Principles for an Ethical and Sustainable Internet — The Trichordist offers a set of 8 principles for ensuring the internet remains a viable public forum for content creators and consumers alike. “Technology may change but principles do not. A society that encourages the creative spirit is rare in history and worth defending. The internet and digital technology have opened up many new opportunities for artists, but it has also opened up new opportunities for those who wish to exploit those artists.”

The Big Online Rip-Off — Danuta Kean has a comprehensive piece on “the burgeoning power and influence of internet venture capital, and illegal filesharing sites.” Well worth a read, Kean closes with a list of steps that creators can take to counter this power and influence.

The Illusion of More — Be sure to check out filmmaker David Newhoff’s new site, launched this week. Subtitled, “Dissecting the Digital Utopia,” Newhoff already has a number of great articles up. The site promises to be “a response to the promise of the digital age that more would necessarily be better. More content, more information, more access, and more interaction would ultimately produce more freedom, more democracy, more cultural diffusion, more innovation, and so on.  According to some, the evolution of the Internet would ultimately fuse with human evolution itself, allowing us to transcend even our own mortality. To be sure, we seem to have accomplished the more part, but whether it’s all for the better is a question worth asking.”

The Best Book Reviews Money Can Buy — The New York Times profiles the increasing use of paid book reviews in the world of self-publishing. Among those the Times looks at is author John Locke, who used such services to become somewhat of an internet superstar, even parlaying his success into an e-book, “How I Sold One Million E-Books in Five Months.”

Brand banners on pirate sites: whose fault is it anyway? — Adland looks for an answer, inspired by a recent series of posts on the Trichordist pointing out many major brands that show up on display ads for notorious pirate sites — like this recent one showing over a dozen brands advertising alongside unauthorized Neil Young recordings. The list includes Ford, Mini, Target, and even the Boy Scouts. Over at Music Think Tank, Bruce Warila looks at the same series of posts and asks, Are we a community of copyright cowards?

Brian Keene: I write novels, stories, and comic books for money — Lucinda Dugger of the Copyright Alliance profiles comic artist Brian Keene. “Yet, despite the many hours of work for what would seem to many of us like little financial return, Brian continues to write and offer new opportunities to his fans. In fact, he so appreciates his fans, that he wrote a novel, Deluge: The Conqueror Worms II, which he offered for free on his website.”

Average wait time from theater to home video — An interesting graph showing how consistently and dramatically the release windows for films have dropped in the past 14 years. The companion thread on Reddit.

Two court decisions involving online services transmitting broadcast television have recently been released. Both — WPIX v ivi in the Second Circuit and ABC v Aereo in the Southern District Court of New York — involve companies sued by television broadcasters for providing,in essence, the same type of service. However, the technology behind the scenes of each differs, as well as the legal issues involved.

And while both involved preliminary injunctions, they each resulted in different outcomes — Aereo succeeded in convincing the district court to deny an injunction while the Second Circuit upheld an earlier-granted injunction against ivi.

But while the differences in the two cases may outweigh the similarities, they do share one thing in particular that is, perhaps, most relevant: in both cases, the court reiterated the public’s strong interest in ensuring effective copyright protection.

WPIX v ivi

Billed as “the first internet cable network,” ivi launched in 2007. The service captures broadcast television from several markets, offering live viewing over the internet for a monthly fee. The company was sued in 2010, and the district court granted a preliminary injunction against it last year. On Monday, the Second Circuit upheld the injunction.

ivi argued that it is a “cable system” under the Copyright Act. Section 111 of the Act creates a compulsory license for “cable systems”, as defined in the Act, to retransmit television broadcasts — so long as a “cable system” complies with the statute and pays rights holders according to rates set by law, it can retransmit broadcasts without the consent of broadcasters.

Because the definition of “cable system” is not entirely without ambiguity, the Second Circuit turned to the legislative history of the section, as well as the Copyright Office’s interpretation of the law. Both clearly showed that the definition of “cable system” was never intended to encompass services like ivi. This conclusion is strengthened by the fact that, as the court notes, the definition of “cable system” must be read narrowly since it involves government intrusion into the marketplace and acts in derogation to the exclusive property rights granted by the Copyright Act.

ABC v Aereo

Aereo provides paid online access to New York City television stations broadcast over the air, including all the major networks (the service is currently only available to New York City residents). Unlike ivi, however, the service offers both live viewing and DVR-style functionality, allowing users to pause and record programs. Aereo operates an array of tens of thousands of antennae, each the size of a dime. When users access the service, Aereo dynamically assigns them a unique antenna.

Aereo hinges its defense on the nature of its setup. Relying on the Second Circuit’s Cablevision decision, Aereo argues that it essentially acts as a remote device controlled by its users. Because any individual transmission is going to a unique individual, says Aereo, any performance of television broadcasts is not public and thus not within the scope of any copyright holder’s exclusive rights. The district court concluded that Aereo’s arguments were strong enough to defeat the necessary likelihood of success on the merits that the television broadcasters must show in order to succeed on a motion for a preliminary injunction.

The Public Interest

To grant a preliminary injunction, courts consider four factors: the plaintiff’s likelihood of success on the merits, the irreparable harm that would result in the absence of an injunction, the balance of hardships between the plaintiff and defendant in the presence or absence of an injunction, and the public interests at stake. Despite the different legal issues involved, and despite the injunction in Aereo being denied because plaintiffs did not demonstrate a likelihood of success on the merits, both courts noted that the public interest favored granting an injunction.

The Aereo court puts it this way: “There is a strong public interest in the copyright system’s function of motivating individuals to make available their creative works and increase the store of public knowledge.”

The court also knocked down arguments that the public interest would be served by keeping the Aereo service running. Said the court, “There is a logical gap—one that Aereo and amici fail to bridge— between any public interest in receiving broadcast television signals generally and the public interest in receiving them from Aereo’s particular service.”

Interestingly, the court addresses arguments raised by the EFF and Public Knowledge in their amicus brief. “[A]mici argue that there is a public interest in the free access to and reception of broadcast television. The Court notes, however, that even setting aside the other lawful methods through which consumers may access broadcast television even in Aereo’s absence, Aereo is a business and does not provide ‘free’ access to broadcast television [Emphasis added].” The court continues even more stringently, “Amici‘s argument thus bears an unacceptable resemblance to advocacy that copyright infringement of broadcast television is generally in the public interest, a point on which this Court cannot agree.”

In ivi, the Second Circuit explores the public interests involved at length, in a section worth repeating in full:

Here, streaming television programming live and over the Internet would allow the public — or some portions of the public — to more conveniently access television programming.

On the other hand, the public has a compelling interest in protecting copyright owners’ marketable rights to their work and the economic incentive to continue creating television programming. Inadequate protections for copyright owners can threaten the very store of knowledge to be accessed; encouraging the production of creative work thus ultimately serves the public’s interest in promoting the accessibility of such works.

Plaintiffs are copyright owners of some of the world’s most recognized and valuable television programming. Plaintiffs’ television programming provides a valuable service to the public, including, inter alia, educational, historic, and cultural programming, entertainment, an important source of local news critical for an informed electorate, and exposure to the arts. Plaintiffs’ desire to create original television programming surely would be dampened if their creative works could be copied and streamed over the Internet in derogation of their exclusive property rights.

Further, there is a delicate distinction between enabling broad public access and enabling ease of access to copyrighted works. The service provided by ivi is targeted more toward convenience than access, and the public will still be able to access plaintiffs’ programs through means other than ivi’s Internet service, including cable television. Preliminarily enjoining defendants’ streaming of plaintiffs’ television programming over the Internet, live, for profit, and without plaintiffs’ consent does not inhibit the public’s ability to access the programs. A preliminary injunction, moreover, does not affect services that have obtained plaintiffs’ consent to retransmit their copyrighted television programming over the Internet.

What’s next

ivi has indicated in the press that it doesn’t plan on giving up just yet. That could mean an appeal or, more likely, continuing in litigation at the district court level. Though with its service still offline — the lower court last year denied its motion to stay the injunction while its appeal was pending, meaning it hasn’t been able to operate for over a year — it is uncertain how much longer it will stick with its plan.

The Aereo decision has been appealed to the Second Circuit. The appeal will be closely watched since Aereo is the first internet rebroadcaster to survive past the preliminary injunction stage. For example, earlier this month,, a similar service that was sued in October 2010, agreed to shut down its internet broadcasting service as part of a settlement with broadcasters. Within the past couple years, other services like VuiVision and iCraveTV have been quickly shuttered by courts. 1H/T to Andrew Berger for making those decisions available at IP in Brief.

References   [ + ]

1. H/T to Andrew Berger for making those decisions available at IP in Brief.

Way back in 2003, the member labels of the RIAA brought lawsuits against a number of individuals for distributing copyrighted works on P2P networks. Massachusetts grad student Joel Tenenbaum was among them and was sued over five years ago. Tenenbaum’s case went to trial in 2009 — one of only two to reach trial, the other being Capitol v Thomas-Rasset — and the jury returned a verdict for $675,000 in statutory damages for infringing 30 sound recordings.

The District Court reduced the award the following year to $67,500 on the grounds that the jury’s award violated the Due Process Clause of the US Constitution. Both parties appealed (I looked at the issues on appeal in a previous post). The First Circuit held that the court erred when it did this — under the doctrine of constitutional avoidance, it should have considered the common law doctrine of remittitur before examining the award under constitutional grounds. The original $675,000 jury award was reinstated, and the Circuit Court remanded to the District Court to consider the motion for remittitur. (My previous post on the First Circuit decision here.)

Now, roughly a year later (during that time, Tenenbaum appealed the decision to the Supreme Court, but the petition was not granted), the District Court has considered the issue of remittitur and released its decision. In short, it found remittitur is not appropriate here and the original jury award does not violate due process, so the original $675,000 verdict stands.


The court begins by noting the high standard needed to grant remittitur: “A damage award must stand unless it is ‘grossly excessive, inordinate, shocking to the conscience of the court, or so high that it would be a denial of justice to permit it to stand.'” Under this standard, the court found “no basis” to reduce the award.

The jury was thoroughly instructed on factors it should consider when considering the amount of damages to award, as well as the harms that result from unauthorized filesharing. The jury also heard evidence revealing the scope and scale of Tenenbaum’s conduct — he downloaded and distributed thousands of files over an eight year period. In addition, the evidence revealed the extent that Tenenbaum acted willfuly, as he received multiple warnings from various sources during this time about infringement and personally knew that other individuals were facing lawsuits for the same conduct. Finally, the evidence showed that Tenenbaum destroyed evidence, lied during legal proceedings, and only grudgingly admitted responsibility for his acts.

In spite of this, the court notes, the jury award was not only at the low end of the statutory range for willful infringement, it was even below the statutory maximum for non-willful infringement.

Due Process

The court next considered Tenenbaum’s due process challenge to the award. Just a note: many people assume that the Eighth Amendment’s ban on “excessive fines” is at issue here. However, the Eighth Amendment only applies to criminal fines, while this is a civil lawsuit. 1Browning-Ferris Industries of Vt., v Kelco Disposal, 492 US 257 (1989). Instead, the challenge here had come under the Fifth Amendment, which says that “No person shall be …  deprived of life, liberty, or property, without due process of law.” The argument is essentially that the damage award is “so grossly excessive as to amount to a deprivation of property without due process of law.” 2See Waters-Pierce Oil v Texas (No. 1), 212 US 86, 111 (1909).

The district court here begins by noting that the First Circuit suggested that the proper standard to evaluate a due process challenge to statutory damage awards is the one from St. Louis, IM & SR v Williams. 3251 US 63 (1919). Tenenbaum had argued that the court should follow the standard set out by the Supreme Court in punitive damages cases, specifically BMW v Gore, 4517 US 559 (1996). a far less deferential standard. But as the First Circuit noted, and the court here reiterates, the factors set out in Gore — aimed at due process concerns over the lack of notice over the amount of otherwise unconstrained punitive damages — are simply not relevant when a statute constrains the amount of damages that a defendant can face.

Under Williams, the court states, “a statutory damages award comports with due process as long as it “cannot be said to be so severe and oppressive as to be wholly disproportioned to the offense or obviously unreasonable.” As noted above, this standard is highly deferential — Congress has wide latitude in setting the amount of damages for legal violations, and too close review of such awards by courts raise separation of powers concerns. The district court concluded that the jury award here did not violate due process under the Williams standard.

What’s next?

Some have suggested that an appeal from Tenenbaum is likely. But his arguments have repeatedly been rejected at the District and Circuit court levels, so it is unlikely he will have any success for any future challenge.

Still left to watch is the only other RIAA filesharing case to make it to trial, Capitol v Thomas-Rasset. That case is one step ahead of Tenenbaum: after a second trial resulted in a jury verdict of $80,000 for each of 24 songs at issue (a verdict in the earlier trial had been vacated on a procedural error), the district court judge remitted the award to $54,000 total, or $2,250 a song. The record labels exercised their Seventh Amendment rights to reject the remitted award, and a third trial, solely on damages, resulted in a jury verdict of $62,500 per song. This time, the judge reduced the award on constitutional grounds. Thus, when that reduction was appealed to the Eighth Circuit, the court was not confronted with the question of whether remittitur was required before constitutional review of award, as the First Circuit was, since the lower court had already gone through with remittitur.

On appeal, the court is confronted with the question of which standard to review the award under — Williams or Gore. 5As well as a preserved appeal of the question of whether making a work available on a P2P network is a violation of a copyright holder’s distribution right. The Eighth Circuit heard oral arguments in Capitol this past June, so a decision should be forthcoming in the next few months.

References   [ + ]

1. Browning-Ferris Industries of Vt., v Kelco Disposal, 492 US 257 (1989).
2. See Waters-Pierce Oil v Texas (No. 1), 212 US 86, 111 (1909).
3. 251 US 63 (1919).
4. 517 US 559 (1996).
5. As well as a preserved appeal of the question of whether making a work available on a P2P network is a violation of a copyright holder’s distribution right.

Real cost of ‘free’ downloads — Ken Paulson, president and CEO of the First Amendment Center, pens this must read op-ed on copyright and free speech, just in time for the 225th annivesary of the drafting of the US Copyright Clause (September 5th). “In the end, this is not about business models or emerging technology. It’s about living up to the promise we made to Webster and the first generation of Americans who believed that art should be free, but not necessarily free of charge.”

“Legitimate” piracy — John Degen takes a trip down the “freecult logical vortex for legitimizing piracy.” “If you, the professional content creator, are stupid enough to actually create valuable content and even think about putting it near the Internet, you are inviting piracy. And if you think technological protection measures (TPMs) will protect the value of your valuable content, you’re even more stupid. If you think the law should address your problem, you’re some kind of freedom-hating corporate monster. Also, stupid.”

Pro-Music’s Global Guide To Music Services — Eliot Van Buskirk of presents a list of legitimate music services, categorized by country, from The list is long, but certainly not exhaustive — music listeners have tons of other ways to legally enjoy music online, more than any other time in history.

Survey on Digital Content Usage 2012: Sanctions and warnings regarding copyright infringements are gaining acceptance among the public — The IFPI presents a report that showcases the attitudes and behaviors of German consumers regarding online media. Some of the key findings, according to the IFPI: “Three of every four Germans believe it is appropriate to fine people who offer copyrighted media content online without permission. More than half the population (53 percent) endorses the imposition of fines on people who illegally download media content. Consumers feel that warnings would have a preventive effect: 57 percent of Germans believe that up- and downloaders would discontinue their copyright-infringing activities upon receiving a warning from the provider.”

Piracy and Internet Search – The Debate — Along the same lines, researcher Brett Danaher wonders what the effect of Google’s recent move to downgrade search ranking based on takedown notices will have. Danaher notes that his previous research has shown that “laws aimed at deterring consumers from filesharing can increase music sales” and “shutting down a major cyberlocker increased movie sales,” but the effect of Google’s new policy remains to be seen.

The Andersen P2P file sharing study on the purchase of music CDs in Canada — One of the few studies that concluded that filesharing helps, rather than hurts, recorded music sales again faces fundamental questions. As Barry Sookman reports, the 2007 paper’s key conclusion that filesharing leads to higher music sales had previously been revised by the author, dropping the claim. This week, a new paper, re-examining the same data as the original paper, reports the exact opposite conclusion, and notes the original and revised papers are “fundamentally flawed.” The new paper, by Australian economist Prof. George Barker “consistently [found] a negative and statistically significant partial correlation between CD purchases and P2P downloads.”

RapidShare: We’ll help Hollywood, but ‘not at all costs’ (Q&A) — Declan McCullagh of CNet interviews RapidShare general counsel Daniel Raimer. Though there is still a ton of infringing content available on the service, it is encouraging to see the company express interest in mitigating that. Says Raimer, “We believe it’s a much more interesting market to have the legitimate customers upload important files that they want to have for long periods of time — a reliable cloud computing service that they can trust. These are the types of customers we want. Legitimate customers don’t really want to argue whether your service costs $4.99 a month or $50 a year. Copyright pirates are different. They really want everything for free. They’re definitely not the long-time customers.”

A Commendable Response from Zedo — On Tuesday, Chris Castle discovered that ad platform Zedo was serving ads on several notable torrent sites. By Wednesday, the company responded with a promise to make sure it doesn’t happen in the future. Kudos to Zedo. But as Castle notes, “This exchange highlights the most important aspect of the collision of legitimate companies with the seedy underbelly of the Internet–it’s not enough to sit back and wait for someone to formally notify you when things are going wrong.”

David Lowery to host SXSW panel on music piracy? — Adland reports that David Lowery has submitted a proposal for a panel on an “Innovative, Open, Ethical & Sustainable Internet” for this year’s SXSW. If this sounds interesting, follow the link in the article to the panel picker to vote it up — voting ends August 31.

Eat less, exercise more.

This simple advice is, barring medical problems, at the heart of any weight loss plan for the 75 million self-identified dieters in the US. 1See Caroline Scott-Thomas, Advice to Eat Less, Exercise More Still Trumps Diet Products for Weight Loss, Study Finds, April 16, 2012; Heidi Grant Halvorson, 5 Habits of Highly Successful Dieters, CNN, Mar. 19, 2012: “Eat less, exercise more. That’s the recipe for losing weight, and we all know it by heart”; Kristen Philipkoski, Stop Complicating a Simple Obesity Solution: Eat Less, Exercise More, Gizmodo, Mar. 8, 2012. Yet the US weight loss market is valued at over $60 billion a year, filled with a constant stream of fad diets, “miracle” foods, and dubious supplements, as many search in vain for a magic bullet.

The same is true when dealing with expressive works like music, movies, and books. Many search in vain for a magic bullet to ensuring a vibrant creative ecosystem online, but more and more the key boils down to simple advice: Make piracy harder, make legal options easier.

Carnegie-Mellon economist Michael D. Smith describes this in a recent article on Digitopoly, Anti-piracy regulation and competing with free. The article is a response to an earlier op-ed piece by Nick Bilton at the New York Times, Internet Pirates Will Always Win. Smith took issue with the defeatist attitude that Bilton adopted concerning making piracy harder.

In short, Bilton’s arguments don’t mesh with reality. Smith points to his own research on price differentiation that  “found that while Amazon’s prices were well above the lowest price online, they still retained a dominant share of the market in head-to-head competition with much lower priced alternatives from online retailers like altbookstore, booksnow, and musicboulevard.” Smith goes on to explain:

What does this have to do with anti-piracy regulation? Possibly quite a lot if one views “competing with free” as simply a special case of price competition. Imagine competition in the digital media space where the media companies and their online distribution partners play the role of Amazon, and where pirate sites play the role of lower priced alternatives from the likes of altbookstore. The twist on this example is that while Amazon could only control the differentiation of their own offerings, media companies can use anti-piracy regulation to impact the differentiation of their pirate competitors’ offerings as well. Thus, media companies can use iTunes and Hulu to improve the convenience, quality, and reliability of their paid products, while also using anti-piracy regulation to reduce the convenience, quality, and reliability of the free pirate competition.

Smith points to empirical evidence that this is indeed what happens when anti-piracy regulations are adopted. Smith’s takeaway is that they “don’t have to be perfectly effective to get the job done. In that way, anti-piracy interventions may be less like ‘Whac-A-Mole,’ and more like horseshoes where you can score points just by getting sufficiently close to the target.”

But attitudes like Bilton’s persist.

One strand of thought seems to embrace the idea that antipiracy efforts are all or nothing. You have folks like angry sci-fi author Cory Doctorow pounding on the podium that efforts to make piracy harder are just the first step in a “war on general computing.”

You have Pirate Party founder Rick Falkvinge saying, with a straight face and clenched fist, “The only way to even try to limit file sharing is to introduce surveillance of everybody’s private communication. There is no way to separate private messages from copyrighted material without opening the messages and checking the contents. Gone is the postal secret, the right to communicate in private with your lawyer or your web-cam flirt, or your whistle-blower protection if you want to give a sensitive story to a journalist.” 2This argument is quite common. New America Foundation’s James Losey wrote in Slate last year, “If the United States decides that copyright infringement must be stopped at any cost, the required censorship regime will depend on ever more invasive practices, such as monitoring users’ personal Web traffic.”

And a recent documentary from al-Jazeera claims that debates over copyright are “about centralized control versus ‘the ability to share information across the world without traditional boundries or regulations'” and recent legislation was “not about pirated entertainment but how do we live in the digital age and who gets to decide what we do.”

This line of thinking is, to put it bluntly, insane. It would be like saying the only way to stop tax fraud would be to allow government access to everybody’s bank accounts, or the only way to prevent speeding would be to require that speedometers broadcast data to the feds. No one seriously contemplates these solutions, and we somehow manage to enforce these laws without 100% compliance. The same is true with copyright.

On the flip side, legal options need to be more easier. Here, the failure of creators to adopt legal alternatives has been overstated.

Just yesterday, the MPAA noted “there are more legitimate avenues available today to watch movies and TV shows online than ever before: Hulu, HBO Go, Vudu, Crackle, UltraViolet, Epix, MUBI, Netflix, Amazon – and that just scratches the surface.” The RIAA reported in its recent IPEC comment that there are currently over 2,000 digital services offering access to consumers to over 20 million music recordings, a number that is growing. Countless other opportunities exist for emerging and indie musicians, authors, and filmmakers online. And the infrastructure continues to develop — for example, this past May, the RIAA, NMPA, and DiMA rolled out five new licenses that provide a “one-stop shop” for new online music distribution services.

Access to music, films, TV shows, books, and other works has never been easier or cheaper. Ever.

But, just like “eat more, exercise less”, “make piracy harder, make legal options easier” goes hand in hand; neither one is sufficient on its own. Legitimate options are better for the public in the long run, but they need a fair marketplace in order to thrive.

References   [ + ]

1. See Caroline Scott-Thomas, Advice to Eat Less, Exercise More Still Trumps Diet Products for Weight Loss, Study Finds, April 16, 2012; Heidi Grant Halvorson, 5 Habits of Highly Successful Dieters, CNN, Mar. 19, 2012: “Eat less, exercise more. That’s the recipe for losing weight, and we all know it by heart”; Kristen Philipkoski, Stop Complicating a Simple Obesity Solution: Eat Less, Exercise More, Gizmodo, Mar. 8, 2012.
2. This argument is quite common. New America Foundation’s James Losey wrote in Slate last year, “If the United States decides that copyright infringement must be stopped at any cost, the required censorship regime will depend on ever more invasive practices, such as monitoring users’ personal Web traffic.”

On Friday, the Florida Southern District Court held a hearing on several dispositive motions in litigation between film studios and popular file-locker Hotfile.

Major film studios — including Disney, 20th Century Fox, Universal City, Columbia Pictures, and Warner Bros. — sued Hotfile in February 2011 for copyright infringement and secondary copyright infringement. The studios also brought a claim against Hotfile’s owner and operator, Anton Titov, for personal liability. In July, the court dismissed the claim for direct copyright infringement but allowed the claims for inducement, contributory infringement, and vicarious liability to go forward. Hotfile raised a number of defenses in its answer to the complaint, notably that it is protected by the DMCA safe harbor, and also brought a counterclaim against Warner Bros., alleging the film studio had made material misrepresentations in thousands of DMCA takedown notices it had sent to Hotfile. Both parties moved for summary judgment earlier this year. 1The studios also seek to strike portions of testimony from several of Hotfile’s expert witnesses and defendant Anton Titov.

Though this is not the first infringement suit against file-lockers — Hotfile itself has been sued several times 2Once by Perfect10 and twice by Liberty Media Holdings. — it is notable for being one of the first suits initiated by major film studios against a popular file-locker. If the case progresses, it may prove influential in shaping copyright law online.

The claims of the studios are similar to claims in other copyright cases involving online service providers. It is alleged that Hotfile engaged in massive, commercial infringement by actively facilitating the reproduction and distribution of unauthorized TV shows and movies through its service. The studios point to Hotfile’s “affiliate program” that pays users for uploading popular files with the most downloads. Hotfile also operates a referral program that generates income for third-party sites that link to Hotfile content, the result of which, the studios allege, “is that Hotfile effectively partners, and acts in concert, with a vast array of pirate link sites and other affiliates to advertise and promote the infringing content on Hotfile’s servers.” Finally, like Megaupload, Hotfile is alleged to stymie takedowns of infringing content by making multiple copies of every file uploaded, each with a separate link. As the studios state:

Defendants protest that Hotfile is not like Napster, Grokster, Limewire, and other notorious infringers. But the differences make Hotfile’s infringement more egregious, not less. No earlier pirate services had the temerity actually to pay its users to upload infringing content. Hotfile does. Hotfile’s own economist acknowledges that Hotfile’s practice of paying uploaders (Hotfile’s so-called “Affiliates”) based on how many times their files are downloaded induces the uploading of “popular” (i.e., infringing) content. Additionally, unlike previous adjudicated infringers, which facilitated access to content stored on users’ computers, Hotfile itself physically stores all the infringing content on its own servers, giving it an unprecedented ability to stop the infringement – an ability Hotfile chooses not to exercise. Finally, Hotfile’s business model is indistinguishable from that of the website Megaupload, which recently was indicted criminally for engaging in the very same conduct as Hotfile. Defendants even admit that they formed Hotfile “to compete with” Megaupload.

The motions

On motion for summary judgment, the studios argue that Hotfile is ineligible for safe harbor protection because it failed to reasonably implement a repeat infringer policy, it failed to comply with the DMCA agent designation requirements, it had disqualifying knowledge — including actual knowledge of specific infringing files, “red flag” knowledge, and willful blindness — and it induced infringement.

On the first point, the studios note that Hotfile had the ability to track the number of takedown notices that individual users were responsible for (“strikes”), but it took no steps to terminate repeat infringers — a number of individual uploaders had accumulated over three hundred strikes without being terminated. The studios also note that over half of all downloads on Hotfile come from files uploaded by users with three or more strikes.

The last point, concerning the lack of knowledge requirement for safe harbor protection, has been the subject of recent court decisions in Viacom v. YouTube, from the Second Circuit, and UMG v. Veoh, from the Ninth. 3Note that the 9th Circuit ordered more briefing in Veoh this past June, following the decision in Viacom. Thus, the decision may yet be amended; the court also has a petition for rehearing on the case pending. It appears that this is the first time a court in the Eleventh Circuit has been confronted with interpreting these provisions of the DMCA. This portion of the DMCA states that a service provider is only eligible for safe harbor protection if it “does not have actual knowledge that the material or an activity using the material on the system or network is infringing,” or “in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent.” The above cases focused primarily on the scope of the latter, so-called “red flag” knowledge.

Here, the studios point to several “red flags” that should have made Hotfile aware of infringement: over 90% of downloads were infringing, the operators received a “constant stream of communications” from users who said they were downloading infringing works, thousands of linking sites associated with Hotfile contained terms like “pirate” or “warez” that indicated obvious infringement, and, perhaps most brazenly, Hotfile’s tutorials for using its service used names and titles of copyrighted works as examples.

But the court may not need to dive into the scope of “red flag” awareness just yet; the studios have also provided evidence that Hotfile had actual knowledge of specific infringing works.

Without the safe harbor, the studios argue that Hotfile is liable for contributory copyright infringement, vicarious liability, and inducement. These arguments are fairly straight-forward applications of these doctrines of secondary liability. For contributory infringement, Hotfile provided the “site and facilities” for infringement and had reason to know about such infringement. For vicarious liability, Hotfile financially benefited from infringement through its premium subscriptions while declining its ability to stop or limit infringment.

The inducement claim — “active steps . . . taken to encourage direct infringement” — tracks the Supreme Court’s Grokster opinion and “parallels the pattern of prior adjudicated infringers,” according to the studios. They allege that Hotfile’s unlawful objective is apparent from its Affilliate program, which pays users to upload popular, and predictably copyrighted, files. Hotfile also directly targets a user base of infringers, refuses to terminate repeat infringers, is overwhelmingly used only for infringement, and depends on infringement for its business model. Finally, the defendants have helped users to infringe, have impeded efforts by copyright holders to mitigate infringement, and have refused to even consider technology that could be used to prevent infringement.

Hotfile’s response to the studios’ motion for summary judgment essentially refutes their characterization of the facts — it didn’t induce infringement, it did reasonably implement a repeat infringer policy, etc. 4Hotfile has also moved for partial summary judgment on the claim that it is protected by the DMCA safe harbor for any infringement that occurred after February 11, 2011 — ten days after it was sued by the studios. To be sure, the court must sift through a lot of facts to resolve the issues raised on these motions. To succeed at the summary judgment stage, a party must show that, when all the facts are viewed in the light most favorable to the opposing party, no genuine issue of material facts exist, and the moving party is entitled to judgment as a matter of law on the issues it raises in its motion. With such complex legal issues, and thousands of pages of evidence already in front of it, the court here has its work cut out for it.

Other issues to watch

In the meantime, there are a few other legal issues raised in this litigation that are worth watching.

First, does inducement disqualify a service provider from DMCA safe harbor protection? A number of other courts have taken this position. 5See Viacom v YouTube, 676 F.3d 19, 38 (2nd Cir. 2012) (“inducement of copyright infringement … which ‘premises liability on purposeful, culpable expression and conduct,’ … might also rise to the level of control under § 512(c)(1)(B)”); Columbia Pictures v Fung, cv 06-5578-SVW, Order Granting Plaintiffs’ Motion for Summary Judgment on Liability (CD Cali. 2009) (“inducement liability and the Digital Millennium Copyright Act safe harbors are inherently contradictory”); Arista Records v, 633 F. Supp. 2d 124, 142 SDNY 2009 (if defendants “encouraged or fostered such infringement, they would be ineligible for the DMCA’s safe harbor provisions”). The language and legislative history of the statute certainly seem to suggest that active conduct to encourage infringement is incompatible with a safe harbor for passive conduct, but courts in the Eleventh Circuit have yet to weigh in on the issue, as far as I can tell.

Next, what is the role of willful blindness in the knowledge prong of the DMCA safe harbor? The studios make the claim that Hotfile acted with willful blindness, effectively admitting “that they sought to blind themselves to the infringement all around them as much as possible.” Willful blindness, defined by the Supreme Court as taking “deliberate actions to avoid confirming a high probability of wrongdoing,” has long been considered a form of knowledge. The twist is that the DMCA provides that safe harbor protection does not require “a service provider monitoring its service or affirmatively seeking facts indicating infringing activity, except to the extent consistent with a standard technical measure complying with the provisions of subsection (i).” The Second Circuit in Viacom v. YouTube confronted this question and concluded that the DMCA “limits—but does not abrogate— the doctrine” of willful blindness, and it “may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.”

Finally, on a bit of a side note, the movie studios also argue that Hotfile is ineligible for the 512(c) safe harbor — which limits remedies “for infringement of copyright by reason of the storage at the direction of a user” — because Hotfile’s service was not used primarily for “storage.” They note that a significant portion of registered users on the site only use it to download, not upload, files. More to the point, Hotfile routinely deletes files that have never been downloaded — the “antithesis” of storage, as the studios put it. I don’t recall seeing this argument raised before in another case, so it will be interesting to see how the court approaches it.

A trial is currently scheduled for early November, but it shouldn’t be a surprise if the court’s eventual decision on these motions is appealed to the Eleventh Circuit, delaying trial.

References   [ + ]

1. The studios also seek to strike portions of testimony from several of Hotfile’s expert witnesses and defendant Anton Titov.
2. Once by Perfect10 and twice by Liberty Media Holdings.
3. Note that the 9th Circuit ordered more briefing in Veoh this past June, following the decision in Viacom. Thus, the decision may yet be amended; the court also has a petition for rehearing on the case pending.
4. Hotfile has also moved for partial summary judgment on the claim that it is protected by the DMCA safe harbor for any infringement that occurred after February 11, 2011 — ten days after it was sued by the studios.
5. See Viacom v YouTube, 676 F.3d 19, 38 (2nd Cir. 2012) (“inducement of copyright infringement … which ‘premises liability on purposeful, culpable expression and conduct,’ … might also rise to the level of control under § 512(c)(1)(B)”); Columbia Pictures v Fung, cv 06-5578-SVW, Order Granting Plaintiffs’ Motion for Summary Judgment on Liability (CD Cali. 2009) (“inducement liability and the Digital Millennium Copyright Act safe harbors are inherently contradictory”); Arista Records v, 633 F. Supp. 2d 124, 142 SDNY 2009 (if defendants “encouraged or fostered such infringement, they would be ineligible for the DMCA’s safe harbor provisions”).

Understanding the New Google “Pirate Penalty” — Last Friday, in welcome news, the search behemoth announced it would be incorporating legitimate DMCA takedown notices into its search ranking. PlagiarismToday’s Jonathan Bailey has an in-depth look at what the change means, followed up with 10 Questions Answered about Google’s New “Pirate Penalty.” Interestingly, Bailey notes that the change will mostly fall “on the shoulders of various file sharing sites”: the first non-filesharing site on Google’s transparency report is ranked all the way at number 170 in terms of takedown notices received.

Business Matters: Teens Listen to Music Most on YouTube, Pay for Music More Than Other Age Groups, Nielsen Study Says — Billboard notes that a newly released Nielsen study shows that “the average teen has more normal listening and discovery characteristics than one might expect given the hyperbole easily found in today’s media.” Half of all teens surveyed still listen to CDs, compared to 64% who listen on YouTube: a difference, but not as much as one might think.

BMW slams ad machine in reverse, screeches out of pirate den — Andrew Orlowski at The Register reports on BMW’s response to its ads showing up on filesharing sites after it was brought to the company’s attention by the Trichordist blog. “The car maker, which posted revenues of €68bn in 2011 – making it more than twice the size of Google – has promised to review how it promotes itself on the internet after the Trichordist blog noticed the German giant was touting its flash motors on pirate music sites.”

Dear American Express: Stop advertising on sites that illegally exploit my music — And speaking of the Trichordist, this week David Lowery calls attention to the financial services company for the same issue. “This isn’t abstract to me–this page is a link to an illegal download of one of my songs. You should also note some of the other ‘suggested’ searches on this same site are for some pretty nasty stuff.  I don’t like having my brand seen in these places and I’m sure you don’t either.”

Does the DMCA’s Safe Harbor Apply to Pre-1972 Sound Recordings? — Natalie Nichol of the Citizen Media Law Project examines the thorny issue, the subject of two recent court cases. Both courts resolved that it does, though both were lower court decisions. The US Copyright Office disagrees with the reasoning of the decisions (and as a matter of statutory interpretation, I believe the Copyright Office makes the stronger case) and an appeal of one of the decisions is possible, so for now the application of the DMCA to pre-1972 sound recordings remains unresolved.

Collins’ Crypt: How JAWS Spawned TWO Sub-Genres — Finally, I hope everyone enjoyed a blessed and prosperous Shark Week. In honor of the holiday, here is an interesting look at how the 1975 film inspired entire subgenres to follow in its footsteps.

Today’s guest post comes from Copyhype contributor Devlin Hartline.

Judge Posner’s opinion for the Seventh Circuit in Flava Works, Inc. v. Gunter has caused quite a bit of confusion, to say the least. As Terry Hart mentioned in his post last Monday, the headlines “showcase some of the shortcomings consistently seen in legal reporting.” That’s the diplomatic way of saying that the reporting from the “usual suspects” is bogus and misleading.

Here’s a further sampling of the cheerful headlines:

And my personal favorite:

That, of course, isn’t quite what Judge Posner said.

See if you can spot the syllogistic fallacy:

Major premise: Users embedded infringing videos on the myVidster website.

Minor premise: Judge Posner, confined to the particular facts of the partially-developed record before him (including the fact that there was no evidence that myVidster had encouraged or induced anyone to upload, embed, or stream any infringing videos) and limited by the particular arguments raised by the plaintiff (which only argued non-inducement contributory infringement), found that plaintiff Flava Works was not likely to be successful on the merits of its contributory infringement claim against myVidster for the user-embedded infringing videos.

Conclusion: All embedded infringing videos are totally legal. Hooray!

I’m still shaking my head.

Just because Judge Posner did not find infringement by myVidster for the particular embedded infringing videos at issue in the appeal, it doesn’t follow that all embedded infringing videos are therefore legal. That’s like saying that since a jury acquits one defendant in a prosecution for a shooting death, then all shootings that result in death must be legal.

One must separate out the general statements of law made by the court from the application of the law to the particular facts of the case. And with this opinion, that’s not the easiest thing to do—the opinion leaves much to be desired as far as clarifying exactly what the liabilities are for embedded infringing videos.

Nonetheless, I created tables of the potential liabilities identified by Judge Posner for uploading and streaming infringing videos and posted it to Scribd. Seeing it in tabular form, for me anyway, is quite helpful, and I welcome readers to see what I came up with (and to disagree in the comments if you read the case differently).

With amici like these…

The amicus brief filed in the Seventh Circuit by Google and Facebook, purporting to be in support of neither party (although Judge Posner wisely notes that the brief is “friendly to myVidster”), says it all:

II. Linking can potentially be contributory or vicarious copyright infringement under some circumstances.

To say that linking can never be direct copyright infringement is not to say that linking can never lead to copyright liability of any sort. Copyright law has well-developed doctrines of secondary liability—contributory infringement and vicarious infringement—which can hold liable a culpable party when that party has not, himself, done an act which directly infringes one of the exclusive rights. The specific requirements of these doctrines may be inquired into in the context of linking in the same way that they are applied to any other activity. ***

Thus, holding that myVidster is not a direct infringer—or that its users are not direct infringers—will not leave Flava Works without a path to a possible remedy. If Flava Works can show that myVidster or its users had knowledge of infringement and that their activities were intended to materially contribute to that infringement, myVidster or its users could potentially be liable as contributory infringers. If Flava Works can show that myVidster or its users had the right and ability to supervise the particular infringing performances and also had a direct financial interest in those performances, myVidster or its users could potentially be liable as vicarious infringers.

Brief of Amici Curiae Google Inc. and Facebook, Inc. in Support of Neither Party at 16-17, Flava Works, Inc. v. Gunter, No. 11-3190, 2012 WL 3124826 (7th Cir. Aug. 2, 2012) (emphasis added).

So even Google and Facebook agree that the user-embedded infringing videos on myVidster potentially make it liable for copyright infringement. Though, in their opinion, myVidster could only be liable as a contributory or vicarious infringer, and not as a direct infringer.

Suffice it to say that those claiming that sites hosting user-embedded infringing videos can never be liable for copyright infringement are just plain wrong. The fact that Google and Facebook admit as much should tell you how settled the principle is—few have more to lose on that score. If anyone were to deny it, it’d be them.

A linking site like myVidster can be liable as a secondary infringer, i.e., for contributory infringement (which includes inducement, as per Grokster) or for vicarious infringement. Such sites are not always liable, nor are they always free from liability. What matters is the role that the site plays in the underlying infringement, and that analysis must be done on a case-by-case basis as it is fact-intensive.

A bundle of rights

So what did Judge Posner actually say?

Recall that copyright is actually a bundle of rights:

§ 106. Exclusive rights in copyrighted works

Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and

(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

17 U.S.C.A. § 106 (West 2012).

So there are actually six different copyright rights: (1) reproduction, (2) derivation, (3) distribution, (4) public performance, (5) public display, and (6) public performance (for digital audio transmissions of sound recordings). When we say that a certain act does or does not violate someone’s copyright rights, we have to be careful to say which right in particular we’re talking about. The same act can violate one right but not another; in fact, this is almost always the case.

Turning to the opinion, Judge Posner states:

Is myVidster therefore a contributory infringer if a visitor to its website bookmarks the video and later someone clicks on the bookmark and views the video? myVidster is not just adding a frame around the video screen that the visitor is watching. Like a telephone exchange connecting two telephones, it is providing a connection between the server that hosts the video and the computer of myVidster’s visitor. But as long as the visitor makes no copy of the copyrighted video that he is watching, he is not violating the copyright owner’s exclusive right, conferred by the Copyright Act, “to reproduce the copyrighted work in copies” and “distribute copies … of the copyrighted work to the public.” 17 U.S.C. §§ 106(1), (3). ***

As the record stands (a vital qualification, given that the appeal is from the grant of a preliminary injunction and may therefore be incomplete), myVidster is not an infringer, at least in the form of copying or distributing copies of copyrighted work. The infringers are the uploaders of copyrighted work. There is no evidence that myVidster is encouraging them, which would make it a contributory infringer.

Flava Works, Inc. v. Gunter, No. 11-3190, 2012 WL 3124826, *3-4 (7th Cir. Aug. 2, 2012) (emphasis added).

Take a moment to parse what Judge Posner actually said. Here, he’s talking only about the reproduction and distribution rights, numbers (1) and (3) in Section 106. He is not talking about the public performance right, number (4) in Section 106, or any of the other three copyright rights.

Judge Posner says that the party that uploaded the infringing video to the internet is an infringer since that party actually caused a copy to be made. And if myVidster encouraged or induced that party to upload the infringing video, it would be a contributory infringer to that infringement. But users of myVidster who thereafter merely stream that infringing video are not infringers of the reproduction or distribution rights since they have made no copies.

This is important: Judge Posner did not say that streaming infringing videos is legal (it’s not). He did not say that streaming infringing videos does not violate the public performance right (it does). He said that users who stream embedded infringing videos on the myVidster website do not violate the reproduction or distribution rights of the copyright holder. And since that streaming does not violate those two rights, by extension, myVidster is not a contributory infringer for facilitating that specific noninfringing conduct.

It should be noted that whether a streamer actually makes a copy is actually a debatable point, as Terry Hart points out in his post. The record in this case did not disclose whether copies were actually made when someone streamed an embedded infringing video using the myVidster website. Had the record indicated otherwise, it’s likely that the court would have reached a different conclusion on this point.

The public performance right

Judge Posner, like amici Google and Facebook, acknowledges that streaming an infringing video violates the public performance right. And if a website like myVidster significantly encourages or induces that infringement, it could be liable as a contributory infringer.

The opinion is a little confusing on this point, because Judge Posner provides two different interpretations of what it takes to violate the public performance right. The first interpretation is that merely making an infringing video available via a link is by itself direct infringement, while the second interpretation requires that someone have actually used the link to stream the infringing video before there is an infringement.

Either way, it’s clear that the second interpretation swallows the first; there is no doubt that streaming an infringing video is a violation of the public performance right. Judge Posner does not decide the issue of whether merely making the video available via a link suffices, but as Barry Sookman points out, there is reason to think that it does.

Judge Posner continues:

But if the public performance is the transmission of the video when the visitor to myVidster’s website clicks on the video’s thumbnail (the second interpretation) and viewing begins, there is an argument that even though the video uploader is responsible for the transmitting and not myVidster, myVidster is assisting the transmission by providing the link between the uploader and the viewer, and is thus facilitating public performance. ***

In contrast, Flava’s pirated videos are not sold, and there isn’t even admissible evidence that they’re actually being accessed via myVidster, rather than via other websites, and if they are not, myVidster is not contributing to their performance.

Id. at *8 (emphasis added).

Did you catch what Judge Posner said there? There was no admissible evidence that anyone had actually streamed one of plaintiff Flava Works’ videos using the myVidster website. And so, as with the reproduction and distribution rights discussed above, myVidster cannot be a contributory infringer unless it has actually facilitated infringing conduct.

Nor was there any evidence that myVidster had encouraged or induced anyone to embed infringing videos. So even if merely making an infringing video available via a link is itself direct infringement, myVidster would not be liable for that infringement either—not unless there was evidence that it had played a role in encouraging or inducing the person that posted the link.

Note what Judge Posner didn’t say. He did not say that there was no infringement because streaming an infringing video is not an infringement of the public performance right. He said that myVidster was not an infringer because there was no evidence that it had encouraged or induced anyone to embed an infringing video and there was no evidence that anyone actually used the myVidster website to stream an infringing video.

As I said above, whether or not a linking website like myVidster is liable for infringement must be determined on a case-by-case basis because it is a fact-intensive inquiry. Change the facts and the answer likely changes too.

The “Server Test”

I don’t think anyone else has reported as much, but I think that Judge Posner did in fact adopt the “server test” for the public performance right in the Seventh Circuit.

The “server test” comes from the district court in Perfect 10 v. Google, Inc.:

Under the server test, someone could create a website entitled “Infringing Content For All!” with thousands of in-line links to images on other websites that serve infringing content. That website, however, would be immune from claims of direct infringement because it does not actually serve the images. [footnote 10: That website, however, might still be held liable for secondary infringement.] ***

The Court concludes that in determining whether Google’s lower frames are a “display” of infringing material, the most appropriate test is also the most straightforward: the website on which content is stored and by which it is served directly to a user, not the website that in-line links to it, is the website that “displays” the content. Thus, the Court adopts the server test, for several reasons.

Perfect 10 v. Google, Inc., 416 F.Supp.2d 828, 839-43 (C.D. Cal. 2006) (emphasis added).

The Ninth Circuit, in Perfect 10 v., Inc., affirmed in part and reversed in part, adopting the “server test” circuit-wide in the process:

In considering whether Perfect 10 made a prima facie case of violation of its display right, the district court reasoned that a computer owner that stores an image as electronic information and serves that electronic information directly to the user (“i.e., physically sending ones and zeroes over the [I]nternet to the user’s browser”) is displaying the electronic information in violation of a copyright holder’s exclusive display right. Conversely, the owner of a computer that does not store and serve the electronic information to a user is not displaying that information, even if such owner in-line links to or frames the electronic information. The district court referred to this test as the “server test.”

Applying the server test, the district court concluded that Perfect 10 was likely to succeed in its claim that Google’s thumbnails constituted direct infringement but was unlikely to succeed in its claim that Google’s in-line linking to full-size infringing images constituted a direct infringement. As explained below, because this analysis comports with the language of the Copyright Act, we agree with the district court’s resolution of both these issues.

Perfect 10, Inc. v., Inc., 508 F.3d 1146, 1159-60 (9th Cir. 2007) (internal citations omitted) (emphasis added).

The “server test” is simple. The website server that actually sends out the infringing ones-and-zeroes is the one that directly violates the public display right, number (5) in Section 106. Another website that merely links to the infringing content does not directly violate the public display right—it can indirectly violate that right, therefore making it a contributory or vicarious infringer, but it doesn’t directly infringe that right.

It’s important to note that the “server test” argument is not over whether a linking website can be an infringer. It can. The argument is over whether that website is a direct or an indirect infringer. The “server test” says that, at worst, a website that links to infringing material is a contributory or vicarious infringer—still subject to the full range of remedies provided by the Copyright Act, mind you. In a sense, the argument is over whether they’re the bank robber or the getaway driver—it’s difficult to see how it really matters since both are liable for the robbery.

The only difference I can think of (and I haven’t directly researched the point) is that of knowledge: Direct infringers are liable for infringement whether they know of it or not, since direct infringement is a strict liability tort. Contributory infringers, on the other hand, must have knowledge, either actual or implied, of the infringement before any liability attaches.

Given the DMCA safe harbors (that absolve a linking website of most liability so long as it doesn’t have actual or implied knowledge of the underlying infringement) and the Netcom line of cases (that absolve a linking website of liability absent volitional conduct on its part to cause the infringement), it’s hard to see how it really matters. Whether direct or indirect liability is at stake, a linking site is not going to be liable unless it knows of and by its action (or inaction) causes the infringement.

In Flava Works Inc. v. Gunter, the district court below rejected the “server test” argument for the public performance right, number (4) in Section 106:

We decline to apply Perfect 10 to this case. The Ninth Circuit’s decision is not binding on this court; moreover, it is highly fact-specific and distinguishable. Defendants assert that the cases involve “essentially the same technology.” Both cases may involve inline linking, but the processes are quite different. The relevant comparison is between the conduct of Google and the conduct of myVidster’s users, not between Google and myVidster. In response to a search query, Google’s image search engine uses an automated process to display search results through inline linking. In contrast, myVidster’s users do not employ any sort of automation to determine which videos they bookmark; rather, they personally select and submit videos for inline linking/embedding on myVidster. (And many of those hand-picked videos are infringing.) Google’s use of inline linking is neutral to the content of the images; that of myVidster’s users is not.

To the extent that Perfect 10 can be read to stand for the proposition that inline linking can never cause a display of images or videos that would give rise to a claim of direct copyright infringement, we respectfully disagree. In our view, a website’s servers need not actually store a copy of a work in order to “display” it. The fact that the majority of the videos displayed on myVidster reside on a third-party server does not mean that myVidster users are not causing a “display” to be made by bookmarking those videos. The display of a video on myVidster can be initiated by going to a myVidster URL and clicking “play”; that is the point of bookmarking videos on myVidster—a user can navigate to a collection of myVidster videos and does not have to go to each separate source site to view them.

Flava Works, Inc. v. Gunter, No. 10-cv-06517, 2011 WL 3876910, *3-4 (N.D. Ill. Sept. 1, 2011) (emphasis added).

On appeal, Judge Posner disagrees:

By listing plays and giving the name and address of the theaters where they are being performed, the New Yorker is not performing them. It is not “transmitting or communicating” them.

Is myVidster doing anything different? To call the provision of contact information transmission or communication and thus make myVidster a direct infringer would blur the distinction between direct and contributory infringement and by doing so make the provider of such information an infringer even if he didn’t know that the work to which he was directing a visitor to his website was copyrighted. Then he would have to search for a safe harbor in the Digital Millennium Copyright Act. myVidster doesn’t touch the data stream, which flows directly from one computer to another, neither being owned or operated by myVidster.

Flava Works, Inc. v. Gunter, No. 11-3190, 2012 WL 3124826, *7-8 (7th Cir. Aug. 2, 2012) (internal citations omitted) (emphasis added).

It’s subtle. Judge Posner doesn’t come right out and say that he’s adopting the “server test” for the public performance right in the Seventh Circuit. But the opinion makes clear that he thinks that holding myVidster liable as a direct infringer goes too far since that would mean holding it liable even if it had no knowledge of the underlying infringement and even though the ones-and-zeroes didn’t actually cross its server.

Thus, similar to the Ninth Circuit in Perfect 10, which found that linking to infringing images only creates indirect liability for infringement of the display right, number (5) in Section 106, the Seventh Circuit here found that myVidster, which links to infringing videos, could only be liable as an indirect infringer of the public performance right, number (4) in Section 106. In other words, both courts found that linking cannot give rise to direct liability for infringement.

Again, given the DMCA safe harbors and the Netcom line of cases, I’m not convinced that Judge Posner’s concern about strict liability is merited—it’s not like every linking site will be directly liable for every link it provides to infringing material. The safe harbors still protect it and there has to be volitional conduct on its part in providing the links. It’s clear though that Judge Posner thinks myVidster’s connection to the underlying infringement is too remote to hold it liable as a direct infringer because the ones-and-zeroes don’t cross its server.

Personally (and similar to the district court below), I think the “server test” elevates form over function, and the better view is that a link to an infringing video directly causes a public performance to occur when clicked—that is its very purpose. Whether or not the ones-and-zeroes cross the server providing the link misses the point: It’s a necessary link in the chain, without which, there would not be the particular infringement.

It will be interesting to see how other circuits address the issue when so confronted.

Follow me on Twitter: @devlinhartline

This is actually a few days late — I first began Copyhype on August 8, 2010, meaning it has just marked its second year, though it seems like just yesterday.

The second year has been even more exciting than the first. Readership has nearly doubled. I was very honored that this site was named one of the ABA Journal’s top 100 legal blogs in 2011. Citations to articles have also begun cropping up in published and forthcoming law review articles — though I’m still looking forward to being cited in a court opinion.

Much of the past winter was dominated, of course, by the now-dead Stop Online Piracy Act. I was somewhat amused that this site made it onto a list of organizations supporting the bill that circulated heavily around the internet — I even got a handful of emails from people claiming they would no longer buy my products and/or services if I didn’t withdraw support.

It’s always interesting to see which articles have ended up being the most viewed; there are always a few surprises. These are the most popular posts written during the past year:

  1. Hey, What happened to Wikipedia? An introduction to SOPA — other popular SOPA posts include Dispatches from the SOPAcolypse, Why I support the Stop Online Piracy Act, Stop Online Piracy Act walkthrough, and How the Stop Online Piracy Act will hit what it aims at
  2. Justin Bieber is not going to jail
  3. Was Hollywood built on piracy?
  4. More evidence for copyright protection
  5. What is technology?
  6. The ‘copyright infringement isn’t theft’ trope
  7. Who cares what Jefferson thought about copyright?
  8. Megaupload and the DMCA
  9. Copyright and web fonts: Santorum web developer sued for typeface infringement
  10. Copyright and the First Amendment: the unexplored, unbroken historical practice, part 4 — for whatever reason, this was notably more popular than part 1, part 2, part 3, and part 5.

I want to say thanks to all my readers for continuing to stop by here, and to everyone who has shared their thoughts in the comments. If you’re new to the site, remember you can subscribe for updates by RSS or email, follow me on Twitter, or “like” my Facebook page.

Copyhype’s third year promises to be even more exciting. I will be launching a new look in the upcoming weeks. Nothing too dramatically different — just a little fresh paint that will be more readable, faster loading, and responsive — so the page should look relatively the same whether you’re on a smartphone, a tablet, or a regular computer.

Copyright law in recent decades has seen a number of shaky claims and arguments grow in popularity. These arguments are often based on faulty logic, historical revisionism, or erroneous facts. Nevertheless, they have a surface appeal that aids in their dissemination. The result is a rather well-developed copyright “mythology” which presents a mistaken view of copyright’s history, its goals, and its effects.

Below is a collection of seven law review articles that critically examine many of these myths, correcting the distortions caused by, in the words of one of the authors, the “scholarly house of mirrors” that increasingly permeates discussions of copyright. I’ve cited to or discussed most of these articles on this site before, but I think they all deserve a special mention on their own. Enjoy!

The Mythology of the Public Domain: Exploring the Myths Behind Attacks on the Duration of Copyright Protection

Link. Scott M. Martin, 36 Loyola L.A. Law Review 253 (2002).

This article was written before the US Supreme Court upheld Congress’s authority to extend the term of copyright protection in Eldred v. Ashcroft, and many of the arguments have been vindicated by that decision. But Martin debunks other common myths surrounding copyright duration that are still around today, including “Congress ran rampant by granting term extensions, enacting eleven extensions in just forty years, and must be stopped by the courts”, “copyright good, public domain better”, “extensions of the term of copyright protection are an affront to, and an impingement on, First Amendment rights”, and “the Sonny Bono Copyright Term Extension Act of 1998 was the worst kind of special-interest legislation engineered by Disney to satisfy its insatiable corporate greed.” The last one especially skewers the premises of those who refer to the CTEA as the “Mickey Mouse Protection Act.”

The Progress of Knowledge: A Reexamination of the Fundamental Principles of American Copyright Law

Link. David A. Householder, 14 Loyola L.A. Entertainment Law Review 1  (1993).

Householder embarks here on a “systematic reevaluation of the basic policy and principles of American copyright law by returning to the source of such law, the Copyright Clause of the United States Constitution.” The article shines a light on “a number of concepts that, through ritualistic incantation have attained the unfortunate status of basic tenets of copyright law, even though they have little if any relevance to the basic purposes of American copyright law.” Since i predates even the NII White Paper, the concepts could be considered the “old guard” of copyright critiques; they include: “1. A copyright is a monopoly; 2. Copyright is intended to motivate creativity; 3. Copyright law makes reward to the owner a secondary consideration; 4. The public interest is served primarily by the limited duration of copyright; and 5. The public interest competes with the interests of individual authors.”

Reason or Madness: A Defense of Copyright’s Growing Pains

Link. Marc H. Greenberg, 7 John Marshall Review of Intellectual Property Law 1 (2007)

Greenberg takes on seven of the leading arguments against existing copyright law in this post-Eldred article.

a. Argument One: The expansion of copyright protection has been driven by media conglomerates, who have received from the legislature an allocation of entitlements, to the significant detriment of individuals and the public at large.

b. Argument Two: Copyright’s principal purpose is to provide economic benefits to owners—this property right should not trump the First Amendment rights of users.

c. Argument Three: Changes in the scope and term of copyright law since the 1970 Nimmer article, as well as the nature of digital technology and the greater ease achieved in copying content, render Nimmer’s immunity doctrine out of date and in need of change.

d. Argument Four: Since copyright deals with content, the law should be subject to a strict scrutiny analysis as to its impact on First Amendment rights, and under such scrutiny, it clearly violates the First Amendment rights of users.

e. Argument Five: Some form of compulsory licensing for all copyrighted works should be sufficient to address the concerns of owners, which after all are principally economic in nature.

f. Argument Six: Free speech rights include the right to use the words or other expression of another in expressing your own point of view.

g. Argument Seven: The idea/expression doctrine and the fair use doctrine have become too rife with uncertainty to afford meaningful protection to users

Copyright and Incomplete Historiographies – of Piracy, Propertization, and Thomas Jefferson

Link. Justin Hughes, 79 Southern California Law Review 993 (2006)

Meanwhile, Justin Hughes reaches back to the dawn of US copyright law to see how closely it matches the version of history frequently used by copyright scholars. He concludes that “historical claims frequently made in arguments about the propertization of copyright are incomplete,” and specifically focuses on three common examples: “the newness of the word ‘piracy,’ Thomas Jefferson’s views on intellectual property, and the history of the phrase ‘intellectual property.'” Hughes other work, which goes into more detail surrounding historical and other aspects of copyright law, is worth checking out.

Economists’ Topsy-Turvy View of Piracy

Link. Stan Liebowitz, 2 Review of Economic Research on Copyright Issues 5 (2005)

Recent scholarship on the effects of piracy have retreated from the traditional view that unauthorized copying always harms copyright holders. Liebowitz notes that in some situations, there is no harm — his own earlier work even demonstrated this. But the exceptions today have seemed to swallow the rule, resulting in economic literature on piracy that is “badly out of kilter” and tends to embrace views that are “more traditionally known as a breakdown in civilization.” Liebowitz uses this article to set the record straight and provide “a more balanced and nuanced view of copying.”

Remix Without Romance

Link. Thomas W. Joo, 44 Connecticut Law Review 415 (2011)

Joo devotes his article, featured previously on this site, to only two myths, but these are two myths that serve a central role in what could be called “free culture”, and thus deserving of thorough treatment. The first is that copyright law stifles “recoding and remixing” — Joo focuses specifically on the practice of digital sampling in music. The second is that if this were true, copyright law should adapt, because “by enabling more people to participate in culture, remixing and recoding supposedly enhance ‘semiotic democracy’ and mitigate the dominance of the media industry.” As Joo explains, if the goal is to facilitate “semiotic democracy,” than weakening copyright law to allow more remixing is the wrong way to reach that goal, since doing so would only tend to reinforce dominant cultural expression.

Constructing Copyright’s Mythology

Link. Thomas Nachbar, The Green Bag, Vol. 6 (2002)

Last, but not least, is the briefest article of the seven, and perhaps the most readable for non-lawyers. Written while Eldred v. Ashcroft was pending in the Supreme Court, Nachbar dismantles the historical claims made by those arguing in favor of striking down the Copyright Term Extension Act on constitutional grounds. He explains that these claims — for example, that copyright was designed solely as an incentive to create works, or that it was originally intended to limit the power of publishers — amount to little more than mythology. Nachbar concludes by noting the dangers of relying on such historical myths to shape copyright policy today.