Son of NewzBin: Another victory for the film-makers — IPKat takes a look at one of the many British copyright decisions to come through this week. In this one, the court ruled in favor of the Motion Picture Association’s action to require a British ISP to block access to a website previously deemed infringing.

Drop It Like It’s Hot[file] — On July 8th, the direct infringement claim against cyberlocker Hotfile was dismissed, leaving only the secondary infringement claims brought by the five major motion picture studios. Christopher Harrison wonders if the court got it right, noting that once a file is uploaded, Hotfile creates five additional copies of the file; this seems to Harrison to be the type of volitional conduct that previous cases weren’t talking about when they found no direct infringement.

Of libraries and writers (and rights) — John Degen notes, with some irony, that when libraries are in trouble, it is authors that come to their aid, while the free-culture movement sits in silence. Good read.

Rogue Site Goes Good — China’s top search engine Baidu, long a concern of rightsholders for its notorious infringement, has recently announced a licensing deal with several major music labels. Steve Tepp calls this a “dramatic step in the right direction.”

Hello Mr. Brightside — Eric Beall gives five reasons to be optimistic about the music industry. “After almost a decade of what has seemed like irreversible decline in the music industry, with each year bringing declining sales, more consolidation, less creative growth, and a growing irrelevance in pop culture, we might finally be turning things around.”

Un-cover-ing — Law Law Land never fails to deliver entertaining and often humorous articles on mostly dry legal topics. Here, Harrison J. Reynolds looks at cover songs of cover songs. That is, sometimes a cover song is so distinctive or different from the original version that it becomes almost like a different song. Are there any legal issues that arise when another artist covers the cover song?

Pittsburgh Transforms into Gotham City — The Steel City is home to the third installment of the new Batman trilogy. The largest film production that Pittsburgh has seen brings with it thousands of jobs and big boosts in revenues for local businesses.

Disruptors disrupted: NLA victory brings common sense back to copyright — Dominic Young cuts through the hype associated with a UK Court of Appeals ruling that a news crawler and its PR clients require a license from newspapers. It is not, as some have characterized the decision, the end of the web as we know it.

The Oddball US Privacy Law That’s Keeping Netflix Away from Facebook — A law that puts limits on publishing a person’s video rental history is making Netflix hesitant to open up its Facebook application in the US. Social networking has really turned the concept of privacy on its head.

Labor is a cost, not a profit — Though geared toward prop-makers, Eric Hart’s (my brother) post is great advice for anyone freelancing in creative fields.

ZapTunes wants deals to sell independent artists’ music — A warning to independent artists. This company was previously in the news for selling what amounted to an mp3 search engine for $25 a month, with the added bonus that some users reported credit card charges after they had cancelled. Not a bad idea to steer clear of this one.

Five Minutes of Fame — Faza at the Cynical Musician looks at fame and the internet. “Musicians have tended to monetise their fame directly: fame meant fans and fans meant sales. Fame can thus be viewed as mind-share, in the marketing sense. If this fame-sales connection is broken – something we seem to be heading towards – then there seems to be little benefit to be had from your short-term fame while it lasts. That is why I say that a non-paying fan is no better than a non-fan. It is best understood when we compare Rebecca Black and Justin Beiber – both are world-famous, but only one of them has a career.”

Lay Judgments of Judicial Decision-Making — The results of a study confirm what many perhaps find obvious. Non-lawyers base their decision of how “good” a judicial opinion is primarily on the result; if they agree with the outcome of the case, they accept the reasoning the court used to get there.

On Friday, a federal judge slashed the verdict awarded  by a jury against illegal downloader Jammie Thomas-Rasset last November.

This decision brings a mix of good news and bad news for copyright owners. It also represents a somewhat striking departure from judicial deference to Congress’s authority to set damages in civil cases by statute.

To put it another way, this decision and last year’s decision against Joel Tenenbaum represent the first time in history that a US court has found a substantive due process limit on damages set by statute. Regardless of how much one agrees with the result of the courts’ decisions, one should appreciate the need for caution when those courts depart dramatically from historical practice and enter new constitutional territory.

Judge Davis, sitting in the District Court of Minnesota, called the $1.5 million verdict for stealing 24 songs “appalling” and reduced it to $54,000 on constitutional grounds. This is similar to last July’s ruling in Sony v. Tenenbaum, where Judge Gertner, in the District Court of Massachusetts, reduced a $675,000 verdict against the college student for downloading and distributing 31 songs on constitutional grounds (though Judge Gertner reached her conclusion using a different standard than Judge Davis used, as explained below). Both parties in Tenenbaum have appealed that decision; that appeal is currently pending in the First Circuit.

The Tale of Thomas-Rasset

This is the second time Judge Davis has reduced a jury award against Thomas-Rasset. The history of Capitol v. Thomas-Rasset1 is a bit involved, so it’s worth reviewing it.2

On October 4, 2007, a jury award damages of $222,000, or $9,250 per song. The verdict was vacated after the court held it had erred in one of the jury instructions, and a new trial was set. On June 18, 2009, the jury in the second trial returned an award of $1,920,000 against Thomas-Rasset, $80,000 per song. The court reduced that award under the common-law doctrine of remittitur. Capitol rejected the remitted award and a third trial, solely to determine the amount of damages, was set.3 This time, the jury awarded $1,500,000 against Thomas-Rasset, or $62,500 a song.

After this judgment, both parties moved to amend the verdict. It’s on this motion that Judge Davis reduced the verdict on constitutional grounds.

The court’s exact holding was that in copyright cases “involving a first-time willful, consumer infringer who committed illegal song file-sharing for her own personal use”, the maximum award that due process allows is three times the statutory minimum, or $2,250 per song.

Before looking at the decision in more detail, I think it’s important to note three things.

First, since this decision come from a district court, it is not binding precedent. Other courts may find Judge Davis’s reasoning persuasive if they are ever faced with a similar case, but no court is required to follow his holding.

Second, whether one agrees or disagrees with the court’s holding, it should be pointed out that this is a very limited holding. It would seem that it doesn’t apply if a defendant was found liable for distributing a copyrighted work rather than just reproducing it. For various reasons, during their end-user litigation campaign, the record labels relied largely on the theory that simply making a copyrighted work available (by using a program like Kazaa that, by default, shares a user’s music files with other users) constitutes distribution. The Minnesota District Court ultimately rejected this theory, so Thomas-Rasset was only found liable for reproduction. Many other courts, however, have adopted the “making available” approach.4

Joel Tenenbaum, by the way, was found liable for distribution after admitting to it at trial.

Finally, I don’t want to minimize concerns about the size of statutory damage awards in copyright cases, especially cases like these. It’s certainly an important policy issue. But the fact remains that this verdict was rendered by a jury and falls within the range set by Congress through law. The question here is not whether one personally thinks the award is too high, but rather whether something in the Constitution limits an award rendered in this manner.

Setting the Standard

The decision in full:

[scribd id=60635512 key=key-1rvopby119r8d3nonrmi mode=list]

Most people would (understandably) assume that a decision like this was made under the Eighth Amendment of the Constitution, which states that excessive fines shall not be imposed. But that’s not the case. A “fine” is a payment “directly imposed by, and payable to, the government.”5 A jury award is not a fine since it is imposed by a private plaintiff and payable to that plaintiff.

The basis for this decision is instead the Fifth Amendment, which says “No person shall … be deprived of life, liberty, or property, without due process of law.” Due process limits “grossly excessive” damages awards based on notions of “fundamental fairness.”6

At the heart of this case and the pending appeal in Sony v. Tenenbaum is which standard should be used to determine the maximum award allowed by due process. In Tenenbaum, the court analyzed the statutory damages award using the standard developed to address excessive awards of punitive damages, specifically BMW of North America v. Gore,7 Capitol and the government argued, however, that such awards should be analyzed under the far more deferential standard set down in St. Louis, I.M. & S. Ry. Co. v.Williams, which addresses due process limits on damage awards that have been set by statute.8

The court sided with Capitol and the government. Punitive damages awards present due process concerns that aren’t present when the amount of damages are set by statute; for example, defendants have notice of their potential liability under statutory damages, while punitive damages theoretically have no upper cap. Leslie Burns notes that this is good news for copyright owners; I imagine it’s not quite as welcome news for Joel Tenenbaum.

Things start to get weird from here, however. Judge Davis begins by stating that Williams “highlighted three factors when analyzing whether the statutory damages award complied with the due process clause: ‘the interests of the public, the numberless opportunities for committing the offense, and the need for securing uniform adherence to established passenger rates.'” He then considers these three factors in the context of this case. However, this consideration seems to be an analysis of the constitutionality of the statute itself, rather than the amount of damages awarded in a particular case. That is, if Judge Davis found these factors weren’t present here, would that mean due process never allows statutory damages in copyright infringement cases?

Nevertheless, the court did find these factors supported an award of statutory damages, and his analysis is very favorable to copyright owners. For the first factor, the court remarked that “There is a significant public interest in vindicating copyright. In fact, ‘the primary object in conferring the monopoly lie[s] in the general benefits derived by the public from the labors of authors.'” There are numberless opportunities for infringing copyright through P2P networks since it is “easy, costless, and quick.” Finally, the need for deterrence is high. Said Judge Davis, “Online infringement is easy to complete; it causes real damage to the copyright holders, and, thereby injures the public by leading to a decrease in the incentive to create artistic works; and it is widespread.”

“Obviously” — You keep using that word…

The court did not think, however, that an award of $1,500,000 for stealing 24 songs was appropriate under the due process clause. It cites only two reasons for its conclusion: (1) Thomas-Rasset is an individual and not a business and infringed for personal use rather than commercial gain; and (2) the statutory damages award is too far away from the actual damages suffered by Capitol. The court may be correct as a matter of policy, but this seems rather flimsy reasoning for saying the damages award is prohibited by the Constitution.

I’m not alone in thinking the court was on shaky ground arriving at this conclusion. Attorney Christopher Harrison notes:

Judge Davis’ entire constitutional due process analysis appears to boil down to, “I personally think this is too high an award.”  There is no further legal support to his position.  In fact, later in the opinion he states “The Court accords deference to the jury’s verdict. Yet an award of $1.5 million for stealing and distributing 24 songs for personal use is appalling. Such an award against an individual consumer, of limited means, acting with no attempt to profit, is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.”

But the jury’s verdict is quite clearly not obviously unreasonable.  As noted above, the three juries in this case awarded damages of $9,250, $80,000, and $62,500 per song.  The jury in Tenenbaum awarded $22,500 per song.  While that range is pretty wide, the juries have awarded between 4 and 35 times as much as both Judge Davis and Judge Gertner find “obviously unreasonable.”

Indeed, I think you can present more legal support that the court misapplied the Williams standard rather than applying it correctly. For starters, reducing an award of statutory damages is extremely rare — while courts since Williams have stated that due process places a limit on statutory damages, they almost always uphold verdicts. I’ve only been able to come across one previous case where an award hasn’t been upheld.

In Southwestern Telegraph & Telephone Co. v. Danaher, the Supreme Court struck down a damages award against a telephone company on due process grounds in part because it found the company had been acting reasonably.9 The Court noted, “There was no intentional wrongdoing; no departure from any prescribed or known standard of action, and no reckless conduct.” None of those hold true in this case.

The District Court of Minnesota has broken new ground and entered terra incognita in due process jurisprudence with this decision. It’s difficult to see how a jury award for a willful violation of a law, within the range of damages that Congress has provided by statute, is so “obviously unreasonable” to be unconstitutional.

What happens now? Either side can appeal this decision to the Eighth Circuit Court. This would put appeals in two separate circuit courts on the issue of due process limitations on statutory damages in file-sharing cases. No word yet on whether this will happen.

Footnotes

  1. Although the plaintiffs include six record labels, I’ll be referring to the plaintiff as Capitol to keep things simple. []
  2. For more background, I highly recommend Ben Sheffner’s posts at Copyrights and Campaigns on the Thomas-Rasset and Tenenbaum lawsuits. []
  3. Under the Seventh Amendment, a plaintiff has the right to reject a remitted award, see Hetzel v. Prince William County, 523 US 208, 211 (1998). []
  4. See Peter S. Menell, In Search of Copyright’s Lost Ark: Interpreting the Right to Distribute in the Internet Age (October 08, 2010). []
  5. Browning-Ferris Industries of Vt. v. Kelco Disposal, 492 US 257, 268 (1989). []
  6. TXO Production Corp. v. Alliance Resources Corp., 509 US 443, 454-55 (1993). But note that not everyone is convinced that due process does any such thing. Justice Scalia, in particular, has been consistently skeptical of the Supreme Court’s adoption of a “substantive due process” approach in its punitive damages jurisprudence; see BMW v. Gore, 517 US 559, 598-607 (1996) (Scalia, J., dissenting in judgment); TXO v. Alliance Resources Corp, 509 US 443, 470 (1993) (Scalia, J., concurring in judgment); Pacific Mut. Life Ins. Co. v. Haslip, 499 US 1, 25-28 (Scalia, J., concurring in judgment). []
  7. 517 US 559 (1996). []
  8. 251 U.S. 63, 67 (1919). []
  9. 238 US 482 (1915). []

An Oral History of Friday Night Lights (via Alex Epstein) — One of the best TV shows no one has seen wrapped up its fifth and final season last week. This oral history recounts the long odds the show faced and, despite this, how everyone remained true to its creative vision (minus the second season’s murder subplot). Great reading, as you hear not only from producers and actors, but also writers, camera operators, and others involved.

PROTECT IP’s Groundhog Day — The RIAA notes how critics of PROTECT IP frequently recycle the same arguments they’ve used before in other situations. It points out that the dire predictions made years ago didn’t come true, but that hasn’t stopped the advancement of the same predictions for this legislation. To paraphrase Mr. Masnick, how many times will IP critics claim the sky is falling before people stop believing them?

US Copyright Alert System: What About Cyberlockers? — James Gannon asks whether the recently announced agreement between ISPs and copyright owners can be extended to alleviate the substantial infringement coming from cyberlocker sites and offers a couple recommendations.

More Bunk from the CCIA: What do Derek Jeter, Tom Adams and Ari Emanuel have in common? — They all work in a “fair use” industry, at least according to the Computer & Communications Industry Association. Chris Castle picks apart the joke of a study released by the CCIA, which is more interested in creating a false wedge between content creators and technology companies than providing actual research.

Artistic originals: we invest more than we think … — Art and Artifice looks at the UK’s Intellectual Property Office’s Economics, Research and Evidence team recently published report on estimates of investment in creative works in the UK. The report estimates that approximately £4.3 billion ($7.0 billion) was invested in creating new artistic works in the UK in 2008.

Independent Filmmaker Shares His Take on the Impact of Content Theft — Jason Stall, whose recent documentary Blood Into Wine follows Maynard James Keenan’s sojourn into winemaking, talks about the effect piracy has had on him. “If you can’t raise the money you did before, quality is going to go down, quantity is going to go down and you’ve crushed the creative process.”

PayPal works with police and industry to tackle copyright infringing websites — The IFPI announced that the popular online payment service has entered into an agreement that provides for stronger action against infringers. “Carl Scheible, PayPal UK’s managing director, commented, ‘Today’s announcement shows that PayPal is very serious about fighting music piracy. We’ve always banned PayPal’s use for the sale of content that infringes copyright, and the new system will make life even harder for illegal operators. Our partnership with the music industry helps rights holders make money from their own content while stopping the pirates in their tracks.'”

Jam Tomorrow — Another excellent piece from the Cynical Musician. For new musicians whose goal is to eventually get paid for their work (and this applies to other creative professionals), the focus should be on, well, getting paid for their work. “Exposure” and giving things away are a means, not the end.

Why TV Companies Couldn’t Care Less About Original Online Video — An informative post from Ashkan Karbasfrooshan, founder and CEO of WatchMojo, about investment in premium web-only content by traditional media companies. Karbasfrooshan’s conclusion is that while such content continues to grow in popularity, and provides opportunities for start-ups to make money from lean, efficiently produced content, it doesn’t yet make sense for traditional media companies to pour more money into creating their own new media content.

Sierra Leone Celebrates New Copyright Act — The African nation’s parliament recently passed a new Act to replace the 1965 Act. Upon passage, “throngs of celebrants used loud musical sets placed on top of vehicles, plus traditional musical instruments including the popular ‘Bubu’ instruments, to party all day long along major streets in Freetown.” Also from the Afro-IP blog this week, no IP changes yet for the newly-independent nation of South Sudan.

Jewel cases! Get your empty jewel cases here! — I’ve previously heard of this strategy being touted amongst certain communities as a way around the law when selling works that might be considered infringing. Basically, you say you’re “giving away” the CD or DVD and selling the packaging. The 1709 Blog reports that a man in Florida who was using such a strategy is now facing felony charges.

Jail? For downloading too many articles??? — Copyright Librarian offers an evenhanded, objective look at the Aaron Swartz story, straightening out many of the misconceptions.

Alexander v. Murdoch — TV’s Modern Family (big fan) survives a claim of copyright infringement claim from a scriptwriter who believed a treatment he wrote was copied to create the popular show. The court gives a substantial discussion about why there is no infringement, at times hewing close to snark:

Plaintiff also claims that both works have characters with “funny Jewish names,” specifically mentioning Plaintiff’s Ben Figiwitz and Modern Family‘s “Pepper Saltzman” and “Shell Turtlestein.” Magistrate Judge Francis noted that “[i]t is not obvious why the name Figiwitz is funny, whereas both of the names featured in Modern Family are plainly designed to be humerous.” Specifically, “Pepper Saltzman” is clearly a play on salt and pepper, and “Shell Turtlestein,” the name of Manny’s pet turtle clearly refers to the poet Shel Silverstein, and not a reference to the turtle’s religion (assuming that the turtle is, in fact, Jewish).

Yesterday I was able to take Spotify for a test-drive after getting a beta invite. My dad was nearby, so I asked him for a song to see how deep the catalog was. He recommended “Trouser Press” by the Bonzo Dog Band.

I don’t get my dad’s taste in music.

I also don’t get this post about Spotify by the Electronic Frontier Foundation. Titled Spotify’s US Launch Highlights the Good, the Bad, and the Promise of Subscription-Based Music Services, it seems mostly to use the launch of Spotify as an excuse to dust off archaic complaints against the entire recording industry.

Instead of being forced to buy full-length CDs at $15.99, fans can now make their own decision about how much they value music and how much of it they want.

What the EFF? Setting aside this patronizing view of consumers being compelled to purchase music against their will, what happened to iTunes? Thousands of record labels have provided single songs for sale on the site since it launched in 2003. Before iTunes, record labels had been experimenting with digital single sales since at least 1997, before the arrival of Napster even.1 An entire generation has grown up that hasn’t ever been “forced to buy full-length CDs at $15.99″.

The EFF continues:

Of course, the record labels could have launched a service like this years ago.

This statement is baffling for a number of reasons.

First, Spotify isn’t the first streaming music subscription service. Others include Rhapsody, Rdio, and Mog. I didn’t pick those three randomly, they’re the three services that the EFF mentioned only sentences before. Rhapsody has had music from the catalogs of all the major labels available since 2002 — nine years ago.

Second, record labels aren’t necessarily the ones who should be developing services like this in the first place. They’re in the business of recording and marketing music, not technology. It makes as much sense as saying, prior to the internet, that record labels should have been the ones developing and operating physical stores where CDs and albums were sold.

Put another way, if technology companies could have made the type of service the EFF finds acceptable years ago, but for the record labels’ licensing terms, why is no one asking why technology companies haven’t developed and recorded their own catalog of music?

Most baffling is why the EFF wrote this in the first place. The EFF is a public interest group that bills itself as “the first line of defense” for “when our freedoms in the networked world come under attack.” It’s difficult to see how a thinly-veiled criticism of the collective business decisions of an entire industry fits this purpose — especially when those criticisms have been obsolete for at least a decade. Never mind that the EFF welcomes the arrival of Spotify — with licenses for the major labels’ music — in the US. When it comes to the EFF’s view of record labels, it seems to be “damned if you do, damned if you don’t.”

Footnotes

  1. See, for example, Sue Zeidler, New Music Goes on Sale Online, Pittsburgh Post-Gazette, pg 5, Sept. 8, 1997. []

“The law needs to keep pace with technology. There’s no point in talking about broader copyright policy if exclusive rights can’t be enforced. … I always start with the enforcement issues online because if there isn’t effective enforcement possibility, then there is no meaningful exclusive right and then copyright doesn’t work.”

That was new US Register of Copyrights Maria Pallante, speaking with Ars Technica last week. Artists and creators recognize her words as common sense. But there are those among the critics of copyright law who would argue every point she mentions.

Why should we worry about enforcement, they might ask. There are groups who express concern about the rights of creators but oppose any attempts at enforcement, whether through new legislation that attempts to keep pace with technology, voluntary agreements that attempt to make existing law work more effectively, or even individuals who attempt to assert their core rights granted by copyright law.

There are those who go even further and question the need for a broader copyright policy at all. Surely the internet and digital technology has rendered copyright obsolete.

I agree, however, with Pallante. It’s important, during these times when the ways in which art, media, and content are produced and accessed are rapidly changing, to ensure that the concept of copyright remains vital. That’s not to suggest that the focus should only be on enforcement. There are numerous factors that play a role — from pricing, to building sustainable business models, reducing the complexity of licensing, and many others.

But at the core of the “copyright question,” if you will, is a choice: a choice between what end results a society wants to encourage.

Copyright as a Choice

Nobel Prize winning economist Douglass North discusses this choice in his Prize Lecture:

The organizations that come into existence will reflect the opportunities provided by the institutional matrix. That is, if the institutional framework rewards piracy then piratical organizations will come into existence; and if the institutional framework rewards productive activities then organizations – firms – will come into existence to engage in productive activities.1

In their seminal work on the economics of copyright law, William Landes and Richard Posner talk plainly about how these two different incentive choices would play out:

Without copyright protection, authors, publishers, and copiers would have inefficient incentives with regard to the timing of various decisions. Publishers, to lengthen their head start, would have a disincentive to engage in prepublication advertising and even to announce publication dates in advance, and copiers would have an incentive to install excessively speedy production lines. There would be increased incentives to create faddish, ephemeral, and otherwise transitory works because the gains from being first in the market for such works would be likely to exceed the losses from absence of copyright protection. There would be a shift toward the production of works that are difficult to copy; authors would be more likely to circulate their works privately rather than widely, to lessen the risk of copying; and contractual restrictions on copying would multiply.2

It really is as simple as that. Yet one will hear a whole host of ills supposedly caused by copyright. Obviously, copyright is not perfect; nothing is. But it’s wrong to think that weakening copyright protection will, as if by magic, cure this host of ills.

The Choice for Emerging Economies

Earlier this year, the Social Science Research Council released a report on Media Piracy in Emerging Economies (MPEE).3 The report describes, using media reports, informal interviews, and focus groups, the accessibility and consumption of pirated works in several countries. What conclusions it can derive from these observations point toward the idea that these issues are multifaceted.

Without any context, a reader could readily assume that the choice of piracy over copyright would be far more beneficial. In the short run, they may be correct in a strictly economic sense — though in a strictly economic sense, natural disasters are beneficial in the short run since they lead to lots of new building projects afterward.

But in the long term? Choosing to incentivize piracy over copyright is detrimental, not only to creators, but the general public as well.

When it comes to emerging economies, it’s especially important to make note of this. Encouraging the development of copyright in these economies often comes from foreign countries with established cultural and media production. It’s often assumed that this encouragement is a one-way street: foreign entities are the only ones to benefit from stronger copyright regimes in emerging economies.

Not so. In fact, piracy usually has the effect of stalling the development of local artistic and creative firms.

The US was once an emerging economy, and its history provides an example of this effect. George Haven Putnam describes one common pattern of cultural development in emerging economies like the US, and ancient Rome before that:

The literary life of the American Republic has, of course, during a large portion of its independent existence, as in the old colonial days, drawn its inspiration from the literature of its parent state, Great Britain. There has been, in this instance, as in the relation between Rome and Greece, on the part of the younger community, first, an entire acceptance of and dependence upon the literary productions of the older state; later, a very general appropriation and adaptation of such productions; still later (and in part pari passu with such appropriation), a large use of the older literature as the model and standard for the literary compositions of the writers of the younger people; while, finally, there has come in the latter half of the nineteenth century for America, as in the second half of the first century for Rome, the development, in the face of these special difficulties, of a truly national literature. For America, as for Rome, this development was in certain ways furthered by the knowledge and the influence of the great literary works of an older civilization, while for America, as for Rome, the overshadowing literary prestige of these older works, and the commercial difficulties in the way of securing public attention and a remunerative sale for books by native authors in competition with the easily “appropriated” volumes of older writers of recognized authority, may possibly have fully offset the advantage of the inspiration.4

James David Hart, in his own history of American publishing, describes the same effect of piracy on American authors:

Samuel Goodrich, the Boston publisher, estimated in 1820 that three-quarters of the books Americans bought were of English origin. In the early years of the century, bookdealers opposed a tariff on printed matter because America could not furnish enough books for the expanded reading public. As printing became a big business, they fought against the importation of English books but still clamored for the works of English writers because, without copyright and royalties, they could be sold at better profit. Either way, English authors were favored.5

Basically, foreign books are better, both in quality and desirability, and because of piracy, they are as cheap or cheaper to purchase than domestic books.

Hart goes on to show how US publishers finally gained the upper hand:

More authors came to public attention with the growth of interest in the novel, many of them Americans after the International Copyright Law of 1891 for the first time made their works no more expensive to issue than those by foreigners. After 1894 more novels, though not always more popular novels, came from Americans than from Europeans.6

The US experience from 100-200 years ago is not an isolated one. The same holds true if we’re talking about a country on the other side of the world in modern times. Scholar Jiarui Liu recently examined the effects of piracy on domestic musicians in China:

[T]he findings here suggest that a high level of piracy could have profound effects on the profitability, applied business models, and creative processes of domestic musicians. In many cases, piracy of foreign works could be more devastating to domestic companies than to foreign companies. Because the competition from low-priced pirated works both online and offline undercuts stable income from royalties, Chinese musicians have witnessed the entire music industry becoming increasingly dependent on alternative revenue streams such as advertising, merchandizing, and live performance. The pressures of paid appearances and extended tours have started to squeeze the time that artists need to spend on music production. The alternative revenue streams also force many music companies to abandon traditional album contracts and operate in a way more like talent agencies that control all aspects of an artist’s career. Music companies are inclined to sign talents at a very young age with a long-term agency deal in order to exploit the full value of artists in the advertising market. In addition, the need to attract sponsorship opportunities puts more emphasis on non-musical qualities, such as a fresh appearance and healthy public image, which to some extent marginalizes “pure” musicians who have less value in those alternative markets.

Most importantly, as copyright piracy obstructs the communication of consumer preferences to musicians, an increasing number of musical works are created to accommodate the tastes of entrepreneurs (e.g., sponsors and advertisers) rather than those of average consumers, and this has caused a fundamental shift in the creative process of the Chinese music industry. Although entrepreneurs should arguably be willing to take whatever is popular among music fans as a draw to their own products, the expectations of entrepreneurs and consumers do not always meet in a dynamic market setting. For this reason, the interests of less commercial artists and new artists are more likely to be compromised.7

It’s not only local creators who are harmed by the piracy of foreign works; open-source software suffers from the piracy of commercial software.

The MPEE report notes that in South Africa, where local music production revolves around a small handful of professional software packages:

Because the production community is relatively small and interconnected, shared production techniques and training introduce strong network effects in the choice of products. Producers tend to use software that has been ‘vetted’ in their communities, and these choices tend to self-reinforce as producers and musicians exchange knowledge. In our interviews, open-source alternatives, such as Audacity, did not even register.8

In emerging economies, the problems piracy causes for open-source alternatives are magnified. Louis Suarez-Potts, the community manager at Sun Microsystems Inc. for the OpenOffice.org open-source project, was asked about these problems:

“Piracy hurts open source because open source asks people to help give back and contribute code, but they say, ‘Why should I help? I have Microsoft Office for free,'” Suarez-Potts said.

Around the world, he said, many national governments are realizing that this hurts them, too, because their citizens are then consumers of stolen technology rather than active participants in open-source communities that can help people gain technology skills that benefit workforces and nations.

By cracking down on software piracy, nations around the globe are starting to see that they can help themselves dramatically by encouraging innovation and creativity — as well as job growth and richer economies — through open-source development, he said.9

As these examples show, the effects of piracy are felt by more than just those whose works are pirated. When it comes to debates about copyright and piracy, it’s important to keep in mind the core of the “copyright question” — the choice between what activities we want to encourage.

With that in mind, Maria Pallante is entirely correct. There are many questions concerning broader copyright policy, but without effective enforcement, copyright simply doesn’t work.

Footnotes

  1. Douglass C. North – Prize Lecture“. Nobelprize.org. December 9, 1993. []
  2. Landes and Posner, An Economic Analysis of Copyright Law, 18 J.Leg.Stud. 325 (1989). []
  3. Some have hailed the report as effectively establishing that enforcement of IPR’s in emerging economies doesn’t work, but that is an overly superficial reading of the report. []
  4. Authors and their public in ancient times: a sketch of literary conditions and of the relations with the public of literary producers, from the earliest times to the invention of printing, George Haven Putnam, pg. 68 (1893). []
  5. The popular book: a history of America’s literary taste, James David Hart, pp. 67-68 (Univ. of Cali. Press 1950). []
  6. Hart pg. 185. []
  7. Jiarui Liu, The Tough Reality of Copyright Piracy: A Case Study of the Music Industry in China, 27 Cardozo Arts & Entertainment 621, 623-24 (2010). []
  8. Pg. 122. []
  9. Todd Weiss, Software Piracy Hurts the Open-source Community, Too, ComputerWorld, July 23, 2008. []

Spotify US Premium Service Hands-On — Have you guys heard about this thing called Spotify? Apparently it’s this service where you can listen to music, and it just became available in the US yesterday. I’m having a difficult time finding any news about it though… I kid, I kid. I’d love to hear thoughts from anyone who has tried it out so far.

Putting Online Piracy in Dry Dock — The LA Times offers this editorial on the recently announced Copyright Alert System, calling it a “good step and worthy of further efforts.” “It won’t convert every illegal downloader into a paying customer, but it’s a start.”

America’s Artists Are the Ultimate Entrepreneurs: Let’s Give Them a Hand — Arts+Labs co-chairman Mark McKinnon calls independent creators the “ultimate start-ups.” He takes a look at several examples of those working on new business models online. Says McKinnon, the least we can do is work to safeguard their intellectual property to help them succeed.

“Do we come to bury copyright — or to praise it?” Debate report — Notes from The Copyright Debate, organized by the 1709 Blog and IPKat, held this past Tuesday in London. It appears that Team Copyright won.

Criminal Use is not Fair Use — “Copyright law is a tapestry of rights and exceptions, and its effective nurturing and implementation relies just as heavily on appropriate evaluation of defenses (such as fair use) as it does on strong enforcement against harmful infringements. No one in the creative community denies that, and artists and creators would be the first to suffer if the fair use doctrine were rolled back.”

A Royal Flush: The Poker Prof and his Full House React to the Protect IP Act–Part 1 — Chris Castle responds to the letter written by a number of law professors opposing the Protect IP Act. Also check out part 2, “Mommy, Mommy, Johnny is Breaking the Internet!”: The Poker Prof and his Full House React to the Protect IP Act

PROTECT IP Act Now Counts A Quarter of the Senate as Cosponsors — The MPAA notes that 25 members of the Senate from both parties are currently signed on as co-sponsors of the bill. They represent states from New England to the southwest, both large and small. Creators should feel heartened knowing so many in government recognize the importance of protecting their rights.

Setting the Record Straight on PROTECT IP — Many critiques of the Protect IP Act mischaracterize the provisions of the bill, either inadvertently or deliberately. Sandra Aistars takes a look at one such critique, addressing the false assertions that it makes.

What’s next for copyright reform in Canada? — That’s the question Barry Sookman answers. Remarks made at the first annual general meeting of Music Canada shed some light on the direction the next attempt at reforming Canada’s copyright law might take. MP Dean Del Mastro predicts a new bill will be in force as early as December.

Google’s Anti-Piracy Filter Is Quite Effective — TorrentFreak is surprised to learn that, contrary to its predictions, Google’s simple act of removing certain piracy-related terms from its Autocomplete feature has resulted in a dramatic drop in searches for pirated content.

Why the Sale of Hulu Is (Really) Good News for Content Businesses — Ad Age Digital’s Reed Phillips is optimistic that the pending sale of Hulu will be good for both TV producers and viewers. He says, “despite the fuzzy outlook on Hulu’s special access to new broadcast content, several buyers must be licking their chops because Hulu has high-quality content and has yet to unlock its full potential. Hulu is just now approaching 1 million paid customers. With the wider distribution that a new owner such as Google, Amazon, Yahoo, Apple, Facebook or Microsoft could bring, Hulu’s customer base could be many times larger.”

UltraViolet Moves Ahead For Fall Launch, Adds Blockbuster And Vudu — Ultraviolet is a cloud-based service that seeks to make it far easier for consumers to watch digital video they purchase on different platforms. The consortium already includes over 70 movie studios, distribution platforms, and tech companies, and continues to add more as it plans for a fall roll-out.

Being a Gentleman in the Age of the Internet: 6 Ways to Bring Civility Online — Finally, the Art of Manliness (“a blog dedicated to uncovering the lost art of being a man”) looks at ways to cultivate civility online. Copyright debates are far from immune to ugly rhetoric, name-calling, and worse.

A company owning domain names that had been seized by ICE as part of its efforts to fight online piracy is seeking their return pending the outcome of the Government’s forfeiture proceeding against them. On Monday, the US filed its memorandum of law opposing the return.

“Rojadirecta.com” and “Rojadirecta.org” were seized on February 1, 2011, as part of ICE’s third phase of Operation in Our Sites. The owner of the domain names, Puerto 80 Projects, and its legal counsel engaged in informal discussions with the government to return them, but Puerto 80 ultimately refused to accept the government’s condition that it stop facilitating copyright infringement in order to get its domain names back.

On March 22, Puerto 80 filed Seized Asset Claim Forms, identifying itself as owner of the domains and giving the US 90 days to file a forfeiture complaint in federal court. The US filed the complaint within the time frame, on June 17.

[scribd id=59833516 key=key-1566znwdixbdffbituqq mode=list]

A few days earlier, Puerto 80 filed a petition for release of seized property. The petition and memorandum of law in support are available here. The EFF filed an amicus brief as well, available here.1

On Monday, July 11, the US filed its memorandum of law in opposition to the petition.

[scribd id=59833528 key=key-2arcs8o6trmwkgyizosy mode=list]

If the court grants the motion, it doesn’t mean Puerto 80 wins, it just means possession of the domain names will be returned to Puerto 80 during the forfeiture proceedings. The court may also enter any order necessary to ensure the property’s value is maintained while the proceeding is pending (like requiring Puerto 80 to post a bond), and the government may place a lien on it to prevent its transfer to another person.2 If the government eventually wins its forfeiture case, than the domain names are given back to be destroyed.

In many ways, this procedure is similar to a criminal defendant being released on bail after arrest and before trial.

Federal judicial forfeiture actions are governed by Supplemental Rule G of the Federal Rules of Civil Procedure. Those rules state that someone seeking return of seized property pending the outcome of a forfeiture proceeding may petition the court under 18 USC § 983(f).3

Section 983(f) lays out five conditions that must be met for a court to release property that is the subject of a forfeiture proceeding. It requires that:

(A) the claimant has a possessory interest in the property;

(B) the claimant has sufficient ties to the community to provide assurance that the property will be available at the time of the trial;

(C) the continued possession by the Government pending the final disposition of forfeiture proceedings will cause substantial hardship to the claimant, such as preventing the functioning of a business, preventing an individual from working, or leaving an individual homeless;

(D) the claimant’s likely hardship from the continued possession by the Government of the seized property outweighs the risk that the property will be destroyed, damaged, lost, concealed, or transferred if it is returned to the claimant during the pendency of the proceeding; and

(E) none of the conditions set forth in paragraph (8) applies.

Paragraph (8) states that release of seized property is unavailable if the property:

(A) is contraband, currency, or other monetary instrument, or electronic funds unless such currency or other monetary instrument or electronic funds constitutes the assets of a legitimate business which has been seized;

(B) is to be used as evidence of a violation of the law;

(C) by reason of design or other characteristic, is particularly suited for use in illegal activities; or

(D) is likely to be used to commit additional criminal acts if returned to the claimant.

In its petition, Puerto 80 says it meets all these requirements. The substantial hardship caused by the continued possession of the domain names that Puerto 80 claims include a reduction in traffic, a loss of business goodwill, and deprivation of its users’ and visitors’ First Amendment rights.

The US responds that Puerto 80 hasn’t shown it satisfies the requirements of 983(f) and doesn’t mince words in doing so:

In attempting to provide justification for granting this extreme remedy, Puerto 80 seeks to characterize the website it operated under the Rojadirecta Domain Names as an online discussion forum and, in so doing, would have this Court decide, on an expedited basis and without a fully developed factual record, a variety of issues that are more properly raised either in a motion to dismiss the Government’s Verified Complaint or following a period of discovery. Indeed, through its petition, Puerto 80 is attempting to use a limited provision of forfeiture law designed to provide relief in only the rarest of circumstances in order to mount a broader challenge to a widely employed tool of law enforcement.

Specifically, the US argues that the hardships cited by Puerto 80 are not the substantial ones Congress intended when it wrote 983(f). Looking at both the case law and legislative history, the US points out that, especially in light of the examples given by the statute — “preventing the functioning of a business, preventing an individual from working, or leaving an individual homeless” — potential loss of goodwill and a 1/3 drop in traffic don’t qualify.

The US states that Puerto 80’s inclusion of the impact on the First Amendment rights of its users as a substantial hardship borne by Puerto 80 “borders on frivolous.” If there’s a First Amendment issue here, Puerto 80 must raise it in the forfeiture proceeding, not shoehorn it into a 983(f) petition.

Finally, the US states says the return of the domain names is likely to result in their further use in committing criminal copyright infringement, since it has no reason to believe Puerto 80 will stop the acts that led to the domain names being seized in the first place.

This portion is worth a read, as the US takes the time to elaborate on its theory of the case against the domain names — why it believes they facilitate criminal copyright infringement. It says “Puerto 80’s attempts to liken itself to an Internet search engine is wholly unavailing. Unlike a search engine or other site that aggregates links to existing content neutral material on the Internet, Rojadirecta organizes links to very specific content in a precise and targeted way.”

The US goes on to argue that even if Puerto 80 isn’t engaged in direct infringement on its website, it “certainly has engaged in contributory infringement, and has aided and abetted the infringement of others.”

My thoughts: this seems like an easy call for the court to make in favor of the US. Courts have read the “substantial hardship” requirement for these petitions strictly. An example given in the statute is “preventing the functioning of a business” — the case law suggests a substantial hardship is closer to completely preventing, ie a business would be forced to declare bankruptcy without the property seized, the functioning than significantly impeding the functioning.

The various substantive issues raised by Puerto 80 are more appropriately raised in the forfeiture proceeding itself. I don’t doubt they’ll do exactly that. But the 983(f) petition is a limited remedy, and I’d be surprised to see a court rule on substantive issues at this point.

Some other thoughts: Puerto 80 and the EFF devote considerable time to arguing that these seizures amount to an improper prior restraint under the First Amendment, and many in the blogosphere have shared this view. Those concerns extend to the pending PROTECT IP Act, since its provisions will largely depend on domain name seizures such as this.

The US disagrees, and its brief remarks on the issue in its memorandum suggest it’s approaching the issue similarly to how I’ve approached it here in previous posts.4 The government notes that the discussion forums remain on Rojadirecta’s site and are still accessible through other domain names, where case law dealing with seizures and the First Amendment have focused on whether or not the seizure actually removes expressive material from circulation.

In a footnote, the US states: “Indeed, it is clear from the record before this Court that the Government’s seizure of the Rojadirecta Domain Names was prompted by enforcement of the criminal copyright laws, and not as regulation of speech or other expressive conduct. As such, the seizure is not properly viewed as a prior restraint. See, e.g.Arcara v. Cloud Books, Inc., 478 U.S.697, 706 n.2 (1986).”

Finally, a word about the Spanish court decision finding Rojadirecta not liable for copyright infringement. The US notes that this doesn’t preclude Rojadirecta for being liable for violating US copyright law. Generally, any business that operates in a country is subject to that country’s laws; you can’t, for example, operate a mail-order marijuana business in a country where that substance is legal and ship to US customers without getting into trouble.

The EFF argues, however, that the district court should give the Spanish court decision preclusive effect under the principle of comity. I don’t find this argument convincing.

A nation’s courts aren’t required to take a foreign court’s decisions into consideration (except when specifically required by a treaty agreement between the two countries).5 But they generally will do so under the concept of comity, unless there’s a strong policy reason not to. Comity is based on respect between nations and the presumption that other nations will reciprocate.

Typically, comity shows up when someone asks a court to enforce a foreign court’s judgment. The EFF states, however, that “the principles apply more broadly.” They do, but not in the general sense the EFF suggests.

Giving effect to a foreign court decision means treating it as if it was a US court decision. That means it prevents the relitigation of either the same claim between the same parties that had already been decided (“res judicata”) or the same issue that had already been decided in an earlier case involving one of the parties (“collateral estoppel”).

I don’t think either res judicata or collateral estoppel preclude the forfeiture of these domain names. The parties are different: the Spanish case involved Spanish copyright owner Audiovisual Sport S.L. and the operators of Rojadirecta, this case is between the US government and the Rojadirecta domain names. The issues are largely different too: the primary issue in the Spanish case was whether the website infringed on copyrights, the primary issue here is whether the domain names facilitated the infringement of copyrights. Indeed, the Spanish court even said in its decision, “The actions of making available and advertising the games that are transferred facilitate download”.6

The court has 30 days to rule on Puerto 80’s petition unless both parties consent to an extension. More on this case as it develops.

Footnotes

  1. I’m curious to know if this is the first time anyone has filed an amicus brief for this type of petition. []
  2. 18 USC § 983(f)(7). []
  3. FRCP Supplemental Rule G(8)(d)(i). []
  4. See COICA: First AmendmentDomain Name Seizures Don’t Violate First AmendmentICE Seizures Criticism: Magic Words A Response to ‘Supporters of DHS Domain Name Seizures Undervalue Important Constitutional Protections’, and Responding to Sellars: Copyright and Content-based Regulations. []
  5. By contrast, US states are required to recognize judgments made in another state’s courts under the Full Faith and Credit Clause of the Constitution. []
  6. Declaration of Igor Seoane Miñán, Exhibit 1. []

Last month, we saw the story of “Kind of Bloop”. Tech entrepreneur Andy Baio had put together a Chiptune tribute album of the classic Miles Davis work Kind of Blue. He secured licenses for the songs but failed to license the Chiptune version of the original album’s cover art that was used as the cover art for Kind of Bloop. Jay Maisel, the photographer and copyright holder of the iconic image of Davis, objected to Baio’s use, and the two settled the dispute without resorting to litigation.

Baio recounts his side of the story on his blog in a post titled “Kind of Screwed.” The story struck a chord in some areas of the blogosphere, spun as greedy-copyright-owner-shakes-down-poor-hobby-artist. The 80-year old Maisel was viciously attacked online in numerous places.

Jeremy Nicholl wrote two posts about this tale (first post and second post), describing the harassment and examining the facts more closely. The real story is a far cry from the version embraced by the online rabble and the bloggers who roused them.

Setting that aside, I want to take a look at the copyright issue underlying this story — the copyright issue that got so many so furious because they felt that, while Baio’s view was correct, the law gave Maisel an unfair upper hand.

See, the premise of Baio’s belief that he was “kind of screwed”, the premise that led some to push this story as “yet another in a long list of examples of how copyright is used to censor, rather than to promote progress”, and the premise that the online mob used to justify their harassment of an 80-year old photographer both online and off, was that the new cover art is clearly a fair use of the original work.

But it’s not.

If you record an 8-bit cover version of a Miles Davis song, you clearly need a license from the publisher, just as you need a license to record, say, a country version of a Beatles song. Baio knew this — he secured licenses for all the songs on the album before releasing it. The rules don’t suddenly change when you make an 8-bit version of a Miles Davis album cover.

To understand why, let’s take a look at Baio’s argument in more detail and see how well it holds up in reality. Baio says that “The crux of our disagreement hinges on the first factor — whether the Kind of Bloop illustration is ‘transformative'” so I’ll also talk primarily about that, but I will add a few comments on the other factors.

Transformative Purposes and Derivative Works

Baio’s argument is as follows:

In his influential paper on fair use, Judge Pierre N. Leval wrote, “Factor One is the soul of fair use.” Stanford’s Fair Use Center asks, “Has the material you have taken from the original work been transformed by adding new expression or meaning? Was value added to the original by creating new information, new aesthetics, new insights and understandings?”

From the beginning, Kind of Bloop was a creative experiment. I was drawn to the contradiction between the textured, subdued emotion in Kind of Blue and the cold, mechanical tones of retro videogame music. The challenge was to see whether chiptune artists could create something highly improvisational, warm, and beautiful from the limited palette of 1980s game consoles. (I think we succeeded.)

Similarly, the purpose of the album art was to engage both artist and viewer in the same exercise — can NES-style pixel art capture the artistic essence of the original album cover, with a fraction of the resolution and color depth of an analog photograph?

It reinforced the artistic themes of the project, to convey the feel of an entire album reimagined through an 8-bit lens. Far from being a copy, the cover art comments on it and uses the photo in new ways to send a new message.

This kind of transformation is the foundation of fair use. In a 2006 verdict, the court found artist Jeff Koons’ use of a fashion photo “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.”

I don’t think there’s any question that Kind of Bloop’s cover illustration does the same thing. Maisel disagreed.

Baio is incorrect for one simple reason:

“[C]opying that is complementary to the copyrighted work (in the sense that nails are complements of hammers) is fair use, but copying that is a substitute for the copyrighted work (in the sense that nails are substitutes for pegs or screws), or for derivative works from the copyrighted work, is not fair use.” (Emphasis added.)1

Copyright owners have, along with the exclusive right to copy and distribute their works, the exclusive right to prepare derivative works based on their own works. Most commonly, we think of derivative works such as the movie version of a book, or a foreign language translation of a book, but they can include any new work derived from an existing work.

So what distinguishes derivative works from fair uses of a work? Both can, after all, be considered “transformative” in some sense of the word.

The Second Circuit has noted that there exists “a potential source of confusion in our copyright jurisprudence over the use of the term ‘transformative.'” It explains:

A “derivative work,” over which a copyright owner has exclusive control, is defined as

a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted.

17 U.S.C. §§ 101, 106(2) (emphasis added). Although derivative works that are subject to the author’s copyright transform an original work into a new mode of presentation, such works — unlike works of fair use — take expression for purposes that are not “transformative.”2

If you want to understand what courts mean by “transformative purposes”, reading through the case law on the subject might not prove terribly enlightening. But in the last few years, three empirical studies of the fair use doctrine in case law have provided a greater depth to understanding its application — Barton Beebe’s An Empirical Study of US Copyright Fair Use Opinions, 1978-2005,3 Pamela Samuelson’s Unbundling Fair Use,4 and Matthew Sag’s Predicting Fair Use.5

In his new paper, Making Sense of Fair Use, Neil Netanel examines these studies and adds his own research to this area. He writes:

[C]ourts have made clear that matters for determining whether a use is transformative is whether the use is for a different purpose than that for which the copyrighted work was created. It can help if the defendant modifies or adds new expressive form or content as well, but different expressive purpose, not new expressive content, is almost always the key. Using Samuelson’s proffered nomenclature and policy clusters, courts as transformative primarily those uses that are “productive” or “orthogonal.” What Samuelson defines as “transformative” uses — uses that modify a preexisting work in creating a new one — are deemed “transformative” by the courts only if the defendant creates the new work for a different expressive purpose than the preexisting work.

Netanel lists some of these different expressive purposes that courts have deemed transformative:

[R]eplication of literary or graphic works to serve as an information tool; replication of artistic works to illustrate a biography; reproducing a fashion photograph originally made for a lifestyle magazine in a painting to make a comment about the mass media; copying and displaying a photographic portrait originally made as a gift item for the subject’s family and friends for purposes of entertainment and information; a football team’s display of artwork that the team previously used as its logo without the artist’s permission in a “museum-like setting” in the lobby of the team’s corporate headquarters; copying a work to criticize its author; and, of course, copying a work to parody or criticize the work.

The example of the fashion photograph is especially relevant since that is the same case as the one cited by Baio, the “2006 verdict” involving artist Jeff Koons. But his likening of his cover art to the Koons case misses the mark. When you actually read the case, you can see the court explain how Koons’ use of the fashion photograph was fair because it had a transformative purpose, and you can also see how Baio’s use lacked such a purpose. (I’ve left in some of the citations that shed further light on transformative purposes.)

Koons does not argue that his use was transformative solely because Blanch’s work is a photograph and his a painting, or because Blanch’s photograph is in a fashion magazine and his painting is displayed in museums. He would have been ill advised to do otherwise. We have declined to find a transformative use when the defendant has done no more than find a new way to exploit the creative virtues of the original work.  See Davis, 246 F.3d at 174 (use of plaintiff’s eyewear in a clothing advertisement not transformative because it was “worn as eye jewelry in the manner it was made to be worn”); Castle Rock Entm’t, 150 F.3d at 142-43 (quiz book called the “Seinfeld Aptitude Test” not transformative when its purpose was “to repackage [the television show] Seinfeld to entertain Seinfeld viewers”); Ringgold v. Black Entm’t Television, Inc. 126 F.3d 70, 79 (2d Cir.1997) (copy of plaintiff’s painting used as decoration for a television program’s set not transformative because it was used for “the same decorative purpose” as the original).

But Koons asserts — and Blanch does not deny — that his purposes in using Blanch’s image are sharply different from Blanch’s goals in creating it. The sharply different objectives that Koons had in using, and Blanch had in creating, “Silk Sandals” confirms the transformative nature of the use. See Bill Graham Archives, 448 F.3d at 609 (finding transformative use when defendant’s purpose in using copyrighted concert poster was “plainly different from the original purpose for which they were created”).

Koons is, by his own undisputed description, using Blanch’s image as fodder for his commentary on the social and aesthetic consequences of mass media. His stated objective is thus not to repackage Blanch’s “Silk Sandals,” but to employ it “‘in the creation of new information, new aesthetics, new insights and understandings.'” When, as here, the copyrighted work is used as “raw material,” in the furtherance of distinct creative or communicative objectives, the use is transformative.

The test for whether “Niagara’s” use of “Silk Sandal” is “transformative,” then, is whether it “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.” The test almost perfectly describes Koons’s adaptation of “Silk Sandals”: the use of a fashion photograph created for publication in a glossy American “lifestyles” magazine — with changes of its colors, the background against which it is portrayed, the medium, the size of the objects pictured, the objects details and, crucially, their entirely different purpose and meaning — as part of a massive painting commissioned for exhibition in a German art-gallery space. We therefore conclude that the use in question was transformative. (Some citations removed.)6

Baio used Maisel’s photo from the cover of a Miles Davis album for the same purpose as the original — copying cover art to use as cover art. Aesthetics has no bearing on this lack of a transformative purpose; one could easily say the new cover is “art”, and one could certainly say the new cover has new expression or meaning. But since it serves the same purpose, it is a derivative work, and only Maisel can authorize its use.

Jeff Koons himself knows this, as he had lost in another case over a decade before the one above. Koons claimed fair use for a sculptural copy of a photo from professional photographer Art Rogers without Rogers’ permission, asserting that his sculpture conveyed an altogether different meaning than the photo, but the court didn’t agree:

If an infringement of copyrightable expression could be justified as fair use solely on the basis of the infringer’s claim to a higher or different artistic use — without insuring public awareness of the original work — there would be no practicable boundary to the fair use defense. Koons’ claim that his infringement of Rogers’ work is fair use solely because he is acting within an artistic tradition of commenting upon the commonplace thus cannot be accepted. … Of course, while our view of this matter does not necessarily prevent Koons’ expression, although it may, it does recognize that any such exploitation must at least entail “paying the customary price.”7

In the same way, Baio’s artistic motivations for his cover do not justify his copying of Maisel’s photo as fair use. It is instead clearly a derivative work, a “translation” of the original into 8-bit language, if you will — the equivalent of the 8-bit cover versions of Miles Davis’s music that accompany the work.

Protectable Elements of a Photograph

I also wanted to comment on Baio’s discussion of the third fair use factor: “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.”

Baio first states, “With regard to the third factor, although the illustration does represent the cover of Kind of Blue, it does so at a dramatically reduced resolution that incorporates few of the photograph’s protectable elements.” One has to wonder based on this, what Baio thinks would constitute protectable elements of a photograph. (And, if he’s correct, he wouldn’t need a fair use defense at all — a work that isn’t substantially similar to another work isn’t infringing in the first place.)

The protectable elements of a photograph are those elements derived from the photographer’s creativity and expression, as opposed to factual or functional elements. Admittedly, no bright line exists between protectable and non-protectable elements, but courts have listed protectable elements as including things like subject matter and posing of subjects; layout, positioning, and arrangement; selection of angles, lighting, shading, and coloring.8

Comparing the two images with these protectable elements in mind, it’s difficult to point to any protectable elements of the original photograph that weren’t copied. There’s certainly little argument that a substantial portion of them were copied — this is the key factor in infringement and fair use questions; it’s not a defense to show how much someone didn’t copy from the original work.9

One also has to wonder if Baio really believes that the illustration incorporates few of the photo’s protectable elements since he follows this statement immediately with his remark that “Courts routinely find fair use even where the entirety of an image is used.”

This remark is easily proven wrong. From Beebe’s study of fair uses:

Of the 99 opinions that addressed facts in which the defendant took the entirety of the plaintiff’s work, 27.3% found fair use (albeit with 9 of these 27 opinions finding a transformative use, and 4 finding a nontransformative use). The story is more extreme in situations where the court finds that the defendant did or did not take the “essence” or the “heart” of the plaintiff’s work. Courts explicitly found that the defendant took the heart of the plaintiff’s work in 37 opinions, and found no fair use in 35 of these. Courts made the opposite finding — that the defendant did not take the heart of the plaintiff’s work — in 25 opinions, and found fair use in 23 of these.

It is hardly “routine” when courts reject a finding of fair use when the entire work was used three out of four times.

Kind of Unfortunate

The mobbing of a celebrated photographer is inexcusable, but unfortunately it is becoming all too common for artists and creators to find themselves receiving abuse whenever they speak up for their rights or seek to protect their work online. It is much worse when, like here, the story used to encourage such behavior was so far from the truth.

In a broader sense, there is no broader sense to this event. The right exercised by Maisel to authorize works derived from his own work is much the same right a creator in 1909 had. Fair use is not disappearing — Netanel graphs defendant win rates in fair use cases in his paper; the graph bounces up and down at times but displays a remarkably constant trend since 1978 (when the doctrine was codified into the US code). Baio chose not to defend his use as fair in court because of the cost of litigating, but lawsuits are expensive for both parties.

Footnotes

  1. Ty, Inc. v. Publications Intern., 292 F.3d 512, 517 (7th Cir. 2002). []
  2. Castle Rock Entertainment v. Carol Publishing Group, 150 F. 3d 132, 143 (1998). []
  3. 156 University of Pennsylvania Law Review 549 (2008). []
  4. 77 Fordham Law Review 2537 (2009). []
  5. Unpublished, July 6, 2011. []
  6. Blanch v. Koons, 467 F.3d 244, 252-53 (2nd Cir. 2006). []
  7. Rogers v. Koons, 960 F.2d 301, 310 (2nd Cir. 1992). []
  8. See e.g., Burrow-Giles Lithographic Co. v. Sarony, 111 US 53, 60 (1884); Ets-Hokin v. Skyy Spirits, 225 F.3d 1068, 1077 (9th Cir. 2000); Rogers v. Koons at 308; Eastern America Trio Products v. Tang Electronic, 97 F.Supp.2d 395, 417-18 (SDNY 2000). []
  9. Harper & Row v. Nation Enterprises, 471 US 539, 565 (1985), quoting Sheldon v. Metro-Goldwyn Pictures, 81 F.2d 49, 56 (2nd Cir. 1936). []

Creative America — Creative America is a new grassroots organization “uniting the entertainment community and others against content theft.” Along with their website, you can find the group on Facebook and Twitter. Chris Dodd of the MPAA remarks:

Most of the over 2 million Americans whose jobs are supported by the motion picture industry aren’t marquee stars or studio executives. They’re the people whose names you see in the closing credits, with titles like makeup artist, set dresser, prop maker, sound effects editor, visual effects artist, rigging electrician, costumer, and driver. They’re the teenagers working their first job taking tickets at the local movie theatre or theme park. And they’re the people who work for local retailers, caterers, dry cleaners, florists, hardware and lumber suppliers, transportation companies, and thousands of other small businesses that support our industry.

When someone steals a movie and profits from that theft, these are the people they’re robbing from. These are the people who will have less to feed their families, to care for their parents, to save for retirement, to put their kids through school. And now, these are the people whose voices you’re about to hear.

Creative America, a new and unprecedented partnership among studios, networks, unions, and guilds, will give the men and women of our community a new way to speak out in the fight against content theft. This grassroots campaign will help everyone across this country understand that content theft isn’t a victimless crime – it hurts all of us.

Major ISPs agree to “six strikes” copyright enforcement plan — Ars Technica reports on the voluntary agreement announced this week signed by major ISPs. The RIAA released a statement in support of the new Copyright Alert System, quoting statements of support from many other trade associations. Also in support: the White House. James Gannon offers his take, noting that recent studies show this type of system is the most effective way of addressing online infringement to date.

Blindsided! Will U.S. Supreme Court Patent Ruling on Willful Blindness Determine Standard for Red-Flag Knowledge Under DMCA? — Naomi Jane Gray reports on a breaking development in the Viacom v. YouTube appeal currently awaiting oral argument in the Second Circuit. Great analysis of the issues, but as Gray concludes, it’s anyone’s guess how the Second Circuit will ultimately respond to Viacom’s argument.

Fighting the Good Fight — Leslie Burns reminds artists, creators, and those who recognize the importance of copyright in society not to stoop to the level of opponents, who often hide behind anonymity, resort to name-calling, and engage in even more deplorable tactics when facts, reason, and good policy don’t support their position.

Cherish the Book Publishers – You’ll Miss Them When They’re Gone (H/T Lee Goldberg) — Eric Felten reports on the e-book gold rush currently underway. The lack of gatekeepers for self-publishing writers seems attractive, but what is the public losing out on?

A friend, years ago, worked at a major New York publishing house tending the slush pile. It was her job to peruse the unsolicited manuscripts for anything that might be a hidden gem, and to send the dreaded form letters to the rest. She took no pleasure in sending rejections and was eager to find something, anything, worthy in the pile. She dreamed of discovering the great undiscovered talent—oh, what a story (and a career) it would make! Alas, in two years of sifting she found only one marginally plausible submission she could recommend to her bosses.

The e-book era promises us all the pleasure of wading through the slush pile ourselves, even as the pile grows exponentially.

Extradition For Pirates? Seized Domain Admins Call It Quits — TorrentFreak reports on pirate site operators voluntarily shutting down in the wake of ICE’s Operation in Our Sites. “The risks outweigh the pros of running a site like Re1ease now, then when we heard about TVShack, we thought enough is enough, ” said one.

On full content RSS (not excerpt only), spam blogs and content thieves — Bloggers, do you offer full posts or excerpts in your RSS feed? Hillary DePiano would like to hear your thoughts on the subject.

How to Fix Horror (H/T Alex Epstein) — If you’re a fan of horror movies like I am, you might be interested in author Jason Zinoman’s ongoing series of provocative essays on the subject at Slate. Up so far: “Stop trying to be so respectable”, “Kill the back story”, and “Embrace the remake”.

Finally, the distinction between copyright and plagiarism has recently been a (somewhat) hot topic online. Here’s a couple of stories from the past week on the subject:

The Unoriginal Sin: Differences Between Plagiarism and Copyright Infringement — Attorney and writer Mark Fowler takes a comprehensive look at both the legal and descriptive differences between the two, touching also on newer developments likeMurphy v. Millennium Radio Group.

The Role of Copyright in Fighting Plagiarism — PlagiarismToday’s Jonathan Bailey takes a different approach to this issue: he looks at the overlap between copyright infringement and plagiarism rather than the differences and discusses how the legal tools of copyright are used to police the largely ethical issue of plagiarism.

I know an internet meme has hit the mainstream when my mother asks me about it.

“Did you hear they want to throw people who post videos of lip-synching online in jail?” she asked me the other day.

She was referring to bill S.978, the Commercial Felony Streaming Act. The bill has raised considerable consternation online, with fears that it will be used against people engaged in all sorts of conduct that has up to now escaped legal attention, like posting videos on video-sharing sites or embedding videos on blogs. I had previously written about why those fears are overblown.

But those fears continue. Today I want to address the bill more in depth from a legal perspective to allay those fears.

The bill is addressed toward only large-scale, commercial piracy, and the bill is drafted accordingly.

To see why, I’ll show how the language creates several high bars to prevent it being applied to other types of infringement. But first, a little background.

Criminal Infringement of the Public Performance Right

If you take away only one thing from this article, take away this: S.978 doesn’t change what is legal and what is illegal.

Copyright is really a bundle of rights: the right to reproduce, distribute, and publicly perform, among others. Infringing any of these rights can trigger criminal infringement prosecution. Criminal infringement of reproduction and distribution has long carried felony charges in certain circumstances, but criminal infringement of other rights like public performance has been a part of the law since 1897 and has included the possibility of jail time.

Online, the distinction between what right is implicated by certain conduct blurs. Some courts have made a distinction between “downloading” and “streaming” to draw a line between reproduction and public performance,1 though that doesn’t entirely clear up the confusion.

The distinction between downloading and streaming is not really a technical one. As Cory Doctorow explains in a 2009 column “Streaming will never stop downloading,” streaming is really only a subset of downloading. A work is still being copied, except with “streaming”, a user can start watching or listening before the entire work is finished copying, and generally, the copy isn’t permanently stored where it can easily be accessed later.

Legally, there is a difference between copying and a public performance. Ideally, that would translate online to a distinction between downloading and streaming, but as I just mentioned, that’s a difficult distinction to make.

Meanwhile, copyright owners are harmed just the same whether a site owner offers a movie that can be downloaded first and watched later or watched as soon as the downloading starts. Some copyright owners are particularly harmed by streaming: sports events are nearly always streamed since much of the experience comes from watching the event live.

Newly minted Register of Copyrights Maria Pallante explained the scope of this harm last June:

During its 2009-2010 professional basketball season, the NBA identified 2,975 unauthorized streams on just eight websites/services, while in the current 2010-2011 NBA season, the NBA identified more than 2,700 unlawful streams of games on just one foreign website alone. According to industry sources, monthly traffic to ten of the cyber lockers that provide unauthorized access to streamed content grew by 13 million separate users per month during 2010, to 105 million separate users per month. And a recent NBC Universal-commissioned study found that one site that provided access to pirated movie streams had 6.5 million unique users each month, while another similar website had 5 million unique users each month. Recent legal challenges involving claims of unauthorized streaming include a complaint by the Ultimate Fighting Championship (UFC) against life-casting website Justin.tv alleging that more than 50,000 viewers watched illegal streams of a live UFC bout, “UFC 121 Lesnar v. Velasquez” through the site, and that UFC vendors removed over 200 infringing feeds during just that live event.2

Bill S.978 seeks to address these problems by standardizing the penalties for large-scale, willful, commercial infringement of a public performance with the penalties for the same type of infringement of the reproduction and distribution right. S.978 amends the criminal copyright infringement provisions in part to add the following, stating that any person who willfully infringes a copyright:

(2) shall be imprisoned not more than 5 years, fined in the amount set forth in this title, or both, if–

(A) the offense consists of 10 or more public performances by electronic means, during any 180-day period, of 1 or more copyrighted works; and
(B)(i) the total retail value of the performances, or the total economic value of such public performances to the infringer or to the copyright owner, would exceed $2,500; or
(ii) the total fair market value of licenses to offer performances of those works would exceed $5,000

The language of the statute sets forth several bars to arbitrary and unreasonable application of the law, including its requirement of willfulness and the value necessary to trigger it. Let’s take a look at both of these in turn before looking at some more general bars to its application.

Willfulness

Civil copyright infringement is a strict liability tort — the intent or state of mind of an alleged infringer is irrelevant, and “innocent” infringement is not a defense.3

Criminal copyright infringement, however, requires intent. The infringement must be “willful.” Courts have interpreted this to mean an “intentional violation of a known legal duty.”4 In other words, in a criminal copyright trial, the government must prove a “bad purpose” or “evil motive” rather than merely an “intent to copy and not to infringe.”5

This is a high standard. In addition, it is a subjective rather than an objective standard, meaning the question is not whether a reasonable person would have known certain conduct infringed a copyright but rather what the alleged infringer himself thought, even if he was obviously wrong.

A good example of this distinction is found in the case law. In US v. Moran, the owner of a “mom-and-pop” movie rental store was charged with criminal copyright infringement after an investigation revealed that he was making a copy of every movie he got to rent out, keeping the originals in storage.

The owner testified that he did this as “insurance” because movies frequently became damaged or vandalized as they were rented out, and he was under the impression that, while piracy is illegal, his type of conduct was not. On this point, he was wrong, but the court noted that he honestly believed he was operating within the law, so the standard of willfulness hadn’t been met.

Obviously there are limits to this. Bad-faith claims or outright lying won’t save a willful infringer. Neither will disagreement over the validity of copyright law itself.6

But it does mean that someone posting a mashup that they think is a fair use won’t find FBI agents at their door,7 nor does it mean an online intermediary with a legitimate DMCA policy in place will find itself in criminal court anytime soon.

Value

The second bar that has to be passed for a conviction under S.978 is establishing value. The proposed bill establishes two separate measures of value: either 10 or more performances within 180 days where the total retail value (or total economic value to the infringer or copyright owner) exceeds $2,500 or where the total fair market value of licenses to offer performances would exceed $5,000.

Contrary to some of the commentary I’ve seen, these numbers — retail value, total economic value, or fair market value — can’t be pulled out of thin air. They mean what they say they mean, not whatever a copyright owner or the government wants them to mean.

Retail value is simply what an authorized version would cost at the store. Felony provisions for reproducing a copyrighted work use the same measure of value.8 So a bootlegger copying a $20 DVD would need to make 125 copies in 180 days before coming within the scope of the felony provision.

What is the value of a performance? It’s equivalent to the fee for streaming or renting. New movie releases can be streamed online from places like Amazon and iTunes typically for $3.99. Pay-per-view events like UFC fights generally hover around $50.

Things like clips or cover songs would have values that are fractions of these. Your ordinary blogger won’t come close to reaching this bar. But a website operator pulling in 5 figures a year for offering hundreds (if not thousands) of unauthorized movies, TV shows, and sporting events (as evidence from Operation in Our Sites has shown was common for the sites whose domain names were seized) will.

Other Bars

Perhaps the biggest reason not to worry about this bill is that the government must prove willfulness, the total value, and all other elements of criminal copyright infringement under S.978 beyond a reasonable doubt. In a civil trial, a plaintiff only has to prove the elements of the case by a preponderance of the evidence — it is more likely than unlikely that a certain thing is true. It is far easier to be found civilly liable than it is to be found criminally guilty — just ask OJ Simpson.

The rule of lenity acts as another bar in criminal law. Criminal courts must construe any gray areas in a statute in favor of a defendant.

Finally, in my previous post, I talked about why prosecutorial discretion acts as a bar, a discussion that some have interpreted as me saying “trust the government.” That’s not the case.

The discussion here shows why the law itself prevents S.978 from being applied to conduct that many fear it applies to. These legal principles, however, prevent such convictions. Prosecutorial discretion — specifically, the government’s incentive to only bring cases it knows it can win and its limited time and resources to prosecute cases — means that those cases in the bubble between clearly legal and clearly illegal conduct won’t be prosecuted in the first place.

Conclusion

To sum up, Bill S.978 can’t be used to prosecute the uses that many fear it applies to. It doesn’t change what conduct is legal and what conduct is illegal. It is designed to apply only to outright pirates who profit off the streaming of unauthorized copyrighted works, and the language reflects this design.

Footnotes

  1. See, for example, US v. ASCAP, 485 F.Supp.2d 438 (SDNY 2007). []
  2. Promoting Investment and Protecting Commerce Online: The ART Act, the NET Act and Illegal Streaming, Statement of Maria A. Pallante, Register of Copyrights, before the Subcommittee on Intellectual Property, Competition, and the Internet Committee on the Judiciary United States House of Representatives, 112th Congress, 1st Session (June 1, 2011). []
  3. Although innocent infringement may reduce the minimum statutory damages available if the plaintiff seeks them. []
  4. Prosecuting Intellectual Property Crimes, USDOJ, pg. 30, Third Edition (2006). []
  5. US v. Moran, 757 F.Supp. 1046, 1048 (D. Neb. 1991). []
  6. See Cheek v. US, 498 US 192 (1991). []
  7. The Prosecuting IP Crimes Manual says fair use has “rarely” been developed in criminal cases, in part because of the willfulness standard. I have yet to see a criminal copyright infringement case that presented a colorable fair use defense. []
  8. 18 USC § 2319(b). []
Page 1 of 212