Can We Ever End Legalized Piracy?

Creators of every stripe must watch Miranda Mulholland’s May 24th speech delivered to the Economic Club of Canada. The musician, composer, and label-owner, with nearly 20 years of professional experience, does an excellent job of contrasting the realities of being a professional creator in today’s market against the rhetorical promises of the corporate leaders who designed that market. In addition to answering some of the classic tech-utopian “advice”—adapting, selling CDs at venues, touring, etc.—Mulholland focuses broadly on the subject of accountability and the fact that what we normally call “piracy” occurs on legal platforms. She says …

“Let’s look at the biggest music service in the world – YouTube. Did you know that 82% of YouTube users use it for music? It is supported by advertising and it is based on user uploaded content. But wait. Running a commercial site based on unauthorized uploading of copyrighted music is illegal, right?

YouTube says, it isn’t our fault – we are just the shop window. We didn’t put the items in the window, so we are not accountable for them. We are a passive intermediary. We are not liable for this massive copyright infringement.”

Because YouTube is currently a mix of licensed and unlicensed music, it is hard to get a fix on the percentage of infringing v. non-infringing uses. Anecdotally, though, musicians like Mulholland tell this story time and again. Still, she hardly asserts that business should return to the way things were before the digital revolution but instead looks forward, recommending specific actions that artists, industry, consumers, and government can take to get the formula right. And with very subtle differences, what’s good for Canada is good for the U.S. Her top item for government: End Tech Company Safe Harbors. (Okay, they spell it harbours up there.)

As has been widely reported by countless independent artists as well as large rights holders, the intended balance in the provisions of the 1998 Digital Millennium Copyright Act was soon overwhelmed by the unforeseen volume of copyright infringement on legal platforms. And because the largest of these platforms YouTube is part of a $700 billion-dollar empire called Google (Alphabet), litigation is an economic non-starter. Moreover, the major rights holders remain in an awkward limbo comprising negotiated deals with YouTube while still sending millions of notices of infringement of their works on the site.*

Since 2015, the US Copyright Office has been conducting a review of the DMCA; and many artists and creators have for several years been advocating some type of Take Down/Stay Down provision. One way or another, based on the case law to date and the financial power of providers like Google, it does seem as though only legislative action can recalibrate the intended compromise with rights holders by, among other things, clarifying the statutory conditions a service provider must meet in order to retain the liability shield known as the “safe harbor.”

Of course consumers will be told—and have been told—that any revision to the safe harbor conditions in the DMCA will destroy innovation, free speech, and the internet itself. We know the play. The Internet Association, along with “digital rights” activists like EFF will come out in full force against any proposed change. And they will all claim to be acting on behalf of consumers. But the bottom line is this: the DMCA presently enables massive corporations to grind up the dreams and labors of independent creators; and over time, consumers who want new works—or who wish to become creators themselves—will very likely find themselves part of the piling dust.

Based on just a sampling of the anecdotal experiences described by rights holders, both large and small, who attempt to use DMCA for enforcement, it is very likely that YouTube would be found to have already abrogated its “safe harbor” shield through non-compliance with one or more provisions of the DMCA as written. Of course, for us to prove this, somebody would have to file a new copyright infringement claim against the company, and that won’t happen—not because a plaintiff would lack standing on the merits, but because Google is simply too big to sue. Ironically enough, though, the perception endures that the 300lb gorillas in this story are still Hollywood and the recording industry.

Viacom v. YouTube Is Unfinished Business

Readers probably remember that ten years ago, when YouTube was new, and only recently acquired by Google for $1.65 billion, the video platform was sued for infringement and vicarious infringement by a class of rights holders led by Viacom. In 2010, the District Court granted a summary judgment in favor of YouTube, holding that the platform was entirely shielded by §512 of the DMCA; but on appeal in 2012, the Second Circuit called the lower court decision “premature,” finding that there were several triable issues of fact, and remanded the case back down.

Because the parties settled in March of 2014, just days before a new round of oral arguments was scheduled back at the Second Circuit, we’ll never know whether or not the rights holders would have been able to demonstrate to a jury that YouTube was failing to comply with key provisions in the DMCA and thus forfeit its safe harbor. What we do know is that Viacom had provided evidence that YouTube’s founding executives, in its earliest days, were making calculated decisions to not remove material they knew to be infringing because the content was driving traffic. We also know that the circuit court held that there were statutory issues warranting further discovery where YouTube might have been found wanting in holding up its end of the DMCA bargain.

The circuit court opinion also cites YouTube’s own internal audit at the time, which revealed that 60% of its content was copyrighted content and that only 10% of that material was authorized. So, it is no exaggeration to say that while the Viacom case dragged on, YouTube grew its dominant position on the backs of creators, who were involuntarily “sharing” their work for no return.

Since 2010, the platform has grown from 24 hours of video uploaded every minute to 300 hours every minute; and the assumption has been that a service provider cannot know, amid all that material, what is and is not infringing. Indeed, one of the formative principles of DMCA was that ISPs would not have to affirmatively monitor for infringement, but would instead be required to respond to each individual infringing use upon notification by the rightful owner of the copyright.

The flaw in this mechanism is now obvious and its consequences for creators are clear. A platform like YouTube is able to monetize infringements at warp speed while responding to claims at the pace of a horse and buggy by contrast—all while generating so much ad revenue that the company becomes untouchable via litigation. At the same time, shielded from liability for mass infringements on its own platform, YouTube enjoys an aggressive bargaining position that has enabled it to pay far lower rates than competing services for those works they do license.

There is a disconnect between the intent of the DMCA and the manifest reality. And what’s falling through the statutory cracks are the middle-class livelihoods of thousands of creators like Miranda Mulholland. Meanwhile, the promise that digital-age models replace old models for the artists who learn to “adapt” has been consistently disproven by creators who have actually done everything the digital gurus told them to do.

I suspect the prospect of ending safe harbors, as Mulholland proposes, is a non-starter. The principle of limiting liability for sites hosting User Generated Content remains sound; and it cannot be discounted that a site like YouTube must also manage an appeals process for wrongful claims against creators who build successful channels on the site and do not carelessly infringe copyrights. Nevertheless, it cannot be denied that YouTube walks, talks, bargains, and earns money like a very actively-managed distribution network rather than the “dumb pipe” they claim to be when threading the loopholes of the DMCA.

While digital rights activists criticize every possible solution—from voluntary measures to legislative amendment—the fact is we now have 20 years worth of data not available to the authors of the DMCA in 1998. These data show what artists like Miranda Mulholland have tried repeatedly to explain on the most human level—that they’re getting clobbered by an industry making fortunes from their labor. Copyright law has always had to evolve when confronted with new technologies and new paradigms. And in context to the lifespan of the public internet, the DMCA is ancient history.

*The irony is not lost on me that Mulholland’s video is best shared via YouTube, but that’s part of the challenge. They’re pretty much the only game in town.

BMG v Cox Goes to 4th Circuit Appellate Court

Amicus briefs were filed recently in the 4th Circuit Court of Appeals in the case of BMG Rights Management v Cox Communications. In November of 2014, BMG sued Cox (an ISP) for contributory copyright infringement, and a US District Court found for the plaintiff in December of 2015, awarding $25 million in damages. The suit was based on evidence that Cox was willfully ignoring and/or failing to address the use of its service by repeat infringers.

“Digital rights” groups and (let’s be honest) people who support piracy decried the outcome, which Cox has now appealed. A decision may expected by early Spring, and if the court were to find Cox’s arguments persuasive, this would have a very damaging effect for rights holders—further aggravating the weakness in the DMCA as a mechanism of enforcement.

Having failed in the lower court to convince either judge or jury that Cox had sufficiently maintained its liability shield (safe harbor) under the DMCA, the company now seeks to argue on appeal that the DMCA says something other what it says. And true to form, Public Knowledge and the Electronic Frontier Foundation have chimed in (via joint amicus brief) to propose that if the Cox ruling is upheld, it could lead to disenfranchisement of people from internet access and…y’know…destroy free speech. Again.

Anyway, let’s review.

Although one might get the idea from general discussion that DMCA is either a blanket liability shield for ISPs or a blanket takedown mechanism for rights holders, it is neither of these things. Instead, the DMCA statutes define the conditions and responsibilities of service providers with regard to users uploading or accessing unlicensed, copyrighted material onto their platforms. In simple terms, the law states how an ISP may conditionally retain its safe harbor liability shield, and it is these conditions which tend to get lost in the broader reporting on DMCA-related stories.

A service provider like Cox, which sells internet access to consumers, generally would not be concerned with hosting infringing material the way a platform like YouTube will be, but they can be liable for contributory infringement if the company is aware of subscribers using its service to repeatedly infringe copyright and takes no action to stop the infringing activity. The statute in DMCA §512(i) states that a service provider must have “a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers.” Note that the DMCA explicitly anticipates conditions by which the provider must eventually terminate the accounts of repeat infringers—logically, those who refuse to stop after some amount of warning.

So, for all of EFF’s and PK’s dramatics about the cruelty of account termination—their brief compares it to “cutting off a tenant’s water”—one might get the idea that in writing the DMCA, Congress never imagined such a remedy; but termination is precisely what the law says. (A more reasonable comparison would be made to the prospect of losing a driver’s license, which can be quite damaging to an individual, but which is also a penalty imposed only after some degree of willful abuse.) What the DMCA does not say is how much infringement makes a “repeat infringer,” or how an ISP must design its policy for addressing repeat infringers where account termination is a possible consequence.

This ambiguity can be exploited by service providers, and in this case, BMG presented substantial evidence to the court that Cox’s policies seemed purposely designed to avoid taking action against repeat infringers within a reasonable interpretation of the DMCA. The district court opinion written by Judge Liam O’Grady states, “Unfortunately for Cox, the record was replete with evidence that foreclosed any assertion by Cox that it had reasonably implemented a repeat infringer policy.”

**Who’s a repeat infringer?**

In its appeal, Cox seeks to argue that “repeat infringers” in DMCA §512(i) can only mean “subscribers who have been found liable for infringement by a court or a jury on more than one occasion.” In other words, BMG’s evidence of users consistently accessing unlicensed material does not make those users “repeat infringers” unless they’ve already been found guilty of infringement in a court of law—more than once.

Cox is relying on a specific interpretation of the word “infringer” in the statute, hoping that the appellate court will agree that a “repeat infringer” can only be an individual who has lost at least two copyright infringement cases in court. That population may be a number barely large enough to fill a small cafe, which is considerably smaller than the billions of users anticipated by the architects of the DMCA. And because it is obvious to any reasonable person that one can be guilty of a violation without being held liable—if you’re let go for speeding with a warning, it doesn’t mean you weren’t speeding—any reasonable person should conclude that Congress’ use of the word “infringer” in this case was meant to describe individuals engaged in unlicensed access to, or use of, copyrighted material, even if the rights holders do not intend to pursue litigation against them.

It is a truly bizarre argument, which overtly pretends the DMCA is something other than what it is. The background, intent, and language of the law is known, by the parties involved in its writing, to have been designed as a process by which ISPs and rights holders would collaborate to mitigate infringement—no matter where the users reside or who they are—without costly litigation. For example, a “repeat infringer” under the DMCA can easily be—and often is—a user in a foreign country who has never seen a U.S. court, let alone been a named party in a U.S. copyright case.

The DMCA’s existence is based partly on an understanding that worldwide users would inevitably infringe—either willfully or unintentionally—but that the ISPs and rights holders would have a mechanism for removing infringing files or stopping infringing activity without anyone getting sued—as long as all parties met the conditions in the agreement.

Knowledge of Infringement

If you call someone on their cell 3-4 times and they don’t answer, there may be any number of reasonable explanations. If you call them 50 times and they don’t answer, they’re ducking your calls—or in legal terms, they’re engaging in “willful blindness” by choosing not to hear what you have to say. So, what about a few million calls? At issue in the lower court decision was the fact that Cox simply ignored millions of notices sent by Righstcorp on behalf of BMG containing IP addresses and other corroborating information demonstrating repeat infringement by numerous subscribers.

Cox’s rejection of these notices was deemed “willful blindness,” which is the legal equivalent to taking affirmative action to infringe, hence the charge of contributory infringement. On appeal, Cox contends that the notices, which they chose to ignore, would not constitute “knowledge of infringement” anyway, thus seeking a standard of “knowledge” so narrow that it would effectively excuse all ISPs from adopting any kind of anti-infringement policy as mandated by the DMCA.

The Betamax Argument

Cox further argues that as a conduit provider, they can only be held liable if they “actively encourage or induce infringement through affirmative acts.” In this regard, Cox relies on a very broad reading of Sony Corp v Universal Studios (1984), which held that Sony could not be liable for copyright infringements that may be committed by users of its VCRs. There are several parts to the Sony ruling, including the Court’s holding that because the VCR could be used for “substantial non-infringing purposes,” Sony could not be liable for any infringing uses unless it actively induced or encouraged that infringement by its customers.

Cox now seeks to argue, by the same principle, that because internet access may be used for “substantial non-infringing” purposes, they should be held to the same standard as Sony because they also did not induce its users to infringe. Once again, Cox’s argument seeks to bypass the terms of the DMCA with an argument that, if upheld, would unconditionally absolve all ISPs of liability unless they promoted infringement in their marketing.

The fact that the internet, writ large, is used for substantial non-infringing purposes is immaterial. To stick with automotive analogies, just because cargo trucks are used for substantially legal purposes, this has no bearing on the liability of a trucking company, if it were to turn a blind eye to some of its drivers transporting contraband across state lines.

Nevertheless, Cox—with the hyperbolic assistance of EFF/PK—seeks to argue that if this hypothetical trucking company pays a penalty, loses it’s license, or fires the named truckers, that will lead to the end of trucking itself, and we all starve. If 100 Cox subscribers lose their access due to their infringing activity, it has no more bearing on the internet and its billions of users, than if a different 100 subscribers lost their access due to non-payment for the service.

As argued in the brief filed by the Copyright Alliance, “If Cox’s view was the law, then as long as it was not actively inducing or promoting infringement, Cox could throw each and every infringement notice it received straight into the trash, and the “Abuse Group” charged with addressing online piracy could knowingly permit active infringement without creating any risk of liability to Cox.”

To summarize, the Cox argument boils down to the following: 1) repeat infringers are not repeat infringers; 2) even if they were repeat infringers, we could not know they were repeat infringers from the evidence presented; 3) even if they were repeat infringers and we knew about them, we aren’t liable because we didn’t tell them to infringe.

Implications of this Case

This effort to treat the safe harbor as an unconditional liability shield is generally where large ISPs have tried to move the conversation, both in the courts and in the public dialogue. But the DMCA was never meant to provide a free ride for service providers, although it has inadvertently produced that result to a greater extent than anticipated by its authors.

As Copyright Alliance also observes in its brief, if a rights holder the size of BMG has no remedy in a case in which a service provider has been shown to have circumvented the provisions in the law, then independent rights holders truly have no hope of protection whatsoever in the evolving digital market. Instead, independent rights holders need the DMCA to be made more effective than it is by revising some of the ambiguity in the statutes, which leads to the kind of bad-faith policies on the part of ISPs that are apparent in this case.

Activists Promote Revisionist History of DMCA

Rusty boat lying on girders on shore with light cloudy ocean background — Photo by eyevision Pond5

Earlier this month, Rolling Stone published an article by Steve Knopper called Inside YouTube’s War With the Music Industry. I would characterize the article as more of a glimpse than an inside view; but setting that aside, the article contained a quote about the DMCA that caught my attention.

Knopper focuses on the fact that several major stars like Taylor Swift, Paul McCartney, and Beck recently signed an open letter to Congress demanding revision to Section 512 of the DMCA. The article is actually too short and broad to really get into the nitty-gritty, but anyone who follows the issue knows that the crux of all artists’ complaints with the DMCA is that it has unintentionally enabled platforms like YouTube to distribute works without a negotiated license and to monetize mass infringement of works without providing rights holders an effective means of control—as the law was meant to do.

Toward the end of the article is a quote from Corynne McSherry, legal director of the Electronic Frontier Foundation. Keeping in mind that her statement is brief and can be taken out of context, McSherry said, “I don’t think copyright owners appreciate what they got [with the DMCA]. In 1997, if you wanted to get music taken offline, you had to go to court.”

I don’t know if McSherry added any nuance to that statement, but as presented, it connotes a revisionist history that feeds a general misunderstanding of DMCA and how it got here. Both tech-industry advocates and mainstream reporters are apt to continue the narrative that Section 512 is principally a takedown provision that happens to have a liability shield (safe harbor). In fact, it’s the other way around, and the difference is actually rather important.

Why the DMCA is seen as flawed for rights holders.

Drafting of Title I of the DMCA began in December of 1996 in order to implement the WIPO Copyright Treaty adopted that same month. The treaty was a special agreement under the Berne Convention to which the US has been a signatory since 1989. Title I is primarily known for Section 1201, which prohibits circumvention of technical protection measures (TPM) used to protect copyrighted digital goods. In the late 1990s, this would largely have applied to products like DVDs and CDs, but the DMCA was intended to anticipate copyright enforcement on the internet. (1201 has its own criticisms, as noted in a recent post.)

While Title I was being debated, major ISPs, which at that time were telecoms led by Verizon and AT&T, petitioned Congress for a shield from monetary liability for copyright infringement—the shield we now call the “safe harbor.” These service providers knew that users would continue to upload infringing content but argued that only the rights holders could know what was infringing and that the rights holders were in the better position to identify infringements than the ISPs were. These service providers further argued that, if they were constantly vulnerable to litigation for contributory infringement, this would stifle the development of the still-fledgling internet.

It is worth noting that when the ISPs initially argued that the responsibility of “ferreting out” online copyright infringement should fall to the rights holders, Roy Neel of the United States Telephone Association highlighted the availability of “spiders” (now called “bots”) that owners could use to automate search for infringing files. Today, this same automation, which has grown in scale in an effort to keep up with the scope and frequency of infringement, is regularly characterized by the internet industry and “digital rights” activists as an overreach that cannot help but chill speech online. The history that this automation was a key component of what the ISPs initially lobbied for is rewritten almost daily with statements like the one by McSherry.

In response to the ISPs’ request for the liability shield, major rights holders, including the MPAA and RIAA, negotiated conditions the service providers would have to meet in order maintain the “safe harbor” status—most prominently that the ISPs had to adopt systems for removing infringing material upon request (i.e. takedown). The result of these negotiations are the provisions in Title II of the DMCA, particularly Section 512, which is the part of the law the aforementioned music stars are asking Congress to amend.

So the request for safe harbor came first, and the takedown provisions were one part of the conditional compromise. Rights holders had not petitioned Congress for a takedown provision in order to avoid the burden of litigation, which is what McSherry’s statement can imply to the casual reader.

Meanwhile, in 1996, we were all still dialing into AOL; Napster was three years away from changing everything; YouTube would not launch until 2005; and users could only rather slowly view a single photograph online, let alone stream HD video. At the time Title II of the DMCA was drafted, neither Congress nor the rights holders—nor perhaps some of the online service providers—quite anticipated the massive growth in online infringement that was to come. Plus, the parties were—perhaps naively—sanguine about the prospect that new technological protection measures would be adopted through collaboration between the ISPs and the rights holders—which happens to be exactly what Congress had instructed both parties to do. That collaboration never quite happened.

Meanwhile, many rights holders would argue today that subsequent court interpretations of DMCA have undermined the intent of Congress, giving ISPs so much latitude in the manner in which they conformed to its conditions that the law inadvertently creates an incentive to enable user infringement at the volume we see today. As Robert Levine points out in his book Free Ride, the DMCA’s lead architect, former commissioner of the USPTO Bruce Lehman, admitted at a conference in 2007 that the law had been a great disservice to the creative industries.

But are rights holders better off?

Is Corynne McSherry correct to say that copyright owners are fortunate to have the DMCA because its takedown provisions obviate the need for costly litigation? It’s hard to imagine this is actually the case. If we’re talking about major rights holders, like big studios or labels, consider the options …

Option 1 – Without DMCA

Several years of expensive litigation against a single provider for multiple infringements in which the rights holder would stand a decent chance of winning the case, where the rights holder may be afforded some injunctive relief, and whereby the case may act as a deterrent to other providers regarding infringement on their platforms.

Option 2 – With DMCA

A round-the-clock, expensive process of requesting individual files be removed one at a time from multiple platforms only to have the same files reappear while some service providers monetize these uses, become too big to sue, and remain free from liability forever.

I’m not in a position to speak for the major rights holders here, but I don’t know if McSherry really wants to ask them if they wouldn’t choose Option 1. When Viacom sued YouTube in 2007 for a billion dollars’ worth of infringements and the case was finally decided in YouTube’s favor in 2013, it is not unreasonable to imagine a different outcome absent the DMCA safe harbor provision. (Keep in mind that this particular post isn’t about anyone’s opinion of how things should be, only a consideration of McSherry’s assertion that rights holders are better off under Section 512 of the DMCA.)

For smaller, independent rights holders, they’re kind of hosed either way but maybe a bit better off with Option 1. Absent the DMCA, they could not afford to sue the likes of Google anyway; but with the DMCA, the takedown provisions are useless as a means of enforcement because of the Whack-a-Mole problem. If, on the other hand, the majors had successfully sued a big provider like YouTube (i.e. had Viacom gone the other way) independents may have benefitted by proxy.

For one thing, if Viacom had won its case, it’s a pretty good bet YouTube would suddenly discover a remarkable capacity for mitigating infringement on its platform. Secondarily, had Viacom set the opposite precedent, this would have empowered independent rights holders to either litigate or threaten to litigate as a means of enforcing their rights across the web. So, McSherry’s note that if you wanted to get music offline in 1997, you had to go to court is only partly true and not necessarily the lesser alternative for rights holders, as she implies.

Yes, YouTube itself would have evolved differently—and a few billionaires might only be multi-millionaires today—but do the social benefits of web platforms have to come at the expense of permission and compensation-free exploitation of other people’s work?

Over the weekend, I watched a 1912 film on YouTube called Falling Leaves by Alice Guy Blaché—a file that silent film accompanist and historian Ben Model uploaded along with his own piano composition. To me, this is a great example of the information-age ideal. I can research an important work in film history, which has long been in the public domain, and discover a contemporary artist/historian at the same time. Great. Love it.

But was the progress of YouTube—whose growth was substantially subsidized by copyright infringement—the only history that could possibly have resulted in my seeing Guy-Blaché’s film and finding Model’s work in 2016? Not necessarily. So, I don’t know if McSherry really meant to play the alternate histories game here, because it is certainly possible to imagine the benefits of the internet evolving since 1997 without the hundreds of millions of infringements that occur every month. And that was certainly what Congress expected when Title II of the DMCA was being negotiated. So, now that it’s clear the intended consequences did not come to pass, maybe amending the law isn’t such a crazy idea.

To support revision to the DMCA, click the link in the sidebar to sign the Take Down/Stay Down petition.

The Illusion of More

Dissecting the digital utopia.

Tag: DMCA