March 29, 2013 · · Comments Off

Pick a side BUT don’t call it piracy… — There has been a lot of discussion swirling over the “artists vs. artists” billboard in Times Square this week. Ellen Seidler pins down one of the biggest problems with the promotion. “When artists choose to give their work away, they’re not choosing to support piracy, they’re choosing to offer their creations to the public at no cost.  It’s a distribution decision any artist is free to make, but please don’t call it piracy…”

Associated Press v. Meltwater: Associated Press Scores Significant Copyright Victory — Simon Pulman of Cowan DeBaets Abrahams & Sheppard does a great job analyzing last weeks Meltwater decision upholding the importance of journalism to a free society and the need for commercial services copying significant portions of news articles to seek proper licenses.

Google’s Bonfire of the Vanities: The Human Drones of Google Glass Coming to a Venue Near You — “It appears that Google has finally developed the means to monetize human conversation.” See also “Stop the Cyborgs” launches public campaign against Google Glass.

Copyright Hub gets £150,000 Government funding — 1709 Blog reports on this week’s announcement of the UK government’s funding of a one-stop online shop for licensing copyrighted works.

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The EFF is a non-profit group dedicated to advocating for electronic freedom, though at times that seems to entail supporting for-profit corporations that don’t want to pay license fees.1 The logic of connecting freedom to not paying suppliers escapes me, but it is not out of line with other arguments made by the group.

Case in point: one of the arguments made by the EFF in an amicus brief it filed last week in the Fox v. Aereokiller case currently in front of the 9th Circuit. Among other points, the EFF argues that Aerokiller should not be enjoined because of something Jack Valenti said 30 years ago.

Aereokiller, like any cable TV provider, retransmits broadcast television to subscribers for a fee. However, unlike cable TV providers that license television programming from copyright owners, Aereokiller has taken the position that it does not need a license. Aereokiller was sued in the Central District Court of California last year by several broadcasters. In December, the court granted a preliminary injunction against Aereokiller, holding that the service was functionally indistinguishable from cable television services. The decision was appealed to the 9th Circuit.

If all of this sounds vaguely familiar, it should. The facts and issues in Aereokiller (as well as the names of the defendants) are very similar to litigation on the other side of the U.S. involving similar service Aereo. There, the district court denied a preliminary injunction against Aereo, citing Second Circuit precedent in Cablevision, and that decision has been appealed and argued in front of the Second Circuit with a decision pending.2

In both Aereo and Aereokiller,3 the defendants argued that copyright law should not be technologically neutral. A cable service may need to license broadcast television to perform it for its subscribers, but if the cable service keeps adding antennas, it eventually reaches a point where it is exempt from copyright liability — and Aereo and Aereokiller both have tons of tiny antennas.4 Because of the similarities between the two cases, different outcomes in each of the Circuit courts could mean we’ll see the issue eventually end up in front of the Supreme Court.

But until then, the 9th Circuit has Aereokiller to review. And it is here that the EFF makes its case.

As noted above, the appeal arises from the grant of a preliminary injunction by the district court. To be awarded a preliminary injunction, the plaintiff in a lawsuit must demonstrate “(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.”5

In its response to the first factor, the EFF makes the claim that “The history of litigation against video and audio technologies counsels skepticism of plaintiffs’ irreparable harm claims.” Included in this history: “In 1982, the president of the Motion Picture Association of America famously compared the videocassette recorder to a serial killer.”6 Next, the EFF cites litigation by the RIAA (not a plaintiff here) and Paramount Pictures (also not a plaintiff). It points to statements made in amicus briefs in other cases by ASCAP (not a plaintiff), the American Society of Media Photographers (again, not a plaintiff), and the Progress and Freedom Foundation (not even a company involved in music or films). To support its contention that these statements are wrong, all the EFF can muster up is a report that digital music sales increased in 2011 and a 2009 article from the Economist about DVRs. The EFF concludes that “Given this history, the district court should have treated Appellees’ claims of irreparable harm with greater skepticism.”

Remarkable.

None of this actually speaks to the demonstration of irreparable harm that plaintiffs in this case made and the district court accepted. As the court had noted, Aereokiller’s infringement would cause harms not “easily calculable, nor easily compensable” by threatening “to damage Plaintiffs’ ability to negotiate favorable retransmission consent agreements with cable, satellite and telecommunications providers”, damaging Plaintiffs’ goodwill with their other licensees, competing “with Plaintiffs’ ability to develop their own internet distribution channels”, and harming “Plaintiffs’ position in their negotiations with advertisers.” Textbook irreparable harm.

On a broader note, the EFF’s argument is merely a variation on a common argument that has taken hold among the copyright skeptic set in the past 10-15 years. The idea is to mine past decades (and even centuries) for quotes from disparate sources about different issues and distill them down to a simplistic slogan: copyright owners hate innovation.7 The fallacy of this argument is facially evident, and it is more at home in propaganda than policy (or the court room).

Worse, it ignores the fact that, more often than not, copyright owners have presented legitimate concerns about new technologies exploiting their work without compensation, the law has adapted to address these concerns, and all involved have benefited. In 1906, John Philip Sousa testified to Congress about the need for record manufacturers to compensate songwriters when they recorded and sold their music. Congress responded by including mechanical reproduction among the exclusive rights in the 1909 Copyright Act.8 Record labels have done okay since then. When radio broadcasting was getting off the ground, songwriters sought compensation for the public performance of their works over the airwaves. Case law eventually settled the issue in favor of songwriters;9 AM/FM radio is still going strong nearly a century later. Television producers made the same argument about cable television when it appeared in the middle of the century. Congress provided that retransmission of broadcast television over cable is a public performance in the 1976 Copyright Act. Did cable television die? No, and in fact, today it is involved in the creation of some of the most exciting shows.10

Hopefully, the 9th Circuit recognizes the EFF’s argument for the silliness it is.

Footnotes

  1. See, for example, the EFF/PK amicus brief in AP v. Meltwater and the EFF/PK amicus brief in WNET v. Aereo. []
  2. ABC v. Aereo, 874 F.Supp. 2d 373 (SDNY 2012; see Aereo takes its tiny antennas to Opposite Town. []
  3. Both companies have since sued each other for trademark infringement, adding to the drama. []
  4. Aereo made use of 16 circuit boards with 80 antennas on each, Aereo at 379. The Aereokiller decision suggests that Aereokiller’s system is closely similar to Aereo’s. []
  5. eBay v. MercExchange, 547 US 388, 391 (2006). []
  6. It’s astounding the amount of play this single quote has gotten from copyright skeptics. And it’s telling that citing a 30 year old quote is the strongest argument the EFF can raise here. []
  7. I’ve previously discussed this in A Story of John and Jack and 100 Years of Copyright and Disruptive Technology. []
  8. Sec. 1(e). []
  9. See Jerome H. Remick & Co. v. American Automobile Accessories Co., 5 F. 2d 411 (6th Cir. 1925); M. Witmark & Sons v. L. Bamberger & Co., 291 F. 776 (D. NJ 1923). []
  10. See, for example, Breaking Bad, Mad Men, Louie, the Walking Dead, etc. []

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Today’s guest post comes from Copyhype contributor Devlin Hartline. Cross-posted on the Law Theories blog.

Love them or loathe them, notorious copyright enforcer Righthaven presents an interesting question of law: Does Righthaven, the assignee of a copyright plus the accrued causes of action, have standing to sue for past infringements if it grants back to its assignor, Stephens Media, an exclusive license to exploit the copyright? The district courts that have considered this question have all found that such an arrangement does not leave Righthaven with an ownership interest sufficient to have standing. I think they’re wrong.

Last month, Righthaven finally had its day before the Ninth Circuit when it participated in oral arguments in two of its appeals (audio available here).1 These appeals almost didn’t happen. Back in late 2011, a district court granted a motion to appoint a receiver made by one of Righthaven’s defendants, Wayne Hoehn. The court ordered Righthaven’s intellectual and tangible property to be assigned to the receiver so that it could be sold to partially satisfy Hoehn’s judgment against Righthaven. Despite the fact that the receivership was explicitly for this limited purpose,2 the receiver had more grandiose plans. When she found out that Righthaven CEO Steven Gibson was planning to appeal Hoehn’s victory, the receiver reported to the district court that she had taken over the company, fired Gibson, and fired the counsel Gibson had lined up to prosecute the appeal.

The receiver argued that, given Righthaven’s poor chances of success on appeal, it was in the best interests of the receivership to cease the appeals process. She also claimed, somewhat circularly, that since Righthaven no longer owned any of the copyrights that it had sued over, it had no standing to pursue its appeals before the Ninth Circuit.3 The very issue on appeal, of course, was whether Righthaven owned the copyrights and had standing to sue, and it is elementary that a party has standing to appeal a district court’s determination that it does not have standing to sue.4 Exercising her mandate that she thought gave her “broad, almost limitless equitable powers,” the receiver sought to have the court ratify her decision to torpedo the appeals. The district court rebuffed the receiver’s request, clarifying that the receivership was for the limited purpose of selling Righthaven’s assets—not for the purpose of firing Righthaven’s counsel and withdrawing its appeals.5

Having won that small victory in the district court, Righthaven’s fate is now being decided by a panel of the Ninth Circuit. The legal question presented on the standing issue is actually a rather straightforward and simple application of the law. Yet, I believe that every court that has so far addressed the issue has approached it in the wrong way. I think the blame lies mainly with Righthaven’s poor briefing of the somewhat metaphysical doctrine of copyright ownership, but I think the judiciary’s unfamiliarity with the issues has played a role as well. In this article, I’ll explain why I think the Righthaven standing issue is simple and why I think Righthaven has standing to sue for past infringements.

Silvers v. Sony

In the Ninth Circuit, where the Righthaven appeals are being prosecuted, the Silvers v. Sony case controls the standing analysis. In the district court, the plaintiff, Nancey Silvers, claimed that the defendant, Sony Pictures, had infringed the copyright in a television movie she had written on a work-for-hire basis with the production company Frank & Bob Films.6 Since Silvers had no ownership interest in the copyright by way of her work-for-hire contract,7 Frank & Bob Films assigned to her the accrued causes of action so that she could pursue the alleged infringement on her own. Sony argued that Silvers was not a “legal or beneficial owner” under the Act and thus had no standing to sue.8

Silvers, on the other hand, cited the copyright treatise Nimmer on Copyright which at the time provided that “the assignee of an accrued infringement cause of action has standing to sue without the need to join his assignor, even if the latter retains ownership of all other rights under the copyright.”9 The district court, citing Nimmer, the text of the Act, and public policy, sided with Silvers, holding that she had standing to sue even though owning only the accrued causes of action: “Where the cause of action has already accrued, though, the claim is akin to a vested right, and the Court sees no reason why a copyright holder, like any other property owner, would not have the ability to assign that right.”10

A few months later, the district court granted Sony’s motion for interlocutory appeal to the Ninth Circuit on the standing issue.11 There, the appellate panel noted that it was a matter of first impression in the circuit “whether an accrued cause of action for copyright infringement may be assigned to a third party, without any other copyright rights accompanying the assignment.”12 The panel echoed the reasoning of the district court below, citing Nimmer, the text of the Act, and public policy, to conclude that:

Nothing in the statute prohibits the legal or beneficial owner of the exclusive right under copyright from assigning an accrued cause of action for infringement of that right. Such an assignment is like assignment of any other chose in action under contract theory. Nothing in the language of the statute prohibits or restricts an assignee of an accrued infringement cause of action from bringing a copyright infringement action.13

Unhappy with its defeat before the district court and the appellate panel, Sony petitioned for and was granted a rehearing en banc.14 There, the en banc majority reversed the district court, holding instead that an assignee of accrued causes of action who has no other legal of beneficial ownership in the copyright has no standing to sue for past infringements.15

The majority started its analysis by noting that standing to sue in copyright, a creature of federal statute, is authorized by Section 501(b) of the Copyright Act which provides:

The legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it.16

The majority reasoned that, under the plain language of the statute, one must be a “legal or beneficial owner” of the exclusive right at issue in order to have standing to sue. The court deduced that since an accrued cause of action is not one of the listed rights in Section 106, its holder is not a “legal or beneficial owner” of the copyright unless she also has some other ownership interest in it. The majority went on to examine the legislative history of the Act, patent law, and opinions from other circuits to conclude that “[t]he bare assignment of an accrued cause of action is impermissible under 17 U.S.C. § 501(b). Because that is all Frank & Bob Films conveyed to Silvers, Silvers was not entitled to institute and may not maintain this action against Sony” for the alleged infringement.17

It should be noted that the majority did not see a problem with assigning an accrued cause of action, finding the practice to be consistent with the Copyright Act and its constitutional purpose. Moreover, the majority provided the rationale for allowing such transfers: “When one acquires a copyright that has been infringed, one is acquiring a copyright whose value has been impaired. Consequently, to receive maximum value for the impaired copyright, one must also convey the right to recover the value of the impairment by instituting a copyright action.”18 Thus, it was not the assignment of the accrued causes of action that posed a problem for the majority. The problem was, in the majority’s opinion, that such an assignee was not also a “legal or beneficial owner” entitled to institute an action under Section 501(b) of the Act.

Personally, I think the majority’s analysis is rather poor—while purporting to prevent a circuit split,19 the majority in fact only caused one.20 I’ll sketch out some of the basic problems with the decision here, but the topic is complicated and rightfully deserving of its own post. The majority was correct to note that an accrued cause of action is assignable. Such was the case under the 1909 Act as it is now under the 1976 Act. This comports with the common law view generally that an accrued cause of action for a property tort is itself a property interest that is freely assignable.21 The twist added to this general rule by the majority is that it read Section 501(b) as mandating that the accrued causes of action must be accompanied by an ownership interest in the copyright, else the holder is not a “legal or beneficial owner” with statutory standing to sue under the Copyright Act.

The majority misreads Section 501(b). On its face, the statute appears to say that an accrued cause of action is not assignable since it authorizes the “legal or beneficial owner . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it.” But, as the majority itself demonstrates, courts do not interpret it this way. Instead, the statute is read to mean that a cause of action accrues to whomever is the “legal or beneficial owner” at the time the cause of action accrues. Once the cause of action accrues to the “legal or beneficial owner,” it becomes a vested property interest that can be assigned to another, as the majority rightly concedes. What the majority misses is that such an assignee has standing to sue because he is a “legal or beneficial owner” of the underlying exclusive right, even if he is conveyed no other ownership interest in it.

There’s two different ways to look at this. The first is to realize that an assignee stands in the shoes of his assignor.22 The courts allow the assignee to take on his assignor’s position, so that if the assignor was the “legal or beneficial owner” at the time the cause of action accrued, the assignee steps into his shoes and can claim to have been such an owner as well. The second way to look at this is to recognize that an owner of an accrued cause of action is himself a “legal or beneficial owner” in his own right since an accrued cause of action is an in rem property interest in the underlying exclusive right. Not only can he claim his assignor’s ownership status as it relates back to when the cause of action accrued, he can claim his own ownership status for the purpose of standing.

This is demonstrated in the case law. The general rule is that, unless a copyright assignment expressly includes the accrued causes of action, an assignee of a copyright—even one who obtains otherwise full legal and equitable ownership—is not also transferred the accrued causes of action and does not have standing to sue for past infringements.23 Instead, the assignor, who no longer holds any other ownership interest in the copyright, is alone permitted to sue for past infringements.24 Under the majority’s logic, this should not be possible since it reasons that a party who holds only the accrued causes of action and no other ownership interest is not a “legal or beneficial owner” under Section 501(b). The majority conspicuously fails to address this point.

Nor does the majority address another wrinkle in the doctrine which provides that a copyright owner who otherwise parts with legal and equitable ownership of an exclusive right, while retaining the right to receive royalties from its future exploitation, has standing to sue for later occurring infringements of that right.25 Under the majority’s reasoning, since the right to receive royalties is not an enumerated right under Section 106, such a rightholder would not have standing to sue. But Congress clearly intended otherwise by explicitly providing in the legislative history of the Act that such a party would be a “beneficial owner” of the underlying exclusive right with standing to sue for its infringement.26 The simple explanation for this is that, like the holder of the accrued causes of action, the holder of the right to receive royalties has an in rem interest in the exclusive right that makes him the “legal or beneficial owner” of it.

While the majority was perhaps correct to note that Section 501(b) limits standing to sue to only a “legal or beneficial owner” of the underlying exclusive right, it somehow missed the jurisprudential gloss that such ownership may relate back in time to that of his assignor’s ownership, such as with an assignee of an accrued cause of action, or may include one who otherwise has no present legal or beneficial ownership interest, such as with an assignor of all legal and beneficial ownership who retains the accrued causes of action or retains the right to receive royalties. Thus, the question is not, as the majority perceived it, whether he currently controls the exploitation of the exclusive right. The question is whether he holds an in rem ownership interest in the exclusive right, whether via the “shoes” of his assignor or in his own right.

The majority’s reasoning makes other critical mistakes, such as misinterpreting the legislative history and misreading the case law from other circuits. But for better or for worse, Silvers is the law in the Ninth Circuit and a holder of an accrued cause of action has no standing to sue unless he also holds some other legal or beneficial ownership in the underlying exclusive right.

The Righthaven Assignment

It was against this legal backdrop that Righthaven and Stephens Media executed the contract that’s at issue here. The contract actually consists of two parts, a “Copyright Assignment” and a supplemental agreement militaristically dubbed the “Strategic Alliance Agreement” (“SAA”). The Copyright Assignment in relevant part provides:

Stephens Media hereby transfers, vests and assigns the work depicted in Exhibit A, attached hereto and incorporated herein by this reference (the “Work”), to Righthaven, subject to Stephens Media’s rights of reversion, all copyrights requisite to have Righthaven recognized as the copyright owner of the Work for purposes of Righthaven being able to claim ownership as well as the right to pursue past, present and future infringements of the copyright in and to the Work.

By itself, the Copyright Assignment conveys ownership of the underlying exclusive rights and the accrued causes of action to Righthaven, which under the majority opinion in Silvers would grant Righthaven standing to sue for past infringements. In fact, district courts that looked at only the Copyright Assignment had no trouble finding that it granted Righthaven standing to sue.27 Thus, it is with the addition of the SAA to the Copyright Assignment that the Righthaven standing issue arises.

The provision of the SAA which has received the most attention is Section 7.2, which in relevant part provides:

Despite any such Copyright Assignment, Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery.

Other sections of the SAA have received notice too, such as Section 5 which provides that Righthaven is to split recoveries minus costs with Stephens Media and Section 8 which provides Stephens Media with a reversionary right in the copyrights assigned to Righthaven, but Section 7.2 is the one that’s caused the most fuss.

The first serious blow to Righthaven came in the Democratic Underground case, wherein Chief Judge Roger Hunt noted that the SAA was “highly relevant to Righthaven’s standing in this and a multitude of other pending Righthaven cases.”28 In his opinion, the SAA “expressly denies Righthaven any rights . . . other than the bare right to bring and profit from copyright infringement actions.”29 He reasoned that under Section 7.2 of the SAA, Righthaven received no other ownership interest in the underlying exclusive rights: “The plain and simple effect of this section was to prevent Righthaven from obtaining, having, or otherwise exercising any right other than the mere right to sue as Stephens Media retained all other rights.”30

As to Righthaven’s argument that the SAA did not alter its standing under the clear import of the Copyright Agreement, Chief Judge Hunt quipped: “This conclusion is flagrantly false—to the point that the claim is disingenuous, if not outright deceitful. The entirety of the SAA was designed to prevent Righthaven from becoming an owner of any exclusive right in the copyright . . . .”31 He then held that under the majority opinion in Silvers, Righthaven, as the holder of only the accrued causes of action, did not have standing to sue: “In reality, Righthaven actually left the transaction with nothing more than a fabrication since a copyright owner cannot assign a bare right to sue after Silvers.”32

Six days after Chief Judge Hunt issued his seminal opinion in Democratic Underground, the district court in the Hoehn case followed suit, finding that the “carveouts” in the SAA “deprive Righthaven of any of the rights normally associated with ownership of an exclusive right necessary to bring suit for copyright infringement and leave Righthaven no rights except to pursue infringement actions . . . .”33 The day after that, Chief Judge Hunt issued an opinion in the DiBiase case, finding again that the SAA left Righthaven without “the exclusive rights necessary to maintain standing in a copyright infringement action,” and incorporating his opinion in Democratic Underground by reference.34 It is these opinions in the Hoehn and DiBiase cases that form the basis of Righthaven’s appeals before the Ninth Circuit.

Why Righthaven Has Standing

Much like the majority in Silvers failed to recognize that the holder of only the accrued causes of action is a “legal or beneficial owner” of the underlying exclusive right, so too have the district courts that have analyzed the Righthaven standing issue failed to recognize that Righthaven has an ownership interest in the underlying exclusive rights in addition to the accrued causes of action. As discussed above, the Copyright Assignment grants to Righthaven ownership of the underlying exclusive rights plus ownership of the accrued causes of action. The SAA supplements the Copyright Assignment, and it provides that “Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license” to exploit the exclusive rights and to keep the royalties to itself. The mistake made by the district courts is interpreting this simultaneous retention by (or license back to) Stephens Media as divesting Righthaven of whatever ownership interests in the underlying exclusive rights that the Copyright Assignment may have granted it.

The Copyright Assignment and SAA instead should be read as dismembering the ownership such that Righthaven became the legal owner and Stephens Media remained the beneficial owner of the underlying exclusive rights. The key to understanding the Righthaven standing issue is to recognize that legal ownership of an exclusive right can be held by one in trust for another who is a beneficial owner. In such a trust relationship, the legal owner holds legal title while the beneficial owner holds equitable title to the underlying exclusive rights.35 The Copyright Assignment and SAA simply transferred to Righthaven legal title to the underlying exclusive rights and the accrued causes of action, while Stephens Media retained or was simultaneously granted back—it matters not which way you look at it since both achieve the same result—the equitable title to the underlying exclusive rights.

The following table illustrates the legal and beneficial ownership interests held by Righthaven and Stephens Media before and after the Copyright Assignment and SAA:

righthaven_ownership

 

 

 

 

 

 

 

The whole point of the Copyright Assignment and SAA was to comply with the dictate in Silvers. Righthaven was not assigned only the accrued causes of action, but it was assigned legal title to the underlying exclusive rights as well. Thus, as the legal owner of the underlying exclusive rights and the accrued causes of action, Righthaven has standing to sue for past infringements under the rule declared by the Silvers majority. The very purpose of the Copyright Assignment and SAA was to give both legal title and the accrued causes of action to Righthaven while Stephens Media kept the equitable title for itself. The parties did exactly what Silvers said to do.

Contrary to Chief Judge Hunt’s quip that Righthaven’s representation about the SAA was “flagrantly false—to the point that the claim is disingenuous, if not outright deceitful,” I think Righthaven’s claim that the SAA did not affect its standing was correct. The reason is simple: The SAA did not divest Righthaven of the legal title or the accrued causes of action that it had been granted in the Copyright Assignment. To be sure, the SAA established in the underlying exclusive rights both in personam contractual rights and in rem property interests, but none of those equitable interests changed the fact that Righthaven still held its legal interests and the accrued causes of action.36

The district courts that have looked at the Righthaven standing issue have misconstrued the difference between an assignment, which typically transfers both legal and equitable title, and an exclusive license, which transfers only equitable title.37 The difference is critical. Courts are familiar with the concept of an exclusive licensee, and an entire body of federal common law has developed around this type of ownership interest. But antiquated concepts, such as the idea that an exclusive licensee holds equitable title, tend to get lost—though some remnants appear in the 1976 Act. For example, Section 301(a) preempts “all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 . . . .”38 This presupposes the existence of both legal and equitable rights in a copyright.

Another example is Section 501(b)’s provision that a “legal or beneficial owner” has standing to sue. Courts often indicate that both legal owners and exclusive licensees have standing under this section, but they don’t make the connection that the legal titleholder is the “legal owner” while the exclusive licensee, who holds equitable title, is the “beneficial owner.” Back before the merger of law and equity, whether one’s title was legal or equitable mattered significantly since only the legal owner could institute an action in a court of law. Equitable owners, such as an exclusive licensee, had to bring suit in a court of equity.39 The merger of law and equity did away with the procedural, but not the substantive, differences between the two.40 It was not until the 1976 Act that legal and equitable ownership interests were put on an equal footing for certain purposes, but—and this is crucial—they still remain distinct types of ownership interests.

The 1976 Act itself creates confusion over exactly what an exclusive license is. Section 101 provides:

A “transfer of copyright ownership” is an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright or of any of the exclusive rights comprised in a copyright, whether or not it is limited in time or place of effect, but not including a nonexclusive license.41

Thus, an assignment and an exclusive license are both a “transfer of copyright ownership.” What kind of ownership is transferred, the statute doesn’t say. The answer, developed in the case law that Section 101 merely ratified, is rather simple. Generally speaking, an assignment transfers legal and equitable title while an exclusive license transfers only equitable title. Both are a “transfer of copyright ownership,” as noted by Section 101, but the ownership interests transferred are different. Section 501(b) tells us this difference matters not in at least one significant way since both the “legal or beneficial owner” has standing to sue. The combined purpose of Sections 101 and 501(b) in the 1976 Act was to put an equitable titleholder, such as an exclusive licensee, on an equal footing with his licensor, the holder of legal title, for purposes of standing to sue. Much like the merger of law and equity had eliminated some of the procedural differences between legal and equitable ownership, the 1976 Act eradicated some of the substantive differences between the two as well.

That a licensor has a different type of ownership interest than his exclusive licensee was made clear in Gardner v. Nike,42 an opinion out of the Ninth Circuit from 2002. There, Nike had granted an exclusive license to Sony Music, and the issue was whether Sony Music could then transfer its exclusive license to Gardner. The district court held that an exclusive licensee could not transfer his ownership interest to another without his licensor’s permission, and the Ninth Circuit agreed. The appellate panel relied on Section 201(d)(2) of the Act which provides that the owner of any particular exclusive right is entitled “to all of the protection and remedies accorded to the copyright owner” under the Act.43 Thus, reasoned the court, an exclusive licensee is vested with only the same “protections and remedies,” but not the same rights, as his licensor. If an exclusive licensee actually had legal ownership of the underlying exclusive right, his ability to transfer his interest to another would not be so saddled. Gardner v. Nike proves that exclusive licensees are not legal owners—at least in the Ninth Circuit where Righthaven is prosecuting its appeals.

There’s another layer that’s worth a mention. While Section 301(a) sounds in the general common law of property by referring to “legal or equitable rights,” Section 501(b) sounds in the general common law of trusts by referring to a “legal or beneficial owner.” The analogy to trust law is deliberate, for it was noted long ago that the licensor-exclusive licensee relationship is just like that of a trustee-beneficiary, with one holding legal title in trust for the other who is an equitable or beneficial owner of the property.44 Trust law and copyright law have obviously gone their separate ways, but the analogy between the two remains and is at times instructive. It’s just not often that it’s mentioned anymore, much less so that it matters like it does here with Righthaven.

The analogy to trust law has not been totally lost, nor is it necessarily only an analogy, as demonstrated in the fifteen-year-old opinion in A. Brod, Inc. v. SK&I Co.45 penned by then-District Judge Sonia Sotomayor. The facts there, somewhat similar to Righthaven’s, were that one party had assigned to the other “the entire right, title, and interest” to a particular copyright for the purpose of litigation.46 The assignor, who wanted his copyright back, argued that the assignment really included only the legal title which his assignee held in trust for him as the equitable titleholder. The assignee denied the legal possibility of a trust, claiming that “trust-based rights in the copyright are preempted by the Copyright Act.”47 Judge Sotomayor did not agree:

[L]egal and equitable interest in a copyright may be held separately. As cases pre-dating the 1976 Copyright Act make clear, a copyright may constitute a proper trust res, with the trustee holding legal title to the copyright and the settlor retaining equitable title. The 1976 Copyright Act did not change this, but rather codified the notion that both the equitable, or “beneficial,” owner of a copyright and the legal owner have standing to sue for infringement.48

Judge Sotomayor went on to analyze the assignment under New York state trust law, looking at whether it created an express or constructive trust such that the trustee-assignee’s subsequent transfer of his interest to a third party was subject to the assignor’s equitable interest in the trust. I think the soundness of this approach is dubious, as federal common and statutory law trumps state law when it comes to copyright ownership. The problem with analyzing copyright ownership under state trust law is that then concepts such as a good faith purchaser for value get injected into what is otherwise a federal common law scheme. The en banc Federal Circuit has rejected such an approach with patents,49 and I think the same logic applies with equal force to copyrights. Copyright ownership issues should be decided applying federal copyright law which, while analogous to state trust law in some ways, is not the same thing.

So where does that leave us? Based on the oral arguments before the Ninth Circuit panel, things do not look good for Righthaven. One judge queried which party, Righthaven or Stephens Media, a prospective user of the copyright should approach for permission. Since it isn’t Righthaven, the judge implied, it means that Righthaven doesn’t really own the copyright and therefore does not have standing to sue. But this line of questioning misses the fact that there’s two types of ownership interests in a copyright, legal and equitable. A prospective user would contact the party who holds the equitable title to the exclusive right that he wishes permission to use since only that party controls the use of that right. But it should not be forgotten that legal ownership may reside in another—and that appears to be the case here with Righthaven.

Follow me on Twitter: @devlinhartline

Footnotes

  1. The Ninth Circuit joined two of Righthaven’s appeals for purposes of oral arguments: Righthaven v. Hoehn and Righthaven v. DiBiase. []
  2. The motion that was granted provides the following summary: “Defendant Wayne Hoehn (‘Hoehn’), through his attorneys, brings this motion seeking this Court to order the appointment of a receiver to which Plaintiff Righthaven LLC (‘Righthaven’) shall assign all of its intellectual property and other intangible property, which the receiver shall auction in order to partially satisfy Hoehn’s judgment and writ of execution entered against Righthaven. (Docs. # 44, 59)”; Hoehn also sought that “all objects, items, or other property belonging to Righthaven should be delivered to the Receiver for auction,” though it was “presumed that Righthaven owns little tangible property of material value.” []
  3. The receiver argued: “Moreover, as Righthaven no longer owns any of the copyright rights it originally sued Hoehn and others for infringing, it no longer possesses standing to pursue its claims before the Ninth Circuit Court of Appeals or any other Court. (Doc. # 90) This further affirms my view that the receivership estate’s best interests at this point are served by making the estate as productive as possible for its many creditors, and by terminating the existing appeals.” []
  4. See, e.g., In re Pittsburgh & L.E.R. Co. Sec. & Antitrust Litig., 543 F.2d 1058, 1064 (3d Cir. 1976) (“A party denied standing to sue, or to intervene, or to object, may obviously appeal such a determination. The question of standing does not go to whether or not the appeal should be heard, but rather to its merits.”). []
  5. Docket entry 117 provides in part: “The Court clarifies the scope of the Receivership and confirms the Receivership was for the limited purpose to dispose of assets to satisfy the judgment, not to fire counsel handling the appeal and not to take any other action regarding Righthaven’s appeal.” []
  6. See Silvers v. Sony Pictures Entm’t, Inc., Order Granting in Part and Denying in Part Defendant’s Motion to Dismiss, No. 00-cv-6386, 2001 WL 36127624 (C.D. Cal. Jan. 25, 2001). []
  7. See 17 U.S.C.A. 201(b) (West 2013) (“In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.”). []
  8. See 17 U.S.C.A. § 501(b) (West 2013) (“The legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it.”). []
  9. Silvers, 2001 WL 36127624 at *1 (quoting Nimmer on Copyright § 12.02[B]) (internal quotations omitted). []
  10. Id. at *2. []
  11. See Silvers v. Sony Pictures Entm’t, Inc., Order Granting Defendants’ Motion for Interlocutory Appeal, No. 00-cv-6386, 2001 WL 36127626 (C.D. Cal. Mar. 29, 2001). []
  12. Silvers v. Sony Pictures Entm’t, Inc., 330 F.3d 1204, 1206 (9th Cir. 2003). []
  13. Id. at 1208. []
  14. See Silvers v. Sony Pictures Entm’t, Inc., 370 F.3d 1252 (9th Cir. 2004). []
  15. See Silvers v. Sony Pictures Entm’t, Inc., 402 F.3d 881 (9th Cir. 2005). []
  16. 17 U.S.C.A. § 501(b) (West 2013). []
  17. Silvers, 402 F.3d at 890. []
  18. Id. at 890 n.1 []
  19. See id. (“[T]he creation of a circuit split would be particularly troublesome in the realm of copyright.”). []
  20. See Prather v. Neva Paperbacks, Inc., 410 F.2d 698 (5th Cir. 1969); Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d 27 (2d Cir. 1982); ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971 (2d Cir. 1991). []
  21. See, e.g., City of Cincinnati v. Hafer, 49 Ohio St. 60, 66 (1892) (“Mere personal torts die with the party, and are not assignable; but where the action is brought for damage to the estate, and not for injury to the person, personal feelings, or character, and the right of action survives to the personal representative, it may be assigned so as to pass an interest to the assignee.”); Comegys v. Vasse, 26 U.S. 193, 213 (1828) (“In general, it may be affirmed, that mere personal torts, which die with the party, and do not survive to his personal representative, are not capable of passing by assignment; and that vested rights ad rem and in re, possibilities coupled with an interest, and claims growing out of, and adhering to property, may pass by assignment.”); 6A C.J.S. Assignments § 43 (“A chose in action or claim, whether arising in tort or contract, is generally assignable, as a chose in action is personal property.”). []
  22. See, e.g., 6 Am. Jur. 2d Assignments § 134 (“Although an assignee acquires the rights of the assignor, including the right to enforce the assigned obligation, he or she does not sue in his or her own right, but stands in the shoes of the assignor.”); RTC Commercial Loan Trust 1995-NP1A v. Winthrop Mgmt., 923 F.Supp. 83, 88 (E.D. Va. 1996) (“[I]t is a fundamental maxim of common law that the assignee stands in the shoes of the assignor . . . .”). []
  23. See, e.g., ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991) (“Thus, a copyright owner can assign its copyright but, if the accrued causes of action are not expressly included in the assignment, the assignee will not be able to prosecute them.”); Giddings v. Vision House Prod., Inc., 584 F.Supp.2d 1222, 1229 (D. Ariz. 2008) (“Copyright assignments do not include accrued causes of action unless they are expressly included in the assignment.”); 3-12 Nimmer on Copyright § 12.02 (“[O]nly the grantor, not the grantee, has standing to sue for pre-grant infringement, even if the action is filed after the grant has been executed.”). []
  24. See, e.g., Skor-Mor Products, Inc. v. Sears, Roebuck & Co., 1982 WL 1264 (S.D.N.Y. May 12, 1982) (“Similarly, it is the assignor, not the assignee, who has standing to sue for infringing acts which occurred prior to the assignment of copyright.”); ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991) (“Rather, the assignee is only entitled to bring actions for infringements that were committed while it was the copyright owner and the assignor retains the right to bring actions accruing during its ownership of the right, even if the actions are brought subsequent to the assignment.”); M.J. Golden & Co. v. Pittsburgh Brewing Co., 137 F.Supp. 455, 457 (D. Pa. 1956) (“[E]ven though there has been a sale of the copyright this does not prevent the owner at the time of the alleged infringement from suing for previous damages it alleges to have sustained while it was the owner.”). []
  25. See, e.g., Cortner v. Israel, 732 F.2d 267, 271 (2d Cir. 1984) (“When a composer assigns copyright title to a publisher in exchange for the payment of royalties, an equitable trust relationship is established between the two parties which gives the composer standing to sue for infringement of that copyright. Otherwise the beneficial owner’s interest in the copyright could be diluted or lessened by a wrongdoer’s infringement.”) (internal citations omitted). []
  26. See H.R. Rep. No. 1476, 159 (“A ‘beneficial owner’ for this purpose would include, for example, an author who had parted with legal title to the copyright in exchange for percentage royalties based on sales or license fees.”). []
  27. See, e.g., Righthaven LLC v. Dr. Shezad Malik Law Firm P.C., No. 10-cv-0636, 2010 WL 3522372, *2 (D. Nev. Sept. 2, 2010) (Hunt, C.J.) (“Furthermore, the assignment in question (which Plaintiff has attached to its opposition) clearly assigns both the exclusive copyright ownership, together with accrued causes of action, i.e., infringements past, present and future. While Courts have denied standing to bring an action on an accrued claim where just the copyright is owned or just the cause of action has been assigned, where there is an assignment of both the copyright, and any accrued causes of action, the courts have held that the assignee of both can bring an action even for infringing activities which occurred before the assignment. Thus, in this instance, Plaintiff has standing to sue, even for an infringement which preceded the assignment, because that right was specifically assigned with the exclusive assignment of the copyright itself.”) (internal citations omitted). []
  28. Righthaven LLC v. Democratic Underground, LLC, 791 F.Supp.2d 968, 971 (D. Nev. 2011) (Hunt, C.J.). []
  29. Id. at 972. []
  30. Id. (italics in original). []
  31. Id. at 973 (italics in original; internal quotations omitted). []
  32. Id. []
  33. Righthaven, LLC v. Hoehn, 792 F.Supp.2d 1138, 1146 (D. Nev. 2011) (Pro, J.). []
  34. Righthaven, LLC v. DiBiase, No. 10-cv-01343, 2011 WL 2473531, *1 (D. Nev. June 22, 2011) (Hunt, C.J.). []
  35. See, e.g., Black v. Henry G. Allen Co., 42 F. 618, 621 (C.C.S.D.N.Y. 1890) ([T]here is no restriction upon the power of the proprietor to assign or transfer, in equity, an exclusive right to use the copyrighted book in a particular manner or for particular purposes upon such terms and conditions as may be agreed upon. In such case the legal title remains in the proprietor; and a beneficial interest, to the extent which is agreed upon, vests in the other party, who has acquired an equitable right in the copyright, and who will be properly styled an assignee of an equitable interest.”) (internal quotations omitted); Bisel v. Ladner, 1 F.2d 436 (3d Cir. 1924) (“The legal title to a copyright vests in the person in whose name the copyright is taken out. It may, however, be held by him in trust for the true owner . . . .”); Manning v. Miller Music Corp., 174 F.Supp. 192, 195 (S.D.N.Y. 1959) (“[T]he courts recognize that legal title to a copyright may be in one person and equitable title in another. Thus, one may be a ‘proprietor’ of a copyright if he holds legal title, though equitable title may be in another wither expressly or as trustee ex malificio.”) (internal citations omitted); Silverman v. Sunrise Pictures Corp., 273 F. 909, 914 (2d Cir. 1921) (“There is nothing in the nature of copyright forbidding a separation between the legal and equitable titles; one may hold in trust for others . . . .”); Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1578 n.3 (Fed. Cir. 1991) (discussing patents) (“Equitable title may be defined as the beneficial interest of one person whom equity regards as the real owner, although the legal title is vested in another.”) (internal quotations omitted); Matter of Southmark Corp., 49 F.3d 1111, 1117-18 (5th Cir. 1995) (“In a trust relationship, by contrast, the law actually divides the bundle of rights in the property; the trustee holds legal title while the beneficiary possesses an equitable title or property interest.”). []
  36. See, e.g., Marrone v. Washington Jockey Club of Dist. of Columbia, 227 U.S. 633, 636 (1913) (“A contract binds the person of the maker, but does not create an interest in the property that it may concern, unless it also operates as a conveyance.”); Matter of Southmark Corp., 49 F.3d 1111, 1117-18 (5th Cir. 1995) (“At the outset, it is important to distinguish generally between two types of ‘equitable interests.’ In a contractual (or debtor-creditor) relationship, the creditor may possess an ‘equitable claim’ to property actually owned by the debtor, but there is no division of ownership or title in the property at issue; the debtor is entirely free to dispose of the property as he sees fit. In a trust relationship, by contrast, the law actually divides the bundle of rights in the property; the trustee holds legal title while the beneficiary possesses an equitable title or property interest.”). []
  37. See, e.g., Presley’s Estate v. Russen, 513 F.Supp. 1339, 1350 (D.N.J. 1981) (“An assignment passes legal and equitable title to the property while a license is mere permission to use. Assignment is the transfer of the whole of the interest in the right while in a license the owner retains the legal ownership of the property.”). []
  38. 17 U.S.C.A. § 301(a) (West 2013) (“On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.”). []
  39. See, e.g., Ted Browne Music Co. v. Fowler, 290 F. 751, 753 (2d Cir. 1923) (“The owner of the equitable title is not a mere licensee [i.e., a nonexclusive licensee], and he may sue in equity, particularly where the owner of the legal title is an infringer, or one of the infringers, thus occupying a position hostile to the plaintiff.”); Cortner v. Israel, 732 F.2d 267, 271 (2d Cir. 1984) (“Prior to the adoption of the 1976 Copyright Act, 17 U.S.C. §§ 101, 501(b), the beneficial owner, in order to have standing to sue the infringer, was required to join the owner of the copyright as a defendant, alleging that the latter had refused after demand to sue.”); Buck v. Virgo, 22 F.Supp. 156, 157 (W.D.N.Y. 1938) (“The rights of a licensee under a copyright do not depend upon legal title. A licensee has no right to sue in his own name for infringement. The reason for the necessity of joining the owner of the copyright as plaintiff is that the owner has the legal title. This he holds in trust for the licensee.”) (internal citations omitted); Stephens v. Howells Sales Co., 16 F.2d 805, 806 (S.D.N.Y. 1926) (“[A] licensee cannot bring suit for infringement of the copyright under which he holds his license in his own name; this for the reason that the copyright is, technically speaking, indivisible, the legal title remaining in the licensor and the licensee having merely an equitable title.”). []
  40. See, e.g., Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 382 n.2 (1949) (“Notwithstanding the fusion of law and equity by the Rules of Civil Procedure, the substantive principles of Courts of Chancery remain unaffected.”); Railex Corp. v. Joseph Guss & Sons, Inc., 40 F.R.D. 119, 123 (D.D.C 1966) (“Initially, it should be mentioned that F.R.C.P. Rule 2 abolishes only the procedural distinctions but not the substantive distinctions between law and equity. The substantive distinctions between legal and equitable rights and remedies are still applicable in the Federal Courts, particularly with regard to the constitutional right to trial by jury ‘in suits at common law’ declared by the Seventh Amendment.”). []
  41. 17 U.S.C.A. § 101 (West 2013). []
  42. Gardner v. Nike, Inc., 279 F.3d 774 (9th Cir. 2002). []
  43. 17 U.S.C.A. § 201(d)(2) (West 2013) “Any of the exclusive rights comprised in a copyright, including any subdivision of any of the rights specified by section 106, may be transferred as provided by clause (1) and owned separately. The owner of any particular exclusive right is entitled, to the extent of that right, to all of the protection and remedies accorded to the copyright owner by this title.”). []
  44. See, e.g., Littlefield v. Perry, 88 U.S. 205, 223 (1874) (discussing patents) (“A court of equity looks to substance rather than form. When it has jurisdiction of parties it grants the appropriate relief without regard to whether they come as plaintiff or defendant. In this case the person who should have protected the plaintiff against all infringements has become himself the infringer. He held the legal title to his patent in trust for his licensees. He has been faithless to his trust, and courts of equity are always open for the redress of such a wrong. This wrong is an infringement.”); Indep. Wireless Tel. Co. v. Radio Corp. of Am., 269 U.S. 459, 468-69 (1926) (discussing patents) (“If the owner of a patent, being within the jurisdiction, refuses or is unable to join an exclusive licensee as coplaintiff, the licensee may make him a party defendant by process, and he will be lined up by the court in the party character which he should assume. . . . This would seem to be in accord with general equity practice. . . . A cestui que trust may make an unwilling trustee a defendant in a suit to protect the subject of the trust.”) (internal citations omitted). []
  45. A. Brod, Inc. v. SK&I Co., L.L.C., 998 F.Supp. 314 (S.D.N.Y. 1998). []
  46. Id. at 318. []
  47. Id. at 320. []
  48. Id. at 325 (internal citations omitted). []
  49. See Rhone Poulenc Agro, S.A. v. DeKalb Genetics Corp., 284 F.3d 1323, 1328 (Fed. Cir. 2002) (“In short, because of the importance of having a uniform national rule, we hold that the bona fide purchaser defense to patent infringement is a matter of federal law. Because such a federal rule implicates an issue of patent law, the law of this circuit governs the rule.”). []

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A lot of copyright news this week!

Supreme Court reverses in Kirtsaeng — First up, the Supreme Court released its decision in Kirtsaeng on Tuesday.

Copyright Act in the Digital Age — Next, the Register of Copyrights went to Congress to propose a general revision of the Copyright Act. Rob Levine wrote a fantastic preview of her testimony.

Worth the Wait: 9th Circuit Delivers Big Win for Creators in Isohunt Case — Then on Thursday, the 9th Circuit released its opinion in a case that seemed almost forgotten (Isohunt was argued nearly 2 years ago). The Copyright Alliance’s Alexandra Goldstein summarizes the decision, which seems to provide strong support for the common sense notion that those who intentionally profit off infringement don’t get a free pass just because they operate online instead of offline.

Meltwater loses again: the black knight rises — Finally, a NY district court ruled against a digital news clipper on copyright infringement. This is a fascinating case involving fair use and other issues in an online context. Dominic Young provides a good summary of the opinion here, but I may dig into the decision more in a stand alone post next week.

In other news…

Protect rights of artists in new copyright law — This week’s must-read is Sandra Aistar’s op-ed regarding the push for a general copyright revision. “Ensuring that all creators retain the freedom of choice in determining how their creative work is used, disseminated and monetized is vital to protecting freedom of expression.  Consent is at the heart of freedom, thus we must judge any proposed update by whether it prioritizes artists’ rights to have meaningful control over their creative work and livelihood.”

Mirror, Mirror…Why Does the Anti-Copyright Lobby Live in Opposite World? — Ellen Seidler provides some cutting insights. “The talking points echoed by the panel at SXSW reflected the anti-copyright lobby’s disingenuous mantra that content creators seeking to protect their work from theft should be viewed as criminals, while those who brazenly steal (and monetize) the work of others are somehow the ‘innovators.’”

A Step Closer to an Internet that Values Freedom of Expression, Freedom of Information, and the Freedom to Protect the Things We Create and Own — Chris Marcich of the MPAA comments on the recent European Court of Human Rights decision in the Pirate Bay case. “The Internet is a central part of our lives.  Citizens across the world, particularly young people, care about it passionately.  So do we.  We just want to ensure the Internet works for everyone.  We want an Internet where the creative property of artists and creators is protected along with the privacy and security of all users.  An Internet where the values society holds dear in the offline world, shape how we interact online.  And yes, these include freedom of expression, freedom of information and the freedom to protect the things we create and own.”

IFPI slams EU piracy study as ‘flawed and misleading’ — Recently, the EU released a study on piracy’s effects on digital music sales. The study’s conclusions were misreported the study itself suffers some serious flaws.

SXSW: David Lowery and Co. Lash out Against Industry ‘Pimps’ — Last week was the music portion of SXSW. Billboard takes a look at what may have been one of the best panels: David Lowery, Daryl Friedman, East Bay Ray, and Nakia discussing “Who’s Ripping Me Off Now?”

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Today, the Supreme Court released its decision in Kirtsaeng v. John Wiley & Sons, reversing the Second Circuit’s decision that held the first sale doctrine does not allow importation without the authorization of the copyright owner of copyrighted works manufactured and acquired outside of the U.S. Justice Breyer penned the 6-3 decision, with a concurrence by Kagan (joined by Alito) and a dissent by Ginsburg (joined by Kennedy and Scalia).

What’s interesting about this case, from an academic perspective, is that the amici arguments of both sides were not actually opposing. Both sides wanted different things that put them against each other only because of how three interrelated statutory provisions acted. Copyright owners who supported John Wiley wanted the ability to differentiate foreign markets that the importation provision of §602(a)(1) purported to protect. Those who supported Kirtsaeng, including libraries and resellers, wanted clarification that §109(a) prevented restraints on downstream sales and other disposition for goods manufactured outside the U.S. Taken separately, neither argument on its face contradicts the other. The conflict only occurs when the provisions, along with §106(3), are read together.

This suggests that there is a resolution to the outcome of this case that would be satisfactory to all parties. And fortunately, Justice Kagan shines a light on one possible way forward in her concurrence.

Kagan begins by noting that, even though she joins the majority opinion, she is concerned about the effect it has on the Copyright Act’s importation provisions, which are now limited “to a fairly esoteric set of applications.”

But if Congress views the shrinking of §602(a)(1) as a problem, it should recognize Quality King—not our decision today—as the culprit. Here, after all, we merely construe §109(a); Quality King is the decision holding that §109(a) limits §602(a)(1). Had we come out the opposite way in that case, §602(a)(1) would allow a copyright owner to restrict the importation of copies irrespective of the first-sale doctrine [Emphasis added].

How so? Kagan explains in a footnote that Quality King erroneously interpreted the statutory text to foreclose this outcome. A more “cogent” argument was provided by the Solicitor General in Quality King, who made the case “that §109(a) does not limit §602(a)(1) because the former authorizes owners only to ‘sell’ or ‘dispose’ of copies—not to import them: The Act’s first-sale provision and its importation ban thus regulate separate, non-overlapping spheres of conduct.”

This interpretation would result in a win-win. Kagan explains that it “would enable the copyright owner to divide international markets in the way John Wiley claims Congress intended when enacting §602(a)(1). But it would do so without imposing downstream liability on those who purchase and resell in the United States copies that happen to have been manu- factured abroad.”

In other words, that outcome would target unauthorized importers alone, and not the “libraries, used-book dealers, technology companies, consumer-goods retailers, and museums” with whom the Court today is rightly concerned. Assuming Congress adopted §602(a)(1) to permit market segmentation, I suspect that is how Congress thought the provision would work—not by removing first-sale protection from every copy manufactured abroad (as John Wiley urges us to do here), but by enabling the copyright holder to control imports even when the first-sale doctrine applies (as Quality King now prevents).

Kagan concludes by emphasizing that, “If Congress thinks copyright owners need greater power to restrict importation and thus divide markets, a ready solution is at hand—not the one John Wiley offers in this case, but the one the Court rejected in Quality King.” On a personal note, I find this argument compelling. Following oral arguments in Kirtsaeng last October, I even suggested the Supreme Court consider this very idea of overturning this portion of Quality King (as well as going into more detail about the argument Kagan makes here). Congress could restore the original purpose of §602(a)(1) without touching the first sale doctrine by making it clear that “importation” is not considered a sale or other disposition. This way forward would not only be elegant, but likely agreeable to both sides.

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Despite the “robust history” of treating copyright as property,1 “property talk” still makes some copyright skeptics nervous.

Most recently, calls for regressive copyright changes have tried to recast copyright protection as more like government regulation than property. In fact, in Copyright Unbalanced: From Incentive to Excess, released last November by the Mercatus Center, law professor Tom Bell appears to argue that this in and of itself is among the necessary changes to copyright law. One of his “Five Reforms for Copyright Law” is to “Reconceive ‘IP’ ['Intellectual Property'] as ‘Intellectual Privilege‘.” Forget about substance, the problem with copyright is semantics.

But too often, arguments against copyright as property are pushed through on shaky grounds. Recently, legal scholar Adam Mossoff responded to one common claim — one that states that “’traditional property rights in land’ is based in inductive, ground-up ‘common law court decisions,’ but that IP rights are top-down, artificial statutory entitlements.” A complete myth, says Mossoff. Traditional property rights in land were frequently throughout history created and extended through statute rather than common law courts.

I’d like to look at another common claim.

It’s just different

In Copyright Unbalanced, editor Jerry Brito begins his chapter by saying copyright is “a very different kind of property” than “traditional property.” In support of this claim, Brito points to the respective durations of each. As Brito explains, the “copyright clause allows Congress to establish copyrights for ‘limited times’ only. This means that unlike traditional property, copyrights must cease to belong to their owners at a certain point.”2 Brito is not alone in this argument; copyright skeptics have long made this argument. Lawrence Lessig, for example, perhaps the godfather of copyright skepticism, says in his 2006 book Code that the difference between copyright and what he calls “ordinary property” is recognized in the Constitution’s “limited times” language:

[N]ote the special temporality of this right: “for limited Times.” The Constitution does not allow Congress to grant authors and inventors permanent exclusive rights to their writings and discoveries, only limited rights… It does not give Congress the power to give them a perpetual “property” in their writings and discoveries, only an exclusive right over them for a limited time.

The Constitution’s protection for intellectual property then is fundamentally different from its protection of ordinary property.

But is it correct that copyright is fundamentally unlike “traditional” or “ordinary” property (whatever that is) because it has a cut-off date? Setting aside for now the fact that the Copyright Clause in the U.S. Constitution only applies to the United States — while every other country with copyright laws does limit its duration, I’m not aware that this limited duration is a constitutional requirement outside the U.S. Under Brito’s logic, it would apparently be easier to argue that copyright is property in, say, South Korea.3

Or is it?

If we consider property as a relationship between person and thing, than it should be easy to see that all property rights are limited in time. Until scientists discover a cure for death, property is limited in time to the life of its owner. After you die, you don’t own anything anymore; that specific relationship between person and thing is terminated. Who owns your property after you die is settled by — and this is important — positive law.

Because, if we’re talking about common law or natural law, as those who often advance such arguments are especially fond of talking about, the transfer of ownership upon death is far different. Nowadays, in very general terms, when you die, your property is disposed in the following manner: first, according to your will; next, if you have no will, then to your heirs according to the relevant state law; finally, if you have no heirs, then your property escheats to the state.

This is how William Blackstone explained the law in his Commentaries on the Laws of England. Said Blackstone:

The most universal and effectual way, of abandoning property, is by the death of the occupant; when, both the actual possession and intention of keeping possession ceasing, the property, which is founded upon such possession and intention, ought also to cease of course. For, naturally speaking, the instant a man ceases to be, he ceases to have any dominion: else, if he had a right to dispose of his acquisitions one moment beyond his life, he would also have a right to direct their disposal for a million of ages after him; which would be highly absurd and inconvenient. All property must therefore cease upon death, considering men as absolute individuals, and unconnected with civil society: for then, by the principles before established, the next immediate occupant would acquire a right in all that the deceased possessed.4

The “permanence” of property developed later, through civil law; first, through the right of inheritance, and later through the right to dispose of property through testament. Blackstone is clear: heirs had no natural right to inherit their parents’ property, and property owners had no natural right to “direct the succession of his property after his own decease.” Under natural law, all property lasts for “limited times”, becoming common property (part of the public domain) upon the death of the possessor. It is only through “the positive law of society” that a stable system of inheritance is created.

Blackstone’s Commentaries were hugely influential when they were published, referred to heavily by the drafters of the U.S. Constitution. While the bulk of public mentions of copyright during that time referred to it as property or literary property, I’m not aware of any explicit discussion of the “limited times” language in the Constitution and how it relates to copyright as property from the drafters.

However, there are roughly contemporary accounts of copyright that do recognize that its “limited times” do not take it outside the scope of “property.” In 1831, Congressman Gulian Verplanck delivered an address on literary property following the passing of the Copyright Act of 1831 — the first major general revision to U.S. copyright law. Verplanck argued that copyright was equivalent to other forms of property, how the “right of property in the productions of intellectual labour was as much founded in natural justice as the right of property in the productions of corporeal labour.” Said Verplanck:

Such too was the doctrine of the framers of our own constitution, as I maintained was quite evident from the peculiarity of their language on this point. They had not used any word, which would imply that they thought “to give rights to authors and inventors” but had authorized congress “to promote the progress of science and the useful arts by securing to authors or inventors the exclusive rights to their writings or inventions.” They clearly did not think they were enabling congress to give these rights, but presuming them to exist, they provided for protecting them by a legal remedy. The limitation of the term of legal exclusive enjoyment and protection was indeed the effect of positive law. But this limitation was precisely of the same nature with the terms of prescription of property and limitation of actions in all legal systems, which may be longer or shorter according to views of public policy, the natural and moral rights of property remaining unchanged [Emphasis added].5

Far from representing a fundamental break from “normal” property, the U.S. Constitution’s “limited times” language for copyrights remains consonant with how property has been conceived over centuries.

Footnotes

  1. Justin Hughes, Copyright and Incomplete Historiographies: Of Piracy, Propertization, and Thomas Jefferson79 Southern California Law Review 993, 1004 (2006). []
  2. Why Conservatives and Libertarians Should be Skeptical of Congress’s Copyright Regime, Copyright Unbalanced: From Incentive to Excess, ch. 1 (Mercatus Center 2012). []
  3. Or, more interestingly, if, but for 17 U.S.C. § 301, copyright would be considered property in a state but not the federal government. Prior to that section, which went into effect in 1978 and preempts any state laws that provide protections equivalent to those under the U.S. Copyright Act, a dual system of federal and state copyright existed. Goldstein v. California, 412 US 546, 560 (1973). []
  4. Book 2, Chapter 1. []
  5. Discourses and addresses on subjects of American history, arts, and literature, pg. 221 (1833). []

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Explanation of Megaupload Study (or: Econometrics 101) — Brett Danaher, who, along with Michael D. Smith, co-authored the recent study showing the shut down of Megaupload caused a 6-10% rise in digital film sales, explains the study’s methodology in plain English. A thoroughly useful article that should be pointed to by those who criticize the work (apparently without reading the study). As Danaher notes, “The most common critique in comments on blogs and news articles is that ‘sales were increasing anyway because of (digital growth) (new digital channels) (blockbusters released in January) (insert your favorite reason you think sales would have grown here).’ I suppose people think that as economists we would not have thought of this.”

Unlocking Cell Phones Shouldn’t Dismantle Copyright Laws — I have an article over at IP Watchdog this week about recent developments regarding the petition to reverse the decision not to grant a DMCA exemption for unlocking cell phones. Proponents behind the petition are set to get exactly what they asked for but are now complaining that it’s not enough.

Meet the men who spy on women through their webcams — One of the creepiest articles I’ve read in recent memory. Made worse by the fact (not noted in this article until the last page) that the same technology has begun to be used by repressive governments to spy on dissidents.

Derek Khanna & Co. Continue Attack on Artists Rights at SXSWi Panel — The Trichordist reports on another unbalanced panel about copyright, this one at SXSW. Panelists, including Cheezburger CEO Ben Huh, were advocating “permissionless innovation” — that weird new tech buzzword that ignores the fact that things like “permission” and “consent” and “agreement” are at the foundation of any free society. But the ultimate irony, as Tricordist points out, is that for many features of the Cheezburger network of sites, like its API, one can use them only after getting, well, permission.

Word ‘Innovate’ Said 650,000 Times At SXSW So Far — Speaking of SXSW and buzzwords, the Onion nails it.

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Last year, various individuals connected with the Pirate Bay reacted strongly to the refusal of the Swedish Supreme Court to hear their appeal in a copyright case against them. Peter Sunde exclaimed that the site, one of the most notorious and unapologetic facilitators of infringement in recent memory, “has been one of the most important movements in Sweden for freedom of speech” and those involved in running the site “have been mentioned as possible winners of the nobel peace prize.”

However, yesterday a unanimous chamber at the European Court of Human Rights held that the massive infringement the site enabled justified any interference with the site founders’ free expression rights. The Court, in fact, said that the founders’ appeal on free speech grounds was “manifestly ill-founded.”

Peter Sunde, of Finland, and Frederik Neij, of Sweden, were charged in 2008 with complicity to commit crimes in violation of Sweden’s Copyright Act for their role in operating the Pirate Bay. The District Court found both guilty in April 2009 and handed down a sentence that included prison time and fines. Both appealed the decision, and though the verdict was upheld, the appellate court reduced Neij’s sentence. This decision, in turn, was appealed to Sweden’s Supreme Court. The Court refused to hear the appeal in February 2012.

And so, Sunde and Neij appealed to the European Court of Human Rights, a supra-national court that has jurisdiction to hear cases where a violation of human rights, as defined by the European Convention on Human Rights, by a member nation are alleged. The Court issued its decision in Neij and Sunde Kolmisoppi v. Sweden (application no. 40397/12) yesterday.

The Pirate Bay founders claimed that their convictions interfered with their right to free expression. That right is enshrined in Article 10 of the European Convention on Human Rights, which states:

1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This Article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises.

2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.

At the outset, the Court did conclude that the Pirate Bay founders’ actions taken to run the site were an exercise of their right to free expression, and the subsequent conviction did interfere with that right. But that is only the beginning of the Court’s inquiry. It next turned to a three-pronged question: (1) was the interference prescribed by law, (2) was there a legitimate aim to the interference, and (3) was the interference a “necessity in a democratic society.” The first two parts of this question were easy to answer. The convictions were based on Sweden’s Copyright Act and Penal Code, and were in pursuit of the legitimate aim of protecting plaintiff’s copyright — i.e., protecting the rights of others and preventing crime.

The final prong, perhaps unsurprisingly, generated the most discussion. As the Court said, “The test of whether an interference was necessary in a democratic society cannot be applied in absolute terms. On the contrary, the Court must take into account various factors, such as the nature of the competing interests involved and the degree to which those interests require protection in the circumstances of the case. In the present case, the Court is called upon to weigh, on the one hand, the interest of the applicants to facilitate the sharing of the information in question and, on the other, the interest in protecting the rights of the copyright-holders.”

How the Court characterized the interests of copyright-holders is, in my opinion, the most striking part of the decision. The Court stressed “that intellectual property benefits from the protection afforded by Article 1 of Protocol No. 1″ to the European Convention on Human Rights. This article states:

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

That is, under the European Court on Human Rights, intellectual property rights are treated as property rights. This wasn’t a new holding; the Court cited to a 2007 case that agreed that intellectual property “incontestably” enjoys the same protections as personal and real property under the Convention.1

The Court’s case law is consistent with the conception of copyright and free speech in the U.S. that I have previously suggested accounts for their unquestioned co-existence from the founding of the country and nearly two centuries afterward. Copyright was considered property. Remedies to protect property were generally not seen as infringing freedom of speech. Just as the First Amendment does not typically trump trespass law, it does not typically trump copyright law.2 This conception has, of course, been assailed in recent decades by the academy3 and certain civil society groups (and, lately, from a subset of libertarians) — all of which likely helped convinced the Pirate Bay founders that they had a case here.

Not only are intellectual property rights treated as property rights, but, as the Court reiterates, States have an affirmative duty to protect them. That means in certain cases, it is sometimes appropriate to have criminal enforcement in addition to civil enforcement. The Court concluded that this was one such case. It said the Swedish government had “weighty reasons for the restriction of the applicants’ freedom of expression [Emphasis added].”

This, along with the Court’s holding that “the prison sentence and award of damages cannot be regarded as disproportionate”, led to its ultimate conclusion that the interference the Pirate Bay founders’ conviction caused with their free expression rights was ”necessary in a democratic society.”

Footnotes

  1. Anheuser-Busch v. Portugal [GC], no. 73049/01, § 47, ECHR 2007‑I. []
  2. For a modern take on this comparison between copyright, the First Amendment, and trespass, see Lillian BeVier, Copyright, Trespass and the First Amendment: An Institutional Perspective, 21 Soc. Phil. & Pol’y 104 (2004). []
  3. For a lengthy yet nonexhaustive list, see this footnote from Copyright and Censorship. []

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Innovation and Piracy — The Wall Street Journal had an excellent article early this week that took a behind-the-scenes look at NBCUniversal’s efforts to minimize the effects of piracy. The piece also discussed Wolfe Video’s experience with piracy. Wolfe is a small, independent distributor of LGBT films and has seen sales drop in the face of piracy despite worldwide distribution on all major platforms and assertive anti-piracy efforts. Here, Sandra Aistars notes, “What’s more, Wolfe serves the LGBT market for films. Beyond entertaining audiences, Wolfe brings realistic and meaningful films to an otherwise underserved community.  When companies like Wolfe who serve niche audiences, are affected by piracy it threatens entire communities. Poor (legal) distribution prospects not only threaten distributors like Wolfe, but adversely impact financing for the film projects to begin with.  Films are not made without financing, so piracy literally threatens to silence the voices of entire communities.”

To Save Everything, Click Here: How to Vanquish Technological Defeatism — Evgeny Morozov has been making the rounds to promote his new book, To Save Everything, Click Here: The Folly of Technological Solutionism, and based on this excerpt in Slate and previous ones, the book has moved to the front of my to-read pile. The book is not about copyright, yet Morozov’s broader critique of “The Internet” (as opposed to just the internet) remains relevant since the same worldview is often shared by those who advance anti-copyright arguments.

Input/Output Podcast: David Lowery and the Future of Artists’ Rights — I’ve been a regular reader of Trust Me I’m a Scientist for a while now, and I was pleasantly surprised to see this podcast with Camper Van Beethoven’s David Lowery pop up this week. Lowery touches on everything from his letter to Emily White to Pandora in this wide-ranging, free-wheeling 45 minute discussion.

Annual Frey Lecture in Intellectual Property 2013 — Duke Law School held its annual Frey Lecture this week, with RIAA Chairman and CEO Cary Sherman. Sherman admits that the RIAA does, in fact, kill kittens, and if you think he is not joking than I recommend watching this video even more.

Please Help Me Welcome Our Newest Writer, Helienne Lindvall… — Songwriter and music journalist Lindvall joins the crew at Digital Music News.

The Fallacy of “Incremental Revenue” Part 1 — Chris Castle tells an engaging (and cautionary) tale about “special markets” in the music biz. Looking forward to part 2.

The Curious Case of Cell Phone Unlocking and Copyright — Finally, over at the Copyright Alliance’s Idea/Expression blog this week, I wrote about the White House’s response to a petition to make cell phone unlocking legal, why this is a copyright issue, and why the Library of Congress plays a role.

 

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The majority of academic literature has found that piracy has a negative impact on movie and music revenues.1 This is accepted by all but a few filesharing denialists. The big question is, what does this mean for copyright policy? Because it’s one thing to establish that online piracy reduces sales, it’s another to figure out what to do about it.

And there has been no shortage of those whose answer to what to do about piracy is: nothing. Or, rather, authors and creative industries need to learn how to “compete with free”, piracy enforcement doesn’t work.2 A litany of justifications for this have arisen over the past decade and a half, but generally, the idea seems to be that most unauthorized downloading or streaming of media comes from individuals who would not have paid in the first place. Thus, while anti-piracy efforts might reduce piracy, they won’t increase sales. Right?

Wrong, according to a growing body of empirical research. Last year, a group of researchers found that HADOPI, France’s recent graduated response program, led to a 20-25% increase in music sales in that country.3 And in 2011, researchers concluded that physical music sales increased 27% and digital music sales increased 48% in Sweden following copyright protection reform that increased the risks of unauthorized downloading.4

This week, Brett Danaher and Michael Smith, working at the Initiative for Digital Entertainment Analytics (IDEA) at Carnegie-Mellon University, have released another study looking at this question. The study, Gone in 60 Seconds: The Impact of the Megaupload Shutdown on Movie Sales, found that digital movie revenues from online sales and rentals increased by 6-10% following the January 2012 shutdown of the popular cyberlocker site (Megaupload execs, including Kim Dotcom, are of course currently facing criminal charges in the U.S. for copyright infringement).

The abstract says:

The growth of Internet-based piracy has led to a wide-ranging debate over how copyright policy should be enforced in the digital era. While some enforcement approaches involve policies designed to deter consumers from filesharing though incentives or penalties, other approaches target the supply of piracy by shutting down Internet sites that serve as major conduits for pirated content. In this paper we analyze how one such anti-piracy intervention, the shutdown of the popular Megaupload site, affected the digital sales of movies for two major studios.

Simply examining changes in sales after the shutdown would produce an inaccurate measure of its actual effect as sales are changing over time for a variety of reasons. Instead we exploit cross-country variation in pre-shutdown usage of Megaupload as a measure of treatment intensity. Controlling for country-specific trends and the Christmas holiday, we find no statistical relationship between Megaupload penetration and changes in digital sales prior to the shutdown. However, we find a statistically significant positive relationship between a country’s Megaupload penetration and its sales change after the shutdown, such that for each additional 1% pre-shutdown Megaupload penetration, the post-shutdown sales unit change was 2.5% to 3.8% higher, suggesting that these increases are a causal effect of the shutdown.

Aggregating these increases, our analysis across 12 countries suggests that, in the 18 weeks following the shutdown, digital revenues for these two studio’s movies were 6-10% higher than they would have been if not for the shutdown. Thus our findings show that the closing of a major online piracy site can increase digital media sales, and by extension we provide evidence that Internet movie piracy displaces digital film sales.

As the paper notes, not only does this research add to the empirical studies on this subject mentioned above, but it makes a couple new contributions. For one, Danaher and Smith note that this is the first paper to look at “supply-side” enforcement. The previous studies focused on “demand-side” enforcement — both the French and Swedish laws studied policed individual downloaders. Each has its pros and cons, its costs and benefits, but it seems to me that the trend in the U.S. and many other countries is to move away from demand-side enforcement and toward supply-side enforcement. For another, this is the first paper to measure digital movie sales. Both physical and digital sales of music have been measured numerous times since the late 90s, as well as DVD sales and box office receipts, but until now there has been no data on digital movie sales and rentals.

Perhaps most interestingly, Danaher and Smith were able to show that the shutdown of Megaupload did not just correlate with the subsequent increase in digital film revenues but actually caused it. Filesharing denialists are quick to discredit the numerous studies showing negative effects of piracy on sales by spouting that “correlation does not imply causation”, but by looking at the data country-by-country and comparing sales with Megaupload’s penetration rate in each country, the researchers were able to conclude that the shutdown “caused some customers to shift from cyberlocker-based piracy to purchasing or renting through legal digital channels.”

Also interesting is the discussion from Danaher and Smith at the end of the blog post announcing the study. The authors say, “While some have argued that you can’t compete with free, we think a more productive view is that competing with free (pirated) content is just a special case of price competition.” They note that convenience is sometimes more important that prices to consumers and explain that “we would expect that some consumers would be willing to buy through legitimate channels if content in those channels is more valuable than the ‘free’ pirated alternative.” But then they apply the results of their study to this line of thinking:

[W]e believe that another key part of competing with free piracy can be making content on illegal channels less valuable to consumers. In this regard, our finding of a 6-10% increase in digital movie revenue suggests that even though shutting down Megaupload didn’t stop all piracy, it was successful in making piracy sufficiently less reliable, less easy-to-use, and less convenient than it was before, and some consumers were willing to switch from piracy to legal channels as a result.

Taken this way, one might say that enforcing against piracy is necessary to ensure a vibrant, functional marketplace for expressive works online (though this alone is not sufficient). That’s not to say that the goal must be the complete elimination of piracy (that has never been the reality), nor is it to say that there is not a point where the costs of enforcement (monetary or otherwise) overtake the benefits. Efforts to mitigate piracy also do not need to be limited to law enforcement efforts or new legislation. They can include voluntary, market-based solutions aimed at education, like the Copyright Alert System that began operations on Monday, or reducing financial support of infringing sites, like the Statement of Best Practices to Address Online Piracy and Counterfeiting adopted last year by the Association of National Advertisers and American Association of Advertising Agencies.

But simply ignoring online infringement, and the harm it causes creators of all levels, forestalls the development of that vibrant marketplace and impedes the progress of the arts and sciences.

Footnotes

  1. See Smith & Telang, Assessing the Academic Literature Regarding the Impact of Media Piracy on Sales (Aug. 19, 2012), “Based on our review of the empirical literature we conclude that, while some papers in the literature find no evidence of harm, the vast majority of the literature (particularly the literature published in top peer reviewed journals) finds evidence that piracy harms media sales.” []
  2. See, for example, Joe Karaganis, Media Piracy in Emerging Economies (SSRC 2011). Note that this report’s conclusion, that “After a decade of ramped up enforcement, the authors can find no impact on the overall supply of pirated goods,” does not contradict the findings of the study discussed here. Even if true, it would seem that supply of pirated goods is a meaningless metric, especially where, as here, the goods are capable of infinite reproduction. []
  3. Danaher, Smith, Telang, and Chen, The Effect of Graduated Response Anti-Piracy Laws on Music Sales: Evidence from an Event Study in France, Journal of Industrial Economics (forthcoming). []
  4. Liang & Adermon, Piracy, Music, and Movies: A Natural Experiment, Working Paper, Uppsala University, Uppsala, Sweden (2011). []

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