Chiang on the Property Theory of Copyright’s First Amendment Exemption — Lawrence Slolum highlights law prof Tun-Jen Chiang’s recent article Rehabilitating the Property Theory of Copyright’s First Amendment Exemption. Highly recommended for anyone interested in copyright and free speech issues. “A continuing controversy in copyright law is the exemption of copyright from First Amendment scrutiny. The Supreme Court has justified the exemption, based on the history and the intentions of the Framers, but this explanation is unpersuasive on the historical facts. There is an alternative explanation: copyright is property, and private property is generally exempt from scrutiny under standard First Amendment doctrine.”

White House must strengthen foundation of US innovation — Tennessee Rep. Marsha Blackburn shares some thoughts on copyright. “America has always been a society that rewards good ideas and protects property rights in a free-market capitalist system, not one premised on permission-less innovation where others can free-ride or take someone’s creation without even asking.”

The Power of Repeated Listening — Jeremy Schlosberg discusses how appreciation of good albums grows over repeated listens and how there’s a danger of forgetting this as we become increasingly surrounded by ever more and newer stuff to catch our attention. Great stuff.

Nimmer on Copyright: Celebrating 50 Years — Video from the U.S. Copyright Office event last May, held as part of its Copyright Matters series. David Nimmer discusses the influential treatise, started by his father, the late Melville Nimmer, half a century ago. Nimmer is joined by other copyright luminaries who share insights on the impact of Nimmer on Copyright.

A Guide to Music Performance Royalties, Part 1 — News about disputes over royalties between Pandora and musicians is often accompanied by misunderstandings about the different rights and royalties at play. Chris Castle offers a helpful primer on these topics. Also check out the Trichordist’s take, The Digital Royalty Fight: A Primer for Business Journalists. Part 1.

Copyright and the Creative Process — David Newhoff: “While planning the production of goneElvis, I wanted to use my friend Martin Ruby’s cover of ‘Tonight’s the Night,’ famously recorded by The Shirelles, but I was turned down by the publishers when I requested the license for which I could not of course pay. It seems the tendency these days is to view this kind of obstacle as unfair or muting the creative process of the next generation; but this attitude is a mistake, and I’d venture that almost any serious artist will agree. Because I couldn’t have what I thought I wanted in the first place, I ended up with something much better simply because I was forced to go look for it.”

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This past March, the Supreme Court considered in Kirtsaeng v. John Wiley & Sons “whether the words ‘lawfully made under this title’ restrict the scope of §109(a)’s ‘first sale’ doctrine geographically.” It ultimately held that they do not — copyright’s first sale doctrine has no geographic limitation. But since then, many have looked beyond Kirtsaeng’s narrow and fact-specific holding to find what they believe to be endorsement of broad, and potentially troubling to creators, expansions to the first sale doctrine.

Digital First Sale

Almost immediately, some speculated that Kirtsaeng would have an impact on “digital first sale”, especially given the fact that a decision in Capitol Records v. ReDigi dealing with that very issue was pending in the Southern District Court of New York (ReDigi operated a service allowing users to buy and sell “used” mp3s).1 For example, Joe Wikert, of TOC, wrote the same day that “the Kirtsaeng ruling can only help ReDigi’s case and that’s a good thing for anyone who wants the ability to resell their digital goods,” though he was far from the only one to share this view.2 But the court in ReDigi didn’t see anything in Kirtsaeng‘s general remarks about first sale that rendered the provisions at issue ambiguous, and it would hold that ReDigi did not have a valid first sale defense — the first sale doctrine only applies to the distribution of particular, lawfully made, copies of a work, while ReDigi was distributing new, unlawfully made, reproductions of copies.

Sales vs. Licensing

More recently, a software reseller has sought solace in Kirtsaeng‘s first sale language for a different issue in Adobe v. Kornrumpf, currently on appeal to the Ninth Circuit.

Adobe was in the practice of licensing OEM versions of its software — such as Photoshop Elements 8 — to be sold exclusively in conjunction with hardware equipment. According to court records, Kornrumpf acquired copies of these OEM products and resold them separately. Adobe sued, alleging infringement of its exclusive distribution rights since Kornrumpf had not lawfully acquired title to the software.

The court ruled in favor of Adobe, finding that the software was licensed, not sold. The decision was a fairly straightforward application of the test developed by the Ninth Circuit in Vernor v. Autodesk: “[A] software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions.” Since the evidence demonstrated that Adobe clearly met each of these elements, the first sale doctrine did not apply, and Kornrumpf was liable for infringing Adobe’s exclusive distribution right.

But Kornrumpf appealed, with a novel argument: the Supreme Court’s decision in Kirtsaeng limits the scope of Vernor. Specifically, he argues that the Court held that “market division is not a valid aim of copyright”, that it held “courts should not be burdened with enforcing restrictions on the alienability of chattels”, and that it reaffirmed “the venerable common-law aversion to restraints on alienability in the copyright context.”

As in ReDigi, these are essentially policy arguments, as they are not supported by the legal conclusions of Kirtsaeng.

Reaffirming Traditional First Sale Doctrine

In fact, if anything, Kirtsaeng reaffirmed the point that the first sale doctrine is inapplicable when copies have been licensed rather than sold. In responding to the argument that its interpretation of the first sale doctrine would render copyright’s importation provisions superfluous, for example, the Court says that, to the contrary, the provisions “would still forbid importing … copies lawfully made abroad … where … any … licensee, consignee, or bailee sought to send them to the United States.” [Emphasis added.]

What’s more, if there is anything that is venerable, it is copyright law’s tradition of recognizing a distinction between transferring title of a copy of a work through a sale and licensing a work. Going back to what is considered the origin of the first sale doctrine in U.S. copyright law, the 1908 Supreme Court case Bobbs-Merrill v. Straus, one can see this distinction already established. As the Supreme Court said there:

The precise question, therefore, in this case is, does the sole right to vend (named in § 4952) secure to the owner of the copyright the right, after a sale of the book to a purchaser, to restrict future sales of the book at retail, to the right to sell it at a certain price per copy, because of a notice in the book that a sale at a different price will be treated as an infringement, which notice has been brought home to one undertaking to sell for less than the named sum? We do not think the statute can be given such a construction, and it is to be remembered that this is purely a question of statutory construction. There is no claim in this case of contract limitation, nor license agreement controlling the subsequent sales of the book. [Emphasis added].

So it would seem that Kornrumpf, like ReDigi, will have trouble convincing courts to accept its first sale arguments. Nevertheless, these two cases exemplify a recent push, intensified by the Kirtsaeng decision, to inflate the first sale doctrine beyond its due boundaries. No doubt its proponents will raise the issue as Congress reviews the Copyright Act. Why is this troubling?

The Benefits of Traditional First Sale

For starters, a meaningful ability to license works benefits both consumers and creators. Many have observed that there is a general shift from ownership models to access models, especially with music and films.3 Licensing facilitates these new models, by allowing a more granular grant of rights than sales can provide. This gives consumers a diversity of options to read, watch, or listen, at a range of price points.

Put another way, think of it in terms of ordinary goods. For example, you can buy a car, enter into a long-term lease, rent a car for a short period, or take a cab. No one would argue that a framework that only allows outright sale of cars is preferable to this system. The same is true with real property: you can buy a house, lease an apartment, or book a hotel room. It would be an incredibly inefficient system if only the first of these was possible.

As far as digital first sale goes, there are issues with treating digital works like physical goods. There really isn’t such a thing as a “used” digital file — the file is absolutely identical to a “new” file and will remain identical indefinitely. This means “used” digital files are exact substitutes for “new” digital files and would compete directly with them.4 Obviously, there are limited issues regarding transferability and alienability that may arise, such as providing mechanisms for passing along digital files to heirs. But forcing digital works to act more like physical objects is clearly not an ideal solution.

The “First Sale License”

Which seems to be the thinking underlying much of the push for expanding first sale in the digital world: we should ignore the beneficial characteristics of the internet and arbitrarily force it to operate like a brick and mortar store. In many ways, first sale is the square peg in the future’s round hole.

Either of these — preference of sales over licensing or digital first sale — would be detrimental to creators and consumers. But the negative effects are multiplied when taken together. Most of today’s popular and innovative services — Spotify, Netflix, Audible, to name just a few — would be unlikely to exist under a system where any transfer of digital works are presumptively sales, and once transmitted they can be resold. Even copyleft systems like Creative Commons and open source software would be in trouble since they are built on copyright licensing.

In there place would be services that would operate under a “first sale license”,5 setting up convoluted systems that would allow them to provide access to songs, movies, ebooks, and other digital works without permission from or payment to creators. Imagine a streaming service that provides on-demand access to the universe of recorded music. Identical to, say, Spotify, but this service is premised on the conceit that a user “buys” a “used” song when it begins playing and then “sells” it back automatically when the song is finished. In this fashion, the service can claim it does not need permission from creators nor does it need to pay any applicable performance royalties. I don’t think such a service is outside the realm of possibilities — and if you don’t think some company will go through the effort to build a Rube Goldberg-like contrivance to take advantage of perceived loopholes in copyright law, well, I’ve got a thousand tiny antennas in Brooklyn to sell you.

Footnotes

  1. Kilpatrick, Townsend & Stockton LLP, “No first-sale doctrine for digital music files“, Lexology (April 8, 2013): “ReDigi had nothing to do with foreign manufacture/sale, and importation of copyrighted goods, but because the Supreme Court’s decision changed the meaning of the first-sale doctrine in the eyes of many, there was speculation that the decision might cause the Southern District to apply a comparably broad reading of the first-sale doctrine”. []
  2. See also Maria Scheid, “The First Sale Doctrine and the Sale of Digital Goods in Light of Kirtsaeng and ReDigi“, Copyright Corner (April 23, 2013): “the Supreme Court’s decision in Kirtsaeng is particularly important because it reaffirms the basic notion that one has physical ownership of the things that you buy. A court may hold this broad rationale to be equally applicable to digital goods, meaning consumers should be able to resell their digital goods under the protection of the first sale doctrine”; Daniel Gervais, “Digital Kirtsaeng: The first-sale doctrine and online content“, Blouin Beat (April 3, 2013), “ReDigi and others, relying on Kirtsaeng, will say that there is no valid reason to distinguish physical copies from online copies. When someone is done with a copy they should have the right to transfer it to someone else. They have copyright policy (as explained by a majority of the Supreme Court in Kirtsaeng) on their side.” []
  3. See, for example, Steve Jobs Was Wrong — Consumers Want To Rent Their Music, Not Own ItFuture of Music Biz: Ownership vs. Access with Ted Cohen, Founder of TAG StrategicSpotify CEO: Music access, not ownership, is the future. []
  4. Accord Register of Copyrights, DMCA Section 104 Report, U.S. Copyright Office, pp. 82-83 (August 2001):

    Physical copies of works degrade with time and use, making used copies less desirable than new ones. Digital information does not degrade, and can be reproduced perfectly on a recipient’s computer. The “used” copy is just as desirable as (in fact, is indistinguishable from) a new copy of the same work. Time, space, effort and cost no longer act as barriers to the movement of copies, since digital copies can be transmitted nearly instantaneously anywhere in the world with minimal effort and negligible cost. The need to transport physical copies of works, which acts as a natural brake on the effect of resales on the copyright owner’s market, no longer exists in the realm of digital transmissions. The ability of such “used” copies to compete for market share with new copies is thus far greater in the digital world.

    []

  5. Analogous to the “DMCA license” that some online service providers claim allows them to build business models around copyrighted works without permission, so long as the works are uploaded by users and the service provider responds to DMCA takedown notices. []

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June 28, 2013 · · Comments Off

Can we afford online piracy? — That’s the question Ellen Seidler asks, looking at a recent LA Times op-ed that argues that “online piracy is not something to be celebrated, but rather an activity that ultimately undermines our art and those who toil to make it (not just the well-paid executives).”

Who will stop Google? — Lately it seems like every week a new story pops up that pulls aside the veneer of innovation and do-goodery in the tech world to reveal its self-centered, autocratic core. This article from Salon links to many of these stories and adds to the narrative. “Imagine that it’s 1913 and the post office, the phone company, the public library, printing houses, the U.S. Geological Survey mapping operations, movie houses, and all atlases are largely controlled by a secretive corporation unaccountable to the public. Jump a century and see that in the online world that’s more or less where we are.”

A Surprising Theme at National Small Business Week: Intellectual Property? — “The week serves as a stark reminder of just how important small businesses are. We know the statistics: half of Americans work for, or own a small business, and small businesses create just about two out of every three new jobs in America each year. Something else I heard this week, however, was a message around small businesses that I didn’t know–that we need to focus on protecting our work and our businesses. Protecting our intellectual property.”

Capitol Records v. ReDigi — If you recall, earlier this year, the SDNY ruled that “used mp3″ service ReDigi was infringing on Capitol Records’ reproduction rights in a closely watched case. Last week, the court denied ReDigi’s attempt to appeal the decision, saying there was no need to review the decision prior to judgment. Discovery will continue in the litigation.

Defense of Marriage Act (DOMA) Goes Down — Copyright Goes Up — Perhaps surprisingly, the U.S. Supreme Court’s much anticipated decision in US v. Windsor, striking down a portion of DOMA, has ramifications in the copyright world. Specifically, as this article notes, those provisions directed at “statutory heirs” in the Copyright Act, such as the termination of transfers provision, since the definition of statutory heirs includes a copyright owner’s surviving spouse.

Historic Treaty Adopted, Boosts Access to Books for Visually Impaired Persons Worldwide — WIPO successfully concluded a landmark treaty this week which would require limitations and exceptions that permit the reproduction and making available of published works in accessible formats for the visually impaired. “It also provides for the exchange of these accessible format works across borders by organizations that serve the people who are blind, visually impaired, and print disabled. It will harmonize limitations and exceptions so that these organizations can operate across borders. This sharing of works in accessible formats should increase the overall number of works available because it will eliminate duplication and increase efficiency. Instead of five countries producing accessible versions of the same work, the five countries will each be able to produce an accessible version of a different work, which can then be shared with each of the other countries.”

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June 21, 2013 · · Comments Off

Rick Carnes, Eddie Schwartz and Fair Trade Music Project Speaks Out for Silenced Songwriters–Please sign the petition! — The songwriters have spoken out to raise awareness of other songwriters arrested and imprisoned throughout the world for the messages they have conveyed. “Freedom of expression is the life blood of all creators. There is a disturbing trend in many parts of the world to snuff out political opposition by denying songwriters the ability to express themselves through their songs. This is why the Fair Trade Music Project adopted protection of free speech as one of its five principles. Without basic freedom of expression it’s not just music that suffers… people suffer as well,” said Carnes.

The Small Businesses Behind the Big (and Small) Screen — To celebrate the 50th year of National Small Business Week, Creative America takes a look at just a few of the 95,000 businesses that support film and television in the U.S. Roughly 80% of these businesses are small businesses, employing fewer than 10 people.

Where Patton Oswalt is Right and Wrong about Plagiarism — Jonathan Bailey takes a look at the comedian’s recent remarks about plagiarism. “In short, even if you are naturally talented, it’s a lot of work to be a creative. Many people, however, won’t see it that way. This impacts how they interact with your work in many different ways, including making it easier to justify infringement, plagiarism and other activities.”

Fear and Loathing of Silicon Valley — “The fallacy of the tech industry is that we think our ‘change the world/connect the world’ intentions are enough, or at least that they should shield us from reproach, much like our gated communities of Ubers, Airbnbs, and TaskRabbits. We revel in our massive concentration of wealth, private-public transportation, private tech-heavy schools, and the underlying ideology that the government is stupid. We are exempt.”

Pandora’s Boxing: Too Many Punches have Left it Vulnerable to a Knockout — The Internet radio service has seemingly been on a path to squander its goodwill at every turn since the introduction last fall of the Internet Radio Fairness Act, which asked Congress to dramatically cut royalties recording artists get under the compulsory license. Mark Rogowsky takes a look at Pandora’s troubles over at Forbes, while also noting, “The company’s problem, then, is that its bad at making money not that it pays too much.”

Study Finds That Wealthier People Steal More Music… — Even though we’re constantly told that piracy results from people who can’t afford legal options.

Technical review of draft legislation on copyright exceptions — The UK Intellectual Property Office today released a set of proposed copyright exceptions to solicit public comment. The technical review is a part of that country’s copyright reform process, which began with the publication of Digital Opportunity — commonly known as the “Hargreaves Report” — in November 2010. This set of exceptions include amendments to educational exceptions; expanding exceptions for research, libraries, and archives to include sound recordings, films, and broadcasts; and a new exception “to copy the work as part of a technological process of analysis and synthesis of the content of the work for the sole purpose of noncommercial research.”

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Yesterday, the Electronic Frontier Foundation provided a “reality check” of recent comments by MPAA CEO Chris Dodd regarding the current review of copyright law in the U.S. In a blog post titled Looking Deeper into MPAA’s Copyright Agenda, the organization writes the following:

Don’t Be So Sure You’ve Got The Founders On Your Side

Dodd claims that copyright as we know it is what “the founders of this republic intended.” Hardly. The first copyright act in the U.S, passed in 1790 by some of the same people who helped write the Constitution and the Bill of Rights, was very limited. It covered only books, maps, and charts – not music, theater, pamphlets, newspapers, sculpture, or any other 18th-century creative medium.  The Founders’ copyrights lasted 14 years, with an option to renew for another 14.  Today, of course, copyright covers nearly all written, visual, sculptural, architectural, and performing art, not to mention computer software and games, and it lasts for the author’s life plus 70 years.  We suspect that if anyone had described today’s copyright system to, say, Thomas Jefferson, he would have been shocked.  By all means, let’s look at how the Founders thought copyright should work, as one guidepost for fixing today’s law.

But as is true with much the organization says, the EFF’s “reality check” falls far short of reality — specifically concerning the subject matter covered by the 1790 Copyright Act.

It’s true the statute only refers to “books,” but the term was far broader. It included even a single page.1 Certainly pamphlets and newspapers were covered by the Act, though publishers of such rarely secured copyright protection, likely because the onerous registration requirements of the Act far outweighed the ephemeral quality of such publications.2

English courts have held musical compositions to fall within the Statute of Anne (which, serving as the inspiration for the US Copyright Act, also referred to “books”) since 1777.3 In the same manner, the 1790 U.S. Act likely included music in printed form — indeed, US composers began to register musical works not too long after the statute went into effect.4

Theatrical performances weren’t protected under the 1790 Act, but, as with musical compositions, written plays were protected as books. Again, the earliest copyright registration for theatrical works began within a decade of the Act.5 (Theatre took a while to rebuild during this period in large part because the Continental Congress had banned it during the Revolutionary War.)6

The EFF is technically correct that the 1790 Act didn’t include many visual works that are protected today, but if we are looking more generally at what the Founders thought of copyright, than even this point does not hold true. The Supreme Court would hold in 1884 that photographs were susceptible to copyright protection under the 1802 Copyright Act, and specifically pointed out that this act was enacted by “men who were contemporary with its formation, many of whom were members of the convention which framed it.”7 And the Court was correct; the bill was drafted by Sen. Stephen Bradley, a colonel in the Revolutionary War and a politician active in Vermont starting before the ratification of the United States, and signed into law by President Thomas Jefferson — the same Thomas Jefferson who apparently would’ve been shocked that today’s copyright covered visual works (the bill also, concidentally, doubled the statutory damages available to copyright owners).8 In addition, though motion pictures were not explicitly included as copyrightable subject matter in the Copyright Act until 1912,9 early film producers such as Thomas Edison began registering films as still photographs in the early 1890′s, a practice upheld in court.10

It is true that sculptural works were not brought within the scope of copyright law until 1870 (though limited protection under design patent provisions were available beginning in 1842).11 But copyright for sculptures is not exactly a hot button issue these days.

It’s also true that, unlike under the 1790 Act, nearly all written expression is covered under copyright law today. However, such expression was, so long as it remained unpublished, protected under common law copyright. And, unlike today, common law copyright was perpetual and not subject to traditional defenses such as fair use or first sale.12

What’s curious is that the EFF would focus so much on the provisions rather than the principles of early U.S. copyright law (never mind how incorrectly they stated the former) yet leave out so many provisions in current copyright law that the early acts lacked. For example, the 1790 Copyright Act included no statutory recognition of fair use, the first sale doctrine, or the idea/expression dichotomy; no prohibition on protecting government works by copyright;13 no exceptions for libraries, educational institutions, or non-profit groups; no centralized registration system or deposit requirement.

The grave inaccuracies contained in just a few short sentences should leave little surprise that the EFF is on shaky ground concluding that their views on copyright would be compatible with the Founders. Most Founders shared a philosophy that emphasized the primacy of private property — not just as a mechanism for prosperity but also as an essential component of a free society.14 Copyright (or literary property) was explicitly seen as a form of property by these same Founders.15 Early US copyright law is not some ideal we should gaze at with nostalgia. It had long been considered inadequate to achieve its goals of advancing the public interest and has only in recent decades evolved to provide meaningful rights to the creators that drive progress and innovation.

So it is more likely that the Founders would find current copyright law an improvement over the 1790 Act. As Thomas Paine, the Father of the American Revolution, wrote:

The state of literature in America must one day become a subject of legislative consideration. Hitherto it hath been a disinterested volunteer in the service of the revolution, and no man thought of profits: but when peace shall give time and opportunity for study, the country will deprive itself of the honour and service of letters and the improvement of science, unless sufficient laws are made to prevent depredations on literary property.16

The EFF is welcome, as it concludes in its post, to write about and promote “real copyright reform.” But it should try to do so without revisionist claims that it has history on its side.

Footnotes

  1. Robert Maugham, A Treatise on the Laws of Literary Property, pg. 74 (London 1828). []
  2. Meredith L. McGill, “Copyright“, in An Extensive Republic: Print, Culture, and Society in the New Nation, 1790-1840, pg. 199 (2010); note, too, that six of the thirteen original States explicitly included “pamphlets” within their colonial copyright statutes. []
  3. Bach v. Longman, 2 Cowp. 623 (1777). []
  4. Kevin Parks, Music & Copyright in America: Toward the Celestial Jukebox, pg. 4 (ABA Publishing 2012) (early works registered include The Rural Harmony, Being an Original Composition, in Three and Four Parts in 1793 and The Kentucky Volunteer, a New Song in 1794. []
  5. See, for example, John Burk, Bunker-Hill, “Copy-Right Secured According to Law [1797]. []
  6. Allison Sarah Finkelstein, “Unhappy Differences”: The American Revolution and the Disruption of the Course of Theatre in Virginia (April 23, 2008) (unpublished B.A. thesis, College of William & Mary). []
  7. Burrow-Giles Lithographic v. Sarony, 111 US 53 (1884). []
  8. William Patry, “Statutory Revision“, Copyright Law and Practice, n.108 (2000). []
  9. Act of August 24, 1912, Pub. L. No. 62-303, 62d Cong., 2d Sess., 37 Stat. 488. []
  10. Edison v. Lubin, 122 F. 240 (1903). []
  11. See Mazer v. Stein, 347 US 201 (1954). []
  12. See Did the 1976 Copyright Act Lessen the Orphan Works Problem? []
  13. One would recall that one of the early seminal cases in U.S. copyright law, Wheaton v. Peters, 33 US 591 (1834), involved the copying of Supreme Court opinions. []
  14. “Property must be secured or liberty cannot exist.” John Adams, Discourses on Davila, No. 13 (1790); “Let these truths be indelibly impressed on our minds: (1) that we cannot be happy without being free; (2) that we cannot be free without being secure in our property; (3) that we cannot be secure in our property if without our consent others may as by right take it away.” John Dickinson, Letters from a farmer in Pennsylvania to the inhabitants of the British Colonies, Letter xii (1767). []
  15. See, for example, Randolph J. May & Seth L. Cooper, The Constitutional Foundations of Intellectual Property, 8 Perspectives from FSF Scholars (2013); Paul Clement, Viet Dinh & Jeffrey Harris, The Constitutional and Historical Foundations of Copyright Protection, Center For Individual Freedom (2012); Myths from the Birth of US Copyright; Justin Hughes, Copyright and Incomplete Historiographies: Of Piracy, Propertization, and Thomas Jefferson, 79 Southern California Law Review 993 (2006). []
  16. A Letter Addressed to the Abbe Raynal (1782). []

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Time and Cost of Making an Album Case Study: NIRVANA — Justin Colletti offers an interesting look at how long and for how much it took to make three of Nirvana’s albums, and what that translates into in today’s dollars. Great for music fans, and informative for aspiring musicians looking to budget for their own recordings.

The Problem with False Creative Commons Licenses — “The issue is that for a person to put a work under a CC license, or any license, they have to be the owner of the copyright in that work. The problem is that more and more work is passed around online by people other than the copyright holder, often without permission and they often place the works they post under a CC license, regardless of whether or not they have the right to do so.”

Google in spotlight again for links to criminal websites — Ellen Seidler reports that the tech giant has come under scrutiny from Mississippi Attorney General Jim Hood for failing to address the advertisement of illegal pharmacies through the site, less than two years after Google forfeited $500 million to the feds for similar conduct.

Copyright: Empowering Innovation and Creativity — MPAA CEO Chris Dodd lays out five “fundamental tenets that create the foundation of sound copyright policy” to keep in mind as Congress reviews the Copyright Act. Dodd notes, “Today, the copyright debate has grown extremely polarized. But the founders of our republic considered copyright so important to unlocking the creative and economic potential of this country that they explicitly called for its protection and promotion in our Constitution.”

NMPA: David Israelite, RIAA’s Cary Sherman Work to Mend Fences Between Publishers, Labels — Billboard’s Ed Christman reports on what could be the dawn of a new era in cooperation between record labels and publishers. During the annual meeting of the National Music Publisher’s Association this week, the heads of both the NMPA and RIAA highlighted how the two are increasingly working together to address the challenges of licensing and opportunities of new digital platforms.

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In the prologue of his 2004 book, Free Culture, Lawrence Lessig writes:

A free culture supports and protects creators and innovators. It does this directly by granting intellectual property rights. But it does so indirectly by limiting the reach of those rights, to guarantee that follow-on creators and innovators remain as free as possible from the control of the past. A free culture is not a culture without property, just as a free market is not a market in which everything is free. The opposite of a free culture is a “permission culture”—a culture in which creators get to create only with the permission of the powerful, or of creators from the past.

Lessig starts out well enough with his observation that intellectual property rights are part of a free culture, but things go quickly downhill after that, and the remainder of the book does nothing to rehabilitate this descent.

Although Lessig was not the first to use the term “free culture” as an antithesis to “overly restrictive” copyright laws, he did play a major role in developing and popularizing the concept.

The problem with this description of a “free culture” is that it is placed opposite of “permission culture.” This could not be more wrong. Permission, or consent, is not the opposite of freedom, it is a necessary part of freedom.

In Western philosophy at least, consent is considered one of the foundations of a democratic society.1 Not only does legitimate authority derive solely from the “consent of the governed”, but one of the ends of government is the preservation of property — which, essentially, is a framework for organizing consent. As John Locke wrote:

Men therefore in society having property, they have such a right to the goods, which by the law of the community are their’s, that no body hath a right to take their substance or any part of it from them, without their own consent: without this they have no property at all; for I have truly no property in that, which another can by right take from me, when he pleases, against my consent.

In addition, property has long been considered integral to the maintenance of a free society.2once wrote, “Let the people have property, and they will have power — a power that will for ever be exerted to prevent a restriction of the press, and abolition of trial by jury, or the abridgement of any other privilege.”

Lessig’s conception of a “free culture” is fatally flawed. The opposite of consent, of permission, is not freedom, but force. Freedom requires consent, property is built on consent, and the two are inextricably intertwined.

This holds true whether we are talking about the species of property governing tangible items or the species of property governing intellectual items.

I would argue that the nature of the works protected by copyright — expressive, cultural, scientific, etc. — makes it more, not less, important to fit them within this liberty/property paradigm. For in addition to the freedom and self-realization creators gain when they are able to reap what their labor has sown, the works they create enrich the general public, allowing society itself to flourish.

The necessity of this to a free culture was recognized most recently by a federal court less than three months ago:

Paraphrasing James Madison, the world is indebted to the press for triumphs which have been gained by reason and humanity over error and oppression. Investigating and writing about newsworthy events occurring around the globe is an expensive undertaking and enforcement of the copyright laws permits AP to earn the revenue that underwrites that work. Permitting Meltwater to take the fruit of AP’s labor for its own profit, without compensating AP, injures AP’s ability to perform this essential function of democracy. (Emphasis added).3

Journalism’s role in fostering democracy may be somewhat obvious, but the fine arts play their role as well.

It has not been customary to include the arts, the fine arts, as an important part of the social conditions that bear upon democratic institutions and personal freedom. Even after the influence of the state of industry and of natural science has been admitted, we still tend to draw the line at the idea that literature, music, painting, the drama, architecture, have any intimate connection with the cultural bases of democracy. Even those who call themselves good democrats are often content to look upon the fruits of these arts as adornments of culture rather than as things in whose enjoyment all should partake, if democracy is to be a reality. The state of things in totalitarian countries may induce us to revise this opinion. For it proves that no matter what may be the case with the impulses and powers that lead the creative artist to do his work, works of art once brought into existence are the most compelling of the means of communication by which emotions are stirred and opinions formed. The theater, the movie and music hall, even the picture gallery, eloquence, popular parades, common sports and recreative agencies, have all been brought under regulation as part of the propaganda agencies by which dictatorship is kept in power without being regarded by the masses as oppressive. We are beginning to realize that emotions and imagination are more potent in shaping public sentiment and opinion than information and reason.4

Now, what copyright brings to the table is not a necessary condition for creating expressive works; surely we will still have writers and artists without these rights. Instead, it brings a type of creativity that is separate from government, whether such sponsorship is benign or “part of the propaganda agencies by which dictatorship is kept in power”, and separate from the whims of the wealthy elite, such as you might find under a patronage system. It is the freedom to create independently, facilitated by copyright, that has long been recognized as essential to a free press, a free society, and a free culture. Just a few examples from a diverse array of sources over the past two centuries that speak to this recognition include…

…this passage from a journal article in 1844:

If the public desire a really free press, they must not look to it as a source of taxation; and if they are anxious for truth, for elevated and elevating sentiments, for ideas matured by study and reflection, and an honest exposition of grievances, they must recognise original articles as property, and secure them against a plundering appropriation by a copyright.5

…British lawyer James Paterson in 1880:

When any person is free to publish whatever he deems interesting or valuable either as a mode of procuring profit to himself or as a means of influencing the minds and will of his fellow-citizens on matters on which union and combination can effect great results, this is the highest mark of freedom.6

…historian Edward Bloom in 1949:

Recognition of proprietary rights of authors under the Copyright Act of 1709 was an extremely important step in liberating the press. Copyright security helped to stimulate private initiative by providing authors of books some measure of financial independence. By at least partially obviating the economic function of political patrons, the Act of 1709 aided immeasurably in the freedom of the press.7

…former Register of Copyrights Barbara RInger in 1974:

[T]he concept of copyright changed radically as a result of the revolutionary political movements of the late 18th and 19th centuries, and the first copyright statutes were based on a rejection of autocratic repression and monopoly control and upon a new recognition of individual liberty and the human rights of authors. … Freedom of speech and freedom of the press are meaningless unless authors are able to create independently from control by anyone, and to find a way to put their works before the public.8

…or copyright scholar Neil Netanel in 1996:

By according authors and their assigns a proprietary entitlement, copyright fosters the development of an independent sector for the creation and dissemination of original expression, a sector composed of creators and publishers who earn financial support for their activities by reaching paying audiences rather than by depending on state or elite largess.9

So I think it is no stretch to say that property in expressive works, built on consent, plays a vital role in the maintenance of a free culture. The modern definition of “free culture” to mean a permissionless culture — one that calls for a regressive weakening of creators’ rights — is a dramatic reversal of longstanding conceptions of property and freedom. And, ironically, it achieves the opposite of what it purports to address. As legal scholar Guy Pessach observed in a forthcoming article (which I wrote about on Monday), weak copyright protection increases media concentration and decreases cultural diversity. In addition, Thomas Joo has argued that more permissive rules toward “remix” also reinforce dominant culture, contrary to what proponents of such rules (including Lessig) have claimed.

In a recent commentary, Lawrence Lessig stated the need to “learn how liberty can live in the digital age.” Just last month, Ethernet inventor Bob Metcalfe said, “The Internet needs to deal with property properly.” I would suggest the two are interdependent, which is clear once we start with a better definition of “free culture.”

Footnotes

  1. See, for example, The Ethics of Consent, pp. 45-51 (Oxford University Press 2010), citing Thomas Hobbes, Adam Smith, Immanuel Kant, and John Stuart Mill. []
  2. See, for example, Lynch v. Household Finance Corp., 405 US 538, 552 (1972),  Noah Webster — who, coincidentally, considered an author’s copyright equivalent to, and deserving of, the same protection as all other species of property ((See Letter to Daniel Webster, Sept. 30, 1826. []
  3. The Associated Press v. Meltwater US Holdings, Dist. Court, No. 12 Civ. 1087 (DLC) (SDNY March 21, 2013). []
  4. John Dewey, Freedom and Culture, pp. 9-10 (Capricorn Books 1963) (1939). []
  5. Impediments to Knowledge“, The Reasoner No. 17, 264 (1844). []
  6. The Liberty of the Press, Speech, and Public Worship, pg 14. (Macmillian 1880). []
  7. Edward Bloom, Johnson on a Free Press: A Study in Liberty and Subordination, A Journal of English Literary History (Dec. 1949). []
  8. The Demonology of Copyright, R.R. Bowker Memorial Lecture, 1974. []
  9. Copyright and a Democratic Civil Society, 106 Yale Law Journal 283, 347 (1996). []

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Skeptics of copyright are generally not too fond of “gatekeepers.”

Prior to the widescale adoption of the internet, these “gatekeepers”, the typical narrative goes, controlled what the masses read, watched, and listened to, reinforcing a dominant culture and creating the concept of media “consumers.” But the networked, one-to-one nature of the internet challenged this one-to-many model. It allowed creators to bypass “gatekeepers” and connect directly with fans, supporting more diverse and decentralized culture.

To many proponents of this view, current copyright law facilitates the former, broadcast model. Legal professor Guy Pessach thinks this is wrong.

In his forthcoming article, Deconstructing Disintermediation — A Skeptical Copyright Perspective, Pessach examines the effects that disintermediation has had in the copyright realm and comes to the conclusion that it has decreased cultural diversity, decentralization, and artist welfare.

Deconstructing Disintermediation

As Pessach notes, the conventional wisdom of disintermediation and copyright has been championed by many over the past decade, including academics like Jessica Litman, Neil Netanel, William Fisher, and Yochai Benkler. The basic premise is that copyright law has evolved to primarily benefit corporate media at the expense of users and individual creators. This system is criticized for undermining cultural diversity, making amateur and “civic-engaged activity” that involves the use of copyrighted cultural materials more difficult, and eroding the ability of creators to get a fair return for their work.

By focusing on cutting out the middleman, copyright law reformers hope to decrease corporate media’s influence on culture and make it easier for creators to reach audiences and for readers to enjoy a more diverse range of creative works. This would be achieved in part by enhancing existing provisions in copyright law like termination and work-for-hire rules to be more favorable to creators and in part by shielding some peer-to-peer activities from infringement liability and broadening safe harbors for online intermediaries.

Pessach is skeptical of this argument, and his article advances this skepticism on three grounds. First, the new intermediaries, like YouTube and Facebook, are not as different from traditional media as disintermediation proponents might think and may, in fact, be worse in many ways. As Pessach notes, “the creative destruction of traditional corporate media and its replacement by mega networked intermediaries may generate realms that are more concentrated, homogeneous and exploitive of creators.” Related to this is Pessach’s next argument that as new intermediaries gain power over audiences, the preservation of “traditional” media may have an increasingly important role mitigating that dominance. Finally, Pessach shows that incorporating disintermediation provisions in copyright law tends to have the opposite effect than intended, resulting more often in centralization of media, less cultural diversity, and less leverage for creators.

In short, argues Pessach, when you recognize that copyright law regulates power relationships between different actors in creative markets, you recognize that “extreme concentration of media power could derive not only from excessive copyright protection, but also from excessive ability to freely utilize content.” Pessach concludes,

Once this aspect is acknowledged, a novel and hidden role of copyright law is unveiled. Copyright law is a dynamic mechanism for regulating power relationships in media and information markets. It does so both by acknowledging copyright protection and by exempting from copyright liability. Hence, under certain economic and social conditions, copyright protection may have a legitimate role in mitigating media and market powers of copyrightless intermediaries that leverage copyright exemptions and limitations as their gateway to control over audience attention.

Money for Nothing

Pessach next turns to exploring these ideas in greater detail. First up: the nature of the new intermediaries. Pessach writes that

the bargaining position of originating authors and creators, versus a handful of Internet intermediaries, may be weaker than it was for traditional distributors and corporate media. The more concentrated the layer of effective networked distribution is, the weaker the bargaining position and economic welfare of authors and creators becomes. Seemingly, the Internet and networked communication platforms provide almost an unlimited range of distribution platforms. Nevertheless, if one adds the parameter of effective audience attention and the ability to effectively reach audiences, in realms of information overflow, reality appears different.

YouTube is used as a case study here. The sheer size and popularity of the site makes it a must for video creators to distribute their content online. But YouTube invests very little in producing the works available on its site1 and only pays about 5% in ad revenues to creators.

When compared to traditional creative industries, this state of affairs does not seem encouraging. For example, within the audio-visual creative industries, the guilds’ collective agreements between authors, directors and performers, on the one hand, and motion picture/television studios, on the other, seem to provide authors, creators and performers with financial conditions that are much better than the YouTube scenario, particularly because the financial investment and risk are born entirely by corporate media. As for the music industry, indeed, there are many reports and evidence regarding the imbalanced allocation of revenues between most artists and record companies. However, even in this regard, revenues from the “bad” old record company seem higher than the new digital distribution system. If one takes into account elements such as advances, coverage of production costs and even percentages of revenue share, the new boss might be worse than the old bad boss at the end of the day.2

Other examples of how the new intermediaries have not resulted in better conditions for authors and creators. Pessach cites to the purchase of the Huffington Post by AOL in 2011 by $300 million, value created by its thousands of unpaid bloggers who received no benefit from the sale as well as the Instagram flap earlier this year. Both cases demonstrate the enormous bargaining and negotiating power new intermediaries have over authors and creators.

Be Sure to Drink Your Ovaltine

In addition to reintermediation of expressive works, Pessach examines the monetization of these works online. Advertising has become the dominant method of monetization for online works, further exacerbating the negative effects to creators and culture. Pessach explains that an ad based model places emphasis on creating the most popular content in order to attract the most “eyeballs.” “Traditional” media has relied in part on advertising, of course, but disintermediation offers a more extreme version of this model. The former found the pressure to deliver eyeballs on the traditional intermediary. But the latter places that pressure on the creator himself. Pessach says the difference is that “as opposed to corporate media, individual creators and authors lack the financial resources required to spread risks between different types of cultural products or seek and develop other distribution platforms.”

Thus, Pessach concludes, disintermediation has not improved creators’ welfare, it has not increased cultural diversity, and it has amplified media concentration. One of the takeaways from this conclusion is that the internet has made “corporate” media more relevant, not less. Pessach notes the many essential roles that record labels, movie studios, book publishers, broadcasters and other traditional media have as social networks, search engines, and user-generated content platforms increase their dominance. First, their size puts them in a better negotiating position against digital distribution channels, getting, in many cases, a better “deal” for the creators of works in their portfolio than individual creators could likely get on their own. Second, these institutions carry “a cultural legacy of commitment to the creative industries”, which Pessach says is “currently absent in the commitments and cultural DNA of networked intermediaries.” Finally, the financial investment, risk allocating, and filtering functions of these companies help facilitate a broad range of cultural production that is highly unlikely to appear in a disintermediated digital environment.

Disintermediation and Copyright

So what does this all of this have to do with copyright?

To answer this question, Pessach next discusses two “themes” that have emerged from efforts to increase disintermediation through copyright law. The irony is that the actual effect appears to be contrary to the purported goals.

The first of these relates to the protection of online service providers through DMCA safe harbors, most notably the § 512(c) safe harbor for user-uploaded material. Part of the hope of this safe harbor was to support the development of new, decentralized distribution platforms. Reality tells a different story, which Pessach demonstrates by using the example of YouTube once again:

The dominant and unprecedented market and power position that YouTube has managed to obtain is… mostly due to § 512(c)’s safe harbor regime. It is the safe harbor regime that enabled the hosting and public provision of endless amounts of popular copyrighted cultural materials, and it is this ability that made the platform so dominant in terms of its market share. The growing popularity of the platform was largely based on its ability to cover entire portfolios of content (“full repertoire”) under one umbrella and highly demanded (copyrighted) content. The ability to do so without any need to obtain ex-ante authorizations from copyright owners and with the safe harbor’s limited legal risk is what facilitated the economic and cultural conditions for the current market domination of YouTube, particularly due to elements of network economics. Practically, the fact that under § 512(c)’s safe harbor regime, YouTube was obliged to remove (ex-post) infringing materials, based on a takedown notice by copyright owners, was not a real obstacle in establishing the platform’s dominance. By itself, such an obligation did not prevent the rapid growth in the platform’s popularity and the immense portfolio of popular copyrighted content that it hosted.

Once this dominant market position was achieved, however, it was also the stage to move toward business models, which are based on collaboration and revenue-sharing with creators and rights owners, only now from a completely different negotiation (or one may say, coercive) position. At this stage, authors, creators and rights owners were faced with a highly dominant and popular intermediary, which attracts a significant portion of audience attention and which is already partially shielded from legal liability for the hosting of their materials. Under such conditions, YouTube’s ability to launder its content activities under its own terms was considerable. Authors, creators and performers have very few options other than agreeing to YouTube’s terms and conditions or vanishing from audiences’ awareness.

The second theme Pessach looks at are proposals to vest more rights, particularly initial ownership rights, in creators. Though at times inelegantly phrased, the argument here is essentially that a focus on initial ownership rights takes the focus off the more important mechanisms that can provide meaningful bargaining power to decentralized and diffused creators. One self-published author is going to get whatever deal Amazon gives her, but a publisher that can negotiate on behalf of many authors could get a better deal.

The entire article is worth a read. Though astute observers may not find much surprising within, Pessach does an admirable job tying together various themes — “maybe the internet only wants one of everything”, the continuing importance of “traditional” intermediaries, the sharp decrease in creator welfare caused by disintermediation — and adds to a growing academic literature that highlights the flaws in the arguments of copyright’s skeptics.3 It is tragic that the erosion of creators’ rights has had the opposite effect than those responsible had intended. Disintermediation has benefitted few but a handful of giant internet firms. Hopefully, Pessach’s article shines a light on the fact that meaningful copyright protection remains just as vital to the public interest, if not more so, in the digital age.

Footnotes

  1. Pessach states that “YouTube does not finance or invest in the production of the content,” though in the past year, the site has begun at least advancing ad revenues for some original production. []
  2. Pessach cites here to David Lowery’s seminal article, Meet the New Boss, Worse than the Old Boss. []
  3. See, for example, Randolph May & Seth Cooper, The Constitutional Foundations of Intellectual Property, 8 Perspectives from FSF Scholars, Free State Foundation (May 10, 2013); Ronald Cass & Keith Hylton, Laws of Creation: Property Rights in the World of Ideas (Harvard Univ. Press 2012); Thomas Joo, Remix Without Romance, 44 Conn. L. Rev. 415 (2011); Marc H. Greenberg, Reason or Madness: A Defense of Copyright’s Growing Pains, 7 John Marshall Review of Intellectual Property Law 1 (2007); Justin Hughes, Copyright and Incomplete Historiographies – of Piracy, Propertization, and Thomas Jefferson, 79 Southern California Law Review 993 (2006); Stan Liebowitz, Economists’ Topsy-Turvy View of Piracy, 2 Review of Economic Research on Copyright Issues 5 (2005); Thomas Nachbar, Constructing Copyright’s Mythology, The Green Bag, Vol. 6 (2002). []

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June 07, 2013 · · Comments Off

This week in D.C. was the World Creators Summit, two days of discussion and debate about the challenges and opportunities facing creators around the globe. Reports on each of the panels (with video slowly being added) is available at creatorssummit.com. Especially check out the events I covered as an official blogger: Visions for the future – creators in a digital age, Can photographers get fair deals?, Orphan works – balancing access and creators’ rights, Piracy – the vision of a creator, The U.S. agenda – the perspective from the creators, and Re-connecting with the digital narrative.

Uncertainty, Copyright and Courage — One of the highlights of the Summit was this early morning keynote by songwriter and ASCAP President Paul Williams. Worth reading in its entirety.

In the digital economy, we’ll soon all be working for free – and I refuse — “For what is being eroded is not only actual wages but also the very idea that work must be paid for. Huge profits are being made from these so-called opportunities for our youth. But they are, in fact, the exploitation of insecurity. This is not about being anti-technology. It is about being pro-human.”

When did cover songs become annoying marketing ploys? — Thanks to concerns about the market power of the Æolian Company (remember them?), U.S. law provides a compulsory license for covering songs, permission from the copyright holder is not required. Many performers provide their own unique interpretation of other’s songs, but as Slate reports, there is a vibrant industry of mostly legal knockoff recordings that aim to mimic popular versions of songs as closely as possible in order to free-ride off their success. These copycats clutter streaming services — Slate reports there are over 600 non-Adele versions of Skyfall available on Spotify — and dupe music listeners.

Time for Silicon Valley to grow up and take responsibility for their online advertising business model — Is whitelisting the way to go for brands who don’t want to see their ads show up on scammy, porn-y, pirate-y websites? The Trichordist argues it is. “Blacklist systems too often put the burden on the victims or advocates for the victims while enabling brand advertising and Madison Ave/Silicon Valley profits at the expenses of others. Whitelist systems put the burden on those reaping the benefits: Brands, Madison Ave. Silicon Valley and Publishers. This is the ethical model.”

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May 31, 2013 · · Comments Off

People Still Pirated Arrested Development Because People Pirate — It’s a common refrain. “People only turn to unauthorized sources of entertainment when authorized sources are unavailable.” But as Gizmodo points out, Netflix, which unveiled exclusive new episodes of cult phenomenon Arrested Development this weekend, was available in 4 of the top 5 countries in terms of Arrested Development piracy.

National Federation of the Blind, MPAA join forces to back book treaty — Despite efforts by copyright skeptics to derail an international treaty focused on making works more accessible to the visually impaired in order to erode copyright protections, the MPAA and the National Federation of the Blind announced yesterday that they are working together to make sure the treaty moves forward.

Google cashes in on hate videos: Internet giant puts ads alongside thousands of terror rants on YouTube — The Daily Mail reports, “Google is profiting from adverts which appear alongside vile terror videos on YouTube, it emerged last night. The Mail has found adverts for reputable companies on videos of Al Qaeda fanatics calling for jihad.”

Exclusive: Pandora Paywall Pays Off, Research Shows — Internet radio service Pandora capped the number of hours available to its free subscribers and the number of paying subscribers… increased? Good news for Pandora, though the result might cut into its argument that it needs Congress to cut the government-set license rates it pays to sound recording owners in order to remain profitable.

Did Boing Boing’s Cory Doctorow Even Read the IP Commission Report? — Cory Doctorow is the worst thing to happen to Boing Boing.

Why 3D Printing Is Overhyped (I Should Know, I Do It For a Living) — For some reason, hyping 3D printing (and its projected effects on intellectual property law) has become something of a cottage industry online. Nick Allen, founder of 3D printing company 3D Print UK, says don’t believe the hype.

Yes, Silicon Valley, You Are as Exactly as Vain as They Say — “Tech’s greed is a generally thoughtless one, the greed of children who don’t realize that by hoarding toys, the rest of the class gets less—the greed that sees itself as progress, as a thrill, never as greed at all.”

Live: Google, David Lowery and the BPI talk ad-funded piracy — Musically reports on a recent panel discussion featuring David Lowery, Theo Bertrand (UK policy manager at Google), Alexandra Scott (public policy manager at the Internet Advertising Bureau in the UK), and James Barton (artist manager at The Blue Team) on the subject of brand sponsored piracy. Some provocative remarks from Google’s Betrand, including this one: “It does seem to me to be an entirely sensible way to tackle piracy… most people doing piracy are not some guy in his bedroom altruistically sharing music with his friends. It’s people making money out of piracy, and it’s big business: some of these sites have 2m visitors regularly, and they’re not doing a bad business from advertising.”

Supreme Court Won’t Hear Challenge on Copyright Royalty BoardTwo weeks ago, I noted that SCOTUSBlog had named Intercollegiate Broadcasting System v. Copyright Royalty Board, a case involving the appointment of Copyright Royalty Judges in charge of setting royalty rates for a number of compulsory licenses, including webcasting licenses, as its petition of the day. But this week, the Court denied the cert petition, leaving the DC Circuit Court’s decision to stand.

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