Copyhype Turns Two Years Old

By , August 14, 2012.

This is actually a few days late — I first began Copyhype on August 8, 2010, meaning it has just marked its second year, though it seems like just yesterday.

The second year has been even more exciting than the first. Readership has nearly doubled. I was very honored that this site was named one of the ABA Journal’s top 100 legal blogs in 2011. Citations to articles have also begun cropping up in published and forthcoming law review articles — though I’m still looking forward to being cited in a court opinion.

Much of the past winter was dominated, of course, by the now-dead Stop Online Piracy Act. I was somewhat amused that this site made it onto a list of organizations supporting the bill that circulated heavily around the internet — I even got a handful of emails from people claiming they would no longer buy my products and/or services if I didn’t withdraw support.

It’s always interesting to see which articles have ended up being the most viewed; there are always a few surprises. These are the most popular posts written during the past year:

  1. Hey, What happened to Wikipedia? An introduction to SOPA — other popular SOPA posts include Dispatches from the SOPAcolypse, Why I support the Stop Online Piracy Act, Stop Online Piracy Act walkthrough, and How the Stop Online Piracy Act will hit what it aims at
  2. Justin Bieber is not going to jail
  3. Was Hollywood built on piracy?
  4. More evidence for copyright protection
  5. What is technology?
  6. The ‘copyright infringement isn’t theft’ trope
  7. Who cares what Jefferson thought about copyright?
  8. Megaupload and the DMCA
  9. Copyright and web fonts: Santorum web developer sued for typeface infringement
  10. Copyright and the First Amendment: the unexplored, unbroken historical practice, part 4 — for whatever reason, this was notably more popular than part 1, part 2, part 3, and part 5.

I want to say thanks to all my readers for continuing to stop by here, and to everyone who has shared their thoughts in the comments. If you’re new to the site, remember you can subscribe for updates by RSS or email, follow me on Twitter, or “like” my Facebook page.

Copyhype’s third year promises to be even more exciting. I will be launching a new look in the upcoming weeks. Nothing too dramatically different — just a little fresh paint that will be more readable, faster loading, and responsive — so the page should look relatively the same whether you’re on a smartphone, a tablet, or a regular computer.

7 Mythbusting Copyright Law Articles

By , August 13, 2012.

Copyright law in recent decades has seen a number of shaky claims and arguments grow in popularity. These arguments are often based on faulty logic, historical revisionism, or erroneous facts. Nevertheless, they have a surface appeal that aids in their dissemination. The result is a rather well-developed copyright “mythology” which presents a mistaken view of copyright’s history, its goals, and its effects.

Below is a collection of seven law review articles that critically examine many of these myths, correcting the distortions caused by, in the words of one of the authors, the “scholarly house of mirrors” that increasingly permeates discussions of copyright. I’ve cited to or discussed most of these articles on this site before, but I think they all deserve a special mention on their own. Enjoy!

The Mythology of the Public Domain: Exploring the Myths Behind Attacks on the Duration of Copyright Protection

Link. Scott M. Martin, 36 Loyola L.A. Law Review 253 (2002).

This article was written before the US Supreme Court upheld Congress’s authority to extend the term of copyright protection in Eldred v. Ashcroft, and many of the arguments have been vindicated by that decision. But Martin debunks other common myths surrounding copyright duration that are still around today, including “Congress ran rampant by granting term extensions, enacting eleven extensions in just forty years, and must be stopped by the courts”, “copyright good, public domain better”, “extensions of the term of copyright protection are an affront to, and an impingement on, First Amendment rights”, and “the Sonny Bono Copyright Term Extension Act of 1998 was the worst kind of special-interest legislation engineered by Disney to satisfy its insatiable corporate greed.” The last one especially skewers the premises of those who refer to the CTEA as the “Mickey Mouse Protection Act.”

The Progress of Knowledge: A Reexamination of the Fundamental Principles of American Copyright Law

Link. David A. Householder, 14 Loyola L.A. Entertainment Law Review 1  (1993).

Householder embarks here on a “systematic reevaluation of the basic policy and principles of American copyright law by returning to the source of such law, the Copyright Clause of the United States Constitution.” The article shines a light on “a number of concepts that, through ritualistic incantation have attained the unfortunate status of basic tenets of copyright law, even though they have little if any relevance to the basic purposes of American copyright law.” Since i predates even the NII White Paper, the concepts could be considered the “old guard” of copyright critiques; they include: “1. A copyright is a monopoly; 2. Copyright is intended to motivate creativity; 3. Copyright law makes reward to the owner a secondary consideration; 4. The public interest is served primarily by the limited duration of copyright; and 5. The public interest competes with the interests of individual authors.”

Reason or Madness: A Defense of Copyright’s Growing Pains

Link. Marc H. Greenberg, 7 John Marshall Review of Intellectual Property Law 1 (2007)

Greenberg takes on seven of the leading arguments against existing copyright law in this post-Eldred article.

a. Argument One: The expansion of copyright protection has been driven by media conglomerates, who have received from the legislature an allocation of entitlements, to the significant detriment of individuals and the public at large.

b. Argument Two: Copyright’s principal purpose is to provide economic benefits to owners—this property right should not trump the First Amendment rights of users.

c. Argument Three: Changes in the scope and term of copyright law since the 1970 Nimmer article, as well as the nature of digital technology and the greater ease achieved in copying content, render Nimmer’s immunity doctrine out of date and in need of change.

d. Argument Four: Since copyright deals with content, the law should be subject to a strict scrutiny analysis as to its impact on First Amendment rights, and under such scrutiny, it clearly violates the First Amendment rights of users.

e. Argument Five: Some form of compulsory licensing for all copyrighted works should be sufficient to address the concerns of owners, which after all are principally economic in nature.

f. Argument Six: Free speech rights include the right to use the words or other expression of another in expressing your own point of view.

g. Argument Seven: The idea/expression doctrine and the fair use doctrine have become too rife with uncertainty to afford meaningful protection to users

Copyright and Incomplete Historiographies – of Piracy, Propertization, and Thomas Jefferson

Link. Justin Hughes, 79 Southern California Law Review 993 (2006)

Meanwhile, Justin Hughes reaches back to the dawn of US copyright law to see how closely it matches the version of history frequently used by copyright scholars. He concludes that “historical claims frequently made in arguments about the propertization of copyright are incomplete,” and specifically focuses on three common examples: “the newness of the word ‘piracy,’ Thomas Jefferson’s views on intellectual property, and the history of the phrase ‘intellectual property.'” Hughes other work, which goes into more detail surrounding historical and other aspects of copyright law, is worth checking out.

Economists’ Topsy-Turvy View of Piracy

Link. Stan Liebowitz, 2 Review of Economic Research on Copyright Issues 5 (2005)

Recent scholarship on the effects of piracy have retreated from the traditional view that unauthorized copying always harms copyright holders. Liebowitz notes that in some situations, there is no harm — his own earlier work even demonstrated this. But the exceptions today have seemed to swallow the rule, resulting in economic literature on piracy that is “badly out of kilter” and tends to embrace views that are “more traditionally known as a breakdown in civilization.” Liebowitz uses this article to set the record straight and provide “a more balanced and nuanced view of copying.”

Remix Without Romance

Link. Thomas W. Joo, 44 Connecticut Law Review 415 (2011)

Joo devotes his article, featured previously on this site, to only two myths, but these are two myths that serve a central role in what could be called “free culture”, and thus deserving of thorough treatment. The first is that copyright law stifles “recoding and remixing” — Joo focuses specifically on the practice of digital sampling in music. The second is that if this were true, copyright law should adapt, because “by enabling more people to participate in culture, remixing and recoding supposedly enhance ‘semiotic democracy’ and mitigate the dominance of the media industry.” As Joo explains, if the goal is to facilitate “semiotic democracy,” than weakening copyright law to allow more remixing is the wrong way to reach that goal, since doing so would only tend to reinforce dominant cultural expression.

Constructing Copyright’s Mythology

Link. Thomas Nachbar, The Green Bag, Vol. 6 (2002)

Last, but not least, is the briefest article of the seven, and perhaps the most readable for non-lawyers. Written while Eldred v. Ashcroft was pending in the Supreme Court, Nachbar dismantles the historical claims made by those arguing in favor of striking down the Copyright Term Extension Act on constitutional grounds. He explains that these claims — for example, that copyright was designed solely as an incentive to create works, or that it was originally intended to limit the power of publishers — amount to little more than mythology. Nachbar concludes by noting the dangers of relying on such historical myths to shape copyright policy today.

Friday’s Endnotes – 08/10/12

By , August 10, 2012.

The time has gone by for urging the old and stale idea that authors should be satisfied with fame, and not permitted to entertain any sordid motives. The desire to acquire property is no sordid stimulus. Property is the basis of civilization. The acquisition of property raises the lower classes. The diffusion of property humbles the upper. Those laws which most sacredly guarantee and most rigidly enforce the right which a man has to the fruits of his labour, are not merely incentives to industry—they are the surest bulwarks of freedom.

—”Veto”, Correspondence, The Plaindealer, vol. 1, pg. 122 (Dec. 3, 1836).

Behind the music: This column might be ending, but the fight continues — Thank you, Helienne Lindvall, for four years of fearless reporting on the ever-changing music industry landscape. Lindvall is ending her column at the Guardian, but, as she notes, “the fight continues.” Chris Castle offers a great sendoff for Helienne Lindvall’s Excellent Column.

The Naked and the TED — Evgeny Morozov writes one of the most scathing, comprehensive critiques of the type of thinking that springs forth from Silicon Valley and permeates the internet. ‎”But perhaps this is what the Hybrid Age is all about: marketing masquerading as theory, charlatans masquerading as philosophers, a New Age cult masquerading as a university, business masquerading as redemption, slogans masquerading as truths.”

A2IM Files Comments To Obama Administration Regarding New Joint Strategic Plan on Intellectual Property Enforcement — The American Association of Independent Music has posted its comments on intellectual property enforcement, requested by Victoria Espinel, the US Intellectual Property Enforcement Coordinator. A2IM lays out what it feels should be the top 3 priorities in intellectual property enforcement.

About.com and the Slow Decline of Content Farms — Jonathan Bailey reports, “It’s an amazing thought to realize that Google is powerful enough to sustain entire economies, in particular with companies and individuals not directly involved with it, but that’s exactly what the content farm economy is: An economy of Google. Basically, content farms work by putting out as much content as possible on high-searched-for terms in hopes that Google will drive large amounts of traffic to them. Spammers do this by either scraping or generating content to fool the search engines but content farms do it by paying an army of authors to do it by hand.”

Understanding Flava Works v myVidster: does inline linking infringe copyright? — Barry Sookman takes an in-depth look at the Flava Works decision. Worth the read especially for the comparison between the decision and similar decisions in jurisdictions outside the US.

Will Aereo’s Internet Streaming Service Survive Second Circuit Review? — Internet service Aereo, a cable company in all but name, recently survived a motion for preliminary injunction in federal court. With an appeal on that ruling pending, attorney Andrew Berger looks at the lower court’s decision and examines Aereo’s chances at the Second Circuit.

The Deceptive Politics of Piracy — Scott Cleland takes issue with New York Times technology columnist Nick Bilton’s article, “Internet pirates will always win.” Says Cleland, “Mr. Bilton is not the first, and won’t be the last, columnist to buy into the piracy lobby’s deceptive political narrative that fighting piracy is akin to a futile game of Whac-a-mole, so content creators should just unilaterally surrender the concept of market pricing of their content going forward and offer it free to the public on the Internet or at a minimal price that Internet pirates judge is ‘fair.'”

BMW’s Response to Ads for Its Brands on Pirate Sites — Kudos to automaker BMW for taking action after it was pointed out that ads for their products were being served on sites with infringing content. And kudos to readers of the Trichordist for bringing this issue to their attention. BMW has “not only stopped the ads from being served on the particular site in question but the incident triggered a complete audit of BMW’s digital buying practices.  This includes a review of their current agreements with all of their partner ad networks, as well as a review of their current verification provider (Double Verify in this case).”

Google records show book scanning was aimed at Amazon — There seems to be a collective blindness toward tech companies in the tech press — with all this talk of “openness” and “sharing”, very little attention is paid to the fact that these companies pursue these policies because they are for-profit entities acting in their own best interests. Case in point: internal Google documents revealed through its litigation with the Authors Guild over its book-scanning project reveal that one of its motivations for making the decision to scan over 20 million books was that “we want web searchers interested in book content to come to Google not Amazon.”

New Congressional Report: IP Theft Is Hurting American Industries and Innovation — Says the MPAA, “A new report from the Congressional Joint Economic Committee this week sheds some light on the increase in intellectual property theft in recent years and underscores the damage it’s doing to businesses all across the US economy. Noting the many negative consequences of intellectual property theft on American industries, the report summarizes that, ‘Foreign infringement of intellectual property harms businesses by raising their costs, lowering revenue, and eroding profits.'”

Zoe Keating posts her online sales and streaming data — Musician Zoe Keating has made publicly available a Google Doc that breaks down her music-related earnings. Music Ally also links to an analysis of the report from the Atlantic. An interesting inside look at how one musician makes her living in the online economy.

The Genius of The Hunger Games

By , August 08, 2012.

On Friday, the Cynical Musician posted an article titled Demystifying Creativity, in which he asks the question, “What is creativity?” It’s an interesting post, worth a read, and it got me thinking.

I find myself in agreement with much of what Faza says, but I wanted to look at the question through the lens of copyright law. To do so, I’ll eventually get to The Hunger Games. But first, I’d like to look at the concept of “genius.”

Genius and Generation

Copyright, at its dawn in the US, was often spoken of in terms of “genius.” In March 1783, the US Continental Congress appointed a committee 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.” 124 Journals of the Continental Congress 180. In May, the committee issued its report, stating that it was “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.” 224 Journals of the Continental Congress 326. The pre-constitutional state copyright statutes of Connecticut, Georgia, and New Hampshire were titled Acts “for the encouragement of literature and genius.” The acts of New York and North Carolina both adopted the Continental Congress’s language that securing the rights of literary property would encourage genius and “persons of learning and genius”. During the ratification of the Constitution, future Supreme Court Justice James Iredell also referred to the Copyright Clause as an encouragement to genius. 3Answers 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 (1788).

Nowadays, we often think of a “genius” as someone with exceptional intelligence. But at the time, the term was broader: “a man endowed with superior faculties; mental power or faculties; disposition of nature by which any one is qualified for some peculiar employment.” 4Thomas Sheridan, A General Dictionary of the English Language (1780). The word comes from the Latin genius, an aspect of ancient Roman religion. It was used both to describe the “guardian deity or spirit which watches over each person from birth” 5“Genius“, Online Etymology Dictionary. and the “rational soul of every one.” 6St. Augustine, City of God, VII.13 (trans. Marcus Dods, 1887).

The latin term itself is derived from the Proto-Indo-European root “*gen-“, meaning “to produce” or “to beget”, and it shares a common heritage with words like “generate”. I mention this because it is interesting how the purpose of copyright, to encourage genius, and the scope of copyright, protection over what a creator generates, share an etymological relationship.

Genius and Copyright

Interesting because the exclusive rights only extend to what an author personally creates. “The sine qua non of copyright is originality.” 7Feist Publications, Inc. v. Rural Telephone Service Co., 499 US 340, 345 (1991).

To qualify for copyright protection, a work must be original to the author. Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity. …

Originality is a constitutional requirement. The source of Congress’ power to enact copyright laws is Article I, § 8, cl. 8, of the Constitution, which authorizes Congress to “secur[e] for limited Times to Authors . . . the exclusive Right to their respective Writings.” In two decisions from the late 19th century—The Trade-Mark Cases, 100 U. S. 82 (1879); and Burrow-Giles Lithographic Co. v. Sarony, 111 U. S. 53 (1884)—this Court defined the crucial terms “authors” and “writings.” In so doing, the Court made it unmistakably clear that these terms presuppose a degree of originality.

In The Trade-Mark Cases, the Court addressed the constitutional scope of “writings.” For a particular work to be classified “under the head of writings of authors,” the Court determined, “originality is required.” The Court explained that originality requires independent creation plus a modicum of creativity: “[W]hile the word writings may be liberally construed, as it has been, to include original designs for engraving, prints, &c., it is only such as are original, and are founded in the creative powers of the mind. The writings which are to be protected are the fruits of intellectual labor, embodied in the form of books, prints, engravings, and the like.”

In Burrow-Giles, the Court distilled the same requirement from the Constitution’s use of the word “authors.” The Court defined “author,” in a constitutional sense, to mean “he to whom anything owes its origin; originator; maker.” 8Id. at 345-46.

The idea/expression distinction is derived from this same reasoning. Facts and ideas do not owe their origin to any individual.

The author of a book comes to the great ocean of human thought which belongs to all; he dips up a portion of the brine, evaporates it, causes it to crystallize, purifies the crystals from unpleasant ingredients, and presents it in a new form, a form by which it is made his own. He enters the great forest of ideas, which is common ground, hews down trees, shapes them into articles of furniture, or builds a house with them, and he who takes from him that furniture is a thief, and he who breaks into that house is a burglar. The author clothes ideas in words of his own selection, forms the words into sentences of his own construction, gives the ideas his own arrangement, combines and illustrates them in his own manner, and in this state they are his own, made so by his labor, skill and invention, and they belong as properly to him as the product of salt-works on the edge of the sea belongs to the manufacturer. 9Speech of William Cullen Bryant, International Copyright: Meeting of Authors and Publishers, at the rooms of the New York Historical Society, pg. 14 (1868).

“No Man Writes Exclusively”

Above, we see recognition of the fact that creators always build on the works of the past. No creator creates in isolation, but instead “stands on the shoulders of giants.” And progress in the arts and sciences is made by encouraging genius: the originality that a creator generates.

Justice Story said as much in 1845:

In truth, in literature, in science and in art, there are, and can be, few, if any, things, which, in an abstract sense, are strictly new and original throughout. Every book in literature, science and art, borrows, and must necessarily borrow, and use much which was well known and used before. No man creates a new language for himself, at least if he be a wise man, in writing a book. He contents himself with the use of language already known and used and understood by others. No man writes exclusively from his own thoughts, unaided and uninstructed by the thoughts of others. The thoughts of every man are, more or less, a combination of what other men have thought and expressed, although they may be modified, exalted, or improved by his own genius or reflection. If no book could be the subject of copy-right which was not new and original in the elements of which it is composed, there could be no ground for any copy-right in modern times, and we should be obliged to ascend very high, even in antiquity, to find a work entitled to such eminence. Virgil borrowed much from Homer; Bacon drew from earlier as well as contemporary minds; Coke exhausted all the known learning of his profession; and even Shakespeare and Milton, so justly and proudly our boast as the brightest originals would be found to have gathered much from the abundant stores of current knowledge and classical studies in their days. [Emphasis added.] 10Emerson v. Davies, 8 F.Cas. 615 (D. Mass. 1845).

Even classical fair use can be said to embrace these ideas. “From the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright’s very purpose, “[t]o promote the Progress of Science and useful Arts.” 11Campbell v. Acuff-Rose Music, 510 US 569, 575 (1994).

[T]he author’s consent to a reasonable use of his copyrighted works ha[d] always been implied by the courts as a necessary incident of the constitutional policy of promoting the progress of science and the useful arts, since a prohibition of such use would inhibit subsequent writers from attempting to improve upon prior works and thus . . . frustrate the very ends sought to be attained. 12Harper & Row, Publishers v. Nation Enterprises, 471 US 539, 549 (1985), quoting H. Ball, Law of Copyright and Literary Property 260 (1944).

It’s a misnomer, then, to claim that the idea that “everything is a remix” somehow negates the basis for copyright.

But there are those who do indeed claim that the idea that creativity is built on the past is foreign to a legal framework that protects specific expression. There are those who say copyright “stifles” creativity, or those who say, “our system of law doesn’t acknowledge the derivative nature of creativity”, or academics who quote Michel Foulcault and speak of the notion of “Romantic authorship” — even though the cumulative nature of creativity is baked into copyright law.

The Genius of The Hunger Games

With that, let’s turn to The Hunger Games as an example.

Suzanne Collins’ hit trilogy (and now feature film) tells the tale of a dystopian future where children are forced to battle to the death. Since it was published, a few have compared it to the 2000 Japanese film Battle Royale, about a dystopian future where children are forced to battle to the death. Some have even asked if the former was a rip-off of the latter. Collins, however, has said in interviews that she had never watched Battle Royale before writing her books, 13In order to copy a work, one must have seen the work. In a copyright infringement case, access to the work is one of the elements the plaintiff must prove, see, e.g., Ferguson v. National Broadcasting, 584 F.2d 111 (5th Cir. 1978). and aside from the central conceit, both stories differ substantially.

In other interviews, though, Collins admits that she had drawn inspiration from another, existing story: the ancient Greek myth of Theseus and the Minotaur. Says Collins, “In her own way, Katniss [the heroine of The Hunger Games] is a futuristic Theseus.” And in its own way, Hunger Games is a “remix” of the ancient Greek myth.

But would it be copyright infringement? Obviously, the myth of Theseus was written thousands of years before copyright even existed, but let’s say it wasn’t. And obviously, as with most myths, there is no single, definative version of the story, but let’s say there was (for example, Plutarch’s version, 75 A.D., trans. John Dryden). Even then, there wouldn’t be any verbatim copying between the two. And you’d be hard-pressed to make the case for nonliteral substantial similarity between the stories. 14As the Second Circuit has stated, substantial similarity “requires that the copying [be] quantitatively and qualitatively sufficient to support the legal conclusion that infringement (actionable copying) has occurred. The qualitative component concerns the copying of expression, rather than ideas [, facts, works in the public domain, or any other non-protectable elements]…. The quantitative component generally concerns the amount of the copyrighted work that is copied.” Castle Rock Entertainment v. Carol Publishing Group, 150 F.3d 132, 138 (1998), quoting Ringgold v. Black Entertainment Television, Inc., 126 F.3d 70, 75 (2d Cir. 1997). Though the two may share some plot elements and stock characters, the differences far surpass any similarities.

The Hunger Games, in other words, though it builds on existing works, is decidedly original in the copyright sense; it is a product of Collins’ genius in the classical sense.

References

References
↑1 24 Journals of the Continental Congress 180.
↑2 24 Journals of the Continental Congress 326.
↑3 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 (1788).
↑4 Thomas Sheridan, A General Dictionary of the English Language (1780).
↑5 “Genius“, Online Etymology Dictionary.
↑6 St. Augustine, City of God, VII.13 (trans. Marcus Dods, 1887).
↑7 Feist Publications, Inc. v. Rural Telephone Service Co., 499 US 340, 345 (1991).
↑8 Id. at 345-46.
↑9 Speech of William Cullen Bryant, International Copyright: Meeting of Authors and Publishers, at the rooms of the New York Historical Society, pg. 14 (1868).
↑10 Emerson v. Davies, 8 F.Cas. 615 (D. Mass. 1845).
↑11 Campbell v. Acuff-Rose Music, 510 US 569, 575 (1994).
↑12 Harper & Row, Publishers v. Nation Enterprises, 471 US 539, 549 (1985), quoting H. Ball, Law of Copyright and Literary Property 260 (1944).
↑13 In order to copy a work, one must have seen the work. In a copyright infringement case, access to the work is one of the elements the plaintiff must prove, see, e.g., Ferguson v. National Broadcasting, 584 F.2d 111 (5th Cir. 1978).
↑14 As the Second Circuit has stated, substantial similarity “requires that the copying [be] quantitatively and qualitatively sufficient to support the legal conclusion that infringement (actionable copying) has occurred. The qualitative component concerns the copying of expression, rather than ideas [, facts, works in the public domain, or any other non-protectable elements]…. The quantitative component generally concerns the amount of the copyrighted work that is copied.” Castle Rock Entertainment v. Carol Publishing Group, 150 F.3d 132, 138 (1998), quoting Ringgold v. Black Entertainment Television, Inc., 126 F.3d 70, 75 (2d Cir. 1997).

Flava Works v Gunter: Injunction Vacated

By , August 06, 2012.

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

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

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

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

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

So what did the Seventh Circuit do here?

The eBay Standard

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

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

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

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

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

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

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

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

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

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

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

What else did the court hold?

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

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

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

myVidster Does not Contribute to Unauthorized Copying

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

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

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

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

Are embedded videos a “public performance”?

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

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

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

[…]

To perform or display a work “publicly” means—

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

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

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

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

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

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

References

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

Friday’s Endnotes – 08/03/12

By , August 03, 2012.

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

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

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

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

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

Enter the Pirate King

By , August 02, 2012.

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

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

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

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

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

Early on, Parliament asked:

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

Willetts answers, music is too expensive:

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

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

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

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

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

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

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

Later, Willetts proposes a compulsory license:

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

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

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

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

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

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

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

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

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

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

Perhaps, most tellingly, is the following exchange:

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

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

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

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

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

References

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

Friday’s Endnotes – 07/27/12

By , July 27, 2012.

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

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

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

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

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

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

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

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

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

Megaupload Megaupdate

By , July 23, 2012.

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

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

Extradition

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

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

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

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

Motion to Dismiss

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

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

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

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

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

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

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

Search Warrant Illegal

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

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

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

User Data

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

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

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

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

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

As the Government notes in its brief:

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

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

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

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

References

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

Friday’s Endnotes – 07/20/12

By , July 20, 2012.

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

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

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

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

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

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

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

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

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

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

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

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

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

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