On January 12, photographer Michael Kienitz asked the Supreme Court to review the Seventh Circuit’s decision in Kienitz v. Sconnie Nation. Sconnie Nation waived its brief, though the Media Institute filed an amicus brief in support of Kienitz.

The issue is fair use, specifically whether the Seventh Circuit split with the Second Circuit on the application of the “transformative use” test with its decision.

Kienitz takes place in the town of Madison, Wisconsin, where, several years ago, the Mayor sought to shut down an annual block party. Sconnie Nation, a novelty t-shirt maker, printed up a handful of t-shirts with a photo of the mayor and the phrase “Sorry for partying.” The photo was originally taken by Kienitz, a journalist and conflict photographer, and used without permission. Kienitz sued Sconnie Nation for copyright infringement.

Sconnie Nation asserted fair use, and the district court agreed, granting summary judgment in favor of the defendant.

On appeal, the Seventh Circuit affirmed the lower court’s judgment but criticized its reasoning. Specifically, it took aim at the court’s reliance on the “transformative use” test, saying, “That’s not one of the statutory factors, though the Supreme Court mentioned it in Campbell v. Acuff-Rose Music.” It observed that the Second Circuit has embraced this test, most recently in its decision in Cariou v. Prince, where it “concluded that ‘transformative use’ is enough to bring a modified copy within the scope of §107.” Writing for the Seventh Circuit, Judge Easterbrook said,

We’re skeptical of Cariou‘s approach, because asking exclusively whether something is “transformative” not only replaces the list in §107 but also could override 17 U.S.C. §106(2), which protects derivative works. To say that a new use transforms the work is precisely to say that it is derivative and thus, one might suppose, protected under §106(2). Cariou and its predecessors in the Second Circuit do not explain how every “transformative use” can be “fair use” without extinguishing the author’s rights under §106(2).

The court nevertheless found the use fair, saying the t-shirts have not “reduced the demand for the original work.”

While Cariou’s approach to transformative use has been criticized before, 1See, e.g., Patricia Cohen, Photographers Band Together to Protect Work in ‘Fair Use’ Cases, New York Times, Feb. 21, 2014. Kienitz represents the first Circuit Court decision to do so.

Recall, Cariou involved the unauthorized appropriation of photographs of working-class photographer Patrick Cariou by celebrity artist Richard Prince. 2Cariou v. Prince, 714 F. 3d 694 (2d. Cir. 2013). The Second Circuit held that 25 of Prince’s paintings were fair use, despite “Prince’s deposition testimony that he ‘do [es]n’t really have a message,’ that he was not ‘trying to create anything with a new meaning or a new message,’ and that he ‘do[es]n’t have any … interest in [Cariou’s] original intent.'” The court said that “The law imposes no requirement that a work comment on the original or its author in order to be considered transformative, and a secondary work may constitute a fair use even if it serves some purpose other than those (criticism, comment, news reporting, teaching, scholarship, and research) identified in the preamble to the statute.” The Supreme Court subsequently denied to review the Cariou decision.

I think Cariou was wrongly decided. But whether or not Kienitz represents a good vehicle for Supreme Court review, I think the occasion does provide a good place to reiterate the importance of necessity to fair use.

Judge Easterbrook raises this point, though it is ultimately of no help to Kienitz. Easterbrook observes:

[D]efendants did not need to use the copyrighted work. They wanted to mock the Mayor, not to comment on Kienitz’s skills as a photographer or his artistry in producing this particular photograph. There’s no good reason why defendants should be allowed to appropriate someone else’s copyrighted efforts as the starting point in their lampoon, when so many non-copyrighted alternatives (including snapshots they could have taken themselves) were available. The fair-use privilege under §107 is not designed to protect lazy appropriators. Its goal instead is to facilitate a class of uses that would not be possible if users always had to negotiate with copyright proprietors. (Many copyright owners would block all parodies, for example, and the administrative costs of finding and obtaining consent from copyright holders would frustrate many academic uses.)

Fair Use and Necessity

I’m not the first to describe fair use in terms of necessity. Alan Latman, going all the way back to his seminal 1958 study on fair use as part of the Copyright Law Revision process leading to the current Act, wrote:

Practical necessity is at times the rationale of fair use. Thus article 10 of the law of Argentina requires that an excerpt be “indispensable” to the purpose of the later work. The modus operandi of certain fields requires that the rights of each author yield to a step-by-­step progress. This consideration is often linked to the constitutional support for fair use as an indispensable tool in the promotion of “science.” Practical necessity and constitutional desirability are strongest in the area of scholarly works.

Similarly, in reviews of a work, a certain amount of reconstruction is often necessary; and in burlesque, the user must be permitted to accomplish the “recalling or conjuring up of the original.” Of more questionable necessity is the use of an earlier work in the preparation of a compilation. However, extensive use of earlier works as guides and checks appears to be common in this type of work which, although perhaps not achieving the intellectual aims inherent in the constitutional objective of copyright, does produce useful publications. 3Alan Latman, Fair Use of Copyrighted Works, pp 30-31, Copyright Law Revision Study No. 14, US Copyright Office (1958).

More recently, David Fagundes ruminates on the idea in a 2011 post, South Park & a Necessity Theory of Fair Use’s Parody/Satire Distinction:

Parody/satire may not track well onto the idea of transformativeness, but I do think it tracks well onto the idea of necessity.  Necessity is a familiar defense to property torts.  In the context of trespass, for example, emergency can entitle yachters stranded on a stormy lake to tie up at a stranger’s dock without permission, on the theory that avoiding the loss of their lives is more important than respecting the owner’s negative liberty (remember Ploof v. Putnam?).

And there are others who have looked at the idea of necessity in fair use, either favorably 4E.g., David Lange & Jessica Lange Anderson, Copyright, Fair Use and Transformative Critical Appropriation (working paper) (2011) (arguing that “fair use must be understood to make deliberate room for transformative appropriation of copyrighted work whenever the appropriation and transformation are necessary steps toward the realization of significant social criticism”). or critically. 5E.g., John Tehrenian, Infringement Nation: Copyright 2.0 and You, p. 41 (Oxford Univ. Press 2011) (“The Supreme Court’s distinction between satire and parody in the application of the fair use test is ultimately unsatisfying. Such a formulation reduces fair use to a test about necessity. Thus, where use is necessary to produce a form of speech (parody), it will be reluctantly tolerated as fair. But, where use is unnecessary to produce a form of speech (satire), it will not be tolerated. Such a conceptualization of fair use is highly propertized, allowing borrowing only when conditions require it. Such a view casts fair use as a privilege, not a right—a stark contrast to the former view of copyright itself as a privilege rather than a natural right. Under a utilitarian vision of copyright, progress in the arts rather than a necessity calculus should drive the fair use doctrine. As a consequence, there is no inherent reason why satire should be subject to different fair use rights than parody.”)

Fair Use Justifications

Necessity derives from the justifications for fair use.

The earliest justification for fair use is grounded in the goals of copyright law itself. That is, “that a certain degree of latitude for the users of copyrighted works is indispensable for the ‘Progress of Science and useful Arts.’” 6Alan Latman, Fair Use of Copyrighted Works, pg 7, Copyright Law Revision Study No. 14, US Copyright Office (1958); accord Campbell v. Acuff-Rose Music, 510 US 569, 575 (1994) (“From the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright’s very purpose, ‘[t]o promote the Progress of Science and useful Arts. . . .’”

In one of the earliest law review articles on fair use, Judge Yankwich concludes:

[T]he earnest scholar and student, be he reviewer, critic or scientist in the same field, should have reasonable access to the work of others, lest we put—in the words of Lord Ellenborough—“manacles upon science.” On the whole, the law of “fair use,” as evolved by the courts, is a wise synthesis of conflicting rights which, while safeguarding the author, avoids injury to the progress of ideas which would flow from an undue “manacling” of others in the reasonable use of copyrighted material.7Leon R. Yankwich, What is Fair Use? 22 Univ. of Chicago Law Review 203, 215 (1954).

More recently, fair use has also been justified on free speech grounds. The Supreme Court has said on several occasions that fair use is one of copyright’s “built-in First Amendment accommodations”; it, along with doctrines like the idea-expression dichotomy, is “generally adequate” to address “First Amendment concerns.” 8Eldred v. Ashcroft, 537 US 186, 219 (2003). In Eldred v. Ashcroft, the Court said fair use “allows the public to use not only facts and ideas contained in a copyrighted work, but also expression itself in certain circumstances.” When the expression itself is essential to a further purpose, such as news reporting or commentary, then fair use may allow copying. When it’s not essential, fair use should not apply, as the Supreme Court said in Harper & Row v. Nation Enterprises, where it held the unauthorized, verbatim copying of 300 words from an unpublished manuscript was not fair use:

Nor do respondents assert any actual necessity for circumventing the copyright scheme with respect to the types of works and users at issue here. Where an author and publisher have invested extensive resources in creating an original work and are poised to release it to the public, no legitimate aim is served by pre-empting the right of first publication. The fact that the words the author has chosen to clothe his narrative may of themselves be “newsworthy” is not an independent justification for unauthorized copying of the author’s expression prior to publication. To paraphrase another recent Second Circuit decision:

“[Respondent] possessed an unfettered right to use any factual information revealed in [the memoirs] for the purpose of enlightening its audience, but it can claim no need to ‘bodily appropriate’ [Mr. Ford’s] ‘expression’ of that information by utilizing portions of the actual [manuscript]. The public interest in the free flow of information is assured by the law’s refusal to recognize a valid copyright in facts. The fair use doctrine is not a license for corporate theft, empowering a court to ignore a copyright whenever it determines the underlying work contains material of possible public importance.” [Emphasis added.] 9Harper & Row v. Nation Enterprises, 471 US 539, 557-58 (1985).

Taken together, these justifications suggest that throughout the history of fair use, there has been this idea that some overriding purpose is required to privilege a use that would otherwise be infringing. And the use of the original work must be necessary to the new work.

Campbell v. Acuff-Rose

This is precisely what the Supreme Court held in Campbell v. Acuff-Rose. In Campbell, the publishers of “Oh Pretty Woman,” written and recorded by Roy Orbison and William Dees, sued 2 Live Crew after it released “Pretty Woman,” a take-off on the Orbison classic that incorporated numerous elements from the song, including the famous bass riff, and added ribald rap lyrics. The district court had found the 2 Live Crew song to be a parody of the Orbison song, and the case made it to the Supreme Court on the issue of fair use.

This was the first time the Court would weigh in on whether parody may be fair use. It held that it could, saying, “Like less ostensibly humorous forms of criticism, it can provide social benefit, by shedding light on an earlier work, and, in the process, creating a new one.” In doing so, it drew a sharp distinction between parody and satire, defining the former as a work that comments on an existing work through mimicry while the latter copies for a non-related purpose.

For the purposes of copyright law, the nub of the definitions, and the heart of any parodist’s claim to quote from existing material, is the use of some elements of a prior author’s composition to create a new one that, at least in part, comments on that author’s works. If, on the contrary, the commentary has no critical bearing on the substance or style of the original composition, which the alleged infringer merely uses to get attention or to avoid the drudgery in working up something fresh, the claim to fairness in borrowing from another’s work diminishes accordingly (if it does not vanish), and other factors, like the extent of its commerciality, loom larger.

The Court went on to point out that this distinction hinges on necessity.

Parody needs to mimic an original to make its point, and so has some claim to use the creation of its victim’s (or collective victims’) imagination, whereas satire can stand on its own two feet and so requires justification for the very act of borrowing. [Emphasis added.]

The necessity requirement makes sense in light of the underlying justifications of fair use. If copying of expression is necessary for some speech purpose, fair use may excuse it so that copyright protection does not overextend and impinge on free speech interests.

When, however, copying expression is not necessary to a new work, there is no free speech issue, since the copyright owner cannot prevent others from communicating the facts and ideas conveyed by her work.

This distinction is illustrated in the Ninth Circuit’s 2012 Monge v. Maya Magazines decision. 10688 F. 3d 1164. Maya, a gossip magazine, had published photos taken of a clandestine wedding of a young pop singer, one who maintained being single as part of her image. Maya argued fair use, characterizing the publication as news reporting and claiming, in part, that its “publication transformed the photos from their original purpose—images of a wedding night—into newsworthy evidence of a clandestine marriage.” It relied on the First Circuit’s decision in Núñez v. Caribbean Int’l News Corp. as support.

In Núñez, a newspaper had reprinted, without authorization, risqué photographs that had surfaced of a Miss Universe winner. The discovery of the photographs had sparked an inquiry into whether the model was fit to retain the Miss Universe title. The court disagreed that Núñez supported Maya’s fair use argument.

Although Núñez also involved news reporting, the similarities end there. The controversy there was whether the salacious photos themselves were befitting a “Miss Universe Puerto Rico,” and whether she should retain her title. In contrast, the controversy here has little to do with photos; instead, the photos here depict the couple’s clandestine wedding. The photos were not even necessary to prove that controverted fact—the marriage certificate, which is a matter of public record, may have sufficed to inform the public that the couple kept their marriage a secret for two years. [Emphasis added.]

Similarly, some use of expression may be necessary for commentary, criticism, quotation, or parody—all purposes that further the underlying goal of copyright in advancing art, science, and knowledge. Here, it bears repeating that, as a general rule, the protection of copyright will serve the purposes of copyright. When the original work is fungible to the new work—when there are alternative sources of raw materials for the second creator to draw upon—then the creation of the new work is not blocked. 11Credit to Jasmine Abdel-khalik, from whom I got the idea of “fungibility.” The second creator can “work[] up something fresh”, 12Joseph Fishman explains how this furthers copyright’s purpose in his forthcoming article, Creating Around Copyright. turn to the public domain for material, or find a work with more favorable licensing terms. 13In fact, entire industries providing stock photos, footage, and music have grown up to meet this demand. Copyright’s purpose is to create a commercial market for creative works, and these outcomes are consistent with a functioning marketplace. When fair use privileges uses of original works that are not necessary to the creation of new works, it undermines this market, and, consequently, undermines copyright.

Toward a Fair Use Standard

Focusing on the necessity of the original work to the new use also puts the other factors into sharper focus. Take, for example, the third factor, which looks at “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.” If there is no connection between the original and new works, what standard guides courts in weighing this factor? How much use of a work is “fair” when it is not necessary to a new work? In this case, the inquiry becomes redundant with a substantial similarity analysis.

But when there is a connection between new and original works, courts have a standard to guide analysis of the third factor. Campbell provides a clear application of this principle in the context of parody.

Parody’s humor, or in any event its comment, necessarily springs from recognizable allusion to its object through distorted imitation. Its art lies in the tension between a known original and its parodic twin. When parody takes aim at a particular original work, the parody must be able to “conjure up” at least enough of that original to make the object of its critical wit recognizable. What makes for this recognition is quotation of the original’s most distinctive or memorable features, which the parodist can be sure the audience will know. Once enough has been taken to assure identification, how much more is reasonable will depend, say, on the extent to which the song’s overriding purpose and character is to parody the original or, in contrast, the likelihood that the parody may serve as a market substitute for the original. But using some characteristic features cannot be avoided.

In fact, it’s often forgotten that the Supreme Court did not hold that 2 Live Crew’s use was fair. It instead remanded to the district court to determine fair use, and in its discussion, it continues to be clear that a necessity requirement underlies fair use.

Suffice it to say here that, as to the lyrics, we think the Court of Appeals correctly suggested that “no more was taken than necessary,” but just for that reason, we fail to see how the copying can be excessive in relation to its parodic purpose, even if the portion taken is the original’s “heart.” As to the music, we express no opinion whether repetition of the bass riff is excessive copying, and we remand to permit evaluation of the amount taken, in light of the song’s parodic purpose and character, its transformative elements, and considerations of the potential for market substitution sketched more fully below.

The two parties settled following the Supreme Court decision, agreeing to a license.

In recent decades, fair use has categorically expanded to include the copying of entire works for new purposes rather than new works—for example, time-shifting, 14Sony Corp. of America v Universal City Studios, 464 U.S. 417 (1984). mass digitization, 15Authors Guild v. Hathitrust, 755 F.3d 87 (2nd Cir. 2014). or image search. 16Kelly v. Arriba Soft Corp., 336 F. 3d 811 (9th Cir. 2003). In these situations, necessity may not play the same role, if it plays one at all. But in its historical application—as a privilege for the incorporation of expression from an existing work into a new work—courts should look at necessity. Whether necessity is an essential element of fair use is a separate question, but at the very least, it should play a key role in any fair use inquiry to ensure that the doctrine remains consistent with copyright’s ultimate goals.

References   [ + ]

1. See, e.g., Patricia Cohen, Photographers Band Together to Protect Work in ‘Fair Use’ Cases, New York Times, Feb. 21, 2014.
2. Cariou v. Prince, 714 F. 3d 694 (2d. Cir. 2013).
3. Alan Latman, Fair Use of Copyrighted Works, pp 30-31, Copyright Law Revision Study No. 14, US Copyright Office (1958).
4. E.g., David Lange & Jessica Lange Anderson, Copyright, Fair Use and Transformative Critical Appropriation (working paper) (2011) (arguing that “fair use must be understood to make deliberate room for transformative appropriation of copyrighted work whenever the appropriation and transformation are necessary steps toward the realization of significant social criticism”).
5. E.g., John Tehrenian, Infringement Nation: Copyright 2.0 and You, p. 41 (Oxford Univ. Press 2011) (“The Supreme Court’s distinction between satire and parody in the application of the fair use test is ultimately unsatisfying. Such a formulation reduces fair use to a test about necessity. Thus, where use is necessary to produce a form of speech (parody), it will be reluctantly tolerated as fair. But, where use is unnecessary to produce a form of speech (satire), it will not be tolerated. Such a conceptualization of fair use is highly propertized, allowing borrowing only when conditions require it. Such a view casts fair use as a privilege, not a right—a stark contrast to the former view of copyright itself as a privilege rather than a natural right. Under a utilitarian vision of copyright, progress in the arts rather than a necessity calculus should drive the fair use doctrine. As a consequence, there is no inherent reason why satire should be subject to different fair use rights than parody.”)
6. Alan Latman, Fair Use of Copyrighted Works, pg 7, Copyright Law Revision Study No. 14, US Copyright Office (1958); accord Campbell v. Acuff-Rose Music, 510 US 569, 575 (1994) (“From the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright’s very purpose, ‘[t]o promote the Progress of Science and useful Arts. . . .’”
7. Leon R. Yankwich, What is Fair Use? 22 Univ. of Chicago Law Review 203, 215 (1954).
8. Eldred v. Ashcroft, 537 US 186, 219 (2003).
9. Harper & Row v. Nation Enterprises, 471 US 539, 557-58 (1985).
10. 688 F. 3d 1164.
11. Credit to Jasmine Abdel-khalik, from whom I got the idea of “fungibility.”
12. Joseph Fishman explains how this furthers copyright’s purpose in his forthcoming article, Creating Around Copyright.
13. In fact, entire industries providing stock photos, footage, and music have grown up to meet this demand.
14. Sony Corp. of America v Universal City Studios, 464 U.S. 417 (1984).
15. Authors Guild v. Hathitrust, 755 F.3d 87 (2nd Cir. 2014).
16. Kelly v. Arriba Soft Corp., 336 F. 3d 811 (9th Cir. 2003).

This weekend, Fifty Shades of Grey opens in theaters. The family-friendly tale of young love is based on a series of best-selling novels by British author E.L. James. Jonathan Band, a lobbyist for the Computer and Communications Industry Association (CCIA), yesterday posted an article about the film on CCIA’s Project Disco blog. In it, Band makes the extraordinary claim that “fair use is to blame—or thank—for the existence of the Fifty Shades franchise.”

Band correctly notes that James “originally wrote the trilogy as fan fiction of Stephanie Meyer’s popular Twilight series… At some point the popularity of the story must have convinced James of its potential commercial value, so she eliminated the vampires and the potentially infringing references to Twilight characters and plotline.” The series was indeed subsequently published, and indeed became commercially valuable. Band says, “Over 100 million copies of the novels have been sold, the first novel of the series has been on the New York Times bestseller list for 140 weeks, and the novels have been translated into 51 languages.” And soon, the film version will be playing in theaters worldwide.

So how, according to Band, does fair use play a role here? See if you can follow along. First, Band makes the erroneous legal assertion that “Fan fiction is a quintessential fair use.” There are no such categorical rules in fair use; it requires balancing multiple factors on a case-by-case basis. 117 USC § 107 provides in part that “In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include — (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.” Second, he makes the questionable presumption that any fanfic author’s fair use of a copyrighted work automatically privileges any third-party site’s hosting and distribution of that work online, thus shielding the site that James first uploaded her story to. Finally, by sharing her fanfic stories on a site devoted to Twilight fan fiction, Band speculates that “James almost certainly would have received constructive comments from other fans of ‘Twific’ (Twilight fan fiction) recommending stylistic changes and plot twists, and urging her to continue writing.”

That is why fair use was essential to 50 Shades. Because who’s ever heard of a non-fanfic based writer community?

Idea Expression

But what’s really curious about the example that Band chooses is that it serves as a perfect example of how, contrary to persistent claims by copyright critics, copyright does not stifle creativity.

James was inspired by Stephanie Meyer’s work and admittedly copied it. Yet, with a bit of additional creativity, she was able to produce her own work that is clearly not infringing. This is thanks to the foundational—yet underappreciated—distinction between idea and expression in copyright law.

As the First Circuit has explained, “[I]n most contexts, there is no need to ‘build’ upon other people’s expression, for the ideas conveyed by that expression can be conveyed by someone else without copying the first author’s expression.” 2Lotus Development Corp. v. Borland Intern., Inc., 49 F. 3d 807, 818 (1st Circuit 1995). This distinction mediates between the need for a commons of ideas that all authors can draw upon freely and the exclusive rights that facilitate the commercialization of expressive works. 3See, e.g., Stan J. Liebowitz & Stephen Margolis, Seventeen Famous Economists Weigh in on Copyright: The Role of Theory, Empirics, and Network Effects [PDF], 18 Harvard Journal of Law & Technology 435, 453 (2004) (“Copyright protects expression, not ideas. Many economists have seen It’s a Wonderful Life, the Jimmy Stewart movie classic, and have read The Choice, Russell Roberts’ treatment of free trade. Although Roberts uses the plot device of a man who must return to earth to earn his angel’s wings, his book does not infringe the movie’s copyright. Though clearly an important creative element of the movie, the plot device is not protected by copyright… Artists do indeed draw on old themes, and they are allowed to do so. On the other hand, they are not allowed to incorporate details of copyrighted works. So the economists are correct in that copyright does raise artists’ costs—copyright forces artists to do some work themselves. However, since only specific expressions are protected, extensive parts of the culture are not, as it is sometimes claimed walled off from creative re-use.”). The fact that all works are built on existing works while the vast majority of works do not infringe on other works proves the centrality and effectiveness of the idea expression distinction.

Perhaps it is the case that the operation of the idea expression distinction is so fundamental to copyright that it becomes easy to ignore. As copyright law professor Jessica Litman has observed, “The concept that portions of works protected by copyright are owned by no one and are available for any member of the public to use is such a fundamental one that it receives attention only when something seems to have gone awry.” 4Jessica Litman, Public Domain, 39 Emory L.J. 965, 977 (1990). And perhaps the line between idea and expression, as Landes and Posner observe, is “often hazy.” 5William M. Landes and Richard A. Posner, An Economic Analysis of Copyright Law 18 J. Leg. Stud. 325, 349 (1989). Nevertheless, the vast majority of works both build upon existing works yet do not infringe upon existing works. This is due primarily to the idea expression distinction. 6Accord Jane Ginsburg, Authors and Users in Copyright, 45 J. Copyright Soc’y USA 1, 5 (1997) (“The fair use doctrine … and the idea/expression dichotomy … relieve most of the tension that exclusive rights for first authors may cause when confronted with the creative demands of second authors.”).

To Boldly Go Where No One Has Gone Before

A good example of the idea expression distinction in action can be found in the development of the original Star Trek television series. In The Making of Star Trek, Gene Roddenberry notes some of the ideas that influenced his concept, including, “A. E. van Vogt’s tales of the spaceship Space Beagle, Eric Frank Russell’s Marathon series of stories, and the film Forbidden Planet (1956).” 7Whitfield, Stephen PE; Roddenberry, Gene (1968). The Making of Star Trek. New York: Ballantine Books. ISBN 0-345-31554-5. OCLC 23859. When Roddenberry first pitched the show, he described it as a “’Wagon Train’ concept”, referring to the popular Western television show that ran from 1957-65. The captain of the Enterprise was described as “A space-age Captain Horatio[] Hornblower,” an allusion to the protagonist of a series of novels by author C. S. Forester.

Roddenberry created Star Trek by copying from these—and undoubtedly other—sources. Yet no one would consider such copying actionable under copyright law. Roddenberry, like all creators, copied, rearranged, and combined ideas from multiple sources. He didn’t, however, need to copy material expression from any existing works.

This is how the distinction between idea and expression, on a day-to-day basis, works. It mediates between protection of creative works and recognition that any creative work necessarily borrows from other creative works. It allows remedies against misappropriation while allowing creative appropriation. It gives creators and courts a rough guide for distinguishing between property and the public domain. 8Accord Warner Bros. v. American Broadcasting Companies, 720 F. 2d 231, 240 (2nd Cir. 1983) (“Though imprecise, [the idea-expression dichotomy] remains a useful analytic tool for separating infringing from non-infringing works”). The result is billions of dollars in economic activity creating and disseminating creative works with a trivial amount of litigation involving an idea/expression issue.

Progress of Science

Not only does copyright facilitate the dissemination and reuse of ideas, but its restraints on expression may also be beneficial to the public and culture. In Creating Around Copyright, Joseph Fishman writes that, as cognitive psychology, management studies, and art history has all shown, creativity requires restraints. Certain types of constraints, including those inherent in copyright law, are generative. Fishman talks specifically about the derivative work right, which is “is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted.” 917 USC § 101.

Without a derivative work right, we may get more homogenization. That’s damaging if the name of the game is creativity. The wider the range of undiscovered appropriate solutions to a problem, the more audiences may miss out when problem solvers become locked in to a single solution. And if audiences value a multiplicity of solutions separately from the content of those solutions, the cost of that lock-in becomes exacerbated. The expressive arts, where appropriateness is often extremely ill-defined and where we desire new works even though there’s nothing wrong with the old ones, check both of those boxes. To the extent that the derivative work right stimulates create-around effort, it furthers—not frustrates—copyright’s constitutional goal of “stimulat[ing] artistic creativity for the general public good.” Thus, although the current derivative works system constrains more broadly than a hypothetical blocking copyrights system, it may also constrain more wisely.

James’ original story, when it was still a “fanfic” of Twilight, would more than likely be considered a derivative work of that series. Yet James was able to “create around” Meyer’s original expressive elements to create a work that builds upon an existing work in a noninfringing way. And she did not need to rely on fair use to do so.

References   [ + ]

1. 17 USC § 107 provides in part that “In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include — (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.”
2. Lotus Development Corp. v. Borland Intern., Inc., 49 F. 3d 807, 818 (1st Circuit 1995).
3. See, e.g., Stan J. Liebowitz & Stephen Margolis, Seventeen Famous Economists Weigh in on Copyright: The Role of Theory, Empirics, and Network Effects [PDF], 18 Harvard Journal of Law & Technology 435, 453 (2004) (“Copyright protects expression, not ideas. Many economists have seen It’s a Wonderful Life, the Jimmy Stewart movie classic, and have read The Choice, Russell Roberts’ treatment of free trade. Although Roberts uses the plot device of a man who must return to earth to earn his angel’s wings, his book does not infringe the movie’s copyright. Though clearly an important creative element of the movie, the plot device is not protected by copyright… Artists do indeed draw on old themes, and they are allowed to do so. On the other hand, they are not allowed to incorporate details of copyrighted works. So the economists are correct in that copyright does raise artists’ costs—copyright forces artists to do some work themselves. However, since only specific expressions are protected, extensive parts of the culture are not, as it is sometimes claimed walled off from creative re-use.”).
4. Jessica Litman, Public Domain, 39 Emory L.J. 965, 977 (1990).
5. William M. Landes and Richard A. Posner, An Economic Analysis of Copyright Law 18 J. Leg. Stud. 325, 349 (1989).
6. Accord Jane Ginsburg, Authors and Users in Copyright, 45 J. Copyright Soc’y USA 1, 5 (1997) (“The fair use doctrine … and the idea/expression dichotomy … relieve most of the tension that exclusive rights for first authors may cause when confronted with the creative demands of second authors.”).
7. Whitfield, Stephen PE; Roddenberry, Gene (1968). The Making of Star Trek. New York: Ballantine Books. ISBN 0-345-31554-5. OCLC 23859.
8. Accord Warner Bros. v. American Broadcasting Companies, 720 F. 2d 231, 240 (2nd Cir. 1983) (“Though imprecise, [the idea-expression dichotomy] remains a useful analytic tool for separating infringing from non-infringing works”).
9. 17 USC § 101.

On January 12th, the Supreme Court called for the views of the US Solicitor General (SG) on a cert petition filed by Google in a case involving Oracle’s Java software platform. SCOTUSBlog has a wonderful background on calls for the Solicitor General (CVSG)—but, while the Supreme Court often follows the recommendation of the SG on whether or not to hear a case, in intellectual property cases it tends to listen to what it has to say and then chart its own path.

This case involves Google’s admitted literal copying of 7,000 lines of verbatim software code, as well as the nonliteral copying of the structure, sequence, and organization of Oracle’s Java API packages. Despite Google’s arguments, last May, the Federal Circuit held that these elements are indeed copyrightable, and remanded to the district court for further proceedings on Google’s fair use defense to the lower court’s finding of infringement. (For more background on the case, see my previous posts, Fed Circuit hears Oracle v Google arguments and Federal Circuit releases decision in Oracle v Google.) Yet, rather than seeking en banc review or waiting for a district court decision on fair use, Google took the rather unusual step of appealing straight to the Supreme Court for review.

The Supreme Court only hears a small percentage of cases it is asked to review, and at the petition stage, the focus is not typically on the merits of the case, but rather whether there is some factor making it worth Supreme Court review. In its opening brief, Google argues primarily that the Supreme Court should review the Federal Circuit decision because “it presents a longstanding, widely-recognized split in the courts of appeals.” It claims these courts “are in disarray about the application of Section 102(b) to software.”

In fact, there is no disarray. Google cites few Circuit Court decisions from the past three decades to support its claim of a deep split, and in addition, the most recent case Google cites for this proposition is from 1997—18 years ago.

If there is any such disarray in the courts regarding copyright protection for software, the software industry hasn’t noticed. As the Software and Information Industry Association reports, “From 1997 to 2012, software industry production grew from $149 billion to $425 billion,” outpacing the rest of the economy.1Robert J. Shapiro, The U.S. Software Industry as an Engine for Economic Growth and Employment, Sonecon (Sept. 2014).

A closer look at the cases cited by Google reveals that this purported split is largely illusory.

For starters, the four cases Google cites in its discussion on the split all stand for the same general propositions. Each Circuit agrees that infringement can arise from copying of either literal or nonliteral elements of software.2Mitel, Inc. v. Iqtel, Inc., 124 F. 3d 1366, 1373 (10th Cir. 1997); Lotus Development Corp. v. Borland Intern., Inc., 49 F. 3d 807, 814 (1st Cir. 1995); Computer Associates Intern., Inc. v. Altai, Inc., 982 F. 2d 693, 702-03 (2nd Cir. 1992); Whelan Associates v. Jaslow Dental Laboratory, 797 F.2d 1222, 1237 (3d Cir. 1986). They agree that copyright only protects expression, not ideas,3Mitel at 1371; Altai at 703; Whelan at 1234. and that copyright protection may exclude expression if it is purely functional/utilitarian, is considered scènes à faire, or is the only way to express an idea (the merger doctrine).4Mitel at 1374-76; Altai at 707-10 (describing scenes a faire in the context of computer software as “elements dictated by external factors”); Whelan at 1235-37.

The Federal Circuit’s decision is consistent with these decisions.

Google’s circuit split argument relies heavily on the First Circuit’s Lotus decision. Google’s argument, however, is misplaced, as Lotus is easily distinguishable on its facts from the Oracle case. First, Google verbatim copied 7,000 lines of admittedly original and creative source code, while the defendant in Lotus did not copy any code at all. Second, both parties, the district court, and the Federal Circuit all agree that Oracle’s complex declaring code and its organization is creative, but the evidence in Lotus established that the commands at issue were not. Third, the Federal Circuit found that “while the court in Lotus found the commands at issue were ‘essential to operating’ the system, it is undisputed that—other than perhaps as to the three core packages—Google did not need to copy the structure, sequence, and organization of the Java API packages to write programs in the Java language.”

Google’s “deep circuit split” simply does not exist on closer inspection. If there is any split, it hasn’t resulted in any noticeable difference in outcomes, and certainly hasn’t thrown the software industry in disarray. A circuit split implies that courts are employing contradictory tests—coming to opposite conclusions when presented with similar sets of facts. That is not the case here. Certainly one can see some variation in outcomes when one looks at decisions involving different underlying facts—but that would seem an unavoidable result when looking at the metaphysical boundary between idea and expression.

What’s more, Google’s other main argument—that issues of interoperability should factor into a copyrightability analysis—is both incorrect and further reason for the Supreme Court to deny review. As the Federal Circuit correctly observed, “Google’s interoperability arguments are only relevant, if at all, to fair use.” A doctrine that privileges a reasonable amount of copying for socially beneficial uses that don’t supersede a copyright owner’s interest is perfectly suited for dealing with interoperability. However, Google has appealed before any fair use determination could be made, making this case a poor vehicle for Supreme Court review regardless of any split.

Perhaps even more importantly, the Federal Circuit made clear that, as a factual matter, Android is not interoperable with Java—programs written for Android will not run on Java, and vice-versa. Google documents and witnesses admitted this during the district court trial. Indeed, Google purposefully designed Android in such a way as to fragment Java and ensure that programs written in the Android flavor of Java cannot run on any other operating system, circumventing Java’s goal of “write once, run anywhere.”

References   [ + ]

1. Robert J. Shapiro, The U.S. Software Industry as an Engine for Economic Growth and Employment, Sonecon (Sept. 2014).
2. Mitel, Inc. v. Iqtel, Inc., 124 F. 3d 1366, 1373 (10th Cir. 1997); Lotus Development Corp. v. Borland Intern., Inc., 49 F. 3d 807, 814 (1st Cir. 1995); Computer Associates Intern., Inc. v. Altai, Inc., 982 F. 2d 693, 702-03 (2nd Cir. 1992); Whelan Associates v. Jaslow Dental Laboratory, 797 F.2d 1222, 1237 (3d Cir. 1986).
3. Mitel at 1371; Altai at 703; Whelan at 1234.
4. Mitel at 1374-76; Altai at 707-10 (describing scenes a faire in the context of computer software as “elements dictated by external factors”); Whelan at 1235-37.

On Monday, I looked at what’s in store for copyright in the policy world in the upcoming year; today, I want to take a look at what we might see in the courts. Although it is impossible to predict what will come out of the courts in 2015, there are a number of ongoing lawsuits and appeals that may lead to further developments over the next twelve months. The following discussion is nowhere near comprehensive and highly idiosyncratic, reflecting my personal interests.

Supreme Court

All is quiet on the copyright front at the Supreme Court as we enter 2015. The Court does not currently have any cases featuring copyright issues scheduled on its docket. But pending is a cert petition filed this past autumn by Google in an infringement suit brought against the company by Oracle. In May, the Federal Circuit held that software code copied by Google from Oracle’s Java platform was copyrightable. Google is asking the Court to reconsider that decision, arguing that the literal code, along with the “structure, sequence, and organization”, that it copied is uncopyrightable as a system and method of operation. Oracle has responded that the Federal Circuit decision was correct, and Supreme Court review is not appropriate at this moment.

It will be interesting to see how courts continue to respond to last term’s decisions in Aereo and Petrella. Though there was some hand-wringing that the Court’s attempt to cabin its decision so as not to unduly impact cloud computing services would be unsuccessful, some lower courts have seemed a little too cautious in applying Aereo. For example, in September, a Southern District Court of New York judge declined to apply Aereo’s holding to the question of whether the defendant was engaged in an unauthorized public display “because its holding was explicitly limited to technologies substantially similar to the one before the Supreme Court.” 1Capitol Records v MP3Tunes, Memorandum and Order, 07-CV-9931 (SDNY, September 29, 2014). See MP3Tunes and the Ghost of Cablevision for an analysis questioning this conclusion. Additionally, though the majority in Aereo never once mentioned the “volitional conduct” test, a non-statutory doctrine applied sporadically and inconsistently in a handful of lower courts, a judge from the Southern District Court of California held that this silence implied endorsement in a December decision. 2Gardner v. CafePress, Order, 3:13-CV-1108 (SD Cali, December 4, 2014) (“[T]he Supreme Court expressly decided not to address the volitional conduct issue which leaves Fox [Broad. Co. v. Dish Network L.L.C., 747 F.3d 1060, 1067 (9th Cir. 2014)] undisturbed. As this Court is bound by Ninth Circuit precedent and Fox is still good law, the Court finds that volitional conduct is a required element of direct infringement.”).

Ironically, one of the early beneficiaries of the Aereo holding has been Dish Networks. The satellite television provider has exclusive rights to transmit a number of Arabic language television channels in the US. In 2012, it sued TV Net, a company that had begun offering many of those same channels to US subscribers via internet streaming. In October, a federal magistrate judge recommended Dish’s motion for default judgment and a permanent injunction 3Report and Recommendation, Dish Network v. TV Net Solutions, No. 6:12-cv-1629-Orl-41TBS, 2014 U.S. Dist. LEXIS 165305 (MD Fla., Oct. 10, 2014). (a recommendation that was subsequently adopted by the court). 4Dish Network v. TV Net Solutions, 2014 U.S. Dist. LEXIS 165120 (MD Fla., Nov. 25, 2014). The magistrate cited to Aereo to support its conclusion that transmission of the channels by TV Net to its customers constituted public performances.

The irony here is that Dish Networks had just a few months earlier filed an amicus brief arguing the opposite—that providers of “user-controlled technologies” like Aereo (and, presumably, by extension, TV Net) should not be held liable for public performance.

In Petrella, the Court tackled the equitable doctrine of laches; however, one of the interesting potential outcomes of the case has nothing to do with its holding. The Petrella opinion included dicta that seemed to suggest the Court was endorsing one side of an issue that has split the Circuit Courts—whether a copyright registration is effective when the Copyright Office receives an application (the “application” approach) or when it completes the processing of the application (the “registration” approach). 5Under US law, copyright registration is not mandatory; however, it does confer a number of benefits, including serving as a prerequisite before a civil infringement suit may be filed. At one point, the Court in Petrella said, “Although registration is ‘permissive,’ both the certificate and the original work must be on file with the Copyright Office before a copyright owner can sue for infringement.” The reference to a requirement that the registration certificate be on file before an infringement suit can be brought suggests that the receipt of an application alone does not satisfy the law’s registration requirement. This issue does not come up too often, but it will be interesting to see if courts pay any heed to the Petrella language.

It’s worth noting that the Copyright Office firmly endorses the view that registration is only effective after processing is complete. It says in the Third Edition of its Compendium, the final version of which was published in December 2014,

The mere submission of an application to the U.S. Copyright Office does not amount to a registration. This is corroborated by the statute and the legislative history… [which], when read together, clearly evince Congress’s intention that the Register of Copyrights must either issue a certificate of registration or refuse an application for registration prior to filing a suit for copyright infringement. Not only would the filing of a lawsuit solely on the basis of submission of an application eliminate the mediating role that Congress intended the Office to fulfill, it also would nullify the Register of Copyrights’ statutory right to intervene in an infringement action in cases where the application for registration has been refused.

The Supreme Court continues to grant cert petitions through the end of its current term, which concludes in June, and it begins considering cases for its next term starting in October, so there’s always the possibility it will confront a copyright issue before the end of the year.

Circuit Courts

There are a number of appeals before the Circuit Courts dealing with interesting or noteworthy issues that may see rulings in 2015.

Digital sampling. In the Ninth Circuit, parties are still briefing VMG Salsoul v. Ciccone, involving alleged infringing sampling by Madonna for her hit Vogue. A California district court ruled in November 2013 that the portion copied—an individual “horn hit” from a 1976 composition called “Love Break”—lacked the required originality to be protected by copyright, and even if it did, the amount used was de minimis. Notably, the plaintiffs based their argument primarily on the Sixth Circuit’s 2005 Bridgeport Music v. Dimension Films decision, which held that copyright’s traditional “substantial similarity” test for infringement does not apply to sound recordings, and any copying, no matter how minute, is infringing. While no court outside the Sixth Circuit has followed Bridgeport, 6Most recently, the Southern District Court of New York on December 9, 2014. and a few have even explicitly rejected it, 7See Blurred Lines: Digital Sampling, Bridgeport, and Substantial Similarity. this could be the first time a sister circuit court has squarely addressed the issue.

Mass digitization. The Second Circuit heard oral arguments in Authors Guild v. Google, concerning the Google Books commercial mass digitization project, less than a month ago, which could mean a decision some time in 2015 (though not necessarily). 8In 2009, the most recent year statistics are available, the average time from notice of appeal to disposition in the Second Circuit was 17.6 months for civil cases. The notice of appeal in Authors Guild v. Google was filed December 23, 2013. In 2013, the district court had held that Google’s scanning and display of excerpts en masse was fair use. However, the Authors Guild has noted, “Whatever the outcome of this case, a Supreme Court petition is in the cards.”

DMCA safe harbors. The parties in Capitol Records v. Vimeo are also still in the middle of briefing an appeal at the Second Circuit. Vimeo, like YouTube, allows users to upload and publicly share videos. The court there is being asked to consider the proper application of “red flag knowledge” and “willful blindness” under the DMCA as well as whether the DMCA safe harbor extends to pre-1972 sound recordings. Oral arguments there may be heard this year.

Lower Courts

Finally, there are a number of lawsuits in both federal and state lower courts which may bring developments in 2015.

The Southern District Court of New York continues to keep an eye on the dispute between Fox News and media monitoring service TVEyes. This past September, the court held that TVEye’s creation of a database and provision of television clips to its paying subscribers is fair use, an unusually expansive interpretation of the privilege. Fox News has not appealed this decision at this point (though it may be appealed whenever a final judgment is entered), and the parties continue to litigate whether the “features that allow searches by date and time, and that allow clips to be archived, downloaded, emailed, and shared via social media” are also fair use.

Litigation against satellite radio provider Sirius XM for alleged unauthorized public performance of pre-1972 sound recordings continues in a number of courts across the country. As I wrote previously, federal courts in New York and California ruled that pre-1972 sound recording owners do have an exclusive right of public performance under state and common law in lawsuits filed by surviving Turtle’s members Flo & Eddie, while a state court in California held the same in a lawsuit brought by major record labels. A summary judgment motion on the same question remains pending in a Florida federal case brought by Flo & Eddie, as well as any appeals that may yet come out. 9A motion for reconsideration also remains pending in the California federal court. The California state court has certified the ruling for interlocutory appeal while the New York federal court has yet to rule on certification.

Relatedly, litigation against streaming service Grooveshark continues. 10See Grooveshark is Done for a previous discussion of these lawsuits. In UMG Recordings v. Escape Media Group, a New York state court is ready to rule on a motion for summary judgment as to Grooveshark’s liability—including on a claim of direct infringement of public performance rights for pre-1972 sound recordings. 11Supreme Court of the State of New York, County of New York, Index No. 100152/2010 . This is particularly worth watching since a state court ruling on state law presumably carries more weight than a federal court ruling on state law (as has occurred in the Sirius litigation). Grooveshark is also facing claims of federal copyright infringement by Capitol Records in the Southern District Court of New York. Last May, the magistrate judge there recommended summary judgment in favor of Capitol Records, a recommendation Grooveshark subsequently opposed. A resolution remains pending.

Last August, Getty Images sued Microsoft over a “Bing image widget” released by Microsoft that allows third parties to embed on web sites images supplied by Microsoft’s Bing search engine. Getty alleges that this conduct amounts to copyright infringement by Microsoft. The Southern District Court of New York has so far denied a motion for preliminary injunction by Getty (Microsoft had disabled the widget by then) and a motion to dismiss by Microsoft; last month, Microsoft filed its answer and counterclaim.

References   [ + ]

1. Capitol Records v MP3Tunes, Memorandum and Order, 07-CV-9931 (SDNY, September 29, 2014). See MP3Tunes and the Ghost of Cablevision for an analysis questioning this conclusion.
2. Gardner v. CafePress, Order, 3:13-CV-1108 (SD Cali, December 4, 2014) (“[T]he Supreme Court expressly decided not to address the volitional conduct issue which leaves Fox [Broad. Co. v. Dish Network L.L.C., 747 F.3d 1060, 1067 (9th Cir. 2014)] undisturbed. As this Court is bound by Ninth Circuit precedent and Fox is still good law, the Court finds that volitional conduct is a required element of direct infringement.”).
3. Report and Recommendation, Dish Network v. TV Net Solutions, No. 6:12-cv-1629-Orl-41TBS, 2014 U.S. Dist. LEXIS 165305 (MD Fla., Oct. 10, 2014).
4. Dish Network v. TV Net Solutions, 2014 U.S. Dist. LEXIS 165120 (MD Fla., Nov. 25, 2014).
5. Under US law, copyright registration is not mandatory; however, it does confer a number of benefits, including serving as a prerequisite before a civil infringement suit may be filed.
6. Most recently, the Southern District Court of New York on December 9, 2014.
7. See Blurred Lines: Digital Sampling, Bridgeport, and Substantial Similarity.
8. In 2009, the most recent year statistics are available, the average time from notice of appeal to disposition in the Second Circuit was 17.6 months for civil cases. The notice of appeal in Authors Guild v. Google was filed December 23, 2013.
9. A motion for reconsideration also remains pending in the California federal court. The California state court has certified the ruling for interlocutory appeal while the New York federal court has yet to rule on certification.
10. See Grooveshark is Done for a previous discussion of these lawsuits.
11. Supreme Court of the State of New York, County of New York, Index No. 100152/2010 .

2014 was a busy year for copyright policy on a number of fronts, with the House Judiciary Committee, US Copyright Office, and USPTO actively working on a broad range of issues. What will 2015 bring?

House Judiciary Committee

Turning first to the House Judiciary Committee, it will likely continue its review of copyright law. The current copyright review process began nearly two years ago when Register of Copyrights Maria Pallante addressed Congress, saying it was time for it to approach copyright law issues “comprehensively.” Heeding the Register’s call, a Congressional copyright review was formally announced April 24, 2013. Representative Goodlatte (R-VA), chairman of the House Judiciary Committee, said the Committee would hold over the next few months a “comprehensive series of hearings on U.S. copyright law” in order “to determine whether the laws are still working in the digital age.”

Since then, the House Subcommittee on Courts, Intellectual Property, and the Internet has conducted sixteen days of informational hearings, five in 2013, and eleven this past year, on a range of issues across the copyright spectrum. Following November’s elections, Rep. Goodlatte announced Rep. Darrell Issa (R-CA) as chairman of the IP Subcommittee for the 114th Congress, also announcing that all copyright related issues will be handled at the full Committee. Goodlatte has said elsewhere that while the review process will continue into 2015, it is “almost complete.” He has emphasized that no specific goal or end product has been set for the process, saying, “A lot of the problems will be solved not by legislation but by new technologies, by business models, by business deals.”

One issue that hasn’t been heard yet during the review process is the operation of the Copyright Office. The IP Subcommittee did hold an oversight hearing on the Copyright Office September 18, where Register of Copyrights Maria Pallante testified not only about the current status of the Office and its projects but also the obstacles and opportunities it faces going forward. Pallante noted that the Office is “leanly funded” and its “fee authority does not permit the Office to collect for capital improvements or other forms of investment above the cost it incurs in the ordinary course of business.” She said the staff is “smaller than it should be to carry out the volume and complexity of work prescribed by Title 17.” Finally, Pallante remarked that the Office may need to “absorb more direct responsibility for its” technological needs; it currently uses the technical infrastructure of the Library of Congress, “including its network, servers, telecommunications and security operations.” This arrangement results in “both synergies and resource challenges.”

Departments across the Library compete for services and equipment. However, these services do not always support the fact that the Copyright Office is a twenty-four-hour business with a distinct mission. The Copyright Office intersects with a dynamic global marketplace and affects the legal rights and economic interests of those who rely on the provisions of Title 17.

This has been a constant theme of the review process—when Pallante first proposed a comprehensive review of copyright law, she remarked that “Evolving the Copyright Office should be a major goal of the next great copyright act.” 1Maria Pallante, The Next Great Copyright Act, 36 Columbia Journal of Law & the Arts 315, 341 (2013). The article is “is an extended version of the Twenty-Sixth Horace S. Manges Lecture delivered on March 4, 2013 at Columbia Law School.” See also “The Register’s Call for Updates to U.S. Copyright Law”, Subcommittee on Courts, Intellectual Property and the Internet Committee on the Judiciary United States House of Representatives 113th Congress, 1st Session, Statement of Maria A. Pallante, Register of Copyrights of the United States (March 20, 2013); (“evolving the Copyright Office should be a major goal of the next great copyright act.”).

Copyright Office

Pallante expanded on her thoughts during the Eleventh Annual Christopher A. Meyer Memorial Lecture delivered on November 20, 2013 at George Washington University Law School, remarks of which have been edited and published as The Next Generation Copyright Office: What it Means and Why it Matters. There, Pallante noted that there is a desire among the broader copyright community to build a “next generation Copyright Office” that could take advantage of technology to provide a wider array of services.

For example, BMI suggested that it would be useful for the Office to collect and incorporate short digital samples of musical works as part of its registration records, to help people identify copyright ownership. The American Society of Media Photographers and the Graphic Artists Guild suggested it would be helpful for the Office to invest in image recognition technologies to help people find works of visual art. The Association of American Publishers said it would be helpful to the book publishing industry if the Office adopted commercially successful metadata standards for digital content, such as ONIX. And SoundExchange said that if the Copyright Office could develop APIs, then rights management organizations and aggregators could create innovative applications for collecting and disseminating information regarding copyrighted content across the supply chain. In a publication about the Copyright Office released in 2010, Public Knowledge observed that “[t]he long term cost savings created by an easy-to-use, comprehensive registry should easily outweigh the costs associated with its creation.”

Nevertheless, the Copyright Office remains busy going into 2015. It is currently engaged in active policy studies on orphan works and mass digitization, the making available right, and music licensing. While the Office has solicited public comments and held public roundtables on each of these studies over the past year, that does not necessarily mean we will see any outcomes in 2015—it would not be surprising for the Office to call for additional comments or other public input in any of these proceedings. 2Two recently concluded policy studies from the Copyright Office concerning resale royalty and copyright small claims could give some idea of report timelines. The Copyright Office solicited two rounds of public comment regarding resale royalties September 2012 and March 2013 and held a public roundtable April 2013. That report was released December 2013. The study of copyright small claims involved three rounds of comments—October 2011, August 2012, and February 2013—and two sets of public events—a roundtable May 2012 and two days of public hearings November 2012—with the final report released September 2013.

US Patent and Trademark Office

Shifting to the executive branch, The Internet Policy Task Force (IPTF)—a Department of Commerce group led by the US Patent and Trademark Office (USPTO) and the National Telecommunications and Information Administration (NTIA)—held a series of public roundtables over the past year on several topics identified in its 2013 Green Paper, Copyright Policy, Creativity, and Innovation in the Digital Economy. Those include “(1) the legal framework for the creation of remixes; (2) the relevance and scope of the first sale doctrine in the digital environment; and (3) the appropriate calibration of statutory damages in the contexts of (i) individual file sharers and (ii) secondary liability for large-scale infringement.” The stated purpose of these roundtables was to “seek additional input from the public in locations around the country in order for the Task Force to have a complete and thorough record upon which to make recommendations.” During the fourth and final roundtable, held July 30, 2014 in Berkeley, California, Chief Policy Officer and Director for International Affairs at the USPTO Shira Perlmutter remarked that the conclusions and recommendations would be issued in the form of a White Paper, which would likely be issued sometime early 2015.

During 2014, the IPTF also coordinated a multistakeholder process for consensus-building among stakeholders with the aim of producing an agreed outcome by the end of 2014 on the issue of improving the operation of the DMCA notice and takedown system. The final public meeting of 2014 occurred December 18, where the Working Group presented a discussion draft of “Good, Bad and Situational Practices.” The draft notes:

The document represents the near final outcome of eight months of intensive public discussions, meetings, and negotiations in a process that was open to any and all interested stakeholders. A broad range of practices for potential inclusion were considered and discussed intensively over the course of eight months, and this draft contains recommendations on issues within the scope of the group’s work as to which best practices could be formulated.

The draft goes on to note that comments on the specific wording of the draft are now being accepted, and the IPTF will provide further information as to any future plenary meetings of the group.

In sum, 2015 promises to bring plenty of developments in copyright law and policy.

 

References   [ + ]

1. Maria Pallante, The Next Great Copyright Act, 36 Columbia Journal of Law & the Arts 315, 341 (2013). The article is “is an extended version of the Twenty-Sixth Horace S. Manges Lecture delivered on March 4, 2013 at Columbia Law School.” See also “The Register’s Call for Updates to U.S. Copyright Law”, Subcommittee on Courts, Intellectual Property and the Internet Committee on the Judiciary United States House of Representatives 113th Congress, 1st Session, Statement of Maria A. Pallante, Register of Copyrights of the United States (March 20, 2013); (“evolving the Copyright Office should be a major goal of the next great copyright act.”).
2. Two recently concluded policy studies from the Copyright Office concerning resale royalty and copyright small claims could give some idea of report timelines. The Copyright Office solicited two rounds of public comment regarding resale royalties September 2012 and March 2013 and held a public roundtable April 2013. That report was released December 2013. The study of copyright small claims involved three rounds of comments—October 2011, August 2012, and February 2013—and two sets of public events—a roundtable May 2012 and two days of public hearings November 2012—with the final report released September 2013.

Even after two courts in California, one federal and one state, determined in September and October that California state protection of pre-1972 sound recordings includes an exclusive right of public performance, the conventional wisdom seemed to be that the decisions would not stand for too long. The public policy ramifications were too great for the holdings to survive on appeal or through further litigation. But then in November, a federal court in New York came to the same conclusion, and all bets seemed off.

The background of the litigation and issues involved are discussed more fully in the above two links, but very briefly: Flo & Eddie, a corporation made up of two founding members of the Turtles, sued satellite radio provider Sirius XM in federal court in California, New York, and Florida for infringement of their public performance rights under state and common law. The major record labels sued Sirius XM in state court in California alleging the same. Flo & Eddie have so far been granted summary judgment on the issue in California and New York; the record labels have won approval of a jury instruction stating California law grants public performance rights in sound recording owners.

Sirius XM changed legal teams days after the New York decision. 1Note, though, that Sirius XM had already done the same for the California federal court litigation prior to the New York decision. The new team immediately moved for reconsideration in all three proceedings, calling attention to not-yet-cited precedent that it claimed stood for the proposition that pre-1972 sound recordings did not include an exclusive right of public performance.

The case it relied most fully on was RCA Mfg. Co. v. Whiteman, a Second Circuit decision from 1940. 2114 F.2d 86. Sirius also relies on Supreme Records, Inc. v. Decca Records, Inc., 90 F. Supp. 904 (S.D. Cal. 1950) in its California motions. Sirius also raises a Dormant Commerce Clause challenge in its motions, which I won’t discuss here. In Whiteman, a maker of records sought to restrain their broadcast by a radio station. 3Though Whiteman is captioned as the defendant here, he was actually the original plaintiff and performer on the records at issue; the court explains how, procedurally, he ended up being the defendant on appeal:

Before the action was brought Whiteman had filed a complaint against W. B. O. Broadcasting Corporation and Elin, Inc., to restrain the broadcasting of phonograph records of musical performances by Whiteman’s orchestra. By leave of court RCA Manufacturing Company, Inc., then filed the complaint at bar, as ancillary to Whiteman’s action, asking the same relief against W. B. O. Broadcasting Corporation and Elin, Inc., as Whiteman had asked in his action, and in addition asking that Whiteman be adjudged to have no interest in the records of his performances, because of contracts between him and itself. Whiteman thereupon discontinued his action, leaving only the ancillary action in which the judgment on appeal was entered.

The case is one of the earliest to address property interests in sound recordings, the technology itself still in its early stages—state law would not begin protecting sound recordings for two decades, federal law, three. 4US Copyright Office, Federal Copyright Protection for Pre-1972 Sound Recordings, 2011. Musical compositions—the underlying songs that are protected by copyright separately from sound recordings—have had public performance rights protected under federal law since 1897, but even then, it was only until the 1920s that courts recognized that public performance included broadcast by radio. 5Twentieth Century Music Corp. v. Aiken, 422 US 151, 158-59 (1975). The case was, in other words, decided when the law concerning sound recordings was quite primordial.

The Southern District Court of New York was the first to respond to the reconsideration motion from Sirius, and it did not sound happy. In a December 3rd order directing a response to the reconsideration motion from plaintiffs Flo & Eddie, the court said, “Whiteman plainly should have been addressed the first time around, and it must be dealt with now—it is, after all, a Second Circuit decision (albeit a pre-Naxos decision) discussing key issues in this case.” It concluded even more bluntly:

I will not accept reply papers; I will also not hold oral argument. I am well aware of the ramifications of my original ruling, which I did not reach lightly. But in the end, this court does not make policy; I deal in law. Sirius has had its say about the law; Flo & Eddie will weigh in in writing; and I will decide whether or not to reconsider my original ruling.

Two days later, the California state court, where the plaintiffs are the major record labels, considered the motion for reconsideration. The court did not change its original decision that California law recognizes a public performance right in sound recordings, though it did certify the question for interlocutory appeal. 6The California federal court denied to certify the same question for interlocutory appeal on November 20.

It made short work of the arguments from Sirius. It says “Whiteman was limited to New York common law” while the original decision here was based on the text and structure of California statutory law. In addition, it notes that Whiteman “was expressly disapproved in Capitol Records v. Mercury Records Corp.” which held that Whiteman‘s conclusion “is not the law of the State of New York.” The court was equally unpersuaded by Sirius’s reliance on Supreme Records v. Decca Records, a 1950 California decision that the court says “involved the imitation of particular arrangements of a song” rather than addressing “the issue of public performance rights in sound recordings.”

But the worst blow to Sirius’s morale was yet to come. On Friday, December 12, the New York court denied the motion for reconsideration in a remarkably devastating critique of the arguments advanced. It begins by noting, “Obviously Whiteman is a very old case, and does not represent any ‘intervening change of controlling law,’ so the argument must be that the Court’s failure to apply Whiteman constitutes ‘clear error.'” But, says the court, “The only clear error in this case is O’Melveny’s [Sirius’ counsel].” It continues:

Sirius’s former counsel had two perfectly good reasons not to argue the lack of any public performance right on the basis of Whiteman: (1) Whiteman does not hold that New York does not recognize a public performance right as part of the common law copyright in sound recordings; and (2) its actual holding – which is that the sale of sound recordings to the public constituted “publication,” which divested a creation of any common law copyright whatsoever – is no longer good law, and has not been for 60 years.

The court goes on to say that the crux of Whiteman was whether the sound recording was published, and therefore lost any rights it had. It notes that the court did not specify what exactly those rights were—whether they included a right to publicly perform or not. 7I would add that Whiteman appears to make a material error in its discussion. It says, “Copyright in any form, whether statutory or at common-law… consists only in the power to prevent others from reproducing the copy-righted work.” This is clearly not the case, since federal statute had provided a right of public performance to owners of dramatic compositions since 1856, nearly a century prior to Whiteman. In any event, the court adds, Whiteman has since been overruled by New York courts.

Sirius also asserted a Constitutional challenge to Flo & Eddie’s claims based on the Dormant Commerce Clause. The court’s clarity here concerning property and commerce is worth quoting:

Sirius does not dispute that the reach of the Dormant Commerce Clause is only to state actions properly characterized as “regulations.” Instead of explaining how liability for common law copyright infringement constitutes a regulation, Sirius dodges and misconstrues the issues.

The question is whether the law at issue – common law copyright – constitutes “regulation.” In the one case Sirius does cite applying the Commerce Clause to a judicial finding of liability the law involved [] a California statute requiring pre-approval for marketing cosmetic products. The cases holding that a law may violate the Dormant Commerce Clause because of its “practical effects” on interstate commerce each involved state liquor-pricing schemes. All of those state laws -pharmaceutical approval and liquor pricing laws – are classic instances of states exercising their regulatory power, and are very different from this case, where the issue is protection of property rights.

Protecting Flo and Eddie from the theft of its property is not “regulation”; a simple example illustrates the point. Suppose, instead of stealing Flo and Eddie’s property rights in the sound recordings, someone stole its company car, which was then used to operate an interstate taxi service. The Dormant Commerce Clause obviously would not bar Flo and Eddie from maintaining an action at common law for conversion of the car. And that would be true even though the action, and the return of the car and the end of the taxi service, would affect interstate commerce. State laws barring theft do not violate the Dormant Commerce Clause.

The court ultimately defers on certification of this issue for interlocutory appeal.

That leaves pending the motion for reconsideration in the California federal court (a proposed motion seeks hearing January 26, 2015) and the motion for summary judgment on the same issue in Florida.

Thus far, things have not gone well for Sirius. But it may be the case that the issues in the cases are resolved legislatively before they are resolved through litigation—the Copyright Office has already reported on federalization of pre-1972 sound recordings and taken up the issue in a recent round of public comments, and the House Judiciary Committee considered the issue during a two part hearing this past June. Proposed legislation that would bring these recordings within the compulsory license that Sirius relies on for digital performances of sound recordings (stopping short of full federalization) was introduced this past session.

Many sound recordings made before 1972 remain economically valuable, as this series of litigation demonstrates. At the same time, there are numerous issues remaining to be resolved if federalization is the goal. But in the interim, the recognition by several courts of the property rights of creators to the products of their intellectual labors is welcome.

References   [ + ]

1. Note, though, that Sirius XM had already done the same for the California federal court litigation prior to the New York decision.
2. 114 F.2d 86. Sirius also relies on Supreme Records, Inc. v. Decca Records, Inc., 90 F. Supp. 904 (S.D. Cal. 1950) in its California motions. Sirius also raises a Dormant Commerce Clause challenge in its motions, which I won’t discuss here.
3. Though Whiteman is captioned as the defendant here, he was actually the original plaintiff and performer on the records at issue; the court explains how, procedurally, he ended up being the defendant on appeal:

Before the action was brought Whiteman had filed a complaint against W. B. O. Broadcasting Corporation and Elin, Inc., to restrain the broadcasting of phonograph records of musical performances by Whiteman’s orchestra. By leave of court RCA Manufacturing Company, Inc., then filed the complaint at bar, as ancillary to Whiteman’s action, asking the same relief against W. B. O. Broadcasting Corporation and Elin, Inc., as Whiteman had asked in his action, and in addition asking that Whiteman be adjudged to have no interest in the records of his performances, because of contracts between him and itself. Whiteman thereupon discontinued his action, leaving only the ancillary action in which the judgment on appeal was entered.

4. US Copyright Office, Federal Copyright Protection for Pre-1972 Sound Recordings, 2011.
5. Twentieth Century Music Corp. v. Aiken, 422 US 151, 158-59 (1975).
6. The California federal court denied to certify the same question for interlocutory appeal on November 20.
7. I would add that Whiteman appears to make a material error in its discussion. It says, “Copyright in any form, whether statutory or at common-law… consists only in the power to prevent others from reproducing the copy-righted work.” This is clearly not the case, since federal statute had provided a right of public performance to owners of dramatic compositions since 1856, nearly a century prior to Whiteman.

Almost a month to the day after a California state court became the second court in this fall to recognize a public performance right for pre-1972 sound recordings, the Southern District Court of New York has held that New York State common law also recognizes such rights.

The court on Friday, November 14, 2014, denied satellite radio provider Sirius XM’s motion for summary judgment and ordered it to show cause why summary judgment should not be entered in favor of the plaintiffs Flo & Eddie, the corporation owned by two of the original members of the rock band the Turtles. It did so after concluding, among other things, that “general principles of common law copyright dictate that public performance rights in pre-1972 sound recordings do exist.”

As previously explained, Congress extended federal copyright protection to sound recordings in 1972, but only prospectively, meaning sound recordings made before 1972 would only be protected, if at all, under state and common law. Also, unlike musical compositions, Congress did not provide sound recordings owners with a public performance right under federal law, so a songwriter would get royalties when her song is played, for example, on the radio, but the performing artist would not.

Congress extended to sound recording owners a limited public performance right for digital audio transmissions in 1995. At the same time, it created a compulsory licensing scheme for such transmissions for satellite radio providers.

In recent years, Sirius XM began discounting the amount of royalties it paid under this compulsory license, proceeding under the basis that it didn’t have to pay royalties for performances of pre-1972 sound recordings under federal law.

The satellite provider faced a slew of lawsuits following that decision. SoundExchange, the organization that collects and distributes digital performance royalties under the compulsory license, filed a complaint August 2013 in federal court. A group of music labels sued Sirius XM in California state court in September 2013. And Flo & Eddie filed putative class action suits in California, New York, and Florida.

The Decision

Here, the Southern District Court of New York began its decision by noting that it was undisputed that Flo & Eddie have a common law copyright in their sound recordings. Under New York law, “artists can acquire a common law copyright in ‘any original material product of intellectual labor’—including sound recordings—by expending ‘time, effort, money, and great skill’ in its creation.” Sirius, however, argued that this right only covers reproduction and distribution, not public performance.

The court disagreed, noting initially that this argument has to be resolved by looking “to the background principles and history of New York copyright common law” rather than referring to the federal copyright act. And under the common law, New York has long recognized public performance rights for copyright owners of plays and films.

Sirius’s strongest argument is to ask why then, if recording artists and record labels had the exclusive right to publicly perform their works, they waited decades to assert that right. The court devotes considerable attention in response. First, it can’t infer that “the common law copyright in sound recordings does not encompass all of the rights traditionally accorded to copyright holders in other works” simply because this is the first case to raise the issue. The fact that participants in the recording industry had waited so long simply demonstrates a failure to act, not a lack of an enforceable common law right.

This judicial silence is not unique to the circumstances of this case. The court says, “The Supreme Court, for example, failed to grapple with many fundamental constitutional questions for the first 150 years of the Constitution’s existence.” It cites to the opinion from DC v Heller, where the majority observed that it “first held a law to violate the First Amendment’s guarantee of freedom of speech in 1931, almost 150 years after the Amendment was ratified, and it was not until after World War II that we held a law invalid under the Establishment Clause.” 1554 US 570, 625 (2008). Yet we wouldn’t say that proves we don’t have freedom of speech.

The court then turns the tables, saying

An arguably stronger argument can be made that years of judicial silence implies exactly the opposite of what Sirius contends—not that common law copyright in sound recordings carries no right of public performance, but rather that common law copyright in sound recordings comes with the entire bundle of rights that holders of copyright in other works enjoy. No New York case recognizing a common law copyright in sound recordings has so much as suggested that right was in some way circumscribed, or that the bundle of rights appurtenant to that copyright was less than the bundle of rights accorded to plays and musical compositions.

The court also points to federal law as supporting the argument that copyright in sound recordings includes an exclusive right of public performance, saying “if public performance rights were not part of the normal bundle of rights in a copyright, Congress would not have needed to carve out an exception specifically for sound recordings” when it extended protection to them in 1971.

Next, the court responds to the policy arguments raised by Sirius. The satellite provider argued that “affording public performance rights would not serve the underlying purposes of copyright law because pre-1972 recordings already exist and further rights cannot create incentives for the creation of new pre-1972 recordings.” But the court finds that this claim advances a far too narrow view of copyright under both New York and federal law, concluding that rewarding past creativity is just as proper a goal under either statutory or common law copyright as fostering future creativity.

Sirius also calls attention to the potential disruption and administrative difficulties that recognizing public performance rights for pre-1972 sound recordings under the common law could cause. The court is sympathetic to these policy arguments but ultimately unpersuaded.

Sirius may well be correct that a legislative solution would be best. But the common law, while a creature of the courts, exists to protect the property rights of the citizenry. And courts are hardly powerless to craft the sort of exceptions and limitations Congress has created, or to create a mechanism for administering royalties.

What’s Next

In the wake of this decision, Sirius replaced its legal team, which may indicate it is looking at shifting strategy. However, as noted above, two courts in California—state and federal—similarly concluded that California state copyright law includes an exclusive right of public performance for sound recording owners. That increases the likelihood that a decision recognizing such a right survives any potential appeal.

There remains a third lawsuit filed by Flo & Eddie against Sirius XM pending in Florida. Will the court there provide a clean sweep for public performance rights in pre-1972 sound recordings, or will it break rank from the California and New York courts? Even if it does the former (the likelihood of which has increased following the New York decision), I think the court is correct in suggesting “a legislative solution would be best.” Federalization would provide far more consistency in the protection of sound recording owners’ use and enjoyment of their rights; however, such a transition implicates a host of issues, some not readily apparent. The Copyright Office discusses many of these issues in its 2011 report on Federal Copyright Protection for Pre-1972 Sound Recordings. Both the Copyright Office and the House IP Subcommittee are already interested in addressing pre-1972 and other music-related copyright issues; this decision could only serve to motivate them further.

References   [ + ]

1. 554 US 570, 625 (2008).

The issue of whether to enact performance rights for sound recordings has been debated by parties, courts, national legislatures, and intergovernmental bodies in various State, Federal, foreign, and international forums for more than 40 years. It was one of the most hotly contested issues in the recent program for general revision of the Federal copyright law, and it remains highly controversial. 1Performance Rights in Sound Recordings, House Judiciary Committee Subcommittee on Courts, Civil Liberties, and the Administration of Justice, pg iv (1978).

The Librarian of Congress wrote that in 1978. But the issue of performance rights for sound recordings in the US remains just as hotly contested 36 years later. The issue has heated up thanks to several recent court decisions involving satellite radio provider SiriusXM.

The public performance of sound recordings created after 1972 by satellite radio providers is governed under federal law by a compulsory license administered by the Copyright Royalty Board. 217 USC § 114(d)(2). According to the Hollywood Reporter, “Over the last few years, SiriusXM has been allegedly reducing its reported gross revenues by between 10 and 15 percent,” after deciding to stop paying royalties on sound recordings made before 1972. The result has been a number of lawsuits filed by various owners of pre-1972 sound recordings.

These court holdings could end up having a big impact on the music landscape, even if they may be appealed.

Music v. SiriusXM

The first decision came from a federal court on September 22, brought by Flo & Eddie, founding members of the rock band The Turtles. The Central District Court of California held SiriusXM liable for copyright infringement on a motion for summary judgment. During litigation, SiriusXM did not dispute that it was publicly performing Flo & Eddie’s sound recordings. Rather, it argued that public performance rights aren’t secured under California state law.

The court began its analysis by looking at the plain text of California’s copyright statute, which provides that

The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound recording.

The court asked, “What does it mean to have ‘exclusive ownership’ in a sound recording ‘as against all persons’?” Both ordinary meaning and the California legislature define ownership as “having the right to use and possess the recording to the exclusion of others.” The only exclusion to this right to use in the statute is an exclusion of the right to make “cover” versions of a sound recording (versions that “imitate or simulate the sounds contained in the prior sound recording” but “consist[] entirely of an independent fixation of other sounds”). The court inferred that the legislature didn’t intend any further limitations, “otherwise it would have indicated that intent explicitly.”

The court next found that the case law supports this interpretation, and noted that SiriusXM was unable to point to any cases that cut against a public performance right in sound recordings under California law. On the other hand, several cases do presume its existence.

More recently, a California state court adopted a jury instruction that includes public performance among a sound recording owner’s rights in a case brought by the RIAA. Like the federal court, the state court started with the plain text of the statute, finding it insufficient to answer the question of whether California’s copyright law secured a sound recording owner’s public performance rights.

Ownership of a sound recording is not as easily defined as ownership of tangible property. For example, a person may purchase a tangible good such as an automobile and use it how he or she wishes- drive it, give it to their child, resell it- without violating the automobile manufacturer’s rights. When an individual owns a sound recording and sells authorized copies of that sound recording to others, the issue of how those persons may use their authorized copies of the sound recording is more complicated. Can the purchaser play the recording for friends who did not purchase it? Can the purchaser broadcast it over an amplifying system at a party? Can it be digitally broadcast over the radio? Civil Code §980 does not explicitly address the issue of how purchasers of authorized copies of sound recordings may use those copies.

Taking judicial notice of the Flo & Eddie decision, the California state court was persuaded that the presence of one exception in the statute—for “cover” recordings—suggested an absence of any other limitations on rights. The court also agreed that the case law indicated a public performance right existed with no decision to the contrary.

“The pen is mightier than the sword”

While this is the first time courts have directly recognized a common law public performance right in sound recordings, the decision is consistent with the existing contours of non-federal copyright.

The first statutory recognition of a copyright owner’s exclusive right to publicly perform a work appeared in England in 1833. 3Dramatic Literary Property Act, 1833, 3 & 4 Will. 4, c. 15 (Eng.). The author of the Act, Edward Bulwer-Lytton, introduced the bill by pointing out that the object was to more completely secure an author’s property:

At this moment dramatic authors possessed no control over the use of their property . . . . A play, when published, might be acted upon any stage without the consent of the author, and without his deriving a single shilling from the profits of the performance. It might not only be acted at one theatre, but at 100 theatres, and though, perhaps, it filled the pockets of the managers, not a single penny might accrue from its performance, however successful, or however repeated, to the unfortunate author. 416 PARL. DEB., H.C. (3d ser.) (1833) 560 (U.K.), quoted in Shane D. Valenzi, A Rollicking Band of Pirates: Licensing the Exclusive Right of Public Performance in the Theatre Industry, 14 Vanderbilt Journal of Entertainment and Technology Law 759, 765 (2012).

The US extended the same protection in 1856, and like England, only to dramatic authors. 5Act of Aug. 18, 1856, 11 Stat. 138. An 1897 statute enlarged the public performance right to include nondramatic musical compositions — songs. 6Act of January 6, 1897, 44th Cong., 2d Sess., 29 Stat. 694. Around the same time, the technology to record and playback sounds themselves began to develop, and with that development brought new copyright questions. Congress provided that songwriters had the exclusive right to record songs onto phonorecords in 1909.

But while bills to include sound recordings among federally protected subject matter began to appear in Congress as early as 1925, 7H.R. 11258, 68th Cong., 2d sess. (1925). it would be several decades before the recording artists themselves would see their rights secured. States would first enact legislation to protect the copyright of recording artists, and finally in 1972, federal law extended protection — but only for reproduction and distribution, not public performance. 8Pub. L. 92-140, 85 Stat. 391 (1971). A 1965 report from the Register of Copyrights had noted that the issue of public performance for sound recordings remained “explosively controversial.” 9Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1965 Revision Bill” (1965). The Register concluded that while “we cannot close our eyes to the tremendous impact a performing right in sound recordings would have throughout the entire entertainment industry… We are convinced, under the situation now existing in the United States, that the recognition of a right of public performance in sound recordings would make the general revision bill so controversial that the chances of its passage would be seriously impaired.”

In 1995, Congress extended a right of public performance to sound recordings, limited, though, to digital transmissions. 10Digital Performance Right in Sound Recordings Act, Pub. L. No. 104-39, 109 Stat. 336 (1995). The right was cabined by a number of compulsory licenses, including one for non-interactive services (music services that resemble radio broadcasts). Interactive services, like Spotify, negotiate licenses directly with copyright owners of sound recordings for performances. Federal law still does not secure full public performance rights to sound recordings, so users such as AM/FM radio do not require permission to broadcast recordings (though they do need permission from songwriters and publishers to broadcast the underlying musical compositions).

The “general revision bill” mentioned above—which eventually became the 1976 Copyright Act—included a historically major change relevant to our discussion. Prior to the Act, both federal and state law concurrently protected copyright. 11Goldstein v. California, 412 US 546 (1973). The 1976 Act would include an express preemption provision, making copyright solely the province of federal law. 1217 U.S. Code § 301. Notably, that provision would not extend to sound recordings fixed prior to 1972, allowing state and common law to continue to protect them until February 15, 2067. 1317 U.S. Code § 301(c).

The question of whether to bring pre-1972 sound recordings under federal law now rather than waiting until 2067 remains a hot issue today. 14On May 29, 2014, Rep. George Holding introduced the RESPECT Act, which would require licensors under the compulsory licenses for digital audio transmissions to also license pre-1972 sound recordings, one step short of full federalization. As part of its ongoing copyright review process, the House Judiciary Subcommittee on Courts, IP, and the Internet held two hearings on music licensing issues, including whether the law should change regarding pre-1972 sound recordings. The US Copyright Office is currently involved in its own study of music licensing issues, including pre-1972 issues. Interestingly, in a report on performance rights in sound recordings released after the 1976 Act went into effect, the Copyright Office said:

Considerations of national uniformity, equal treatment, and practical effectiveness all point to the importance of Federal protection for sound recordings, and under the Constitution the copyright law provides the appropriate legal framework. Preemption of state law under the new copyright statute leaves sound recordings worse off than they were before 1978, since previously an argument could be made for common law performance rights in sound recordings. [Emphasis added.]

Publication and performance

While the federal copyright act is clear about the scope of the public performance right of sound recordings under federal law, the question remains about those made before 1972. I think further clarification can be found by looking at the concept of “publication” in copyright law.

Before 1976, federal copyright protection required publication—unpublished works were protected by common law. Publication destroyed this common law protection, and if the author did not register the copyright or otherwise comply with existing formalities, the work was considered abandoned or dedicated to the public. Despite its pivotal role, “publication” was not defined by statute, so it was up to courts to determine its precise meaning. And they fairly consistently held that a performance of a work did not amount to a publication of a work. The Supreme Court noted in 1912, “The public representation of a dramatic composition, not printed and published, does not deprive the owner of his common-law right, save by operation of statute. At common law, the public performance of the play is not an abandonment of it to the public use.” 15Ferris v. Frohman, 223 US 424, 435 (1912); See also E.J. MacGillivray, A Treatise upon the Law of Copyright in the United Kingdom and the Dominions of the Crown, and in the United States of America, pg. 296 (London 1902) (“Performance on the stage not being a publication, affects neither the right of copy nor the performing right.”); William Strauss, Protection of Unpublished Works, Copyright Revision Study No. 29, pp. 10-12 (1957).

But does this mean there is an independent right of representation or performance at common law? In Tompkins v Halleck, 16133 Mass. 32 (1882). the Supreme Court of Massachussetts said yes. There, the proprietor of an unpublished and unregistered play sought an injunction against defendants, who had memorized the play during performances and began putting on competing performances. Thus, the claim was not for some contractual breach or unauthorized copying, but unauthorized public performance at common law.

In reaching its conclusion that a common law copyright property interest includes an exclusive right of public performance, the Court explained:

Dramatic compositions differ from other literary productions not intended for oral delivery in this, that they have two distinct values, each worthy of protection; — that which they have as books or publications for the reader, and that which they have by reason of their capacity for scenic representation. They are works, in prose or poetry, in which stories are told or characters represented both by conversation and action. Some are poems cast in a dramatic form, capable of representation upon the scene rather than adapted to it, and whose most valuable characteristic is their purely literary merit. Others, of but slight literary pretensions, and affording but little satisfaction in the perusal, are found agreeable in representation from the spirited development of the story which is told in action, the vivacity and interest of the events displayed, even if the conversations of the imaginary characters, out of this connection, would appear tame and unattractive. The most perfect are those which, like some of the tragedies of Shakespeare, as Hamlet or Macbeth, are adapted alike to the library and the stage, and which address themselves more agreeably to those who read or those who hear, as such persons themselves differ in their respective capacities for enjoyment.

That the right of property which an author has in his works continues until by publication a right to their use has been conferred upon or dedicated to the public, has never been disputed. If such publication be made in print of a work of which no copyright has been obtained, it is a complete dedication thereof for all purposes to the public. If of a work of which a copyright has been obtained, it is so dedicated, subject to the protection afforded by the laws of copyright, the author accepting the statutory rights thereby given in place of his common-law rights. But the representation of an unprinted work upon the stage is not a publication which will deprive the author or his assignee of his rights of property therein. It will not interfere with his claim to obtain a copyright therefor. Nor will it deprive him of his power to prevent a publication in print thereof by another.

Nor can we perceive why it should deprive him of his right to restrain the public representation thereof by another.

The Court concludes, “The special use of his play made by the author, for his own advantage, by a representation thereof for money, is not an abandonment of his property nor a complete dedication of it to the public, but is entirely consistent with an exclusive right to control such representation,” a conclusion later cited positively by the US Supreme Court, which spoke of “the common-law right of representation in this country.” 17Ferris, supra., at 436. This is the same conclusion that at least one contemporary treatise had reached. William Theophilus Brantly, Principles of the Law of Personal Property, §67 pg 109 (San Francisco 1891) (citing Boucicalt v. Hart, 13 Blatchf. 47; Palmer v. DeWitt, 47 N.Y. 532) (“The unauthorized representation of an unpublished play is a violation of the owner’s common law, and not of his statutory rights…”).

That leaves us with one final question: If a public performance right in sound recordings is consistent, as I’ve argued, with the contours of state and common law copyright, then why have courts just now expressly recognized it?

In Productive Use in Acquisition, Accession, and Labour Theory, professor Eric Claeys describes legal property rights as sitting on a continuum between the right merely to use an object (use rights) and the right to exclude others from using an object (control rights). John Locke’s theory of labour, says Claeys, “is grounded in use [but] does not justify control rights straightforwardly.” How does one then derive control rights from a justification of use rights? Claeys argues:

In theories of natural law or rights like Locke’s, positive laws need not and often should not parallel strictly the moral principles they implement. Labour supplies a non-conventional ‘Foundation’ for property—but it justifies and requires the exercise of prudent judgment to implement the foundations it lays. For some assets—say, riparian water in temperate climates—legal use rights appropriately secure labor-based moral use rights. Paradoxically, however, for land and chattels, legal rights of exclusive control secure labour better than usufructs.

Logically, this means that rights may remain dormant, morally justified but not secured by positive law. The Second Circuit observed nearly sixty years ago that “Literary property is in essence a right to exclude, to a greater or lesser extent, others from making some or all use of the expressed thoughts of an author. The number of the conceivable grades of the extent of the exclusion and the number of the conceivable kinds of uses of the thoughts of authors are almost limitless.” 18Capitol Records v. Mercury Records Corporation, 221 F. 2d 657, 662 (2nd Circuit 1955). When and how the rights to these kinds of uses are secured by positive law is often more a matter of history than principle. In the last month, two courts have concluded that that right includes a right of public performance, and while the decisions are sure to be appealed, they are a welcome confirmation of a creator’s rights to the fruits of her labor.

References   [ + ]

1. Performance Rights in Sound Recordings, House Judiciary Committee Subcommittee on Courts, Civil Liberties, and the Administration of Justice, pg iv (1978).
2. 17 USC § 114(d)(2).
3. Dramatic Literary Property Act, 1833, 3 & 4 Will. 4, c. 15 (Eng.).
4. 16 PARL. DEB., H.C. (3d ser.) (1833) 560 (U.K.), quoted in Shane D. Valenzi, A Rollicking Band of Pirates: Licensing the Exclusive Right of Public Performance in the Theatre Industry, 14 Vanderbilt Journal of Entertainment and Technology Law 759, 765 (2012).
5. Act of Aug. 18, 1856, 11 Stat. 138.
6. Act of January 6, 1897, 44th Cong., 2d Sess., 29 Stat. 694.
7. H.R. 11258, 68th Cong., 2d sess. (1925).
8. Pub. L. 92-140, 85 Stat. 391 (1971).
9. Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1965 Revision Bill” (1965).
10. Digital Performance Right in Sound Recordings Act, Pub. L. No. 104-39, 109 Stat. 336 (1995).
11. Goldstein v. California, 412 US 546 (1973).
12. 17 U.S. Code § 301.
13. 17 U.S. Code § 301(c).
14. On May 29, 2014, Rep. George Holding introduced the RESPECT Act, which would require licensors under the compulsory licenses for digital audio transmissions to also license pre-1972 sound recordings, one step short of full federalization. As part of its ongoing copyright review process, the House Judiciary Subcommittee on Courts, IP, and the Internet held two hearings on music licensing issues, including whether the law should change regarding pre-1972 sound recordings. The US Copyright Office is currently involved in its own study of music licensing issues, including pre-1972 issues.
15. Ferris v. Frohman, 223 US 424, 435 (1912); See also E.J. MacGillivray, A Treatise upon the Law of Copyright in the United Kingdom and the Dominions of the Crown, and in the United States of America, pg. 296 (London 1902) (“Performance on the stage not being a publication, affects neither the right of copy nor the performing right.”); William Strauss, Protection of Unpublished Works, Copyright Revision Study No. 29, pp. 10-12 (1957).
16. 133 Mass. 32 (1882).
17. Ferris, supra., at 436. This is the same conclusion that at least one contemporary treatise had reached. William Theophilus Brantly, Principles of the Law of Personal Property, §67 pg 109 (San Francisco 1891) (citing Boucicalt v. Hart, 13 Blatchf. 47; Palmer v. DeWitt, 47 N.Y. 532) (“The unauthorized representation of an unpublished play is a violation of the owner’s common law, and not of his statutory rights…”).
18. Capitol Records v. Mercury Records Corporation, 221 F. 2d 657, 662 (2nd Circuit 1955).

On Monday, a federal district court held that Escape Media, which operates streaming music service Grooveshark, was liable for copyright infringement, “creating a business model that was based upon the unlicensed sharing of copyright protected material.” According to the court [Opinion], Escape’s Chairman “bet the company on the fact that [it] is easier to ask forgiveness than it is to ask permission” — now he will get the chance to test that claim.

The lawsuit was filed in 2011 by Universal Music Group along with eight other record labels. 1Atlantic Recording Corporation, Zomba Recording, Elektra Entertainment Group, Arista Records, LaFace Records, Warner Bros. Records, Arista Music, and Sony Music Entertainment. Universal had earlier filed a lawsuit against Escape in a New York state court (more on that below). During those proceedings, Universal discovered evidence that Escape employees were personally uploading copyrighted sound recordings to Grooveshark. Universal, joined by the other sound recording plaintiffs, quickly filed suit in federal court following this revelation for copyright infringement against Escape Media and its two co-founders, Samuel Tarantino and Joshua Greenberg.

Universal moved for summary judgment this past February and now the court has released its decision.

Groovin’ on up

As the court explains, Grooveshark began in 2006 as a peer-to-peer network that allowed users to copy and distribute digital music files among other Grooveshark users. Tarantino and Greenberg formed Escape Media with the ultimate goal of creating a business around the network, a business that the company knew “depended upon the use of infringing content.” However, in its early days, “Grooveshark did not have a large user base to leverage as a source for content.” So Escape turned to its employees, instructing them “to create Grooveshark user accounts and to store hundreds of thousands of digital music files on their computers in order to upload or ‘seed’ copies of these files to other Grooveshark users.” 2One message from Greenberg written in 2007 that the court quotes is quite colorful. In it, he instructs employees to “Download as many MP3’s as possible, and add them to the folders you’re sharing on Grooveshark. Some of us are setting up special ‘seed points’ to house tens or even hundreds of thousands of files, but we can’t do this alone… There is no reason why ANYONE in the company should not be able to do this, and I expect everyone to have this done by Monday… IF I DON’T HAVE AN EMAIL FROM YOU IN MY INBOX BY MONDAY, YOU’RE ON MY OFFICIAL SHIT LIST.”

In June 2007, Escape switched from a peer-to-peer model to one using centralized servers. Not only did it update its software to “automatically copy every unique music file from each of its users’ computers and upload them to the storage library,” but it continued to instruct employees to manually add copyrighted content to the servers. In 2008, the company evolved from a file-sharing service to an on-demand music streaming service, its present form. Uploading infringing files remained “a regular part of Escape employees’ job responsibilities up and until the initiation of the present litigation.” In addition, “Escape’s senior officers searched for infringing songs that had [been] removed in response to DMCA takedown notices and re-uploaded infringing copies of those songs to Grooveshark to ensure that the music catalog remained complete.”

Universal specifically alleged that Escape is liable for direct infringement as well as indirect infringement in the form of vicarious liability, inducement, and contributory infringement. Universal also brought claims against Tarantino and Greenberg personally. If ever there was an open and shut case for infringement, this is it, a fact that even Escape seemed to recognize. The court notes:

In support of these claims, plaintiffs have created a substantial and largely uncontroverted record of evidence. Confronted with this body of evidence, defendants have chosen a purposeful litigation strategy. As discussed above, defendants have primarily mounted procedural and evidentiary challenges to plaintiffs’ copyright infringement claims. Defendants devote very little of their summary judgment memorandum to actually engaging with the substance of plaintiffs’ copyright claim.

And indeed, while the court discusses each of these claims, there is never any doubt as to its conclusions.

Though Escape has suggested an appeal is possible, its chances of success seem highly doubtful. The parties are now briefing on the scope of permanent injunctive relief.

Groovesharknado

This isn’t the only lawsuit Escape Media is currently facing. As mentioned above, this lawsuit resulted from a still ongoing New York state action brought by Universal for common law claims pertaining to pre-1972 sound recordings (which are not protected under federal copyright law 3See Federal Copyright Protection for Pre-1972 Sound Recordings, A Report of the Register of Copyrights (2011). ). In April 2013, a New York state appellate court dismissed Grooveshark’s DMCA defense, holding that the federal safe harbors do not protect against state and common law copyright claims.

Last week, Universal moved for summary judgment on its claims that Escape infringed its common law rights of distribution, reproduction, and public performance (UMG is also seeking summary judgment on an unfair competition claim) — infringement alleged to occur independently of Escape employees and officers uploading copyrighted content themselves. Universal argues in its memorandum of law supporting the motion that “At all relevant times, Escape employed a business model for Grooveshark that was based upon the use of infringing content.”

[R]ather than obtaining… licenses, Escape made a calculated business decision to launch Grooveshark, utilizing infringing label content in order to grow faster, reduce costs and attempt to strike more favorable licensing deals… Indeed, Escape’s officers openly discussed the possibility that they would never have to pay for their unauthorized use of copyrighted content. Specifically, they hoped that by illegally growing their user base, they could collect valuable data about Grooveshark users’ listening habits, which they could then sell to the labels for more than Escape would have to pay in licensing fees.

Additionally, a separate federal lawsuit with Capitol Records (d/b/a EMI) as the sole plaintiff was filed against Escape in the Southern District Court of New York in 2012. EMI had previously sued Escape in 2009. The two companies settled and entered into a distribution agreement, “which granted Escape the right to distribute digitally EMI’s content on Grooveshark.” However, Escape repeatedly breached the terms of the license and failed to make payments, leading EMI to terminate the agreement. It sued again for infringement occurring after the termination.

The magistrate judge assigned to that litigation recommended this past May that Escape’s DMCA defense be rejected and summary judgment be “granted in favor of EMI on its claims for direct infringement of the right of performance under federal law, secondary infringement under federal law for both contributory and vicarious infringement, and direct and secondary infringement under New York common law for copyrighted works not covered by the Copyright Act.” Escape subsequently filed objections to that report, meaning a district court judge must review the findings de novo, a review that remains pending.

The recommendation is clear that even if employees didn’t personally upload any files, the service would still be liable for facilitating and profiting off of massive infringement. Most significantly, the magistrate judge found that Escape did not implement a policy for terminating repeat infringers, one of the conditions for safe harbor protection under the DMCA.

Courts have recognized a wide range of procedures and practices for implementing a repeat infringer policy that constitute “implementation” under § 512(i)(1)(A), and they should continue to do so. Thus, there is a high bar for a plaintiff to show that a service provider, as a matter of law, does not “implement” its repeat infringer policy within the meaning of the DMCA. The undisputed facts before the Court, however, point only to that conclusion. Escape does not have a repeat infringer policy or an alternative policy that serves the same purpose; does not keep records of repeat infringement sufficient to enforce an adequate repeat infringer policy; permits an extensive amount of repeat infringement to occur without taking action or making a record; depends upon a small number of repeat and flagrant infringers to supply a substantial amount of the content available on Grooveshark; takes action in response to copyright owners’ DMCA notifications of infringement that fails to actually make the song unavailable or prevent it from reappearing immediately on Grooveshark; prevents copyright owners from collecting the data necessary to issue DMCA notifications in a meaningful way; and, finally, has never terminated a repeat infringer’s account and has no policy or procedure for doing so. For these reasons in combination, the Court finds that Escape does not “implement” a repeat infringer policy under § 512(i)(1)(A) and is thus ineligible for DMCA safe harbor.

Groove is in the Shark

Monday’s decision should be welcomed by everyone. Even the most ardent copyright minimalist would agree that the law should, at the least, provide a remedy for intentional, wide-scale, commercial piracy. The real question is whether the DMCA, as it is currently interpreted, provides too much cover to companies engaged in this type of large scale piracy. Evidence of employee uploads was only uncovered after years of litigation by major record companies (never mind that employee uploads still only made up a minority of songs available through the site). Up til then, Grooveshark was able to operate a largely unlicensed commercial music streaming service in the open, with a plausible claim that the DMCA shielded it from legal liability because of how courts have interpreted the safe harbor.

Grooveshark is not that different from other online services. Escape’s belief that it’s “easier to ask forgiveness than it is to ask permission” is as close to a Silicon Valley mantra as you will find, where “permission” is often considered a dirty word. Throughout its tenure, it has cloaked itself in buzzword-laden innovation talk. Its founders parrot the same “music should be free” talking points heard all too often and claim that the problem in the music industry is outdated business models, not rampant online infringement.

But this court decision reveals that this was all just a smokescreen to obscure the fact that Escape Media was illicitly profiting off the work of others, to the detriment of the public interest.

This illustrates how the DMCA has failed in its goal of providing “strong incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements that take place in the digital networked environment.” 4H. Rep. 105-796, 105th Congress (1997). Escape Media’s wanton infringement would not have been discovered had it not been possible for record labels to move forward with litigation in state courts because of the distinct treatment of pre-1972 sound recordings under the federal Copyright Act, a quirk unavailable to other types of copyright owners — makers of film and television programs, photographs and works of visual arts, or books, for example.

Earlier this year, US Representatives Judy Chu and Tom Marino wrote that the DMCA is not only ineffective but actually “favors non-compliance.” Grooveshark is the poster child for this effect. Media companies end up having to send millions upon millions of takedown notices and spend years in litigation just to be able to continue to create and distribute the works that consumers want. The situation is worse for small businesses and individual creators; they are faced with choosing between spending time and resources they don’t have going after infringers or giving up entirely, a point vividly make in last week’s Ars Technica article, Bugging Out: How Rampant Online Piracy Squashed One Insect Photographer by (former) professional photographer Alex Wild.

References   [ + ]

1. Atlantic Recording Corporation, Zomba Recording, Elektra Entertainment Group, Arista Records, LaFace Records, Warner Bros. Records, Arista Music, and Sony Music Entertainment.
2. One message from Greenberg written in 2007 that the court quotes is quite colorful. In it, he instructs employees to “Download as many MP3’s as possible, and add them to the folders you’re sharing on Grooveshark. Some of us are setting up special ‘seed points’ to house tens or even hundreds of thousands of files, but we can’t do this alone… There is no reason why ANYONE in the company should not be able to do this, and I expect everyone to have this done by Monday… IF I DON’T HAVE AN EMAIL FROM YOU IN MY INBOX BY MONDAY, YOU’RE ON MY OFFICIAL SHIT LIST.”
3. See Federal Copyright Protection for Pre-1972 Sound Recordings, A Report of the Register of Copyrights (2011).
4. H. Rep. 105-796, 105th Congress (1997).

On Thursday, the Digital Citizens Alliance released a report revealing how profitable copyright infringement can be for cyberlockers. The study by NetNames, Behind the Cyberlocker Door, found that the top fifteen direct download cyberlockers and top fifteen streaming cyberlockers rake in over $96 million a year. This represents absurdly high profit margins — 63.4% for direct download and 87.6% for streaming — due in no small part to the exploitation of infringing content. The study estimates that “78.6 percent of files on direct download cyberlockers and 83.7 percent of files on streaming cyberlockers” infringe.

One interesting question that emerges from the report is whether one can draw a distinction between cyberlockers and legitimate online storage providers. The NetNames report provides a useful guide.

Copyright implicates tricky questions when it comes to services that enable copying. Copying is no doubt a useful function: think of photocopiers, VCRs, or even your hard drive, which copies as a matter of function. Yet copying is also one of the exclusive rights of a copyright owner; unchecked copying of copyrighted works can undermine the system of property rights that has resulted in the wealth of cultural prosperity we see today.

Sony Sheep and Grokster Goats

The Supreme Court first broached the question of copyright and copying devices in Sony Corp v Universal City Studios, concerning an infringement case brought against the manufacturer of one of the earliest consumer home video recorders. The district court had found that Sony could not be directly liable for user infringement; it does not “loan or otherwise provide the copyrighted work”, and “The copying occurs not in a store operated and managed by the defendants but rather in a person’s home, a location in which individual privacy is constitutionally protected and over which defendants have no control. Furthermore, defendants’ acts of selling the Betamax and blank tapes to consumers can easily lead to noninfringing uses.” On appeal, the Supreme Court looked at indirect liability. Specifically, it asked when the provision of copying devices gives rise to liability. It answered this question by saying that the mere “sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes.”

A touch over thirty years later, the Court was asked to look at the liability of companies that provided software that allowed peer-to-peer trading of computer files in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. Unlike the manufacturer defendant in Sony, the defendants in Grokster provided the ongoing infrastructure needed for users of their software to distribute files of all types. In addition, there was clear evidence that defendants “clearly voiced the objective that recipients use [their software] to download copyrighted works, and … took active steps to encourage infringement.”

The Supreme Court was asked to apply the Sony test in Grokster, a rule that “barred secondary liability based on presuming or imputing intent to cause infringement solely from the design or distribution of a product capable of substantial lawful use, which the distributor knows is in fact used for infringement.” However, the Court declined. It said:

Sony‘s rule limits imputing culpable intent as a matter of law from the characteristics or uses of a distributed product. But nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability derived from the common law.

The Court went on to describe how one could be liable for inducing infringement, holding, “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”

After Grokster, it was clear that there was a line between legitimate services that might be capable of infringement and illegitimate services that were intended to facilitate infringement, but it was less clear where that line would fall in every case — a question of increasing relevance given the explosion of online services that come into contact with copyrighted works. Columbia Law professor Jane Ginsburg refers to this inquiry as “separating the Sony sheep from the Grokster goats.” 1Jane Ginsburg, Separating the Sony Sheep from the Grokster Goats, 50 Arizona Law Review 577 (2008). She observes that many cloud services are “dual purpose.”

That is, they are not inherently pernicious; they can in fact be put to perfectly lawful and socially desirable uses. If the technology itself is at least in theory neutral, does this pose an insoluble quandary: either enforce copyright at the expense of technological evolution, or promote technology at the cost of copyright? Or can we have it both ways, fostering both authorship and technological innovation? To reach that happy medium, we need to ensure the “neutrality” of the technology as applied in a given business setting. If the entrepreneur is not neutral, and is in fact building its business at the expense of authors and right owners, it should not matter how anodyne in the abstract the technology may be.

Reaching this “happy medium” is particularly challenging when it comes to cloud storage services, since their essential purpose is to serve as repositories of files for third parties. The ability to remotely store and share files is valuable. But it can also allow for a damaging level of copyright infringement — a prospect which, given the profit margins mentioned above, serves as a strong temptation to those willing to risk getting away with it.

Cyberlockers vs Cloud Storage

Prior to the NetNames report, a few observers have discussed ways to distinguish between “legitimate” services — like Dropbox — and services which tend to facilitate infringement — like Megaupload, which was indicted by a grand jury in 2012 for “massive worldwide online piracy.” In Hotfile, Megaupload, and the Future of Copyright on the Internet: What can Cyberlockers Tell Us About DMCA Reform?, Ross Drath highlights four features “that copyright owners (and governments) typically find objectionable” when it comes to remote file storage services: “(1) public (as opposed to password-protected) sharing capability; (2) direct linking; (3) lack of search function; and (4) rewards programs.” 212 J. Marshall Rev. Intelli. Prop. L. 205, 212 (2012).

Carrie Bodner describes a taxonomy of cyberlockers in Master Copies, Unique Copies and Volitional Conduct: Cartoon Network’s Implications for the Liability of Cyber Lockers. 336 Columbia Journal of Law & the Arts 491, 498-504 (2013). On one end of the spectrum are services like Dropbox, SkyDrive, and Amazon Cloud. These services are marketed “primarily as a backup service, similar to an external hard drive,” and thus such services tend to be employed for productive or business uses rather than entertainment. Some services are more geared toward entertainment uses — for example, Amazon Cloud Player and Google Music, both of which provide storage specifically for music files — but Bodner notes that some have nevertheless “avoided an illicit reputation,” citing close ties to reputable businesses and legitimate online music stores. 4Bodner does not mention this in her article, but most of the major services also have explicit agreements with major rightsholders governing features of their cloud storage services that more directly impact copyrighted works. See, e.g., Amazon’s music cloud is licensed by all top labels. On the other end of the spectrum are “one-click file hosts” such as “Rapidshare, Hotfile, Megaupload, MediaFire and 4Shared.” The primary difference is that these services lack any restrictions on who can download files that have been uploaded. Other distinguishing characteristics include the offering of monetary incentives to users who upload content that is downloaded frequently and premium accounts that remove restrictions on download speeds and waiting periods.

The distinction drawn in the NetNames report largely tracks that made by Bodner and Drath. According to the report, cyberlockers (as opposed to “legitimate cloud storage services”) generally place no limits on who can download or stream a file and frequently offer “affiliate programs that reward users when their uploaded content is accessed.” In addition, cyberlockers often delete files that haven’t been accessed after a period of time and don’t offer synchronization with a user’s devices, indicating that their purpose is not personal storage and access. Finally, cyberlockers are lax when it comes to enforcing repeat infringer policies.

In short: for cyberlockers, the client is the downloader. For legitimate cloud storage services, the client is the uploader. Yes, both allow users to store files remotely, but the similarities end there. For cyberlockers, the goal of spreading files as widely as possible permeates every aspect of the service.

That’s not to say that any of the characteristics described above, by itself or taken together, necessarily does or should render any given service liable for copyright infringement. In fact, Behind the Cyberlocker Door calls on credit card processors to take steps to prevent cyberlockers from profiting off the work of others. Outside of the report, voluntary efforts to mitigate piracy from all the various participants in the online ecosystem continue. These efforts are aided by a clear distinction between cyberlockers and legitimate cloud storage services.

References   [ + ]

1. Jane Ginsburg, Separating the Sony Sheep from the Grokster Goats, 50 Arizona Law Review 577 (2008).
2. 12 J. Marshall Rev. Intelli. Prop. L. 205, 212 (2012).
3. 36 Columbia Journal of Law & the Arts 491, 498-504 (2013).
4. Bodner does not mention this in her article, but most of the major services also have explicit agreements with major rightsholders governing features of their cloud storage services that more directly impact copyrighted works. See, e.g., Amazon’s music cloud is licensed by all top labels.
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