The headlines heralding a Seventh Circuit decision in Flava Works v. Gunter, written by Judge Richard Posner, one of the most widely cited judges and legal scholars, showcase some of the shortcomings consistently seen in legal reporting. They range from slightly incorrect — Embedding copyrighted video is not infringement, rules Posner — to wildly inaccurate — Embedding copyright-infringing video is not a crime, court rules — to facepalm-inducing absurdity — Embed all the Pirated Video You Want Because It’s Totally Legal.

The appellate court, however, did no such thing. What it did do was vacate a preliminary injunction against video bookmarking site myVidster because the district court had applied the wrong standard.

Flava Works is a NSFW producer of videos. myVidster is a social video bookmarking service. myVidster users can “bookmark” videos found around the web, and myVidster uses embed codes to allow users to view the videos through their myVidster account in the future. Flava Works sued myVidster for copyright and trademark infringement in October 2010, alleging that several of its videos had been posted on myVidster without authorization.

Flava Works moved for a preliminary injunction against myVidster, and on July 27, 2011, the district court granted the injunction, concluding that “(1) plaintiff is likely to succeed on the merits of its contributory infringement claim; (2) unless a preliminary injunction issues, plaintiff will suffer irreparable harm to its business; (3) the balance of harms favors plaintiff; and (4) the public interest favors granting a preliminary injunction.” myVidster appealed the preliminary injunction to the Seventh Circuit. I previously covered the district court’s opinion and the issues raised on the appeal here.

The appeal drew the attention of Google, Facebook, and the MPAA because of the issues it raised, and these parties filed amici briefs, drawing attention to what had up til then been a relatively obscure copyright lawsuit. But few of the issues raised in the appeal were addressed by the Seventh Circuit, including the central issue of whether or not the Circuit should adopt the Ninth Circuit’s “server test” for analyzing a service provider’s liability for public performance and, if so, whether the “server test” even applies to the public performance right.

So what did the Seventh Circuit do here?

The eBay Standard

Perhaps the key holding in this decision was the application of the standard set out by the Supreme Court in eBay v. MercExchange in 2006. There, the Court reversed the Federal Circuit’s application of its “general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances” and held that plaintiffs seeking permanent injunctions in patent infringement cases must satisfy a four-factored test:

(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

The Seventh Circuit held that the district court erred by not considering all four factors. But, while it’s true the district court said, “as a practical matter, the analysis boils down to a single factor—the plaintiff’s likelihood of success,” it isn’t true that the other factors weren’t considered. Immediately before this statement, the district court said:

To determine whether a preliminary injunction is warranted, we engage in a two-phase analysis:

As a threshold matter, a party seeking a preliminary injunction must demonstrate (1) some likelihood of succeeding on the merits, and (2) that it has “no adequate remedy at law” and will suffer “irreparable harm” if preliminary relief is denied. If the moving party cannot establish either of these prerequisites, a court’s inquiry is over and the injunction must be denied. If, however, the moving party clears both thresholds, the court must then consider: (3) the irreparable harm the non-moving party will suffer if preliminary relief is granted, balancing that harm against the irreparable harm to the moving party if relief is denied; and (4) the public interest, meaning the consequences of granting or denying the injunction to non-parties.

“Irreparable injury may normally be presumed from a showing of copyright infringement.” As for the third factor, “courts typically fail to invoke this standard in copyright cases” because if it were applicable, “a knowing infringer would be permitted to construct its business around its infringement.” Similarly, the fourth factor requires little discussion because there is a strong public policy interest in protecting copyrights. [Citations removed.]

And, as noted earlier, the district court recited the four eBay factors when it reached its conclusion.

The Seventh Circuit took issue primarily with the presumption of irreparable harm that results from a facial showing of copyright infringement, stating that the Supreme Court’s decision in eBay “made clear that there is no such presumption.”

For decades prior to eBay, many courts, including courts in the Seventh Circuit, presumed irreparable harm for a preliminary injunction when plaintiffs could show the facial elements of copyright infringement. 1See, for example, the case cited in the opinion, Atari v. North American, 672 F.2d 607, 620 (7th Circuit 1982). But since eBay, there has been debate over whether this presumption in copyright cases has survived.

With this decision, the Seventh Circuit joins the Second, 2Salinger v. Colting, 607 F.3d 68 (2010). Fourth, 3Bethesda Softworks v. Interplay Entertainment Corp. (2011). Ninth, 4Flexible Lifeline Systems v. Precision Lift, 654F.3d 989 (2011). and Eleventh Circuits 5Peter Letterese & Associates v. World Inst. of Scientology, 533 F.3d 1287 (2008). in saying it does not. The Seventh Circuit specifically notes the Second Circuit’s decision in Salinger v. Colting and the Ninth Circuit’s decision in Flexible Lifeline Systems v. Precision Lift as particularly persuasive, and both provide far more discussion regarding their conclusion on how eBay abrogated copyright law’s traditional presumptions in preliminary injunction motions.

The effect, in theory, is that preliminary injunctions for copyright infringement would be granted less often. Plaintiffs would need to demonstrate more fully irreparable harm without relying on presumptions. Courts would need to consider more fully the balance of hardships and public interest without relying on categorical rules. For an insightful take on the consequences of the eBay decision, read law professors Mark Gergen, John Golden, and Henry Smith’s The Supreme Court’s Accidental Revolution? The Test for Permanent Injunctions. They criticize eBay‘s reliance on “traditional principles” of equity for actually being a sharp divergence from such traditional principles. The authors note, “Equity’s traditional, structured sets of presumptions and safety valves—the true ‘well-established principles of equity’—are well designed to solve the problems stressed by the equitable tradition while at the same time minimizing harms from vagueness and ex post discretion.'”

What else did the court hold?

From here, the Seventh Circuit begins a meandering discussion that is peppered with speculation, obtuse analogies, and musings on copyright law. Some of it is entertaining, much of it is perhaps dicta. 6Since the Circuit Court ruled that the district court erred by not applying the eBay standard, its analysis of the plaintiff’s likelihood of success on the merits is seemingly irrelevant. Likelihood of success on the merits is not a threshold question for a grant of a preliminary injunction; even after eBay, courts have continued to apply a “sliding scale” to their analyses, where a stronger public interest present or a stronger hardship faced by a defendant requires a stronger showing of likelihood of success on the merits, and vice versa. This type of situation would tend to suggest dicta rather than holding. See Michael Abramowicz & Maxwell Stearns, Defining Dicta, 57 Stanford Law Review 953 (2005).

The ruling is, after all, a review of the district court’s grant of a preliminary injunction. The Seventh Circuit confines itself to a discussion of whether or not the plaintiff demonstrated a likelihood of success on the merits. This is necessarily both a cursory and speculative analysis — a motion for preliminary injunction occurs before all the facts and arguments are fully developed. 7Smyth ex rel. Smyth v. Rivero, 282 F.3d 268, 276 (4th Cir. 2002). From a practical standpoint, the success or failure of a preliminary injunction often has an effect on lawsuits since it gives the prevailing party more leverage in settlement negotiations, but from a legal standpoint, a court’s conclusions at this stage have no dispositive effect.

More importantly, here the plaintiff had only sought a preliminary injunction based on the myVidster’s alleged contributory copyright infringement. Flava Works’ complaint, however, alleges six other causes of action, including direct copyright infringement, vicarious liability, and inducement. In other words, any suggestion that specific features of myVidster or similar services were declared “legal” by the Seventh Circuit are incorrect.

myVidster Does not Contribute to Unauthorized Copying

With that in mind, Judge Posner suggests that myVidster is not likely to contribute to the copying and distribution of Flava Works’ videos. Posner implies that myVidster could be liable for inducement if it invites users to upload or bookmark Flava Works’ videos, but, though Flava Works alleges inducement in its complaint, it did not seek the preliminary injunction on this ground. Not discussed is whether myVidster could be held vicariously liable for infringement — if it benefitted financially from infringement that it had a right and ability to control — a claim that, again, was alleged in the complaint but not argued for in the injunction.

There’s another caveat to Posner’s conclusion. He notes:

But as long as the visitor makes no copy of the copyrighted video that he is watching, he is not violating the copyright owner’s exclusive right, conferred by the Copyright Act, “to reproduce the copyrighted work in copies” and “distribute copies . . . of the copyrighted work to the public.”  His bypassing Flava’s pay wall by viewing the uploaded copy is equivalent to stealing a copyrighted book from a bookstore and reading it. That is a bad thing to do (in either case) but it is not copyright infringement. The infringer is the customer of Flava who copied Flava’s copyrighted video by uploading it to the Internet.

But it is not a foregone conclusion that the viewer of streaming video hasn’t made a copy. Streaming and downloading are technically the same — both involve the reproduction of the work onto the user’s computer, it’s just that with streaming, the copy is typically stored temporarily in an unintuitive location. 8See Cory Doctorow, Streaming Will Never Stop Downloading, The Guardian (Dec. 8, 2009). The Copyright Act defines a “copy” as a material object “in which a work is fixed”, which, in turn, means “sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. A work consisting of sounds, images, or both, that are being transmitted, is “fixed” for purposes of this title if a fixation of the work is being made simultaneously with its transmission.” 917 USC § 101. This language suggests a strong argument that a visitor to a site providing streaming video makes a copy of the video he watches. 10See, MAI Systems v. Peak Computer, 991 F.2d 511 (9th Cir. 1993), holding that loading copyrighted software into RAM creates a “copy” in violation of the Copyright Act. But see Cartoon Network v. CSC Holdings, 536 F.3d 121 (2nd Cir. 2008) and CoStar Group v. LoopNet, 373 F.3d 544 (4th Cir. 2004), which both held intermediaries not liable for copying under the Copyright Act because the copying was transitory in duration.

Are embedded videos a “public performance”?

As the Seventh Circuit notes, the conclusion that myVidster did not infringe or contribute to infringement of the reproduction and distribution rights of Flava Works doesn’t end the analysis, since copyright owners also have the exclusive right to publicly perform their works.

The Copyright Act defines, separately, “public” and “performance”:

To “perform” a work means to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible.

[…]

To perform or display a work “publicly” means—

(1)to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or

(2)to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

Judge Posner makes a common mistake by bootstrapping the definition of what makes a performance “public” into a definition of what a “performance” is in the first place. This mistake is the same one relied on by ASCAP when it argued that a download of a digital file containing a musical composition constituted a public performance of that composition. The Second Circuit explicitly rejected this argument in 2010 and noted the mistake:

ASCAP argues that downloads fall under clause (2) of this definition because downloads “transmit or otherwise communicate a performance,” namely the initial or underlying performance of the copyrighted work, to the public. We find this argument unavailing. The definition of “publicly” simply defines the circumstances under which a performance will be considered public; it does not define the meaning of “performance.” 11US v. ASCAP, 627 F.3d 64, 73 (2010).

What, if any, legal holdings could be gleaned from the portion of the opinion that follows this erroneous interpretation could only add to confusion over the contours of the public performance right.

In the end, this is an odd opinion, and it remains to be seen what effect, if any, it will have. In the meantime, litigation at the district court continues between Flava Works and Gunter, as well as newly-added (as of May) defendants, the alleged domain name server and website host for myVidster.

References   [ + ]

1. See, for example, the case cited in the opinion, Atari v. North American, 672 F.2d 607, 620 (7th Circuit 1982).
2. Salinger v. Colting, 607 F.3d 68 (2010).
3. Bethesda Softworks v. Interplay Entertainment Corp. (2011).
4. Flexible Lifeline Systems v. Precision Lift, 654F.3d 989 (2011).
5. Peter Letterese & Associates v. World Inst. of Scientology, 533 F.3d 1287 (2008).
6. Since the Circuit Court ruled that the district court erred by not applying the eBay standard, its analysis of the plaintiff’s likelihood of success on the merits is seemingly irrelevant. Likelihood of success on the merits is not a threshold question for a grant of a preliminary injunction; even after eBay, courts have continued to apply a “sliding scale” to their analyses, where a stronger public interest present or a stronger hardship faced by a defendant requires a stronger showing of likelihood of success on the merits, and vice versa. This type of situation would tend to suggest dicta rather than holding. See Michael Abramowicz & Maxwell Stearns, Defining Dicta, 57 Stanford Law Review 953 (2005).
7. Smyth ex rel. Smyth v. Rivero, 282 F.3d 268, 276 (4th Cir. 2002).
8. See Cory Doctorow, Streaming Will Never Stop Downloading, The Guardian (Dec. 8, 2009).
9. 17 USC § 101.
10. See, MAI Systems v. Peak Computer, 991 F.2d 511 (9th Cir. 1993), holding that loading copyrighted software into RAM creates a “copy” in violation of the Copyright Act. But see Cartoon Network v. CSC Holdings, 536 F.3d 121 (2nd Cir. 2008) and CoStar Group v. LoopNet, 373 F.3d 544 (4th Cir. 2004), which both held intermediaries not liable for copying under the Copyright Act because the copying was transitory in duration.
11. US v. ASCAP, 627 F.3d 64, 73 (2010).

Google and Facebook’s new tactic in the tech wars — It’s a pretty shady tactic.

Copyright and the Little Guy Part 2 – Copyright and Competition Redux — A great follow up from the Cynical Musician on why, contrary to some assertions, copyright is in fact more important to individuals and SME’s than large corporations.

Amazon decides it actually does need licenses for music — Kudos to Amazon for securing licenses that will allow some pretty cool (and legal) features for its cloud storage services. According to Ars Technica, “Amazon’s new scan-and-match service copies customer’s iTunes and Windows Media Player music libraries and matches songs to those in Amazon’s own library of 20 million songs, populating your cloud player so you can listen anywhere. ‘All matched songs–even music purchased from iTunes or ripped from CDs–are instantly made available in Cloud Player and are upgraded for free to high-quality 256 Kbps audio,’ an Amazon press release wrote.”

Craigslist’s Big Bluff — The popular online classifieds site changed its TOS to require users to grant an exclusive license in their postings to the site, in part to assist in recent efforts to combat third-party sites from using its listings. GigaOM speaks to IP prof Richard Gold, who doesn’t believe the move stands on solid legal ground.

Flava Works v. Gunter — The Seventh Circuit vacates a preliminary injunction against social bookmarking site myVidster. I’ll have a longer writeup on this decision next week, but for now, any thoughts?

A “pirate king” who changed his name, started his career on financial crimes, and claimed his “permissionless innovation” was a better alternative for artists and creators than the existing system.

Kim Dotcom in 2012? Or, James Frederick Willetts in the 1900s?

At the turn of the 20th century, before recorded music gained hold, sheet music was king. And, analogous to now, illicit reprinting of sheet music dogged music publishers and songwriters.

In England, James Frederick Willetts was one of the leading pirates. Also known as “John Fisher”, or, simply, “the colonel” — and formerly convicted for embezzlement — his operation distributed and sold tens of thousands of copies of other peoples’ works without permission. 1Adrian Johns, Piracy: The Intellectual Property Wars from Gutenberg to Gates,pg. 343, et. seq. (Univ Chicago Press 2009). In 1904, the British Parliament held hearings on the problem of music piracy, and, in a perhaps unprecedented move, Willetts appeared to testify.

Fair warning: what you’re about to hear may sound familiar.

Early on, Parliament asked:

I believe you have some suggestions to make to the committee, first of all, with regard to the cause of piracy?

Willetts answers, music is too expensive:

The cause of piracy, I say, is the extortionate price charged to the public by the publishers of copyright music—a price which I consider is altogether beyond the reach of the general public, by whom there is a great and pressing demand—and a price which is out of all reason considering the cost of production, even after making the most handsome allowance for the labour of the author and composer. I consider that a man really has no copyright in the gifts conferred on him by Providence, these being conferred upon him for the general good of mankind. The cause also is a general agitation for the reduction in the price of music.

Later, Willetts claims that songwriters need not charge so much because the cost of producing songs, ie, the cost of paper, has gone down.

And that leads you on to your next head—the cost of production ?—I think so. Under that head I may say that the progress of invention and the fact that the price of paper has gone down to such an extent, enable publishers to produce music at very much cheaper prices than they could years ago.

Willetts even waves the flag of “musical education” — the 1900’s version of, perhaps,  culture, or free speech. He, or course, is a champion of “musical education” while copyright owners are cast as its opponents.

There is a ring there: music is the same price today as it was then; and what is more — the publishers come to Parliament and ask Parliament to protect them, and to police them. What for? To stop the musical education of the country. That is what I think it means, to really stop the musical education of this country.

Next, Parliament finds that Willetts believes advertising will save the publishing industry:

The next head is, “cheaper music will find legitimate employment for more people” ?—I say, under that head, that if the cheaper editions of copyright music were sold, there would be no market or demand for the sale of pirated music, and I do not think there would be any pirates, for the reason that they would not risk, even in the present state of the law, having the pieces seized from them which are pirated copies, whilst they could go to the publisher and buy a cheap edition. I may tell you, gentlemen, when I met Mr. Day, I suggested to him the advisability of having a cheap edition, if even it was disfigured, to a certain extent, with advertisements, and so let these street markets and hawkers and others have a cheaper edition for the working classes. It would still be the means of keeping thousands of men in employment who would otherwise be idle and who are now selling what they term pirated and other cheap music in the streets; and it would still be the means of finding them a living by allowing them to have cheaper editions of music, with advertisements if you like, not good enough, perhaps, for gentlemen in a position to pay the 1st 4d. or the 2s., or the 4s. if they felt so disposed, would not care to have their children playing on the piano, in company; but still good enough for the working classes. There would be a greater number of people interested in the sales also of this copyright music and there would be no pirates, that is what it amounts to, and what is more, I take it, the people would not buy the pirated edition if they can get the cheaper copyright edition.

Later, Willetts proposes a compulsory license:

Now your last head is as to proposals for the alteration of the law. Have you some proposals to make with regard to suggested alterations?—There is one suggestion. I should think it would be a good plan—a plan which has recently occurred to me—that authors and composers should let any publisher publish their compositions who feels disposed, or is in a position, to pay royalty, not confining the publication to one publisher, but giving the right to any publisher who approaches an author or composer and who wants to publish a piece; he should have the power to do it, providing that the composer gets the recognised royalty for the piece. The composer should be protected by Act of Parliament, I take it, but there should be no royalty, no protection, as implied in the Copyright Act—I mean for the printer or the publisher; he should not have a copyright. There is no copyright in the mere fact that I can print some handbills as well as any other printer. And. therefore, I should have the right to go to any composer to demand from him, if I am a respectable mail or representing a respectable firm, the right to publish his piece.

In one exchange, Willetts was forced to acknowledge that taking away a creator’s choice doesn’t work:

Do you think that the author or composer is to be himself the judge of what is best for his own interest or that Parliament should step in and say that this and that and the other thing should be done—you see my point?— I think I see your point.

A great many of your proposals were directed to this point, that you and those like you, publishers, should step in and pay a royalty to the author, which you consider more to his interest than the method at present adopted?—That is so.

The author is not to be a free agent or to allow his property to be dealt with in the way in which it is given by statute ?—If the statute says that it should be competent to go and offer that, then that at once brings up the publishers’ ring who say, “Now we are a ring to keep everybody outside.”

Would you kindly answer my question?—What is it?

My question is this: you propose to take away from the author the complete control over the management of his own work and to give it to the publisher who approaches him and they say, ” We are going to do this under certain statutory provisions” ?—Unless the author could show any special reason why the publishers should not do it, and as long as they pay him the royalty it does not matter to him and it will be for the benefit of the public at large.

You take away from him the liberty of managing his own business as he pleases ?—Yes.

Are you aware that that experiment has already been tried in Canada by Act of Parliament and that there it was a complete failure ?—No, I was not aware of it.

And that there was a statutory royalty enacted in Canada, and it failed ?—I did not know that.

Perhaps, most tellingly, is the following exchange:

Your evidence has been directed to a change in the law as it affects the present question of piracy—you think that the law is a bad law ?—So far as I have read it.

But you said you had not read it ?—Well, so far as I have read, not the identical Act, but certain extracts from it.

In other words, over a century ago, a man who did not understand copyright law proclaimed that his bypassing of it benefitted the public, without any evidence.

Since the dawn of copyright, creators have heard the same song and dance: they are enemies of free speech and innovation. If only they would shut up and let others profit off their labor, the world would be better off.

But the Willetts and Dotcoms of the world are wrong, and the fact remains; few remember Willetts; more remember Sousa, Stravinsky, Flight of the Bumblebee, or Meet me in St. Louis, Louis.  In three hundred years, the most progress of the useful arts and sciences has come from those who compensate artists and creators. It’s not a terribly difficult concept: a framework that lets creators share in the value they create is one where everyone wins. A framework that allows companies to internalize all the profits from other people’s works is one that doesn’t sustain expression, one where the public ultimately loses out. And we should remember that, no matter how many “pirate kings” surface to tell us otherwise.

References   [ + ]

1. Adrian Johns, Piracy: The Intellectual Property Wars from Gutenberg to Gates,pg. 343, et. seq. (Univ Chicago Press 2009).

Alive Inside: A Story of Music and Memory — Filmmaker Michael Rossato-Bennett is working on a documentary that follows the work of social worker Dan Cohen, “who discovers the power personalized music has to ‘awaken’ and regenerate deeply locked memories in patients with dementia and Alzheimer’s.” The promo is incredibly moving, and reminds of the power of music. Rossato-Bennett is currently raising funds on Kickstarter to complete the documentary, and is still short of his goal, with three days to go. It would be great to see Copyhype readers help support such an amaing project!

A Hollywood Director Responds to Kim Dotcom: Can I Borrow Your Lamborghini? — Seriously funny. Bruce Leddy, writer and director of Cougar Town, among other projects, responds to the Megaupload founder’s recent open letter to Hollywood. ” I say, if Hollywood is going to spend all this time and effort making these movies and TV shows, employing hundreds of thousands of hardworking Americans and union members and then letting a guy like you become a multimillionaire off its work, it’s our own damn fault! Holy cow, are we dumb! LOL.”

UPDATE: Artists: Be The Change, Submit Comments! Deadline EXTENDED to August 10th — White House Intellectual Property Enforcement Coordinator Victoria Espinel is seeking public comments on federal IP enforcement. As the Trichordist points out, “If you care about artist rights, this is a good time to tell Victoria Espinel what you think.” A link to an online form for submitting comments is also included.

Three-strikes cuts piracy in New Zealand, says local record industry — The Recording Industry Association of New Zealand reports that online piracy rates have been cut in half since the introduction of that country’s graduated response program. As CMU points out, “Stats from South Korea, where three-strikes is also live, as well as these from New Zealand, both suggest graduated response warning letters can have an impact on file-sharing, though those who oppose the whole thing would likely interpret data differently.”

A+L Innovation Central Podcast – Brian McNelis of Lakeshore Records — Chris Castle sits down with Brian McNelis, Senior Vice President of Music and Soundtracks for Lakeshore Entertainment (which recently released the critically-acclaimed soundtracks to Drive and Lincoln Lawyer) to discuss the opportunities and challenges of running a music business in a digital age.

Copyright and the Little Guy Part 1 – Copyright Acquisition — The Cynical Musician takes on the trope that copyright primarily benefits only big businesses. He notes, “Without copyright, anything the little guy makes is up for grabs by the biggest bully, without any acknowledgement or compensation.”

The Big Lie — Jon Taplin doesn’t mince words when it comes to Kim Dotcom’s most recent music video released online. “In his brilliant attempt to square the circle of his fortune built on stealing from artists, Kim equates his struggle with that of Martin Luther King. He attempts to hijack the whole Occupy movement to aid in his redemption. But in deciding that he could make $ million by selling advertising on Megaupload–with an inventory of quantities of stolen digital content–it’s easy to think that Kim Dotcom believed he was above the law.”

Why DOES Google lobby so much? — Andrew Orlowski observes, “The range and depth of global lobbying undertaken by Google is now so formidable, it may be more accurate to describe the company as a political organisation with a legacy tech business attached.”

The Fat Cat Internet Defense League — Speaking of lobbying, Jeremy Nicholl over at The Russian Photos Blog takes a look at some of the big money behind the latest “digital rights” advocacy groups to sprout up. “It’s hard to raise a torches and pitchforks mob with a cry of ‘defend my venture capital’, but ‘defend the Internet’ will do the trick every time.”

Six months ago, authorities in the United States and eight other countries moved against Megaupload following a grand jury indictment that charged the company and its officers with five federal charges stemming from a “mega-conspiracy” of criminal copyright infringement. Police in New Zealand arrested the site’s founder, Kim Dotcom, and three other Megaupload employees at Dotcom’s mansion (two other employees indicted were arrested a few days later in Europe while the last employee charged in the indictment remains at large). The indictment alleges the company and its employees made over $175 million in illegal profits, and the case is considered one of the largest criminal copyright cases in US history.

There are a lot of moving parts to this case already — no surprise, given its size and complexity — so a quick update may be helpful. The New Zealand Listener has put together a handy timeline of the Megaupload case. Specifically, I want to look at some of the issues that have made headlines recently, including the New Zealand extradition proceedings, a motion to dismiss filed in the US, a New Zealand ruling that certain search warrants were illegal, and a US proceeding seeking access to user data stored on Megaupload servers.

Extradition

The formal request for extradition of Dotcom and three other Megaupload defendants in New Zealand was filed on March 2nd. The hearing was originally scheduled for August, but the hearing has been postponed until at least March 2013, due to the growing legal complications surrounding the case.

Under New Zealand law, extradition is governed by the Extradition Act of 1999 and any bilateral treaty in place. 1Extradition Officer, Legal Division, Ministry of Foreign Affairs and Trade, New Zealand: Extradition. The United States and New Zealand entered into an extradition treaty in 1970. 2Treaty on Extradition Between the United States of America and New Zealand (entered into force Dec. 8, 1970). That treaty lists thirty-two offenses for which subjects can be extradited; criminal copyright infringement is not one of them. However, under New Zealand’s Extradition Act, section 101B, someone may also be extradited for offenses that carry a penalty of not less than one year in the requesting country and involves conduct that would be criminal had it occurred in New Zealand and carries a similar penalty. Extradition of suspects indicted but not convicted require an arrest warrant and any accompanying depositions.

Here, the extradition hearing is likely to hinge on whether the offenses Dotcom has been charged with are offenses in New Zealand that would carry a similar penalty. Admittedly, the primary operation of Megaupload presents a novel set of facts for criminal liability of copyright infringement even in the US, but the indictment also alleges a number of the defendants personally uploaded infringing works to the service, which, by itself, could be sufficient to constitute an extraditable offense under New Zealand law.

And, in an odd twist, the New Zealand judge who had been presiding over the extradition proceeding stepped down last week after calling the US “the enemy” at a copyright conference earlier this month. Judge Nevin Dawson, who granted Dotcom bail in February, will be taking over the case.

Motion to Dismiss

On July 3, Megaupload filed a motion to dismiss for lack of personal jurisdiction. The motion to dismiss applies only to the Megaupload Limited corporation itself — it does not pertain to Kim Dotcom, or the other individual defendants, personally, nor does it pertain to Vestor Limited, the other corporate defendant indicted. 3According to the indictment, Megaupload Limited is the registered owner of Megaupload.com and Megaclick.com. Vestor Limited owns 68% of the shares in Megaupload Limited, as well as being the sole shareholder of Megamedia Limited, an unindicted corporation that controls Megavideo and other “Mega” companies and sites. Kim Dotcom is the sole director and shareholder of Vestor Limited.

Corporations, as separate entities, have long been held liable for criminal actions. Said the Supreme Court in 1909 (quoting an earlier criminal law treatise):

Since a corporation acts by its officers and agents their purposes, motives, and intent are just as much those of the corporation as are the things done. If, for example, the invisible, intangible essence of air, which we term a corporation, can level mountains, fill up valleys, lay down iron tracks, and run railroad cars on them, it can intend to do it, and can act therein as well viciously as virtuously.

But, like with individual defendants, before a case can proceed against a corporation, the court must have personal jurisdiction over it, and before a court can exercise personal jurisdiction, the corporation must be properly served. 4Murphy Brothers v. Michetti Pipe Stringing, 526 US 344, 350 (1999): “In the absence of service of process (or waiver of service by the defendant), a court ordinarily may not exercise power over a party the complaint names as defendant.” Megaupload’s attorneys argue that charges against the company should be dismissed because it wasn’t properly served under Federal Rules of Criminal Procedure 4(c)(3)(C). Under that rule:

A summons is served on an organization by delivering a copy to an officer, to a managing or general agent, or to another agent appointed or legally authorized to receive service of process. A copy must also be mailed to the organization’s last known address within the district or to its principal place of business elsewhere in the United States.

Megaupload basically argues that, under the second portion of that rule, a corporation can never be held liable for crimes committed in the United States so long as it doesn’t maintain an office or address within the country. 5“In no event can the Government satisfy Rule 4’s second requirement that it mail the summons to Megaupload’s ‘last known address within the district or to its principal place of business elsewhere in the United States,’ for no such address exists. Megaupload does not have an office in the United States, nor has it had one previously. Service of a criminal summons on Megaupload is therefore impossible, which forecloses the Government from prosecuting Megaupload.” The United States responded that Megaupload’s reading of the Rule can’t possibly be correct — “Neither the facts, the law, nor common sense and the interests of justice, which the Federal Rules of Criminal Procedure are designed to serve, support as extreme a remedy as the outright dismissal sought by defense counsel” — and offers a number of arguments against it, as well as alternative methods that could be used to properly serve Megaupload. The court will hear oral arguments on the motion on July 27.

Should the court grant the motion to dismiss Megaupload Limited, the effects are unclear. Vestor Limited and the other indicted defendants, including Dotcom, would still remain. Given the allegations of personal involvement by the defendants, and the fact that Megaupload Limited can be considered merely a corporate “alter ego” of these defendants, dismissal may turn out to be mostly a symbolic victory.

Search Warrant Illegal

On June 28, a New Zealand judge ruled that certain search warrants, used to gather evidence from Dotcom’s mansion during his arrest, were illegal. The search warrants were executed by New Zealand police, on behalf of the US pursuant to New Zealand’s Mutual Assistance in Criminal Matters Act (MACMA). The US had requested the warrants to search Dotcom’s residence for evidence that could be used to “demonstrate that the mega-conspiracy’s directors and employees were aware that Megaupload’s websites were regularly used to reproduce and distribute infringing copies of copyright works, to gain a better understanding of and document the mega-conspiracy’s activities, and to identify additional individuals who were working with the mega-conspiracy.”

The judge concluded that the search and seizure was overly broad and, thus, illegal. She also held that the New Zealand Central Authority breached MACMA when it shipped clones of hard drives seized to the FBI. The immediate impact of the ruling is unknown. New Zealand police and the FBI haven’t responded, and it is highly likely the ruling will be appealed up through the New Zealand court system. If the warrants were illegal, the New Zealand police may be able to cure the defect with new, narrower warrants. Or, some of the evidence may become excludable at trial as “fruit of the poisonous tree.”

I’m not familiar with New Zealand extradition proceedings, so take this with a grain of salt, but I doubt this ruling would affect Dotcom’s extradition hearing. The evidence seized here was for the US criminal trial; the extradition hearing is similar to a preliminary hearing or grand jury in that the judge is primarily concerned with whether there is sufficient evidence for a trial to proceed, evidence which the US had already submitted. 6See the May 29, 2012 opinion of the New Zealand court presiding over the extradition hearing for more discussion on the purpose and standards of extradition.

User Data

The entry of third parties seeking access to their own data that had been uploaded to Megaupload adds a collateral issue to this case. On June 29, a hearing on the motion was held, and a decision is forthcoming.

MegaUpload leased over 500 servers from Virginia based Carpathia Hosting as part of its business. As part of its investigation, the United States served a search warrant on Carpathia. It copied select data from the servers and then released the servers back into the custody of Carpathia.

Carpathia later moved for a protective order regarding the servers. According to the order, it is costing Carpathia thousands of dollars a day to preserve the servers, and the company is losing money because it cannot repurpose the servers for other clients. As the company notes, “Carpathia does not have any legal obligation to preserve evidence on the Mega Servers” — it likely could delete the data on the servers and put them back into use without liability. However, it has so far refrained from doing so because several parties have expressed interest in the data. Those include MegaUpload itself, which wishes to examine the servers for evidence to prepare for its defense in the criminal trial, and the Electronic Frontier Foundation, which, according to Carpathia, “claims to represent the interests of end users who have non-infringing content stored on the Mega Servers and has requested that the data be preserved in order to facilitate its return to Mega users who have not engaged in copyright infringement.”

In May, an individual who had an account with MegaUpload before it was indicted filed with the court to have his property returned.  In response, the US has reiterated that it has no continuing interest in the servers or data. The MPAA, an interested non party, told the court that it has no position in the matter, but whatever the court decides to facilitate return of user data, “it is essential that the mechanism include a procedure that ensures that any materials the users access and copy or download are not files that have been illegally uploaded to their accounts.”

Demand Progress, a 527 group which specializes in writing strident headlines, added its own two cents with its own court filing. The PAC told the court, “Our sincere hope is for the immediate return of all property not related to Mr. Dotcom’s indictment and a clear pronouncement that the seizure of the private property of innocent third parties is not countenanced by our Constitution.” But Demand Progress has it entirely wrong: the US never seized Megaupload’s servers in the US and is not exercising any continuing custody over them.

As the Government notes in its brief:

The government does not possess any of Mr. Goodwin’s property, nor does it seek to forfeit it. The government also does not oppose access by Kyle Goodwin to the 1103 servers previously leased by Megaupload. But access is not the issue – if it was, Mr. Goodwin could simply hire a forensic expert to retrieve what he claims is his property and reimburse Carpathia for its associated costs. The issue is that the process of identifying, copying, and returning Mr. Goodwin’s data will be inordinately expensive, and Mr. Goodwin wants the government, or Megaupload, or Carpathia, or anyone other than himself, to bear the cost.

The US later points out, “Mr. Goodwin does not argue that the actual search violated his rights – he actually argues the opposite. Mr. Goodwin claims that the government’s failure to seize his information led to its abandonment ‘under circumstances in which it was both inaccessible and potentially subject to destruction.'”

From a legal standpoint, I don’t see how the court can exercise its jurisdiction over Megaupload’s servers as Goodwin and Demand Progress have asked. Courts can exercise jurisdiction where the federal government once had property but later gave it away, lost it, or destroyed it. 7See cases cited in US v. Chambers, 192 F.3d 374, 376-77 (3rd Cir. 1999). But a court can’t force the government to return property it never possessed, as here. 8See US v. Solis, 108 F.3d 722 (7th Cir. 1997).

In the event the court denies any relief, Goodwin is unfortunately in the same situation as he would be had Megaupload stopped paying its bills to Carpathia — he could seek a remedy from Megaupload (highly unlikely, given that Megaupload’s terms of service waived all liability for loss of data) or arrange to recover his data himself from Carpathia.

References   [ + ]

1. Extradition Officer, Legal Division, Ministry of Foreign Affairs and Trade, New Zealand: Extradition.
2. Treaty on Extradition Between the United States of America and New Zealand (entered into force Dec. 8, 1970).
3. According to the indictment, Megaupload Limited is the registered owner of Megaupload.com and Megaclick.com. Vestor Limited owns 68% of the shares in Megaupload Limited, as well as being the sole shareholder of Megamedia Limited, an unindicted corporation that controls Megavideo and other “Mega” companies and sites. Kim Dotcom is the sole director and shareholder of Vestor Limited.
4. Murphy Brothers v. Michetti Pipe Stringing, 526 US 344, 350 (1999): “In the absence of service of process (or waiver of service by the defendant), a court ordinarily may not exercise power over a party the complaint names as defendant.”
5. “In no event can the Government satisfy Rule 4’s second requirement that it mail the summons to Megaupload’s ‘last known address within the district or to its principal place of business elsewhere in the United States,’ for no such address exists. Megaupload does not have an office in the United States, nor has it had one previously. Service of a criminal summons on Megaupload is therefore impossible, which forecloses the Government from prosecuting Megaupload.”
6. See the May 29, 2012 opinion of the New Zealand court presiding over the extradition hearing for more discussion on the purpose and standards of extradition.
7. See cases cited in US v. Chambers, 192 F.3d 374, 376-77 (3rd Cir. 1999).
8. See US v. Solis, 108 F.3d 722 (7th Cir. 1997).

Thousands of YouTube partners now make six figures a year — Google has reported that thousands of Youtube creators are now making over six figures a year. Though many of these are established content producers, like major label artists, there are a lot of new, YouTube-native producers, who have found success thanks to significant investment from Google in promoting creators.

The DMCA is Broken… — The Trichordist presents a post from an indie label that has reported over 50,000 DMCA takedown notices in the past year. “If site operators want to hide behind ‘how do we know what’s infringing’… Well, here’s how, we’ll let you know! If we issue you a notice, you now know… do you think the title will suddenly not be infringing the next day, when re-uploaded by the same offending person? Seriously? Does Billy in Pittsburgh suddenly own the rights to a Radiohead album (for example)?”

Music piracy – who’s on the moral high ground? — Interesting piece from the BBC. Notable quote: “Google’s Theo Bertram strongly disputes that: ‘I’m happy to say Google doesn’t support piracy and does support freedom of expression,’ he told me. ‘Those are not in conflict.'”

Vincent Misiano on the Golden Age of Television — TV director of tons of shows, including West Wing, Law and Order, Medium, Warehouse 13, and White Collar, Vincent Misiano shares his thoughts on filmmaking and technology. I share his thoughts that we are currently living in a “golden age” of television. I think you’d be hard-pressed to find a vehicle of storytelling throughout history that is so highly developed and fulfilling. As Misiano notes, we may be moving to a world that doesn’t support such storytelling, but that’s not a world I want to live in.

Kim Dotcom Extradition Judge Steps Down After Joking US Is ‘Enemy’ — The New Zealand judge who recently ruled that warrants executed in the Megaupload case were illegal has recused himself after making comments that his country’s long-term ally was an “enemy” at a copyright conference.

Viacom Top Lawyer Michael Fricklas on Piracy, YouTube and His Toughest Decisions (Q&A) — Congrats to Fricklas for receiving The Hollywood Reporter’s “Raising the Bar” award this year. THR has an interesting interview with the general counsel of Viacom.

Guest post: Dear Kim Ditcom — Independent filmmaker Ellen Seidler has a rebuttal to the Megaupload CEO’s “Letter to Hollywood” that is well worth a read. “For the record, the Internet does not belong to you and your ilk (no matter how many times you change your name).  The Internet belongs to us all–and that includes the millions of artists and creators who deserve a fair marketplace and an Internet that works for everyone.”

Memo to DOJ: Drop the Apple E-Books Suit — Senator Charles Schumer writes an insightful editorial on the DOJ’s anti-trust lawsuit involving e-books. “If publishers, authors and consumers are at the mercy of a single retailer that controls 90% of the market and can set rock-bottom prices, we will all suffer. Choice is critical in any market, but that is particularly true in cultural markets like books. The prospect that a single firm would control access to books should give any reader pause.”

Two Inane Suggestions for Compensating Artists Online — The Cynical Musician’s Faza explains why free culture guru’s Richard Stallman’s proposals for compensating artists online won’t work.

Google Exec: If You Want to Control the Pirates, Go After Their Money… — That was the response from Google in a “heated debate” between an exec from BPI. The response: “Once we’ve told Google 100,000 times that a particular site is illegal, we don’t think that site should be coming above iTunes and Spotify in the results.”

ICE-led IPR Center seizes 70 websites duping consumers into buying counterfeit merchandise — Kudos to ICE for launching the second phase of Operation in Our Sites, which targets the domain names of websites engaged in infringing activities. This latest round resulted in the seizure of 70 domain names engaged in selling a wide range of counterfeit goods. Many of the sites also displayed SSL Certificates, “further duping the consumer into thinking they were shopping on a legitimate website” and “potentially putting customers’ financial information at risk,” according to the federal agency.

Weighing the costs of crowdfunding — The Future of Music Coalition provides some balance to the hype over crowdfunding, noting “that big pronouncements about how crowd-funding is ‘the future of music’ might be more than a bit inflated. Services like Kickstarter and Indiegogo are an important new tool in musicians’ arsenals. But they work best for artists who already have a particularly tech-savvy, deep-pocketed audience — and who have a long history of putting in the kind of work necessary to build a strong social media following — which … can leave music itself on the back burner.”

How Free is Ruining Everything — Epic, must-read post from Eamonn Forde.

Are SOPA opponents crying wolf over Attaché Act? — SOPA opponents are becoming very adept at fleeing from reality. The latest example is the minor uproar this week over the proposed Intellectual Property Attaché Act, which would realign a six year-old program under the auspices of the Patent and Trademark Office. Tamlin H. Bason at Bloomberg takes a look at just how wide the gap is between what the bill does and what folks at Public Knowledge, Boing Boing, and Techdirt say it does.

Robert Levine argues against the culture of ‘free’ — Ben Challis at the 1709 Blog writes up Free Ride author Rob Levine’s appearance at the UK’s IndieCon last week. As Challis states, “Robert was interviewed by Ben Watt, one half of alternative pop duo Everything But The Girl, BBC 6Music DJ, author and founder of his own label, Buzzin’ Fly. Robert adds an interesting and clear voice to the debate about the future of copyright and to be clear whilst critical of some aspects of copyright, overall he supports the regulatory framework and the right of authors to be paid – if they want to be paid.”

Megaupload and the twilight of copyright — Roger Parloff of Fortune pens an extraordinarily comprehensive look at the state of copyright law from Sony to Megaupload. Highly recommended.

One filmmaker’s fight against the cyberlockers — A companian piece to the article above. It tells the story of indie filmmaker Ellen Seidler, and the huge blows online piracy has had on her ability to make movies. “I got to say it galled me to see Google making money off my film, and the pirate-operator making money, and we’re still in debt,’ says Seidler.”

Lowery: The blue-collar musician at the eye of the copyright storm — Andrew Orlowski interviews David Lowery, whose posts on the Trichordist have kickstarted the entrance of a fresh set of voices in online copyright discussions. Excellent piece that covers a wide range of topics.

What’s so great about viral? — Some words of caution for creators from Bemuso. “Viral content and pop media parasites offer empty calories… Music spreads between people who value art rather than artifice and if it’s good enough it builds careers. It doesn’t survive in the fast lane where the audience only has a few seconds to spare.”

A Reality Series Finds Silicon Valley Cringing — Coming soon to Bravo, a reality show that promises a closer look at the topsy-turvey world of Silicon Valley startup culture. “As the cameras rolled the other day, Ben and Hermione Way, a photogenic brother-and-sister team from England, discussed the $500,000 they got to develop a fitness app. ‘Four noes and one yes,’ Ben said, sadly. ‘Not exactly people throwing money at us.’ He added that he developed the idea for the business while drinking in a bar.”

PayPal Bans Major File-Hosting Services Over Piracy Concerns — The major online payment processor has stepped up its efforts to prevent its services from being used for commercial copyright infringement. In recent months, it has cut off several major cyberlockers, and recently it has updated its terms of use to be more robust.

The Supreme Court rules on copyright — The Supreme Court of Canada released its decisions in five copyright appeals heard last December. Attorney Barry Sookman has a run down of what the Court held and what the decisions mean.

No Two Artists Are Alike — Lucinda Dugger of the Copyright Alliance reports on the incredible range of artists who performed at an event for delegates and stakeholders in San Diego earlier this month during TPP negotiations. Says Dugger, “The evening served as a wonderful reminder of the diversity of voices and experiences in the creative community.”

On July 6, the DC Circuit Court of Appeals issued its decision in Intercollegiate Broadcasting v. Copyright Royalty Board. I had written about the case before — check out my article Is the Copyright Royalty Board Unconstitutional? for more background — but basically, this litigation arose out of rate determinations in front of the Copyright Royalty Board, an agency in the Library of Congress that sets royalty rates for a number of statutory licenses. Here, the statutory licenses regarded the use of sound recordings by “webcasters”, such as the Intercollegiate Broadcasting System. During an appeal of the Royalty Board’s determination to a federal court, Intercollegiate raised the argument that the rates were void because Copyright Royalty Judges are unconstitutionally appointed.

Though a headline declaring the Board unconstitutional is dramatic, the actual holding is quite narrow. The Circuit Court’s decision leaves the Board entirely intact, except for restrictions on the Librarian of Congress’s ability to fire Board Judges, which Congress included when it created the Board. The Court stated, “Specifically, we find unconstitutional all of the language in 17 U.S.C. § 802(i) following ‘The Librarian of Congress may sanction or remove a Copyright Royalty Judge . . . .'” 117 U.S.C. 802(i) in full reads (with the now unconstitutional language in italics):

(i) Removal or Sanction.— The Librarian of Congress may sanction or remove a Copyright Royalty Judge for violation of the standards of conduct adopted under subsection (h), misconduct, neglect of duty, or any disqualifying physical or mental disability. Any such sanction or removal may be made only after notice and opportunity for a hearing, but the Librarian of Congress may suspend the Copyright Royalty Judge during the pendency of such hearing. The Librarian shall appoint an interim Copyright Royalty Judge during the period of any such suspension.

The court reasoned that absent this ability to remove Copyright Royalty Judges, the Board’s authority and discretion to set royalty rates was so broad as to make them “principal officers” — and under the Constitution, only the President may appoint “principal officers.” However, the court concludes, “Once the limitations on the Librarian’s removal authority are nullified, they would become validly appointed inferior officers,” and the Constitution allows Congress the ability to vest appointment power of inferior officers “in the President alone, in the Courts of Law, or in the Heads of Departments” — the last of which includes the Librarian of Congress.

This last point, that the Librarian of Congress is a Head of a Department, had been contested by Intercollegiate Broadcasting in the same case. The Circuit Court rejected the claim.

The Library of Congress is an Executive Department

As I noted in my previous post on this subject, the Constitution doesn’t define “Department”, and current Supreme Court precedent on what constitutes a Department is “not … entirely clear.” Specifically, in Free Enterprise Fund v. PCAOB, 2561 US ___ (2010). the Court seemingly ignored the majority’s convulted definition of a Department from Freytag v. Commissioner 3501 U.S. 868 (1991). and adopted the concurrence’s simpler definition.

The court here did the same. Under this definition, a Department is any “freestanding component of the Executive Branch, not subordinate to or contained within any other such component.” And the Library of Congress “clearly meets” this definition. Said the court:

To be sure, it performs a range of different functions, including some, such as the Congressional Research Service, that are exercised primarily for legislative purposes. But as we have mentioned, the Librarian is appointed by the President with advice and consent of the Senate, and is subject to unrestricted removal by the President. Further, the powers in the Library and the Board to promulgate copyright regulations, to apply the statute to affected parties, and to set rates and terms case by case are ones generally associated in modern times with executive agencies rather than legislators. In this role the Library is undoubtedly a “component of the Executive Branch.”

This means that both Circuits that have been faced with this question have held that the Library is an executive department under the Appointments Clause. 4The other is the Fourth Circuit, in Eltra v. Ringer, 579 F.2d 294, 300-301 (1978). This part of the decision I believe is fully correct, and hopefully should resolve any lingering doubts over the Librarian as a Head of a Department — relevant since the Librarian also appoints the Register of Copyrights, who engages in some executive functions.

The Impact of the Decision

The effect of this decision is limited to a vacation of the rate determination proceeding involving Intercollegiate Broadcasting and the other parties in this case — the proceeding starts over from square one, with the slight change that Copyright Royalty Judges can be removed without cause. It is uncertain whether parties in previous proceedings will launch their own constitutional challenges based on this decision, but it would seem that any future proceedings would be immune from Appointments Clause challenges now that the Circuit Court has struck down what it considers the unconstitutional removal provisions.

What does this mean constitutionally? It’s difficult to say. One can search in vain through the Constitution, the Convention Debates, or Ratification sources (like the Federalist Papers) to find Constitutional principles that were furthered by this decision. As I noted in my earlier piece, the Appointments Clause came about largely from discussion over the best way to ensure quality officers while minimizing cronyism and encroachment of one branch of government over another. The distinction between principal and inferior officers was added later as a nod to pragmatism — it would be inefficient for the President to have a hand in every single official appointment. The Heads of Departments and courts of law were seen as qualified enough to make those appointments — the only branch prohibited from appointing executive officers was Congress, based on separation of powers concerns.

So the strict formalist line of thought, unbounded by any principles, that the Circuit Court followed makes little sense. Limiting the Librarian of Congress’s ability to remove Copyright Royalty Judges doesn’t result in Congress encroaching on the Executive Branch’s authority; if anything, it minimizes the chances Judges would consider politics when making decisions. And it is odd that the current setup is more open to challenges under a clause designed to foster quality officers than the previous Copyright Royalty Tribunal, where members were appointed directly by the President. As William Patry noted, one Senator had said privately “the CRT was a dumping ground for unqualified people to whom the President owed a small favor.”

The only principle here would seem to be that Intercollegiate Broadcasting was unhappy with the rate determination made by the Copyright Royalty Judges and found a successful way to make a collateral challenge on constitutional grounds. No word yet on whether this decision will be appealed.

References   [ + ]

1. 17 U.S.C. 802(i) in full reads (with the now unconstitutional language in italics):

(i) Removal or Sanction.— The Librarian of Congress may sanction or remove a Copyright Royalty Judge for violation of the standards of conduct adopted under subsection (h), misconduct, neglect of duty, or any disqualifying physical or mental disability. Any such sanction or removal may be made only after notice and opportunity for a hearing, but the Librarian of Congress may suspend the Copyright Royalty Judge during the pendency of such hearing. The Librarian shall appoint an interim Copyright Royalty Judge during the period of any such suspension.

2. 561 US ___ (2010).
3. 501 U.S. 868 (1991).
4. The other is the Fourth Circuit, in Eltra v. Ringer, 579 F.2d 294, 300-301 (1978).

Decoding the “Declaration of Internet Freedom” — Daniel Castro has a funny take on the “Declaration of Internet Freedom” released this week. Also be sure to check out Elie Mystal’s take on Above the Law, ‘Declaration of Internet Freedom’ Contemplates No Rights or Freedoms Worth Declaring.

Low-budget knockoff movies benefit from Hollywood blockbusters — The LA Times has an interesting look at the growing business of “mockbusters.” The story is reminiscent of a recent Billboard article on the growing business of “knockoff” cover songs. A little too reminiscent, if you ask me…

Little Grey Cells #6… People don’t realise Facebook is all about monetising social graphs— A Q&A with Douglass Rushkoff, tech commentator and author of a new book on the importance of mastering the new digital world. “The user with no programming knowledge at all may as well be sitting in the back seat of the car, with curtains covering the windows – or  video screens in place of the windows. He may be going to the best places in the best ways, or he may not. He has to trust his driver. I don’t trust the drivers of our software and websites any more than I trusted the people making game shows and commercials for TV. I’m sure they’re nice people, but I don’t believe they all have my best interests at heart.”

All your © are belong to us — In a two-part series, Bemuso looks at a recent troubling UK proposal for opt-in collective licensing (part 2 here). “Under this new law collection societies may license categories of content without the permission of creators. So if you fall into any category as a songwriter or record label they will license (i.e. own the rights to) your stuff unless you say no.”

BPI AGM: Taylor slams Google’s ‘stonewall refusal’ over search de-listing — Transcript of the BPI exec’s speech this week. Said Taylor, “If Google is clever enough to teach a computer to think – even if only about cats – it’s clever enough, when it has been told more 150,000 times that The Pirate Bay is illegal, to rank that site below Amazon and iTunes when consumers search for music.”

Techo-Utopians Part II – Culture — David Newhoff continues his insights into some of the shortcomings of techno-utopian arguments. “The techno-utopian seems to want to conflate information and entertainment when it is convenient to make idealistic statements like the one quoted in Part I — ‘Imagine all the world’s information and culture…’ and so on.  And while I agree that information and culture are interdependent and intertwined, this does not mean, for instance, that one’s right to know what Congress does without a cost barrier also implies a right to download Coldplay to one’s iPod without a cost barrier.”

Rockefeller says big tech companies acting like Standard Oil — Senator Jay Rockefeller (D-WV), whose great-grandfather founded Standard Oil — broken up by the Supreme Court in 1911 — had strong words for tech companies like Apple, Google, and Facebook. Among other things, according to the Hill, “he said the instinct to build anti-competitive monopolies is ‘alive and well in the United States … with a lot of these big computer companies.'”

The New Busking — Musician Terre Roche offers a few words of caution to the “new business model” hype. “I was thrilled as first-responders offered up their credit card numbers to a strange Web site in order to show me that they cared. It seemed like a huge improvement over the days when I sat in record company boardrooms with “product managers” who’d been assigned to give me a “makeover” as a last resort before dropping me from their labels.”

In Plain English: The Trans Pacific Partnership (TPP) — The Copyright Alliance presents a guest post from law student Joan Blazich on the trade agreement currently being negotiated between the US and ten other nations. A great introduction with more to follow soon.

Court Denies Pirate Party Naming Right, Cites “Real Pirate” Confusion — Taiwan’s Pirate Party has suffered a setback as the country’s High Administrative Court has rejected its use of the term “Pirate” in the party name. It would appear that it won’t, as the German Pirate Party has bragged, be growin as fast as the Nazis.

Interview With David Lowery of Cracker — Chris Castle interviews Lowery in the aftermath of his super-viral letter to Emily. “Until now the debate has always been Record Labels vs. The Technology Industry.  Meanwhile the artists have been caught in the crossfire. We set out with The Trichordist to re-frame the debate about artist’s rights. We figured it was a five-year project. We got lucky this week. It’s still a five-year project.”

A Brief History of Artists’ Control of Their Product — Speaking of Trichordist, if you aren’t already reading it, I highly recommend it. Here, Jonathan Segel (solo instrumentalist and fellow bandmate of Lowery in Camper van Beethoven) lays out a detailed look at the rise of the “recording” industry, beginning with the “recording” of music on paper. Great stuff: ” I see this as a hypocrisy: either music has no value at all, (in which case why copy it to begin with?), or it has value and the copiers are refusing to admit that it does, simply because it is a copy.” Also check out Bob Regan’s post, Breaking News!! Band Embraces New Technology and Business model. Touring? T-shirts? Regan was doing that in ’77.

Moving On… — I highly recommend subscribing to Chris Ruen’s blog or following him on twitter. He has a book coming out in the Fall that promises to contribute greatly to copyright debates. Says Ruen, “In academia and new media, a handful of voices have made their names on the novelty of their own contrarianism in this regard. They tell us artists can succeed…by being more desperate for support. They tell us that creators’ legal rights are artificial…while other citizens’ legal rights are not. They seduce our lazy quest for instant gratification by rocking our good nature to sleep, purring that exploitation is really ‘sharing’ and crime is protected ‘free speech.’ And they tell us that technology is too powerful to fight anyway. We have no agency in regards to digital technology. It’s a brave new world. Truly. The survival of the festering wound is in the interest of these contrarians. Without it they would receive little publicity. They would need a new beat or a new job.”