Aereo files emergancy motion on remand arguing it’s a cable provider entitled to Section 111 compulsory license — via Shades of Gray‘s Naomi Gray comes the just-filed memorandum of law from Aereo in support of its argument that, despite two years strenuously claiming otherwise, it is, actually, a cable provider. But only under the Copyright Act, where it can get the benefit of a below market rate compulsory license for transmitting copyrighted works, not under FCC regulations, which would subject it to retransmission consent and a host of other obligations.

Space Creators: Building the Guardians of the Galaxy — The Credits takes a closer look at some of the craftspeople involved in producing the big-screen version of Guardians of the Galaxy, opening in theaters today.

Copyright.gov — Did you see the redesigned web site for the US Copyright Office yet? Looks pretty sharp!

Ultra Records Responds to Michelle Phan & Kaskade Copyright Controversy — “When a music artist or songwriter signs to Ultra, it is our responsibility to protect what they have created. Enforcing copyrights is fundamental to the survival of artists, writers and producers, and to Ultra’s ability to continue to invest in and support them, so that they can continue to bring great music to music fans around the world. Whatever Ultra collects enforcing these important rights is shared with its artists according to their agreements.”

Should there be a system for resolving small copyright claims? — A look at last week’s House Judiciary IP Subcommittee’s hearings on copyright remedies and the question of whether Congress should create an expedited process for resolving copyright disputes involving low dollar amounts. Last year, the US Copyright Office released a report recommending just that.

We’re All Waiting, BitTorrent — “Funny how some technology companies like BitTorrent are always extolling the unlimited power of technology – except when it can be used to help creators by preventing the unauthorized distribution of their creative content.”

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This past week, a DVD quality copy of Expendables 3 leaked onto online pirate sites, weeks before its August 15 box office debut. Along with the news came the usual claims that filmmakers shouldn’t worry about pre-release piracy—it’s good promotion, says David Pierce at the Verge, and internet commenters offer scores of other rationalizations.

But over at the Technology Policy Institute Blog, researcher Michael W. Smith says the unauthorized pre-release copy will likely hurt box office revenues for the film. He and his colleagues studied the effect of pre-release movie piracy on box office revenue and found that, on average, it “results in a 19% reduction in box office revenue relative to what would have occurred if piracy were only available after the movie’s release.”

Smith’s study is the first peer-reviewed journal article to look at this particular form of piracy. It was recently accepted for publication in the Information Systems Research journal, but a pre-publication draft is available at SSRN.

The study casts doubts on claims that pre-release piracy has no impact on theatrical revenue or even has a beneficial effect by generating buzz. On the contrary, Smith finds that “pre-release piracy significantly reduces a movie’s expected box office revenue and that this impact is stronger earlier in a movie’s lifecycle than in later periods.”

Smith concludes the report by noting some of its limitations. It doesn’t look at the intensity of pre-release pirating, nor at the quality of the unauthorized copies, data which may provide additional insights. It also does not consider the effect of pre-release piracy on different types of films, nor does it examine the effects on revenue streams besides the box office, such as DVD sales.

These last two limitations are particularly worth further research. Most films—particularly indie and niche films—don’t ever screen in theaters, and even among those films that do, box office revenue is only a part of overall revenues.

While Smith’s study is the first peer-reviewed article to look specifically at pre-release piracy and its effects, it is not the first to look at the effects of other forms of piracy on films. In fact, in his article, Smith notes that eight peer-reviewed studies so far have looked at the effect of piracy on film sales, and, more significantly, seven of the eight studies have found “that piracy results in significant harm to motion picture sales.” A broader literature review – focusing not solely on films but on other types of works such as recorded music – found that “The vast majority of papers which have been published in peer-reviewed academic journals — papers spanning a variety of methods, time periods, and contexts — find that piracy causes a statistically significant decrease in sales.”

And yet some measure of file-sharing denialism persists. It, first, runs counter to common sense—yes, if people can get something for free they’ll buy less, and if people buy less of something, less of it will be produced. But it also, as seen above, is not supported by the overwhelming majority of empirical evidence.

In ‘The Expendables 3’ Torrent and the Techno-Utopian Delusion, Indiewire writer Sam Adams sees through this denialism, or, as he calls it, “sheer self-justifying delusion.” In doing so, he touches on a larger point.

Adams notes that some of the rationalization for downloading The Expendables 3 is based on the idea that it is not a movie but a show, one in which the experience of watching in the theater takes precedence (and thus justifies watching an illegitimate, lower-quality version). Because of this, he cautions:

And when you’re paying for the experience — not out of curiosity or as a way of supporting an ecosystem that allows the creation of new work — it only makes sense to sample the product beforehand. But in so doing, you’re pushing cinema in a direction where every movie has to be a show: Either it’s big and loud enough to make you feel like you’re missing out by watching it (legally or illegally) at home or it might as well not show up to play.

CNET’s Nick Statt raises similar concerns:

We often complain about “sequelitis” and the onslaught of low-quality, brainless action movies and series reboots, yet don’t ever seem to take responsibility for the fact that our collective unwillingness to pay for things that don’t have formulaic payout is what drives creative decision making.

In the current model, everything from “Boyhood” and “12 Years A Slave” to “Zero Dark Thirty” and “Gravity” are more harmed by systemic piracy because it devalues films as an art form. Risks are not rewarded when the only movie with a concrete return on its investment is a $200 million narrative train wreck about robot cars or a tongue-and-cheek ensemble action flick featuring Rocky, the former governor of California, and Han Solo.

I enjoy such films, as do millions of others. But it would be a shame if that was all we got to see. The ultimate point is that piracy has societal effects beyond any given film’s bottom line.

In Copyright Extremophiles: Do Creative Industries Thrive or Just Survive in China’s High-Piracy Environment?1 published earlier this year, Eric Priest digs into some of these less obvious effects of piracy in more detail. The claim is sometimes made that maybe copyright—the legal foundation that provides exchange value for creative works—is irrelevant since creativity still exists in areas, such as China, where piracy runs rampant. Priest refutes this by comparing creators in high-piracy areas to biological organisms known as extremophiles.

Just as microorganisms have evolved to thrive in superheated deep-sea vents or highly acidic environments, so too can a subset of creative professionals find ways to monetize their works even in a high-piracy environment. The fact that some monetization models can work for some types of producers or artists in China does not mean that optimal or even near-optimal conditions exist for the development of flourishing, healthy, and stable creative industries. In short, poor copyright enforcement inflicts significant and persistent harms on China’s music and film industries. To invoke the extremophiles analogy, China’s inhospitable creative industry environment may support narrow strains of creative “life,” but with an effective regime of copyright norms and enforcement, China’s creative ecosystem could more closely resemble a lush, diverse rain-forest.

Priest’s research unpacks some of the more pernicious results that piracy has on China’s film and music industries. Along with undermining the ability of a professional class of creators to sustain their livelihoods, high piracy has made these industries “neither robust nor stable” and lead them to become “hyper-dependent on a single revenue stream” (box office for films and ringback tones for music). Priest concludes:

This lack of revenue stream diversity distorts and undermines the creative ecosystem in at least three ways. First, the scarcity of monetization options creates a winner-take-all market dominated by big producers. The paucity of other revenue sources seriously undermines financial support for smaller, independent producers.

Second, rampant piracy and concentration of revenue streams distorts market signals to producers. For example, film producers are incentivized to invest in a relatively narrow range of works that attract the audience whose tastes are most easily monetized – young, urban cinemagoers. Music producers likely are incentivized to produce music that will make the most marketable ringtones.

Third, and perhaps most importantly, reduced revenue stream diversity disproportionately exposes producers to the whims of peculiar markets and exploitation by gatekeeper or monopsonist intermediaries. China’s music industry proves an especially vivid example, as ringback tones gross more than $4 billion annually, but the mobile operators who control ringback tone distribution keep more than ninety-eight percent of that revenue for themselves. The meager two percent that goes to copyright owners amounts to ninety percent of those copyright owners’ total income from recorded music. So if ringtones lose their appeal with consumers, the recording industry will collapse. Without other viable revenue streams to leverage, musicians, producers, and record labels have little choice but to grin and bear it while a state telecommunications monopoly enjoys the great bulk of the rewards of their artistic efforts.

It seems difficult to make a more compelling case for copyright. How creators and the film industry responds to pre-release and other forms of piracy is a wholly separate topic, but the fact remains that any type of piracy has a significant negative effect on revenues as well as the stability and vitality of creative and cultural industries. If we want to maintain robust and independent creativity, we should not be so quick to treat copyright as expendable.

Footnotes

  1. 27 Harvard Journal of Law & Technology 469 (2014). []

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Garrett Brown: An Interview with a Visionary-Part 1 — Nick Friedman speaks with Garrett Brown, a cinematographer and inventor of the Steadicam, an innovation which, in the words of Stanley Kubrick (who famously used it in The Shining) “would revolutionize the way films are shot.”

Great Photos, Little Cash: The Problem of “Small Claims” in Copyright — Coinciding with the House Judiciary IP Subcommittee’s hearing on copyright remedies, attorney Tara Aaron highlights a recent default judgment against a website that had allegedly infringed a photographer’s copyrights. Though the court awarded the photographer statutory damages and attorney fees, because the award of attorney fees was limited by local rules, the photographer still ended up short. It’s a good case study for the need for a “small claims” procedure.

“Notice & Notice” does Not Contribute to a Balanced Copyright System — A comparison between the US notice-and-takedown system and Canada’s new notice-and-notice system and why the first is better for creators.

Disney’s corporate synergy, 1957 and today — Screenwriter John August shares an interesting chart from 1957 showing how “the various elements of the Walt Disney company fit together.” This holds true still today. “The company makes money in many ways, but feature films are still the key drivers. You don’t get Cars merchandise without the movie. The success of Frozen is an example of how Disney can capitalize on a hit film by using it in other divisions: Disneyland attractions, TV tie-ins (Once Upon a Time), music, books, merchandise, and possibly a Broadway musical.”

Report on the responses to the Public Consultation on the Review of the EU Copyright Rules — Like the US, the European Union is currently in the process of reviewing its copyright laws. Here is the result of a public consultation process that concluded earlier this year, generating nearly 10,000 responses. “The consultation covered a broad range of issues, identified in the Commission communication on content in the digital single market , i.e.: ‘territoriality in the Internal Market, harmonisation, limitations and exceptions to copyright in the digital age; fragmentation of the EU copyright market; and how to improve the effectiveness and efficiency of enforcement while underpinning its legitimacy in the wider context of copyright reform’.”

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“Fifteen years of utter bollocks”: how a generation’s freeloading has starved creativity — A great essay from author Chris Ruen, whose excellent book Freeloading: How our insatiable appetite for free content is starving creativity has recently been released in the UK. “Any desperate excuse was good enough, so long as it justified the original campaign. Otherwise, the people who fought against copyright in this battle would have to confront the fact that they were never carrying the flag for freedom or ‘openness’, but for aggression, entitlement and selfishness masked by superficial delusions of grandeur.”

5 Major Publications that Cover Copyright Well — From Jonathan Bailey at PlagiarismToday, a nice list of mainstream news sources with above average copyright coverage.

Aereo Hits Roadblock in Effort to Become Cable System — Back in the District Court following the Supreme Court’s remand, Aereo pursued a new line of argument: that it is a cable system, and thus entitled to carry broadcast programming under the Copyright Act’s Section 111 compulsory license. This week, the Copyright Office rejected that argument (though it provisionally accepted the application until the court rules on the issue). Aereo still has the option of bringing the question to the FCC, but that would subject it to a host of regulations, including the need to negotiate retransmission consent with the broadcasters.

DMCA’s protection of copyright management information applied to non-electronic works — Evan Brown provides a heads-up on a recent decision involving § 1202, a lesser known section of the DMCA that prohibits the removal or alteration of “copyright management information.” The question here was whether that provision applies “only to electronic works intended for distribution over the internet, or whether it applies to more traditional works such as hard copy technical drawings.” The court here chose the latter.

Fishman on Creating Around Copyright — “It is generally understood that the copyright system constrains downstream creators by limiting their ability to use protected works in follow-on expression. Those who view the promotion of creativity as copyright’s mission usually consider this constraint to be a necessary evil at best and an unnecessary one at worst. This conventional wisdom rests on the seemingly intuitive premise that more creative choice will deliver more creativity. Yet that premise is belied by both the history of the arts and contemporary psychological research on the creative process. In fact, creativity flourishes best not under complete freedom, but rather under a moderate amount of restriction.”

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Today, the House Judiciary Committee Subcommittee on Courts, Intellectual Property, and the Internet is continuing its comprehensive review of US copyright law with a hearing on moral rights, termination rights, resale royalty, and copyright term.

Perhaps no other feature of copyright law is so widely criticized as its term — to the point where the declaration that “copyright lasts too long!” seemingly needs no further support.

But perhaps no other copyright doctrine is also subject to as much misinformation as the term of copyright. It’s not difficult to find those who are absolutely convinced copyright term will be extended within the next several years, because this is part of an indisputable pattern of extending copyright term every 20 years.1 These and similar assertions evaporate under the slightest scrutiny. Therefore, before we can have a useful discussion on the length of copyright protection, it’s necessary to look at how the current term of copyright protection evolved in the US and how that compares to copyright protection in other countries.

The genesis of copyright law

The journey begins in England with the Statute of Anne. Passed in 1710, the Act is considered the first modern copyright law, vesting exclusive rights to reprint books to any and all authors. The Act also limited the exclusive rights to a term of fourteen years, with an option to renew protection for an additional fourteen years. At the end of this period, the exclusive rights expired, allowing anybody besides the author or publisher to print and reprint the work. This length was borrowed from the term for protection of letters patent that the earlier Statute of Monopolies established in 1624.2 And that term was, according to one scholar, “based on the idea that 2 sets of apprentices should, in 7 years each, be trained in the new techniques” that were protected under such letters patent.3

The United States was the second country to adopt a general copyright law. In 1790, Congress passed a Copyright Act that borrowed extensively from the Statute of Anne, including the “14 + 14″ year term.4 The law was passed with only the most cursory of discussion in the legislature, so the importation of Britain’s act almost word for word was likely driven by expedience more than anything else.

The third modern copyright law came out of France, itself also emerging from a revolution, and it diverged from Britain and the US in terms of duration. In 1793, only three years after the first US Copyright Act was passed, the French National Convention passed a decree providing for copyright protection lasting the life of the author plus ten years.5 (Thomas Paine, who “counted copyright agitation among his many other revolutionary interests”, was a member of the legislature that passed the French act).6

The shift to a life-based term

England would follow France and adopt a term based on the life of the author shortly after the 19th century rolled around. In 1814, the term of protection was extended to the life of the author or 28 years, whichever was longer.7 In 1842, England extended the copyright term to the life of the author plus seven years, or forty-two years, whichever was longer.8

The US did not follow suit to a life of the author based term, though it did bump up the initial term of protection to 28 years in 1831 (the renewal period remained at 14 years).9 And thus, despite being the second nation to provide for general copyright protection, it would fall behind international norms for the majority of its history. During the 19th century, many countries with copyright laws moved toward a “life plus” duration. One 19th century treatise provides this catalog:

Sweden, formerly perpetual, now for life and fifty years, no registration; Denmark, for life and thirty years, no registration or deposit; Switzerland, for life or thirty years; Russia, for life and fifty years, registration but not deposit being required, with complicated provisions as to new editions; Turkey, for forty years, or twenty for translations; Greece, for fifteen years, subject to royal extension; Mexico, which has perpetual literary copyright, registration and deposit being obligatory; Venezuela, for life and fourteen years, or deposit and registration; Chili, for life and five years; Brazil, for life and ten years ; Japan, for thirty years, with extension to forty-five.10

France would be one of the first countries to settle on life of the author plus 50 years, adopting that term in 1866.11 Several other European countries would follow suit toward the latter half of the 19th century.

In 1887, the following countries adopted the Berne Convention, the world’s first multilateral international agreement on copyright: Australia, Belgium, Canada, France, Germany, Haiti, India, Italy, Liberia, Monaco, New Zealand, Spain, Sweden, Switzerland, Tunisia and the United Kingdom. The agreement set minimum standards for copyright protection that agreeing parties must extend to works of authors from member states. The original text did not address duration of protection, but that would soon change.12

The US effort to join the international community

At the turn of the 20th century, US lawmakers looked to revise the copyright law. At that time, R.R. Bowker of the American Copyright League pointed out:

A copyright term extending through and beyond the life of the author has been adopted by thirty-seven countries, or more than half of those which have copyright laws, while five others give perpetual copyright; the term of life and fifty years is adopted by France and fourteen other nations, and although life and thirty years is proposed in Lord Herschel’s British draft, life and fifty years has also been proposed as an alternative in England.

An early version of a US revision bill in 1906 proposed a term of life of the author plus fifty years.13 The proposal was ultimately dropped in favor of the existing convention of a set term with an optional renewal term, as this was seen as more favorable to authors. The renewal term, however, was extended to match the initial term of 28 years.14

The Berne Convention, which was gradually adding new member parties, had set a voluntary minimum term of life of the author plus 50 years in 1908. England adopted this term in 1911, which extended to its Commonwealth Countries — Australia, Canada, India, New Zealand, etc.15 Other countries would slowly but surely follow suit, and Berne made the term mandatory in 1948. The decades following the US enactment of the 1909 Act saw a number of unsuccessful efforts to join Berne, hampered in part by two World Wars and a Great Depression. Bills introduced in 1924, 1925, 1926, 1930, and 1940 called for a term of life of the author plus 50 years; advocates for this term also voiced their views at hearings on other bills during this timeframe.16

But it would not be until 1955 that the US began in earnest the process that would lead to the 1976 Copyright Act, the current law. In that year, Congress appropriated funds to the US Copyright Office to engage in a series of studies on issues relating to copyright revision. One study covered the duration of copyright and noted that by this point over half of all countries with copyright laws protected a work for life of the author plus 50 years.

In this group are Australia, Austria, Belgium, Canada, Chile, Costa Rica, Czechoslovakia, Denmark, Ecuador, Finland, France, Germany, Great Britain, Greece, Guatemala, Hungary, Iceland, Eire, Italy, Lebanon, Luxembourg, Monaco, Netherlands, New Zealand, Norway, Paraguay, Switzerland, Syria, Turkey, Union of South Africa, and Vatican.

Some countries had longer post-life terms and some had shorter; however, by the 1950s, the US stood alone with the Phillippine Islands in diverging from a “life plus” copyright term.

By 1965, a general revision bill included a term of life of the author plus 50 years. But revision efforts stalled, primarily due to stark disagreements over a number of unresolved issues such as library photocopying and community antenna television providers.17 Congress was concerned about the inequities that would fall upon authors because of a bogged-down legislative process, so during this time period, it passed a series of nine interim extensions to copyright duration.18 (Lawrence Lessig counts each of these nine interim extensions when he makes his famous claim that Congress extended copyright term 11 times since 1962 and also defines this series of interim extensions preceding the general revision as “a practice that has defined copyright law since).19 The revision finally passed in 1976, going into effect in 1978, over a century since France adopted a life plus 50 term and decades after most every other country had followed suit.20

But the US continued to lag behind. In 1965, for example, Germany adopted a term of life of the author plus seventy years.

The shift to “life plus 70″

A 1971 guide from WIPO on the Berne Convention, which then consisted of over 60 member parties, explained the justification of a life plus fifty term:

By computing the term of protection from the date of the author’s death, the Convention binds the work to its creator. Honest men can differ on how long this should be: some feel it should be for ever since the nature of the work of the mind remains, throughout the ages, a reflection of the character of its creator. Like a fine piece of furniture, it gives pleasure to generation upon generation. But the particular nature of intellectual property, resulting in a need, in the interests of the public at large, for it to be made known without let or hindrance for the enrichment of culture, suggest some limit on the duration of the monopoly enjoyed by authors and their heirs in the exploitation of their works.

It is not merely by chance that fifty years was chosen. Most countries have felt it fair and right that the average lifetime of an author and his direct descendants should be covered, i.e., three generations.

In 1993, the Council of European Communities, finding that “the minimum term of protection laid down by the Berne Convention, namely the life of the author and 50 years after his death, was intended to provide protection for the author and the first two generations of his descendants; whereas the average lifespan in the Community has grown longer, to the point where this term is no longer sufficient to cover two generations”, directed its Member States which hadn’t already granted the term to adopt a “life plus seventy” copyright duration.21 The U.S., narrowing the lag behind international norms, adopted a term of life plus seventy in 1997,22 citing a need to harmonize protection with its global trading partners.23

Today, 167 countries are Member Parties of the Berne Convention and provide for a minimum of life of the author plus fifty years. Over 65 of these countries provide for life of the author plus seventy years, while an additional seven provide greater length.24

How long should copyright last?

One can argue over the “optimal” length of copyright protection—a discussion beyond the scope of this already lengthy article—but one can’t assert after surveying this history that, for example, Congress extends copyright every time Disney’s Steamboat Willie is about to enter the public domain.25

Copyright duration is a hot topic. But it is also a bit of a red herring. Creators’ main concern is lack of effective protection now, so the length of protection is somewhat a moot point. And issues raised by user communities are only tangentially related to duration, meaning any changes to term would only result in marginal differences to the real issues.

Footnotes

  1. See, for example, Timothy B. Lee, “15 years ago, Congress kept Mickey Mouse out of the public domain. Will they do it again?“, The Switch (Oct. 25, 2013); Jeff John Roberts, “Will copyright be extended 20 more years? An old debate returns“, GigaOM (Aug. 20, 2013); Eugene Volokh, “Copyright Extension Prediction?“, Volokh Conspiracy (Aug. 19, 2013). []
  2. Ronan Deazley, ‘Commentary on the Statute of Monopolies 1624‘, in Primary Sources on Copyright (1450-1900) (eds L. Bently & M. Kretschmer, 2008). []
  3. Fritz Machlup, “An Economic Review of the Patent System”, pg 5, Study of the Subcommittee on Patents, Trademarks, and Copyrights of the Committee on the Judiciary, United States Senate, United States Printing Office, Washington: 1958. []
  4. See Oren Bracha, The Adventures of the Statute of Anne in the Land of Unlimited Possibilities: The Life of a Legal Transplant, 25 Berkeley Technology Law Journal 1427 (2010). []
  5. French Literary and Artistic Property Act, Paris (1793), Primary Sources on Copyright (1450-1900), eds L. Bently & M. Kretschmer, www.copyrighthistory.org. []
  6. William Patry, Copyright Law and Practice, Chapter 1 (BNA 2000). []
  7. Copyright Act, London (1814), Primary Sources on Copyright (1450-1900), eds L. Bently & M. Kretschmer. []
  8. Copyright Law Amendment Act, 1842, 5 & 6 Vict., c.45. []
  9. Copyright Act of 1831, 4 Stat. 436. []
  10. R.R. Bowker, Copyright, Its Law and Its Literature, pg. 24 (1886). []
  11. Walter Arthur Copinger, The Law of Copyright in Works of Literature and Art, pg. 238 (1870). []
  12. It did, however, set a minimum term of protection for translations. Around this time, it became common to provide different terms of protection depending on subject matter (such as one term for literary works and a different term for sculptures or phonographs) as well as different terms depending on authorship (for example, different terms for anonymous authors or corporate authors. For simplicity purposes, I will subsequently refer only to the term of a natural author of a literary work when I discuss copyright duration. []
  13. S. 6330 and H.R. 19853, Section 18(c), 59th Congress, 1st Session. []
  14. Copyright Act of 1909. []
  15. Copyright Act of 1911. []
  16. James J. Guinan, Jr., Duration of Copyright, Copyright Law Revision Study No. 30, Copyright Office (1957). []
  17. See William Patry, Copyright Law and Practice, Chapter 1 (BNA 2000). []
  18. Scott M. Martin, The Mythology of the Public Domain: Exploring the Myths Behind Attacks on the Duration of Copyright Protection, 36 Loyola L.A. Law Review 253, 260-61 (2002). []
  19. Free Culture, pg. 134. []
  20. Copyright Act of 1976, 90 Stat. 2541. []
  21. Council Directive 93/98, 1993 O.J. (L 290/9). []
  22. Copyright Term Extension Act, 112 Stat. 2827. []
  23. Senate Report No. 104-315, 104th Cong., 2d Sess (1996). []
  24. Wikipedia, List of countries’ copyright lengths, visited July 14, 2014. []
  25. In his recent book, Intellectual Privilege, Tom Bell spends considerable effort—including illustrations—to imply a correlation between US copyright term length and the entry of Steamboat Willie into the public domain before dismissing it by saying, “No one can, of course, say with certainty whether or to what degree lobbying by the Walt Disney Company drove those copyright extensions.” []

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Is Silicon Valley Funding the Wrong Stuff? — Eye-opening: “Consider this. The entire market for advertising is around $100 billion a year in the U.S. (Globally it’s close to $500 billion.) Yet the nation’s gross domestic product is more than $16 trillion. That means every venture-backed startup chasing advertising revenue is going after just 0.6% of the economy. Put in employment terms, the ad-related economy employs just a few million people, versus 140 million Americans whose job it is to do everything else. Still, the pursuit of advertising dollars includes about every startup that is going for scale first and says it will figure out how to ‘monetize’ its users ‘once it has the eyeballs.’”

Number of Statehouse Reporters Is in Decline, Study Shows — “The nation’s statehouses lost more than one-third of the journalists devoted to covering legislative matters full time, according to a study released on Thursday morning by the Journalism Project at the Pew Research Center.” Potato salad Kickstarter coverage remains unchanged.

Under Tariff 8, Barenaked Ladies would need 9,216 plays of “If I Had $1,000,000″ to earn enough royalties to buy one box of Kraft Dinner — A recent decision by the Copyright Board of Canada has set one of the worst royalty rates in the world for music streaming.

Taking on Amazon — If you haven’t checked out Scott Timberg’s blog CultureCrash, I highly recommend it. A great blog that covers issues relating to the sustainability of creative individuals and industries. Here he reports on several items related to Amazon and its dealings with authors and publishers.

A Notice of Author Obviation — “Dear Content Creator, We are happy to announce that our recent efforts in fiction generation have been successful, and we are now able to feed the entirety of any individual writer’s output into our computer and procedurally generate new works using a combination of Markov chains and random syntax sampling. A regular expression-based pattern matching system then determines which sentences are most similar in style to ones you would have personally constructed, and arranges them in terms of plot development (or what passes for plot in your novels). In essence, we have rendered you obsolete.”

Copyrights are more than just federal “privileges” — As Tom Sydnor explains, copyright “alone creates a system for producing expressive works that lets private creators and investors make the risky, long-term investments of financial and human capital needed to produce expressive works designed to inspire or entertain large numbers of private, ordinary citizens – rather than works designed to indulge the preferences of Tenure Committees, rich philanthropists, or government bureaucrats.”

From Google to Amazon: EU goes to war against power of US digital giants — “Google’s earnings from search have drained advertising spending from European newspapers, magazines and radio stations. Piracy, facilitated by search engines and broadband, has hit revenues for record labels hard. Bookshops and electronics stores have disappeared from high streets as sales migrate to Amazon and even Apple’s bricks and mortar retail outlets. Europe’s mobile phone networks, once considered global technology pioneers, have handed fortunes to Apple and South Korea’s Samsung in subsidies for mobile phone handsets. The sense of injustice has been reinforced by revelations about tax. Amazon, Google and Apple have found ways to reduce their corporation tax payments on international revenues to single-digit percentages of profits. Now fear has been added to the mix, with Edward Snowden’s revelations about digital surveillance.”

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Biscuit the Democat, by Eric Hart. Posted with permission.

It may with propriety be remarked, that in all countries where literature is protected, and it never can flourish where it is not, the works of an author are his legal property; and to treat letters in any other light than this, is to banish them from the country, or strangle them in the birth.

Thomas Paine, 1792.

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On Monday, I looked at the majority’s opinion in American Broadcasting Companies v. Aereo, which held that the online television provider performed to the public under the Copyright Act. Today, I want to take a closer look at the dissent.

The dissent’s argument begins with the assertion, relying on a copyright treatise, that “The Networks’ claim is governed by a simple but profoundly important rule: A defendant may be held directly liable only if it has engaged in volitional conduct that violates the Act.” It then states that “This requirement is firmly grounded in the Act’s text, which defines ‘perform’ in active, affirmative terms: One ‘perform[s]’ a copyrighted ‘audiovisual work,’ such as a movie or news broadcast, by ‘show[ing] its images in any sequence’ or ‘mak[ing] the sounds accompanying it audible.’” Already, the soundness of the dissent’s argument is on shaky ground, as there is nothing necessarily “active” about the making of sounds of a broadcast audible.1

But there’s a bigger problem with how the dissent defines perform, a definition which shapes its entire analysis of the issue: it is incorrect as a textual matter.

Statutory Interpretation

Examining the meaning of a word in a statute with the context of the whole act is a fundamental principle.

The meaning of terms on the statute books ought to be determined, not on the basis of which meaning can be shown to have been understood by a larger handful of the Members of Congress; but rather on the basis of which meaning is (1) most in accord with context and ordinary usage, and thus most likely to have been understood by the whole Congress which voted on the words of the statute (not to mention the citizens subject to it), and (2) most compatible with the surrounding body of law into which the provision must be integrated — a compatibility which, by a benign fiction, we assume Congress always has in mind.2

Obviously, the assumption is even stronger when we are talking not about provisions adopted at separate times but provisions enacted at the same time.

Along with this rule, the Supreme Court has called it “a cardinal principle of statutory construction” that statutes should be interpreted in a way that prevents any clause or provision from being rendered superfluous.3

If we take heed of these canons, we can see that the majority in Aereo had the better interpretation of “perform.”

To begin with, it may not matter how active or affirmative Section 101 of the Copyright Act defines the act of performing, since the language of Section 106 establishes infringement in broader terms. It is only partially correct that Section 106 provides copyright owners the right to perform works publicly. Section 106 actually provides that “the owner of copyright under this title has the exclusive rights to do and to authorize” any of the enumerated acts such as public performance. (Emphasis added). The “and to authorize” language confirms that the exclusive domain of the copyright owner can be encroached by conduct beyond “active, affirmative” acts.

The Exceptions that Prove the Rule

The text of Section 111 supplies further support. Section 111(a) creates exceptions from copyright infringement for certain secondary transmissions of primary (broadcast) transmissions. One of these, Section 111(a)(3), exempts a carrier from liability “who has no direct or indirect control over the content or selection of the primary transmission or over the particular recipients of the secondary transmission, and whose activities with respect to the secondary transmission consist solely of providing wires, cables, or other communications channels for the use of others.” I don’t see how one can come up with a more passive system than this. The statutory text here also undermines the dissent’s argument that the key issue in determining who is directly liable is who selects the content since this exception applies only to carriers who do not select the content.

The exception in Section 111(a)(1) is even more clear. That provision declares that a transmission is not infringement if “the secondary transmission is not made by a cable system, and consists entirely of the relaying, by the management of a hotel, apartment house, or similar establishment, of signals transmitted by a broadcast station licensed by the Federal Communications Commission, within the local service area of such station, to the private lodgings of guests or residents of such establishment, and no direct charge is made to see or hear the secondary transmission.” Save for the fact that Aereo was charging for its transmission, this sounds a lot like how it characterized its service when it argued that it was not performing: “do[ing] no more than supply[ing] equipment that ‘emulate[s] the operation of a home antenna.’” Yet if that does not constitute performing under the Copyright Act, there would be no need for the 111(a)(1) exception.

The dissent’s misstep is reminiscent of the 1892 Supreme Court decision in Church of the Holy Trinity v. United States, which decided that a federal statute that referred to “labor” only applied to manual labor and not “professional” services. Not only is this distinction not found in the text of the statute, it also “renders the exceptions for actors, artists, lecturers, and singers utterly inexplicable.”4 Similarly, the Copyright Act’s specific exceptions for two passive activities would be “utterly inexplicable” under the dissent’s definition of “perform.” If Congress did not mean to include such conduct within the definition of “perform”, it would not have needed to create these exceptions.

In sum, the dissent’s interpretation of “perform” in the Copyright Act does not hold up when we interpret the term within the context of the whole act.

Footnotes

  1. The dissent also asserts that “Every Court of Appeals to have considered an automated-service provider’s direct liability for copyright infringement has adopted that rule.” But that’s not entirely the case, at least when it comes to the Ninth Circuit’s decision in Fox Broadcasting Co. v. Dish Network. The court there did not once utter the word “volition”, and district courts in the Circuit apparently don’t believe the test was adopted. See, e.g., Order Granting in Part and Denying in Part Allvoice’s Motion to Dismiss Plaintiff’s First Amended Complaint, Oppenheimer v. Allvoices, Inc., No. C-14-00499 (ND Cali June 10, 2014) (“Although the Netcom requirement of “volitional” conduct for direct liability has been adopted by the Second and Fourth Circuits, the Ninth Circuit has not yet addressed the issue, and courts within this Circuit are split on it”); Order Granting in Part and Denying in Part Defendant’s Motion to Dismiss, National Photo Group, LLC v. Allvoices, Inc., No. C-13-03627 (ND Cali Jan. 24, 2014) (noting volitional conduct “requirement has not been adopted by the Ninth Circuit and Courts within this Circuit are divided on whether the requirement is valid”). []
  2. Green v. Bock Laundry Machine Co., 490 US 504, 528 (1989) (J. Scalia concurrence). []
  3. Bennett v. Spear, 520 US 154, 173 (1997) (quoting US v. Menasche, 348 US 528, 538 (1955). []
  4. Antonin Scalia, Common-Law Courts in a Civil-Law System: The Role of United States Federal Courts in Interpreting the Constitution and Laws, The Tanner Lectures on Human Values 79, 94 (1995). []

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The rise and fall of Aereo was meteoric, with the company going from founding to Supreme Court shutdown in little over two years. Last week, the Supreme Court held in American Broadcasting Companies v. Aereo that the company was liable for publicly performing when it transmitted copyrighted works without permission to paying subscribers.1

Since details of the service and litigation have been recounted here and elsewhere in great detail, I will only very briefly summarize before looking at the Supreme Court decision in more detail. Aereo launched in early 2012 and offered subscribers the ability to watch broadcast television stations online, along with DVR-type capabilities, for a monthly fee. The stations were captured by Aereo using antennas to receive over-the-air signals. Aereo did not license any of the television programs it transmitted.

Broadcasters sued in March 2012, alleging that Aereo was publicly performing television programs they owned the copyright in, and sought a preliminary injunction.2 Aereo argued that it was merely providing equipment to customers rather than performing itself. It also argued that “like the RS-DVR system in [the Second Circuit’s 2008 decision in] Cablevision, its system creates unique, user-requested copies that are transmitted only to the particular user that created them and, therefore, its performances are non-public.” The district court agreed with Aereo and denied the injunction, a decision the broadcasters appealed.

However, the broadcasters were unable to distinguish Aereo from Cablevision to the Second Circuit’s satisfaction, and the court affirmed the lower court’s decision.3 The broadcasters again appealed, this time to the Supreme Court, which granted cert in January and held oral arguments at the end of April.

In a 6-3 opinion by Justice Breyer, the Supreme Court reversed the Second Circuit and held that Aereo does indeed perform to the public. (I’ll look at the dissent in a future post.)

The Aereo Decision

In a series of posts earlier this year following the Court’s grant of cert, I broke the analysis up into a series of questions, asking first “what is to the public”, then asking “what is a performance” and “who is the performer.” The Court approached it in a similar fashion, beginning its analysis by saying, “This case requires us to answer two questions: First, in operating in the manner described above, does Aereo ‘perform’ at all? And second, if so, does Aereo do so ‘publicly’?” (Although the Court at the outset does not separately ask what a performance is, it does address the issue, apparently agreeing, as I did, with the Second Circuit’s rule that a performance requires contemporaneous perceptibility.)4

When does an entity perform?

Turning to the first question, the Court says:

Considered alone, the language of the Act does not clearly indicate when an entity “perform[s]” (or “transmit[s]”) and when it merely supplies equipment that allows others to do so. But when read in light of its purpose, the Act is unmistakeable: An entity that engages in activities like Aereo’s performs.

The Court then examines its previous Fortnightly and Teleprompter decisions, which held CATV providers (community antenna television providers, the precursor to modern cable providers) did not “perform” under copyright law before explaining that Congress sought to overturn those decisions when it revised the Copyright Act in 1976. The Court notes that Congress specifically considered both the broadcaster and the viewer to be a performer under the Act. It also included the Transmit Clause, which, the Court says, “makes clear that an entity that acts like a CATV system itself performs, even if when doing so, it simply enhances viewers’ ability to receive broadcast television signals.”

And, says the Court, Aereo is just such an entity. “Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach.”

Aereo sells a service that allows subscribers to watch television programs, many of  which are copyrighted, almost as they are being broadcast. In providing this service, Aereo uses its own equipment, housed in a centralized warehouse, outside of its users’ homes. By means of its technology (antennas, transcoders, and servers), Aereo’s system “receive[s] programs that have been released to the public and carr[ies] them by private channels to additional viewers.” It “carr[ies]… whatever programs [it] receive[s],” and it offers “all the programming” of each over-the-air it carries.

The Court rejects the argument that Aereo doesn’t perform because it emulates equipment that viewers can use at home, saying the same was true of the CATV systems that Congress brought within the scope of the Copyright Act in 1976. The Court does point out that the question of whether a provider performs in cases involving different kinds of services and technologies remains. “But the many similarities between Aereo and cable companies, considered in light of Congress’ basic purposes in amending the Copyright Act, convince us that this difference is not critical here.”

When is a performance to the public?

Next, the Court analyzes whether Aereo’s performances are “to the public.” The Court rejects Aereo’s position that the technology it deployed should be determinative—Aereo accomplishes the same thing cable companies, which clearly perform to the public, do, so why should it matter whether it does so “via a large multisubscriber antenna or one small dedicated antenna?”

It also completely rejects Cablevision’s holding that courts must look at the potential audience of a particular copy of a work to determine whether a performance is to the public.

We do not see how the fact that Aereo transmits via personal copies of programs could make a difference. The Act applies to transmissions “by means of any device or process.” And retransmitting a television program using user-specific copies is a “process” of transmitting a performance. A “cop[y]” of a work is simply a “material objec[t] . . . in which a work is fixed . . . and from which the work can be perceived, reproduced, or otherwise communicated.” So whether Aereo transmits from the same or separate copies, it performs the same work; it shows the same images and makes audible the same sounds.

In previous posts, I argued that, when interpreting what “the public” means, one should focus on the relationship between the performer and the audience. I proposed that “’Public’ relationships are those that tend to be described as commercial, arms-length, or impersonal, and are strongly unidirectional, while ‘private’ relationships tend to be described as familial, social, or collegial, and are much more reciprocal in nature.” The Court came to a similar conclusion, saying “the subscribers to whom Aereo transmits television programs constitute ‘the public.’ Aereo communicates the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other.” But it then adds a further gloss on the term, holding that one should also examine the relationship between the audience and the underlying work.

Neither the record nor Aereo suggests that Aereo’s subscribers receive performances in their capacities as owners or possessors of the underlying works. This is relevant because when an entity performs to a set of people, whether they constitute “the public” often depends upon their relationship to the underlying work. When, for example, a valet parking attendant returns cars to their drivers, we would not say that the parking service provides cars “to the public.” We would say that it provides the cars to their owners. We would say that a car dealership, on the other hand, does provide cars to the public, for it sells cars to individuals who lack a pre-existing relationship to the cars. Similarly, an entity that transmits a performance to individuals in their capacities as owners or possessors does not perform to “the public,” whereas an entity like Aereo that transmits to large numbers of paying subscribers who lack any prior relationship to the works does so perform.

The Court ends by addressing concerns raised about the effects of a holding reversing the Second Circuit on cloud computing services. It notes that its interpretation is influenced by Congress’s intent to cover “cable companies and their equivalents,” that its definition of the public “does not extend to those who act as owners or possessors of the relevant product,” and that fair use and the DMCA safe harbors for online service providers should mitigate any remaining concerns.

Analyzing the decision

I think the Court gets it right. It eliminates the overly-convoluted interpretations of the Copyright Act’s public performance provisions that resulted from Cablevision in favor of a straight-forward approach that is consistent with the Act’s language and intent. In hindsight, it will seem silly that a for-profit company could provide the functional equivalent to cable television, commercially exploiting copyrighted works to the public, and escape liability based on the number of antennas it used.

Already there a number of criticism of the decision, which I won’t address here. But I would add one of my own: I think the Court did not adequately explain the rule it was applying. Such an explanation, especially if it was articulated in more general terms, would provide lower courts with guidance to reach results consistent with the Court’s holding.

In a post published on SCOTUSblog, I argue that the majority’s inquiry resembles a proximate causation analysis. One way to think about the Court’s approach is that it uses analogy as shorthand. The Court says “An entity that engages in activities like Aereo’s performs.” Framed in terms of proximate causation, what it is doing is saying that we will not excuse as a legal cause an actor engaged in the factual cause of a harm when its conduct is functionally equivalent to the conduct of an actor clearly within the scope of the Copyright Act.

The Court explains in more detail some of the factors it considered when reaching its decision, which I note in my SCOTUSblog article:

Although Justice Breyer never raises the issue of proximate causation, he outlines a number of reasons why Aereo is directly liable in this case and which serve to lay the path for future proximate causation analyses. First, Breyer notes that in providing its service, “Aereo uses its own equipment, housed in a centralized warehouse, outside of its users’ homes.” The owner of the equipment is relevant since she maintains dominion and control over the process and is in a position to prevent infringement.

Breyer next points out that Aereo subscribers don’t “receive performances in their capacities as owners or possessors of the underlying works.”  Later, he explains that the decision “does not extend to those who act as owners or possessors of the relevant product.”  The provider of the copyrighted work at issue is relevant because he initiates the process that results in potential infringement and is in a better position to know whether the particular copy was authorized and whether she has a right to copy or perform the work.

Breyer also notes that the holding is limited because “we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content.”  The range of uses of a particular service speaks to foreseeability and intent.

None of these facts by themselves are sufficient to show proximate causation. But taken together, they support the conclusion that Aereo is the legal cause of the harm and provide guidance to lower courts facing the question in future cases.

In Making Copies! Retiring the Volitional Conduct Test in Favor of Proximate Causation, I proposed that a proximate causation inquiry for cloud computing services that interact with copyrighted works should focus on the individual steps involved in the exploitation of a copyrighted work, including such considerations as the location of the equipment, the provision of the copyrighted work, the participation (or involvement) in the process, the range of uses of the service, and the dominion over any final copy. The Court’s analysis here looked at several of these factors.

But it also examined the service in light of the intent of the Copyright Act. Though it was able to resolve this case by looking at the very narrow intent of Congress to bring cable systems within the scope of the Act, future courts will need to look at other principles. I think it’s fair to say that the copyright law in general evinces three broad principles: (1) that a copyright owner’s exclusive rights to do or authorize any of the Section 106 acts are properly secured absent any limitation or exception, and (2) that copyright law is particularly concerned with acts that multiply copies or communicate works to the public, and (3) that any non-infringing conduct by an actor is not unduly curtailed. Analyzing proximate causation with those principles in mind, courts should be able to apply copyright law to cloud computing services in a consistent and logical manner.

Footnotes

  1. Disclosure: The Copyright Alliance filed an amicus brief in support of broadcasters in the Supreme Court. As with all articles on this site, I am commenting here in my personal capacity. []
  2. American Broadcasting Companies v. Aereo, Inc., 874 F. Supp. 2d 373 (SDNY 2012). []
  3. WNET, Thirteen v. Aereo, Inc., 712 F. 3d 676 (2nd Cir. 2013). []
  4. This rule was adopted by the Second Circuit in United States v. American Soc. of Composers, Authors and Publishers, 627 F. 3d 64, 73 (2nd Cir. 2010). The Court here never explicitly adopts that interpretation, but its opinion suggests at various points that it concurs with the Second Circuit, as when it says, for example, that “an entity only transmits a performance when it communicates contemporaneously perceptible images and sounds of a work.” []

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The emperor of “disruption theory” is wearing no clothes — A lot of reaction this week to a New Yorker piece by Jill Lepore criticizing some of the core principles guiding Silicon Valley, this is one of the latest. “It’s possible to be critical of the way Silicon Valley is agitating for regulatory reform that is designed to nurture Silicon Valley business models without being ‘anti-technology.’ It’s possible to explore the question of how the current pace of technological innovation is affecting jobs and inequality without being anti-technology. It is possible to be critical of how, in the current moment, technology appears to be serving the interest of the owners of capital at the expense of workers without being anti-technology. It’s even possible to love one’s smartphone and the Internet while at the same time critiquing run-amok ‘change the world’ hype.”

The Walking Dead producer criticises Game of Thrones executive over piracy — “‘When consumers do go [onto pirate websites] they look legitimate,’ she said. ‘They have advertising from well-known brands, and they take credit cards. How would the consumer know the difference between legitimate sites and illegitimate sites? There is a lot the advertising industry, credit card industry and search industry can do to help protect legit content.’”

Congress moves against ad-supported piracy — Writer and director Alec Berg (Seinfeld”, “Curb Your Enthusiasm”, “Silicon Valley.”) applauds recent efforts in Congress to draw more attention to the fact that major brands advertising on sites offering unauthorized creative works. “These major brands can avoid funding illegal activity. They can. The question is: Will they?”

Copyright exhaustion does not apply to digital goods other than software, Hamm Court of Appeal says — Good news for creators, as a court in Germany declined to extend the 2012 UsedSoft decision, which held that the distribution right for software can be exhausted by digital transmission under certain circumstances, to subject matter beyond software — here, audiobooks.

Google ordered by BC court to block websites selling pirated goods: Equustek Solutions Inc. v. Jack — Another positive decision, this one from Canada. As attorney Barry Sookman explains, plaintiffs won a default judgment against a website that was selling counterfeit goods and asked Google to help. “When Google refused to de-index the offending websites from its search results, the plaintiffs brought a motion against Google for interim relief requiring Google to de-index the websites. Over Google’s objections, in Equustek Solutions Inc. v. Jack 2014 BCSC 1063, Madam Justice Fenlon of the British Columbia Supreme Court granted the injunction.”

AJ Rafael Announces Hiatus from Performing [Exclusive Letter] — That didn’t take long. This week, a YouTube artists announced he is retiring, citing the difficulties for creators to sustain a career distributing and promoting their work through the free online video site.

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