Rebecca Tushnet

Transformative work of the day?

Posted on April 7, 2014 by rtushnet

Browser plug-in that swaps Daily Mail headlines with reader comments. Nearly complete identity but for the arrangement, but also commentary, and this reaction shows how the two are intertwined: “This plugin is definitely funny, but there’s something illuminating about it too. In the first place, they don’t feel too dissimilar from one another. Second, it strikes not only at the information that The Daily Mail would like to convey to readers, but also what readers choose to focus on.” Similarity plus difference…

(Of course there is the doctrinal question of whether rearranging users’ views in a predictable way constitutes creation of a derivative work. We’ve all pretty much agreed to ignore that with respect to ad blockers and the like, despite a bunch of commentary, maybe because very few copyright owners end up wanting to call their customers primary infringers. See Aereo. But this plugin goes a bit further, with a decision one might call minimally original. Still, it’s possible that the plugin is transformative of meaning without sufficiently transforming the work to trigger copyright.)

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Reading list: judging similarity in copyright

Posted on April 7, 2014 by rtushnet

Shyamkrishna Balganesh, Irina D. Manta, & Tess Wilkinson-Ryan, Judging Similarity, 100 Iowa L. Rev. (forthcoming 2014)

Our first study reveals that basic knowledge about the act of copying, meaning that one work was copied from the other, greatly influences individuals’ assessments of similarity. And since substantial similarity is presented as a question to the jury once copying as a factual matter is shown to exist, the substantial similarity question is structurally skewed in favor of a jury’s finding greater—i.e., substantial—similarity between the two works. Our second study shows that in addition to simple knowledge about the copying, additional information about the creator’s efforts in producing the work also trigger individuals’ intuitions that cause them to find a greater amount of similarity between two works. In some ways, this finding is perhaps more troubling for copyright law because it suggests that juries, who are the decisionmakers on the similarity question, are likely introducing variables into the analysis/comparison that copyright law’s devices have over the years worked hard to eliminate from consideration altogether. A creator’s labor/effort is one such prominent consideration, which copyright jurisprudence in the United States has uniformly jettisoned as irrelevant.

Also, the second study tested information about a negative/substitutionary effect on the market and found that such information didn’t significantly increase judgments of similarity, which I find equally intriguing.

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Reading list: false advertising and prior restraint

Posted on April 7, 2014 by rtushnet

Corinne Stuart, The Applicability of the Prior Restraint Doctrine to False Advertising Law(Winter v. Natural Resources Defense Council, Inc., 129 S. Ct. 365, 2008), 21 Geo. Mason L. Rev. 531-555 (2014). Argues that prior restraint doctrine should be applied to preliminary injunctions in false advertising cases because truthful commercial speech is valuable. Not trademark cases?

My own reaction: By hypothesis, some hopefully small percentage of preliminary injunctions is wrongly granted, meaning that truthful commercial speech was halted. Under Central Hudson, does the government’s interest in halting false commercial speech—which is both unprotected and potentially highly damaging to consumers and competitors—justify the resulting burden on truthful commercial speech? I’d say yes, since the interest is significant and the general standard for preliminary relief is a well-established way of managing the risk of error.

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Next Great Copyright Act Conference, reform

Posted on April 4, 2014 by rtushnet

Modes and Venues for Reform

Moderator: Nancy E. Weiss, U.S. Institute of Museum and Library Services (IMLS)

Troy Dow, The Walt Disney Company

Need to ensure meaningful and not merely symbolic protection to authors as well as users; otherwise it’s not a copyright law at all. Goodlatte announced review: not necessarily reform. Proceeding section by section through the code. Easy to kill legislation, hard to get something done. All the more true in increasingly partisan environment, though copyright is mainly nonpartisan. Rules of Republican caucus place term limits on committee chairman; this colors the ambition/agenda of any given committee and weighs against longer term projects. Too often there’s a focus on users without regard for authors, or authors without regard for users.

Concerned about difficulty of finding a proposal not immediately labeled “son of SOPA.” Two weeks ago 25 tech companies wrote to chair of finance committee, urging opposition to trade authority—anti-TPP. Said it was first step to internet censorship/pressures ISPs to monitor users. Democracy will cease to exist. You might wonder what’s so cataclysmic: the claim was that takedown and ask questions later will chill innovation. This is reference to the same DMCA safe harbor provisions described yesterday as foundation of internet as we know it, with calls to leave it alone. So which is it? (RT: Excluded middle?) EFF says that the TPP insists on notice and takedown, while intermediaries ought to just pass on notices. We can debate approach, but 512 is notice and takedown and EFF is still calling for opposition to TPP to prevent slow erosion of rights on the internet.

Dep’t of Commerce’s Green Paper was balanced stock-taking exercise with a number of recommendations, and no sooner had it been released than White House received a Stop SOPA 2013 petition, reference to administration’s continued support of provision that would close a gap in criminal provisions that don’t provide for criminal penalties for streaming. Fear of revived SOPA; this isn’t true but it’s in the petition and now has enough signatures for a White House response. So has a Stop SOPA 2104 petition, in response to the DMCA stakeholder meeting.

We need to have a discussion where we discuss shared objectives. Not suggesting that this stream flows in only one direction. Needs no reminder about Jack Valenti. Not assigning blame, but we need to have a conversation. (If I were a suspicious person, I might hear this as: you put down your biggest weapon, which is the occasional ability to mobilize the public, and we will … continue to not be popular with the public, though we will keep our checkbooks. Sounds fair, right?)

Our experience with UGC principles: sat down (with whom? Hint: big content, big ISPs, not so much “users”) and agree on set of principles. Shared set of common goals. We all agreed: ideally, we’d support a robust, legitimate UGC environment free from infringement. If there were commercially reasonable, technologically effective means to achieve that, we would work together to implement it. Foundation for discussions that led to UGC principles. We wouldn’t have gotten to the end if we hadn’t put ourselves in each other’s shoes. (And will you stand in my shoes if I agree to stand in yours?)

Judge Mary Margaret McKeown, Ninth Circuit Court of Appeals

Dance between Congress and courts goes way back. Courts sometimes have stepped in first in looking at new tech, and Congress followed: Justice Holmes, 1911, Court extended copyright to motion pictures. Piano roll case: not like sheet music, reasoning by analogy, metaphor, and example. Congress fixed that. Fast forward to late 60s/early 70s. Court wrote about “drastic technological change”: retransmission of TV broadcast without permission. Sound familiar? Courts found no infringement, but Congress quickly blunted that ruling with compulsory licensing.

In most of the early cases, courts wring their hands about the tech, make a decision, then almost invite Congress to step in if they’re wrong. Doesn’t see that much in recent years—there’s always handwringing about tech change and judicial uncertainty, but you don’t see courts asking Congress for help. Courts are letting chips fall where they may. Doesn’t think it’s because Congress doesn’t know how to step in when it wants to—Lily Ledbetter case about calculating the statute of limitations, Congress quickly responded to Justice Ginsburg’s eloquent dissent. But perhaps as Lessig intimated, copyright doesn’t have the same policy appeal as other social issues.

When Congress leads: 1976 Act has been amended/supplemented at a staggering rate. Reflects modern industrial policy, set out in alphabet soup terms (NET Act, DMCA, SOPA/PIPA). Congress has stepped out incrementally in many ways. Stepped out in terms of congressional authority—Eldred; Golan. But there have been very few SCt cases on copyright, aside from Eldred and Golan, which are more about constitutional authority. The remainder is very few cases that tell courts how copyright ought to be interpreted—Kirtsaeng is an exception. Despite tech change and circuit splits, little guidance. Action has been in the “inferior” courts.

Courts as a venue for the next act. Courts will remain in the vanguard because inevitably there will be statutory, contractual, and other disputes needing resolution. There is a danger of courts learning tech outside the record; we need instruction from lawyers. Deal with change through metaphors; also look at privacy and 4^thAmendment cases, because many more of those cases involve tech. At some point you will have a post-Napster judiciary.

Courts have a skewed docket. Many key issues are resolved by business deals, settlement, or otherwise. A single technology may be at issue (Betamax, Grokster, Aereo), but we decide and lawyers/subsequent courts are left to extrapolate. Fair use will continue to dominate some legal battles. We need not the judgment of Solomon but the dexterity of Houdini.

Jennifer Rothman, Loyola Law School, Los Angeles

Four types of private ordering: licenses, fair use guidelines, alternative copyright regimes, and private agreements.

Clearance culture/reliance on risk avoidance. Many corporate counsel always recommend licensing; even EFF says that if you’re risk averse. Can make sense in individual cases even with good fair use defenses, but Rothman is concerned that courts incorporate these risk averse customs into their legal analysis—example from Ringgold v. BET, where Ringgold’s art appeared for less than 30 seconds, never as a focal point, and court found no fair use in large part because of industry custom to license background scenery. §107 should make explicit that the existence of licensing markets should not weigh against fair use, correcting an error of relying on clearance culture.

Formalized trade practices/agreements. Classroom Guidelines: Publishers and authors sat down, with minimal representation of universities, teachers, no voice for students. Universities/libraries all opposed the guidelines, but they were put in legislative history, and courts subsequently looked at them for fairness—violation of guidelines which were supposed to be floors/safe harbors but courts treated them as ceilings. Need more representative group, and make clear that these are safe harbors whose violation doesn’t reflect negatively on anyone claiming fair use. Also, more informal guidelines developed in valiant effort to give use communities guidance and encouragement to assert fair use: many out of Center for Social Media. Helpful to many who are lost and ideally insulating them from willful infringement. Despite the positive value, there are reasons to discourage codification/judicial reliance on them as the standard of fair use. Many statements were developed without particularly representative groups, like large content providers, and sometimes overclaim fair use; other times underclaim fair use (e.g., statements about photos; suggesting that one can’t edit to the beat or spill over in a documentary, or fashion a documentary about a copyrighted work). Legislation could clarify that private guidelines don’t affect the scope of fair use; consider broader educational guidelines.

Regimes that overlay copyright. Creative Commons: greater freedom than the default. David Byrne; White House; Al Jazeera have all used them. Should largely not interfere with them in legislative process, but some areas for intervention. Attribution is ubiquitous desire, now standard. This preference for attribution is across the board and users want to do it. Shouldn’t make failure to attribute dispositive, but put thumb on the scale in factor two or factor three. Another potential legislative reform: what happens when a private license is violated? Some courts might view violation as weighing against fair use; particularly concerned about this with ShareAlike license, where commercial documentarians might want to use a work—should clarify that violation of license should also not affect fair use.

Use of contracts to go beyond copyright/fair use. Private agreements about technology, e.g. Content ID used to take down works despite fair use. Build into legislation restriction on ability to limit through contract or tech the ability to assert fair use. Preemption might also be an area to address this. Fair use isn’t an evil to be tolerated. Copyright should continue to provide breathing room, perhaps codify some more safe harbors; private ordering has often been generated by uncertainty—more safe harbors for news, documentaries, UGC would help.

Legislation could address downside of private ordering/clearance culture, and push back against obsolescence of fair use in the face of contracts/tech.

Plan B: if courts consider customs in fair use, customs should be certain and not disputed; representative of different groups; not create slippery slopes (filesharing); motivated by efforts to establish appropriate boundaries (not by fear).

Pamela Samuelson, UC Berkeley School of Law, BCLT

Some things only Congress can do (term), but not the only actor. Courts’ role: more modest reforms, such as inconsistency in liability standard for nonliteral infringement. Copyright Office: more role for focus on economics—need a Chief Economist, as PTO has—or at least see how an economist would think about it. Likewise a chief technologist or tech fellow; Pallante stumbled on testimony about SOPA because she didn’t appreciate some things about the tech. More rulemaking could be good, though raises delicate constitutional question, and she’s also enthusiastic about small claims potential. Would like to revive Office of Technology Assessment, which could talk to stakeholders, but that’s not going to happen.

Scholarship: we have to hope someone will pay attention, though mostly they don’t. Treatises however have served as a mode of copyright reform where the law is unclear. Copyright is impenetrable; judges are unsure what it means; normative basis is not evident from reading the statute; judges assume that treatise authors have analyzed the cases and thought about them, and sometimes treatises can point law in one direction or another. Aereo: that may matter. Pet peeves: sometimes treatises contribute to overturning clear expressions of congressional intent, as with Baker/§102(b). But who elected Nimmer and Goldstein? Why do they get to say what the law is when the rest of us have something to say?

National Academy of Sciences: evidence based policy making is a good idea. American Law Institute does principles on a regular basis; ALI has brought people together on various controversial issues before. High standards for review/good processes, so ALI might be good at distilling some core principles. This could help sit on top of the statute and make it more consistent, then over time evolve into the basis for new legislation.

Social norms: also part of what’s happening. Norms have evolved a lot. Effort at K-12 copyright education—she doesn’t think that will go very far, nor will DRM. Relaxation about Web 2.0 UGC, fan fiction, etc.: things that might have looked infringing 10 years ago are less stressful now. Darwin: not the strongest or smartest or even the ones with best lobbyists who survive; it’s the ones who can adapt. There are more of them than there are of us. We may be the past; they are the future. How does copyright survive? (I think in this statement I am the “them.” In honor of that and of Samuelson’s Darwin adaptation, here’s a fantastic mashup vid using the same Darwin quote; it’s Battlestar Galactica/Terminator: The Sarah Connor Chronicles.)

New act won’t be soon, but it’s time to start imagining it.

Q: anything achievable in near future?

Dow: depends on how you define it. Not necessarily 20-year revision process. Pallante mentioned things in the system for some time.

Andrew Bridges: agrees we should seek more moderate language. But one of the hyperbolic debates you discussed, TPP as new SOPA, seemed a pretty accurate characterization because they feel like juggernauts that feel impossible to stop—SOPA came without hearings. Do you know what’s in TPP? Can you tell us?

Dow: I haven’t visited the USTR to look at it, but many people on all sides have done that. What he’s seen is what most have seen, which is text that was distributed. Know generally.

Bridges: all I know is that I don’t know what’s in it and I have to rely on someone else. We’re talking about a trade system that binds the US to norms being negotiated in secret. Calls for an up and down vote on restrictions on what Congress can do. Is Congress even relevant if trade agreements restrict what Congress does? What is the role of trade agreements as engine/obstacle for copyright reform?

Dow: ongoing discussion, and members of Congress may know more than you or I. They are relevant. I’m more concerned about characterization of substance than I am about substance. (I bet you are!)

Samuelson: given lack of transparency about TPP/ACTA, many of us are worried. Leaked provisions didn’t seem to be about counterfeiting but about strengthening rules in ways that would tie Congress’s hands. Usually in treatymaking you at least get to see drafts; transparency adds legitimacy. The idea that for a trade negotiator to tell the Euro. Parliament about the treaty would violate national security is ridiculous. That doesn’t add legitimacy to copyright conversations.

McKeown: depends also on whether it’s self-executing.

Q: Leval says we should eliminate the fair use factors, and say fair use isn’t infringement, leaving the rest to the courts. What is the role of judicial discretion in copyright law/reform?

McKeown: discretion unbounded is tyranny. But you could figure out which factors make sense and which have required courts to go further. Courts are incremental. We have multiple infringement tests, and at a minimum the SCt ought to step in to harmonize. Look to the past for what courts have done as a foundation for fair use going forward. Courts are supposed to take the law we have, not reform.

Q: what’s the role of big players in litigation? Samuelson has criticized Rule 23 as copyright reform/class action as de facto way of making reform when Congress is paralyzed (I believe Qer means the Google Books settlement). What confidence should we have when major players are the ones making copyright law/policy for the rest of us? We’ve heard from photographers without as much representation (Qer says “skin in the game” but I think Mopsik thinks they’ve got nothing but skin in the game, along with plenty of abrasions).

McKeown: there’s definitely dominance in plaintiffs. But simply because you have a dominant plaintiff doesn’t mean they make policy. Many interesting decisions out of very small cases. (*cough*Garcia*cough*.) There are areas of uncertainty, and the more cases you bring the more issues you will tease out. But access to the courts generally is a huge issue. ADR is encouraging.

Samuelson: this is another area where statutory damages are really of concern. Google Books: 3 authors from the Authors Guild tried to represent all authors of scanned books. Judge Chin certified the class; reversed; it will be difficult for one small group to adequately represent interests of all authors/creators, but it’s statutory damages that makes everything toxic. If $750 is the statutory members, where there’s more than a small number of works, that gets really big really quick, and especially tech companies are at enormous risk because they make products that interact with bunches of works. Sometimes big Ps do us a big favor though—yay for Perfect 10 bringing so many suits. Google was able to defend where colleges/universities couldn’t take on that risk.

Peter Jaszi: a bit about best practices. Doesn’t want anyone who’s unfamiliar with this to come away with the impression that it’s an attempt to replicate negotiated classroom guidelines. Couldn’t agree more with Rothman’s critique of that failed process. Best practices are different: try to document the real and aspirational values of practice communities around fair use and make sure info is conveyed both to members of the community, who sometimes find it liberatory, and to other actors in the system. Can’t go into detail on theory, but there are many examples of ways in which these documents do seem to have liberated scholarship, teaching, filmmaking. We’ve tried extraordinarily hard to avoid lock-in or any suggestion that what communities can agree on is an outer limit on fair use. Does Rothman have examples of instances in which projects she regards as fair use have been foregone because of anything in best practices?

Rothman: She thinks it’s a great project in pushing back on some clearance culture—likes its aspirational nature. But based on looking on larger body of industry practices and social norms, and how courts react, she concludes that some courts react by incorporating those practices as limits on fair use. It’s that context which concerns her: if they were codified or used as reason to reject/find fair use without independent scrutiny. Librarians disagree about some things, too—we could ask whether different user groups were adequately represented. Jaszi says the Classroom Guidelines weren’t representative and not valuable; but best practices doesn’t represent everyone either. (I suspect Jaszi would say that’s why the best practices define themselves as the best practices of the user communities.)

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Next Great Copyright Act Conference, remedies

Posted on April 4, 2014 by rtushnet

Remedies and Enforcement

Moderator: Mitchell Zimmerman, Fenwick & West LLP

To copyright maximalists, the entire population of the world seems to be Holmes’ bad man.

Corynne McSherry, Electronic Frontier Foundation

Broad agreement on need to fix, even if we don’t agree how. Statutory damages are out of whack with reality/real harm. Other kinds of harms and how we punish them: if you shoplift 6 CDs or 4 DVDs in MA, your fine is $250. If you evade a subway fare in NYC, $100. If you sell tobacco to a minor, the fine is $200. Speeding, up to $300. These cause real harm. Campaign finance laws—harm to democracy—fine is $1000, if any such laws are left. These are bad things; it makes sense to deter them. If you set a kitten on fire, you can be fined up to $2000. We can agree that this is a very bad thing to do. But if we go by the fines, sharing a song without permission is worse than all of these together. Up to $8000 per work—the statute says up to $150,000, but a jury has awarded that in Capitol Records v. Thomas.

Filesharing is what helped general public understand a bit about copyright and statutory damages. The amount was enough to get the judge in the case to plead with Congress to fix the law—pretty rare.

RIAA called off its campaign, but other lawyers not constrained by public reaction decided that this looked like a good business model, and started sending out letters threatening lawsuit unless $3000 payment made; used statutory damages and result in Thomasas part of the threat. Trolls have made millions doing this, at least according to a lead troll.

Strange, disproportionate, unnecessary, and causing harm beyond the filesharing context. Irrational penalties deter people with valid fair use claims from pursuing them, even when EFF is willing to take the case. No matter how many times she reassures them about the smallness of the downside risk, as soon as she says $150,000 they are too afraid to continue even with free lawyers. Chills innovation—if you have no rational way to evaluate magnitude of risk, you need quite a warchest. Irrational penalties exacerbate other problems. If you guess wrong—put up an orphan work and you’re not a library, your downside risk is too big.

Copyright’s purpose is not to chill innovation/speech; also they don’t work as deterrents. Consider filesharing. The scary damage awards did not stop filesharing, according to all reports. Deters lawful uses, but not pirates.

Proposals: (1) No penalties with reasonable good faith belief that what you did wasn’t infringing; (2) get some ties to actual harm—minimal unless showing of actual harm; (3) no financial penalties for commercial/personal use; (4) clear reasonable guidelines on range, not just what judge or jury thinks is just.

Annemarie Bridy, University of Idaho Law School

Less is better: narrower scope/penalties could get us more deterrence and more public commitment to enforcement of IP rights. History repeats: New/disruptive tech leads to panic among copyright owners; pressure to do something fast; criminal infringement liability expands.

For over 100 years, was exclusively civil cause of action. Then criminal infringement existed but was narrow and misdemeanor only. 1976: felony penalties for repeat offenders, then 1982 to first-time for some types of works, 1992 for all types of works. Internet age has given two watershed moments: 1997’s NET act, eliminating commercial motive as a prerequisite for criminal liability, for as few as 10 unauthorized copies. Then creation of IP enforcement coordinator office in 2009, leading to significant expansion of criminal enforcement and demands for permanent stream of public money. SOPA would have extended noncommercial felonies to cover public performance right; another proposal would’ve provided 5 years of prison for streaming 10 shows over 6 month period.

What would be rightsizing? Think of the different dimensions. Scope of conduct and scope of penalty. Conduct: required mental state; nature of infringement (qualitative); amount (quantitative). We currently require willfulness—with respect to the underlying act or with respect to commission of a crime? Do we require financial gain/how do we define financial gain? Which exclusive rights? How much more than de minimis infringement do we require, in what amount of time?

Penalties: fines, prison time, and property forfeiture.

Find the right value for each—optimize both for deterrence and fit with social norms, as well as accommodation of competing law enforcement priorities.

Costs of expansive criminalization: noneconomic costs include public perception that law doesn’t work/doesn’t fit about small-scale private infringement. This undermines respect/compliance. Chilling effects. Enforcement costs of enforcing against small-scale infringements outstrip economic harm to property owners.

Restore requirement of commercial motive for all criminal infringement, and limit liability to larger infringements. She thinks that the 50-60 actual prosecutions per year fit this already. Be mindful that every public enforcement shifts costs of enforcement from private parties to taxpayers. What are the opportunity costs of that increased public investment?

Eugene Mopsik, ASMP

Pallante: Can safeguard free expression, due process, access, and respect for IP together. Uncontroversial: interest of authors intertwined with interest of public, not counterweight to public interest. At center of the equation. Fair return for author’s creative labor, but ultimate aim is stimulate creativity for the public good. Congress has duty to keep authors in its mind’s eye.

Professional photographers create many/most of the images the public sees every day—the public record. Much of incentive to create would be lost without copyright.

Freelance photographers create the largest group of works but are least able to access the benefits of © because of high costs of litigation, small amounts of money at issue, and many infringers are aware of this situations and use it to their advantage. Disruption to business/emotional stress of litigation = more than most sole proprietors can afford. Most images aren’t registered before infringement, preventing statutory damages and atty’s fees from being on the table. Many infringers are beyond the law and DMCA is little deterrent; 1202 is rarely enforced; takedowns are required for each infringement instead of one notice per image. Metadata is routinely stripped from images, either on upload or through other action.

Plus Coalition has the greatest hope for tracking orphaned images, but it’s underfunded/understaffed. Need copyright small claims court to create efficient and affordable redress of claims for a few thousand dollars or less. Copyright Office could run it; limited discovery; limited recovery; no appeal. Constitutional questions, yes. But desire to have justice, not simply legislation, definitely.

Ability to register images from within digital asset management workflow would help. Photographer could select images at end of shoot. Could be deposited for ongoing identification. Registrations should be image searchable instead of just by rightsholder or title. This would require changes in registration practice and Copyright Office database. Annual subscription fee allowing unlimited registrations for a flat fee would help. Elimination of published/unpublished would simplify registration and eliminate one of the most confounding parts of the process; already too complicated/no point.

Returning fair use to a case by case affirmative defense instead of a broadly applied right would be good too. Much of library/university community has now turned to fair use instead of orphan works.

It’s easier to steal images than to license them; people who wouldn’t shoplift think nothing of stealing intangible works. It’s next to impossible to convince them of value of digital property. They think what’s on the internet is free for taking. Photography is a pleasant activity for sharing for many people, making the problem worse. Visual artists want their images seen but want fair compensation—everyone has figured out how to make money from images but photographers.

Need for machine readable persistent identifiers that can’t be removed, but not currently on the horizon. Image recognition software may help, but still need to figure out what’s authorized, though 80% are unauthorized. Getty Images made 30 million images available for free: stay on Getty’s server and Getty gets info on where images appear, who views it, etc. – metadata more valuable than unmonetized images. Getty can’t keep up with infringements; where does that leave the individual photographer? Inability to keep up makes image recognition a marginal tool.

PLUS: the picture licensing universal system. Universal glossary of trade terms that are machine readable, with customary licensing packages. Registry to connect rightsholders and info and will digitally manage automated licensing. Closer to persistent machine-actionable info than any other product on the market. Working with UK Copyright Hub, Copyright Office, and other partners. Represents rightsholders and consumers of images. It isn’t in business of licensing, though.

Extended collective licensing needs to be created to facilitate small internet uses (RT: not sure “facilitate” is the right word there, or maybe “uses” is the problem; try “monetize” or “payments” since the uses seem to be doing fine); this would contribute to income stream for rightsholders. Google & Pinterest would bear significant portion of fee burden. Patterned after SoundExchange.

Photographers are uniquely disenfranchised from their legal entitlement. Time for gov’t to step in to ensure preservation of our heritage and reasonable profit from their works. Justice for individual rightsholders, not more legislation.

Peter Menell, UC Berkeley School of Law, BCLT

Menell points out that he couldn’t figure out how to license the picture he wanted to use—the image of a lynchpin.

Gary Becker’s seminal Crime and Punishment: An Economic Approach. If we’re trying to optimize social resources we’d use a high penalty with low enforcement, and people would be deterred. Nice idea, but may not be true. 1961: Register issued a report about damages; foundation of 1976 Act. Traced back to 1790. Key elements: value of copyright is by nature difficult to establish, which provides reason to depart from standard rule about actual damages. Only damages were license fee; often less than cost of enforcement; award of profits would also likely be inadequate. Ensuring both compensation and deterrence was a problem. Report was sure experienced jurists could balance the considerations at issue, but shouldn’t be compelled to award more than they consider reasonable just because multiple infringements are involved. 1976 Act followed that idea, and for most of the 25 years after that it didn’t present a big problem. Enabled ASCAP and BMI to go around and get people to take blanket licenses; no massive awards for failure to take licenses.

1998 case: the court agrees that statutory damages must be sufficient to deter and shouldn’t award minimum estimated losses—then district judge Sotomayor. But subsequent events dramatically changed our understanding of these issues. The perfect storm: SCt overturned congressional judgment that statutory damages should be in judges’ hands. Combined with digital theft deterrence/copyright improvement act that ramped up damages to $150,000 work, plus Napster: beginning of natural experiment. Industry then targeted end users. Unleashed warfare: over 35,000 people were sued. Hard to characterize them as evil, just average/curious.

Bad remedies led to questionable interpretations—does the P have to prove that there was a download, not just an offer to upload? Understandable that Judge Davis thought that interpretation made sense rather than putting Thomas through a horrible ideal, maybe there’s no liability. Result: two trials, damages went up. The regime is out of whack with what Congress thought in 1961; no one wanted to create a lottery system. Eventually, music industry backed away.

Over time as tech changes, we see balance shift. What really shifted recently was social norms. Can’t think of law as Becker did; must think about backlash and response. When someone is unfairly accused of infringement, the damages aren’t enough to deter. Even when we tried to correct abuses, we didn’t. When he goes to the Prince toddler video, he sees the comments: people who couldn’t determine which song it was; people who say copyright law is garbage; people who mock the idea of this video as substitution for a CD. When people hold law in contempt, there’s a problem.

Also, porn companies have picked up where the RIAA left off—bringing 1000s of defendants into one case, not even willing to pay multiple filing fees. They use the $150,000 number in the threat letter. Swamps the patent troll problem; hundreds of thousands of defendants. Judge Wright called attention to the use of this threat to embarrass, and said he didn’t want to use the court as an extortion scheme. But it’s difficult because the statute exists and this is hard to distinguish from other cases.

Safe harbors: When he looks at the facts in some of these cases, where Veoh has set up a group working in Russia trying to strip porn out to protect the business—they asked “aren’t infringing videos the majority of Veoh?” Response: they’re unauthorized, but don’t use the term infringing—I’ll explain to you on the phone. Judge gave Veoh SJ; it should’ve survived, but because of statutory damages they were destroyed by their bills, even as they were trying to put tech in place. YT is a similar story with a bigger war chest. YT: statutory damages are the elephant in the rule; judges are turned off by the prospect.

SOPA: another manifestation of an unpopular system. At this point copyright is a counterexample to Becker’s optimal enforcement scheme.

His suggestion, with something to offend everyone. In an ideal world, detecting infringement would be easy. Making available regime is a sensible rule, but we need to recalibrate damages. Small claims, without lawyers—more like traffic fines. Get people into licensing regimes. Fred Yen’s suggestion: deal with abuse too.

Once we open statutory damages, we can solve many other issues. Restore confidence; stop alienating consumers and judges; reduce litigation fees; build bridges to Silicon Valley. Why not think about notice and staydown as a trade for getting rid of statutory damages? Truly safe harbor for building the tech, but avoiding distortions of copyright driven by fear of statutory damages. §512, orphan works, fair use all get on the table if we can talk about statutory damages.

Zimmerman: how much money does uncompensated online use cost photographers? Would these people be paying?

Mopsik: the truth is in the middle. Many members find unauthorized uses every day. There may be issues of model releases (models due compensation), or violations of exclusive licenses. Small uses by householders, blogs—he’s not particularly worried about those, but the uses with an income stream. (I wish he’d tell the paparazzi photo trolls that they should leave blogs alone.)

Zimmerman: music industry has told us there’s a vast substitution effect, but far less clear with photos—masses wouldn’t consider paying licensing fees. What is the small claims court solving for?

Mopsik: frictionless licensing. Not interested in being punitive, but fair and reasonable compensation for usage.

Menell: copyright is about cultural norms, since Napster. No more going through turnstiles for access. Licensing is a goal. If we can’t do it, then we can move to levies, though that’s politically complicated. Rebuild around formalities, tools, competition. Ideally, people would gravitate towards norms of participation in a market. That’s happening now with music services. Motion pictures: shorter windows; people like some of the new services. Being able to figure out how to license photos would be nice.

Bridy: how would blanket registration work? Could the Office afford that?

Mopsik: our position was that we were trying to encourage registrations; it would only be for online use, not paper registrations; we were waiting for a number for what it would cost per year. Many photographers take a month’s work and register that in a single registration for one fee. Issues with independent economic value; different courts treat group registrations differently. Unique high-value images you might want to register alone. With sheer volume of images, that starts to get expensive for a sole proprietor.

Zimmerman: fee structure/financial needs of Copyright Office could be dealt with by other means.

Chris Sprigman: new occasional photographers; photographers who do it as an avocation, and are less motivated by money; wedding photographers who operate very differently than news photographers. How much is what’s going on the market under technology versus the copyright system?

Mopsik: capture/processing may be faster, but you do all the retouching etc. that used to be done by the processor—increased burden. Part of the stress photographers feel is change in business models. But there’s a difference between images created on demand to fulfill a client’s need, in the proper format, archived for client’s use—added value from photographer. Copyright is contributing to the stress. There are ways copyright and photographers could work better together, like registration API.

Q: is there a way to distinguish factual photographs and works that are more intended to be creative/more highly protected?

Mopsik: doesn’t like the form of the question—Richard Prince/appropriation artists copy ads. To a photographer every image is unique.

McSherry: the key point isn’t the fact/fiction distinction, but grappling with the reality that we have so many copyrighted works circulating all the time, and reform should figure out how to align the law with the fact that everything is copyrighted and authors have a variety of interests, some of which involve money and others don’t. Learn from the troll problem: we don’t want a world with a lottery system.

Mopsik: our guys aren’t trolls but small individuals trying to make a living.

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Next Great Copyright Act Conference: Larry Lessig

Posted on April 4, 2014 by rtushnet

David Nelson Memorial Keynote Lecture

Introduction by Andrew E. Monach, Morrison & Foerster LLP

Lawrence Lessig, Harvard University

Aaron Swartz: How will you ever solve the problem of laws that choke creativity with a government that’s so corrupt. Lessig said that wasn’t his field; he did internet/copyright policy. Swartz: But as a citizen, is it your field? There is a flaw at the core of our democracy. We have to change the bovine quality of our reaction to this flaw. We have to recognize the threat.

Many people focus on problems of speech, or corporate speech. He locates the problem elsewhere: the fundraising. Modern American congressperson learns which buttons need to be pushed in order to survive. Develop a sixth sense about how what they do might affect ability to raise money, in every little detail. “Always lean to the green.” Not an environmentalist statement. Time is one problem, but not even the most important—it’s also the problem of the people from whom they raise this money, because of the distribution of contributions. People whose views matter: .05% of America, the same as the number of people named Lester or perhaps Sheldon. Either way, a bad system for reflecting the Framers’ objective of representative democracy representing the people, the rich no more than the poor.

This is also an unstable system. When such a tiny number have power, even a tinier fraction has the capacity to block reform, especially for things like the next great copyright act.

COICA: bill never made it to the floor, but came back as SOPA/PIPA, and resulting public campaign. After a year’s organizing, they were successful in blocking it in House and Senate after important organizations like Google, Reddit, Wikipedia went dark demanding Congress reject the legislation. A victory not just for copyright but for the recognition of the role of special interests—corruption.

SOPA/PIPA fight idn’t build a mechanism for getting needed reform—can’t count on the internet to show up when you press a button.

Another strategy: cooperation. Roosevelt made all sorts of deals with the devil to get reform. What kind of deal might make sense here? Landes & Posner: indefinitely renewable copyright, in exchange for a real efficient system where unrenewed works would become available.

If we need copyright to internalize positive externalities, need carbon tax to internalize negative externalities—but we had “copyright wars” waged on what Jack Valenti called “terrorists,” which is to say our kids. Activist, aggressive legislation, but we still have done nothing to solve negative externalities of climate change—the environmental pirates, who don’t believe they should participate in internalizing negative externalities. He’s not a copyright abolitionist/doesn’t believe in piracy. But when he thinks about strategies, he wonders whether there isn’t a role for strategic pro-piracy advocacy. Imagine the Pirate Party’s platform: so long as there are environmental pirates, people who insist on not paying for the externalities they cause, we will encourage copyright pirates, and renounce it when there’s a deal.

Swartz’s tragedy. Targeted JSTOR because of something he learned when he heard that it would cost $250 million to liberate JSTOR for the third world. But that was a misunderstanding. MIT was never asked whether the access was unauthorized; prosecution went on 2 years without anyone ever asking this fundamental jurisdictional question. Hope was the one thing we didn’t give Aaron; his lawyer was optimistic and his friends were but that wasn’t delivered to Aaron.

Swartz would look at this event as a hopeful one. Even without political reform, maybe, there is a way to think about copyright reform. Because if we think about 10 years ago v. today there’s been extraordinary progress. End with a call to us as citizens.

Fred von Lohmann: can we democratize the giving of money? Netflix has 40 million subscribers, relatively intensive internet users. Shouldn’t we use the tools we already have to unlock small giving? We can click a button to buy at Amazon; why not click a button to give $10 to a politician who has our views on these issues. If $70 million had been raised in SOPA/PIPA, Judiciary Committee would be saying something very different today.

Lessig: we could deploy that strategy to reform the system, or that could be our reform. With respect to the first, we’re going to launch an experiment based on work by political analysts. But without public funding/legislation that will never happen at the level of Congress; maybe for president. But you need tax credits or something else to get candidates to focus on a broad swath of their constituents.

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Next Great Copyright Act Conference, quasi-copyright

Posted on April 4, 2014 by rtushnet

Quasi-Copyright Reforms

Moderator: Hank Barry, Sidley Austin

Rebecca Tushnet, Georgetown Law School

I’m going to talk about managing the interface between copyright and several other rights—in the very first panel of the conference, Wendy Gordon reminded us that various doctrines channel some claims to copyright and others to patent. I’m going to briefly cover both quasi-copyright rights and their interaction with copyright and also what I’ll call marketing value IP rights and their interaction with copyright.

Two quasi-copyright rights: 1201 and 1202.

1201 anticircumvention: a disaster. 1201 trips up people who are trying to do the right thing, and doesn’t trip up people who are trying to do the wrong thing. The exemption rulemaking every three years is a bonanza for those firms that charge their clients by the hour and a nightmare for everyone else. We start preparing for the next round as soon as we finish the last. We elect presidents less often than we have 1201 exemption proceedings. In real copyright reform, 1201 should be eliminated and ordinary secondary liability allowed to do any necessary work. If not, at the very least exemptions should not expire.

1202 copyright management information: starting to see increasing use—sometimes the pattern with a new legal right is that it remains in relative quiet for a while and then is discovered, which may be happening here. 1202 has differential effects depending on medium, because some kinds of copying are inherently likely to preserve CMI and others aren’t: earlier this week, for example, Boatman v. United States Racquetball Association allowed a 1202 claim to proceed to trial based on garden variety infringement of a photograph. New lawsuits against ordinary reproduction of photos also are starting to include allegations of removed CMI because the way information is attached to photos means that it is very easy to copy the photo without copying the CMI, intentionally or not, and intention is often not an issue that can be decided early on in a case. E.g., Kelly v. Arriba Soft. Depending on how 1202(b) is read, it’s possible that liability for removing CMI can attach without any underlying copyright infringement, just as it’s possible to violate 1201 in the course of making a fair use.

My challenge: Has the CMI provision ever been used independently of an infringement case in an appropriate situation? Was 1202 just another bad congressional prediction about what technology would enable and/or require? It’s notable that 1202 concerns exactly the information that we expect to get out of the “copyright hub,” but I haven’t heard anyone discuss 1202 as something that is enabling us to get to that solution. Copyright owners already have the necessary incentives to provide that information. Nor, if we really do want to use CMI as part of automated systems, is it sufficiently clear that 1202 is only for that. I don’t see the current cases as covering instances in which CMI would have assisted in enabling detection of infringement. Instead, 1202 claims force courts to decide if having a copyright statement on the terms of service page of a website operates as CMI for a poem found on another page on the same site (Personal Keepsakes case, N.D. Ill.), or if a photo credit on the back of a record album is sufficiently connected to the cover photo to count as CMI (Levyfilm v. Fox Sports). If we do open DMCA issues up, this is a looming one. My suggestion: replace with direction to the Copyright Office to study CMI issues and the power to make rules (and not on a three-year cycle, either).

The other quasi-copyright claims on my agenda are two marketing value rights, the TM/copyright interface and the right of publicity. These are preemption issues. Conflict preemption and preclusion operates along with §301 and §301 should also be rewritten to the extent necessary to make that clear.

Dastar said that “origin” in the Lanham Act meant physical origin, not origin of ideas, and that copying an uncopyrighted work was allowed by the copyright law and should not therefore be interfered with by trademark law. This is preclusion, or as Mark McKenna has called it, channeling. In the more distant past, Sears and Compco were very clear statements from the Supreme Court that states could not make it a violation of trademark law to merely do that which one was entitled to do as a result of patent law’s negative space, which is to say copy an unpatentable (or patent expired) article. States could require labeling, but could not prohibit the copying itself on the theory that mere copying was deceptive. The same result should follow for copyright law, and ideally would be made explicit: it’s not a violation of trademark law to produce a communicative work whose subject is out of copyright. This would make the Betty Boop trademark case very easy, and have effects on Warner v. X One X (leaving Warner only with copyright claims based on copying elements of The Wizard of Oz and Tom & Jerry that weren’t contained in the copyright-expired promotional materials).

But courts are at least patchily working their way towards these conclusions now. Legislation could confirm the trend. The real preemption problem is the right of publicity, where courts (mostly the 9^th Circuit) have created rights that directly interfere with copyright owners’ exclusive rights. The doctrine on this is metaphysical, and badly so, attempting to distinguish an uncopyrightable persona from copyrightable works depicting that persona in the service of controlling the use of copyrightable works. Among other things, this is like saying that because the natural world is uncopyrightable, there’s no conflict preemption problem with a state law right that bars people from commercially exploiting their copyrighted pictures of the natural world, where commercial exploitation includes selling their photos or paintings for decorative purposes. Just recently, this head-scratcher created yet another tangled loop in Garcia v. Google that distracted from the main issue there. I’m not a big fan of federalizing the right of publicity, but we should federalize its limits: nonadvertising use of material that is authorized by the copyright owner or by copyright law should be outside the scope of the right of publicity because of its conflict with the objectives of copyright law.

Glynn S. Lunney, Tulane Law School

Where is the radicalism at this Berkeley conference? Maybe copyright doesn’t need radicalism. But we seem to think copyright law isn’t achieving its objectives very well. When was the last great copyright act? The DMCA? 1790 was pretty good, downhill since then. Protects too much too broadly for too long. Let’s put more on the table.

The next great copyright act should abolish copyright. A lawyer who is planning to settle doesn’t start with the drop-dead offer. Compromise is the end, not the beginning. Also, he believes we might be better off with no copyright than the Copyright Act we have—long story of public choice inaction leading to law that enriches only a handful at the expense of the rest of us. Would the world look radically different? Coase: the parties will bargain; the government gets it wrong. People can work together and contract around a no-copyright rule. Most copyright infringement cases he dealt with were between former partners—architect/client, songwriter/publisher. Converting copyright to contract would be trivial.

Might make difference for stranger infringement, historically anyway. But now there are EULAs. Contract could accomplish a lot of what we do today. And it would eliminate need to fight about statutory damages.

Coase cuts both ways. If we get too much copyright from the gov’t, private markets can fix that too. If you really believe in markets, the private sector can fix it anyway. Creative Commons = one way. iTunes dropped its DRM. Free & open software. But not universal yet. Why? Some are not market transactions in the sense we ordinarily think; we don’t want the relevant value commodified. Fair use parodies: we don’t think licensing will work well. In terms of well-commodified terms still not working well: (1) markets for these works aren’t generally very competitive. Price competition: all movies $7.50 (lower cost of living in New Orleans, I guess); all iTunes songs $.99 (actually, now it’s $.69, .99, and 1.29, but I take the point). (2) Consumers have limited time/cognitive resources; hard for them to adjust on the fly. (3) Externalities, such as those imposed by bans on reverse engineering.

Jason Schultz, NYU Law School

Patent and copyright background. Patent lawyers are stereotyped as more conservative/nerdy, but they’re kicking our ass in legislative reform. We might want to codify some things to be clear, and others to have flexibility. Kirtsaeng: we got there, whether you agree or not—the statute helps in some ways, but interpretation is also important. What if we took the common law of copyright misuse and nailed some of them down in the statute? The more some restrictions end up in terms & conditions the more we might want statutory confirmation of rights.

Anticompetitive issues: interoperability, accessing facts/ideas, fair use. Anti-cheating clauses (MDY v. Blizzard). Information that allows repair by you or third party. Medical Justice: forms for drs/dentists that claimed copyright in your reviews. Datel flash drives for backing up Microsoft game data. Anti-exhaustion/anti first sale clauses not just with software and CDs, but also on iPhone/other mobile devices, related to jailbreaking.

All sorts of cases where we might want to address these quasi copyright concerns, because they’re rarely ordinary infringement claims. Instead it’s interference w/contract or some other concern. Basic unconscionability doesn’t seem to get the job done, even though these mass market contracts are procedurally unconscionable. Preemption under current §301 and conflict models is insufficient. We could recraft misuse as preemption if we wanted.

To the extent we ID things that are solely for individual benefit, ok, but we shouldn’t necessarily allow people to contravene public policy by private agreement, clickthrough or not.

§301 is just about rights; nothing about defenses. What if we said we should have an equivalent for conflicts with state attempts to restrict exceptions and limitations? This would allow us to avoid identifying particular state issues or particular anticompetitive uses in the statute. Could also allow “fair” breach of contract where copyright law allowed the conduct for public policy reasons/where the copyright is being misused; could allow actual damages from breach but not prevent it.

Could also do something better than §512(f) where there is an abuse of license; create an affirmative claim. Compulsory license = remedy for abuse, or even statutory damages. Copyright trolling where people exploit the power differential with individuals.

Fred von Lohmann, Google Inc.

Quasi-copyright: live in Title 17 but not really part of traditional system: bootleg rules, 1201, 1202. Doesn’t participate in full set of rights/exceptions/limitations. Droit de suite. Also TM claims that abut/interfere with copyright; right of publicity; contract crashing into copyright has created quasi-copyright issues as contract starts to look like right against the world. Also, pre-1972 sound recordings is an emblematic example of quasi-copyright, though not in Title 17—but like others, cause trouble to no one’s ultimate benefit.

Most of these: striking how incomplete they are. When you look at antibootlegging provisions or even 1201, you have a large body of nuanced copyright law with detailed remedial schemes, registration requirements, limitations and exceptions; when compared to Ch. 11 with no limits/exceptions and enormous ambiguity, we would have been a lot better off with the rest of Title 17 instead of this incompleteness. Similarly with pre-1972 sound recordings: what does state law protection entail? Is there a public performance right? Is there secondary liability? Who knows?

Intermediary liability is where the rubber meets the road for the reality of these provisions. Imagine that §107 were to disappear tomorrow. The day after, YouTube would look pretty much unchanged. Because the users wouldn’t know—they don’t know §107 today. If you changed intermediary liability, though, you’d see prompt, immediate, radical changes across platforms. If you care about how copyright is experienced/how it orders the market, you should care a lot about intermediary liability.

1201’s antitrafficking provisions: is that secondary liability? One could argue it is. Gordon v. Nextel: court just assumed that all copyright rules, including secondary liability, also applied to 1202—what would that look like, though? Antibootlegging: not clear whether there’s secondary liability; what’s its scope? How can a provider distinguish a live musical performance from something that’s not covered by Chapter 11? Pre-1972 sound recordings are currently in litigation, and the cases have come out different ways. One ruling found them to fall within the DMCA safe harbor. Vimeo and Grooveshark cases found that they didn’t because they aren’t part of federal copyright law. If you think it’s hard to figure out who owns a sound recording, try figuring out when it was made.

Of course it would be nice if we could federalize them, which would fix the problem. But we need not wait that long.

(1) We shouldn’t have any more quasi copyright law. Could absorb bootlegging into basic features of Title 17. Do we really want islands in the body of copyright that aren’t of the body of copyright.

(2) Or we could try to complete them. Think about limitations, remedies, secondary liability.

(3) Make preemption more sensible so we know where the lines are drawn between TM/copyright/contract.

(4) 512 has resulted in a lot of people reframing non copyright claims as copyright claims in order to get the power of notice and takedown, and that’s creating a lot of tension. Consider whether 512 was for these edge cases

Barry: would contract be more complicated than copyright?

Lunney: yes, but entire destruction of copyright not likely. Antitrust may be most plausible; misuse may have some potential but hasn’t gotten very far.

Wendy Gordon: why little mention of moral rights? Doing things with a copy = proper domain of quasi-copyright. Distribution right blurs the line.

RT: not active, which has to do with distaste for touching §107 and if you don’t do that it’s pointless to talk about moral rights.

Q: we see more reform in patent because patent is formalized—int’l effort, formalities? Little int’l harmonization of copyright by comparison. Also wonders about effect on other areas of copyright that haven’t been hit by the digital revolution—design copyrights. Likes statutory damages—they’re effective for industrial designs.

Von Lohmann: disagrees w/premise: enormous int’l harmonization via WIPO, free trade, multilateral negotiations.

Schultz: patent reform crowd has its act together. Some is politics, but also hard work organizing people and getting them to speak out—programmers, entrepreneurs, small businesses. Trolling may be worse but also better publicized. We have stories to tell too.

Von Lohmann: whatever else you can say about design copyrights, they are copyrights and we know what the rules are for intermediaries etc.

Q: we were doing well under 1909 Act and a lot of quasi copyright comes from calls to harmonize—especially 1101/bootlegging, which may not even have fair use/duration. See calls to harmonize for things like database rights and other quasi-copyright rights. So we could start trusting our own judgment and not that of the EU.

RT: I don’t think that’s driving Congress. We ignore int’l law when we want to.

Von Lohmann: need more discussion of harmonization. But we have laws that result from int’l treaty obligations, like Ch. 11 and 12, and he isn’t as optimistic as Tushnet to say that we violate our treaty obligations when we feel like it. We need to talk about reopening these treaties.

Schultz: Australia, Israel, Canada doing work. There are allies if we want to push back.

RT: first, we need to accept implementations of the kind that we deem appropriate for ourselves.

Posted in cmi, contracts, copyright, drm, http://schemas.google.com/blogger/2008/kind#post, music, preemption, presentations, right of publicity, trademark | Leave a comment

Next Great Copyright Act Conference, libraries

Posted on April 4, 2014 by rtushnet

Reforms Affecting Schools, Libraries, Archives, and Museums

Moderator: Tom Hemnes, GTC Law Group LLP & Affiliates

Ruth Okediji, University of Minnesota Law School

Schools don’t play a central role in the last Copyright Act; the next shouldn’t take the same piecemeal/dismissive approach. Schools and students are changing, and digital tech is a big part of that. In the current Act, there are disconnected pieces—face to face teaching, TEACH Act (miserable failure), disability provisions, fair use. Often schools don’t have enough resources/knowledge to use all the pieces. Act takes a passive view of schools and static view of education, but schools are adapting and adopting new tech all the time, and we should be worried if they don’t.

The purpose of copyright: promoting learning. Other state preambles mentioned education.

Do we really want to regulate how students learn and how teachers teach in a rights-based approach? Ecosystem of license processes—no standard rates to fall back on. Educational institutions become overly cautious, and underfunded institutions can’t compete. Little incentive for publishers to negotiate with educational institutions. Need for translations; much of student body doesn’t speak English, but translation right is in the way. Teachers’ uncertainty interferes with access and use of digital content.

All this when skills in working with digital content are increasingly important as educational goals.

If fair use is just about transformation, that may not be helpful for schools; Congress does not want to look under the hood of that particular question. It’s not the lack of exceptions that is a problem, but we don’t have exceptions that work or serve our needs. Exceptions thicket: where does face to face teaching apply? where does the TEACH Act apply? Where does fair use apply? Our three tiered approach has no sense of how each kind of exception should interact.

Safe harbor solutions; open licensing solutions; but broader implications in need of solution. Richer schools may overpay for access and use. Underresourced: won’t access/use works. Teaching and learning should be frictionless for ordinary educational use; fair use should only be at the margins; Copyright Office guidelines may have a role to play; need a reform with no discrimination between schools—rich, poor, art, film, karate. Structure of Act could be improved: everything dealing with education, not just educational uses, should be one place. A blanket exception for schools and teachers as schools and teachers is her dream. Students are a different story. But if radio can be exempt, then schools can also be exempt.

Ivy Anderson, California Digital Library

Transformation of library collections in the digital age. Three overarching themes: urgency of digital imperative; need to operate at scale; and how well fair use has served libraries.

Largest libraries hold billions of works; many are still in copyright, and many rare volumes are orphans. Libraries spend $4-5 billion in content purchases/year. Over half of library users buy books by authors they first discovered in a library—the industry’s best advertisers. $50 billion that ARL members have spent on research material since 1923, equivalent amount in staff/operational costs—and they hold less than half of the 2.8 billion items held by libraries. $200 billion in stewardship investment at stake in the digital transition.

Can libraries self-regulate? They can and they do. Preservation planning. Sound recording preservation is just one instance of larger preservation challenge.

Three digital adjustments: preservation, access, and service reconfiguration.

Large scale digitization allows us to preemptively safeguard collections from manmade and natural disasters—Tulane lost 3 million items in the aftermath of Katrina. At UC these aren’t idle concerns; we’re seismically unstable. Concerns about collections are very real, so we embrace mass digitization—nearly four million volumes from our collections.

Supporting use of digital collections is no less an imperative as students and researchers seek more online access and researchers use data analysis. If it isn’t online, it doesn’t exist—not just a catchphrase. If we fail, much of the history of human endeavor will go into the dustbin.

In the US we’ve used fair use to move collections online. Four factors are remarkably trustworthy. Frontera collection at UCLA: largest repository of Mexican and Mexican-American vernacular performances. Rare and fragile recordings, gathered accessbility, allowing wide ranging research in Mexican/Mexican-American culture. But this is exactly the kind of content that we can’t collect today as it’s produced. Never received a takedown, only thanks (small excerpts available streaming online, full in the library). Other California collections: Calisphere—for use K-12 and for the public. Never received a takedown request from a copyright owner, one for privacy concerns.

Also great role of smaller public libraries/cultural heritage organizations in preservation. §108 study group considered whether only large libraries should be eligible, but small ones have unique collections and can stimulate civic activism. Law shouldn’t dictate who gets to do preservation; profession can develop appropriate preservation practices and law shouldn’t dictate those practices.

Archiving the web is increasingly common despite lack of clear exception. One archive has adopted §108 study group recommendations (clear labels, no public access, offer opt-out).

Collectively we hold more than 1 billion books and journals, and many are running out of space as circulation is declining. Work to reduce physical footprint; groups of libraries are sharing storage and consolidating collections. This goes hand in hand with digitization—books are more findable due to full text indexing of digitized copies. Obscurity isn’t in authors’ interests or readers’. HathiTrust is an important part of making this possible.

Rather than placing backward-looking tax on old books with no active commercial market, scarce library resources are better spent on new authors. Many of these copies are even properly thought of as replacement copies, given deaccessioning going on. New restriction on digital uses mimicking access restrictions on physical books would be a far better solution.

In the meantime, a HathiTrust project is helping open up works—Copyright Review Management System. Researches copyright status of books published between 1923 and 1967. 55% are not renewed. A few notable things: beyond that percentage, the project was only possible because of formalities and the existence of a registry; and only possible due to prior digitization, which made a distributed online workflow possible and couldn’t have been done across physical books over 100s of libraries. Involved hundreds of hours and still only touched 3% of the HathiTrust corpus. Metadata is available online. More cooperation with rightsholders there is desirable.

Also, copyright should prevail over contract, so we don’t have to keep fighting over licenses.

David Hansen, University of North Carolina Library

Many institutions and individuals responded to Copyright Office inquiry on orphan works. Report carefully collected the many perspectives. Problem: uncertainty even if there is no one who will actually claim the work; fear of large damages. Productive and beneficial uses forestalled, to no benefit of any author or rightsholder.

Digitization example: Thomas E. Watson collection—politician of late 19^th/early 20^th century. Typical special collection—books, speech drafts, letters, all thrown into one bucket (library collections may not follow copyright categories because they’re about a subject). Tracking down owners: over 8000 documents in the letter subset. After 80 hours of work, identified 3304 individual names as authors; of those, 2671 were presumably still in copyright. That investigation took 4 ½ months. They ultimately found 4 authors w/dependable contact info (you could have spotted these w/o investigation): William Randolph Hearst and 3 other prominent figures; all but Hearst granted permission, and Hearst didn’t respond—its contact info was “send a letter care of the San Francisco Chronicle.”

They felt comfortable relying on fair use once they’d done this level of investigation. But copyright isn’t always the primary obstacle. Watson wrote some spicier texts even in public; his personal correspondence could be even more exposed. Privacy is a question.

Other libraries are gaining comfort with fair use too. Orphan Works best practices in development to document what libraries and archives should do. Jennifer Urban’s great article on using fair use for orphan works. More comfort with relying on fair use since 2006; the fear of copyright liability has diminished at least for libraries and archives, and best practices initiative further helps them. There remain a category of uses where users aren’t as comfortable with fair use, and some remedy limitations along the lines of the Office’s proposal might be appropriate. But we always wonder whether legislation will make things worse rather than better.

Maureen Whalen, Getty Trust

Museums don’t spend as much as educators but we spend a lot on education. Many museums are free/donation supported.

In the trenches: orphan works exemption would be useful. We don’t believe any type of work should be excluded (e.g., photos or unpublished works). Safe harbor for nonprofits. We will do due diligence and record metadata and make rights info available to the public.

Need improvement in the public display right to allow us to display video art—the current rule allows only display of one image at a time. But video art doesn’t work like that. In exhibitions it’s treated like sculpture but in law it’s treated like film. Exhibit/display should be permitted despite public performance language—only limited to video art, similar to definitions in VARA, limited-edition works (not feature films). Would that harm incentives? No; museums would feel more comfortable collecting video art if they weren’t facing concerns about how they could display it/having to negotiate complicated contracts for each piece.

Q: as a practical matter, aren’t damages limited in orphan works cases? Attys taking cases wouldn’t think that damages would be high. That should be part of risk analysis.

Hansen: that’s a big factor; most library collections don’t face statutory damages as part of the equation because most works are unregistered and also libraries are pretty protected.

Mike Carroll: Push back on schools as institutions and more on educational uses writ large. What about the teacher exception/works for hire? Multibillion dollar system runs on the assumption that teachers can transfer copyright but maybe they can’t. Should the next act clarify?

Okediji: struggles with that; isn’t sure wants to rock that boat. But academic authors do need to think about how much we’re giving away and how we want to walk the talk. Legislative position might lead to unwanted consequences.

Peter Jaszi: Inspiring call to action, but difficulties in achievability. Just at the moment educators recognizes the need, the content community sees the opportunity for an educational market. There is value in interim solutions to the big problems Okediji describes. Code of Best Practices in Fair Use for Media Literacy Education as a small solution—makes differences in daily practice in that area by relaxing inherent conservatism of educational institutions. Another area of conservatism has been embrace of open textbooks as interim solution. What could we do in the near term to encourage this movement?

Okediji: Scale is an issue—if only 5-10 schools are involved, then other schools are nervous about being early adopters.

Posted in copyright, http://schemas.google.com/blogger/2008/kind#post, libraries | Leave a comment

The Next Great Copyright Act Conference, exceptions and limitations

Posted on April 4, 2014 by rtushnet

Exception & Limitation Reforms

Moderator: Andrew Gass, Latham & Watkins

Jessica Litman, University of Michigan Law School

Saying that the most important reason for copyright is to encourage readers etc. to experience works of authorship might suggest that readers etc. have interests the law should pay attention to, and that’s controversial, though it shouldn’t be. Owners have concluded that attention to readers would limit their rights. Thus we’ve heard “there are no users’ rights under copyright law” and “fair use is a privilege, not a right.” But cyberradicals didn’t invent the concept that the public—readers, listeners, viewers—has interests that are sometimes more important than those of authors; appears in almost every SCt case in the 20^th century and throughout the legislative history. Why is it suddenly scary?

Evolution of digital networks/markets has been very fast; looks like scary machine for disseminating millions of copies. Also, conviction not grounded in law or history that © owners ought to control all uses of their works. Some owners have gotten used to arguing that it ought to be true. Copyfetish: any appearance of any part of work anywhere is a copy that needs a license or excuse, whether or not anyone will ever see the copy, whether it’s incidental to lawful use, etc. This inspired Authors Guild to sue HathiTrust over copies that no one will ever see. Copyright owners have been losing lawsuits they wouldn’t have brought if they didn’t feel obliged to protect themselves from all unlicensed copies—devotion to the RAM copy. Litman thinks the 9^thCircuit just made a mistake, but if we cling to the idea that RAM copies are always actionable, then playing a DVD, reading an ebook, using an MP3 player are all actionable reproductions. That would be major incursion on interests of readers, listeners, etc. who have counted on freedom to use works they purchase or license.

Another fetish: describing HathiTrust decision as “Plessy v. Ferguson.” No one sees these copies; no one reads them; they are instead indexed and used to perform sophisticated analysis and attach metadata. They can be searched and users can find that a word is in a book, but can’t see a snippet of text. They can generate readable copies for print impaired readers, which is expressly permitted. The only objection is dignitary: that the library has a whole bunch of copies it didn’t license. Copyfetish means that when I say you have to consider the interests of readers, listeners and viewers, some in the room stop listening.

Legislation happens when lawyers for institutions get together and find a compromise they can live with. Until now, readers have not gotten a seat at the table, and even NGOs representing them are banished to the children’s table. Explains CONTU and section 108 study group. So we can predict short shrift for readers’ rights, which should worry all of us. Every one of us who writes, makes movies, etc. wants to convey our works to audiences so they can enjoy them, interact with them, learn from them. Copyright works because it encourages authors to create and audiences to read, listen to, etc. those works. Now for some the primary goal is to get paid, and allocation problems are real (see last panel), but that isn’t the problem of readers.

We should value imaginative readers as we value imaginative authors. If there is to be expansion, there should also be statutory readers’ rights. Pretty modest list (unless you’re a copyfetishist). Someone who lawfully owns or lawfully accesses a work should be entitled to make incidental uses: copies, adapt to her needs, entitled to extract & use any material not protected by copyright, even if doing so means making a copy or defeating tech protections; she should be able to time-shift; loan, sell, give away; encouraged to respond to it and share her response with others; should have expectation that intellectual privacy would be respected. These aren’t radical. These were completely lawful before wide deployment of networked digital technology. Links of networks don’t change essence of reading, and engagement with works is as crucial today as it was 40 years ago.

We see impulse to control/suppress reader creativity motivated by panic about online piracy, but creative reader reaction isn’t what causes piracy and usually redounds to © owner’s bottom line’s benefit. More importantly, it’s good for the creative system.

Proposals to subject reading, listening, watching to tight control will not discourage people from stealing access to works they’re unable to buy. Instead they’re more likely to discourage them from buying access to works they’d otherwise be eager to see. Even if © owners came up with a perfect tech, if controls interfered with reading, listening, and viewing, it would harm half of the system. When talk of reader’s rights discomfits authors it’s because the sense is that compensation is already shockingly inadequate, and reader’s rights might shave off more of the teeny tiny share of money that goes to creators from the sloshing pile of money. But that’s the fault of the architecture, and hamstringing readers won’t put any money in authors’ pockets. Congress has repeatedly tweaked © law to enhance owners’ control over works, and none of those tweaks put more money in authors’ pockets. If the point is to help authors, ratcheting up owner control yet again is unlikely to get the job done: instead restructure system to make getting money to authors a higher priority.

Aaron Perzanowski, Case Western Reserve School of Law

The idea that you own the stuff you buy from online retailers was deemed an extreme digital view. Here to defend that idea. If you accept property rights framework, must accept that creators are not the only ones with ownership interests at stake: users own the copies of books and albums they have. The Q is which rights deriving from ownership will survive transition to digital marketplace. Analog world drew line using exhaustion. Exhaustion is not an unfortunate loophole exploited by scofflaw competitors and rogue librarians. It’s a fundamental component of ©’s balance between copyright owners and consumers. Exhaustion allows copyright owner to set initial price. Rightsowner receives reasonable return for that particular copy.

Incentives for consumers: by making sure consumers have property rights in their purchases, encourages them to participate in the market in the first place. © asks consumers to pay supracompetitive prices for works available for free everywhere. How to convince them? Statutory damages are sticks; exhaustion is a carrot.

§109 makes digital first sale very hard now. ReDigi court is fixated on reproduction v. distribution; digital transfers demand reproduction, so §109 can’t make sense of digital first sale. Copy ownership is the trigger, but ownership isn’t defined in the Act and courts aren’t giving much clarity. 9^thCircuit: decides based on unilateral statements in license agreements; also sometimes 9^th Circuit does opposite and looks at economic realities of transaction.

What does digital exhaustion look like? (1) Detailed list of exceptions spelling out rights reserved for consumers and rights for copyright owners. Would not let 15 people read the “same” copy of a book as long as they weren’t all reading at once. (2) Look at what’s really going on. Should think about how transaction is characterized to consumer, not in 15,000 word terms of use but if they’re clicking on a button that says “buy.” Digital exhaustion is both workable and wise; real extremism would be elimination of consumer property rights.

Jane Ginsburg, Columbia Law School

Not a copyfetishist, but fair use has run amock. Two fateful and related developments in the doctrine of fair use: First, its expansion from its historical role of encouraging creation of new works by providing follow-on authors the breathing space to write commentaries, analyses, parodies, and so forth without being infringing derivative works. Played that role even before Folsom v. Marsh in the doctrine of fair abridgement. Sony consecrated fair use in new forms of dissemination/technological fair use, with complete copies of existing works without transforming those works into new works, for largely the same purpose of enjoying the work. Second: the transformation of “transformative” use, coined by Judge Leval. Transformed to transformative “purpose,” allowing complete copies of the same work, for supposedly different purpose but it seems that often means new business models. Transformative use has a stampeding effect, as Barton Beebe says, on the four factor analysis. If a court finds a use transformative, well, we never cared about factor two anyway. The third factor might be thought to mean “not the whole work” but we got over that in Sony. Factor four repeats factor one: a transformative use is likely to be in a transformative market and thus doesn’t negatively affect the market for the copyright owner’s work.

Wonderful and publicly beneficial use = must be fair use! She thinks that’s the bottom line in HathiTrust and Google Books, whether or not one thinks it’s a good outcome.

We get there because fair use is an on/off switch, all or nothing. Proposes a middle route. (I remember when it was copyright restrictionists who wanted a fair use payant (like the domaine public payant), to allow more uses to be free of copyright owners’ veto power. It’s a sign of the change that Ginsburg is talking about that it’s now a rearguard proposal by expansionists.) Some, like libraries, should get, if not a free pass, a heavily discounted rate; proper source for that subsidy might be the author/copyright owner. With market failure where use would otherwise be foregone there could be fair use, but it’s not the same normative justification as for new works or for subsidization; logically, if a market develops it should no longer be a free pass.

Even with a totally functioning license market, we might still think that some people should be subsidized. She doesn’t agree w/the case, but it’s an example: Georgia State litigation over e-reserves. Georgia State court made up a 10% fair use quantum. Above that, judge made up a rule: license it or lose it. If they offered a reasonable license, no fair use; if not, fair use. 10% off the top is the straight subsidy and license it or lose it was the rest—she wants to put that in broader context.

US is outlier in having capacious fair use that doesn’t compensate copyright owners at all for redistributive uses (she is not proposing to reform new creative uses cases—those have problems but they are problems we’ve had forever). By and large, the rest of the world, with respect to the social subsidy uses, has: license or lose solutions; license or gov’t compulsory license; extended collective licensing; new French law on unavailable books supposed to foster mass digitization. If a book published before 2000 is not in commerce, and if the publisher doesn’t object, a gov’t society administers licenses for digitization and distribution, society composed half of authors and half of publishers; half the money goes to authors. Countries with intermediate solutions pay the authors for the uses. Recognizes that a number of differences b/t US and EU exist, including antitrust, scope of collecting societies, and our all-purpose fair use doctrine, but still instructive.

What is to be done? We have compulsory licenses and bargaining in their shadow. Should we have more? Reading §119 is a good answer to that question. But license it or lose it has a certain appeal. The problem is that it has to be convenient and reasonable according to Georgia State—who is to decide? Will every court be a rate court? So she’s working through a proposal for a form of “last best offer” arbitration before CRB. Owning parties and using parties, who might be represented by bargaining agent, would come in, each with last best offer, and CRB then picks one. There are huge details to be worked out. If we did something like this it should have a five-year sunset, because compulsory license is a problem because they just stick around. Market licensing mechanisms should be encouraged, and sunset would encourage that.

Alfred Yen; Boston College Law School

The problem of costless overreaching. Copyright concepts are ambiguous. One can also be big about rights one claims; this goes both ways (people post things they don’t own); people send invalid takedowns or claim rights they don’t have. Amendments to the Copyright Act over past decades have been explicitly designed to fight the aggressive copyright user.

As casebook author, my publisher wants everything cleared, including exhibits in federal court decisions. We dutifully cleared everything: including with Rogers in Koons v. Rogers. Once this happens, we have copyright creep; the practice becomes more audacious about what ought to be licensed—Jim Gibson, Jason Mazzone, etc. have documented this. We should recognize that people who aren’t infringing are exercising free speech and we shouldn’t accept interference with that as a fait accompli.

Two ideas: Someone who is trying to silence a critic v. expedient overreachers who do it because it’s costless. Attorneys’ fees provisions aren’t enough because so few people ever fight back. There should be costs. Suit for bad faith. Bad faith insurance claims have caused insurers to be a little less greedy. Like §512(f) but broader. Should be able to elect treble damages, statutory damages, or punitive damages. Should be enforceable by declaratory relief. To establish bad faith, the would-be defendant has to explain to the © why the claim is bogus. The owner can choose to insist or withdraw the claim. Someone who declines to respect an assertion of fair use could potentially face a bad faith claim.

Would also like to embellish effect of a putback notice: create 6 month statute of limitations. If you don’t file a suit against a putback, you should very quickly lose your right to sue. You know about the infringement; could put up or shut up.

Gass: for Perzanowski: if users value ownership, why won’t a market emerge?

Perzanowski: Apple and Amazon seem to be looking at that; this might be a reasonable compromise in some respects, but there are still reasons to worry. Licensed resale markets within particular ecosystems lead to worries about platform lock-in. Also doesn’t take care of transaction cost/information cost problem. Uniformity emerging from legal process has value.

Litman: waiting for licensed market has big problems, losses, while waiting for markets to arise. Barriers are less about tech and more about business.

Ginsburg: unless you think we need an entire world of ratesetting because we think that authors/owners ought to make only so much (the content of the so much is unclear), she thinks we should leave it to the market. Her proposal is a stopgap for when the market hasn’t formed (but we think it should).

Q: what about we do about people who want to resell but keep their copies?

Perzanowski: we’ve never asked people to prove they haven’t made copies before they resell their copy at a used bookstore (or before they resell their used CDs). So this isn’t new, but there are possible solutions, with technological measures.

Q: prior notice of intended fair use sounds reasonable when you’re doing it, but I worry about a trolling problem.

Yen: like lawyers run around setting up insurance companies for bad faith claims? Although I’m not entirely enamored of insurance practice, on the whole it’s a good thing. When people say they’ll be trolled, it’s easy to protect yourself: if it’s a reasonable use proposed, don’t object.

Ginsburg: a way of trying to compensate artists is the resale right; that’s for the physical object, but it’s a similar theory that the artist ought to get a percentage of resale, though not any continuing control. This is the subject of a directive in the EU. It was in California, but now preempted. Doesn’t think there’s much prospect of it at the federal level but the impetus was the feeling that artists weren’t enjoying the increased value of their works, while copyright gave rewards to other kinds of authors who got royalties. Don’t confuse author’s right with copyright. Based on the physical object, and copyright isn’t.

Peter Jaszi: another form of costless overreach: over the top C&D letters. May be based on nominally plausible claim but asserts statistically impossible damages claims. Any remedy for that?

Yen: you need some savviness on the part of the recipient, which is why I want to educate people.

Q: §108 study group—recommended preservation exception for qualifying libraries, because there should be speed bumps/obligations to protect and manage content, even though digitization is wonderful. Thoughts about responsibilities for digitizing organizations?

Litman: the preservation problems posed by digital media are very serious, b/c digital media degrade much faster than books. Seems a good thing for libraries and archives to be more aggressive in preservation than a narrow reading of §108 would support. The difficulties of updating §108 has forced many to rely on fair use to carry out their mission of making sure copies endure.

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The Next Great Copyright Act Conference, music

Posted on April 3, 2014 by rtushnet

Music Industry Specific Reforms

Moderator: Lydia Loren, Lewis & Clark Law School

Rube Goldberg-like design of rules, antitrust degrees, licenses, etc.: reform is hardest to contemplate, but most desperately needed. So we need some ideas.

Gary Greenstein, Wilson Sonsini Goodrich & Rosati

What do music people want? Artists complain they aren’t collecting enough; not getting enough from labels. Labels are concerned with illegal alternatives, fair rates. Publishers/songwriters: losing mechanical royalties, as physical and digital downloads peak; too little money vis a vis the record labels; reform of the consent decrees. Services: too complicated/takes too long to get a license; if you get it wrong damages can be crushing. Proposal for reform: creation of a unitary music license. Digital services use music; they don’t care about musical work/sound recording; public performance/reproduction/communication to the public. They want to build a product. If you create a unitary license you could mandate a split to individual creators, or better yet copyright owners decide how to allocate the pool of money—cable and satellite compulsory licenses, where money is paid in and then different interest groups decide about allocation. Universal Publishing and Universal Music could decide their own split, rather than fighting about “parity” (which doesn’t make sense based on the costs and risks in sound recordings); services wouldn’t have to get in between in that fight. Make it easier to reach the consumer, who’s often forgotten.

Other alternatives: reform §115’s mechanical license—for distribution to the public primarily for personal use. You have to give advance notice to the copyright owner, but you may not know who they are. Unitary license could solve that problem. Another: expand §114 statutory license to include interactive services like Spotify, Rhapsody. 3 primary labels control vast majority of catalog that gets paid; there are MFN provisions. The economics of those deals are widely known: percentage of revenue per subscriber. High degree of certainty in industry now: make it statutory, so that industries can predict and won’t get socked with higher fees that won’t get passed to artists anyway. Ephemeral statutory license: conditions on the license include destroying server copies every 6 months. If there is a worse provision in the Copyright Act he doesn’t know. It’s wasteful, environmentally destructive, and nobody is actually complying with it—could mean willful infringement.

SoundExchange is now collecting 100s of millions in royalties, potentially up to $1 billion. No gov’t oversight, self-perpetuating board. There should be mandatory transparency on how they handle money and resolve disputes. There should be reports to Congress and greater disclosures. They’re still using an outdated annual report. With all this money and people complaining it’s not going to creators, you want to have that information.

Zahavah Levine, Google Inc.

More incremental short-term suggestions. Right now there’s no transparency about who owns what; hard to license 100s of millions of works. Agents that represent groups can’t tell us accurately or reliably what songs they represent which makes it hard to value their licenses. If you can’t find the owner, the compulsory license is broken. Untenable choice: don’t include works, which isn’t good for users and no one gets paid; or include the work with best intentions and try to pay, but nonetheless be exposed to crushing liability. Reduce fragmentation of licensing landscape. Combining all the different rights into one would have fantastic effect of making her job obsolete, but probably unlikely any time soon. But incremental steps to break down fragmentation: complexity is not so much on the sound recording side, where labels have pretty much all the rights whether it’s streaming or downloads.

Publishing is much more complex for historical reasons. Reproduction, distribution, and synchronization are all different. In the old world, it was not as big a problem because it was more either/or. Europe has done an agency that manages both performance and reproduction rights together—one-stop shopping for musical works. We could do the same. Right now public performance is by consent decree, and reproduction is done by ratesetting at CRB; we would need to figure out reasonable nondiscriminatory terms, and comprehensive public database for transparency/valuation. Plus we’d need some protection/safe harbor for a service that does use the public system and escrowing funds for works that weren’t identifiable.

Steve Marks, RIAA

Would like to reduce friction/inefficiencies for everyone in the market, to leave more money left over for everyone. We agree that music publishing is something to focus on, because no one is happy: songwriters, publishing companies, record labels, and services. Everyone thinks it’s broken because it was built over years for other marketplaces. Inefficient, complicated, balkanized. Because of the way §115 works now, you could need up to 215 licenses for an album—you have to license work by work, and you have to license for every use; if you have a music video that’s not covered by the album license; then there’s many owners for each works, so you might need license from each of 10 people who own a share, which is very common in certain genres. Arduous process just to get it out the door. Now multiply by services looking for millions of compositions.

Brian Zisk, Future of Music Coalition

Interests of authors are intertwined with interests of public. Immediate effect is fair return, but ultimate goal is to stimulate creativity for the general public good. In the vast majority of major label contracts: royalties are reduced for broken goods, because the album might break, still being taken on digital goods; new media deductions are still being taken on CDs. If a digital download lacks characteristics of sale, such as resale right, it should be treated as license, so artists are compensated at the higher license rate. Controlled composition clauses: labels insist that songwriters are paid 75% of minimum statutory right, and cap on number of tracks per CD. It’s as if industry has agreed to pay 75% of minimum wage, and also cap despite making you work more hours than we pay for. These are silly provisions. Money retrieved through litigation should come to the artists. This practice carried over from record clubs (big advance, small payment to artists).

Other incentives that labels and copyright aggregators should have: fiduciary duty to account properly to artists. The royalty statements are unintelligible, lack sufficient info (e.g. “sample”). Royalty statements should be signed under penalty of perjury, which is what we ask of digital services. When there’s a negotiation to put out an album, it shouldn’t be forced on the artist to agree that it is a work for hire, where the album was created before the contract was entered into. Reversion/termination of transfer should be less complex, with clear right to recapture instructions. Bad faith objections to termination should be sanctioned. Artists are filing, but know they’re facing a fight from a well financed opponent. Better tracking of chain of title, as with Bitcoin; even the labels agree.

Appropriate fees: 90% to artist, 10% to service. Should have terrestrial broadcast right too, with same split.

Q: including pre-1972 sound recordings in compulsory licenses: safe harbors too?

Marks: there are complicated questions about federalization and we’re trying to figure out how to do that. We’re in favor of federalizing under the right conditions if term and ownership are dealt with.

Levine: we need parity in rates between internet and terrestrial stations. Right now terrestrial stations pay nothing to labels. Purely historical/sound recording right was created when digital was in its infancy. Rates are crazy out of whack; Pandora has a discount and is paying 55% of revenues; 5-15% for cable/satellite; 0 for radio. We need parity for rates, no discrimination against any medium in delivering music services to users. Rate should foster growth of radio services.

Marks: everyone here agrees that terrestrial radio should be paying (interruption: Levine says she wants parity, which could be no one paying; Zisk says he can’t agree; some discussion about payola). If broadcasters would agree to free market rate for our exclusive rights we’d be all for it. It’s not correct to say that satellite and cable as categories pay under a different rate standard. (I think we can see how even with some people not at the table, such as terrestrial radio, this is not going to be easy.) Some services pay other rates; we’re talking about 1000s of services. Every service under the compulsory license except for 3 companies pays willing buyer/willing seller. This discount for 3 companies should not be the model, but rather the 2000 services that pay willing buyer/willing seller, if we’re going to restrict the exclusive rights of the copyright owner. Get rid of existing exemption.

Levine: so you’re saying everyone should pay 55% (or more).

Marks: rates have been going down as they monetize.

Greenstein: grandfathering was included when record industry first got a right that was intended to be limited. Five services in two industries: subscription services and satellite radio.

Marks: the categories specifically state the companies. So it doesn’t allow new entrance.

Greenstein: so rate was established in 2002 by biggest players like AOL and Microsoft. Small Webcaster Settlement Act was the result; Congress granted authority to SoundExchange to enter into alternative arrangements. Second webcaster proceeding in 2007; Greenstein and Marks were on the same side then against Levine, but what happened was a rate standard and then a Congressional intervention with two pieces of legislation. You’ve got the largest, most efficient radio service—Pandora—is a public company that reports content acquisition fees. They’ve recently gone below 50%, but until Q3 of last year it was over, and at times in the 60% range. And they’re the most efficient in monetizing, but they’re paying 46% for the sound recordings; they’re paying rates negotiated with SoundExchange under an extraordinary proceeding; and they’re excluded from being used as a comparator in the CRB proceedings. Their rate would equate to roughly half of the supposed willing buyer willing seller rate, which means that 92% would go to labels. Now you see the problem of “parity” with the publishers. 184% of revenues to rightsowners isn’t a sustainable business model.

When we talk about efficiency, the record labels want publishers to be subject to regime where they give up all their rights and the labels are the gatekeepers. If you’ve ever seen a record label agreement, that’s not frictionless, and that’s not an agreement in which artists get paid, not even pursuant to their contracts. Label licenses iTunes, but doesn’t pay as if it’s licensed. All of a sudden it’s a sale with a low royalty rate. The structure of the industry is broken. There’s 100s of millions getting paid in, but not going out; that’s why people attack Pandora, Spotify, and YT; it’s not that they’re unwilling to pay, but they’re being held up and there’s too much friction.

Marks: Every industry has some contractual disputes. Argument by anecdote.

Zisk: It’s an anecdote about a standard contract clause.

Marks: record labels pay more than 25% of revenues as royalties to artists. (Zisk disagrees.) Costs for artist royalties have risen by almost 40% over past ten years. Myth of advances not getting paid is simply not true. Better for us to focus on something like streaming. Clearly a transition to streaming services. Consumers are now viewing them as attractive. Artists withholding them repertoire makes services less attractive, and consumers go elsewhere for free; YT pays much less than Spotify. Need to come together to offer consumers the services they want.

Levine: music industry alone has gotten more than $1 billion from YT in past few years.

Q from Chris Sprigman: deals with distributors are most effective antipiracy campaigns. Why wouldn’t your strategy be growth now, extract later.

Marks: not saying they’re extracting now.

Zisk: equity in Spotify pays off later. When the labels cash out, the money isn’t going to go to artists. (Marks says don’t assume that; Zisk says he will because it’s not in the contract.) Beatz and Spotify are creatures of the labels.

Marks: we absolutely want to grow the market. But they aren’t scaled yet. 6 million subscribers in the US; Netflix has over 40 million. Once those services scale, and hopefully that’s quick, through distribution and bundling deals, debates over fractions of pennies should fall by the wayside.

Greenstein: If you’re paying out 70% of revenue because of per-subscriber minimums, marketing is harder to fund. A $5 package bundled with every cellphone would make you more money, but the labels still want to hold on to the revenue stream from CDs. Industry is grabbing for digital and afraid to let go of physical. Crushing advances prevent investment; don’t be surprised if more services fail. Yahoo! and AOL left the streaming business.

Marks: but they’ve got a lot of funding. (Levine: Have they turned a profit?) Well, it takes time to earn a profit.

Peter Menell: the irony here is that the most important potential marketer isn’t here. Artists aren’t plugging these services. They all agree that these services aren’t really designed for them, or to encourage the next generation of artists. Consumers join the services for convenience. Marketing idea: could we come up with deals like Eminem’s 50/50 split of digital? The costs of delivery are so minimal; labels wouldn’t have to solve the marketing problem because artists would tell consumers to join. Maybe you take a little less now, but there’ll be a lot more later if everyone joins.

Marks: a handful of artists don’t support the services; many others do support the services and disagree.

Levine: we agree. There are vocal holdouts, but that’s largely from lack of scale.

Marks: artist marketing would be great, though that hasn’t been part of their day to day experience.

Zisk: artists promote Bandcamp because they believe they’ll get paid, and they do get paid.

Marks: bands didn’t do commercials for their albums back in the day. (Hunh?) Would love for that to happen, but would be fairly remarkable change.

Posted in copyright, http://schemas.google.com/blogger/2008/kind#post, music | Leave a comment

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Rebecca Tushnet

Transformative work of the day?

Reading list: judging similarity in copyright

Reading list: false advertising and prior restraint

Next Great Copyright Act Conference, reform

Next Great Copyright Act Conference, remedies

Next Great Copyright Act Conference: Larry Lessig

Next Great Copyright Act Conference, quasi-copyright

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The Next Great Copyright Act Conference, exceptions and limitations

The Next Great Copyright Act Conference, music

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