Category: Intellectual Property

NC Court Grants Motion in Allen v. Cooper to Reconsider Takings Claim

On March 23, 2020, the Supreme Court remorsefully found in Allen v. Cooper that its own precedents obligated it to affirm that states are immune from federal litigation in claims of copyright infringement. On September 4, 2020, plaintiff Rick Allen filed a motion to reconsider the North Carolina district court’s 2017 dismissal of his takings claim under the Fifth Amendment for that state’s unlicensed use of his audio-visual works documenting the recovery of Blackbeard’s ship Queen Anne’s Revenge. On August 18, 2021, the court granted Allen’s motion.

Anyone who has followed the matter of sovereign immunity and state infringement of copyrighted works is aware of the byzantine, Heller-esque logic at the heart of this mess in which no reasonable party believes that justice is being served. Still, here’s the general reasoning in plain terms:

The Eleventh Amendment bars persons from bringing federal lawsuits against state or state actors …

BUT Congress, believing (perhaps naively) in its Article I powers to make laws, passed a trio of IP remedy statutes, clearly articulating its intent to abrogate sovereign immunity in cases where the state, or state actors, infringe trademarks, patents, or copyrights.

BUT in a series of cases in the late 1990s and culminating in 2000, the Supreme Court decided that Congress does not have the right under Article I to abrogate Eleventh Amendment immunity, and thus, held the three IP remedy laws to be unconstitutional.

BUT in Allen v. Cooper, although the Supreme Court affirmed those 90s-era decisions under the principle of stare decisis, the justices seemed pretty sad about it, even calling the state of North Carolina et al “pirates” for their conduct toward Mr. Allen et al. Thus, the Court also provided a roadmap for Congress to validly abrogate sovereign immunity in the future.

NOW, one of the principles supporting Eleventh Amendment immunity is that a plaintiff who has a beef with a state is presumed to have recourse to due process in that state’s courts. BUT there is no mechanism for bringing a copyright infringement claim in state courts. SO, that’s a head-scratcher.

MEANWHILE, the Fifth Amendment prohibits the state from taking private property for public use without due process, and the Fifth Amendment naturally carries more weight than a few pesky statutes written by Congress.

BUT at the time that Mr. Allen initially filed a takings claim against North Carolina in 2017, the legal precedent held that before a party may file a claim in federal court, he must first try to remedy his complaint in state court.

BUT when the complaint is an unconstitutional taking of an intangible form of property protected by federal statute, devising a state complaint is dubious at best. AND even if a plaintiff does file a claim in state court and loses, he is then barred from filing a claim in federal court.

MEANWHILE, just to be total dicks about this particular case, North Carolina passed a statute colloquially called “Blackbeard’s Law” which asserts state ownership of any AV material captured of any historic vessel found in North Carolina waters.

THEN, in 2019, the Supreme Court held in a municipal takings case, Knick v. Township of Scott, that a plaintiff need not exhaust state remedies prior to appealing to a federal forum for a claim of “unconstitutional treatment.”

SO, the decision in Knick created the foundation for Allen’s motion to reconsider his takings claim, and the District Court for the Eastern District of North Carolina agreed.

PLUS, because the Supreme Court held that the copyright remedy law was invalid as a prophylactic abrogation of immunity, the district court will now reconsider Allen’s case in light of United States v. Georgia (2006), which allows for case-by-case abrogation, if there is both a violation of federal statute and constitutional rights.

NOW, this will be interesting to watch. For one thing, if Rick Allen finally achieves justice and compensation, other rightsholders with infringement claims against state actors may also find remedies.

More broadly, though, when the Supreme Court ruled in Allen, it invited Congress to have another go at writing statutes to abrogate state immunity in IP infringement claims against states.[1] But in doing so, the Court drew a very narrow roadmap through the Fourteenth Amendment §5, which grants Congress authority to pass laws that bar state deprivation of property without due process under §1 of that amendment. So, with that in mind, this quote from the district court’s decision to grant Allen’s motion for reconsideration seemed worthy of highlight:

“Even though Knick was not a sovereign immunity case, its conclusion that a compensatory remedy is constitutionally-required was necessary to its decision and is contrary to [the precedent] conclusion that state sovereign immunity can bar takings claims brought under the Fourteenth Amendment.”

What that suggests to this lay reader is that if Allen prevails in his takings claim, and Congress does write new IP remedy laws, the statutes are likely to hold up to a constitutional challenge predicated on sovereign immunity. In fact, in granting this motion, the district court also reiterated its own interpretation on the limits of Eleventh Amendment immunity, writing:

“…this Court stated that the position that the Eleventh Amendment was intended to constitutionalize a broad principle of sovereign immunity contradicts both the historical evidence and the plain meaning of the Amendment that the founders wrote a Constitution upon the sovereignty of the people, rather than that of the States.”

Meanwhile, any state actors who interpret the SCOTUS outcome in Allen as a license to steal intellectual property, may want to reconsider adding to the body of evidence showing that state infringement is rampant, because that evidence will be the foundation on which Congress writes new laws abrogating sovereign immunity in IP cases.

This all seems like a long way to go to right an obvious wrong, and kudos to Rick Allen and his counsel for continuing this fight, even after defeat in the Supreme Court. Assuming this issue will one day be resolved, rightsholders will owe Allen and others in this fight a tremendous debt of gratitude.

[1] With the exception of Justice Thomas, who stated in his concurring opinion that the Court has no business directing Congress to do anything at all.

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

Fight for the Future Doesn’t Speak for Artists (or anyone else)

Fight for the Future recently launched a new campaign website called End Creative Monopolies, and among its many vague declarations, the petition asks signatories to “demand the dissolution of the current US copyright system and a fundamental reimagining of artists’ rights and protections for the 21st century that shifts power away from creative monopolies and puts the interests of artists and the public first.”

This is a common, if irrational, refrain. The underlying syllogism declares that corporate media producers and/or legacy copyright owners are wealthy and powerful (generally true). It then claims that independent creators are struggling and powerless (also frequently true). But the conclusion that the copyright system only serves the former at the expense of the latter does not follow as a generalization at all. The story about copyright and independents is a complex conversation about specific aspects of the law—judicial, statutory, and administrative—which FFTF is neither qualified nor willing to have in any way helpful to creators.

Meanwhile, you know who actually does care about helping indie artists make the most of the copyright system? Copyright advocates.

The people who are experts in the law and also believe in maintaining its fundamental principles are consistently talking about how to make the system work better for small creators. In fact, I don’t know a single pro-copyright authority (and I know quite a few) who does not think the system could use some tinkering in a few places to better serve individual authors. But tinkering. Not dissolution of the whole system and starting with a blank slate as FFTF decrees in its new campaign. Here are just a few recent examples off the top of my head:

Terrica Carrington, VP Legal Policy and Copyright Counsel at Copyright Alliance, recently blogged about the intersection of copyright and cultural misappropriation of choreography, explaining what the #blacktiktokstrike is all about. “Cultural misappropriation is an ethical concern that is not always rooted in the law,” writes Carrington, “but in some instances, these ethical concerns overlap with the law in such a way that makes the offense not only morally wrong, but illegal. That is the situation Black creators on TikTok are being confronted with: misappropriation of culturally relevant dances that may also be copyright infringement.”

The American Music Fairness Act is backed by copyright advocates great and small because this legislation finally proposes to overturn the status quo whereby U.S. terrestrial radio broadcasters have been exempted from royalty payments to musical artists. This law directly mandates that a very big industry finally pay fair rates to individual creators, which is just one reason my friend Blake Morgan (an archetypal indie artist) was standing on Capitol Hill the day lawmakers announced the bill this past June 24th. Did FFTF back this bill? Nah.

Steven Tepp, copyright consultant and former senior counsel at the Copyright Office, recently spoke with me on the IOM podcast about some of the formalities in copyright registration and enforcement that, with even modest changes, could make copyright work better for the independent author. For example, Tepp specifically recommends making the designation “published” optional on registration applications because the uncertainty in the law as to the meaning of “published” puts small creators at a disadvantage when it comes to enforcing their rights. I know that’s wonky and arcane, but that’s what actual, sober policy reform looks like.

Prof. Lateef Mtima, founder and director of the Institute for Intellectual Property and Social Justice, spoke extensively on the IOM podcast about how essential it is to not throw out the IP baby with the bathwater. “One of the problems with some of those perspectives,” Mtima said, “is that it basically accepts a premise that the system can only be utilized for social evil and corporate benefit. As I said in the beginning [of the podcast], I fundamentally don’t think that way, but as a practical matter, that’s not particularly helpful.”

Copyright Alliance, whose key members include several of the big media companies FFTF is complaining about, has filed pro-copyright amicus briefs in cases that have major implications for small creators. Allen v. Cooper, Unicolors v. H&M, Canada Hockey LLC v. Texas A&M University, Brammer v. ViolentHues Productions, Fourth Estate v. Wall-Street.com, VHT v. Zillow, to name a few.

Oh, and what was that law that passed at the end of 2020 that FFTF and its sister organizations tried so hard to kill? The Copyright Alternative in Small-Claim Enforcement (CASE) Act? Arguably, this is the most significant amendment to U.S. copyright law ever written with the sole purpose of helping independent creators, and FFTF, EFF, PublicKnowledge, et al opposed it. And worse, they lied about CASE being a big media bill, which is absurd on its face because big media doesn’t need a small claim option.

Specifically, on the subject of music, the good folks at FFTF should be ashamed of themselves for citing Spotify as a predator that pays songwriters pennies. I mean Spotify is a predator that pays songwriters pennies, but where was FFTF when the songwriters started mentioning this problem about ten minutes after the platform launched in 2011?* I know! They were being founded. Coincidentally at the very same time the Internet Association was established, the anti-piracy bills SOPA/PIPA were being hammered by Silicon Valley, and Google increased its lobbying expenditures from negligible to the top five. One might almost get the idea that FFTF was forged in a crucible of tech money for the purpose of weakening copyright law.

With Friends Like FFTF?

Independent artists already know the difficulties when it comes to protecting their work and enforcing their rights. I interact with some of these creators almost every day. And not once have I seen a writer, musician, photographer, etc. say, “Wow, I’m struggling because Disney is too big.” Why they usually say is, “Some clown just posted my work on his website or used it in his commercial or in a YouTube video, etc. without permission.” Or quite commonly, “A foreign counterfeiter is selling my stuff on Amazon or eBay.” These are the kind of problems copyright advocates discuss all the time.

Policy changes are hard. Look how long it takes to get infrastructure legislation passed when everybody mostly agrees! Fight for the Future has a lot of nerve declaring that a system as complex as copyright law is “broken” just because they say it is and then presuming to declare that we must scrap it and “reimagine” the whole thing for the 21st century. What this really means is that they want to reimagine some of your money into their donation coffers while they spin tales about agendas they are never going to achieve. And neither should they.

*Not surprisingly, yesterday’s Bloomberg Law story about renegotiating streaming royalties never mentions Fight for the Future. Just the usual pro-copyright advocates and experts navigating this difficult path between tech giants and the copyright law.