Tag: CASE Act

Fair Use & The CASE Act

Although this week marks the eighth annual observation of Fair Use Week, I remain unconvinced that the fair use doctrine is any better understood today than it was before this ritual began. I see fair use errors all the time—e.g. in chat threads where creators are trying to do the right thing—and I maintain that it is often the fair use advocates themselves who cause confusion by promoting theories that have not thrived terribly well in court. And it is confusion about the legal use of works, especially online, that was a major reason why the small-claim copyright provision was finally adopted with the passage of the CASE Act in December.

I mention the CASE Act because the site fairuseweek.org led off this week with a post written by scholar Kenneth D. Crews which asserts the “defense of fair use will be on the docket” when the Copyright Office implements the law and establishes the small-claim copyright tribunal, the Copyright Claims Board (CCB) at the end of this year.

Granted, none of us can say for certain how events will transpire at the CCB, but Crews raises concerns that seem to predict that the doctrine itself may be amended by the decisions of the Board—and presumably not in a way the fair use advocates would endorse. Specifically, one statement by Crews caught my attention because it seems to echo a wishful thinking principle about factor four of the fair use test, and one that was recently rejected (again) in Dr. Seuss Enterprises v. ComicMix. Crews writes:

Think of that fourth factor of fair use: the effect of the use on the market for or value of the work.  A court will often need confidential economic data about the sales of the work in question and the revenue earned.  The Copyright Claims Officers, parties, and staff attorneys do not have clear authority to compel disclosures and discovery.  They can “request” documents and information.  As a result, the Board could frequently be called upon to decide questions of fair use, but without the needed evidence.  The choices at that point will be far from satisfactory.

While financial data may be relevant evidence when considering the potential harm to the rightsholder’s market under the fourth factor, the case law generally holds that this analysis is agnostic with regard to such details. In fact, ComicMix attempted to assert this exact defense, arguing that DSE should be required to prove with financial evidence the direct harm their mash-up book would do to the plaintiff’s market. The district court in that case erred when it agreed with this argument, but that error was overturned by the Ninth Circuit Court of Appeals, which held that ComicMix’s fair use defense failed on all four factors. As the court stated directly on this matter:

Not much about fair use doctrine lends itself to absolute statements, but the Supreme Court and our circuit have unequivocally placed the burden of proof on the proponent of the affirmative defense of fair use. ComicMix tries to plow new ground in contending that fair use is not an affirmative defense and that the burden shifts to Seuss to prove potential market harm.

So, turning to the CCB, it seems the most logical assumption is to expect that, as a small-claims body adjudicating relatively straightforward cases, the Officers will not be eager to “plow new ground” in fair use doctrine. In fact, the Board is obligated by statute to follow the law. Its fourth factor analyses, therefore, should be consistent with the courts and largely ignore detailed financial information (as Crews indicates may be necessary) because those facts are not especially germane to that prong of the test. At the same time, where there may be a circuit split on any matter, including fair use, the CCB is required by the CASE Act to follow the precedent of the circuit where the case would be decided if it went to court.

To reiterate a point made many times on this blog and elsewhere, because potential market harm implies a market the rightsholder has never exploited, including possible derivative works, there is no financial data available in such an instance. And despite attempts to argue the contrary, recent case law has reiterated the principle that fair use does not extinguish the copyright owner’s exclusive right to prepare derivative works, or to prevent the preparation of derivative works if that is the copyright owner’s decision.

I would also add that a fair use analysis is a mix of law and fact, and to the extent that anyone may be concerned about the fate of the doctrine itself, it is opinions of law that matter. When, inevitably, a case is presented to the CCB that contains errors of fact on either side, the outcome of that individual case may be unfair as a result, but the law remains unaffected. Still, I homed in on Crews’s comment about factor four because it highlights why I would question his thesis that fair use doctrine somehow hangs in the balance as the CCB is formed and begins to adjudicate cases. Concerned that the CCB might begin to write its own common law, Crews states:

Decisions from the Copyright Claims Board will not be binding on anyone other than the immediate parties, and they officially will have no precedential value in later actions in a court or before the Board.  Yet conventions of lawyering and the inevitability of human reasoning will surely press to the contrary.  As the Board builds a record of rulings, the outcomes and the reasoning will undoubtedly be fodder for scrutiny and statistical tabulation.  Individual rulings will in some manner be referenced in later proceedings.  Analyses of trends and patterns will be pursued for their scholarly value and as insights for parties and attorneys thinking about the next case to come before the new Board.

This apprehension appears to hinge on an assumption that the Board would make decisions or render opinions that might reshape fair use doctrine, even though, as Crews notes, there is nothing officially controlling about the Board’s opinions. This is doubtful. For one thing, the types of cases in which both parties agree to adjudication by the CCB are very unlikely to present revolutionary legal challenges not already answered by case law. Although we correctly describe fair use as a case-by-case consideration, that does not mean each case presents a novel consideration. Further, if this assumption is not a sufficient guardrail, the CASE Act contains a provision that allows the CCB to dismiss any case that presents a novel theory of law.

In the last ten years alone, we have seen a compelling variety of contemporary fair use defenses; and if the CCB merely follows that guidance, Crews’s concerns should be allayed. Unless, of course, the concern is not that the CCB will be inconsistent with case law but that it will further solidify case law. After all, advocates of a broader, or looser, fair use doctrine have generally not faired too well in a number of headline cases in federal courts. So, I imagine that if the CCB renders decisions that affirm ComicMix, ReDigi, KinderGuides, Brammer, and VidAngel, to name a few, this might not be very popular among those who currently advocate a more expansive approach to fair use.

Crews does state explicitly that fair use can “survive” the work of the Copyright Claims Board, and he is certainly not wrong to say that the efficacy of the Board has to prove itself—frankly in all aspects of copyright litigation, and not just fair use. Moreover, the rubber-meets-road decisions by the CCB may serve to better educate both plaintiffs and respondents about copyright’s protections and limitations. And finally, I disagree with Crews that a respondent who believes he has a fair use defense is safer opting out of a CCB adjudication in the early days of its existence. As discussed in this post about Brammer v. ViolentHues (a very typical digital-age litigation), the defendant might have arrived at the same rejection of his untenable fair use defense for a fraction of the cost.

Photo by Corgarashu

 

Omnibus Bill Passes Congress, Anti-Copyright Crowd Turns Shrill

I have covered the development of the CASE Act in depth. But because the usual gang of anti-copyright zealots began screaming on social media at the news that the small-claim copyright provision was attached to the omnibus spending bill that passed last night, I offer some responses to those allegations about CASE that are factually untrue as well as the predictions that are logically unsupportable. (In a separate post, I will discuss the felony streaming bill that also passed as part of the spending bill.)

CASE Facts Anyone Can Check Themselves

The CASE Act has been the subject of public Congressional consideration, negotiation, debates, and votes for almost two years. And the more general proposal of a copyright small claims solution was in discussion for several years before that. The few objectors’ cloak-and-dagger narrative is a favorite tactic used by just about any party that doesn’t like a particular proposal, and it is demonstrably false in this circumstance. If CASE has been “sneaking” its way through the legislature, it has been doing so in broad daylight and moving very slowly. Because here are some basic realities that readers are free to verify:

  1. the idea of creating a small-claim copyright provision has been discussed in copyright circles and on Capitol Hill for more than decade;
  2. the CASE Act specifically has been the subject of public Congressional consideration over and over;
  3. the CASE Act passed the House 14 months ago with a vote of 410-6;
  4. CASE Act received bipartisan co-sponsorship from nearly one quarter of the Senate;
  5. the CASE Act is a voluntary alternative dispute resolution and is, therefore, not a violation of any party’s right to due process;
  6. the CASE Act has nothing to do with Hollywood or other Big Media, which has no interest in small copyright claims because duh; and
  7. the CASE Act would probably be law already, if Senator Wyden had not put a hold on the bill and refused to engage in any discussion that would not have poisoned its core purpose.

On that last point, it cannot be overstated that the fully transparent, normal legislative process was stopped dead in its tracks by Senator Wyden’s hold. Although CASE critics have tried to paint the senator’s recalcitrance as an act of courage, in reality, he pandered and condescended to his own constituents in Oregon who wanted the bill passed, blew a lot of hot air about erroneous and generalized concerns, and then refused to negotiate a single good-faith amendment to the bill. His only proposals would simply have gutted the intent of the bill. Not only was Wyden wrong about CASE itself, but he hyperextended the purpose of Senate holds, which he once personally advocated should last no longer than 24 hours.

Sane Predictions or Scare Tactics?

Anyone with a brand and a following can make a prediction without backup because, of course, predictions cannot be disproven by evidence. Nevertheless, the ACLU, the EFF, Mike Masnick, Public Knowledge, et al have predicted that the voluntary tribunal established by CASE, the Copyright Claims Board (CCB), will be a venue attractive to copyright trolls,* and they once again invoke the generalized bugbear that CASE will chill free speech online.

Regarding copyright trolls, I have explained in as much detail as I can contemplate (see posts here, here, here, and here) why the Copyright Claims Board would be a money-losing forum for the unscrupulous attorney—namely, that the bill contains multiple anti-troll barriers, which no Article III court can provide. While the critics lazily allude to trolling in general and predict, without supporting arguments, why the CCB would increase trolling, I explain in this post about an actual troll litigation why the CCB is more likely to decrease the volume of trolling by providing an alternative for the kind of plaintiffs who are often the targets of trolls in the digital age.

The copyright skeptics are unlikely to admit that the massive increase in online infringement has been a primary, if not the primary, driver of increased troll-like litigation. But as the judge in the case mentioned above wrote, “Misuse of intellectual property has become a pervasive problem in the internet era and one that is especially pernicious for freelance photographers like [the plaintiff], who often lack the resources to pursue claims in court.”

The critics are free to rebut the theory that CASE would decrease trolling, citing evidence and applying reason, but they do not. Instead, they merely asked Congress and the public to take their word for it, under the imprimaturs of their brands, that CASE will increase trolling because they say so. And in that same vein, anyone who takes the “chill speech on the internet” claim seriously at this point is blindly submitting to the undeserved street cred of parties like the ALCU without actually thinking the issue through very clearly. 

There is a reason why the “online speech” narrative has proven to be incoherent at best, and nation-destroying at worst. Constitutional scholar Mary Ann Franks sums it up adroitly in her book Cult of the Constitution, in which she describes both the ALCU and the EFF in particular as “first amendment fundamentalists,” who “aggressively embrace” the “marketplace of ideas” theory of free speech. “According to the marketplace of ideas theory,” writes Franks, “unfettered competition will eventually lead to the truth.” Can anyone seriously claim that truth is winning so far?

On the contrary, we have watched the effects of laissez-faire internet moderation cause devastating, potentially self-annihilating harm to the very essence of truth, and we have largely ignored how often speech is silenced for people outside the privileged bro-culture of Silicon Valley. But without digressing fully into that complex subject in this post, suffice to say the premise that all online activity must be accorded first amendment-like deference is a profoundly failed theory in general, and even if this were not plainly true, the act of legitimate copyright enforcement is not in conflict with the first amendment.

I know what the classic frightful scenario is, but in the spirit of the season, let me say that Grandma will not get run over by the CASE Act. Neither she, nor anyone else, will innocently share a meme on Facebook and find themselves mysteriously on the hook for a damage award that was rubber-stamped by the CCB. That fiction is blatant fearmongering by a multi-billion-dollar industry that benefits when rightsholders have as a few remedies as possible for infringement of their works. Meanwhile, the small-claim provision does exactly what this same industry claims it wants rightsholders to do about enforcement, which is to direct their complaints at primary parties who have allegedly infringed.

The CASE Act provides a badly needed, though limited, remedy for independent creators who make modest livings from their creative work. A copyright owner must file meritorious claims, pay filing fees, and may only file up to ten claims per year; and the respondent must voluntarily submit to the ruling of the CCB. So, the limitations for the average copyright owner, making perhaps $30-40,000 annually from her creative work, are quite clear: she only has the resources to try to remedy the most harmful infringements, which will often be infringements by commercial users who dodged the responsibility of licensing her work. There is nothing insidious, secretive, or unconstitutional about that.

The last-minute efforts to oppose to the CASE Act by a small corner of anti-copyright special interests presented a slurry of unsupported, implausible, and discredited claims about the bill, mixed with process arguments that are misleading lies of omission. The truth is the bill would likely have already been signed into law a year ago if not for the hypocritical use of the Senate hold procedure to prevent further debate or voting on the proposal. Fortunately, the overwhelming bipartisan support for CASE overcame all that and may finally provide entrepreneurial creators a remedy they have been seeking for a very long time.

*Copyright trolls are attorneys who engage in unscrupulous practice and/or bring unmeritorious claims in order to frighten defendants into settlements, but copyright critics also exaggerate the scope of the “troll problem.”

Copyright Troll Smackdown Reveals Need for CASE ACT

The wicked deeds of the infamous copyright troll have been cited among the excuses to reject many proposed improvements for copyright enforcement in the digital age. For anyone unfamiliar with the term, copyright trolls (and their cousins the patent trolls), are the ambulance-chasers of IP law. They file often dubious copyright claims with the sole purpose of frightening settlements out of respondents. They work on volume (more claims filed equals more settlements), and the claims themselves will often lack merit outright, or they will fail to follow proper civil procedure.

Enter Richard Liebowitz, a notorious copyright troll, who has been sanctioned multiple times by multiple courts for his conduct and was recently smacked down in very strident terms—first by the Southern District of Illinois and then by the Southern District of New York, on May 7th and 8th respectively. In both cases, both involving claims by photographers, it was Liebowitz’s blatant disregard for civil procedure that raised the hackles of Judges Rosenstengel (Illinois), and Caproni (New York), and the two provided plenty of Twitter material for law hawks to share.

Judge Rosenstengel, in the case Ward v. Consequence, sanctioned Liebowitz for “vexatious and bad faith practice,” referring to him as exemplary of the “worst kind of lawyering.” Judge Caproni of New York, in Chevrestt v. Barstool Sports, also imposed sanctions after expressing her disdain for his recidivist conduct, stating, “Mr. Liebowitz has ‘earned the distinction of being a regular target of sanction-related motions and orders,’ and ‘it is no exaggeration to say that there is a growing body of law in this District devoted to the question of whether and when to impose sanctions on Mr. Liebowitz alone.'”

So, ouch. But these opinions, and primarily the opinion in Ward, reveal why the small claim proposal known as the CASE Act is so essential for independent creators in the digital age—and why it is technically absurd that anyone would argue that the Copyright Claims Board (CCB) would be a venue of opportunity for copyright trolls. First, Judge Rosenstengel is unequivocal in describing how Liebowitz’s trolling is just as toxic to the plaintiff as it may be to a respondent …

“It is a simple matter for the Court to conclude that Liebowitz’s conduct in this case has been irresponsible, unreasonable, and detrimental to the fair administration of justice, harming both Consequence, the Court, and even his own client, who has lost his opportunity to advance what appears to have been a meritorious claim.”

Then, because the claim was likely meritorious, she later explains her rationale for restoring only a portion of Consequence’s legal fees pursuant to Liebowitz’s misconduct, admonishing the respondent thus:

“The Court hopes that Consequence’s remaining uncompensated financial expenditure and the experience of wrangling with legal lampreys such as Liebowitz will serve to ensure that Consequence in the future exercises the merest modicum of caution necessary to avoid misusing the intellectual property of others.”

But it is the following comments from the judge’s discussion that truly sum up the problem faced by so many creators today, and also point to the need for the small-claim alterative called for in the CASE Act …

“Misuse of intellectual property has become a pervasive problem in the internet era and one that is especially pernicious for freelance photographers like Ward, who often lack the resources to pursue claims in court against organizations like Consequence, knowing that even if successful they may receive mere token payments of a few hundred dollars for their work, far less than their legal fees. Aggressive plaintiffs’ attorneys such as Liebowitz, then, can be said to represent the fetid backwash of online media providers’ own persistent and willful disregard for intellectual property norms, and the Court is not overly sympathetic to Consequence’s plea to be made whole.” [Emphasis added]

Arguments for passing the CASE Act can be found in these opinions, along with one very strong counterargument against the implications made by anti-copyright activists that the small-claim CCB would provide a rich hunting ground for copyright trolls. To the contrary, the CASE Act just might be a copyright troll destroyer.

As I opined regarding the Brammer case, Ward presents a scenario in which both parties would likely have come to a much easier and less costly resolution if a small-claim option had existed. Consequence admitted its wrongful use of Jesse Ward’s photograph and would, therefore, likely have been willing to voluntarily submit to the cheaper and less burdensome small-claim tribunal. (As it is, Consequence paid its attorney and Ward got nothing.) I cannot say the same about photographer Angel Chevrestt and Barstool, as the latter seems to have at least some record for “persistent and willful disregard for intellectual property norms,” but less hassle is less hassle for any party.

The opinions written by both judges in these cases provide a glimpse into the troll business model, which appears to depend on certain elements that would be unavailable via the CCB. As mentioned, the troll relies on volume. Point enough $150,000 (statutory damage award) guns at enough targets, and the troll will frighten at least a percentage of those targets to settle claims for several thousand dollars, long before they might ever pay a lawyer to discover whether the claim has merit, or might otherwise fail for the kind of procedural sloppiness alluded to in both of these cases.   

This shotgun approach to litigation would be very difficult in the more constrained environment of the CCB than it is in Article III courts. Unlike the court system, the CCB is a single venue, which has a statutory responsibility to flag repeated claims (even valid claims) filed by any one party, and it has the discretion to limit the number of claims filed by any single party. The CCB is also authorized to ban any party for filing one unmeritorious claim and, as a consequence, throw out all other claims filed by that party.

The CCB may fine a party $5,000 for abuse of the system and/or bar them from filing with the board for up to one year. Add to all that the fact that the small-claim tribunal is voluntary, plus the fact that the lion’s share of the substantially lower damage awards should go to the clients, and the CCB begins to look like a money-losing proposition by the time the troll does the math. In fact, it was designed that way because, contrary to many opinions out there, copyright advocates don’t like trolls either.  

Finally, and perhaps most intriguingly, because the CCB is an alternative dispute resolution forum designed to be used with or without counsel, its availability would leave both complainants and respondents far less susceptible to unwittingly engaging troll attorneys, as seems to be the case in Ward. So, oddly enough, in addition to the intrinsic mechanisms in CASE that were specifically written as anti-troll provisions, the very existence of the CCB could, over time, shrink the market of desperate creators who may inadvertently become the clients of “legal lampreys.” If we, therefore, take a much broader view, not only would the CCB be a poor environment for the troll to ply his dark arts, but the availability of a small-claim option may eventually put a lot of trolls out of business, while still providing work for conscientious attorneys to assist with small claims where that assistance is desired.   

Troll image by: Kaselmeyk