Digital copyright law in 2008: Ray Beckerman
p2pnet news view Freedom | P2P:- “Ray Beckerman is a commercial litigation attorney practicing in New York City at Ray Beckerman, P.C., http://beckermanlegal.co. He is an honors graduate of St. John’s University School of Law and started his legal career with Phillips, Nizer, Benjamin, Krim & Ballon. A member of the bar for 30 years, his practice includes copyright, Internet, trademark, libel, slander, privacy, publicity, and software, as well as many bricksand- mortar subjects such as air and ocean freight, corporate and partnership, and traditional commercial disputes. In addition to litigating, he advises companies, forms startups, drafts and negotiates commercial agreements, represents clients in alternative dispute resolution, and supervises litigation. He has represented individuals targeted by the Big 4 recording companies and individuals and Web sites sued by the Big 6 motion picture studios. He is the author of the popular copyright law blog ‘Recording Industry vs. The People,’ http://recordingindustryvspeople. blogspot.com . He is known as ‘NewYorkCountryLawyer’ on the well read technology social network site ‘Slashdot,’ http://slashdot.org, where he is a member of its Hall of Fame.”
That’s the intro to Ray’s Journal of Internet Law article, Content Holders vs the Web, itself a virtual re-jig of the title of his now famous Recording Industry vs The People blog.
With the sub-head US copyright Law Victories Point to Robust Internet, he says the advent of digitalization and the Internet has, “shaken the foundations of the large recording and filmmaking corporations whose wealth is measured in the ownership of intellectual property.
“Technology has simply erased the barriers to entry that once restricted content creation to the few and, in doing so, has eroded their monopoly position.”
Here’s the article in full, with thanks to Ray and the copyright holder, Aspen Publishers »»»
The ‘Big 4″ recording companies, once considered necessary to the success of musical artists, are seeing their monopoly position erode, as performers now find themselves able to market their music directly to the entire world, either without the use of middlemen at all, or by selecting middlemen who are numerous and who must compete for their business.
And the ‘Big 6″ motion picture studios, once considered necessary to the success of film makers, are now on the losing end of a competition with everyday people, many of them teenagers, who are creating ‘user-generated’ content at a dizzying rate, armed with no more than an inexpensive digital camera, videocam, or even a video-capable cellphone. And these budding filmmakers likewise have access to the entire world, and for free.
Having been unable to find the key to marketing their vast treasure troves of sound recordings and motion pictures on the internet, the ten (10) content owners have launched a litigation campaign the likes of which the world has never seen, arguing in every case for the most expansive possible interpretation of the United States Copyright Act.
2008 has not been kind to their aruments, however, as the Courts have adhered to a ’strict construction’ of the Copyright Act, both its traditional sections, and the Digital Millenium Copyright Act (’DMCA’), designed to enable America to participate in a robust worldwide internet.
Since the campaign was launched in 2003, most of the litigations have been aimed at non-commercial defendants without the resources to contest federal court litigationsii, and since most involve default judgments, ex parte proceedings, and cases in which the defendant has no legal representation, let alone an experienced copyright litigation attorney, the recording companies’ cases of that nature had for a while proceeded like a warm knife through butter. In those rare instances where they have been met with resistance, they have usually, sooner or later, dismissed the cases voluntarily. And theirs and the motion picture companies’ DMCA ‘take-down’ notices — almost invariably unchalleged and almost invariably directed against the creations of non-commercial users without resources to retain legal counsel — have resulted in much material being ‘taken down’ which under existing copyright law need not have been ‘taken down’.
In 2008, in those cases where there has been meaningful opposition, and the Courts have had the opportunity both to be briefed by both sides and to render a decision, the results have been largely negative for the content holders, casting serious doubt on the major premises upon which their campaign is based.
This article will brieflly summarize some of the important skirmishes taking place in 2008, and attempt to assess the state of the law in their aftermath.
Primary infringement liability cases
‘Making available’ in the RIAA litigations
One of the most astonishing themes in the ‘primary’ or ‘direct’ liability area has been the recording companies’iii attempt to advance a theory that a noncommercial end user can have violated a record companies ‘distribution right’ for a sound recording, prescribed by 17 USC § 106(3), by merely ‘mak[ing] available for distribution’, notwithstanding (a) the absence of any such suggestion in the statute, (b) decades of caselaw to the contrary, and (c) unanimity among leading legal scholars to the contrary. Undoubtedly the reason for inclusion of the phrase was the RIAA’s awareness that its pre-litigation investigation yields no evidence of any file having been ‘distributed’ within the meaning of 17 U.S.C. § 106(3), and at best yields some evidence that files were perhaps ‘available’.
The following phrase appeared in all of the record companies’ boilerplate complaints starting in 2003 : ‘to download…., to distribute….., and/or to make the Copyrighted Recordings available for distribution to others’ (italics supplied). There it remained, until October 2007, when District Judge Rudi Brewster in a little known, unpublished case, Interscope Records v. Rodriguez, No. 06-2485, 2007 WL 2408484 (S.D. Cal. 2007), denied an uncontested application for a default judgment, on the ground that the RIAA’s boilerplate complaint failed to state a claim for relief. The RIAA promptly filed an amended complaint, omitting the ‘making available’ charge. Starting in October, 2007, the RIAA jettisoned the phrase ‘making available’ from its complaints.
In a subsequent, more widely noticed, case, likewise denying an uncontested application for default judgment, Atlantic Recording v. Brennan, 534 F. Supp. 2d 278 (D. Conn. February 13, 2008), Judge Janet Bond Atherton likewise recognized the deficiencies in the RIAA’s boilerplate complaint, and among them specifically noted that, under well settled law, one of the requisite components for infringement of the distribution right is an actual distribution or dissemination of actual copies or phonorecords, without which there cannot be a violation of the distribution right.
The history of the phrase in contested litigations, starting in 2005 when it was first challenged, has been somewhat bizarre, and certainly inchoate, until 2008, when a string of district court decisions, starting with Judge Atherton’s, unceremoniously rejected it.
The first time the RIAA’s ‘making available’ theory was challenged was a pre-answer motion to dismiss, made in 2005, in Elektra Entertainment v. Santangelo, 05-CV-2414 (S.D.N.Y.), where the Court’s November 2005 decisioniv denied the dismissal motion but never addressed the ‘making available’ issue at all. A string of similar motions were made all across the country in 2005 and 2006, five of which resulted in decisions (peculiar decisions, in the view of the author) to the effect that the Court could not decide the issue because it did not well enough understand the technology involved or because it was not necessary to reach the issue at the pleadings stage.
One of the motions, however, remained pending for two (2) years. The motion in Elektra Entertainment v. Barker attracted amicus curiae briefs on both sides. When it was finally decided on March 31, 2008v, not only had it been rendered anticlimatic by Brennan, it was also overshadowed by another decision handed down the same day, London-Sire Records v. Does 1-4, 542 F.Supp.2d 153 (D. Mass. March 31, 2008)(Dictum). Both Barker and London-Sire rejected the ‘making available’ theory.vi A month later a similar decision was handed down by Judge Neil V. Wake in Atlantic Recording v. Howell, 554 F. Supp. 2d 976 (D. Arizona April 29, 2008). And in September, in Capitol Records v. Thomas, 2008 U.S. Dist. LEXIS 84155 (D. Minnesota September 24, 2008), the only known jury verdict in an RIAA case — rendered in Duluth, Minnesota, in October, 2007, and awarding $222,000 based on the sharing of twenty four (24) song files having a combined retail value of $23.76 — was set aside sua sponte by District Judge Michael J. Davis, based upon his determination that he had committed a ‘manifest error of law’ in accepting the RIAA’s proposed jury instruction to the effect that merely ‘making available’ could constitute an infringement of the distribution right. A new trial was ordered.
Damages and attorneys fees issues in the RIAA litigations
While Judge Davis’s decision to reject the ‘making available’ theory was widely anticipated, his surprise prononouncement on the excessiveness of the damages being sought in RIAA cases was not; he had previously indicated he was not likely to reach the damages question, since the liability determination had been fundamentally flawed. Judge Davis wrote:
The Court would be remiss if it did not take this opportunity to implore Congress to amend the Copyright Act to address liability and damages in peer to peer network cases such as the one currently before this Court. The Court begins its analysis by recognizing the unique nature of this case. The defendant is an individual, a consumer. She is not a business. She sought no profit from her acts. The myriad of copyright cases cited by Plaintiffs and the Government, in which courts upheld large statutory damages awards far above the minimum, have limited relevance in this case. All of the cited cases involve corporate or business defendants and seek to deter future illegal commercial conduct. The parties point to no case in which large statutory damages were applied to a party who did not infringe in search of commercial gain.
The statutory damages awarded against Thomas are not a deterrent against those who pirate music in order to profit. Thomas’s conduct was motivated by her desire to obtain the copyrighted music for her own use. The Court does not condone Thomas’s actions, but it would be a farce to say that a single mother’s acts of using Kazaa are the equivalent, for example, to the acts of global financial firms illegally infringing on copyrights in order to profit in the securities market. Cf. Lowry’s Reports, Inc. v. Legg Mason, Inc., 271 F. Supp. 2d 42 737, 741, 42 (D. Md. 2003) (describing defendants as a ‘global financial services firm’ and a corporation that brokers securities).
While the Court does not discount Plaintiffs’ claim that, cumulatively, illegal downloading has far-reaching effects on their businesses, the damages awarded in this case are wholly disproportionate to the damages suffered by Plaintiffs. Thomas allegedly infringed on the copyrights of 24 songs the equivalent of approximately three CDs, costing less than $54, and yet the total damages awarded is $222,000 – more than five hundred times the cost of buying 24 separate CDs and more than four thousand times the cost of three CDs. While the Copyright Act was intended to permit statutory damages that are larger than the simple cost of the infringed works in order to make infringing a far less attractive alternative than legitimately purchasing the songs, surely damages that are more than one hundred times the cost of the works would serve as a sufficient deterrent.
Thomas not only gained no profits from her alleged illegal activities, she sought no profits. Part of the justification for large statutory damages awards in copyright cases is to deter actors by ensuring that the possible penalty for infringing substantially outweighs the potential gain from infringing. In the case of commercial actors, the potential gain in revenues is enormous and enticing to potential infringers. In the case of individuals who infringe by using peer-to-peer networks, the potential gain from infringement is access to free music, not the possibility of hundreds of thousands – or even millions – of dollars in profits. This fact means that statutory damages awards of hundreds of thousands of dollars is certainly far greater than necessary to accomplish Congress’s goal of deterrence.
Unfortunately, by using Kazaa, Thomas acted like countless other Internet users. Her alleged acts were illegal, but common. Her status as a consumer who was not seeking to harm her competitors or make a profit does not excuse her behavior. But it does make the award of hundreds of thousands of dollars in damages unprecedented and oppressive.
The damages issue, more than any other, could signal the death knell for the RIAA’s litigation campaign. In this age of ‘micropayments’, the record companies’ actual damages are in the neighborhood of 35 cents per download.vii The statutory damages it has been seeking, of from 2,142 to 428,571 times the actual damages, have been attacked as violating the Due Process Clause of the United States Constitution.viii Were Congress were to take action as Judge Davis has ‘implored’ it to do, or were the Courts to determine that the RIAA’s statutory damages theory is violative of Due Process, the likelihood of the RIAA continuing its campaign is nil.
Another interesting damages development in the record company cases is Maverick Recording v. Harper, 07-CV-026-XR (W.D. Texas August 7, 2008)(unpublished but available online at http://beckermanlegal.com/Documents/maverick_harper_080808.pdf), which partially denied the plaintiffs’ summary judgment motion on the ground that there were factual issues in the case giving rise to the ‘innocent infringement’ partial defense afforded by 17 USC § 504(c)(2), which might limit the record companies to $200, as opposed to $750+, per infringement, in statutory damages. The Court ruled that the RIAA would have to proceed to a jury trial unless it stipulated to accept $200 per infringement. The RIAA opted for the latter.ix
Because of the RIAA’s uniform practice of suing the person who pays the bill for the suspect internet account without evidence as to whether that person was the individual who actually infringed copyrights, numerous ‘false positives’ occur, and many cases are voluntarily dismissed. In Atlantic Recording v. Andersen,x, e.g., decided in January, this was the case, and following traditional copyright attorneys fees analysis — entailing findings that the record companies were at fault in pursuing the case — the Court awarded such a defendant $108,000. However, several later, non-RIAA, non-internet, attorneys fees decisions emanating from the U.S. Court of Appeals for the Seventh Circuit may eclipse the significance of Andersen, and if followed in other circuits will have an enormous impact on the RIAA litigation dynamic. These decisions held that even where the defendant’s victory in a copyright infringement case is achieved by virtue of the plaintiff’s having ‘thrown in the towel’, the defendant is presumptively entitled to an award of his or her attorneys fees. Mostly Memories, Inc. v. For Your Ease Only, Inc., 526 F.3d 1093 (7th Cir. May 27, 2008); Riviera Distributors, Inc. 517 F.3d 926 (7th Cir. February 20, 2008). Defendant’s lawyers in RIAA cases have realized the significance of these to their clients’ plight, and, in a Second Circuit RIAA ‘throwing in the towel’ case, Lava Records v. Amurao, the defendant has argued that the Seventh Circuit rule should be followed in the Second Circuit.xi Interestingly, the record companies’ responding brief omitted all reference to the Seventh Circuit authorities, an omission pointed out by defendant in his reply brief. Lava is expected to be argued in late November or early December.
The dancing toddler and fair use.
The record companies took a drubbing in another of their missteps, Lenz v. Universal Music Corp., 572 F. Supp. 2d 1150 (N.D. California August 20, 2008). Among the thousands of DMCA take-down notices they have sent to sites such as MySpace and YouTube, one was based on the following set of facts:
On February 7, 2007, Plaintiff Stephanie Lenz (”Lenz”) videotaped her young children dancing in her family’s kitchen. The song “Let’s Go Crazy” by the artist professionally known as Prince (”Prince”) played in the background. The video is twenty-nine seconds in length, and “Let’s Go Crazy” can be heard for approximately twenty seconds, albeit with difficulty given the poor sound quality of the video. The audible portion of the song includes the lyrics, “C’mon baby let’s get nuts” and the song’s distinctive guitar solo. Lenz is heard asking her son, “what do you think of the music?” On February 8, 2007, Lenz titled the video “Let’s Go Crazy # 1″ and uploaded it to YouTube.com (”YouTube”), a popular Internet video hosting site, for the alleged purpose of sharing her son’s dancing with friends and family. YouTube provides “video sharing” or “user generated content.” The video was available to the public at http://www.youtube.com/watch?v=N1KfJHFW1hQ.
YouTube meekly complied, removing the video for 6 weeks, before eventually re-posting it at Ms. Lenz’s insistence. Ms. Lenz, represented by the Electronic Frontier Foundation, sued Universal for misrepresentation of a copyright violation, within the meaning of the DMCA. Universal moved to dismiss her complaint, arguing that in issuing DMCA ‘takedown’ notices it is not required to take into account whether or not the use was a ‘fair use’. The Court denied the motion, holding that a copyright owner’s investigation prior to issuance of a take-down notice must include an analysis of whether or not the use is a ‘fair use’, since a ‘fair use’ is not an ‘unauthorized’ use.
When is a copy transitory?
An interesting and important decision which feels like it should be discussed in a discussion of ’secondary liability’, but which was decided — by stipulation — under principles of ‘primary’ or ‘direct’ liability, is the Cablevision case, Cartoon Network, LP, LLLP v. CSC Holdings, Inc., 536 F. 3d 121 (2d Cir. August 4, 2008). There the motion picture companies’ copyright infringement claim against Cablevision, based upon their claim that Cablevision’s proposed remote storage digital video recorder system violated the motion picture companies’ “performance” rights and “reproduction” rights, was rejected by the United States Court of Appeals for the Second Circuit. The lower court decison of Judge Denny Chin, which ruled in favor of the motion picture companies, was reversed.
On the issue of the “reproduction” right, the Court held that:(1) the buffered versions were not “copies” within the meaning of the Copyright Act since the 1.2-second period in which they were buffered was insufficient to satisfy the part of the statutory definition of copies which required that they exist for more than a “transitory duration”; and (2) as to the playback versions, Cablevision could not be directly liable, since it was the customer — not Cablevision — that was making the copies; i.e., there was no “volitional” conduct on Cablevision’s part.
As to the “public performance” right, the Court found for the defendant on the ground that the transmission was not “to the public”. (The Court called into question the 3rd Circuit decision in Ford Motor v. Summit Motor Productsxii which said that a distribution to one person could be “to the public”, but did not formally reach the question since the allegations related to the “public performance” right, rather than the “distribution” right.).xiii
Secondary infringement liability cases
A very important case, helping to carve out an understanding of life under the DMCA, is IO Group, Inc. v. Veoh Networks, Inc., 2008 U.S. Dist. LEXIS 65915 (N.D. California August 27, 2008). The Court granted the defendant’s motion for summary judgment, on the basis of the DMCA, holding that defendant’s video-sharing web site complied with the DMCA and was entitled to the protection of the statute’s “safe harbor” provision. The Court’s decision noted, among other things, that the DMCA was “designed to facilitate the robust development and world-wide expansion of electronic commerce, communications, research, development, and education in the digital age”, and rejected plaintiff’s contention that Veoh had failed to reasonably impement its notification policy for repeat offenders.
An interesting parallel to the copyright case is the trademark infringement decision in New York’s Southern District, Tiffany (NJ) Inc. v. eBay, Inc., 2008 U.S. Dist. LEXIS 53359 (S.D.N.Y. July 14, 2008), where, following a bench trial, District Judge Richard J. Sullivan concluded that “it is the trademark owner’s burden to police its mark, and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites”. Judge Sullivan found that eBay had diligently complied with Tiffany’s requests to take down offending auctions, and had generally implemented policies to discourage, rather than foster, trademark infringement.
The technology issues, the next major battleground
In 40,000 RIAA cases against end users, the statistics are as follows:
Number of times the RIAA’s investigator has been deposed: 0
Number of times the RIAA’s expert has been deposed: 1The RIAA’s expert, at his lone deposition, admitted that neither he nor the investigator had satisfied any of the Daubert reliability factors, and yet the defendant’s motion to exclude his testimony in limine was denied.xiv
Based upon my impression of the flawed technology upon which the RIAA’s cases are founded, the judicial rejection of the ‘making available’ theory, the legal problems the RIAA’s investigators are having with the fact that they never obtained private investigator’s licenses, and the conflicts of interest of the RIAA’s expert, who profits from the sale of filtration software to the local area networks (LAN’s) the RIAA is threatening with suit, I anticipate that litigation over the technology will move to center stage in these cases.
Battleground assessment
As the dust settles on the battleground which 2008 represented, my subjective appraisal of the situation is as follows:
(a) The courts are not opting for the exotic interpretations of the Copyright Act in general, or of the DMCA in particular, which the ten (10) large content holders are seeking; instead, they are focusing on reading the statutes as they were written.
(b) The ‘making available’ theory is virtually dead on arrival. While it remains for appeals courts to officially seal its final doom, there is no non-frivolous argument that can be made on its behalf. When summoned across country to the Duluth, Minnesota, district court, to argue on behalf of the ‘making available’ theory, the noted Supreme Court appellate lawyer brought in by the RIAA could think of nothing more persuasive to say than that ‘it can’t be that that’s the law’.
(c) The essential guiding principle for social networks and for online marketplaces will be that when a rights holder brings an IP violation to their attention, they must act, and they must routinely take reasonable precautions to prevent wholesale rights violations, but as long as they have followed those two (2) principles, and are not inducing or encouraging infringement, they can expect to win if they are sued.
(d) The courts will look with disfavor on outlandish damages awards against noncommercial infringers.
(e) Innovative distribution, playback, and display of digital recordings and videos will continue to be a complex and technical area, with the ‘distribution’ rights and the ‘performance’ rights being implicated in addition to the ‘reproduction’ right.
(f) Although the Courts have not ruled out the possibility of a ‘copy’ being something that exists in only an ephemeral format in RAM (random access memory), they are requiring that it be in memory for more than a transitory duration.
(g) Content holders who persist in sending torrents of DMCA takedown notices without taking fair use into account do so at their peril.
(h) It is too early to tell whether the Seventh Circuit rule, that attorneys fees should be routinely assessed against copyright infringement plaintiffs who ‘throw in the towel’, will be adopted widely, but if it is, this in and of itself will force the RIAA to conduct better investigations before it initiates litigation, which brings us to the issue which may be the next frontier in those cases: technology.
“It was an exciting year in the tug of war between old-line content rights holders and the internet,” says Ray, adding:
“I think on balance the internet won.”
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