Friday, November 30, 2007

Yes Virginia, there is a 411(a)

My disagreements with Nimmer's view on 17 USC 411(a)'s requirement that a "work of the United States" have been actually registered (or refused registration) before suit can be instituted has bored too many readers to repeat. This week, a friend from California emailed me that the issue had come up at a hearing and the judge remarked from the bench: "Mr.
Patry is not alone in finding Mr. Nimmer to be wrong on this point." Those are the things that can make my week, a sign of how utterly pathetic my so-called scholarly life is.

Yesterday, the Second Circuit gave some teeth to the debate in a decision that will have very far-ranging consequences beyond the narrow nebbishy "no ticket-no get into court" issue, and that is settlement agreements. After the Supreme Court's Tasini opinion, the parties engaged in protracted negotiations, and finally reached a settlement agreement that involved class certification; the original suit was not a class action, but was instead brought by named individual freelancers. The district judge certified the class and approved the settlement; there were objectors, including those who had authored unregistered works; they appealed, and were successful, with the court of appeals vacating and holding courts lack subject matter jurisdiction to certify and approve settlements arising from the infringement of unregistered claims.

In so doing the court of appeals also took the opportunity to note "we have never held that a district court may enjoin the infringement of unregistered copyrights so long as the underlying action arises from a registered copyright held by the same party," a point I have also argued. The court did hold open the possibility of injunctions "where a defendant has engaged in a pattern of infringement of a plaintiff's registered copyrights and can be expected to continue to infringement new copyrighted DP material emanating in the future from the plaintiff," something I don't conceded, and in in any event, even here the court went out of its way to disagree with the 9th circuit's broader approach in the P10, Inc. v., Inc. opinion, 487 F.3d 701, 710 (9th Cir. 2007).

Accordingly, the court held that each claim within a certified class must satisfy Section 411(a)'s registration requirement. Judge Walker dissented, concluding that "the fact that some of the otherwise presumably valid copyrights have not been registered is an insufficient basis for undoing this class-action settlement." While his opinion is thorough and thoughtful (and quite typically so), I think some may find his efforts to distinguish a "rights-creating statute and an enforcement mechanism" is contrary to the plain words of the statute forced as applied outside the settlement context; that is, in a straight-up infringement context.

The case is In re Literary Works in Electronic Databases Copyright Litigation, 2007 WL 4197413 (2d Cir. Nov. 29, 2007); here is a link to the opinion; it is the second one with that name

Wednesday, November 28, 2007

Is Sweet & Maxwell Timid or Prudent?

Two weeks ago, I gave a speech in London, the Stephen Stewart Memorial Lecture, sponsored by the Intellectual Property Institute. The Institute has a journal, the Intellectual Property Quarterly which typically publishes the lectures, and wanted to do so in my case. I was happy to have them publish it. The printer is Sweet & Maxwell; I say printer because as far as I can tell that's all they do: they don't solicit the articles and they don't edit them; they don't pay for them either although they do charge for the journal. That doesn't mean they are passive, far from it. For an entity that in this case does nothing intellectual they seem quite opinionated about the content.

Here's the problem. The speech was called "Metaphors and Moral Panics in Copyright." Before drafting the actual text, I spent a large amount of time on the introduction because I became obsessed with the whole idea of introductions to talks, how people try to tell lame jokes, or refer to previous speakers; foreigners usually try to ingratiate themselves to the locals. I decided I would do a parody of such introductions by using all of the most common forms of such introductions and make sly fun of them without seeming to be doing so. This involved in one portion the use of photographs, due to the prevalence of inane PowerPoint presentations that have slide shows. I wanted to parody this too, and did.

Whether the audience got my PostModern assault on introductions or not, I don't know, but I had tremendous fun. I sent a copy of the speech to the journal and they were happy to publish it; that's where Sweet & Maxwell entered. They wanted the photos out: they were expensive to publish in color and there were allegedly copyright problems. I offered to have them printed in black and white, and in that event there would be no cost since they were embedded in the text. I also offered to indemnify them for any copyright problems. No go: their lawyer got involved, and they refused to publish the article with the photos. Well, the introduction wouldn't work without the photos because they are integrally related in every sense to the text. I then told them to simply drop the entire introduction, which is what they are doing.

In my view this exchange is symptomatic of why copyright has failed as a system, but I am interested in others' view. I am happy to send anyone who wants the entire article with the introduction and the photos inhtact, but in order to permit you to form your own views on the merits of whether the use of the photographs is fair use or fair dealing, here is the entirety of the introduction, but with a gaping hole where the photos should be, much like the Girl Scouts danced around the campfire without the music in the Great Macarena Dispute:

The Stephen Stewart Memorial Lecture
William Patry, November 13, 2007
to the Intellectual Property Institute
London, England


As a lecture in memory of a most distinguished scholar, I confess to feeling inadequate. One reason for this inadequacy is my nationality: U.S. intellectual property writers have a reputation for being parochial, for lacking a solid grounding in comparative law, and for lacking the nuanced thinking that marked Stephen Stewart’s work with such greatness.

My sense of national inferiority was, however, happily overcome when I looked through the PowerPoint presentation for Charles Oppenheim’s talk to the Institute in July, entitled “What’s Wrong with Copyright?” The second slide in his presentation was entitled “Yanks: over-sexed, over-paid and over here.” At the risk of insulting my wife, who is present tonight, and colleagues from Google’s London office, I take exception to the first two of Professor Oppenheim’s accusations, which I chalk up to extreme jealousy.

And what a long-simmering jealousy it is: over 65 years have elapsed since that saying became popular. British men, have you been doing nothing for the better part of a century to prove your mettle? If I may be so bold as to offer you some advice, you may want to avoid this look:


in favor of this:


Of course, if you do look and act like that there are many problems, such as approval ratings in the


so you will, I think, be best served by being:


Given the lack of eye-catching images found in Professor Oppenheim’s presentation, I wondered whether I should attempt a joke in order to win you over. I consulted with my father in-law, who is a native of London, and a lawyer. He recommended I look at some collections of British humor. I promptly commenced an book search for British humor. The first book listed on the search was “Bears Can’t Run Downhill and 200 other Dubious Pub Facts.” The second search result was “Enough to Make a Cat Laugh.”

I quickly concluded that the British regard animals as particularly amusing, and in a way Americans don’t. I then came across a story that convinced me this is indeed the case.

In the middle of July, at the very time of Professor Oppenheim’s talk, I read Prince Charles had given Camilla a pair of sheep for her 60th birthday, accompanied by a card that read, “Happy Birthday to Ewe.” Camilla was reported to have been “chuffed to bits” by the gift. I was unfamiliar with the expression “chuffed to bits.” I didn’t know if the chuffing was something Charles or the sheep did to Camilla, or whether it was a good thing, no matter who did it. I recalled too a famous episode from the very first Monty Python’s Flying Circus show, called “Flying Sheep.” This was far from being the only Monty Python sketch about sheep; there was Sheep in Wainscoting segment, and perhaps most famously, the Killer Sheep skit. Between Prince Charles and Monty Python, I concluded that humor, especially about sheep, was better not explored, so I am sorry to say I have no joke tonight.

Lacking a joke, I sought inspiration from those who delivered previous Stephen Stewart lectures. I naturally decided to go to the most recent, by Mr. Gowers. His talk, however, came right before the release of his report, and accordingly he was circumspect in his remarks. Indeed, I understand from the institute’s newsletter that what wowed you last year was not Mr. Gowers’ presentation, but rather, and I quote, “the chance to own an IPI duck, generously donated by Professor Jeremy Phillips.”

This unexplained and perhaps unexplainable enthusiasm for ducks, much like the intense British fondness for sheep, so befuddled me that I gave up on the entire idea of an introduction. Lacking an introduction, I shall instead now launch directly into my presentation, “Metaphors and Moral Panics in Copyright.”

Tuesday, November 27, 2007

The Revisionism of Originality and Infringement

There is a tendency to think of copyright as having always been what it is now, at least in fundamentals such as originality and infringement. The fundamentals have not always been the same, and the evolving nature of these core concepts goes a very long way toward dispelling the foundational myth of Romantic authorship and the incentive rationale. A recent book, “Plagiarism and Literary Property in the Romantic Period,” by Tilar Mazzeo, a professor of English at Colby College is an excellent start. Professor Mazzeo covers some of the same ground well ploughed by others, especially the accusations brought against Coleridge in 1834 by Thomas DeQuincey in the Tait’s Magazine, as well as Wordsworth’s screeds against others and his own rather dubious practices. Lord Byron comes in for review too. One scholar who went down this path before was Thomas Mallon in his 1989 book, “Stolen Words: Forays into the Origins and ravages of Plagiarism,” which I read when it was published. Mallon focused though on the charges made against Laurence Sterne’s Tristam Shandy. A more recent look is that of Paul St. Amour in his 2003 “Copywrights: Intellectual Property and the Literary Imagination,” which I found too loaded down with jargon (“packing and unpacking” meanings, etc.), beginning with the too precious conceit of the word “copywright,” described as a “’portmanteau’” word – one into which multiple meanings have been ‘packed up.’” I didn’t find one much less many to unpack, and almost packed up the book and sent it back after reading this, the first sentence in the book. But I did persevere for an hour with some happy results. If one overlooks the unfortunate writing, there are some good factual nuggets.

Professor Mazzeo’s account is far different from the packing and unpacking in Professor St. Amour’s book and the sometimes tedious moralizing in Mallon’s book: instead, than looking back at the accusations from our sense of propriety, he makes a sober detailed examination of how contemporaries viewed both originality, infringement, and plagiarism, using the analytical approach used at the time to these questions. That approach brings some rather surprising discoveries. DeQuincey, for example, nicely laid out three circumstances in which a plagiarism should not be found: “(1) when the author improved on the work of the original; (2) when the second author has borrowed from a work so well that known that a well-read reader may be expected to credit the original source; (3) when the borrowing had been unconscious.” (page 19). “Unconscious” does not mean the type that got George Harrison in hot water with My Sweet Lord and He’s So Fine, but rather,, a practice as a matter of habit (rather like DeQuincey’s opium habit, as DeQuincey himself pointed out in detailing his accusations against Coleridge). Instead, habit was an odd mixture of an erasure from consciousness yet still tinged with a mark of the erasure. As Professor Mazzeo put it, “Erased from consciousness, habit is not unknown or inaccessible to consciousness but is instead a ruin, a memorial, a trace, a mark of erasure, still visible but serving only to the point back to the thing which it no longer is.”

I confess this made no sense to me, but that’s an important point: originality infringement, and plagiarism are intensely historical and contextual. None of the three circumstances noted by DeQuincey as not being the slightest problematic would pass muster today. Those who invoke the gods of Romanticism as a justification for copyright today had better find other deities to worship.

Monday, November 26, 2007

The 1878 UK Royal Commission Report

The U.S. government has never had a meaningful foundational discussion about the nature of copyright and the means to accomplish desired objectives. It is true that the process of formulating, drafting, and enacting the 1976 U.S. Copyright Act took 21 years, well-documented in a considerable number of roundtable discussions, reports, and testimony unique in the annals of copyright and invaluable in understanding that Act, but the discussions, interesting as they are, focus heavily on how to implement specific aspects of a statute, and not foundational questions.

The United Kingdom is blessed to have had a number of fascinating foundational examinations. The first is popularly called the Battle of the Booksellers, and refers to the period after the 1710 Statute of Anne, when book sellers attempted to convince the courts that the Statute of Anne was supplementary to, and not preemptive of, an alleged perpetual common law. This point was settled (at least as to the preemptive part) by the House of Lords in Donaldson v. Becket (1774) after the contrary decision of the King's Bench in Millar v. Taylor (1769). The debates about the nature of copyright during this period (which began long before the decision in Millar) have been well documented. So too the next examination, when Serjeant Talfourd attempted to extend the term of copyright and to make other, comprehensive reforms, only to be humiliated by Lord Macaulay not once but twice, in 1841 and then again in 1842. These speeches are well-known and a delight to read, regardless of one's position.

But there was another occasion, one less well-known, although thanks to the work of a number of scholars, this next March it should be better known: I refer to the 1878 Report of the Royal Commission on Copyright. The commission has not been a secret, even in the 20th century, numerous references to it were made, including in then Professor Stephen Breyer's 1970 "Uneasy Case for Copyright" article (84 Harv. L. Rev. 289). Professor Breyer also noted something few others did, the presence of substantial dissent from the report. U.S. professor of English Paul Saint-Amour devotes a whole chapter to reviewing the Commission in his 2003 book, "The Copywrights: Intellectual Property and the Literary Imagination." U.K. law professor Catherine Seville has also discussed the commission, most extensively in her 2006 book "The Internationalisation of Copyright Law: Buccaneers and the Black Flag in the Nineteenth Century," about which I blogged here.

Most recently, Irish law professor Ronan Deazley whose dazzling prior books "On the Origin of the Right to Copy" (2004)(available here) and "Rethinking Copyright" (2006)(available here) should be on everyone's shelves, has drafted an as-yet unpublished essay on the Royal Commission, to be available in March in connection with an amazing project to make primary historical source material available online. (More on that in March).

The Commission was the result of lobbying efforts by the Association for the Protection of the Rights of Authors. Prime Minister D'Israeli did what many government officials do when handed a hot potato: he passed it along to a commission, comprised of sitting and former government officials, lawyers, historians, a publisher, and an author (Anthony Trollope). From May 1876 to May 1877, the commission heard from almost 50 witnesses; they took a year to release their 800 page report, with appendices and dissents.

As Professor Deazley notes, only 5 of the 15 commissioners signed the report without reservation; a majority of 9 signed with either a dissent or other comment; Sir Louis Mallet refused to sign the report at all, and instead wrote his own ten page dissent. As Professor Deazley observes, "[a]lthough the Report recommended that copyright continue to be treated 'as a proprietary right,' it said little else to clarify what that actually meant. Indeed as Feather correctly observes, in this regard, 'the Commissioners made no serious attempt to define copyright, even though they themselves rightly noted that the confusion in the law, and argued that it arose, in large part, from the very lack of definition,'" (quoting Feather, Publishing, Piracy and Politics: an Historical Study of Copyright in Britain 187 (1994)).

Professor Deazley writes that "Perhaps the most profound point of disagreement that lies at the heart of the Report concerned the very nature and function of copyright itself, set against a backdrop of arguments about free trade and protectionism." This last point is fascinating indeed. Mallet and some others were followers of Richard Cobden, a co-founder of the Anti-Corn Law League. To Cobden's followers like Mallet, the concept of copyright as a property right was false, resting an economic fallacy, "the misconception of the nature of the law of value." What makes this fascinating to contemporary readers, I believe, is the absolute brilliance of content owners in turning intellectual property into an engine of free trade, principally in the GATT TRIPS agreement, and in subsequent FTAs. This amazing feat, insisting that strong monopoly power be set as an international norm is, to say the least, not obvious. How the feat was accomplished is detailed in a 2003 book by Susan Sell, "Private Power, Public Law: The Globalization of Intellectual Property Rights," (available here).

The 1878 Royal commission's report is, therefore, an interesting read for how trade and copyright were previously perceived, as well as for a reminder that the nature and function of copyright, far from being received wisdom, has always been contested. No one in 1878 called for its abolition, and rightly not. But the existence of some level of protection for authors is far different from an agreement about the scope of the protection; most importantly, the 1878 report is a reminder that foundational arguments about the nature of copyright matter.

Friday, November 23, 2007

A Conflict Between Publicity Rights and Copyright?

A suit just filed in Detroit by the Romantics against Activision Inc. for including their 1980 song What I Like About You" in the video game "Guitar Hero" raises an interesting preemption question. Section 114(b) reads in relevant part:

The exclusive rights of the owner of copyright in a sound recording under clauses (1) and (2) of section 106 do not extend to the making or duplication of another sound recording that consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate those in the copyrighted sound recording.

This section permits -- encourages -- the making of sound alikes. For example, in the sound track to the movie Easy Rider, the Band would not permit use of their song The Weight, so the label hired Smith to copy The Band's performance as closely as possible. No cause of action was available for this, the mechanical royalties having been paid. In the Activision case, a sync license was obtained for reproduction of the song. The Romantics claim however that the sound alike violates their right of publicity in the sense of imitating the sound of their voices. Without knowing the facts of the case, and just as a matter of general law, it seems such a claim is preempted since it is based on the very acts that Section 114(b) permits.

Thursday, November 22, 2007

There They Go Again: Copyright Alliance and "Education"

I have posted before on the Copyright Alliance's cartoonish efforts to "educate," via propaganda, our nation's children in the ways of content owners. Patrick Ross indeed has a unique definition of education, as seen in his latest effort: sending all 17 presidential hopefuls a questionnaire. Here is a article on the effort from Variety:

An industry-backed organization has asked 17 hopefuls seeking either the Democratic or Republican presidential nomination to explain what they would do, if elected, to promote and protect intellectual property rights.
The Copyright Alliance, whose members include the Motion Picture Assn. of America and the Recording Industry Assn. of America, said it hopes to have replies from all the campaigns by early next year and will make all answers publicly available at a later date.

In a conference call Tuesday with reporters, alliance exec director Patrick Ross acknowledged that with the country facing issues such as the war in Iraq, the mortgage crisis and health care, candidate stands on intellectual property rights aren’t likely to determine voter decisions.

“We’re not pretending our issue is paramount or the only one of concern,” Ross said. But given the significance of intellectual property to the U.S. economy -- accounting for about 13% of it, Ross said -- the issue should merit attention.

Ross emphasized that the questionnaire mailed to the candidates isn’t ultimately intended to single out a particular candidate for endorsement. “We are an educational organization,” he said.

If candidates either don’t reply or give answers that the alliance feels are inadequate, Ross said he and member orgs will “do more to get the word out to candidates and the general public” about the importance of copyright industries.

Here are the questions:

How would you promote the progress of science and creativity, as enumerated in the U.S. Constitution, by upholding and strengthening copyright law and preventing its diminishment?

How do you feel the rights that have served our economy and spurred creativity in the physical world should apply in the digital world?

How would you protect the incentive to create by committing sufficient resources to support effective civil and criminal enforcement of copyright laws domestically and internationally?

How would you ensure inclusion of copyright protections in bilateral, regional and multilateral trade agreements to protect creators and foster global development?

How would you protect the rights of creators to express themselves freely under the principles established in the First Amendment?

One doesn't know whether to laugh or cry at such inanities. I have bolded only the most obvious of points: all of the questions are so loaded and one-sided as to be a buffoonish caricature of a high school student's efforts to craft an interview. If I were a Presidential hopeful, I would send the questionnaire back blank and say: "If this is your idea of creativity, I would go talk to one of the striking writers; you clearly lack any semblance of creativity yourselves." And I would also suggest Mr. Ross go back to school and get a proper education.

Wednesday, November 21, 2007

Snoop Dogg Ends up Top Dogg

The Sixth Circuit, which has brought upon itself an avalanche of suits involving Bridgeport Music, just issued an interesting opinion involving Snoop Doggy Dog. The issue confronted was this: is someone who makes a sound recording of an allegedly infringing musical composition contributorily liable when others make covers of that musical composition without a (voluntary) license from defendant, and defendant receives royalties from the covers?

The Sixth Circuit affirmed a grant of summary judgment to defendant, also rejecting a duty to police infringements. Here's a link to the opinion. Here's a link to an article about Mr. Dogg's Doggy Biscuitz sneakers, of which I own.

Jermaine Dupri Does Talk Straight

Last Thursday I did a posting on Edgar Bronfman Jr.'s reported comments about the music industry and delivery of products of services that consumers wants. Other were skeptical or critical of his remarks, but I take them at face value. Two days ago on the Huffington non-blog (which I got to via the AlleyInsider blog), hip hop artist/producer Jermaine Dupri definitely talked straight. I reproduce his whole column below because I think it important to read all his remarks in their context. I found it fascinating that Mr. Dupri repeats the mantra in the industry vowing never again to repeat the "MTV mistake," an alleged mistake so catastrophic that it has apparently embedded itself into the very DNA of music industry figures, passed on through generations, much like the Biblical admonition to never forget Amalek.

Also of interest is a article in today's New York Post which refers to a deal between Yahoo! and Sony BMG to permit consumers to incorporate content from the label's artists into consumers' own videos, and to enable viewers to embed Sony BMG videos in blogs and other personal pages. It would be instructive to hear Mr. Dupri's thoughts on those developments. In any event, here is his column:
A Good Album is More than Just a Collection of Singles Some people find it hard to understand my man Jay-Z's decision not to let iTunes break up his American Gangster album and sell it as single tracks. They say he's fighting the future and losing out on sales from fans who only want to download singles. But I say it was a stand somebody had to take in the music industry. Jay is speaking for all of us. He's not the first. He's not the lone cowboy in all of this. Radiohead and AC/DC have turned their backs on iTunes for the same reason. Doug Morris, the CEO of Universal Group, has been fighting Steve Jobs on this for a minute now. But Jay is at a level people are going to pay attention to. He's had 10 number one albums. He may run Def Jam but he's also an artist who put his heart and soul into something that he wants people to hear all the way through. As the creator and investor, he has every right to demand this. Not only that, I believe he's starting a movement that's necessary. More artists and producers are gonna take back control of how their art is sold because his strategy has paid off. Maybe Hova coulda sold another 100,000 to 200,000 units by playing it iTunes' way, but he still had the number one album last week. He STILL sold 425,000 units. Even more, he's proven you can still sell an album without those guys. Jay made everyone realize that iTunes taking what we give them and doing what they want with it isn't the way it has to be. He put the light on and made other people realize, "Oh these guys are just selling our music, they ain't making it." If anything, WE made iTunes. It's like how we spent $300,000 to $500,000 each on our videos and MTV and BET went ahead and built an entire video television industry off of our backs. We can't let that happen again. These businesses exist solely because of our music. So if we as artists, producers and label executives stand up, those guys at Apple can either cooperate, or have nothing for people to buy and download on their iPods. Apple thinks that's never gonna happen. They think that we as the record industry will never stick together. But Universal sells one out of every three records. All it'll take is for Warner Music to say, "You know what, I'm with you," for us to shut 'em down. No more iPods! They won't have nothin' to play on their players! We can take back the power if we're willing to sacrifice some sales to make our point. These days people just assume that you need a number one single to have a number one album. But look at what's really happening. Soulja Boy sold almost 4 million singles and only 300,000 albums! We let the consumer have too much of what they want, too soon, and we hurt ourselves. Back in the day when people were excited about a record coming out we'd put out a single to get the ball going and if we sold a lot of singles that was an indication we'd sell a lot of albums. But we'd cut the single off a few weeks before the album came out to get people to wait and let the excitement build. When I put out Kris Kross we did that. We sold two million singles, then we stopped. Eventually we sold eight million albums! Did consumers complain? Maybe so. But at what point does any business care when a consumer complains about the money? Why do people not care how we - the people who make music - eat? If they just want the single, they gotta get the album. That was how life was. Today we should at least have that option. Yeah, it's about the money, but it's also about quality. Creating each album as a body of work that means something gives the consumer something better to listen to, It's that simple. Otherwise all anyone would care about is making a bunch of ringtones. A good album is more than just a collection of singles. American Gangster was a story with a beginning, middle and end. I came in at the end and did the last song, "Fallin'." But every joint was related. Each song gets better from listening to the one next to it, and the one after that. I didn't just sit by myself in my studio in Atlanta, crank somethin' out, and throw it in the pot. That album was the product of the best minds in hip hop today: Jay, Puffy, the Neptunes, No I.D., Just Blaze and me. We all came together and threw ideas around. Me and Jay had long conversations about our favorite mafia movies, and that moment in all those gangsta stories - Scarface, The Godfather -- when the hero makes his big mistake and falls. We came in with respect for each others' craft so the whole album could do right by the story. We made quality music for our consumers. We made art. None of this is new. Every record is in some way a concept album. The whole always strives to be better than its parts. I dedicate a whole chapter in my book to this process. Every thing I produce is a product of me spending time with the artist and getting to know where his or her head is at. Usher's Confessions album was all about where he was at that point in his life. Same with Mariah's Emancipation of Mimi. Even if I'm not executive producing and I'm brought in at the end on someone else's album, I listen to what everyone else has done and try to make my tracks fit. I'm like an interior decorator who comes into a house and fixes up one room. It doesn't look like every other room, but at least it picks up some threads so that room looks like it belongs in the same home. Every album is created for you to hear the next song, especially on rap albums. Rappers make intros on their records for a reason- they want you to listen it to set the mood and get ready for that second song. I'm not saying that music can't ever be sold as singles. Not every album is equal and consumers are always going to try to cherry pick the songs they like. But that doesn't mean the people who investing their time, money and sweat into a record shouldn't have the right to decide how it's gonna be sold, whether that's in single units or as a whole. My book, Young, Rich and Dangerous: The Making of a Music Mogul, came out in hardcover last month, but Simon & Schuster doesn't let the book stores tear it up and sell it chapter by chapter. A record is no different. Asking us to let other people mess with all our hard work like that is disrespectful. It's like when you go an art auction, and an Andy Warhol painting is up for sale at $5 million, but a buyer is allowed to just by off the top right hand corner of the canvas for a hundred thou' Apple, why are you helping the consumer destroy our canvas? We don't tell you to break up your computers into bits and pieces and sell off each thing. When you go to the Apple store you may only need one thing, but you have to buy all their plug ins and stuff. You have to buy their whole package, even if you don't necessarily want it, or your equipment won't work. We're just saying, if you have the audacity to sell your products like that, don't treat our products as something less than yours. Respect the craft

Tuesday, November 20, 2007

First Sale, Software, and eBay

The question whether a transaction in which a copy of software is transferred for a set price to end users is a sale or license is long-standing. It has been raised again in a suit brought by Timothy Vernor against Autodesk, in which he is now represented by Public Citizen. Here is a link to their press release about the suit (including a link to the amended complaint), and a short excerpt from that release:

The lawsuit ... was filed in federal court in Seattle and contends that the software company’s actions are abusive and lead to higher prices for consumers. ... eBay vendor Timothy Vernor picked up his first used copy of Autodesk’s “AutoCAD Release 14” at a tag sale. Autodesk sells this product new in a shrink-wrapped box that contains a “license agreement” that the company claims prohibits the purchaser from reselling the software. Public Citizen argues that this contract language is unlawful under the Copyright Act, which guarantees that the owner of a copyrighted product can resell that product without permission.

The complaint seeks declaratory relief that no infringement occurred and has a count for unfair and deceptive practices arising out of the DMCA take down notices sent to eBay. Within the Ninth Circuit, Adobe has made some law on the question, although the courts are split. In the first case, Adobe Sys. Inc. v. One Stop Micro, Inc., 84 F.Supp.2d 1086 (N.D. Cal. 2000), Adobe distributed software to the educational market through authorized distributors who in turn transferred copies to authorized resellers. Those authorized resellers had an agreement with Adobe limiting sale to end users in the educational market. Defendant, a company not an educational end-user, bought a copy in the "open market," as the court described it. While the court found some ambiguity in the agreement on the question whether the parties intended a sale or license, using extrinsic evidence, it held that a license was intended due to the presence of restrictions on the types of sales, and expert testimony that software is generally licensed, not sold. This testimony was of course conclusory in nature; that is, it stated an opinion on the law, masked as testimony about facts. The court dismissed the language "purchase and sale" in the agreement as "convenient and familiar," but meaningless in light of the custom of licensing it found. The custom was, however, in how the industry wants such agreements to be legally construed, and not how they may be factually. For example, Adobe did not, I believe, require return of a copy. Characterizing such transactions as sales does not leave Adobe and others high and dry; rather, they still have available a breach of contract action against the party who breached the resale agreement.

In the next case, Softman Products Co. LLC v. Adobe Sys., Inc., 171 F. Supp.2d 1075 (C.D. Cal. 2001), the court reached the opposite result, disagreeing with the earlier decision, and noting that the industry's preference for describing the transactions as licenses ""does not alter the Court's analysis that the substance of the transaction at issue here is a sale and not a license."

Finally, in Adobe Sys., Inc. v. Stargate Software, Inc., 216 F. Supp.2d 1051 (N.D. Cal. 2002), the court agreed with the One Stop Micro court and disagreed with Softman, which it lamely attempted to distinguish as involving the disaggregation of a compilation of products.

In many ways, the debate hearkens back to Judge Easterbrook's ProCD case and his concerns about arbitrage, the effort to develop a market that impedes the copyright owner's efforts to market the work in a discrete way. In the Adobe cases, Adobe was targeting the educational market and perhaps offering terms different (and hopefully more favorable) than those it offered to the commercial market. One would want to encourage such efforts; yet, the question is how, consistent with the statute and the actual facts of the transaction. If, as the Softman court held, the substance of the transaction is a sale, calling it a license shouldn't change matters and copyright owners should be left to pursue contract remedies. If the substance is a license as that term is used in other fields of law, then there is no first sale. The type of restrictions pointed to by some courts -- restrictions on whom copies may be sold to -- is no different than any agreement where a sale is commonly found: you can sell copies of a CD in the U.S., but not Canada for example. It is unthinkable that this last agreement would be deemed a license. So too an agreement that says you can sell the software to the educational market but not the general market.

Monday, November 19, 2007

Haute Diggity Dog: Fair Use in TM and Copyright

Even before the Supreme Court's DaStar case, the intersection, overlap, conflict, or whatever word one wishes to choose to describe the situation where plaintiff asserts trademark and copyright claims over the same acts with respect to the same goods, was murky. After DaStar, many trademark claims have been dismissed as "mutant" copyright claims. On the defendant's side of the caption, the defense of fair use is frequently asserted, with the caveat that trademark fair use and copyright fair use are not the same.

These issues are seen in the recent Fourth Circuit opinion, Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 2007 WL 3348013 (4th Cit. Nov. 13, 2007), available here. I did a post awhile back on the district court opinion (464 F. Supp.2d 495 (E.D. Va. 2006), here. The court's initial trademark fair use analysis reads just like a copyright fair use analysis:

For trademark purposes, “[a] ‘parody’ is defined as a simple form of entertainment conveyed by juxtaposing the irreverent representation of the trademark with the idealized image created by the mark's owner.” People for the Ethical Treatment of Animals v. Doughney (“ PETA ”), 263 F.3d 359, 366 (4th Cir.2001) (internal quotation marks omitted). “A parody must convey two simultaneous-and contradictory-messages: that it is the original, but also that it is not the original and is instead a parody.” Id. (internal quotation marks and citation omitted). This second message must not only differentiate the alleged parody from the original but must also communicate some articulable element of satire, ridicule, joking, or amusement. Thus, “[a] parody relies upon a difference from the original mark, presumably a humorous difference, in order to produce its desired effect.” Jordache Enterprises, Inc. v. Hogg Wyld, Ltd., 828 F.2d 1482, 1486 (10th Cir.1987) (finding the use of “Lardashe” jeans for larger women to be a successful and permissible parody of “Jordache” jeans). When applying the PETA criteria to the facts of this case, we agree with the district court that the “Chewy Vuiton” dog toys are successful parodies of LVM handbags and the LVM marks and trade dress used in connection with the marketing and sale of those handbags. First, the pet chew toy is obviously an irreverent, and indeed intentional, representation of an LVM handbag, albeit much smaller and coarser. The dog toy is shaped roughly like a handbag; its name “Chewy Vuiton” sounds like and rhymes with LOUIS VUITTON; its monogram CV mimics LVM's LV mark; the repetitious design clearly imitates the design on the LVM handbag; and the coloring is similar. In short, the dog toy is a small, plush imitation of an LVM handbag carried by women, which invokes the marks and design of the handbag, albeit irreverently and incompletely. No one can doubt that LVM handbags are the target of the imitation by Haute Diggity Dog's “Chewy Vuiton” dog toys. At the same time, no one can doubt also that the “Chewy Vuiton” dog toy is not the “idealized image” of the mark created by LVM. The differences are immediate, beginning with the fact that the “Chewy Vuiton” product is a dog toy, not an expensive, luxury LOUIS VUITTON handbag. The toy is smaller, it is plush, and virtually all of its designs differ. Thus, “Chewy Vuiton” is not LOUIS VUITTON (“Chewy” is not “LOUIS” and “Vuiton” is not “VUITTON,” with its two Ts); CV is not LV; the designs on the dog toy are simplified and crude, not detailed and distinguished. The toys are inexpensive; the handbags are expensive and marketed to be expensive. And, of course, as a dog toy, one must buy it with pet supplies and cannot buy it at an exclusive LVM store or boutique within a department store. In short, the Haute Diggity Dog “Chewy Vuiton” dog toy undoubtedly and deliberately conjures up the famous LVM marks and trade dress, but at the same time, it communicates that it is not the LVM product. Finally, the juxtaposition of the similar and dissimilar-the irreverent representation and the idealized image of an LVM handbag-immediately conveys a joking and amusing parody. The furry little “Chewy Vuiton” imitation, as something to be chewed by a dog, pokes fun at the elegance and expensiveness of a LOUIS VUITTON handbag, which must not be chewed by a dog. The LVM handbag is provided for the most elegant and well-to-do celebrity, to proudly display to the public and the press, whereas the imitation “Chewy Vuiton” “handbag” is designed to mock the celebrity and be used by a dog. The dog toy irreverently presents haute couture as an object for casual canine destruction. The satire is unmistakable. The dog toy is a comment on the rich and famous, on the LOUIS VUITTON name and related marks, and on conspicuous consumption in general. This parody is enhanced by the fact that “Chewy Vuiton” dog toys are sold with similar parodies of other famous and expensive brands-“Chewnel No. 5” targeting “Chanel No. 5”; “Dog Perignonn” target-ing “Dom Perignon”; and “Sniffany & Co.” targeting “Tiffany & Co.” We conclude that the PETA criteria are amply satisfied in this case and that the “Chewy Vuiton” dog toys convey “just enough of the original design to allow the consumer to appreciate the point of parody,” but stop well short of appropriating the entire marks that LVM claims. PETA, 263 F.3d at 366 (quoting Jordache, 828 F.2d at 1486).
The court didn't stop there, though, noting that there could be confusing and non-confusing parodies, but in the end held,

In concluding that Haute Diggity Dog has a successful parody, we have impliedly concluded that Haute Diggity Dog appropriately mimicked a part of the LVM marks, but at the same time sufficiently distinguished its own product to communicate the satire. The differences are sufficiently obvious and the parody sufficiently blatant that a consumer encountering a “Chewy Vuiton” dog toy would not mistake its source or sponsorship on the basis of mark similarity.
Here is the court's entire discussion of the copyright fair use issue:

Finally, LVM argues that the district court erred in finding that Haute Diggity Dog's use of the “CV” and the background design was a fair use of LVM's copyrighted Multicolor design. Because LVM attempts to use a copyright claim to pursue what is at its core a trademark and trade dress infringement claim, application of the fair-use factors under the Copyright Act to these facts is awkward. See 17 U.S.C. § 107; Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994). Nonetheless, after examining the record, we agree with the district court that Haute Diggity Dog's use as a parody of certain altered elements of LVM's Multicolor design does not support a claim for copyright infringement.

Friday, November 16, 2007

Canadian Photocopy Suit

Access Canada, a licensing organization, has sued Staples/Business Depot for in-store photocopying. It appears from commentary that the copying was done by customers on machines provided by the company. Here is an article in Canadian Press:

Canadian Press

November 15, 2007
Access Copyright sues Staples/Business Depot for copyright infringement

TORONTO - Access Copyright, which represents almost 9,000 Canadian writers and publishers, is suing retailer Staples/The Business Depot for copyright infringement, claiming $10 million in damages over unauthorized photocopying by store customers.

The publishing organization said Thursday its lawsuit contains the largest claim to arise from copyright infringement of published works in Canada.

"Staples/Business Depot is a sizable, for-profit organization that has built part of its business through a lucrative service that exploits the published works of authors, photographers and publishers," Access Copyright said in a release.

"Companies that photocopy illegally are effectively taking money directly out of the pockets of creators and publishers who depend on book sales and copyright royalties for their livelihood."

Companies that profit from illegal photocopying "are undermining the work of others," said Maureen Cavan, executive director of Access Copyright. "Staples/Business Depot is no different from those organizations that profit from illegally downloading copyright protected music or the unauthorized sharing of videos and published works on the Internet."

Access Copyright said it has been investigating Staples/Business Depot since 1998 in response to concerns raised by creators and publishers.

"Despite repeated attempts by Access Copyright to reach a settlement and come to an amicable resolution, Staples/Business Depot has made no perceivable changes to their business practices.

The great Canadian copyright scholar Michael Geist had this to say on his blog:

Given the high stakes, this is the sort of case that could end up at the Supreme Courtof Canada. The last time the court addressed the question of photocopying and copyright, the publishers lost badly, with the court ruling that libraries are entitled to presume that their facilities are being used lawfully. Moreover, the Court ruled that fair dealing is a user right that should not be unduly constrained.

It is difficulty to comment fully without seeing the statement of claim, but those twin findings make this a very risky suit for Access Copyright. Staples will likely argue that it has not authorized infringement since it is entitled to presume that its facilities are being used lawfully and that much of the copying on its premises is either personal (ie. the copyright holder is the copier) or being done for research or private study purposes and therefore qualifies as fair dealing. Unless Access Copyright has some damaging evidence to the contrary, the Supreme Court's jurisprudence appears to side with Staples, which may help explain why the parties were unable to reach a settlement.

Thursday, November 15, 2007

Edgar Bronfman, Jr. Reported to Talk Straight

Edgar Bronfman, Jr.'s efforts to become a powerful figure in the entertainment world, via money derived from his father's Seagram empire, are long-standing. In his latest effort, with Warner Music, he clashed memorably with Steven Jobs over pricing on the iTunes. Jobs' rejoinder that the music industry was greedy may have been directed toward Bronfman personally. Simon Aughton in the UK MacUser blog had a story yesterday that shows Mr. Bronfman has now warmly embraced at least some aspects of Apple's approach. Here is a link, and some excerpts:

The boss of Warner Music has made a rare public confession that the music industry has to take some of the blame for the rise of p2p file sharing. ...

"We used to fool ourselves,' he said. "We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find and as a result of course, consumers won."...
Bronfman suggested that mobile companies have much to learn from Apple, despite being critical in the past. "For years now, Warner Music has been offering a choice to consumers at Apple's iTunes store the option to purchase something more than just single tracks, which constitute the mainstay of that store's sales," he explained. "By packaging a full album into a bundle of music with ringtones, videos and other combinations and variation we found products that consumers demonstrably valued and were willing to purchase at premium prices. And guess what? We've sold tons of them. And with Apple's co-operation to make discovering, accessing and purchasing these products even more seamless and intuitive, we'll be offering many, many more of these products going forward." And the iPhone and iPod touch shows that approach can be made to work on mobile platforms, he said, "You need to look no further than Apple's iPhone to see how fast brilliantly written software presented on a beautifully designed device with a spectacular user interface will throw all the accepted notions about pricing, billing platforms and brand loyalty right out the window. And let me remind you, the genesis of the iPhone is the iPod and iTunes - a music device and music service that consumers love." Bronfman appears to be experiencing an epiphany when it comes to digital music. From threatening to withdraw from iTunes and suggesting that to drop DRM would be "without logic or merit", he is now heaping praising on Apple and recently opened a DRM-free section on Warner's own Classics and Jazz music store.
If Mr. Bronfman's remarks indicate that he has accepted flat pricing for single tracks, but also wishes to offer consumers additional choices, including premium offerings and full albums, this would be wonderful news, as is the DRM-free section. Mr. Bronfman's remarks that it was "inadvertent" that the industry went to war with consumers is, however, unlikely to be met with unanimous agreement; some may believe the war is far from over. (see this article on P2PNet about his speech). The industry continues to claim that P2P results in massive losses and then uses those dubious claims to justify ever-greater legislation and intrusive tactics. (See earlier posting here, and the report mentioned in Mr. Dames' comment). Nevertheless, Mr. Bronfman's enthusiasm for Apple's products appears genuine, and his candor about the industry's failures is highly commendable. No industry can afford to be at war with its consumers; innovation is inherently disruptive, and some industries react more quickly than others to adapt with new business models that match consumers' desires. Mr. Bronfman appears to be headed on exactly the right track. Bravo.

Tuesday, November 13, 2007

Copyright and London Art Galleries

Since I am in London at the moment, and saw an article by the famous Canadian Cory Doctorow in the British online Guardian Unlimited about an exhibit currently running at the British National Portrait Gallery. Mr. Doctorow notes that the artists in the exhibit made quite free (in both meanings of that term) use of others' works. In the U.S., such uses would likely be transformative, and certainly so after the Blanch v. Koons case. He then notes that there is a ban at the Gallery on the taking of photographs, which he appears to find inconsistent with the art work itself. But almost all art galleries have such bans, and there is nothing transformative about taking a snapshot of a transformative work.

Here is an excerpt from the article, which also notes the British rights in typography and layout:

The excellent programme for Pop Art Portraits, the current exhibition at London's National Portrait Gallery, has a lot to say about the pictures hanging on the walls and the diverse source material the artists used to produce their provocative works. Apparently they cut up magazines, copied comic books, drew trademarked cartoon characters like Minnie Mouse, reproduced covers from Time magazine, made ironic use of a cartoon Charles Atlas, painted over iconic photos of James Dean and Elvis Presley - and that's just in the first of seven rooms. The programme describes the aesthetic experience conjured up by these transmogrified icons of high and low culture. Celebrated pop artists including Larry Poons, Robert Rauschenberg and Andy Warhol created these images by nicking the work of others, without permission, and transforming it to make statements and evoke emotions never countenanced by the original creators. Despite this, the programme does not say a word about copyright. Can you blame the authors? A treatise on the way that copyright and trademarks were - had to be - trammelled to make these works could fill volumes. Reading the programme, you can only assume that the curators' message about copyright is that where free expression is concerned, the rights of the creators of the original source material must take a back seat to those of the pop artists. There is, however, another message about copyright in the National Portrait Gallery: it is implicit in the "No Photography" signs prominently displayed throughout its rooms, including one by the entrance to the Pop Art Portraits exhibition. These signs are not intended to protect the works from the depredations of camera flashes (otherwise they would read "No Flash Photography"). No, the ban on pictures is meant to safeguard the copyright of the works hung on the walls - a fact that every member of staff I asked instantly confirmed. Indeed, it seems every square centimetre of the National Portrait Gallery is under some form of copyright. I wasn't even allowed to photograph the "No Photographs" sign. A member of staff explained that the typography and layout of the signs was itself copyrighted.

Monday, November 12, 2007

The Feds, Copyright, and Ed

Eric Bangeman has an article in Ars Technica about the latest effort by content owners to make educators enforce content owners' rights for them. Here is a link to the full article, which is a bit exaggerated. Even with the exaggerations, it is disturbing for the federal government to require educators to be policing enforcement issues for private companies on pain of loss of federal funds. What's next, an amendment to Sarbanes Oxley that requires the CEO of companies to certify no employee infringes copyright? Or, how about a requirement that before we can receive U.S. mail, each of us has to certify to the Post Office that we don't infringe copyright? Or, how about a requirement that before we can get a drivers license, passport, or social security card we do the same? I hesitate to throw out such examples for fear they will give content owners ideas. Yes, I can imagine some saying, why not?

Here is the excerpt from the article:

New bill would punish colleges, students who don't become copyright cops

By Eric Bangeman | Published: November 11, 2007 - 11:15PM CT

A massive education bill (747-page PDF) introduced into Congress contains a provision that would force colleges and universities to offer "technology-based deterrents" to file-sharing under the pain of losing all federal financial aid. Section 494 of the College Opportunity and Affordability Act of 2007 is entitled "Campus-Based Digital Theft Prevention" that could have just as easily been called "Motion Picture and Recording Industry Subsidies," as it could force schools into signing up for subscription-based services like Napster and Rhapsody.

Under the terms of the act, which is cosponsored by Rep. George Miller (D-CA) and Rep. Ruben Hinojosa (D-TX), schools will have to inform students of their official policies about copyright infringement during the financial aid application and disbursement process. In addition, students will be warned about the possible civil and criminal penalties for file-sharing as well as the steps the schools take to prevent and detect illicit P2P traffic.

That's not all: schools would have to give students an alternative to file-sharing while evaluating technological measures (i.e., traffic shaping, deep packet inspection) that they could deploy to thwart P2P traffic on campus networks. Many—if not most—schools already closely monitor traffic on their networks, with some (e.g., Ohio University) blocking it altogether, and the bill would provide grants to colleges so they could evaluate different technological solutions.

The most objectionable part of the bill is the part that could force schools into signing up for music subscription services. In order to keep that beloved federal aid money flowing, universities would have to "develop a plan for offering alternatives to illegal downloading or peer-to-peer distribution of intellectual property."

Introduced in 2003, campus-wide subscription agreements give students access to download services like Napster or Rhapsody whether they want it—or can use it (the iPod isn't supported by any of the subscription services). The services are typically funded by activity fees; by and large, they've been met with a collective yawn from students. Lack of iPod support is a major turn-off, as is the fact that the subscriptions end when a student graduates or transfers, rendering the downloads unplayable.

The Motion Picture Association of America doesn't see it that way. Chairman and CEO Dan Glickman called it a positive step in the fight against file-sharing, throwing out some unsubstantiated figures on how file-sharing allegedly costs jobs and hurts the economy. "Intellectual property theft is a worldwide problem that hurts our economy and costs more than 140,000 American jobs every year," said Glickman in a statement. "We are pleased to see that Congress is taking this step to help keep our economy strong by protecting copyrighted material on college campuses."

The Association of American Universities doesn't like the idea at all. In a letter (PDF) sent to Rep. Miller just before the bill was introduced, the group expressed its "grave concerns" about Section 494 of the bill. "We urge the Education and Labor Committee to reject the entertainment industry's proposal as it crafts its bill to reauthorize the HEA," reads the letter. "The proposal would mandate a completely inappropriate role for the Secretary of Education to single out individual institutions based on information under the control of the entertainment industry, force institutions to seek an unachievable goal of preventing illegal P2P file sharing, and risk the loss of student aid for countless students innocent of any illegal file sharing activity."

Thursday, November 08, 2007

The Long Reach of U.S Copyright Law

Hew Griffiths has a wikipedia entry (here), although I imagine he wished he didn't. Here is part of the entry (the entry also has links to new stories on him):

Hew Raymond Griffiths ... has been accused by the United States of being a ring leader of DrinkOrDie or DOD, an underground software piracy network. Griffiths was living in ... Australia before he was placed on remand at [an Australian] Detention Centre. After fighting extradition for almost 3 years, Griffiths was finally extradited from Australia to the United States and on February 20, 2007, he appeared before Magistrate Judge Barry R. Portez of the U.S. District Court in Alexandria, Virginia. On April 20, it was announced by the U.S. Department of Justice that Griffiths had entered a plea of guilty. His case is of interest in that he is an Australian resident who has been indicted by a court in Virginia for copyright infringement and conspiracy to infringe copyright under the US Code. ... Griffiths... had never at any point physically left Australia since arriving in his adopted country at an early age [from the UK]. [T]he Australian courts and executive government have agreed to treat Griffiths' activities as having taken place in US jurisdiction. The case therefore highlights the serious consequences for Australian internet users who are charged with pirating US copyright-protected material. Griffiths' extradition was very controversial in Australia. The matter ... has been cited as an example of how bilateral arrangements can lead to undesirable effects such as a loss of sovereignty and the introduction of draconian measures. On the other hand, increased enforcement internationally through heavy criminal sanctions is seen as an effective way of protecting legitimate distribution networks. ... The case is further complicated by the fact that a conspiracy was alleged, most of the overt acts of which, and most of the members of which, were based in the United States, giving rise to an argument that the US was the most suitable place for prosecution. Nevertheless, it may be that the close relationship between Australia and the United States, exemplified in the AUSFTA and other bilateral activities, made extradition more likely. On June 22, 2007 Hew Griffiths was sentenced to 51 months in prison for conspiracy to commit copyright infringement. It is noted he will only serve an estimated 15 months as the courts are granting him time served for the three years in Australian custody. ...

There are many noteworthy things about the case. One is that Griffiths is reported to have been willing to plead guilty to violating Australian law and serve time in an Australian. This would have been an entirely appropriate resolution; the question for me is not whether he should have gone to jail, but where and for violating which country's laws. It hardly ends the matter to say U.S. law, through conspiracy counts, reaches activity that occurred overseas if done in conjunction with activity in the U.S: under U.S. copyright law one is not secondarily liable for acts committed overseas in encouragement of direct infringement in the U.S., and vice versa (on the vice versa, see Subafilms v. MGM, 24 F.3d 1088 (9th Cir. 1994).

It is of course up to the Australian government to decide how to handle extradition requests; in this case, the decision was, as wikipedia notes, controversial.

I am off to London tonight for a week and will likely not post until next Thursday.

Wednesday, November 07, 2007

Is Diddy a Copyright Bad Boy?

Stanford Law School has some of the most amazing legal programs in the world dealing with the Internet and fair use. The umbrella program is the Law, Science and Technology program, of which the Center for Internet and Society (CIS) is a part, and of which a subpart is the Fair Use Project, founded in 2006 “to provide legal support to a range of projects designed to clarify, and extend, the boundaries of ‘fair use’ in order to enhance creative freedom." A sub-sub part of the Fair Use Project is Documentary Film program, which “provides filmmakers with information about fair use, access to insurance for liability arising out of copyright litigation, and access to lawyers who will defend copyright claims pro bono or at reduced rates.” CIS’S CPU consists of Anthony Falzone, Brandy Karl, Chris Ridder , Jennifer Urban, Julie Ahrens, and Lauren Gelman. They are truly doing God’s work; they almost make me wish I was back in law school.

Anthony Falzone recently posted a blog on a sampling case, which I recommend .
He gives some important history of other cases, which links to the samples, but he focuses on including Bridgeport Music, Inc. v. Justin Combs Pub., 2007 WL 3010525
(6th Cir.October 17, 2007). I blogged on the punitive damages part of this opinion. Mr. Falzone is interested in why fair use wasn’t raised as a defense:

Diddy (CEO of Bad Boy) and B.I.G. (real name Christopher Wallace and, sadly, deceased more than 10 years) are giants of hip-hop music, a genre that has always been underpinned by fantastically innovative sampling that lets us experience old sounds in new ways. If anyone would rise to defend the legality of this technique, and the wonderful creativity is spawns, I would think it would be Diddy and his label (even if it is half-owned by Warner). Yet the fair use defense is nowhere to be found in the Sixth Circuit decision, and was apparently not raised by the defendants. Why is that? Was it inadvertence? I doubt it. Was it a "strategic decision?" Perhaps, but if so, it was a bad one in hindsight. Or was it simply a reluctance to raise a defense that lots of music publishers and record labels fear -- one that supposedly threatens their "control" over their music, and by extension, over future creativity and musical expression? The question I'm left with is why, Diddy? Why didn't you -- an artist who has helped shape this art form that uses sampling so beautifully and so creatively -- stand up for the right to sample?

Perhaps Mr. Diddy will answer, or not. Mr. Diddy featured controversially in another case, one involving the infamous controlled composition clause. The case was Universal-MCA Music Publishing v. Bad Boy Entertainment, Inc., 2003 WL 21497318 (N.Y. Sup 2003).

Plaintiffs were the named record company and three individual songwriters. Defendants were Mr. Diddy and the company of which he was the president and CEO. In 1996, Combs signed a multi-year, multi-album recording agreement; that agreement contained a controlled composition clause. Combs's controlled composition clause apparently had a few variations, including one that treated fees paid for use of samples as royalties.

The effect of a typical controlled composition clause may be summarized as:

(1) The clause pays royalties only at 75% of the statutory rate. If we assume the rate is eight cents per song, this means the rate is only six cents;
(2) The rate does not increase if the song is more than five minutes, contrary to the statutory rate;
(3) The clause caps payment at 10 songs per album. If there are 12 songs on the album, this means two are not compensated for.
(4) The clause limits the rate paid to the rate in effect on the date the masters are delivered, so if the statutory rate increases, the spread between the statutory rate and the controlled composition rate increases.
(5) Royalties are paid only on “Records Sold,” a practice which is reputed to further reduce payments by 15% to 20%.

Controlled composition clauses are implicated in joint authorship situations because they apply when the composer subject to the clause writes the song in question as a joint author. Joint authors may bind others to the terms of a controlled composition clause even where, as typically happens, the clause is contained in an earlier contract to which the other joint authors were not a party. The effect of controlled composition clauses extends well beyond reducing payments received by all joint authors: the clause also provides a right of recoupment against the composer for royalties the record label is obligated to pay above the cap. In practice, this means where, on a particular album, compositions owned by publishers or writers who are not bound by the controlled composition clause are included, royalties the record label has to pay above the controlled composition limit (the difference between full statutory rate and the controlled composition rate) are deducted from royalties that would otherwise be due. If, for example, the fee payable to the artist under the controlled composition clause works out to 60 cents per CD, but the label is obligated to pay 70 cents per CD to others, the artist under the controlled composition clause ends up paying the record label 10 cents per CD. This problem is particularly serious where multiple albums are involved, where the number of noncontrolled or “outside” songs may be much higher.

The recoupment provision was an issue in Universal-MCA Music Publishing v. Bad Boy Entertainment. In 1997, the three Universal Songwriters coauthored with Combs six songs to be included in the album “No Way Out.” The three writers plus Combs were to share equally in the royalties generated. Combs then licensed the songs to his company, Bad Boy. The three songwriters were not subject to a controlled composition clause, but Combs was. It was alleged Combs did not inform them of that fact. After four years of not receiving any royalties, Combs finally informed plaintiffs that no royalties were allegedly owed because of the offset provision, even though the album sold more than five million copies in the four years. The offset was paid, of course, to Combs' own company.

Plaintiffs sued Combs and Bad Boy for breach of a fiduciary duty. Even though co-authors don't have such a relationship as a general rule, in Combs's case, the claim survived a motion to dismiss due to “special circumstances”: Combs's status as the owner of the label that he had signed the controlled composition clause with. In ordinary cases, though, where one joint author has no such special relationship, the others are plain out of luck.

Monday, November 05, 2007

Japan Looks at Copyright Term Extension

Japan, which currently has a term of life of the author plus 50 years, has been reviewing proposals to move to life plus 70. An article by Yoshikazi Suzuki in yesterday's Daily Yomiuri Online (link here) provides a refreshing look at the issue, one that was entirely absent from the U.S. press when term extension was originally debated -- as compared to all the after-the-fact armchair complaints. Here is an edited, abbreviated section from the article, which should be read in full:

A ministerial subpanel debating a proposal to extend copyright protection periods is sharply divided between those on the panel sympathetic to copyright holders who want to extend the period and members cautious about the idea.

Since its establishment in March, the Education, Science and Technology Ministry's subpanel on the protection and use of copyrighted works, including literature, music and objects of art, has met nine times. However, the subpanel has been unable to reach a consensus about whether to extend the protection period from the current 50 years to 70 years.

Considering this, it remains to be seen whether the government will be able to achieve the goal stipulated in its "Intellectual Property Strategic Program 2007," which stated that it would reach a conclusion that balances copyright protection with content use by the end of the current fiscal year.

The subpanel is a division of the copyright subcommittee set up under the ministry's Council for Cultural Affairs.


The current dispute arose in September last year when a federation of various organizations formed by writers and other copyright holders asked the Cultural Affairs Agency to extend the protection period in Japan to 70 years to match the periods adopted in the United States and many European countries.

The federation, chaired by novelist Masahiro Mita, comprises 17 organizations, including the Japan Writers' Association and the Japanese Society of Rights of Authors, Composers and Publishers.

The federation's move aroused negative reactions from an association formed by many academics, critics, lawyers, artists and others that oppose an extended protection period. The association urged the agency not to authorize an extended protection period without having the issue debated among various sectors of society. The group argued there were concerns that extending the period of copyright protection could adversely affect the public.

The Japan Federation of Bar Associations followed suit, presenting the agency a written opinion against the extension.

Divisions between copyright holders seeking an extended copyright protection period and those cautious or negative about the idea also can be seen in the opinions expressed by members of the panel on the protection and use of copyrighted works. In fact, an interim report issued by the subpanel last month concerning its discussions on the issue appeared to be a showcase of conflicting opinions among its members.

For example, proponents of the extension said Japan's protection period should be set at a level suited to intellectual property produced in the United States and Europe, with which this nation has a great deal of cultural exchanges. They added foreign copyrighted works enjoyed in this country are mostly from nations with 70-year copyright protection periods.

This argument was rebutted by those cautious about the extension, saying the 50-year protection period remains predominant worldwide. They also raised questions about what could be done to encourage the advancement of culture in Japan by adjusting the protection period to match the United States and Europe.

The conflict of opinions also was evident in discussions about whether the extension would benefit Japan's efforts to export intellectual property. Copyright holders insisted the extension would help protect Japanese intellectual property--including comics and animated films that have been widely exported overseas.

Meanwhile, some rejected such an assertion, saying profits gained by Japan through the sale of copyrighted products to other nations have been far below those obtained by other countries selling similar products to Japan. They concluded the extension would only serve to further widen the gap.

Another contentious issue focused on whether the extension would contribute to cultural advancement in Japan. Those in favor said the move would help motivate creators. But this argument was rejected by skeptics who said there was no reason to believe the current 50-year protection period would undermine motivations.

They asserted that most copyrighted products would have no commercial value when they reach the end of their 50-year protection period. They said this meant rights pertaining to such works, if the protection period was extended, would only be preserved in vain because few opportunities would exist to be used for commercial purposes. The extension would hurt the interests of people who want to benefit from works with expired copyright, citing, as an example, Web site libraries that release novels and other works with expired copyright.

What I find so refreshing about the article is that it lays out the arguments on both sides, and not just the rhetoric.

Canada Leads Again: P2P Study

The effect of peer to peer (P2P) swapping has been asserted to pose an existential threat to the entertainment industries. In the recent documentary, "Good Copy, Bad Copy," an IFPI official asserted that thousands of jobs have been lost due to P2P. But no evidence (causal or not) for that assertion was offered, and no time period was mentioned. Intuitively and anecdotally, it would seem that there is a loss of sales when massive numbers of people are downloading copyrighted works without permission. The closure of record stores in New York City alone is there for all too see: no more HMV, no more Tower Records. There is a Virgin Megastore in Times Square, but that's about it.

But there can be many reasons for a decline in a business, one of which is terrible product, overpricing, refusal to make product available to consumers in a form they want (e.g., single downloads versus CDs) or in the medium they want (online downloads versus hard copy). And then, there is the problem of quantifying losses in a market that has changed rapidly from hard copy to online: how can one assert, for example, that the old hard copy market is harmed by digital downloads if people are no longer interested in hard copy?

There have been studies of the effect of P2P done by the copyrighted industries for political purposes. The conclusions drawn by those studies have been predictably disputed along partisan lines. That's why a new independent study, conducted on behalf of the Canadian government (Industry Canada) without a political purpose is so important. Its not the first -- an earlier one (here) -- was done for the Canadian Heritage ministry). Here is a link to the new study, which is consistent with the Canadian Heritage report. Here is the abstract to the report:

The primary objective of this paper is to determine how the downloading of music files through Internet peer-to-peer (P2P) networks influences music purchasing in Canada. P2P networks permit members to transfer digitally-stored information to one another over the Internet; popular examples include BearShare, LimeWire and eMule. Using representative survey data from the Canadian population collected by Decima Research on behalf of Industry Canada, we attempt to quantify this economic relationship, while accounting for other factors that influence music purchasing. We undertake a variety of econometric estimations for the population of Canadians who engage in P2P file-sharing (P2P "downloaders"), as well as for the whole Canadian population. To our knowledge, this is the first study on P2P file-sharing that analyzes original and representative microeconomic survey data from the Canadian population. Few previous studies have analyzed representative microeconomic data, for Canada or any other country.

The existing literature identifies two competing effects associated with the P2P music file-sharing: the sampling and substitution effects. The sampling effect is characterized both by individuals downloading music in order to listen to it before buying it as well as by individuals downloading music that is not available in stores, while the substitution effect is characterized by individuals downloading music instead of purchasing it. In this paper, we further disentangle the sampling effect by adding a market segmentation effect, characterized by individuals engaging in P2P file-sharing because they do not want to purchase the entire bundle of songs on a CD.

Our review of existing econometric studies suggests that P2P file-sharing tends to decrease music purchasing. However, we find the opposite, namely that P2P file-sharing tends to increase rather than decrease music purchasing.

Among Canadians who engage in P2P file-sharing, our results suggest that for every 12 P2P downloaded songs, music purchases increase by 0.44 CDs. That is, downloading the equivalent of approximately one CD increases purchasing by about half of a CD. We are unable to find evidence of any relationship between P2P file-sharing and purchases of electronically-delivered music tracks (e.g., songs from iTunes). With respect to the other effects, roughly half of all P2P tracks were downloaded because individuals wanted to hear songs before buying them or because they wanted to avoid purchasing the whole bundle of songs on the associated CDs and roughly one quarter were downloaded because they were not available for purchase. Our results indicate that only the effect capturing songs downloaded because they were not available for purchase influenced music purchasing, a 1 percent increase in such downloads being associated with nearly a 4 percent increase in CD purchases.

We find evidence that purchases of other forms of entertainment such as cinema and concert tickets, and video games tend to increase with music purchases. It has been argued in the literature that the increase in the number of entertainment substitutes has led to a decline in music purchasing, but our results do not support this hypothesis. As expected, we find that reported interest in music is very strongly associated with music purchases. Finally, our results suggest that household income is not important in explaining music purchases.

Friday, November 02, 2007

Hula Litigants Dance to a Different Tune

On December 22, 2006, a district court in Hawaii issued an opinion in a dispute between a photographer and the owner of an art gallery, Reece v. Island Treasures Art Gallery, 468 F. Supp.2d 1197 (D. Hawaii 2006). The dispute centered on the photographer's picture of a hula dancer, which the photographer alleged was infringed by a stained glass work of art being sold by the gallery. Judge Seabright denied plaintiff's motion for a preliminary injunction finding she had failed to establish a likelihood of success, even though there is a pretty close similarity between the poses in the two works.

A TV station in Hawaii is now reporting the parties have settled, with the gallery paying $60,000 in attorney's fees. Here is a link to the clip, which helpfully displays the two works. Let the luau begin!