Category: Intellectual Property

FilmOn Not a “Cable Provider” Says Ninth Circuit

A recurring narrative promoted by the internet industry and its cheerleaders is that the old creative industry, which relies on copyright law, is “outdated.”  The major rights holders, they keep saying, “cling to old models,” pretending the future is not happening.  Of course this new v old narrative is more than a misleading PR message—it is a gross hypocrisy if you follow the story behind the tweets, headlines, and comment threads.

Because if we were to summarize the story of copyright in cyberspace, it is generally one in which new business models seek to rely rather heavily on loopholes and loose interpretations of old law in order to succeed.  Time and again, the courts try to wrestle with new business ventures, whose owners hope for favorable interpretations of statutes that were written long before their models were imaginable, let alone possible. And much of the time, these “new” businesses represent various ways to exploit creative works without payment or permission.  Such is the case with a service called FilmOn, which hit a major setback this week in the Ninth Circuit Court of Appeals.

Essentially, FilmOn captures television broadcasts via the airwaves and then retransmits the content to paying customers over the internet. Several broadcasters, who are named collectively in the case as Fox, sued on the basis that FilmOn infringes the exclusive right of publicly performance. Like Aereo, FilmOn had argued in several courts that its service does not “publicly perform” works, but when the Supreme Court held that Aereo’s very similar model did infringe this exclusive right, FilmOn changed its defense strategy.

Instead of going for no licensing, FilmOn has been vying for cheap licensing by arguing that the company can be defined as a “cable provider” under the terms of §111 of the Copyright Act. “Cable providers” are eligible for compulsory, government-set licenses which obviate the need to negotiate with individual rights holders for retransmission of creative works.  A district court agreed that FilmOn qualifies as a “cable provider,” but the Ninth Circuit has now reversed that decision. And although the court has stated that both FilmOn and the broadcasters presented plausible interpretations of §111, the opinion appears to have turned on two factors:  context and deference to the Copyright Office.

In its analysis of the exception carved out in §111 with the 1976 Copyright Act, the circuit court notes the balance struck between the interests of copyright holders and the need to serve segments of the population that lived in remote locations.  §111 was designed to enable a network of local cable providers to make the large, capital investments necessary to serve these smaller markets without the added burden of negotiating terms with individual rights holders. Moreover, those cable companies were subject to FCC regulation, including “must-carry” provisions mandating certain content be transmitted just for them to be allowed to operate.  From the Ninth-Circuit opinion …

“… in 1976 the cable industry was a fledgling one; cable systems had little market power and little ability to overcome the considerable transaction costs they would incur if they had to negotiate individual licenses directly with copyright owners. Congress responded to these economic conditions by enacting § 111, which relieved cable systems of the need to sit down with every copyright holder before retransmitting their copyrighted broadcast works. … Fundamentally, however, § 111 was Congress’s attempt to balance the socially useful role cable systems had come to play, on the one hand, against the property interests and creative incentives of copyright holders, on the other.”

By contrast, the court observes that FilmOn is operating in a very different market as a business that a) does not have to make the kind of capital investments as 70s-era cable companies; and b) can reach far beyond a local market to potentially any viewer in the world via the internet.  So, although the court stipulates that FilmOn’s statutory interpretation of §111 is not wholly without merit, the panel ultimately defers to the assumption that Congress intended to maintain balance between protecting copyright and serving the remote markets via the more limited technology that existed at the time the statute was written.

Additionally, in light of its finding that both the broadcasters and FilmOn provide reasonable interpretations of §111, the court gave considerable weight to past testimony by the Copyright Office, which has, since the 1990s, asserted that internet-based companies like FilmOn are not “cable providers” under the terms of the statute.  Quoting from the preambles to the USCO 1992 and 1997 rulemaking proceedings, “… a provider of broadcast signals [must] be an inherently localized transmission media of limited availability to qualify as a cable system.” In other words, the ability to transmit globally via the internet exceeds the intent of §111.

Everything about the rationales applied to write §111, including the three tiers of statutory rates based on system size, is predicated on an analysis of local markets.  This includes matters like local advertisers who pay relatively low rates to reach a local customer base via their “cable providers.”  That small-town hardware store ad you see pays pennies on the dollar compared to a major brand reaching millions via national broadcast, and this factors into the calculus of what makes a “cable provider” eligible for which compulsory license under the terms of the statute.

There is simply no reasonable way to argue that a business like FilmOn, which retransmits a signal to the entire world via the internet, achieves the goals of Congress in establishing the compulsory license regime for “cable providers.” But as I say, this is a recurring theme in the copyright narrative. In the world of PR, these companies portray themselves as new, progressive, forward-thinking, etc.  But in order to avoid paying for the creative works they need to operate, they try very hard in the courts to look like they’re just business as usual.

Will the EFF Tolerate Any Copyright Enforcement?

 

Maybe the folks at the Electronic Frontier Foundation could save themselves a lot of repetitive work if they just write a blanket statement declaring once and for all that they believe copyrights should never be enforced online in any context whatsoever.  Because no matter what proposal they encounter, it seems they will always grab their box of fridge-magnet hyperbole and cobble together a statement designed to make it sound underhanded and nefarious.

Of course we’ve come to expect that if a proposed copyright measure is legislative, the EFF will call it something like “government overreach.” But apparently, if a proposed action is part of a voluntary initiative by industry, they’ll call it “shadow regulation.”  That’s exactly how Jeremy Malcolm, Senior Global Policy Analyst for the EFF, refers to a recent agreement in the UK reached by Microsoft, Google, and representatives of major copyright holders. Brokered by the UK Intellectual Property Office, the parties negotiated a voluntary “code of conduct” with the purpose of demoting search results for URLs that have received a certain (undisclosed) number of DMCA takedown notices.

Malcolm correctly observes that Google was already using DMCA data to demote certain sites in its search results, but the EFF is still sounding alarm bells over two factors in the development of this agreement:  1) that the meetings themselves, and some of the agreed-upon terms are secret; and 2) that the agreement was allegedly reached in response to an “explicit threat” by the UK government to take legislative action if the parties could not come to terms.   So, referring back to my original accusation, if the government mandates that platforms mitigate copyright infringement, the EFF thinks it’s wrong; and if the platforms voluntarily collaborate with rights holders to mitigate copyright infringement, the EFF still thinks this is wrong.  See where I’m going with this?

The EFF complains that “the public” is not represented in these “shadow regulation” agreements—an accusation that earns a cartoon double-take because this proclivity for exaggeration only feeds the illusion that the public has any say in the operation of these search companies in the first place.  We have a measure of market power, as we do with all companies, but Google and Microsoft do not seek public debate on the manner in which their search algorithms function or are adjusted. And it should be obvious to users by now that Google’s search results reflect some combination of Wikipedia, paid priority, and popular trend—none of which guarantees that the most relevant or best-quality results will top the list every time.

How good is search these days anyway?

With regard to my last post about advertisers seeking better value online, and the role of fake news in that story, I happened to do a Google search for the term “pizzagate.”  And what do we get?  Results #3 and #4 are both utterly bogus sites designed to attract users who may be inclined to believe that Hillary Clinton really was running a child sex ring through a D.C. pizzeria. Y’know, because search quality.

Result #4  pizzagate.com is a classic example of what happens when some opportunist buys a URL based on a trending topic and then populates a page with keywords, videos, images, and links that optimize SEO in order to generate revenue with traffic to posted ads. It’s a site full of garbage that probably makes its registered owner some money, but which provides no social value of any kind; and it sits above the fold on the first page of Google’s search results because that’s how the system works.

This capacity to manipulate search results—all in the name of unfettered “innovation”—has done considerable harm to journalism, scientific knowledge, authors of creative works, local businesses, major advertisers, users, and even the democratic process itself.  So, unless Google and Microsoft have ready solutions for improving all of that, the EFF can spare us its hand-wringing over the search-result demotion of websites that engage in chronic copyright infringement.  Yet, Malcolm writes, “[Google] must be very careful that its acquiescence to this shadowy regulation doesn’t escalate into a series of capitulations to copyright holder demands.”  Fridge magnets.

As reported yesterday, Google may be about to “capitulate” to new advertiser demands because (hold onto your beers) this is all just business. People really should stop pretending the internet industry is something special—as if the decisions made are not business decisions and as if those business decisions are not going to require negotiation with other business interests and with government.

But because we’re talking about the internet, the EFF and others seem to imagine that the public enjoys general oversight—as if Google were Congress.  We’re just customers, either happy with the services or not.  If anything, the pervasiveness of Google’s control over so many aspects of the digital market should be a far greater concern than whether or not the company agrees to work with rights holders to mitigate infringement. And in fairness, this is where the EFF’s strengths as a public advocate seem best directed.  Real issues of concern like privacy should give that organization plenty to do, particularly in the current political climate, but copyright enforcement really isn’t the side door to social injustice they keep portraying it to be.

In general, copyright enforcement in the digital age benefits consumers and creators just like it did before the digital age. The only players who substantially benefit from zero enforcement are the major web platforms, and the EFF should stop doing PR (even if it’s not their intent) for these multi-billion-dollar companies. Meanwhile, if the platform owners and creative industries collaborate to foster a more legal, fair, and sustainable digital market for creative works, this will benefit consumers, creators, and economies overall.

Fair Use Isn’t “Dare Use”

LTG YT

Don’t fall for fair-use daredevil tactics. You might get hurt.

I know Fair Use Week is technically over, but when I saw this video produced by Public Knowledge, I couldn’t, y’know…let it go.

Remember how I’ve argued a few times that organizations have a habit of promoting fair use messages that can confuse people and potentially get well-meaning creators into legal trouble? Well, kids, with regard to the snarky video Public Knowledge released last week, all I can say is, don’t try this at home. Because their fair use argument is technically pretty weak, and I wouldn’t follow their lead unless you feel like poking a phalanx of lawyers with a stick.

So, what Public Knowledge did was have a guy named Charles Duan write anti-copyright lyrics on the theme “Let ‘em Go” set to the tune “Let It Go” from Disney’s movie Frozen. Vocalist Courtney Duffy, with all the earnestness she could muster, sings lyrics like “But companies with cash and greed, Choke the public domain these artists need.” Ouch.

Anyway, the video itself is a montage of clips from Disney animated films, home-movie footage of people dressed as Disney characters, and a variety of creative expressions both directly and indirectly trying to make a point about copyright. The message, as usual, is muddled. PK is provoking Disney because of the trope that the company is directly responsible for the last extension of copyright terms—not actually true—but the video is also trying to be a lesson in fair use, presuming to prove its point by brazenly making use of works belonging to one of the most famously protective companies in the world. (Oh, and a shot of Holden, the “dancing baby” in Lenz is thrown in for good measure.)

Never mind that any number of the depicted “uses” would not implicate copyright (or consequently fair use), but on the subject of copyright terms, the message is weakened by the fact that PK depicts a number of works, like clips from Frozen, whose copyrights would not have expired even if terms were dramatically shorter. Of course, the folks at PK never let pesky details get in the way of a well-entrenched conceit.

Personally, I don’t get everyone’s obsession with the Mouse, and it would be nearly impossible to count all of the creative works that have been produced concurrent with Mickey’s long tenure as an IP-protected icon, but whatever. No doubt there’s an artist somewhere, languishing in a lonely garrett, rendered mute because he cannot fulfill his Mickey Mouse vision.

The Song Is Not Fair Use

The big thing that jumped out at me about this video, though, is that PK’s use of the song in this case would likely not do very well under a fair use test if Disney were to sue the organization. The song may be covered by a blanket license for use on YouTube,* which would be an amusing irony, given the posture of “civil disobedience” PK presumes to be striking here. But if that were not the case, and if Disney wanted to take action, I think Public Knowledge would fail in a fair use defense for its use of “Let It Go” in this video.

As mentioned in an older post, a fair use of a song in the way PK used it here protects parody, meaning that the new use must in some way comment on the original work. Fair use as parody does not protect the use of a song with new lyrics written to express something that is entirely separate from the meaning or spirit of the original work. As noted in this post about the Westboro Baptists writing and recording anti-semitic lyrics to McCartney’s “Hey Jude,” such uses can have very negative effects and even infringe the speech rights of the authors. As we saw in regard to the settlement in GoldieBlox’s use of a Beastie Boys song, the fair use defense does not generally support a use like the one PK made for this video.

The song “Let It Go” is about a young woman breaking out of her frozen shell to become her true self, so I think PK would receive a pretty frosty, judicial response if they tried to argue that their anti-copyright lyrics meet the definition of parody. If Disney were to sue Public Knowledge, I believe the use of the song in this case would fail on the first, second, and third factors of the fair use test. Specifically, PK’s desire to comment upon The Disney Company via its use of “Let It Go” would likely invoke a citation of the 2009 case Salinger v Colting in which the defendant’s authorship of an unauthorized sequel to The Catcher in the Rye was not held to be a fair use on the basis that it was expressing a comment upon J.D. Salinger himself. From the opinion:

“While the addition of Salinger as a character in 60 Years is indeed novel, the Court is unconvinced by Defendants’ attempts to shoehorn Defendants’ commentary and criticism of Salinger into the parodic framework of Campbell,** which requires critique or commentary of the work.”

For all their smugness, Public Knowledge is more likely protected either by license between Disney and YouTube or by PR (i.e. Disney may decide it isn’t worth the press fight); but the fair use defense here kinda blows. And that’s why I say these organizations are not doing the public any favors when they produce this kind of propaganda. They can get well-intentioned creators into trouble by evangelizing a general understanding of a legal doctrine that demands a more nuanced consideration. Maybe, Public Knowledge should heed an apropos line by comedian Ron White: “The next time you have a thought, let it go.”

*ADDENDUM:  Thanks to the comment from artandcreativesite, which reminds us that even with such a license to use a song, complete revision of the original lyrics still infringes the rights holder’s exclusive right to create derivative works.

**Campbell v Acuff-Rose, a landmark case in which 2 Live Crew’s use of Roy Orbison’s “Oh, Pretty Woman” was held to be  fair use as a parody.