Category: Law & Policy

Petitioner Asks SCOTUS to Hear ReDigi Case

A new business called OmniQ has filed an amicus brief urging the Supreme Court to grant cert in ReDegi v. Capitol Records, alleging that the Second Circuit’s opinion in December 2018 effectively brings an end to the First Sale doctrine.  The company is developing a patent pending model that (presumably) would facilitate an online market for “used” and hard-to-find motion pictures.  Its brief contends that the lower court erred in its plain text reading of “reproduction” under the copyright law and would permanently “outlaw” the kind of technology they propose to introduce.

It is unlikely the Supreme Court will agree to hear ReDigi, not least because, as Hollywood Reporter’sEric Gardner rightly notes, “The issue of whether the First Sale Doctrine has survived the digital age may make for good scholarly articles, but is the Supreme Court really going to devote its limited bandwidth to technology that’s already outdated?”  ReDigi proposed to facilitate trade in “used” digital music files at the same time that subscription streaming was on the rise and may, therefore, be considered obsolete at inception. But in its brief, OmniQ implies that its business model fulfills an unmet need in the market by addressing what it claims is dwindling access to classic motion pictures …

…the public has already lost access to vast libraries of motion pictures and other audiovisual works, simply because modern technological solutions like the one at issue here are lacking.

…the breadth of choice in movies was many times higher 20 years ago than it is today.

I personally find the brief’s argument about the lower court’s interpretation of “reproduction” somewhat persuasive when it states “there is no ‘reproduction’ without the multiplication of copies.” If in fact a file can be moved from my hard drive to your hard drive so that you now have it and I do not, then it there is a plausible argument to be made that “reproduction” has not occurred.  But from there, I think OmniQ’s claims overreach, blaming copyright protections for phenomena fostered solely by the market and technological change.

First Sale Probably Does Not Survive the Digital Age

Even if the Supreme Court were to agree with OmniQ that the Second Circuit misread “reproduction” in ReDigi, this would not rescue the fact that the proposed business model exceeded the purpose of the First Sale doctrine because it would create a “used” market in name only—one that could theoretically become a substitute for the primary market.  In 1908, the Supreme Court held…

“It is not denied that one who has sold a copyrighted article, without restriction, has parted with all right to control the sale of it. The purchaser of a book, once sold by authority of the owner of the copyright, may sell it again, although he could not publish a new edition of it.”

And for the next century, physical copies of books, records, DVDs, etc. were sold in second-hand stores, garage sales, or rented through outlets like Blockbuster.  But the fact that a “used” digital file is identical to a “new” digital file is a technological reality that reshapes the meaning of “second-hand” material, and this at least alters—if it does not outright extinguish—the First Sale principle.  

Further, the potential for a transaction facilitator (which OmniQ presumably aspires to be) to foster a parallel trade in “used” digital files operating at internet scale is a vastly different consideration from the scope and nature of the secondary market that emerged between 1908 and the digital age. 

Finally, these same technological changes have spawned a primary market that (despite persistent complaints that all media should be free) is both cheaper and more abundant than the primary market of 20 years ago.  For example, The Criterion Collection, while perhaps not wholly satisfying to all film buffs, allows an account-holder to stream a library of motion-picture classics for about 27 cents a day—access that was unthinkable 20 years ago.  

In the still-evolving digital market, therefore, a petitioner like OmniQ should at least be required to demonstrate that its purpose is to facilitate a “second-hand” trade in material that is not likely to become available via licensed distribution systems—whether online or as physical copies.  And in this regard, the brief makes an emotional and cultural plea that fails to present a problem caused by copyright law.  

“1960 Doesn’t Exist on Netflix”

To demonstrate the market need for its business model, OmniQ relies almost entirely on one article written by Zach Schonfeld in 2017 for Newsweek.  It is an engaging piece on the theme that motion pictures from the oeuvres of Hitchcock, Truffaut, Fellini, Kubrick, et al are disappearing from mainstream cultural literacy.  The spirit of the piece which focuses almost exclusively on Netflix, is well captured when Schonfeld quotes blogger Nora Fiore (a.k.a. The Nitrate Diva) …

“If you’re the biggest name in film streaming services, the less you offer in classic movies, the more you imply that classic movies have less to offer.  It’s a terrible message to put out there.”

Perhaps this is a fair observation about contemporary culture and the movies, but the reasons for these changes have little or nothing to do with copyright law and everything to do with the inevitability that Netflix was going to transition to become a producer of new material. 

Before I go on, I have to interject that it is curious that in one moment, copyright is alleged to be a framework for nostalgic fuddy-duddies who don’t understand the future, but in the next moment, it is the nostalgic fuddy-duddies who are blaming copyright for stifling connection to the past.  Or I might also note that one of the complaints about copyright terms is the false allegation that creators will not produce anything new as long as they retain copyrights on older material they can keep reselling.  Maybe there are forces at play that are not really about copyright?

Speaking as one nostalgic fuddy-duddy who would rather watch Day for Night than Game of Thronesany day, the problem (if we agree it is a problem) with the apparent loss in status of classic films in the cultural mainstream is not a licensing issue.  Netflix could make all these films available tomorrow, and I predict that younger audiences will, by and large, think they’re being told to eat their vegetables.  

It isn’t copyright’s fault that a whole generation has been feasting on a steady diet of short-attention-span, handheld video clips for more than a decade.  The young mind does not easily transition from TikTok to Tarkovsky, and availability of the latter alone is not going to fill the apparent gap in cinematic literacy. Piracy statistics bear this out year after year as even illicit access worldwide continues to favor major, contemporary works like blockbuster movies by substantial margins.  

As an observer of culture and a cineaste, I would love to join Schonfeld and the film historians, academics, and buffs he cites for a drink to mourn the apparent loss of interest in the classics, but this was to be expected in a market destined to expand and become more segmented.  It should be little surprise in a world where we can have “liberal news” and “conservative news,” that entertainment is going to be even more distinctly subdivided.  

On the plus side, we get a diverse range of material and subject matter because investors are not restricted to appealing to the safe middle every time.  On the negative side, we no longer share a common film culture as we once did.  But this is a change borne of technological innovation in distribution systems that has nothing to do with copyright per se. 

Further, I think Schonfeld’s article is unduly harsh on allNetflix offerings as being substandard when he writes, “The universal power of boredom guarantees that any piece of Netflix programming will be watched by millions simply by virtue of being plastered across the Netflix homepage.”  This complaint that Netflix does not host a library of classics that Schonfeld et al believe it should is not especially helpful to OmniQ’s purpose.  After all, this is familiar territory. When David Lynch’s Blue Velvet was released in 1986, the box-office winner that year was Top Gun. It was ever thus.

Which Market is OmniQ Really Trying to Serve?

Serious film buffs have long been a niche audience who, by and large, have had to spend extra resources in the pursuit of their passion.  In many ways, I can only imagine that film-buffery is easier today because one can enter a title into various search tools and locate, for instance, a used DVD someone is willing to sell.

Presumably, OmniQ wants to facilitate the same kind of one-to-one transactions in titles that would-be sellers own as digital files on hard drives rather than plastic disks.  And it is not an unreasonable premise to claim that First Sale should apply to this kind of trade so long as the number of copies in circulation remains fixed and never increases.  A problem arises, however, when an enterprise facilitates this trade at scale in works that are available through licensed channels; and it is not clear which market OmniQ proposes to serve.

If OmniQ is focusing on the serious collector looking to obtain a digital file of a hard-to-find title by Ernst Lubtisch, they may have a reasonable legal argument, but possibly not a viable business.  If instead, the company is responding to a declining interest in classics like The Apartmentor Spartacus (both named in the Schonfeld’s introduction), availability is not the underlying cause of this cultural phenomenon.  These and other popular classics are widely available through existing channels, including streaming, and this weighs against OmniQ’s claim that First Sale remains relevant in the digital age.  

As mentioned, it seems highly unlikely the Supreme Court will hear ReDigianyway, but even if it were to overturn the Second Circuit opinion on “reproduction,” I suspect OmniQ would still have a lot of homework to do in order to prove that its business operates within the spirit of First Sale.  I do not think one magazine article, no matter how much I personally agree with the spirit of its commentary, is going to support OmniQ’s argument with regard to copyright law.  

Flipping the Narrative on the Effects of Social Media

Many years ago while still in college, I was on the train to New York City—a beautiful ride along the eastern banks of the Hudson River.  Several rows from me sat a family of American tourists who caught my attention when I heard the dad say, “Look kids, there’s Alcatraz.”  

Reasonably confident that Alcatraz sits on an island in San Francisco Bay, I glanced over to see the man pointing across the river and his two children gazing at the fortress of the Military Academy at West Point.  The layers of incorrectness in this guy’s armchair tour-guiding is more or less the kind of “information age” social media has amplified at an unprecedented scale.  And I remain unconvinced that there is a policy, either public or private, that can do much about it. 

In her June 13 article on FastCompany, former Google VP of Communications Jessica Powell recommends a behavioral and cultural shift whereby those who work for Silicon Valley join, rather than scorn, the conversation about regulatory and practice changes in her industry …  

… we tend to close ranks when our industry is criticized. We view an attack on Facebook’s handling of content moderation, for example, as something that might threaten all the legal protections given to platforms—and if we’re Twitter, YouTube, Reddit, or any other social platform, we tend to go silent. Rather than providing a more nuanced critique about what Facebook may be doing wrong (or right), we attack the outsiders as Luddites who want social media apps to remove all speech we don’t like or demand that platforms like Facebook should hire a million humans to moderate controversial content. 

Kudos to Powell for identifying the habits of her colleagues and for proposing the very reasonable notion that “Some of the best ideas about how to sensibly regulate tech can probably be found in the Valley….”  Fair enough.  And by all means, cooperation would be a refreshing change coming from that industry. But what if it is necessary to flip the narrative on the nature of what we’re really talking about?  

Powell does not acknowledge in her article the Olympian hubris with which Silicon Valley has proclaimed its innovations to be so universally beneficial for society that the critics should shut up and thank them for their largesse. Remember that all proposals, even those seeking to mitigate new forms of tech-enabled crime, have generally been rebuffed with some variation on the caveat that we must avoid stifling the greatest tool for democracy ever created.  

That premise continues to distort the nature of the conversation, and it is probably false.  Rather than assuming a platform like Facebook is a positive social force with a few negative effects that need mitigating, it may actually be the case that it is a negative social force with a few nice qualities.  We can wish one another Happy Birthday, keep up with our friends, and even have some very substantive discussions; but what if social media as an information source is fundamentally toxic to democratic institutions and we have to address it in those terms?   That would be a very different conversation from the one being had right now, and I cannot imagine “the Valley” Powell describes would be eager to table the premise that much of what they do is, on the whole, destructive.  

In a blog post for Luminate, an organization that funds and supports efforts to improve democratic institutions around the world, David Madden writes about tackling Digital Threats to Democracy …

“Over the last nine months, three of the world’s biggest countries have held elections: Brazil, Nigeria, and Indonesia….Social media posed a clear threat to the elections of all three countries.

 “…a video on Facebook three days before the polls suggested that the [Brazilian]Workers’ Party Candidate Fernando Haddad was planning to distribute ‘gay kits’ to child care centers. 

… a rumor that [Nigerian]President Buhari was dead and that a body double was serving in his place. This rumor was so widely shared that President Buhari had to publicly deny that he had been ‘cloned’.

Online “hoaxes” increased dramatically during the [Indonesian]campaign and the deadly violence that followed the announcement of the election result was the natural conclusion of the incendiary battle fought on social media and WhatsApp.”

These, and many stories like them, are the reason the conversation is finally being had about platform moderation and/or regulation.  Congress just last week held hearings on the subject of “deepfakes” because it is clearly the next technological innovation about to be weaponized and aimed at democratic institutions.  But this kind of purposeful disinformation, as devastating as it has proven to be, may be more easily mitigated than the ordinary, subtle effect the new “commons” has in steadily eroding the delicate fabric that holds liberal democracies together.  

For instance, because it’s in my wheelhouse, I’ll note a recent blog post published by my friends at Creative Future on the topic that Google has funded academics who just happen to espouse anti-copyright views.  When I scrolled by their post on Facebook yesterday morning, there were 260 comments, so I took a peek.  I know. Never read the comments.  But the problem with that rule of thumb is that the comments are us.  Bots and trolls notwithstanding, they are an anthology of what we think and why we think it, except that we are perhaps just egomaniacal enough that we like to believe the peanut galleryis everybody else.  

Just in response to this one blog post, commenters unpacked their views on liberals, conservatives, capitalism, socialism, climate change, and academia overall, plus at least one reference to Nazis and, of course, one guy reciting Scripture.  It’s like a Richard Scary book illustrating Crazytown, where the village hosts a public forum on one topic, and a literal food fight would be a step forward in thoughtful discourse.  Whether in agreement or not with a given post—even just straight reportage—the subject is too-often subsumed by other matters about which the commenters seem equally uninformed. Look kids, there’s Alcatraz! 

We are all ignorant about a great many things.  Even the most gifted astrophysicist who knows way more than you and I about the cosmos is still searching for what she does not know.  But with regard to the kind of informed public that is understood to be essential for the survival of a democratic society, the capacity of social media to amplify misinformation is not only unprecedented, but it is not limited to the most obvious forms of chicanery.  The effects are subtle and mundane.  The simple act of typing and publishing a misinformed comment more deeply etches a false narrative into one’s world view.  Multiply this phenomenon across every story on every topic, and it is little surprise that democratic institutions are in dire straits. 

As others have noted, one of the greatest hazards posed by “deepfakes” technology is the prospect of  universal plausible deniability—the opportunity for anyone to claim that video evidence of them saying or doing something is fake when it is not.  Anticipating that environment feels as though we are standing on the edge of an event horizon different from the technological singularity predicted to occur when the machines become self-aware.  In this scenario, the singularity is caused by the paradox of infinite doubt—a gravitational force from which reliable information cannot escape because there is no longer sufficient consensus as to what a reliable source looks like.  

That may be needlessly pessimistic, but to the extent that we already see evidence of this phenomenon having tangible and devastating effects, social media must be recognized as an underlying cause of the problem, which means that it is unlikely to be its own antidote. Certainly not without a very different conversation that begins with Jessica Powell’s friends and colleagues dropping their making the world better rhetoric.  Because it seems abundantly clear that they are doing no such thing.  

When Fair Use Threatens the Derivative Works Right

At the same AI and copyright round-table referred to in my last post, Stephen Carlisle of Nova Southeastern University posed this question:  Is the application of “transformative” analysis under the fair use doctrine threatening to extinguish the derivative works right?  This grabbed my attention, partly because it jibed with comments I made in at least two posts about Brammer v. Violent Hues; but for readers who don’t follow copyright law for fun, I’ll try to explain …

Section 106(2) of the U.S. copyright law grants authors the exclusive right to prepare derivative works.  So, the filmmaker who wants to adapt your novel into a movie must obtain your license to prepare a “derivative work” based on said novel (a.k.a the “underlying work”).  If the film creates original visual material, like a creature that might make a cool action figure, the action-figure producer would have to obtain the filmmaker’s license to prepare a derivative work based on that original design. If another party proposes a Netflix series based on minor characters from the novel, that license may remain with you as the original book author; with the filmmaker who made the first adaptation; or be shared depending on certain variables and agreements.

Suffice to say, derivative works are nearly always some use of underlying material in a new context; and  for the purposes of this post, it is fair to summarize the opinion in Brammer as holding that the use of a whole work in a new context from its original purpose was “transformative” under a fair use analysis.  So, because Brammer is an extreme example of a broader effort by certain parties to push the boundaries of fair use, this is what Carlisle was driving at with his comment; and he further noted that the word transform is part of the statutory definition of a derivative work …

A “derivative work” is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted.”

So, it is not hard see how a misreading of “transformative” in a fair use analysis can end up validating infringement of the author’s derivative works right.  Moreover, once that “transformative” box is checked, the likelihood of finding fair use increases considerably.  This is reasonable enough when a use is made to produce a truly new expression; but when “transformative” becomes synonymous with “placed in a new context,” the courts are in danger of abrogating the foundation of nearly all licensing protected by the bundle of rights vested in the author.

Almost the only check on such a reading of “transformativeness” is factor four of the fair use test, which assesses the commercial nature of the use; and unfortunately, commerciality may be equally misconstrued.  For instance, if monster maker Jordu Schell sculpts an original creature he intends to sell as a limited-edition piece to collectors, his exclusive right under 106(2) prohibits some not-for-profit entity from 3D printing miniature copies of the monster to give away at a fundraising event. 

But based on the flawed fair use analysis in Brammer, the not-for-profit defendant could argue that their use is “transformative” because 1) it is very different from the context of fine-art collectors; 2) because their use was communicative rather than expressive;  and 3) because their use was non-commercial on the basis that they did not sell the figurines.  Prior to all the confusion sown by these squishy “transformative” arguments, any court should easily be able to call bullshit on such reasoning and recognize that the defendant would have infringed Schell’s exclusive right to prepare derivative works.  End of discussion.

Like fair use, the derivative works right was codified in the 1976 Copyright Act, but its emerging principles can be found in caselaw dating back to at least the mid eighteenth century in both the U.K. and the U.S.  With the development of photography, followed by sound recording, motion pictures, etc., new technologies naturally fostered new ways to use the “heart” of an underlying copyrighted work.  And because law is usually slower than invention—let alone a thorough understanding of a new medium—there are several examples throughout the nineteenth century in which one could argue that copyright law was conveniently interpreted beyond statutory rationale to find infringement.

Scholar Oren Bracha offers such an analysis with respect to the case he considers seminal in the development of the derivative works right.  In Kalem Co. v Harper Brothers (1911) the fifteen-minute, silent film adaptation of Ben Hur was held by Justice Holmes to have infringed the authors’ exclusive right to “dramatize” their works under the statutory amendment of 1891.

There are actually a number of moving parts in to this particular case, but simply put, Bracha contends that Holmes stretched the meaning of “dramatize” in order to encompass the very new medium of motion pictures and then shoehorned a rationale to find contributory infringement. “The Kalem decision was thus a crucial transitory moment,” he writes.  The decision’s rationale was already based on the new model of copyright, but its legal reasoning still relied on manipulating the doctrines that were rooted in the the traditional print-bound model.”

One can interpret Holmes’s opinion in Kalem as legislating from the bench (although he did have ample precedent that copyright protects intangible expression*) or as a prescient understanding of copyright’s transition into the technological 20th century.  Or perhaps a bit of both.  That case was decided one year before the category “motion pictures” was added to U.S. copyright law and ninety years before the first Harry Potter movie was released.  And I doubt that anyone today would support Warner Bros. building a mega-franchise based on those books without honoring J. K. Rowling’s exclusive right to “prepare derivative works.”  

Presently, we are in the midst of another transitory period with new technologies allegedly posing new challenges to copyright law.  At least that’s the headline. But I’m not convinced that copyright is nearly so challenged in the 21st century as it was during the 19th.  No matter how one analyzes Holmes’s opinion in Kalem, there is no denying that he was contending with something truly revolutionary that challenged the court to consider the nature of copyright.  By contrast, a lot of tech companies today will liberally appeal to the virtue of innovation as a rationale to circumvent, ignore, or amend copyright law—including the effort to make “transformative” mean whatever serves the interest of the moment. But how many of the major “innovators” have actually invented something that poses new questions about copyrighted works and the exclusive rights of authors?

Returning to Brammer, for example, publishing a photograph on a website hardly requires a major theoretical inquiry in order to compare that conduct to publishing a photograph in a magazine or a brochure.  It’s just a different form of “reproduction” and “display” and should be about ten minutes work for any court.  Likewise, most of the major platforms are just variations on the capacity to display or broadcast creative works through computer networks—a fairly new experience for us as consumers, but not necessarily as groundbreaking from a copyright perspective as the platform owners would have us believe.

The relative novelty of streaming or downloading music and video doesn’t come anywhere close to posting the legal challenges triggered by the seminal technologies invented between the 1830s and the 1890s.  And in case after case, those courts generally tracked the “essence” of the author’s work as it was used in contexts far more exotic than almost any 21st century use trying to bamboozle us with notions of “transformativeness.”

It was out of that extraordinary period of invention—concurrent with the evolution of fair use doctrine—that the derivative works right was given shape and eventually added to the bundle of rights vested in the author.  To date, it seems to me that no technology or model has yet been invented that would justify the fair use doctrine encroaching upon the derivative works right.  Yet if decisions like Brammer are allowed to stand and various tech businesses had their way, that’s exactly what would happen.

*Turner v. Robinson (UK); Daly v. Palmer; Burrow-Giles v. Sarony; et al