Category: Art

Second Circuit Soundly Denies Rehearing to Warhol Foundation

Many copyright observers, me included, believe the Supreme Court’s majority opinion in Google v. Oracle was deeply flawed because rather than answer the copyrightability question presented (i.e. whether APIs are properly a subject of protection), the Court instead deconstructed that analysis and spread it across the four factors of the fair use test. As a result of that decision, copyright case law was left with a fair use opinion so over-broad in some of its reasoning that it also explicitly stresses that its findings should be read as unique to that case and not interpreted to disturb fair use doctrine in general. Warhol

And rightsholders should be very glad the Court sought to limit that opinion because almost immediately on the heels of the decision, the Andy Warhol Foundation filed a petition for en banc rehearing at the Second Circuit, principally on the basis that Google v. Oracle had altered the fair use analysis in its favor. At issue is Warhol’s use of photographer Lynn Goldsmith’s unpublished photograph of Prince (see background below), and as stated in earlier posts, I would personally find non-infringement in the Warhol screens, but not for most of the reasons presented by AWF, and especially not for the reasons adopted in Google.

What was most concerning for creators about the Google decision was the very broad opinion (mostly discussed in the analysis of fair use factor four on potential market harm) that general social purpose may be served by finding fair use of even verbatim copying of protected works. Thus, AWF argued that, just like software innovation serves social purpose, so too, does fine art serve a social purpose, even where verbatim copying exists.. And while those generalizations are true, one can imagine how a too liberal reading of the “social benefit” premise might find fair use in almost anything.[1] Thus, AWF’s petition for rehearing was the first test of the Court’s stated limitations in Google, and here, the Second Circuit was unequivocal. In a withering 63-page opinion, it responded specifically to the argument that Google v. Oracle had changed the law thus:

In particular, the Supreme Court in Google took pains to emphasize that the unusual context of that case, which involved copyrights in computer code, may well make its conclusions less applicable to contexts such as ours. Thus, while Google did indeed find that the precise copying and incorporation of copyrighted code into a new program could (and did, on the particular facts of the case) constitute fair use, the opinion expressly noted that ‘copyright’s protection may be stronger where the copyrighted material . . . serves an artistic rather than a utilitarian function.’

And to further emphasize that the outcome in Google had not altered fair use doctrine as AWF asserted, the opinion states:

And indeed, the Supreme Court did not leave that conclusion to inference, expressly advising that in addressing fair use in this new arena, it ‘ha[d] not changed the nature of those [traditional copyright] concepts.’

So, this is an odd one to comment upon for me because I believe the fair use reasoning in Google v. Oracle is very bad law, while I find the Second Circuit’s analyses in Goldsmith to be generally good law, albeit arriving at a conclusion with which I disagree. Most importantly for rightsholders, though, is that the first attempt to exploit the Google decision beyond the limits of a certain type of computer code has failed. And that is certainly very good law.

Background on AWF v. Goldsmith (reprinted from earlier post)

Lynn Goldsmith captured the photograph at issue in 1981, during a truncated photo session with the semi-reclusive musical artist Prince Rodgers Nelson, who was then barely known to mainstream audiences as Prince. Goldsmith contends that she made certain creative choices resulting in an image of the “vulnerable human being” behind the persona. The photograph was never published but was licensed in 1984 (unbeknownst to Goldsmith) to Vanity Fair as a “reference photo” to produce an illustration to accompany a story about musician’s rise to stardom. In fact, the photo was used by Andy Warhol make a series of silkscreens similar to those he has made of Marilyn Monroe, Mao Zedong, etc., all using photographs as original sources.

Goldsmith was not aware of the existence of the Warhol screens until 2016 when, after Prince’s death, Vanity Fair published a special edition with one of the Warhol versions on the cover. At that time, Goldsmith communicated to the Andy Warhol Foundation (AWF) that the works may infringe the copyright on her still unpublished photo, and in response, AWF filed suit seeking a declaratory judgment of non-infringement or, barring that, a finding of fair use. The district court held the Warhol screens to be fair use, primarily by following the Second Circuit ruling in Cariou v. Prince, but on appeal, the court reversed, finding the Warhol screens are not fair uses.

[1] Notably, the Court could have served the same intent by finding APIs to be uncopyrightable, which would have been a cleaner ruling with respect to copyright law in general.

Rare Books Publisher Valancourt Versus The Deposit Requirement

On July 23, the District Court for the District of Columbia denied publisher Valancourt’s claims that the requirement to provide deposit copies of U.S. published works to the Library of Congress constitutes an unlawful taking under the Fifth Amendment and/or an infringement of speech under the First Amendment. Although many legal experts are likely to agree with the outcome, some may also find the reasoning a little tortured, while at the same time, rightsholders may be made aware of an obscure but significant hypocrisy in the Library’s authority to demand deposit copies. Namely, that in certain cases, the copyright owner receives no benefit in return for compliance.

There is nothing new, of course, about the general requirement that copyright owners submit deposit copies in order to participate in the copyright system. Or to put it more philosophically, the tradition of supplying deposit copies, dating back to England’s Statute of Anne (1710), is grounded in copyright’s modern purpose to incentivize the creation and dissemination of cultural works. In the United States, this principle was most expansively adopted in the 1870 revision to the copyright law, which consolidated the registration process at the Library of Congress with the clear purpose of growing that collection.

Today, the Library of Congress contains the largest collection of works in the world, thanks in no small part to its statutory authority to demand deposit copies of any work published in the United States. And in most cases, the deposit copy requirement is not terribly burdensome for authors or publishers, especially when submitting digital copies along with a registration application to the Copyright Office.

Nevertheless, §407 of the copyright law, which empowers the Library, via the Copyright Office, to demand copies, and even penalize scofflaws, contains an inherent conflict because the mandate is not explicitly a condition for the rightsholder to avail himself of full copyright protection. For this reason, Valancourt Books’s complaint against the Copyright Office, while perhaps strained on constitutional grounds, highlights an uncommon, but significant question of justice.

Background

The niche publisher Valancourt Books was founded by James Jenkins in 2015 and is today operated solely by Jenkins and his husband Ryan Cagle. Together they edit or oversee the production of books from old, rare, and hard-to-find manuscripts—some dating back to the 18th century—which are printed on-demand for customers, including educational institutions. Although many of the works they republish are long in the public domain, the companion material in the Valancourt editions, like scholarly introductions and footnotes, are subjects of copyright; and some of the books they print are still under copyright protection and are, therefore, used by permission of authors or their estates.

Valancourt does not register its books with the Copyright Office—or at least it did not register the 240 titles at issue in this litigation—but it does voluntarily place notices of copyright in the front material. The reason for the notices appears principally to let readers know that either the underlying manuscript and/or supporting elements in the book are protected by copyright. Particularly in a case in which Valancourt has obtained permission for limited, on-demand publication of an out-of-print book, they would reasonably not acquire a traditional publisher’s license but would need to notify readers that the author or her estate still owns the copyright.

In 2018, Valancourt began receiving letters from Copyright Acquisitions Division (CAD) of the Copyright Office demanding deposit copies (the “two copies of best editions” as articulated by statute) of all 341 titles in its catalog. Requiring a print-on-demand niche publisher to supply 682 books at its own expense is a substantial burden, which the Copyright Office has discretion to limit upon a request for “special relief.” However, it was only after Valancourt challenged the demand through legal counsel that the USCO eventually reduced the number of titles to 240 and amended the deposit format it would accept to electronic copies.

Valancourt averred that even the demand for electronic copies was too burdensome for a small operation to access and, in some cases, update older files into compatible deposit formats. Whether this claim is reasonable—files dating back to 2015 should generally work today—Valancourt elected to go big by filing a lawsuit against the Copyright Office and the DOJ, alleging that the deposit demand itself, as codified in §407 of the copyright act, is unconstitutional.

The First Amendment Claim

With regard to Valancourt’s First Amendment claim, the publisher is probably out on a legal limb when it argues that “because only those publishers that receive a demand letter from the Copyright Office can be fined for noncompliance, and because the letters are not sent out at random, the deposit requirement is also a content-based restriction in practice.”

Here, the court finds that there is nothing in the record to indicate that the discretionary practices of the CAD makes content-based decisions as to which publishers it contacts to demand compliance with the deposit requirement. As such, nothing about the nature of Valancourt’s claim appears to implicate an infringement of the speech right. Nevertheless, Valancourt is probably justified in feeling somewhat picked on due to the fact that the LOC/USCO rarely make deposit demands relative to the volume of works produced in the U.S.

The Fifth Amendment Claim

Under the Fifth Amendment, the state may not take private property without due process, which most commonly applies to real property and compensation for the taking of same. But here the court leans on Ninth Circuit precedent in response to another deposit demand case, reiterating, “[t]here is no question but that the materials are private property and that deposit with the Library is for public use,” but “Congress can reasonably place conditions on the grant of a statutory benefit.”

That may sound reasonable on its face because we are accustomed to complying with certain conditions when accessing various services provided by a state or federal agency. But copyright is a funny animal in this regard, and especially tricky in Valancourt’s unusual circumstance. The first problem is that copyright is not a conditional “statutory benefit,” but rather a statutory bundle of rights that attach automatically to any subject matter work fixed in the U.S. after January 1, 1978. The next problem is that although copyright notices are not required by law or administrative function of the Copyright Office, Valancourt’s placement of notices was the factor on which the court’s opinion turned in rejecting the takings claim. Here, it agreed with defendants that the notices constitute “receiving the benefits of copyright,” which obligates plaintiffs to comply with the deposit copy condition. But what benefits does Valancourt receive?

The big condition with which most creators are familiar is registration, which is not mandatory, but is a prerequisite to filing a claim of infringement in federal court. And, of course, submitting deposit copies is a condition of registration, which is reasonable enough as a bargain, but here’s the rub …

Section 407 of the copyright act, which gives the Copyright Office the authority to demand copies (and solely for the benefit of the Library) has nothing to do with the registration formality, which avails the owner of the full opportunity to enforce a copyright in federal court. Simply put, the Library has the authority to demand copies of works published in the U.S. (or levy fines for failure to do so), regardless of the rightsholder’s choice to avail himself of the benefits of registration. And while this disconnect may rarely be a conflict, and may not ultimately be found to rise to the standard of an unconstitutional taking, the Valancourt example reveals that it isn’t exactly equitable either.

Especially in this circumstance, in which this niche, on-demand publisher is responsibly providing rare books that comprise a mix of public domain and copyrighted materials, it is not unreasonable for Valancourt to feel it is trapped between a rock and a hard place. Its modest operation unquestionably supports copyright’s purpose to promote the progress of science, arts, and culture, which is the foundational principle on which the Library is authorized to demand copies in the first place.

A Case Worth Watching

Whether Valancourt’s complaint that providing the electronic copies is too burdensome is a question of fact that may yet be determined, and the publisher seems likely to appeal for a few reasons. For one thing, although the district court responded generally that the government may make services and privileges conditional within constitutional bounds, it did not directly address the underlying evidence that Valancourt arguably receives no benefit for compliance with the deposit demand. And there are certainly legal minds who may be inclined to call this a taking.

Further, if the publisher can show that even the electronic deposit burden is greater than de minimis (i.e. that it would be profoundly detrimental to the business), this may bolster a taking allegation and also animate an argument that, in this case, enforcement of §407 undermines the purpose of copyright. Simply put, if Valancourt can show that it cannot operate—and by extension other small publishers to which it alludes in its filings—that would clearly defeat the purpose to promote.

Photo by: jannoon028

Library Associations Pursue Misguided eBook Licensing Laws

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Recently, the New York and Maryland state legislatures passed nearly identical eBook licensing bills (and Rhode Island had a sister bill in the works) responding to complaints of inequity by various library associations. Couched in the rhetoric of seeking “reasonable terms” on behalf of readers, and claiming to be neither anti-publisher nor anti-author, what the libraries have in fact advocated with these bills is an end run around copyright law. I say this because the key provisions of the legislation amount to state compulsory license regimes, which means they are almost certainly in conflict with federal statute.

The bills contain three mandates: 1) that publishers license eBooks to libraries at the same time they license them to the consumer market; 2) that publishers provide an unlimited number of licenses to libraries; and 3) that publishers make eBook licenses available “on reasonable terms.” While most publishers already choose to fulfill the first demand, the fact remains that any state law directing a publisher to make works available under any conditions undermines the exclusive rights of copyright owners as codified by federal law. Meanwhile, the ambiguity in the expression “reasonable terms” is likely to be a catalyst for a lot of unnecessary, and ultimately futile, drama related to these matters.

Although the state bills do not explicitly mention renegotiating licensing fees for libraries as a provision for arriving at “reasonable terms,” it is a matter of record that the library associations allege that library eBook licensing is too expensive. And it is clear from the press release issued by the Maryland Library Association that the libraries intend to negotiate lower licensing fees with the backing of state government, which begins to take on the color of a compulsory license regime, as stated above.

What the libraries will say in response is that they simply want eBooks licensed to them at the same rates as the consumer market, which is usually the point in the narrative when they introduce rhetorical statements about “fairness” and “access” and “underserved markets,” obfuscating the fact that eBook lending is objectively a different animal than eBook ­selling.

Buy a new eBook, and perhaps a whole family reads it for, say, $12. License that same eBook to a library system for the same price, and it is made freely available to perhaps hundreds of readers in a single year. It does not take deep knowledge of the publishing industry to see how those two paradigms are different. Now, add unlimited licensing on the day a title is released to the consumer market, and the publishers (and by extension authors) are being compelled by state law to effectively treat libraries as though they are ordinary consumers while, at the same time, accord them preferential treatment as public institutions designed for lending.

Consequently, we should not be surprised if the publishers litigate the constitutionality of these state bills on the grounds that they are preempted by federal copyright law. Section 106 of Title 17 unequivocally grants the exclusive rights to make works available on terms determined by the copyright owners. It is, therefore, almost impossible to imagine the federal court that will not find that state legislatures have no authority whatsoever to determine what constitutes “reasonable terms” for licensing copyrighted works to libraries or any other party.

The Politics of Information

Although these bills have solid bipartisan support in all three states for the moment, I suspect this has a more to do with the short-term politics of capitalizing on vague declarations like the Maryland Library Association alleging they “were shut out of the marketplace of ideas and information.” Assuming these bills are eventually defeated in federal court several years from now, I would not expect to see many of the legislators who voted for them losing any sleep over the issue. They will have scored political points and moved on.

And that brings us back to what I said at the beginning about how bewildering it is to watch library associations spend millions of dollars and tens of thousands of hours on potentially futile legislative agendas and, in the process, foster an antagonistic relationship with their only natural partners—publishers and authors. As a New York State resident, I would like to know exactly how onerous eBook licensing is relative to the resources being spent to lobby for these ill-fated state laws and similar initiatives.

And as an American citizen watching current events, I will unapologetically cast a jaundiced eye upon the libraries, or any other institution, that claims to serve the “marketplace of ideas and information” as a rationale for its policy agenda. In case the librarians aren’t following the headlines, ideas and information are in deep trouble, and not for lack of access. On the contrary, rampant conspiracy theories and absurd narratives counter to empirical evidence are being actively pursued and spread by tens of millions of Americans who have plenty of access and believe they are informing themselves. So, let’s drop the highfalutin rhetoric and talk brass tacks.

Libraries already license millions of eBook titles, including frontline and backlist books, and yet, according to market data, most avid readers still prefer buying physical copies. Moreover, library industry statistics indicate that the leading category in loaned material is cookbooks, followed by thrillers. Not that there is anything wrong with either, but libraries very likely play a more modest role in the “marketplace of ideas and information” than they like to claim while advocating changes to copyright law.

On this subject, if what many libraries are really responding to is that their most loyal visitors are complaining about being put on wait lists for the latest Harlan Coben thriller (meaning no disrespect to Mr. Coben), since when is this longstanding practice a hardship? At what point did libraries decide they are entitled to provide the immediate access offered by retailers while continuing to enjoy preferential treatment and statutory carveouts as institutions designed for free lending?

I think the answer to that is the moment everything went digital, the promise of instant access muddled everyone’s thinking and fostered a sense of entitlement to all works at the touch of a button, and at a price of free or almost free. Were this in fact the paradigm, it is a guarantee that certain authors would never write books again and that certain new authors would never write books in the first place.

Rightsholders in other categories (partly because libraries loan more than literary works through digital portals) should take note that these state bills are viewed by the library associations as one step in a larger agenda to amend—or for some parties, simply gut—American copyright law. As discussed in this post, the library groups hope to amend specific areas of the federal law while claiming that their agenda is neither anti-author nor anti-publisher.

But several of the proposals made by library associations (like advocating digital first sale) imply such a naïve understanding of the commercial digital market that they fail to recognize how, in the long run, the library advocates would only hasten the obsolescence of libraries themselves. So, perhaps the library associations’ resources would be better spent on renewed, good-faith negotiations with publishers, or, perhaps, collaborating to increase library funding. Because once upon a time, in a world before the invention of the eReader, publishers and libraries had mutual interests. And they still do.

Photo by: racorn