Friday’s Endnotes – 11/21/14

By , November 21, 2014.

Not a good week for Sirius XM:

While the Court is largely unpersuaded and sometimes baffled by Sirius XM’s repetitive or off-point theories about how reasonable jurists might read an unwritten exclusion into §980(a)(2), the Court will not analyze the potential grounds for difference of opinion because certification of this Order suffers from an even more basic deficiency.

Disney’s global success with ‘Frozen’ took lots of translation, investment — “The company put a huge investment into making the animated film as accessible in Beijing as in Buenos Aires. The movie is translated into 41 languages, which included an international cast of more than 900 people. They worked on 1,300 recording sessions.”

Top 113 Congressional Copyright Review Moments — While the 113th Congress still has a few more days in session before the end of its term, there are no more copyright review hearings planned. Here is a look back at some of the top moments of the past year.

Landmark Trade Deal at Risk Without Strong Intellectual Property Laws — “The nature of the TPP’s IP provisions matter greatly to the United States because America’s competitive advantage in the global economy increasingly lies in innovation-based industries—such as life sciences (pharmaceuticals and medical devices), information and communications technologies, digital services, music and film, aerospace, and advanced manufacturing—that at their core depend on the production, and protection, of intellectual property.”

Fair Use and Market Harm: Use It or Lose It? — Thomas Young has an in-depth look at the Eleventh Circuit’s troubling conclusion concerning market harm in the GSU e-reserves case, one of the issues the publisher plaintiffs are asking the full bench to review in their petition for an en banc rehearing.

Social Media Bots Offer Phony Friends and Real Profit — “‘This all points to social media advertising being one giant bubble,’ said Tim Hwang, chief scientist at the Pacific Social Architecting Corporation, a research group that focuses on bots. ‘Everyone is really happy to say, ‘Look at the numbers that we got, it must have been successful,’ even though the retweets and favs are inflated by bots.'”

The Creepy New Wave of the Internet — Sue Halpern says in the New York Review of Books, “In other words, as human behavior is tracked and merchandized on a massive scale, the Internet of Things creates the perfect conditions to bolster and expand the surveillance state.”

Go back forty-four years, to 1970, when NJ Representative Cornelius Gallagher said much the same thing: “By weaving a web of data representing all of an individual’s experience, it seems to me that we are creating a suffocating sense of surveillance in this country.” 1Fair Credit Reporting Hearings on H.R. 16340 Before the H. Subcomm. on Consumer Affairs of the Comm. on Banking and Currency, 29, 91st Cong. (1970) (Statement of Rep. Cornelius E. Gallagher). Gallagher went on to say, “Files which are economically unfeasible to computerize now will undoubtedly yield to further generations of computing machines in a vast nationwide, even worldwide network of information. The question is no longer science fiction.”

References

References
↑1 Fair Credit Reporting Hearings on H.R. 16340 Before the H. Subcomm. on Consumer Affairs of the Comm. on Banking and Currency, 29, 91st Cong. (1970) (Statement of Rep. Cornelius E. Gallagher). Gallagher went on to say, “Files which are economically unfeasible to computerize now will undoubtedly yield to further generations of computing machines in a vast nationwide, even worldwide network of information. The question is no longer science fiction.”

New York Second State to Recognize Public Performance Right in Pre-72 Sound Recordings

By , November 20, 2014.

Almost a month to the day after a California state court became the second court in this fall to recognize a public performance right for pre-1972 sound recordings, the Southern District Court of New York has held that New York State common law also recognizes such rights.

The court on Friday, November 14, 2014, denied satellite radio provider Sirius XM’s motion for summary judgment and ordered it to show cause why summary judgment should not be entered in favor of the plaintiffs Flo & Eddie, the corporation owned by two of the original members of the rock band the Turtles. It did so after concluding, among other things, that “general principles of common law copyright dictate that public performance rights in pre-1972 sound recordings do exist.”

As previously explained, Congress extended federal copyright protection to sound recordings in 1972, but only prospectively, meaning sound recordings made before 1972 would only be protected, if at all, under state and common law. Also, unlike musical compositions, Congress did not provide sound recordings owners with a public performance right under federal law, so a songwriter would get royalties when her song is played, for example, on the radio, but the performing artist would not.

Congress extended to sound recording owners a limited public performance right for digital audio transmissions in 1995. At the same time, it created a compulsory licensing scheme for such transmissions for satellite radio providers.

In recent years, Sirius XM began discounting the amount of royalties it paid under this compulsory license, proceeding under the basis that it didn’t have to pay royalties for performances of pre-1972 sound recordings under federal law.

The satellite provider faced a slew of lawsuits following that decision. SoundExchange, the organization that collects and distributes digital performance royalties under the compulsory license, filed a complaint August 2013 in federal court. A group of music labels sued Sirius XM in California state court in September 2013. And Flo & Eddie filed putative class action suits in California, New York, and Florida.

The Decision

Here, the Southern District Court of New York began its decision by noting that it was undisputed that Flo & Eddie have a common law copyright in their sound recordings. Under New York law, “artists can acquire a common law copyright in ‘any original material product of intellectual labor’—including sound recordings—by expending ‘time, effort, money, and great skill’ in its creation.” Sirius, however, argued that this right only covers reproduction and distribution, not public performance.

The court disagreed, noting initially that this argument has to be resolved by looking “to the background principles and history of New York copyright common law” rather than referring to the federal copyright act. And under the common law, New York has long recognized public performance rights for copyright owners of plays and films.

Sirius’s strongest argument is to ask why then, if recording artists and record labels had the exclusive right to publicly perform their works, they waited decades to assert that right. The court devotes considerable attention in response. First, it can’t infer that “the common law copyright in sound recordings does not encompass all of the rights traditionally accorded to copyright holders in other works” simply because this is the first case to raise the issue. The fact that participants in the recording industry had waited so long simply demonstrates a failure to act, not a lack of an enforceable common law right.

This judicial silence is not unique to the circumstances of this case. The court says, “The Supreme Court, for example, failed to grapple with many fundamental constitutional questions for the first 150 years of the Constitution’s existence.” It cites to the opinion from DC v Heller, where the majority observed that it “first held a law to violate the First Amendment’s guarantee of freedom of speech in 1931, almost 150 years after the Amendment was ratified, and it was not until after World War II that we held a law invalid under the Establishment Clause.” 1554 US 570, 625 (2008). Yet we wouldn’t say that proves we don’t have freedom of speech.

The court then turns the tables, saying

An arguably stronger argument can be made that years of judicial silence implies exactly the opposite of what Sirius contends—not that common law copyright in sound recordings carries no right of public performance, but rather that common law copyright in sound recordings comes with the entire bundle of rights that holders of copyright in other works enjoy. No New York case recognizing a common law copyright in sound recordings has so much as suggested that right was in some way circumscribed, or that the bundle of rights appurtenant to that copyright was less than the bundle of rights accorded to plays and musical compositions.

The court also points to federal law as supporting the argument that copyright in sound recordings includes an exclusive right of public performance, saying “if public performance rights were not part of the normal bundle of rights in a copyright, Congress would not have needed to carve out an exception specifically for sound recordings” when it extended protection to them in 1971.

Next, the court responds to the policy arguments raised by Sirius. The satellite provider argued that “affording public performance rights would not serve the underlying purposes of copyright law because pre-1972 recordings already exist and further rights cannot create incentives for the creation of new pre-1972 recordings.” But the court finds that this claim advances a far too narrow view of copyright under both New York and federal law, concluding that rewarding past creativity is just as proper a goal under either statutory or common law copyright as fostering future creativity.

Sirius also calls attention to the potential disruption and administrative difficulties that recognizing public performance rights for pre-1972 sound recordings under the common law could cause. The court is sympathetic to these policy arguments but ultimately unpersuaded.

Sirius may well be correct that a legislative solution would be best. But the common law, while a creature of the courts, exists to protect the property rights of the citizenry. And courts are hardly powerless to craft the sort of exceptions and limitations Congress has created, or to create a mechanism for administering royalties.

What’s Next

In the wake of this decision, Sirius replaced its legal team, which may indicate it is looking at shifting strategy. However, as noted above, two courts in California—state and federal—similarly concluded that California state copyright law includes an exclusive right of public performance for sound recording owners. That increases the likelihood that a decision recognizing such a right survives any potential appeal.

There remains a third lawsuit filed by Flo & Eddie against Sirius XM pending in Florida. Will the court there provide a clean sweep for public performance rights in pre-1972 sound recordings, or will it break rank from the California and New York courts? Even if it does the former (the likelihood of which has increased following the New York decision), I think the court is correct in suggesting “a legislative solution would be best.” Federalization would provide far more consistency in the protection of sound recording owners’ use and enjoyment of their rights; however, such a transition implicates a host of issues, some not readily apparent. The Copyright Office discusses many of these issues in its 2011 report on Federal Copyright Protection for Pre-1972 Sound Recordings. Both the Copyright Office and the House IP Subcommittee are already interested in addressing pre-1972 and other music-related copyright issues; this decision could only serve to motivate them further.

References

References
↑1 554 US 570, 625 (2008).

Friday’s Endnotes – 11/14/14

By , November 14, 2014.

“Because the more people that touch a story, the more that story touches the world.” In conjunction with the launch of Wheretowatch.com, which provides a slick and easy way to find TV shows and movies online, the MPAA also posted this great look at the people working behind the scenes.

In Twist, Publishers Appeal Their ‘Win’ in GSU Copyright Case — The publishers primarily want review of the 11th Circuit’s view that fair use should not be media neutral, agreeing with Judge Vinson’s remarks in his concurrence that “The use of a copyright-protected work that had previously required the payments of a permissions fee does not all of a sudden become fair use just because the work is distributed via a hyperlink instead of a printing press.”

Mission Creep-y — Public Citizen this week issued a scathing report on Google’s practices, concluding the company “is so rapidly expanding both its information-collecting capabilities and its political clout that it could become too powerful to be held accountable.” The public interest group examines both Google’s increasingly pervasive surveillance of the world’s population along with its rapidly expanding hard and soft lobbying and PR.

Taylor Swift — There was a bit of discussion this week about Swift. Here are a few of my favorite takes on it. Robert Levine on why Swift’s decision makes sense for Swift and why it’s not the end of the world if we respect that. The consistently quotable Taylor Swift and the Myth of the Mean Greedy Artist (e.g., “You are not helping the underprivileged by making it impossible for anyone who isn’t already rich and privileged to take up artistic careers.”). Phillip, I disagree, which points out that “cutting out the middle man” should more accurately be described as “taking on the middle man’s responsibilities”; “So yeah, you can do a lot of things without needing a record company, but if you want to do music full time and make a living, maybe even put a couple bucks away for retirement or your kids college fund, then you are going to need help from a lot of people.” Or, finally, Blake Morgan on CNN, figuratively dropping the mic on the Swift discussion.

International Copyright Essential to the Development of American Literature

By , November 13, 2014.

In a recent article in Newsweek, cultural historian Peter Baldwin (who recently published The Copyright Wars: Three Centuries of Trans-Atlantic Battle, reviewed by Robert Levine at Columbia Journalism Review), says of early US copyright law, “More important, it refused to grant foreign authors protection. *** Convinced that a fledgling nation, eagerly building its cultural infrastructure, would be best served by having the Old World’s heritage freely on tap, America’s founders not only shamelessly pirated European culture, but also proudly hailed their pilfering as pursuit of the Enlightenment ideal of an educated democratic citizenry.”

Given that this is an excerpt published in a magazine, I can’t see what sources Baldwin relies on to make these claims, but having studied a bit of copyright history myself, this strikes me as inaccurate on a number of levels. First, to point out that the first copyright act did not grant foreign authors protection makes the fact sound remarkable when it was anything but. This was generally the case with most laws at the time. And to say the US “refused” to grant protection to foreign authors makes it sound like a far more deliberate and deliberated choice than it actually was. There is no recorded debate about the substance of any provisions of the first copyright act—the bill itself was essentially the same as England’s Statute of Anne and the state copyright acts that preceded the Constitution.1Oren Bracha, Commentary on the U.S. Copyright Act 1790 (2008). Indeed, the only deliberate choice seems to have been the decision to pass separate copyright and patent bills; initial proposals had the two combined. This was done at the urging of South Carolina representative Aedanus Burke, who told his fellow Congressmen, “several gentlemen had lately published the fruits of their industry and application, and were every hour in danger of having them surreptitiously printed.”2Gales & Seaton’s History, pp. 1117-18 (January 25, 1790). Burke thought a separate copyright bill could be passed easily, saying “a short bill would be sufficient for the purpose, because it is almost as easy to ascertain literary as any other kind of property.” Patent legislation, on the other hand, “would occasion a good deal of discussion.” A bill sped through the House and Senate and was signed into law by President Washington a mere four months after Burke’s remarks.

Second, while some at the time may have “proudly hailed their pilfering,” this was far from a universally shared belief. In the century following the first US copyright act, you can find numerous examples of Americans calling for recognition of copyright beyond national borders, and serious legislative efforts to remedy this defect began as early as the 1830s. One of the earliest was a result of an 1837 petition of British Authors to a US Senate Committee seeking protection of their property in the United States. And while, yes, one Senator (James Buchanan from Pennsylvania, who, coincidentally, would go on to become one of the worst Presidents in US history) talked about the importance of focusing on “the interest of the reading people of the United States”, and how “cheap editions of foreign works” brought them “within the reach of every individual,”3Senator Buchanan’s remarks also included an early version of the “piracy is great exposure” claim, saying, “But to live in fame was as great a stimulus to authors as pecuniary gain; and the question ought to be considered, whether they would not lose as much of fame by the measure asked for, as they would gain in money.” there was more discussion about the detriments of a lack of protection.4Gales & Seaton’s Register of Debates in Congress, 24th Congress, 2nd Session, 670-71 (Feb. 2, 1837).

Kentucky Senator Henry Clay, who presented the petition to the Senate, said, “Of all classes of our fellow-beings, there is none that has a better right than that of authors and inventors, to the kindness, the sympathy, and the protection of the Government. And surely nothing could be more reasonable than that they should be allowed to enjoy, without interruption, for a limited time, the property created by their own genius.” Clay concluded his remarks by saying, “Indeed, I do not see any ground of just objection, either in the constitution or in sound policy, to the passage of a law tendering to all foreign nations reciprocal security for literary property.” South Carolina Senator William Preston observed that “there was a large and meritorious class of authors in this country, who had a direct interest in securing to the authors of Great Britain the copy-right to their works, because copies of these works were sold without the expense of a copyright, and thus came in free and injurious competition with the works of American authors.”

In the years following, several groups of American authors added their voices in support of international copyright protection. On February 4, 1837, thirty US citizens (including telegraph inventor Samuel Morse) submitted a petition “Praying an alteration of the Law regulating Copyrights.” The petitioners wrote that “they believe native writers to be as indispensable as a native militia” and echoed Preston’s remarks that “our own authors are unable to contend with foreigners who are paid elsewhere.” They concluded by calling for international copyright protection to, among other goals, secure the public “against a discouraging monopoly.” A second petition was submitted by “a number of citizens of Boston” April 24, 1838 and signed by 130 individuals. The petition urged passage of an international copyright law, asserting it was “essential to the encouragement and development of American literature.”

These efforts were unsuccessful, as were other pushes for international copyright law in the 1850s and 1860s.5William Patry, Copyright Law and Practice (1994). But the motivation persisted. The following is an excerpt from Brander Matthews‘ 1890 article, The Evolution of Copyright, that demonstrates the pragmatic nature of this development as well as calls for further improvement.

In the beginning the sovereign who granted a privilege or at his caprice withheld it, could not, however strong his good will, protect his subject’s book beyond the borders of his realm; and even when privilege broadened into copyright, a book duly registered was protected only within the state wherein the certificate was taken out. Very soon after Venice accorded the first privilege to John of Spira, the extension of the protection to the limits of a single state only was found to be a great disadvantage. Printing was invented when central Europe was divided and subdivided into countless little states almost independent, but nominally bound together in the Holy Roman Empire. What is now the Kingdom of Italy was cut up into more than a score of separate states, each with its own laws and its own executive. What is now the German Empire was then a disconnected medley of electorates, margravates, duchies and grand-duchies, bishoprics and principalities, free towns and knight-fees, with no centre, no head and no unity of thought or of feeling or of action. The printer-publisher made an obvious effort for wider protection when he begged and obtained a privilege not only from the authorities of the state in which he was working but also from other sovereigns. Thus when the Florentine edition of the Pandects was issued in 1553, the publisher secured privileges in Florence first, and also in Spain, in the Two Sicilies and in France. But privileges of this sort granted to non-residents were very infrequent, and no really efficacious protection for the books printed in another state was practically attainable in this way. Such protection indeed was wholly contrary to the spirit of the times, which held that an alien had no rights. In France, for example, a ship wrecked on the coasts was seized by the feudal lord and retained as his, subject only to the salvage claim. In England a wreck belonged to the King unless a living being (man, dog or cat) escaped alive from it ; and this claim of the crown to all the property of the unfortunate foreign owner of the lost ship was raised as late as 1771, when Lord Mansfield decided against it. When aliens were thus rudely robbed of their tangible possessions, without public protest, there was little likely to be felt any sense of wrong at the appropriation of a possession so intangible as copyright.

What was needed was, first of all, an amelioration of the feeling toward aliens as such ; and second, such a federation of the petty states as would make a single copyright effective throughout a nation, and as would also make possible an international agreement for the reciprocal protection of literary property. Only within the past hundred years or so has this consolidation into compact and homogeneous nationalities taken place.

***

The United States of America is now the only one of the great powers of the world which absolutely refuses the protection of its laws to the books of a friendly alien. From having been one of the foremost states of the world in the evolution of copyright, the United States has now become one of the most backward.

A year after this article was published, the US passed the International Copyright Act, which for the first time conditionally extended copyright protection to foreign authors.

References

References
↑1 Oren Bracha, Commentary on the U.S. Copyright Act 1790 (2008).
↑2 Gales & Seaton’s History, pp. 1117-18 (January 25, 1790).
↑3 Senator Buchanan’s remarks also included an early version of the “piracy is great exposure” claim, saying, “But to live in fame was as great a stimulus to authors as pecuniary gain; and the question ought to be considered, whether they would not lose as much of fame by the measure asked for, as they would gain in money.”
↑4 Gales & Seaton’s Register of Debates in Congress, 24th Congress, 2nd Session, 670-71 (Feb. 2, 1837).
↑5 William Patry, Copyright Law and Practice (1994).

Friday’s Endnotes – 11/07/14

By , November 07, 2014.

Exclusive: Taylor Swift on Being Pop’s Instantly Platinum Wonder… And Why She’s Paddling Against the Streams —

But all I can say is that music is changing so quickly, and the landscape of the music industry itself is changing so quickly, that everything new, like Spotify, all feels to me a bit like a grand experiment. And I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists, and creators of this music. And I just don’t agree with perpetuating the perception that music has no value and should be free.

Giorcelli on Italian Opera & Copyright — A fascinating article that looks at empirical data on Italian operas created between 1790-1900, a time period where Italian states were adopting copyright laws at different times. The authors found that adoption of copyright led to a “significant increase” in both quantity and quality of operas created.

Fall of the Banner Ad: The Monster That Swallowed the Web — “Because they are so ineffective, banner ads are sold at low prices for high volume, which means to make any money from them, sites need to pull in major traffic. This business model instilled the idea that page views were a paramount goal of the web, thus spawning millions of low-rent, me-too sites bent on getting your click.”

NPPA Member Justin Cook Reaches Agreement with UNC — The University had originally claimed that since it had found Cook’s photo on the internet, it assumed it was free to use.

Police In Germany Are Trying To Stop Armed Warfare Between Rival File-Sharing Gangs — Yeah, but if you can’t compete when your business is set on fire, than perhaps your business model is outdated.

The Psychological Comforts of Storytelling — The Atlantic looks at why humans have been telling stories for thousands of years and why that’s important.

George R. R. Martin’s Sister: The Economics of Being a Writer — “The implications of this growing inequity for the writing industry are this: in the future, you will need to either a have a wealthy patron, or already be wealthy if you wish to become a writer. Indeed, this is not merely a question for the future; it is the grim reality facing working class and poor writers now.”

Friday’s Endnotes – 10/31/14

By , October 31, 2014.

I got a rock.

Charlie Brown (1966).

Old Masters — A fantastic series of vignettes from the New York Times Magazines of individuals over the age of 80, many of them artists and craftspeople, who are still hard at work.

Will Google finally admit search a factor in online piracy? — This is the question Ellen Seidler asks of the search giant, which had long maintained that search was not a factor in online piracy. However, after a recent tweak in its algorithm to downgrade sites receiving large numbers of DMCA takedown requests, traffic to those sites has plummeted.

Taking Pictures: A Way for Photographers to Protect Their Work — The New Yorker profiles photojournalist Yunghi Kim, who over the years has documented events and conflict in places like Somalia, Rwanda, Kosovo, and Iraq, and who has seen first hand the damage online infringement causes to photographers trying to bring these photos to the public.

No Lemonade for Aereo’s Lemons — Devlin Hartline looks at the recent decision involving streaming service Aereo, enjoined by a court that rejected its latest argument that it was a “cable service” under the Copyright Act and thus eligible for a compulsory license (immunizing it from copyright liability).

Copyright at Common Law in 1774 (via the 1709 Blog) — An important contribution to the history of copyright. Tomas Gomez-Arostegui presents a compelling case that the “revisionists” who’ve argued in recent decades that a seminal decision in 18th century England held copyright was solely a creature of statute are wrong.

Back to the Future Wouldn’t Have Been the Same Without Spielberg — The film might have been called “Spaceman from Pluto”, for one thing.

California Law Protects Public Performance Rights of Pre-1972 Sound Recordings

By , October 21, 2014.

The issue of whether to enact performance rights for sound recordings has been debated by parties, courts, national legislatures, and intergovernmental bodies in various State, Federal, foreign, and international forums for more than 40 years. It was one of the most hotly contested issues in the recent program for general revision of the Federal copyright law, and it remains highly controversial. 1Performance Rights in Sound Recordings, House Judiciary Committee Subcommittee on Courts, Civil Liberties, and the Administration of Justice, pg iv (1978).

The Librarian of Congress wrote that in 1978. But the issue of performance rights for sound recordings in the US remains just as hotly contested 36 years later. The issue has heated up thanks to several recent court decisions involving satellite radio provider SiriusXM.

The public performance of sound recordings created after 1972 by satellite radio providers is governed under federal law by a compulsory license administered by the Copyright Royalty Board. 217 USC § 114(d)(2). According to the Hollywood Reporter, “Over the last few years, SiriusXM has been allegedly reducing its reported gross revenues by between 10 and 15 percent,” after deciding to stop paying royalties on sound recordings made before 1972. The result has been a number of lawsuits filed by various owners of pre-1972 sound recordings.

These court holdings could end up having a big impact on the music landscape, even if they may be appealed.

Music v. SiriusXM

The first decision came from a federal court on September 22, brought by Flo & Eddie, founding members of the rock band The Turtles. The Central District Court of California held SiriusXM liable for copyright infringement on a motion for summary judgment. During litigation, SiriusXM did not dispute that it was publicly performing Flo & Eddie’s sound recordings. Rather, it argued that public performance rights aren’t secured under California state law.

The court began its analysis by looking at the plain text of California’s copyright statute, which provides that

The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound recording.

The court asked, “What does it mean to have ‘exclusive ownership’ in a sound recording ‘as against all persons’?” Both ordinary meaning and the California legislature define ownership as “having the right to use and possess the recording to the exclusion of others.” The only exclusion to this right to use in the statute is an exclusion of the right to make “cover” versions of a sound recording (versions that “imitate or simulate the sounds contained in the prior sound recording” but “consist[] entirely of an independent fixation of other sounds”). The court inferred that the legislature didn’t intend any further limitations, “otherwise it would have indicated that intent explicitly.”

The court next found that the case law supports this interpretation, and noted that SiriusXM was unable to point to any cases that cut against a public performance right in sound recordings under California law. On the other hand, several cases do presume its existence.

More recently, a California state court adopted a jury instruction that includes public performance among a sound recording owner’s rights in a case brought by the RIAA. Like the federal court, the state court started with the plain text of the statute, finding it insufficient to answer the question of whether California’s copyright law secured a sound recording owner’s public performance rights.

Ownership of a sound recording is not as easily defined as ownership of tangible property. For example, a person may purchase a tangible good such as an automobile and use it how he or she wishes- drive it, give it to their child, resell it- without violating the automobile manufacturer’s rights. When an individual owns a sound recording and sells authorized copies of that sound recording to others, the issue of how those persons may use their authorized copies of the sound recording is more complicated. Can the purchaser play the recording for friends who did not purchase it? Can the purchaser broadcast it over an amplifying system at a party? Can it be digitally broadcast over the radio? Civil Code §980 does not explicitly address the issue of how purchasers of authorized copies of sound recordings may use those copies.

Taking judicial notice of the Flo & Eddie decision, the California state court was persuaded that the presence of one exception in the statute—for “cover” recordings—suggested an absence of any other limitations on rights. The court also agreed that the case law indicated a public performance right existed with no decision to the contrary.

“The pen is mightier than the sword”

While this is the first time courts have directly recognized a common law public performance right in sound recordings, the decision is consistent with the existing contours of non-federal copyright.

The first statutory recognition of a copyright owner’s exclusive right to publicly perform a work appeared in England in 1833. 3Dramatic Literary Property Act, 1833, 3 & 4 Will. 4, c. 15 (Eng.). The author of the Act, Edward Bulwer-Lytton, introduced the bill by pointing out that the object was to more completely secure an author’s property:

At this moment dramatic authors possessed no control over the use of their property . . . . A play, when published, might be acted upon any stage without the consent of the author, and without his deriving a single shilling from the profits of the performance. It might not only be acted at one theatre, but at 100 theatres, and though, perhaps, it filled the pockets of the managers, not a single penny might accrue from its performance, however successful, or however repeated, to the unfortunate author. 416 PARL. DEB., H.C. (3d ser.) (1833) 560 (U.K.), quoted in Shane D. Valenzi, A Rollicking Band of Pirates: Licensing the Exclusive Right of Public Performance in the Theatre Industry, 14 Vanderbilt Journal of Entertainment and Technology Law 759, 765 (2012).

The US extended the same protection in 1856, and like England, only to dramatic authors. 5Act of Aug. 18, 1856, 11 Stat. 138. An 1897 statute enlarged the public performance right to include nondramatic musical compositions — songs. 6Act of January 6, 1897, 44th Cong., 2d Sess., 29 Stat. 694. Around the same time, the technology to record and playback sounds themselves began to develop, and with that development brought new copyright questions. Congress provided that songwriters had the exclusive right to record songs onto phonorecords in 1909.

But while bills to include sound recordings among federally protected subject matter began to appear in Congress as early as 1925, 7H.R. 11258, 68th Cong., 2d sess. (1925). it would be several decades before the recording artists themselves would see their rights secured. States would first enact legislation to protect the copyright of recording artists, and finally in 1972, federal law extended protection — but only for reproduction and distribution, not public performance. 8Pub. L. 92-140, 85 Stat. 391 (1971). A 1965 report from the Register of Copyrights had noted that the issue of public performance for sound recordings remained “explosively controversial.” 9“Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1965 Revision Bill” (1965). The Register concluded that while “we cannot close our eyes to the tremendous impact a performing right in sound recordings would have throughout the entire entertainment industry… We are convinced, under the situation now existing in the United States, that the recognition of a right of public performance in sound recordings would make the general revision bill so controversial that the chances of its passage would be seriously impaired.”

In 1995, Congress extended a right of public performance to sound recordings, limited, though, to digital transmissions. 10Digital Performance Right in Sound Recordings Act, Pub. L. No. 104-39, 109 Stat. 336 (1995). The right was cabined by a number of compulsory licenses, including one for non-interactive services (music services that resemble radio broadcasts). Interactive services, like Spotify, negotiate licenses directly with copyright owners of sound recordings for performances. Federal law still does not secure full public performance rights to sound recordings, so users such as AM/FM radio do not require permission to broadcast recordings (though they do need permission from songwriters and publishers to broadcast the underlying musical compositions).

The “general revision bill” mentioned above—which eventually became the 1976 Copyright Act—included a historically major change relevant to our discussion. Prior to the Act, both federal and state law concurrently protected copyright. 11Goldstein v. California, 412 US 546 (1973). The 1976 Act would include an express preemption provision, making copyright solely the province of federal law. 1217 U.S. Code § 301. Notably, that provision would not extend to sound recordings fixed prior to 1972, allowing state and common law to continue to protect them until February 15, 2067. 1317 U.S. Code § 301(c).

The question of whether to bring pre-1972 sound recordings under federal law now rather than waiting until 2067 remains a hot issue today. 14On May 29, 2014, Rep. George Holding introduced the RESPECT Act, which would require licensors under the compulsory licenses for digital audio transmissions to also license pre-1972 sound recordings, one step short of full federalization. As part of its ongoing copyright review process, the House Judiciary Subcommittee on Courts, IP, and the Internet held two hearings on music licensing issues, including whether the law should change regarding pre-1972 sound recordings. The US Copyright Office is currently involved in its own study of music licensing issues, including pre-1972 issues. Interestingly, in a report on performance rights in sound recordings released after the 1976 Act went into effect, the Copyright Office said:

Considerations of national uniformity, equal treatment, and practical effectiveness all point to the importance of Federal protection for sound recordings, and under the Constitution the copyright law provides the appropriate legal framework. Preemption of state law under the new copyright statute leaves sound recordings worse off than they were before 1978, since previously an argument could be made for common law performance rights in sound recordings. [Emphasis added.]

Publication and performance

While the federal copyright act is clear about the scope of the public performance right of sound recordings under federal law, the question remains about those made before 1972. I think further clarification can be found by looking at the concept of “publication” in copyright law.

Before 1976, federal copyright protection required publication—unpublished works were protected by common law. Publication destroyed this common law protection, and if the author did not register the copyright or otherwise comply with existing formalities, the work was considered abandoned or dedicated to the public. Despite its pivotal role, “publication” was not defined by statute, so it was up to courts to determine its precise meaning. And they fairly consistently held that a performance of a work did not amount to a publication of a work. The Supreme Court noted in 1912, “The public representation of a dramatic composition, not printed and published, does not deprive the owner of his common-law right, save by operation of statute. At common law, the public performance of the play is not an abandonment of it to the public use.” 15Ferris v. Frohman, 223 US 424, 435 (1912); See also E.J. MacGillivray, A Treatise upon the Law of Copyright in the United Kingdom and the Dominions of the Crown, and in the United States of America, pg. 296 (London 1902) (“Performance on the stage not being a publication, affects neither the right of copy nor the performing right.”); William Strauss, Protection of Unpublished Works, Copyright Revision Study No. 29, pp. 10-12 (1957).

But does this mean there is an independent right of representation or performance at common law? In Tompkins v Halleck, 16133 Mass. 32 (1882). the Supreme Court of Massachussetts said yes. There, the proprietor of an unpublished and unregistered play sought an injunction against defendants, who had memorized the play during performances and began putting on competing performances. Thus, the claim was not for some contractual breach or unauthorized copying, but unauthorized public performance at common law.

In reaching its conclusion that a common law copyright property interest includes an exclusive right of public performance, the Court explained:

Dramatic compositions differ from other literary productions not intended for oral delivery in this, that they have two distinct values, each worthy of protection; — that which they have as books or publications for the reader, and that which they have by reason of their capacity for scenic representation. They are works, in prose or poetry, in which stories are told or characters represented both by conversation and action. Some are poems cast in a dramatic form, capable of representation upon the scene rather than adapted to it, and whose most valuable characteristic is their purely literary merit. Others, of but slight literary pretensions, and affording but little satisfaction in the perusal, are found agreeable in representation from the spirited development of the story which is told in action, the vivacity and interest of the events displayed, even if the conversations of the imaginary characters, out of this connection, would appear tame and unattractive. The most perfect are those which, like some of the tragedies of Shakespeare, as Hamlet or Macbeth, are adapted alike to the library and the stage, and which address themselves more agreeably to those who read or those who hear, as such persons themselves differ in their respective capacities for enjoyment.

That the right of property which an author has in his works continues until by publication a right to their use has been conferred upon or dedicated to the public, has never been disputed. If such publication be made in print of a work of which no copyright has been obtained, it is a complete dedication thereof for all purposes to the public. If of a work of which a copyright has been obtained, it is so dedicated, subject to the protection afforded by the laws of copyright, the author accepting the statutory rights thereby given in place of his common-law rights. But the representation of an unprinted work upon the stage is not a publication which will deprive the author or his assignee of his rights of property therein. It will not interfere with his claim to obtain a copyright therefor. Nor will it deprive him of his power to prevent a publication in print thereof by another.

Nor can we perceive why it should deprive him of his right to restrain the public representation thereof by another.

The Court concludes, “The special use of his play made by the author, for his own advantage, by a representation thereof for money, is not an abandonment of his property nor a complete dedication of it to the public, but is entirely consistent with an exclusive right to control such representation,” a conclusion later cited positively by the US Supreme Court, which spoke of “the common-law right of representation in this country.” 17Ferris, supra., at 436. This is the same conclusion that at least one contemporary treatise had reached. William Theophilus Brantly, Principles of the Law of Personal Property, §67 pg 109 (San Francisco 1891) (citing Boucicalt v. Hart, 13 Blatchf. 47; Palmer v. DeWitt, 47 N.Y. 532) (“The unauthorized representation of an unpublished play is a violation of the owner’s common law, and not of his statutory rights…”).

That leaves us with one final question: If a public performance right in sound recordings is consistent, as I’ve argued, with the contours of state and common law copyright, then why have courts just now expressly recognized it?

In Productive Use in Acquisition, Accession, and Labour Theory, professor Eric Claeys describes legal property rights as sitting on a continuum between the right merely to use an object (use rights) and the right to exclude others from using an object (control rights). John Locke’s theory of labour, says Claeys, “is grounded in use [but] does not justify control rights straightforwardly.” How does one then derive control rights from a justification of use rights? Claeys argues:

In theories of natural law or rights like Locke’s, positive laws need not and often should not parallel strictly the moral principles they implement. Labour supplies a non-conventional ‘Foundation’ for property—but it justifies and requires the exercise of prudent judgment to implement the foundations it lays. For some assets—say, riparian water in temperate climates—legal use rights appropriately secure labor-based moral use rights. Paradoxically, however, for land and chattels, legal rights of exclusive control secure labour better than usufructs.

Logically, this means that rights may remain dormant, morally justified but not secured by positive law. The Second Circuit observed nearly sixty years ago that “Literary property is in essence a right to exclude, to a greater or lesser extent, others from making some or all use of the expressed thoughts of an author. The number of the conceivable grades of the extent of the exclusion and the number of the conceivable kinds of uses of the thoughts of authors are almost limitless.” 18Capitol Records v. Mercury Records Corporation, 221 F. 2d 657, 662 (2nd Circuit 1955). When and how the rights to these kinds of uses are secured by positive law is often more a matter of history than principle. In the last month, two courts have concluded that that right includes a right of public performance, and while the decisions are sure to be appealed, they are a welcome confirmation of a creator’s rights to the fruits of her labor.

References

References
↑1 Performance Rights in Sound Recordings, House Judiciary Committee Subcommittee on Courts, Civil Liberties, and the Administration of Justice, pg iv (1978).
↑2 17 USC § 114(d)(2).
↑3 Dramatic Literary Property Act, 1833, 3 & 4 Will. 4, c. 15 (Eng.).
↑4 16 PARL. DEB., H.C. (3d ser.) (1833) 560 (U.K.), quoted in Shane D. Valenzi, A Rollicking Band of Pirates: Licensing the Exclusive Right of Public Performance in the Theatre Industry, 14 Vanderbilt Journal of Entertainment and Technology Law 759, 765 (2012).
↑5 Act of Aug. 18, 1856, 11 Stat. 138.
↑6 Act of January 6, 1897, 44th Cong., 2d Sess., 29 Stat. 694.
↑7 H.R. 11258, 68th Cong., 2d sess. (1925).
↑8 Pub. L. 92-140, 85 Stat. 391 (1971).
↑9 “Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1965 Revision Bill” (1965).
↑10 Digital Performance Right in Sound Recordings Act, Pub. L. No. 104-39, 109 Stat. 336 (1995).
↑11 Goldstein v. California, 412 US 546 (1973).
↑12 17 U.S. Code § 301.
↑13 17 U.S. Code § 301(c).
↑14 On May 29, 2014, Rep. George Holding introduced the RESPECT Act, which would require licensors under the compulsory licenses for digital audio transmissions to also license pre-1972 sound recordings, one step short of full federalization. As part of its ongoing copyright review process, the House Judiciary Subcommittee on Courts, IP, and the Internet held two hearings on music licensing issues, including whether the law should change regarding pre-1972 sound recordings. The US Copyright Office is currently involved in its own study of music licensing issues, including pre-1972 issues.
↑15 Ferris v. Frohman, 223 US 424, 435 (1912); See also E.J. MacGillivray, A Treatise upon the Law of Copyright in the United Kingdom and the Dominions of the Crown, and in the United States of America, pg. 296 (London 1902) (“Performance on the stage not being a publication, affects neither the right of copy nor the performing right.”); William Strauss, Protection of Unpublished Works, Copyright Revision Study No. 29, pp. 10-12 (1957).
↑16 133 Mass. 32 (1882).
↑17 Ferris, supra., at 436. This is the same conclusion that at least one contemporary treatise had reached. William Theophilus Brantly, Principles of the Law of Personal Property, §67 pg 109 (San Francisco 1891) (citing Boucicalt v. Hart, 13 Blatchf. 47; Palmer v. DeWitt, 47 N.Y. 532) (“The unauthorized representation of an unpublished play is a violation of the owner’s common law, and not of his statutory rights…”).
↑18 Capitol Records v. Mercury Records Corporation, 221 F. 2d 657, 662 (2nd Circuit 1955).

Friday’s Endnotes – 10/17/14

By , October 17, 2014.

A Slippery Slope: the Facilitation of Fair Use as Fair Use — “Even with the limited nature of the decision, it continues a worrisome trend – permitting a for-profit entity to commit direct copyright infringement because of potential downstream fair uses by third parties. While the fair use doctrine has long been nebulous, it should concern copyright owners that that downstream fair use could justify upstream infringement. Under the court’s reasoning, one could assert that it is not copyright infringement for a street vendor to pirate a copyrighted film and sell it to a film critic so that she may review it because criticism and comment are permissible fair uses.”

Himma on the Unlimited Supply of Information — A fascinating (an d brief) take on the scarcity and nonrivalrous arguments in IP.

An intellectual object of any kind can be reached only through the mediation of some intellectual activity.

This is all the more so of complicated intellectual objects like mathematical proofs, scientific theories, and novels. Intellectual objects are not like fruits on a tree that can simply be picked and consumed; someone has to do something to make them available for consumption. Indeed, it might take hundreds of years of concerted intellectual activity on our part to gain reasonable access to an intellectual object in logical space – as was the case with the proof of Fermat’s Last Theorem.

***

Moreover, and this is crucial, the available supply of intellectual objects can be increased in only the same way that the available supply of material objects can be increased – namely, by deploying a resource that is limited and valuable because it is limited: human labor. Every moment I spend in writing this paper has value to me because I will live for only a limited number of moments. To increase the number of novels available for human consumption, then, someone has to devote her time and her energy, resources of value to any being with a finite lifespan, to produce one. To increase the number of apples available for human consumption (beyond the small number that naturally occur), someone has to devote her time and her energy to it. This is no less true of intellectual objects than it is for material objects.

Copyright, the Internet and Efficient Risk Bearing — Stuart Brotman argues the DMCA could be improved by using an efficient risk-bearing standard. “One of the most basic principles underlying liability rules is that legal responsibility should fall on those who most cost-effectively can limit or eliminate harm. The shape of common law’s tort rules largely is organized around this principle, and so are rules for enforcement of contracts and property rights, including intellectual property rights.”

Streaming Is the Future, Spotify Is Not. Let’s talk Solutions. — “Isn’t it odd that companies like Pandora and Spotify that are not profitable and don’t support artists are thought to behold some kind of gnostic wisdom of economics that defies all logic and reason? Last year Twitter lost $645 million dollars. Record labels have been profitable for over half a century with a sustainable ecosystem that invests in artists and new talent, while also creating hits and stars. It’s time to leave the rainbow unicorn school of economics and faith healing behind and develop real business models based on real economics.”

Smile! Marketing Firms are Mining Your Selfies — So if you’re, say, eating chips in a photo, you’ll be targeted for ads for more chips. Because that’s just how the Internet works.

Common Ground Between Creativity and Innovation — Last week, I was at a conference that explored the similarities between copyright and patent. Here is a summary of that conference.

Is Amazon a Monopoly? — “But on the larger question of whether Amazon is literally and technically a monopoly: Probably not, but the distinction is not all that important. It’s a bully, it’s destroying important institutions, and it’s getting more and more powerful, and its founder now owns the dominant newspaper in the nation’s capital. Amazon controls roughly half the trade in books in the U.S. We may need a new word to describe what it is, but to sit around and debate terminology as we watch the creative destruction seems to me the worst kind of chattering-class hair-splitting.”

Friday’s Endnotes – 10/03/14

By , October 03, 2014.

Profit, Not Ideology, Motivates Cyberlockers that Facilitate Copyright Infringement — “A vigorous debate has developed in recent years over numerous aspects of copyright protection. There can be little doubt, however, that cyberlockers are profitably inducing copyright infringement on a massive scale. The discussion should thus not be over whether infringement is occurring, but what measures legitimate businesses can take to deter and stop it.”

Creation is Not Its Own Reward: Making Copyright Work for Authors and Performers — Just a few days left to register for this symposium at Columbia Law School in NYC on October 10. The all day event features an impressive lineup of panelists, ending with a discussion featuring US Register of Copyrights Maria Pallante and the USPTO’s Shira Perlmutter.

Music consumption helps drive UK technology sales by £11bn — “A report published by the music industry body BPI suggests music has been a key influence in the demand for smartphones and tablets. The independent study calculates that every 1% increase in demand for music in the UK translates to a 1.4% lift in sales of smartphones, while for tablets the rise is 2.2%.”

Happy Together: Infringement as Conversion — Devlin Hartline takes a closer look at the conversion claim in the recent court opinion finding that owners of sound recordings made before 1972 (the year federal copyright law began securing copyright in sound recordings) have the exclusive right to publicly perform works. Be sure to catch the follow up, Further Thoughts on Infringement as Conversion, for a discussion about the impact (or lack thereof) of the Supreme Court’s decision in Dowling v United States on the analysis.

Veteran Location Manager S. Todd Christensen — Fascinating article on a key but not very well-known role in the making of a film. “First, Christensen reads and breaks down the script, looking at every single location and what it might require. His political skills are necessary as the location manager acts as a go-between, translator and mediator to get things done. They must secure permits and permissions, staff based upon the location’s particulars (this can be hiring anyone from a snake wrangler to a structural engineer), and then manage that location throughout production, making sure it’s left the way it was found.”

Meet Washington Times’ Andrew Harnik, the man behind the camera and photos on your front page — The political and sports photographer talks about his career in this video interview. “It takes years of dedication to perfect this craft.”

When Russians thought the Internet would make them free — “Two decades later and it’s hard to find the traces of our belief in the Russian Internet. The only thing we inherited from the nineties and the Samizdat are the torrents and e-libraries. Copyright is dead: almost any film and any book can be downloaded for free after a five minute search. The film distributors have to make arrangements with pirates about ‘two week vacancies’ after theatre premieres, but the small publishers are just bankrupt. I’m not sure it’s the great result we dreamt in early years of the Internet.”

Grooveshark is done

By , October 01, 2014.

On Monday, a federal district court held that Escape Media, which operates streaming music service Grooveshark, was liable for copyright infringement, “creating a business model that was based upon the unlicensed sharing of copyright protected material.” According to the court [Opinion], Escape’s Chairman “bet the company on the fact that [it] is easier to ask forgiveness than it is to ask permission…” now he will get the chance to test that claim.

The lawsuit was filed in 2011 by Universal Music Group along with eight other record labels. 1Atlantic Recording Corporation, Zomba Recording, Elektra Entertainment Group, Arista Records, LaFace Records, Warner Bros. Records, Arista Music, and Sony Music Entertainment. Universal had earlier filed a lawsuit against Escape in a New York state court (more on that below). During those proceedings, Universal discovered evidence that Escape employees were personally uploading copyrighted sound recordings to Grooveshark. Universal, joined by the other sound recording plaintiffs, quickly filed suit in federal court following this revelation for copyright infringement against Escape Media and its two co-founders, Samuel Tarantino and Joshua Greenberg.

Universal moved for summary judgment this past February and now the court has released its decision.

Groovin’ on up

As the court explains, Grooveshark began in 2006 as a peer-to-peer network that allowed users to copy and distribute digital music files among other Grooveshark users. Tarantino and Greenberg formed Escape Media with the ultimate goal of creating a business around the network, a business that the company knew “depended upon the use of infringing content.” However, in its early days, “Grooveshark did not have a large user base to leverage as a source for content.” So Escape turned to its employees, instructing them “to create Grooveshark user accounts and to store hundreds of thousands of digital music files on their computers in order to upload or ‘seed’ copies of these files to other Grooveshark users.”2One message from Greenberg written in 2007 that the court quotes is quite colorful. In it, he instructs employees to “Download as many MP3’s as possible, and add them to the folders you’re sharing on Grooveshark. Some of us are setting up special ‘seed points’ to house tens or even hundreds of thousands of files, but we can’t do this alone… There is no reason why ANYONE in the company should not be able to do this, and I expect everyone to have this done by Monday… IF I DON’T HAVE AN EMAIL FROM YOU IN MY INBOX BY MONDAY, YOU’RE ON MY OFFICIAL SHIT LIST.”

In June 2007, Escape switched from a peer-to-peer model to one using centralized servers. Not only did it update its software to “automatically copy every unique music file from each of its users’ computers and upload them to the storage library,” but it continued to instruct employees to manually add copyrighted content to the servers. In 2008, the company evolved from a file-sharing service to an on-demand music streaming service, its present form. Uploading infringing files remained “a regular part of Escape employees’ job responsibilities up and until the initiation of the present litigation.” In addition, “Escape’s senior officers searched for infringing songs that had [been] removed in response to DMCA takedown notices and re-uploaded infringing copies of those songs to Grooveshark to ensure that the music catalog remained complete.”

Universal specifically alleged that Escape is liable for direct infringement as well as indirect infringement in the form of vicarious liability, inducement, and contributory infringement. Universal also brought claims against Tarantino and Greenberg personally. If ever there was an open and shut case for infringement, this is it, a fact that even Escape seemed to recognize. The court notes:

In support of these claims, plaintiffs have created a substantial and largely uncontroverted record of evidence. Confronted with this body of evidence, defendants have chosen a purposeful litigation strategy. As discussed above, defendants have primarily mounted procedural and evidentiary challenges to plaintiffs’ copyright infringement claims. Defendants devote very little of their summary judgment memorandum to actually engaging with the substance of plaintiffs’ copyright claim.

And indeed, while the court discusses each of these claims, there is never any doubt as to its conclusions.

Though Escape has suggested an appeal is possible, its chances of success seem highly doubtful. The parties are now briefing on the scope of permanent injunctive relief.

Groovesharknado

This isn’t the only lawsuit Escape Media is currently facing. As mentioned above, this lawsuit resulted from a still ongoing New York state action brought by Universal for common law claims pertaining to pre-1972 sound recordings (which are not protected under federal copyright law3See Federal Copyright Protection for Pre-1972 Sound Recordings, A Report of the Register of Copyrights (2011). ). In April 2013, a New York state appellate court dismissed Grooveshark’s DMCA defense, holding that the federal safe harbors do not protect against state and common law copyright claims.

Last week, Universal moved for summary judgment on its claims that Escape infringed its common law rights of distribution, reproduction, and public performance (UMG is also seeking summary judgment on an unfair competition claim)—infringement alleged to occur independently of Escape employees and officers uploading copyrighted content themselves. Universal argues in its memorandum of law supporting the motion that “At all relevant times, Escape employed a business model for Grooveshark that was based upon the use of infringing content.”

[R]ather than obtaining… licenses, Escape made a calculated business decision to launch Grooveshark, utilizing infringing label content in order to grow faster, reduce costs and attempt to strike more favorable licensing deals… Indeed, Escape’s officers openly discussed the possibility that they would never have to pay for their unauthorized use of copyrighted content. Specifically, they hoped that by illegally growing their user base, they could collect valuable data about Grooveshark users’ listening habits, which they could then sell to the labels for more than Escape would have to pay in licensing fees.

Additionally, a separate federal lawsuit with Capitol Records (d/b/a EMI) as the sole plaintiff was filed against Escape in the Southern District Court of New York in 2012. EMI had previously sued Escape in 2009. The two companies settled and entered into a distribution agreement, “which granted Escape the right to distribute digitally EMI’s content on Grooveshark.” However, Escape repeatedly breached the terms of the license and failed to make payments, leading EMI to terminate the agreement. It sued again for infringement occurring after the termination.

The magistrate judge assigned to that litigation recommended this past May that Escape’s DMCA defense be rejected and summary judgment be “granted in favor of EMI on its claims for direct infringement of the right of performance under federal law, secondary infringement under federal law for both contributory and vicarious infringement, and direct and secondary infringement under New York common law for copyrighted works not covered by the Copyright Act.” Escape subsequently filed objections to that report, meaning a district court judge must review the findings de novo, a review that remains pending.

The recommendation is clear that even if employees didn’t personally upload any files, the service would still be liable for facilitating and profiting off of massive infringement. Most significantly, the magistrate judge found that Escape did not implement a policy for terminating repeat infringers, one of the conditions for safe harbor protection under the DMCA.

Courts have recognized a wide range of procedures and practices for implementing a repeat infringer policy that constitute “implementation” under § 512(i)(1)(A), and they should continue to do so. Thus, there is a high bar for a plaintiff to show that a service provider, as a matter of law, does not “implement” its repeat infringer policy within the meaning of the DMCA. The undisputed facts before the Court, however, point only to that conclusion. Escape does not have a repeat infringer policy or an alternative policy that serves the same purpose; does not keep records of repeat infringement sufficient to enforce an adequate repeat infringer policy; permits an extensive amount of repeat infringement to occur without taking action or making a record; depends upon a small number of repeat and flagrant infringers to supply a substantial amount of the content available on Grooveshark; takes action in response to copyright owners’ DMCA notifications of infringement that fails to actually make the song unavailable or prevent it from reappearing immediately on Grooveshark; prevents copyright owners from collecting the data necessary to issue DMCA notifications in a meaningful way; and, finally, has never terminated a repeat infringer’s account and has no policy or procedure for doing so. For these reasons in combination, the Court finds that Escape does not “implement” a repeat infringer policy under § 512(i)(1)(A) and is thus ineligible for DMCA safe harbor.

Groove is in the Shark

Monday’s decision should be welcomed by everyone. Even the most ardent copyright minimalist would agree that the law should, at the least, provide a remedy for intentional, wide-scale, commercial piracy. The real question is whether the DMCA, as it is currently interpreted, provides too much cover to companies engaged in this type of large scale piracy. Evidence of employee uploads was only uncovered after years of litigation by major record companies (never mind that employee uploads still only made up a minority of songs available through the site). Up til then, Grooveshark was able to operate a largely unlicensed commercial music streaming service in the open, with a plausible claim that the DMCA shielded it from legal liability because of how courts have interpreted the safe harbor.

Grooveshark is not that different from other online services. Escape’s belief that it’s “easier to ask forgiveness than it is to ask permission” is as close to a Silicon Valley mantra as you will find, where “permission” is often considered a dirty word. Throughout its tenure, it has cloaked itself in buzzword-laden innovation talk. Its founders parrot the same “music should be free” talking points heard all too often and claim that the problem in the music industry is outdated business models, not rampant online infringement.

But this court decision reveals that this was all just a smokescreen to obscure the fact that Escape Media was illicitly profiting off the work of others, to the detriment of the public interest.

This illustrates how the DMCA has failed in its goal of providing “strong incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements that take place in the digital networked environment.”4H. Rep. 105-796, 105th Congress (1997). Escape Media’s wanton infringement would not have been discovered had it not been possible for record labels to move forward with litigation in state courts because of the distinct treatment of pre-1972 sound recordings under the federal Copyright Act, a quirk unavailable to other types of copyright owners—makers of film and television programs, photographs and works of visual arts, or books, for example.

Earlier this year, US Representatives Judy Chu and Tom Marino wrote that the DMCA is not only ineffective but actually “favors non-compliance.” Grooveshark is the poster child for this effect. Media companies end up having to send millions upon millions of takedown notices and spend years in litigation just to be able to continue to create and distribute the works that consumers want. The situation is worse for small businesses and individual creators; they are faced with choosing between spending time and resources they don’t have going after infringers or giving up entirely, a point vividly make in last week’s Ars Technica article, Bugging Out: How Rampant Online Piracy Squashed One Insect Photographer by (former) professional photographer Alex Wild.

References

References
↑1 Atlantic Recording Corporation, Zomba Recording, Elektra Entertainment Group, Arista Records, LaFace Records, Warner Bros. Records, Arista Music, and Sony Music Entertainment.
↑2 One message from Greenberg written in 2007 that the court quotes is quite colorful. In it, he instructs employees to “Download as many MP3’s as possible, and add them to the folders you’re sharing on Grooveshark. Some of us are setting up special ‘seed points’ to house tens or even hundreds of thousands of files, but we can’t do this alone… There is no reason why ANYONE in the company should not be able to do this, and I expect everyone to have this done by Monday… IF I DON’T HAVE AN EMAIL FROM YOU IN MY INBOX BY MONDAY, YOU’RE ON MY OFFICIAL SHIT LIST.”
↑3 See Federal Copyright Protection for Pre-1972 Sound Recordings, A Report of the Register of Copyrights (2011).
↑4 H. Rep. 105-796, 105th Congress (1997).
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