Tag: Featured

Enough With the Legal Theories About Piracy

When it comes to enterprise-scale piracy, it would be great if those who advocate its existence would just make simple declarations like, “I want free media and don’t care how I get it.”  Sure, that would be a childish thing to say, but still less offensive than all the pretense to rationale that accompanies piracy—the absurd legal arguments, the mystical economic analyses, and above all, the lionization of pirate site operators as though they are social revolutionaries in a grand culture war.  (Never mind that some pirate sites are verticals for larger criminal enterprises engaged in some pretty horrible activities.)  

Of course, an entrenched attitude is not easily pried from the mind once it takes hold; instead, it usually becomes fossilized under layers of facile talking points posing as ideas.  Petty aphorisms like sharing isn’t stealing, for instance, help paper over an otherwise complex issue and excuse ignorance of the broader implications of a phenomenon like media piracy. In this regard, the public is constantly fed variations on the theme that operating a website, which is purposely designed to exchange infringing material and, by virtue of that exchange, earns its owners millions of dollars is somehow not criminal.

And that brings us to the complaint by the United States against alleged Kickass Torrents (KAT) site founder Artem Vaulin and his unnamed co-conspirators.  The complaint was filed in an Illinois District Court on July 8, 2016 and Vaulin, a Ukranian, was arrested while traveling through Poland that same month.  Insisting upon his innocence, Vaulin chose to remain in Poland’s Bialoleka prison—it sounds pretty awful from this account on The Verge—for nearly a year, rather than prove his innocence at trial in the United States. (I’d personally try to avoid the Polish prison even if I were guilty, but to each his own.)  Vaulin is now out on $108,000 bail, fighting extradition, and is represented by Silicon Valley attorney Ira Rothken, who also represents Kim Dotcom.

As reported last Friday, Vaulin filed a motion to dismiss along with a litany of arguments contending that the copyright infringement counts against him are not properly criminal indictments. All of these arguments were rejected by the Illinois court.  The motion to dismiss was denied under the fugitive disentitlement doctrine, which basically says that if an individual refuses to appear in a U.S. court (i.e. makes himself a fugitive), then he may not avail himself of court protections like motions to dismiss.

Vaulin is charged with four criminal counts comprising three counts of criminal copyright infringement (§506 of Title 17) and one count of money laundering.  The 50-page complaint, filed by the investigating Special Agent for the Department of Homeland Security, cites compelling evidence alleging that Vaulin was the founder of the KAT network; that he and his associates purposely designed KAT with the goal of hosting torrents containing infringing material; that they knew their conduct was illegal; that they provided incentive for users to engage in infringement; that illegal activity took place within the United States; that the KAT network generated about $17 million/year in revenue from traffic to infringing content; and that the owners sought to hide funds through dummy corporations in bank accounts set up in Latvia and Estonia.  Here’s just one highlight from the complaint that makes several points rather simply:

“March 29, 2011, when an individual reached out to Vaulin…with the subject line “new movies.” The individual asked about the movies Kung Fu Panda and The Hangover, remarking that people were asking for those movies. Vaulin replied that same day, noting that Kung Fu Panda was added six hours ago and that The Hangover was just added.”

As I say, I get the self-interested reasons why people rationalize what these site operators are doing; but when the indictment is handed down, let’s not pretend we’re straying into some ambiguous area of criminal law.  Piracy advocates and copyright antagonists are very fond of the refrain that the owners of a site cannot be held criminally liable for the activities of its users.  But there are several examples like the quote above indicating that the KAT site operators knew exactly what they were doing, and it’s frankly stupid to pretend otherwise.

Nevertheless, copyright antagonists like Mike Masnick at Techdirt place a lot of emphasis in this case on the supposed ambiguity of of secondary liability, which is a common law principle applied in civil copyright cases but for which there is no federal statute proscribing the conduct. The theory being applied is that if Vaulin and his colleagues merely own a platform on which infringement takes place, they themselves cannot be criminally liable.

Indeed this secondary liability issue is one of the arguments presented by Vaulin’s attorney; and it is true that there is no statute in Tile 17 (the Copyright Law), which explicitly states that aiding and abetting copyright infringement is a crime. In fact, Rothken asserts that because the 1909 Copyright Act explicitly criminalized secondary liability but the 1976 Act does not, this implies that Congress does not consider secondary liability to be criminal. Yeah…no.

In the 1909 Copyright Act, each criminal statute included its own aiding and abetting provision; but by the time the 1976 Act was written, the federal criminal code had been completely overhauled and included a general provision for aiding an abetting of all criminal violations against the United States.  Thus, the court rejected Rothken’s reasoning, stating that a separate aiding and abetting provision in the 1976 Copyright Law would have been redundant.  Title 18 §2 states:  (a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal. 

Thus, the Illinois court has held that if one is alleged to have helped people commit criminal copyright infringement, induced them to do so, rewarded them for doing so, and/or profited from their doing so, then one is properly charged with criminal copyright infringement.  And if that sounds like common sense, it’s because it is common sense.  And I will add that if this story were about trafficking in some less popular form of illegal activity—like snuff porn, or harmful counterfeit goods—I highly doubt that many average defenders of pirate sites would hope to see the law applied any differently.

I will not enumerate each of Vaulin’s defenses the court rejected, lest this post become unreasonably long and of interest to about ten law nerds.  But suffice to say that the defenses sound to this law nerd like a lot of grasping at straws. My personal favorite, though, is the assertion that torrents are not protected by the copyright law, and it is therefore not possible to infringe torrents.  That’s kind of like getting caught with a truckload of bootlegs and declaring that “audio tape isn’t illegal.”  As the court patiently explained, the torrents are the means to infringement, so it was a no-go on the twisted logic being applied there.

In his somewhat hand-wringing rebuttal to the opinions of the court, Masnick writes, “No one denies that there were people in the US who used the platform for infringement. But just because people are using the platform for infringement, doesn’t make it criminal infringement. For something to be criminal copyright infringement it has to reach a much higher bar than just ‘people downloaded stuff.’”

He’s absolutely right.  And a plain, common-sense reading of the details in the complaint should make clear to any reasonable person that the government has met the burden to bring a criminal indictment in this case. The 2016 DOJ guidelines regarding consideration of criminal charges in IP cases recommend weighing several factors that define best practices independent of the the type of IP involved.  The recommendations consider factors such as deterrence, potential economic harm, public safety, recidivism of the actors, and the efficacy of civil proceedings in lieu of criminal charges.  Suffice to say, an enterprise operating at the scale of Kickass Torrents easily checks off several boxes under the guidelines.

I mention this broader view of IP enforcement because, as indicated above, it is a dangerous precedent—no matter how popular pirating movies and music may be—to wish that the law worked differently than it does, especially in the digital age.  We live in a networked world in which transnational IP infringement can mean tainted food or drugs or other unreliable products getting into the supply chain. Cyberspace is still a relatively new frontier for crime; and some pretty nasty characters have sought to argue the same kind of defenses being used in this case in order to distance themselves from the harm they cause simply because their presence is virtual.  So, to any parents who, as cited in the complaint, were asking for Kung Fu Panda on KAT, I’d say be very careful what you wish for.

Copyright Small Claims Proposals Address a Real Need

Photo source by Vaobullan

It’s far easier to disagree with strident antagonists of copyright than it is to disagree with collegial defenders of the law.  Attorney Leslie Burns has been a supporter of this blog since its earliest days, and I’ve always appreciated her readership and enthusiasm on social media; but I have to respectfully disagree with a recent blog of hers criticizing proposals to create a small claims system for copyright enforcement.  Calling the proposal a “Bad Solution to a Non-Problem,” I worry that her post may cause confusion among the very class of creators a small claim system would be designed to serve.

A Non-Problem?

As stated a few times, the works of visual artists are probably the most frequently infringed on the internet. It’s just too easy to grab images and share them on social media platforms relative to the general understanding of copyright law (see Khloe Kardashian’s mistake).  For many of copyright’s detractors, the scope of visual-works infringement alone is reason to just let copyright itself fade into oblivion as a concept.

For the authors of these visual works, however, it seems they have a mixed set of experiences and feelings regarding unlicensed uses of their images.  They end up having no choice but to let a lot of casual appropriations go but often want to draw lines where infringements are particularly egregious and/or when they are made by for-profit entities. For instance, the story about skateboard photographer Max Dubler having his work used for marketing purposes by a company (for which he only wanted $25) is typical of the kind of unenforceable infringement many independent creators face.

I believe it remains a rule of thumb that even a small-market attorney will tell you that a claim—in any area of law—that is under $10,000 is barely worth the cost of filing the first papers in a lawsuit. And since we’re talking about a class of creators whose median income for their creative work hovers around $30,000/year, it’s reasonable to assume that there are thousands of creators in the U.S. who could use a small claims process to enforce their copyrights.

A lot of photographers just like Dubler do not register their works with the USCO as standard practice because the time and cost to register perhaps hundreds of images exceeds their available resources.  Failure to timely register will usually void an author’s ability to engage in litigation for infringement, but the small claims proposal (as it stands) actually gives an author more flexibility by enabling him/her to register the allegedly infringed work with the USCO as part of the complaint process.  This removes a significant cost barrier to enforcement for a whole class of independent and start-up creators, which brings us to the matter of small claims as a solution.

A Bad Solution?

My friend (and I hope she stays my friend) Leslie Burns cites statistical evidence identifying the number of copyright litigations that do not come anywhere near going to trial but which instead settle for awards well below statutory damages.  She’s right, of course, that this happens all the time; in fact, most litigations in all manner of claims settle well before trial proceedings.  But it is incorrect to read this general narrative as having created a de-facto small claims copyright process as a byproduct of traditional litigation.  Clearly, the statistical outcomes in litigation do not represent the class of authors who cannot ever avail themselves of litigation in the first place—which is what small claims is all about.

Burns states that a small claims process will limit the rights and remedies currently available to copyright holders; and while this initially caught my attention,  I don’t see how it can be quite accurate.  If we look for instance at H.R. 6496, the proposal co-sponsored by Rep. Judy Chu (D-CA) and Rep. Lamar Smith (R-TX), the bill explicitly states that the small claims option is voluntary and that by electing to avail themselves of these proceedings, neither claimants nor respondents are precluded from pursuing traditional enforcement through litigation—even after a determination by the small claims Board.  The important highlight is that the small claim option is an additional remedy and not a replacement of any process currently available.

In essence, the small claim proposal (as per H.R. 6496) would create a new Board within the Copyright Office, comprising three experienced copyright attorneys and at least one of these with “substantial experience in the field of alternative dispute resolution.”  The Board would have the authority to adjudicate claims and defenses for which statutory damages for infringement of “timely registered works” may not exceed $15,000, or $7,500 for infringement of “works not timely registered.”  Based on my anecdotal experience, these numbers, which are fractions of the statutory damages in federal lawsuits, sound about right.

For instance, a typical letter to an infringer of a photograph will demand somewhere in the neighborhood of $1,500-$5,000 to settle without any legal proceedings. Hence, if a small rights holder can afford to back that up with an enforceable remedy ranging between $7,500 and $15,000, that should be sufficient to put some teeth in a non-procedural demand for settlement.   To Burns’s overall point, a lot of copyright claims are pretty straightforward; the infringer knows the unauthorized use is indefensible, and settlements are made rather than lose a costly litigation.  The small claims option does not remove any author’s ability to file federal litigation proceedings; it simply provides a viable alternative for rights holders, or specific cases, for which litigation is financial a non-starter.

As proposed in the Chu/Smith bill, the decision of the Board may be enforced by petition to the US District Court for the District of Columbia, which may prove to be more effective than typical small claims court.  I actually won a small claim years ago in New York City in a default judgment, then learned that in order to get the company to pay, I had to file a petition with the Sheriffs Department.  Guess how that worked out.

Restoring Faith in Copyright

Enforcement of the Board’s judgments is just one of a handful of questions yet to be addressed in a legislative process that began about a decade ago.  And while, we can all agree that the devil will lurk in the details, I believe the underlying principles of small claims for copyright are sound.  The thinking reflects an understanding of the digital age that could actually help restore some faith in copyright itself for thousands (or millions) of new creators still trying to understand where the opportunities and threats are in this dynamic market.  (This post about designers selling merchandise addresses this point.)

How many times have I argued that copyright is for everyone?  And it is. On the books anyway.  But in practical terms, this isn’t quite accurate.  Time and again, from individual creators and from copyright critics, we hear the theme repeated that copyright is unenforceable for all creators except big corporations and millionaires.  And apropos one point Burns is making, this over-used exaggeration does not paint an accurate reflection of enforcement; there is indeed a segment of creative professionals who can, and do, avail themselves of existing legal remedies.

But from my own observations, I suspect Burns may be overlooking the smaller indies and new entrants to this volatile market who could not remotely afford to walk into her office today.  Many of these creators are the same people who shrug at the whole subject of copyright because they are powerless in a world where infringement is so common. And exploiting that ambivalence is exactly what the big Silicon Valley corporations do very well.

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.