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

Supreme Court

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

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

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

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

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

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

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

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

Circuit Courts

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

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

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

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

Lower Courts

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

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

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

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

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

References   [ + ]

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

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

House Judiciary Committee

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

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

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

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

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

Copyright Office

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

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

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

US Patent and Trademark Office

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

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

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

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

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

 

References   [ + ]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

References   [ + ]

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

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

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

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

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

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

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

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

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

The Decision

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

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

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

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

The court then turns the tables, saying

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

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

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

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

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

What’s Next

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

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

References   [ + ]

1. 554 US 570, 625 (2008).

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

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

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

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

Music v. SiriusXM

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

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

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

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

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

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

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

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

“The pen is mightier than the sword”

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

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

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

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

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

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

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

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

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

Publication and performance

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

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

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

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

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

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

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

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

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

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

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

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

References   [ + ]

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

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

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

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

Groovin’ on up

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

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

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

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

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

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

Groovesharknado

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

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

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

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

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

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

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

Groove is in the Shark

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

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

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

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

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

References   [ + ]

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

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

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

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

Sony Sheep and Grokster Goats

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

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

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

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

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

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

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

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

Cyberlockers vs Cloud Storage

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

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

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

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

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

References   [ + ]

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

In 1985, the Supreme Court said, “The fair use doctrine is not a license for corporate theft, empowering a court to ignore a copyright whenever it determines the underlying work contains material of possible public importance.” 1Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 US 539, 558, quoting Iowa State University Research Foundation, Inc. v. American Broadcasting Cos., Inc., 621 F. 2d 57, 61 (1980). Last week, a court held to the contrary.

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

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

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

Transformative Use

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

Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

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

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

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

Four years later, the Supreme Court referenced Leval’s “transformative” framing, and lower courts have followed its lead since. 2Campbell v. Acuff-Rose Music, Inc., 510 US 569, 579 (1994). But regardless of how descriptively accurate this framing might be, the TVEyes decision demonstrates its shortcomings as an actual standard.

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

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

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

Fortunately, less than a day ago, the Seventh Circuit explicitly rejected the transformative use test, noting that “To say a new use transforms a work is precisely to say that it is derivative and thus, one might suppose, protected under §106(2).” 3Kienitz v. Sconnie Nation, No. 13-3004 (7th Cir. 2014). The court characterized the discussion of transformative use in Campbell as a “suggestion.” Instead, said the court, “We think it best to stick with the statutory list…”

Commerciality

Another dramatic turn in fair use doctrine is seen in the treatment of “commerciality” in the first factor. Traditionally, courts have given wider berth to scholarly and non-profit users of copyrighted works. In its 1984 Betamax decision, the Supreme Court observed that every commercial use of copyrighted material is presumptively unfair. However, a decade later, the Court would retreat from that holding and remove the presumption. In Campbell, the Court explained that, “If, indeed, commerciality carried presumptive force against a finding of fairness, the presumption would swallow nearly all of the illustrative uses listed in the preamble paragraph of § 107, including news reporting, comment, criticism, teaching, scholarship, and research, since these activities ‘are generally conducted for profit in this country.'” Instead, the Court adopted a sliding scale approach, where commerciality should be treated as merely “a fact to be ‘weighed along with other[s] in fair use decisions.'” Nowadays, commerciality has little, if any, role in the fair use doctrine. 4See Matthew Sag, Predicting Fair Use, 72 Ohio State Law Journal 47, 77 (2012) (finding commercial use as a factor insignificant in a study of 280 fair use decisions from 1978-2011); Barton Beebe, An Empirical Study of U.S. Copyright Fair Use Opinions, 1978–2005, 156 U. PA. L. Rev. 549 (2008) (finding commerciality has no significant impact on case outcomes in study of 306 fair use decisions from 1978-2005).

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

Amount and Substantiality Used

The implementation of the third fair use factor, which looks at “the amount and substantiality of the portion used in relation to the copyrighted work as a whole” has also noticeably shifted in recent decades. In fact, until Betamax, it was virtually axiomatic that copying an entire work could never be fair use. 5See Williams & Wilkins Company v. United States, 487 F. 2d 1345, 1366 (Ct of Claims 1973); Public Affairs Associates, Inc. v. Rickover, 284 F.2d 262, 272 (DC Cir. 1960); Benny v. Loew’s Inc., 239 F.2d 532, 536 (9th Cir.1956); Leon v. Pacific Telephone & Telegraph Co., 91 F.2d 484, 486 (9th Cir.1937) (“Counsel have not disclosed a single authority, nor have we been able to find one, which lends any support to the proposition that wholesale copying and publication of copyrighted material can ever be fair use.”). But Betamax held, in part, that home taping of broadcast television by VCR owners was a fair use, despite the fact that exact duplicates of complete works were being made. This holding drew a sharp rebuke from the four Justices on the dissent, who said, “Fair use is intended to allow individuals engaged in productive uses to copy small portions of original works that will facilitate their own productive endeavors. Time-shifting bears no resemblance to such activity, and the complete duplication that it involves might alone be sufficient to preclude a finding of fair use. It is little wonder that the Court has chosen to ignore this statutory factor.”

Since then, the floodgates have been opened. Last year, for example, the Southern District Court of New York held that the wholesale copying of twenty million books (by a for-profit corporation) was a fair use. 6Authors Guild, Inc. v. Google Inc., 954 F. Supp. 2d 282 (SDNY 2013). Though, to be fair, the court did note that the third factor weighed “slightly against” a finding of fair use.

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

Public Benefit

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

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

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

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

***

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

References   [ + ]

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

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

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

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

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

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

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

Comprehending the Compendium

This is not so for a number of reasons.

First, even if the Copyright Compendium is making a definitive statement about the copyrightability (or not) of the monkey selfie, such a statement is not binding as law. The Compendium itself points this out, saying, “The policies and practices set forth in the Compendium do not in themselves have the force and effect of law and are not binding upon the Register of Copyrights or U.S. Copyright Office staff.”  It should also be noted that a decision by the Register of Copyrights to deny a copyright registration is not dispositive of the ultimate question of copyrightability. 1In fact, the Copyright Act expressly allows for a civil infringement suit to be brought in cases where registration is refused. 17 USC § 411(a).

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

Third, there is no reason why this question would be answered by US law. Copyrightability is most likely “determined by the law of the state with ‘the most significant relationship’ to the property and the parties”, 2Itar-Tass Russian News Agency v. Russian Kurier, Inc., 153 F. 3d 82, 90 (2nd Cir. 1998). The court here was looking at the question of ownership, which is distinct from copyrightability, but I believe the analysis is the same. which would clearly not be the US under the facts here: Slater is British, and the photo was taken in Indonesia.

Authorship and photographs

But let’s pretend US law would apply.

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

The Supreme Court, however, has defined “author,” and it has done so, coincidentally, in a decision establishing that photographs can be protected by copyright in the first instance. In Burrow-Giles Lithographic Co. v. Sarony, the Court said that an “author” is defined as “he to whom anything owes its origin; originator; maker.” 3111 US 53, 58 (1884). Over a century later, the Court would expand on this idea of the author as originator. “The sine qua non of copyright is originality. To qualify for copyright protection, a work must be original to the author. Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity.” 4Feist Publications, Inc. v. Rural Telephone Service Co., 499 US 340, 345 (1991).

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

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

We can quickly dismiss the last possibility. Joint authorship requires, in part, that “each of the authors prepared his or her contribution with the knowledge and intention that it would be merged with the contributions of other authors as ‘inseparable or interdependent parts of a unitary whole.’” 5H.R.Rep. No. 1476, 94th Cong., 2d Sess. 120 (1976). The claim that a monkey could do such a thing is even more extraordinary than a claim that animals have knowledge or intent in the first place.

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

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

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

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

The Zapruder pictures in fact have many elements of creativity. Among other things, Zapruder selected the kind of camera (movies, not snapshots), the kind of film (color), the kind of lens (telephoto), the area in which the pictures were to be taken, the time they were to be taken, and (after testing several sites) the spot on which the camera would be operated. 6293 F. Supp. 130, 143 (SDNY 1968).

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

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

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


Updated August 28, 2014 to correct photographer’s name

 

References   [ + ]

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

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

The dissent’s argument begins with the assertion, relying on a copyright treatise, that “The Networks’ claim is governed by a simple but profoundly important rule: A defendant may be held directly liable only if it has engaged in volitional conduct that violates the Act.” It then states that “This requirement is firmly grounded in the Act’s text, which defines ‘perform’ in active, affirmative terms: One ‘perform[s]’ a copyrighted ‘audiovisual work,’ such as a movie or news broadcast, by ‘show[ing] its images in any sequence’ or ‘mak[ing] the sounds accompanying it audible.’” Already, the soundness of the dissent’s argument is on shaky ground, as there is nothing necessarily “active” about the making of sounds of a broadcast audible. 1The dissent also asserts that “Every Court of Appeals to have considered an automated-service provider’s direct liability for copyright infringement has adopted that rule.” But that’s not entirely the case, at least when it comes to the Ninth Circuit’s decision in Fox Broadcasting Co. v. Dish Network. The court there did not once utter the word “volition”, and district courts in the Circuit apparently don’t believe the test was adopted. See, e.g., Order Granting in Part and Denying in Part Allvoice’s Motion to Dismiss Plaintiff’s First Amended Complaint, Oppenheimer v. Allvoices, Inc., No. C-14-00499 (ND Cali June 10, 2014) (“Although the Netcom requirement of “volitional” conduct for direct liability has been adopted by the Second and Fourth Circuits, the Ninth Circuit has not yet addressed the issue, and courts within this Circuit are split on it”); Order Granting in Part and Denying in Part Defendant’s Motion to Dismiss, National Photo Group, LLC v. Allvoices, Inc., No. C-13-03627 (ND Cali Jan. 24, 2014) (noting volitional conduct “requirement has not been adopted by the Ninth Circuit and Courts within this Circuit are divided on whether the requirement is valid”).

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

Statutory Interpretation

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

The meaning of terms on the statute books ought to be determined, not on the basis of which meaning can be shown to have been understood by a larger handful of the Members of Congress; but rather on the basis of which meaning is (1) most in accord with context and ordinary usage, and thus most likely to have been understood by the whole Congress which voted on the words of the statute (not to mention the citizens subject to it), and (2) most compatible with the surrounding body of law into which the provision must be integrated — a compatibility which, by a benign fiction, we assume Congress always has in mind. 2Green v. Bock Laundry Machine Co., 490 US 504, 528 (1989) (J. Scalia concurrence).

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

Along with this rule, the Supreme Court has called it “a cardinal principle of statutory construction” that statutes should be interpreted in a way that prevents any clause or provision from being rendered superfluous. 3Bennett v. Spear, 520 US 154, 173 (1997) (quoting US v. Menasche, 348 US 528, 538 (1955).

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

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

The Exceptions that Prove the Rule

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

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

The dissent’s misstep is reminiscent of the 1892 Supreme Court decision in Church of the Holy Trinity v. United States, which decided that a federal statute that referred to “labor” only applied to manual labor and not “professional” services. Not only is this distinction not found in the text of the statute, it also “renders the exceptions for actors, artists, lecturers, and singers utterly inexplicable.” 4Antonin Scalia, Common-Law Courts in a Civil-Law System: The Role of United States Federal Courts in Interpreting the Constitution and Laws, The Tanner Lectures on Human Values 79, 94 (1995). Similarly, the Copyright Act’s specific exceptions for two passive activities would be “utterly inexplicable” under the dissent’s definition of “perform.” If Congress did not mean to include such conduct within the definition of “perform”, it would not have needed to create these exceptions.

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

References   [ + ]

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