A recent copyright decision articulates in clear and direct language the underlying policies that guide copyright law. This past January, several publishers and author estates filed suit against Frederik Colting and Melissa Medina for allegedly infringing their works through a series of childrens’ books called “Kinderguides”. These books were billed as “Learning Guides” to classical works of literature by defendants; they each generally followed a similar format, with a story summary followed by a series of back-pages containing, for example, keywords and quizzes. At issue here were works still under copyright protection: Breakfast at Tiffany’s by Truman Capote, The Old Man and the Sea by Ernest Hemingway, On the Road by Jack Kerouac, and 2001: A Space Odyssey by Arthur C. Clarke. Defendants argued that any potential infringement was excused by fair use.

The court ruled against the defendants in late July, finding that they were liable for infringement and not excused by fair use. On September 7, Judge Rakoff of the Southern District Court of New York issued a detailed opinion describing his reasoning.

Copyright aficianados may remember Colting from the 2010 Second Circuit decision Salinger v Colting, where he was facing allegations of copyright infringement over an unauthorized sequel to J.D. Salinger’s Catcher in the Rye. 1The Second Circuit vacated the district court’s preliminary injunction on the grounds that it did not apply the proper standard, though it agreed with the court’s conclusion that Colting was not likely to succeed on his fair use claim. The parties subsequently settled, with Colting consenting to a permanent injunction barring him from publishing or distributing his unauthorized sequel. The current case demonstrates that he has not strayed far from the type of conduct that landed him in court then.

The case also demonstrates Judge Rakoff’s deft ability to apply the sometimes challenging concepts involved with copyright to determine that the Kinderguides are substantially similar to the original works, despite Colting’s attempt to argue that he only copied unprotected elements from the works. (For example, “Breakfast at Tiffany’s is, according to defendants, just the story of ‘a small town girl with a tough past who has come to the big city'” and thus a stock, unprotected character.)  He also easily rejects defendants’ fair use defense, with a particularly clear and correct articulation of the fourth fair use factor, which instructs courts to consider “effect of the use upon the potential market for or value of the copyrighted work.”

But it is under Judge Rakoff’s examination of “other considerations” within the fair use analysis where this opinion really stands out. He writes that among these other considerations “is whether, as defendants argue, their works should be protected because otherwise the constitutional purpose of copyright law — to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries — would be frustrated.”

The crux of defendants’ argument is that plaintiffs have declined to create children’s versions of their novels, so it would be contrary to the constitutional imperative of copyright for them to be able to use their exclusive rights to bar others from doing so. But, Judge Rakoff replies, “Congress did not provide a use-it-or-lose-it mechanism for copyright protection. Instead, Congress granted a package of rights to copyright holders, including the exclusive right to exploit derivative works, regardless of whether copyright holders ever intend to exploit those rights.

I agree fully with Judge Rakoff, and believe his statement is correct not just for copyright but for all property. Once the decision has been made to vest exclusive rights in a resource to an owner, as government has historically done with property and Congress has done through the Copyright Act, that right remains exclusive regardless of whether a non-owner sincerely believes they may put the resource to better use. At times, the non-owner may even be correct. But absent an exception, property prioritizes the owner’s use (or non-use) over the non-owner’s interest in use because in the aggregate, among other benefits, this facilitates the most productive use of resources. 2See, for example, Eric Claeys, Labor, Exclusion, and Flourishing in Property Law 95 N.C. L. Rev. 413 (2017).

That is not to undervalue the work that exceptions do at the margins, but at its core, this initial allocation of entitlements—property—is exactly what Congress had in mind. It is, indeed, not a “use-it-or-lose-it” mechanism. Rather, it is a “set-it-and-forget-it” mechanism.

But Judge Rakoff is not finished—he takes defendants further to task. Rakoff writes, “Implicit in defendants’ argument, then, is a contention that the Copyright Act itself is unconstitutional. As defendants put it, ‘the original copyright act granted authors exclusive rights for a 14-year term, with the option for a renewal term of the same length. Over the course of the following 200+years, the grant of rights has expanded unchecked, leading us here today.”

This is a common argument among copyright minimalists, who point to the 1790 Copyright Act as though it should operate as some ideal baseline for copyright policy, despite the fact that the first Congress spent very little time creating the Act (the majority of it was cribbed directly from England’s Statute of Anne)3See Oren Bracha, The Adventures of the Statute of Anne in the Land of Unlimited Possibilities: The Life of a Legal Transplant, 25 Berkeley Tech. L.J. 1427 (2010). and despite the extraordinary cultural and technological changes since that time. Rakoff spent little time rebutting this argument. “Defendants are no doubt correct in pointing out that Congress’ policy judgments have changed substantially over the course of our nation’s history.”

[B]ut as a legal matter, for the Copyright Act to withstand constitutional scrutiny, it must merely be the case that, in constructing its general scheme, Congress had a rational basis to believe that granting a suite of exclusive derivative rights to copyright holders would advance progress in the sciences and the arts. See Eldred v. Ashcroft, 537 U.S. 186, 208 (2003) (finding that, if the Copyright Act is “a rational enactment,” the Court is “not at liberty to second-guess congressional determinations and policy judgments . . . however debatable or arguably unwise they may be”). As defendants make no effort to show that Congress lacked such a rational basis for providing plaintiffs an exclusive right to exploit derivative works, including children’s adaptations, this Court cannot provide defendants with the relief they are seeking.

Perhaps recognizing the futility of continuing to push this argument, defendants subsequently stated that an appeal of the decision would be “highly unlikely.”

References   [ + ]

1. The Second Circuit vacated the district court’s preliminary injunction on the grounds that it did not apply the proper standard, though it agreed with the court’s conclusion that Colting was not likely to succeed on his fair use claim. The parties subsequently settled, with Colting consenting to a permanent injunction barring him from publishing or distributing his unauthorized sequel.
2. See, for example, Eric Claeys, Labor, Exclusion, and Flourishing in Property Law 95 N.C. L. Rev. 413 (2017).
3. See Oren Bracha, The Adventures of the Statute of Anne in the Land of Unlimited Possibilities: The Life of a Legal Transplant, 25 Berkeley Tech. L.J. 1427 (2010).

The Southern District Court of New York ruled in favor of a YouTube duo (Ethan and Hila Klein, who release videos under the moniker H3H3) facing a claim of copyright infringement for a “reaction video” on August 23, holding that their use of clips from plaintiff’s video constituted fair use. The decision in Hosseinzadeh v Klein garnered significant attention online given that it is one of the first copyright cases involving popular YouTube creators and the wholly YouTubian genre of “reaction videos.” Broadly speaking, reaction videos show people watching other videos, with the focus on the reaction to those vidos. The videos commonly show part or all of the original video, which is rarely created by the creator of the reaction video, raising obvious copyright implications (the court is careful to note that it “is not ruling here that all ‘reaction videos’ constitute fair use).

Setting aside the broader significance of the decision to YouTube creators, I tend to think the actual fair use determination itself is unremarkable—involving a relatively straight-forward and conventional application of the four fair use factors. However, the decision is worth comment for another reason; this is the first reported decision I’m aware of where a claim of misrepresentation for a counter-notice under 17 USC § 512(f) was considered.

17 U.S.C. § 512(f)

The notice-and-takedown provisions of the DMCA require online service providers to remove or disable access to material identified by a copyright owner as infringing in a takedown notice in order to maintain immunity from potential liability for copyright infringement. As part of the notice-and-takedown process, Congress created a counter-notification provision which allows a user affected by a takedown notice to inform the service provider that the material was removed as a result of mistake or misidentification. Upon receipt of a counter-notice, an online service provider must replace the material between 10-14 days unless the original notice sender informs it that it has filed a lawsuit against the user. 117 USC § 512(g)(2).

The DMCA also provides for penalties for misrepresentation for senders of both notices and counter-notices.

(f)Misrepresentations. — Any person who knowingly materially misrepresents under this section—

(1) that material or activity is infringing, or

(2) that material or activity was removed or disabled by mistake or misidentification,

shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer, by any copyright owner or copyright owner’s authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it.

In Lenz v Universal Music Corp (the “dancing baby” case), the Ninth Circuit held that the standard for holding a notice sender liable under §512(f)(1) is whether she lacked a subjective good faith belief that a use is not authorized.2801 F.3d 1126 (9th Cir. 2015). That is, there is no liability if someone believed material was infringing even if that belief was mistaken.

But up to this point, no court has addressed the Lenz holding in the context of a counter-notice (§512(f)(2)). The court here said it applies the same. It noted, “If the same standard did not apply, creators of allegedly infringing work would face a disparate and inequitable burden in appealing an online service provider’s decision to remove or disable access to their work. Given the fact that the statutory requirements for takedown notices and counter notifications are substantially the same, the DMCA plainly does not envision such a scheme.”

Here, the Defendants responded to Plaintiff’s takedown notice within three days of receipt with a counter-notice, stating that their video was not infringing since it was, “among other reasons, a fair use and ‘noncommercial.’” Plaintiffs disputed both, alleging the video was not a fair use and was commercial, claiming, “the Defendants’ YouTube channel belongs to the Freedom! advertising network which is a YouTube partner that helps YouTube contributors, such as the Defendants, grow their advertising revenues generated from content that they publish to YouTube.” Plaintiffs included in their complaint a claim under 512(f) seeking relief for the alleged misrepresentation, saying they were harmed since the DMCA and YouTube’s policies forced them to file a court action “in order to secure the ultimate removal of the Infringing Video from YouTube.”

Having earlier determined that defendant’s use of plaintiff’s material was fair use, the court dismissed the misrepresentation claim since the statements in the counter-notice were factually accurate. But it went on to say that even if the video was not fair use, it would still dismiss the misrepresentation claim since the record showed that the defendants did form a subjective good faith belief that their video was not infringing, and plaintiffs offered no evidence contradicting this.

I think the court is exactly right, as the plain text of §512(f) provides no distinction between the standard for liability for misrepresentations made in notices as in counter-notices.

The Unsuccessful Push for a Stricter Standard

What’s ironic is that the Electronic Frontier Foundation (EFF) represented Lenz in her lawsuit against Universal and pushed for a tougher objective standard for imposing liability under 512(f). That is, one would be liable even in the event they were mistaken in their belief about infringement. In its cert petition to the Supreme Court, the EFF said that the Ninth Circuit’s holding “that a copyright holder cannot be held liable for causing the takedown of lawful content as long as it subjectively believes the material is infringing—no matter how unreasonable that belief may be” would “give[]a free pass to the censorship of online speech, particularly fair uses.”3The EFF’s cert petition was supported by amicus briefs from the Organization for Transformative Works and Public Knowledge, the Yes Men, and a group of online service providers that included Automattic, Google, Tumblr, and Twitter.

The EFF and its amici either overlooked or ignored the fact that, as confirmed here in Hosseinzadeh v Klein, the tougher standard would also apply to senders of counter-notices. The result would certainly deter internet users who sincerely believed their material was not infringing or was fair use—under an objective standard, not only would a counter-notice expose them to the risk of a lawsuit for copyright infringement, but if they were mistaken in their belief, they would face additional penalties under §512(f). One could say that the user communities that EFF seeks to protect were fortunate that the EFF did not succeed in Lenz.

References   [ + ]

1. 17 USC § 512(g)(2).
2. 801 F.3d 1126 (9th Cir. 2015).
3. The EFF’s cert petition was supported by amicus briefs from the Organization for Transformative Works and Public Knowledge, the Yes Men, and a group of online service providers that included Automattic, Google, Tumblr, and Twitter.

On Thursday, the Ninth Circuit issued its decision in Disney Enterprises v VidAngel, affirming the district court’s order enjoining VidAngel after it was sued by several studios alleging copyright infringement.1Unless otherwise specified, the quotes in this article come from the decision. VidAngel operated an unauthorized, on-demand video streaming service that allowed viewers to filter out objectionable content, such as swearing or nudity, and argued that doing so was permissible for a variety of reasons, most notably that it was exempt from liability pursuant to an exception created by the Family Movie Act of 2005 (FMA).2Codified in 17 USC §110(11). The Ninth Circuit disagreed.

VidAngel might be considered one of the latest companies to engage in legal parlor tricks, creating a service that was functionally the same as an infringing service but purportedly sticks to the letter of the law. Other examples include MP3.com,3UMG Recordings v MP3.Com, 92 F.Supp.2d 349 (SDNY 2000) (“although defendant seeks to portray its service as the ‘functional equivalent’ of storing its subscribers’ CDs, in actuality defendant is re-playing for the subscribers converted versions of the recordings it copied, without authorization, from plaintiffs’ copyrighted CDs.”). Zediva,4Warner Bros. Entertainment v WTV Systems, 824 F.Supp.2d 1003 (CD Cali 2011) (“Although Defendants are clearly transmitting performances of Plaintiffs’ Copyrighted Works, Defendants argue that their service offers “DVD rentals” rather than transmissions of performances.”). Aereo,5American Broadcasting Co. v Aereo, 134 S.Ct. 2498 (2014) (“In Aereo’s view, it does not perform. It does no more than supply equipment that ‘emulate[s] the operation of a home antenna and [digital video recorder (DVR) ]’…  having considered the details of Aereo’s practices, we find them highly similar to those of the CATV systems in Fortnightly and Teleprompter. And those are activities that the 1976 amendments sought to bring within the scope of the Copyright Act.”). and ReDigi.6Capitol Records v Redigi, 934 F.Supp.2d 640 (SDNY 2013) (“At base, ReDigi seeks judicial amendment of the Copyright Act to reach its desired policy outcome.”). But just as courts rejected those companies’ convoluted arguments, the Ninth Circuit here saw through VidAngel’s smoke and mirrors and found it infringing via a straightforward (and unfiltered) application of the copyright law.

VidAngel’s Service

As the Ninth Circuit explained, VidAngel offers over 2,500 film and television episodes to consumers. At the time of the lawsuit, VidAngel operated by first purchasing DVDs or Blu-ray discs of the titles, ripping them to a computer, creating intermediate files that breaks the works into segments that can be tagged for objectionable content, and storing these segments, which make up the entirety of the movie or television episode, on cloud servers.

Customers could then “purchase” a title for $20. That is, VidAngel assigned the specific disc of the title to the customer’s unique ID but retained physical possession of the disc. At this point, the customer, after selecting what types of objectionable content they wished to avoid, could stream the work online from the cloud servers. The customer then had the option of “selling” the disc back to VidAngel, minus $1 per night ($2 for high-definition videos). You can be forgiven if you think that this sounds more like an on-demand streaming service than a Blockbuster, and indeed, the record demonstrates that that is how VidAngel’s customers used the service—VidAngel only ever shipped out four physical discs to purchasers, with virtually all customers selling back their titles within five hours of purchasing them.

Studios sued VidAngel, alleging it infringed their rights of reproduction and public performance and also that it had circumvented technological measures controlling access to copyrighted works in violation of §1201(a)(1)(A). VidAngel denied both claims and raised the defense of fair use and legal authorization by the FMA. Studios sought a preliminary injunction. The district court granted the injunction, finding that VidAngel violated §1201(a)(1)(A) when it ripped the DVDs and Blu-ray discs, infringed the studios’ right of reproduction when it copied the works to its computers and third-party cloud servers and right of public performance when it streamed the works to customers. It also rejected VidAngel’s defenses. VidAngel appealed.

The Ninth Circuit provided a wholesale rejection of all of VidAngel’s arguments.

On the infringement claim, VidAngel argued that it was entitled to copy the works to its computers under the first sale doctrine because it had lawfully purchased them, but the court said that doctrine only applies to disposition of “a particular copy” of a work and doesn’t entitle an owner to reproduce the work. This issue is currently squarely in front of the Second Circuit, which recently heard oral arguments in Capitol Records v Redigi. (Indeed, within hours of the Ninth Circuit’s decision, attorneys for Capitol Records had informed the Second Circuit).

Having concluded that the studios were likely to succeed on their infringement claim, the court turned to VidAngel’s affirmative defenses.

Family Movie Act

The FMA was passed in the shadow of litigation over a tool that automatically muted or skipped over objectionable material on ordinary DVDs. The legislation created an exception from liability for such tools, codified in 17 USC § 110(11), which provides that

the making imperceptible, by or at the direction of a member of a private household, of limited portions of audio or video content of a motion picture, during a performance in or transmitted to that household for private home viewing, from an authorized copy of the motion picture, or the creation or provision of a computer program or other technology that enables such making imperceptible and that is designed and marketed to be used, at the direction of a member of a private household, for such making imperceptible, if no fixed copy of the altered version of the motion picture is created by such computer program or other technology

is not copyright infringement.

The exception specifically requires that the performance or transmission comes “from an authorized copy.” VidAngel argued that because it begins its process with an authorized copy, it meets this requirement. The Ninth Circuit disagreed, saying “from an authorized copy” is different from “beginning from” or “indirectly from” an indirect copy, which is how VidAngel interprets the statute. It goes on to say the statutory context and legislative history of the provision supports its interpretation. “More importantly,” said the Ninth Circuit, “VidAngel’s interpretation would create a giant loophole in copyright law, sanctioning infringement so long as it filters some content and a copy of the work was lawfully purchased at some point. But, virtually all piracy of movies originates in some way from a legitimate copy.”

Fair Use

The Ninth Circuit also rejected VidAngel’s fair use defense. The service argued that the district court abused its discretion with respect to the first factor—the “purpose and character of the use”—and the fourth factor—the “effect of the use upon the potential market for or value of the copyrighted work.”

On the first factor, the circuit court easily agreed with the district court that VidAngel’s service adds nothing new to Plaintiff’s works and merely “transmits them for the ‘same intrinsic entertainment value’ as the originals.” As the court said, “Star Wars is still Star Wars, even without Princess Leia’s bikini scene.”

Given that VidAngel’s use was both not transformative and commercial, the Ninth Circuit said it was “not error to presume likely market harm” under the fourth factor. But still, VidAngel tried to argue that “its service actually benefits the Studios because it purchases discs and expands the audience for copyrighted works to viewers who would not watch without filtering.” No dice, said the court. As a matter of law, alleged positive benefits do not excuse defendants from usurping markets directly derived from unauthorized reproduction. And factually, the record showed that, contrary to VidAngel’s argument, “49% of its customers would watch the movies without filters,” demonstrating that the service acted as an effective substitute for unfiltered works.

Of note, VidAngel also advanced two alternate fair use arguments, both of which were decisively rejected by the Ninth Circuit. First, it argued that its service is “a paradigmatic example of fair use: space-shifting.” But the court said, far from being paradigmatic, “The reported decisions unanimously reject the view that space-shifting is fair use under § 107.” And even if space-shifting could be fair use, the court says, “VidAngel’s service is not personal and non-commercial space-shifting: it makes illegal copies of pre-selected movies and then sells streams with altered content and in a different format than that in which they were bought.”

Second, VidAngel argued that the copies it made were “intermediate” copies, which it said are considered “classic fair use.” In a footnote, the Ninth Circuit responded that, “The cases it cites are inapposite, because VidAngel does not copy the Studios’ works to access unprotected functional elements it cannot otherwise access.”

Circumvention of access control measures under the DMCA

The Ninth Circuit also upheld the district court’s finding that the Studios are likely to succeed on their DMCA claim. Here, the question was whether, in ripping DVD and Blu-ray discs to digital files, VidAngel circumvented “a technological measure that effectively controls access to a work”, an act prohibited by 17 USC § 1201(a)(1)(A).

VidAngel conceded that it used software to decrypt encryption access controls on the discs it purchased. (The Ninth Circuit observed in a footnote that the software VidAngel employed for this purpose, “AnyDVD HD”, is sold by “a Belize-based company run by former employees of a company convicted overseas for trafficking in anti-circumvention technology and identified by the United States Trade Representative as selling software that facilitates copyright violations.” Interesting choice for a family-friendly service.) But the court rejected VidAngel’s argument that the Studios had authorized DVD buyers to circumvent encryption technology, saying “Rather, lawful purchasers have permission only to view their purchased discs with a DVD or Blu-ray player licensed to decrypt the TPMs.”

VidAngel also tried raising on appeal for the first time the argument that technological measures cannot serve as both “use controls” and “access controls”, which are each separately addressed under §1201. The statute prohibits trafficking in devices that circumvent both use and access controls, but it only prohibits the actual act of circumvention of access controls. VidAngel thus argued that the technological measures at issue were use controls and that it engaged only in their circumvention, not in trafficking tools to allow circumvention. The Ninth Circuit said even assuming this argument was not waived it fails, since “the statute does not provide that a TPM cannot serve as both an access control and a use control.”

The remaining preliminary injunction factors fell in the studios’ favor. On irreparable harm, the Ninth Circuit observed that “the district court had substantial evidence before it that VidAngel’s service undermines the value of the Studios’ copyrighted works, their ‘windowing’ business model, and their goodwill and negotiating leverage with licensees.” It rejected VidAngel’s argument that damages could be calculated based on licensing fees, noting that many of the harms it cited are non-monetary and “cannot readily be remedied with damages.” On the balance of equities, it noted that the only harm VidAngel alleged was “financial hardship from ceasing infringing activities”, which does not outweigh the harm to the studios absent an injunction. Finally, on the public interest, VidAngel had argued that its service was the only filtering service on the market available for streaming digital content, a fact that was contradicted by the record. On the other hand, said the Ninth Circuit, quoting the district court, “the public has a compelling interest in protecting copyright owners’ marketable rights to their work and the economic incentive to continue creating television programming.”

Conclusion

Though in hindsight, the Ninth Circuit decision seems unsurprising, the risk of a bad decision here was high, not just for studios but for many businesses in the media and publishing fields. Besides the legal holdings, the decision provides positive language about the value of copyright and ability of copyright owners to exercise their marketable rights. The unequivocal decision will likely be welcomed by many copyright owners, and should prove helpful in other fora.

But it remains to be seen whether this is the end of this particular litigation. VidAngel had retained a high-powered legal team and has been active on Capitol Hill. So its efforts in court should not be discounted, and one can likely expect the company to file for en banc review by the Ninth Circuit followed by a Supreme Court petition unless it reaches a settlement agreement with the Studios.

 

References   [ + ]

1. Unless otherwise specified, the quotes in this article come from the decision.
2. Codified in 17 USC §110(11).
3. UMG Recordings v MP3.Com, 92 F.Supp.2d 349 (SDNY 2000) (“although defendant seeks to portray its service as the ‘functional equivalent’ of storing its subscribers’ CDs, in actuality defendant is re-playing for the subscribers converted versions of the recordings it copied, without authorization, from plaintiffs’ copyrighted CDs.”).
4. Warner Bros. Entertainment v WTV Systems, 824 F.Supp.2d 1003 (CD Cali 2011) (“Although Defendants are clearly transmitting performances of Plaintiffs’ Copyrighted Works, Defendants argue that their service offers “DVD rentals” rather than transmissions of performances.”).
5. American Broadcasting Co. v Aereo, 134 S.Ct. 2498 (2014) (“In Aereo’s view, it does not perform. It does no more than supply equipment that ‘emulate[s] the operation of a home antenna and [digital video recorder (DVR) ]’…  having considered the details of Aereo’s practices, we find them highly similar to those of the CATV systems in Fortnightly and Teleprompter. And those are activities that the 1976 amendments sought to bring within the scope of the Copyright Act.”).
6. Capitol Records v Redigi, 934 F.Supp.2d 640 (SDNY 2013) (“At base, ReDigi seeks judicial amendment of the Copyright Act to reach its desired policy outcome.”).

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).