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.1 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 1940.2 In Whiteman, a maker of records sought to restrain their broadcast by a radio station.3

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.4 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.5 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.6

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.7 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.

Footnotes

  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.”1 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.

Footnotes

  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.1

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.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 1833.3 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.4

The US extended the same protection in 1856, and like England, only to dramatic authors.5 An 1897 statute enlarged the public performance right to include nondramatic musical compositions — songs.6 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 1925,7 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.8 A 1965 report from the Register of Copyrights had noted that the issue of public performance for sound recordings remained “explosively controversial.”9 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.10 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.11 The 1976 Act would include an express preemption provision, making copyright solely the province of federal law.12 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, 2067.13

The question of whether to bring pre-1972 sound recordings under federal law now rather than waiting until 2067 remains a hot issue today.14 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.”15

But does this mean there is an independent right of representation or performance at common law? In Tompkins v Halleck,16 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.”17

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.”18 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.

Footnotes

  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.1 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.”2

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 law3 ). 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.”4 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.

Footnotes

  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.”1 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.”2

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.3 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.4 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.

Footnotes

  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. []

In 1985, the Supreme Court said, “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.”1 Last week, a court held to the contrary.

In a September 9th order, the Southern District Court of New York granted summary judgment in favor of TVEyes, a media monitoring company, on the issue of fair use. Fox News Network had filed a lawsuit against TVEyes for recording its station continuously and creating a searchable database out of its content and the content of 1,400 other television and radio stations.

Like other media monitoring services, TVEyes allows subscribers to track news coverage of particular events or issues. The service begins at $500 month; in 2013 the company had revenues of $8 million, with over 2,200 subscribers. Fox News Network owns and operates Fox News Channel and Fox Business Network, delivering twenty-four hour news and business coverage. It also actively licenses video clips to third parties. Fox News asked the court to order TVEyes to stop using Fox content without permission for its service, and both parties moved for summary judgment. In last week’s order, the court only addressed the copying and distribution of Fox News clips to TVEyes subscribers — the service also allows subscribers to “save, archive, download, email, and share clips,” features that the court needs more evidence to rule on.

But in finding this wholesale, commercial copying to be fair use, the decision stands as an example of just how dramatically — and fundamentally — the fair use doctrine has been transformed in just a few decades. What was once a bounded exception allowing reasonable use of copyrighted works when necessary for specific purposes has become a broad and sweeping mechanism that allows courts to seemingly ignore copyright at their own discretion.

Transformative Use

The modern conception of “fair use” — an independent, affirmative defense against copyright infringement that takes into account a number of factors such as the purpose of the use — does not seem to have consistently established itself in US courts until the mid-1950s. This was also the same time that the Copyright Office released a study on fair use as part of the revision process that would eventually result in the 1976 Copyright Act. The 76 Act marked the first statutory reference to fair use. Section 107 of the Act reads:

Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. 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.

The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

But perhaps just as important to the development of the fair use doctrine is a 1990 law review article by federal judge Pierre Leval, Toward a Fair Use Standard. The prescriptive essay argued that the “heart” of the fair use inquiry was the first factor, the purpose and character of the use, and that the answer to the inquiry lied in determining whether the challenged use is “transformative.” Leval wrote:

The use must be productive and must employ the quoted matter in a different manner or for a different purpose from the original. A quotation of copyrighted material that merely repackages or republishes the original is unlikely to pass the test; in Justice Story’s words, it would merely “supersede the objects” of the original. If, on the other hand, the secondary use adds value to the original–if the quoted matter is used as raw material, transformed in the creation of new information, new aesthetics, new insights and understandings– this is the very type of activity that the fair use doctrine intends to protect for the enrichment of society.

Four years later, the Supreme Court referenced Leval’s “transformative” framing, and lower courts have followed its lead since.2 But regardless of how descriptively accurate this framing might be, the TVEyes decision demonstrates its shortcomings as an actual standard.

For one, it is ill-defined, an incoherence revealed by the TVEyes court at the outset. The court begins its discussion by stating that “Transformation almost always occurs when the new work ‘does something more than repackage or republish the original copyrighted work.'” But that sentence is immediately followed by this one: “A use ‘can be transformative in function or purpose without altering or actually adding to the original work.'” Perhaps these two seemingly contradictory statements — both from Second Circuit decisions from the past year — can be reconciled, but the court spends no time doing so. Instead, it offers the following conclusory analysis:

Unlike the indexing and excerpting of news articles, where the printed word conveys the same meaning no matter the forum or medium in which it is viewed, the service provided by TVEyes is transformative. By indexing and excerpting all content appearing in television, every hour of the day and every day of the week, month, and year, TVEyes provides a service that no content provider provides. Subscribers to TVEyes gain access, not only to the news that is presented, but to the presentations themselves, as colored, processed, and criticized by commentators, and as abridged, modified, and enlarged by news broadcasts.

In other words, “the use is transformative because TVEyes copied the entire work verbatim, and don’t worry if that is indistinguishable from the definition for infringement.” The court does little to shed more light on its reasoning when it later endorses TVEyes’ assertion that “monitoring television is simply not the same as watching it.” Along the same lines, I suppose you could argue that it’s fair use to copy reality television shows so long as you watch them ironically.

Fortunately, less than a day ago, the Seventh Circuit explicitly rejected the transformative use test, noting that “To say a new use transforms a work is precisely to say that it is derivative and thus, one might suppose, protected under §106(2).”3 Instead, said the court, “We think it best to stick with the statutory list…”

Commerciality

Another dramatic turn in fair use doctrine is seen in the treatment of “commerciality” in the first factor. Traditionally, courts have given wider berth to scholarly and non-profit users of copyrighted works. In its 1984 Betamax decision, the Supreme Court observed that every commercial use of copyrighted material is presumptively unfair. However, a decade later, the Court would retreat from that holding and remove the presumption. In Campbell, the Court explained that, “If, indeed, commerciality carried presumptive force against a finding of fairness, the presumption would swallow nearly all of the illustrative uses listed in the preamble paragraph of § 107, including news reporting, comment, criticism, teaching, scholarship, and research, since these activities ‘are generally conducted for profit in this country.'” Instead, the Court adopted a sliding scale approach, where commerciality should be treated as merely “a fact to be ‘weighed along with other[s] in fair use decisions.'” Nowadays, commerciality has little, if any, role in the fair use doctrine.4

TVEyes continues this trend. The court does note that “Clearly, TVEyes is a for-profit company, and enjoys revenue and income from the service it provides.” But it follows this with a recitation of the above language from Campbell without a word more.

Amount and Substantiality Used

The implementation of the third fair use factor, which looks at “the amount and substantiality of the portion used in relation to the copyrighted work as a whole” has also noticeably shifted in recent decades. In fact, until Betamax, it was virtually axiomatic that copying an entire work could never be fair use.5 But Betamax held, in part, that home taping of broadcast television by VCR owners was a fair use, despite the fact that exact duplicates of complete works were being made. This holding drew a sharp rebuke from the four Justices on the dissent, who said, “Fair use is intended to allow individuals engaged in productive uses to copy small portions of original works that will facilitate their own productive endeavors. Time-shifting bears no resemblance to such activity, and the complete duplication that it involves might alone be sufficient to preclude a finding of fair use. It is little wonder that the Court has chosen to ignore this statutory factor.”

Since then, the floodgates have been opened. Last year, for example, the Southern District Court of New York held that the wholesale copying of twenty million books (by a for-profit corporation) was a fair use.6

In TVEyes, the departure from third factor tradition is even more striking. Not only is TVEyes copying entire works, it’s copying entire stations. There is nothing Fox News airs that TVEyes doesn’t copy. Yet, not only does the court not consider this a negative that might otherwise be outweighed by the other three factors, it suggests that this factor favors TVEyes. Said the court, “One cannot say that TVEyes copies more than is necessary to its transformative purpose for, if TVEyes were to copy less, the reliability of its all-inclusive service would be compromised.” Or, you can copy everything if your purpose is to copy everything.

Public Benefit

The final area of fair use transformation is seen in the court’s consideration of the fourth factor, “the effect of the use upon the potential market for or value of the copyrighted work.” The court here says, “The fourth factor requires a balance between the ‘benefit the public will derive if the use is permitted, and the personal gain the copyright owner will receive if the use is denied,'” (emphasis added) citing to the Second Circuit’s 2006 decision in Bill Graham Archives v. Dorling Kindersley L’td. Since that language appears nowhere in the statute, it’s worth taking a closer look at where it came from. Bill Graham itself cites an earlier Second Circuit decision: MCA, Inc. v. Wilson. There, the court said of the fourth factor, “where a claim of fair use is made, a balance must sometimes be struck between the benefit the public will derive if the use is permitted and the personal gain the copyright owner will receive if the use is denied.” (Emphasis added). So already we’ve made the jump from a balance that “must sometimes be struck” to an absolute requirement. But if we look even closer, we see that the cases MCA cites to support its proposition are not discussing the fourth fair use factor specifically but fair use in general. This makes sense, since fair use is a doctrine where courts strike a balance between public and private interests. But somewhere along the lines, the Second Circuit duplicated this principle into the fourth fair use factor.

Leaving the doctrinal history aside, TVEye‘s discussion of the public benefit leaves much to be desired (never mind the fact that the service is, as noted by the court, not available to the general public). It essentially boils down to this: TVEye offers a useful service. Of course, most businesses offer useful services; otherwise, they wouldn’t remain in business long. And the operation of business does benefit the public in the broadest sense. But this definition of the public benefit if too wide to be of much use here — and, more importantly, it doesn’t explain why a for-profit business that provides a service involving the regular copying of copyrighted works should be privileged under the law from licensing those works. Maybe I’m old-fashioned, but I don’t think asking a business to pay its suppliers is unfair.

And the Supreme Court would agree, at least thirty years ago. After its line about fair use and corporate theft, quoted at the beginning of this article, the Court in Harper & Row continued:

In our haste to disseminate news, it should not be forgotten that the Framers intended copyright itself to be the engine of free expression. By establishing a marketable right to the use of one’s expression, copyright supplies the economic incentive to create and disseminate ideas.

***

It is fundamentally at odds with the scheme of copyright to accord lesser rights in those works that are of greatest importance to the public. Such a notion ignores the major premise of copyright and injures author and public alike. “[T]o propose that fair use be imposed whenever the `social value [of dissemination] . . . outweighs any detriment to the artist,’ would be to propose depriving copyright owners of their right in the property precisely when they encounter those users who could afford to pay for it.”

Footnotes

  1. Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 US 539, 558, quoting Iowa State University Research Foundation, Inc. v. American Broadcasting Cos., Inc., 621 F. 2d 57, 61 (1980). []
  2. Campbell v. Acuff-Rose Music, Inc., 510 US 569, 579 (1994). []
  3. Kienitz v. Sconnie Nation, No. 13-3004 (7th Cir. 2014). The court characterized the discussion of transformative use in Campbell as a “suggestion.” []
  4. See Matthew Sag, Predicting Fair Use, 72 Ohio State Law Journal 47, 77 (2012) (finding commercial use as a factor insignificant in a study of 280 fair use decisions from 1978-2011); Barton Beebe, An Empirical Study of U.S. Copyright Fair Use Opinions, 1978–2005, 156 U. PA. L. Rev. 549 (2008) (finding commerciality has no significant impact on case outcomes in study of 306 fair use decisions from 1978-2005). []
  5. See Williams & Wilkins Company v. United States, 487 F. 2d 1345, 1366 (Ct of Claims 1973); Public Affairs Associates, Inc. v. Rickover, 284 F.2d 262, 272 (DC Cir. 1960); Benny v. Loew’s Inc., 239 F.2d 532, 536 (9th Cir.1956); Leon v. Pacific Telephone & Telegraph Co., 91 F.2d 484, 486 (9th Cir.1937) (“Counsel have not disclosed a single authority, nor have we been able to find one, which lends any support to the proposition that wholesale copying and publication of copyrighted material can ever be fair use.”). []
  6. Authors Guild, Inc. v. Google Inc., 954 F. Supp. 2d 282 (SDNY 2013). Though, to be fair, the court did note that the third factor weighed “slightly against” a finding of fair use. []

Last week, the US Copyright Office released the third edition of its Copyright Compendium. This edition was long awaited – the second edition was released in 1984. The Copyright Compendium details internal regulations concerning how the Copyright Office determines whether an application can be registered or not. In the US, works are protected by copyright the moment they are fixed in a tangible format, however, registration does provide certain benefits. It is required before a civil lawsuit for infringement is filed, for example.

Almost immediately, a number of news outlets zeroed in on one sentence within the 1,222 pages of the Compendium. “The Office will not register works produced by nature, animals, or plants,” says the Compendium. This includes, “A photograph taken by a monkey.” This led to what the internet does best: a viral story about nothing of particular consequence.

The Internet took this sentence as a reference to a certain monkey photograph. To recap: in 2011, a British photographer, David Slater, traveled to Indonesia to photograph black macaques. As he was there, one female macaque grabbed his camera and happened to trigger the camera, taking a series of photos. Upon retrieving the camera, Slater found that several of the photos were quite remarkable and published them, leading to a fair amount of fame.

One of the photos was uploaded to Wikipedia without Slater’s permission. Slater requested removal of the photo, but Wikipedia editors refused, coming to the factual conclusion that the macaque, not Slater, was the sole author of the photograph, thus placing it in the public domain.

The internet exploded with a wealth of discussion about monkey selfies and copyright. Some of it was even worth reading.

Just as things began to calm down, the US Copyright Office announced the third edition of the Copyright Compendium, containing its reference to a photograph taken by a monkey. This led to the most recent burst of news, some of it suggesting that “the government” has “settled” the issue.

Comprehending the Compendium

This is not so for a number of reasons.

First, even if the Copyright Compendium is making a definitive statement about the copyrightability (or not) of the monkey selfie, such a statement is not binding as law. The Compendium itself points this out, saying, “The policies and practices set forth in the Compendium do not in themselves have the force and effect of law and are not binding upon the Register of Copyrights or U.S. Copyright Office staff.”  It should also be noted that a decision by the Register of Copyrights to deny a copyright registration is not dispositive of the ultimate question of copyrightability.1

Second, the statement that “The Office will not register works produced by … animals” is not novel nor surprising. But to say that this settles the question of this particular photograph, as many stories in the past week seem to suggest, begs the question that the monkey is the sole author of the photo.

Third, there is no reason why this question would be answered by US law. Copyrightability is most likely “determined by the law of the state with ‘the most significant relationship’ to the property and the parties”,2 which would clearly not be the US under the facts here: Slater is British, and the photo was taken in Indonesia.

Authorship and photographs

But let’s pretend US law would apply.

The Copyright Act has little to say about authorship. 17 USC § 102(a) says that “Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression”, and § 201 says, “Copyright in a work protected under this title vests initially in the author or authors of the work”, but these terms – “works of authorship” and “author” are not defined anywhere within the Act.

The Supreme Court, however, has defined “author,” and it has done so, coincidentally, in a decision establishing that photographs can be protected by copyright in the first instance. In Burrow-Giles Lithographic Co. v. Sarony, the Court said that an “author” is defined as “he to whom anything owes its origin; originator; maker.”3 Over a century later, the Court would expand on this idea of the author as originator. “The sine qua non of copyright is originality. To qualify for copyright protection, a work must be original to the author. Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity.”4

So authorship requires two things: absence of copying and a modicum of creativity.

With this in mind, there are at least three possibilities concerning the authorship of this photo: 1) The monkey is the sole author, 2) Slater is the sole author, or 3) the monkey and Slater are joint authors.

We can quickly dismiss the last possibility. Joint authorship requires, in part, that “each of the authors prepared his or her contribution with the knowledge and intention that it would be merged with the contributions of other authors as ‘inseparable or interdependent parts of a unitary whole.’”5 The claim that a monkey could do such a thing is even more extraordinary than a claim that animals have knowledge or intent in the first place.

In the case of the monkey as author, the sole act involved is the pushing of the button that triggered the camera and resulted in the shot. This act is certainly necessary to the creation of the photo, but I am not convinced that it is sufficient to establish the monkey as an author. The monkey possesses no knowledge of the nature of the camera, nor knows that pushing the button would result in the creation of a photograph. While copyright law is silent on what, if any, knowledge or intent is required for authorship, surely there must be some level needed to distinguish what the monkey did here from any other force of nature or deus ex machina that could cause the creation of a photograph. The intuition is that there is something specifically human required under copyright law for authorship.

Slater, on the other hand, did everything but push the button. He chose the location, camera, film, and time of day. He set it all up with the intention to create photographs. He processed and developed the resulting photos. The photos would not exist but for these conscious acts.

Courts have found similar acts sufficient for copyrightability. The Southern District Court of New York said the following in 1968 when it was confronted with alleged copying of the Zapruder Film by Life Magazine:

Any photograph reflects “the personal influence of the author, and no two will be absolutely alike”, to use the words of Judge Learned Hand.

The Zapruder pictures in fact have many elements of creativity. Among other things, Zapruder selected the kind of camera (movies, not snapshots), the kind of film (color), the kind of lens (telephoto), the area in which the pictures were to be taken, the time they were to be taken, and (after testing several sites) the spot on which the camera would be operated.6

So it would seem to me under this definition that Slater would be considered the author of the photographs.

I do think it’s interesting to note that the division between those who think the monkey is the author of the photo and those who think Slater is the author generally tracks the division between copyright skeptics and copyright proponents. On the one hand are those who have devalued creativity to the point where they think all it involves is the push of a button – even a monkey can do it. So, in that case, why do we even need copyright protection?

On the other hand are those who still recognize some value in human authorship, who think that creativity does not just spring forth independent of human effort, who understand that human effort does not emerge spontaneously but responds to motivation, and that one of the most just and dignified forms of motivation comes in the form of property acquired through creative productive labor.


Updated August 28, 2014 to correct photographer’s name

 

Footnotes

  1. In fact, the Copyright Act expressly allows for a civil infringement suit to be brought in cases where registration is refused. 17 USC § 411(a). []
  2. Itar-Tass Russian News Agency v. Russian Kurier, Inc., 153 F. 3d 82, 90 (2nd Cir. 1998). The court here was looking at the question of ownership, which is distinct from copyrightability, but I believe the analysis is the same. []
  3. 111 US 53, 58 (1884). []
  4. Feist Publications, Inc. v. Rural Telephone Service Co., 499 US 340, 345 (1991). []
  5. H.R.Rep. No. 1476, 94th Cong., 2d Sess. 120 (1976). []
  6. 293 F. Supp. 130, 143 (SDNY 1968). []

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

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

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

Statutory Interpretation

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

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

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

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

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

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

The Exceptions that Prove the Rule

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

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

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

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

Footnotes

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

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

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

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

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

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

The Aereo Decision

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

When does an entity perform?

Turning to the first question, the Court says:

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

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

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

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

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

When is a performance to the public?

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

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

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

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

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

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

Analyzing the decision

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

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

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

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

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

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

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

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

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

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

Footnotes

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

The following comes from a decision released by the Tenth Circuit last week. Though the case involves immigration law, the discussion may be of interest to readers of this site.

To summarize, the Department of Homeland Security initiated removal proceedings of Perez-Paredes, a Mexican native living in the US, after he was convicted under a Utah anti-piracy statute. On advice of his counsel, Perez-Paredes agreed to leave the US voluntarily, but later changed his mind and moved to reopen the removal proceedings based on ineffective assistance of counsel. The Immigration Judge denied that request, a decision that was upheld by the Bureau of Immigration Appeals (BIA).

Here, the Tenth Circuit denied a review of the BIA’s decision, holding that Perez-Paredes was not eligible for cancellation of removal. The Circuit explained (some citations removed and emphasis added):

To be eligible for cancellation of removal, the alien must show that he or she is of “good moral character.” 8 U.S.C. § 1229b. An alien who has been convicted of an aggravated felony or a crime involving moral turpitude is not eligible under § 1229b

…The Immigration and Nationality Act provides that any “theft offense (including receipt of stolen property) or burglary offense for which the term of imprisonment [is] at least one year” is an aggravated felony. Additionally, the Act provides that any “offense relating to commercial bribery, counterfeiting, forgery, or trafficking in vehicles the identification numbers of which have been altered for which the term of imprisonment is at least one year” also constitutes an aggravated felony.

Perez-Paredes admits that he was convicted of a third-degree felony under Utah Code Annotated § 13-10-8. That statute prohibits unlawfully failing to disclose the origin of 100 or more recordings that the defendant has—for commercial advantage or financial gain—sold, rented, or lent, offered to sell, offered to rent, or possessed for any of those purposes when the defendant knows the recordings do not properly contain the true name and address of the manufacturer. Perez-Paredes does not dispute that the permissible term of imprisonment for that crime exceeded one year. He does, however, argue that a conviction under § 13-10-8 is neither a theft offense nor an offense relating to counterfeiting.

The terms “theft offense” and “relating to counterfeiting” are not defined in the Immigration and Nationality Act. But the BIA examined the Utah statute of conviction and reasonably concluded it fit within the Act’s prohibited categories.

Section 13-10-8 is a part of Utah’s Unauthorized Recording Practices Act, which is intended to “prevent the piracy of recorded materials.” It is not unreasonable to deem piracy closely related to both counterfeiting and theft. See, e.g., World Copyright Law 2.29 (3d ed. 2007) (identifying piracy as a form of theft); Elizabeth Friedler, Protecting the Innocent—the Need to Adapt Federal Asset Forfeiture Laws to Protect the Interests of Third Parties in Digital Asset Seizures, 32 Cardozo Arts & Ent. L.J. 283, 311 (2013) (“[T]here is no question that law enforcement agencies treat piracy as theft”); D.O.J. News Release 06-657 (Sept. 28, 2006) (“Whether it is referred to as counterfeiting, or piracy, or willful infringement of trademarks and copyrights, it all comes under the less elegant heading of stealing—pure and simple—and we must continue our efforts to stop it” (quoting U.S. Trade Representative Susan Schwab)).

Order and Judgment, Perez-Paredes v. Holder, No. 13-9593 (10th Cir. May 28, 2014).

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