Category: Intellectual Property

Is ComicMix going to trial? Probably not.

We may finally be at the end of a five-year litigation between Dr. Seuss Enterprises (DSE) and ComicMix. The latter produced a book called Oh, the Places You’ll Boldly Go!, a mash-up of Dr. Seuss and Star Trek that, though funny, was neither parodic nor fair use under any of the four factors according to the Ninth Circuit Court of Appeals as of December 2020. That court reversed the lower court’s finding of fair use and remanded rather than issue a decision on the infringement claim.

Both ComicMix and DSE filed motions. The former filed a Motion for Reconsideration as to the validity of the copyright registrations at issue; and the latter filed a Motion for Summary Judgment on a finding of copyright infringement. The district court denied both.

ComicMix’s Challenge to Registration

When this whole hullabaloo began, ComicMix initially argued that the copyright registrations in the Seuss works The Sneeches and Other Stories and Oh, the Places You’ll Go! were invalid due to the allegation that those group applications combined published and unpublished works. And because the Ninth Circuit in Unicolors v. H&M as since held that an application may be invalidated even where there is no intent to defraud the Copyright Office, ComicMix argued that the law has changed since it filed its original motion. The court disagreed, stating “…this Court’s Referral Order never addressed the intent-to-defraud issue in light of its finding that there were no known inaccuracies in Seuss’s copyright applications and registrations.”

Substantial Similarity and an Odd Conclusion

Of likely greater interest to rightsholders and copyright watchers is the district court’s finding that under the principle of this circuit’s “intrinsic test” for substantial similarity, that it was unable to decide that question in this case as a matter of law. So, what does that mean?

Assessing the similarity between an allegedly infringing work and the original work is always a mixed question of law and fact. In the Ninth Circuit, the court first applies an “extrinsic test,” whereby the plaintiff is required to identify the similarities between its work and the alleged copy. Next, the court reviews the evidence and first disregards any “copied” elements that are not protectable (e.g. line weight or style in a drawing) and then assesses the “thickness” of protection on the original work as a whole. For instance, when ComicMix made an almost verbatim copy of Seuss’s iconic “Star-Off Machine,” they copied a work with “thick” protection because it is highly original in both subject matter and style.

In the Ninth Circuit, once an analysis passes the “extrinsic test,” the question of similarity then proceeds to an “intrinsic test,” which asks whether an ordinary observer would perceive substantial similarity between the original work and the alleged copy with regard to “total concept and feel.” Although it is standard that a jury is the trier of fact in this circuit’s “intrinsic test,” Devlin Hartline of Hudson Institute tells me via email, “That’s a problem when it’s an obvious case like this one. The defendant’s entire purpose was to copy the total concept and feel. Now, it may go to the black box of a jury, but it would be better to have the judge’s reasoning on this in order to better develop the test. Other jurisdictions give the judges more leeway on this question.”

There is no question that Hartline is right about ComicMix’s intent to copy extensively, especially as the principals stated in testimony that they painstakingly set out to copy Seuss, even hoping that DSE might want to license Boldly!. Then, in the appellate court’s thorough rejection of fair use, it describes extensive copying—both quantitative and qualitative—which this district court reiterates for about seven pages. Nevertheless, this court concluded that it cannot grant summary judgment under the “intrinsic test” as a matter of law. The opinion states:

“…in light of the rarity of courts granting summary judgment in favor of copyright holders on the issue of copying in this Circuit, and the lack of any authorities doing so with regard to subject matter comparable to that at issue here—i.e., illustrated books of rhyming prose—the Court finds, on the record presently before it and viewing the facts and evidence in the light most favorable to ComicMix as the nonmovant, that Boldly ‘[is] not so similar to the protected [works] that no triable issue exists with respect to whether the total concept and feel of the works are substantially similar. Therefore, the issue of intrinsic similarity must be left for the jury.’”

How the court can use the language “not so similar” in this case, rather than simply rule that no reasonable jury could possibly mistake the similarities, is a bit of head-scratcher. Still, I think it’s a safe bet that this is likely the end of a long journey for ComicMix. The fair use defense is a dead issue, and by proceeding to trial, they would have to believe that a jury will somehow not see that Boldly! extensively copies Seuss’s works. As indicated in older posts about this case, I predict this one will serve as a very useful guide to future creators for where not to go when using existing creative works—especially famous ones.

Cox Appeal in Suit with Music Labels May Be Overreaching

On May 24, Cox Communications filed its opening brief at the Fourth Circuit Court of Appeals, asking that the panel either vacate the jury verdict holding the ISP liable for secondary copyright infringement or to at least order a new trial. Sony Music, joined by 57 other labels, sued Cox for vicarious and contributory infringement of 10,017 sound recordings and compositions, and a jury awarded Plaintiffs the unprecedented damage award of $1 billion. Cox’s appeal includes arguments against the foundations for that award, but of greater interest to copyright owners are the questions presented on the matter of secondary liability.

In fact, Sony Music et al v. Cox Communications may prove a landmark case in the ongoing battle that began in the 1990s, when it was first recognized that the internet would inevitably be used by consumers to pirate copyrighted works in volume. That assumption was the rationale for §512 of the DMCA, which the major ISPs of the era lobbied Congress to write as a conditional shield (“safe harbor”) against liability for copyright infringements committed by users of their services.

In the precedent case in the same circuit (BMG v. Cox), it was proven that Cox failed to meet the DMCA’s statutory conditions requiring account termination of repeat infringers and, thereby, voided its “safe harbor,” allowing both that trial and Sony to proceed. Losing DMCA immunity does not prove that an ISP is liable for infringements committed by users, but the two are related because losing the “safe harbor” and reaching the standards of secondary liability both entail considerations of law and fact as to what actions the ISP took, either to respond, or avoid responding, to infringements via its network, and why the ISP took, or failed to take, those actions.

Contributory Liability

Contributory liability exists when the accused party has knowledge of illegal conduct and materially supports or induces that conduct. On appeal, Cox argues that the district court erred at summary judgment by finding that notices sent at the direction of the RIAA were sufficient for establishing Cox’s knowledge of the infringements at issue. It also argues that the verdict cannot stand because the company’s decisions to avoid terminating the relevant subscribers does not reach the standard of “material support” as a matter of law. “…no reasonable juror could find that Cox materially contributed to each infringement for which it was held liable. The district court erroneously found that Cox materially contributed because internet access was necessary to each infringement,” the brief states.

Vicarious Liability

To be vicariously liable for copyright infringement, a party must receive a direct financial benefit from the infringement, and it must have the right and ability to stop or prevent the infringement. Here, Cox argues that because it provides access for flat fees, and because its service is provided for substantially non-infringing purposes, the ISP did not receive any direct financial benefit as a result of customers using its network to illegally download music. The brief argues, “The district court defied prevailing law in holding that Plaintiffs were not required to prove that” Cox had a direct financial interest in users downloading songs or that it promoted the opportunity to engage in infringement as a “draw” to consumers. “[The court] further erred in finding that Cox received a direct financial benefit by not terminating…subscribers who infringed.”

On the second prong of the vicarious liability question, Cox argues that it does not have the right and ability to “supervise the conduct of its six million customers” and further states that nobody should want an ISP to supervise consumers so invasively. In order to avoid the “crushing liability” implied in this case, Cox asserts that “ISPs would have no choice but to terminate subscribers the moment they are accused of a single infringement, stranding countless subscribers in an internet exile.”

Questions of Law and Fact

Cox appeals on matters of law, but it will be interesting to see what the panel makes of the more colorful generalizations in its brief, which may be there to obfuscate facts that go directly to the legal questions presented. For example, the brief’s first sentence declares, “The music industry is waging war on the internet.” A provocative and sweeping headline for the media, but the panel may find the fatal flaw in Cox’s appeal is that it too broadly asks the court to consider implications for “the internet” while eliding details germane to Cox’s conduct.

Specifically, on the matter of contributory liability, evidence was presented to the juries in both BMG and Sony indicating that Cox engaged in willful blindness and that it actively avoided taking measures leading to account termination, even for recidivist infringers. Both the district court and the juries found this conduct to be “material support.” On the question of vicarious liability, similar evidence was presented to show that the motive for Cox’s failure to terminate relevant accounts was its desire to preserve the revenue from those customers, and this was held to be “financial benefit.”

Indeed, it would seem difficult to argue before a reasonable jury that protecting about $94 million annually is not “financial benefit,” and that is roughly the value of the 1% of total customers Cox estimates are encompassed by the Sony claim.[1] And in perhaps another example of overreaching, this 1% number appears to be the rationale for the following assertion in the Cox brief:  “… unlike the offerings of Napster and its ilk, internet service is neither designed nor advertised to promote piracy. And on this record, 99% of Cox’s internet users never put it to that use.”

Even if Cox could prove that its other 5.94 million customers never engage in piracy, the comment reads like another distraction for the headlines because it is irrelevant to the questions presented. If Cox was shown to have materially supported repeat infringers for the purpose of protecting any of its revenue, it doesn’t matter what portion of the balance sheet that activity represents.

Although certain questions inherent to the case are not without difficulty (e.g. account termination is nothing to take lightly), it seems that Cox wants the court to hold that ISPs are inherently immune from secondary liability for copyright infringement. But if that were true, then §512 of the DMCA would not have been written in the first place. Why carve out a shield for a liability that cannot exist based on the general function of the enterprise being shielded?

This legal paradox has been steadily woven into the narrative for the past twenty years by the ISPs themselves. In the 1990s, it was Cox’s industry that lobbied for the “safe harbor,” and the conditions in §512 of the DMCA were substantially predicated on the infringement mitigation methods those companies claimed were technologically feasible. Those measures never really materialized. Instead, the narrative shifted during the intervening years to the declarations: We can’t supervise. You don’t want us to supervise. And the internet is too important to cancel anyone’s account ever. We’ll see, but I’m not sure the courts are going to buy it.

[1] 60,000 customers x $130 average monthly bill x 12 months.

Library Associations Pursue Misguided eBook Licensing Laws

ebooks

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