Tag: Google

New CPIP Policy Brief: The Long Shadow of the Blackberry Shutdown That Wasn’t

Post author By Joshua Grove
Post date July 28, 2020

CPIP has published a new policy brief by CPIP Senior Fellow for Innovation Policy Jonathan Barnett entitled The Long Shadow of the Blackberry Shutdown That Wasn’t. The policy brief looks at how the Blackberry litigation and the “patent troll” narrative ultimately contributed to the Supreme Court’s 2006 decision in eBay v. MercExchange that limited the availability of injunctive relief for successful patentees.

Professor Barnett then examines the problematic legacy of the post-eBay case law, which significantly shifted the legal infrastructure supporting the U.S. innovation markets. In particular, he explains how this shift has led to opportunistic infringement that favors downstream incumbents with the resources to fund extensive litigation at the expense of upstream innovators—a dynamic that is exemplified in the recent litigation between Sonos and Google.

The introduction is copied below:

Introduction

In early 2006, there was widespread public interest in a seemingly arcane patent infringement litigation brought by a small IP licensing entity, NTP, Inc., against Research in Motion (or “RIM”), the maker of the then-ubiquitous Blackberry mobile communications device. The reason: NTP alleged that the Blackberry device and service infringed upon its patents relating to wireless email communications. In the district court litigation, NTP had secured a judgment of willful patent infringement against RIM, entitling NTP to treble damages, attorneys’ fees, and a permanent injunction (stayed pending appeal) that placed at risk the continued operation of the Blackberry service.

Given NTP’s success at the district court, and uncertainty surrounding RIM’s ability to design a non-infringing alternative, there seemed to be a material risk that the appeals court would sustain the lower court’s rulings and, most importantly, the injunction order. Faced with this predicament, RIM settled all claims with NTP in March 2006 for the impressive sum of $612.5 million.

In this contribution, I revisit the almost 15-year-old Blackberry litigation and its connection with both the Supreme Court’s 2006 decision in eBay, Inc. v. MercExchange LLC, which limited patent owners’ ability to secure injunctions, and ongoing infringement litigation (commenced in January 2020) involving Google and Sonos, a leading innovator and supplier of wireless audio systems. While the eBay decision may have deterred certain opportunistic uses of patent infringement litigation, there are growing indications that it has had a significant adverse effect on the innovation ecosystem.

As illustrated by the Google/Sonos litigation, eBay and post-eBay case law has enabled incumbents that maintain key technology platforms and distribution pathways to infringe upon patent-protected technologies held by others at relatively modest legal and business risk. The increasing normalization of patent infringement as a rational business strategy endangers the property-rights infrastructure behind important segments of the U.S. innovation economy.

To read the policy brief, please click here.

Tags "patent trolls", Blackberry, ebay, efficient infringement, Google, injunction, Jonathan Barnett, patent, Sonos

Twenty Years Later, DMCA More Broken Than Ever

Post author By Joshua Grove
Post date April 24, 2019

With Section 512 of the DMCA, Congress sought to “preserve[] strong incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements that take place in the digital networked environment.”[1] Given the symbiotic relationship between copyright owners and service providers, Congress meant to establish an online ecosystem where both would take on the benefits and burdens of policing copyright infringement. This shared-responsibility approach was codified in the Section 512 safe harbors. But rather than service providers and copyright owners working together to prevent online piracy, Section 512 has turned into a notice-and-takedown regime where copyright owners do most of the work. This is not what Congress intended, and the main culprit is how the courts have misinterpreted Section 512’s red flag knowledge standards.

Several provisions in Section 512 demonstrate that Congress expected service providers to also play a role in preventing copyright infringement by doing some of the work in finding and removing infringing material. In order to benefit from the safe harbors, service providers must designate an agent to receive takedown notices, respond expeditiously to takedown notices, act upon representative lists, implement reasonable repeat infringer policies, and accommodate standard technical measures. But it’s also clear that service providers have the duty to remove infringing content even without input from copyright owners. As the Senate Report notes, “Section 512 does not require use of the notice and take-down procedure.”[2] And the knowledge provisions in Section 512 reflect this. Absent a takedown notice, service providers must, “upon obtaining . . . knowledge or awareness” of infringing material or activity, “act[] expeditiously to remove . . . the material” in order to maintain safe harbor protection.[3]

Under Section 512, there are two kinds of knowledge that trigger the removal obligation without input from the copyright owner—actual and red flag. For sites hosting user-uploaded content, actual knowledge is “knowledge that the material or an activity using the material on the system or network is infringing”[4] and red flag knowledge is “aware[ness] of facts or circumstances from which infringing activity is apparent.”[5] Thus, actual knowledge requires knowledge that specific material (“the material”) or activity using that specific material (“activity using the material”) is actually infringing (“is infringing”), while red flag knowledge requires only general awareness (“aware[ness] of facts or circumstances”) that activity appears to be infringing (“is apparent”). There are similar knowledge provisions for search engines.[6]

Importantly, actual knowledge refers to “the material,” and red flag knowledge does not. It instead refers to “infringing activity”—and it’s not the infringing activity, but infringing activity generally.[7] However, with both actual and red flag knowledge, the service provider is obligated to remove “the material.”[8] With actual knowledge, the service provider doesn’t have to go looking for “the material” since it already has actual, subjective knowledge of it. But what about with red flag knowledge where the service provider only knows of “infringing activity” generally? How does it know “the material” to take down? The answer is simple: Once the service provider is subjectively aware of facts or circumstances from which infringing activity would be objectively apparent[9]—that is, once it has red flag knowledge—it has to investigate and find “the material” to remove.[10]

The examples given in the legislative history, which relate to search engines, show that red flag knowledge puts the burden on the service provider. As the Senate Report notes, merely viewing “one or more well known photographs of a celebrity at a site devoted to that person” would not hoist the red flag since the images might be licensed or fair use.[11] However, sites that are “obviously infringing because they . . . use words such as ‘pirate,’ ‘bootleg,’ or slang terms . . . to make their illegal purpose obvious . . . from even a brief and casual viewing” do raise the red flag.[12] And a search engine “that views such a site and then establishes a link to it . . . must do so without the benefit of a safe harbor.”[13] Thus, Congress didn’t want search engines worrying about questionable infringements on a small scale, but it also didn’t want search engines to catalog sites that are clearly dedicated to piracy. And, most importantly, red flag knowledge kicks in once a service provider looks at something that is “obviously pirate”—even if it’s an entire website.[14]

So how has Congress’s commonsensical plan worked out? Not very well. As of today, Google indexes nearly 1.5 million results from the infamous pirate site, The Pirate Bay.[15] Like the examples in the legislative history, The Pirate Bay has the word “pirate” in its title, and a brief viewing of the site reveals its obvious, infringing purpose. And it’s not like Google hasn’t been told that The Pirate Bay is dedicated to infringement—nor that it needs to be told. According to data from the Google Transparency Report,[16] the search engine has received requests to remove over 4 million URLs from thepiratebay.org domain alone. There are many other related domains, such as thepiratebay.se, that have received millions of requests as well. In fact, Google tells us that it has received requests to remove over 4 billion URLs from its search engine due to copyright infringement, with many domains receiving more than 10 million requests each.

So how is it that Google can index The Pirate Bay and not be worried about losing its safe harbor? The answer is that the courts have construed Section 512 in a way that contradicts the statutory text and Congress’s intent. They’ve all but read red flag knowledge out of Section 512 and placed the burden of policing infringement disproportionately on the copyright owner. And by narrowing the applicability of red flag knowledge, the courts have perversely incentivized service providers to do as little as possible to prevent infringements. Instead of looking into infringing activity of which they are subjectively aware, they are better off doing nothing lest they gain actual, specific knowledge that would remove their safe harbor protection.

A brief traverse through the case law, especially in the Second and Ninth Circuits, shows how the red flag knowledge train has been derailed. In Perfect 10 v. CCBill, the Ninth Circuit held that domains such as illegal.net and stolencelebritypics.com—the very sort of indicia mentioned in the legislative history—were not enough to raise the red flag.[17] According to the court, “describing photographs as ‘illegal’ or ‘stolen’ may be an attempt to increase their salacious appeal, rather than an admission that the photographs are actually illegal or stolen.”[18] While that’s certainly possible, it’s not likely. And it defies common sense. The Ninth Circuit concluded: “We do not place the burden of determining whether photographs are actually illegal on a service provider.”[19] But this misses the point, and it conflates red flag knowledge with actual knowledge.

The Second Circuit in Viacom v. YouTube held that the “difference between actual and red flag knowledge is . . . not between specific and generalized knowledge, but instead between a subjective and an objective standard.”[20] The court arrived there by focusing on the removal obligation, reasoning that “expeditious removal is possible only if the service provider knows with particularity which items to remove.”[21] And it rejected an “amorphous obligation” to investigate “in response to a generalized awareness of infringement.”[22] By limiting red flag knowledge to specific instances of infringement, the Second Circuit severely curtailed the obligations of service providers to police infringements on their systems. The entire point of red flag knowledge is to place a burden on the service provider to investigate the infringing activity further so that the specific material can be removed.[23]

The Ninth Circuit followed suit in UMG Recordings v. Shelter Capital, holding that red flag knowledge requires specificity.[24] The court reasoned that requiring “specific knowledge of particular infringing activity makes good sense” because it will “foster cooperation” between copyright owners and service providers “in dealing with infringement” online.[25] This “cooperation,” according to the Ninth Circuit, would come from takedown notices sent by copyright owners, who “know precisely what materials they own, and are thus better able to efficiently identify” infringing materials than service providers, “who cannot readily ascertain what material is copyrighted and what is not.”[26] Of course, this is not the shared-responsibility approach envisioned by Congress, and it conflates the red flag knowledge standards with the obligation to respond to takedown notices—separate provisions in Section 512.

Perhaps the most significant gutting of red flag knowledge can be found in the Second Circuit’s opinion in Capitol Records v. Vimeo.[27] The district court below had held that it was a question for the jury whether full-length music videos of current, famous songs that had been viewed by the service provider amounted to red flag knowledge.[28] But the Second Circuit disagreed that there was any jury question: “[T]he mere fact that a video contains all or substantially all of a piece of recognizable, or even famous, copyrighted music and was to some extent viewed . . . would be insufficient (without more) to sustain the copyright owner’s burden of showing red flag knowledge.”[29] That this gloss on red flag knowledge “reduces it to a very small category” was of “no significance,” the Second Circuit reasoned, since “the purpose of § 512(c) was to give service providers immunity, in exchange for augmenting the arsenal of copyright owners by creating the notice-and-takedown mechanism.”[30]

The Second Circuit thus held as a matter of law that there was no need for the factfinder to determine whether the material was so obviously infringing that it would raise the red flag. How is this a question of law and not fact? The court never explains. More importantly, this flies in the face of what Congress provided for with red flag knowledge, and it demotes Section 512 to being merely a notice-and-takedown regime where copyright owners are burdened with identifying infringements on URL-by-URL basis. Giving service providers a free pass when confronted with a red flag turns the Section 512 framework on its head. And it enables service providers to game the system and build business models on widespread, infringing content—even if they welcome it—so long as they respond to takedown notices. The end result is that an overwhelming amount of obvious infringements goes unchecked, and there’s essentially no cooperation between service providers and copyright owners as Congress intended.

[1] S. Rep. No. 105-190, at 40 (emphasis added); see also H.R. Rep. No. 105-551(II), at 49.

[2] Id. at 45; see also H.R. Rep. No. 105-551(II), at 54.

[3] 17 U.S.C. § 512(c)(1)(A)(iii); see also 17 U.S.C. § 512(d)(1)(C).

[4] Id. at § 512(c)(1)(A)(i) (emphasis added).

[5] Id. at § 512(c)(1)(A)(ii) (emphasis added).

[6] See id. at §§ 512(d)(1)(A)-(B).

[7] See 4-12B Nimmer on Copyright § 12B.04[A][1][b][ii] (“By contrast, to show that a ‘red flag’ disqualifies defendant from the safe harbor, the copyright owner must simply show that ‘infringing activity’ is apparent—pointedly, not ‘the infringing activity’ alleged in the complaint.” (emphasis in original)).

[8] 17 U.S.C. § 512(c)(1)(A)(iii)

[9] S. Rep. No. 105-190, at 44 (“The ‘red flag’ test has both a subjective and an objective element. In determining whether the service provider was aware of a ‘red flag,’ the subjective awareness of the service provider of the facts or circumstances in question must be determined. However, in deciding whether those facts or circumstances constitute a ‘red flag’–in other words, whether infringing activity would have been apparent to a reasonable person operating under the same or similar circumstances–an objective standard should be used.”); see also H.R. Rep. No. 105-551(II), at 53.

[10] Id at 48 (“Under this standard, a service provider would have no obligation to seek out copyright infringement, but it would not qualify for the safe harbor if it had turned a blind eye to ‘red flags’ of obvious infringement.”); see also H.R. Rep. No. 105-551(II), at 57.

[11] Id.; see also H.R. Rep. No. 105-551(II), at 57-58.

[12] Id.; see also H.R. Rep. No. 105-551(II), at 58.

[13] Id. at 48-49; see also H.R. Rep. No. 105-551(II), at 58.

[14] Id. at 49; see also H.R. Rep. No. 105-551(II), at 58.

[15] See The Pirate Bay, available at https://www.thepiratebay.org/.

[16] See Google Transparency Report, available at https://transparencyreport.google.com/.

[17] See Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007).

[18] Id. at 1114.

[19] Id.

[20] Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19, 31 (2d Cir. 2012).

[21] Id. at 30.

[22] Id. at 30-31.

[23] See, e.g., H.R. Rep. No. 105-551(I), at 26 (“Once one becomes aware of such information, however, one may have an obligation to check further.”).

[24] UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006 (9th Cir. 2013).

[25] Id. at 1021-22.

[26] Id. at 1022.

[27] Capitol Records, LLC v. Vimeo, LLC, 826 F.3d 78 (2d Cir. 2016).

[28] Capitol Records, LLC v. Vimeo, LLC, 972 F. Supp. 2d 537, 549 (S.D.N.Y. 2013) (“[B]ased on the type of music the videos used here—songs by well-known artists, whose names were prominently displayed—and the placement of the songs within the video (played in virtually unaltered form for the entirety of the video), a jury could find that Defendants had ‘red flag’ knowledge of the infringing nature of the videos.”).

[29] Capitol Records, 826 F.3d at 94 (emphasis in original).

[30] Id. at 97.

I presented this at the Fordham IP Conference on April 25, 2019. My oral presentation is here, and the accompanying slides are here.

Stream Ripping Emerges as the New Face of Music Piracy

Post author By Joshua Grove
Post date September 5, 2017

Cross-posted from the Mister Copyright blog.

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

A Fast Growing Threat

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

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

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

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

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

YouTube-mp3.org

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

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

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

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

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

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

The Future of Music Piracy

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

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

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

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

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

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

Post author By Joshua Grove
Post date February 28, 2017

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

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

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

To read the amicus brief, please click here.

Tags copyright, fair use, Federal Circuit, Google, intellectual property

What Would Judge Gorsuch Mean for Fair Use?

Post author By Joshua Grove
Post date February 23, 2017

U.S. Supreme Court building On February 1^st, President Trump nominated Neil Gorsuch to fill the Supreme Court seat left vacant by the passing of Justice Antonin Scalia. The announcement opened the floodgates of prognostication as to how the appellate court judge from Colorado might sway the Court in the coming terms, with forecasters pouring over his past decisions in an attempt to get into the head of the potentially game-changing jurist. And while Gorsuch’s views on intellectual property remain largely unknown, a closer look at his track record provides some insight into his understanding of copyright law that should leave creators and copyright owners optimistic.

In the forty years since the Copyright Act was enacted, courts have expanded the “transformative” fair use doctrine to encompass a variety of uses whose original expressive contribution is difficult, if not impossible, to separate from the underlying work. In particular, courts have applied fair use to cases where the purported fair user merely transforms the purpose of an underlying work, without transforming the underlying work itself and without contributing any original artistic expression. This is a discouraging trend that disregards copyright’s promotion of creativity by encouraging the addition of new expression to old. Fortunately, this trend could be offset by lawmakers and judges with an understanding of the originality requirements of copyright law.

As a federal judge for the U.S. Court of Appeals for the Tenth Circuit, Gorsuch oversaw 14 cases concerning various forms of IP, four of which involved copyright claims. Despite finding for the accused infringer in all four copyright cases, one of those decisions stands out and reveals an appreciation for the originality and new expression required of copyright–a requirement often ignored by proponents of ever-expanding notions of fair and transformative use.

In the 2008 case Meshwerks v. Toyota, the plaintiff brought a copyright infringement claim against Toyota for the unauthorized use of digital automotive models in a television commercial. The works in question were computerized two-dimensional models created by Meshwerks and based on existing Toyota vehicle designs. Though the parties had originally contracted for the designs to be used on Toyota’s website, Toyota began running TV ads featuring the designs, and Meshwerks brought an infringement claim based on the unauthorized use.

The District Court in Utah granted summary judgment in favor of Toyota, finding that Meshwerks’ designs were not sufficiently original to qualify for copyright protection. Meshwerks then appealed to the U.S. Court of Appeals for the Tenth Circuit in Colorado, where Gorsuch had served since his confirmation in 2006.

Approaching the question of originality central to the case, Gorsuch agreed with the district court that the Meshwerks models contributed no new expression to Toyota’s preexisting designs and therefore were not eligible for copyright protection. In the opinion, Gorsuch refers to the “sine qua non of copyright” that requires at least a degree of originality in protectable works of authorship so that copyright will “reward[ ] (and thus encourag[e]) those who contribute something new to society.” The decision goes on to address Meshwerks’ depiction of Toyota’s three-dimensional physical objects in a two-dimensional digital medium, asserting that the “putative creator who merely shifts the medium in which another’s creation is expressed has not necessarily added anything beyond the expression contained in the original.”

Though Meshwerks didn’t involve fair use claims, Gorsuch’s focus on the lack of original expression in simply shifting mediums reflects the Supreme Court’s articulation of transformative fair use in Campbell v. Acuff Rose, a case that he experienced first hand as a law clerk for Justice Anthony Kennedy. Campbell involved the unauthorized parody of a popular Roy Orbison song, and in its fair use deliberation the Court focused intently on “whether the new work merely supersedes the objects of the original creation . . . or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is ‘transformative.’” (emphasis added). The Court found that if the new work sufficiently transforms the original through the additional of new expression, it may qualify as fair use.

But the idea of what qualifies as “transformative” has come to include works of transformative purpose, which often are little more than extensive, for-profit acts of wholesale copying of entire works that merely offer the underlying works in a new context. The transformative purpose theory has been applied to the mass scanning and digitization of copyrighted materials for projects such as Google Books, where the creation of a searchable database is considered transformative, despite the fact that the underlying works were not transformed in any original or expressive way. This change in context is effectively the same as the shifts in medium denounced in Meshwerks, and Gorsuch’s ideas about the need for new and original expression not only echo the Supreme Court’s interpretation in Campbell, but also reflect an understanding of the core principle of originality in copyright law.

As the digital age enables copying at the click of a mouse, it’s important to recognize the limits of fair use and realize that while an argument could be made that some of these recent acts of copying are transformative, others are dangerously close to the mere shifts in medium Gorsuch warned against in Meshwerks. Some instances of format-shifting that have been found to be fair use—such as converting full-size images to thumbnails in a search engine—provide an example of unauthorized uses that could benefit from a Gorsuch-style analysis of originality. While few would argue that the owner of a legitimate copy of an album or movie shouldn’t be able to transfer the work to different devices, allowing for a broad fair use application to format-shifting creates a slippery slope for shifts in medium that add no original expression.

Fortunately, despite pressure from groups who would like to see an expansion of fair use that would effectively annihilate copyright law, the Copyright Office recently refused to adopt an exemption that would have allowed broad, noncommercial format-shifting of motion pictures distributed on DVDs, Blu-ray discs, and downloaded files. The Office’s final rule found that proponents of the exemption “failed to establish a legal or factual record sufficient to establish that the space- or formatshifting of audiovisual works, e-books, and other copyrighted works constitutes a noninfringing use,” and that “fair use, as it stands today, does not sanction broad-based space-shifting or formatshifting.” Notwithstanding its refusal to grant the exemption, the Copyright Office recommended that format-shifting policy judgments be left to Congress, further highlighting the need for leaders who understand the goals of copyright law.

As different–and often misguided–theories of what constitutes fair use flood the internet during Fair Use Week, it’s important to acknowledge the doctrine’s purpose as a tool to promote the combination of original expressive works and honor the goals of copyright law. As Gorsuch says in Meshwerks, copyright law intends to encourage those who contribute something new to society, “while also allowing (and thus stimulating) others to build upon, add to, and develop those creations.” Gorsuch’s words invoke the same principles endorsed in Campbell, which says, “[f]rom the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright’s very purpose, ‘[t]o promote the Progress of Science and useful Arts. . . .”

As copyright experts have pointed out (see here, here, and here), many of those celebrating fair use this week misunderstand the doctrine and want the public to believe that copyright law and fair use are at odds. It’s a false dichotomy that betrays the purpose of copyright law and risks devaluing the original works whose expressions truly enrich society. It’s a risk that could threaten both the quality of future works and the creative ecosystem they facilitate, but it’s a risk that can be offset by leaders, advocates, and judges with an appreciation for the true intent of copyright law and the fair use doctrine.

Tags copyright infringement, Google, intellectual property, Kevin Madigan, Supreme Court, U.S. Copyright Office

Copyright Copyright Licensing Copyright Theory Infringement Intellectual Property Theory Internet Reasonable Royalty Uncategorized

Despite What You Hear, Notice and Takedown is Failing Creators and Copyright Owners

Post author By Joshua Grove
Post date August 24, 2016

In a recent op-ed in the LA Times, Professors Chris Sprigman and Mark Lemley praise the notice and takedown provisions of the Digital Millennium Copyright Act (DMCA) as “a bit of copyright law worth saving.” They argue that Section 512 of the DMCA continues to serve its purpose of balancing the rights of copyright owners and creators with those of Internet service providers (ISPs), while leaving both sides only “slightly disappointed.” Satisfying these two groups is indeed a difficult charge, but it’s simply disingenuous to suggest that creators and copyright owners are satisfied with a system so clearly in need of an overhaul.

As the Copyright Office embarks on its review of the DMCA, supporters and critics of the nearly twenty-year-old doctrine are weighing in on its effectiveness in addressing online infringement. Sprigman and Lemley claim that the “process has worked well for years,” and that the result of shifting more enforcement burden to ISPs “could be a broken Internet.” But for those creators and copyright owners who have their works resurface online just minutes after they are taken down, the Internet is already “broken.” The fact that piracy continues to intensify, despite incredible efforts to have infringing content taken down, shows that notice and takedown is largely ineffective.

As CPIP Senior Scholar Sean O’Connor testified before Congress, the notice and takedown system is not working for any of its intended beneficiaries. The constant game of whack-a-mole renders the system essentially futile for copyright owners and creators, and it creates significant burdens for ISPs that want to comply—especially small to mid-level companies that can’t afford compliance staff. Worse still, by shielding service providers from liability, the DMCA creates perverse incentives where there’s little downside to ignoring infringing content. In fact, reviewing content could lead to an ISP having knowledge of infringement and losing its safe harbor.

Now that the Copyright Office’s review is underway, it’s somewhat strange to see some supporters claim that all is well. But has anything actually changed since the Office announced its study? Of course not. The whack-a-mole problem remains, and the knowledge standards are still interpreted broadly to disproportionately favor ISPs. When one side says the system is working and the other side says it’s broken, the truth is that the system is not working well for everyone. Sprigman and Lemley can claim that the DMCA is “worth saving” only by downplaying the true plight of creators and copyright owners.

A concrete example of this struggle comes from the comments filed by Universal Music Group (UMG) as part of the Copyright Office’s study. UMG describes the painstaking efforts devoted to protect just one artist’s creative work. In October of 2014, UMG and Big Machine Records launched a joint offensive to protect Taylor Swift’s “1989.” A staff of UMG employees dedicated 100% of their time and resources to manually search for infringements on YouTube, SoundCloud, and Tumblr, and through March of 2016, they had sent over 66,000 DMCA takedown notices. Despite their considerable efforts, over 500,000 links to the album were identified, and “1989” was illegally downloaded nearly 1.4 million times from torrent sites.

Of course, this type of effort would be impossible to replicate for any works other than those that attract such massive attention. For most artists, the burden of monitoring the Internet and sending takedown notices would fall entirely on their shoulders, with no guarantee of putting a stop to the theft of their works. Sprigman and Lemley ignore these problems, instead claiming that since copyright owners sent “more than 500 million takedown requests just to Google last year,” we know that the “system is a powerful tool against pirated content.” That would be great, if true, but the reality is that those notices barely made a dent.

Sprigman and Lemley claim that the “genius of the DMCA” is that it “enables entertainment companies to turn piracy into legitimate revenue.” They give the example of “YouTube’s Content ID system,” which “gives copyright owners the opportunity to ‘claim’ their work and share in any advertising revenue rather than pull it off the site.” From the perspective of creators and copyright owners, the only “genius” of this system is that YouTube can legally present them with an unfair choice—suffer infringement and get nothing or monetize and get next to nothing.

While Sprigman and Lemley praise the “more than $1 billion” paid out by YouTube, the real question is how much more copyright owners and creators would have been paid in a properly functioning market. YouTube is consistently teeming with infringing videos—one recent report revealed that over 180 million infringing videos had been removed in 2014 alone. And the artists that YouTube’s largess supposedly benefits are loudly complaining about their exploitation. If Content ID is so great, why are so many creators and copyright owners upset with the arrangement? The monetization Google offers to copyright owners and artists is less than half of the royalties paid out by streaming services like Pandora, an amount that artists have denounced as already inequitable.

In her excellent piece on the fictions of the Content ID system, Grammy-winning artist Maria Schneider exposes Content ID as a way for Google to cash in by actually legitimizing and perpetuating piracy. She explains that a majority of creators that opt for monetization realize miserable percentages of ad revenue, and the continued illegal uploading of their music and content drives billions of users to YouTube’s platform. YouTube has turned the weakness of the DMCA into a system that exploits artists while offering embarrassingly lower royalty rates than what would be negotiated in a free market.

The current situation is untenable, and if change means “breaking” the Internet, then we should pull out the pickaxes and get to work. A system of notice and staydown, rather than just takedown, would help alleviate the constant and seemingly ineffectual vigilance required by the current system. By removing all copies of a protected work and blocking inevitable re-postings, ISPs would honor the original purpose of the DMCA while actually doing their part to earn the protection of the safe harbor provisions. Only by ensuring that targeted works do not resurface will ISPs respect the rights of those without whose content they would cease to exist.

How anyone can honestly say that the current notice and takedown system is working for copyright owners and creators is mystifying given the constant calls for reform from creators and the numerous critical comments filed with the Copyright Office. The incredible magnitude of takedown notices sent and the seemingly unstoppable reappearance of infringing works online are a clear signal that the system is completely failing those it was meant to protect. Creators and copyright owners deserve a better chance at protecting the fruits of their labors, and the DMCA needs to be changed so that it truly is a system “worth saving.”

Tags copyright, copyright infringement, DMCA, Google, intellectual property, notice and takedown, notice-and-staydown, Sean O'Connor, Section 512, U.S. Copyright Office

Innovation Inventors Patent Law Statistics Uncategorized

Do As I Say, Not As I Do: Google’s Patent Transparency Hypocrisy

Post author By Joshua Grove
Post date June 30, 2016

It is common today to hear that it’s simply impossible to search a field of technology to determine whether patents are valid or if there’s even freedom to operate at all. We hear this complaint about the lack of transparency in finding “prior art” in both the patent application process and about existing patents.

The voices have grown so loud that Michelle K. Lee, Director of the Patent Office, has made it a cornerstone of her administration to bring greater transparency to the operations of the USPTO. She laments the “simple fact” that “a lot of material that could help examiners is not readily available, because the organizations retaining that material haven’t realized that making it public would be beneficial.” And she’s been implementing new programs to provide “easy access by patent examiners to prior art” as a “tool to help build a better IP system.”

We hear this complaint about transparency most often from certain segments of the high-tech industry as part of their policy message that the “patent system is broken.” One such prominent tech company is search giant Google. In formal comments submitted to the USPTO, for instance, Google asserts that a fundamental problem undermining the quality of software patents is that a “significant amount of software-related prior art does not exist in common databases of issued patents and published academic literature.” To remedy the situation, Google has encouraged the Patent Office to make use of “third party search tools,” including its own powerful search engines, to locate this prior art.

Google is not shy about why it wants more transparency with prior art. In a 2013 blog post, Google Senior Patent Counsel Suzanne Michel condemned so-called “patent trolls” and argued that the “PTO should improve patent quality” in order to “end the growing troll problem.” In comments from 2014, three Google lawyers told the Patent Office that “poor quality software patents have driven a litigation boom that harms innovation” and that making “software-related prior art accessible” will “make examination in the Office more robust to ensure that valid claims issue.” In comments submitted last May, Michel even proposed that the Patent Office use Google’s own patent search engines for “streamlining searches for relevant prior art” in order to enhance patent quality.

Given Google’s stance on the importance of broadly available prior art to help weed out vague patents and neuter the “trolls” that wield them, you’d think that Google would share the same devotion to transparency when it comes to its own patent applications. But it does not. Google has not mentioned in its formal comments and in its public statements that even using its own search engine would fail to disclose a substantial majority of its own patent applications. Unlike the other top-ten patent recipients in the U.S., including many other tech companies, Google keeps most of its own patent applications secret. It does this while at the same time publicly decrying the lack of transparency in the patent system.

The reality is that Google has a patent transparency problem. Not only does Google not allow many of its patent applications to be published early or even after eighteen months, which is the default rule, Google specifically requests that many of its patent applications never be published at all. So while Google says it wants patent applications from around the world to be searchable at the click of a mouse, this apparently does not include its own applications. The numbers here are startling and thus deserve to be made public—in the name of true transparency—for the first time.

Public Disclosure of Patent Applications

Beginning with the American Inventors Protection Act of 1999 (AIPA), the default rule has been that a patent application is published eighteen months after its filing date. The eighteen-month disclosure of the patent application will occur unless an applicant files a formal request that the application not be published at all. An applicant also has the option to obtain early publication in exchange for a fee. Before the AIPA, an application would only be made public if and when the patent was eventually granted. This allowed an applicant to keep her invention a trade secret in case the application was later abandoned or rejected.

The publication of patent applications provides two benefits to the innovation industries, especially given that the waiting time between filing of an application and issuance of the patent or a final rejection by an examiner can take years. First, earlier publication of applications provides notice to third parties that a patent may cover a technology they are considering adopting in their own commercial activities. Second, publication of patent applications expands the field of publicly-available prior art, which can be used to invalidate either other patent applications or already-issued patents themselves. Both of these goals produce better-quality patents and an efficiently-functioning innovation economy.

Separate from the legal mandate to publish patent applications, Google has devoted its own resources to creating greater public access to patents and patent applications. From its Google Patent Search in 2006 and its Prior Art Finder in 2012 to its current Google Patents, Google has parlayed its search expertise into making it simple to find prior art from around the world. Google Patents now includes patent applications “from the USPTO, EPO, JPO, SIPO, WIPO, DPMA, and CIPO,” even translating them into English. It’s this search capability that Google has been encouraging the Patent Office to utilize in the quest to make relevant prior art more accessible.

Given Google’s commitment to patent transparency, one might expect that Google would at least be content to allow default publication of its own applications under the AIPA’s eighteen-month default rule. Perhaps, one might think, Google would even opt for early publication. However, neither appears to be the case; Google instead is a frequent user of the nonpublication option.

Google’s Secrecy vs. Other Top-Ten Patent Recipients

After hearing anecdotal reports indicating that Google was frequently using its option under the AIPA to avoid publishing its patent applications, we decided to investigate further. We looked at the patents Google received in 2014 to see what proportion of its applications was subject to nonpublication requests. To provide context, we also looked at how Google compared to the other top-ten patent recipients in this regard. The results are startling.

Unfortunately, there’s no simple way to tell if a nonpublication request was made when a patent application was filed using the USPTO’s online databases—nonpublication requests are not an available search field. The same appears to be true of subscription databases. The searches therefore have to be done manually, digging through the USPTO’s Public PAIR database to find the application (known in patent parlance as the “file wrapper”) for each individual patent that includes the individual application documents. Those interested in doing this will find startling numbers of patent applications kept secret by Google, both in terms of absolute numbers but also as compared to the other top-ten recipients of U.S. patents.

By way of example as to what one needs to look for, take the last three patents issued to Google in 2014: D720,389; 8,925,106; and 8,924,993.

For the first patent, the application was filed on December 13, 2013, and according to the application data sheet, no request was made to either publish it early or not publish it at all:

Since no such request was made, the application would normally be published eighteen months later or upon issuance of the patent. Indeed, that is what happened in due course—this patent issued just over one year after the application was filed, as it was concurrently published and issued in December of 2014.

For the second patent in our small set of examples, the application was filed on April 20, 2012. In this case, Google requested nonpublication by including a letter requesting that the application not be published:

Google thus opted out of the default eighteen-month publication rule, and the application was not published until the patent issued in December of 2014, some twenty months later.

Finally, for the third patent, the application was filed on November 10, 2011, and the application data sheet shows that Google requested the application not be published:

Google here again opted out of the default publication rule, and the application was not published until the patent issued in December of 2014—more than three years after the application was filed.

We applied this methodology to a random sample of 100 patents granted to each of the top-ten patent recipients in 2014.

In 2014, Google was one of the top-ten patent recipients, coming in sixth place with 2,649 issued patents:

SOURCES: USPTO PatentsView Database & USPTO Patent Full-Text and Image Database

We randomly sampled 100 patents for each of the top-ten patent recipients for 2014. We reviewed the file wrapper for each to determine the proportion of nonpublication requests in each sample.

Our results revealed that Google is an extreme outlier among top-ten patent recipients with respect to nonpublication requests. Eight of the top-ten patent recipients made zero requests for nonpublication, permitting their patent applications to be published at the eighteen-month deadline. The eighth-ranking patent recipient, Qualcomm, requested that one application not be published. By contrast, Google formally requested that 80 out of 100—a full 80%—of its applications not be published.

The following chart shows these results:

SOURCE: USPTO Public PAIR Database

Conclusion

Based on this result, Google deliberately chooses to keep a vast majority of its patent applications secret (at least it did so in 2014). This secrecy policy for its own patent applications is startling given both Google’s public declarations of the importance of publication of all prior art and its policy advocacy based on this position. It is even more startling when seen in stark contrast to the entirely different policies of the other nine top patent recipients for 2014.

It is possible that 2014 was merely an anomaly, and that patent application data from other years would show a different result. We plan to investigate further. So, stay tuned. But for whatever reason, it appears that Google doesn’t want the majority of its patent applications to be published unless and until its patents finally issue. This preference for secrecy stands in contrast to Google’s own words and official actions.

As one of the top patent recipients in the U.S., you’d think Google would want its applications to be published as quickly as possible. The other top recipients of U.S. patents in 2014 certainly adopt this policy, furthering the goal of the patent system in publicly disclosing new technological innovation as quickly as possible. The fact that Google does otherwise speaks volumes.

Three Years Later, DMCA Still Just as Broken

Post author By Joshua Grove
Post date June 30, 2016

By Matthew Barblan & Kevin Madigan

In 2013, CPIP published a policy brief by Professor Bruce Boyden exposing the DMCA notice and takedown system as outdated and in need of reform. The Failure of the DMCA Notice and Takedown System explained that while Section 512 of the DMCA was intended as a way for copyright owners and service providers to work together to fight infringement in the digital age, the notice and takedown system has been largely ineffective in managing the ever-increasing amount of piracy.

Three years later, the DMCA is still just as broken. Since we published the brief, courts have further diminished service providers’ responsibility to cooperate with copyright owners to detect and deter infringement, rendering the DMCA even more fruitless and desperately in need of retooling.

Boyden explained the fundamental problems with the system at the time, beginning with the fact that “despite all the notice, there is precious little takedown to show for it. Unless a site employs some sort of content filtering technology, the same content typically re-appears within hours after it is removed.” The notice and takedown system is particularly unsuited for the twenty-first century, where “infringement is persistent, ubiquitous, and gargantuan in scale. It is a problem that needs to be policed” with more than just takedown notices that don’t give copyright owners “a single day when the content is not available on the most heavily trafficked sites.”

Boyden noted that “even for the largest media companies with the most resources at their disposal, attempting to purge a site of even a fraction of the highest-value content is like trying to bail out an oil tanker with a thimble.” And Boyden pointed out that the courts hadn’t made the situation any better: “The DMCA’s unsuitability as a tool to manage chronic, persistent, and pervasive infringement is particularly apparent after recent decisions from the Second and Ninth Circuit that construed the duty of website owners very narrowly under Section 512.”

To further illustrate his point, Boyden collected data on takedown notices sent by MPAA companies and counter-notices received. Between March and August of 2013, MPAA companies sent takedown notices for over 25 million infringing URLs and received only 8 counter-notices in response. That’s a counter-notice rate of 0.000032%, suggesting that the astronomical volume of notices represents a likewise astronomical volume of infringement rather than overly-aggressive notice-sending.

Grand Totals. Infringing URLs: 25,235,151. URLs Sent to Websites: 13,238,860. URLs Sent to Search Engines: 11,996,291. Counter-Notices Received: 8.

Boyden concluded:

The impossibility of keeping up with new [infringing] uploads means that an online service provider can create a site aimed at and dedicated to hosting infringing copyrighted works, comply with every takedown notice, and still benefit from the safe harbor, as long as its intent remains hidden. If the site has enough users, any popular content removed will be supplanted by new copies almost immediately.

Sadly, three years later the “chronic, persistent, and pervasive” infringement that Boyden described continues, with stolen copyrighted works popping up on sites almost immediately after being taken down. Google Search—one product of one company—has receive nearly 90 million takedown notices this month alone. The situation has gotten so bad that last week a long list of artists, including Paul McCartney and Taylor Swift, signed a digital petition to bring attention to a broken DMCA system that allows companies like YouTube to benefit from infringement at the expense of songwriters and artists.

The artists’ main message: “The existing laws threaten the continued viability of songwriters and recording artists to survive from the creation of music.” They note that “the tech companies who benefit from the DMCA today were not the intended protectorate when it was signed into law nearly two decades ago,” and they ask Congress to “enact sensible reform that balances the interests of creators with the interests of the companies who exploit music for their financial enrichment.”

Recognizing the growing frustration with the DMCA, the U.S. Copyright Office initiated a study earlier this year to examine whether the statute is fulfilling its purpose. We submitted comments to the Copyright Office on behalf of a group of copyright law scholars, noting that courts have disrupted the balance Congress sought to create when it enacted the DMCA. In particular, courts have eliminated any incentive for service providers to work with copyright owners to develop policies and procedures to prevent or curb piracy online. In just one example of how deeply courts have distorted congressional intent, under courts’ current interpretation of the DMCA, search engines can continue to index even obviously infringing sites like The Pirate Bay with no fear of potential of liability.

Adding insult to injury, courts have recently shifted the balance of power even further away from artists and towards service providers, making it easier than ever for companies to enable and profit from infringement while turning a blind eye—or even encouraging—piracy on their sites. In this month’s Capitol Records v. Vimeo decision, for example, the Second Circuit extended the DMCA safe harbor to Vimeo despite smoking-gun evidence that Vimeo employees encouraged users to post stolen works on their site and had viewed the illicit videos at issue in the suit. In a jaw-dropping opinion, the court let Vimeo off the hook simply because the evidence of Vimeo employees encouraging infringement wasn’t directly tied to the specific infringing videos that plaintiffs included in their suit.

CPIP’s Devlin Hartline explains:

After Capitol Records v. Vimeo: A service provider can encourage its users to infringe on a massive scale, and so long as the infringement it encourages isn’t the specific infringement it gets sued for, it wins on the safe harbor defense at summary judgment. This is so even if there’s copious evidence that its employees viewed and interacted with the specific infringing material at issue. No jury will ever get to weigh all of the evidence and decide whether the infringement is obvious. At the same time, any proactive steps taken by the service provider will potentially open it up to liability for having actual knowledge, so the incentive is to do as little as possible to proactively “detect and deal” with piracy. This is not at all what Congress intended. It lets bad faith service providers trample the rights of copyright owners with impunity.

As courts continue to gut the DMCA, making it harder than ever for artists to protect their property and livelihoods, Congress would be wise to heed Bruce Boyden’s advice from three years ago: “It is long past time for a retooling of the notice and takedown regime.”

Tags Bruce Boyden, Capitol Records v. Vimeo, Devlin Hartline, Digital Millennium Copyright Act, DMCA, Google, MPAA, notice and takedown, Paul McCartney, Pirate Bay, Section 512, Taylor Swift, U.S. Copyright Office, whack-a-mole, YouTube

Second Circuit Deepens Red Flag Knowledge Circuit Split in Vimeo

Post author By Joshua Grove
Post date June 28, 2016

The Second Circuit’s recent opinion in Capitol Records v. Vimeo is, to put it mildly, pretty bad. From its convoluted reasoning that copyrights under state law for pre-1972 sound recordings are limited by the DMCA safe harbors, despite the explicit statement in Section 301(c) that “rights or remedies” under state law “shall not be annulled or limited” by the Copyright Act, to its gutting of red flag knowledge by limiting it to the nearly-impossible situation where a service provider actually knows that a specific use of an entire copyrighted work is neither fair nor licensed yet somehow doesn’t also surmise that it’s infringing, it’s hard to see how either result is compelled by the statutes, much less how it was intended by Congress. On the latter point, the Second Circuit in essence has written red flag knowledge out of the statute, reducing the DMCA to a mere notice-and-takedown regime. The reality is that Congress expected red flag knowledge to do far more work, incentivizing service providers to take action in the face of a red flag—even without a notice.

If there’s any good to come from Vimeo, it might only be that the Second Circuit has now deepened the circuit split with the Ninth Circuit in Columbia Pictures v. Fung on two issues related to red flag knowledge. Under the statute, red flag knowledge exists when a service provider is “aware of facts or circumstances from which infringing activity is apparent.” The two circuits are already split on the issue of whether red flag knowledge must pertain to the particular works that are being sued over in the suit. And now with Vimeo, the circuits are split on the issue of whether a service provider can gain red flag knowledge just by looking at an infringing work. The deeper the circuit split, the greater the chance an appeal will make it to the Supreme Court, which would hopefully clean up the current red flag knowledge mess.

In Fung, the defendant, Gary Fung, operated several piracy havens, including isoHunt, TorrentBox, Podtropolis, and eDonkey. The district court found Fung liable for inducement under MGM v. Grokster and denied him safe harbor protection under the DMCA. The district court’s decision came in 2009, two years before the Ninth Circuit first held in UMG v. Shelter Capital that red flag knowledge requires “specific knowledge of particular infringing activity.” It also came two-and-a-half years before the Second Circuit held in Viacom v. YouTube that red flag knowledge is only relevant if it pertains to the works-in-suit. Regardless, since the vast majority of content available on Fung’s sites was copyrighted, including specific content that he himself had downloaded, the district court held that Fung hadn’t even raised a triable issue of fact as to whether he had red flag knowledge. The fact that none of the works he had been sued over were the same as the ones he had been found to have red flag knowledge of was irrelevant.

On appeal, the Ninth Circuit affirmed the district court’s holding that Fung had red flag knowledge as a matter of law. The opinion came out just one week after the same panel of judges issued a superseding opinion in UMG v. Shelter Capital reiterating that red flag knowledge requires “specific knowledge of particular infringing activity.” Importantly, in applying that standard to Fung, the Ninth Circuit did not say that the specific knowledge had to be of the particular works-in-suit. For whatever reason, Fung had failed to argue otherwise. Google even filed an amicus brief supporting the plaintiffs but nonetheless arguing that “the DMCA’s knowledge standards are specific and focus on the particular material that the plaintiff is suing about.” Apparently unaware that this actually helped his case, Fung filed a supplemental brief calling Google’s argument “fallacious.”

In the Ninth Circuit’s opinion, even though red flag knowledge had to relate to particular infringing activity, that activity did not have to involve the particular works-in-suit. Moreover, the Ninth Circuit held that the “material in question was sufficiently current and well-known that it would have been objectively obvious to a reasonable person” that it was “both copyrighted and not licensed to random members of the public.” Since Fung failed to expeditiously remove the particular material of which he had red flag knowledge, he lost his safe harbor protection across the board. Thus, the Ninth Circuit in Fung held that: (1) red flag knowledge that strips a service provider of its entire safe harbor protection does not have to pertain to the particular works-in-suit, and (2) material can be so “current and well-known” that its infringing nature would be “objectively obvious to a reasonable person.”

The Second Circuit in Vimeo parted ways with the Ninth Circuit on these two holdings. Since the “evidence was not shown to relate to any of the videos at issue in this suit,” the Second Circuit held that it was “insufficient to justify a finding of red flag knowledge . . . as to those specific videos.” The Second Circuit thus applied the red flag knowledge standard on a work-by-work basis, in direct contrast to the Ninth Circuit in Fung. Also, the Second Circuit held that “the mere fact that a video contains all or substantially all of a piece of recognizable, or even famous, copyrighted music” and was “viewed in its entirety” by an “employee of a service provider” was not enough “to sustain the copyright owner’s burden of showing red flag knowledge.” The court added that even “an employee who was a copyright expert cannot be expected to know when use of a copyrighted song has been licensed.” So while the Ninth Circuit said it would have been objectively obvious to Fung that particular works were infringing, the Second Circuit in Vimeo set the bar far higher.

Curiously, the Second Circuit in Vimeo didn’t even mention Fung, despite the fact that it was deepening the circuit split with the Ninth Circuit. One wonders whether the omission was intentional. Either way, the circuit split has only gotten deeper. While in the Ninth Circuit an infringement can be so obvious that a court can find that a service provider had red flag knowledge without even sending it to a jury, the Second Circuit says that courts can’t let a jury decide whether a service provider had red flag knowledge even with the most obvious of infringements. And while in the Ninth Circuit a service provider loses its entire safe harbor for failing to remove an obvious infringement that it hasn’t been sued over, the Second Circuit says that red flag knowledge has to be determined on a work-by-work basis for only the works-in-suit. Given this growing divide between the Second and Ninth Circuits, it seems like only a matter of time before the Supreme Court will weigh in on the red flag knowledge standard. And if the Court does finally weigh in, one hopes it will put common sense back into the DMCA.

Tags Capitol Records v. Vimeo, circuit split, Columbia Pictures v. Fung, Digital Millennium Copyright Act, DMCA, Gary Fung, Google, inducement, MGM v. Grokster, Ninth Circuit, pre-1972 sound recordings, red flag knowledge, safe harbors, Second Circuit, Section 301, Section 512, UMG v. Shelter Capital, Viacom v. YouTube, Vimeo

Advertiser Pledge Sets Example of Accountability in the Fight Against Piracy

Post author By Joshua Grove
Post date June 23, 2016

Cross-posted from the Mister Copyright blog.

It should come as no surprise that popular websites make money by hosting advertisements. Anyone surfing the web has undoubtedly been bombarded with ads when visiting certain sites, and for websites that offer free services or user experiences, advertisements are often the only way to generate revenue. Unfortunately, websites that promote and distribute pirated material also attract advertisers to help fund their illicit enterprises, and despite a recent push for awareness and response to these sites, legitimate advertisers, search engines, and domain name registrars continue to enable them to profit from flagrant copyright infringement.

A 2014 study by the Digital Citizens Alliance found that ad-sponsored content theft is a big and growing business. Even after a year that saw the shutdown of some of the most notorious file-sharing websites, an examination of 589 illicit websites found aggregate annual advertising revenues of $209 million. Premium brand advertising also rose from 89 observed brands in 2013 to 132 to in 2014.

The transition from downloading to streaming as the preferred method of consuming entertainment has led to content thieves taking advantage of higher advertising rates, as the cost of advertising during a video stream is far greater than a traditional display ad. Additionally, the Digital Citizens Alliance stresses that websites are easily able to ditch a domain name targeted by authorities and set up shop under a new one, contributing to the never-ending whack-a-mole nature of online piracy:

The content theft industry’s low barriers to entry and the ability of operators to switch domains quickly make it easy for new sites to fill the void left by those that do get shut down, and to evade enforcement.

The presence of recognizable brand advertisements on websites involved in illegal activity does damage far beyond lining the pockets of those distributing the unauthorized works. When users visit a website in search of music, a television show, or movie, and they see the creative work (or links to the work) displayed alongside professional, recognizable advertisements, the advertisements lend legitimacy to the website. This can be especially dangerous for younger or less-informed users who have no idea that downloading or streaming the creative works through one of these websites is copyright infringement that will ultimately harm creators and artists.

The confusion these ad placements create is similar to the misperceptions furthered by search engines and domain name registrars that have made little effort to preclude pirate websites from taking advantage of their services. Despite promises to remove them from their search results, Google continues to display links to pirate websites alongside legitimate links in its results, often displaying the illicit links at the very top of the search results.

Filmmaker and artists’ rights activist Ellen Seidler recently exposed Google’s unwillingness to remove links to websites that distribute unauthorized creative works when she ran a simple Google search for her film And Then Came Lola. As she relates, not only was the film’s official website nowhere to be found among the first page of results, the list was made up of many websites offering pirated versions of the film. Sadly, most people searching for Ellen’s movie would not be able to immediately distinguish between legitimate and illicit links and would likely be steered towards a pirate website.

Domain name registrars have also added to the confusion surrounding the legitimacy of certain infamous pirate sites by allowing them to play domain name musical chairs and evade prosecution. The Pirate Bay—one of the most notorious file-sharing websites—has operated using domain names from 14 different countries, jumping from domain to domain name to stay online in the face of prosecution. Copyright Alliance CEO Keith Kupferschmid warns against providing sanctuary to sites like The Pirate Bay, revealing that the website recently returned to its original .org domain run by the U.S.-based Public Interest Registry (PIR):

It is shocking that a domain name registry in the United States – one that is dedicated to “the public interest” – is allowing a blatantly illegal site to have a home on the .org domain. This is especially disturbing given that the operators of The Pirate Bay have been found guilty of criminal copyright infringement, The Pirate Bay domain names have been seized or suspended around the globe, and even its co-founder, Peter Sunde, has walked away from it.

Despite these alarming trends in the facilitation of pirate websites, there have been some recent initiatives to deter companies from doing business with illicit websites. One notable initiative is the Trustworthy Accountability Group (TAG). A joint effort by the Association of National Advertisers (ANA), the American Association of Advertising Agencies (4A’s), and the Interactive Advertising Bureau (IAB), TAG was formed “to create transparency in the business relationships and transactions that undergird the digital ad industry, while continuing to enable innovation.” In 2015, TAG announced the launch of the Brand Integrity Program Against Piracy—an effort to help advertisers and advertising agencies keep their ads off websites that promote or distribute counterfeit goods or pirated content.

TAG’s mission has resonated with both advertisers and ISPs, demonstrated by a recent announcement that dozens of leading ad agencies, as well as Google and GoDaddy, have taken TAG’s Anti-Piracy Pledge. The Pledge includes a vow to curb the placement of digital advertising on websites associated with the unauthorized distribution of materials and lists the following actions that companies can take to ensure compliance:

(i) directly employing the services of validated Digital Advertising Assurance Providers;

(ii) directly employing advertising placement services that carry the TAG logo “Certified Against Piracy”; and/or

(iii) placing online advertisements through Advertising Agencies that do business exclusively with advertising placement services that carry the TAG logo “Certified Against Piracy

TAG created Digital Advertising Assurance Providers (DAAPs) as part of its Brand Integrity Program to help advertisers identify and weed out websites that do not meet their brand standards. The DAAPs are validated technology companies that the advertisers can employ to gauge the level of risk they are comfortable with and then eliminate websites and other properties that do not meet the advertisers’ standards for risk of infringement.

It’s difficult to measure how harmful advertising on illicit websites is to creators and copyright owners, but it’s not a stretch to presume that without ad revenue, many pirate sites would lose their incentive to operate. In her call to action to marketers, Hannibal executive producer Martha De Laurentiis lays out the destructive effect piracy has on the creative community:

It forces companies to either shrink their production budgets or commit to fewer, less risky projects. And ultimately, it harms audiences by limiting the types of stories that creatives can tell.

De Laurentiis explains that these pirate sites bring in millions in advertising dollars a year, and because they don’t pay for distribution rights for the creative works they steal, profit margins are estimated at around 90%. Potential profits of this scale are irresistible to those behind the pirate sites, but with a little vigilance and responsibility these incentives could be eliminated.

The co-chairs of the International Creativity and Theft-Prevention Caucus, Senator Orrin Hatch, Senator Sheldon Whitehouse, Congressman Bob Goodlatte, and Congressman Adam Schiff, recently praised TAG for its promotion of the Anti-Piracy Pledge, and it seems like the movement for more responsibility in digital advertising is gaining traction. But domain name registrars and search engine services need to follow the example set by advertisers and establish accountability and awareness in their sectors. Only when these services refuse to aid websites that distribute stolen copyrighted works will real progress be made in the fight against digital piracy.

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