Author: David Newhoff

David is an author, communications professional, and copyright advocate. After more than 20 years providing creative services and consulting in corporate communications, he shifted his attention to law and policy, beginning with advocacy of copyright and the value of creative professionals to America’s economy, core principles, and culture.

Strange Rulings at the Second Circuit

Copyright split 2The Second Circuit Court of Appeals handed down opinions on June 16th with two important implications—one that looks like legislating from the bench by ignoring Section 301(c) of the Copyright Act and another that appears to create a split with the Ninth Circuit over interpretation of what’s called “red flag” knowledge referring to § 512(c) of the DMCA.

The case Capital Records v Vimeo involves the alleged infringement of pre-1972 sound recordings that were uploaded to the platform in a manner likely to be infringing. With the passage of the 1976 Copyright Act, sound recordings that were fixed prior to February 15, 1972 remained under the protection of the state copyright laws in which the works were registered.  And as Stephen Carlisle at Nova Southeastern University points out in his in-depth analysis of the circuit court ruling, these pre-1972 recordings have never been covered by federal law, but this court just ruled that they are covered by the provisions in the DMCA (which is of course federal law), which means that Vimeo is therefore eligible for the safe harbor shield in regard to alleged infringement of these recordings.

The EFF and other proponents of the ruling have stated that the court applied common sense on the grounds that the intent of Congress with the DMCA could not have been to “leave service providers subject to liability under state laws.”  It is certainly true that a ruling in the other direction would have major implications for a site like YouTube, which could face numerous litigations under state copyright laws or would have to figure out how to keep all the possibly-infringing, pre-1972 music off its platform.  While this would arguably not be consistent with the intent of DMCA, is this fact alone reason for the appeals court to ignore the federal copyright law statute as it stands?

Keeping in mind that it was also not the intent of Congress that the DMCA would shield the volume of infringements that occur today, Carlisle’s main point is that Section 301 of the Copyright Act is explicit on the copyright status of these recordings and so writes, “Section 512 [of the DMCA] takes away my right to sue a service provider from infringing my pre-1972 sound recordings. This limits my remedies under state law. Unless Congress is going to amend 301 [of the Copyright Act] to provide for an exception for ‘safe harbor’ it cannot act in the way that this Court has just ruled that it did.”  In short, this ruling strips owners of pre-1972 recordings of the ability to enforce their rights under state law even though Congress has not yet folded them into protection of federal law—a proposal that is currently being considered.

The other important opinion in this case, according to Devlin Hartline at the Center for the Protection of Intellectual Property, is that it creates a split with the Ninth Circuit on the issue of what’s called “red flag” knowledge of infringement by the defendant OSP. One of the conditions an OSP must meet in order to retain safe harbor is to “expeditiously” remove infringing material once the provider has “actual knowledge” of an infringement or once the provider becomes “aware of facts or circumstances from which infringing activity is apparent.”  This second part of the statute is generally referred to as “red flag” knowledge, and it is just vague enough to be the basis of an ongoing tug-o-war between rights holders and service providers.  For instance, common sense would dictate that any reasonable person working at Vimeo and monitoring the platform would know that a lot of popular and famous music was not licensed to the individuals uploading it.  And that’s essentially what Capitol Records argued.  But the court disagreed.

The Second Circuit opinion held that Capitol had not presented sufficient evidence to find that the defendant had “red flag” knowledge, stating the following:

[A] showing by plaintiffs of no more than that some employee of Vimeo had some contact with a user-posted video that played all, or nearly all, of a recognizable song is not sufficient to satisfy plaintiffs’ burden of proof that Vimeo forfeited the safe harbor by reason of red flag knowledge with respect to that video.

But Hartline’s point is that the Second Circuit is applying a different standard to “red flag” knowledge than the one imposed by the Ninth Circuit and that the two courts are now split on two separate issues in this regard.  The first opinion is whether or not “red flag” knowledge has to pertain to the works-in-suit.  The Ninth says No; the Second says Yes.  The other opinion is whether or not employees at an OSP can have “red flag” knowledge without having either industry or legal expertise.  The Ninth says Yes; the Second says No.

In other words, the Ninth Circuit court has held that employees of an OSP, by seeing that numerous, famous titles are being uploaded, can intuit that infringement is probably happening, while the Second Circuit disagrees that this is sufficient.  Then, the Ninth Circuit holds that “red flag” knowledge of any infringement not “expeditiously removed” by the OSP is sufficient to void safe harbor protection, while the Second Circuit holds that only knowledge of the works-in-suit may be considered in this regard.  Hartline speculates that this split could result in the Supreme Court taking up the matter, for better or worse.

I have to say that it could not have been the intent of Congress that OSP employees should need to have industry and/or legal expertise in order to at least suspect that infringement is likely occurring on a web platform.  My nine-year-old is used to asking if stuff is legal on the web; it’s not a concept that requires a law degree or even high-school civics.  We’re taught as just regular folks that “ignorance of the law is no excuse,” and the Second Circuit’s opinion in this case seems to run afoul of this common-sense application—suggesting that a professional who works at a place like Vimeo can’t make an educated guess that UserDude8394 probably did not license that Beatles song he uploaded.

In another twist on this story, there are ten videos in contention for which Vimeo may be liable because these were made by employees themselves. The brief filed by Capitol in NY District Court in January of 2013 states the following:

“Vimeo admits that ten of the infringing videos on the schedules to the complaints in this action reside in the accounts of Vimeo employees, accessible from the user page of the Vimeo employee who uploaded them.  Almost all bore a flag (or “badge”) or other indication designating them as having been made by Vimeo employees.”

Because safe harbors apply only to videos uploaded at the direction of users, these ten videos were not considered in the appeal by Second Circuit Court.  It is odd, of course, to consider that Vimeo employees could directly infringe famous musical works while the court assumes innocent blindness regarding infringement on Vimeo’s platform.  As of March 2013, the Community Development Director at Vimeo states on Quora that “we’re quickly approaching 100 employees.” So, how much of a small workforce has to directly and consciously infringe for the courts to consider that veil of ignorance is unlikely?  Stay tuned. We may find out.

Hypocrisy is as hypocrisy does in copyright fight.

I recognize that it’s vogue to malign the interests of copyright holders, particularly when various pundits recount anecdotes of sympathetic-sounding new creators who find themselves as defendants in a litigation. Recently, Andy at TorrentFreak published a lamentation on the excess and “hypocrisy” of copyright enforcement in the case of Serendip v Lewis Bond.

Mr. Bond, a UK citizen who distributes videos to his monetized YouTube channel called Channel Criswell, posted his 20-minute documentary composed almost entirely of film clips from the works of Stanley Kubrick along with his own narrated commentary. The use of the clips may arguably be a fair use—I admit to scanning the doc and not watching the whole thing—but Bond also synched several music tracks from A Clockwork Orange to his film, and he is now being sued for copyright infringement by Serendip LLC, which owns and manages the rights to the works of composer Wendy Carlos.

Calling it a “Sad Hypocrisy” Andy wants to present a tale in which a budding and talented young filmmaker (Bond is 23) is being unfairly and needlessly squashed by an older artist, who should respect that Bond is simply building upon works the way Carlos built upon the works of others. Andy opines that there is a path other than the courts to a happy place where artists collaborate instead of litigate, which sounds sweet but is entirely missing the point. To emphasize his perspective, Andy makes such a hash of copyright law in general, and the facts of this case in particular, that the only clear hypocrite in the mix is him. After all, it is hypocrisy to believe so firmly in a position on a given topic that one makes no effort to examine the facts of an individual story before adding it to the anthology of “evidence” for that point of view.

To begin, Andy relies on a typical assumption that he knows anything about Carlos’s financial interest in her works and that her current income is in any way relevant to enforcing her rights. He states, “While undoubtedly a wonderful and timeless piece of music, is a track from 1971 really bringing in the money for Clockwork Orange [sic] composer Wendy Carlos today? Has Bond’s fleeting reproduction of a part of this track in his documentary caused real financial damage?”

Here, Andy makes two critical errors. The first is that enforcing IP rights isn’t always about financial damage from the use being litigated. It’s about precedent. One either protects IP or one does not. And if a rights holder lets some infringements go on the grounds that “they weren’t all that harmful,” this can weaken his/her ability to enforce those rights in future cases. The second mistake is that Andy’s assumption of value in this case is apparently wrong. The brief filed by Serendip states that of all of Carlos’s works, the tracks she created for A Clockwork Orange are the ones most in demand and most often licensed for substantial fees. This means that, yes, Bond’s use, if left unenforced, does directly threaten the business in which Serendip manages those rights for Carlos’s works. How much or little she currently earns from this enterprise is nobody’s damn business and also irrelevant to the need for consistency in enforcement.

Andy’s next error—and it’s a whopper—is to go off on a whimsical tangent calling Carlos a “hypocrite” because one of the works in question is not her composition but that of Henry Purcell, who died in 1695. Although Andy seems to think he’s zapped Carlos with a real gotcha here, he fails to acknowledge that master recordings are separately copyrightable regardless of who the original composer is, and that uses of music exactly like those made by Bond — as atmospheric elements synched to a film — require both a synch and a master use license. The underlying composition is either separately copyrightable or in the public domain, as is the case here. Andy describes the music thus: “It is an abridged version of this [Purcell’s] music that forms the entire basis of Carlos’ 1971 work. Arrangement and beautiful synthesizer work aside, it’s virtually identical.”

Nope. It’s just identical. Because if one simply looks at the playlist for the film’s soundtrack, we see that the “Title Music from A Clockwork Orange” is attributed to Purcell’s March for the ‘Funeral of Queen Mary.’ Carlos doesn’t claim authorship of the underlying composition and has no reason to do so. But, as mentioned, this has nothing to do with a litigation over copyright infringement of her master recordings, of which three are named in this lawsuit — all of them based on classical compositions, with the other two by Rossini and Beethoven. Andy wants to propose that Lewis Bond is building upon Carlos’s work the way Carlos built upon the works of these other composers, but this is neither true creatively nor legally from any real-world analysis of Bond’s use.

As to the matter of Bond as a victim of copyright, I clearly cannot say whether he is being defiantly foolhardy or innocently naive in this case, but the Serendip brief does state that after they issued a takedown notice through DMCA, Bond “immediately” filed a counter-notice. Now, I’ve learned a few things about copyright over the last four years, but there is no way in hell I would take a potentially $450,000 gamble that my own fair use analysis would be so solid that I’d go filing a counter-notice in a similar circumstance — at least not without consulting an attorney. And in this particular instance, I cannot see an argument that remotely favors a finding of fair use. Bond used these tracks in the most typical manner music is used for film — as accompaniment — and this use is always licensed. If Bond were attempting to distribute his film anywhere but YouTube, he would have to demonstrate that he had all such relevant license agreements in place.

It’s not that I don’t have any sympathy for Lewis Bond—at least in theory—but stories like this raise two broader issues in my mind. The first is that new creators, who want to take the authorship of their works seriously have just as much obligation to consider copyright as the creators who came before them. Wendy Carlos didn’t build her career without ever considering the copyright implications of her choices, and those who want to use or build upon her works have the same responsibility. Just because a contemporary new creator is a creature of the digital age, this calculus shouldn’t change, though many seem to think it should.

Having said that, if Bond and his contemporaries are victims at all, I would argue that they are harmed by editorials like this one by Andy at TorrentFreak. The pundits and corporate leaders who have so consistently misrepresented facts about the law and pushed a message of “infringe now, deal with it later” are doing a disservice to the next generation of artists by fostering bad intel on complex matters like fair use. As such, if these interests really cared about artists, they might back off the rhetoric a bit because new creators like Bond simply cannot afford the hubris of tech-industry billionaires.

Thanks to regular reader John Warr for bringing this story to my attention.

TVEyes v FOX a Huge Deal for Copyright

One of the most important copyright cases in the country landed at the Second Circuit Court of Appeals in December of 2015. Appellants TVEyes and Fox News Network filed opening briefs, each seeking new rulings after the Court for the Southern District of New York held a split decision last year that satisfied neither party.  In July of 2013, Fox sued TVEyes—a B2B, subscription-based, news-monitoring service that records, stores, and indexes 1,400 channels—for copyright infringement of its programs.  TVEyes provides several features for its subscribers, some of which were held to be fair use by the district court while others were not. Most notably, its Content Delivery Features were held to be “necessarily infringing,” and thus the company was enjoined from further offering these services to its customers.

TVEyes is appealing on the grounds that the district court erred in not finding its whole business model, including the Content Delivery Features, a fair use of Fox’s copyrighted news broadcasts and that the court “abused its discretion” in enjoining the company from providing those services. Fox is appealing on the grounds that TVEyes is grossly misrepresenting its business model, the character of its customer base, and especially the nature of the Content Delivery Features; and it is seeking to have the entire district court ruling overturned. This case is important because, if the evidence presented in the Fox brief is an accurate portrayal of TVEyes, and if the business as it stands were held to be a fair use, that outcome could be devastating to the existence of copyright law itself.

It would be difficult to adequately summarize all of the issues raised by the combined 200 pages submitted by the appellants, but the significance of this case seems to rest on two major factors.  The first is the true nature of TVEyes’s business model; and the second is the manner in which TVEyes is asking the court to interpret both the first and fourth factors for consideration of fair use.

In simple terms, TVEyes portrays its service—so stated in its brief—as a “research only” tool akin to Google Books, and their argument relies heavily on this precedent ruling to assert that its entire service—including the Content Delivery Features—makes fair use of Fox’s copyrighted works.  But based on the evidence presented in the Fox brief, TVEyes provides services that not only excede the purposes of research, but which directly substitute existing, legal services for achieving the same commercial and non-commercial ends achieved by TVEyes.

Subscribers to TVEyes, who pay $500/month, include both private and public entities that can search any of the monitored networks for broadcasts of interest.  The TVEyes brief states that the company’s User Agreement requires subscribers to make exclsively internal use for research purposes only. In support of this claim, the brief cites examples that sound both niche and internally analytical, like “The Army uses TVEyes to track media coverage of military operations to ensure national security and safety of troops.” TVEyes’s testimony paints a picture of limited use and unprecedented capability in order to liken the service to that of Google Books.

The evidence presented in the Fox brief, however, offers a very different view of TVEyes—one that cannot be compared to Google Books for one simple reason that Google does not make whole, copyrighted books available to users, while TVEyes apparently does exacly this and quite a bit more.  According to Fox’s testimony, TVEyes provides alternative, infringing access to its subscribers who may a) view 24/7 live streaming of broadcasts; and b) download entire programs in sequential, ten-minute segments.  These video clips are also made available in high-definition without watermarks or copyright statements, and these facts alone are highly suspect since there is no need for either a news-monitoring service or its customers to cover the cost of high-def streaming for “research-only” purposes like those described in the TVEyes brief.

The high-def feature can, however, be explained by the evidence cited by Fox, which states that the majority of TVEyes’s customers (including the Army) appear to be PR firms or PR departments, to whom TVEyes has clearly advertised their service as a tool for storing and distributing unlimited TV content via email, social media, or other platforms.  Citing several examples from research, marketing materials, the Terms of Service, and TVEyes executive testimony, Fox presents a compelling argument that TVEyes is far from an internal-use-only research tool as claimed. Instead, Fox asserts that evidence proves TVEyes to be an “all-you-can-eat” subscription service that directly substitues live TV broadcast, the network’s own online offerings, and the network’s licensing regimes for PR and other uses identical to those being provided by TVEyes.

A classic example of a TVEyes use by a typical subscriber would be when an executive is interviewed by Fox Business Network, and her company wants to exploit the interview for PR purposes and/or edit the segment into an internal video, intranet, or closed-circuit news feed.  Fox (or any network) will normally license clips for these purposes; or if the use is a social media share, the Fox web portal already makes customized embeds possible according to Fox’s testimony.  TVEyes’s Content Delivery Features appear to circumvent both of these revenue streams that rightly belong to the network; and as the Fox brief notes with specific regard to the loss of online traffic through embeds, this kind of expropriation serves to hamper the development of digital strategies for all traditional news and entertainment producers.

The Fair Use Arguments

The most important doctrinal issue in this case is the manner in which TVEyes appears to be presenting its fair use defenses; and the two arguments of greatest consequence are the assertion of “transformativeness” under the first factor and the claims pertaining to market value harm done to Fox under the fourth factor.  Both arguments ask the court to read the statutes in entirely novel ways—interpretations that would come extremely close to nullifying copyright protection of any kind for anyone.

TVEyes’s claim of “transformativeness” relies on the manner in which some of its customers may use its suite of services. But as attorneys for Fox point out—and they specifically cite Google Books here—a defendant bears the burden of proving that its use is intrinsically “transformative” (i.e. novel) rather than argue that certain users of its service might make individual, “transformative” uses of works the defendant has made available to them. I know that’s a mouthful, but TVEyes is essentially arguing that if some of its subscribers make “transformative” uses of Fox news segments, this reflexively makes TVEyes a “transformative” service.

Fox appropriately argues that TVEyes’s assertion here “inverts the first factor” because its business merely substitutes existing, legally available (and well-established) services for both non-commerical and commercial TV-monitoring purposes.  Thus, the public interest is already served in this regard (and “the public” cannot afford TVEyes by the way) and that TVEyes is, therefore, not intrinsically “transformative.”  By contrast, Google Books was held to be intrinsically “transformative” no matter how people use it and because it does not provide a substitute for legal access to whole books but only makes “snippets” from books available.

Under the fourth factor, TVEyes states that Fox has not yet produced any evidence that it has sustained any market harm due to TVEyes operations.  Again, the Fox brief points out that this is a misinterpretation of the fourth factor analysis, which considers potential market harm and not market harm done up to the date of litigation. In addition to the fact that Fox does present examples of direct loss (e.g. 140,000 social media shares for PR purposes that should either be licensed or embedded from Fox’s site), the Fox brief correctly points out that TVEyes is asking the court to consider the fourth factor in a novel and unintended manner.  If an infringement suit is brought shortly after a use is made, and the claim is then countered with a fair use defense, potential market harm is the only rational consideration that can possibly be made at the time.  A court would not say to a plaintiff, “Let’s give the defendant a year or two and see if his use has an adverse effect on your sales.”  That’s not how the fourth factor fair use analysis is applied.

Even in this long post, I’ve only scratched the surface of the many details in this particular case.  But assuming the evidence provided by Fox is accurate, the manner in which TVEyes appears to be asking the courts to reinterpret fair use doctrine seems to be the existential crux of this case for the future of copyright.  There appears to be sufficient evidence that TVEyes is not merely using whole works as a database to create an index for research—as is the case with Google Books—but is making whole TV programs availalbe for mass, unlimited distribution.  As such, a finding of fair use for TVEyes appears to this layman to be tantamount to saying that copyright is no longer relevant.