Is Silicon Valley Funding the Wrong Stuff? — Eye-opening: “Consider this. The entire market for advertising is around $100 billion a year in the U.S. (Globally it’s close to $500 billion.) Yet the nation’s gross domestic product is more than $16 trillion. That means every venture-backed startup chasing advertising revenue is going after just 0.6% of the economy. Put in employment terms, the ad-related economy employs just a few million people, versus 140 million Americans whose job it is to do everything else. Still, the pursuit of advertising dollars includes about every startup that is going for scale first and says it will figure out how to ‘monetize’ its users ‘once it has the eyeballs.’”

Number of Statehouse Reporters Is in Decline, Study Shows — “The nation’s statehouses lost more than one-third of the journalists devoted to covering legislative matters full time, according to a study released on Thursday morning by the Journalism Project at the Pew Research Center.” Potato salad Kickstarter coverage remains unchanged.

Under Tariff 8, Barenaked Ladies would need 9,216 plays of “If I Had $1,000,000″ to earn enough royalties to buy one box of Kraft Dinner — A recent decision by the Copyright Board of Canada has set one of the worst royalty rates in the world for music streaming.

Taking on Amazon — If you haven’t checked out Scott Timberg’s blog CultureCrash, I highly recommend it. A great blog that covers issues relating to the sustainability of creative individuals and industries. Here he reports on several items related to Amazon and its dealings with authors and publishers.

A Notice of Author Obviation — “Dear Content Creator, We are happy to announce that our recent efforts in fiction generation have been successful, and we are now able to feed the entirety of any individual writer’s output into our computer and procedurally generate new works using a combination of Markov chains and random syntax sampling. A regular expression-based pattern matching system then determines which sentences are most similar in style to ones you would have personally constructed, and arranges them in terms of plot development (or what passes for plot in your novels). In essence, we have rendered you obsolete.”

Copyrights are more than just federal “privileges” — As Tom Sydnor explains, copyright “alone creates a system for producing expressive works that lets private creators and investors make the risky, long-term investments of financial and human capital needed to produce expressive works designed to inspire or entertain large numbers of private, ordinary citizens – rather than works designed to indulge the preferences of Tenure Committees, rich philanthropists, or government bureaucrats.”

From Google to Amazon: EU goes to war against power of US digital giants — “Google’s earnings from search have drained advertising spending from European newspapers, magazines and radio stations. Piracy, facilitated by search engines and broadband, has hit revenues for record labels hard. Bookshops and electronics stores have disappeared from high streets as sales migrate to Amazon and even Apple’s bricks and mortar retail outlets. Europe’s mobile phone networks, once considered global technology pioneers, have handed fortunes to Apple and South Korea’s Samsung in subsidies for mobile phone handsets. The sense of injustice has been reinforced by revelations about tax. Amazon, Google and Apple have found ways to reduce their corporation tax payments on international revenues to single-digit percentages of profits. Now fear has been added to the mix, with Edward Snowden’s revelations about digital surveillance.”

Biscuit the Democat, by Eric Hart. Posted with permission.

It may with propriety be remarked, that in all countries where literature is protected, and it never can flourish where it is not, the works of an author are his legal property; and to treat letters in any other light than this, is to banish them from the country, or strangle them in the birth.

Thomas Paine, 1792.

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

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

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

Statutory Interpretation

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

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

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

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

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

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

The Exceptions that Prove the Rule

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

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

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

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

Footnotes

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

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

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

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

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

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

The Aereo Decision

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

When does an entity perform?

Turning to the first question, the Court says:

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

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

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

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

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

When is a performance to the public?

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

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

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

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

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

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

Analyzing the decision

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

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

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

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

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

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

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

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

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

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

Footnotes

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

The emperor of “disruption theory” is wearing no clothes — A lot of reaction this week to a New Yorker piece by Jill Lepore criticizing some of the core principles guiding Silicon Valley, this is one of the latest. “It’s possible to be critical of the way Silicon Valley is agitating for regulatory reform that is designed to nurture Silicon Valley business models without being ‘anti-technology.’ It’s possible to explore the question of how the current pace of technological innovation is affecting jobs and inequality without being anti-technology. It is possible to be critical of how, in the current moment, technology appears to be serving the interest of the owners of capital at the expense of workers without being anti-technology. It’s even possible to love one’s smartphone and the Internet while at the same time critiquing run-amok ‘change the world’ hype.”

The Walking Dead producer criticises Game of Thrones executive over piracy — “‘When consumers do go [onto pirate websites] they look legitimate,’ she said. ‘They have advertising from well-known brands, and they take credit cards. How would the consumer know the difference between legitimate sites and illegitimate sites? There is a lot the advertising industry, credit card industry and search industry can do to help protect legit content.’”

Congress moves against ad-supported piracy — Writer and director Alec Berg (Seinfeld”, “Curb Your Enthusiasm”, “Silicon Valley.”) applauds recent efforts in Congress to draw more attention to the fact that major brands advertising on sites offering unauthorized creative works. “These major brands can avoid funding illegal activity. They can. The question is: Will they?”

Copyright exhaustion does not apply to digital goods other than software, Hamm Court of Appeal says — Good news for creators, as a court in Germany declined to extend the 2012 UsedSoft decision, which held that the distribution right for software can be exhausted by digital transmission under certain circumstances, to subject matter beyond software — here, audiobooks.

Google ordered by BC court to block websites selling pirated goods: Equustek Solutions Inc. v. Jack — Another positive decision, this one from Canada. As attorney Barry Sookman explains, plaintiffs won a default judgment against a website that was selling counterfeit goods and asked Google to help. “When Google refused to de-index the offending websites from its search results, the plaintiffs brought a motion against Google for interim relief requiring Google to de-index the websites. Over Google’s objections, in Equustek Solutions Inc. v. Jack 2014 BCSC 1063, Madam Justice Fenlon of the British Columbia Supreme Court granted the injunction.”

AJ Rafael Announces Hiatus from Performing [Exclusive Letter] — That didn’t take long. This week, a YouTube artists announced he is retiring, citing the difficulties for creators to sustain a career distributing and promoting their work through the free online video site.

If one supposes that information storage and retrieval systems are not now and are not likely to become commonplace during our lifetime, then we may leave the resolution of the rights of a copyright proprietor in respect of computer usage as a legacy to future generations.

But in doing so, would we not be creating another jukebox exemption, this time one of even greater consequences to the world of private authorship and private commercial publishing?

The hard, inexorable facts are, that information storage and retrieval systems do exist and are increasing numerically as well as in the scope of their uses.

Testimony of Bella L. Linden (American Textbook Publishers Institute), Copyright Law Revision, Hearings Before Subcommittee No. 3 of the Committee on the Judiciary, House of Representatives, Eighty-Ninth Congress, First Session on H.R. 4347, H.R. 5680, H.R. 6831, H.R. 6835, at 1429 (June 30, 1965), available at HathiTrust.

Seriously, What if Music Streaming Doesn’t Work Out? (via CultureCrash) — “Not one of the music streaming companies has made a profit yet, not one. Most are involved in corporate growth quarterly suicide, driven by large sums of VC money, or public pressure to return shareholder value. That’s fine, but that’s no way to nurture a creative company. I wish them all well, but honestly, that doesn’t seem like a good situation for the industry or consumer, maybe the VCs and shareholders, and money managers, but not us.”

Why online tracking is getting creepier — “Tracking people using their real names—often called ‘onboarding’—is a hot trend in Silicon Valley. In 2012, ProPublica documented how political campaigns used onboarding to bombard voters with ads based on their party affiliation and donor history. Since then, Twitter and Facebook have both started offering onboarding services allowing advertisers to find their customers online.”

Lack of Registry is No Excuse for Bad Royalty Accounting to Artists: The Return of the Magic Thingy — From The Trichordist: “This ‘if we just had a good database’ dodge has been a frequent feature of Internet lore for quite a while.”

“My Data Belongs To Me”: Returning Online Control To Consumers — “Data protection has not been successful in guaranteeing against misuse, claims Bruck. He proposes instead a human rights approach to data, where the ‘issue is not protection, but rights, not safeguarding, but property ownership.’ … ‘If you wish to use my data, get my permission. And then make transparent what uses you are taking,’ he said.”

The Illusion of Free Stuff — David Newhoff: “We’re seeing a trend of popular artists take gigs to perform for sponsorships, corporate events, or private parties for wealthy individuals; and this move toward patronage by the elite is a direct response to the fact that we the people are no longer a source of revenue.”

Shannon Hurley: “We Must Respect and Value Songwriters” — Indie songwriter Hurley on the inequities her and other songwriters currently face under the current licensing regime.

Lessons from the ‘right to be forgotten’ — “I’m surprised at how many technology lawyers in the U.S. are alarmed at this decision. Many seem to believe that it represents a fundamental break in the EU from American models of free speech. But in fact, we in the U.S. have long had to try to balance privacy and free-speech concerns. The Fair Credit Reporting Act, for example, balances credit-reporting agencies’ right to speak about our pasts with our right to ensure that the report is accurate, and also to keep certain things off the report once a certain amount of time has elapsed. The Spanish case [that led to the European Court of Justice's decision] involved a credit problem that persisted for over 10 years, which is the cut-off for a bankruptcy report to appear on a U.S. credit report.”

Let’s not turn the clock back on internet video — “Unlike with the physical ownership model, you don’t need to plan in advance, take all the content you might want to watch with you when you travel, or worry about forgetting to bring it. Moreover, if you lose or break physical copies of content you own, you will need to pay to replace them. You can’t lose or break Internet content, and if you lose or break your device, many services will reload the content for free.”

Online pirates thrive on legitimate ad dollars — “Content thieves attract visitors with the promise of free downloads and streams of the latest hit movies, TV shows and songs. Then they profit by pulling in advertising from around the Internet, often concealing their illicit activities so advertising brands remain unaware. Pirate websites run ads that are sometimes covered up by other graphics. They automatically launch legitimate-looking websites as pop-up windows that advertisers don’t realize are associated with piracy. At the end of the day, the pirate website operators still receive a check for serving up a number of views and clicks.”

T Bone Burnett’s plea: The piper must be paid — “Music is uniquely durable and, as a result, has for centuries been the medium through which knowledge and insights are passed from generation to generation. Fans can still hear the work of America’s musical pioneers, thanks to online and mobile services. Through downloads and streams and services such as Pandora and Sirius XM Radio, these giants’ recordings continue to captivate and influence young musicians, singers, songwriters and producers. Yet some of these same companies have made the decision to devalue the music of these artists for their own profit by not paying for it.”

Ginsburg on Fair Use & “Permitted but Paid” Use — The esteemed Jane Ginsburg has a new article proposing a middle ground between the currently binary outcomes of fair use. She suggests distinguishing between new distributions and new works, with the latter subject to the traditional fair use analysis and the former subject to “permitted-but-paid” statutory exceptions.

Negotiating Film and Video Content Distribution Agreements in the Digital Age — CDAS attorney Simon Pulman has a helpful guide for filmmakers seeking distribution deals for their works.

Doonesbury — “Don’t be Google.”

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

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

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

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

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

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

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

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

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

On May 19, the Supreme Court decided Petrella v. Metro-Goldwyn-MayerDevlin Hartline recently discussed the decision here, and I have previously noted one particular passage relating to the application/registration debate.

But there is another passage in Petrella that has sparked some interest. It appears as Justice Ginsburg is countering arguments against its holding. She says,

MGM insists that the laches defense must be available to prevent a copyright owner from sitting still, doing nothing, waiting to see what the outcome of an alleged infringer’s investment will be. It is hardly incumbent on copyright owners, however, to challenge each and every actionable infringement. And there is nothing untoward about waiting to see whether an infringer’s exploitation undercuts the value of the copyrighted work, has no effect on that work, or even complements it. Fan sites prompted by a book or film, for example, may benefit the copyright owner. Even if an infringement is harmful, the harm may be too small to justify the cost of litigation.

If the rule were, as MGM urges, “sue soon, or forever hold your peace,” copyright owners would have to mount a federal case fast to stop seemingly innocuous infringements, lest those infringements eventually grow in magnitude. Section 507(b)’s limitations period, coupled to the separate-accrual rule, allows a copyright owner to defer suit until she can estimate whether litigation is worth the candle.

Several among the copyright skeptic crowd were overjoyed when they read this. Kevin Smith, who serves as Scholarly Communications Officer at Duke University, wrote:

I don’t know that the Court has every [sic] before acknowledge [sic] that infringements might be beneficial to rights holders. Perhaps this is an acknowledgement of the myriad potential for reuse and remix. Certainly the authors of fan fiction should feel buoyed by the remark. From a more technical perspective, it seems to me to further undermine what was once a strongly held belief that whenever infringement was found, harm could be presumed. It seems clear that the Court is now reinserting harm as a separate element in the plaintiff burden of proving the tort of copyright infringement.

The CCIA’s Matt Schruers wrote:

A more interesting wrinkle is Justice Ginsburg’s explicit embrace of a point that I had previously characterized as “taboo” — that not all infringements impose costs on the rights holder. In fact, when I wrote last year that some infringements have no economic cost, and that other infringements will reallocate wealth instead of destroy it, the site admins had to install a profanity filter for the comment section. Yet today, Justice Ginsburg goes a step further and states that some infringement “may benefit the copyright owner.”

I hate to rain on their parade.

This statement is actually one that should buoy authors and creators. It is perhaps one of the more robust endorsements by the Supreme Court of the conception of copyright as a property right—an endorsement that goes beyond mere semantics, such as when Justice Breyer said “deliberate unlawful copying is no less an unlawful taking of property than garden-variety theft”, or, when the Court was confronted with evidence that deliberately placed mistakes had been copied, that “such indicia is held to indicate a substantial theft of copyright property.”

For it endorses copyright as a right that “trumps utility.” Ginsburg plainly states that uses which undercut a work’s value, have no effect on it, or even complement it are all actionable infringements. This perfectly comports with other forms of property. If you break into my home, that’s trespass. If you break into my home to wash my dishes, that’s still trespass, even if your act may ultimately benefit me.

Though Ginsburg never explicitly references the notion of property here, the thrust of her remarks are made clearer by her reference to the availability of injunctive relief to a copyright owner not once, but twice in this brief section. The injunction, of course, is the quintessential remedy for property rules.

What’s more, Ginsburg implies that tolerating such non-harmful uses does not operate to the prejudice of a copyright holder. Copyright litigants should make note of this when faced with an implied license or fair use defense. (And Smith’s conclusion that “the Court is now reinserting harm as a separate element in the plaintiff burden of proving the tort of copyright infringement” misreads the passage entirely.)

Why do property rights confer such high standing in our society? That’s a question that can’t be answered in a mere blog post. But perhaps I can offer some general remarks. Assuming private property rights are justly allocated, their recognition protects the dignity and autonomy of individuals. Individuals have an array of equally valid choices about how to exploit their property that others cannot encroach upon. Ignoring respect of that choice invites trouble of all sorts—the harm from infringement of property rights is not necessarily what, if any, damage may be done to the res, but the invasion into the property owner’s sovereignty itself.

This trouble, in my opinion, is aggravated when we start talking about one’s expression. It’s one thing for society to dictate what you should do with land you bought and quite another to dictate what you should do with a book you wrote, or a photo you took, or a song you recorded—none of which, by the way, existed before you created it. These are not only your property but your expression, extensions of your personality. We should be cautious against societal encroachments to something so core to our being. That does not make such rights absolute in all directions; like all forms of property, they must be properly scoped and coexist with doctrines that mediate conflicts with other rights. And, in some cases, must give way to compelling public interests.

But bottom line, it is heartening to see the Supreme Court calmly and without ceremony advance the well-founded conception of copyright as property.

Thanks to Devlin Hartline for feedback during drafting!

We Need to Talk About Aereo: Copyright-Avoiding Business Models, Cloud Storage and a Principled Reading of the “Transmit” Clause — Rebecca Giblin and Jane Ginsburg look at Aereo and the Transmit Clause in detail, presenting two possible interpretations that provide a principled approach that is not technologically determinative.

Your Newfangled Media Algorithms are Bullshit — “I love the idea of a new world of media that exists solely on the Internet. And I really, really want to be part of it. But I also want to pay my rent and feed my cat.”

Oliar, Pattison, & Powell on Copyright Registrations — “Using an original data set containing all 2.3 million registrations from 2008 to 2012, we provide a snapshot of current patterns of registration. We describe who is registering what, where, when, and why. Our main findings include the types of work being registered, how the registrations of individuals and firms differ, when works are being registered relative to their date of creation and date of publication, the age distribution of authors in different creative fields, and the geographic distribution and concentration of registration claimants.”

Bots and ‘Drone Pools’: The Deep Bag of Tricks in Video-Ad Fraud — The online ad market is dysfunctional. “Wenda Harris Millard, president and COO of the ad consultancy Medialink, estimates that as much as 25% of online ad revenue is wasted on fraud and piracy. Similarly, a February report from audience-research firm comScore found that 36% of online ad impressions, or views, are generated by nonhumans.”

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