Tomorrow at 4 pm, the House IP subcommittee will mark-up, H.R. 5439 a bill introduced yesterday by chair Lamar Smith to deal with orphan works, that is, works whose copyright owner is MIA. The mark-up will be webcast (follow this link to the subcommittee).
In January, the Copyright Office issued its report on the issue, making a number of recommendations (see earlier posting). H.R. 5439 adopts the general thrust of the recommendations. The bill proposes a new Section 514, effective for uses that commence on or after June 1, 2008. I don't know what the rationale is for such a two year sunrise provision, but in my opinion it is preferable to the previous recommendation of a ten year sunset. A report is required by the Register no later than December 12, 2014 on the implementation of the act as well as any recommended changes. The Register is also directed to conduct an inquiry on the remedies for the "kleine munze" issue, that is, small copyright claims.
Simplifying things, Section 514(a) of the bill proposes to place limits on remedies where the court finds that the infringer, before beginning the unauthorized use, engaged in a good faith, reasonably diligent but unsuccessful search to locate the copyright owner, and after using the work, and provided a reasonable attribution (one might, for example, not know the author's name). The Copyright Office will assist in maintaining records for search efforts.
Section 514(b) is where the rubber hits the road. Section 514(b)(1) deals with monetary remedies. Section 514(b)(1)(A) limits recovery to reasonable compensation. Section 514(b)(1)(B) contains exceptions to this. 514(b)(1)(B)(i) states that not even reasonable compensation can be awarded if the infringement is made without any purpose of direct or indirect commercial advantage and primarily for a charitable, religious, scholarly, or educational purpose, so long as the infringer stops after receiving notice from the formerly submarined owner. While an exemption from payment is helpful, what happens if the infringement doesn't stop? Is the copyright owner entitled, for monetary relief, only to reasonable compensation or full remedies? I assume the former.
Two small drafting points on this subparagraph: the qualification that the exception does not apply if the court finds the infringer earned proceeds directly attributable to the infringement seems unnecessary since by definition the exception only applies on its face to cases where there is no purpose of direct or indirect commercial advantage. And if the infringer can't have gained any proceeds from the infringement, it may prove that the exception covers only a very narrow class of uses. The other drafting point is in 514(b)(1)(B)(ii), which comes at the very end of this paragraph and states that if the infringer fails to negotiate in good faith regarding the amount of reasonable compensation, the court can award full costs. Since this provision has no relevance to Section 514(b)(1)(B) - since uses in that section are uncompensated- it might be better placed as a proviso to Section 514(b)(1)(A).
Section 514(b)(2) deals with injunctive relief. This provision confuses me a bit. First, I don't quite grasp how it would work with reasonable compensation: other than reasonable compensation for past uses and an injunction against future uses, the two remedies can't work in tandem, and working in tandem in that manner undercuts a principal benefit of the proposal: permitting those who in good faith, after a reasonable effort, to invest in a project to then go ahead with the project (and recall that the infringer has to conduct the search before even beginning to use the work). It is true that the bill refers to the court taking into account the infringer's reliance on having performed the search, but I can't imagine the weight given to that would be great, much less determinative: after all preliminary injunctive relief is handed out as freely as swag at celebrity events, and in the Ninth Circuit the copyright owner is all but if not irrebuttably entitled to preliminary relief. I hasten to add that Section 514(b)(2)(B), dealing with transformative uses, precludes the court's ability to issue an injunction upon payment of a reasonable royalty and attribution, and it may be that such uses are the most worthy.
Hats off to the subcommittee for undertaking such a good government bill and for such a transparent process.