Tag: Stephen Carlisle

When Fair Use Threatens the Derivative Works Right

At the same AI and copyright round-table referred to in my last post, Stephen Carlisle of Nova Southeastern University posed this question:  Is the application of “transformative” analysis under the fair use doctrine threatening to extinguish the derivative works right?  This grabbed my attention, partly because it jibed with comments I made in at least two posts about Brammer v. Violent Hues; but for readers who don’t follow copyright law for fun, I’ll try to explain …

Section 106(2) of the U.S. copyright law grants authors the exclusive right to prepare derivative works.  So, the filmmaker who wants to adapt your novel into a movie must obtain your license to prepare a “derivative work” based on said novel (a.k.a the “underlying work”).  If the film creates original visual material, like a creature that might make a cool action figure, the action-figure producer would have to obtain the filmmaker’s license to prepare a derivative work based on that original design. If another party proposes a Netflix series based on minor characters from the novel, that license may remain with you as the original book author; with the filmmaker who made the first adaptation; or be shared depending on certain variables and agreements.

Suffice to say, derivative works are nearly always some use of underlying material in a new context; and  for the purposes of this post, it is fair to summarize the opinion in Brammer as holding that the use of a whole work in a new context from its original purpose was “transformative” under a fair use analysis.  So, because Brammer is an extreme example of a broader effort by certain parties to push the boundaries of fair use, this is what Carlisle was driving at with his comment; and he further noted that the word transform is part of the statutory definition of a derivative work …

A “derivative work” is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted.”

So, it is not hard see how a misreading of “transformative” in a fair use analysis can end up validating infringement of the author’s derivative works right.  Moreover, once that “transformative” box is checked, the likelihood of finding fair use increases considerably.  This is reasonable enough when a use is made to produce a truly new expression; but when “transformative” becomes synonymous with “placed in a new context,” the courts are in danger of abrogating the foundation of nearly all licensing protected by the bundle of rights vested in the author.

Almost the only check on such a reading of “transformativeness” is factor four of the fair use test, which assesses the commercial nature of the use; and unfortunately, commerciality may be equally misconstrued.  For instance, if monster maker Jordu Schell sculpts an original creature he intends to sell as a limited-edition piece to collectors, his exclusive right under 106(2) prohibits some not-for-profit entity from 3D printing miniature copies of the monster to give away at a fundraising event. 

But based on the flawed fair use analysis in Brammer, the not-for-profit defendant could argue that their use is “transformative” because 1) it is very different from the context of fine-art collectors; 2) because their use was communicative rather than expressive;  and 3) because their use was non-commercial on the basis that they did not sell the figurines.  Prior to all the confusion sown by these squishy “transformative” arguments, any court should easily be able to call bullshit on such reasoning and recognize that the defendant would have infringed Schell’s exclusive right to prepare derivative works.  End of discussion.

Like fair use, the derivative works right was codified in the 1976 Copyright Act, but its emerging principles can be found in caselaw dating back to at least the mid eighteenth century in both the U.K. and the U.S.  With the development of photography, followed by sound recording, motion pictures, etc., new technologies naturally fostered new ways to use the “heart” of an underlying copyrighted work.  And because law is usually slower than invention—let alone a thorough understanding of a new medium—there are several examples throughout the nineteenth century in which one could argue that copyright law was conveniently interpreted beyond statutory rationale to find infringement.

Scholar Oren Bracha offers such an analysis with respect to the case he considers seminal in the development of the derivative works right.  In Kalem Co. v Harper Brothers (1911) the fifteen-minute, silent film adaptation of Ben Hur was held by Justice Holmes to have infringed the authors’ exclusive right to “dramatize” their works under the statutory amendment of 1891.

There are actually a number of moving parts in to this particular case, but simply put, Bracha contends that Holmes stretched the meaning of “dramatize” in order to encompass the very new medium of motion pictures and then shoehorned a rationale to find contributory infringement. “The Kalem decision was thus a crucial transitory moment,” he writes.  The decision’s rationale was already based on the new model of copyright, but its legal reasoning still relied on manipulating the doctrines that were rooted in the the traditional print-bound model.”

One can interpret Holmes’s opinion in Kalem as legislating from the bench (although he did have ample precedent that copyright protects intangible expression*) or as a prescient understanding of copyright’s transition into the technological 20th century.  Or perhaps a bit of both.  That case was decided one year before the category “motion pictures” was added to U.S. copyright law and ninety years before the first Harry Potter movie was released.  And I doubt that anyone today would support Warner Bros. building a mega-franchise based on those books without honoring J. K. Rowling’s exclusive right to “prepare derivative works.”  

Presently, we are in the midst of another transitory period with new technologies allegedly posing new challenges to copyright law.  At least that’s the headline. But I’m not convinced that copyright is nearly so challenged in the 21st century as it was during the 19th.  No matter how one analyzes Holmes’s opinion in Kalem, there is no denying that he was contending with something truly revolutionary that challenged the court to consider the nature of copyright.  By contrast, a lot of tech companies today will liberally appeal to the virtue of innovation as a rationale to circumvent, ignore, or amend copyright law—including the effort to make “transformative” mean whatever serves the interest of the moment. But how many of the major “innovators” have actually invented something that poses new questions about copyrighted works and the exclusive rights of authors?

Returning to Brammer, for example, publishing a photograph on a website hardly requires a major theoretical inquiry in order to compare that conduct to publishing a photograph in a magazine or a brochure.  It’s just a different form of “reproduction” and “display” and should be about ten minutes work for any court.  Likewise, most of the major platforms are just variations on the capacity to display or broadcast creative works through computer networks—a fairly new experience for us as consumers, but not necessarily as groundbreaking from a copyright perspective as the platform owners would have us believe.

The relative novelty of streaming or downloading music and video doesn’t come anywhere close to posting the legal challenges triggered by the seminal technologies invented between the 1830s and the 1890s.  And in case after case, those courts generally tracked the “essence” of the author’s work as it was used in contexts far more exotic than almost any 21st century use trying to bamboozle us with notions of “transformativeness.”

It was out of that extraordinary period of invention—concurrent with the evolution of fair use doctrine—that the derivative works right was given shape and eventually added to the bundle of rights vested in the author.  To date, it seems to me that no technology or model has yet been invented that would justify the fair use doctrine encroaching upon the derivative works right.  Yet if decisions like Brammer are allowed to stand and various tech businesses had their way, that’s exactly what would happen.

*Turner v. Robinson (UK); Daly v. Palmer; Burrow-Giles v. Sarony; et al

Strange Rulings at the Second Circuit

Copyright split 2The Second Circuit Court of Appeals handed down opinions on June 16th with two important implications—one that looks like legislating from the bench by ignoring Section 301(c) of the Copyright Act and another that appears to create a split with the Ninth Circuit over interpretation of what’s called “red flag” knowledge referring to § 512(c) of the DMCA.

The case Capital Records v Vimeo involves the alleged infringement of pre-1972 sound recordings that were uploaded to the platform in a manner likely to be infringing. With the passage of the 1976 Copyright Act, sound recordings that were fixed prior to February 15, 1972 remained under the protection of the state copyright laws in which the works were registered.  And as Stephen Carlisle at Nova Southeastern University points out in his in-depth analysis of the circuit court ruling, these pre-1972 recordings have never been covered by federal law, but this court just ruled that they are covered by the provisions in the DMCA (which is of course federal law), which means that Vimeo is therefore eligible for the safe harbor shield in regard to alleged infringement of these recordings.

The EFF and other proponents of the ruling have stated that the court applied common sense on the grounds that the intent of Congress with the DMCA could not have been to “leave service providers subject to liability under state laws.”  It is certainly true that a ruling in the other direction would have major implications for a site like YouTube, which could face numerous litigations under state copyright laws or would have to figure out how to keep all the possibly-infringing, pre-1972 music off its platform.  While this would arguably not be consistent with the intent of DMCA, is this fact alone reason for the appeals court to ignore the federal copyright law statute as it stands?

Keeping in mind that it was also not the intent of Congress that the DMCA would shield the volume of infringements that occur today, Carlisle’s main point is that Section 301 of the Copyright Act is explicit on the copyright status of these recordings and so writes, “Section 512 [of the DMCA] takes away my right to sue a service provider from infringing my pre-1972 sound recordings. This limits my remedies under state law. Unless Congress is going to amend 301 [of the Copyright Act] to provide for an exception for ‘safe harbor’ it cannot act in the way that this Court has just ruled that it did.”  In short, this ruling strips owners of pre-1972 recordings of the ability to enforce their rights under state law even though Congress has not yet folded them into protection of federal law—a proposal that is currently being considered.

The other important opinion in this case, according to Devlin Hartline at the Center for the Protection of Intellectual Property, is that it creates a split with the Ninth Circuit on the issue of what’s called “red flag” knowledge of infringement by the defendant OSP. One of the conditions an OSP must meet in order to retain safe harbor is to “expeditiously” remove infringing material once the provider has “actual knowledge” of an infringement or once the provider becomes “aware of facts or circumstances from which infringing activity is apparent.”  This second part of the statute is generally referred to as “red flag” knowledge, and it is just vague enough to be the basis of an ongoing tug-o-war between rights holders and service providers.  For instance, common sense would dictate that any reasonable person working at Vimeo and monitoring the platform would know that a lot of popular and famous music was not licensed to the individuals uploading it.  And that’s essentially what Capitol Records argued.  But the court disagreed.

The Second Circuit opinion held that Capitol had not presented sufficient evidence to find that the defendant had “red flag” knowledge, stating the following:

[A] showing by plaintiffs of no more than that some employee of Vimeo had some contact with a user-posted video that played all, or nearly all, of a recognizable song is not sufficient to satisfy plaintiffs’ burden of proof that Vimeo forfeited the safe harbor by reason of red flag knowledge with respect to that video.

But Hartline’s point is that the Second Circuit is applying a different standard to “red flag” knowledge than the one imposed by the Ninth Circuit and that the two courts are now split on two separate issues in this regard.  The first opinion is whether or not “red flag” knowledge has to pertain to the works-in-suit.  The Ninth says No; the Second says Yes.  The other opinion is whether or not employees at an OSP can have “red flag” knowledge without having either industry or legal expertise.  The Ninth says Yes; the Second says No.

In other words, the Ninth Circuit court has held that employees of an OSP, by seeing that numerous, famous titles are being uploaded, can intuit that infringement is probably happening, while the Second Circuit disagrees that this is sufficient.  Then, the Ninth Circuit holds that “red flag” knowledge of any infringement not “expeditiously removed” by the OSP is sufficient to void safe harbor protection, while the Second Circuit holds that only knowledge of the works-in-suit may be considered in this regard.  Hartline speculates that this split could result in the Supreme Court taking up the matter, for better or worse.

I have to say that it could not have been the intent of Congress that OSP employees should need to have industry and/or legal expertise in order to at least suspect that infringement is likely occurring on a web platform.  My nine-year-old is used to asking if stuff is legal on the web; it’s not a concept that requires a law degree or even high-school civics.  We’re taught as just regular folks that “ignorance of the law is no excuse,” and the Second Circuit’s opinion in this case seems to run afoul of this common-sense application—suggesting that a professional who works at a place like Vimeo can’t make an educated guess that UserDude8394 probably did not license that Beatles song he uploaded.

In another twist on this story, there are ten videos in contention for which Vimeo may be liable because these were made by employees themselves. The brief filed by Capitol in NY District Court in January of 2013 states the following:

“Vimeo admits that ten of the infringing videos on the schedules to the complaints in this action reside in the accounts of Vimeo employees, accessible from the user page of the Vimeo employee who uploaded them.  Almost all bore a flag (or “badge”) or other indication designating them as having been made by Vimeo employees.”

Because safe harbors apply only to videos uploaded at the direction of users, these ten videos were not considered in the appeal by Second Circuit Court.  It is odd, of course, to consider that Vimeo employees could directly infringe famous musical works while the court assumes innocent blindness regarding infringement on Vimeo’s platform.  As of March 2013, the Community Development Director at Vimeo states on Quora that “we’re quickly approaching 100 employees.” So, how much of a small workforce has to directly and consciously infringe for the courts to consider that veil of ignorance is unlikely?  Stay tuned. We may find out.

No Borders Does Not Mean No Boundaries

Over this past weekend, it seems The New York Times Editorial Board got together, drank a little Googley Kool-Aid, and then wrote this Op-Ed provocatively titled Keep the Internet Free of Borders.  It is dismaying that, under the imprimatur of a respected name, an OpEd is published that succeeds in drawing such a typically blunt conclusion about an otherwise complex and nuanced issue of great importance.  Here’s what’s going on:

Historically, the U.S. International Trade Commission has the authority to block the importation of articles that infringe the intellectual property rights of American companies.  For instance, a U.S. based importer/wholesaler may not import counterfeits of consumer goods, and the ITC is empowered to enjoin such importation and enforce its authority through agencies like customs and border services.  But this past March, for the first time, the ITC concluded that articles under its purview may include the importation of digital files.  (Cue eerie violins.)

The case itself involves the Invisalign brand of dental aligners, which is a patented system owned by Align Technology.  A Texas-based company called ClearCorrect received data from an entity in Pakistan that contained digital models, design information, and treatment plans, which Align Technology argued can only be used “to infringe or induce the infringement” of its patents.  ClearCorrect argued that the ITC’s authority to restrict the importation of infringing articles does not extend to digital data, but the ITC ruled 5-1 in favor of Align after an administrative law judge concurred that the definition of “articles” in the statute does apply to digital imports, consistent with the ITC’s “legislative purpose to . . . prevent every type of unfair act in connection with imported articles . . . and to strengthen protection of intellectual property rights.”  This case has been appealed and was scheduled to be heard in federal court in Washington D.C. sometime today.

If the ITC’s broadening of the term articles under its purview is held to include digital data, this would certainly set a new precedent that will be attractive to owners of intellectual property.  And of course this prospect has not-surprisingly raised the hackles of digital rights proponents, who predict that granting the ITC this authority will “harm the free flow of information on the Internet.”  Unfortunately, this is the recurring narrative every time any entity, private or public, seeks to remedy any of the new forms of harm that are unavoidable byproducts of the new forms of communication, interaction, and data transmission that most of us enjoy.  Hence, editorials like the one from the Times perpetuate the frankly defeatist notion that our only options are either to accept the predations of bad actors or invite legal regimes that can only lead to censorship.

For a more detailed description of the Align case, I recommend this article written by my colleagues at the Center for the Protection of Intellectual Property.  In particular, I would draw your attention to the authors’ revelation that the usual suspects in Silicon Valley, who presently oppose upholding the ITC’s authority in this case were just a few years ago vociferously in favor of copyright owners using the ITC in precisely this manner. As part of that industry’s PR blitz against SOPA and PIPA, they widely supported the proposed OPEN Act, so named because it would “keep the Internet open.”  And as a component of this advocacy, OPEN’s corporate supporters recommended that the ITC was an ideal venue for rights holders to seek relief from entities committing infringement through digital data imports.

So, if nothing else, the Times editorial board might have done a little homework and recognized that if the Internet industry was once in favor of this type of ITC authority and is now opposed to it, this contradiction might awaken some dormant, journalistic instinct to a bit of skepticism.  Instead, the article concludes with an all-to-common statement that I would challenge anyone to define clearly.  It states, “The appeals court should strike down the commission’s ruling, which is bound to hamper the exchange of ideas and information on the Internet.”  I’ve encountered that hampering sentiment so many times, and it still doesn’t make any sense.  If the ITC blocks a shipment of counterfeit Nikes, and fair trade in sporting goods continues, why is it impossible to imagine that an equally narrow application of this same authority may apply to digital imports without harming the larger flow of information, let alone anything as esoteric as “ideas?”

At some point, this narrative has to change — the one that insists there is no way we will ever balance civil order and civil liberty in cyberspace — because every user has a stake in seeking balance, whether the concerns are privacy, personal security, or intellectual property that supports a business in any sector.  The Align case is about dental products, the Equustek case I wrote about involved systems communications hardware, and with advances in 3D printing technology, we can be sure there will be more and more trade in infringing trade secrets and  other intellectual property.  Hence, it should be clear that the growth in these unlawful and predatory practices, unique to the digital age, is already affecting interests far beyond the motion picture, music, and publishing industries.

Whatever the remedies may be, we should constantly demand specifics as to what it means to “harm the free flow of information on the Internet” because it’s not sufficient to accept that the definition is whatever the major internet companies say it is on any given day. (See above mentioned flip-flop on this very subject).  In fact, as Stephen Carlisle points out in this piece for Nova Southeastern University, in the last several months, site-blocking has been ordered in specific cases in the US, Canada, Germany, and Australia, yet here we are, using the Internet to exchange information and ideas.  What began as adolescent rationalizations for file sharing more than fifteen years ago has now metastasized into a social and corporate agenda that is attacking vital organs in our market-based economy.  We can do better.  Balancing civil order with civil liberty is what we’re supposed to be good at in this country.  We should not be afraid to try.