My new blog

I launched a new blog today, called Moral Panics and the Copyright Wars. Here's the link. The blog is based on a book I just published of the same title, available here and here.

The Declaration on the Three-Step test

On April 2d, I did a post on the counter-reformation against amendments to copyright laws in the public interest. It is, apparently, not enough for some copyright holders that their rights have ballooned to unprecedented size and strength: they also have to fight back any efforts to ameliorate the harsh consequences on the public from the expansion of those rights. One political argument advanced in the push-back against the public is what I call the Neo-Blackstone movement: copyright is property, and property represents “that sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe.” Blackstone’s ode here (in his Commentaries) to property was never descriptive, not even of then-contemporary English law; it was in fact merely a political wish. Professor Robert Gordon, in a study of the actual state of the law in Blackstone’s time, wrote:

What strikes the backward-looking observer
as curious is simply this: that in the midst of
such a lush flowering of absolute dominion talk
in theoretical and political discourse,
English legal doctrines should contain so
very few plausible instances of absolute
individual rights. Moreover, it is curious that
English and colonial social practices contained so
many property relations that seem to traduce the
ideal of absolute individual rights.
Robert Gordon, “Paradoxical Property,” reproduced in Early Modern Conceptions of Property 95, 97 (John Brewer and Susan Staves editors 2996, Rutledge).

And as much as Blackstone pushed the view of copyright as a natural property as a lawyer for the London publishers in the great “Battle of the Bookseller,” when he later became a judge, he did not adhere to the view of copyright as vesting its owner with the sole and despostic dominion he earlier advanced in his Commentaries. Wonderful evidence of this is provided in a report of the 1774 decision in Hawkesworth v. Newbery, which held that abridgments (we would call them condensations today), might not violate copyright owners’ rights:

The Lord Chancellor was of opinion that this abridgement of the work was not any violation of the author's property whereon to ground an injunction.

That to constitute a true and proper abridgement of a work the whole must be preserved in its sense: And then the act of abridgement is an act of understanding, employed in a carrying a large work into a smaller corpus, and rendering it less expensive, and more convenient both to the time and use of the reader. Which made an abridgement in the nature of a new and meritorious work.

That this had been done by Mr. Newbery, whose edition might be read in a fourth of the time, and all the substance preserved, and conveyed in language as good or better than the original, and in a more agreeable and useful manner. That [the Lord Chancellor] had consulted Mr. Justice Blackstone whose knowledge and skill in the profession was universally known, and who as an author had done honour to his country.

That they had spent some hours together, and were agreed that an abridgement, where the understanding is employed in retrenching unnecessary and uninteresting circumstances, which rather deaden the narration, is not an act of plagiarism upon the original work, nor against any property of the author in it, but an allowable and meritorious work. And that this abridgement of Mr. Newberry's falls within these reasons and descriptions.

Judgment for defendant abridger. Fair abridgments were permitted in the United States until passage of the 1909 Act. So much for the sole and despostic view. But one even sees expressions of the view that the natural state of affairs in copyright is sole and despotic dominion in how to interpret the Berne Convention's three-step test. Professor Sam Ricketson, the god of Berne Convention scholars and an all around great guy, wrote in a 2003 study of rights and limitations in the Berne Convention statements that limitations and exceptions will be allowed if “there is a public interest … that justifies overriding the private rights of authors in their works in … particular circumstances.” Sam Ricketson, WIPO Study on Limitations and Exceptions of Copyright Related Rights in the Digital Environment 4, Standing Committee on Copyright and Related Rights, Ninth Session, Geneva, June 23 to June 27, 2003, SCCR/9/7 (April 5, 2003).

I don’t accept the private -- public dichotomy advanced here: there is, after all, no such thing as copyright rights privately created and privately enforced. Copyright is created by governments for public reasons and is enforced by public laws and public judges. Copyright laws are created as an entire fabric consisting of certain entitlements given to copyright owners, and certain entitlements given to the public. There is no basis to regard any one entitlement as more privileged or important than another. That leads me to an exciting new declaration on the three-step test recently issued by three very prominent European scholars: Reto. M. Hilty, who is the Director of the Max Planck Institute for Intellectual Property, Competition and Tax Law, Munich, and a Professor at the Universities of Zurich and Munich, Germany; Christophe Geiger, a Researcher, at Max Planck Institute and Associate Professor and Director, Centre for International Industrial Property Studies (CEIPI), University of Strasbourg, France; and Jonathan Griffiths, Senior Lecturer, School of Law, Queen Mary, University of London.

The declaration is available here, at the Max Planck website, and is entitled “A Balanced Interpretation of the ‘Three-Step Test’ in Copyright Law. The word balanced is accurate for all but the most partisan of combatants in the Copyright Wars. The declaration states, for example: “Copyright law aims to benefit the public interest. It produces important incentives for the creation and dissemination of new works of authorship to the general public. These works serve to satisfy common needs; either in their own right or as a basis for the creation of further works.” The declaration also does not interpret the three-step test as a free for all, noting: “The Three-Step Test has already established an effective means of preventing the excessive application of limitations and exceptions.” No bomb throwers in this group. The declaration adds, though: “The public interest is not well served if copyright law neglects the more general interests of individuals and groups in society when establishing incentives for rightholders.”

This balanced view is continued in how to interpret the three-step test. The dominant way of interpreting it – advanced by copyright owners and natural rights copyright lawyers – is as an obstacle course: national governments interested in amendments to serve the public interest have to surmount all three steps, and the burden is really heavy at each step. In place of this absurd approach, the declaration states in reaction to a finding that “in applying the Three-Step Test, national courts and legislatures have been wrongly influenced by restrictive interpretations of that Test”:

1. The Three-Step test constitutes an indivisible entirety. The three steps are to be considered together and as a whole in a comprehensive overall assessment.
2. The Three-Step Test does not require limitations and exceptions to be interpreted narrowly. They are to be interpreted according to their objectives and purposes.
3. The Three-Step Test’s restrictions of limitations and exceptions to exclusive rights to certain special cases does not prevent legislatures from introducing open ended limitations and exceptions, so long as the scope of such limitations and exceptions is reasonably foreseeable …

The last statement refers of course to fair use and should be a helpful rebuke to the whispering campaign being conducted in certain national capitals against the adoption of more liberal fair dealing laws. I regard the declaration as a watershed event: a statement by the crème de la crème of European scholarship that the counter-reformation is exactly that.

Neil Netanel’s Copyright’s Paradox

On December 13th, 2007, I did a post on UCLA law professor Neil Netanel’s article discussing the causes for copyright’s expansion something like a major league baseball player (pick your favorite) juiced on steroids. I noted that the article was originally intended to be part of a forthcoming book “Copyright’s Paradox.” I am happy to report Copyright’s Paradox is now published (available here, at amazon.com (for the discounted price of $25.16, a definite metziah), or here at Barnes & Noble for the same price for members; non-members pay $27.96.

The book enlarges upon a theme Professor Netanel wrote about earlier in “Locating Copyright Within the First Amendment Skein,” 54 Stan. L. Rev. 1, 13-20 (2001). Copyright’s Paradox is 268 pages with endnotes, and has nine chapters:

1. A “Largely Ignored Paradox”
2. From Mein Kampf to Google
3. What is Freedom of Speech? (And How Does it Bear on Copyright?)
4. Copyright’s Ungainly Expansion
5. Is Copyright “the Engine of Free Expression?”
6. Copyright’s Free Speech Burdens
7. The Propertarian Counter-Argument
8. Copyright and the First Amendment
9. Remaking Copyright in the First Amendment’s Image

I confess that even aside from being a Google employee, the title of the second chapter made me wince, although I appreciate that the juxtaposition was intended to be jarring, given the obvious incongruity, both thematically and chronologically. The discussion of Mein Kampf refers not Hitler as a speaker, but to Alan Cranston's unauthorized and highly critical translation designed to show the evils of Hitler's book. I had known of and written about the Houghton Mifflin verus Stackpole case, but I didn’t know that Senator Cranston had, as a youth worked for the International News Service in the 1930s. Cranston was fluent in German and, after reading “Mein Kampf” tried to sound an early alarm about Hitler’s plans. Cranston had read the “official” English translation, which as Professor Netanel notes, was a “heavily edited, bowdlerized version designed to make Hitler more palatable for British and American readers.” (Thanks Houghton Mifflin!) Cranston then made his own translation which was published just before Hitler invaded Poland to begin WWII, and which contained Cranston’s own commentary, which was highly critical). Cranston’s (also abridged) version was a 32 page newspaper pamphlet which sold for 10 cents. Houghton Mifflin sued and got an injunction. This amazing story is worth the price of Professor Netanel’s book by itself, but there are many others, including an invaluable discussion about what he calls “paracopyright,” illustrated by Adobe’s effort to prevent the copying of snippets, loaning, or even playing aloud of the eBook versions of public domain stories. (page 67). Legislators in other countries contemplating new copyright laws would benefit from reading this section.

One can see in chapter 4 the source of the concern for what was spun-off as Professor Netanel's expansion article. Reading both the article and the chapter gives one a full picture of his point that copyright has expanded dramatically over time, an expansion that disturbingly has occurred fairly recently, contrary to Michael Eisner’s crypto-history. The paradox of chapter 1 and therefore of the book’s title is taken from a 1970 article by Professor Melville Nimmer, “Does Copyright Abridge the First Amendment Guarantees of Free Speech and Press?, " published in 17 UCLA L. Rev. 1180. Professor Netanel writes that at the time of the Nimmer article, “those who values creative expression happily favored both strong copyright protection and rigorous enforcement of First Amendment rights without perceiving any potential tension between the two.” Copyright’s Paradox is a persuasive effort to address that lacuna, and it is long overdue. I say overdue because the Nimmer article, in my opinion, led, no doubt inadvertently, to a backlash in the courts.

Nimmer wrote for example,:

[A] grave danger to copyright may lie in the failure to distinguish between the statutory privilege known as fair use and an emerging constitutional limitation on copyright contained in the first amendment. The scope and extent of fair use falls within the discretion of the Congress. The limitations of the first amendment are imposed upon Congress itself. Fair use, when properly applied, is limited to copying by others which does not materially impair the marketability of the work which is copied. The first amendment privilege, when appropriate, may be invoked despite the fact that the marketability of the copied work is thereby impaired.
17 UCLA L. Rev. at 1200-1201

The distinction is, for my tastes and apparently that of the courts, too neat. Only two years after publication of Nimmer’s article, lower courts reacted negatively to the idea of the First Amendment as a form of uber-IP law, see e.g., Walt Disney Productions v. Air Pirates, 345 F. Supp. 108, 116 (N.D. Cal. 1972), aff'd in part, rev'd in part on other grounds, 581 F.2d 751 (9th Cir. 1978); Robert Stigwood Group Ltd. v. O'Reilly, 346 F. Supp. 376, 382 (D. Conn. 1972), rev'd, 530 F.2d 1096 (2d Cir. 1976) as did the Supreme Court in 1977 in Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562, 577 n.13 (1977). Eight years later, in 1985, in Harper & Row, Publishers, Inc. v. Nation Enterprises, Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985) the Supreme Court put the kibosh on a separate First Amendment defense. In Eldred v. Ashcroft, 537 U.S. 186, 219–221 (2003). the Supreme Court once again rejected a First Amendment challenge. In Cohen v. Cowles Media Co., Cohen v. Cowles Media Co., 501 U.S. 663, 669 (1991), the Supreme Court held broadly: “The press, like others interested in publishing, may not publish copyrighted material without obeying the copyright laws.” Even Justice Brennan, a stalwart defender of the First Amendment, agreed. In New York Times Co. v. United States, 403 U.S. 713, 726 n. (1971) one year after Nimmer’s law review was published, wrote that there was no conflict between the two fields.

Of course saying there is no conflict requires one to sharply delineate the interests protected by and the reach of both fields, and it is here that Professor Netanel’s book excels where Nimmer’s article tended to confuse. Eschewing the formalistic approach to the paradox that has led to the decisions noted above, Professor Netanel (particularly in the final chapter) takes us through the way that copyright, properly limited and understood, may in conjunction with the First Amendment, again play a constructive role. He does this by focusing primarily on the values that underlie the first amendment, which he argues are not coterminous with first amendment doctrine. He argues that copyright should be informed by and tailored to further first amendment values, even beyond what the first amendment might require. His approach is at more respectful of copyright and the First Amendment than the earlier Nimmer article.

Copyright's Paradox is a major book by a major thinker, and a must read for all.

Will Tasini Get Birched?

Last June, I had a post about the Eleventh Circuit vacating its pre-Tasini panel opinion in the Greenberg v. National Geographic case, 244 F.3d 1267 (11th Cir. 2001), vacated, 488 F.3d 1331 (11th Cir. 2007), vacated and pet. for reh’g en banc granted, 497 F.3d 1213 (11th Cir. 2007).

Both Tasini and Greenberg involved interpretation of 17 USC 201(c):

(c) Contributions to Collective Works. — Copyright in each separate contribution to a collective work is distinct from copyright in the collective work as a whole, and vests initially in the author of the contribution. In the absence of an express transfer of the copyright or of any rights under it, the owner of copyright in the collective work is presumed to have acquired only the privilege of reproducing and distributing the contribution as part of that particular collective work, any revision of that collective work, and any later collective work in the same series.

If bad facts make bad law, persistently held erroneous views of the law make even worse cases. The Greenberg case illustrates this principle all too well. In Greenberg, district judge Joan Lenard rightly granted summary judgment to defendants National Geographic Society (NGS) and Mindscape, Inc., for the digitization and distribution of back issues of the NGS’ magazine on CD-ROM. Judge Lenard correctly held that Section 201(c) covered the use. (An introductory montage is not covered by that section but is argued to be fair use). A panel of the Eleventh Circuit, per Judge Stanley Birch, reversed.

Among the most important errors made in Judge Birch’s original panel decision are these two: (1) errors in the describing NGS’s copyright registrations ; (2) erroneously holding that by putting past issues of its magazine on CD-ROM, NGS had created a new collective work merely because buried within the CD-ROM, invisible to the user, was a computer program, created by defendant Mindscape, that permitted the search and retrieval of particular subjects. Judge Birch acknowledged that “Every cover, article, advertisement, and photograph appears as it did in the original paper copy of the magazine; ” [w[hat the user … sees on his computer screen … is a reproduction of each page of the Magazine that differs from the original only in the size and resolution of the text.” That should have been the end of the matter, and an affirmance of Judge Lenard.

Judge Birch also acknowledged that “both the digital reproductions and the microfilm/microfiche reproductions require a mechanical device for viewing them,” but added, “the critical difference, from a copyright perspective, is that the computer, as opposed to the machines used for viewing microfilm and microfiche, requires the interaction of a computer program in order to accomplish the useful reproduction involved with the new medium. These computer programs are themselves the subject matter of copyright, and may constitute original works of authorship, and thus present an additional dimension in the copyright analysis.” Although Judge Birch added that because there were other aspects to the court’s ruling, such as an introductory montage, “we need not decide in this case whether the addition of only the Program would result in the creation of a new collective work,” in reality, the only basis for the panel’s holding on the principal issue – exact reproduction of the NGS issues -- was the use of the computer program.

One can scour in vain the statutory language, the legislative history, cases under the 1909 and 1976 Acts, and the Supreme Court’s Tasini opinion for the slightest indication that use of a computer program, copyrighted or not, in conjunction with an exact replica of the original collective work has any bear on the analysis under Section 201(c), nor did Judge Birch cite any authority for the proposition. Neither did he explain what the “additional dimension” is for the copyright analysis: merely stating there is such a dimension establishes its existence much less relevance. Finally, there is no explanation for why the unseen use of a computer program whose only function is to permit one to search and retrieve a digital version of the intact, original collective work results in a “new collective work”: the old NGS collective work was unchanged.

It is important to point out that Section 201(c) does not refer to a “new collective work;” and neither do the legislative reports, which referred instead to “an entirely different magazine or other collective work.” It is semantic and legal legerdemain to characterize a digital version that exactly reproduces the paper version of the original collective work as a “new collective work,” “an entirely different magazine,” or as another collective. It is, instead, the same collective work, not even a revision of that collective work. The fact that a different work, a computer program, is used functionally to permit consumers to search and access the original collective work in the exact form and context could not be more irrelevant for Section 201(c) purposes.

A holding that use of an underlying, unseen computer program disentitles a publisher of the Section 201(c) privilege makes a mockery of Tasini’s holding that Section 201(c) is media-neutral. Digital accessing of works can only be achieved through use of computer programs. All CD-ROMs utilize computer programs, as do search engines (which are computer programs after all). A Luddite construction of Section 201(c) barring use of computer programs would consign the world to using microfilm and microfiche, in the process not only impeding the present surge in electronic preservation in favor of requiring libraries to maintain hard copies and microform/microfiche, but also impeding the democratic access to and dissemination of information to those who do nor live near depository libraries, to who cannot go to those libraries even if they do because they have to work for a living and cannot arrange to go during library hours, to say nothing of the exponentially larger amount of information available and searchable. Judge Birch’s approach places itself diametrically in the strongest opposition to the Constitutional goal of Promoting the Progress of Science.

A panel of the Eleventh Circuit panel vacated Judge Birch’s opinion on June 31, 2007 and as noted in the prior post, was correct in all respects. But that opinion itself was vacated en banc. The court en banc heard argument two days ago, February 26th. I didn’t attend the argument, and so have to rely on those who did, including newspaper reports. The sense I get from my sources is that the vote may be close. Here are excerpts of a truly outstanding article by R. Robin McDonald from the Daily Report in Georgia (link to the full article here):


Kenneth W. Starr, former independent counsel during the Whitewater Investigation, had been addressing the 11th U.S. Circuit Court of Appeals en banc for less than a minute Tuesday morning when Judge Stanley F. Birch Jr. interrupted.

"Mr. Starr, we're familiar with the facts. Let's get to the heart of things," he chided.

….
… Birch -- the 11th Circuit's resident copyright expert -- repeatedly challenged Starr as National Geographic's executive vice president, Terrence B. Adamson, watched from the packed gallery with former U.S. Attorney General Griffin B. Bell. Adamson clerked for Bell when the latter was a federal appellate judge.

…
… Starr argued that the U.S. Supreme Court's Tasini opinion expanded the definition of a revision to denote "a new version." The CD-ROM archive, he argued, was a new digital version that faithfully reproduced the published magazines and was "the modern version of microform."

As a digital replica, he said it did not infringe the copyrights of the contributors whose photographs had been previously published.

But Birch noted pointedly that the National Geographic had secured a new copyright for the CD-ROM library, called "The Complete National Geographic" -- an indication that the National Geographic Society considered it to be a new work, not a reprint.

Starr responded, "It's a new copyrightable element, which is what makes this a revision."

… Starr asserted Tuesday that if previously published works are faithfully reproduced -- much as they appear on microform -- then Tasini does not find a copyright has been infringed.

"If Tasini does not approve of microform," Starr said, "I am misreading Tasini."
…

Said Barkett: "I think Tasini does say that." [Patry: meaning she agreed with Starr].

Chief Judge J. L. Edmondson also weighed in, saying he was troubled that the digital library also contained computer code and software that made it different from old copies of National Geographic sitting in his father's closet.

"Here's the problem I have," Edmondson said. "This thing can do a lot of stuff that thousands of issues in my father's closet can't do. This thing is different. ... At some point, I have to ask, 'Doesn't something stop being a revision and become a new compilation?'"

Edmondson also noted that the photo montage included in the digital set "seems to be a different thing" than faithfully reprinting the magazine.

Judge Stanley Marcus wanted to know how the CD-ROM library differed from microform. But Starr insisted that any difference in the two products "does not matter as long as there is contextual continuity."

Using Ginsburg's dicta as his basis, Starr insisted that as long as what is presented to the user mirrors the previously published image, "regardless of the robustness of the [digital] search engine," it can be considered a revision acceptable under federal copyright law rather than a new work.

Greenberg was represented by Miami attorney Norman Davis, of Squire, Sanders & Dempsey, who argued that federal copyright law permits the reproduction of articles without infringement only in limited cases.

Like Marcus, Judge Susan H. Black pushed to know how microform and the CD-ROM library differed. When Davis suggested the CD-ROM library was more marketable and more lucrative, Black replied, "The money answer doesn't help a lot."

When Davis insisted that "the money argument" was a relevant part of the debate, Birch suggested that the copyright publishing privileges must be balanced "relative to economic advantages. It's kind of like the writers; strike," he said referencing the recent settlement between Hollywood writers and producers over additional royalties derived from digital libraries and Internet Webcasts. Birch also distinguished Greenberg from Tasini, calling Tasini a "disassembled case" where "they had taken apart the original work" and placed individual articles online. "We don't have that case," Birch said. "We have a different case." Greenberg, he said, "is an assembly case" where pieces have been added to a previously published work rather than having that work dissected for individual articles as was the case in Tasini.

Judge Charles R. Wilson appeared unconvinced by Davis' argument. "It's simply a digital version of microfilm," he said. "At least, it sounds like that to me."

And Anderson wanted to know whether a new collection of bound magazines as well as microfilm "would somehow violate your client's [copy]rights? ... Is it your position that a bound volume is a new collective work?"

And he pressed Davis about Starr's argument: "Your opponent is suggesting strongly that the Supreme Court in Tasini held that microfilm of the entire National Geographic magazine is protected."

"I don't think [the Supreme Court] held that," Davis replied. "I think they suggested it."

During Starr's rebuttal, Birch suggested that a revision, under the federal copyright statute, had to be a revision of an individual issue, not an entire library of work.

Starr replied, "You have fallen into error," citing Tasini as "saying microform is a revision."

When Anderson noted pointedly, "That is dicta," Starr replied, "It is guidance that tells us the meaning of revision."

Copyright Owners Can Get Satisfaction, But Only Once

The Rolling Stones kvetched about gettin' no satisfaction, although no one believed they came ever up short. The Eleventh Circuit is concerned about satisfaction too, and of copyright owners. It concluded, on February 25th that copyright owners should be satisfied, but only once. The case is BUC International Corp. v. International Yacht Council Ltd., 2008 WL 482159, Docket No. 05-16151, available here.

The court of appeals had previously affirmed a jury verdict of $1,598,278 in actual damages for infringement of plaintiff's used boat price guide, 489 F.3d 1129 (11th Cir. 2007)(There was an alternate award of $1,098,ooo in statutory damages). Several weeks before trial, plaintiff had entered into a confidential settlement agreement with some of the co-defendants. One co-defendant paid plaintiff $290,000. Two others paid, through their insurance companies, $500,000. The present appeal was from a decision by the district court declining to reduce the final judgment by the settlement amounts against the defendants who went to trial under the "one-satisfaction rule." Rule 60(b)(5) of the Federal Rules of Civil Procedure allows a court to relieve a part from a final judgment if "the judgment has been satisfied, released, or discharge." See also 60(b)(6). The one-satisfaction rule has its roots in general tort principles, and is designed to limit awards to one payment for a single injury ; the rule sweeps in amounts received from settling joint tortfeasors.

The one-satisfaction rule is different from contribution. Contribution concerns the ability of one defendant to demand that another, co-defendant who is jointly liable pony up for damages too. Under copyright law, a plaintiff may collect the entire amount from one defendant, so it is easy to see why such a defendant might seek contribution from other defendants. But the Copyright Act does not contain any provisions providing for contribution, and not surprisingly, the courts are uniform in holding that no such rights exist as a matter of federal law. See, e.g., Elektra Entertainment Group, Inc. v. Santangelo, 2008 WL 461536 (S.D.N.Y. February 15, 2008); Pure Country Weavers, Inc. v. Bristar, Inc., 410 F. Supp. 2d 439, 448 (W.D. N.C. 2006); Equity Builders and Contractors, Inc. v. Russell, 406 F. Supp. 2d 882, 885-886 (N.D. Ill. 2005); Artista Records, Inc. v. Flea World, Inc., 356 F. Supp. 2d 411, 416 (D.N.J. 2005); Christopher Phelps & Associates, Inc. v. Galloway, 2005 WL 4169714 (W.D. N.C. 2005); Lehman Brothers, Inc. v. Wu, 294 F. Supp. 2d 504 (S.D. N.Y. 2003); Johnston v. Smith, 1997 WL 584349 (N.D. Ga. 1997). But see the dictum in Salton, Inc. v. Philips Domestic Appliances Personal Care B.V., 39 F.3d 871, 877 (7th Cir. 2004), dismissed in Equity Builders, 406 F. Supp. 2d at 885 n.1 as referring to the context of joinder of indispensable parties, and Interscope Records, Inc. v. Duty, 2006 WL 988086, at *2 9D. Az. April 14, 2006)(stating in dictum that defendant "may have" a "viable" contribution claim).

What about state law? In two opinions, federal courts have rejected state claims of contribution for damages paid for copyright infringement, holding such rights may exist only under the Copyright Act; since the Copyright Act does not provide such a right, the claim was rejected. Lehman Brothers, Inc. supra, and Johnston. See also Yash Raj Films (USA) v. Kumar, 2006 WL 2463532 (E.D. N.Y. 2006) (denying leave to file third-party complaint for contribution, noting Lehman Bros. and Johnston); Polygram Intern. Pub., Inc. v. Nevada/TIG, Inc., 855 F. Supp. 1314, 1334 (D. Mass. 1994), where Judge Keeton noted tentative agreement that there is no right of contribution. These rejections did not use preemption as the decisional ground, but no other basis seem apparent: if state law did not provide for such relief, the court would have dismissed on that basis.

What about the one-satisfaction rule? In its decision two days ago, the Eleventh Circuit held that it does apply to copyright infringement actions, citing Screen Gems-Columbia Music, Inc. v. Metlis & Lebow Corp., 453 F.2d 552, 553-554 (2d Cir. 1072), and therefore reversed and remanded, writing: "To hold otherwise would allow a plaintiff to recover multiple times for a single injury, frustrating this elementary principle of tort law in a manner we cannot imagine envisioned by Congress." 2008 WL 482159, at *5.

An Idea by any other name

Copyright, like many areas of law has its pat phrases; one of the most common is that there is no protection for ideas, but only for the expression of ideas. As Judge Easterbrook observed, this is not an analytical tool, but merely a way to state a conclusion. See Nash v. CBS, Inc., 889 F.2d 1537, 1546 (7th Cir. 1990).

Another pat phrase in copyright is "I am only trying to protect my combination of unprotectible elements," including ideas. Sometimes the statement is accurate, but in other cases, the compilation argument is a disguised effort to protect ideas after all. Jewelry designs present a compelling case for careful scrutiny of the "I'm only trying to protect a combination of unprotectible elements" argument. Defendants' rebuttal to this argument have two prongs: plaintiff's design is not protectible at all; or, it is (barely) protectible, but not infringed. In Todd v. Montana Silversmith, Inc., 379 F. Supp.2d 1110 (D. Col. 2005), the court found plaintiff's barbed wire design unoriginal.

David Yurman has brought a number of suits over his use of cable in his upscale jewelry. See Yurman Design Inc. v. PAJ, Inc., 262 F.3d 101, 112 (2d Cir. 2001)(affirming finding of willful infringement); Yurman Design Inc. v. Chaindom Enterprises, Inc., 2003 WL 22047846 (S.D.N.Y. Aug. 29, 2003), Civ. No. 99 Civ. 9307 (reviewing plethora of earlier opinions in the case); Yurman Design Inc. v. Garden Jewelry Mfg. Corp., 2000 WL 1141428 (S.D.N.Y. Aug. 11, 2000, 99 Civ. 10507). A recent suit, Yurman Studio Inc. v. Andin International, Inc. et al, 08 Civ. 01159 (S.D.N.Y.), presents another aspect of this. The case was originally assigned to the great judge Miriam Cedarbaum, who practised copyright law before she went on the bench. I understand that at a conference on the case she indicated that it was her initial view there was no infringement. She later recused herself because her son is a lawyer at a firm of representing another defendant who was added to the case. Here is a side by side of some of plaintiff's design and some of defendants':



There are three basic elements to both designs: (1) the middle part which as a diamond "pave" (think pavement) arrangement; (2) a gold frame around the middle part, and (3) a chain design "skirt" around the gold frame. This is a common combination in the industry. Here are a few examples:






Defendant alleged independent creation and lack of access, but on the substantial similarity issue there are a number of differences only some of which can be seen in the photos above. There is for example only one cable in Yurman's, but three in defendants, and they are of a different type of design and perspective. One can of course see similarities, but similarities alone don't give rise to infringement: the similarities may exist but the two works be independently created (as is alleged here); and the similarities may be in uncopyrightable elements. The danger in this dispute is that none of the elements are themselves protectible. But in looking at the two designs side by side, one tends to focus on the similarities in the discrete elements, and not focus as one should on the bare compilation claim. While I think there are differences in the discrete elements, what probably led Judge Cedarbaum to conclude there was no similarity was her (correct) focusing on the claim that plaintiff can at best own copyright in the combination of three standard, nonprotectible elements, and that therefore any similarities in the discrete elements are irrelevant. Whether the trees are similar (I think not), the forest isn't, and it is only the forest that is protectible, if at all in this case.

No One Likes a Bully: The IIPA and Canada

Despite the use of the word “International” in its name, the International Intellectual Property Alliance (IIPA) is an umbrella group comprised of 7 U.S. trade associations: the Association of American Publishers, Business Software Alliance, Entertainment Software Association (video game industry), The Independent Film & Television Alliance, The Motion Picture Association of America, National Music Publishers’ Association, and Recording Industry Association of America; it pursues a purely U.S. corporate copyright agenda.

The IIPA had a modest infancy: it arose out of early legislative efforts in the mid 1980s to condition favorable U.S. trade benefits on other countries providing U.S. works “adequate and effective” IP protection, a concept very much in the eye of the beholder. With a ramped up GSP program and then the “Special 301” revision in the 1988 Omnibus Trade and Competitiveness Act, the IIPA quickly filled a vacuum: the Office of the United States Trade Representative (charged with enforcing trade laws) needed statistics to establish which countries were naughty and which were nice. Lacking any investigative resources of its own, USTR uses figures given to it by IIPA. The figures offered up by the IIPA on projected U.S. losses from “piracy” have been criticized for being wildly inflated, speculative, and based on demonstrably false assumptions, such as every pirated copy equaling a loss of a sale (and usually at U.S. prices). But what’s wrong with fudging for a good cause? And who are pirates to complain? (It also appears that the U.S. is the nicest country of all since it never appears on its own list, while major Western and many other countries have been tarred with varying degrees of naughtiness).

It is entirely proper for U.S. industries to protect their own interests. IIPA’s website, though, shoots for a loftier goal, that of helping to create “a legal and enforcement regime for copyright that not only deters piracy, but that also fosters technological and cultural development in these countries, and encourages local investment and employment.” The last two clauses evoke a globally beneficent outlook, one reminiscent of the “a raising tide lifts all boats” bromide according to which very high levels of protection are actually good for other countries because it protects authors from those countries. The bromide is false, though, and not only because the IIPA doesn't do outreach to help local investment or employment in foreign countries: it is also false because the ill-effects of hyper-copyright are felt in the U.S., from orphan works, to oppressive remedies, and misuse of circumvention rights to squelch competition and preserve outmoded business models. It must also be pointed out that the rising tide lifts all boats approach is one the U.S. deliberately eschewed in the first 100 years of its existence, resulting in the British referring to the U.S. as the Barbary Coast of Piracy, and that the U.S. did not join the Berne Convention until the extremely late date of March 1, 1989. The U.S. conversion to international copyright is quite recent; post-conversion, we have been acting like Paul, not Saul. Other countries, especially those who have been members of the Berne Convention since the 19th century, can be excused for thinking our conversion came about not out of faith but rather out of an opportunity to force U.S. law on the rest of the world; in short, copyright imperialism.

In practice, the IIPA’s efforts have gone far beyond issues of piracy. Its annual 301 report goes into great detail about the perceived deficiencies of all stripes in foreign laws, accusations that understandably offend those countries. Nor is the IIPA content with attempting to get other countries to adopt U.S. law lock-stock-and-barrel (and regardless of vast differences among legal systems): Last year, I reported on IIPA’s efforts to stop the Israeli Knesset from adopting the U.S. fair use provision in its statute. Apparently, it is only those laws that are favorable to U.S. corporate interests that “will foster[] technological and cultural development in these countries, and encourage[] local investment and employment.”

Sometimes countries fight back (and the Israelis, Baruch HaShem, passed their fair use provision anyway). IIPA’s repeated attacks on Canadian copyright law led Ms. Nancy Segal, a senior Canadian Foreign Affairs official, to remark last year:

In regard to the watch list, Canada does not recognize the 301 watch list process. It basically lacks reliable and objective analysis. It's driven entirely by U.S. industry. We have repeatedly raised this issue of the lack of objective analysis in the 301 watch list process with our U.S. counterparts. I also recognize that the U.S. industry likes to compare anyone they have a problem with, concerning their IPR regime, to China and the other big violators, but we're not on the same scale. This is not the same thing. If you aren't on the watch list in some way, shape, or form, you may not be of importance. Most countries with significant commercial dealings are on the watch list.

Member of Parliament Joe Comartin (Windsor—Tecumseh, NDP), then added:


My perception, and I think this is based on fairly decent material, is that if anybody was going to be on that watch list, the U.S. should put themselves on it, in the sense that they have more counterfeit material and goods going through their country, getting into their country, and manufactured in their country on a proportional basis than Canada does, by a long shot.

In reading these remarks, I remembered my seven years working on Capitol Hill, where on my daily trek up Pennsylvania Avenue to get lunch, I would pass by tables at which counterfeit DVDs were offered for sale, one block from the Capitol building itself, and right across the street from the Copyright Office. The Canadians officials quoted above were reacting, perhaps, to IIPA’s 2007 report, which began, “Canada’s long tenure on the USTR Watch List seems to have had no discernible effect on its copyright policy.” Ordinary people, when faced with such a lack of response from an immediate neighbor – in this case, a friendly, wealthy (Canada’s dollar is worth more than the U.S. dollar), high educated and networked country -- might re-evaluate an obviously failed policy, but no, IIPA’s recommendation was to throw more fuel on the fire, recommending that Canada be placed on an even naughtier list, the Priority Watch List, a recommendation repeated in the 2008 report, and to upbraid the Canadians for allegedly having a copyright law fit for Pirate Bay, not Thunder Bay.

So what are the IIPA’s beefs? The principal ones ostensibly concern Canada’s failure to implement the 1996 WIPO treaties. Examination of the IIPA’s 301 reports reveals, though, that what it has in mind is simply adoption of U.S. law, not amendments to Canada law that are consistent with the treaties obligations. The WIPO treaties modestly require only remedies for circumvention of Technological Protection Measures (TPMs) that involve the exercise of exclusive rights. Although the U.S. attempted to have the treaties include remedies for circumvention of access controls, other countries rejected the U.S.’s efforts. One would never know this from the IIPA’s reports, which mix the two together and lead readers to believe both are required; they are not.

Even more, the IIPA has stated (2004 report), “The WIPO digital treaties provide the principal legal tools required to fight piracy.” No evidence to support this assertion is presented, and the assertion is absurd: piracy (even as IIPA defines it), has existed for millennia, and the tools used to combat it have been traditional copyright rights and remedies. On this (and many other scores), Canada’s law is exemplary. I have not seen any proof that the U.S. TPM laws have led to a decrease in piracy within the U.S.; to the contrary, U.S. corporate interests constantly complain before Congress about the exponential increase of piracy, a “pandemic” that can only be cured by ever stronger laws. If we take content owners at their word, TPMs have been remarkably ineffectual, and therefore not something we would want to stuff down other countries’ throats. Indeed, in a stunning mea culpa not lost on Canadians, last year former U.S. Commissioner of Patent Bruce Lehman, the architect of the DMCA and of the U.S. negotiations at the WIPO treaties, stated during a symposium in Montreal that the DMCA had been a failure due – to copyright owners’ actions. See here.

The actual purpose of TPMS has nothing to do with piracy, and is stated in the concluding sentence to the one I quoted above from the IIPA’s Section 301 report: “Electronic commerce in copyrighted content requires a working digital marketplace in which only legitimate copies of works are transmitted, and only under the terms negotiated or permitted by the rights owner.” In other words, TPMs are all about preserving business models, not about piracy. In the United States, we have been waiting since 1998 for a working digital marketplace, after granting to IIPA’s members extensive rights in the DMCA on the promise that once the laws were in place, copyright owners would create the market. They haven’t: we are still nowhere close to even a nascent digital marketplace, much less a working one. But why not, since the laws are in place? The answer is content owners already have what they wanted, which is control over whether a legitimate marketplace will ever exist; but if it does, it will certainly be on their terms as IIPA clearly indicates. The purpose of the DMCA from their perspective was not to facilitate the actual development of a digital marketplace, but to give them veto power over whether one would ever exist, and if so, what it would look like. That’s why the DMCA represented a fatal blow to copyright as a system: rather than adapting copyright rights to the digital environment, the DMCA gave copyright owners the right to control the environment itself, with consequences that were entirely predictable given the past track record of the industry’s suits against innovations from talkies, to cable television, photocopy machines, and VCRs.

Lacking an authorized marketplace due solely to content owners’ failure to create one, it is hardly surprisingly that unauthorized ones grew up. Content owners response was not to provide consumers with what they wanted, but to declare war. Even Edgar Bronfman Jr., honcho of Warner Music, admitted this was a huge mistake, and it is the unwillingness of copyright owners to provide a legitimate market that led Bruce Lehman to publicly declare his own handiwork had failed. The idea that adherence to the WIPO treaties and a verbatim adoption of U.S. law is both necessary and sufficient to create a legitimate market and fight piracy has thus been roundly rejected by both Mr. Bronfman and Mr. Lehman, yet the IIPA continues to argue it to USTR and to the Canadian government.

The IIPA 301 report also insists on Canada adopting the U.S. notice and takedown safe harbor approach found in Section 512, but the IIPA doesn’t reveal that the WIPO treaties have nothing to do with ISP safe harbors. Indeed, it was content owners’ refusal to incorporate safe harbors into the DMCA that held up that legislation for three years, from 1995 to 1998. Content owners argued then that the WIPO treaties had nothing to do with ISP safe harbors. What a difference a few years makes.

The intense, negative reaction of Canadian citizens to IIPA’s efforts is well-taken. Why any government would want to adopt approaches that have been admitted to be a dismal failure in the U.S. by the law’s own ardent author, and that are not required by the
WIPO treaties is a mystery.

Photographs and Derivative Works

The concept of what constitutes a derivative work seems to elude far too many courts, particularly in the photography context. In Ets-Hokin v. Skky Spirits, Inc., 225 F.3d 1068 (9th Cir. 2000), a photograph of a vodka bottle was taken for use in an advertisement. The district court had held that the bottle depicted in the photograph was a “preexisting work,” and thus the photograph was “based on” that work and was therefore a derivative work. Rather than dismiss this shockingly wrong conclusion on the basis of the plain words of the statute, the court of appeals went off on an irrelevant inquiry: Whether the object depicted in the photograph (the vodka bottle) was copyrightable. According to the court of appeals, if it was, the photograph was a derivative work; if not, the photograph was not a derivative work. In order to determine whether the bottle photographed was copyrightable, the court examined it as the design of a useful article, ultimately rejecting protection for the bottle and therefore upholding copyright in the photograph as a nonderivative work.

Photographs of other objects are not derivative works of those objects. First, a photograph of an object is not “based on” that object: It is a mere depiction of it. Second, even if one were to find that a photograph of an object is based on that “preexisting work” within the meaning of the definition of “derivative work” in Section 101, such a photograph must still “recast, transform, or adapt” the authorship in the preexisting work to be considered a derivative work. Such recasting, transformation, or adaptation does not occur in a photograph of an object, even copyrighted objects. What makes a derivative work a derivative work is the contribution of changes in the actual authorship of the preexisting work, not a mere depiction of that work.

Fortunately, Judge William H. Pauley III of the Southern District of New York set matters straight in SHL Imaging, Inc. v. Artisan House, Inc., 117 F. Supp. 2d 301 (S.D. N.Y. 2000). Judge Pauley rightly focused on the requirement of recasting, transformation, or adaptation, noting: “A photograph of Jeff Koons's ‘Puppy’ sculpture in Manhattan's Rockefeller Center merely depicts that sculpture; it does not recast, transform, or adapt Koons's sculptural authorship. In short, the authorship of the photographic work is entirely different and separate from the authorship of the sculpture

Now a district court in Illinois has returned to the Ets-Hokins approach,
Schrock v. Learning Curve Intern., Inc., 2008 WL 224280
(N.D.Ill., January 29, 2008). In Schrock, defendants hired plaintiff photographer to take pictures of hundreds of toys for use in marketing. There surprisingly was no work for hire or transfer, but instead a license with usage restrictions, which the photographer alleged had been violated. Defendants alleged the photographs were unauthorized derivative works of their toys, and regrettably the court agreed:

Schrock's photographs are product photographs-depictions of Thomas & Friends toys. Such depictions portray the three dimensional toy in two dimensions. In the words of Section 101, such photographs “recast, transform[ ] or adapt [ ]” the preexisting three dimensional toy into another medium, thus creating a derivative work “based upon” the preexisting work. Such photographs are no less derivative works than are three dimensional embodiments of two dimensional drawings (e.g., a guitar created to embody a written symbol, as in Pickett v. Prince, 207 F.3d 402 (7th Cir.2000), or porcelain dolls fashioned to embody Norman Rockwell illustrations, as in Saturday Evening Post, 816 F.2d at 1193). In sum, Schrock's photographs are derivative works of the copyrightable toys that they portray.

The court then widened its destructive trip through basic principles of copyright law by holding that there was no original derivative authorship based on the Seventh Circuit’s widely criticized Gracen opinion. In short it was a windy, blustery day in Chicago.

Scrabbling Copyright

A recent suit in India, followed by Hasbro, over an online version of Scrabble called Scrabulous shows another side of social networking sites: the ability to change a gaming experience between two people into one taking place over continents, involving, it is reported, 2.3 million daily users on Facebook. Permission was allegedly sought, but not received; not surprising since Hasbro granted Electronic Arts exclusive rights. But I don't think EA had put out a social networking version, which is reportedly quite addictive, and can be played out over days, not hours, and across continents, not just living rooms. (I played Candyland with my twins this morning, so traditional board games are still viable too).

There are unauthorized versions of other games, including of Hasbro's Monopoly and Boggle, but in those cases, the games were altered. Copyright in games extends only to the graphic elements and textual explanations, not to the way the game is played, so it is possible to make some changes and avoid infringement. The reaction of fans of Scrabulous Hasbro's actions has not been positive.

Appropriation Art Again

Shepard Fairey had a solo art exhibit in LA in December. Among those commenting on the exhibit was Mark Vallen, who with the help of other artists, published online a lengthy, fairly savage attack on Fairey's unattributed appropriation from a vast number of sources. Vallen provides side by side comparisons and detailed discussions of each piece. Vallen's article is noteworthy in a number of respects: it represents one group of artists challenging another artist, and it sets out some thoughts on what he thinks represents genuine appropriation art from mere plagiarism. I imagine not all will agree with Vallen's approach, but the article is thorough, and would make for an excellent presentation at a seminar or law school class. Here is the link. Hat tip by the way to my favorite online sneaker website, hypebeast.com

Burden of Proof in Profits Claims

The Fourth Circuit has issued an interesting opinion on the burden shifting involved in claims to recover defendant’s profits attributable to the infringement, but unfortunately, it marked the opinion as unpublished to deprive it of precedential value, indicating the lower courts continue to thumb their noses at Congress and the public, and the spirit of new FRAP 32.1, which requires courts of appeals to permit citation to unpublished opinions, but which does not restrict courts have stating they don't have precedential value: of what use is it to cite to something that has no precedential value? Not much.

It is one thing when the opinion is a one-page toss-off prepared by circuit staff counsel; it is quite another when, as here, the opinion is an extended one that contains significant statements of law about an important issue. The only solution to such intransigence seems to be legislation barring the courts from marking any opinion unpublished: all opinion should have the same potential value, with the only determinant being the quality of their reasoning.


The case is Phoenix Renovation Corporation v. Rodriguez, 2007 WL 4443328 (4th Cir. Dec. 17, 2007)(available here). The district court had granted plaintiff’s motion for summary judgment on liability, and denied defendant’s motion for partial summary judgment on the issue of damages for the copyright infringement, reserving the question for trial. After a three-day bench trial, the trial court found defendants were not liable for any damages. Defendant did not appeal the liability finding, but plaintiff appealed the lack of an award for defendant’s profits.


Section 504(b) reads in relevant part: “In establishing the infringer's profits, the copyright owner is required to present proof only of the infringer's gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work." In Bonner v. Dawson, 404 F.3d 290, 294 (4th Cir. 2005), the Fourth Circuit had held that §504(b) “creates an initial presumption that the infringer's profits attributable to the infringement are equal to its gross revenue,” and in Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 520 (4th Cir.2003), the court of appeals had held that once the copyright holder establishes the infringer's gross revenue, "the burden shifts to the infringer to prove either that part or all of those revenues are 'deductible expenses' ( i.e., are not profits), or that they are attributable to factors other than the copyrighted work."

The Phoenix court summarized the issue as follows:

In Bouchat, we established that because the phrase "gross revenue" in § 504(b) refers only to revenue reasonably related to the infringement, "a copyright holder must show more than the infringer's total gross revenue from all of its revenue streams" in order to meet its initial burden under the statute. Bonner, 404 F.3d at 294. Accordingly, before the burden-shifting provision of § 504(b) is triggered, the copyright owner must "demonstrat [e] some causal link between the infringement and the particular profit stream." Id.

As applied to the case at bar, the court wrote:

Here, in denying Appellees' Partial Motion for Summary Judgment as to damages for the copyright infringement, the district court found that Phoenix had met its initial burden of proof. First, the district court noted that Phoenix did not indiscriminately seek the totality of Appellees' profits without regard to the source, but rather "anticipate[d] presenting evidence at trial that [Appellees'] use of Phoenix's Interior Repipe Agreement enabled [them] to enter into 626 transactions in which they received approximately $2.6 million in revenue." Next, the district court identified three factors demonstrating a causal connection between the use of the Infringing Contract and the claimed revenue …. Finally, the district court stated that Phoenix had provided non-speculative evidence of a causal connection and determined that "[b]ecause the claimed revenue ha [d] a reasonable relation to the infringement, ... summary judgment for [Appellees] would be inappropriate."
So what was the rub? The rub came in a different approach taken by the district court at trial. As the 4th Circuit put the matter:

Following the bench trial, however, the district court changed course, finding Appellees not liable for damages. The court found that Phoenix failed to provide evidence supporting each of its three purported causal links. With regard to Phoenix's theory that the contract assisted Atlantic in marketing itself to customers, the district court concluded that Appellees had presented credible evidence establishing that customers hired Atlantic for reasons such as its experience and price, not the appearance of its contract, while "Phoenix ha[d] not presented any evidence that supports this particular causation theory." It therefore deemed the "purported causal link ... mere speculation." The district court further concluded that although use of the Infringing Contract allowed Atlantic to comply with Virginia's requirement that residential contractors make use of written contracts for a time without incurring the expense necessary to do so, any cost avoidance was temporary and did not permanently contribute to Atlantic's revenues because Atlantic later paid an attorney to draft a new contract. Finally, the district court found that none of Atlantic's revenue was attributable to its use of the Infringing Contract in collecting balances owed because Atlantic only collected more money than it cost to enforce the terms of the contract on one occasion, and the proceeds from that collection effort were more than offset by the $7,000 Atlantic spent to collect $3,618 owed on another occasion. Moreover, Atlantic had proven unsuccessful in other collection attempts. The district court therefore concluded that "Phoenix ha[d] not proven the existence of a causal link between [Appellee's] infringement of the Re-Pipe Agreement and their gross revenue from polybutylene replacement jobs where the Infringing Contract was used." Accordingly, it determined that "the burden-shifting provisions of § 504(b) [were] inapplicable to this case" and Phoenix was not entitled to damages.

Plaintiff claimed foul:


Phoenix argues that the district court's about face improperly denied it the benefit of § 504(b)'s burden shifting provision, depriving it of damages to which it is entitled. Phoenix claims to have met its minimal initial burden of demonstrating some causal link between the infringement and the revenue stream by showing that (1) customers' obligation to pay Atlantic arose out of the Infringing Contract, and (2) Atlantic benefitted from the use of the contract, which allowed it to appear more professional, conduct its business in accordance with Virginia law, and collect payment from reluctant customers.
Defendant not surprisingly disagreed:

Appellees counter that the district court correctly applied our holding in Bouchat that a defendant should prevail if either (1) there exists no conceivable casual connection between the infringement and a particular revenue stream, or (2) despite the existence of a conceivable connection, the copyright holder offers only speculation as to the existence of a causal link between the infringement and the claimed revenues. Bouchat, 346 F.3d at 522-23.
The court of appeals agreed with Plaintiff:

As an initial matter, we agree with Phoenix that the district court erred in failing to shift the burden of proof to Appellees pursuant to § 504(b). Although Bouchat held that copyright plaintiffs may not meet their initial burden under the statute simply by submitting evidence of an infringer's gross profits from all of its revenue streams, in requiring proof of a causal link between the infringement and a particular profit stream or streams, we did not purport to saddle plaintiffs with an onerous evidentiary burden.
The court then entered into a sustained review of Bouchat and Bonner:

Bouchat involved a suit for "infringer's profits" by the author of an original drawing that became the basis for the Baltimore Ravens football team's logo. The Ravens obtained revenue from a variety of sources, including a subset of merchandise sales, "minimum guarantee" shortfalls and "free merchandise" requirements established by the Ravens's licensing agent (National Football League Properties, Inc.), that could not fluctuate in response to consumer behavior. We held that Bouchat had not met his initial burden of proof under § 504(b) only with regard to those sources because Bouchat could not establish a conceivable connection between the revenue from the "minimum guarantee" shortfalls and "free merchandise" requirement and the copyright infringement. Bouchat, 346 F.3d at 524. Our subsequent decision in Bonner clarified the extent of the causal connection required under Bouchat. There, we distinguished Bouchat on the ground that Bonner was not seeking all gross revenues from a defendant with multiple streams of income, but rather only the revenue derived from the leasing arrangements of an infringing building. We concluded that because "[t]he building generating the funds was designed based upon Bonner's copyright ," Bonner had satisfied Bouchat's requirement of a causal connection between the infringement and the revenue stream. Bonner, 404 F.3d at 294. We reversed the district court's conclusion to the contrary, holding that the district court had "misinterpreted the level of connection between infringement and profits that is required under Bouchat " when it determined that Bonner had not met his initial burden because it was not clear that the building's design formed the basis of the profits from the lease. Id.; see also Konor Enter. Inc. v. Eagle Publ'ns Inc., 878 F.2d 138, 140 (4th Cir.1989) (holding that where a defendant's only product was a military telephone directory that infringed on a plaintiff's copyright, the burden of proof shifted to the defendant pursuant to § 504(b), because "[i]t [wa]s plausible, absent proof to the contrary, that all profits were a direct result of [the] infringement of [the] copyright").
The court then applied its approach to the issue to the district court’s ruling:

In this case, the district court's summary judgment order correctly followed Bouchat and Bonner to conclude that Phoenix had met its initial burden under § 504(b) of demonstrating a conceivable connection between the copyright infringement and the revenue obtained from jobs on which Appellees used the Infringing Contract. Such a connection exists because customers' obligation to pay arose out of their contract with Atlantic and because it is conceivable that the Infringing Contract generated revenue by: (1) enabling Atlantic to attract customers by looking like a less expensive version of Phoenix; (2) comply with state law governing its business; and (3) collect past due balances. The district court erred in concluding to the contrary in the opinion and order entering the final judgment. Nevertheless, we agree with Appellees that this flaw in the district court's analysis did not affect the outcome of the case. A review of the record compels the conclusion that the district court's finding that Phoenix was not entitled to damages ultimately was based on its finding that the evidence was entirely one-sided, not on its allocation of the burden of proof. The court credited Appellees' evidence that none of Atlantic's revenue was attributable to the Infringing Contract and found that Phoenix had offered only speculation to the contrary. Thus, the district court's finding that Phoenix failed to supply any non-speculative evidence to counter Appellees' showing that Atlantic's revenue stemmed from sources other than the copyright infringement, if correct, compels the conclusion that Phoenix was not entitled to damages.
As long as all this is, it represents merely a snapshot of a far longer discussion of prior case law and statutory interpretation, all of which brings me repeat the point raised at the beginning of the post: why an unpublished opinion? The court obviously took a great deal of care with the case and its opinion; it contains important glosses on the statute and prior case law. It should be published and able to be relied on by litigants in line with the purposes of new FRAP 32.1

You Can Walk Like King Tut, But Don't Copy Him

In the late 1980s, when I was a Policy Planning Advisor to the Register of Copyrights, I went on a few U.S. Government delegations to Egypt in an effort to convince the Egyptian government to “improve” its copyright law. I went with good friends Joe Papovich of USTR (now at RIAA) and Richard Owens of the PTO (now at WIPO), as well as a chap from the State Department whose name I forget and wanted to forget even then. Somewhere, there are pictures of us riding camels at the Pyramids. On the taxi trip to the Pyramids, we drove by tens of thousands shantytowns where the children barely had clothes on, where there was no sewage disposal, no running water, no electricity, and likely little food. In the city, walking to the Cairo Museum, I saw a man, weighing less than 100 pounds, pulling himself along on the ground on his stomach, as thousands of other very poor people trudged along.

Our mission was to get the Egyptian government to clamp down on unauthorized videocassettes and music tapes, which were alleged to pose a serious threat to U.S. corporate interests. I also visited Egyptian universities that used unauthorized books in their courses, a threat to U.S. book publishers. The Egyptians officials we met with were wonderful: gentle, extremely hospitable, and quite willing to help to the limited extent they could, and those limits were severe. To begin with, there was no way the Egyptian public could afford to pay Western prices, and until the pricing was fitted to the public’s ability to pay, there would be unauthorized copying; this was also true of the universities: no one I met advocated taking without paying, but everyone wanted to educate the public.

The Egyptian government officials helpfully suggested that the U.S. companies enter into distribution deals with Egyptians; that way, when a dispute arose, the dispute would be perceived more as one between two Egyptian commercial interests. They also requested financial assistance and training for customs officials. Egypt turned the table too, by requesting assistance with stamping out authorized copying of Egyptian films in the U.S.: Egypt has long had the Middle East’s most vibrant film industry and its movies were widely watched, especially by Arabic speakers in the U.S.

Back home again, we reported our meetings to industry, and none of the Egyptian advice was taken, and as far as I know, nothing was done to help Egyptian filmmakers here, although I suggested using a back-door to the UCC through first publication in Lebanon for older films.

Yesterday, there were stories about proposed legislation by the Egyptian government to stop the copying in the West of famous Egyptian landmarks., like the Pyramids, the Sphinx, and Luxor. Zahi Hawass, the head of Egypt's Supreme Council of Antiquities, is quoted as saying:
"The new law will completely prohibit the duplication of historic Egyptian monuments which the Supreme Council of Antiquities considers 100-percent copies … .If the law is passed then it will be applied in all countries of the world so that we can protect our interests… It is Egypt's right to be the only copyright owner for these monuments in order to benefit financially so we can restore, preserve and protect Egyptian monuments."

The proposal is said to not "forbid local or international artists from profiting from drawings and other reproductions of pharaonic and Egyptian monuments from all eras - as long as they don't make exact copies. ... Artists have the right to be inspired by everything that surrounds them, including monuments," he is reported to have said. Mr. Hawass is also quoted as opining that the Luxor Hotel in Las Vegas (currently the real Luxor is a love nest for French President Nicolas Sarkozy and Italian model Carla Bruni) is "not an exact copy of pharaonic monuments despite the fact it's in the shape of a pyramid. Others are reported to feel differently: the opposition newspaper Al-Wafd published an article Sunday calling for the hotel to pay a portion of it’s lodging and gambling profits to the city of Luxor. The newspaper wrote: "Thirty-five million tourists visit Las Vegas to see the reproduction of Luxor city while only six million visit the real Egyptian city of Luxor." Yet, Samir Farag, chair of Luxor town council acknowledged :"We can't forbid people from using the name of Luxor and copying monuments from (Luxor) city, which is the world's richest city for monuments," adding refreshingly, "tourists going to Las Vegas doesn't affect our city's business."

I don’t know how the distinctions thought of would be made, but if made, Egypt could lay claim to the longest copyright term in the world, by millennia. But to what end? How is that Mr. Hawass thinks that the law would be enforced in other countries for acts that occur in other countries? And what about Steve Martin’s famous King Tut dance and song routine, available here.

A delicious irony in using IP as a trade weapon

Back in the early 1980s, when the Reagan Administration initiated the use of trade leverage as a weapon to force Caribbean nations to revise their laws to fit U.S. content owners' bidding , no one dreamed a Caribbean nation would later turn the tables. Hats off to Antigua for doing so. A story in Saturday's NY Times (here) explains Antigua brought a WTO complaint over the U.S.'s refusal to permit online gambling originating from the island nation to be placed within the U.S., while permitting online betting on horses. The WTO ruled in Antigua's favor, awarding it the equivalent of $21 million in set-offs. Antigua has chosen to engage in unauthorized copying of U.S. films and music in that amount. One wonders whose figures Antigua will use to come to that amount: the IIPA's ludicrously inflated figures, where every estimated unauthorized copy represents a 1:1 displacement of a sale at U.S. prices, or something else of Antigua's own concoction? I am betting on the latter.

Courtesy of IPKat, here is the relevant section of the WTO award:

B. ANALYSIS BY THE ARBITRATOR 5.6 In its request for authorization to suspend concessions or other obligations, Antigua identified certain obligations under the TRIPS Agreement, that it proposed to suspend. Specifically, Antigua indicated that it intends to take countermeasures in the form of suspension of concessions and obligations under the following sections of Part II of the TRIPS: Section 1: Copyright and related rights Section 2: Trademarks Section 4: Industrial designs Section 5: Patents Section 7: Protection of undisclosed information. 5.7 As we have determined above, Antigua may seek to suspend obligations under the TRIPS Agreement. In order for such suspension to be equivalent to the level of nullification or impairment of benefits accruing to Antigua, it must not exceed US$21 million. 5.8 It is incumbent on Antigua to ensure that, in applying such suspension, it does not exceed this level. Antigua has declined to provide any explanation on how it proposes to apply such suspension and how it will ensure that the level of the proposed suspension does not exceed the level to be authorized by the DSB. We regret that Antigua did not find it useful to provide such explanations. 5.9 We note that our mandate does not allow us, in reviewing the equivalence of the proposed suspension with the level of nullification or impairment, to consider the "nature" of the obligations to be suspended. We understand this to mean that we may not question the complaining party's choice of specific obligations to be suspended (other than in the context of considering a claim that the principles and procedures of Article 22.3 have not been followed) and that we must assess the level of the proposed suspension, rather than its form, against the level of nullification or impairment. 5.10 At the same time, it is important that the form that is chosen in order to enact the suspension is such as to ensure that equivalence can and will be respected in the application of the suspension, once authorized. The form should also be transparent, so as to allow an assessment of whether the level of suspension does not exceed the level of nullification. We also note that the suspension of obligations under the TRIPS Agreement may involve more complex means of implementation than, for example, the imposition of higher import duties on goods, and that the exact assessment of the value of the rights affected by the suspension is also likely to be more complex. 5.11 In the light of these considerations, we note the remarks made by the arbitrators in EC – Bananas III (Ecuador), on the suspension of TRIPS obligations in that case. We consider these remarks to also be relevant to this case, in that the same considerations will be pertinent to the manner in which Antigua might implement a suspension of its obligations under the TRIPS Agreement. 5.12 Like the arbitrators in EC – Hormones (US) (Article 22.6 – EC) , US – 1916 Act (EC) (Article 22.6 – US) , and US - Byrd Amendment (Article 22.6 - EC) , we also note that the United States may have recourse to the appropriate dispute settlement procedures in the event that it considers that the level of concessions or other obligations suspended by Antigua exceeds the level of nullification or impairment we have determined for purposes of the award. 5.13 Finally, we note that Article 22.8 of the DSU provides that: "The suspension of concessions or other obligations shall be temporary and shall only be applied until such time as the measure found to be inconsistent with a covered agreement has been removed, or the Member that must implement recommendations or ruling provides a solution to the nullification or impairment of benefits, or a mutually satisfactory solution is reached. ..." VI. AWARD 6.1 For the reasons set out above, the Arbitrator determines that the annual level of nullification or impairment of benefits accuing to Antigua in this case is US$21 million and that Antigua has followed the principles and procedures of Article 22.3 of the DSU in determining that it is not practicable or effective to suspend concessions or other obligations under the GATS and that the circumstances were serious enough. Accordingly, the Arbitrator determines that Antigua may request authorization from the DSB, to suspend the obligations under the TRIPS Agreement mentioned in paragraph 5.6 above, at a level not exceeding US$21 million annually.