Category: Copyright

Busy Copyright Week Update

Though most people can be forgiven for missing it, two Supreme Court Decisions and a District Court granting a motion for summary judgment made a fair bit of copyright news this week.  In a pair of unanimous decisions the Supreme Court settled two statutory disputes relevant to a rightsholders’ ability to enforce his copyrights.  And pursuant to findings at the Ninth Circuit Court of Appeals, the District Court for the Central District of California granted a motion for summary judgment against VidAngel for its infringement of major Hollywood motion pictures.

“Registration” Means USCO Approval 

In Fourth Estate Public Benefit Corp. v. Wall-Street.com, Justice Ginsburg wrote the opinion holding that there is no way for the Court to read the copyright statute §411(a) other than to mean that the Copyright Office must grant Registration of a work before a rightsholder may litigate to remedy an alleged infringement.  

This decision resolves a court split over the issue, with the counter argument contending that filing the application is tantamount to “registration” and that a rightsholder should be allowed to proceed with legal action while the USCO is processing the application. Ginsburg and the other eight Justices found that reading of the statute unpersuasive, but the opinion also recognizes the practical challenge faced by rightsholders given that it takes an average six to seven months to receive a Certificate of Registration.  

This is especially acute in a time when online infringement may be almost instantaneous, and it is not impossible that there may be some legislative response to address these issues, not the least of which would be increasing resources for the USCO.  That said, the House Judiciary Committee does seem a little busy right now.  (See further discussion here.)

“Full Costs” Means Less Full Than Some Hoped

From the opposite ideological end of the bench, Justice Kavanaugh wrote the opinion in Rimini Street v. Oracle USA, another unanimous decision settling yet another statutory interpretation, this time §505 pertaining to the meaning of the term “full costs.” At issue was the question as to whether recoverable legal costs under the copyright statute may extend beyond the six categories of “taxable” costs that a court may award to a litigant in a copyright case. 

After Oracle prevailed in its copyright infringement suit against Rimini Street, it sought $12.8 million to recover its costs for expert witnesses, jury consulting, and e-discovery, which are not enumerated under Title 28 federal statutes pertaining to the types of costs a claimant may recover.  For context, I recommend Kevin Madigan’s analysis posted at the Center for the Protection of Intellectual Property, in which he contends that this decision is an incomplete reading and, as a practical matter, may disadvantage defendants as well as complainants in copyright cases. 

VidAngel’s Flight Seems All But Over

Finally, in the major motion picture studios’ case against VidAngel, a California District Court, finding no triable issues of fact, granted the studios’ motion for summary judgment this week.  As described in posts here and here, VidAngel is the VOD service that provided unlicensed streams of major motion pictures with options to “filter” out the naughty bits—sex, swearing, blasphemy, etc.—its base of customers preferred not to see or hear.  

Although filtering is permitted by law with devices designed for that purpose to be used in one’s own home, VidAngel endeavored to construct a convoluted business model in order to contend that its process of copying, filtering, and streaming films to customers for what amounted to rental fees was nothing more than an extension of the individual consumer’s right to filter.  All of the sanctified streamer’s defenses failed, and the company is held to have infringed the studios’ exclusive rights of reproduction and public performance as well as violated the anti-circumvention provisions under §1201 of the DMCA for decrypting DVD and Blu-Ray disks in order to create the files necessary for its service.

I may write a more extensive post about the outcome in VidAngel, which is an instructive case on a number of levels, but one that sticks out at the moment is the company’s attempt to assert fair use in defense of its circumventing DRM pursuant to the DMCA.  As the District Court notes, there is no fair use defense for violating §1201, though one could easily make this mistake based on the confusion and debate surrounding this statute.  

The distinction is that the Copyright Office has granted exemptions from the provisions of this section of the DMCA for specific uses (e.g. education, commentary, research) that are likely to be fair uses.  This is not the same thing as asserting a fair use defense for circumventing DRM for a purpose not already exempted by the USCO.  And VidAngel’s purpose in making entire motion pictures available (minus a bit of skin and a few curse words) does not come anywhere close to being considered for such an exemption.

Fair Use Week Again. But Why?

Well, it’s Fair Use Week again.  Seventh annual.  I suppose one must say something.  Though what I really want to say is Why?  What exactly happened in 2013 to provoke the idea that we needed this celebration?  The fair use doctrine had been part of the federal copyright law for forty years, and its common law precedents began percolating in the mid to late eighteenth century.  So, why did this somewhat arcane aspect of copyright doctrine, which very few people have reason to think about, suddenly demand of a week’s worth of attention?

I get why Banned Books Week is a thing.  It reiterates the need for vigilance against censorship while celebrating authors whose contributions are so transformative or provocative that somebody somewhere wants to silence them.  Notably, it is the free market that so effectively rejects this kind of censorship, and the author’s mechanism of access to that free market is copyright.  “The Framers intended copyright to be the engine of free expression,” wrote Justice O’Connor in 1985 in Harper & Row Publishers Inc. v. Nation Enterprises.  And indeed it is.

While no one should disagree that the fair use doctrine is necessary to the fulfillment of copyright’s purpose to promote progress and be that engine of free expression, I just cannot fathom the connotation of insurgency expressed in the observance of Fair Use Week—as though the principle were under assault.  Of course, eager celebrants might say that fair use is under assault based on a common tactic in politics, which is to first advocate pushing the limits of a principle and then claim that any resistance to, or criticism of, said pushing is tantamount to threatening the principle itself.  

You see, concurrent with the sudden urgency to celebrate fair use, there has also been a considerable effort to broaden the nature of the doctrine far beyond its supporting role as a cog (albeit a large cog) in the engine of expression.  Publicly, this has taken the form of blog posts and social media commentary that invoke fair use, whether it is actually applicable or not.  In the courts, organizations like the Electronic Frontier Foundation, the Computer and Communications Industry Association, and the American Library Association write amicus briefs supporting tech ventures whose fair use defenses overreach so broadly that they would nullify core copyright protections if allowed to stand as precedent.  

Fortunately, as some of the more high-profile cases have moved through the process, the courts have lately reaffirmed fair use, tucking it into its proper context—as a conditional defense for certain types of uses and not a vaguely-defined blank check based on emotion and general disdain for copyright.  Probably the two most important recent decisions in this regard were in Fox v. TV Eyes and Capitol Records v. ReDigi at the Second Circuit Court of Appeals.  In both of these cases, the court re-illustrated essential contours of fair use in a tech-driven market that too-often seeks to conflate generalized “innovation” with the first fair use factor that weighs “transformativeness.”  

As explained in detail in older posts, “transformativeness” (an analytical doctrine written by Judge Pierre Leval in 1990) is not terribly confusing in its original purpose to consider a new creative expression that makes some use of a precedent creative expression.  Where the doctrine threatens to get out of the barn, however, is in its secondary application as applied in Google Books … “a secondary use may be transformative if it provides information about the original, ‘or expands its utility.’”  

That “expands utility” language has provided opportunity for business ventures to come very close to arguing that simply offering a new service is sufficient to warrant fair use of protected works.  This rationale has even fostered minor attempts by some parties to claim that merely posting a work on social media is “transformative,” which, if this were true, would annihilate the authors’ right to make a work available (or not), thereby distorting fair use from a limited, legal exception to a talismanic incantation.  

Second Circuit Restores Reason to Fair Use 

In both TVEyes and ReDigi, the Second Circuit provided essential contours for the “transformativeness” doctrine.  In the former, the Court held that the TV monitoring service, regardless of its innovative value to B2B subscribers, infringed copyright by making full programming available to customers.  In comparing the utility of TVEyes to that of Google Books, this same court, which decided the latter, stated …

This appeal shares feature with our decision in Authors Guild v. Google,Inc.  That case held that Google’s creation of a text-searchable database of millions of books (including books under copyright) was a fair use because Google’s service was “transformative” and because integral features protected the rights of copyright holders.  However, we cautioned that case ‘test[ded] the boundaries of fair use.’  We conclude that defendant TVEyes has exceed those bounds.

That the same court found daylight between the fair use defenses of Google Books and TVEyes is of considerable value to rightholders in a market replete with ventures seeking new ways to exploit copyrighted works without license.  Authors of works have a hard enough time navigating a landscape of legal (Spotify) and semi-legal (YouTube) platforms that have decimated the monetary value of their creative products without also having fair use expanded into a generalized, amorphous license to steal.  

Perhaps future legal experts will find that the most important decision came in the ReDigi case, denying the fair use defense of this business, which sought to create and exploit a market for “used” digital music files.  One reason this decision my be seen as a landmark is that Judge Leval himself wrote the opinion and added further nuance to his own “transformative” doctrine, which has been the cause of considerable confusion in other cases.  Leval writes …

Here, ReDigi hosts a remunerative marketplace that enables resale by purchasers of digital music files, which is a commercial purpose. Especially in view of the total absence (or at least very low degree) of transformative purpose, the commercial motivation here argues against ReDigi with respect to Factor One.

In other words just because ReDigi’s business model would indeed be novel, that doesn’t make it “transformative” in regard to fair use.  The business model offered a substitute for the primary market for creative works, which would threaten the (already low) market value of those works.  (And as mentioned before, the dominance of music streaming implies ReDigi’s obsolescence rather than its novelty.)  

These two decisions in one of the most active copyright circuits provide essential guidance for the kind of fair use defenses that are typical of the digital market.  Hence the appearance of Fair Use Week six years ago is suspiciously contemporary with efforts to expand that secondary application of “transformativeness” in the service of big tech ventures, rather than the production of new forms of expression.

In this regard, I cannot agree with the way in which Peter Jaszi framed his testimony before Congress in 2014, in which he said …

“Fair use, one might say, is like a muscle – it will grow in strength if it is exercised, and atrophy if it is not. But, by the same token, fair use is hardly unusual or exotic today. Everyone who makes culture or participates in the innovation economy relies on fair use routinely – whether they recognize it or not.”

This conflating the original purpose of fair use (i.e. to foster new expression) with the so-called “innovation economy” is emblematic of the persistent confusion in the market today—a chronic inability to distinguish between the creators and the platforms on which they operate—the difference between the YouTuber and YouTube, if you will.  

Internet companies have consistently sought to exploit confusion about fair use.  Just as they conflate our free speech rights with their profit interest in letting all content “flow freely,” they promote that same talismanic notion of fair use in their own pecuniary interest.  And that’s probably why Fair Use Week started six years ago.  Meanwhile, with the jury still out as to whether the “innovation economy” is really an economy at all, at least the Courts of Appeals have restored some order to the application of fair use for the time being.  

Maybe the Internet IS Just a Dumb Pipe

“Content is king” was the catch-phrase of the 1990s and the heady (headless really) days of the Dot Com bubble.  And although that stopped being a slogan with the resurgence of Web 2.0, it was still true.  Content was still king except the would-be tech giants figured out that they didn’t need to create content but instead just make someone else’s content available.  Whether these companies had any right to exploit said content did not matter since the telecom giants who preceded them had conveniently negotiated a liability shield (DMCA §512) for copyright infringement before anyone quite realized how a YouTube could become a massive infringement machine that prints money for its owners.

When rights holders complained that these platforms were infringers (or at least beneficiaries of infringement), the answer was always some variation on the themes …  It’s not us.  Its the users.  We don’t control what gets uploaded. We’re just a neutral platform.  And so on.  Thanks to that liability shield negotiated by Verizon, AT&T, et al in 1998, Google and the other major platforms got away with the circular logic that “the internet” is simultaneously “just a dumb pipe” and also a network of such inestimable value that no cyber-policy may be altered—other than, of course, by Google and the other major platforms.  They are at liberty to alter the internet all they want because they do so many nice things for us—and all for free!

In 2012, concurrent with the not-so-grassroots defeat of SOPA/PIPA, Google’s lobbying expenditures went from negligible to competing among the top five in the nation; and the major platforms also formed the Internet Association to advocate policy in its interests.  That’s business as usual, and industries have every right to form such organizations, but this new coalition of tech giants was also contemporaneous with the anti-SOPA narrative in which the Motion Picture Association of America a) had allegedly tried to force legislation that would “break the internet”; and b) represented “old thinking” about content, copyright, and digital-age piracy. 

Let us now leap over the past seven years to the present—a time when the major internet platforms—most demonstrably Facebook—have revealed many of the darker consequences of their hands-off, disrupt-culture approach to platform moderation.  Amid this still-developing narrative, came the big news last month—though it should not have been the least bit surprising—that Netflix would leave the Internet Association and join the MPAA.  Because content is still king.

As described in my post of October 2015, Netflix is not an internet company; it’s a motion picture studio that happens to distribute via the internet.  New opportunities to measure viewer data notwithstanding, the simple reality is that the more “tech” companies invest in original programming, the more they will naturally find common ground with the policy interests of the MPAA et al. In that regard, a January article in Variety speculates that Amazon—with its slate of multi-award-winning shows—could be next to join the big studios.  Either way, the swing of this pendulum does suggest a new premise:  that perhaps the internet industry does not have (to use the technical term) jack-shit to teach content creators about copyright or piracy—and let’s not even talk about whatever the hell the “economics of abundance” means.

In fact, if one looks at YouTube’s Copyright Match response to the realization that their own creators do not like having their videos infringed by other YouTubers, maybe the “new” industry actually has something to learn from the “old” one about protecting creative works.  Meanwhile, as the traditional media/entertainment companies continue to migrate toward streaming and other contemporary models of distribution, they will surely learn much from a pioneer like Netflix.  But this will not change the raw investments of time, talent, labor, and money required to produce new works, and so it will not diminish any producers’ interest in protecting and enforcing copyrights.  

In this context, I am reminded of a story from January of last year in which songwriter/performer Blake Morgan found himself having to explain to Spotify executives that music was in fact the product they were selling.  One might think this is not a very high mental hurdle to clear, but Morgan describes that some in the meeting became rather heated in their defense that, no, Spotify was the product.  Because, of course, we launch that app just to look at the interface?

Time will tell if there will be any significant future defections from the Internet Association, though its members are not without vested interest in a range of policy areas.  But to the extent that union was formed in response to proposals like SOPA and to advocate against copyright enforcement, the departure of members who are now major rights holders serves as a long-overdue reminder about the difference between creative works and the technological means to access or distribute those works.  As the platform owners love to repeat in their own defense against liability, the internet doesn’t produce anything; it’s just a dumb pipe.