Tuesday, February 28, 2006

The Nature of the Distribution right

In early efforts (1993) to enact a performance right for sound recordings, after it became clear that the right would be digital only, a series of problems arose beginning with when is a performance a performance and a distribution a distribution, and can a single transmission be both a performance and a distribution? The answers to those questions had a number of implications, extending beyond rights in sound recordings and including the underlying musical composition, where the relative roles of the performing rights and music publishers were at issue. These interests ultimately came into play in the amendments to Section 115, which created a compulsory license for digital phonorecord deliveries ("DPD")

The DPD issue parallels in some ways the distribution right question for sound recordings. Sound recordings already had a distribution right in the 1976 Act: the addition of a digital performance right didn't change the distribution right; thus, both before and after the enactment of Section 106(6), if a distribution is involved, it is Section 106(3) that is implicated.

In the hard copy world, no real questions arose, but when digital dissemination takes place, one has to ask whether there has been a distribution, a transmission, or both. There is a significant difference between Section 106(3) and Sections 106(4) and (6): Sections 106(4) and (6) cover performance (including transmission) of the work, while Section 106(3) covers distribution of copies or phonorecords. Section 106(3) is, therefore, not violated when no distribution of a copy or phonorecord occurs. Copies and phonorecords are defined in Section 101 and involve "material objects."

Do transmissions involve distributions of "material objects?" In the DPD situation, the dividing line Congress drew essentially involved the difference between listening to something in real-time, versus sending a digital version for storage purposes, conduct that was believed to act as a displacement for a hard copy. The issue also arises in peer-to-peer file sharing, where uploads have been argued to be a distribution. That question has recently been briefed in a case in the SDNY, Elektra Entertainment Group Inc. v. Barker, 05 CV 7340 (KMK). The RIAA and the EFF take diametrically opposed views (surprise surprise Gomer). A very large amount of court documents may be found here, if you scroll down to Elektra v. Barker.

Preliminary Injunctions and Affirmative Defenses

One issue in the Perfect 10 v. Google, Inc. case was whether Perfect 10, in seeking a preliminary injunction, bore the burden not only of establishing a likelihood of success on its prima facie case, but in also establishing it was likely to overcome any affirmative defenses Google asserted, in that case fair use. Judge Matz, following the district court decision in the Dr. Seuss case, held that Perfect 10 did bear that burden. The opinion, however, missed contrary authority, and perhaps most importantly, understandably did not discuss a Supreme Court opinion handed down the same day (February 21) that held to the contrary.

There is nothing special about fair use in this discussion: license, statute of limitations, or any other affirmative defense should be treated the same way. Indeed, there is nothing special about copyright: all civil cases, unless there is some statutory or precedential twist, should come out the same way. I encountered the issue for the first time in 1992, when the House Judiciary Committee was amending Section 107 to deal with fair use of unpublished works. At that time, a March 13, 1992 opinion from the Northern District of New York in College Entrance Examination Board v. Cuomo, 788 F. Supp. 134, 140 n. 7 (N.D.N.Y. 1992) had held, without citation to authority, that where the copyright owner seeks a preliminary injunction, the copyright owner bears the burden of disproving the defense. I thought that wrong, and in the House Judiciary Committee report, H.R. Rep. 102-836, 102d Cong., 2d Sess. 3 n. 3 (1992), I inserted the statement that it was erroneous, noting that even the College Entrance Examination Board court agreed when a plaintiff sought summary judgment, it did not bear the burden of disproving fair use. Subsequently, the New York judge, in College Entrance Examination Board v. Pataki, 889 F. Supp. 554, 564 (N.D.N.Y. 1995), noted the House report criticism and changed course.

Meanwhile, on the left coast, influenced by a comment in Judge William Schwarzer's work, California Practice Guide, Federal Civil Procedure Before Trial , volume 2, paragraph 13:47, courts followed the Cuomo approach. The argument was raised by Napster, and on appeal, the Ninth Circuit had this to say, 239 F.3d 1004, 1014 n.3 (9th Cir. 2001):

"FN3. Napster asserts that because plaintiffs seek injunctive relief, they have the burden of showing a likelihood that they would prevail against any affirmative defenses raised by Napster, including its fair use defense under 17 U.S.C. § 107. See Atari Games Corp. v. Nintendo, 975 F.2d 832, 837 (Fed.Cir.1992) (following Ninth Circuit law, and stating that plaintiff must show likelihood of success on prima facie copyright infringement case and likelihood that it would overcome copyright misuse defense); see also Dr. Seuss Enters. v. Penguin Books USA, 924 F.Supp. 1559, 1562 (S.D.Cal.1996) (“The plaintiff's burden of showing a likelihood of success on the merits includes the burden of showing a likelihood that it would prevail against any affirmative defenses raised by the defendant.”), aff'd,109 F.3d 1394 (9th Cir.1997); Religious Tech. Ctr. v. Netcom On-Line Communication Servs., 923 F.Supp. 1231, 1242 n. 12 (1995) (same); 2 William W. Schwarzer et al., California Practice Guide, Federal Civil Procedure Before Trial ¶ 13:47 (2000) (advising that when a preliminary injunction is sought “plaintiff must demonstrate a likelihood of prevailing on any affirmative defense as well as on plaintiff's case in chief”). But see Fair Use of Copyrighted Works,H.R. Rep. 102-836 n.3 (criticizing a Northern District of New York case in which “the district court erroneously held that where the copyright owner seeks a preliminary injunction, the copyright owner bears the burden of disproving the [fair use] defense”); see also 1 William F. Patry, Copyright Law & Practice, 725, 725 n.27 (1994) (citing cases placing burden on defendant at preliminary injunction stage).The district court stated that “defendant bears the burden of proving ··· affirmative defenses.” Napster, 114 F.Supp.2d at 912. Plaintiffs assert that the district court did not err in placing the burden on Napster. We conclude that even if plaintiffs bear the burden of establishing that they would likely prevail against Napster's affirmative defenses at the preliminary injunction stage, the record supports the district court's conclusion that Napster users do not engage in fair use of the copyrighted materials."

On February 21, 2006, however, a unanimous Supreme Court seems to have foreclosed the argument, in an opinion written by Chief Justice Roberts, Gonzales v. O Centro Espirita Beneficente Uniao de Vegetal. That case involved one of those wonderful religious groups that commune with God in part by taking hallucinogenic drugs, in this case, hoasca, whose effects are described in this link to a 1996 article in the Journal of Nervous and Mental Disorders (my grandfather was a psychiatrist, and the journal is a must bedtime reading for me). The sect and the drug is from the Amazon Rainforest (or what is left of it), but there is a small outpost in the U.S. that wished to import it for religious purposes. The feds classified the sacrament as a controlled substance and said no. The sect sued, seeking a PI as a violation of RFRA (42 U.S.C. 2000b et al). The feds did not contest taking the drug was part of a sincere exercise of religion.

For our purposes, the issue came down to this: plaintiff concededly made out its prima facie case of a violation of RFRA. The feds raised the affirmative defense (under the statute), that it has a compelling interest in banning the drug. It offered evidence of such an interest, which the plaintiff sought to rebut. The district judge (affirmed by the court of appeals), found the evidence on the affirmative defense to be in equipoise. The issue was then, whether it was appropriate to grant a PI in that posture: did the plaintiff have to introduce a scintilla of evidence beyond equipoise, show, in other words, a likelihood of succeeding on the merits of not only its prima facie case (which the feds conceded it had), but also in disproving the feds affirmative defense? The trial court, the court of appeals, and the Supreme Court unanimously held plaintiffs do not bear that burden.

Here is the relevant discussion:

"The Government argues that, although it would bear the burden of demonstrating a compelling interest as part of its affirmative defense at trial on the merits, the [plaintiff] bore the burden of disproving the asserted compelling interests at the hearing on the preliminary injunction. This argument is foreclosed by our recent decision in Ashcroft v. ACLU, 542 U.S. 656, [666] (2004). ... The point [is] that the burdens at the preliminary injunction stage track the burdens at trial."

I think that fairly settles the matter.

Friday, February 24, 2006

Insurance Policies

If there is one type of business that does not deserve the profits it has, much less increased ones, it is health insurance companies. Even though I live in Connecticut, home to many insurance companies, I would reserve the lowest of Dante's rungs of hell for them. The banality of corporate evil has never been more evil or banal.

It may come as a surprise, therefore, for me to be praising a recent opinion upholding copyright in particular insurance policies, American Family Life Insurance Company of Columbus v. Assurant Inc. Plaintiff is better known as "Aflac," and adopted a very successful cute duck PR face on a very uncute industry. Plaintiff's niche is supplemental insurance policies; four were at issue in this case: a cancer indemnity policy, and accident-only policy, a hospital confinement indemnity policy, and a hospital confinement sickness indemnity policy. Supplemental insurance policies differ from traditional insurance policies in being risk specific. Aflac is a market leader in such policies.

The policies took several months of drafting work, and went through numerous iterations. A principal, and salutary objective of the drafting was to achieve a narrative style that would be easier for laypersons to understand, as opposed to the legalistic, hide-the-ball style usually employed. Plaintiff claimed that defendants, competitors of Aflac, lifted entire passages verbatim. Defendants attacked plaintiff's originality, and no doubt there was much in the policies that were not original to plaintiff (e.g., having been copied from other policies, from third party-definitions, and the like). Yet, relying on previous insurance company opinions, such as Continental Casualty Co. v. Beardsley, 253 F.2d 702 (2d Cir. 1958), Miner v. Employers Mutual Liability Insurance Co., 229 F.2d 35 (D.C. Cir. 1938), and Dorsey v. Old Surety Life Insurance Co., 98 F.2d 872 (10th Cir. 1936), Judge Beverly Martin of the Northern District of Georgia rightly held that there was a sufficient degree of originality to support protection, at least against verbatim copying.

Certainly from a "policy" standpoint, it is desirable to have clarity in insurance documents, if only to learn clearly how you are being shafted.

Tuesday, February 21, 2006

Mental Competency and Copyright

The New York Times had an article on Febraury 19th, about artist Daniel Johnston of Waller, Texas (pop. 2,032). Marty Schwimmer's Trademark Blog has a great copy of one of his works. The Times article is called "Man-Child in the Promised Land." Johnston's works are included in two upcoming New York City shows: (March 2) Whitney Musuem Biennial and a March 16 exhibition at the Clementine Gallery in Chelsea. Mr. Johnston is also a composer, whose music has been covered by Beck, Tom Waits, and Wilco. In 2005, a documentary was released, entitled The Devil and Daniel Johnston. Mr. Johnston, 45, has hit the big time.

The title of the documentary refers to the demons that have haunted Mr. Johnston for a long time. He has been diagnosed, according to the NY Times, as having a serious bipolar disorder, and has serious health issues too. He has spent periods in mental hospitals and lives with his elderly parents.

Now that his works are generating serious money, the inevitable battles have occurred, as detailed in the newspaper article. For copyright purposes, an important issue is competency: is Mr. Johnston competent to transfer rights in his works? He has not been deemed incompetent and may not be. He has no legal guardian. He is 45, so being a minor isn't an issue as it was for Franky Lymon and the Teenagers. These issues are state law issues: while Section 204 (the Copyright Act's version, in part, of the Statute of Frauds) sets forth the requirements for a valid transfer, it says nothing about the competency of the person who signs it, nor about issues of duress (another issue in the Frankie Lymon case), lack of consideration, and the like, all of which must, therefore, be filled in by state law. And then there will be choice of law issues too, depending on where the assignments are signed and whether they have forum designation provisions.

I doubt we have heard the last from Mr. Johnston, either in the art world or the copyright world.

Thursday, February 16, 2006

Standing on Someone Taller

In a too little known 1945 article, Reflections on the Law of Copyright, 45 Colum. L. Rev. 503, 511 (1945) the late Professor Zachariah Chafee argued for generous fair use privileges by noting: "The word goes ahead because each of us builds on the works of our predecessors. 'A dwarf standing on the shoulders of a giant can see farther than the giant himself.'" The origins of the quoted passage, and its phrasing, have been the subject of much scholarly interest, regardless of one's height. (For those interested in the correct terminology for these things, Little People of America run the Dwarfblog.).

The most extensive look at the quote (which is sometimes playfully abbreviated as OTSOG , "On the Shoulders of Giants') is by Robert K. Merton in a 1965 book called, appropriately, "On The Shoulders of Giants." A 1991 reprint, called the "Post-Italiante Edition," has a "Shandean Postscript" and a foreward by Umberto Eco. I find Merton's book annoying, a too cute idea of trying to write a investigative piece in the style of a specific over-the-top novel, Laurence Sterne's "Tristam Shandy," recently made into an "Altmanesque" movie. When it comes to detective work, I'm more of a Jack Webb, "just the facts ma'am" type. Finding the facts is not easy in Merton's work, but maybe that's the idea.

Many associate the saying with Isaac Newton "If I have seen further it is by standing on ye sholders of Giants." Merton ascribes to Robert Burton's epic masterpiece The Anatomy of Melancholy the attribution to Didacus Stella, but my edition of Burton (the 1977 Jackson edition) has Burton tracing it to Plato's Banquet (p. 437 n.4). Wikipedia, though, has the most straightforward explanation of this messy business:

"The metaphor of dwarfs standing on the shoulders of giants (Latin: Pigmaei gigantum humeris impositi plusquam ipsi gigantes vident) is first recorded in the 12th century, attributed to Bernard of Chartres. It is often mistakenly attributed to Isaac Newton.
The attribution to Bernard is due to John of Salisbury , who writes in 1159 in his Metalogicon:
"Bernard of Chartres used to say that we are like dwarfs on the shoulders of giants, so that we can see more than they, and things at a greater distance, not by virtue of any sharpness on sight on our part, or any physical distinction, but because we are carried high and raised up by their giant size."
Didacus Stella took up the quote in the 16th century, and it became commonplace in the 17th century.
Robert Burton (1577-1640) in The Anatomy of Melancholy (1621-51) quotes Didacus Stella,
"I say with Didacus Stella, a dwarf standing on the shoulders of a giant may see farther than a giant himself."
Later editors of Burton's misattributed the quote to Lucan. While Burton had, correctly, Didacus Stella, in luc 10, tom. ii "Didacus on the Gospel of Luke, chapter 10; volume 2", this became a reference to Lucan's Pharsalia 2.10, where nothing of the kind is found.

George Herbert, Jacula Prudentum, (1651):
"A dwarf on a giant's shoulders sees farther of the two."
Isaac Newton famously remarked in a letter to Robert Hooke, dated 5 February 1676:
"If I have seen a little further it is by standing on the shoulders of Giants."

The British Two Pound coin has the edge inscription STANDING ON THE SHOULDERS OF GIANTS in commemoration of Newton.

Coleridge, The Friend (1828):

"The dwarf sees farther than the giant, when he has the giant's shoulder to mount on"

The 13th century stained glass of the south transept of the Chartres Cathedral may also be influenced by the metaphor. The tall windows under the Rose Window show four major Old Testament prophets Isaiah, Jeremiah, Ezekiel, and Daniel as gigantic figures, and the four New Testament evangelists Matthew, Mark, Luke, and John as sitting on their shoulders. The evangelists, though smaller, "see more" than the huge prophets (they saw the Messiah about whom the prophets spoke).
The phrase also appears in the song "King of Birds" by the U.S. rock band R.E.M., which includes the lyric, "standing on the shoulders of giants / leaves me cold."

Google Scholar has adopted "stand on the shoulders of giants" as its motto."

Wednesday, February 15, 2006

What Do You Tell Juries?

In an ordinary copyright infringement case, say involving two literary works, what do we tell juries about how they are to find liability or not? I don't mean abstract principles like, "You have to find plaintiff's work is copyrightable, plaintiff owned the rights in question at the time defendant allegedly infringed them, that defendant acted without authorization, and that defendant copied a material amount of expression." I mean the nitty gritty of what we tell the jury that will be of actual assistance in finding that the two works are substantially similar in expression.

The lawyers will point to the testimony of witnesses and to analyses of the works themselves, maybe even to demonstrative charts with side-by-side comparisons from the works, but how do you assist the jury in deciding too much or too little of something was copied? "Substantial" includes both quantitative and qualification aspects on top of other problems.

In Arnstein v. Porter, 154 F.2d 464 (2d Cir. 1946), the court of appeals phrased matters this way: "The question, therefore, is whether defendant took from plaintiff's works so much of what is pleasing to the ears of lay listeners, who comprise the audience for whom such popular music is composed, that defendant wrongfully appropriated something which belongs to the plaintiff." This is of course, completely circular: how does the jury know when something belongs to plaintiff in the first place and if so to such an extent that defendant should pay in damages?

Monday, February 13, 2006

Copyright in Sneaker Design

On January 29th, the New York Times ran this story:

"Tribute Brand
By ROB WALKER (NYT) Mike Sneakers
Scott Nelson loves Jordan. He calls Michael Jordan the greatest basketball player ever, and he started wearing Air Jordans, the sneakers made by Nike, as a skateboarding and basketball-playing teenager back in the 1980's. As a grown-up designer working in the ''streetwear'' subculture of the apparel business, he even interviewed for a job at the Jordan brand. That gig never came to pass, but Nelson found another way to fuse his Jordan fanship with fashion, with a brand called Mike.
If you happen to see a Mike T-shirt or cap, it might strike you that there's something kind of familiar about the design. The word ''Mike'' is executed in a sharp, forward-leaning, sans-serif font that looks an awful lot like the one you've seen on other clothes and sneakers that say ''Nike.'' You might also notice a silhouette of a jumping basketball player -- quite reminiscent of the icon used on Jordan-branded shoes and apparel. There are also Mike sneakers, which, Nelson explains, are based on Converse Chuck Taylor All Star low-tops, executed in an elephant-skin-like pattern that was used on the third version of the Air Jordan in the late 1980's. Given all this -- and throwing in the fact that Nike bought Converse a few years ago -- you might assume that these are Nike products. But they're not. They're Mike products, designed and sold by Nelson.
Nelson is not trying to pass off his clothing as Nike goods, in the manner of a Canal Street counterfeiter. Nor is he engaging in some kind of subversive satire, like AdBusters magazine's famous twisting of Joe Camel into a dying and bedridden Joe Chemo. ''I'm strictly paying homage,'' he says, adding that he doesn't expect any trouble. He did talk to a lawyer first and says he believes he has tweaked everything enough to be on the right side of the law, but that's not the real reason he's confident. ''If anything,'' he says, ''I'm helping their brands.''
At first, this sounds like a bit of a stretch, but Mike is an example of the sometimes porous border between brands and their fans and how hard it is to nail down who ''owns'' what. Susan Scafidi, a Southern Methodist University law professor, examines such questions in ''Who Owns Culture? Appropriation and Authenticity in American Law.'' In an interview, she compared the Mike brand to the ''fan fiction'' that some Star Trek enthusiasts write, in effect building new content (and new communities) out of somebody else's intellectual property. While Nike, Converse and the Jordan brand ''have given the consumer a vocabulary of style,'' Scafidi says, at least part of the ''meaning'' of sneaker brands today has been defined by consumers who turned athletic shoes into a staple of contemporary street fashion -- a phenomenon explored in the recent documentary ''Just for Kicks.''
Like the fan fiction writers, Nelson has moved from consumer to reinterpreter, adding ''street edge,'' as he puts it. (Maybe the most interesting thing about Mike is that Nike itself would be extremely unlikely to use an Air Jordan graphic pattern on a real Converse sneaker, since the company prefers to keep those brands separate in the marketplace.) Nelson's products are produced in very limited quantities, have been highlighted in alternative-culture magazines like Mass Appeal and Juxtapoz and are sold only on his Web site and in a handful of boutiques -- like Colette in Paris, Commissary in San Diego and the aNYthing store in downtown Manhattan -- that cater to the hard-core street-fashion fanatic. His audience, then, is exactly the trendy consumer tribe that sneaker makers court relentlessly.
Still, as Scafidi also points out, the law is much more geared to protecting individual (and corporate) property than ''collective creativity.'' While creators of Star Trek have been unusually liberal about fan fiction (even in its raunchiest variations), many intellectual property owners respond with cease-and-desist orders, even if it means going after their own consumers. By and large, she points out, ''corporations don't hesitate to appropriate and commodify urban culture; they just don't like the equation reversed.'' A Jordan brand spokeswoman declined to answer questions about the Mike brand. But Nelson is so confident that he holds out the possibility of working with the Jordan brand in some more officially sanctioned way. ''It would be an honor,'' he says. "

Here is a link to his website, which has a picture (the site loads slowly) to the elephant design sneakers. There are far more serious trademark issues than copyright ones in this story, so perhaps my friend Marty Schwimmer of the Trademark Blog will take them up, and I will leave to others what appears to me to be on the facts a rather fatuous "homage" defense. But there are copyright issues with sneaker designs. I have alot of them (sneakers), including Chuck Taylors, and Nike (AF1, no Air Jordans).

There are three possible copyright issues with sneaker designs. The first is the easiest: the two dimensional designs imprinted on them are protectible under the same standards that apply to carpets and shmata. Under that standard some designs will be protectible, and some won't. Two-dimensional designs on sneakers have become big business and have attracted fashion designers like Marc Jacobs (for Vans), LA tattoo artist Mr. Cartoon (again for Vans), as well as posthumous designs licensed by the estate of Andy Warhol (Vans once again), and Jean Michael Basquiat (Reebok).

Then there are the soles. In SCOA Industries, Inc. v. Famolare, Inc., 192 USPQ 216 (S.D.N.Y. 1976), the court held that "There can be no valid copyright in troughs or wavy lines on the sides. These have no existence as works of art and if they did have, even the minimum originality needed for copyright." The court was, no doubt, correct as to that design and perhaps almost all others since most soles are designed to be slip resistant and to avoid retaining debris, but there can be very rare exceptions. For example, the Basquiat Reeboks have his representational devil character on the sole. A Chuck Taylor hi-top Converse by Jim Lee uses Batman, with a themed design on the sole. These are of course pre-existing works of art imprinted on the sole, and thus are distinguishable, but "Doggy Biscuitz" designed by Snoop Doggy Dog for Pony shoes, has a ornate bandana design carried over from the fabric design on the shoe itself and etched into the sole that might well pass muster since the design itself serves no utilitarian function and is, at least to me, original.

The final issue is the three-dimensional shape of the shoe. As fantastic as many of the shoes are, I can't see the Copyright Office accepting them for registration. For a design patent infringement case, see LA. Gear, Inc. v. Thom McAn Shoe Co., 988 F.2d 1117 (Fed. Cir. 1993).

Friday, February 10, 2006

Why Generally is Generally Used

Before I went to work in the Copyright Office in 1987 or 1988 (I can't remember which), I was an avid reader of the Copyright Office's Compendia of Office Practices. There are two of them, one for the 1909 Act, which didn't have a chapter on examination apparently because Barbara Ringer couldn't let it go, and one for the 1976 Act, mostly completed in 1984 and which also didn't have a chapter on examination, but which later added one. The Compendia are internal manuals of sorts, but available to the public and highly informative. I highly recommend reading the 1909 Compendium for those who didn't practice under it and who want an idea of the gargantuan nature of formalities.

One word reappears in the Compendium, especially the II, and that is "generally." Once I was at the Office I asked Dick Glasgow, then the Associate GC, why "generally" so much? Dick said, the Office couldn't contemplate all situations, and besides liked to leave itself wiggle room. Courts do the same thing and generally for sound reasons, but in one instance, involving punitive damages, use of the word caused problems. Sometimes you have to set definitive rules. That's true in answering the question whether punitive damages are available under the Copyright Act. The answer is, no, never. The Act takes into account bad behavior in assessing damages only in awarding enhanced statutory damages under Section 504(c).

There was no doubt about this until On Davis v. Gap Inc., 246 F.3d 152, 172 (2d Cir. 2001) used the word generally in describing their unavailability; they were, the court said generally not available. The court said this not because it thought were available, but reflexively, out of a desire to preserve for itself the possibility of changing the law if it chose to at a future point. It didn't take long for an entreprising lawyer to argue generally meant sometimes now, no matter how rarely and that his case was one of those rare exceptions. The case was TVT Records v. Island Def Jam Music Group, 262 F. Supp.2d 185 (S.D.N.Y. 2003), and the district judge bought plaintiff's argument. Fortunately, his views were dictum because plaintiff opted for statutory damages. But another court also seemed unwilling to close the door, Blanch v. Koons, 329 F. Supp2d 568 (S.D.N.Y. 2004). The correct view is that of Judge Lynch in Leutwyler v. Royal Hashemite Court of Jordan, 184 F. Supp.2d 303, 308 (S.D.N.Y. 2001) and a more recent decision in Tampa, Calio v. Sofa Express, Inc., 368 F. Supp.2d 1290 (M.D. Fla. 2005).

Whether generally is generally a good idea, it was a bad one here.

Wednesday, February 08, 2006

Copyright Office Satellite Report

In an extremely impressive show of its bench strength, the Copyright Office yesterday released a second report to Congress, this time on the Satellite Home Viewer Extension and Reauthorization Act. The report covers the unserved household limitation in Section 119 and the relatively recent Section 122 statutory license for the retransmission of local network stations into their local markets. Section 119 is not for the faint of heart, and requires very technical knowledge, both of the industry, copyright law, and FCC law. There are only a tiny number of copyright lawyers who can grasp the intracies of the SHVA, which also requires a great deal of history of past acts. Bill Roberts, now Judge Roberts of the Copyright Royalty Board, was the principal drafter of the report, and is one of the select few. My home boy Tom Olson, a partner at Wilmer Hale is another.

For those wondering how sunsets work in practice, Section 119 is an example. In 1994, when I was counsel to the House of Representatives, the SHVA, first passed in 1988, was up for renewal or death. I preferred death, but I had no say in the matter. I therefore spent the good part of a year working with Bill Roberts, the Senate, and opposing members in the House, principal of whom was the late Mike Synar a strong proponent of the satellite industry. Committee chair Jack Brooks was also a supporter, which eliminated much negotiating room for those of us in the House who sided with the broadcasters. The Senate was also hostile to the broadcasters over their having killed cable compulsory reform the prior year. Subcommittee staff were upset about that too, but we took issues on a case by case basis, and sided with the broadcasters and sports leagues.

The most contentious issue in 1994, as now, is the unserved household restriction. The restriction serves to ensure that households that receive over-the-air signals do not receive through their satellite service another such signal, from another station affiliated with the same network. In 1994, the Senate preferred an extremely, and we believed unworkable scheme, of testing compliance. We went along with it out of comity. That system failed miserably.

In 1999, the system was amended and adopted a predictive model to determine subscriber eligibility. Although the Office's report notes one dissenting view, it concludes that the 1999 revisions have operated both efficiently and effectively. That is a "signal" improvement indeed.

Another issue is the fee for the satellite license. The license is calculated differently from the cable compulsory. One of the most unusual experiences I think I had in Washington arose out of the 1994 renewal legislation, when we dictated that market rate be set as the benchmark for what was then the carps (copyright arbitration royalty panels). When the arbitrators faithfully followed the statute in the rate adjustment under the 1994 Act, there was a huge uproar among some, including members of Congress who weren't involved in the legislation. The result was a rollback in 1999, and a freezing of the rates for five years, so that now the rates are far below market rate. There is no reason in the world why the satellite industry should be subsidized by copyright owners, and I applaud the Office's report for concluding that copyright owners are being harmed by below market rates. Sunsets are, though, intensely political matters and the issue is fought out by muscle, not on the merits.

The Office's report is another outstanding effort, so bravo again.

Monday, February 06, 2006

On the Road Again

The continuing, ancient struggle between ownership of the physical object and ownership of the copyright in a work of authorship embodied therein has reared its head in a current dispute over a tour featuring the manuscript of Jack Kerouac's "On the Road." The tour organizer is reported to have refused permission to take photographs of the manuscript. Some enterprising citizens have done so anyway, see http://www.flickr.com/photos/51035555243@N01/93821899/in/pool-fairuse/

An open letter to the tour organizer protesting this policy is found here. The manuscript is owned by Colt's owner Jim Irsay. Irsay of course has no copyright interest in the manuscript itself, so any infringement action would have to be brought by Kerouac's estate. Good luck on that account. The above photographs would qualify as news reporting fair use. This is not to deny that as a contract matter one can ban photography, nor that in the case of certain material objects flash photographs should be banned to avoid deterioration. But that hardly seems a problem here.

Sunday, February 05, 2006

Copyright Office Orphan Works Report

The Copyright Office's Orphan Works report, found here, has generated some comment, some overseas, including Kim Weatherall's Austrialian blog, who compares it favorably to the Australian Copyright Council's proposal (linked on her site). Among the domestic comments on the report are ones by Public Knowledge and Joe Gratz.

The report is the result of concern by the Copyright Office over the adverse impact on those who wish to use works whose owners cannot be located after a good faith, reasonably diligent search. Congress shared this concern and requested the Office prepare a report, which it did. The report is a very impressive effort in a short time period. Having written two such reports while a Planning Policy Advisor to the Register (the report on technological changes to motion pictures, and the report on Architectural Works), and having done almost all the spade work on a third (the Droit de suite report), I have first hand knowledge of the efforts it takes to get such a report out, as well as for the role such studies play. Bravo.

The Copyright Office is unique in many respects, in this context for being both concerned with policy but not making it. The body that makes the policy is the Congress, and hence the role of the Office is to faithfully lay the issues out and to make recommendations. The current report, the work of Jule Sigall along with Oliver Metzger, Matt Skelton and Rob Kasunic, performs this task quite admirably.

As with all such recommendations, there will be those who are disappointed that their recommendations were not adopted and some who are relieved more sweeping changes were not suggested. The report is, however, principally a discussion document, one for Congress to evaluate to determine first if it believes a legislative inititative is warranted, and if so, what its initial form should take. If legislation is proposed, there will be plenty of opportunity for all to have their say and attempt to shape the final product. The proper way to view the report, therefore, is as an excellent vehicle with which to advance the debate. (The law review article I wrote with Judge Posner which discusses a role for fair use may be found here).

The report is candid in setting out the origins of the problem. Those origins lie not with the Sonny Bono term extension, but with the 1976 Act, which abandoned the renewal scheme of the past, created an automatic system of copyright, set a unified term measured by the life of the author, and greatly reduced the importance of formalities. The 1988 Berne Convention implementing legislation did away with most of the remaining formalities. We are now fairly close to a formality free, automatic system of copyright. The result is that the chaff-separating done by past systems isn't in existence. The report correctly notes that that past system also threw into the public domain works that people did care about tremendously, but which ran afoul of very thorny formalities. From my days in the Copyright Office, I am aware of cases where widows lost copyright for a timely filing of a renewal application, but with the wrong name spelled out as the claimant. Those who have not practiced under the 1909 Act tend to underestimate how easy it was to lose copyright.

The 1976 Act attempted to prevent such losses, and for good reason. There is a substantial argument, however, that in doing so, that Act failed to contemplate the substantial negative impact on the use of works that people did not care about, hence the orphan report. It is a fact of life that through treaty obligations, the U.S. has considerably less room to fix the orphan works problem, but the Office has made a constructive start. In terms of the office's recommendations, a basic divide was whether to require payment. The Office said yes. There is then the question of injunctive relief. Taking a page perhaps from the 1994 GATT implementing legislation, the Office separated out derivative works, making such works generally free from injunctions. I question, however, why the lack of injunctive relief should be limited to derivative works: film restoration, for example, is expensive and may well not result in a derivative work. It may be better to eliminate all injunctive relief. Indeed, having to pay a reasonable royalty and be subject to injunctive relief seems inconsistent: I can see people investing in a project and salting away rainy day money for such compensation, but why would you invest in a project if you were subject to an injunction?

The Office's statutory recommendations are:


(a) Notwithstanding sections 502 through 505, where the infringer:(1) prior to the commencement of the infringement, performed a good faith, reasonably diligent search to locate the owner of the infringed copyright and the infringer did not locate that owner, and(2) throughout the course of the infringement, provided attribution to the author and copyright owner of the work, if possible and as appropriate under the circumstances,the remedies for the infringement shall be limited as set forth in subsection (b).

(b) LIMITATIONS ON REMEDIES(1) MONETARY RELIEF(A) no award for monetary damages (including actual damages, statutory damages, costs or attorney’s fees) shall be made other than an order requiring the infringer to pay reasonable compensation for the use of the infringed work; provided, however, that where the infringement is performed without any purpose of direct or indirect commercial advantage, such as through the sale of copies or phonorecords of the infringed work, and the infringer ceases the infringement expeditiously after receiving notice of the claim for infringement, no award of monetary relief shall be made.

(2) INJUNCTIVE RELIEF(A) in the case where the infringer has prepared or commenced preparation of a derivative work that recasts, transforms or adapts the infringed work with a significant amount of the infringer’s expression, any injunctive or equitable relief granted by the court shall not restrain the infringer’s continued preparation and use of the derivative work, provided that the infringer makes payment of reasonable compensation to the copyright owner for such preparation and ongoing use and provides attribution to the author and copyright owner in a manner determined by the court as reasonable under the circumstances; and(B) in all other cases, the court may impose injunctive relief to prevent or restrain the infringement in its entirety, but the relief shall to the extent practicable account for any harm that the relief would cause the infringer due to the infringer’s reliance on this section in making the infringing use.

(c) Nothing in this section shall affect rights, limitations or defenses to copyright infringement, including fair use, under this title.

(d) This section shall not apply to any infringement occurring after the date that is ten years from date of enactment of this Act.

Thursday, February 02, 2006

Declaratory Judgments

The phrase “arises under” appears in both 28 U.S.C. §1331 (the general federal question jurisdiction provision) and Section 1338(a) (the specific section for copyright actions). The phrase is derived from Article III of the Constitution, and is to be construed identically in both sections. Article III is also relevant for declaratory judgment suits brought under the Declaratory Judgment Act, 28 U.S.C. §2201(a), since the case or controversy requirement in that section is the same as the constitutional case or controversy requirement embodied in Article III. In declaratory judgment actions, the parties switch their traditional roles, and thus subject matter jurisdiction is determined by whether the declaratory judgment defendant could have brought the threatened litigation as a traditional plaintiff.

The Declaratory Judgment Act is a procedural device only, providing a way to an individual who has a reasonable apprehension of suit to bring the matter before a federal court. As a procedural device, the Declaratory Judgment Act does not provide an independent basis for subject matter jurisdiction, and is discretionary even when such an independent basis is established. Thus, the declaratory judgment plaintiff must establish, consistent with the well-pleaded complaint rule, that the district court has original jurisdiction over the subject matter of the dispute. Aside from proving that the matter arises under the Copyright Act (a very thorny area) , the declaratory judgment plaintiff must also prove the existence of case or controversy. This requires a substantial dispute of sufficient immediacy between adverse parties. These threshold requirements serve to discourage advisory opinions. Advisory opinions are viewed by courts as a way for potential (but not imminent) litigants from getting the court’s advance thoughts about the outcome of a case. While such advisory opinions would likely save litigants lawyers’ fees, they would impose high burdens on courts. To avoid such flooding, courts, viewing the totality of the circumstances, examine whether there is a concrete, “actual or imminent, not conjectural or hypothetical” inquiry.”

For nonlitigation issues such as ownership, one must be able to establish an objectively reasonable dispute regarding, for example: claims for work for hire; joint authorship or co-ownership; claims of sole ownership; failure to effectively transfer rights; proper renewal claimant; termination under Section 203 or Section 304; invalidity of the copyright, in the case of licensing, that one party had or did not have a license; or that no valid license obligation existed because the copyright had expired. Other permissible bases include a challenge to the unconstitutionality of a provision of the Act.

Occasionally one comes across a complaint filed by a copyright owner seeking a declaration that the defendant infringed its copyright. Such claims are nonsensical. They add nothing to a complaint phrased as an ordinary infringement action, triable by a jury.

On January 27th, Judge Richard Berman issued an opinion in Solin v. NASD, in which plaintiff sought a declaratory judgment that the NASD arbitration awards database is not protected by copyright and that NASD does not have the legal authority to limit his use of it. Plaintiff was interested in using the database for a law review article. NASD moved to dismiss alleging there was no allegation it had threatened to sue plaintiff, and had indeed given him permission to use the database for the article; thus no case or controversy existed. The court agreed and dismiss the action.