Tag: David Lowery

Podcast: Talking NFTs and Grift with Neil Turkewitz & David Lowery

In this episode, I talk to artists’ rights activists Neil Turkewitz and David Lowery about the scope and nature of fraud in the NFT trade–and why NFTs are yet another false promise to help independent artists in the digital age. 

Read Neil Turkewitz’s interview with artist bor, a member of the activist group @NFTTheft, and read his follow-up piece about the scope of fraud on the site OpenSea.

Read David Lowery’s post about the HitPiece NFT ripoff. 

Read Aaron Moss’s post about HitPiece at CopyrightLately.

Check out Molly White’s blog Web3 is going just great.

And because it came up in discussion, one Cambridge University study finds that mining Bitcoin uses 121.36 terrawatt-hours per year–or more than the nation of Argentina.

Jonathan Mann weighs in.

Photo source by: inmicco

Will SCOTUS Close Cy Pres Loophole in Class Action Litigation?

Suppose there were a company whose minions went around whacking people in the head with two-by-fours.  Then, suppose that in response, the multiple victims of said whacking joined a class-action lawsuit against the corporation and won their case.  Now, imagine that rather than any damage award going to the plaintiff class members, the money instead went to various organizations, including non-profit and academic institutions, that advocate policies favoring two-by-four head-whacking by the very industry that includes the defendant company.  If that seems absurd, welcome to the often maddening outcome known as the cy pres award in the world of class-action litigation.

From the French cy près comme possible, meaning “as near as possible,” cy pres is supposed to provide a reasonable alternative to awarding damages stemming from class-action lawsuits where the members of the injured class cannot effectively be compensated by the penalties collected in settlement.  So, in my exaggerated example above, if ten million class members are whacked by two-by-fours, and the company settles for $20 million, it may not be practical to distribute two bucks a head (literally) to the class, especially after the plaintiff attorneys take their cut (more about them below).

So, in lieu of paying the class members themselves, the court may order a cy pres award to an organization, or organizations, that, in theory, work to benefit the class members’ interests indirectly.  For example, the money in my hypothetical scenario might go to the American Society for the Prevention of Two-By-Four Whacking.  But this is often not what happens.  

In fact, just the opposite occurs according to the petition granted cert by the Supreme Court in Frank v. Gaos, for which oral arguments will be heard tomorrow.  The petition alleges that district courts too-frequently approve cy pres awards without “rigorous analysis,” and this results in (among other problems) victim classes winning settlements that only serve to fund institutions who advocate on behalf of the very parties they sued.  

Cy Pres Awards Fund Google’s Anti-Copyright Agenda

The aberrant nature of cy pres awards is the basis on which three musician/copyright activists—David Lowery, Blake Morgan, and East Bay Ray—filed an amicus brief in Frank v. Gaos, written by attorney Antigone G. Peyton. The brief describes how cy pres awards, resulting from lawsuits Google has settled, end up funding policy advocacy that favors Google, including the company’s global assault on copyright law.  “Artists such as amici watch in powerless amazement as the lower courts allow millions in cy pres awards to be funneled to Google’s academic and nonprofit influencers through dubious class action settlements, …” the brief states.

For instance, the Electronic Frontier Foundation apparently received $1 million of the $17 million Google paid in 2011 to settle a consumer privacy lawsuit (the Google Buzz case) filed by the Federal Trade Commission.  An otherwise reasonable circumstance for issuing a cy pres award, this is just one example where Google wins for losing—paying a “fine” for one transgression that directly funds organizations that generally advocate public policy in its favor.  Plus, Google gets a tax break for giving money to non-profit institutions!

Thus, Lowery et al demonstrate, in context to the larger complaint against cy pres, how copyright owners are injured through what almost amounts to shadow funding of organizations and academic institutions that consistently attack copyright through litigation and amicus briefs, academic papers, and public communications. Other parties named in the brief as receiving Google money through cy pres settlements include Public Knowledge, the Center for Democracy and Technology, the Berkman Center, and Stanford’s Center for Internet and Society.  

The Bigger Picture

Naturally, the broader complaint in Frank v. Gaos demonstrates the negative effect of cy pres awards in class actions beyond complaints against the internet industry, although the litigants here do arise from yet another Google privacy violation case settled in 2010. The petitioners’ complaint lays out the means by which an $8.5 million settlement in that case first paid class counsel a substantial fee and then funded organizations with existing relationships to Google.  From the petition …

“There are recognized conflicts of interest between class counsel and the class, because the defendant cares only about its total cost of settlement, while every dollar going to class members is a dollar that will not go to class counsel’s fees.  In the absence of legal rules explicitly forbidding such gamesmanship, class counsel and settling defendants have a variety of gimmicks available in a class-action settlement to maximize class counsel’s proceeds while minimizing the cost of settlement to the defendant.”

Essentially, the courts’ tendency to “rubber stamp” cy pres awards in these settlements creates a powerful incentive for class counsel to abrogate its responsibility to the class members because counsel’s interests and those of the defendant become deviantly aligned.  To put it in stark terms, the attorney who graduated from Harvard Law has an all too-tempting opportunity to earn a substantial fee for himself and also negotiate a donation to his alma mater and call it a “win” for his clients, who get nothing.  

Further, the petition asserts a constitutional complaint arising from the fact that a cy pres award may infringe class members’ First Amendment rights by way of forcing them to support organizations or institutions they would never choose to fund.  For instance, because the AARP was one of six recipients of the cy pres award in this particular Google settlement, the petition states, “Petitioners also objected to being compelled as a class member to subsidize the AARP’s advocacy and lobbying on controversial policy issues, which petitioner Frank often opposes.” 

Few readers of this blog need to be convinced that “digital rights” organizations such as those mentioned above present themselves as a public-serving groups while advocating policy positions that are often insidiously industry-serving.  But at least direct donations by Google to EFF et al are clearly identifiable, while cy pres awards create a layer of obfuscation between the effective “donor” and the recipient of substantial operating funds.  

From the broader petition, it seems that every citizen who doesn’t want to be whacked by a metaphorical two-by-four has an interest in the Supreme Court’s decision in this case; but copyright owners should be keenly aware of the outcome in Frank v. Gaos for the reasons described.  As the amicus brief concludes, “Allowing cy pres awards to continue along their current path means that the courts are complicit in allowing Google to fund its network of academics, think tank partners, and friendly nonprofits at the expense of class members.”  

Let’s Be Sure To Kill the Songwriters

I have said a few times on this blog that contemporary politics in the United States is increasingly reminiscent of the turbulent 19th century.  We only have 2.4 centuries of existence as a nation, and it took half of that time just to begin to fulfill the promise of equality—principally by advancing of the rights of labor relative to the power of capital.  Now, sadly, we seem to be moving in the opposite direction; and a new bill introduced in the House reveals that big capital—shiny digital-age capital—is not quite done eviscerating the rights of songwriters and musical artists.

As long as U.S. public policy is in a general state of chaos, we might as well write a bill that would allow corporations the size of Google and Amazon to steal from songwriters with impunity.  That’s not how Rep. Jim Sensenbrenner’s (R-WI) “Transparency in Music Licensing Ownership Act” is being presented by its proponents, of course, but that’s basically what it is.  And sources tell me there are murmurs within the Judiciary Committee about applying the same rationale (to use the word kindly) to all copyrightable works in addition to music.

A Bit of Context

As many readers know, songwriter David Lowery (of Cracker and Camper Van Beethoven) led a class-action suit against Spotify for publicly performing unlicensed songs.  The streaming company claimed it had made every effort to find the correct parties to pay license fees, but could not locate them.  Normal behavior would suggest that you don’t use the work until you get the license; but asking permission is just not the Silicon Valley way. Hence the lawsuit, which was settled this past May with Spotify creating a $43.4 million fund to compensate the publishers and songwriters whose works were used without license.

Then, as reported in detail by attorney Chris Castle, major music-streaming services—Google, Amazon, Pandora, and Spotify—have been exploiting a provision in the copyright act that was originally designed for single-use, good-faith actors, but which is now a giant loophole for predatory corporations with big computers.  Section 115 states that if the USCO record does not contain address information where a rights holder can be served, a prospective user of a work may instead file a Notice of Intent with the Copyright Office.

The big data companies have been abusing this provision by filing millions of NOIs against songs whose authors can very much be found, if one actually looks.  As Lowery notes in a recent post on The Trichordist, Google allegedly could not find Brian Wilson and so filed an NOI for an obscure ditty called “Surfer Girl.” Think of this NOI maneuver as a temporary liability shield for mass infringement—not an outright exemption so much as an elaborate stall tactic—a hack—that can only be achieved by companies with big computing power.  Meanwhile, creating an outright safe harbor for mass, corporate-scale infringement requires legislative action, and that’s where Rep. Sensenbrenner’s bill enters the story.

HR 3350 is Not What It Seems

On the surface, Sensenbrenner’s bill looks like a modernization initiative. Ostensibly, the proposal would amend the copyright act by mandating that a new database for musical works and sound recordings be created and maintained by the Register of Copyrights.  The bill is being sold as a means to more efficiently get artists paid by updating and fixing the public records.  And while nobody can claim the current, searchable database of the USCO is up to par, this is a) not the reason Google can’t find Brian Wilson; and b) not an issue that will be ameliorated by this half-baked legislation.  Most insidiously, this bill threatens rights holders’ ability to enforce their copyrights at all (more on that below).

Copyright Office modernization is a much-desired, highly-politicized, and underfunded goal that has been in the proverbial works for years.  As such, it seems hardly efficient to introduce legislation, which implies that there is now some urgency to create this database for two categories of works.  Suddenly, we need to develop a music database (which happens to be redundant to those maintained in the private sector) outside the context of any broader agreement about USCO modernization and the appropriations necessary to achieve that outcome.

This suggests that the urgency of Sensenbrenner’s bill is driven by the combined $1.5 trillion worth of corporate entities represented by a lobbying group called the MIC Coalition. Comprising the above-mentioned music streaming companies, terrestrial radio networks, consumer electronics companies, and hotel and retail giants, what these industries like about HR 3350 is that it directly weakens a rights holders’ ability to enforce his copyrights, period.

Preempting Liability

While many critics complain about statutory damages, they are fundamental to any rights holder’s ability to enforce a claim of copyright infringement.  Proving that an infringement has occurred is often quite straightforward, while proving exactly how much harm a specific infringement has done to the owner is far more subjective. For instance, some harm may be qualitative and hard to value in monetary terms.  Thus, the federally-mandated penalties for infringement act 1) as a deterrent; and 2) as an incentive to settle the majority of relatively simple cases in which attorneys for both parties typically know what the outcome of an otherwise costly trial would be.

Registration with the USCO is already required in order for a rights holder to be eligible for statutory damages in a prospective litigation.  But the provision in Sensenbrenner’s bill would mandate that rights holders register via this new database or forfeit their eligibility for statutory damages.  So, among the unanswered questions this bill begs is what it would cost rights holders to newly register and/or maintain their records in this as-yet-undeveloped database.  For instance, would an out-of-date phone number automatically nullify a rights holder’s eligibility for statutory damages in a litigation? And what would it cost a rights holder like a photographer, with thousands of copyrights, to change every record — depending on how the database is designed?

This NPR story by Andrew Flanagan calls HR 3350 “opaque” and quotes attorney Lisa Alter as saying, “It’s basically a prophylactic for copyright infringement.”  And that’s exactly what it looks like to rights advocates—a preemptive measure to evade liability for mass infringement of works, disguised as a modernization mandate. It even has the word transparency in its name to help with that confusion.

What About My Coffee House?

In a much older post, I referenced my local coffee house as a place that hosts an open mic night and, therefore, pays the three major PROs — ASCAP, BMI, & SESAC — and displays a sign at the entrance telling musicians to “play whatever they want.”  While the proprietor is focused on ordering supplies, managing his employees, brewing coffee, baking killer muffins, and catering to his customers, I imagine paying the annual PRO fees is about as much time as he will ever want to devote to thinking about music licensing.

As such, it’s hard to imagine how this small venue owner, and millions just like him, would benefit from this proposal despite the claims by mega-corporation proponents to the contrary.  At best, these databases are useful for prospective users of individual works, but the small proprietor of a bar, restaurant, or store has little to no use for that level of detail. He just wants music in his establishment.

While the language in this bill creates a brand new safe harbor shield for businesses like Pandora, Google, and Amazon—and perhaps even a major hotel chain—it’s likely to be somewhere between useless to harmful to my local coffee house owner.  Sensenbrenner is considered by industry professionals to be an enemy of the PROs, and it’s unclear the extent to which this bill could wind up harming those organizations. If this were to happen, though, that’s about as helpful to a small business owner as saying, “We got rid of the power company, so all you have to do now is buy every kilowatt from a different supplier.”

All Creators Should Reject this Bill

To quote Chris Castle, “It’s rare that the Congress can accomplish the hat trick of an interference with private contracts, an unconstitutional taking and an international trade treaty violation all in one bill.”  But he asserts that HR 3350 would achieve all three of these feats in a single act.  I proposed in a recent post that Napster gave us Donald Trump, which was just a provocative way of saying that I believe we accelerated the devaluation of labor and labor rights relative to capital when we presumed to reject the copyrights of musical artists and literally gave the artists’ money to tech VCs and criminal organizations.  Apparently, that narrative is still being written. Songwriters and musical artists are still the proverbial canaries in the coal mine; and it’s unclear if anyone will notice if they stop singing.