This past summer, the Ninth Circuit released its decision in Fox Broadcasting Company v. Dish Network, holding that the lower court had not abused its discretion when it denied a preliminary injunction against Dish.

Fox had sued Dish after the satellite television provider released a set-top DVR called the “Hopper” along with two features: the first, PrimeTime Anytime (PTAT), automatically records all four broadcast networks’ programming during prime time hours, giving viewers a video on-demand type experience, and the second, AutoHop, allows viewers to automatically skip over commercial breaks while watching shows recorded by PTAT. Fox alleged that these features breached its contract with Dish, which prohibits the recording of Fox programs and requires that any video on demand services disable fast-forward functionality during commercial breaks. Fox also alleged copyright infringement because Dish exceeded the scope of its license.

The district court denied the injunction, unconvinced that Fox had demonstrated a likelihood to succeed on the merits at this stage of the litigation.

After the Ninth Circuit affirmed the district court’s decision, writers at the Fenwick & West blog made the following observation:

the Ninth Circuit left open what causation standard governs copyright actions. Following Cablevision, the district court purported to apply ordinary tort principles to determine whether Dish was directly liable. Despite the role that Dish played in operating PTAT, the district court held, and the Ninth Circuit repeated: “The user, then, and not Dish is the ‘most significant and important cause’ of the copy.” 905 F. Supp. 2d at 1102 (quoting Prosser & Keeton on Torts § 42); Opinion at 12. Oddly, this statement misquotes Prosser & Keeton’s commentary on proximate, or legal, causation. The treatise provides that: “[Legal Causation] is sometimes said to depend on whether the conduct has been so significant and important a cause that the defendant should be legally responsible.” Prosser & Keeton § 42. By substituting “most” for “so,” the opinions suggest that only one actor may be liable for direct infringement. This approach threatens to eliminate the ordinary rule of joint and several liability in favor of a new “primary causation” standard.

Oops. It’s not every day that a Circuit Court reaches a legal conclusion through such a glaringly obvious mistake. Broadcasters have rightfully jumped on this error in their petition for rehearing. Unfortunately, courts outside the Ninth Circuit have gone down the same road without being misled by a misreading of legal authority. The result has been a strand of copyright cases that seemingly stand for the proposition that only one actor can be found directly liable. With multiple actors, it becomes a binary, either/or question of causation, and any other liability can only be found indirectly.

This is a sharp departure from well-established legal rules concerning causation. What’s all the more striking about this departure is how little explanation has accompanied it in court decisions responsible for it. Such a dramatic change at the very least deserves far closer examination then what courts — especially the Ninth Circuit through Dish — have given it.

Joint Causation and Netcom

William Prosser, whose name graces the torts treatise that the Ninth Circuit misquoted, wrote in 1937 on Joint Torts and Several Liability, a guide of sorts to understanding joint tortfeasors. In it, he provides a taxonomy of situations where the law has historically recognized that multiple people can be held directly liable for a single harm. This includes, most relevantly, “Concurrent causation of a single, indivisible result, which neither would have caused alone.”

Where the acts of two defendants combine to produce a single result, which is incapable of being divided or apportioned—such as the death of the plaintiff—each may be the proximate cause of the loss, and each may be held liable for the entire damage. A common case is that of two vehicles which collide and injure a third person. The duties which are owed to the plaintiff by the defendants are separate, and may not be similar in character or scope, but by far the greater number of courts now permit joinder in one action.

Entire liability in these cases rests upon the obvious fact that each defendant is responsible for the loss, and the absence of any logical basis for apportionment. It is not necessary that the misconduct of the defendants be simultaneous, or that it operate simultaneously to produce the result; one defendant may create a situation, harmless in itself, upon which the other may act to cause injury. One may leave combustible material, and the other set it afire; one may leave a hole in the street and the other drive into it. The first defendant remains the proximate cause of the injury, so long as the intervention of the second is a foreseeable, or normal, “not extraordinary” consequence, which fairly may be said to lie within the scope of the risk created.

Relatively straightforward. But when copyright law entered the internet age, the idea that multiple actors could be liable for direct infringement began to erode.1

One of the earliest cases involving copyright and online services, Religious Tech. Center v. Netcom On-line Comm. (Netcom), involved the unauthorized posting of copyrighted materials on a Usenet group. The copyright owner sued the alleged uploader, as well as the BBS service that connected the uploader to the internet and the internet service provider that connected the BBS service to the internet. When the court reached the issue of direct liability for the latter, it paused, noting that strict liability in this circumstance would “create many separate acts of infringement and, carried to its natural extreme, would lead to unreasonable liability.” The court likened Netcom to a machine that makes copies, and concluded that because the copies are made at the initiation of the user and without any further human intervention, Netcom, as owner of the machine, was not directly liable for the copies. It buttressed this conclusion with a nod toward policy, saying, “Where the infringing subscriber is clearly directly liable for the same act, it does not make sense to adopt a rule that could lead to the liability of countless parties whose role in the infringement is nothing more than setting up and operating a system that is necessary for the functioning of the Internet.”

CoStar: Putting the Stamp of Approval on Netcom

Netcom would be directly challenged several years later in CoStar Group v. LoopNet. In that case, which reached the Fourth Circuit, real estate photographer CoStar Group sued ISP LoopNet for directly infringing its photographs, which were posted by LoopNet users on LoopNet’s website. CoStar argued that Netcom’s holding was based on the expedience of preventing the internet from being crippled in its infancy. Now that the internet was more mature, and in light of the DMCA safe harbors that had been established by Congress, the “special exemption” was no longer necessary.

The Fourth Circuit disagreed and said that

While the Copyright Act does not require that the infringer know that he is infringing or that his conduct amount to a willful violation of the copyright owner’s rights, it nonetheless requires conduct by a person who causes in some meaningful way an infringement. … This, of course, does not mean that a manufacturer or owner of machines used for copyright violations could not have some indirect liability, such as contributory or vicarious liability. But such extensions of liability would require a showing of additional elements such as knowledge coupled with inducement or supervision coupled with a financial interest in the illegal copying…

But to establish direct liability … something more must be shown than mere ownership of a machine used by others to make illegal copies. There must be actual infringing conduct with a nexus sufficiently close and causal to the illegal copying that one could conclude that the machine owner himself trespassed on the exclusive domain of the copyright owner. The Netcom court described this nexus as requiring some aspect of volition or causation. CoStar Group 545-50.

You’ll note right off the bat that the Fourth Circuit did not embrace a “primary causation” theory like Dish would. It anticipates that multiple actors may be liable for infringement. But rather than looking for the “most significant and important cause” of a copy, it is looking only for a “nexus sufficiently close and causal” to the copying.

Even so, CoStar determined that an ISP that does not engage in intervening conduct when a subscriber uses its facilities to infringe on copyright is not directly liable for such infringement. Like Netcom, CoStar analogized the ISP to the owner of a copying machine, who at the most could be found indirectly liable for infringement if it, for example, had knowledge of unauthorized copying. CoStar also found that the requirement that there be “some aspect of volition and meaningful causation” was supported by the Copyright Act’s fixation requirement for copies. Said the Fourth Circuit, “When an electronic infrastructure is designed and managed as a conduit of information and data that connects users over the Internet, the owner and manager of the conduit hardly ‘copies’ the information and data in the sense that it fixes a copy in its system of more than transitory duration.

Finally, CoStar notes that its endorsement of Netcom’s volition requirement serves an important public policy.

There are thousands of owners, contractors, servers, and users involved in the Internet whose role involves the storage and transmission of data in the establishment and maintenance of an Internet facility. Yet their conduct is not truly “copying” as understood by the Act; rather, they are conduits from or to would-be copiers and have no interest in the copy itself. To conclude that these persons are copyright infringers simply because they are involved in the ownership, operation, or maintenance of a transmission facility that automatically records material — copyrighted or not — would miss the thrust of the protections afforded by the Copyright Act.

The CoStar decision has not escaped criticism; indeed, it attracted a dissent. Circuit Judge Gregory agreed with the legal reasoning of the majority but disagreed with its characterization of LoopNet, believing instead that the ISP engaged in “non-passive, volitional conduct with respect to the photographs on its website such that the Netcom defense does not apply.”

Gregory notes that once a photograph has been uploaded to LoopNet’s servers, it does not become automatically and immediately accessible to other users. Instead, “one of the company’s employees can review the photo to ensure (1) it is an image of commercial real estate, and (2) it is not an obviously copyrighted image.” To Judge Gregory, this distinguishes LoopNet from a truly passive service provider, one that exercises no control over what is being communicated through its hardware.

LoopNet remains the pivotal volitional actor, “but for” whose action, the images would never appear on the website. Indeed, “volition” is defined as “the act of willing or choosing[;] the act of deciding (as on a course of action or an end to be striven for)[;] the exercise of the will … [or] the termination of an act or exercise of choosing or willing[;] a state of decision or choice.” Under any analytical framework, LoopNet has engaged in active, volitional conduct; its employees make a conscious choice as to whether a given image will appear in its electronic publication, or whether the image will be deleted from the company’s system. Nothing in the brief nature of LoopNet’s review makes the company akin to a copy machine owner or a security guard by the owner’s door. LoopNet is the publisher of LoopNet Magazine in cyberform; a volitional copier of images to whom direct infringement liability applies. Because I believe that the Netcom volitional defense should focus on passivity and the automated nature of the act — not the fact that a user’s initial volition somehow exterminates liability for later volitional acts — I would reverse the district court.

I believe Judge Gregory was correct on this last point. CoStar represents a slight shift from Netcom’s volition or causation requirement for direct liability to more of an “initiation” requirement. However, CoStar‘s conclusions regarding volition were at least still motivated by the same concerns as Netcom over cabining liability in a wide open communications network.

Cablevision and Dish: Extending the Volition Requirement Beyond its Origins

Cablevision represents the next shift away from traditional tort principles. Cable provider Cablevision was found by a district court to be directly liable for copying that occurred through its “Remote Storage DVR” (“RS-DVR”) service that allowed customers to save television programs for later viewing without needing a set-top DVR device.2 The court marshaled a number of reasons why Cablevision was actively involved in the copying of television programs: Cablevision designs, houses, and maintains the necessary equipment used for copying; it is involved in an ongoing relationship with customers, unlike the manufacturer of a copying device; the copying is instrumental rather than incidental to the RS-DVR service; Cablevision selects the programming that is available for recording; and it provides that content to its RS-DVR service [rather than a user providing the content to be copied]. In short, Cablevision’s RS-DVR service was “a far cry from the ISP’s role as a passive conduit in Netcom” and played a sufficiently active role in causing the copies to be made.

The Second Circuit completely rejected the district court’s conclusions on appeal.3 It paid no heed to Netcom‘s original desire to draw a line to keep the number of direct infringers at a limited and reasonable number and seemingly couldn’t get past the superficial similarities between the operation of the RS-DVR system and a set-top VCR. Devlin Hartline has criticized the decision, saying

Cablevision’s actions were far more proximate to the copying of particular materials than Netcom’s or the CoStar defendant’s ever were, and the rule from Netcom has been extended significantly past relieving mere passive conduits of liability for direct infringement. This leads to the potentially nefarious situation where no matter how instrumental a service provider’s actions may be in causing the unauthorized copying of particular materials—such as by Cablevision (1) supplying its customers with the source materials and the tools for the job, (2) making the copying as simple as pressing a virtual button, and (3) maintaining complete control over every aspect of its dedicated copy machine that existed for no purpose other than to make particular copies—that service provider would not be a direct infringer.

The Second Circuit gives little reason why it adamantly refused to recognize joint causation here. Both Cablevision and its customers are necessary, “but for” causes of the copying. There are no concerns that such a holding would render the entire internet liable. Nevertheless, the Circuit narrowed the element of volition even further than Netcom and CoStar to one of “initiation” or, perhaps, a “last deliberate intervention” requirement that results in a less likelihood there can be multiple actors directly liable.

And so we arrive at Dish. On a motion for a preliminary injunction, the district court adopted the novel “causation” requirement developed through Netcom, CoStar, and Cablevision to determine that Dish was not a sufficient cause of the copying on its service.4 This despite the fact that Dish has designed, houses, and maintains the equipment necessary for the copying. It determines what to copy, when to copy it, and how long copies are available for subscribers to watch. Users cannot stop the copying once it starts after the service is enabled. For the court, the only sufficient cause of the copying for purposes of direct liability was the user, when she enables the PTAT service.

The Ninth Circuit affirmed the district court’s holding with little discussion, save for the previously mentioned misquote of Prosser and Keeton.

What Next for Volition

The shift in copyright’s liability standard that has occurred from Netcom to Dish calls out for more attention, as it has been as dramatic as it has been ignored.

One brief observation: much of the doctrinal confusion in these cases seems to come from a conflation between factual, or “but for”, causation and legal, or “proximate”, causation. The courts mentioned above appear on the face to be talking about factual causation when they are really talking about legal causation. By doing this, the courts obscure or ignore the policy considerations inherent in defining proximate causation behind a facade of what seems to be factual observations.

But any first year law student halfway through a torts class can see that Netcom, LoopNet, Cablevision, and Dish Networks are factual causes of the copying that has occurred. But for the design and maintenance of their systems and services, the copying could not have occurred. The appropriate inquiry is whether such acts should be considered the legal cause of the copying.

By recognizing that when courts have talked about volition they really mean proximate causation, we can have a more thorough discussion about how to apportion responsibility in copyright law.5 Much preferable to misquoting Prosser.

Footnotes

  1. Indirect liability—contributory infringement, vicarious infringement, or inducement—is a form of joint liability, one long recognized in copyright law. See Arista Records v. Lime Group, 784 F.Supp.2d 313, 315 (SDNY 2011) (Service provider that induced infringement is jointly and severally liable with individual, direct infringers). []
  2. Twentieth Century Fox Film v. Cablevision, 478 F.Supp.2d 607 (SDNY 2007). []
  3. Cartoon Network v. CSC Holdings, 536 F.3d 121 (2nd Cir. 2008). []
  4. Fox Broadcasting Co. v. Dish Network, 905 F.Supp. 2d 1088 (CD Cali 2012). []
  5. For more on causation in tort law, see Honoré, Antony, “Causation in the Law“, The Stanford Encyclopedia of Philosophy (Winter 2010 Edition), Edward N. Zalta (ed.). []

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Hood hits Google on guarding intellectual property — Mississippi State Attorney General Jim Hood continues to work on behalf of creators. His latest efforts concern gaining support from other state attorneys general to solicit greater cooperation from internet giant Google in helping curb infringement.

Samsung Exposed as Top Advertiser on Pirate Sites — Similar to some efforts in the U.S., a group of media companies in Ukraine have started a “Clear Sky” initiative that aims to find solutions to online infringement. One of their first campaigns has been to measure major brand advertising on several popular filesharing sites, and the resulting list has consumer electronics manufacturer Samsung firmly at the top.

The Supreme Court’s New Copyright Case Is Not a Copyright Case — Though arising out of a copyright infringement action, the issue in front of the Supreme Court in Petrella v. Metro-Goldwyn-Mayer (granted cert last week) actually concerns the equitable doctrine of laches, sort of a common law version of a statute of limitations.

Internet Exploitation, Not Just a Problem For Artists — This post from UK mastering engineer Nick Lewis looks at some of the fallout that an non-sustainable creative ecosystem has beyond the “front-line” creators. “The free market theory is that competition will drive price down, which is good for the consumer. Adam Smith couldn’t possibly have predicted what would happen in the face of intangible, easily copyable assets and hyper-globalisation. The trend towards zero is not good for the consumer in the long-term as the quality of product degrades or disappears altogether along with the skills and supportive infrastructure that go into it.”

The soul of a new machine: Gawker struggles with the slippery slope between viral and true — “If you tell the truth, people might not share it.” If freedom of speech is valued so highly because of it’s truth-seeking function, then should stories like this raise concern?

Copyright’s Role in a Free Press — Speaking of free expression, last week I discussed at the Copyright Alliance Idea/Expression blog a recent story that looked at how resource intensive high-quality investigative journalism continues to be. I argue that it’s important to keep copyright functioning as a mechanism for funding such efforts.

Photofocus Podcast Interview with Terry Hart — I’d also be remiss if I didn’t link to this Photofocus Podcast where I was invited as a guest last month. The topic was recent changes to Facebook’s terms of service that raised concerns among photographers and other creators regarding what Facebook could do with their images once uploaded.

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These Journalists Spent Two Years and $750,000 Covering One Story — Writes Peter Osnos of the Atlantic, “It costs a lot, but investigative reporting can save lives. And non-profits lead the way in producing high-quality, in-depth stories. So who’s going to pay for them?” Maybe they can sell t-shirts?

Breaking Up With ‘Breaking Bad’ Is Hard for Albuquerque — A highlight of the contributions that film and television production have on local economies. “During the show’s run, the production directly employed an average of 200 people, said Wayne Rauschenberger, chief operating officer at Albuquerque Studios, the 28-acre facility where much of the show was filmed. Beyond that, there were lumber yards, antique stores, limousine companies, hotels, caterers and others performing ancillary functions. Residents were hired as extras, and homeowners and businesses were paid for filming privileges.”

A Conversation with Dr. David Price Part 1 — David Newhoff chats with Price, author of the recent NetNames report Sizing the Piracy Universe. The result is an in-depth and engaging discussion. Continued in Part 2.

New York Times: “David Lowery Represents the Anger of Musicians In the Internet Age…” — “Because the tech industry still hasn’t innovated a way to shut up David Lowery.” Digital Music New’s intro to this New York Times article.

An interesting duo from the Trichordist, whose titles speak for themselves: Record Labels Invest $4.5 Billion Annually in Artists… Pirates, $0… Any Questions? and Grand Theft Auto V: How Profits Soar when Piracy is Managed.

Why Ad Blocking can Hurt Ad Blockers — Jonathan Bailey writes, “The end result though is that ad blocking doesn’t push the Internet toward a future free of advertising, rather, it pushes us toward a future of ads tougher to separate from the content and harder to remove. We’re likely nudging toward this future regardless of ad blocking, but ad blocking is certainly a factor and could become a much bigger one. The only way to ensure better business models and a better future for content is to support the content creators that you feel are finding the right chords.”

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September 27, 2013 · · Comments Off

MPs attack Google’s ‘derisory’ efforts to stop music and film piracy — Despite Google’s “influence in the government’s inner, policy-making sanctum,” a UK gov’t committee has released a report that “accused the search engine of offering the thinnest of excuses to avoid taking action against widespread piracy.”

How Google Algorithm Changes Hit Torrent Site Traffic — Torrentfreak speaks with an admin of one of the largest torrent sites who notes that changes in Google’s search engine have a big impact on the traffic that is driven to infringing sites, confirming last week’s report from the MPAA.

Fox Television Stations, Inc. et al. v. Filmon X LLC, et al.:Another victory for content providers in the ongoing saga of internet re-transmission of broadcast TV — Scott Sholder of Cowan, DeBaets, Abrahams & Sheppard examines the decision from a DC district court earlier this month that continued the trend of courts outside the Second Circuit rejecting the “one antenna one user” contrivance that Aereo and FilmOn X have relied on.

As the world churns: The young and restless world of online video — TechPolicyDaily looks at the explosion in options in online video that we’ve seen in recent years. “Of course, any assertion that media consumers are not better off than ever is difficult to support. In my childhood, most of us got CBS (and perhaps a few dozen VHF and UHF channels) via one medium — broadcast. Depending on your geographic location, the signal was often fuzzy. And once a show aired — it was gone forever, or at least until summer reruns.”

The 13 Most Insidious, Pervasive Lies of the Modern Music Industry… — Everything from the Long Tail to touring and t-shirts.

Copyright 2.0 Show – Episode 300 – Not Quite Sparta — Last week I joined Jonathan Bailey, Patrick O’Keefe, and David Newhoff of Illusion of More for the 300th episode of Jonathan and Patrick’s Copyright 2.0 show. A freewheeling discussion of current copyright issues ensued.

Goold on Translations in Early Copyright Law — Interesting academic article that challenges the dominant historical account that early copyright law focused only on verbatim copying and did not extend the exclusive right to translations.

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Hotfile is liable for the “staggering” amount of infringement it financially benefitted from, and it is not protected by the DMCA safe harbor for online service providers.

That is the conclusion of U.S. District Court Judge Kathleen Williams of the Southern District Court of Florida. Williams made the ruling August 28, but the decision had been under seal until this past Friday.

What makes this case notable is that it was brought by the five major motion picture studios (Disney Enterprises, Inc., Twentieth Century Fox Film Corporation, Universal City Studios Productions LLLP, Columbia Pictures lndustries, Inc., and Warner Bros. Entertainment Inc.) against a fairly popular filelocker service (at least at the time the suit was filed). This appears to be the first time an infringement lawsuit from major players in the creative industries had been brought against a filelocker service specifically — previous efforts have aimed at P2P services and the like. Add to that the fact that the suit was filed in Florida, outside the 2nd and 9th Circuits where the bulk of copyright litigation occurs, and you have a situation where the court is interpreting many DMCA provisions on a blank slate.

Oh, and the decision also comes in at just under 100 pages.

I had previously discussed the issues in front of the court and both parties’ arguments. That was over a year ago, which is an unusually long time between hearing and order on a summary judgment motion. Part of that may have been the sheer complexity of the issues; part of that may have been the aggressive litigation posture taken by both sides. The court diplomatically refers to the many “robust pleadings” filed without leave of court and notes, certainly an understatement, that “the parties do not agree on much.”

Whatever the case may be, the issue boils down to a familiar one. Hotfile, an “off-shore technology company” provides online file storage. As is often the case, infringing works are among the files that were stored and shared by Hotfile users. The film studios argued that Hotfile should be held liable for such infringement because it contributes to, encourages, or benefits from such infringement.

As the court explains, Hotfile’s storage locker service allows registered users to upload any file they want from their computer to Hotfile’s servers to be stored. The service automatically generates a link where the file can be accessed. The files or links are not otherwise private; any member of the public can access them so long as they know the link. Hotfile operated an affiliate program which paid users when they directed others to Hotfile file locations, encouraging affiliates to catalog and broadcast Hotfile links. Hotfile also provided premium service, which gave users additional file space and faster download speeds for a monthly fee.

The court begins with a careful, comprehensive discussion of the facts (nearly 35 pages worth). As we’ll see in a moment, the question of whether Hotfile had adopted and reasonably implemented a repeat infringer policy will play a key role in determining whether the service is protected by the DMCA safe harbor, but I do want to highlight the court’s discussion regarding the policy that was in place — some of these numbers are staggering. The evidence reveals that when the studios had filed their complaint, Hotfile had received a total of 10 million takedown notices for infringing content, yet had only terminated 43 users – 33 of those as a result of a court order from prior litigation. At the same time, nearly 25 thousand Hotfile users had accumulated more than three infringement notices; 61 of those users had over 300 notices each. After the litigation began, Hotfile adopted a “revamped” repeat infringement policy, and the results were dramatic: 444 of its 500 highest paid affiliates were terminated for repeated infringement.

The DMCA safe harbor and the repeat infringer policy

Turning to the legal issues, the court begins with the DMCA safe harbor.1 As it notes, if Hotfile qualifies for the safe harbor, it is immunized from any liability for infringement. If it doesn’t, the court must then separately consider if Hotfile is liable. The court cites to the relevant legislative history of the DMCA to explain the law’s motivations in striking a balance between protecting creators’ rights and promoting the growth of online services.

The DMCA applies to online service providers, which Hotfile clearly is, and one of the safe harbors covers storage at the direction of the user, which the court says covers the activities at issue here.2

The DMCA safe harbor requires that a service provider

has adopted and reasonably implemented, and informs subscribers and account holders of the service provider’s system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers.3

The court here turned to the legislative history and other courts to flesh out the details of this provision, since the terms are not defined in the statute. It determined that a policy is “reasonably implemented” if it terminates users, under appropriate circumstances, who “repeatedly or blatantly infringe copyright.” At a minimum, this means that a policy “must be capable of tracking infringers.” Hotfile, said the court, “effectively did nothing to tie notices to repeat infringers.” This, in addition to the breathtaking scope of infringement that Hotfile essentially ignored took the service provider outside the protection of the DMCA safe harbor. The court concluded:

Here, the scale of activity – the notices of infringement and complaints from copyright holders — indicated to Hotfile that a substantial number of blatant repeat infringers made the system a conduit for infringing activity. Yet Hotfile did not act on receipt of DMCA notices and failed to devise any actual policy of dealing with those offenders, even if it publicly asserted otherwise. It has presented no evidence to show that the small number of removals that did occur were for any reason other than threatened Iitigation or by court order. lndeed, it has been unable to point to a single specific user who was terminated pursuant to its policy of manual review and exercise of ”discretion.” Documents and statistics indicate that there was never any realistic threat of termination to Hotfile’s users, whose activities were protected by the company’s indifference to infringement notices. In sum, regardless of official policies forbidding infringement, Hotfile did not significantly address the problem of repeat infringers. This renders Hotfile’s policy legally insufficient under Section 512(i).

While this, on its own, was enough to kick Hotfile out of the safe harbor, the court continued to provide observations and conclusions on two other DMCA requirements. The first provides that service providers designate an agent to receive infringement notices and register the agent with the U.S. Copyright Office. Hotfile, however, did not register an agent until December 2009 and had not identified the agent on its website as required by the statute until May 2010. Additionally, the court suggested that Hotfile was still not in compliance with this requirement since it “to date, has not provided a proper mailing address for its registered agent insofar as it lists only a post office box,” contrary to Copyright Office regulations.

The second requirement is that a service provider cannot have either actual or “red flag” knowledge of infringement. But, as the court notes, the DMCA places limitations on this requirement. Under the statute, a service provider does not initially have a duty to affirmatively monitor for infringement. Courts have also determined that the statute requires the knowledge be of specific infringing activity rather than a general awareness of infringement, a determination that the court here adopts. At the same time, willful blindness is a form of knowledge, and courts have struggled with incorporating willful blindness into the DMCA consistent with its limitations on the knowledge prong — the court here notes the complexity of this inquiry but doesn’t attempt to clarify it.

Instead, it concludes that whether Hotfile had the requisite knowledge that would disqualify it from the DMCA safe harbor was a question that would need to be decided by a jury. This conclusion is a little odd procedurally, as the court had already granted summary judgment denying Hotfile’s DMCA defense, meaning the question of knowledge would never reach a jury, but perhaps Judge Williams wrote it anticipating an appeal.

Secondary liability for copyright infringement

Next the court turns to the question of infringement itself. As it notes, the DMCA safe harbor and secondary liability are independent inquiries (even though there is plenty of overlap between some of the factors and the evidence that is relevant to each). And while it has been a challenge for courts to apply common law secondary liability principles to new technologies, they still play an important role since copyright protections would be rendered meaningless if creators were limited to going after each individual infringers using such services.

Inducement and contributory infringement are discussed first. The court marches through some of the most relevant precedent here, including, among others, the Supreme Court’s Grokster decision, the recent Lime Group decision, and the Ninth Circuit’s Perfect 10. The court extracts from this precedent its own standard for examining contributory infringement, one that provides three separate avenues for establishing secondary liability:

First, while it may be unclear whether Grokster introduced a new category of Iiability based on inducement or whether it spoke to pre-existing notions of contributory liability, it is evident that a defendant will be liable for actually expressing an intention to foster infringement. If that intent is express or can otherwise be said to be ‘’unmistakable,’’ the Sony/Betamax defense will not apply and the defendant will be liable for aII acts of direct infringement committed using its system, as was the case in Grokster. Similarly, as explained in Amazon.com, where traditional principles permit a court to impute intent – for instance, where the defendant knows of specific infringing content available on its system yet fails to remove it – that defendant may be Iiable, by operation of Iaw, just as if he had actually intended to infringe under Grokster. Finally, contributory infringement may be found based on a material contribution theory in instances where a defendant did not express an intention to foster infringement but provided the means for infringement of distributed a commercial product that was subsequently used to infringe. Under that theory, the Sony/Betamax rule provides a backstop of liability, immunizing a defendant who demonstrates that noninfringing uses of the system are substantial.

Here, the evidence left a number of unresolved questions about whether Hotfile is liable under any one of these avenues, and the court concludes that “while Hotfile may have difficulty explaining its ‘innocence’ to a jury, the genuine issues of material fact must be resolved by a jury at trial.”

Less complex is the vicarious liability inquiry. The standard used by the court here is two pronged: one is vicariously liability if he (1) profits from direct infringement while (2) declining to exercise a right to stop or limit it.

The profit, or financial benefit, from infringement does not, the court observe, need to be a direct one, or even a significant one. It is enough that there is a causal relationship between infringement and benefit to satisfy this prong. And here, the court found that the evidence did establish a connection between infringement on Hotfile and its sales of premium subscriptions, concluding that “it is undeniable that it financially benefitted from [infringement] by attracting some users.”

The second prong was just as easily met. The infringing files were stored on Hotfile’s own servers, and it contractually retained a right to control uploaded files in its terms of service. As a matter of law, then, Hotfile is vicariously liable for copyright infringement.

Two final issues were addressed in the court’s order. First, the court held that Anton Titov, one of the primary corporate officers of Hotfile, is, as a matter of law, personally liable for any infringement along with Hotfile itself. And second, the court found that there was enough evidence to support Hotfile’s counterclaim against one of the studios involved, Warner. The evidence suggested that Warner intentionally sent takedown notices for files that it knew it had no right to remove.

While the decision has been a long time coming, and while it will take a long time to digest — it’s very thorough — this is likely only the beginning. Hotfile has already appealed the decision to the Eleventh Circuit.

Footnotes

  1. 17 U.S.C. § 512. []
  2. I note that the court glosses over one of the studios’ (admittedly far-reaching) arguments that the infringement in question was not within the scope of the storage safe harbor. The studios had argued that Hotfile’s practice of routinely deleting files that have never been downloaded was the antithesis of “storage” and thus not protected under the safe harbor. []
  3. 17 U.S.C. § 512(i)(1)(A). []

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Colour grading: the unsung hero of film — Whether it involves balancing color tones over different scenes to make a consistent look or more aggressive techniques to create a specific tone or mood, film colorists are just another of the countless behind-the-scenes technicians who contribute to the films and television programs that audiences enjoy.

Online Piracy Grows, Reflecting Consumer Trends — A study from NetNames was released this week that gave an empirical look at the size and shape of online infringement. Among the study’s revelations is that “Successful pay-for-play subscription plans, such as Netflix and Amazon, have not curbed widespread piracy of copyrighted content.” The full report is available here.

Congress: Restore Our Rightful Privacy Ownership — An interesting piece arguing for more meaningful privacy protections. The overlap between privacy and copyright is not always obvious, but no less tangible. “In the not too distant past, people enjoyed substantial privacy because practically it was inefficient, difficult, and expensive to collect, store, and disseminate private information. In stark contrast, Internet technology now makes it hyper-efficient, easy and near-free incrementally to collect, store, and disseminate private information. As we have learned, Internet technology can serve as a universal tracking and recording device, copy machine, and surveillance system for those who want it to serve those functions.”

Rene Summer gets it Wrong about Piracy and Payment… The Internet Time Machine Strikes Again — The arguments favoring piracy have been wrong for over a decade, yet they are still being recycled. “So Kim Dotcom’s five suggestions have been fulfilled and yet, I don’t think we’ll see an end to piracy anytime soon. There is still one thing piracy offers that legal, licensed and legitimate services do not, and that is compensation to the artists, musicians, filmmakers and creators which requires that consumers actually do pay the fair price asked.”

MPAA report says Google, other search engines a major gateway to piracy — “The survey found that 74% of consumers surveyed cited using a search engine as a navigational tool the first time they arrived at a site with infringing content, even when the consumer was not looking for pirated movies or TV shows.”

Practical Lessons from the MPAA’s Search Engine Study — PlagiarismToday’s Jonathan Bailey offers some practical advice, especially for independent creators and artists, in the wake of the MPAA study that shows a significant amount of traffic for infringing works comes from search.

Google’s Eric Schmidt says government spying is ‘the nature of our society’ — Schmidt also says that protecting citizens from government surveillance will “break the way the internet works.” If this is Google’s vision for the internet, do we really want to keep it from breaking?

UnSound : New Film Explores Artists Rights in The Digital Age (Video Clip) — UnSound looks to be a promising romp through the past decade or two and how it has reshaped the music industry. Here is a clip from the documentary featuring Bad Religion guitarist and Epitaph Records founder Brett Gurewitz.

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“[W]ithout question, the exercise of the [copyright] power has operated as an encouragement to native genius, and to the solid advancement of literature and the arts.”1

September 17 marks “Constitution Day” in the United States, a day that commemorates the approval of the final draft of the Constitution by the U.S. Constitutional Convention delegates in 1787.2 Copyright is the subject of one of Congress’s few enumerated powers; Clause 8 of Section 8 of Article 1 says that  “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 story of how the United States became only the second nation in history to recognize a modern day version of copyright is one of authors and ideals. There was no publishing industry to speak of in Colonial America. What few printers did exist in the thirteen original states by the time of the Revolution focused mostly on government printing or newspapers. Horace Scudder, a 19th century biographer of Noah Webster (more on him later) wrote of the time, “Literature in its finer forms had but slender encouragement. The absence of easy communication, the poverty of the people, the dispersion of the population, gave little chance for bookstores and circulating libraries and private accumulation.”3

As in many parts of Europe and Great Britain, exclusive publishing privileges had at times been granted to individuals in the colonies, but these were rare.4 It was not until after the Revolutionary War that we would see the push for copyright begin in earnest.

Copyright before the Constitution

Thomas Paine, who is best known in U.S. history for his 1776 pamphlet Common Sense, immensely influential in calling for independence from Great Britain, also “counted copyright agitation among his many other revolutionary interests.”5 In a 1782 pamphlet, Paine used the introduction to call attention to the pirating of works by French writer Abbe Raynal, saying “It may with propriety be remarked, that in all countries where literature is protected, and it never can flourish where it is not, the works of an author are his legal property; and to treat letters in any other light than this, is to banish them from the country, or strangle them in the birth.”6 Paine added, in a passage that demonstrated that his thoughts on copyright were consistent with the Republican ideals he espoused in his political writings,

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

These sentiments were shared by Noah Webster, who wrote in a letter to Connecticut representative John Canfield, “America must be as independent in literature as in Politics, as famous for arts as for arms.”7

Webster, who would go on to create the dictionary bearing his name, played perhaps the most pivotal role in getting states to recognize copyright. Having recently completed his second book on grammar and spelling for schoolchildren, Webster began efforts to lobby the states for copyright laws, beginning in New Jersey in 1782. Then, on to Connecticut in October of that year (at which time he wrote the letter quoted above), returning in January of 1783 where he learned of the plans to pass a general copyright act.

On January 6, 1783, author and explorer John Ledyard had petitioned the Connecticut General Assembly for copyright protection for his latest work, A Journal of Captain Cook’s Last Voyage to the Pacific Ocean. On January 29, 1783, the General Assembly instead passed a general copyright statute, the first in the colonies.

Titled “An Act for the Encouragement of Literature and Genius”, the statute’s preamble indicated its foundations in natural rights and its goals to encourage publication, which was seen as providing a benefit to the public and the nation.

Whereas it is perfectly agreeable to the Principles of natural Equity and Justice, that every Author should be secured in receiving the Profits that may arise from the Sale of his Works, and such Security may encourage Men of Learning and Genius to publish their Writings, which may do Honour to their Country, and Service to Mankind.

The statute also provided a public interest requirement that authors and publishers provide sufficient copies of books at reasonable prices.

Along with Ledyard and Webster, others were striving for a copyright act, including historian Jeremy Belknap and author and politician Joel Barlow. Barlow wrote to Elias Boudinot, president of the Continental Congress in 1783, calling on him to protect the rights of authors. Barlow’s letter would end up playing an influential role in the foundations of U.S. copyright law. It both pressed the issue forward and established its starting points. Barlow’s exhortation for protecting the natural rights of authors would be reflected in the Continental Congress’s and State’s language to follow, and his suggestion to follow the Statute of Anne was also heeded.

In it, Barlow also echoed the appeals to pride in the new nation that Paine and Webster used. Said Barlow,

America has convinced the world of her importance in a political & military line by the wisdom, energy & ardor for liberty which distinguish the present era. A literary reputation is necessary in order to complete her national character; and she ought to encourage that variety & independence of genius, in which she is not excelled by any nation in Europe. As we have few Gentlemen of fortune sufficient to enable them to spend a whole life in study, or enduce others to do it by their patronage, it is more necessary, in this country than in any other, that the rights of authors should be secured by law.

According to Continental Congress records, the Connecticut Act was forwarded to the Continental Congress two days after it was proposed, on January 8th, followed another two days later by Barlow’s letter.8

Continental Congress representative Hugh Williamson of North Carolina moved that a committee be formed “to consider the most proper means of cherishing genius and useful arts through the United States by securing to authors or publishers of new books their property in such works.” That motion carried on March 10th, with the Congress appointing a committee consisting of Williamson, Ralph Izard of South Carolina, and James Madison.

On May 2, the committee issued its report. Records indicate the committee “to whom were referred sundry papers and memorials from different persons on the subject of literary property, [are] persuaded that nothing is more properly a man’s own than the fruit of his study, and that the protection and security of literary property would greatly tend to encourage genius.”9 The Continental Congress issued a recommendation encouraging States to pass copyright legislation. By that time, Massachusetts and Maryland had already joined Connecticut in passing a general copyright law. It is likely that Noah Webster shared some responsibility for the the Massachusetts law, as he had been in that state, along with New York, that winter to lobby the representatives.

The Massachusetts copyright act began with a preamble explaining the foundations and motivations for the law:

Whereas the improvement of knowledge, the progress of civilization, the publick weal of the Commonwealth, and the advancement of human happiness, greatly depend on the efforts of learned and ingenious persons in the various arts and sciences: As the principal encouragement such persons can have to make great and beneficial exertions of this nature, must exist in the legal security of the fruits of their study and industry to themselves, and as such security is one of the natural rights of all men, there being no property more peculiarly man’s own than that which is produced by the labour of his mind.

After the Continental Congress’s recommendation, Webster redoubled his efforts, visiting the “middle and southern states” in May 1785. That November, Webster visited General Washington, who gave him letters addressed to members of the Virginia legislature to assist Webster in his efforts. Webster also lobbied James Madison personally to pass a copyright act, including through a letter to the Virginiana legislator in 1784. Madison would eventually write the act himself. The bill, “An act for securing to the authors of literary works an exclusive property therein for a limited time,” was presented to the Virginia House of Delegates by Madison on November 16, 1785.

Webster’s successful run fell short, however, when he reached Delaware. He petitioned the legislature, saying

Among all modes of acquiring property, or exclusive ownership, the act or  operation of creating or making seems to have the first claim. If anything can justly give a man an exclusive right to the occupancy and enjoyment of a thing it must be that he made it. The right of a farmer and mechanic to the exclusive enjoyment and right of disposal of what they make or produce is never questioned. What, then, can make a difference between the produce of muscular strength and the produce of the intellect?

But while a committee was formed to draft a copyright bill, the bill was deferred at the end of the legislative session, never to resume. All in all though, not too bad. Following the Continental Congress’s recommendation, twelve of the thirteen original states — all but Delaware — had enacted copyright legislation within three years. And over half, like Massachusetts, referred explicitly to the natural rights foundation of the law.10

Toward a Federal Copyright Power

Within a year of the last state copyright act going into effect (That honor goes to New York, which passed a copyright act on April 29th, 1786) there were calls to amend the Articles of Confederation that governed the Continental Congress. Once this Convention assembled however, in May 1787, delegates agreed that the goal was not amendment but drafting of an entirely new Constitution. From that point, the delegates moved quickly:

The Convention kicked off May 14, 1787. On June 23, a Committee on Detail was established to draft a document that incorporated the various plans and proposals from the Convention. The Committee presented the first draft of the Constitution to the Convention on August 6. On September 8, a Committee on Style was created to incorporate changes brought up by delegates after discussing the first draft and revise the text of the Constitution. This Committee presented the final draft to the Convention on September 12, who ratified and signed it on September 17. And that’s how you make an America.11

James Madison played a pivotal role in drafting the Constitution. In the April before the Convention, he sat down to write a memorandum to the chairman of the Convention detailing a dozen Vices of the Political System of the United States. Among these vices was a “want of concert in matters where common interest requires it.” Madison wrote that this defect was most noticeable concerning commercial affairs, but it was also felt in “the want of uniformity in the laws concerning naturalization & literary property.”

Considering the enormity of the issues facing the delegates, it should not be surprising that copyright was not a high priority. It was not included in the first draft of the Constitution, on August 6, and would not be proposed until the waning days of the Convention.12

On August 18, James Madison and Charles Pinckney proposed a number of enumerated powers to vest in the legislative branch of the federal government. Among these, Madison proposed that Congress have the power “to secure to literary authors their copyrights for a limited time” while Pinckney proposed the similar power “to secure to authors exclusive rights for a certain time.” All were referred to the Convention’s Committee on Detail without discussion.13 The final version of the Copyright Clause (which also incorporated a authority to secure patents) was presented to the Convention on September 5, where it was agreed to without any objections.14 There is no evidence that the change in wording between the proposed powers and the final version was intended to be substantive rather than merely stylistic.

The Copyright Clause in the Court of Public Opinion

After September 17, the newly drafted Constitution went to the Continental Congress for approval on September 28, and then referred to the states to be ratified. Reflecting the low amount of attention the power received during the Convention, there were few mentions of the power during ratification debates.

James Madison did refer to the Clause in the Federalist Papers, written along with John Jay and Alexander Hamilton to drum up support for ratifying the Constitution, but only once, and only very briefly. In Federalist Papers 43, Madison wrote

The utility of this power will scarcely be questioned. The copyright of authors has been solemnly adjudged, in Great Britain, to be a right of common law. The right to useful inventions seems with equal reason to belong to the inventors. The public good fully coincides in both cases with the claims of individuals. The States cannot separately make effectual provision for either of the cases, and most of them have anticipated the decision of this point, by laws passed at the instance of Congress.

George Mason, a delegate to the Continental Convention from Virginia became one of the Constitution’s most strenuous critics, and penned a series of Objections explaining his reasons for not signing the final draft. Among these, he warned that “Under their own construction of the general clause at the end of the enumerated powers, the Congress may grant monopolies in trade and commerce, constitute new crimes, inflict unusual and severe punishments, and extend their power as far as they shall think proper.”15 Mason was referring to the Necessary and Proper Clause. But this and his other objections drew a response from North Carolina’s James Iredell, a strong supporter of the Constitution and future Supreme Court Justice. Iredell explained that the Necessary and Proper Clause was not an independent grant of authority; it could only be exercised in conjunction with authority that the Constitution expressly granted Congress. Iredell then went on to confirm that none of Mason’s specific dangers could come to fruition through Congress’s delegated powers. When he looked at the possibility that “Congress may grant monopolies in trade and commerce,” Iredell remarked in a footnote

One of the powers given to Congress is, “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.” I am convinced Mr. Mason did not mean to refer to this clause, he is a gentleman of too much taste and knowledge himself to wish to have our government established upon such principles of barbarism as to be able to afford no encouragement to genius.16

At another point in his answer to Mason’s objections, Iredell noted that Congress could not infringe the freedom of speech and press through the Copyright Clause:

The liberty of the press is always a grand topic for declamation, but the future Congress will have no other authority over this than to secure to authors for a limited time an exclusive privilege of publishing their works. This authority has been long exercised in England, where the press is as free as among ourselves or in any country in the world; and surely such an encouragement to genius is no restraint on the liberty of the press, since men are allowed to publish what they please of their own, and so far as this may be deemed a restraint upon others it is certainly a reasonable one, and can be attended with no danger of copies not being sufficiently multiplied, because the interest of the proprietor will always induce him to publish a quantity fully equal to the demand-besides, that such encouragement may give birth to many excellent writings which would otherwise have never appeared.17

We see the Clause come up during the Pennsylvania ratification debates as well, where it was mentioned by influential politician Thomas McKean, who was addressing possible objections to the Constitution. He noted none regarding the clause, pointing out instead the need for national uniformity in protecting authors.

[T]he power of securing to authors and inventors the exclusive right to their writings and discoveries, could only with effect be exercised by Congress. For, sir, the laws of the respective States could only operate within their respective boundaries, and therefore, a work which has cost the author his whole life to complete, when published in one State, however it might there be secured, could easily be carried into another State, in which a republication would be accompanied with neither penalty nor punishment—a circumstance manifestly injurious to the author in particular, and to the cause of science in general.18

The Constitution would eventually be ratified by the States, and it went into effect on March 4, 1789. The first Congress exercised its authority under the Copyright Clause not too long after, with George Washington signing into law the first U.S. copyright act on May 31, 1790.

Footnotes

  1. Joseph Story, Commentaries on the Constitution of the United States, Book 3, Chapter 19 (1833). []
  2. 36 U.S.C. § 106. []
  3. Horace Scudder, Noah Webster: American Man of Letters (Boston: 1890). []
  4. The first was granted to John Usher in 1672 to print and publish the laws of the Massachusetts colony. The first attempt by an author, rather than a publisher, to seek exclusive rights to his work came in 1772 from musician William Billings, though he was ultimately unsuccessful. []
  5. John William Tebbel, 1 A History of Book Publishing in the United States 138 (1972). []
  6. Paine, On the Affairs of North America: In Which the Mistakes in the Abbe’s Account of the Revolution of Amreica [sic] are Corrected and Cleared Up (1782). []
  7. Oren Bracha, Commentary on the Connecticut Copyright Statute 1783, in Primary Sources on Copyright (1450-1900), (2008). citing Noah Webster, Letters of Noah Webster ed. H.R. Warfel (New York: Literary Publishers, 1953), 1-4. []
  8. 24 Journals of the Continental Congress 211 (1783). []
  9. 24 Journals of the Continental Congress 326. []
  10. The others included Connecticut, Georgia, New Hampshire, North Carolina, New York, and Rhode Island. []
  11. Copyright and the Constitution (September 12, 2010). []
  12. Some suggest that South Carolina delegate Charles Pinckney included authority to secure copyrights in the Plan he submitted on May 28th, which would move the genesis of the clause a few months earlier. However, at least one scholar has concluded that the evidence does not support this. See Dotan Oliar, The (Constitutional) Convention on IP: A New Reading, 57 UCLA Law Review 421 (2009). []
  13. 2 The Records of the Federal Convention of 1787, at 321–22, 324–35. []
  14. Id. at 509. []
  15. Objections of the Hon. George Mason, one of the Delegates from Virginia in the Late Continental Convention, to the Proposed Federal Constitution; Assigned as His Reasons for not Signing the Same (Oct. 1787). []
  16. Reprinted by Griffith John McRee in Life and correspondence of James Iredell, vol. 2, pg. 186 (1863). []
  17. Answers to Mr. Mason’s Objections to the New Constitution Recommended by the Late Convention at Philadelphia, in Pamphlets on the Constitution of the United States, pg. 361. Alexander Hamilton implicitly made a similar argument regarding the liberty of the press and the copyright clause in the Federalist Papers number 84, when he wrote, “Why, for instance, should it be said that the liberty of the press shall not be restrained, when no power is given by which restrictions may be imposed?” []
  18. Thomas McKean Speaking at the Pennsylvania Convention on the Ratification of the Federal Constitution. []

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September 13, 2013 · · Comments Off

Beastie Boys Can’t Escape ‘Paul’s Boutique’ Sampling Lawsuit — Great summary (as usual) by Eriq Gardner of a recent decision involving allegedly infringing samples used in the Beastie Boy’s classic album Paul’s Boutique. A link is provided to the actual decision, which will delight hardcore copyright nerds, as it extensively discusses the law’s substantial similarity doctrine and how it applies to sampling.

“Artists Should Expect Nothing” from Spotify says George Howard — The Trichordist has an excellent answer to that claim from Howard.

The end of kindness: Weev and the cult of the angry young man — Greg Sandoval has written a compelling and thoroughly disturbing (don’t read if you don’t have a strong stomach) piece on internet abuse and free speech. “‘I have this beef with a lot of organizations, including EFF,’ Aurora said. ‘This is another case where they’re saying, ‘The cases we care about are the ones white men are interested in. We’re less interested in protecting women on the web.’’”

About that “graduated response doesn’t work” paper — Say you found evidence of a murder on Google maps, and the Internet will work tirelessly until it has debunked the claim. Say you found evidence that copyright protections don’t work, and that’s apparently good enough. Fortunately, IPI’s Tom Giovanetti takes a closer look at a recent study that claims graduated response efforts are ineffective and finds, among other shortcomings, that the study’s author “ignores or disparages data that disagree with her prevailing bias, and … draws predetermined conclusions.”

Which music services are growing, which are shrinking — Paul Lamere has an interesting collection of graphs showing search trends over the past decade for a number of major online music services. See which services are apparently growing in popularity and which ones seem to be struggling to stay relevant.

FilmOn Turned Off: Another Court Rejects Aereo’s “Unique Copies” Interpretation — Details on last week’s decision from a DC District Court enjoining FilmOn X after finding that it was likely publicly performing television broadcasts without permission.

Randolph May & Seth Cooper: Copyright’s Constitutional History and Its Meaning for Today — The Originalism Blog notes that May and Cooper’s excellent article, Literary Property: Copyright’s Constitutional History and its Meaning for Today, is now available at SSRN. Recommended.

Five Things Congress Could Do for Music Creators That Wouldn’t Cost the Taxpayer a Dime Part 4: Pay Unclaimed Royalties to State Unclaimed Property Offices — The latest installment in Chris Castle’s multi-part series on practical, common sense updates to the copyright laws that would improve the situation for musicians and songwriters.

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Although published in 2011, I’ve only recently finished reading Robert Merges’ Justifying Intellectual Property. The book provides an examination of the ethical foundations of intellectual property — primarily copyright and patent — and an explanation of how they fit into a fair and just society. Merges has made a significant contribution to the field of IP while also advancing a positive view of a legal doctrine that has been the subject of increasing skepticism over the past two decades.

It could be said that Justifying Intellectual Property is actually two books in one.

In the first section, Merges explains his theory of the philosophical foundation and justification of intellectual property. He jettisons the utilitarian basis of IP that tends to dominate copyright debates (particularly in the academic arena). Essentially, the utilitarian seeks to maximize net social welfare; IP policy is working if its benefits outweigh its costs. But for Merges, when it comes to IP, this type of calculus is so complex as to be, for all practical purposes, impossible — like, he says, trying to design “a perfect socialist economy.” How do you measure the “optimal number” of copyrighted works? And how do you quantify the quality of works?

Instead, Merges uses property as his starting point, but not some narrow, primitive conception of property that only includes those things we can see or touch. As Merges explains, property is an incredibly adaptable doctrine that has developed a vocabulary that is just as useful for intangibles as it is for tangibles. But most importantly for Merges, property is built around an important core principle, a one-to-one mapping of owner to asset that allows for decentralized ownership and coordination.

Merges obviously doesn’t declare copyright to be property and call it a day. He synthesizes the work of three influential philosophers — John Locke, Immanuel Kant, and John Rawls — to create his normative foundation of IP. As he summarizes near the end of the book:

Locke has a simple but convincing story about initial appropriation, the conditions under which property rights originally arise. Kant understands ownership to be crucial to the development of a person’s full potential, which involves both extensive interaction with objects in the environment and also persistent rights over those objects, so that the individual can place his unique stamp on them. And for Rawls, property fits into the overall scheme of a fair and just society, taking its place alongside other institutions and rights that guarantee an equal chance at self-fulfillment to all citizens.

Locke in particular has fallen somewhat out of favor among academics for the relevance of his labor theory of appropriation to intellectual property. Merges joins several other legal scholars in rehabilitating the Lockean foundations of copyright.1 A big part of this rehabilitation comes from focusing on Locke’s “provisos” — limitations or conditions on property appropriation and ownership. Merges writes that these “provisos” — “sufficiency”, “spoliation”, and “charity” — have not received enough attention by scholars, particularly the “charity” proviso. But these provisos, says Merges, are central to Lockean property theory. If properly applied, they strengthen the justification for intellectual property, especially in ways that are relevant to current policy debates.

In the remaining sections, Merges departs from the normative foundation he established to argue, essentially, that normative foundations are not the most important guiding principles of IP law. That honor instead goes to midlevel principles, the “basic concepts that tie together a number of discrete and detailed doctrines, rules, and practices in a particular legal field.” The primacy of midlevel principles over foundational, or “upper-level principles” is a concept that Merges attributes mostly to John Rawls and his conception of pluralism in a modern state. Merges explains

I believe in the independence of … foundational normative principles from the operational details of the field, as well as from the midlevel principles that arise from and are shaped by those details. By “independence” I mean that there are a number of foundational normative commitments that may serve equally well to anchor the principles and practices of IP law. I offered the ones I did… because those are the ones I believe best justify the structure of IP law. But other foundations might serve as well. As I put it earlier, in my view there is “room at the bottom,” at the foundational level of the field, for various justificatory principles, including perhaps utilitarianism and various alternative ethical theories.

Midlevel principles engage foundational values in a number of ways, but they do not depend on any particular set of values for their validity. They spring from doctrine and detail, from the grain of actual practice. It is at the level of midlevel principles, therefore, that much normative debate in the IP field takes place. From a certain point of view, in fact, this is their role exactly: they enable normative debate — debate above the detailed doctrinal level — without requiring deep agreement about ultimate normative commitments. Because of this, they are the common currency of most debate over IP policy.

Merges identifies four plausible candidates for midlevel principles in IP law, though there are obviously other potential candidates: nonremoval (from the public domain), proportionality, efficiency, and dignity. While all are explored throughout the book, Merges sets aside an entire chapter to discuss proportionality in detail. As he describes it, proportionality is in many ways a corollary to the justification for intellectual property. If we accept that the act of creation or invention entitles one to property rights, then it follows that one is not entitled to anything beyond what one creates or invents. That is, the rights should be proportionate to what a creator deserves.

From this discussion of midlevel principles, Merges turns to contemporary issues in IP policy to show how the principles might be applied in practice. These issues cover a wide spectrum: from corporate ownership of copyrighted works and transaction costs, to property in the digital era (which includes remixes, collaborative creation, and open source licenses), to patents and drugs for the developing world.

Merges concludes his work by reiterating what he considers the basic elements of a workable theory of IP. Intellectual property law should (1) “Propertize creative labor,” (2) “Grant real rights, but not absolute rights”, and (3) “Accommodate the needs of consumers and users by (a) facilitating and encouraging cheap and easy IP permission and licensing mechanisms, together with (b) simple waiver techniques that permit binding dedication of rights to the public.”

At times, I felt that I was not reading specifically about intellectual property, but about property in general. Copyright skeptics often make the mistake that certain aspects of copyright — that it should provide a public benefit, that there are times when competing interests override exclusive rights — distinguish it from other forms of property. Quite the opposite. All property shares these characteristics, and intellectual property, at least how Merges conceives of it, comes the closest to the Platonic ideal of property.

While Justifying Intellectual Property may not be an easy read, it is certainly an accessible read — put another way, it requires mental stamina rather than mental agility. One does not necessarily need a legal or philosophical background to get what’s going on. Merges does not assume much prior knowledge on the part of the reader; concepts are explained fully as they are introduced. This is, in my opinion, one of the strengths of the book. Weak arguments are not disguised behind academic jargon. Instead, the clarity of writing reveals the clarity of thinking.

The other great strength, in my opinion, is that Merges does not take any of his assertions for granted. He moves carefully from point to point to ensure that each conclusion he makes rests on a solid logical foundation. And he anticipates counterarguments, many of which are familiar to those who have followed copyright debates closely over the past decade. So, for example, Merges replies to arguments that IP is not susceptible to being property because it is “nonrivalrous”; or that it is not justified because it creates “artificial scarcity.” He discusses open source licenses and “remix culture”, fan sites and the democratization of publishing (and not, lest one think Merges is a caricature of a “copyright maximalist”, in a negative manner).

Justifying Intellectual Property is a landmark work that provides a solid theoretical foundation to “what may be called the metaphysics of the law.” It should be on the shelf of anyone with a deep interest in intellectual property doctrine and policy.

Footnotes

  1. Others include Adam Mossoff, Saving Locke from Marx: the Labor Theory of Value in Intellectual Property, 29 Social Philosophy and Policy 283 (2012); Justin Hughes, Locke’s 1694 Memorandum (and other Incomplete Historiographies) (2006). []

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FilmOn X, which is a commercial service retransmitting Plaintiffs’ television performances, is in no meaningful way different from cable television companies, whose relationship with broadcasters such as Plaintiffs was the primary motivation for the 1976 Act’s enactment.

Fox Television Stations v. FilmOn X, Opinion, No. 13-758 (RMC) at 27 (D. DC Sept. 5, 2013).

TV Broadcasters Granted Injunction Against Alki David’s TV Streaming Service — The District Court of D.C. yesterday became the second court outside the Second Circuit to consider an Aereo-styled Internet retransmission service and the second court to reject the Second Circuit’s erroneous interpretation of the Copyright Act’s public performance provisions. Judge Collyer saw through FilmOn X’s overly clever arguments, saying that the system was “hardly akin to an individual user stringing up a television antenna on the roof.”

The sharps and flats of the music business — Indie musician Zoë Keating speaks candidly about the challenges and opportunities that face musicians looking to earn a living from their craft today. “It sounds pathetic, but knowing that 60,000 people liked my albums enough to buy them gave me confidence I’d lacked and encouraged me to take my art seriously and make more of it… Now subscription streaming and YouTube are finishing what Napster began, and the revolution is fully corporatized. With music services spending millions of dollars to promote tag lines like ‘Never pay for music again,’ the story is no longer about a collective Robin Hood taking down a resented industry. Now it’s about plain old personal economics. Only a fool or a true fan would pay to own music that is available for free listening at any time on a subscription music service.”

U.S. Copyright Office Announces Ringer Fellowships and Kaminstein Scholars, Names Brauneis of The George Washington University — Congrats to Robert Brauneis for being named the first Kaminstein Scholar by the U.S. Copyright Office. And recent law school grads and recently minted attorneys interested in copyright law and policy should certainly check out the Office’s new Ringer Fellowship.

New (old) study on Megaupload’s demise features fuzzy methods and major omissions — Vox Indie’s Ellen Seidler takes a closer look at a study that purports to show that theatrical revenues from some films actually decreased after Megaupload was shut down following its indictment for criminal copyright infringement. Many smaller and independent films don’t rely so much, if at all, on revenues from theaters.

Thom Yorke, Trent Reznor and a Chorus of Artists Speak Out For An Ethical and Sustainable Internet — The Trichordist collects a series of quotes from artists and musicians. “Perhaps 2013 will be the year that we see as the tipping point in artists rights advocacy for an ethical and sustainable internet. There have been more artists speaking up vocally this year than in we can remember over the last decade.The hangover from an excess of hope that the internet would empower musicians has begun to set in as the evidence of more, and worse exploitation becomes increasingly obvious every day.”

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