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). []

12 Comments

  1. My scenario would be a person using utorrent to download a song and then allowing others to upload from his system for weeks. Could this person be prosecuted under S.978?

    Randy

    • No, that would be reproduction and distribution, which can be a felony in certain circumstances under existing law — though I’m not aware of any prosecutions similar to that scenario.

  2. Hype Commenter

    Terry:

    Good post, but you forgot one important provision in S. 978, namely the part that adds a separate prohibition for pre-release works — and for this provision there are no thresholds.

    • That’s flat wrong. Willfulness is still a threshold for pre-release (look at 506(a)(1)), as is proving it beyond a reasonable doubt. Furthermore, pre-release has its own set of thresholds – has to be pre-release, infringer had to know or should have know that the work was not released yet, had to be made available on a publicly-accessible computer network

  3. “During its 2009-2010 professional basketball season, the NBA identified 2,975 unauthorized streams on just eight websites/services”

    The biggest mistake is assuming that this is the equivalent of stating “The NBA identified 2,975 harm-inducing streams on just eight websites services,” and it is here where we run into a massive issue that the Internet has presented.

    One of the largest issues in the sports streaming and “piracy” realm is geolocation. If I am in a location where no host broadcaster exists, or my host broadcasters have obtained full rights to NBA league coverage but show only 1 game a day of the preferred teams of my region (not involving my preferred team), who is truly being “harmed” in my finding a stream of my preferred team’s game?
    It doesn’t make sense to say that streams are automatically reducing the number of legitimate views with associated marketing and commercialization components. Generally, people stream because it is the last resort — an “I want to watch my team, and this is the only way to achieve that” scenario. I don’t see at all how harm is being done to an organizations property by people having MORE availability/accessibility to their product than less.

    This situation does not solely exist in small foreign countries or with irrelevant/miniscule sporting organizations. Take the English Premier League. Their rights are held in the US by Fox Soccer Channel, with 1-2 games sometimes being subleased to ESPN. Typically though the coverage spans 5-6 matches total per week. An American who follows the league, but one of the teams whose match is not selected, is shut out from viewing the match. Is it an improvement over the old system where EPL matches were $29.95 via PPV (and typically only Manchester United or Liverpool’s match was buyable)? Absolutely.

    Problem is, when a subset of a held-rights property isn’t profitable (or maximizes returns) to an organization, it is often cast-off or ignored. If businesses such as sports leagues had any sense, they would release these “wasted” properties to the public to control their dispersal via limited live reproduction rights.

  4. Terry,

    You did not note perhaps the most important bar to prosecution under S. 978: because it only applies to infringements under 17 U.S.C. 506(a)(1)(A), it requires that the infringement be done “for purposes of commercial advantage or private financial gain.” The case law makes clear that this standard applies to commercial-scope infringements, not merely people trying to avoid paying for a copyrighted work nor people engaged in barter of copyrighed works. That is the main reason why all the concern about YouTube uploaders, bitTorrent users, are totally unfounded.

  5. Please comment on the following scenario: A young woman sings someone else’s song on the street and a young man happens to film her and posts a high-quality video on youtube that receives over 1 million views (each view being a stream). Now let us assume three different financial situations: a. neither the performer nor the video-maker receives any income from the video. b. the video-maker receives income from Youtube (by allowing advertising on his streaming website), c. the performer and video-maker agreed ahead of time that he would video-tape her and they share the advertising income from the streaming Youtube video site. Note that, in all 3 cases, the streams are free to the viewers. Could the video-maker or the performer be prosecuted under bill S.978 (or some other copyright law) under any of these 3 situations? Thank you for your time.

    • Not under S.978. YouTube is responsible for the public performances of works uploaded by users, not the users themselves.

      • @Michael and Terry,

        In Michael’s scenario, the uploader of the video using the copyrighted song would be liable under copyright law because synchronization is one of the exclusive rights of the copyright owner of the song. Assuming neither the filmmaker nor the singer has obtained a license to “synch” the audio with the visual, there is an infringement. The use does not meet the “fair use” criteria, and they are engaged in a commercial enterprise because they are accepting compensation (ad revenue) from YouTube. Not all copyright owners have blanket performance rights licenses, so due diligence is required on the part of the user.

        • @ Lisa Thomas

          To be clear, the “synchronization” right derives from the exclusive right of an author to reproduce their work under 17 USC 106(1). There is no exclusive “synchronization” right in the Copyright Act, per se.

          • Doesn’t it also constitute a derivative work, since the existence of the video as a whole is pendent on the original music and lyrics?

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  8. Another part of the No Electronic Theft Act

    “For purposes of this subsection, evidence of reproduction or distribution of a copyrighted work, by itself, shall not be sufficient to establish willful infringement”

    would almost certainly exclude viewers of pirated content. In other words, your ISP logs alone would not be enough. They would have to get a lot more than that. That makes all the hype about viewers going to jaill all a bunch of FUD