimed that fair use is not an affirmative defense such that the district court properly put the burden on Seuss to show market harm. The crux of the IP professor brief was that, even though on a high level of abstraction both works had the same entertainment purpose, there were nonetheless “differences in expressive meaning or message” that made Boldly transformative. As there were such differences at a lower level of abstraction—e.g., Go! had a “hyper-individualistic character” while Boldly focused on “institutional structures that promote discovery through” combined “efforts”—the IP professor brief concluded that it was transformative in the fair use sense.

Finally, an amicus brief by Mason Kortz on behalf of the Electronic Frontier Foundation (EFF), Organization for Transformative Works, Public Knowledge, and others concluded that “Boldly is a significantly transformative work” that “recasts, recontextualizes, and adds new expression or meaning to Go! in order to create a new, significant work of creative expression.” The EFF brief argued that uses can be transformative even if “they fail to comment on or parody the original” so long as they have different “expressive content and message.” Here, Boldly was transformative because it “adapt[ed] the stylistic, visual, and rhyming elements from Go! to create new expression” and added “new meanings that speak with particularity to the themes of Star Trek beloved by its community of fans.”

Ninth Circuit Holds that Boldly Is Not Transformative

Turning back to the parties, Seuss argued on appeal that ComicMix’s “use was exploitative and intended to grab the attention of potential buyers, not transformative,” since it added no “new purpose or meaning.” ComicMix answered that its use was “highly transformative,” with a “radically distinct purpose and effect,” that crafted “new meanings from the interplay between Star Trek’s and Seuss’s creative worlds.” Judge McKeown, writing for the unanimous Ninth Circuit panel, sided completely with Seuss: While the “fair use analysis can be elusive,” if not metaphysical, “[n]ot so with this case.” The court held that “Boldly is not transformative” and that all of the fair use “factors decisively weigh against ComicMix.”

Quoting Campbell, the court started with the premise that a transformative work “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message,” and a work that “merely supersedes the objects of the original creation” is not transformative. It also noted Campbell’s explanation that commentary with “no critical bearing on the substance or style of the original” and which is used “to get attention or to avoid the drudgery in working up something fresh” has less—if any—claim to fair use. The court then cited to its previous holding in Dr. Seuss v. Penguin Books (mentioned above as having been ignored by the district court below despite the glaring similarities) that the mash-up at issue there merely copied the Seussian style without critiquing it. The court there held that the defendant was only trying “to get attention,” and the court here found that the same result holds true. ComicMix’s “post-hoc characterization” that it was “criticizing the theme of banal narcissism of Go!” or “mocking the purported self-importance of its characters falls flat.”

The court then turned to ComicMix’s argument that, even if Boldly was not a parody or a critique, it was nonetheless transformative since it substituted Seussian characters and elements with Star Trek themes. The court rejected this framing as foreclosed by Penguin Books, noting that it “leverage[s] Dr. Seuss’s characters without having a new purpose or giving Dr. Seuss’s works new meaning.” And without “new expression, meaning or message” that alters Go!, ComicMix merely added “Star Trek material on top of what it meticulously copied” and failed to engage in transformative use. Helpfully, the court laid out three “benchmarks of transformative use,” which it gleaned from Campbell and Ninth Circuit precedent, to explain why Boldly was not transformative: “Boldly possesses none of these qualities; it merely repackaged Go!.”

First, the “telltale signs of transformative use” include a “‘further purpose or different character’ in the defendant’s work, i.e., ‘the creation of new information, new aesthetic, new insights and understanding.’” The court found that Boldly had neither a further purpose nor a different character since it paralleled the purpose of Go! and propounded its same message. Without a “new purpose or character” that would make it transformative, the court found that Boldly “merely recontextualized the original expression by ‘plucking the most visually arresting excerpt[s].”

The second of the “telltale signs” looks for “‘new expression, meaning, or message’ in the original work, i.e., the addition of ‘value to the original.’” The court found that ComicMix likewise failed to do this: “While Boldly may have altered Star Trek by sending Captain Kirk and his crew to a strange new world, that world, the world of Go!, remains intact.” The court’s focus was on whether Boldly changed Go! itself or merely repackaged it into a new format. Here, “Boldly does not change Go!,” and ComicMix’s admission that it could have used another work as the basis of its mash-up indicated that “Go! was selected ‘to get attention or to avoid the drudgery in working up something fresh,’ and not for a transformative purpose.”

The last of the “telltale signs” considers “the use of quoted matter as ‘raw material,’ instead of repackaging it and ‘merely supersed[ing] the objects of the original creation.’” The court, embedding several side-by-side images into the opinion to demonstrate the point, found that Boldly merely repackaged Go!. For the illustrations, the “Star Trek characters step into the shoes of Seussian characters in a Seussian world that is otherwise unchanged.” And for the text, rather than “using the Go! story as a starting point for a different artistic or aesthetic expression,” ComicMix instead matched its structure in a way that “did not result in the Go! story taking on a new expression, meaning, or message.” Since Boldly “left the inherent character of the [book] unchanged, it was not a transformative use of Go!.”

The court concluded that, “[a]lthough ComicMix’s work need not boldly go where no one has gone before, its repackaging, copying, and lack of critique of Seuss, coupled with its commercial use of Go!, does not result in a transformative use.” The first fair use factor thus “weigh[ed] definitively against fair use,” and the court went on to find that the other three factors favored Suess as well—without transformativeness to drive the analysis, ComicMix could not get the court to put its thumb on the scale in favor of fair use. Importantly, the court also rejected the holding below that the burden of proving likely market harm rested on Seuss: “the Supreme Court and our circuit have unequivocally placed the burden of proof on the proponent of the affirmative defense of fair use.” Additionally, the court chastised ComicMix for failing to address the “crucial right” of “the derivative works market,” noting that Boldly would likely “curtail Go!’s potential market for derivative works,” especially given that Seuss had “engaged extensively for decades” in this area.

Conclusion

All-in-all, the Ninth Circuit’s decision is a welcome development to the doctrine of fair use. Since Campbell was handed down over one-quarter of a century ago, the notion of transformativeness has taken on a central role—one that appears to be shrinking the exclusive right to prepare derivative works while expanding what it means to be transformative fair use. The accused work at issue here—Boldly—used the original work to create new expression, but lacking was any justification for the taking. ComicMix could have used any number of works for its mash-up, and the same nontransformative repackaging would have occurred because ComicMix’s purpose would not be tied to the particular work onto which it transposed the Star Trek universe. Thankfully, the Ninth Circuit was able to distinguish the transformative nature of a derivative work from the transformativeness that constitutes fair use. And given the prevalence of mash-ups in today’s culture, one suspects that this opinion will be cited and expanded upon for many years.

Categories
Copyright

CPIP Applauds Congress on Passing CASE Act and Protecting Lawful Streaming Act

U.S. Capitol building

As advocates for individual artists and small businesses in the arts, CPIP is grateful this holiday season for the inclusion of the CASE Act and the Protecting Lawful Streaming Act as part of the end-of-year omnibus and COVID-19 relief package: the Consolidated Appropriations Act, 2021. These measures enjoyed overwhelming support and address longstanding challenges in IP enforcement. While there are many additional obstacles for artists and arts venues to overcome stemming from the pandemic, we are hopeful that these measures, which artists have worked many years to achieve, will be a building block to a more equitable future for independent arts businesses.

Categories
Copyright

Professor Shyam Balganesh on Understanding Privative Copyright Claims

The following post comes from Liz Velander, a recent graduate of Scalia Law and a Research Assistant at CPIP.

the word "copyright" typed on a typewriterBy Liz Velander

Some argue that modern copyright law is decidedly market-oriented, almost entirely justified in utilitarian terms. By promising authors a set of marketable exclusive rights in their works, copyright is believed to incentivize the production of works of authorship. In his new paper, Privative Copyright, Professor Shyamkrishna Balganesh of the University of Pennsylvania Law School explains that this view produces a clear mismatch when using copyright law to remedy noneconomic harms. This paper was work-shopped at CPIP’s Philosophical Approaches to Intellectual Property research colloquium in 2019 and subsequently published in the Vanderbilt Law Review.

“Privative” copyright claims are infringement actions brought by authors for the unauthorized public dissemination of works that are private, unpublished, and revelatory of an author’s personal identity. They are driven by considerations of authorial autonomy, dignity, and personality rather than monetary value, seeking to redress a particular form of copyright harm that Prof. Balganesh refers to as “disseminative harm.” An example of a privative copyright claim is found in the recent Ninth Circuit case, Monge v. Maya Magazines.

The plaintiffs in the case were a well-known pop music star and her manager, who got married in secret. To maintain the secrecy of the wedding, the couple limited the number of witnesses and took a very limited number of photographs that were intended for the couple’s private use. Through unscrupulous means, the photographs fell into the hands of an individual who sold them to the defendant, a gossip magazine that published them. The district court found for the defendant, concluding that the publisher’s use of the photographs constituted fair use. On appeal, the Ninth Circuit reversed in a rare denial of fair use for a privative claim.

To gain a full understanding of the Ninth Circuit’s opinion in this case, the nature of privative copyright claims in general, and why courts find them troublesome, Prof. Balganesh believes that one must trace the historic evolution of privative copyright claims in Anglo-American copyright law. Modern copyright scholarship is deeply critical of privative copyright claims, believing that the dignitary interests and harms that underlie such claims are best dealt with through privacy law. Prof. Balganesh’s article challenges this dominant view, arguing that privative copyright claims form a legitimate part of the copyright landscape. He demonstrates that protecting an author’s dignitary interest and the underlying commitment to authorial autonomy that motivates these claims have remained important normative goals of copyright law despite the multiple doctrinal variations and updates that the law has gone through over the last three centuries.

Prof. Balganesh explains that in its most basic form, copyright law functions by rendering forms of expressive harm privately actionable. He identifies three types of expressive harm protected by copyright law: (1) appropriative harm, (2) in situ reputational harm, and (3) disseminative harm. Appropriative harm is the primary form of expressive harm that copyright ordinarily centers around, typically resulting from instances of copying. In situ reputational harm originates from the U.S. copyright system’s limited recognition of moral rights protection in the form of the rights of integrity and attribution. A common feature of both rights is they derive from the need to protect an author’s reputation as manifested in the work. The integrity right focuses on protecting against a mutilation or distortion of the work in the recognition that this would impact authorial reputation directly. The attribution right focuses on ensuring that a work is not wrongly attributed to an author, again with the recognition that attributions contrary to the author’s actions and intent to do harm to authorial reputation.

The third category of copyright harm forms the basis of privative copyright claims. It emerges from the mere dissemination or use of a protected work without the creator’s authorization, regardless of the objective utility or value of such actions. The dissemination is harmful not for its economic effects, but instead because of its interference with the author’s unique dignitary interests. In various situations, such as in the Monge case, individuals produce original expression that they intend to keep private or limit to very particular recipients. When fixed in a tangible medium of expression, such as a photograph, the communications become eligible for copyright protection. When such expression is made public, it amounts to a direct infraction of its creator’s personal autonomy.

Prof. Balganesh sees this infraction as two-layered. First, it repudiates the creator’s choice to control whether, how, and when the work is to be shared. Second, it forces the creator to admit to being the author of the work, since elements of the creator’s persona and identity are often apparent on the face of the work. The publication thus forces authorship on the creator, with all its social, legal, and moral implications. Central to disseminative harm is the recognition that the work is personal to its author in a rather distinctive way.

Modern copyright scholarship believes that disseminative harm is best dealt with through privacy law, not copyright law. Prof. Balganesh argues that this approach misunderstands the nature of privative claims in copyright law and the centrality of authorial autonomy that underlies them. He sees it as being drive by three primary concerns: (1) copyright utilitarianism, (2) free speech concerns, and (3) perception that privacy torts are better suited to address dignitary harms.

Prof. Balganesh addresses each of these concerns in turn. First, while copyright law today is often justified exclusively in utilitarian terms, this was not always the case. Privative copyright claims actually predate the utilitarian turn in copyright law. Prof. Balganesh argues that the overt utilitarian turn in copyright law is far from a principled reason to critique the legitimacy of privative copyright claims. To the contrary, normative pluralism has remained a hallmark of the copyright landscape, much like it has for a variety of legal institutions. The logic underlying the functioning of privative copyright claims began to take shape shortly after the passage of the Statute of Anne in 1710. In the three centuries since, they have mutated and adapted to society’s changing concepts of privacy, personal autonomy, and copyright’s coverage of new subject matter.

Second, Prof. Balganesh dismisses the concern that copyright protection for dignitary or privacy interests risks converting authorship into censorship. He explains that copyright has various devices protective of free speech that can come into play in privative claims, the most notable being fair use. Courts use fair use as a stand-in for free speech concerns and balance the fair use factors against the plaintiff’s claims. Given the robustness of these mechanisms, Prof. Balganesh sees no credible free speech concerns with privative copyright claims.

Third, Prof. Balganesh argues that privacy torts are not better suited to protect dignitary interests because the dignitary interests underlying privative copyright claims entail more than just a concern with privacy. They implicate considerations of personality and personal autonomy, in the way of authorial autonomy. Privacy torts, most notably the tort of public disclosure of private facts, focus on representational autonomy and an individual’s ability to control public representations of her persona. They view the denial of such autonomy as emanating from the subject’s choice to keep certain facets of her persona private, and then scrutinize the existence and parameters of that choice rather carefully. The nonconsensual public disclosure of such facts is seen to cast the subject into the public and in turn produce potentially emotional and reputational harm. Privative copyright claims, on the other hand, involve a combination of representational and authorial concerns that an incapable of disaggregation.

With this understanding of privative copyright claims, the Ninth Circuit’s opinion in Monge v. Maya Magazines can be seen in a new light. Recall that the plaintiffs were a celebrity couple who had taken photographs of their secret wedding and the defendant magazine somehow obtained copies of those photographs and published them. The Ninth Circuit’s finding for the plaintiffs demonstrates the difficulty courts have with privative copyright claims and why it is tempting to place them in another legal realm.

The court’s decision was predicated on an analysis of the four fair use factors. Since the fair use doctrine was codified in 1976, courts have grown to place significant reliance on the fourth factor—the potential market harm for the copyrighted work. However, examining the existence (or absence) of market harm for privative copyright claims is an obvious mismatch considering the plaintiff’s work was intended to be kept private. In Monge, the Ninth Circuit refused to acknowledge this mismatch, instead presuming an actual market for the plaintiffs’ photographs because the couple was “in the business of selling images of themselves and had done so in the past.”

The Ninth Circuit’s reasoning is puzzling because, by its own admission, the plaintiffs’ primary (if not exclusive) motivation in retaining the photographs was for their own private use. The photographs were not for sale, they were intended to remain secret. Prof. Balganesh acknowledges that such secrecy has a potential price in that the scarcity renders the information more valuable. But he finds it to be a stretch to presume an actual market for the work.

Prof. Balganesh recommends an alternative approach for courts to use when applying the fair use defense to privative claims. He argues that courts should consider the “dignitary” nature of the work under the second factor, a combination of its being (1) unpublished, (2) private, and (3) embodying expression directly implicating the author’s persona and identity. While this classification should not be dispositive in the overall fair use analysis, it should weigh heavily and influence the interpretation and application of the other factors. The fourth factor, relating to market effect, should be understood as receding in importance once the work is classified as “dignitary” in nature.

Prof. Balganesh’s article makes a strong case for courts to adopt this approach through tracing the historic evolution of privative copyright claims in Anglo-American copyright law. He teases apart the theories behind copyright law and develops a theoretical basis for understanding the workings of privative copyright claims. Privative Copyright is an essential read for a deeper understanding of copyright law.

Categories
Copyright

CPIP’s Sandra Aistars and Scalia Law Arts & Entertainment Advocacy Clinic Co-Host Virtual Copyright Event on Arts and the Pandemic

The following post comes from Chris Wolfsen, a recent graduate of Scalia Law and a Research Assistant at CPIP.

flyer for Arts and the Pandemic eventBy Chris Wolfsen

On October 27, 2020, CPIP Director of Copyright Research and Policy Sandra Aistars and students from her Arts & Entertainment Advocacy Clinic at Scalia Law School co-hosted a virtual event with Washington Area Lawyers for the Arts (WALA) and the Copyright Alliance. This virtual copyright clinic, focused on Arts and the Pandemic, provided information to artists wishing to protect their works as well as educators incorporating creative works into distance learning and museums wishing to make work available during the pandemic.

The event kicked off with a testimonial from the Rock Creek King’s Evan Moses, explaining WALA’s assistance in pairing the band with an attorney who advised them in securing the proper permits and asserting their First Amendment rights to perform outdoors during the COVID-19 quarantine for the Save Our Stages Movement. The band continues to raise awareness of the need for legislation to support local music venues during COVID-19 shutdowns. The Rock Creek Kings are calling on both the D.C. City Council and the U.S. Congress to assist these small businesses until they can reopen safely again.

Professor Aistars then turned the event over so her clinic students could answer questions submitted by attendees, with former clinic student, now adjunct professor, Dr. Stephanie Semler moderating. First was an explanation from David Ward on how artists can copyright their artwork. He explained that artists have a copyright as soon as their work is fixed in a tangible medium, but that registering that copyright with the United States Copyright Office will benefit artists. This registration will allow people seeking to license works to find artists and for artists to recover statutory damages in the case of a successful infringement claim. David explained that there are six categories of protectable works and shared a quick walkthrough of the process on https://copyright.gov/.

Bernard Horowitz then fielded a question on the minds of many artists: should I sign a COVID waiver in the studio or for the live event I participate in? Bernard explained that this question is a moving target—COVID waivers have not yet been litigated and Congress has not acted on the matter. He noted that we can look to current personal injury laws to draw conclusions about what may happen with this type of waiver and went on to explain the sharp distinction between the laws in Maryland and D.C. compared to those in Virginia.

Another topic that has been brought to the forefront during the pandemic is collaboration between artists and teachers. Yumi Oda walked attendees through the concept of fair use—a defense to copyright infringement—explaining that teachers using creative works during a live stream of their lesson can take certain measures to improve the likelihood that they will have a good argument that their use of a work in a classroom setting is a fair use. She explained that fair use is a fact-specific inquiry, but that educational use in a classroom setting is a classic example. Yumi also recommended teachers take additional steps such as protecting the lectures, and the creative works within them, with a password and removing student access at the end of the semester.

In a similar vein, Emily Gunberg discussed how museums are adapting to life in a pandemic. Curators have to consider whether they have the right to display a visual work online, which requires making a reproduction. This is a right that does not automatically attach when a museum acquires the physical work for display within the museum building. Emily noted that some types of online postings are usually acceptable, such as thumbnail images due to their lower resolution and limited use. For general availability to the public, such as a feature in a museum’s virtual tour, curators should revisit licensing agreements to ensure they have permission from rights owners.

Heather Uzer was given a more holistic and open-ended question: is the pandemic a catalyst for reform, or a death knell for independent creators? She emphasized that it is within our capacity to use this moment as an opportunity and as a catalyst for change. Artists’ right to protect their works still remain and there are many resources available to help with that protection. WALA, the Copyright Alliance, and many others are committed to protecting independent creators. David Ward also noted that several legislative efforts have gained attention, and that some record labels are holding special days to acknowledge creator efforts and supplement revenue for broadcasting artists by returning all revenues to performing artists on those days.

The event concluded with a performance by the Rock Creek Kings, live, but socially distanced from Crescendo Studios in Falls Church, Virginia. You can watch the video of their performance here on YouTube. One of the owners of Crescendo Studios, Eddie Fuentes, spoke about the importance of art and music in a time where we cannot be physically connected, and Evan, the lead singer of the band, reinforced the message during the performance This has been a year where people have missed weddings, graduations, funerals, and birthdays. Our communities rely on creators now more than ever to bring us together through shared experiences when we are six feet, or even oceans, apart.

Categories
Copyright

House Judiciary Committee Hearing Reacts to Copyright Office Report on Efficacy of Section 512

The following post comes from Liz Velander, a recent graduate of Scalia Law and a Research Assistant at CPIP.

U.S. Capitol buildingBy Liz Velander

In late September, the House Judiciary Committee held a hearing entitled Copyright and the Internet in 2020: Reactions to the Copyright Office’s Report on the Efficacy of 17 U.S.C. 512 After Two Decades. As Chairman Jerrold Nadler (D-NY) explained, the hearing sought “perspectives on whether Section 512 is working efficiently and effectively for this new internet landscape.” The hearing was guided by the U.S. Copyright Office’s Section 512 Report, released in May, which concluded that the operation of the Section 512 safe harbor system disfavors copyright owners—contrary to “Congress’ original intended balance.”

The witnesses included: Jeffrey Sedlik, President & CEO, PLUS Coalition; Meredith Rose, Senior Policy Counsel, Public Knowledge; Morgan Grace Kibby, Singer and Songwriter; Jonathan Band, Counsel, Library Copyright Alliance; Matthew Schruers, President, Computer & Communications Industry Association; and Terrica Carrington, Vice President, Legal Policy and Copyright Counsel, Copyright Alliance.

Enacted in 1998 as part of the Digital Millennium Copyright Act (DMCA), Section 512 establishes a system for copyright owners and online service providers (OSPs) to address online infringement, including a “safe harbor” that limits liability for compliant OSPs. To qualify for safe harbor protection, an OSP must fulfill certain requirements, generally consisting of implementing measures to expeditiously address online copyright infringement. Congress sought to create a balance between two goals in enacting Section 512: (1) providing important legal certainty for OSPs so that the internet ecosystem can flourish without the threat of the potentially devastating economic impact of liability for copyright infringement as a result of user activity, and (2) protecting the legitimate interests of authors and other rights owners against the threat of rampant, low-barrier online infringement.

The Copyright Office’s Report determined that the balance Congress originally sought is now “askew.” It found that “despite the advances in legitimate content options and delivery systems, and despite the millions of takedown notices submitted on a daily basis, the scale of online copyright infringement and the lack of effectiveness of Section 512 notices to address that situation, remain significant problems.” The Report did not recommend any wholesale changes to Section 512, but instead identified certain areas that Congress could fine-tune in order to better balance the rights and responsibilities of OSPs and copyright owners. These include eligibility qualifications for the service provider safe harbors, repeat infringer policies, knowledge requirement standards, specificity within takedown notices, non-standard notice requirements, subpoenas, and injunctions.

At the hearing, the six witnesses reacted to the Copyright Office’s Report in dramatically different fashions. Representatives of OSPs disagreed with the Report’s conclusions, testifying that Section 512 is working as Congress intended. Mr. Band from the Library Copyright Alliance referred to Section 512 as a “shining example of enlightened legislation for the public good” that is responsible for the “golden age of content creation and distribution.” Mr. Schruers from the Computer & Communications Industry Association criticized the Report for inadequately reflecting the interests of users and “conspicuously” overlooking the problem of Section 512 misuse. Ms. Rose from Public Knowledge stated “the Office’s analysis performed a familiar sleight-of-hand by presenting user interests as coextensive with those of platforms, effectively erasing free speech concerns from its analysis.”

Representatives of content creators painted an entirely different picture of Section 512’s efficacy. They applauded the Copyright Office for calling attention to areas of imbalance related to Section 512 and to how overly expansive or narrow interpretations of the statute have aided in skewing the balance Congress intended. Mr. Sedlik, a photographer with over 35 years of professional experience and President & CEO of the PLUS Coalition, described how service providers take advantage of his and others’ copyrighted works while hiding behind Section 512’s safe harbors. He explained that, like many other copyright owners, he must spend an exorbitant amount of time searching for infringing materials online and sending takedown notices instead of creating new works.

Ms. Kibby, a singer and songwriter, testified that Section 512 is “undermining creativity, and more alarmingly, quietly undercutting our next generation of artists. It is jeopardizing livelihoods for working class musicians, obliterating healthy monetary velocity in our creative community. It is rewarding unscrupulous services that deal in the unauthorized trade and use of our works. It is fundamentally sabotaging the legitimate online marketplace that we all rely on and that Congress envisioned.” Responding to the argument that notice-and-takedown results in censorship of user-generated content, Ms. Kibby said that Section 512’s “stripping creators of their fundamental rights, their livelihood, and ultimately their creative contributions is the real censorship.”

Ms. Carrington from the Copyright Alliance identified three main problems with Section 512: (1) the ineffective notice-and-takedown process, (2) the effective elimination of the red flag knowledge standard, and (3) ineffective repeat infringer policies. She recommended adjusting the statute to clarify the difference between actual and red flag knowledge, enacting the Copyright Alternative in Small-Claims Enforcement (CASE) Act, and transparently developing effective standard technical measures (STMs).

Members of the Committee recognized the need for reform. Chairman Nadler remarked that the sheer volume of takedown notices being sent does not seem like the hallmark of a system functioning as intended. Some Members first spoke about the importance of copyright law before questioning the panelists. For example, Representative Hank Johnson (D-GA) said “it’s crucial that these creators are able to rely on copyright law protections to make their living. This is even more true in an age where the click of a button can plagiarize a lifetime of work.”

It was heartening to hear the Representatives’ positive response to the concerns of small, individual creators whose livelihoods depend on the commercial viability of their works. It was clear that the Committee is seriously considering the recommendations in the Copyright Office Report and looking for a way to rebalance Section 512 so that it respects what Congress originally intended—a system that respects the rights of authors and artists who face widespread infringement of their rights in the online environment.

Categories
Copyright

The Changing Nature of Sound Recording Rights

The following post comes from Meghan Carlin, who is in her second year at Osgoode Hall Law School in Toronto, Ontario. In addition to her work with the IPilogue, Meghan is a Fellow with the Innovation Clinic and is Co-President of the Osgoode Entertainment and Sports Law Association. This post first appeared at IPilogue.

2020 Evolving Music Ecosystem Conference flyerBy Meghan Carlin

The ongoing history of sound recording rights continues to provide a fascinating study in the United States’ copyright regime’s ability to contemplate and absorb new technologies into its framework. The evolution of these rights in America over the last 50 years charts alongside the country’s evolving music industry, crystallizing the importance, and distinctiveness, of music law in relation to the broader copyright regime.

Over the last 20 years, global music industry players have seen traditional revenue streams decrease as the shift towards digital distribution has intensified. In 2018, reported global revenues from recorded music were 25% lower than those reported in 1999 – without adjusting for nearly 20 years of inflation. With the worldwide concert industry grinding to a halt, removing a major source of revenue for performers and copyright owners alike, the effect of COVID-19 on the global music industry has placed a spotlight on moving the conversation on sound recording rights forward.

On September 9th through 11th, 2020, the Center for the Protection of Intellectual Property (CPIP) hosted The Evolving Music Ecosystem conference. Streaming online from George Mason University Antonin Scalia Law School in Arlington, Virginia, day one of the conference saw panelists tackling a number of topics in music law, including the colourful history of sound recording rights in America and their current status under the US copyright regime. The below provides a deeper look at the issues discussed during the Changing Nature of Sound Recording Rights panel on September 9th.

Looking Back: The Music Modernization Act

Revenues from recorded music have grown over the last five years in the US, with the Recording Industry Association of America (RIAA) reporting four years in a row of double-digit growth. In 2019, revenues from recorded music grew 13%, primarily through paid subscription services. Total revenues from streaming alone grew 19.9% in 2019, accounting for almost 80% of all recorded music revenues in the United States.

Consider these statistics against the legislative backdrop that governs the payment of royalties for recorded music. On October 11, 2018, the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (H.R. 1551) (“MMA”) was signed into law by President Donald Trump. The MMA combines three previously introduced bills intended to modernize copyright law as it relates to the music industry.

Title I of the MMA is the Musical Works Modernization Act, which impacts the conversation on sound recording rights in a number of ways. First, Title I changes the standard used by the Copyright Royalty Board (“CRB”) in setting digital royalty rates, bringing the standard used for digital radio stations up to date. Under the old regime, the standard used for setting statutory royalties relied on public interest considerations, preventing the CRB from considering what a licensee might pay as a market rate. Under the MMA, the rates for all compulsory blanket licences are to be determined through a market-based standard, sometimes referred to as a willing buyer/willing seller standard, ideally creating a fairer standard of compensation for the owners of sound recordings.

Further, Title I establishes the Mechanical Licensing Collective (MLC). While the primary role of the MLC is to collect and distribute section 115 mechanical publishing royalties, it has also been tasked with the creation of a Musical Works Database, intended to link sound recordings to their underlying compositions. In theory, the database will provide music users with a one-stop shop for uncovering all potential rightsholders involved in a song, on both the sound recording and the composition side.

Title II of the MMA tackles the grey zone inhabited by pre-1972 recording artists, otherwise known as “legacy artists”. The Classics Protection and Access Act extends the same protections to the digital public performance of pre-1972 sound recordings as those extended to post-1972 recordings. The practical outcome of this legislation? Digital radio stations and streaming services are now responsible for paying royalties for the expansive catalogue of pre-1972 recordings in their repertoires, according to the uniform rate setting standard outlined in Title I.

Title III, The AMP (Allocation for Music Producers) Act, creates a new “letter of direction” process, allowing recording artists to distribute a portion of the royalties collected for a sound recording to the producers, sound engineers or mixers involved in its production. Title III enables SoundExchange, the entity collecting and distributing sound recording royalties under section 114 statutory licenses, to distribute these royalties directly to the producers involved on behalf of recording artists who submit a “letter of direction” outlining their intention to make such a payment.

Simply put, and as it currently stands, the US legislation regarding sound recording rights maintains its focus on digital plays. What about analog?

Looking Forward: AM-FM Act

The AM-FM (Ask Musicians For Music) Act, introduced to Congress in November 2019, is a bi-partisan bill aimed at creating a terrestrial radio (AM/FM) performance right for sound recordings. The AM-FM Act arrives following the Fair Pay for Fair Play Act, introduced in both 2015 and 2017 with the same goal, but which failed to pass.

Supporters of the AM-FM Act describe it as ending a “a decades-long loophole” stemming back to the early days of radio that has allowed AM-FM radio broadcasters to play recorded music on air without obtaining the permission of the recording’s copyright owner, and without paying royalties for the use. In essence, it is argued, terrestrial radio broadcasters are being subsidized by the recording industry and will continue to be until the creation of an AM-FM radio performance right in sound recordings.

The National Association of Broadcasters has come out in opposition of the AM-FM Act, countering with their support of the Local Radio Freedom Act, stating that  “Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over the air, or on any business for the public performance of sound recordings on a local radio station broadcast over the air”.

In contemplating the ongoing battle over the creation of a terrestrial broadcast performance right in sound recordings, we’re provided with the opportunity to consider the role of analog radio in a digital era, and to think through the questions of promotion versus consumption that relate to music copyright as a whole.

Today: CUSMA

One argument made by proponents of the AM-FM Act is that while countries with a terrestrial radio performance right for sound recordings collect royalties for American artists whose sound recordings are played outside the US, they are unable to pass on these royalties to US rights holders as there is no domestic royalty scheme. In written comments filed in February 2020 in response to the USTR’s Request for Comments and Notice of Public Hearing Regarding the 2020 Special 301 Review, SoundExchange identified 6 territories which deny full national treatment to American recording artists – UK, France, Australia, Japan, the Netherlands, and Canada.

On July 1, 2020, the Canada-United States-Mexico Agreement (CUSMA) entered into force in Canada, providing full national treatment to sound recordings. Chapter 20 on intellectual property rights states at Article 20.8 that “in respect of all categories of intellectual property covered in this Chapter, each Party shall accord to nationals of another Party treatment no less favorable than it accords to its own nationals with regard to the protection of intellectual property rights”. As explained by panelist and Attorney Eric Schwartz of Mitchell Silberberg & Knupp, Canada’s implementation of its CUSMA obligation to give national treatment to sound recordings is sure to result in new payments to American copyright owners for uses occurring in Canada.

The effect of COVID-19 on the worldwide music industry has put the focus on the copyright regime’s ability to respond to change, both cultural and technological. For those interested in music law, and in the modernization of copyright more generally, the complicated and curious history of sound recording rights provides countless jumping off points for creatively thinking through the issues affecting artists and copyright holders today.