Last week, France’s HADOPI released a report of figures from its first 20 months of operation.

HADOPI, if you recall, is both the French law implementing a graduated response, or “three strikes”, approach to mitigating online infringement, and the agency created to administer the law. Internet users who download an infringing work are first sent a warning email by the agency. If the user’s ISP notes a second infringement within six months of the first, a certified letter is sent to the user. A third infraction within a year of the second warning results in additional measures — including termination of internet access for up to a year, though court review is required before any such measures can be taken.

One thing revealed from the HADOPI report is that there has been an unofficial “fourth strike” added by practice: only users who infringe after a third warning are referred to a court for further measures.

Since it began operations, HADOPI has identified 3 million IP addresses connected with downloading infringing works. Of those, it sent out 1.15 million initial warnings. 102,854 users received a second warning. Of these, 340 received a third warning. Thirty of these cases resulted in repeated infringement after a third warning and were reviewed by a commission within HADOPI, though only 14 of those 30 have been referred to a court for judicial review.

In other words, from first identification, only .00047% French internet users face punitive measures for repeated infringement. These numbers are consistent with the program’s goal of educating internet users about the harms of copyright infringement — and turning them toward legal options — rather than punishing users.

What’s interesting here, however, is how substantially the picture that emerges from these figures differs from the apocalypse predicted by copyright skeptics when the law was first introduced.

Since its inception, HADOPI has been describe as “repressive” and “draconian“, with dire predictions that “already overworked courts risk being overwhelmed by piracy cases.”

The EFF, no stranger to hyperbole, described the HADOPI agency as an “executioner” and the law like a “guilliotine.” It warned of other country’s following France’s lead and “pressuring ISPs to throw their customers offline.” Even as recently as a month ago, the organization continued to call it “ham-fisted,” saying the process “runs contrary to principles of due process, innovation, and free expression.”

Would you believe Techdirt has also chimed in over the past 20 months? The site has said of HADOPI: “Due process? It’s dead.” The law, according to Techdirt, was “designed to kick accused (not convicted) file sharers off the internet“, it “suggests a huge percentage of French citizens at risk of losing internet access“, and “has effectively criminalized vast swathes of that country.”

This type of rhetoric is all too common from copyright skeptics whenever any effort is made to protect creators’ rights. One could call this “copyright hypochondria,” where every minor change in copyright law or enforcement is surely a symptom of a life-threatening disease. Far more often, it’s not, as this story demonstrates.

HADOPI’s numbers show that, contrary to the claims of copyright skeptics, the law did not threaten “vast swathes” of French internet users with punitive measures based solely on accusations. Instead, it seems to have achieved its purpose of educating users. Only about 38% of the IP addresses identified in connection with unauthorized downloading actually received an email warning. Of those, less than nine percent continued to infringe. And the bottom line is that only fourteen users in twenty months face actual penalties for continuing to infringe despite repeated warnings — less than one for each month of operation.

Also contrary to warnings that the process would surely lack due process or rely on naked allegations of infringement, the numbers suggest strong protections. While thirty users reached the unofficial fourth strike, HADOPI only recommended less than half to a court for further action.

So far, it appears to be the case that HADOPI has reduced piracy in a fair manner, but is it effective? Early studies suggest it is. A 2012 study by researchers, including professor of economics Brett Danaher, noted that consumer awareness of HADOPI has increased iTunes sales in France by over 22%. And a report by HADOPI itself after 17 months of operation showed that the clear decline in online piracy coincided with a rise in quality and quantity of legal cultural offerings.

In the US, a voluntary agreement between ISPs and major content producers that takes a graduated response approach is set to commence within the coming months. Like HADOPI, the process involves a series of escalating warnings to internet users who engage in unauthorized downloading. Unlike HADOPI, the process involves as many as six “steps”, and, while it provides for mitigation measures after the fifth or sixth steps, there is less of an emphasis on temporary termination of internet access. If HADOPI’s experience is any indication, the Copyright Alert System should do a good job in helping reduce online piracy and guiding internet users to legal options.

Unless you’re a copyright hypochondriac, of course, in which case the Copyright Alert System means that “ISPs are poised to start treating their customers like criminals, restricting their access to the Internet.” Sound familiar?

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September 07, 2012 · · Comments Off

In Honor of Labor Day — This past Monday was Labor Day in the US. Check out CreativeAmerica’s interactive map that shows the jobs and economic contributions made by the film and television industry in each state.

No, Bruce Willis isn’t suing Apple over iTunes rights (H/T IPKat) — Earlier this week, there was a flurry of news stories that actor Bruce Willis was considering taking legal action against Apple over whether he can pass on his digital music collection to his kids when he passes away. While it raises interesting contractual issues that we’ll likely see more and more of, it turns out that this particular story is more fiction than fact. Meanwhile, Jeff John Roberts at GigaOM looks at 3 ways to deal with digital media when you die.

Pirate Bay Founder Arrest Related To Tax Hack, Not Piracy — Also earlier this week, Pirate Bay cofounder Gottfrid Svartholm was arrested in Cambodia at the request of Swedish authorities. Many assumed the arrest was in connection with his role in the Pirate Bay, which earned him a one year sentence. Svartholm left the country before a 2010 appeal affirmed the conviction but reduced the prison term. Torrentfreak reports, however, that the arrest is in connection with Svartholm’s alleged role in a hacking operation that published the tax numbers of thousands of Swedes online. Because, well, information wants to be free.

Legal brief done in comic form — Great stuff. However, just yesterday, the judge issued a surprise ruling in the ebook antitrust litigation, approving a settlement offer, which this brief argued against.

Meet the man who wants to satirize Silicon Valley — “British arch-satirist Armando Iannucci – best known for his documentary-style dissections of the political classes — is getting ready to take on his next project: a black comedy based on Silicon Valley’s worst moments of excess. Fish, meet barrel.”

Making Stuff and Making Money — Some smart words from the Cynical Musician.

 

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On September 5, 1787, New Jersey Delegate David Brearly submitted the final language of the Copyright Clause to the members of the US Constitutional Convention. Granting the new federal Congress the authority to issue copyrights had been proposed several weeks earlier by James Madison (and, separately, by Charles Pinckney).

The full language, which also gives Congress power to issue patents, reads, “The Congress shall have power… To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The US Constitution would not be finalized until September 17th, it would not be ratified for another year, and the first Copyright Act would not be signed into law until May 31, 1790. But it seems appropriate to mark this date as an important one in US copyright history.

The existence of copyright law in the United States is mainly the result of efforts by authors.

The Statute of Anne, Britain’s 1710 law establishing copyright in that country, did not apply in its American colonies. The colonies before independence did not have anything resembling a “publishing industry.” Attitudes toward printing in the 17th century were inherited from England; Legal professor Oren Bracha notes that, “In short, throughout the colonial period … the press was seen as an important but dangerous public resource to be encouraged and used by the government, but also to be restricted and regulated.”1 Any book trade was small and unorganized, with only a handful of printers and presses in the colonies at the time. This reflected the less-industrially developed character of the colonies at this time.

Legal mechanisms were scarcely needed because printers faced little risk from reprinting. Printers faced little competition due to their scarcity and the lack of any ability to serve more than their local market. The existence of reprinting was further minimized by extra-legal mechanisms, described by Bracha as “private contractual agreements among booksellers not to print each other’s copies” and “an informal social norm within the trade against such behavior.” There were a few exclusive printing patents granted during this time, primarily for the exclusive right of printing compilations of a colony’s laws.

It was authors who primarily lobbied for general copyright laws in the colonies, and, eventually, the federal government. These authors include Joel Barlow, American politician and writer of Vision of Columbus and Hasty Pudding. Barlow played in important role in convincing the Continental Congress to pass its 1783 resolution encouraging the States to enact copyright legislation.

They also include Noah Webster, who would eventually write the dictionary that still bears his name today. Webster took it upon himself to lobby the individual state legislations, in person, to act on the Continental Congress’s resolution. (He would later play a role in the first major revision of the US Copyright Act in 1831).2

Other authors who played a role include Jeremy Belknap, writer of the first modern history in America, the History of New Hampshire, and Thomas Paine, whose pamphlets proved indispensible to the American Revolution.3

But often overlooked is the part played by a lesser-known author — and a musician, to boot — in efforts to create American copyright law.

William Billings

The author is William Billings, the “father of American choral music.” Billings was born in Boston in 1746. He worked as a tanner but taught himself music, never receiving any formal training, and according to biographical reports, seemed to have been quite the character:

Billings was a mixture of ludicrous, eccentric, commonplace, smart, active, patriotic and religious elements, with a slight touch of musical and poetical talent. To this side of the tanner-composer’s moral nature his personal appearance and habit formed a harmonious sequel. He was somewhat deformed, blind of one eye, one leg shorter than the other, one arm somewhat withered; and he was given to the habit of continually taking snuff. He carried this precious article in his coat-pocket made of leather, and every few minutes would take a pinch, holding the snuff between the thumb and clinched hand. To this picture we must add his stentorian voice, made, no doubt, rough as a saw by the effects of the quantity of snuff that was continually rasping his throat.4

Critically panned5 but popular, Billing’s works seem to capture the quintessence of American spirit. Though “crude, unrefined, and even vulgar”, and “scarred with glaring imperfections”, they contained a “buoyancy of rhythm, originality, life and melodic fluency.”6 His “lively and spirited” psalms were a welcome change from the old “slow isochronous” hymns, which aided in their wide acceptance.7

Not everyone welcomed Billings’ new style of music, however. Indeed, some accounts seem reminiscent of more modern day accounts of new trends in music:

These old bigots must have been paralyzed at the new style of psalm-singing which was invented and introduced by a Massachusetts tanner and singingmaster named Billings, and which was suggested, doubtless, by the English anthems. It spread through the choirs of colonial villages and towns like wild-fire, and was called “fuguing.” …

All public worshippers in the meetings one hundred years ago did not, however, regard fuguing as “something sweet everywhere,” nor did they agree with Billings and Byles as to its angelic and ecstatic properties. Some thought it ” heartless, tasteless, trivial, and irreverent jargon.” Others thought the tunes were written more for the absurd inflation of the singers than for the glory of God; and many fully sympathized with the man who hung two cats over Billings’s door to indicate his opinion of Billings’s caterwauling. An old inhabitant of Roxbury remembered that when fuguing tunes were introduced into his church “they produced a literally fuguing effect on the older people, who went out of the church as soon as the first verse was sung.”8

Billings’ popularity grew as he turned to patriotism during the Revolutionary War. He penned the tune, “Chester“, which became known as the first unofficial National Anthem. The song was said to have been “frequently heard from every fife in the New England ranks” during the war.9

Let tyrants shake their iron rod,

And Slav’ry clank her galling chains,

We fear them not, we trust in God,

New England’s God forever reigns.

Billings’ Copyright Bill

William Billings hoped to have a successful career as a songwriter. In November 1770, Billings petitioned the Massachusetts House of Representatives, “praying that he may have the exclusive Privilege of selling a Book of Church-Musick compos’d by him self, for a certain Term of Years.” Over the next two years, Billings continued his petition until he was able to bring a bill in front of the legislature. Both the Massachusetts House of Representatives and the Council eventually passed the bill.

Bracha notes that this is “This was an important landmark in American copyright history.”

For the first time an author rather than a printer or a bookseller applied to receive exclusive privileges in his own work. Two and a half centuries after printing privileges were granted to authors in Venice, France, Germany and England, an American legislature was willing to bestow rights on an author as such. In Britain the Statute of Anne had formally conferred rights on authors since 1710 and during the eighteenth century authorship had become the dominant ideology of copyright law and discourse, but in America Billings’ petition and Bill constituted the first appearance of the author as a claimer of rights.

Unfortunately, Billings never got his bill. Massachusetts Governor Thomas Hutchinson vetoed it and several other bills without comment. Tensions between the Loyalist Governor and the more radical legislature were already growing, so it is likely that Billings’ bill was simply a victim of politics.

Also unfortunate: Billings never escaped poverty during his life. He was buried in an unmarked grave even though his music remained popular, reprinted freely without compensation throughout the States.

Two hundred twenty five years later

US copyright law has come a long way since Billings’ time. In the 225 years since the Copyright Clause was drafted, the law has expanded to include artistic and creative works beyond books and maps. The entry of the US into the international copyright realm in the nineteenth century allowed American creators to compete on a level playing field with foreign authors.10 Today, US films, television shows, music, and books are enjoyed across the globe.

As with any legal doctrine, copyright will continue to face challenges in the face of societal and technological advancements. But securing the exclusive rights of authors remains a valuable and viable mechanism for promoting the progress of the arts and sciences.

Footnotes

  1. Oren Bracha, Commentary on John Usher’s Printing Privilege 1672, in Primary Sources on Copyright (1450-1900), eds L. Bently & M. Kretschmer (2008). []
  2. Oren Bracha, ‘Commentary on the U.S. Copyright Act 1831‘, in Primary Sources on Copyright (1450-1900), eds L. Bently & M. Kretschmer (2008). []
  3. William Patry, ‘The Colonies and Copyright’, in Copyright Law and Practice (2000). []
  4. Frédéric Louis Ritter, Music in America, pg. 60 (Charles Scribner’s Sons 1884). []
  5. Ritter, Id., says, “Nevertheless, Bill Billings remained an awkward harmonist and a worse contrapuntist … not to speak of hideous consecutive fifths and illogical progressions of octaves, motivi, without any inner aesthetic connection, chase each other, without rhyme and reason, from one end of the scale to the other; chords and harmonies tumble upon each other without order and euphony, playing carnival in the hearer’s ears.” []
  6. A Hundred Years of Music in America, ed. W.S.B. Mathews, pp 25-29 (Theodore Presser, 1900). []
  7. Musical Reporter, no. 1 vol. 7 (1841). []
  8. Alice Morse Earle, The Sabbath in Puritan New England, pp 218-221 (Charles Scribner’s Sons 1891). []
  9. Musical Reporter, Id. []
  10. “More authors came to public attention with the growth of interest in the novel, many of them Americans after the International Copyright Law of 1891 for the first time made their works no more expensive to issue than those by foreigners. After 1894 more novels, though not always more popular novels, came from Americans than from Europeans.” The popular book: a history of America’s literary taste, James David Hart, pg. 185 (Univ. of Cali. Press 1950). []

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Principles for an Ethical and Sustainable Internet — The Trichordist offers a set of 8 principles for ensuring the internet remains a viable public forum for content creators and consumers alike. “Technology may change but principles do not. A society that encourages the creative spirit is rare in history and worth defending. The internet and digital technology have opened up many new opportunities for artists, but it has also opened up new opportunities for those who wish to exploit those artists.”

The Big Online Rip-Off — Danuta Kean has a comprehensive piece on “the burgeoning power and influence of internet venture capital, and illegal filesharing sites.” Well worth a read, Kean closes with a list of steps that creators can take to counter this power and influence.

The Illusion of More — Be sure to check out filmmaker David Newhoff’s new site, launched this week. Subtitled, “Dissecting the Digital Utopia,” Newhoff already has a number of great articles up. The site promises to be “a response to the promise of the digital age that more would necessarily be better. More content, more information, more access, and more interaction would ultimately produce more freedom, more democracy, more cultural diffusion, more innovation, and so on.  According to some, the evolution of the Internet would ultimately fuse with human evolution itself, allowing us to transcend even our own mortality. To be sure, we seem to have accomplished the more part, but whether it’s all for the better is a question worth asking.”

The Best Book Reviews Money Can Buy — The New York Times profiles the increasing use of paid book reviews in the world of self-publishing. Among those the Times looks at is author John Locke, who used such services to become somewhat of an internet superstar, even parlaying his success into an e-book, “How I Sold One Million E-Books in Five Months.”

Brand banners on pirate sites: whose fault is it anyway? — Adland looks for an answer, inspired by a recent series of posts on the Trichordist pointing out many major brands that show up on display ads for notorious pirate sites — like this recent one showing over a dozen brands advertising alongside unauthorized Neil Young recordings. The list includes Ford, Mini, Target, and even the Boy Scouts. Over at Music Think Tank, Bruce Warila looks at the same series of posts and asks, Are we a community of copyright cowards?

Brian Keene: I write novels, stories, and comic books for money — Lucinda Dugger of the Copyright Alliance profiles comic artist Brian Keene. “Yet, despite the many hours of work for what would seem to many of us like little financial return, Brian continues to write and offer new opportunities to his fans. In fact, he so appreciates his fans, that he wrote a novel, Deluge: The Conqueror Worms II, which he offered for free on his website.”

Average wait time from theater to home video — An interesting graph showing how consistently and dramatically the release windows for films have dropped in the past 14 years. The companion thread on Reddit.

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August 29, 2012 · · Comments Off

Two court decisions involving online services transmitting broadcast television have recently been released. Both — WPIX v ivi in the Second Circuit and ABC v Aereo in the Southern District Court of New York — involve companies sued by television broadcasters for providing,in essence, the same type of service. However, the technology behind the scenes of each differs, as well as the legal issues involved.

And while both involved preliminary injunctions, they each resulted in different outcomes — Aereo succeeded in convincing the district court to deny an injunction while the Second Circuit upheld an earlier-granted injunction against ivi.

But while the differences in the two cases may outweigh the similarities, they do share one thing in particular that is, perhaps, most relevant: in both cases, the court reiterated the public’s strong interest in ensuring effective copyright protection.

WPIX v ivi

Billed as “the first internet cable network,” ivi launched in 2007. The service captures broadcast television from several markets, offering live viewing over the internet for a monthly fee. The company was sued in 2010, and the district court granted a preliminary injunction against it last year. On Monday, the Second Circuit upheld the injunction.

ivi argued that it is a “cable system” under the Copyright Act. Section 111 of the Act creates a compulsory license for “cable systems”, as defined in the Act, to retransmit television broadcasts — so long as a “cable system” complies with the statute and pays rights holders according to rates set by law, it can retransmit broadcasts without the consent of broadcasters.

Because the definition of “cable system” is not entirely without ambiguity, the Second Circuit turned to the legislative history of the section, as well as the Copyright Office’s interpretation of the law. Both clearly showed that the definition of “cable system” was never intended to encompass services like ivi. This conclusion is strengthened by the fact that, as the court notes, the definition of “cable system” must be read narrowly since it involves government intrusion into the marketplace and acts in derogation to the exclusive property rights granted by the Copyright Act.

ABC v Aereo

Aereo provides paid online access to New York City television stations broadcast over the air, including all the major networks (the service is currently only available to New York City residents). Unlike ivi, however, the service offers both live viewing and DVR-style functionality, allowing users to pause and record programs. Aereo operates an array of tens of thousands of antennae, each the size of a dime. When users access the service, Aereo dynamically assigns them a unique antenna.

Aereo hinges its defense on the nature of its setup. Relying on the Second Circuit’s Cablevision decision, Aereo argues that it essentially acts as a remote device controlled by its users. Because any individual transmission is going to a unique individual, says Aereo, any performance of television broadcasts is not public and thus not within the scope of any copyright holder’s exclusive rights. The district court concluded that Aereo’s arguments were strong enough to defeat the necessary likelihood of success on the merits that the television broadcasters must show in order to succeed on a motion for a preliminary injunction.

The Public Interest

To grant a preliminary injunction, courts consider four factors: the plaintiff’s likelihood of success on the merits, the irreparable harm that would result in the absence of an injunction, the balance of hardships between the plaintiff and defendant in the presence or absence of an injunction, and the public interests at stake. Despite the different legal issues involved, and despite the injunction in Aereo being denied because plaintiffs did not demonstrate a likelihood of success on the merits, both courts noted that the public interest favored granting an injunction.

The Aereo court puts it this way: “There is a strong public interest in the copyright system’s function of motivating individuals to make available their creative works and increase the store of public knowledge.”

The court also knocked down arguments that the public interest would be served by keeping the Aereo service running. Said the court, “There is a logical gap—one that Aereo and amici fail to bridge— between any public interest in receiving broadcast television signals generally and the public interest in receiving them from Aereo’s particular service.”

Interestingly, the court addresses arguments raised by the EFF and Public Knowledge in their amicus brief. “[A]mici argue that there is a public interest in the free access to and reception of broadcast television. The Court notes, however, that even setting aside the other lawful methods through which consumers may access broadcast television even in Aereo’s absence, Aereo is a business and does not provide ‘free’ access to broadcast television [Emphasis added].” The court continues even more stringently, “Amici‘s argument thus bears an unacceptable resemblance to advocacy that copyright infringement of broadcast television is generally in the public interest, a point on which this Court cannot agree.”

In ivi, the Second Circuit explores the public interests involved at length, in a section worth repeating in full:

Here, streaming television programming live and over the Internet would allow the public — or some portions of the public — to more conveniently access television programming.

On the other hand, the public has a compelling interest in protecting copyright owners’ marketable rights to their work and the economic incentive to continue creating television programming. Inadequate protections for copyright owners can threaten the very store of knowledge to be accessed; encouraging the production of creative work thus ultimately serves the public’s interest in promoting the accessibility of such works.

Plaintiffs are copyright owners of some of the world’s most recognized and valuable television programming. Plaintiffs’ television programming provides a valuable service to the public, including, inter alia, educational, historic, and cultural programming, entertainment, an important source of local news critical for an informed electorate, and exposure to the arts. Plaintiffs’ desire to create original television programming surely would be dampened if their creative works could be copied and streamed over the Internet in derogation of their exclusive property rights.

Further, there is a delicate distinction between enabling broad public access and enabling ease of access to copyrighted works. The service provided by ivi is targeted more toward convenience than access, and the public will still be able to access plaintiffs’ programs through means other than ivi’s Internet service, including cable television. Preliminarily enjoining defendants’ streaming of plaintiffs’ television programming over the Internet, live, for profit, and without plaintiffs’ consent does not inhibit the public’s ability to access the programs. A preliminary injunction, moreover, does not affect services that have obtained plaintiffs’ consent to retransmit their copyrighted television programming over the Internet.

What’s next

ivi has indicated in the press that it doesn’t plan on giving up just yet. That could mean an appeal or, more likely, continuing in litigation at the district court level. Though with its service still offline — the lower court last year denied its motion to stay the injunction while its appeal was pending, meaning it hasn’t been able to operate for over a year — it is uncertain how much longer it will stick with its plan.

The Aereo decision has been appealed to the Second Circuit. The appeal will be closely watched since Aereo is the first internet rebroadcaster to survive past the preliminary injunction stage. For example, earlier this month, Filmon.com, a similar service that was sued in October 2010, agreed to shut down its internet broadcasting service as part of a settlement with broadcasters. Within the past couple years, other services like VuiVision and iCraveTV have been quickly shuttered by courts.1

Footnotes

  1. H/T to Andrew Berger for making those decisions available at IP in Brief. []

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August 27, 2012 · · Comments Off

Way back in 2003, the member labels of the RIAA brought lawsuits against a number of individuals for distributing copyrighted works on P2P networks. Massachusetts grad student Joel Tenenbaum was among them and was sued over five years ago. Tenenbaum’s case went to trial in 2009 — one of only two to reach trial, the other being Capitol v Thomas-Rasset — and the jury returned a verdict for $675,000 in statutory damages for infringing 30 sound recordings.

The District Court reduced the award the following year to $67,500 on the grounds that the jury’s award violated the Due Process Clause of the US Constitution. Both parties appealed (I looked at the issues on appeal in a previous post). The First Circuit held that the court erred when it did this — under the doctrine of constitutional avoidance, it should have considered the common law doctrine of remittitur before examining the award under constitutional grounds. The original $675,000 jury award was reinstated, and the Circuit Court remanded to the District Court to consider the motion for remittitur. (My previous post on the First Circuit decision here.)

Now, roughly a year later (during that time, Tenenbaum appealed the decision to the Supreme Court, but the petition was not granted), the District Court has considered the issue of remittitur and released its decision. In short, it found remittitur is not appropriate here and the original jury award does not violate due process, so the original $675,000 verdict stands.

Remittitur

The court begins by noting the high standard needed to grant remittitur: “A damage award must stand unless it is ‘grossly excessive, inordinate, shocking to the conscience of the court, or so high that it would be a denial of justice to permit it to stand.’” Under this standard, the court found “no basis” to reduce the award.

The jury was thoroughly instructed on factors it should consider when considering the amount of damages to award, as well as the harms that result from unauthorized filesharing. The jury also heard evidence revealing the scope and scale of Tenenbaum’s conduct — he downloaded and distributed thousands of files over an eight year period. In addition, the evidence revealed the extent that Tenenbaum acted willfuly, as he received multiple warnings from various sources during this time about infringement and personally knew that other individuals were facing lawsuits for the same conduct. Finally, the evidence showed that Tenenbaum destroyed evidence, lied during legal proceedings, and only grudgingly admitted responsibility for his acts.

In spite of this, the court notes, the jury award was not only at the low end of the statutory range for willful infringement, it was even below the statutory maximum for non-willful infringement.

Due Process

The court next considered Tenenbaum’s due process challenge to the award. Just a note: many people assume that the Eighth Amendment’s ban on “excessive fines” is at issue here. However, the Eighth Amendment only applies to criminal fines, while this is a civil lawsuit.1 Instead, the challenge here had come under the Fifth Amendment, which says that “No person shall be …  deprived of life, liberty, or property, without due process of law.” The argument is essentially that the damage award is “so grossly excessive as to amount to a deprivation of property without due process of law.”2

The district court here begins by noting that the First Circuit suggested that the proper standard to evaluate a due process challenge to statutory damage awards is the one from St. Louis, IM & SR v Williams.3 Tenenbaum had argued that the court should follow the standard set out by the Supreme Court in punitive damages cases, specifically BMW v Gore,4 a far less deferential standard. But as the First Circuit noted, and the court here reiterates, the factors set out in Gore — aimed at due process concerns over the lack of notice over the amount of otherwise unconstrained punitive damages — are simply not relevant when a statute constrains the amount of damages that a defendant can face.

Under Williams, the court states, “a statutory damages award comports with due process as long as it “cannot be said to be so severe and oppressive as to be wholly disproportioned to the offense or obviously unreasonable.” As noted above, this standard is highly deferential — Congress has wide latitude in setting the amount of damages for legal violations, and too close review of such awards by courts raise separation of powers concerns. The district court concluded that the jury award here did not violate due process under the Williams standard.

What’s next?

Some have suggested that an appeal from Tenenbaum is likely. But his arguments have repeatedly been rejected at the District and Circuit court levels, so it is unlikely he will have any success for any future challenge.

Still left to watch is the only other RIAA filesharing case to make it to trial, Capitol v Thomas-Rasset. That case is one step ahead of Tenenbaum: after a second trial resulted in a jury verdict of $80,000 for each of 24 songs at issue (a verdict in the earlier trial had been vacated on a procedural error), the district court judge remitted the award to $54,000 total, or $2,250 a song. The record labels exercised their Seventh Amendment rights to reject the remitted award, and a third trial, solely on damages, resulted in a jury verdict of $62,500 per song. This time, the judge reduced the award on constitutional grounds. Thus, when that reduction was appealed to the Eighth Circuit, the court was not confronted with the question of whether remittitur was required before constitutional review of award, as the First Circuit was, since the lower court had already gone through with remittitur.

On appeal, the court is confronted with the question of which standard to review the award under — Williams or Gore.5 The Eighth Circuit heard oral arguments in Capitol this past June, so a decision should be forthcoming in the next few months.

Footnotes

  1. Browning-Ferris Industries of Vt., v Kelco Disposal, 492 US 257 (1989). []
  2. See Waters-Pierce Oil v Texas (No. 1), 212 US 86, 111 (1909). []
  3. 251 US 63 (1919). []
  4. 517 US 559 (1996). []
  5. As well as a preserved appeal of the question of whether making a work available on a P2P network is a violation of a copyright holder’s distribution right. []

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Real cost of ‘free’ downloads — Ken Paulson, president and CEO of the First Amendment Center, pens this must read op-ed on copyright and free speech, just in time for the 225th annivesary of the drafting of the US Copyright Clause (September 5th). “In the end, this is not about business models or emerging technology. It’s about living up to the promise we made to Webster and the first generation of Americans who believed that art should be free, but not necessarily free of charge.”

“Legitimate” piracy — John Degen takes a trip down the “freecult logical vortex for legitimizing piracy.” “If you, the professional content creator, are stupid enough to actually create valuable content and even think about putting it near the Internet, you are inviting piracy. And if you think technological protection measures (TPMs) will protect the value of your valuable content, you’re even more stupid. If you think the law should address your problem, you’re some kind of freedom-hating corporate monster. Also, stupid.”

Pro-Music’s Global Guide To Music Services — Eliot Van Buskirk of Evolver.fm presents a list of legitimate music services, categorized by country, from Pro-Music.org. The list is long, but certainly not exhaustive — music listeners have tons of other ways to legally enjoy music online, more than any other time in history.

Survey on Digital Content Usage 2012: Sanctions and warnings regarding copyright infringements are gaining acceptance among the public — The IFPI presents a report that showcases the attitudes and behaviors of German consumers regarding online media. Some of the key findings, according to the IFPI: “Three of every four Germans believe it is appropriate to fine people who offer copyrighted media content online without permission. More than half the population (53 percent) endorses the imposition of fines on people who illegally download media content. Consumers feel that warnings would have a preventive effect: 57 percent of Germans believe that up- and downloaders would discontinue their copyright-infringing activities upon receiving a warning from the provider.”

Piracy and Internet Search – The Debate — Along the same lines, researcher Brett Danaher wonders what the effect of Google’s recent move to downgrade search ranking based on takedown notices will have. Danaher notes that his previous research has shown that “laws aimed at deterring consumers from filesharing can increase music sales” and “shutting down a major cyberlocker increased movie sales,” but the effect of Google’s new policy remains to be seen.

The Andersen P2P file sharing study on the purchase of music CDs in Canada — One of the few studies that concluded that filesharing helps, rather than hurts, recorded music sales again faces fundamental questions. As Barry Sookman reports, the 2007 paper’s key conclusion that filesharing leads to higher music sales had previously been revised by the author, dropping the claim. This week, a new paper, re-examining the same data as the original paper, reports the exact opposite conclusion, and notes the original and revised papers are “fundamentally flawed.” The new paper, by Australian economist Prof. George Barker “consistently [found] a negative and statistically significant partial correlation between CD purchases and P2P downloads.”

RapidShare: We’ll help Hollywood, but ‘not at all costs’ (Q&A) — Declan McCullagh of CNet interviews RapidShare general counsel Daniel Raimer. Though there is still a ton of infringing content available on the service, it is encouraging to see the company express interest in mitigating that. Says Raimer, “We believe it’s a much more interesting market to have the legitimate customers upload important files that they want to have for long periods of time — a reliable cloud computing service that they can trust. These are the types of customers we want. Legitimate customers don’t really want to argue whether your service costs $4.99 a month or $50 a year. Copyright pirates are different. They really want everything for free. They’re definitely not the long-time customers.”

A Commendable Response from Zedo — On Tuesday, Chris Castle discovered that ad platform Zedo was serving ads on several notable torrent sites. By Wednesday, the company responded with a promise to make sure it doesn’t happen in the future. Kudos to Zedo. But as Castle notes, “This exchange highlights the most important aspect of the collision of legitimate companies with the seedy underbelly of the Internet–it’s not enough to sit back and wait for someone to formally notify you when things are going wrong.”

David Lowery to host SXSW panel on music piracy? — Adland reports that David Lowery has submitted a proposal for a panel on an “Innovative, Open, Ethical & Sustainable Internet” for this year’s SXSW. If this sounds interesting, follow the link in the article to the panel picker to vote it up — voting ends August 31.

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Eat less, exercise more.

This simple advice is, barring medical problems, at the heart of any weight loss plan for the 75 million self-identified dieters in the US.1 Yet the US weight loss market is valued at over $60 billion a year, filled with a constant stream of fad diets, “miracle” foods, and dubious supplements, as many search in vain for a magic bullet.

The same is true when dealing with expressive works like music, movies, and books. Many search in vain for a magic bullet to ensuring a vibrant creative ecosystem online, but more and more the key boils down to simple advice: Make piracy harder, make legal options easier.

Carnegie-Mellon economist Michael D. Smith describes this in a recent article on Digitopoly, Anti-piracy regulation and competing with free. The article is a response to an earlier op-ed piece by Nick Bilton at the New York Times, Internet Pirates Will Always Win. Smith took issue with the defeatist attitude that Bilton adopted concerning making piracy harder.

In short, Bilton’s arguments don’t mesh with reality. Smith points to his own research on price differentiation that  “found that while Amazon’s prices were well above the lowest price online, they still retained a dominant share of the market in head-to-head competition with much lower priced alternatives from online retailers like altbookstore, booksnow, and musicboulevard.” Smith goes on to explain:

What does this have to do with anti-piracy regulation? Possibly quite a lot if one views “competing with free” as simply a special case of price competition. Imagine competition in the digital media space where the media companies and their online distribution partners play the role of Amazon, and where pirate sites play the role of lower priced alternatives from the likes of altbookstore. The twist on this example is that while Amazon could only control the differentiation of their own offerings, media companies can use anti-piracy regulation to impact the differentiation of their pirate competitors’ offerings as well. Thus, media companies can use iTunes and Hulu to improve the convenience, quality, and reliability of their paid products, while also using anti-piracy regulation to reduce the convenience, quality, and reliability of the free pirate competition.

Smith points to empirical evidence that this is indeed what happens when anti-piracy regulations are adopted. Smith’s takeaway is that they “don’t have to be perfectly effective to get the job done. In that way, anti-piracy interventions may be less like ‘Whac-A-Mole,’ and more like horseshoes where you can score points just by getting sufficiently close to the target.”

But attitudes like Bilton’s persist.

One strand of thought seems to embrace the idea that antipiracy efforts are all or nothing. You have folks like angry sci-fi author Cory Doctorow pounding on the podium that efforts to make piracy harder are just the first step in a “war on general computing.”

You have Pirate Party founder Rick Falkvinge saying, with a straight face and clenched fist, “The only way to even try to limit file sharing is to introduce surveillance of everybody’s private communication. There is no way to separate private messages from copyrighted material without opening the messages and checking the contents. Gone is the postal secret, the right to communicate in private with your lawyer or your web-cam flirt, or your whistle-blower protection if you want to give a sensitive story to a journalist.”2

And a recent documentary from al-Jazeera claims that debates over copyright are “about centralized control versus ‘the ability to share information across the world without traditional boundries or regulations’” and recent legislation was “not about pirated entertainment but how do we live in the digital age and who gets to decide what we do.”

This line of thinking is, to put it bluntly, insane. It would be like saying the only way to stop tax fraud would be to allow government access to everybody’s bank accounts, or the only way to prevent speeding would be to require that speedometers broadcast data to the feds. No one seriously contemplates these solutions, and we somehow manage to enforce these laws without 100% compliance. The same is true with copyright.

On the flip side, legal options need to be more easier. Here, the failure of creators to adopt legal alternatives has been overstated.

Just yesterday, the MPAA noted “there are more legitimate avenues available today to watch movies and TV shows online than ever before: Hulu, HBO Go, Vudu, Crackle, UltraViolet, Epix, MUBI, Netflix, Amazon – and that just scratches the surface.” The RIAA reported in its recent IPEC comment that there are currently over 2,000 digital services offering access to consumers to over 20 million music recordings, a number that is growing. Countless other opportunities exist for emerging and indie musicians, authors, and filmmakers online. And the infrastructure continues to develop — for example, this past May, the RIAA, NMPA, and DiMA rolled out five new licenses that provide a “one-stop shop” for new online music distribution services.

Access to music, films, TV shows, books, and other works has never been easier or cheaper. Ever.

But, just like “eat more, exercise less”, “make piracy harder, make legal options easier” goes hand in hand; neither one is sufficient on its own. Legitimate options are better for the public in the long run, but they need a fair marketplace in order to thrive.

Footnotes

  1. See Caroline Scott-Thomas, Advice to Eat Less, Exercise More Still Trumps Diet Products for Weight Loss, Study Finds, April 16, 2012; Heidi Grant Halvorson, 5 Habits of Highly Successful Dieters, CNN, Mar. 19, 2012: “Eat less, exercise more. That’s the recipe for losing weight, and we all know it by heart”; Kristen Philipkoski, Stop Complicating a Simple Obesity Solution: Eat Less, Exercise More, Gizmodo, Mar. 8, 2012. []
  2. This argument is quite common. New America Foundation’s James Losey wrote in Slate last year, “If the United States decides that copyright infringement must be stopped at any cost, the required censorship regime will depend on ever more invasive practices, such as monitoring users’ personal Web traffic.” []

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On Friday, the Florida Southern District Court held a hearing on several dispositive motions in litigation between film studios and popular file-locker Hotfile.

Major film studios — including Disney, 20th Century Fox, Universal City, Columbia Pictures, and Warner Bros. — sued Hotfile in February 2011 for copyright infringement and secondary copyright infringement. The studios also brought a claim against Hotfile’s owner and operator, Anton Titov, for personal liability. In July, the court dismissed the claim for direct copyright infringement but allowed the claims for inducement, contributory infringement, and vicarious liability to go forward. Hotfile raised a number of defenses in its answer to the complaint, notably that it is protected by the DMCA safe harbor, and also brought a counterclaim against Warner Bros., alleging the film studio had made material misrepresentations in thousands of DMCA takedown notices it had sent to Hotfile. Both parties moved for summary judgment earlier this year.1

Though this is not the first infringement suit against file-lockers — Hotfile itself has been sued several times2 — it is notable for being one of the first suits initiated by major film studios against a popular file-locker. If the case progresses, it may prove influential in shaping copyright law online.

The claims of the studios are similar to claims in other copyright cases involving online service providers. It is alleged that Hotfile engaged in massive, commercial infringement by actively facilitating the reproduction and distribution of unauthorized TV shows and movies through its service. The studios point to Hotfile’s “affiliate program” that pays users for uploading popular files with the most downloads. Hotfile also operates a referral program that generates income for third-party sites that link to Hotfile content, the result of which, the studios allege, “is that Hotfile effectively partners, and acts in concert, with a vast array of pirate link sites and other affiliates to advertise and promote the infringing content on Hotfile’s servers.” Finally, like Megaupload, Hotfile is alleged to stymie takedowns of infringing content by making multiple copies of every file uploaded, each with a separate link. As the studios state:

Defendants protest that Hotfile is not like Napster, Grokster, Limewire, and other notorious infringers. But the differences make Hotfile’s infringement more egregious, not less. No earlier pirate services had the temerity actually to pay its users to upload infringing content. Hotfile does. Hotfile’s own economist acknowledges that Hotfile’s practice of paying uploaders (Hotfile’s so-called “Affiliates”) based on how many times their files are downloaded induces the uploading of “popular” (i.e., infringing) content. Additionally, unlike previous adjudicated infringers, which facilitated access to content stored on users’ computers, Hotfile itself physically stores all the infringing content on its own servers, giving it an unprecedented ability to stop the infringement – an ability Hotfile chooses not to exercise. Finally, Hotfile’s business model is indistinguishable from that of the website Megaupload, which recently was indicted criminally for engaging in the very same conduct as Hotfile. Defendants even admit that they formed Hotfile “to compete with” Megaupload.

The motions

On motion for summary judgment, the studios argue that Hotfile is ineligible for safe harbor protection because it failed to reasonably implement a repeat infringer policy, it failed to comply with the DMCA agent designation requirements, it had disqualifying knowledge — including actual knowledge of specific infringing files, “red flag” knowledge, and willful blindness — and it induced infringement.

On the first point, the studios note that Hotfile had the ability to track the number of takedown notices that individual users were responsible for (“strikes”), but it took no steps to terminate repeat infringers — a number of individual uploaders had accumulated over three hundred strikes without being terminated. The studios also note that over half of all downloads on Hotfile come from files uploaded by users with three or more strikes.

The last point, concerning the lack of knowledge requirement for safe harbor protection, has been the subject of recent court decisions in Viacom v. YouTube, from the Second Circuit, and UMG v. Veoh, from the Ninth.3 It appears that this is the first time a court in the Eleventh Circuit has been confronted with interpreting these provisions of the DMCA. This portion of the DMCA states that a service provider is only eligible for safe harbor protection if it “does not have actual knowledge that the material or an activity using the material on the system or network is infringing,” or “in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent.” The above cases focused primarily on the scope of the latter, so-called “red flag” knowledge.

Here, the studios point to several “red flags” that should have made Hotfile aware of infringement: over 90% of downloads were infringing, the operators received a “constant stream of communications” from users who said they were downloading infringing works, thousands of linking sites associated with Hotfile contained terms like “pirate” or “warez” that indicated obvious infringement, and, perhaps most brazenly, Hotfile’s tutorials for using its service used names and titles of copyrighted works as examples.

But the court may not need to dive into the scope of “red flag” awareness just yet; the studios have also provided evidence that Hotfile had actual knowledge of specific infringing works.

Without the safe harbor, the studios argue that Hotfile is liable for contributory copyright infringement, vicarious liability, and inducement. These arguments are fairly straight-forward applications of these doctrines of secondary liability. For contributory infringement, Hotfile provided the “site and facilities” for infringement and had reason to know about such infringement. For vicarious liability, Hotfile financially benefited from infringement through its premium subscriptions while declining its ability to stop or limit infringment.

The inducement claim — “active steps . . . taken to encourage direct infringement” — tracks the Supreme Court’s Grokster opinion and “parallels the pattern of prior adjudicated infringers,” according to the studios. They allege that Hotfile’s unlawful objective is apparent from its Affilliate program, which pays users to upload popular, and predictably copyrighted, files. Hotfile also directly targets a user base of infringers, refuses to terminate repeat infringers, is overwhelmingly used only for infringement, and depends on infringement for its business model. Finally, the defendants have helped users to infringe, have impeded efforts by copyright holders to mitigate infringement, and have refused to even consider technology that could be used to prevent infringement.

Hotfile’s response to the studios’ motion for summary judgment essentially refutes their characterization of the facts — it didn’t induce infringement, it did reasonably implement a repeat infringer policy, etc.4 To be sure, the court must sift through a lot of facts to resolve the issues raised on these motions. To succeed at the summary judgment stage, a party must show that, when all the facts are viewed in the light most favorable to the opposing party, no genuine issue of material facts exist, and the moving party is entitled to judgment as a matter of law on the issues it raises in its motion. With such complex legal issues, and thousands of pages of evidence already in front of it, the court here has its work cut out for it.

Other issues to watch

In the meantime, there are a few other legal issues raised in this litigation that are worth watching.

First, does inducement disqualify a service provider from DMCA safe harbor protection? A number of other courts have taken this position.5 The language and legislative history of the statute certainly seem to suggest that active conduct to encourage infringement is incompatible with a safe harbor for passive conduct, but courts in the Eleventh Circuit have yet to weigh in on the issue, as far as I can tell.

Next, what is the role of willful blindness in the knowledge prong of the DMCA safe harbor? The studios make the claim that Hotfile acted with willful blindness, effectively admitting “that they sought to blind themselves to the infringement all around them as much as possible.” Willful blindness, defined by the Supreme Court as taking “deliberate actions to avoid confirming a high probability of wrongdoing,” has long been considered a form of knowledge. The twist is that the DMCA provides that safe harbor protection does not require “a service provider monitoring its service or affirmatively seeking facts indicating infringing activity, except to the extent consistent with a standard technical measure complying with the provisions of subsection (i).” The Second Circuit in Viacom v. YouTube confronted this question and concluded that the DMCA “limits—but does not abrogate— the doctrine” of willful blindness, and it “may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.”

Finally, on a bit of a side note, the movie studios also argue that Hotfile is ineligible for the 512(c) safe harbor — which limits remedies “for infringement of copyright by reason of the storage at the direction of a user” — because Hotfile’s service was not used primarily for “storage.” They note that a significant portion of registered users on the site only use it to download, not upload, files. More to the point, Hotfile routinely deletes files that have never been downloaded — the “antithesis” of storage, as the studios put it. I don’t recall seeing this argument raised before in another case, so it will be interesting to see how the court approaches it.

A trial is currently scheduled for early November, but it shouldn’t be a surprise if the court’s eventual decision on these motions is appealed to the Eleventh Circuit, delaying trial.

Footnotes

  1. The studios also seek to strike portions of testimony from several of Hotfile’s expert witnesses and defendant Anton Titov. []
  2. Once by Perfect10 and twice by Liberty Media Holdings. []
  3. Note that the 9th Circuit ordered more briefing in Veoh this past June, following the decision in Viacom. Thus, the decision may yet be amended; the court also has a petition for rehearing on the case pending. []
  4. Hotfile has also moved for partial summary judgment on the claim that it is protected by the DMCA safe harbor for any infringement that occurred after February 11, 2011 — ten days after it was sued by the studios. []
  5. See Viacom v YouTube, 676 F.3d 19, 38 (2nd Cir. 2012) (“inducement of copyright infringement … which ‘premises liability on purposeful, culpable expression and conduct,’ … might also rise to the level of control under § 512(c)(1)(B)”); Columbia Pictures v Fung, cv 06-5578-SVW, Order Granting Plaintiffs’ Motion for Summary Judgment on Liability (CD Cali. 2009) (“inducement liability and the Digital Millennium Copyright Act safe harbors are inherently contradictory”); Arista Records v Usenet.com, 633 F. Supp. 2d 124, 142 SDNY 2009 (if defendants “encouraged or fostered such infringement, they would be ineligible for the DMCA’s safe harbor provisions”). []

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August 17, 2012 · · Comments Off

Understanding the New Google “Pirate Penalty” — Last Friday, in welcome news, the search behemoth announced it would be incorporating legitimate DMCA takedown notices into its search ranking. PlagiarismToday’s Jonathan Bailey has an in-depth look at what the change means, followed up with 10 Questions Answered about Google’s New “Pirate Penalty.” Interestingly, Bailey notes that the change will mostly fall “on the shoulders of various file sharing sites”: the first non-filesharing site on Google’s transparency report is ranked all the way at number 170 in terms of takedown notices received.

Business Matters: Teens Listen to Music Most on YouTube, Pay for Music More Than Other Age Groups, Nielsen Study Says — Billboard notes that a newly released Nielsen study shows that “the average teen has more normal listening and discovery characteristics than one might expect given the hyperbole easily found in today’s media.” Half of all teens surveyed still listen to CDs, compared to 64% who listen on YouTube: a difference, but not as much as one might think.

BMW slams ad machine in reverse, screeches out of pirate den — Andrew Orlowski at The Register reports on BMW’s response to its ads showing up on filesharing sites after it was brought to the company’s attention by the Trichordist blog. “The car maker, which posted revenues of €68bn in 2011 – making it more than twice the size of Google – has promised to review how it promotes itself on the internet after the Trichordist blog noticed the German giant was touting its flash motors on pirate music sites.”

Dear American Express: Stop advertising on sites that illegally exploit my music — And speaking of the Trichordist, this week David Lowery calls attention to the financial services company for the same issue. “This isn’t abstract to me–this page is a link to an illegal download of one of my songs. You should also note some of the other ‘suggested’ searches on this same site are for some pretty nasty stuff.  I don’t like having my brand seen in these places and I’m sure you don’t either.”

Does the DMCA’s Safe Harbor Apply to Pre-1972 Sound Recordings? — Natalie Nichol of the Citizen Media Law Project examines the thorny issue, the subject of two recent court cases. Both courts resolved that it does, though both were lower court decisions. The US Copyright Office disagrees with the reasoning of the decisions (and as a matter of statutory interpretation, I believe the Copyright Office makes the stronger case) and an appeal of one of the decisions is possible, so for now the application of the DMCA to pre-1972 sound recordings remains unresolved.

Collins’ Crypt: How JAWS Spawned TWO Sub-Genres — Finally, I hope everyone enjoyed a blessed and prosperous Shark Week. In honor of the holiday, here is an interesting look at how the 1975 film inspired entire subgenres to follow in its footsteps.

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