On Friday, April 7, 2017, the Ninth Circuit published its opinion in Mavrix Photographs v LiveJournal, a potentially significant decision touching on a number of provisions in Section 512 of the Copyright Act, which was passed as part of the Digital Millennium Copyright Act in 1998 (DMCA) and provides safe harbors for online service providers against claims of copyright infringement under certain circumstances.

The court reversed the district court’s ruling that LiveJournal qualified for the safe harbor, and while some of its holdings are positive for copyright owners—who have long advocated that the DMCA safe harbors have failed to fulfill Congress’s goal of cooperation between service providers and copyright owners in detecting and deterring online infringement—other parts of the decision may create perverse incentives for service providers to do less to prevent infringement on their sites.

I want to focus in particular on the Ninth Circuit’s suggestion that LiveJournal’s use of a technological tool to automatically block posts from certain sources may be a factor that determines whether the service had “the right and ability to control infringements”, and, consequently, whether it would be disqualified from protection under §512’s safe harbor. I think courts should resist this suggestion, as it is contrary to the text and purpose of the statute, and could disincentivise service providers from employing tools that are critical for detecting and deterring infringement.

The Case

But first, a bit of background. LiveJournal is perhaps one of the earliest social media networks, and anyone of a certain age will deny ever having posted a personal blog there. The site features a number of “communities”, and at issue here is a community called “Oh No They Didn’t!” (ONTD), which is focused on providing celebrity gossip. Community members submit photos, videos, links, and other media concerning up-to-date celebrity news. Originally, like other LiveJournal communities, posts were moderated by volunteers, but as the community became one of the most popular on LiveJournal, the company took a more active role in curating posts to attract and maximize advertising revenue. At the time of the complaint, LiveJournal employed a full-time community leader, who oversaw a team of volunteer moderators charged with screening and approving user submissions.

Mavrix Photographs is a photo agency specializing in photos of celebrities, which it licenses to celebrity magazines. It alleges that between 2010 and 2014, twenty of its photos were posted on ONTD without authorization, and it sued LiveJournal for copyright infringement. LiveJournal asserted it was immune from liability under the §512 safe harbor and moved for summary judgment, which the district court granted. Mavrix appealed to the Ninth Circuit.

Section 512(c) shields service providers from liability “for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider”, and the bulk of the Ninth Circuit’s decision hinged upon whether, given the volunteer moderators’ role in screening and approving the content, that content was stored on LiveJournal “at the direction of a user.” 1The court concluded that agency law governs whether such volunteer moderators are acting on behalf of LiveJournal and remanded for the factfinder to determine the ultimate question. But even if the content is stored at the direction of a user, and LiveJournal meets this threshold requirement for safe harbor protection, §512 outlines other requirements a service provider must meet. Two in particular were in dispute, and the Ninth Circuit addressed each of those in its opinion “to provide guidance to the district court” on remand.

“Right and ability to control” and technological tools

I want to focus here on one of those two in particular—the requirement expressed in § 512(c)(1)(B), which provides that a service provider cannot qualify for the safe harbor if it “receive[s] a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.”

This “right and ability to control”, as the Ninth Circuit observed, “involves ‘something more than the ability to remove or block access to materials posted on a service provider’s website.’”

The service provider does “something more” when it exerts “high levels of control over activities of users.” The service provider exerts “high levels of control,” for example, when it, “prescreens sites, gives them extensive advice, prohibits the proliferation of identical sites,” provides “detailed instructions regard[ing] issues of layout, appearance, and content,” and ensures “that celebrity images do not oversaturate the content.”

The Ninth Circuit went on to explain:

LiveJournal’s rules instruct users on the substance and infringement of their posts. The moderators screen for content and other guidelines such as infringement. Nearly two-thirds of submitted posts are rejected, including on substantive grounds. ONTD maintains a list of sources that have complained about infringement from which users should not submit posts. LiveJournal went so far as to use a tool to automatically block any posts from one source. In determining whether LiveJournal had the right and ability to control infringements, the fact finder must assess whether LiveJournal’s extensive review process, infringement list, and blocker tool constituted high levels of control to show “something more.”

Among the facts that the Ninth Circuit indicated could count as “something more” under the “right and ability to control” prong, it is the inclusion of the last one—the use of automated blocking technology—that is especially problematic for creators and copyright owners. Given the scale of online infringement, technological tools that can block, filter, or identify infringing materials are critical to addressing online piracy. Many major platforms already incorporate automated tools to minimize infringement. And a number of creators and copyright owners have urged greater adoption of such tools, recognizing that efforts to enforce copyright online are greatly ineffective in their absence.

But if the Ninth Circuit is correct, and the implementation of automated technology to block potentially infringing material can kick a service provider out of the safe harbor, it would create a powerful disincentive for the adoption of such tools. Service providers would likely decline to adopt them altogether rather than running the risk of losing safe harbor protection and being exposed to liability.

While the Ninth Circuit is correct on the law, I think its suggestion that blocking technologies give rise to “something more” under the “right and ability to control” test is contrary to the text and purpose of §512. And I get there by using the same reasoning that led to the “something more” standard in the first place.

Something more

The phrase “something more” is not found in the statute—rather, its genesis comes from case law. As the Central District Court of California explained in 2001:

[T]he “right and ability to control” the infringing activity, as the concept is used in the DMCA, cannot simply mean the ability of a service provider to remove or block access to materials posted on its website or stored in its system. To hold otherwise would defeat the purpose of the DMCA and render the statute internally inconsistent. The DMCA specifically requires a service provider to remove or block access to materials posted on its system when it receives notice of claimed infringement. The DMCA also provides that the limitations on liability only apply to a service provider that has “adopted and reasonably implemented … a policy that provides for the termination in appropriate circumstances of [users] of the service provider’s system or network who are repeat infringers.” Congress could not have intended for courts to hold that a service provider loses immunity under the safe harbor provision of the DMCA because it engages in acts that are specifically required by the DMCA. 2Hendrickson v. eBay, 165 F. Supp. 2d 1082, 1093-94 – Dist. Court, CD California 2001.

The same is true when it comes to implementation of technological tools for blocking or filtering content. Section 512(i)(1)(B) provides that the limitations on liability only apply to a service provider that “accommodates and does not interfere with standard technical measures”, which are technical measures used “to identify or protect copyrighted works.” Assuming for the sake of this argument that LiveJournal’s blocking tool otherwise qualified as a standard technical measure under the statute, 3It doesn’t, for reasons unrelated to this argument. Under §512(i)(2), standard technical measures “(A) have been developed pursuant to a broad consensus of copyright owners and service providers in an open, fair, voluntary, multi-industry standards process; (B) are available to any person on reasonable and nondiscriminatory terms; and (C) do not impose substantial costs on service providers or substantial burdens on their systems or networks.” I’m not aware of any technical measure that was developed pursuant to the process laid out in the statute. it would render the statute internally inconsistent to say that a service provider would lose immunity by employing a blocking tool that is specifically required by the statute.

This interpretation is also consistent with the overall purpose of §512. Congress drafted §512 with the intent to provide incentives for service providers and copyright owners to detect and deter online infringement. 4S. Rep. No. 105-190 at 20 (1998). It would run contrary to this intent if service providers were discouraged from employing automated tools that do just that to preserve their safe harbors.

Conclusion

Courts should, instead of looking at steps taken to prevent infringing activity, focus on facts that show the ability to control infringing activity. That’s not to say that under no circumstances is the use of automated technology disqualifying—a service provider might tout its use of filtering or blocking tools merely as a pretense while continuing to facilitate and profit off infringement. But courts could also, as the Ninth Circuit noted here in a footnote, find right and ability to control if the facts show a service provider intentionally induced infringement. Similarly, as the MPAA argued in its amicus brief, if the facts show that a service provider actively reviews and prescreens each user submission for the purpose of curating likely infringing content intended to draw visitors to the site, then it necessarily exercises higher levels of control over activities of users that would kick the service provider out of the safe harbors under this prong.

References   [ + ]

1. The court concluded that agency law governs whether such volunteer moderators are acting on behalf of LiveJournal and remanded for the factfinder to determine the ultimate question.
2. Hendrickson v. eBay, 165 F. Supp. 2d 1082, 1093-94 – Dist. Court, CD California 2001.
3. It doesn’t, for reasons unrelated to this argument. Under §512(i)(2), standard technical measures “(A) have been developed pursuant to a broad consensus of copyright owners and service providers in an open, fair, voluntary, multi-industry standards process; (B) are available to any person on reasonable and nondiscriminatory terms; and (C) do not impose substantial costs on service providers or substantial burdens on their systems or networks.” I’m not aware of any technical measure that was developed pursuant to the process laid out in the statute.
4. S. Rep. No. 105-190 at 20 (1998).

As I’ve done in previous years (2015 and 2016), I’d like to take a look ahead at what we may expect in the world of copyright policy in the year ahead. The difficulty of that task is markedly greater this year—a new Administration will take the lead of the Executive Branch at the beginning of the year, and that brings with it a shift in priorities and entirely new agenda. Congress too, will begin a new term. But even the Copyright Office, which is outside the Executive Branch, faces some uncertainly—it has been operating without a permanent Register of Copyrights at its lead since October. That means the sands could shift quickly over the next twelve months, rendering the predictions below meaningless.

Executive Branch

Let’s turn first to the Executive Branch, which administers areas impacting copyright such as enforcement, trade, and antitrust. In addition, the Administration, through the Department of Commerce, oversees the US Patent and Trademark Office, which advises it and other federal agencies on intellectual property policy, including copyright.1Though by statute, this responsibility is shared with the Copyright Office, which resides in the Legislative branch. USPTO copyright policy work may not “derogate from the duties and functions of the Register of Copyrights or otherwise alter current authorities relating to copyright matters,” and “In exercising the Director’s powers and duties under this section, the Director shall consult with the Register of Copyrights on all copyright and related matters.” 35 USC § 2(c).

President-elect Trump will be inaugurated on January 20, beginning the symbolic first 100 days of his administration. Copyright has not been explicitly mentioned in any outline of policy priorities for those first 100 days.2Which is not surprising, since copyright has rarely, if ever, ranked high on the agenda for any President. Even beyond the first 100 days, there have been few public statements from President-elect Trump or his advisors regarding copyright. In a recent article at IP Watchdog, copyright policy expert Marla Grossman reads the tea leaves to see what we might expect from a Trump administration in that area.

But beyond the front-page policy items, there is a lot of ongoing work within the Executive Branch that continues across Administrations. For example, the Intellectual Property Enforcement Coordinator’s Joint Strategic Plan for 2016-2019 was released last month and will likely be relied upon by those agencies with IP enforcement responsibilities. Its recommendations include continuing a “follow the money” approach to combat online commercial piracy and reducing online piracy by increasing the ability of consumers to locate content through lawful means.

The Director of the USPTO is a political appointee, so eyes will be on who may take over the helm of that department if current Director Michelle Lee decides not to remain in the position. In a recent interview with The Hollywood Reporter, Lee discussed copyright reform efforts and her Office’s ongoing work in that area. The USPTO is currently working on issues that it addressed as part of the Department of Commerce’s Internet Policy Task Force in its White Paper on Remixes, First Sale, and Statutory Damages, released at the beginning of 2016. Last month, the department held a public meeting which looked at “ways to promote a more robust and collaborative digital marketplace for copyrighted works.” The meeting “focus[ed] on initiatives in this space that relate to standards development, interoperability across digital registries, and cross-industry collaboration, to understand the current state of affairs, identify challenges, and discuss paths forward.” Director Lee has said of the issues discussed at the meeting and on the issue of first sale in the digital environment, the USPTO will “continue to convene and encourage multiple stakeholders to convene on best practices and so forth. There’s still lots of work to be done.”

US Copyright Office

The US Copyright Office is charged, among other things, with the statutory duty to “Advise Congress on national and international issues relating to copyright.”317 USC § 701(b)(1). But before looking at the substantive work the Office may take on 2017, let’s take a look at a matter far more pressing to the Office: the appointment of the next Register of Copyrights. Since October, the Office has been without a permanent Register, following the Librarian of Congress’s de facto termination of Maria Pallante (occurring only five weeks into the new Librarian’s tenure).

The move fueled plenty of speculation about the motivations of the Librarian, but the real question for 2017 involves the future of the Copyright Office. Will the move advance efforts to modernize the Copyright Office? Those calls have come consistently over the past several years, beginning in earnest with former Register Pallante’s 2013 article The Next Generation Copyright Office and producing an extensive public record identifying the challenges facing the Office as it currently operates and potential solutions for giving it the tools to effectively meet the challenges of a 21st century copyright system.4See, e.g., Pallante, The Next Generation Copyright Office, 61 J. Copyright Soc’y 213 (2014); House Judiciary Committee hearing, Oversight of the US Copyright Office (Sept. 18, 2014); House Judiciary Committee hearing, US Copyright Office: Its Functions and Resources (Feb. 26, 2015); House Appropriations Legislative Branch Subcommittee budget hearing, Architect of the Capitol and Library of Congress (Feb. 26, 2015); Senate Appropriations Legislative Branch Subcommittee budget hearing, FY16 Library of Congress and Architect of the Capitol (March 17, 2015); House Judiciary Committee hearing, Register’s Perspective on Copyright Review (April 29, 2015); US Copyright Office, Strategic Plan 2016-2020 (Dec. 1, 2015); House Administration Committee hearing, Improving Customer Service for the Copyright Community (Dec. 2, 2015); US Copyright Office, Provisional Information Technology Modernization Plan and Cost Analysis (March 1, 2016); House Appropriations Legislative Branch Subcommittee budget hearing, Architect of the Capitol and Library of Congress and US Copyright Program Project and Activity Review (March 2, 2016); Senate Appropriations Legislative Branch Subcommittee budget hearing, Library of Congress and Architect of the Capitol FY17 (March 15, 2016). In response, last year, Representatives Judy Chu (D-CA) and Tom Marino (R-PA) introduced H.R. 4241, the Copyright Office for the Digital Economy Act, to address many of the challenges identified in the operation of the Copyright Office—including making the Register of Copyrights a Presidential appointee (with the advice and consent of the Senate).

In December, the House Judiciary Committee issued a policy proposal addressing reform of the Copyright Office. It too recommended that while the Office remain within the Legislative Branch, the Register of Copyrights should be appointed by the President with the advice and consent of the Senate. Significantly, the proposal said that “the next Register and all that follow should be subject to [this] nomination and consent process.” (Emphasis added). However, the Librarian, apparently ignoring the Committee’s clear instructions, moved ahead a few days later with its own process to appoint the next Register, the first step of which includes that time honored method of collecting public input via Survey Monkey. We will likely see further developments in this area in the weeks and months to follow.

Nevertheless, the Copyright Office has not slowed down its regular policy work. It currently is working on two major ongoing policy studies. The first involves Section 1201, which prohibits certain anticircumvention devices used to access or copy copyrighted works. The Copyright Office, following an initial round of public comments and public roundtables last year, collected a second round of public comments this past autumn. The second study involves Section 512, which establishes safe harbors against infringement claims for internet service providers engaged in certain acts. The Copyright Office is currently engaged in a second round of public comments for that study. It’s possible the Office will release one or both final reports some time in 2017, although it’s also likely one or both won’t arrive until a later year. The Office had also begun work in 2016 on a potential update for Section 108, which permits reproduction by libraries and archives for preservation and archival purposes, and on moral rights. It would not be surprising to see additional work on either of these issues in 2017.

Congress

As noted above, the House Judiciary Committee released a policy proposal for reforming the US Copyright Office and will be taking public comments through the end of January. The proposal is the latest step in the Committee’s ongoing copyright review process, which began in 2013. However, it is not the last step. When the proposal was released, Judiciary Chairman Goodlatte said, “Nothing should be read into the fact that we are only releasing a policy proposal on one topic today. This is just the beginning of this stage of the copyright review, and we intend to release policy proposals on music licensing issues and other individual issue areas in time.”

A number of bills relating to music licensing have already been introduced during the 114th Congress. These include the Fair Play Fair Pay Act (H.R. 1733), which would, among other things, extend the public performance right for sound recordings to audio transmissions such as AM/FM terrestrial radio and the Songwriter Equity Act, (S. 662 and H.R. 1283) which adjusts the ratesetting process for the statutory license for public performance of sound recordings by digital audio transmission. It’s possible these or similar bills will be reintroduced in the 115th Congress as part of the Judiciary Committee’s process.

The Judiciary Committee’s policy proposal also called for a small claims process within the Copyright Office. The Office released a report recommending such a process in 2013, recognizing that federal litigation is too costly for individual copyright owners creating works of low individual economic value. Two bipartisan bills were introduced last Congress that would create a process consistent with the Office’s recommendations: the Copyright Alternative in Small Claims Enforcement Act of 2016 (H.R. 5757) and the Fairness for American Small Creators Act (H.R. 6496). It’s likely we will see futher action on this issue over the next year.

Finally, last year, the President sent two copyright related treaties to the Senate for advice and consent. The Beijing Treaty on Audiovisual Performances provides an international framework for protecting the rights of motion picture, TV, and other audiovisual performers in their performances. The Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired, or Otherwise Print Disabled addresses the “book famine” for literary works in accessible formats by requiring parties to create limitations allowing authorized entities under certain circumstances to reproduce and distribute books in accessible formats to beneficiaries, as well as authorized entities in other countries that are a party to the treaty. The Senate did not pass a resolution recommending ratification before the end of the year, so it may be possible we see that occur in 2017.

References   [ + ]

1. Though by statute, this responsibility is shared with the Copyright Office, which resides in the Legislative branch. USPTO copyright policy work may not “derogate from the duties and functions of the Register of Copyrights or otherwise alter current authorities relating to copyright matters,” and “In exercising the Director’s powers and duties under this section, the Director shall consult with the Register of Copyrights on all copyright and related matters.” 35 USC § 2(c).
2. Which is not surprising, since copyright has rarely, if ever, ranked high on the agenda for any President.
3. 17 USC § 701(b)(1).
4. See, e.g., Pallante, The Next Generation Copyright Office, 61 J. Copyright Soc’y 213 (2014); House Judiciary Committee hearing, Oversight of the US Copyright Office (Sept. 18, 2014); House Judiciary Committee hearing, US Copyright Office: Its Functions and Resources (Feb. 26, 2015); House Appropriations Legislative Branch Subcommittee budget hearing, Architect of the Capitol and Library of Congress (Feb. 26, 2015); Senate Appropriations Legislative Branch Subcommittee budget hearing, FY16 Library of Congress and Architect of the Capitol (March 17, 2015); House Judiciary Committee hearing, Register’s Perspective on Copyright Review (April 29, 2015); US Copyright Office, Strategic Plan 2016-2020 (Dec. 1, 2015); House Administration Committee hearing, Improving Customer Service for the Copyright Community (Dec. 2, 2015); US Copyright Office, Provisional Information Technology Modernization Plan and Cost Analysis (March 1, 2016); House Appropriations Legislative Branch Subcommittee budget hearing, Architect of the Capitol and Library of Congress and US Copyright Program Project and Activity Review (March 2, 2016); Senate Appropriations Legislative Branch Subcommittee budget hearing, Library of Congress and Architect of the Capitol FY17 (March 15, 2016).

The Second Circuit is set to consider Fox News v TVEyes, with both parties having submitted their briefs (see Fox News brief and TVEyes brief). The appeal represents the latest evolution of the “transformative use” standard that Judge Pierre Leval first wrote about in his seminal 1990 Harvard Law Review article, Toward a Fair Use Standard.

When Judge Leval articulated his idea of “transformative use” as the key to understanding fair use, his goal was to provide “a better understanding of fair use and greater consistency and predictability of court decisions.” He perhaps could not foresee just how expansively this idea would broaden fair use. 1See Statement of Professor June Besek at a hearing in front of the House Judiciary Committee on fair use for one account of this expansion.

In fact, when the Supreme Court embraced Leval’s “transformative use” in Campbell v. Acuff-Rose just a few years after his article was published, it took care to limit any future expansion. While the Court noted that the fair use doctrine should recognize that a parody of a copyrighted work “must be able to ‘conjure up’ at least enough of that original to make the object of its critical wit recognizable”, it followed up by remarking, “This is not, of course, to say that anyone who calls himself a parodist can skim the cream and get away scot free.” And the Court, though finding the work at issue to be a transformative parody, stopped short of declaring it fair use. It remanded to the lower court on the issue of the amount and substantiality of the original work used, saying, “we express no opinion whether repetition of the bass riff is excessive copying, and we remand to permit evaluation of the amount taken, in light of the song’s parodic purpose and character, its transformative elements, and considerations of the potential for market substitution sketched more fully below.” 2The parties subsequently settled; see Did Campbell v Acuff-Rose find 2 Live Crew’s song to be fair use?

Justice Kennedy was even more cautious in a concurring opinion that he wrote. While he agreed with the majority’s conclusion, he wrote separately to reiterate “the importance of keeping the definition of parody within proper limits.” He concluded by saying, “If we allow any weak transformation to qualify as parody, … we weaken the protection of copyright.”

Over 20 years later, Judge Leval would revisit the doctrine he invented in the Google Books case, Authors Guild v Google. And if he didn’t contemplate the limits of transformative use in his original article, he recognized them here, beginning his opinion by writing, “This copyright dispute tests the boundaries of fair use.”

Although Leval’s ultimate holding that Google’s copying was fair use can seem astonishing in its breadth, his opinion at least recognizes potential outer limits of the doctrine. He took care to confirm that a “would-be fair user of another’s work must have justification for the taking” (emphasis added). 3See What did Google Books Decision do to Cariou v Prince for a discussion of Leval’s focus on justification. He observed that Google’s copying is done to provide “dissemination of information about the original works”, not “the re-transmission, or re-dissemination, of their expressive content.” He noted that while Google makes copies of entire works, it does not “reveal” those copies to the public—the copying is done to create a searchable index, and Google provides snippets of the copies, but only enough to provide context to help a searcher “evaluate whether the book falls within the scope of her interest.” And finally, he held that a secondary user like Google, who makes copies for an internal, transformative purpose, must employ security measures to ensure it does not unreasonably expose copyrighted works to the public.

If Google Books tested the outer bounds of fair use, TVEyes threatens to break them.

TVEyes is a video news clipping service which “monitors and records all content broadcast by more than 1,400 television and radio stations twenty-four hours per day, seven days per week, and transforms the content into a searchable database for its subscribers.” 4Fox News Network v TVEyes, 43 F.Supp. 3d 379 (SDNY 2014). For $500 a month, subscribers can play unlimited high definition clips from TVEyes’ database, archive them online, download them to their own devices, and email and share them with unlimited numbers of nonsubscribers. And TVEyes offers all of this without having permission from any copyright owner or broadcaster. 5Nor, for that matter, from the MVPDs it used to receive content. Satellite MVPD DirecTV sued TVEyes for alleged unlawful retransmission of a pay-TV signal. The two parties reached a settlement in November 2015, with TVEyes agreeing to cease obtaining content for its service from DirecTV. See DirecTV Settles Fight Against TVEyes. In July 2013, Fox News Network sued TVEyes for copyright infringement. TVEyes claimed fair use.

What’s astonishing is not the sheer breadth of what TVEyes sought. What’s astonishing is that the District Court agreed. 6See Fox News v TVEyes: Fair Use Transformed for more discussion about the decision. In a September 2014 decision on cross motions for summary judgment, the Southern District Court of New York held that “TVEyes’ copying of Fox News’ broadcast content for indexing and clipping services to its subscribers constitutes fair use.” The court called for further development of the record regarding other functions provided by TVEyes. On renewed motions for summary judgment, the court held that TVEyes’ archiving function—which enabled subscribers to save an unlimited number of clips indefinitely—was fair use, and its emailing feature could be fair use provided it “develops and implements adequate protective measures.” However, it did hold that its downloading feature and date/time search functions were not a fair use.

There would seem to be a clear cut case against fair use on all counts. TVEyes’ purpose for copying 1,400 stations 24/7 is to deliver portions of them wholesale to its subscribers. It is a for-profit entity financially benefiting from providing access to the works. It does not transform the works in any way save to index them. The nature of the works being copied runs across the entire spectrum, from factual to fictional, from news to entertainment and more. Entire works are being copied. While TVEyes doesn’t deliver entire works, only clips up to 10 minutes, there is no limit on the clips, and subscribers can easily piece together entire programs (in high resolution). And the market harm was clearly established by the record—there is not only harm to existing, “traditional” television revenue sources but also to existing clip licensing markets and emerging online revenue sources.

But the court read the record in an idiosyncratic way and applied a number of novel concepts unsupported by case law. It primarily fixated on potential fair uses of the works by TVEyes’ subscribers such as media criticism—and that, in enabling such uses, TVEyes’ own copying and delivery of copyrighted works becomes fair use.

On appeal, TVEyes argues that the court didn’t go far enough. It is asking the Second Circuit to hold that all of its functions, including email, download, and date/time search, are “protected fair use.” TVEyes focuses almost entirely on what it enables its subscribers to do, asserting that its services allow them to engage with the copyrighted works in putative transformative purposes—essentially arguing that it should be allowed to stand in the shoes of its customers when it comes to fair use.

If the Second Circuit were to accept these arguments, it would undermine the principles that fair use is based on and, consequently, the principles of copyright law itself.

Fair use has historically been seen as a corollary to copyright law, available in those circumstances when unauthorized use of an existing work furthers rather than impedes the aims of copyright. 7See Campbell v. Acuff-Rose, 510 US 569, 574 (1994), “From the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright’s very purpose, ‘[t]o promote the Progress of Science and useful Arts…’; Harper & Row, Publishers v. Nation Enterprises, 471 US 539, 549 (1985), quoting H. Ball, Law of Copyright and Literary Property 260 (1944), “[T]he author’s consent to a reasonable use of his copyrighted works ha[d] always been implied by the courts as a necessary incident of the constitutional policy of promoting the progress of science and the useful arts, since a prohibition of such use would inhibit subsequent writers from attempting to improve upon prior works and thus … frustrate the very ends sought to be attained.” It is necessarily limited—in ordinary cases, securing authors’ exclusive rights furthers the aims of copyright, and the market promotes “the progress of science and the useful arts.” Fair use serves as a complement by either privileging certain justified uses like news reporting and criticism, or excusing uses that by custom are considered reasonable or outside an author’s control. 8See A. Latman, Fair Use of Copyrighted Works, Copyright Office Revision Study 14 (1958). Some, including Leval, have described fair use as a mechanism for drawing a boundary line between protected and unprotected uses. 9See Google Books at 213, stating the crucial fair use question was “how to define the boundary limit of the original author’s exclusive rights”; Folsom v Marsh, 9 F. Cas 342 (D. Mass. 1841), “no one can doubt that a reviewer may fairly cite largely from the original work, if his design be really and truly to use the passages for the purposes of fair and reasonable criticism. On the other hand, it is as clear, that if he thus cites the most important parts of the work, with a view, not to criticise, but to supersede the use of the original work, and substitute the review for it, such a use will be deemed in law a piracy. A wide interval might, of course, exist between these two extremes, calling for great caution and involving great difficulty, where the court is approaching the dividing middle line which separates the one from the other.”

But however fair use is conceptualized, it should be self-evident that too broad of an application would undermine the goals of copyright instead of promoting them. As Justice Kennedy said in his Campbell concurrence, “[U]nder-protection of copyright disserves the goals of copyright just as much as overprotection, by reducing the financial incentive to create.” Unless one does not see any value in copyright, and views fair use as merely a mechanism for nullifying the protections authors currently see under the law, one should recognize that fair use has its proper limits. We’ll see if the Second Circuit finds that TVEyes goes beyond those limits.

References   [ + ]

1. See Statement of Professor June Besek at a hearing in front of the House Judiciary Committee on fair use for one account of this expansion.
2. The parties subsequently settled; see Did Campbell v Acuff-Rose find 2 Live Crew’s song to be fair use?
3. See What did Google Books Decision do to Cariou v Prince for a discussion of Leval’s focus on justification.
4. Fox News Network v TVEyes, 43 F.Supp. 3d 379 (SDNY 2014).
5. Nor, for that matter, from the MVPDs it used to receive content. Satellite MVPD DirecTV sued TVEyes for alleged unlawful retransmission of a pay-TV signal. The two parties reached a settlement in November 2015, with TVEyes agreeing to cease obtaining content for its service from DirecTV. See DirecTV Settles Fight Against TVEyes.
6. See Fox News v TVEyes: Fair Use Transformed for more discussion about the decision.
7. See Campbell v. Acuff-Rose, 510 US 569, 574 (1994), “From the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright’s very purpose, ‘[t]o promote the Progress of Science and useful Arts…’; Harper & Row, Publishers v. Nation Enterprises, 471 US 539, 549 (1985), quoting H. Ball, Law of Copyright and Literary Property 260 (1944), “[T]he author’s consent to a reasonable use of his copyrighted works ha[d] always been implied by the courts as a necessary incident of the constitutional policy of promoting the progress of science and the useful arts, since a prohibition of such use would inhibit subsequent writers from attempting to improve upon prior works and thus … frustrate the very ends sought to be attained.”
8. See A. Latman, Fair Use of Copyrighted Works, Copyright Office Revision Study 14 (1958).
9. See Google Books at 213, stating the crucial fair use question was “how to define the boundary limit of the original author’s exclusive rights”; Folsom v Marsh, 9 F. Cas 342 (D. Mass. 1841), “no one can doubt that a reviewer may fairly cite largely from the original work, if his design be really and truly to use the passages for the purposes of fair and reasonable criticism. On the other hand, it is as clear, that if he thus cites the most important parts of the work, with a view, not to criticise, but to supersede the use of the original work, and substitute the review for it, such a use will be deemed in law a piracy. A wide interval might, of course, exist between these two extremes, calling for great caution and involving great difficulty, where the court is approaching the dividing middle line which separates the one from the other.”

In recent years, there have been some attempts to characterize copyright as a government subsidy. Tom Bell, for example, argues that copyrights should not be considered “property” but should instead be considered to belong “to a bestiary of modern, artificial, statutory privileges, such as welfare benefits, farm subsidies… and taxi medallions.” 1Tom W. Bell, Copyright Porn Trolls, Wasting Taxi Medallions, and the Propriety of “Property”, 18 Chap. L. Rev. 799, 813 (2015). Similar charges can be found by other advocates, calling copyright a “subsidy“, a “government subsidy“, or a “government-created subsidy.”

The reason for doing so is primarily rhetorical: at the very least, “subsidy” suggests a higher level of scrutiny than “property” or “right.” At most, anything labelled a government subsidy is treated with the highest level of skepticism. Adopting the label of “subsidy” thus replaces a lot of persuasive work that would otherwise need to be done.

But a Federal Circuit decision last month undermines the characterization of copyright as a government subsidy. The decision, In re Tam, involves trademarks, but its reasoning is both implicitly and explicitly applicable to copyright.

In re Tam

In re Tam looks at the First Amendment implications of federal trademark registration. The Federal Circuit begins by noting that trademarks both “protect the public so it may be confident that, in purchasing a product bearing a particular trade-mark which it favorably knows, it will get the product which it asks for and wants to get” and ensure that trademark holders can protect their “investment from . . . misappropriation by pirates and cheats.” Trademarks may be protected through state and common law. The Lanham Act was passed by Congress to provide a federal system of registering and protecting trademarks.

Federal registration of a trademark by a markholder is optional but confers important substantive and procedural rights. These rights include:

  • Exclusive nationwide use of the mark (common law trademark is limited to the geographic area where the mark is actually used)
  • A presumption of validity, and incontestability after five years of consecutive post-registration use
  • Ability to sue in federal court for trademark infringement
  • Ability to recover treble damages for willful infringement
  • Ability to obtain assistance of US Customs and Border Protection to restrict importation of counterfeit goods
  • Qualification for a simplified process for obtaining protection of works in foreign countries that are members of the Paris Convention
  • A complete defense to state or common law claims of trademark dilution.

Section 2(a) of the Lanham Act, the section at issue here, bars registration of marks that, among other things, “disparage … persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute.”

In 2011, Simon Shiao Tam filed an application to register a trademark in the name of his band, “The Slants”, an “Asian-American dance rock band.” A USPTO examiner denied the registration, finding it disparaging. The decision was affirmed by the Trademark Trial and Appeal Board and the Federal Circuit, but the Federal Circuit sua sponte ordered a rehearing en banc to consider whether refusal of disparaging trademarks implicated the First Amendment.

The en banc panel first held that Section 2(a) denies important legal rights to private speech based on its content. It is thus presumptively invalid and can only be justified if the government can prove that it is “narrowly tailored to serve compelling state interests.” The court states that “no argument has been made that the measure survives such scrutiny.”

The government also argued that Section 2(a) does not implicate the First Amendment at all, asserting that denial of trademark registration does not prohibit speech, that trademark registration is government speech, or that trademark registration is a government subsidy. The Federal Circuit rejected all of these arguments.

The third of these arguments is most relevant to the discussion above. As the Federal Circuit explains, the key distinction here is between Congress’s ability to direct government spending and a constitutional prohibition against denying a “benefit to a person on a basis that infringes his constitutionally protected interests—especially, his interest in freedom of speech.” The Constitution’s Spending Clause, after all, provides Congress discretion over the ability to tax and spend for the general welfare, which includes “‘the authority to impose limits on the use of such funds to ensure they are used in the manner Congress intends,’ even when  these limits exclude protected speech or other constitutionally protected conduct.” However, this authority does not permit Congress “to attach ‘conditions that seek to leverage funding to regulate speech outside the contours of the program itself.'” This is admittedly not a clear distinction, but in essence, “Congress cannot recast a condition on funding as a mere definition of its program in every case, lest the First Amendment be reduced to a simple semantic exercise.”

But the Federal Circuit doesn’t reach this distinction because it rejects the government’s threshold argument, saying, “Trademark registration does not implicate Congress’s power to spend or to control use of government property. Trademark registration is not a subsidy.” It rejects all of the government’s counterarguments, observing that “The restriction on the registration of disparaging marks bears no relation to the objectives, goals, or purpose of the federal trademark registration program.”

The court next underscores the importance of its holding.

Were we to accept the government’s argument that trademark registration is a government subsidy and that therefore the government is free to restrict speech within the confines of the trademark program, it would expand the “subsidy” exception to swallow nearly all government regulation.

Characterizing something as a subsidy invites all sorts of government interference, including that which might regulate speech.

Application to copyright law

The holding in In re Tam applies just as much to copyright as it does to trademark.

In the discussion that follows its rejection of the government’s subsidy argument, the court observes the resemblance between trademark registration and copyright registration. It says that under the logic of the government’s approach, Congress could similarly prohibit the registration of copyrighted works which contain racial slurs or religious insults. “This idea—that the government can control speech by denying the benefits of copyright registration to disfavored speech—is anathema to the First Amendment.” The court notes that the government agrees that copyright registration is protected by the First Amendment, “But the government has advanced no principled reason to treat trademark registration differently than copyright registration for present purposes.”

The Federal Circuit is explicit that there is no daylight between its trademark holding and one that would involve copyright. But the relationship between the two does not stop there. In fact, comparisons to copyright and copyright registration are pervasive throughout the court’s opinion. For example, the court responds to the government’s argument that “accoutrements of registration—such as the registrant’s right to attach the ® symbol to the registered mark, the mark’s placement on the Principal Register, and the issuance of a certificate of registration—amount to government speech.” It says if that was the case, then the same would be true for copyright registration, since that has identical accoutrements. The court observes that “the government would be free, under this logic, to prohibit the copyright registration of any work deemed immoral, scandalous, or disparaging to others.” It concludes that “This sort of censorship is not consistent with the First Amendment or government speech jurisprudence.”

It again draws parallels to copyright when it rejects the government’s argument that federal funding of the Patent and Trademark Office brings trademark registration within the ambit of the Spending Clause, noting that the Copyright Office likewise receives appropriations, but copyright registration is not a subsidy.

So while the Federal Circuit’s holding is about trademark, its reasoning clearly and directly extends to copyright. And its conclusion is clear: not only is copyright not a government subsidy, but to mischaracterize it as such would undermine free speech protections.

References   [ + ]

1. Tom W. Bell, Copyright Porn Trolls, Wasting Taxi Medallions, and the Propriety of “Property”, 18 Chap. L. Rev. 799, 813 (2015).

What can we expect for US copyright policy in 2016?

As I did last year, I’d like to take a brief look at what developments we may see in the copyright policy arena over the next twelve months.

House Judiciary Committee copyright review

Last year the House Judiciary Committee brought the first phase of its copyright review process to a close. Over the course of two years, the Committee had held a series of twenty hearings, featuring 100 witnesses, covering a broad array of topics. Chairman Goodlatte announced the next step would consist of meeting one on one with stakeholders to discuss their priorities and positions regarding copyright law. The Committee also traveled to Nashville, Silicon Valley, and Los Angeles as part of a “listening tour” to hear from different parties.

The ultimate outcome of the review process is still undetermined. A number of bills have been introduced addressing issues such as music licensing (the Fair Play Fair Pay Act and Songwriter Equity Act), resale royalties (American Royalties Too Act), and embedded software (You Own Devices Act). None of these bills have advanced since being introduced.

US Patent and Trademark Office

This year will likely see the release of an Internet Policy Task Force’s (IPTF) White Paper on copyright policy in the digital era. In 2013, the IPTF—a Department of Commerce task force composed of Commerce bureaus including the USPTO’s Office of Policy and International Affairs and the National Telecommunications and Information Administration—released a Green Paper on Copyright Policy, Creativity, and Innovation in the Digital Economy that examined the current legal framework related to copyright and the internet. According to remarks by PTO Director Michelle Lee, the forthcoming White Paper will contain policy recommendations on three issues: “The appropriate calibration of statutory damages; [t]he application of the First Sale doctrine to digital transmissions; and the legal status of remixes.”

Copyright Office

The Copyright Office looks like it will be keeping busy this year. At the end of 2015, the Copyright Office dropped not one but three requests for public comment on studies it is initiating. The most recent of these will look at the impact and effectiveness of the safe harbor provisions contained in Section 512 (the DMCA safe harbors). As Register Pallante observed in her testimony at the final copyright review hearing in April, “In the nearly twenty years since Congress enacted the DMCA, courts have stepped in to fill perceived gaps in the statutory framework, often interpreting provisions in ways that some believe run counter to the very balance that the DMCA sought to achieve. … The current online environment is vastly changed from the bulletin-board era in which Congress enacted the DMCA in 1998.”

The other two studies are closely related, looking at software-enabled consumer products and Section 1201 of the Copyright Act (which prohibits the circumvention of technological protection measures). As more and more everyday consumer devices—everything from toasters to tractors—include copyrighted software, a host of issues regarding the “impact of existing copyright law on innovation and consumer uses” are emerging. The Office is engaging in a separate Section 1201 study to examine more closely the anti-circumvention provisions and triennial rulemaking process for exemptions to those provisions.

The Office is collecting public input in all three studies throughout the first several months of 2016. It has stated plans for public meetings for each of these studies following the comment period, so we may see one or more of those later in the year. The software-enabled consumer products study was initiated as a result of a request from Senators Grassley and Leahy who asked that it be completed by December 15, 2016.

Still outstanding are reports on mass digitization, visual works, and making available; perhaps we’ll see one or more of these issued in 2016.

Copyright Office modernization

The operation of the Copyright Office itself promises to remain an active area of development in 2016. The department’s resources and functions—most notably its IT and technology—have been the focus of increasing attention. In the past year and a half, the Office’s operations have been discussed at an oversight hearing, a copyright review hearing, and a House Admin hearing. Last year, the issue was also explored in House and Senate appropriations hearings along with a GAO report. The Office itself most recently underscored the need for modernization in its 2016-2020 Strategic Plan.

In December, Representatives Marino, Chu, and Comstock introduced legislation (the Copyright Office for the Digital Economy, or CODE, Act) that would address the significant structural challenges facing the Office by providing it with more autonomy over its budget and technology. It is likely we will see additional Copyright Office modernization developments over the next twelve months.

Library of Congress

Given that the US Copyright Office is a department within the Library of Congress and acts under its direction and supervision, who the next head of the Library will be may have copyright policy implications.

The most recent Librarian, Dr. James Billington, announced on June 10 he would retire at the end of the year. He subsequently stepped down three months early, on September 30, and deputy Librarian David Mao has been serving as Acting Librarian since then. Although names of some potential candidates have floated in the press, no one has been nominated yet.

The Administration would presumably want to have a Librarian nominated and confirmed before the end of the President’s term next January, so it’s reasonable to expect a new Librarian some time in 2016, but time is running short.

Trans-Pacific Partnership

In October, trade ministers from the twelve Trans-Pacific Partnership (TPP) nations announced the conclusion of negotiations, paving the way for the major trade agreement to go into effect. The US Trade Representative released the full text of the agreement in November, which covers a broad array of issues, including standards for intellectual property protections like copyright.

Conclusion of the agreement triggers a process ultimately leading to adoption. Over 2016, we will see an International Trade Commission analysis of the economic impact of the TPP, as well as any draft legislation required for implementation (the TPP’s copyright provisions should not require any legislative changes since they are consistent with US law). Though the agreement is a top priority for the Administration, it remains to be seen, whether the agreement will make it in front of Congress before the end of the year.

In closing, I’d note that the question of what we can expect in 2016 cannot help but be shaped by the November Presidential election. Though copyright has not historically been an election (or even partisan) issue, the focus on the contest will no doubt shape what policymakers do (or don’t do) in the copyright space. One immediate consequence of the election is an abbreviated Congressional calendar; the House will be in session just 111 days this year, the least amount of workdays since 2006.

On Friday, the Second Circuit published its long-awaited decision in Authors Guild v. Google, holding that the Google Books project was fair use. The litigation has extended over a decade, and the court’s opinion ably recounts the factual and legal background so there is no need to repeat that here. Surely it will provide fodder for plenty of commentary over the coming months, but for now, I wanted to highlight an ancillary point: the court’s apparent overlook of its fair use holding in Cariou v. Prince.

Cariou involved the appropriation, without permission, by celebrity artist Richard Prince of over thirty photos taken by professional photographer Patrick Cariou, to create a series of new works. Prince asserted a fair use defense after Cariou sued him for copyright infringement. The district court rejected the fair use defense. 1Cariou v. Prince, 784 F.Supp.2d 337 (SDNY 2011). Key to its holding was its response to Prince’s assertion that “use of copyrighted materials as raw materials in creating ‘appropriation art’ which does not comment on the copyrighted original is a fair use.” The court disagreed, saying it was “aware of no precedent holding that such use is fair absent transformative comment on the original.”

To the contrary, the illustrative fair uses listed in the preamble to § 107—“criticism, comment, news reporting, teaching […], scholarship, [and] research”—all have at their core a focus on the original works or their historical context, and all of the precedent this Court can identify imposes a requirement that the new work in some way comment on, relate to the historical context of, or critically refer back to the original works.

On appeal, the Second Circuit reversed, finding all but five of Prince’s works to be fair use (the remaining five were remanded to the district court on the issue). 2Cariou v. Prince, 714 F.3d 694, 706-07 (2nd Cir. 2013). In doing so, the Second Circuit disputed the above statement from the lower court, saying, “The law imposes no requirement that a work comment on the original or its author in order to be considered transformative … Prince’s work could be transformative even without commenting on Cariou’s work or on culture, and even without Prince’s stated intention to do so.”

The New York Times noted that the decision was criticized by copyright experts and photographers. I also criticized the decision, and later wrote that it ignored a long-standing principle that fair use requires that the use of the original work is essential to the new work for some purpose related to those listed in the statute (“criticism, comment, news reporting, teaching […], scholarship, [and] research”). 3See also William F. Patry & Shira Perlmutter, Fair Use Misconstrued: Profit, Presumptions, and Parody, 11 Cardozo Arts & Entertainment L. J. 667, 714-15 (1992) (“If the defendant is commenting on something that has nothing to do with the plaintiff’s work, he has no need to use the plaintiff’s work to make that comment. He can equally well create his own expression, or use material in the public domain. … In the absence of a need to use that particular work, there is inadequate justification for carving out a substantial chunk of the copyright owner’s exclusive rights.”). This necessity principle, I observed, can be derived from the underlying justifications of fair use—which include furthering the goals of copyright itself and providing First Amendment safeguards.

My discussion was motivated by the Seventh Circuit’s 2014 decision in Kienitz v. Sconnie Nation, which, after criticizing the Second Circuit’s holding in Cariou, touched briefly upon the necessity requirement. 4766 F.3d 756 (7th Cir. 2014). There, Judge Easterbrook said,

There’s no good reason why defendants should be allowed to appropriate someone else’s copyrighted efforts as the starting point in their lampoon, when so many non-copyrighted alternatives (including snapshots they could have taken themselves) were available. The fair-use privilege under §107 is not designed to protect lazy appropriators. Its goal instead is to facilitate a class of uses that would not be possible if users always had to negotiate with copyright proprietors.

Following the Supreme Court’s denial of cert in Sconnie Nation, it seemed like we’d be stuck with a bit of a circuit split between the Seventh Circuit and the Second (and Ninth) Circuit. Until Authors Guild.

Judge Leval, who authored the opinion, began his fair use analysis by exploring what it means to be “transformative” in the fair use context (a term he himself introduced into copyright jurisprudence). 5See Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105 (1990). It “does not mean that any and all changes made to an author’s original text will necessarily support a finding of fair use.” To explain the distinction, Leval turned to the same passage from the Supreme Court’s opinion in Campbell v. Acuff-Rose that I relied on to describe the necessity requirement. There, the Court explained (as quoted by Leval),

[T]he heart of any parodist’s claim to quote from existing material . . . is the use of . . . a prior author’s composition to . . .comment[] on that author’s works. . . . If, on the contrary, the commentary has no critical bearing on the substance or style of the original composition, which the alleged infringer merely uses to get attention or to avoid the drudgery in working up something fresh, the claim to fairness in borrowing from another’s work diminishes accordingly (if it does not vanish). . . . Parody needs to mimic an original to make its point, and so has some claim to use the creation of its victim’s . . . imagination, whereas satire can stand on its own two feet and so requires justification for the very act of borrowing.

Leval drives this point home, saying,

In other words, the would-be fair user of another’s work must have justification for the taking. A secondary author is not necessarily at liberty to make wholesale takings of the original author’s expression merely because of how well the original author’s expression would convey the secondary author’s different message. Among the best recognized justifications for copying from another’s work is to provide comment on it or criticism of it. A taking from another author’s work for the purpose of making points that have no bearing on the original may well be fair use, but the taker would need to show a justification.

This would appear to contradict Cariou—there, Prince did not have any justification for using Cariou’s photos; indeed, he did not articulate any reason at all for using them, but the court nevertheless held that to be a fair use. I say appear to contradict since a panel court cannot overrule prior holdings by the same court, so we are left with a state of tension between the holdings in Cariou and Authors Guild.

Nevertheless, and setting aside other aspects of this decision, the Second Circuit’s recognition of the necessity requirement of fair use is a welcome one.

 

References   [ + ]

1. Cariou v. Prince, 784 F.Supp.2d 337 (SDNY 2011).
2. Cariou v. Prince, 714 F.3d 694, 706-07 (2nd Cir. 2013).
3. See also William F. Patry & Shira Perlmutter, Fair Use Misconstrued: Profit, Presumptions, and Parody, 11 Cardozo Arts & Entertainment L. J. 667, 714-15 (1992) (“If the defendant is commenting on something that has nothing to do with the plaintiff’s work, he has no need to use the plaintiff’s work to make that comment. He can equally well create his own expression, or use material in the public domain. … In the absence of a need to use that particular work, there is inadequate justification for carving out a substantial chunk of the copyright owner’s exclusive rights.”).
4. 766 F.3d 756 (7th Cir. 2014).
5. See Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105 (1990).

Nearly four years ago, the US Justice Department indicted Kim Dotcom (née Kim Schmidt)—along with six other individuals and two corporations—on a number of charges related to the operation of Megaupload and alleged “massive worldwide online piracy.” 1Researchers found that “the shutdown of Megaupload and its associated sites caused digital revenues for three major motion picture studios to increase by 6.5-8.5%.”

Since then, Dotcom has consistently questioned the charges, claiming not innocence but a lack of legal basis for the charges themselves—that is, that his conduct in creating and operating Megaupload does not make him criminally liable for copyright infringement and related charges. His defense team even took the highly unusual step of publishing a “white paper” that explores its arguments against the criminal charges. 2I wrote previously about the arguments raised in the white paper here.

Despite this insistence of legality, Dotcom’s defense has repeatedly delayed an actual trial with procedural challenge after procedural challenge. This week, despite those efforts, his extradition hearing has begun and is expected to last four weeks.

But that still doesn’t mean Dotcom is confident his legal claims will hold up in court. In fact, his legal team has enlisted the aid of presidential candidate Lawrence Lessig to support their case. Lessig recently filed an expert opinion in the extradition hearing to support the argument “that the Superseding Indictment and Record of the Case filed by the DOJ do not meet the requirements necessary to support a prima facie case that would be recognized by United States federal law and subject to the US-NZ Extradition Treaty.”

There are a couple things worth highlighting about Lessig’s declaration.

Lessig, of course, has become a popular figure in the copyright world for his work in addressing how the law should work in a networked, digital world. However, his track record in accurately describing how the law actually works has been less than stellar.

This is not the first time he has appeared in litigation as an expert witness—he appeared in the godfather of online copyright cases, A&M Records v. Napster. In his expert declaration for Napster, Lessig argued in part that in evaluating whether the service enabled infringement, a court should look at whether it has “potential for substantial noninfringing purposes.” He concluded that Napster was capable of “vast” noninfringing uses, including “the sharing of non-copyrighted music, the sharing of copyrighted music that had been authorized for sharing (for example, for purposes of sampling), and the sharing of other non-copyrighted content on the net in a peer-to-peer manner.” Lessig added that, by passing the Audio Home Recording Act, Congress expressly left “private, noncommercial home recording unregulated by copyright law.”

None of these arguments were successful in the Ninth Circuit. 3A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). The court did note it was bound by Sony‘s holding regarding substantial noninfringing purposes and would not “impute the requisite level of knowledge to Napster merely because peer-to-peer file sharing technology may be used to infringe plaintiffs’ copyrights” However, the court explained “Napster’s actual, specific knowledge of direct infringement renders Sony‘s holding of limited assistance to Napster. We are compelled to make a clear distinction between the architecture of the Napster system and Napster’s conduct in relation to the operational capacity of the system.”

The Ninth Circuit also rejected the argument that “that MP3 file exchange is the type of ‘noncommercial use’ protected from infringement actions by” the Audio Home Recording Act, holding that the plain language made the statute irrelevant to the issues at hand.

Lessig also spent a considerable amount of time and energy during the 2000s arguing that the Copyright Term Extension Act, as regarding the term extension of existing copyrights, violated the Copyright Clause of the Constitution. This litigation went all the way up to the Supreme Court, which rejected Lessig’s arguments unequivocally in Eldred v. Ashcroft. 4537 US 186 (2003). In doing so, the Court concluded its opinion by saying, “Beneath the facade of their inventive constitutional interpretation, petitioners forcefully urge that Congress pursued very bad policy in prescribing the CTEA’s long terms. The wisdom of Congress’ action, however, is not within our province to second-guess.”

Given this track record, it might be said that Dotcom is more interested in making a statement than beating the charges.

The second thing about Lessig’s declaration that jumps out is an apparent contradiction between Lessig and Dotcom’s defense team regarding the applicability of the DMCA safe harbors to Megaupload.

In the white paper, Dotcom’s defense team says

Even if the U.S. government’s wishful expansion of the criminal copyright law into the realm of secondary infringement were tenable (which it is not), Megaupload is shielded from criminal liability by specific “safe harbor” provisions in the Digital Millennium Copyright Act (DMCA), included in the law to protect companies like Megaupload that make efforts to remove infringing material in response to “take-down” notices issued by copyright holders

But in his declaration, Lessig asserts “The DMCA is only a defense in the civil context”. The reversal is notable.

I do think Lessig is correct here. As I wrote in 2012 following the indictment,

Though [the DMCA] references only “infringement of copyright” — which could include both criminal and civil infringement — it merely shields service providers from “liab[ility] for monetary relief, or [in some circumstances] injunctive or other equitable relief.” This is civil lawsuit language — criminal defendants are punished with fines, not liable for monetary relief.

In addition, criminal liability would seem to preclude safe harbor protection solely as a matter of common sense. Criminal copyright infringement requires willful infringement. The DMCA safe harbor only protects service providers from liability for passive infringement. If the evidence shows that a defendant was willfully infringing copyrighted works beyond a reasonable doubt, it doesn’t seem possible that that same defendant could ever meet the requirements for safe harbor protection under the statute.

Nevertheless, for Lessig to contradict a point the defense has been asserting for three years cannot be welcome news for Dotcom.

References   [ + ]

1. Researchers found that “the shutdown of Megaupload and its associated sites caused digital revenues for three major motion picture studios to increase by 6.5-8.5%.”
2. I wrote previously about the arguments raised in the white paper here.
3. A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001).
4. 537 US 186 (2003).

The problem of online piracy remains acute, and enforcement is particularly challenging against for-profit operations which often operate anonymously and off-shore. 1See generally, Good Money Gone Bad, Digital Citizens Alliance (Feb. 2014). Even if a particular site can be successfully shut down, a new version can appear in a different location, sometimes within hours.

MovieTube is a particularly brazen example of such an operation. The MovieTube sites openly admit that “many movies we linked are pirated movies” but “Luckily we are not a US company so we do not need to respect US laws.” The operators exert full control over the sites—the complaint alleges, “All content streamed from the MovieTube Websites is selected, aggregated, organized, streamed and made available for viewing by the MovieTube Websites’ operators—Defendants—only.” Defendants market their sites heavily and profit off them through online advertising.

The major motion picture studios sued the MovieTube websites—consisting of a network of at least 29 different sites—on July 24, 2015 for direct and secondary copyright infringement, federal trademark infringement, and unfair competition and false designation of origin. The studios sought, among other remedies, injunctive relief against the MovieTube websites, as well as an order that “(i) registries and registrars disable the domains to the MovieTube Websites and (ii) third-party service providers cease providing services to the MovieTube Websites and Defendants in relation to the Infringing Copies.” Injunctive relief against third-party services that facilitate the operation of infringing sites gives effect to the legal judgment of the court while minimizing the “whac-a-mole” problem discussed above.

While this approach is relatively new in the context of online piracy, it is based on established and long-standing legal provisions and principles.

Active Concert or Participation

The Copyright Act provides copyright owners with a number of remedies they can seek against infringers, including common remedies such as damages and injunctions. Specifically, 17 USC § 502(a) provides that a court may “grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.”

Temporary injunctions—which includes both temporary restraining orders and preliminary injunctions in federal courts—are granted before judgment on the merits of a case, and their purpose is to preserve the status quo during litigation and prevent irreparable harm to a party’s rights before final judgment. 2Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F. 2d 1415, 1422 (9th Cir. 1984).

A court will grant a preliminary injunction if a plaintiff has demonstrated a likelihood of success on the merits, irreparable harm in the absence of an injunction, a balance of equities in her favor, and consistency with the public interest. 3Winter v. Natural Resources Defense Council, Inc., 129 S. Ct. 365, 374 (2008). Courts also require plaintiffs to post a bond when seeking a preliminary injunction. 4FRCP 65(c). The bond ensures that defendants are covered for any harm incurred in the event that an injunction is erroneously granted. 5Thomas Patterson, Litigation: The bond requirement for preliminary injunctions, Inside Counsel, September 5, 2013.

Under the Federal Rules of Civil Procedure, an injunction binds “(A) the parties; (B) the parties’ officers, agents, servants, employees, and attorneys; and (C) other persons who are in active concert or participation with anyone described in … [](A) or (B).” The Supreme Court has explained that this rule (present in substantially the same form since the Rules were first promulgated in 1938) “is derived from the common-law doctrine that a decree of injunction not only binds the parties defendant but also those identified with them in interest, in ‘privity’ with them, represented by them or subject to their control. In essence it is that defendants may not nullify a decree by carrying out prohibited acts through aiders and abettors, although they were not parties to the original proceeding.” 6Regal Knitwear Co. v. NLRB, 324 US 9, 14 (1945).

In recent years, a number of companies have relied on serving injunctions on aiders and abettors of infringing sites given the difficulty of hailing the operators of such sites into court and the ease with which they can evade judgment. The practice has become routine for sites involving counterfeit goods and trademark infringement. 7See, e.g., Belstaff Group SA v. Doe, Temporary Restraining Order No. 15-cv-2242 (S.D.N.Y. Apr. 8, 2015); Richemont Int’l SA v. Xiao, Temporary Restraining Order, No. 13-cv-9071 (S.D.N.Y. Dec. 23, 2013); Tory Burch LLC v. Doe, No. 12 C 7163 (N.D. Ill. Oct. 2, 2012); Richemont Int’l SA v. Chen, Temporary Restraining Order, No. 12-cv-6689 (S.D.N.Y. Sept. 4, 2012); Burberry v. Doe, No. 12 Civ. 0479 (TPG) (S.D.N.Y. May 15, 2012); Hermès v. Doe, No. 12 Civ. 1623 (DLC) (S.D.N.Y. Apr. 30, 2012); The North Face Apparel Corp. v. Fujian Sharing Imp. & Exp. Ltd. Co., No. 10 Civ. 1640 (AKH) (SDNY June 24, 2011); The Nat’l Football League v. Chen, Temporary Restraining Order, No. 11-Civ-0344 (WHP) (S.D.N.Y. Jan. 19, 2011). More recently, courts have granted similar injunctions in cases involving copyright infringement. For example, in May, ABS-CBN, a media and entertainment company in the Philippines, sued a network of pirate sites that were alleged to provide unauthorized, on-demand streaming of its television shows and films. The court granted an injunction against the sites, and ordered domain name registrars used by the sites to transfer registration to ABS-CBN and privacy protection services used by the sites to disclose the identity of the defendants. Similar injunctions have been granted on a number of other occasions. 8Arista Records, LLC v. Tkach, Memorandum & Order, 15-CV-3701 (SDNY June 3, 2015); Showtime Networks, Inc. v. Doe 1, Temporary Restraining Order and Order to Show Cause, No. 15-CV-3147 (CD Cal. April 30, 2015); Warner Bros. Ent., Inc., v. Doe, Preliminary Injunction Order, No. 14-CV-3492 (SDNY May 29, 2014); AACS-LA v. Shen, Order, No. 14-CV-1112 (SDNY Mar. 4, 2014).

Active concert or participation is a fact-specific inquiry. “In order to show that a non-party ‘aided and abetted’ a party subject to the decree,” say courts, “the plaintiff must show that the non-party had actual knowledge of the judicial decree and violated it, and that the challenged action was taken for the benefit of, or to assist, a party subject to the decree.” 9Adcor Indus., Inc. v. BEVCORP, LLC, 411 F. Supp. 2d 778, 796 (ND Ohio 2005).

Upon notice of an injunction, a non-party can challenge the order in court. A non-party who does not comply with an injunction after having been served notice can be the subject of a contempt proceeding. Here, the non-party can also raise the argument that it is not in active concert or participation with the defendant.

CloudFlare and Grooveshark

One can see this process in action in recent litigation involving Grooveshark and CloudFlare. 10Arista Records, LLC v Vita Tkach, Memorandum & Order, 15-CV-3701 (SDNY June 3, 2015).

Following a finding that music streaming site Grooveshark was liable for copyright infringement, and a permanent injunction against the site’s operators, a “copycat” version of Grooveshark appeared online. The plaintiff record labels immediately sought a temporary restraining order against the operators of the copycat and “any persons acting in concert or participation with them or third parties providing services used in connection with Defendants’ operations.” The plaintiffs served notice of the TRO on Namecheap, a domain name registrar that defendants registered their domains with. Namecheap complied with the order, and defendants subsequently registered new domain names through a new registrar, Dynadot. Dynadot complied with the order after it was served notice. Defendants then registered another domain name with a registrar in Switzerland. Plaintiffs consequently turned their attention to CloudFlare, “an internet service provider that provides authoritative domain name system servers for its customers as a means of providing content delivery network and reverse-proxy services.” CloudFlare’s services had been used by each of the copycat domain names discussed above.

Plaintiffs then requested a court order requiring CloudFlare to comply with the TRO. Cloudflare argued that it is not in active concert or participation with the defendants and “should not be bound by the injunction because its service is ‘passive’ and not necessary for the operation of the Grooveshark sites.” The court rejected both of CloudFlare’s arguments. Cloudflare had knowledge of the TRO and subsequently permitted its services to be used for one of the copycat domain names. This conduct, said the court, “benefits Defendants and quite fundamentally assists them in violating the injunction because, without it, users would not be able to connect to Defendants’ site unless they knew the specific IP address for the site.” The court also said that it is not required to show that CloudFlare is necessary for the operation of Defendants’ site, only that it is in active concert or participation with Defendants.

Due Process

Civil litigation, of course, accords full due process to parties. But it’s important to note that binding nonparties to injunctions, as described above, is also fully consonant with due process. As the First Circuit has explained:

[T]he adjudicative framework surrounding contempt proceedings fully protects nonparties’ constitutional rights. If contempt proceedings are in fact undertaken, the forum court will resolve the fact-specific question of whether the cited nonparty was in active concert or participation with the named defendant. If so, the named defendant will be deemed the nonparty’s agent, and the nonparty’s right to due process will have been satisfied vicariously. If, however, the party prosecuting the contempt proceeding fails to show active concert or participation, a finding of contempt will not lie.

We explain briefly why, in either of these events, due process is not at risk. Contempt proceedings operate to ensure that nonparties have had their day in court. In order to hold a nonparty in contempt, a court first must determine that she was in active concert or participation with the party specifically enjoined (typically, the named defendant). This means, of course, that the nonparty must be legally identified with that defendant, or, at least, deemed to have aided and abetted that defendant in the enjoined conduct. The existence of such a linkage makes it fair to bind the nonparty, even if she has not had a separate opportunity to contest the original injunction, because her close alliance with the enjoined defendant adequately assures that her interests were sufficiently represented.

The coin, however, has a flip side. A nonparty who has acted independently of the enjoined defendant will not be bound by the injunction, and, if she has had no opportunity to contest its validity, cannot be found in contempt without a separate adjudication. This tried and true dichotomy safeguards the rights of those who truly are strangers to an injunctive decree. It does not offend due process. 11Microsystems Software v. Scandinavia Online AB, 226 F. 3d 35, 42-43 (1st Cir. 2000).

In short, the process involves a court determining that the defendant in question is likely infringing copyright after hearing from both parties. If so, it may grant a preliminary injunction. The plaintiff serves notice of the injunction on a service provider, which requires them to stop facilitating the conduct of a party that a court has determined breaks the law (and in most instances violates the service provider’s own terms of service). A service provider who receives notice can challenge the order in court.

The court has ordered defendants here to show cause why a preliminary injunction should not issue by tomorrow, August 7.

References   [ + ]

1. See generally, Good Money Gone Bad, Digital Citizens Alliance (Feb. 2014).
2. Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F. 2d 1415, 1422 (9th Cir. 1984).
3. Winter v. Natural Resources Defense Council, Inc., 129 S. Ct. 365, 374 (2008).
4. FRCP 65(c).
5. Thomas Patterson, Litigation: The bond requirement for preliminary injunctions, Inside Counsel, September 5, 2013.
6. Regal Knitwear Co. v. NLRB, 324 US 9, 14 (1945).
7. See, e.g., Belstaff Group SA v. Doe, Temporary Restraining Order No. 15-cv-2242 (S.D.N.Y. Apr. 8, 2015); Richemont Int’l SA v. Xiao, Temporary Restraining Order, No. 13-cv-9071 (S.D.N.Y. Dec. 23, 2013); Tory Burch LLC v. Doe, No. 12 C 7163 (N.D. Ill. Oct. 2, 2012); Richemont Int’l SA v. Chen, Temporary Restraining Order, No. 12-cv-6689 (S.D.N.Y. Sept. 4, 2012); Burberry v. Doe, No. 12 Civ. 0479 (TPG) (S.D.N.Y. May 15, 2012); Hermès v. Doe, No. 12 Civ. 1623 (DLC) (S.D.N.Y. Apr. 30, 2012); The North Face Apparel Corp. v. Fujian Sharing Imp. & Exp. Ltd. Co., No. 10 Civ. 1640 (AKH) (SDNY June 24, 2011); The Nat’l Football League v. Chen, Temporary Restraining Order, No. 11-Civ-0344 (WHP) (S.D.N.Y. Jan. 19, 2011).
8. Arista Records, LLC v. Tkach, Memorandum & Order, 15-CV-3701 (SDNY June 3, 2015); Showtime Networks, Inc. v. Doe 1, Temporary Restraining Order and Order to Show Cause, No. 15-CV-3147 (CD Cal. April 30, 2015); Warner Bros. Ent., Inc., v. Doe, Preliminary Injunction Order, No. 14-CV-3492 (SDNY May 29, 2014); AACS-LA v. Shen, Order, No. 14-CV-1112 (SDNY Mar. 4, 2014).
9. Adcor Indus., Inc. v. BEVCORP, LLC, 411 F. Supp. 2d 778, 796 (ND Ohio 2005).
10. Arista Records, LLC v Vita Tkach, Memorandum & Order, 15-CV-3701 (SDNY June 3, 2015).
11. Microsystems Software v. Scandinavia Online AB, 226 F. 3d 35, 42-43 (1st Cir. 2000).

The Ninth Circuit’s en banc decision in Garcia v. Google was hugely popular when it came out several weeks ago, though talk about it has quickly died down. 1No. 12-57302, May 18, 2015. Despite that, part of the court’s discussion is troubling and worth note.

To recount the facts quickly, actress Cindy Lee Garcia performed a cameo in what she thought was an “action-adventure thriller set in ancient Arabia.” The film ended up being an offensive anti-Islam film Innocence of Muslims. Garcia appeared for five seconds with a dubbed-over voice asking, “Is your Mohammed a child molester?” A 14 minute version of the film was uploaded to YouTube, causing widespread outrage in the Middle East. A fatwa was issued by an Egyptian cleric against all participants in the film, and Garcia received “multiple death threats” because of her appearance. 2See Cindy Lee Garcia’s declaration for a detailed account of many of these threats.

Garcia took legal action through a number of avenues. On November 30, 2012, a federal district court denied a preliminary injunction based on a copyright claim. A Ninth Circuit panel reversed this decision in 2014 and granted the injunction, causing widespread outrage on the internet. 3766 F.3d 929 (9th Cir. 2014). On May 18th, however, an en banc court dissolved the panel’s injunction and affirmed the district court’s decision.

The En Banc Decision

When deciding whether to grant a preliminary injunction, a court considers four factors: (1) the likelihood a plaintiff will succeed on the merits of her claim, (2) the likelihood a plaintiff will suffer irreparable harm absent an injunction, (3) the balance of hardships between the two parties, and (4) the public interest.

The Ninth Circuit held that the district court did not abuse its discretion in denying the injunction for two reasons. First, it concluded that Garcia was unlikely to succeed on the merits, saying “neither the Copyright Act nor the Copyright Office’s interpretation supports Garcia’s claim.” And second, it held that “Garcia failed to muster a clear showing of irreparable harm.” Because of these two conclusions, the court found it unnecessary to consider the final two factors.

I think the Ninth Circuit reached the correct result on the merits in holding that Garcia did not have an independent copyrightable interest in her five second performance—and there are doctrines the court didn’t look at, such as the de minimis doctrine, that may have separately provided grounds for such a result. However, its discussion regarding irreparable harm does not rest on as solid legal grounds. It’s easy to gloss over the discussion of irreparable harm if one is thinking about it in terms of Garcia’s weak claim. But when one realizes it applies across the board to all copyright owners, then the concern becomes apparent.

The Ninth Circuit starts its discussion of irreparable harm by asserting that “there is a mismatch between [Garcia’s] substantive copyright claim and the dangers she hopes to remedy through an injunction.” That is, says the court, because Garcia is seeking an injunction under copyright law, her “harm must stem from copyright—namely, harm to her legal interests as an author.” The Ninth Circuit cites to the Second Circuit’s remark in Salinger v. Colting that “The relevant harm is the harm that … occurs to the parties’ legal interests” 4607 F.3d 68, 81 & n.9 (2d Cir. 2010). in support.

It then turns immediately to the Constitution, asserting that the “purpose of copyright underscores the disjunction Garcia’s case presents.” The Ninth Circuit finds copyright’s purpose is explicitly commercial and not to “protect secrecy.”

Having defined copyright’s purpose in such a way, the court then describes the harms Garcia is seeking to prevent as “damage to her reputation, unfair[,] forced promotion of a hateful Film, and death.” However, it says, these “harms are untethered from—and incompatible with—copyright and copyright’s function as the engine of expression.”

For example, the court finds “privacy is not a function of the copyright law” because the goal of copyright is “to encourage public access to the creative work of the author.” Similarly, emotional distress damages are unavailable under the Copyright Act “because such damages are unrelated to the value and marketability of their works.”

Finally, the court finds no refuge for Garcia in the “right to be forgotten” or “moral rights”, since it says neither are recognized in the United States. It ultimately concludes that “the gravamen of Garcia’s harm is untethered from her commercial interests as a performer, and instead focuses on the personal pain caused by her association with the film.”

The Legal Interests of an Author

The court gets so much incorrect in so little time. Perhaps it’s the case that the weakness of Garcia’s substantive claim casts a shade over the court’s discussion of irreparable harm. The problem is that this discussion is just as applicable to a meritorious copyright claim.

So what went wrong?

First, the court improperly narrows the interest at stake from the legal interest to the “legal interest as an author” (and, later, narrows this further to the commercial interest as a performer). There is no statutory basis for this interpretation. Copyright protection subsists in a work. 517 USC 102(a). It accords a set of exclusive rights in that work. 617 USC 106. Infringement occurs simply through violation of any of these exclusive rights. 717 USC 501. Nowhere does the Copyright Act qualify infringement or an author’s exclusive rights as the Ninth Circuit has.

Ironically, the very case the court cites in support provides a counterargument. After the Second Circuit says in Salinger that the relevant harm is the one that “occurs to the parties’ legal interests”, as the Ninth Circuit quotes, it goes on to say that “The plaintiff’s interest is, principally, a property interest in the copyrighted material.” An invasion of a property interest causes a legal harm. This is contrary to the Ninth Circuit’s suggestion here that only certain types of invasions cause legal harms which may give rise to irreparable harm, particularly only harms to commercial interests.

The Supreme Court has provided support for this interpretation a number of times over the decades. In eBay v. MercExchangewhich, though it involved an injunction for patent infringement, is just as applicable to copyright injunctions— 8The Ninth Circuit is among the Federal Circuit Courts of Appeal to explicitly hold so, see Perfect 10 Inc. v. Google Inc., 653 F. 3d 976, 980 (9th Cir. 2011). the Court said that “a copyright holder possesses ‘the right to exclude others from using his property.’” 9547 US 388, 392 (2006). It cautioned against adopting “expansive principles suggesting that injunctive relief could not issue in a broad swath of cases.” Of particular relevance here, it chastised the lower court’s conclusion that “’[a plaintiff’s] lack of commercial activity in practicing the patents’ would be sufficient to establish that the patent holder would not suffer irreparable harm if an injunction did not issue.”

As the Court said in Sony, “It is not the role of the courts to tell copyright holders the best way for them to exploit their copyrights.” 10Sony Corp v Universal City Studios, 464 US 417, 450 (1984). But it was most direct in Fox Film Corp. v. Doyal when it said, “The owner of the copyright, if he pleases, may refrain from vending or licensing and content himself with simply exercising the right to exclude others from using his property.” 11286 US 123, 127 (1932).

Elsewhere, the Ninth Circuit has said, “Even an author who had disavowed any intention to publish his work during his lifetime was entitled to protection of his copyright”. 12Worldwide Church of God v. Philadelphia Church of God, 227 F. 3d 1110, 1119 (9th Cir. 2000).

The legal interest in a copyright, based on the statutory text and Supreme Court precedent, is an interest in exercising exclusively the rights enumerated in the Copyright Act. It is not, as the Ninth Circuit suggests, limited to a narrow subset of invasions, such as those that only affect a copyright owner’s commercial interests. That’s not to say that there is a presumption of irreparable harm once a likelihood of infringement has been established; the Supreme Court cautioned against such “categorical rules” in eBay. 13547 US at 392. See also Salinger v. Colting, 607 F. 3d 68 at 82 (2nd Cir. 2010) (“After eBay, however, courts must not simply presume irreparable harm.”). But as the Second Circuit pointed out when applying eBay, “This is not to say that most copyright plaintiffs who have shown a likelihood of success on the merits would not be irreparably harmed absent preliminary injunctive relief. As an empirical matter, that may well be the case, and the historical tendency to issue preliminary injunctions readily in copyright cases may reflect just that.” 14607 F. 3d at 82.

Garcia, however, did not argue for a presumption of irreparable harm. She asserted a number of irreparable harms that were likely to result in the absence of an injunction. 15Ex parte application for a temporary restraining order and an order to show cause re preliminary injunction, and order of impoundment, No. CV 12-8315 (Oct. 17, 2012) (No. 12). These harms included the risk of death, that most irreparable of injuries.

Non-economic Interests

The Ninth Circuit marshals a number of points to support its conclusion that Garcia failed to show irreparable harm. First, the court’s discussion of the Constitutional purpose of copyright is both premature and misconceived.

Its emphasis on copyright’s role in encouraging “public access to the creative work of the author” and its ability to override a copyright owner’s legal interest leads to a logical contradiction. In a sense, the court is suggesting that copyright’s purpose is served by ignoring copyright. One must instead read the Copyright Clause conjunctively: Congress “promote[s] the progress of science and useful arts by securing… to authors… the exclusive right to their… writings.” Copyright’s purpose, in other words, is served when authors’ exclusive rights are secured.

The court then asserts that relief from the injuries Garcia seeks to avoid—”damage to her reputation, unfair[,] forced promotion of a hateful Film, and death”—”is not easily achieved under copyright law” because those harms are incompatible with “copyright’s function as the engine of free expression.”

This is an incomplete statement about the relationship between copyright and the First Amendment. The First Amendment protects not only the freedom to speak, but the freedom not to speak. 16Hurley v. Irish-American Gay, Lesbian, & Bisexual Group of Boston , 515 U.S. 557 (1995). at 573; see also, e.g., Pac. Gas & Elec. Co. v. Pub. Util. Comm’n of Cal., 475 U.S. 1 (1986) (plurality opinion). Courts—including the Supreme Court—have recognized this principle applies equally in copyright cases. The Court in Harper & Row said that “freedom of thought and expression ‘includes both the right to speak freely and the right to refrain from speaking at all.’” 17471 US 539, 559 (1985). Copyright, it said, serves this “First Amendment value.” Indeed, the Second Circuit observed in Salinger, which the Ninth Circuit quotes in its discussion, that “[t]he loss of First Amendment freedoms,” and hence infringement of the right not to speak, “for even minimal periods of time, unquestionably constitutes irreparable injury.” 18Salinger at 81. It would certainly be the case, then, that being threatened with death for words that one did not speak but that have been attributed to her would constitute irreparable injury.

The court is correct when it says that “authors cannot seek emotional distress damages under the Copyright Act.” But the case it cites is speaking about actual damages, not injunctive relief, so that statement is irrelevant here.

The court’s dismissal of a copyright owner’s privacy interests is similarly misguided. Copyright and privacy have long shared common ground. In 1849, a British court said, “That there is property in the ideas which pass in a man’s mind is consistent with all the authorities in English law. Incidental to that right is the right of deciding when and how they shall first be made known to the public. Privacy is a part, and an essential part, of this species of property.” 19Prince Albert v. Strange, 1 McN. & G. (1849). Warren and Brandeis’ seminal article, The Right to Privacy, also observe this kinship. There, the legal giants say, “[T]he legal doctrines relating to infractions of what is ordinarily termed the common-law right to intellectual and artistic property are, it is believed, but instances and applications of a general right to privacy.” 204 Harv. L. Rev. 193 (1890).

Right Results, Wrong Approach

To reiterate, establishing irreparable harm here does not necessarily mean Garcia should get an injunction. As noted above, the weak merits of the copyright claim weighs against an injunction. And though the Ninth Circuit did not look at the third factor, the balance of hardships or equities, that likely weighs against injunctive relief as well, given Google’s attenuated participation in the infringement.

So it is all the more unfortunate that the court expounded erroneously on irreparable harm. At its heart, copyright provides the author with the exclusive right to decide how, when, and where their expression is disseminated to the public (subject, of course, to exceptions and limitations like fair use). Any given author will have a range of equally valid interests motivating those decisions, both economic and non-economic. Courts should exercise caution in second guessing those motivations as the Ninth Circuit did here in its discussion on irreparable harm.

References   [ + ]

1. No. 12-57302, May 18, 2015.
2. See Cindy Lee Garcia’s declaration for a detailed account of many of these threats.
3. 766 F.3d 929 (9th Cir. 2014).
4. 607 F.3d 68, 81 & n.9 (2d Cir. 2010).
5. 17 USC 102(a).
6. 17 USC 106.
7. 17 USC 501.
8. The Ninth Circuit is among the Federal Circuit Courts of Appeal to explicitly hold so, see Perfect 10 Inc. v. Google Inc., 653 F. 3d 976, 980 (9th Cir. 2011).
9. 547 US 388, 392 (2006).
10. Sony Corp v Universal City Studios, 464 US 417, 450 (1984).
11. 286 US 123, 127 (1932).
12. Worldwide Church of God v. Philadelphia Church of God, 227 F. 3d 1110, 1119 (9th Cir. 2000).
13. 547 US at 392. See also Salinger v. Colting, 607 F. 3d 68 at 82 (2nd Cir. 2010) (“After eBay, however, courts must not simply presume irreparable harm.”).
14. 607 F. 3d at 82.
15. Ex parte application for a temporary restraining order and an order to show cause re preliminary injunction, and order of impoundment, No. CV 12-8315 (Oct. 17, 2012) (No. 12).
16. Hurley v. Irish-American Gay, Lesbian, & Bisexual Group of Boston , 515 U.S. 557 (1995). at 573; see also, e.g., Pac. Gas & Elec. Co. v. Pub. Util. Comm’n of Cal., 475 U.S. 1 (1986) (plurality opinion).
17. 471 US 539, 559 (1985).
18. Salinger at 81.
19. Prince Albert v. Strange, 1 McN. & G. (1849).
20. 4 Harv. L. Rev. 193 (1890).

Last fall, a federal judge in the Southern District Court of New York ruled that a news monitoring service’s copying of a news channel’s “broadcast content for indexing and clipping services to its subscribers constitutes fair use.” 1Fox News Network, LLC v. TVEyes, Inc., 43 F. Supp. 3d 379 (SDNY 2014); see also my post, Fox News v TVEyes: Fair Use Transformed. The service, TVEyes, copied wholesale every program broadcast by 1,400 channels (including plaintiff Fox News Network). It then created a searchable index of video clips and provided its clients—who pay $500 a month for the service—streaming and downloading access to that content, all without a license from the channels.

Fox News sued for copyright infringement. Currently, the court is considering whether other features offered by TVEyes also constitute fair use: saving, archiving, downloading, emailing, and sharing clips by subscribers, along with searching television clips by date and time rather then keyword or term. Fox is supported by an amicus brief from Bright House, CNN, CBS, NBC Universal, and News 12, while the EFF and the Technology Law & Policy Clinic at NYU School of Law have filed in support of TVEyes.

Though this litigation is recent, the issues involved here concerning fair use and news monitoring are not new. In fact, Congress looked at them in great detail over twenty years ago.

News monitoring and Section 107

Sen. Orrin Hatch introduced a bill October 1990 that would have amended the Copyright Act to provide that “fair use of a copyrighted work for purposes of monitoring news reporting programming is not an infringement of copyright.” 2S.3229, 101st Cong. (2nd Sess. 1990). The bill did not make it out of Committee.

During a 1991 hearing before the House IP Subcommittee, Robert Waggoner, Chairman of the Video Monitoring Services of America, testified on behalf of the International Association of Broadcast Monitors. 3Copyright Amendments Act of 1991 Hearings before the H. Subcomm. on Intellectual Property and Judicial Administration of the Comm. on the Judiciary on H.R. 2372, 101st Cong. (1991). Waggoner officially appeared in support of Title I of H.R. 2372, the bill being considered by the Subcommittee, but spoke primarily about fair use for broadcast monitoring services, an issue not on the agenda.

Waggoner positioned broadcast news monitoring services as advancing “a core First Amendment interest.”

They disseminate news to an interested public that would otherwise have no effective means of access to such information. They are the custodians of the public’s right to know what is being aired about them, and where.

However, Waggoner raised concerns over the Eleventh Circuit’s 1984 decision in Pacific Southern Co. v. Duncan, which rejected a broadcast news monitor’s fair use defense, primarily because the service was commercial in nature. 4744 F.2d 1490 (11th Cir. 1984), cert. denied, 471 U.S. 1004 (1985). He also cited with concern a number of lower courts that have followed Duncan. 5E.g., Cable News Network, Inc. v. Video Monitoring Services of America, Inc., Civ. No. 1:88-CV-2660-JOF (N.D. Ga. Jan. 9, 1990); NBC Subsidiary (KCNC-TV) v. Video Monitoring Services of America, Inc., Civ. No. 88-Z-234 (D. Colo. July 27, 1989); Georgia Television Co. v. TV News Clips of Atlanta, Inc., 9 U.S.P.Q. 2d (BNA) 2049 (N.D. Ga. 1989).

S. 1805

Senator Hatch introduced his news monitoring bill again a few months following this hearing. 6S. 1805, 102nd Cong. (1st Sess. 1991). Like the previous bill, it would amend §107 of Title 17 by inserting “or monitoring news reporting programming” after “news reporting”. This time, the bill was referred to the Senate Subcommittee on Patents, Copyrights and Trademarks, which held a hearing on the legislation June 16, 1992. 7News monitoring: Hearing before the S. Subcomm. on Patents, Copyrights, and Trademarks of the Committee on the Judiciary on S. 1805, a bill to amend Title 17, United States Code, to clarify news reporting monitoring as a fair use exception to the exclusive rights of a copyright owner, 102nd Cong. (1992), hereinafter “News monitoring hearing”.

The Senate Subcommittee heard from six witnesses, including Register of Copyrights Ralph Oman and noted copyright scholars David Nimmer (appearing on behalf of Turner Broadcasting System and the National Association of Broadcasters) and L. Ray Patterson (who had represented the news clipping service in Duncan). Arizona Senator and Subcommittee Chairman Dennis DeConcini began with a brief statement extolling the benefits of news monitoring services but skeptical that the bill was necessary:

We live in an age where the electronic media provide nonstop access to a constant flow of information and take us around the world as quickly as it takes us down the street. In a constant sea of electronic information, it’s difficult, if not impossible, to stay on top of all that the news has to offer. Therefore, I find these new monitoring services to be extremely valuable. However, I do not believe that the value of these services is the question before us today. To me the question is how these services go about getting access to the information that they monitor, package, and eventually sell.

The fair-use doctrine has evolved over years through the courts as a balancing test that I believe has served us well and one which I’m reluctant to amend in the absence of compelling evidence. I will listen with great interest to the justification for the legislation, and I’ll look for an answer as to why this conflict cannot be resolved in the marketplace.

Register Oman led off the witness slate by testifying that “the Copyright Office does not support enactment of S. 1805.” In the Office’s view, fair use and licensing arrangements would cover most current broadcast monitoring activities, the bill would not provide any additional certainty to providers, and in some cases it goes too far in departing from fair use precedent, particularly by providing commercial access beyond “hard news.” Said Oman, “Monitors would be free to reproduce segments of documentaries, of magazine format-type shows, and public affairs broadcasting.”

Oman also raised concerns about market harm, saying “Broadcast monitoring threatens copyright owners’ potential market for video clips, to some extent, whether or not they now exploit the market, and I understand that some of them already do provide a limited service in this regard.”

Robert Cohen, president of Video Monitoring Services of America, testified next on behalf of the International Association of Broadcast Monitors. He began with a dire warning. “Without this legislation, the existence of the broadcast news monitoring industry in the United States is and will remain in jeopardy. Without our industry, the ability of the public to have access to news reporting about themselves and about issues important to them will be threatened.”

Cohen reiterated that the motivation for the bill were the previously mentioned court decisions like Duncan that have held broadcast monitoring was not fair use. He emphasized the important service that monitors provide to their clients, and he supported the bill in order to “clarify to the judiciary that news monitoring is just the kind of activity that the fair-use doctrine was designed to protect.” Cohen concluded his remarks by stressing “that if we go out of business or our services are chilled, there is no alternative for obtaining information from news programming on an immediate, nationwide basis.” 8International Association of Broadcast Monitors President Ed Moser separately testified during this hearing, but his statement largely echoed Cohen’s points. L. Ray Patterson concurred with Cohen. In his opinion, Duncan was wrongly decided, and this bill was necessary “to clarify [the law] for the courts.” 9Patterson’s argument that it was wrongly decided was that the Eleventh Circuit’s permanent injunction “gave perpetual copyright protection, unlimited in nature, to protect uncopyrightable as well as abandoned material, and this is wholly contra to what the 1976 Copyright Act provides.” This appears to erroneously conflate right with remedy.

David Nimmer offered a succinct description of the broadcasters’ position in his written statement:

We recognize this subcommittee’s interest in exploring ways in which copyright laws can promote public access to information and facilitate rapidly developing communications technologies. Broadcast monitoring services… are but one means of fulfilling this valuable public service. At the same time, however, public access to news broadcasting need not be secured at the expense of copyright ownership.

Neither broadcast monitoring services, nor the public interest in public access to video monitored news, should trump the copyright claims of those who finance, produce, create and edit broadcast news. Copyright protection, not copyright violation, serves the public interest. Copyright protection is intended to encourage creation of intellectual property by allowing the creator to retain the maximum ability to profit from his or her work. The control of a work’s ancillary uses is an important part of deriving full value. For this reason, we are troubled by the rhetoric of those video monitors who refuse to enter into license with the originators of the programs that they copy and sell, but still try to justify their behavior under the cloak of the “public interest”. For example, one witness who testified before Congress on behalf of the broadcast monitoring industry equates the guarantees of free speech with an unimpeded—i.e., unlicensed—right of public access to information.

This tips the balance too far. The simple truth is that this is a business issue, not a constitutional issue. We are not disagreeing about whether the public should have access to news clips but about whether copyright holders deserve compensation for and protection of their product.

Nimmer went on to rebut some of the concerns raised by proponents of the bill.

First, he noted that Congress has already addressed the question of public access to news broadcasts in multiple areas of federal law. For example, the 1976 Act permits archival reproduction and distribution by libraries and archives of “an audiovisual work dealing with news”; outside the Copyright Act, the Library of Congress is permitted to reproduce and distribute a “regularly scheduled newscast or on-the-spot coverage of news media.”

He then considered current business practices, saying, “Far from demonstrating a breakdown in the marketplace for access to news programs, current licensing practices can accommodate the growth of the video monitoring industry through market-based incentives.” Among the benefits of voluntary licensing is that it “forces direct face-to-face negotiations between news producers and video monitors, sensitizing each group to the needs of the others.”

Nimmer concluded,

Information access and retrieval technology is undergoing daily, rapid change. Rather than craft legislation that [may] chill development of new technologies (e.g., interactive, on-line video retrieval), Congress should ensure that existing non-profit, non-commercial uses remain anchored within the fair use exception and that commercial businesses built around the use of materials originated by others continue to be governed by traditional copyright law norms.

Senator Hatch wrapped up the hearing with a statement supporting his bill. Like Cohen and Patterson, he believed most news monitoring should fall under fair use, but court decisions like Duncan have necessitated a legislative course correction.

There was no further action on S.1805 following the hearing. Sen. Hatch reintroduced the bill the following Congressional session but it did not go anywhere, 10S. 23, 103rd Congress, 1st Sess. (1993). and there have been no similar bills introduced since. Congress had ample opportunity to consider adding news reporting monitoring to the list of fair use purposes in 107 but declined to do so.

Then and now

Contrary to Cohen’s predictions, the lack of legislation did not jeopardize the broadcast news monitoring industry. Nevertheless, little has changed in the discussion of fair use and news monitoring from the early 90s to the current litigation involving Fox News and TVEyes. For example, like Senator DeConcini, the amicus brief from the EFF and the NYU Tech Law & Policy Clinic says, “Every day, a virtual flood of news content streams across countless front pages and home pages, broadcast-television and social-media feeds, and more. The amount of content being produced in the media environment has exploded in recent years.”

But some things have changed. Most importantly, the current litigation involving TVEyes presents several crucial facts that are fundamentally different from the context in which proponents of the news monitoring bills in the 1990s supported legislation.

First, Waggoner noted in his 1991 testimony that, at the time, broadcast monitors only recorded news programs and only provided small clips. 11News monitoring hearing at 265-266. “Hard news”, being primarily informational rather than creative, arguably admits to fair use more readily. TVEyes records everything on 1,400 channels: news programs, news magazines, documentaries, and likely everything else. And users can watch at least some of these in their entirety. 12See Expert Report and Declaration of Beth Knobel, Ph.D. at 4-5, Fox News Network, LLC, v. TVEyes, Inc., No. 1:13-CV-05315 (SDNY 2015) (No. 100), hereinafter “Knobel declaration” (“it was easy for me to download an entire episode of NBC Nightly News with Brian Williams without commercials from TVEyes in five high definition video clips”).

Second, at the time, broadcast monitors voluntarily restricted against redistribution and rebroadcast of clips by clients. 13News monitoring hearing at 29. TVEyes, however, allegedly encourages customers to post, redistribute, and email content. 14See Knobel declaration at 26, “the TVEyes Content-Delivery Features are designed to encourage users to download and publicly distribute video clips. TVEyes also touts the ability to use these features for those purposes in its marketing materials and in communications with its clients.”

Finally, there has been a marked shift in technology and the television news market. In the 1990s, as Waggoner observed,

[B]roadcasters themselves do not currently service or exploit the demand for monitored, after-broadcast news programming. They have not demonstrated any interest in doing so. Most broadcasters make previously-aired programming available to the public on a casual or delayed basis, if at all. The public’s interest in having consistent, complete and immediate access to broadcast news programming is not now well served by broadcasters. 15News monitoring hearing at 264.

That is no longer the case. Viewers are increasingly watching shorter video clips online rather than linear television. 16See, e.g., Lara O’Reilly, Most Young People Say They Have Stopped Watching TV, Business Insider (Jan. 26, 2015). As Knobel points out, “the television news business has invested significant resources to make content available through digital distribution and has developed established markets to support such distribution, including website and mobile-device-based advertising, extensions of cable or satellite subscriptions (e.g., TVEverywhere), and clip licensing.” 17Knobel declaration at 4. Thus, services like TVEyes have a more direct impact on the market for broadcasters nowadays. Their reproduction and distribution of clips means they “stand[] to profit from exploitation of the copyrighted material without paying the customary price,” a factor “that tends to weigh against a finding of fair use.” 18See, Harper & Row Publishers, Inc. v. Nation Enterprises, 471 US 539, 562 (1985) (“The fact that a publication was commercial as opposed to nonprofit is a separate factor that tends to weigh against a finding of fair use… The crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.”). Fair use was intended to be a flexible doctrine, so it should be able to account for such shifts in the market.

Oral arguments on the current motions are scheduled for July 9.

References   [ + ]

1. Fox News Network, LLC v. TVEyes, Inc., 43 F. Supp. 3d 379 (SDNY 2014); see also my post, Fox News v TVEyes: Fair Use Transformed.
2. S.3229, 101st Cong. (2nd Sess. 1990).
3. Copyright Amendments Act of 1991 Hearings before the H. Subcomm. on Intellectual Property and Judicial Administration of the Comm. on the Judiciary on H.R. 2372, 101st Cong. (1991).
4. 744 F.2d 1490 (11th Cir. 1984), cert. denied, 471 U.S. 1004 (1985).
5. E.g., Cable News Network, Inc. v. Video Monitoring Services of America, Inc., Civ. No. 1:88-CV-2660-JOF (N.D. Ga. Jan. 9, 1990); NBC Subsidiary (KCNC-TV) v. Video Monitoring Services of America, Inc., Civ. No. 88-Z-234 (D. Colo. July 27, 1989); Georgia Television Co. v. TV News Clips of Atlanta, Inc., 9 U.S.P.Q. 2d (BNA) 2049 (N.D. Ga. 1989).
6. S. 1805, 102nd Cong. (1st Sess. 1991).
7. News monitoring: Hearing before the S. Subcomm. on Patents, Copyrights, and Trademarks of the Committee on the Judiciary on S. 1805, a bill to amend Title 17, United States Code, to clarify news reporting monitoring as a fair use exception to the exclusive rights of a copyright owner, 102nd Cong. (1992), hereinafter “News monitoring hearing”.
8. International Association of Broadcast Monitors President Ed Moser separately testified during this hearing, but his statement largely echoed Cohen’s points.
9. Patterson’s argument that it was wrongly decided was that the Eleventh Circuit’s permanent injunction “gave perpetual copyright protection, unlimited in nature, to protect uncopyrightable as well as abandoned material, and this is wholly contra to what the 1976 Copyright Act provides.” This appears to erroneously conflate right with remedy.
10. S. 23, 103rd Congress, 1st Sess. (1993).
11. News monitoring hearing at 265-266.
12. See Expert Report and Declaration of Beth Knobel, Ph.D. at 4-5, Fox News Network, LLC, v. TVEyes, Inc., No. 1:13-CV-05315 (SDNY 2015) (No. 100), hereinafter “Knobel declaration” (“it was easy for me to download an entire episode of NBC Nightly News with Brian Williams without commercials from TVEyes in five high definition video clips”).
13. News monitoring hearing at 29.
14. See Knobel declaration at 26, “the TVEyes Content-Delivery Features are designed to encourage users to download and publicly distribute video clips. TVEyes also touts the ability to use these features for those purposes in its marketing materials and in communications with its clients.”
15. News monitoring hearing at 264.
16. See, e.g., Lara O’Reilly, Most Young People Say They Have Stopped Watching TV, Business Insider (Jan. 26, 2015).
17. Knobel declaration at 4.
18. See, Harper & Row Publishers, Inc. v. Nation Enterprises, 471 US 539, 562 (1985) (“The fact that a publication was commercial as opposed to nonprofit is a separate factor that tends to weigh against a finding of fair use… The crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.”).