Sunday, December 11, 2005

BMG v. Cecilia Gonzalez

On Friday, a panel of the Seventh Circuit issued a very important opinion, per Judge Easterbrook, in BMG Music et al v. Cecilia Gonzalez. Here is a link to the oral argument.The case involved a consumer who, using KaZaA, downloaded more than 1,370 songs over the course of a few weeks after getting high-speed Internet access. Thirty of these songs formed the basis for a successful summary judgment motion (although Judge Easterbrook ignored that limitation and held that "all of the 1,000+ of her downloads violated the statute").

The end result was a finding of infringement and an award of $22,500 in statutory damages, calculated at the minimum of $750 per work. On this award, the court of appeals agreed with the district court that there is no right to a jury under Feltner provided only minimum damages are sought; that makes sense: there is no discretion or fact finding involved (once the court, as happened here, rejects the reduction down to $200 permitted by Section 504(c)(2)).

The opinion is significant in many respects. First, it established primary liability for those who download (at least under similar facts), an essential underpinning to all the previous (and presumably future) third party liability suits. The opinion then discusses what constitutes primary liability.

Defendant's argument was that she was just previewing songs, "sampling music to determine what she liked enough to buy at retail," and therefore her use was a fair use. She did not, however, erase the 30 songs in question and had not bought an authorized copy of them. On this basis and the fact that the works involved in Sony were transmitted as part of a free, over-the-air broadcast, the court of appeals rejected any analogy to Sony timeshifting. No attempt was made in the opinion to determine how long one might keep a copy for preview, although arguably the answer is that one cannot make such a copy at all, which may explain why no attempt was made.

The court then went on to discuss Internet radio and iTunes, noting that had Gonzales copied from a licensed stream, copyright owners would have received a royalty from the broadcasters. This part of the opinion is ambiguous: does it suggest that had she copied the same 30 songs and kept them as she did, that would have been OK because the stream was licensed, or is it further evdience of harm to the market? The industry's brief is not ambiguous: there is no fair use preview or any fair use for home copying, at least using a system like KaZaA.

The court also referred to "teasers" - 30 second samples on sites like amazon.com, which it said was licensed. These may be licensed, but is that determinative of the issue? If a book publisher licenses excerpts for abstracts, does that alone kill fair use? What if one did make a "preview" copy from such a site? Would that be OK because the copyright owner was getting paid, or would it be not OK because the copyright owner was getting paid?

The court's opinion also glides over a number of nuances in Aimster and in one passage misstates UMG Recordings, Inc. v. MP3.com, 92 F. Supp.2d 349 (S.D.N.Y. 2000), saying that that opinion held "downloads are not fair use even if the downloader already owns one purchased copy." MP3.com didn't involve downloading at all: MP3.com bought lawfully made CDs, copied them on to its servers and through a verification process permitted consumers who had also purchased lawfully made copies to space-shift stream the CD. Judge Posner has criticized Mp3.com, and had Judge Easterbrook accurately understood the facts, one wonders whether, under some of the language in the BMG opinion, he would have come out the other way too, at least with respect to the consumer. (Recall MP3.com was a suit against MP3.com, not consumers, and over the server copy).

In any event, the BMG opinion is a huge win for the industry.

13 comments:

Joe Gratz said...

Any thoughts on whether it was proper to reject the "innocent infringer" reduction in statutory damages on a grant of summary judgment? It's possible Gonzales admitted access to properly noticed phonorecords, but that would ordinarily be a material, disputed quesiton of fact, as I argue in my post on the opinion.

It would seem the surest way to avoid a trial would be for the copyright holder to stipulate to $200 per infringement, though that has an obvious $550 downside.

William Patry said...

Joe:

It is, of course, basic that innocent intent, like willfulness is usually an echt question of fact, but like any fact question it can, in appropriate circumstances be decided on summary judgment, provided inferences are drawn against the moving party. But here, we have a statutory provision that operates to say, effectively, "No innocent infringement if there is a notice on the work."

Your point is a more refined one, based on this language in Section 402(d):

"Evidentiary Weight of Notice. — If a notice of copyright in the form and position specified by this section appears on the published phonorecord or phonorecords to which a defendant in a copyright infringement suit had access, then no weight shall be given to such a defendant's interposition of a defense based on innocent infringement in mitigation of actual or statutory damages, except as provided in the last sentence of section 504(c)(2)."

Your question raises the point of whether defendant's copy had the notice on it or if she otherwise had access to a copy that did. It is not enough that the copyright owner affixed notice; rather, the copy defendant obtained needed to have a notice on it.

Defendant's brief principally attacks the issue from the jury standpoint. The copyright owners' brief states that the defense was waived by not raising it in the answer, but adds, without citation to the record that it was "undisputed" her copy did have the notice on it.

Anonymous said...

amazon.com has thousands of full songs (not just 30 sec samples) available for download -- for promotional purposes. Do the copyright owners get paid for those?

The new Fiona Apple album was promoted by numerous weblogs and websites offering downloads of the bootleg versions of the songs from her latest CD (in an earlier mix -- not exactly what was put on the final CD). Presumably the company (Sony is her label) had full knowledge of what was going on. It was a big deal in music community. Customer reviews on amazon.com routinely are comparing the leaked internet version to the final CD release.

And many record companies send sample songs to MP3 weblogs, which offer downloads of the songs, to promote artists, new and old. I'm sure no one is getting paid for those downloads.

This is very confusing. The music industry is promoting downloads on one hand as a promotional tool, even "inducing" copyright infringement by offering tracks to MP3 blogs -- where the whole point is distribution -- and then on the other hand saying that "downloading is stealing."

Examples of mp3 blogs www.fluxblog.org (which this very day is featuring a Fiona Apple track), www.saidthegrammophone.com , www.stereogum.com (offering tracks from hit band Franz Ferdinand today), etc. The music industry is not unaware of this activity. These sites are distributing copyrighted material out the proverbial wazoo. The artists are not paid for downloads through these sites. Why aren't they having the pants sued off them?

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Joe Gratz writes in his blog: "Under the circumstances, a jury should have been be asked to decide whether Gonzales had any reason to believe her acts were infringing. Maybe she did — knowing generally that unauthorized copying is usually infringement and that practically all sound recordings are copyrighted — or maybe she didn’t."

I thought "unauthorized copying" was the whole point of AHRA, and the practice is widespread when it comes to copying actual CDs for noncommercial purposes. Although AHRA does not cover internet downloading, ordinary people could have been conditioned, just by normal copying practices in our society today, to believe that noncommercial copying is fair use.

Last but not least, is this suit about downloading or about making the songs available for distribution? News stories are reporting it both ways. As usual.

Joe Gratz said...

Anonymous:

Many MP3 blogs actually get permision from the artists, as I was somewhat surprised to find out from some MP3 bloggers at this year's WebZine conference. It would be difficult to come up with a hypo in which a copyright holder is liable for inducing the infringement of his own work, since the inducement would really be a license.

As to your comments on my post:

Unauthorized copying is the whole point of the AHRA, but, as Professor Patry has (ruefully?) pointed out, it is not a comprehensive home copying privilege. Copying a CD to a normal CD-R using a computer is not an activity privileged under the AHRA, and neither is downloading or uploading MP3s. There are no "digital audio recording media" or "digital audio recording devices" involved in either activity, as those terms are defined by the statute. (Copying involving a computer and a special "Music" CD-R is probably privileged, but Fred von Lohmann and I are the only people I know who actually take advantage of that protection.)

Your point about conditioning, though, is a good one. A reasonable person told that copying a song to your iPod is not infringement or copying a cassette tape is not infringement could reasonably infer that all non-commercial copying is not infringement. But "no reason to believe" is a pretty high hurdle, and the RIAA's public relations campaigns could be evidence that there is always reason to believe that P2P swapping of copyrighted content is infringement.

William Patry said...

Anonymous:

From reading the briefs, I think the suit is only about downloading. I don't think there was a claim of further distribution on Ms. Gonzales's part.

Jim Dickinson said...

Nice, you've got to love the part about no jury trial. We wouldn't want a group of her peers to find her innocent because they don't see anything wrong with it or have them use the nice jury nullification tool, now would we?

I'd like to know how many copies that it is OK to distribute or to acquire from another person? None? One? Also, I'd like to know who makes that rule?

For instance, I've got Metallica's Garage Inc. CD and in the liner notes they discuss the history of the band where Lars (the drummer) would acquire records from unknown bands in Europe from importers located in the LA area. The band said this was how they developed their style -- by listening to and learning from these artists. Lars was supposed to have one incredible collection. Wanna bet that he gave (or allowed to be made) copies of some of these records to his bandmates? These guys didn't learn in a vacuum and the recording industry is trying to put all recordings back into a vacuum. And for how many years? When my children get old they will be able to freely trade The Beatles. Yippee. Nothing like a one-sided agreement with the populous. We let you have copyright and you get to keep it for our lifetime and most of our children's lifetime. The discrepancy between this and patents is ludicrous. You are financially better off writing the next Harry Potter than you are developing a frictionless surface. Society loses though because of the disparity.

I see at some point in the near future (10-15 years) a scenario where each person has their own DRM code (DRM 2.0, the new, expanded version) allowing them to format shift to any device they own that adheres to the DRM 2.0 scheme and their code (and only their code). This shift may be lossy or it may be bit-for-bit. No matter though, as they control, or will control, all.

I'll defer to Mr. Patry's brilliance on this one, but I don't think copyright was ever meant to control distribution into one's home. Also I'm curious, does copyright trump the Fourth Amendment?

Oh, one last thing. It is much tougher and costlier for the government to protect copyright interests today. Why not increase the fees for copyright holders and if these fees aren't paid, then the copyright moves into a CC style for some predetermined number of years?

I'm way off topic, so I'll quit here.

Jim

Anonymous said...

grantz: "Copying a CD to a normal CD-R using a computer is not an activity privileged under the AHRA, and neither is downloading or uploading MP3s."

No argument about downloading/uploading MP3s. However,
if the Ninth Circuit ruled that making an MP3 copy of your CD (which is not "privileged" either under AHRA) is OK, whatever line of reasoning they used to justify that form of noncommerical copying would also apply to CD-R.

Or have I erred? Sorry, I'm not a lawyer.

William Patry said...

I think that downloading over 1,300 songs in a few weeks went quite a bit beyond previewing or anything one might contemplate by fair use, but in 1992, in Section 1008, Congress (or at least the House) did believe it was permitting personal use copying, including making "extra copies" for friends.

Section 1008 is though tied to defined terms and from a policy standpoint maybe to royalties paid on copying media and machine: without such payments, as with Internet downloading where no payment is made for the media or machines, Section 1008 is inapplicable.

But this just bucks the question back to fair use and policy issues, issues that won't go away until there is, legislatively, some finality.

selfish crab said...

Mr. Patry,

Just to get a laymen's sense of what the news is.. .

Would it be correct to say that this case establishes primary liability (whatever that is) against people who download music, whereas in the past, the litigation against online music sharers was against people who made their music available for download ("uploaders")?

So now downloaders are in danger too, whereas they were not prior?

William Patry said...

The case only established liability for this downloader from the service in question, although there is some pretty broad langauge about some legal defenses (like previewing).

All the prior cases like Napster, Aimster and Grokster were predicated on primary liability by the downloader from those type services, so this opinion doesn't break new ground, but just does lay that liability out in forceful terms.

Given the language in the opinion about radio, I would think open for debate is copying from other, particularly authorized services.

Anonymous said...

If Ms. Gonzalez were guilty of only downloading songs for personal use, then why is she liable for hundreds of dollars per song? If I were to photocopy a library book, would I be liable for that much more than the cost of the book?

It seems more likely to me, given the default installation of most file-sharing programs, that the songs she downloaded were also available for distribution. That would certainly expose her to much greater liability than simply obtaining an unlicensed song, right?

Mr. Pink said...

I've stumbled into a conversation thats way over my head but I find this fascinating just the same.

The shocking part about this decision to me is not that Gonzalez was found liable but the punishment just doesn't fit the crime. I'm a librarian so I know a little about copyright and from appearances the songs she downloaded were for her own personal use. My question is how can 1 downloaded song for personal use equate to $750 of liability when itunes allows downloads for 99 cents?

I'm sure BMG's intent is to make downloaders aware that there are consequences for downloaders as well as those who offer for distribution but other than shock value I just don't see this. How could Gonzalez reasonably expected to pay $22,000 for 30 songs. Of course I expect it will be appealed and settled for far less, no?

Anonymous said...

The point of the discussion is off base. Everyone is entitled to their day in court. Read the 7th Ammendment. If you cannot see this as the fundamental issue, please move to China!