Copyright Law Update: the Protect Lawful Streaming Act & the CASE Act

January 18, 2021 · by ·

The Protect Lawful Streaming Act was passed on December 2020, as part of the Covid-19 stimulus omnibus bill, the Consolidated  Appropriations Act, 2021.

The Act adds a section 2319C to the Copyright Act on digital transmission services, defined as services having as a primary  purpose  to publicly perform works by digital transmission. The Act prohibits providing such services commercially or for financial gain without the authorization of the  copyright owner.

The penalties are a fine and imprisonment for not more than three years, or both, or imprisonment for not more than five years, or both, if the offense “was  committed  in  connection with  one or more  works  being  prepared  for  commercial public performance; and … the   person   knew   or   should   have   known  that  the  work  was  being  prepared  for  commercial public performance.” The penalty can be a fine and 10 years in prison if the offense is a  second or subsequent offense under section 2319C  or  Section 2319(a).

The ‘‘Copyright  Alternative  in  Small-Claims  Enforcement  Act  of 2020’’ or ‘‘CASE Act of 2020’’ was also passed as part of the omnibus bill. It creates Chapter 15 of the Copyright Act and establishes a Copyright Claims Board in the Copyright Office (CCB)), which much be established within one year of the enactment of the Act.

Composition of the Copyright Claims Board

The CCB, which will be an administrative tribunal for matters related to copyright,  will be composed of three full-time Copyright Claims Officers appointed by the Librarian  of Congress, after consultation with the Register of Copyrights, who must be attorneys with a least seven years of experience, and who must “have substantial familiarity with copyright law  and  experience in the field  of  alternative dispute resolution, including  the resolution of litigation matters  through that method  of  resolution.” The three Officers will be appointed, respectively, to a four-year term, to a five-year term, or a six-year term.

The Register of  Copyrights must also hire at least two full-time Copyright Claims Attorneys  “to  assist  in  the administration of the Copyright Claims Board,” which must have “substantial  experience in the  evaluation,  litigation, or adjudication of copyright infringement claims” and no fewer than three years  of  “substantial experience in copyright law.” They will be appointed to a five-year term.

Both Copyright Claims Officers and Copyright Claims Attorneys will have to recuse themselves if there they have reason to believe there is a conflict of interest. Parties will have to refrain from ex parte communication with the Copyright Claims Officers and the Copyright Claims Attorneys.

Participation in CCB proceedings is voluntary, but respondents need to opt-out within 60 days

Participation in a CCB  proceeding is voluntary, and the parties retain their right to pursue their claim in a court of law “or any  other  forum.” However, if a respondent fails to opt out within a 60-day period after having been served by the claimant, she or he “loses the opportunity to have the dispute decided  by  a court  created  under  article  III of the U.S. Constitution and waives the  right  to  a  jury  trial  regarding the dispute.”

The respondent will be able to file a counterclaim.

Scope of jurisdiction

The CCB will have power to adjudicate copyright infringement claims if the claim does not exceed $30,000. The CCB will also be able to adjudicate claims for a declaration of noninfringement of a copyright, and claims of section 512(f)  DMCA misrepresentations, that is, a misrepresentation in the DMCA takedown notice of the infringing nature of a material or activity, or that a “material or activity was removed or disabled by mistake or misidentification.”

Applicable laws

The CCB will follow the regulations  established by the Register of Copyrights under the new Chapter 15 and other “relevant  principles  of  law  under this title.” In case of conflict with “a judicial precedent on an issue of substantive copyright  law  that cannot  be  reconciled,” then the CCB  will “follow the law of the  Federal  jurisdiction  in  which  the  action  could  have  been  brought  if  filed in a  district court  of  the United  States,  or, if  the  action  could have been brought  in more than one such  jurisdiction, the  jurisdiction that  the  [CCB]  determines has the most significant ties  to the  parties and conduct at issue.” It thus appears that the parties will still being able to benefit from the positions and tests used by the Courts in their respective Circuits.

Legal representation

The proceedings will take place at the CCB offices, and the parties will not have to be present. The procedure will be written, but the CCB will be able to hear the parties or their counsels  via “internet-based applications and  other telecommunications  facilities,  except  that,  in  cases  in which  physical  or  other  nontestimonial  evidence  material  to  a proceeding” cannot be thus provided to the CCB, in which case the CCB “may make  alternative arrangements for the submission of  such evidence that do  not  prejudice any other  party to  the proceeding.”

The parties can be represented by an attorney or by a law student “who is  qualified under applicable law  governing  representation  by  law  students  of  parties  in  legal proceedings  and who  provides  such representation on a pro bono basis.”

Procedure – the claim

Parties will initiate the proceeding by filing a claim with the CCB  which will include a certified statement  of  material  facts  in support of the claim and a filing fee. The amount of the fee will be established by the Copyright Office, which indicated in its Small Claims Report (see note p. 140)  that “[a] conforming amendment to section 708 may be advisable.”

The claim will be then reviewed by a Copyright  Claims  Attorney to  ensure  that  the claim  is compliant with Chapter 15 and other applicable  regulations. The statute of limitations is three years after the claims accrued.

If the claim is compliant, the claimant is notified and can then serve it  to the defendant. If it does not comply, the claimant will be permitted to file an amended claim withing thirty days after receiving the notice that the claim does not comply and will have to file an additional filing fee.  If the claim is still not compliant, the claimant  will be given a second opportunity to amend the  claim not  later than thirty  days  after the date of the second notice of non-compliance, without having, however, to pay another filing fee. If the claim is still not complaint, the proceeding will be dismissed without prejudice.

If the claim is against an  online service  provider storing infringing material or linking to it, the claim will have to state that the claimant has previously notified the service provider by a DMCA notice, and that the  service provider has failed  to expeditiously remove or  disable  access to  the  material  after receiving such notice. The opposing parties can file a counter claim, which compliance is similarly reviewed by a Copyright  Claims  Attorney.

All claims can be dismissed without prejudice for unsuitability by the CCB  if the CCB concludes that a necessary party or an essential witness has not been contacted, or if evidence or expert testimony is lacking, or if the claim involves an issue exceeding the competence scope of the CCB, or if the claimant becomes a member  of a class action.  A claim can also be voluntary dismissed, with no prejudice, by the claimant.

Even if a claim is compliant, the parties can choose any time to settle the case, either during a conference with a Copyright Claim Officer or by submitting a settlement proposal to the CCB.

If the claim proceeds, the CCB will have the power to make factual determinations, based upon a preponderance of the evidence.

If the respondent to the claim does not appear, or failed to pursue defending the claim, the CCB can issue its decision by default.

Permissible remedies

The CCB may award actual damages and profit. It can also award statutory damages, which cannot exceed $15,000 for each work infringed. Statutory damages cannot exceed $7,500 per work infringed or a total of $15,000 in any proceeding.

Effect of a CCB determination

If the CCB issues a final determination, including a default determination, it will preclude, solely with respect to the parties to such determination, the case to be litigated again before any court or tribunal, or before the CCB,  of  the  claims  and  counterclaims  asserted  and  determined  by  the  CCB. However, parties will be able to litigate again, in a court of law or with the CCB, about the same facts, about claims or counterclaims which were either not previously asserted or which had not been determined by the CCB. Also, if the CCB determined ownership of a copyright for the purposes of resolving the case, such determination  will not have any  preclusive  effect in any other action or  proceeding before  a court of law or a tribunal , including the CCB.

No legal  precedent

Decisions by the CCB will not, however, be relied upon as legal precedent, and thus a CCB caselaw will not stem from the adjudicated claims. Following the cases is, however, likely to be enlightening, especially since a Copyright Claim Officer dissenting with a CCB decision will be able to file her or his dissent. This is particularly interesting as all final  determinations of the CCB will be published on a website. Parties will be able to submit a written  request for reconsideration or amendment  of a final determination made by the CCB, if done no later than thirty days after the issuance of the final  determination, “if the party identifies a clear error of law or fact material to the outcome, or a technical mistake.”

Possible negative effect of the CCB

While the CCB will make it easier and less costly for copyright holders to defend their rights, and this is certainly a positive effect, it may also lead to frivolous claims be filed, and so called “copyright-trolls” who engage in mass copyright litigation may find it an efficient tool to pursue their trade.

Positive effect of the CCB

Artists, writers, small businesses, and entrepreneurs will be able to defend their rights at a cost much lower than the costs of litigation in a federal court (the court which has jurisdiction over copyright cases).  The Register of Copyrights will also establish regulations for claims seeking  less than $5,000 (exclusive  of  attorneys’ fees and  costs). In these cases,  at least one Copyright Claim Officer will determine the outcome of the case and the determination will have the same effect as one issued by the entire CCB.

Image is courtesy of Flickr user Alan Levine under a CC BY 2.0 license.

 

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Copyrighting a dance step? Between a Hard (Milly) Rock and a Copyright Office

February 21, 2019 · by ·

Several copyright infringement suits were filed last year against Epic Games, the marker of the Fortnite game, by individuals who became associated with a particular dance move, whether it be their sole claim to fame or not.

One of these plaintiffs is rapper Terence Ferguson, aka 2 Milly, who is at the origin of the Milly Rock dance. Dare we say he created it and that the dance is protected by copyright? More on this later. In any case, you can find a tutorial here.

2 Milly claims that the “Swipe It “dance, an “emote” which in 2018 appeared in season 5 of the game, infringes his copyright. Such emotes, as explained by Defendant, “are movements that an avatar performs to express emotions in the game.”

Epic Games attorneys have now moved to dismiss the case (HT Eriq Gardner for posting the memo online). They claim, in support of the motion that Plaintiff failed to state a claim. They also moved to strike the case under the California anti-SLAPP statute, claiming that the copyright infringement suit was filed to discourage Defendant’s speech in connection with a public issue. Video games are speech, and Defendant cites the U.S. Supreme Court 2011 Brown v. Entertainment Merchants Ass’n case, which found video games to be protected by the Fist Amendment.

“No one can own a dance step”

One of defendant’s arguments is that “no one can own a dance step” and that “Plaintiff’s claims is based on his assertion that he has a monopoly on a side step with accompanying swinging arm movement that is then repeated on the other side.”

Plaintiff claims his work is protected by copyright. Defendant claims they are mere steps, which are not protectable:

“[c]opyright law is clear that individual dance steps and simple dance routines are not protected by copyright, but rather are building blocks of free expression, which are in the public domain for choreographers, dancers, and the general public to use, perform, and enjoy.”

This argument differentiates the steps from the choreography. The first are the building blocks of the second. Indeed, they are many steps in dance, and they are used by many different dancers. For instance, Michael Jackson did not create the moonwalk, but he performed it so well that he is associated with it.

Choreography is protected by copyright in the U.S., but this is fairly recent, as the 1909 Act did not protect it. Defendant cites paragraph 805.1 of the Compendium of U.S. Copyright Office Practices, which explains that a choreographic work is “the composition and arrangement of a related series of dance movements and patterns organized into a coherent whole” and which points out that Congress did not intend to protect “simple dance routine.”

Are the two works substantiality similar?

Defendant describes the 2 Milly dance step as being:

“a side step to the right while swinging the left arm horizontally across the chest to the right, and then reversing the same movement on the other side.”

Defendant describes the Fortnite’s “Swipe It” as:

“consist[ing] of (1) varying arm movements, sometimes using a straight, horizontal arc across the chest, and other times starting below the hips and then traveling in a diagonal arc across the body, up to the shoulder, while pivoting side to side on the balls and heels of the feet, (2) a wind up of the right arm before swiping, and (3) a rolling motion of the hands and forearms between swipes.”

As you can see, “Swipe It” requires many more words and must thus be more complex and thus different from the simple “Milly Rock” step, right?

To determine substantial similarity, courts in the Ninth Circuit use an extrinsic similarity two-part test, where plaintiff must show that the works are substantially similar under both the extrinsic test and the intrinsic test. The extrinsic test is an analysis of the similarities of the two works’ expressive elements, after the courts have filtered out the elements which are not protected by copyright, such as material in the public domain. The intrinsic test analyzes whether an ordinary reasonable person would think that the two works are substantially similar in “total concept and feel.” Defendant claims that the extrinsic test is not satisfied and that thus the case must be dismissed.

Is the right of publicity claim preempted by the Copyright Act?

Defendant is also arguing that Plaintiff’s right of publicity claim is preempted by the Copyright Act and should thus be dismissed, citing Maloney v. T3Media, where the Ninth Circuit affirmed dismissal of a right of publicity claim is proper if such use is not “independent of the display, reproduction, and distribution of the copyrighted material.” It remains to be seen if this is the case here as well.

Copyright Office refuses to register the Milly Rock Dance

Meanwhile, the Copyright Office has refused to register the Milly Rock dance, writing that “[c]horeographic works are typically performed by skilled dancers for an audience. By contrast, social dances, such as ballroom dances, line dances, and similar movements are not created by professional dancers. They are instead intended to be performed by the general public for their own enjoyment.”

By doing so, the Copyright Office seems to place dance in a somewhat lower echelon than painting and illustrative art. Indeed, the Supreme Court explained in 1903 in Bleinstein v. Donaldson Lithographing Co. that “persons trained only to the law” should not “constitute themselves final judges of the worth of pictorial illustrations.” Terpsichore is one of the muses, after all, and there is not even a muse for pictorial art…

 

Image is courtesy of Flickr user shikeroku under a CC BY 2.0 license.

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Not every pattern is protected by copyright, even if creating it involved many choices

January 8, 2018 · by ·

The Review Board of the U.S. Copyright Office (the Board) recently reviewed a second request by T.W.N. Industries (TWN) for reconsideration of the Registration Program’s previous denial to register two of its patterns. On October 25, 2017, the Board again denied registration to one of the patterns, Gold Wood, but granted registration to the Staggered Carbon Pattern.

TWN’s patterns are designed to be used by applying them to an object, such as an airplane interior for example.

Copyright Office

The Board described the two patterns as such:

“Staggered Carbon is a geometric pattern consisting of repeating rectangular bands of different sizes, shapes, and textures, arranged in a woven pattern. The bands are two distinct gray-colored patterns. One band is dark gray with vertical lines, and the other band is light gray with darker gray lines.

Gold Wood is a two-dimensional graphic design consisting of a repeating pattern of striated gold and cream vertical lines, made to resemble a light wood grain. “

The U.S. Copyright Office had originally denied in September 2016 copyright registration to both patterns, informing TWN that they lacked the minimum amount of creative pictorial, graphic or sculptural authorship necessary for a work of visual arts to be protected by copyright.

 TMW then asked the Copyright Office to reconsider its refusal, and  explained the creative process used for both patterns, which both necessitates the use of up to three layers within Photoshop, and were hand-drawn using different brushes and strokes.The Copyright Office again denied registration, as “the elongated rectangular bands” which made up the Staggered Carbon pattern “are a common and familiar shape” and the lines making up the Gold Wood pattern were also “a common and familiar shape” and thus could not be protected by copyright. The Copyright Office also found that the Gold Wood’s features were not “combined in any way that differentiates them from their basic shape and design components,” and were a “simple configuration” not protectable by copyright as “the work as a whole consists of vertical lines in shades of gold and cream.”

TMW asked the Copyright Office to reconsider its refusals for a second time, as allowed by 37 C.F.R. § 202.5 (c), claiming that both works were original enough to be protected by copyright, which bears the question: what is originality under U.S. copyright law?

What is originality under U.S. copyright law?

Under 17 U.S.C. § 102(a), U.S. copyright protects only “original works of authorship.” The threshold for a work to be original is, however, quite low. As explained by the Supreme Court in Feist Publications, Inc. v. Rural Telephone Service Co., Inc. , “[t]he sine qua non of copyright is originality. To qualify for copyright protection, a work must be original to the author. … Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity.”

Thus two cumulative conditions are necessary for a work to be protected by copyright:

–          It must have been independently created by the author and

–          It must possess at least some minimal degree of creativity

A combination of unoriginal elements can be original enough to be protected by copyright

The Board noted that [s]ome combinations of common or standard design elements may contain sufficient creativity with respect to how they are juxtaposed or arranged to support a copyright… [but that] not every combination or arrangement will be sufficient to meet this test.”

It quoted the 2003 Satawa v. Lowry 9th Circuit case, where the court explained that, while

“a combination of unprotectable elements may qualify for copyright protection… not … any combination of unprotectable elements automatically qualifies for copyright protection. Our case law suggests, and we hold today, that a combination of unprotectable elements is eligible for copyright protection only if those elements are numerous enough and their selection and arrangement original enough that their combination constitutes an original work of authorship.”

The Board also quoted § 906.1 of the Compendium of U.S. Copyright Office Practices on Common Geometric Shapes, which explains that “the U.S. Copyright Office will not register a work that merely consists of common geometric shapes unless the author’s use of those shapes results in a work that, as a whole, is sufficiently creative.”

Staggered Carbon is original enough to be protected by copyright

The Board found that “the combination of elements in Staggered Carbon – namely the different textures on the bands, as well as their arrangements – exhibits copyrightable authorship,” and was original enough to be protected, quoting Feist, where the Supreme Court held that only a ‘modicum’ of creativity is necessary for a work to be original.

However, only the “specific combination of textures” created by TWN are protected by copyright, not the “standard designs and other unoriginal elements.”

Gold Wood is not original enough to be protected by copyright

But even though the Board recognized that Gold Wood had been independently created, it was not creative enough to be protected by copyright, as “it consists of simple, minor variations on common shapes arranged in an obvious and uniform manner.” The Board explained further that Gold Wood “is made up of only a very few elements (monochromatic lines in a few shades of gold” arranged in an unoriginal manner (densely and with only minor and repeating variations throughout the pattern).” As explained in § 313.4(J) of the Compendium of U.S. Copyright Office Practices, “a work consisting of a simple combination of a few familiar symbols or designs with minor linear or spatial variations, either in two-dimensional or three-dimensional

form, cannot be registered.”

TWN argued that it had to make “specific choices from endless alternatives of shapes” to create Gold Wood. But the Board explained that “it is not the possibility of choices that determines copyrightability, but whether the resulting expression contains copyrightable authorship.”

Image is courtesy of Flicker user Tony Webster Under a CC BY2.0 license.

This post was first published on The 1709 blog.

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U.S. Bill Would Introduce a Copyright Claims Board

January 10, 2017 · by ·

Representatives Judy Chu (CA-27) and Lamar Smith (TX-21) introduced this month a bill, the Fairness for American Small Creators Act, which would amend the Copyright Act to introduce a Copyright Claims Board (the Board). The press release is here.

The Board would be established within the Copyright Office and would be an alternative forum to resolve some, but not all, copyright claims (collective sigh of relief from IP attorneys).

15500658421_d0d4806dda_zThree Copyright Claims Officers

Three full-time copyright claims officers would serve on the board for a six-year term. They would all be attorneys with at least seven years of legal experience. Two of the copyright claims officers would “have substantial experience in the evaluation, litigation, or adjudication of copyright infringement claims and, between them, … have represented or presided over a diversity of copyright interests, including those of both owners and users of copyrighted works. The third copyright claims officer [would] have substantial experience in the field of alternative dispute resolution.”

They would be independent from the Register of Copyrights, but could consult it on general issues of law, but not with respect to the facts of any particular matter pending before the Board or the application of law to a particular matter. The Board’s decisions could be reviewed by a court.

Copyright Claims Attorneys

No less than two attorneys would be appointed by the Register of Copyrights to assist in the administration of the board. They would have to have at least three years of copyright law experience.

Authority and Responsibilities of the Copyright Claims Board

The Board would determine whether a particular copyright claim, counterclaim, and defense could be brought before the Board, and would ensure that they are “properly filed and otherwise appropriate for resolution by the Board.” The Board would manage the proceedings of the Board and render rulings relating to the consideration of these claims, which would include scheduling and discovery. Indeed, the Board would have the power to request the production of information and documents relevant to the resolution of a claim, and to conduct hearings and conferences. The Board would also have the power to facilitate the settlement of any claim or counterclaim of parties and to require cessation or mitigation of an infringing activity, including takedown or destruction of infringing materials, but only if the party asked to do so agrees.

Authority and Responsibilities of the Copyright Claims Attorneys

Copyright Claim Attorneys would have to provide assistance to the copyright claims officers in the administration of their duties, and provide assistance to members of the public with respect to the procedures and requirements of the Board.

Proceedings

Parties would only participate in a Board proceeding on a voluntary basis and the right of any party to pursue a claim in any court of law would be preserved. The claim would have to be filed no more than three years “after the claim that is the basis for the proceeding accrued.” The Board could review claims for infringement, or provide a declaration of non-infringement, unless the claim is already pending before, or finally adjudicated by a court of law. Both parties would have to be in the U.S. The Board could award actual damages and limited statutory damages, but the latter could not exceed $15,000 per work infringed.

This would be a centralized process, as the Board would conduct proceedings “by means of Internet-based applications and other telecommunications facilities, except that in any case involving physical or other nontestimonial evidence, the Board may make alternative arrangements for the submission of evidence if the arrangements do not prejudice another party to the proceeding.”

The parties could be represented before the Board by an attorney or law student who is qualified under applicable law to represent a party on a pro bono basis.

It is an interesting proposal, especially as the whole procedure could be conducted electronically. Allowing qualified law-students to represent parties may, however, have a somewhat limited impact on the ability of parties to seek pro bono counsel, as U.S. states typically require law students representing parties pro bono to be supervised by a faculty member or a practicing attorney.

This article was first published on The 1709 Blog.

Image courtesy of Flickr user Michael Coghlan under a CC BY-SA 2.0 license.

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Online Service Providers Must Now Designate their DMCA Copyright Agent Electronically

December 5, 2016 · by ·

Section 512(c) of the Digital Millennium Copyright Act (“DMCA”) provides Online Service Providers (OSPs) four types of safe harbor against copyright infringement. In order to benefit from these safe harbors, OSPs must designate a DMCA copyright agent. Such agents are designated by the OSPs to receive notifications of claimed infringement, the “DMCA takedown notices,” which are usually sent by email.
Since December 1, 2016, OSPs must do so electronically. Even if an OSP had formally designated a DMCA agent using the paper method, it must now do so again electronically before January 1, 2018.

dmcaThe Four DMCA Safe Harbors

The DMCA provides a safe harbor for transitory communications. Entities merely serving as a conduit for transmitting, routing or providing connections for digital online communications that are between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received, are shielded from copyright infringement liability, Section 512(k)(1)(A).

The DMCA also provide a safe harbor to providers of online services or network access, or operators of facilities for such services, for system caching, storing information at the direction of users and providing links or other tools for locating material online, Section 512(k)(1)(B).

OSPs Must Designate a DMCA Agent

In order to benefit from these four safe harbors, OSPs must designate individuals as copyright agents and must provide this information on their website “in a location accessible to the public.” They must also provide this information to the U.S. Copyright Office, by providing the name, address, telephone number and email address of the agent.

The Copyright Office maintains a directory of these agents. The list of DMCA agents 1998-2016 is available here. This list will now be phased out. If a OSPs has a DMCA listed in this directory, it satisfies its obligation to register a DMCA agent, but only until December 31, 2017. The designation will expire after this date.

New Rule as of December 1, 2016: OSPS Must Designate their DMCA Agent Electronically

Under interim regulations in effect between November 3, 1998 and November 30, 2016, OSPs could designate agents using a paper form. This changed on December 1, 2016, when the new regulation about the new online registration system entered into force. Under the new electronic system, OSPs must now designate their agents electronically.

Therefore, an OSP wishing to retain its active designation must submit electronically a new designation using the new online registration system by December 31, 2017. The new directory is available here. Good news: the fee to register electronically is significantly lower than was the fee was to register by paper, from $106 to register by paper to $6 to register by electronically.

Image is courtesy of Flickr user Cory Doctorow under a CC BY-SA 2.0 license.

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Changes Ahead in U.S. Copyright Statutory Damages Law

February 18, 2016 · by ·

The U.S. Department of Commerce’s Internet Policy Task Force  (the Task Force), which is led by both the U.S. Patent and Trademark Office (USPTO) and the National Telecommunications and Information Administration (NTIA), published on January 28 a  White Paper on Remixes, First Sale, and Statutory Damages which addresses three issues:

  • 1) the legal framework for the creation of remixes;
  • 2) the relevance and scope of the first sale doctrine in the digital environment; and
  • 3) the application of statutory damages in the context of individual file-sharers and secondary liability for large-scale online infringement.

The Task Force had published a Green Paper, “Copyright Policy, Creativity, and Innovation in the Digital Economy” on July 31, 2013, which had identified these three issues warranting further review by the Task Force.

The Task Force then published a Notice in the Federal Register seeking comment on these issues. It conducted a public meeting in December 2013 and also held roundtables around the U.S., before reviewing comments from stakeholders as diverse as rights holder organizations, Internet-based companies, public interest groups, libraries, academics, and individual authors and artists.

Remixes

Remixes use existing works, some of them still protected by copyright, to create new works, which may be compilations or derivative works under the Copyright Act, or collective works.  As noted by the Task Force, user generated content (“UGC”) “has become a hallmark of the Internet” (p.6).

Some of the remixes, such as fan fiction and fan videos, are created by non-professionals, while others, such as music mashups, are created by professionals and may even be sold. Several stakeholders noted that “the lines between amateur and professional, and between noncommercial and commercial, are often blurred” (p. 7). Others noted that “noncommercial activities can cause harm to the market for the original work or for licensed derivative works” (p.8).

Some remixes are fair use, some are not, and determining what is fair use or not is not easily determinable, even by attorneys or by courts, as noted by some stakeholders (p.10). The Copyright Office maintains an online fair use index to help determine whether a particular use may be fair or not, but this tool alone does not provide an absolute determination of whether a particular use is fair or not.piano rolls

The Task Force did not believe that a compulsory license, such as the one provided by section 115 of the Copyright Act for phono records, would be advisable. At the time this compulsory license was enacted, one company had the monopoly on the piano roll market, and the Task Force has not seen evidence that a similar monopoly exists today for remixes or their licensing.

Also, such compulsory licenses would allow the creation of derivative works, whereas statutory licenses now only permit reproducing, distributing, and public performance of the licensed work, without alteration (p. 26). While the Task Force acknowledged that remixes are “valuable contributions to society… the record has not established a need to amend existing law to create a specific exception or a compulsory license for remix uses” (p. 4).

Instead, the Task Force recommends three goals to be pursued so that remixers would understand when a use is fair or not, and to understand how to obtain licenses.

These three goals are:

  1. developing negotiated guidelines which would provide greater clarity as to the application of fair use to remixes;
  2. expanding the availability of a wider variety of voluntary licensing options; and
  3. increasing educational efforts aimed at broadening an understanding of fair use.

The guidelines could be developed independently or with the collaboration of the government (p. 28) and should be written in language easily understandable by the general public (p.29). The White Paper notes that such guidelines already exist, such as the Principles for User Generated Content Services which aims at “foster[ing] an online environment that promotes the promises and benefits of UGC Services and protects the rights of Copyright Owners.”

As licensing would remain voluntary, authors and rights holders would have the option to refuse granting a license, “especially when the prospective licensee is seeking permission for a use that the author or rights holder considers offensive” (p. 30).

A stakeholder gave the example of the Beatles Hey Jude song used to create an Anti-Semitic work (see note 44 of the White Paper). But such hateful use would probably be fair use, and protected by the First Amendment. Only granting authors a moral right would allow them to bar every use they find offensive. By the way, what is “offensive”?  The Beatles example would be considered offensive by many, if not all, but what about use of a protected work to comment on issues where opinions diverge more, such as political opinions?

First Sale Doctrine

The Task Force noted that works distributed online are often licensed, not sold, and “this could make the resale market obsolete” (p. 35). Some stakeholders noted that the contractual terms of such licenses are often “opaque” (p.39).

Libraries expressed concerns that their use of digital works may be limited, including eBook library loans (p. 47). Indeed, libraries may only lend books thanks to the first sale doctrine, but the Task Force believes that “early government intervention into the eBook market could skew the development of innovative and mutually beneficial arrangements” between eBook publishers and libraries. However, this may change if libraries are not able to “appropriately serve their patrons due to overly restrictive terms imposed by publishers” (p.4).

In order to preserve the first sale doctrine in the online environment, the Task Force believes it is not advisable to extend the first sale doctrine to digital transmissions of copyrighted works, because of the risks that would cause to copyright owners’ primary markets.

The Task Force noted that digital works are offered at lower prices than the hard copies of the works and thus deliver the benefit offered by the first sale doctrine to consumers who may purchase used books and used copies of protected works at a lower price (p.58).

While consumers are not allowed to resell their digital copies, “[i]t is difficult… to determined the value of this lost benefit” as the Task Force does not have “sufficient data to conduct an authoritative  cost-benefit analysis of the trade-offs between the consumer benefits from the first sale doctrine and from licensed online services”(p. 59).

So U.S. law is not (yet) ready to authorize the resale of digital goods.

Statutory Damages

Statutory damages have been applied against individuals sharing files online and against online services found to be secondarily liable for such infringements. Remix artists often refrain from using a protected work, even they believe their use is fair, as fair use can not be accurately predicted and “the threat of high statutory damages can stifle lawful activity” (p.33). Some stakeholders also argued that statutory damages have a chilling effect on innovation and investment (p.80), an assessment disputed by some right holder groups (p. 81).troll

Statutory damages have also allowed the development of a noxious “business model” of massive copyright infringement suits (aka copyright trolls), which abuse the litigation process by filing hundreds of boilerplate copyright infringement suits, using the subpoena power of the courts to find the identity of Internet users. These suits are, however, rarely litigated, but instead are settled after intimidating correspondence (p. 74).

The Task Force recommends three amendments to the Copyright Act so that the needs of copyright owners, users, and intermediaries may be better balanced:

First, the Task Force recommended that Congress add a new paragraph in Section 504 of the Copyright Act to provide a list of factors for courts and juries to consider when determining the amount of a statutory damages award. It proposed the insertion of this new clause in subsection Section 504(c): (p.87)

FACTORS TO CONSIDER — In making any award under this subsection, a court shall consider the following nonexclusive factors in determining the appropriate amount of the award:

(1) The plaintiff’s revenues lost and the difficulty of proving damages.

(2) The defendant’s expenses saved, profits reaped, and other benefits from the infringement.

(3) The need to deter future infringements.

(4) The defendant’s financial situation.

(5) The value or nature of the work infringed.

(6) The circumstances, duration, and scope of the infringement, including whether it was commercial in nature.

(7) In cases involving infringement of multiple works, whether the total sum of damages, taking into account the number of works infringed and number of awards made, is commensurate with the overall harm caused by the infringement.

(8) The defendant’s state of mind, including whether the defendant was a willful or innocent infringer.

(9) In the case of willful infringement, whether it is appropriate to punish the defendant and if so, the amount of damages that would result in an appropriate punishment.

The Task Force explained that these factors “should be weighted holistically” (p. 88).

Secondly, the Task Force recommended amending Section 401(d) and 402 (d) of the Copyright Act to expand eligibility for the lower “innocent infringement” statutory damages awards (p. 97).

Thirdly, the Task Force recommended giving courts discretion to assess statutory damages other than on a strict per-work basis in cases of non-willful secondary liability for large scale online services (p. 97).

Small Claims Tribunal

The Task Force is also in favor of establishing a small claims tribunal, as it believes this “could help diminish the risk of disproportionate levels of damages against individual file-sharers” (p.5). This has been proposed by the Copyright Office itself.

The tribunal would be centralized, in a single location, and would provide for a cap on awards of both statutory and actual damages. There would be limited discovery and counterclaims, and all relevant defenses could be asserted, including fair use. Also, it would not be mandatory to be represented by an attorney, and the tribunal could award costs and fees against frivolous litigants (p. 99). This is a very interesting proposal and I hope it will be implemented soon.

This post was first published on The 1709 Blog.

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