SV Media Law Blog : New Media Law : Lawyer & Attorney Cathy Kirkman : E-commerce, Venture Capital, Technology

Jumping in with a few thoughts on the 9th Circuit's Roommates.com decision, which came out last week -- some viewpoints include Eric Goldman, Michael Erdman, and Evan Brown.

Roommates was sued for violating the fair housing laws, and it unsuccessfully argued that as an interactive computer service it was immune from liability for the content posted by its users, under Section 230 of the Communications Decency Act.

Under the statute, the immunity does not apply if the service provider also participated as an “information content provider”, by being “responsible, in whole or in part, for the creation or development of the offending content.”

The opinion says it adopts a “common-sense interpretation” of what “developing” is, for the purpose of liability. It says that “[C]lose cases, we believe, must be resolved in favor of immunity, lest we cut the heart out of section 230 by forcing websites to face death by ten thousand duck-bites, fighting off claims that they promoted or encouraged – or at least tacitly assented to – the illegality of third parties.”

Actually ducks are really nice animals (guess that's why we're talking 10,000 bites), so let’s leave them out of this. Chickens of course have sharp beaks, and geese can be rather aggressive, but ducks are generally quite genial, with rounded bills and just some serrated edges-- so ducks may find the reference offensive and should reserve their rights and remedies.  Duck image (c) Tomo.yun, (www.yunphoto.net/en/).

The decision focuses on the term “development” in assessing the site’s involvement in providing user drop-down menus for creating their housing profiles, and in providing search and email notifications relating to the user’s stated housing preferences. The decision found the “additional comments” portion of the site to be covered by the immunity, because it was a neutral tool for users to post their comments.

“The decision interprets the term “development” as “referring not merely to augmenting the content generally, but to materially contributing to its alleged unlawfulness. [emphasis added]” 

“In other words, a web site helps to develop unlawful content, and thus falls within the exception to section 230, if it contributes materially it to the alleged illegality of the conduct [emphasis added].”

It thus associates the CDA immunity analysis with the legally complex notions of contributory liability (and inducement liability), which are areas of some uncertainty in the copyright arena. 

The opinion says there’s more clarity now about the legal standard than there was before: “Our opinion extensively clarifies where that edge lies, and gives far more guidance than our previous cases”.  it does take pains to elaborate on what it means by "development", in seeking to avoid a pedantic interpretation, and there’s certainly a lot here to digest. 

Here’s a word cloud summary of some of the opinion’s lexicon.  These are snippets from the opinion, obviously taken out of context, but after the gestalt of the opinion.

“contributes materially to the alleged illegality of the conduct”

“encourage illegal content”

“designed to achieve illegal ends”

“design your website to require users to input illegal content”

“website directly participates in developing the alleged illegality”

“elicits the allegedly illegal content”

“makes aggressive use of it in conducting its business”

“directly related to the alleged illegality of the site”

“developing and enforcing a system that subjects subscribers to [illegal content]"

“inducing third parties to express illegal preferences”

“enhance, encourage, make easier” the posting of illegal content

“solicit” or “encourage” the harmful content”

“creating a website designed to solicit and enforce [illegal] preferences”

“direct encouragement to perform illegal searches or publish illegal content”

* * * * * * * *

“providing neutral tools”

“generic text”

“simple, generic prompt”

“weak encouragement”

 “development by inference”

“enhancement by implication”

“merely provide a framework”

 “generic search engines”

 “edits are unrelated to the illegality”

 “without prompting or help from the website operator”

“did nothing to encourage the posting of [illegal] content”

 “contrary to the website’s express policies”

“mere classifying user characteristics”

nothing “induces anyone” to engage in illegal conduct

“chat rooms for general use”

“generic message board”

“does not provide any specific guidance”

does not “urge subscribers” to engage in illegal conduct

 

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The 8th Circuit issued an opinion today in the fantasy baseball case, CBC Distribution & Marketing v. MLB Advanced Media, in which MLB asserted that fantasy leagues need permission to use players' names and other data. 

The court affirmed the district court ruling, which held that the First Amendment trumps the player's publicity rights and thus permits usage without a license.  The court also confirmed that the "no-challenge" and "no-use" clauses of the prior license agreement were unenforceable, but not on public policy grounds (as the lower court found), but rather on a technical point about breach of warranty of title in the publicity rights by MLB.  See prior post about the lower court ruling.

My partner Glenn Colton filed an amicus brief in the case on behalf of the Fantasy Sports Trade Association.  Glenn also writes the Week That Was column  for Rotoworld.com about fantasy leagues.  He offered these thoughts on the victory:  

"Today's decision from the 8th Circuit Court of Appeals is a major victory for the fantasy sports industry, fantasy sports players, and most importantly, the protection of free speech and expression. Specifically, the Court ruled that the interests protected by the First Amendment to the United States Constitution outweigh any alleged harms to professional athletes from the use of their names in fantasy sports games.

"Notably, the Court went out of its way to point out how "handsomely" players are already rewarded for their performances and endorsements. In the final analysis, the decision drives another nail in the coffin of Major League Baseball and its players association's attempt to wrest control of the fantasy sports industry from the pioneers that worked long and hard to build and create the thriving national hobby millions enjoy today."

 Here are some interesting posts today on the case:

Staci Kramer on Paid Content

Neil Richards on Concurring Opinions

Mike Madison on Madisonian.net

 

 

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In anticipation of the appeal of the recent RIAA P2P victory, Fred von Lohmann reviews the "make available" vs. "distribute" debate in the copyright law.   It's more than a sematics issue -- from Ars Technica it appears the defense appeal will challenge the validity of a jury instruction about "making available" as an infringing act.  

A few orthogonal thoughts on the subject:

The "make available" controversy has been around for a while -- the EFF has previously briefed the subject and Eric Goldman has a thorough discussion here.  

And "make available " language was added to criminal liability under Section 506 in 2005:

"by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution. by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution"

even though "make available" is not part of the enumerated statutory rights under Section 106.  

Also the U.S. has signed treaties with "make available" language, but since treaties are not self-executing, that doesn't mean the concept is part of U.S. law.  See prior posts on this here, here and here.

These complexities bring to mind the newly coined term "propagate" to supersede "distribute" and thereby cast a wider net of coverage in version 3 of the GPL:

To “propagate” a work means to do anything with it that, without permission, would make you directly or secondarily liable for infringement under applicable copyright law, except executing it on a computer or modifying a private copy. Propagation includes copying, distribution (with or without modification), making available to the public, and in some countries other activities as well.

 The FSF said it made this change because the term "distribute" alone wasn't getting the job done:

"The term “distribute” used in GPLv2 was borrowed from United States copyright law. Over the years, we learned that some jurisdictions used this same word in their own copyright laws, but gave it different meanings. We invented these new terms to make our intent as clear as possible no matter where the license is interpreted. They are not used in any copyright law in the world, and we provide their definitions directly in the license."

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Here are some perspectives on the much-publicized RIAA victory ($220K plus jury verdict) this week against the P2P file-sharer, Jammie Thomas:

Bob Lefsetz takes his music industry to task, with rhetorical flourish:  "What the fuck are we gonna DO ABOUT IT?"

Dennis Crouch compares to "patent sharks" of the 19th century, and resulting patent reform.  Is there such a thing as a copyright troll?

Bill Patry gives us the detailed copyright analysis on the jury instructions -- quite interesting about liability for "making available" versus "downloading". 

Recall Mitch Bainwol's slide deck at NARM in 2005, about "building a brighter future" for the music industry, which cites success of user lawsuits and public approval for same -- "maintaining resolve" and "enhancing deterrence".    

Last there's the IFPI statement on the Thomas case:  "We have always made it clear we are reluctant litigators."   Don't see a press release on the RIAA site.

 

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XM Satellite's motion to dismiss was denied last Friday in Atlantic v. XM Satellite, the copyright infringement case brought by record labels over the XM + MP3 player.   The ruling is here.

XM Satellite sought to dismiss the case on the grounds that its MP3 player is exempt from infringement claims under Section 1008 of the Audio Home Recording Act, which provides:

"No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device [DARD], a digital audio recording medium, … or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog recordings."

The court held that this does not immunize XM Satellite from infringement claims based on operation of its satellite subscription music service in conjunction with the MP3 player functionality -- rather only from infringement claims for selling the device itself:

"[U]nder the AHRA, XM is protected from suit based on actions taken in its capacity as a distributor of audio recording devices, but it is not immunized from suit based on its conduct as a satellite radio broadcaster, or from suit based on its actions as an XM + MP3 content provider."

 "The question presented here is plain: where the conduct alleged in the Record Companies' Complaint falls within the ambit of conduct protected by the AHRA.  The Court finds that because of the unique circumstances of XM being both a broadcaster and a DARD distributor and its access to the copyrighted music results from its license to broadcast only, that the alleged conduct of XM in making that music available for consumers to record well beyond the time when broadcast, in violation of its broadcast license, is the basis of the Complaint, and being a distributor of a DARD is not.  Thus, the AHRA, on these facts, provides no protection to XM merely because they are distributors of a DARD."

 It's an interesting case in terms of thinking about how the Section 114 statutory broadcasting license and the AHRA device immunity relate to each other.

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I guess Santa got my letter after all.  William Patry's much-awaited copyright law treatise has been published in seven volumes by Thomson/West, here, with a foreword by Sandra Day O'Connor, no less.  I can't wait to start using it.  

According to Patry, "I did 100% of the research and writing, never using assistants of any kind."  Having worked back in law school as a research assistant on Professor Goldstein's treatise, I have some sense of the nature of this undertaking and am in awe of it.  The table of contents alone is 82 pages, with sections called:  "The straw man of legislative history:  a textualist powerplay" and "the court's bait-and-switch approach to the use of legislative history". 

Patry says in his blog post:

"I think the chapter on statutory interpretation (chapter 2, 284 pages), will be a surprise to those who have assumed that the textualist approach to statutes is the dominant approach, even on the Supreme Court. The chapter represents a painstaking effort to document actual practices. I read far in excess of 1,000 cases, hundreds of law review articles, dozens of books, and of course drawn on my own 8 years in drafting statutes while a federal legislative branch attorney."

He also has started a new blog to support the treatise, called the The Patry Treatise Blog, which I am sure will be a valuable resource in its own right:

"The purpose of this new blog is to start breaking down the one-way nature of treatise writing: I want to provide a forum where people can react to the book and I can both respond and provide further thoughts on things I have written or am thinking about putting in the next supplement."

If you don't yet follow his work, you'll want to.  Here's a brief excerpt of Patry's accomplishments:

"Senior Copyright Counsel, Google Inc. Formerly copyright counsel to the U.S. House of Representatives, Committee on the Judiciary, formerly Policy Planning Advisor to the Register of Copyrights, formerly Law Professor, Benjamin N. Cardozo School of Law; author of numerous treatises and articles (including one on fair use with Judge Richard Posner), including the 7 volume treatise on "Patry on Copyright."

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A California appeals court ruled today in Wagner v. Columbia Pictures that Robert Wagner was not entitled to profits from the Charlie's Angels movies under an earlier agreement relating to the television series.

Robert and Natalie Wood had an agreement with Aaron Spelling's production company to develop ideas for a television pilot for ABC's 1974-1975 season.  They came up with Harry's Angels, which was renamed, and the rest is television history.  The agreement with the Wagners for Charlie's Angels provided a 50% share of net profits on:

"the right to exhibit photoplays of the series and from the exploitation of all ancillary, music and subsidiary rights in connection therewith."

In ruling against Wagner, the court concluded that "in connection therewith" applied to the television series, not to theatrical motion pictures.  In coming to this conclusion, the court review the "separated rights" provisions of the applicable Writer's Guild agreement.  Basically, separation of rights means that by way of collective bargaining, the writer retains certain rights, in this case motion picture rights when selling a script, notwithstanding a work-for-hire agreement.  If you're not familiar with the guild overlay on copyrights in the entertainment context, this case is a good introduction.

Happy new year to all.  A case about Charlies Angels seems like a good way to ease into the first full week of the year! 

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The Librarian of Congress has issued its periodic rulemaking determination for exemptions to the DMCA anti-circumvention provisions and has found six such exemptions for noninfringing uses, following the recommendations of the Register of Copyrights.   According to the LC's statement:

"The new classes of works will enable film and media studies professors to make compilations of film clips for classroom instruction, make it easier for owners of wireless telephone handsets to continue to use those handsets when they switch to new wireless carriers, and permit the testing, investigation and correction of security vulnerabilities on compact discs that are distributed with access control technology that compromises the security of personal computers."

The new exemption for use of audiovisual works by college professors is important because it represents a determination that the exemption can apply based on a type of use or user, rather than only based on particular types of works (as was concluded in prior rulemakings):

"Therefore, depending upon the circumstances, it can be appropriate to refine a class by reference to the use or user in order to remedy the adverse effect of the prohibition and to limit the adverse consequences of an exemption."

 This may lead to future exemptions for other types of uses and users, on an incremental, case-specific basis for fair use.   However the bar appears to be quite high to achieve an exemption.    Section 1201 requires review of a number of specific factors, in addition to an assessment that the underlying use is noninfringing.  For example, in the current rulemaking, the Register recommended against a general exemption for fair use, as well as an exemption for "space-shifting": 

"In the absence of any persuasive legal authority for the proposition that making copies of a work onto any device of the user's choosing is a noninfringing use, there is no basis for recommending an exemption to the prohibition on circumvention."

The report did not mention the 9th Circuit's ruling in RIAA v. Diamond Multimedia, which established space-shifting to one's portable music player as fair use.  Perhaps the exemption request was considered overbroad, but it would have made helpful to frame the issue with a review of existing authority.

 In any event, the Register considered the case for space-shifting under the Section 1201 factors noted above.  In light of these factors, the Register concluded that an exemption would not be warranted:

"On the whole, the Register's observation in 2003 remains equally apposite today: 'in essence, the commentators seek to have their cake and eat it too -- they want copyright owners to provide works in digital formats, but do not want to live with the reasonable measures copyright owners feels they must take to guard against the risks that this digital distribution entails.'"

"Given the wide availability of the works in a wide array of formats in the digital marketplace, the Register finds no reason for recommending an exemption to the prohibition for purposes of space-shifting activity."

 

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Here's the Streamcast decision, in which the California district court, on remand from the Supreme Court's Grokster ruling, has found Streamcast liable for inducing copyright infringement.  Streamcast was the remaining defendant in the Grokster case, as Grokster settled last November and Sharman Networks is said to have settled in August.  The $50 million settlement that Grokster made is "to be reduced by any judgment against the Grokster Parties," namely pursuant to this ruling.   

And here's some of the initial commentary on the 60 page ruling:

The RIAA press release calls the ruling a "significant victory". 

The EFF's analysis here notes that:

"In finding StreamCast liable for inducement, the court said:

Thus, Plaintiffs need not prove that StreamCast undertook specific actions, beyond product distribution, that caused specific acts of infringement. Instead, Plaintiffs need prove only that StreamCast distributed the product with the intent to encourage infringement.

This is a remarkably broad statement, and is at odds with the Supreme Court's view that an intent to encourage infringement must be accompanied by 'clear expression or other affirmative steps' beyond the mere distribution of a product."

On the Patry Copyright Blog, William Patry discusses the case and comments here that:

 "I have had many discussions with friends about whether Grokster did create a new third theory of liability, separate from the inducement prong of classic copyright contributory infringement. I have taken the position it did and further that it did so deliberately to kill off Sony."

This comment has led to a lively exchange of comments on Professor Patry's blog, including postings signed anonymously by "The Sony safe harbor", asserting "The sky has not fallen, nor have I."

 

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Eric Goldman points us to a terrific resource on online defamation law -- an article entitled Wikimunnity and spreadsheet summarizing the relevant case law on 47 USC 230, the Communications Decency Act.  Both were authored by Ken Myers through the Harvard Berkman Center.  Eric also has a related post relating to online community rating systems. 

Section 230 provides:

 "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."  [Section 230(c)(1)]

It preempts any state to the contrary: "[n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section." [Section 230(e)(3)] 

But it does not protect online service providers from liability relating to intellectual property: " Nothing in this section shall be construed to limit or expand any law pertaining to intellectual property."  [Section 230(e)(2)] 

The EFF also has these useful resources on online defamation and Section 230.

Btw Eric has also posted about his fall cyberlaw class at Santa Clara -- the syllabus is a helpful review of legal developments in the past year -- we're glad to have him back here in Silicon Valley!

 

 

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Here are more reports of the content industry's death at the hands of technology being greatly exaggerated.  According to the EFF, "The Consumer Electronics Association is running an ad this week in Roll Call, the Capitol Hill newspaper, reminding Congress of occasions in the past when the entertainment industries cried wolf about new technologies."   They're highlighting what appears to be a persistent credibility problem -- the quotes are here.  Via Boing Boing.

 

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Eric Goldman has a thoughtful post about a new case, Interscope Records v. Duty, and whether making files available in one's P2P directory constitutes an infringing "distribution" -- including commentary from Fred von Lohmann on how this issue is being "hotly contested on a variety of fronts".   See prior post here on the EFF's amicus brief on this issue.  The issue has also been implicated in the Napster investor liability litigation, as well as in S. 167, which became law last year.  See prior posts on the subject --   here and here.

 

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What's going on in Pasadena?  Just last month the issue decided by the Ninth Circuit was use of a sample in Jennifer Lopez's rap song, see prior post.  This time it's use of a "Flashdance" sequence in J.Lo's music video for the song "I'm Glad" that's the source of the dispute.   This is the album.

In Marder v. Lopez, the Ninth Circuit upholds the validity of a general release relating to  the movie "Flashdance".  The release was executed by  Maureen Marder, a dancer whose life was the basis for the film's story.  The money quote (forgive the pun):

"Furthermore, though in hindsight the agreement appears to be unfair to Marder -- she only received $2300 in exchange for release of all claims relating to a movie that grossed over $150 million -- there is simply no evidence that her consent was obtained by fraud, deception, misrepresentation, duress, or undue influence."

California law governs the release.  The release is attached as an appendix to the opinion, so you can see the language that survived legal challenge. 

Update:  Maureen Marder, the plaintiff, has posted comments on the ruling in our comments section below.   Thanks for sharing your perspective!

 

   

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 Hilary Rosen blogs in the Huffington Post about the RIAA's tactics of suing consumers.  She notes that the law suits began after she left the RIAA, but acknowledges that the plan was in discussion during her tenure as chairman and CEO. 

"But for the record, I do share a concern that the lawsuits have outlived most of their usefulness and that the record companies need to work harder to implement a strategy that legitimizes more p2p sites and expands the download and subscription pool by working harder with the tech community to get devices and music services to work better together."

What a great quote.  She had previously blogged that this topic was off-limits, with intimations leaning this way, it seemed to us, -- see our prior post regarding same -- and it's terrific to now get her perspective.  We're glad for her leadership in terms of encouraging cooperation between the content and tech communities. 

Here's our take in a quote in this Monday's article on video downloading in the San Francisco Chronicle: 

"It's how you respond to it, whether you embrace it or fight change," she said. "It seems like (Hollywood) is open to embracing it. Though they want to make sure their copyrights are protected, it seems they have more of a balanced approach (and are trying to figure out) how they can participate in these new opportunities rather than just viewing them as competitive, or something that needs to be eliminated. Because then you're protecting your buggy-whip market. At some point you have to say, 'We have cars now.' "

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The Federal Trade Commission announced settlement with Take-Two Interactive Software and Rockstar Games over the hidden, sexually explicit "Hot Coffee" content in the "Grand Theft Auto San Andreas" video game.   Here is the released summary of the settlement.  Here is our much shorter summary:  "Don't do it again, or else!"  The settlement is subject to public comment and final approval by the FTC before it becomes effective. 

The FTC had alleged that the game companies engaged in unfair and deceptive trade practices in connection with the marketing of the game.   The game originally had a "Mature" rating which was later changed to "Adults Only" after discovery of the hidden material.    "Respondents did not disclose to consumers that the game discs contained unused, but potentially viewable, nude female skins, and disabled, but potentially playable, software code for a sexually explicit mini-game that the ESRB had not rated." The factual background is laid out in detail in the complaint.

The proposed settlement does not include any current fines but includes compliance requirements and potential fines for noncompliance, to prevent similar incidents in the future.  It extends for twenty years and all directors, officers and other senior personnel are required to sign a statement acknowledging the obligations under the agreement. 

The settlement agreement requires the video game companies to: 

"A.  disclose, clearly and prominently, . . . content relevant to the rating, unless that content has been disclosed sufficiently in prior submissions to the rating authority.

"B.  not misrepresent, expressly or by implication, the rating or content descriptors for an electronic game; and

C.  establish and implement, and thereafter maintain, a comprehensive system reasonably designed to ensure that all content in an electronic game is considered and reviewed by respondents in preparing submissions to a rating authority."

It appears that the video game companies disputed the charges on First Amendment grounds -- the agreement states:

"nothing herein shall constitute a waiver of respondents' right to assert that any of their conduct is or was protected by the First Amendment to the United States Constitution or any analogous provision of a State constitution".

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Marty Schwimmer has an edifying post about the flap over who owns the name "Web 2.0". Check it out. See the background on Slashdot; the cease and desist letter from Tim O'Reilly's CMP Media is here. The dispute is over the use of Web 2.0 as service mark for putting on conferences, but given the generic usage of the term, you have to wonder.

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William Patry has blogged the recent 9th Circuit case of Laws v. Sony Music Entertainment,Download file.

Recording artist Debra Laws claimed her publicity rights were violated by sampling of her Very Special CD in J.Lo's "All I Have". Laws couldn't make a copyright claim, because the recording was owned and licensed by Elektra Records. The Court held the claim was pre-empted by the Copyright Act:

"On the one hand, we recognize that the holder of a copyright does not have 'a license to trample on other people's rights' . . . . On the other hand, the right of publicity is not a license to limit the copyright holder's rights merely because one disagrees with decisions to license the copyright. We sense that, left to creative legal arguments, the developing right of publicity could easily supplant the copyright scheme."

Thus while this case was clear, there are other cases that are less clear -- such as use of photographs in advertising.

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William Patry has this post on the Senate Judiciary Committee hearings yesterday on S. 2644, the Platform Equality and Remedies for Rights Holders in Music Act of 2006.

The text of the bill along with Senator Feinstein's introductory remarks are posted on the DiMA site.

According to Feinstein, the bill is intended to:

"Create Rate Parity -- all companies covered by the government license created in Section 114 would be required to pay a 'fair market value' for use of music libraries rather than having different rate standards apply based on what medium is being used to transmit the music; and

Establish Content Protection -- all companies would be required to use reasonably available, technologically feasible and economically reasonable means to prevent music theft. In addition, a company may not provide a recording device to a customer that would allow him or her to create their own personalized content library that can be manipulated and maintained without paying a reproduction royalty."

Fred von Lohmann says: "Among its provisions is one that would condition the statutory license for webcasting on the use of DRM-restricted formats, which effectively would ban MP3 and Ogg streaming", see EFF Deep Links.

We are waiting for the Ponderous Acronym Elimination Act of 2006 to be introduced. But PAEA doesn't resonate, unfortunately.

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Jeff Jarvis has posted here about the state of libel in the blogosphere.

He notes an essay by Glenn Reynolds titled "Libel in the Blogosphere: Some Preliminary Thoughts", which seeks "to account for the paucity of libel litigation relating to weblogs".

The paper was prepared for the upcoming Berkman Center for Internet & Society - Bloggership: How Blogs are Transforming Legal Scholarship Conference. It's on April 28th in Cambridge. More here.

Reynolds has an apt quote from Eric Hoffer that dates to 1963 but seems written for the blogosphere:

"Nothing is so unsettling to a social order as the presence of a mass of scribes without suitable employment and acknowledged status."

The paper posits two main reasons for a lack of online libel litigation:

(1) Section 230 of the Communications Decency Act, which immunizes ISPs and others for publishing third-party comments; and

(2) technological and cultural aspects of the blogosphere, including norms of rapid correction, third-party substantiation, and hostility to legal threats in the form of public exposure and criticism.

It quotes Jarvis who has opined that we need libel laws less online because of the ability of the victim to respond:

"Do we need the courts to confirm for us that the bozo ranting in the corner is indeed, a bozo? Rarely."

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Judge Patel in the Northern District of California has ordered UMG and EMI to produce documents relating to the Justice Department's 2001 antitrust investigation of their online music joint ventures. See order filed today, Download file.

The Napster investor defendants argued that the documents should be produced on the grounds that they were subject to the crime-fraud exemption to legal privilege. They argued that UMG and EMI misled the Justice Department in connection with white papers they submitted when they were under investigation, in violation of 18 USC 1001. See prior post.

According to the Court:

"Here the alleged fraud is the preparation and submission of the two White Papers to the DOJ. The White Papers reflect the culmination of the labels' efforts to bring closure to the DOJ antitrust investigation, and are presumably based on extensive investigation into the dealings between the joint ventures and their label parents. UMG and EMI are therefore ordered to produce all previously withheld communications related to the DOJ's antitrust investigation, including but not limited to the following:

(1) internal investigations of the relationship between the labels and the joint ventures, including the disclosure of competitively sensitive information;

(2) communications made in the course of preparing the White Papers;

(3) other communications concerning what information and documents should be produced to the DOJ."

Thus documents otherwise protected by attorney-client privilege are involved. The allegedly false and misleading statements related to the labels' "most favored nations" licensing clauses, as well as to the efficacy of the "firewalls" put in place between the labels and their joint ventures.

This ruling relates to the Napster investors' antitrust counterclaims and copyright misuse defense. Similar claims have been made in a class action filed in March 2006, Bulcao v. Sony BMG, which alleges antitrust violations in the online music space by the major record labels. See prior post.

While this ruling does not address the labels' copyright infringement claims against the Napster investors, it does appear to reflect some ground gained by them in connection with their defense and counterclaims.

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The California Supreme Court has ruled today in Lyle v. Warner Bros. Television, Download file, that no unlawful sexual harrassment occurred in connection with sexually explicit talk among writers on the popular "Friends" television show. The case reflects that different rules may apply in the media context where the program involves sexual topics and innuendo. It also reflect that in today's transparent world, even without legal liability, the writers appear to have embarrassed themselves publicly in connection with their conduct, which allegedly included crude talk about the actresses on the show.

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Public performance rights organizations saw marked increases in new media revenues in 2005, according to their reported financial results.

ASCAP recently announced a 50% increase in new media revenues in 2005 -- coming in at $8.1 million. However this is still a drop in the bucket compared to traditional revenue sources, which supported total revenues of $749 million in 2005.

BMI's financial results for 2004/2005, which were reported last September, saw a 114% increase in new media revenue, to $11.4 million. Total revenues from all sources were $728 million. According to BMI:

"Tracking the growth of the US market, fees from mobile entertainment (ringtones) accounted for the largest segment of the increase. During the year, more than 500 new digital music providers were licensed, including industry leaders such as the subscription music service Rhapsody, the streaming radio service for mobile services mobZilla, and major wireless carriers."

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The QView has blogged a case filed yesterday in Los Angeles Superior Court, Treadline v. Focus Features, in which actor Randy Quaid alleges fraud and misrepresentation led him to waive his usual actor compensation, including profit participation, in what the complaint calls a "movie laundering scheme" behind Brokeback Mountain.

According to the complaint, Quaid was led to believe that the picture was an art house film, and accordingly he sacrificed his seven-figure quote, 5-10% of adjusted gross profit, or 1-5% of first-dollar gross profit. Quaid alleges at least $10 million in damages and seeks recission of the contract as wrongfully procured. Complaint is here.

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A class action lawsuit, Bulcao et al v. Sony BMG Music Entertainment et al (06-cv-01752-EMC), has been filed in the Northern District of California against the major record labels, alleging federal and state antitrust violations in the online music space. The complaint names Sony BMG, Sony Corp., Bertelsmann, Time Warner, Warner Music Group and EMI. The suit alleges that in furtherance of a conspiracy to fix inflated prices for music, the defendants restrained the availability of online music. The complaint alleges that:

"Defendants engaged in a prolonged pattern of concerted activity to prevent and delay online music from becoming a competitive alternative to their near monopoly of the CD market. Ultimately, when online music became inevitable, defendants then conspired to fix and maintain the prices for such product."

The complaint contains an interesting chronology of the plaintiffs' perspective on the development of the online music space since the 1990s. It focuses on the labels' joint ventures, MusicNet and pressplay, which were formed in 2001, and alleges that "The financial structure of the joint ventures encouraged Defendant Labels to engage in cartel behavior rather than competition." MusicNet was formed by BMG, Warner and EMI, and pressplay was formed by UMG and Sony. The class period is from March 7, 2002.

The complaint further alleges:

"It was not until the phenomenal success of Apple's iPod portable music players and the creation of Apple's iTunes Music Service in 2003 that defendants finally relented . . . . Thus, widespread distribution of online music through iTunes, to be played on iPods, occurred more than eight years after the underlying technology became widely available."

The complaint notes similar investigations by Eliot Spitzer and the Justice Department.

A related filing notes the pendency of similar antitrust allegations in the continuing Napster litigation, but states that coordination of the cases would not promote judicial efficiency due to the difference in the claims and parties.

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The Ninth Circuit has certified,Download file, a very interesting question to the California Supreme Court, in Readylink v. Lynch, namely:

"Does the California Supreme Court's decision in Gates v. Discovery Communications, Inc., . . . and finding no invasion of privacy, under the First Amendment, in the publication of facts about past crimes obtained from public records, apply only to publication by media defendants?"

"Can there be liability under an invasion of privacy theory where a non-media defendant, with a commercial interest in or a malicious motive for publishing facts about a plaintiff's past crimes, does so?"

"Under the commercial speech doctrine, is the speech of a non-media defendant with a commercial interest in or malicious motive for publishing facts entitled to less protection under the First Amendment than that of a media defendant?"

The case involves a lawyer who posted information on his web site about the head of a company that he was suing, in order to solicit potential clients. He pointed to the man's alleged felony record. The company claimed that this is an invasion of privacy, because this information was not newsworthy.

The case is interesting because it goes to a very timely topic -- when is it meaningful or appropriate to make a distinction between the traditional "media" and "non-media" in free speech matters? And where would the line be drawn, in terms of blogs, web sites, and other publications by so-called commercial "non-media"?

The Supreme Court has recognized some limitations on free speech in the commercial context, but the current test under Central Hudson is fairly limited. However in 2002, Nike v. Kasky, the California Supreme Court ruled against Nike in a case involving misleading statements on commercial speech grounds. Here is a good summary of the state of the law from the First Amendment Center.

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Creative Commons announced that the first known court case involving its content license was decided on March 9th by the District Court of Amsterdam. See the press release. According to the post by Creative Commons general counsel Mia Garlick, "The case confirmed that the conditions of a Creative Commons license automatically apply to the content licensed under it."
Update: See CC blog post on this.

The case involved former MTV VJ Adam Curry, who posted photos on Flickr under the Creative Commons Attribution-Noncommercial-Sharealike license. A Dutch tabloid printed several photos, thus violating the non-commercial and share-alike terms of the license.

The newspaper claimed that it was misled by the notice on Flickr that "this photo is public", but the court concluded that the newspaper was in the position to investigate and click on the symbol accompanying the notice 'some rights reserved' that appeared with the photos online.

The decision is in Dutch, and we expect it will be translated into English soon. Here are translated excerpts from Creative Commons:

"All four photos that were taken from www.flickr.com were made by Curry and posted by him on that website. In principle, Curry owns the copyright in the four photos, and the photos, by posting them on that website, are subject to the [Creative Commons] License. Therefore Audax should observe the conditions that control the use by third parties of the photos as stated in the License."

and

"Audax has not observed the conditions stated in the License […]. The claim […] will therefore be allowed; defendants will be enjoined from publishing all photos that [Curry] has published on www.flickr.com, unless this occurs in accordance with the conditions of the License."

Here are the quotes from the CC press release:

"We are very happy with this decision as it demonstrates that the millions of creators who use creative commons licenses are effectively protected against abuses of their willingness to contribute to the commons," said Paul Keller, Public Project Lead for Creative Commons in the Netherlands.

"This decision confirms that the Creative Commons licensing system is an effective way for content creators to manage their copyrights online," said Lawrence Lessig, Creative Commons CEO & Chairman, "The decision should also serve as a timely reminder to those seeking to use content online, to respect the terms that apply to that content."

See also post on Patry Copyright Blog and post on Trademark Law Blog.

Disclosure: we assisted CC in the drafting of its U.S. licenses.

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Last April's ruling in France that required removal of DRM preventing personal copying from DVDs has been overturned by France's highest court. See press reports here and here. Via DRM Watch blog.

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Jay Rosen of PressThink, at NYU's journalism school, has released picks for top newspaper blogs, as well as a comprehensive summary chart of newspaper blogging activities.

Here are the rankings:

1. Houston Chronicle

2. Washington Post

3. USA Today

4. St. Petersburg Times

5. Atlanta Journal-Constitution

6. San Antonio Express-News

It is interesting to see how traditional news media are integrating blogs and adapting to the unique aspects of blogging, such as voice (point-of-view) and links outside their own networks, including to community blogs. And doing this in accordance with their editorial policies and journalistic standards.

As an aside, Jay contributed his scholarly insights at last year's BlogherCon -- see his terrific distillation. The conference is on again this year, July 28-29th in San Jose.

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The FCC released a report to Congress yesterday summarizing its findings on competition in the video marketplace. Summary points from the news release relating to digital video:

"Incumbent local exchange carriers ("ILECs") have reported plans to provide video service. The larger LECs have accelerated their plans to roll out video services. Verizon has received franchises from numerous local communities and began offering multichannel video service, under the brand name "FiOS," in several of them. SBC is planning to deploy an IP-enabled broadband network called "Project Lightspeed," and Qwest and a number of smaller incumbent LECs are offering, or preparing to offer, MVPD service over existing telephone lines using VDSL or ADSL technologies."

"Several major cellular telephone companies are offering video services through handheld devices such as mobile telephones. Verizon Wireless rolled out V-Cast, a service that offers video programming to cellular telephone users, in February 2005."

"The amount of web-based video provided over the Internet continues to increase significantly each year."

"The video industry continues to evaluate the use of advanced compression technologies, such as MPEG-4/H.264 and Microsoft's VC-1, to replace the MPEG-2 standard in order to decrease the amount of bandwidth required to transmit digital video. These advances are expected to allow existing video delivery services to provide more programming and to decrease barriers to entry for new entrants to the MVPD market."

Here are excerpts from the report on Internet video:

"The amount of web-based video provided over the Internet continues to increase significantly each year. As we have reported in the past, many traditional broadcast and nonbroadcast programmers are currently providing streaming and downloadable video content on their Internet web pages, as do many independent content producers. Several companies are also using the Internet, coupled with a television set-top box that allows an on-screen guide, to provide video directly to a television set. In addition, several companies are using Internet Protocol technology to provide facilities-based IP video, as are many independent content producers."

"Streaming Video. Video streamed over the Internet through the web (sent from the content provider to the subscriber in real-time) is still most viable when delivered over broadband networks. Even with the most advanced compression technology available, broadcast quality video is not possible over a 56 kbps dialup connection. Broadcast quality video is possible, however, at 768 kbps with advanced compression/decompression technology (codecs500) and at 1.5 Mbps or higher broadcast quality standard-definition MPEG-2 is possible. Some industry observers continue to believe, however, that widespread adoption of streaming video will only be possible if connection speeds significantly increase over those currently achieved over cable and DSL broadband. As we reported last year, the Internet2 network continues to facilitate high-quality streaming video using its highly reliable 10 Gbps backbone. The Internet2 network, however, continues to primarily serve the research and academic communities."

"Regardless of the fact that there is relatively minimal availability of high-quality video from such high-speed networks as the Internet2, many households continue to access streaming video using dial-up and residential high-speed Internet access connections. The overall number of homes with access to the Internet continues to grow, as does the number of Americans who access the Internet via a high-speed broadband connection. According to one report, as of June 2005, there were approximately 33.7 million residential high-speed Internet access subscribers, representing approximately 48 percent of the 70.3 million residential Internet subscription households. As of January 2005, an average of 14 percent of all Americans had watched some form of streaming video in the past month, and approximately eight percent of Americans had accessed streaming video content in the past week."

"Many traditional programmers continue to offer streaming video on their websites to increase access to and supplement their regular television programming content. For example, CBS News, CNN, Comedy Central, and Nickelodeon offer 24-hour web access to some regularly featured television programming; ESPN.com has partnered with Major League Baseball to provide access to baseball games and baseball highlights; College Sports TV provides access to live video feeds of some college football games; MTV offers access to regularly featured programming and supplemental content; and In2TV, a partnership between AOL and Warner Bros., allows consumers to stream full-length episodes of popular television series from a library of thousands of television programs. In addition, some traditional content producers are also offering new and unique content over the Internet via the web. For example, Scripps Networks has announced that it will launch ten web-based video channels by the end of 2006; AOL continues to offer such exclusive and specialized video content as the Live8 concert and music videos; and Yahoo and Google are both exploring original content for distribution via the web. Clear Channel Communications plans to add original streaming video programming to some 200 local radio stations' web sites. Maxim Magazine plans to offer free streaming video programming on-demand to Internet users via MSN's video streaming service. MTV plans to launch a free hybrid linear video and video-on-demand channel called MTV Overdrive. "The Knot TV" is a 24-hour streaming video channel featuring wedding-related shows."

"Downloadable Video. As we reported last year, we expect that a large amount of video available through the web will be downloadable video. Downloadable video is available on the websites of both traditional programmers and independent producers of video content. There are numerous online services that allow users to download content to a computer hard drive for viewing on a personal computer, television, or mobile video device. In October 2005, Disney's ABC and Apple's iTunes entered into a deal to offer current and past season episodes of ABC and Disney Channel television shows for download from Apple's iTunes Music Store for viewing on a PC or iPod video player. More established efforts to provide downloadable video include offerings from Movielink, Starz! Ticket on Real Movies, ClickStar and CinemaNow. For example, Movielink, a joint venture of Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios, and Warner Bros. Studios, offers movies, television shows, and other popular videos for download on a rental or purchase basis. Some companies are offering or are planning to offer content distribution via the web for independent content producers. DaveTV, Brightcove, and Wi-FiTV provide an Internet-based distribution interface for content producers of all sizes. Some content producers are offering their services directly to Internet users via websites such as Strandvenice.com, which is an online reality channel that offers a 50-minute series pilot episode for free and charges 99 cents for future 30-minute episodes. Akimbo has partnered with producers and distributors of movies and videos to deliver video programming directly to a subscriber's television using the consumer's existing broadband connection. Akimbo provides the subscriber a set-top box that generates an on-screen guide that enables the subscriber to choose programming from a library of video selections. Akimbo then uses IP technology to deliver the video from a central office, over the Internet, to the subscriber's television."

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Marty Schwimmer of the Trademark Law Blog has this post about an EFF amicus brief on the issue of whether making content available on the Internet is a violation of the distribution right. This in the context of Elektra v. Barker, (S.D.N.Y. 1:05-cv-07340-KMK filed 8/19/05) a record industry case against a P2P file sharer. Two industry groups have also filed an amicus brief. See EFF site for more.

This issue has also been implicated in the Napster investor liability litigation, see ruling, Download file, and in S.167, which became law last year, see prior posts here and here.

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In honor of the holiday, here are some presidential copyright cases:

George Washington's letters, Folsom v. Marsh, Download file

Gerald Ford's memoirs, Harper & Row v. Nation, Download file

Dwight Eisenhower's memoirs, Dastar v. 20th Century Fox, Download file,
and 20th Century Fox v. Dastar, Download file

Now to the honorary ski trip!

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Fred von Lohmann has noted a governmental filing by the RIAA and others, which states the position that copying your CD onto your computer is an infringement, notwithstanding what they represented to the Supreme Court during the Grokster case, see prior post.

However as noted by Denise Howell and on Boing Boing, the RIAA web site contradicts this position, unless they are relying on subtle wording to preserve their position that they are granting permission.

"If you choose to take your own CDs and make copies for yourself on your computer or portable music player, that's great. It's your music and we want you to enjoy it at home, at work, in the car and on the jogging trail." [emphasis added]

See RIAA link.

The RIAA's FAQ on Uploads and Downloads makes good use of modal auxiliary verbs in saying:

"Owning a CD means you own one copy of the music, and the U.S. record industry believes you should be able to make whatever personal use you choose. For example, you may make a compilation recording (on tape or on a CD) to use in the car or while exercising. But it's a very different matter - and clearly neither legal nor fair - to make a copy of that CD or even one song available on the Internet for others to take." [emphasis added]

See also the Mitch Bainwol address at the 2005 NARM Convention, in which he says:

"Key Point: Burning and Ripping Are Becoming A Greater Threat than P2P"

but:

"We have no objection to personal use burning."

But to ripping by negative implication?

It's unclear where these statements are heading. In Bainwol's address, he lists under the topic:

"How Do We Build A Brighter Future"

"Pivot To New Products and Services"
-- DualDisc
-- Kiosks
-- Copy Protected CDs

"Win the Messaging War"

It seems unlikely that suing consumers over ripping CDS to their iPODs will help win the messaging war, and it seems a court would quickly jump to pronounce this fair use as in the Rio space-shifting case and create some case law they don't want on the books.

So this may be more about the transition to copy protection and DMCA issues, which was the context of the filing that has raised this issue -- the Copyright Office's anticircumvention rulemaking proceedings.

Thanks to Phil Gomes.

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The Copyright Office has released its report on so-called orphaned works, which was commissioned last year by Senators Hatch and Leahy. See prior post on the public comment process. The report concludes that:

1. "The orphan works problem is real.

2. The orphan works problem is elusive to quantify and describe comprehensively.

3. Some orphan works situations may be addressed by existing copyright law, but many are not.

4. Legislation is necessary to provide a meaningful solution to the orphan works problem as we know it today."

The report recommends changes to the Copyright Act's remedies section in the situation where the user performed a "good faith, reasonably diligent search" to try to locate the copyright owner and gave attribution to the source, where possible. See text of proposed legislation, Download file.

In this situation, remedies would be limited to "reasonable compensation" for the use -- no statutory damages. If the use was not for commercial advantange and if the use was stopped upon receiving notice of the copyright claim, no monetary damages would accrue.

In determining "reasonable compensation" the report references the case of Davis v. The Gap, Download file,noting:

"As that decision makes clear, reasonable compensation would equal what a reasonable willing buyer and a reasonable willing seller in the positions of the owner and user would have agreed to at the time the use commenced, based predominantly by reference to evidence of comparable marketplace transactions."

"As the Davis case suggests, the burden is on the copyright owner to demonstrate that his work had fair market value, and such assertion cannot be based on 'undue speculation.'"

No injunctive relief would be permitted if the reuse created a new derivative work with a "significant amount" of the user's new expression.

This proposal seems like a reasonable step to create some flexibility in the system, in light of the confluence of an extended copyright term with no formalities to maintain copyright interests and the fact that copyrights are regularly implicated through today's digital uses.

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After a recent order, Download file, denying summary judgment in Harris v. San Jose Mercury News, the plaintiff, photographer Christopher Harris, is seeking to amend his complaint and proceed with a class action against the paper.

The case involves the practice of using photos from books without permission as part of a book review. See prior post. The newspaper is arguing this is fair use, while the plaintiff alleges copyright infringement and DMCA violations from removing the copyright notice from the image.

In a two page order, the Court stated:

"Defendant argues that use of the photo was the equivalent of a pictorial quotation from the book and similarly falls under the fair use exception. Yet the photograph was obviously marked as a copyrighted photograph in the book, both on the page the photograph appeared and then again in the credits in the back of the book. In other words, the photograph was a copyrighted work within a copyrighted work."

"As a result, the Court cannot say as a matter of law that use of a copyrighted photograph in a book review, in which the book clearly states that the photograph is copyrighted, constitutes fair use."

It's not clear why the court couldn't weigh the various fair use factors against each other and make a determination. Contrast the recent case, also in the Northern District of California, in which use of copyrighted music posters in a book about the Grateful Dead was held to be fair use. See prior post.

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The MPAA announced suits against consumers in Nebraska and Indiana yesterday for copyright infringement from unauthorized P2P file sharing. See the MPAA announcements, here and here.

It appears that part of the MPAA strategy is public recrimination, as the announcements identify the defendants, label them "Internet thiefs" and state that "Those who have not settled are being named in individual law suits."

Hopefully the MPAA, which has the invaluable benefit of learning from the RIAA's mistakes, has screened out the sympathetic grannies and little kids.

The Nebraska suit against Tara Brown was filed by Sony's Screen Gems, and the Indiana suit against Nada Stjelja was filed by Disney Enterprises.

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The new Copyright Royalty Judges appointed this month have their work cut out for them. In accordance with Section 803 of the Copyright Act, they will be looking at compulsory license rates for:

1. Making and distributing phonorecords under Section 115;

2. Noncommercial broadcasting under Section 118;

3. Pre-existing subscription and satellite digital audio radio services under Section 114 and 112; and

4. New XM Radio music subscription service in basic cable package bundle under Section 114 and 112.

This is in addition to its work on webcasting royalty rates, which is already underway -- a 60 day discovery period extends through early March. See prior posts regarding DIMA proposal and SoundExchange (RIAA) proposal.

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A committee appointed by the Library of Congress will hold public roundtables on potential changes to the copyright exceptions for libraries and archives set forth in Section 108 of the Copyright Act. The Section 108 Study Group committee members are listed here.

The roundtables will be held in March in Los Angeles and Washington D.C. See the announcement. They will address four main topics:

(1) eligibility for the Section 108 exceptions,
(2) exceptions for copies made for preservation and replacement purposes,
(3) access to digital copies outside the premises of libraries and archives, and
(4) separate treatment for unpublished materials.

The subject of access to digital copies outside the physical premises of libraries is clearly a topic of widespread current interest. Without addressing what may be fair use under Section 107 of the Copyright Act, the committee has published an issues paper that frames the issue as follows:

"Currently section 108 requires that libraries and archives that make digital copies for preservation or replacement purposes restrict public availability of those copies to their premises. . . . Members of the library community have commented that a premises-based view of libraries and archives is anachronistic in the digital age. Libraries and archives, say these commentators, cannot adequately serve their patrons if they operate solely as 'brick and mortar' institutions."

"On the other hand, expanding non-licensed electronic access to digital works presents a very serious concern to publishers, authors and other rights holders, given the ease of copying and re-transmission of digital media, and the growing availability of and markets for licensed copies in digital form."

The issue paper suggests three possible approaches to providing electronic access to library materials, including (i) user community restrictions, (ii) simultaneous user restrictions; and (iii) use of access and copy controls, as well as user agreements.

The Study Group has also posted a useful list of background papers relating to libraries and digital copyright.

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The California District Court hearing the remand from the Supreme Court in the MGM v. Grokster case has extended the summary judgment briefing schedule -- the hearing will be May 1st, 2006. See yesterday's scheduling order, Download file.

StreamCast and Sharman Networks remain as defendants in the case. Grokster and related parties settled in November 2005, agreeing to a permanent injunction and payment of $50 million. The settlement covered Grokster Ltd., Swaptor, Ltd., Daniel B. Rung, Matthew A. Rung, and Michael Rung as defendants. The $50 million is to be reduced by any judgment against the Grokster Parties in Jerry Leiber, et al. v. Consumer Empowerment VB a/k/a FastTrack, et al., Case No. CV 01-09923 SVW (FMOx). See the settlement order,Download file, and prior post.

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In KISS Catalog v. Passport International, Download file, the District Court for the Central District of California has held that the federal anti-bootlegging statute, 17 U.S.C. 1101, is constitutional.

This vacates an earlier decision, which held that the statute violates the "for limited times" provision of the Copyright Clause. The case was reconsidered on the motion of the United States, which intervened after that ruling.

In finding the statute constitutional, the Court concluded that the legislation was within the scope of the Commerce Clause and not "fundamentally inconsistent" with the Copyright Clause.

"[T]he statute merely proscribes conduct not otherwise addressed, prohibited or protected by the Copyright Clause: the non-consensual recording of a live performance. Stated differently, what Congress regulates here is an unauthorized and (by this statute) unlawful recording of a live performance, not an authorized, protected, and constitutionally-encouraged fixation of an author's original work. Thus, the Statute complements, rather than violates, the Copyright Clause by addressing similar subject matter, not previously protected -- or protectible -- under the Copyright Clause."

This follows the 11th Circuit's holding in US v. Moghadam, Download file. US v. Martignon, which reached the opposite conclusion, is currently on appeal in the Second Circuit. Professor Patry has some excellent background on the anti-bootlegging statute, here, and here.

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As if they were ever on. The Napster investor liability litigation continues -- with a motion filed by defendant Hummer Winblad, which alleges that UMG and EMI violated the law (18 USC 1001) by making false statements to the Justice Department during its 2001 antitrust investigation of the major label's online music joint ventures, pressplay and MusicNet.

This filing follows a summary judgment motion made by defendants Bertelsmann and Hummer Winblad, which is set for hearing on February 9, 2006. See prior post.

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California's new law regulating access by minors to violent video games was preliminarily enjoined today on the grounds that it violates the First Amendment. The new law would have gone into effect on January 1st. See the opinion in Video Software Dealers Association v. Schwarzenegger, Download file. See prior post for background on the law.

The Court determined that the law failed to satisfy the strict scrutiny test for content-based regulations. The Court leaned on the recent rulings in Illinois and Michigan that yielded the same result.

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The Ninth Circuit has issued a ruling in Brothers Records, Inc. v. Jardine,Download file, a dispute between founding members of the Beach Boys. The case is mostly interesting because it involves the Beach Boys, and serves as a reminder of the issues that can arise out of musical group agreements.

Four founding members of the musical group formed Brothers Records, Inc. (BRI). In 1998, after the death of founding member Carl Wilson, BRI granted permission to Michael Love, another founding member, to use the Beach Boys trademark on a nonexclusive basis. Michael Love then teamed up with another original member, Bruce Johnston, to tour as the Beach Boys.

BRI successfully sued Alan Jardine, (another founding member and BRI shareholder and director) for trademark infringement, and obtained an injunction in 2001 preventing him from using the group name. The net of this is that the licensed Beach Boys tour appears to have most of the tour dates compared to the unlicensed activities of Jardine. (Brian Wilson appears to be doing just fine on his own).

Jardine then brought suit alleging breach of fiduciary duties and breach of contract by the other BRI shareholders, and this ruling goes in his favor to permit him to proceed with those claims. The Court held that Jardine's claims were sufficiently distinct from the trademark claims such that he was entitled to litigate them.

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The Copyright Royalty Board has commenced a rulemaking process to determine appropriate royalty rates for the transmission and ephemeral statutory licenses for sound recordings that would apply to a new type of service. According to XM Satellite Radio's petition to the CRB:

"This new type of subscription service performs sound recordings on digital audio channels programmed by the licensee for transmission by a satellite television distribution service to its residential customers, where the audio channels are bundled with television channels as part of a `basic' package of service and not for a separate fee."

According to XM Radio's petition, the new service will include a number of its music and non-music audio channels and will be "a part of the DirecTV basic package of service, without requiring payment of a separate subscription fee."

The new service would utilize the statutory copyright licenses provided in 17 U.S.C. 114(d)(2) (for performance by means of subscription digital audio transmission) and 17 U.S.C. 112(e) (for ephemeral recordings solely for use in those transmissions).

Interested parties must respond by January 4, 2006.

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In BMG Music v. Gonzalez,Download file, the 7th Circuit has affirmed that a consumer infringed music copyrights by downloading and saving music files, despite her claim of fair use.

Gonzalez downloaded over 1300 songs from the KaZaA P2P file-sharing network. The case focused on 30 of these downloads, as it was disputed whether she owned or later purchased the CD for the other songs.

Gonzalez argued that her downloading was fair use because she was just sampling the songs to determine whether to buy them or not at retail. The Court was unpersuaded by this argument. It noted that she did not delete the songs after deciding not to purchase them. It also noted that the files she downloaded were posted in violation of the copyright law.

"The premise of Betamax is that the broadcast was licensed for one transmission and thus one viewing. Betamax held that shifting the time of this single viewing is fair use. . . . Time shifting by an authorized recipient this is not."

While the outcome here is unsurprising as a matter of fair use analysis, the Court's characterization of the holding in Sony, while it may be technically correct, does seem like a rather narrow reading of the landmark Sony Betamax case, Download file. If the goal of some content owners is to limit the Sony Betamax case to its facts, they seem to have found a receptive audience in the 7th Circuit in that regard.

The Court also commented that consumers can preview music on the radio, for which authors and publishers receive royalties, or through previews offered on licensed online services.

"With all of these means available to consumers who want to choose where to spend their money, downloading full copies of copyrighted material without compensation to authors cannot be deemed 'fair use.'"

The Court was generally unsympathetic to Gonzalez, conveying this sentiment in Judge Easterbrook's opinion through references to shoplifting and the like. Gonzalez was trying to take the case to a jury, apparently in the hope that members of the general public would not view her as a copyright criminal.

BMG Music, on the other hand, apparently was seeking to avoid a trial, because it sought the minimum statutory damages of $750 per infringement, instead of a greater amount up to the maximum $30,000 available under the Section 504(c)(1) of the copyright act. The Supreme Court has held that if a plaintiff seeks anything above the minimum amount, the defendant is entitled to a jury trial. See Feltner v. Columbia Pictures Television, Inc.,Download file.

According to the 7th Circuit:

"We read Feltner as establishing no more (and no less) than that cases under Section 504(c) are normal civil actions subject to the normal allocation of functions between judge and jury. When there is a material dispute of fact to be resolved or discretion to be exercised in selecting a financial award, then either side is entitled to a jury; if there is no material dispute and a rule of law eliminates discretion in selecting the remedy, then summary judgment is permissible."

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The 9th Circuit Court of Appeals has issued a ruling on who owns the merchandising rights to Winnie-the-Pooh, in Milne v. Stephen Slesinger, Inc.Download file. The litigation has been known for being extremely contentious and drawn out, extending over a decade with hundreds of millions of dollars in royalties at stake, and with lots of press coverage. See background on the case in a series of posts from the Legal Reader.

Stephen Silverman, Inc. (SSI) acquired merchandising rights to Pooh from the author Alan Alexander Milne in 1930 and then granted them to Disney in 1961. In 1976, the copyright law was revised to permit authors or their heirs to terminate a transfer of copyright in certain circumstances. A.A. Milne died in 1956, and as a result, to avoid this possibility, in 1983 SSI and Disney entered into a new agreement with Christopher Robin Milne.

SSI eventually sued Disney over royalties, alleging that Disney had underpaid over the years. Disney however worked with the sole remaining heir, Clare Milne, daughter of Christopher Robin, to try to sever SSI's rights and thus short-circuit the litigation. In 2004 Clare Milne sent SSI a termination notice under the copyright act's Section 304 termination of transfers provision. She also made a same-day deal granting her reversionary rights to Disney. Disney in turn agreed to fund the litigation against SSI.

The 9th Circuit sided with SSI in the ruling, and concluded that SSI still owned valid rights under the 1983 agreement. The case turns on a technical point of the law, namely, that for works existing prior to 1978, the agreement to be terminated must have been entered into prior to 1978.

The Court held that the post-1978 agreement that Christopher Robin made in 1983 therefore could not be terminated, despite various technical legal arguments made by Clare Milne and her counsel David Nimmer, author of the treatise Nimmer on Copyright. See prior post with interview of Professor Nimmer.

The Court concluded that the 1983 agreement was not an "agreement to the contrary" under the statute, such as an agreement to make a will or a future grant and thus undercut the termination of transfer provisions.

The Court also concluded that the 1983 agreement was valid notwithstanding Clare Milne's argument that a "moment of freedom" was necessary to exist between the revocation and the re-granting of rights. The Court held that any such "moment of freedom" from simultaneous transactions did not apply because the 1983 agreement was not a termination of transfer under the statute.

"Even assuming that Congress intended such a 'moment of freedom' between a contractual revocation and re-grant of rights, we note that Christopher's ability to exercise his perceived termination right gave him all the freedom he needed to refrain from entering into a new grant of copyright rights to SSI. He parlayed that right into a new agreement giving increased compensation to the Pooh Properties Trust, of which Clare is a prime beneficiary."

"In doing so, he fulfilled the very purposes for which Congress enacted the termination right. Thus, it defeats common sense to suggest that he needed to take a walk around the block between the time he revoked the old agreement and entered into the new one."

As a result, unless the U.S. Supreme Court accepts an appeal of the case, SSI's royalty suit against Disney will proceed in the new year. It is a bit ironic that Disney's attempt to avoid a termination of transfers with the 1983 agreement led to today's ruling where their attempt to assist Clare Milne in severing that agreement failed. Clearly Disney is opportunistically doing whatever it takes to preserve its financial interest in the Pooh franchise.

The case also points out a little known aspect of the copyright law -- the termination of transfer provisions in Section 203 and Section 304 of Title 17. When renewal rights to copyright were eliminated, these provisions were designed to protect widows and other heirs from a situation where many years down the road everyone else reap huge financial gains from a popular work where the author originally did not have sufficient leverage to make a good deal.

The case also suggests that the termination of transfer provisions can be avoided by publishers and other grantees if they enter into pre-emptive agreements like the 1983 agreement to avoid exercise of the statutory termination of transfer.

For those of you who, like myself, spend time watching Pooh videos with little people, you can now use that time to think through these fascinating copyright issues.

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A hearing is set for tomorrow, December 9th, in the legal challenge to California's recently enacted violent video game statute. The law will go into effect in January 1 unless blocked by legal action. See prior post with more on the new law. See also background on the upcoming hearing, Download file. The plaintiffs challenging the new law are asking the court to take judicial notice of the recent ruling striking down a similar law in Illinois Download file, and see prior post regarding same.

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The Illinois law regulating sale of violent video games to minors has been held unconstitutional. This follows a recent Michigan court ruling that yielded the same result. A similar California law is subject to a pending legal challenge.

The opinion provides a careful and thorough analysis of the relevant research relied on by the government to support the law, while finding it unpersuasive.

The court also found the portion of the law covering sexually explicit video games unconstitutional, because the law failed to follow the constitutional test for juvenile obscenity (materials "harmful to minors"), as enunciated in Ginsberg v. New York The law omitted the third prong (below) of the Ginsberg test.

(1) predominately appeals to the prurient, shameful or morbid interest of minors; (2) is patently offensive to prevailing standards in the adult community as a whole with respect to what is suitable material for minors; and (3) is utterly without redeeming social importance for minors.

See the opinion, via Dale Dietrich.

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An interesting copyright infringement case involving Dwight Eisenhower's war memoirs has been decided by the 9th Circuit, Download file.

In Twentieth Century Fox v. Dastar, the Court held that Eisenhower's book, Crusade in Europe, was a work-for-hire under the 1909 Copyright Act. The publisher renewed the copyright on this basis, and thus this result was necessary for the publisher's infringement claim against Dastar to prevail.

The ruling could have easily gone the other way on the facts. The dissent pointed out that Eisenhower had structured the publishing deal as an assignment of rights rather than a services contract for tax reasons, for example.

While the case does not interpret the work-for-hire doctrine under the 1976 Act, it does set forth analytics for determining whether a work was made for hire.

"[W]e have consistently evaluated claims that a work was made for hire by asking whether it was created at the 'instance and expense' of the engaging party."

The case had previously been to the U.S. Supreme Court, which ruled in 2003,Download file, that the Lanham Act claims against Dastar could not stand, because the trademark law does not prevent the unaccredited copying of an uncopyrighted work. This case is the copyright portion that survived after remand.

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Here's the Documentary Filmmakers' Statement of Best Practices in Fair Use of copyrighted materials, which was released on November 18th.

Signatories include the Association of Independent Video and Filmmakers, Independent Feature Project, International Documentary Association, National Alliance for Media Arts and Culture, and Women in Film and Video (Washington, D.C., chapter).

Besides being a guide to assist documentary filmmakers, the Statement is intended to be used in court, see the Statement's FAQ.

"Codes and statements of best practices are usually the first kind of evidence that courts look to in deciding that something is 'fair use', so what filmmakers believe is fair and reasonable is definitely important."

The Statement was developed with assistance from the Center for Social Media (CSM) in the School of Communication and the Program on Intellectual Property and the Public Interest (PIPPI) at the Washington College of Law, as well as financial support from The Rockefeller Foundation and the John D. and Catherine T. MacArthur Foundation.

The Center for Social Media also has a useful chart for analyzing whether a work is in the public domain, a nontrivial exercise.

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The Writers Guild of America, along with the Screen Actors Guild, are calling for either an industry code of conduct for product integration in television and film, or else FCC regulation.

The Guilds complain that producers are "adamantly opposed to anything resembling a discussion" on this issue, and so the Guilds say they are working on a complaint documenting on-going violations of FCC regulations in this area.

A WGA white paper released this week details the growth of commercial products being incorporated as part of storylines and advocates for public disclosure of such integrated advertising.

Excerpts from the White Paper:

"Last year, the use of products in filmed entertainment increased 44 percent and generated revenues in excess of $1 billion. In television alone, product-related revenues skyrocketed a whopping 84 percent. For example, during the third season of The Apprentice, Burger King, Dove Body Wash, Sony PlayStation, Verizon Wireless, and Visa reportedly paid upwards of $2 million per episode to have their products incorporated into plotlines."

"CBS chairman Les Moonves at a 2004 Madison and Vine Conference: 'You're going to see some shows doing [product integration] extremely well, where you're hardly aware that you've been sold something.'"

The proposed Code of Conduct would include the following:

1. Disclosure of product integration deals at the beginning of each program.

2. Strict limits on the usage of product integration in children's programming.

3. Involvement of writers, actors, and directors, arrived at through collective bargaining, about how products are to be integrated into content.

4. Extension of all regulation of product integration to cable television, where the practice is rampant.

See the WGA press release and the SAG press release.

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The House Committee on Energy and Commerce held a hearing today on "Fair Use: Its Effect on Consumers and Industry." Predictably, the witnesses represented opposite ends of the spectrum in their viewpoints on the appropriate scope and public policy justifcations for fair use under the copyright law.

Among those espousing a more limited interpretation of "fair use" were:

Paul Aiken, of the Authors' Guild -- see testimony

"We may wish the potatoes were cheaper, we may want them to be free, we may even think that potatoes want to be free, but none would argue that the public benefit is dependent on free potatoes. . . . The public domain's a fine thing, but it is, and always has been, merely a nice by-product of the copyright system."

Frederic Hirsch, of the Entertainment Software Association -- see testimony

"[N]o later court has cited the Betamax case as a basis for permitting 'private copying'. . . . any other instance of personal copying must be evaluated under the statute's four factors, in light of the particular factors in the case at hand, to determine if it is entitled to the fair use defense."

James DeLong of the Progress and Freedom Foundation -- see testimony

"In sum, fair use is a doctrine that has outlived much of its usefulness. . . . [F]or the most part, it should be left to atrophy as the magic of technology makes new forms of content available."

On the other side were:

Gary Shapiro, Consumer Electronics Association -- see testimony

"[W]ithout fair use, we would have no VCRs and no audio tape recorders, and today, we would have no TiVOs, no DVD recorders, no iPods and no Slingboxes."

Prudence Adler, Library Copyright Alliance -- see testimony

"Within the past decade, there has been a notable shift by publishers to license their works to libraries in lieu of the purchase of these works by libraries. . . . These agreements do not necessarily reflect the privileges and exceptions of the Copyright Act, such as fair use, preservation and interlibrary loan."

Gigi Sohn, Public Knowledge -- see testimony

"Over the past decade, a number of legal, technological and marketplace efforts by the content industry have put fair use in great peril. These efforts include laws like the Digital Millenium Copyright Act, which prohibits circumvention of technological measures even for lawful uses, end user license agreements (EULAs) that restrict fair use, [and] government-imposed technology mandates like the broadcast flag. . . ."

Jonathan Band, NetCoalition -- see testimony

"Fair use is particularly important in the digital environment, where even the most basic functions require computers to make copies."

Peter Jaszi, Washington College of Law, American University -- see testimony

"It also is important to note that fair use is not, as sometimes has been suggested, a mere negative byproduct of the economics of rights clearance in the analog information marketplace, which can be expected to wither away with the transition to digital. Rather, it is a provision of copyright law that serves an affirmative cultural and economic mission. It is likely to be more important than ever in the new information era."

Jaszi also announced that a coalition of independent documentary film producers will announce a "Statement of Best Practices on Fair Use of Copyrighted Material" this Friday, November 18th.

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Michigan's new law against ultraviolent video games has been enjoined in federal court, on the grounds that the law does not satisfy strict scrutiny under the First Amendment. Here's the opinion in Entertainment Software Association v. Granholm, Download file. See prior posts about the legal challenge and the recently enacted law.

"A content-based restriction on speech is presumptively invalid, so defendants have the burden of demonstrating that the Act is necessary to serve a compelling state interest and that it is narrowly tailored to achieve that end."

The Court found the law defective as follows:

1. The State of Michigan did not show a compelling state interest in banning access to ultraviolent video games to minors.

"A cursory review of the research relied upon by the State shows that it is unlikely that the State can demonstrate a compelling interest in preventing a perceived 'harm'".

The Court discounted the State's social science evidence. First, some of the research addressed violent media generally, and not video games specifically. The MRI evidence that exposure to violent media affects brain functioning was successfully challenged by the video game industry's expert. The Court also questioned research linking video games and aggressive behavior, noting that such evidence has not been considered persuasive in other video game cases.

Without the compelling state interest, it doesn't matter how carefully the statute is written, so this presents a major problem to those advancing this type of legislation.

2. The Court found that the law was not narrowly tailored to address the State's legitimate purpose.

"There is a serious problem in determining which games are prohibited to be sold or displayed . . . . Nor is it reasonable to expect store clerks to play each level of each game to determine if it falls within the Act's definition".

This seems a bit simplistic -- the Court did not discuss what about the legislation is difficult to interpret, which would have been helpful given the number of legislatures and courts looking at this issue.

The preliminary injunction hearing did not address the companion part of the law, which addresses explicit sexuality in video games, so that part of the law remains to be addressed.

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In thinking about today's Grokster settlement news (see prior post), you have to be sure to synthesize the fact that the Napster investor litigation is still dragging on in surreal fashion without any indication of an end on the horizon. So the RIAA appears to be suffering from a bipolar disorder of some sort.

Bertelsmann, which is a defendant in the Napster investor case because it loaned money to Napster, recently filed a motion for summary judgment, arguing that it cannot be held liable for infringing works that Napster would not have been liable for. It also argues that even if Napster were liable, Bertelsmann cannot be liable unless it also had specific knowledge of such infringing works at a time when it was able to block access to such works.

So at this point in the litigation, they're just trying to narrow what they could be liable for. Bertelsmann's motion papers make the point that:

"This clarification is particularly appropriate insofar as plaintiffs persist in floating an illusory 'billions in damages' balloon . . . ."

Thus they haven't yet reached the critical issue of whether Bertelsmann's involvement in Napster should result in any liability at all. Hummer Winblad joined the motion today. The summary judgment hearing date is scheduled for December 12th.

Maybe we can take the Grokster settlement as an admission by the record industry that they blew the opportunity with Napster, by taking the hard line that they did. Not that we expect that the Grokster defendants came out very well in the settlement -- published reports say they owe $50 million in damages.

But at least the record industry may have finally figured out that they need to actively spawn licensed services as a viable alternative for consumers, rather than leaving another void to be filled online and lining up the next round of lawsuits.

The Grokster3G.com domain that touts the new licensed service says:

"THE NEW GROKSTER 3G COMING SOON TO A DESKTOP NEAR YOU

A safe, secure & legal P2P experience...

NO Adware
NO Spyware
NO Bundles!
NO Viruses
NO Hassle
Just the best of what P2P has to offer."

The Grokster3G domain was just created on November 5th and is privately registered, so we'll have to wait and see what comes of it.

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The owners and operators of Grokster have settled with the major record labels and music publishers in the MGM v. Grokster case, according to an RIAA press release. The settlement apparently does not include Streamcast.

According to the release, "The settlement includes a permanent injunction prohibiting infringement - directly or indirectly - of any of the plaintiffs' copyrighted works. This includes ceasing immediately distribution of the Grokster client application and ceasing to operate the Grokster system and software."

The Grokster site now says:

"There are legal services for downloading music and movies. This service is not one of them. Grokster hopes to have a safe and legal service available soon."

So it looks like a licensed version of Grokster is on its way. RIAA and NMPA leadership hailed the settlement as a move towards licensed online music services. The case is currently on remand in the U.S. District Court for the Central District of California, following the Supreme Court's June decision. See prior post for background.

In October the parties to the case postponed the case's next status conference until today, and with the settlement a consent judgment will likely be submitted to the court for approval today.

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On November 3rd, SoundExchange announced that it is seeking a 30% royalty for use of sound recordings in webcasting transmissions. This compares to a 5.5% royalty proposed by DiMA in its filings, and the current rate of 10.9% -- see prior post. No problem, just a 25 point delta to be resolved!

SoundExchange is also seek per-minimum rates, including a $1.37 monthly minimum per subscriber for subscription services. See the specifics of SoundExchange's proposal which was filed on October 31st with the Copyright Royalty Board. Once it determines the new rates, they will apply from January 1, 2006 through December 31, 2010.

SoundExchange is a nonprofit organization that administers public performance revenues for record companies and recording artists that arise from digital transmissions that are subject to compulsory licensing under Section 112 and 114 of the Copyright Act.

The compulsory license applies to public performances in four types of digital music services:

1. Eligible nonsubscription services (noninteractive webcasters and no-fee simulcasters);

2. Preexisting subscription services (residential subscription music services via digital cable or satellite television);

3. New subscription services (noninteractive webcasters and fee-based simulcasters); and

4. Preexisting satellite digital audio radio services (XM and SIRIUS).

Separately, in testimony before Congress on November 3rd, the RIAA advocated for a change to the Section 114 compulsory license to treat these different categories the same and to permit the FCC to protect over-the-air digital radio broadcasts. See RIAA chief Mitch Bainwol's testimony.

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The Digital Media Association (DiMA) filed a proposal today with the Copyright Royalty Board to reduce the royalty rate payable by Internet radio-style webcasters to record companies and artists to 5.5% of revenues, compared to the current royalty rate of 10.9%. DiMA has published a comprehensive FAQ laying out its position to supplement its press release.

The proposal is a first step in the arbitration proceeding to establish Internet radio royalties for sound recordings for the years 2006 through 2010. The new rates will be established next year and will apply retroactively to January 1, 2006.

DiMA's argument is that 5.5% is roughly equivalent to the combined royalty payable to ASCAP, BMI and SESAC to compensate for public performances of musical works (the songs performed on the sound recordings). DiMA says this reflects the "marketplace for music performance rights," and argues that the previous arbitration proceeding produced an unfairly high rate. You can expect the RIAA to differ on this point, so stay tuned.

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Here's the complaint filed by the VSDA and ESA challenging California's new violent video game bill. See prior post on the passage of this legislation, as well as legal challenges to similar legislation in Michigan and Illinois.

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The Sixth Circuit has affirmed a district court ruling in Andretti v. Borla Performance Industries, Inc.,Download file, in which Mario Andretti was granted an injunction against unauthorized use of his name in advertising, but denied damages for failure to prove his case.

Andretti was a spokesperson for Car Sound, with an exclusive four-year deal paying $500,000 per year to endorse exhaust systems. Car Sound's competitor, Borla, ran an advertisement that used a quotation from Andretti where he praised a Borla product. Borla obtained permission from the publisher of the quotation, but not from Andretti.

The Court upheld the injunction prohibiting Borla from using Andretti's quotes or likeness or otherwise implying endorsement. However the Court held that Andretti failed to show evidence of damages. The existence of his endorsement contract was insufficient to show the contract was impaired, and possible damage to his reputation as a spokesman was too speculative.

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The Copyright Office issued interim regulations on October 19th governing preregistration of works being prepared for commercial distribution. Preregistration will be available as of November 15. See full text of the interim regulation.

Preregistration is a new procedure established by the Artists' Rights and Theft Prevention Act of 2005 to enable copyright owners to sue for infringement while a work is still being prepared for commercial release. The new law required the Register of Copyrights to determine which types of works have had a history of infringement prior to authorized commercial distribution and thus should be entitled to preregistration. See prior post for background.

The Register of Copyrights has determined that preregistration will be available for the following classes of works:

1. motion pictures,
2. sound recordings,
3. musical compositions,
4. literary works being prepared for publication in book form,
5. computer programs (including videogames), and
6. advertising or marketing photographs.

This expands the eligible classes from just motion pictures and music, as originally contemplated by the Copyright Office.

To be eligible for preregistration, a work must be in one of these classes and applicant must certify that the work is being prepared for commercial distribution and that he or she has a reasonable expectation that the work will be commercially distributed to the public.

The Copyright Office abandoned its prior position that in order to be eligible for preregistration a work must already be subject to a distribution contract with an established distributor.

The Copyright Office is not limiting coverage to works being prepared for distribution in physical formats. Any work that meets the preregistration criteria can be covered even if the work is intended for online distribution.

The Copyright Office rejected requests that the preregistrations be treated as confidential information, noting that it is subject to the Freedom of Information Act: "The Register cannot accept the proposition that the public should be denied access to the preregistration records."

Finally, the agency addressed the issue of browser incompatibility with its online preregistration system: "While the Office is attempting to address browser compatibility issues, initially some applicants may experience difficulties if they are using browsers other than Internet Explorer. For applicants who are unable to use the online preregistration system, information will be available on the Copyright Office website on how to preregister their works."

The Internet Explorer issue created a bit of a firestorm in the open source community. Whereas the question of what types of works should receive preregistration received only 10 initial comments, the browser compatibility issue elicited over 200 comments in large part based on the Free Software Foundation's publicizing of the issue. See prior posts here and here.

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On October 7th Governor Schwarzenegger signed AB 1179 into law, which was sponsored by AssemblymanLeland Yee and regulates the sale of violent video games to minors. See Schwarzenegger's press release and Yee's press release.

The new law is codified at Section 1746 of the California Civil Code.
It prohibits the selling or renting of a video game that has been labeled as a violent video game to a minor. Violators are subject to fines up to $1,000. Each violent video game that is distributed in California for retail sale must be labled with a prominent "18" label on the front of the packaging.

The new law contains the same legal formulations of ultraviolent video games as in Yee's earlier bill, AB 450, which is discussed here.

A "violent video game" is defined as one that involves killing, maiming, dismembering or sexual assault of an image of a human being if the game:

A) Comes within all of the following descriptions: (i) A reasonable person, considering the game as a whole, would find appeals to a deviant or morbid interest of minors. (ii) It is patently offensive to prevailing standards in the community as to what is suitable for minors. (iii) It causes the game, as a whole, to lack serious literary, artistic, political, or scientific value for minors.

OR:

(B) Enables the player to virtually inflict serious injury upon images of human beings or characters with substantially human characteristics in a manner which is especially heinous, cruel, or depraved in that it involves torture or serious physical abuse to the victim.

The new law is being challenged by the Entertainment Software Association, as are similar laws recently enacted in Illinois and Michigan. See prior posts about the Illinois and Michigan laws. Similar bills are being considered in Alabama, Arkansas, Georgia, Maryland, Minnesota, North Carolina, Washington and the District of Columbia.

To survive First Amendment challenge, the new law must:

(i) serve a compelling state interest;
(2) be narrowly tailored to serve its intended purpose; and
(3) not be vague.

The law states that "the state has a compelling interest in preventing violent, aggressive, and antisocial behavior, and in preventing pscyhological or neurological harm to minors who play violent video games." It remains to be seen whether the State will be able to present sufficient social science evidence to back this up.

However according to Kevin Saunders, Michigan State Constitutional Law professor, "Just this year, the Supreme Court ruled in Roper v. Simmons, the child death penalty case, that children are different in the eyes of the law due to brain development."

Also, it remains to be seen whether the law will be found to be unconstitutionally vague. While the law has numerous carefully crafted definitions of what is "cruel", "depraved", "heinous", "serious physical abuse" or "torture", it is not clear whether these definitions are sufficiently precise to avoid chilling legitimate free speech. For example, the definition of "heinous" means "shockingly atrocious".

The new law will go into effect January 1, 2006 unless its opponents succeed in having it enjoined.

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The Entertainment Software Association's complaint challenging Michigan's violent video game law was filed September 21st and is posted here. See prior post about Michigan's recently enacted law.

The Media Coalition legislative web site identifies similar video game bills that have been proposed in Alabama, Arkansas, California, Georgia, Maryland, Minnesota, North Carolina, Washington, and the District of Columbia.

The Media Coalition is a trade association focused on First Amendment advocacy for members including the ESA, VSDA, MPAA, RIAA, and other entertainment producers and publishers.

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Governor Schwarzenegger signed AB 381 into law on September 30th, which increases civil liability for "assault committed with the intent to capture any type of visual image, sound recording, or other physical impression of the plaintiff".

Under the new law, the perpetrator of a paparazzi assault may be liable for up to three times the amount of general and special damages proximately caused by that violation, punitive damages, and disgorgement to the plaintiff of any proceeds or other consideration as a result of the violation. The new law also provides that a person who directs, solicits, actually induces, or actually causes another person to commit an assault of this nature can be liable for similar damages.

The bill expands Section 1708.8 of the Civil Code, which already protects against physical invasion of privacy where a trespass occurs, as well as constructive invasion of privacy, where no trespass occurs but an audio or video enhancing device is used to violate a reasonable expectation of privacy.

According to the author of the bill, Assemblywoman Cindy Montanez (D-San Fernando), as quoted in the Assembly legislative analysis:

"This trend is best personified in the vehicular assault committed by paparazzi against Lindsay Lohan as she drove her car in downtown Los Angeles. Press reports of the incident reveal the danger of the situation. The young actress sped away from the pursuit of the paparazzi, only to come to a dead end. When she made a U-turn in order to escape the parade of paparazzi, one of their number crashed his car into hers, causing her to come to a stop. The incident was captured on film by the rest of the [paparazzi], and pictures of the incident were soon published in many different publications."

"While these rare instances may produce criminal charges due to the egregious nature of the assault, many others go unpunished due to the difficulty of proving criminal assault. And, the financial rewards of the "right" celebrity photo can be an incentive for the [paparazzi] to continue to push this trend. According to CBS [Channel] 4, an online news report, such photos may sell from $6,000 to $100,000. Recent pictures of Brad Pitt and Angelina Jolie are said to have reaped the photographer $500,000."

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Michigan enacted legislation on September 14th to restrict youth access to "ultra-violent" video games and to subject sexually explicity video games to obscenity laws. The Entertainment Software Association announced the same day that it would challenge the new laws on First Amendment grounds. The ESA has posted a summary of relevant case law. See also prior post about AB 450, a similar California bill, which summarizes the most recent case (2004) on the subject, VSDA v. Maleng,Download file.

Senate Bill 416 prohibits the knowing dissemination to a minor an ultra-violent explicit video game, and Senate Bill 463 adds video games to the obscenity laws. Both bills amend Public Act 33 of 1978, which covers the dissemination of sexually explicit materials to minors.

SB 416 contains exemptions for television stations, for ISPs if they are merely providing connectivity without knowledge of the content, and for subscription multichannel video game services, if their terms of use require the user to be over 17 and have a valid ID or credit card. It has also good faith defenses for retailers.

The bill has the same structure as a recent Illinois law, which was also the subject of an immediate legal challenge. It covers sexually explicit material in one section, and ultra-violent material in another, ostensibly to separate them for the inevitable litigation. See prior post analyzing the Illinois law.

In the Illinois case, the plaintiffs have sought a preliminary injunction to keep the law from going into effect next year. See their legal brief Download file, in support. Illinois is in the 7th Circuit, and Judge Posner authored an opinion in 2001 that invalidated a similar violent video game law,AAMA v. Kendrick. Michigan however is in the 6th Circuit, which has not yet addressed this issue.

Under the new Michigan law:

"Ultra-violent explicit video game" means a video game that continually and repetitively depicts extreme and loathsome violence."

"Extreme and loathsome violence" means real or simulated graphic depictions of physical injuries or physical violence against parties who realistically appear to be human beings, including actions causing death, inflicting cruelty, dismemberment, decapitation, maiming, disfigurement, or other mutilation of body parts, murder, criminal sexual conduct, or torture."

It seems like the underlying issue is the efficacy of industry self-regulation, in term of limiting the sale of rated games to the appropriate age group. According to the independent legislative analysis, the "apparent problem" is access to these games by young children:

"For example, a May 4, 2005 press release by Governor Granholm reported that an undercover investigation in six counties found that children as young as nine years old were able to purchase video games rated M or NC-17 at 26 of 58 stores."

On the other hand, as advanced by the opponents to the legislation:

"In the last couple of years, many retailers have voluntarily instituted policies aimed at decreasing sales to minors of games rated for adult and mature audiences. The most recent "Video Game Report Card" released by the National Institute on Media and the Family revealed that minors were unsuccessful 66 percent of the time in their attempts to purchase Mature rated games as compared to just 45 percent the previous year."

While this is progress, it's certainly not stellar. With the bad publicity from the Grand Theft Audio: San Andreas incident, it looks like industry is going to be on the defense for a while until some progress is made. For example, the California video game bill, AB 450, was put back on active status on August 15th. So the First Amendment bar will be busy.

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Brendan Scott, of Open Source Law in Sydney, Australia, has this review of the Kazaa ruling, via Groklaw.net.

See also this analysis from the firm of Allens Arthur Robinson, which includes a discussion of the court's consideration of the Digital Agenda provisions of the Australian copyright law:

"Along with the recently decided Federal Court case of Universal Music Australia Pty Limited v Cooper [2005] FCA 972, the Kazaa decision has made some important statements as to the interpretation of 'Digital Agenda' provisions in the Act, which came into force in 2001. . . ."

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Sharman Networks and related parties been found liable today in Australia for authorizing the infringement of copyrights by users of Kazaa and entering into a common design to carry out such authorization. The ruling in Universal Music Australia Pty Ltd. v. Sharman License Holdings Ltd. is published here.

According to the Court:

"Section 101 of the Australian Copyright Act provides that copyright is infringed by a person who, not being the owner of the copyright and without the license of the copyright owner, authorizes another to do in Australia an infringing act."

The Court pointed to the following facts to support its conclusion:

1) Sharman was aware of infringing use of Kazaa, and its end user license and disclaimers were ineffective;

2) Sharman failed to use available technological measures to prevent infringement, and its financial interest was to the contrary; and

3) Sharman promoted a "revolution" campaign that may have encouraged young people to infringe copyrights.

The Court ordered injunctive relief, putting off damages for another hearing. The Court said that Sharman could comply with the injunction and continue to operate Kazaa by either:

(i) instituting key-word filtering that excludes the plaintiffs' copyrighted works, using technology mutually agreed by the parties and approved by the Court; or

(ii) limiting search results for plaintiff's works to licensed works and excluding provision of such works.

Parties liable for infringement include Sharman Networks Ltd., LEF Interactive Pty Ltd., Nicola Anne Hemming, Altnet, Inc., Brilliant Digital Entertainment, Inc. and Kevin Glen Bermeister.

Via Rik Lambers at CoCo.

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The Copyright Office has received 232 comments arising from its proposed rulemaking about copyright preregistration and the related issue of requiring use of the Internet Explorer browser. The Copyright Office posted 10 of these comments on September 1st. See prior post about the rulemaking on preregistration of works with a "history of infringement prior to authorized commercial distribution." Reply comments on both issues are due by September 7, 2005.

222 of these comments were addressed to the browser issue, which set off a firestorm within the open software community. These have not been posted, but you can get the flavor of these from the Free Software Foundation's post of samples of the comments it collected. See prior post about the FSF's efforts on this.

The Copyright Office says these unposted comments are available for viewing at its office in Washington D.C. Hopefully it won't ignite another controversy by failing to publish these comments online. It's unclear how reply comments can be made to initial comments that aren't practically available to the public.

The ten posted comments address the question of what works should be entitled to the benefits of preregistration, based on a past history of prerelease infringement. The Copyright Office had proposed giving these benefits to motion pictures and music.

Comments from the Entertainment Software Association seek preregistration classification for video games and cite prerelease infringement of Doom II, World of Warcraft III, Halo II, and Grand Theft Auto: San Andreas (maybe not the best example under the circumstances!). The comments also address various specifics of the development and distribution practices of the video game industry, which differ from the film industry, as well as the activities of "cracker" groups that release cracked version of games before their official release date.

Comments from the Software and Information Industry Association also sought preregistration protection for computer software, but requested additional time and confidentiality to demonstrate prerelease infringement problems.

See also comments submitted by representatives of professional photographers and comments by book publishers.

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The Patry Copyright Blog gives us a kind mention in his post today, which includes an insightful analysis of a recent copyright case out of the Northern District of California involving protectible rights to a book about football clock management.

Professor William Patry's recent posts of particular interest from a Silicon Valley perspective include:

-- the behind-the-scenes story of the drafting of Section 1008 of the Audio Home Recording Act:

"Section 1008 of title 17 brings back bad memories. It was drafted 'off-the-Hill' by industry . . . ."

-- the history of pre-DMCA technological protection measures (TPMs) in the Audio Home Recording Act:

"DART, by the way, is a classic case of Congress being sold a phony bill of technological threats."

-- the debate about patent versus copyright protection for software, in which he mentions Lotus v. Borland,

"reminding us that the Supreme Court is indeed in the habit of dodging, not deciding, tough copyright cases, since it dropped Lotus one week after oral argument."

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In an order dated August 12th, 2005,Download file, Judge James Ware of the Northern District of California denied Visa's motion for attorney's fees in its successful defense of Perfect 10, Inc. v. Visa International. While it seems a close call not to have awarded attorney's fees in this case, the Court instead suggests that in fact it was a close call that the case did not go forward against Visa.

Perfect 10's copyright infringement claims against Visa for contributory and vicarious copyright and trademark infringement, among other claims, were dismissed in an August 2004 order,Download file, and a December 2004 order,Download file, last year. In well-reasoned opinions, Judge James Ware noted that Visa only provided credit-card processing services to the infringing web sites, and was not involved in the infringing activity.

In the attorneys' fees order, however, the Court seems to distance itself from its prior rulings, stating that Perfect 10's claims could not be advanced under the "current legal standards" and that their claims might be addressed by the legislature. The Court seems almost apologetic about its rulings, as if it came to the wrong result, compelled by the state of the law. Could this be an instance of the post-Grokster chilling effect?

Judge Ware concluded that Perfect 10's legal claims:

"presented a close question of law. . . . the fact that a direct nexus with the infringement and control necessary to prevent vicarious or contributory copyright infringement were not present as required by the current legal standards did not make Plaintiff's claims frivolous." /blockquote>

"The issues raised by the Plaintiff were novel and complex in light of the newly formed Internet market. Recognizing this, the Court believes that the restructuring of the copyright law and its liability proposition to address technological advances is a matter for the legislature. Thus, it is important to note that though the Court dismissed the Plaintiff's claims because they did not fit within the current copyright infringement standards, the Court recognizes that those claims may have a place in future legislation in this ever evolving Internet environment."

With respect to the trademark claims, more of the same:

"As the Court explained in the Copyright Act claims, complex and novel legal issues related to the Internet cannot be considered as groundless or unreasonable only because they do not meet the current legal standards. It is reasonable for a valid trademark holder to attempt to protect its intellectual property rights, especially when the issues arose out of an unsettled area of law -- the Internet."

[emphases added]

Tags: Content

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Gary Shapiro, CEO of the CEA, issued a statement on Friday lambasting the RIAA in response to media reports that the RIAA is concerned about consumer CD burning.

"There they go again - The recent news that the recording industry now considers casual, non-commercial CD burning as a threat to be stopped comes as no surprise. Even with their recent victory in MGM v. Grokster, the recording industry continues efforts to chip away at established home recording and fair use rights."

Shapiro's statement makes note of apparent public concessions by the RIAA on the personal copying issue. A page on the RIAA website says:

"Don't people have a right to make copies of their CDs?
It depends on the circumstances. Certainly, consumers may be able to make a limited number of copies for their own personal use."

However with copy-protected CDs, the anti-circumvention provisions of the DMCA would prohibit the by-passing of DRM and make the question of the legalities of this use academic.

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The current issue of the Stanford Lawyer has an interview with Chief Justice Rehnquist about his days at Stanford. The interview was given to San Francisco lawyer Michael Eagan, '74, who clerked for Rehnquist in the 1976 term.

Highlights include coming to Palo Alto because the climate is "like North Africa," working as a counselor at Menlo College "to see that they didn't take the roof off the place", having the entire wheel of his 1935 Ford fall off on El Camino Real, and visting Sandra O'Connor's family ranch: "We dated some in the second year, and then we kind of went different ways".

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The Ninth Circuit decided today that an infringement lawsuit against James Cameron, Jeff Berg, ICM and others could go forward because the plaintiff copyright owners were not collaterally estopped from bringing the suit. The case is Kourtis v. Cameron, Download file. The suit alleges that use of a shape-changing character in the film Terminator II infringed the plaintiff's rights in a treatment and screenplay called The Minotaur.

The author of the screenplay, William Green, had previously sued on the same grounds, and had lost on the basis that there was no substantial similarity. However the screenwriter did not own the rights -- the plaintiffs, Filia and Con Kourtis, had acquired these rights by contract.

The court held that the plaintiffs are not collaterally estopped from suing over claims already litigated by Green, because they were not a party to the first suit and were not in privity with the screenwriter.

The case has an interesting discussion of the concept of privity. Even though they had a contract with the screenwriter, the Kourtises were found not be in privity because Green was not acting as the Kourtises' agent in pursuing the claim, and in fact his position was adverse to them because it was premised on his ownership of the screenplay.

The screenplay had originally been shopped by the Kourtises to Berg at ICM, who brought it to Cameron, who passed on the project. The state law claims, for breach of implied and oral contracts and breach of confidence, were barred by the statute of limitations.

This case is mostly notable for its discussion of collateral estoppel doctrine because it is otherwise fairly typical of Hollywood creative disputes.

Here's a link to a radio transcript from 1998 about the history of case.

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The Ninth Circuit formally remanded the Grokster case to the district court today, Download file:

"In confromance with the mandate of the Supreme Court, we remand this case to the district court for further proceedings consistent with the opinion of the United States Supreme Court. See Metro-Goldwyn-Mayer Stuiods Inc. v. Grokster, Ltd., 125 S. Ct. 2764 (2005)."

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Hilary Rosen started guest blogging tonight over at lessig blog. Like a lot of people, we're interested in her views and still trying to make sense of her transition from the RIAA in 2003. She used to be the subject of articles like Wired's "Hating Hilary", but now it's seems like we have a kinder, gentler Hilary. It's all good, as they say.

In her first post she makes clear that her RIAA life is pretty much off-limits "until the book comes out :)". According to the RIAA, she was engaged as an RIAA consultant for a year after leaving.

She lets us know that she is now consulting "with some companies who are investing in this space or advancing their positions in the market", so the change in tone may be due to the fact that she is working on business solutions, rather than serving as the RIAA's spokesperson for its legal agenda. Or it could reflect that she lost enthusiasm for the RIAA's approach and exited to take a new course, although the basis for her resignation was personal reasons.

She links to her posts on the Huffington blog about the Grokster case, and says that the posts:

"are brief and may be trite compared to the large subject matter but they reflect a general mindset that I have long held. They have since been used against my former colleagues unfairly in a Senate hearing by some in the p2p community and that was annoying. It is always easier to pick a few sentences out of context rather than consider a full view."

(emphasis added)

Some of her comments on the Huffington blog seem to suggest a disillusionment with record industry tactics, although hopefully we're not taking them out of context either:

Napster days were a "frustrating time" . . . "I thought that there was a need for a legal ruling at the time, but I also expected so much progress in the marketplace."

"And a tone must be set that allows future innovation to stimulate negotiation and not just confrontation."

"The central premise that tech will 'wait until we are ready with our business models' is not going to work for the movie and television industries either."

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President Bush signed H.R. 2985 (Public Law 109-55) on August 2nd, funding the legislative branch for fiscal year 2005/2006. The Copyright Office's funding is included in this appropriation, which reminds us that it is part of the legislative branch, even though it acts a lot like an executive-branch government agency. The Copyright Office has administered copyright matters through the Library of Congress since 1870 -- see its history. Marybeth Peters has served in this position since 1994.

The Patent and Trademark Office, on the other hand, is an agency of the Department of Commerce, and has been in existence for over 200 years according to its backgrounder. Patent and trademark policy advice to the executive branch falls under the authority of Under Secretary of Commerce for Intellectual Property and PTO Director, Jon Dudas, who was appointed by Bush in 2004.

The former head of the PTO, Bruce Lehman, tried back in 1996 to move copyright over to the PTO, but that effort failed. One of the stated reasons was for greater accountability. Past comments by the President of the National Writer's Union about Lehman suggest that some parties view the Copyright Office as decidedly pro-author, with the PTO being viewed as pro-commerce:

"For us, this wasn't just a question of stopping Lehman from having a bigger sandbox to play in, but a fundamentally different way of looking at what copyright is about. As I wrote in my letter to Sen. Orrin Hatch, the chairman of the Judiciary Committee, 'The Library of Congress has a long, distinguished history promoting the arts, culture and knowledge in this country by...advocating for the preservation of the works of individual creators. That is its primary role.'"

One of the Copyright Office's stated responsibilities is to advise Congress on matters relating to copyright law, hence the Register's periodic testimony before Congress on these matters, including recent testimony on music licensing reform in which we noted her statement: "As always, my focus is primarily on the author."

According to the U.S. Supreme Court, there is a "difficult balance" to be struck:

"It is Congress that has been assigned the task of defining the scope of the limited monopoly that should be granted to authors . . . in order to give the public appropriate access to their work product."

"[T]his task involves a difficult balance between the interest of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and society's competing interest in the free flow of ideas, information and commerce (emphasis added)."

Sony v. Universal, 464 U.S. at 429 (1984).

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SAG talent recently approved the proposed interactive media contract with 81% of the votes in favor. The new contract runs through December 31, 2008. The contract went to a referendum in July after the SAG national executive committee disapproved the deal that was jointly negotiated with and approved by AFTRA. The voting margin is probably a reality check for SAG leadership on the importance of steady work and the minimum rate increases to interactive talent, notwithstanding that the video game producers refused to budge on residuals. And a reality check in terms of balance of power between Hollywood and the video game industry.

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The Copyright Office has issued a Notice of Proposed Rulemaking relating to "Preregistration of Certain Unpublished Copyright Claims", Download file.

The Artists' Rights and Theft Protection Act of 2005,Download file, amended Section 408 of the Copyright Act to permit pre-registration of certain classes of works that the Register of Copyrights determines "has had a history of infringement prior to authorized commercial distribution." The effect of this is to permit infringement claims, and related benefits of statutory damages and attorney's fees, to be pursued based on unauthorized pre-release distributions.

The Register of Copyrights issued a Notice of Proposed Rulemaking published on July 22nd, in which it has identified motion pictures, sound recordings, and musical works embodied therein, as having a history of pre-release infringement and therefore being eligible for these pre-registration benefits.

The proposed classes are:

1. Motion pictures subject to theatrical distribution contracts with established distributors of motion pictures;

2. Sound recordings subject to contracts for distribution of physical phonorecords with established distributors of phonorecords; and

3. Nondramatic musical compositions performed in sound recordings subject to contracts with established distributors of phonorecords.

Comments are sought "as to whether the proposed classes are underinclusive or overinclusive, keeping in mind that the only works that are to be included are works being prepared for commercial distribution and that the Register is to designate only classes of works that have a history of pre-release infringement." This could mean that it ends up being legislation that specifically benefits entrenched media interests.

The NPR also seeks public comment as to whether other classes of works should receive this designation, so proponents for any other types of works should make themselves known. According to the NPR, "Of primary importance, then, is the Register's determination of the boundaries between classes of works that are eligible for preregistration and those that are not. Preregistration is limited to unpublished works being prepared for commercial distribution in a class of works that have already experienced more than a few instances of pre-release infringement."

According to the NPR, "the Office seeks comments on whether there are additional classes of works that have a history of pre-release infringement. Proponents of a class of works should be prepared to document more than 'a few instances' of pre-release infringement. . . . Proponents of any class should be prepared to demonstrate that there is a substantial history of pre-release infringement which is likely to continue, causing harm to copyright owners that can be ameliorated by permitted preregistration of such works."

According to the Copyright Office's interpretation of relevant legislative history, the particular class of copyrighted work should be a narrow and focused subset of the broad categories of works of authorship that are identified in the Copyright Act.

The comment period extends until August 22, 2005. This appears to be a one-time shot to secure this protection (the statute requires that the regulations be in place by October 24, 2005), or at least we did not see any statement contemplating subsequent rulemaking to consider new classes of works.

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Denise Howell points us to the Senate hearing tomorrow on "Issues Related to MGM v. Grokster". It will be interesting to see if the testimony of each witness varies from the public statements of the organizations they are representing:

Adam Eisgrau, P2P Unlimited: "P2P United to Pursue Filesharing 'Until the Last Bell'"

Gregory Kerber, Wurld Media, Inc.: "Wurld Media Reaction Statement to the U.S. Supreme Court's Ruling in MGM v. Grokster"

Mark Heesen, NVCA: "National Venture Capital Association Reaction to Supreme Court Ruling in MGM v. Grokster"

Mitch Bainwol, RIAA: "RIAA Statement on MGM v. Grokster Supreme Court Ruling"

Fritz Attaway, MPAA: "Statement from MPAA President and CEO Dan Glickman re: Supreme Court Ruling in MGM v. Grokster"

Dave Baker, Earthlink: We couldn't find anything released by Earthlink on this. Maybe they think this is a BrandX hearing? :)

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Illinois governor Rod Blagojevic signed legislation yesterday that bans the sale or rental to children of video games that contain violent and sexually explicit material. See my prior post summarizing the bill.

HB 4023, the Safe Games Illinois Act, passed the Illinois legislature on June 7 and had been sitting on the governor's desk. See legislative history, as well as the governor's announcement. Public Act 094-0315 as enrolled is not available yet, but should be posted here.

The new law has already been challenged on First Amendment grounds in Illinois federal court by the Entertainment Software Association, the Video Software Dealers Association, and Illinois Retail Merchants Association, case 1:05-cv-04265. See the ESA's press release.

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A video game case out of the 8th Circuit today has held that Sony Computer Entertainment America did not infringe the trademarks of Frosty Treats, Inc. by depicting an ice cream truck with the "Frosty Treats" name and an evil clown character in Sony's Twisted Metal: Small Brawl video game.

It looks like Sony dodged a bullet here, as this could have raised a legitimate issue of the sponsorship or affiliation between the Sony products and Frosty Treats. This litigation reflects why the standard practice is to conduct appropriate legal clearance on video game titles.

A picture is worth a thousand words, especially here - see them in the opinion, which affirmed the district court's ruling. This seems like a case of a company losing because of its failure to implement an effective trademark program from the outset. The ice cream truck (van) depicted in the opinion looks rather counter-culture until you figure out that all the decals are ice cream stickers. The "Frosty Treats" name appears as a modest placard surrounded by decals for ice cream treats on the van. The van also has a "Safety Clown" graphic that directs children to watch out for cars.

Frosty Treats lost on the name issue on the grounds that the name was merely descriptive and had not acquired the necessary secondary meaning to receive trademark protection, based on consumer survey evidence.

Continue Reading...

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Governor Schwarzenegger has signed legislation, SB 184,Download file, that increases the bonding requirements for talent agencies from $10,000 to $50,000. The surety bond amount has not been raised since 1986. The bill amends Section 1700.15 of the California Labor Code.

This bill was jointly sponsored by the Screen Actors Guild and the Conference of Delegates of California Bar Associations. The following is from the legislative analysis:

"According to the sponsors, most individuals who are represented by talent agencies are paid through the respective agency. As a result, a busy agency will often have tens of thousands of dollars in wages at any given time. The sponsors argue that in many cases, when talent agencies find themselves in financial trouble, the temptation to divert money from the pool of wages is irresistible. As a result, when agencies go out of business, dozens or even hundreds of dividuals find that their wages are gone, with the only prospect for recovering them being a small proportional share of the $10,000 bond."

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A copyright infringement case pending in the Northern District of California (3:04-cv-05262-CRB) pits a Tennessee photographer against the San Jose Mercury News, and involves fair use, DMCA and inducement issues. The photographer, Christopher Harris, has sued the newspaper based on its unauthorized use of his photo in connection with a review of a book in which the photo was published.

The plaintiff's photo of Walker Percy was originally published with permission in Paul Elie's The Life you Save May be You own: An American Pilgrimage. A copyright notice appeared on the photo in the book. The Mercury News reproduced the photo as part of a review of the book, without the copyright notice, but with the attribution: CHRISTOPHER HARRIS - FROM "THE LIFE YOU SAVE MAY BE YOU OWN" printed immediately under the photo.

The amended complaint alleges willful copyright infringement, based on the newspaper's unauthorized reproduction of the photo in the book review after removing the copyright notice from the photo. The complaint also alleges violation of Section 1202(b) of the DMCA, which prohibits removal of "copyright management information" in certain circumstances, based on the newspaper's removal of the copyright notice on the photo.

Section 1202(b) states in pertinent part:

"No person shall, without the authority of the copyright owner or the law— intentionally remove or alter any copyright management information, . . . knowing, or, with respect to civil remedies . . . having reasonable grounds to know, that it will induce, enable, facilitate, or conceal an infringement of any right under this title."

Note how the concept of "inducement" found its way into the DMCA, back in 1998. According to the plaintiff's amended complaint,

"It is common for photographs or similar forms of content which are published without a copyright notice to be freely copied in domestic and foreign publications . . . By removing the copyright notice from the aforesaid photograph . . . and publishing it in its newspaper without a copyright notice, Defendant knew or had reasonable grounds to know that removing the copyright notice from the aforesaid photograph would induce, enable, facilitate or conceal an infringement of Plaintiff's copyright" . . . . as well as by "conveying to the public that this photograph was the work of Plaintiff, and that he had dedicated it to the public domain."

The Court denied the newspaper's motion for judgment on the pleadings in May, but issued an order on July 8 authorizing an expedited motion by the newspaper to be filed on August 19, and limiting discovery to evidence relating to the four fair use factors under Section 107 of the Copyright Act, as applicable to book reviews and other media reviews. The plaintiff's amended complaint made allegations about a decision by the newspaper to stop paying royalties to photographers in 2001 due to financial problems after the dot-com bust.

Continue Reading...

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William Patry has a recent post on John Robert's copyright decision in Universal City Studios v. Peters, in which he notes that Roberts' opinion is "thorough, mainstream and well-written."

Ah yes, well-written! When we blogged the case back in April, we did so mostly out of enjoyment gained from reading a colorful opinion on a dry topic. The case itself was unremarkable -- whether copyright regulations about proper and timely mailing of royalty claims were correctly applied.

However Roberts vividly conveyed the human drama of the situation, in a distinctive and clever literary voice. So assuming this reflects Roberts' prose rather than that of his clerks, and setting aside substance and politics, we may have someone here with a bit of style. See also today's AP report in the SF Chronicle on the "sly wit" of his White House papers.

Here are excerpts from our April post:

The Court provided this stirring account of the salient events: "The studios heard nothing from the Copyright Office until November 2001, when each received word that their claims would not be accepted unless they could produce a receipt with a July U.S. Postal Service date stamp. Even at this remove, we can sense the intensity of the searches that these letters must have precipitated, but neither studio was able to locate a receipt. Lacking a receipt, the studios mobilized their lawyers."

With a healthy dose of parental chiding, the Court noted: "The studios ran a considerable risk by mailing their claims, presumably, in the last days of July; they ran another risk by failing to have their claims postmarked by the U.S. Postal Service."

The ruling of the Court was simply: "And under those regulations, the studios are out of luck."

While at the time we didn't make note of his Shakespeare reference, we can add today his conclusion that the Copyight Office's practices were simply a way "to make assurance double sure." MACBETH, act. 4, sc. 1.

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Ken Schapiro at Qualia Capital, which specializes in media and entertainment investments, is following developments in the "mature market for DVD sales".

This includes a recent post about securities litigation against Dreamworks Animation SKG over DVD return reserves.

"The interesting issues presented by these cases are accounting and disclosure issues--Were Dreamworks reserves for video returns inadequate on the 2004 financial statements, and if so, why? What should have been disclosed to investors when video revenue for 2004 was reported? Setting DVD return reserves is not a pure science."

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More testimony about reform of the Section 115 compulsory license was given today, this time before the Senate Judiciary Committee's Subcomittee on Intellectual Property. Several parties opined that removing the impediments to licensing of online services is a necessary step to provide legitimate services to consumers and thereby reduce piracy, and that the Grokster decision provides a window of opportunity to move forward in this manner.

Register of Copyrights Marybeth Peters' testimony continues to favor her June 21st proposal to eliminate the compulsory license and replace it with voluntary collective licensing bodies. Her June testimony includes a discussion draft of proposed legislation titled the "21st Century Music Reform Act". See earlier post analyzing this proposal.

She said, "The model legislation has generated a sizable response. They majority of the feedback has praised its goals, namely to increase efficiency and promote the free market, but many interested parties have expressed concern as to its actual implementation."

Comments have included, for example, proposed government oversight of rates by collective licensing organizations, concern over higher rates for more popular songs, concerns about uncertainty around displacing the existing licensing regime, and survival of controlled composition clauses in recording agreements.

Except for her professed disaffection for compulsory licensing as a general matter, Peters' testimony did not address why her proposal would disrupt the marketplace by sunsetting existing licenses, or why the repeal would cover physical product, since the focus of the reform is on digital music licensing issues. The new model would not mandate licensing of cover songs (or a rate) for physical product, which are two bedrock elements of current record industry practices. It would probably inform public discussion if the Register laid out more details on the implications of her proposal.

With respect to the alternate proposal of a blanket compulsory licensing scheme, Peters would "at a minimum" cover intermediate copies made in the course of a DPD, such as buffer, cache and server copies. She also believes that any reform of compulsory licensing should address the issue of overlapping performance and mechanical rights. And she said, "I see no reason why prospective licensees should have to do anything to obtain the license other than serve notice of their intent to use the license and comply with all the requirements of that license."

Peters' testimony noted that past attempts have failed to find consensus around a blanket compulsory licensing solution, although "two points of agreement among the interested parties seem to be a desire to have a blanket licensing scheme with one designated agent and a single notice procedure regardless of the number of musical works to be utilized pursuant to the statutory license." This state of affairs was reflected in the conflicting views of others at the hearing.

The testimony of Rob Glaser, CEO of RealNetworks, advocated replacing the "dysfunctional" song-by-song compulsory license with a "comprehensive statutory blanket license" similar to the blanket licenses administered by ASCAP and SoundExchange. A similar proposal was made in the testimony of Ish Cuebas, on behalf of the National Association of Recording Merchandisers.

Glaser would also like the law to clarify that a stream results solely in performance royalties, while downloads results solely in mechanical royalties. It is interesting that while both sides are squared off around this issue, no one has gone to court to seek declaratory relief as to which rights are implicated by a stream and a download, although in some cases both may be.

Glaser also put forth his complaints about Section 114 compulsory licensing of sound recordings. He asks for a clarification of "interactive service" under the sound recording compulsory license, to clarify that Internet radio based on user preferences falls into the statutory license as long as the user cannot control how often or when a particular artist's work is played. He also wants to equalize sound recording performance royalties so there is a level playing field for all radio competitors.

Rick Carnes, president of the Songwriters Guild of America testified to the "painful facts" of current licensing practices -- that the statutory mechanical licensing rate was not raised from 2 cents between 1909 and 1978, and increases since then to 8.5 cents have not made up for this. He also complained that while publishers have agreed to license subscription-style music on the Internet, there has been no agreement with the record industry on revenue splits, and record companies are currently taking up to 50% of revenues for themselves, leaving little or nothing for the publishers if the service providers take the other 50%. That agreement between the RIAA, NMPA and HFA was made in 2001 -- see agreement and press release.

The songwriter and publisher community (including performing rights societies) have put forth a "uni-license" proposal for one-stop shopping that would pay 16.67% of revenues for composition, but it is limited to subscription services. This would reflect the 2/3 - 1/3 split of 50% between record labels and publishers that we have seen contemplated in many deals.

Other testimony was received from David Israelite of the NMPA, Del Bryant of BMI, and Glen Barros of indy label Concord Records. It's interesting that no one from the RIAA or a major label was there. Certainly there's more to come on this.

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The Senate Judiciary's Subcommittee on Intellectual Property is holding a hearing tomorrow on "music licensing reform". Register of Copyrights Marybeth Peters will testify, so ostensibly this will be more on her proposed 21st Century Music Licensing Reform Act, which was the subject of a House hearing on June 21st. Peters advocates repeal of the Section 115 compulsory license and replacement with a free market system where collective licensing organizations such as ASCAP grant both public performance and mechanical licenses.

Other witneses include Rob Glaser of Real Networks, Marilyn Bergman of ASCAP, and Rick Carnes of the Songwriters Guild of America, among others. There will be a live webcast available at 2:30 pm Eastern time.

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The Screen Actors Guild's national board voted last week to hold a referendum of its video game talent to determine whether to accept or reject the tentative Interactive Media Agreement that was reached in June. SAG's national executive committee previously rejected the agreement, but the national board has not taken a position. The referendum will be completed later in July and as a result the video game companies have extended their contract offer until July 31st. AFTRA has already accepted the tentative agreement, which includes an increase in minimum scale but no residuals. SAG Watchdog has posted what is reported to be a copy of an open letter from the SAG negotiating team with more details.

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The 9-0 Supreme Court ruling reversing Grokster on inducement liability grounds may mean different things to different players in the technology industry. See, e.g., Ernest Miller's notes on the pro-Grokster camp press conference. While press reaction from technology players on the ruling are pending, here are some thoughts based on the amicus briefs that were filed.

The outcome seems fairly close to the amicus brief filed by the Business Software Alliance, out of the fifty-five amicus briefs that were submitted. Update: The BSA issued a press release supporting the ruling.

The BSA's amicus brief advocated upholding the Sony doctrine with a reversal based on additional acts of encouraging the use of the technology for infringing purposes. The BSA also asked the Supreme Court to confirm that customary contact with customers, such as advertising, product support and upgrades, is covered by the Betamax exemption. While not exempting advertising, which has been an element of inducement in the patent cases, the Court did state that:

"[M]ere knowledge of infringing potential or if actual infringing uses would not be enough here to subject a distributor to liability. Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves."

Amicus briefs filed by technology companies such as Intel, as well as by the National Venture Capital Association had advocated for the case to be upheld, on the grounds of preserving the Sony doctrine. This was essentially preserved today (setting aside the huge elephant in the room called inducement liability) notwithstanding the Court's finding of error in how the 9th Circuit applied the test:

"The Ninth Circuit has ready Sony's limitation to meant that whenever a product is capable of substantial lawful use, the producer can never be held contributorily liable for third parties' infringing use of it; it read the rule as being this broad, even when an actual purpose to cause infringing use is shown by evidence independent of design and distribution of the product". . . ."This view of Sony, however, was error, converting the case from one about liability resting on imputed intent to one about liability on any theory."

However substantial uncertainty will continue to exist in the doctrine's interpretation, based on the conflicting concurring opinions over the application of contributory infringement doctrine to Grokster, and the majority opinion's statement regarding the concept of a "point of balance between protection and commerce" and "to leave further consideration of the Sony rule for a day when that may be required." And this does not even begin to assess how the inducement liability doctrine will impact technology companies.

Some purveyors of digital media technology filed neutral amicus briefs with factual information on the availability of effective filtering technology. These included Audible Magic, Digimarc and Gracenote, as well as and iMesh.com and Snocap. These companies appear to be clear technology-side winners here, insofar as the Court expressly cited the fact that the Grokster defendants did not use filtering tools to try to curb infringing activity as an element of unlawful intent:

"[T]his evidence of unlawful objective is given added significance by MGM's showing that neither company attempted to develop filtering tools or other mechanisms to diminish the infringing activity using their software. While the Ninth Circuit treated the defendants' failure to develop such tools as irrelevant because they lacked an independent duty to monitor their users' activity, we think this evidence underscores Groksters's and StreamCast's intentional facilitation of their users' infringement."

In a footnote the Court clarified that:

"Of course, in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses. Such a holding would tread too close to the Sony safe harbor."

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The 9-0 Supreme Court ruling,Download file, reversing Grokster on inducement liability grounds is consistent with the voting patterns of the Supreme Court on copyright cases in the last decade or so, which reflect that most of the cases have been decided unanimously or by comfortable voting margins.

For example, in Dastar v. Twentieth Century Fox (2003), Quality King v. L'Anza (1998), Feltner v. Columbia Pictures (1998), Campell v. Acuff-Rose Music (1994), and Fogerty v. Fantasy (1994), all of the decisions were unanimous (some with concurring opinions).

In recent cases that were not unanimous, Eldred v. Ashcroft (2003) and New York Times v. Tasini (2001), there were two dissenters: Justice Stevens and Justice Breyer. Justice Stevens wrote the majority opinion in the 5-4 Sony v. Universal case. In Grokster, Stevens and Breyer teamed up with Justice O'Connor (who was part of the original Sony majority) on a concurring opinion,Download file, that supported the 9th Circuit's analysis that Grokster was not liable for contributory infringement under Sony.

The other concurring opinion, Download file, in Grokster by Justice Ginsburg, which was joined by Rehnquist and Kennedy, argued that the "overwhelming" infringing uses should result in liability under Sony: "The total number of noninfringing copies may be reflective of, and dwarfed by, the huge total volume of files shared." This is reminiscent of Rehnquist's dissent in the Sony v. Universal case in 1984, which would have remanded the case for a finding of fact to determine the percentage of VCR recordings that was infringing.

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The residual-free, tentative Interactive Media Agreement that was reached earlier this month between SAG and AFTRA, on the one hand, and video game companies on the other, has been ratified by AFTRA but rejected by SAG last week. The tentative deal expires on June 30. The 3 1/2 year deal will go into effect for AFTRA talent on July 1, and include immediate scale increases of 25%.

SAG's National Executive Committee voted down the tentative agreement, but the deal is being resubmitted to the full SAG board for reconsideration on June 29. The Interactive Media Agreement does not fall under the guilds' Phase One to Merger structure, which is a 1981 agreement to jointly negotiate agreements as a first step towards a potential merger.

The failure in negotiating residuals, and the unwillingness of SAG and AFTRA talent to strike over this, has been attributed to the fact that only 20% of video game industry talent is organized.

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The Copyright Office has announced public roundtable meetings on so-called orphan works, to be held in Washington DC July 26-27 and in Berkeley August 2nd. Details will be published in the Federal Register.

Orphan works are works where the copyright owner is difficult or impossible to locate. The Copyright Office issued a notice of inquiry in January asking for public comment on whether a legislative or other solution should be enacted to address this problem. The public comment period is closed and resulted in the following initial comments and reply comments.

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Register of Copyrights Marybeth Peters proposed legislation yesterday titled the "21st Century Music Licensing Reform Act" in her testimony at a House oversight hearing, which would repeal the compulsory licenses under Section 115 of the Copyright Act.

The legislation could be called the "MRO Empowerment Act of 2005", as it benefits the music rights organizations (MROs) by legislatively entrenching them in the role of collective licensing bodies and eliminating their antitrust constraints. Licensees of music rights would benefit from one-stop shopping for licenses of digital audio transmissions, but they are severely disadvantaged by the elimination of the compulsory license and statutory rate ceiling.

In her comments, Peters indicates that on-going discussions among stakeholder organizations representing publishers, songwriters, performing rights societies, record companies, online music services, and record retailers have not reached consensus on reform of Section 115 but have made separate proposals to Congress on how to reform Section 115.

The proposed legislation contains a number of distinct elements:

1.Repeal of Compulsory License. It would repeal the compulsory mechanical license under Section 115 to reproduce and distribute copies of nondramatic musical works in CDs and other physical media, as well as by digital phonorecord deliveries (DPDs), by replacing existing Section 115 with the new legislation. The effect of this is that there would be no statutory rate for mechanical licenses, and no assurance that a license could be obtained, except in connection with digital audio transmissions. Under the current law, a mechanical license can be obtained once a song has been publicly released under the authority of the copyright owner.

2.Expansion of MRO Rights. It would expand the rights of a "music rights organization" such as ASCAP or BMI (or HFA, if it gets into this business) that controls licensing of public performance rights to automatically include authorize them to license mechanical rights (reproductions and distributions).

The proposed text states that:

"A lawful authorization to a music rights organization to license the right to perform a nondramatic musical work includes the authorization to license the non-exclusive right to reproduce the work in phonorecords and the right to distribute phonorecords of the work to the public."

According to Peters' comments,

"As a result, a music rights organization shall be empowered to license all rights relating to performance of the musical compositions in its repertoire and relating to the making and the distribution of phonorecords of those musical compositions."

The effect of this would seem to be that the MROs automatically acquires these rights by legislative fiat, without having to obtain consent from their music publisher constituency - if this is not the intent then this ambiguity should be clarified.

3.MRO Licenses for Digital Audio Transmissions. The proposed legislation provides that if an MRO grants a public performance license for digital audio transmissions, the grant also includes a mechanical license:

"to the extent that the exercise of such rights facilitates the public performance of the musical work".

The MRO is required to grant this license for its entire repertoire. This does not mean, however, that an MRO or the copyright owner is required to grant a mechanical license for "cover songs" on CDs and other non-Internet media.

According to Peters:

"Moreover, any MRO would have to offer, as part of its license to perform publicly a nondramatic musical work by means of a digital audio transmission (e.g., an on-demand stream), a non-exclusive license to make phonorecords of that work (including server and other transient copies) and to distribute phonorecords of that work (e.g., downloads) to the extent that the exercise of such rights facilitates the public performance of the nondramatic musical work. This "uni-license" type of approach solves one of the major problems affecting the music industry today, namely whether certain types of digital transmissions (e.g., "pure" streams, on-demand streams, tethered downloads, and "pure" downloads) implicate the public performance right and/or the reproduction and distribution right and if so in what proportions."

However she goes on to note that all other mechanical licenses would be at the election of the MRO or copyright owner:

"A music rights organization may also choose to offer other types of licenses involving the reproduction and distribution rights, such as a traditional mechanical license to make and distribute phonorecords or a license to offer "downloads" of phonorecords of nondramatic musical works."

Her justification is that this collective licensing structure addresses issues in the marketplace over when a mechanical license and/or public performance license is required for Internet transmissions. However whether a DPD also implicates a public performance right should ultimately be decided by a court, and the fact that the performance rights societies have not pursued litigation over this probably reflects their own concerns over the strength of their legal position.

Peters indicates that the scope of this collective licensing scheme is limited to digital audio transmissions, but does not indicate why the entire compulsory licensing regime, which has been relied upon by the marketplace for nearly a decade, except for her philosophical antipathy to compulsory licenses. It is also no where made clear why this MRO scheme needs to be mandated by law - ASCAP, BMI and HFA all exist by voluntary private contract - and it would appear that only the antitrust issue discussed below would need governmental intervention.

4.Antitrust Constraints Lifted. The public performance societies currently operate under antitrust consent decrees which prohibit them from engaging in mechanical licensing. The rights of MROs under the legislation would apply:

"[N]otwithstanding the antitrust laws or any judicial order which, in applying the antitrust laws to any entity including a music rights organization, would otherwise prohibit any licensing activity contemplated by this subsection."

At least it should be clear that the MRO activities authorized by the legislation would need to be subject to on-going antitrust review to avoid abuse of market power from collective licensing activities.
Peter's comments reflect that this is indeed the intent:

"However, it is anticipated that all other provisions of the existing consent decrees will remain in place, and it is possible that the consent decrees will be modified to take into account the new functions of the music rights organizations. For example, it may be that the music rights organizations' setting of royalty rates for reproduction and distribution will be subject to the same type of review by the ASCAP and BMI "rate courts" as is currently the case with respect to royalty rates for public performances."

5.Abrogation of Existing Licenses. Perhaps the most breathtaking aspect of the proposed legislation is that it would abrogate all existing mechanical licenses, whether a compulsory license or obtained by private contract:

"Any license existing as of [effective date] between a copyright owner of a nondramatic musical work or its agent and a licensee with respect to the right to make and distribute phonorecords of such work shall expire according to its terms or on [effective date plus 1 year], whichever is earlier."

These contracts would have a one-year sunset period. After that, presumably all former licensees would now be infringers unless they obtain a new license. This would disturb existing contracts which have been relied upon for obtaining needed mechanical license, for no reason apparently other than to give music publishers and their MROs a blank slate to start from, or a second bite at the apple, depending on your view point.

While courts may decline to enforce private contracts for public policy and other reasons, when has Congress taken this extreme measure of abrogating private contract? Imagine the leverage situation in terms of negotiations during the sunset period - exercise of distribution rights previously cleared would now be infringing unless a new license were obtained. And clearly the implication is that the statutory rate would no longer be a ceiling. If anything, pre-existing contracts should be clearly grandfathered.

Peters does not provide us any logic for this - she merely states that such licenses "should terminate" and:

"It is anticipated that all licensees under existing reproduction and distribution licenses will obtain new licenses either from music rights organizations or directly from publishers or their agents."

6.Restrictions on Copyright Owners. The proposed legislation permits individual copyright owners to still make direct mechanical license grants. It does restrict copyright owners by prohibiting them from using more than one MRO, and prohibiting them from using any licensing agent other than an MRO for digital audio transmissions. As discussed above, a license to an MRO for performance rights is deemed to include mechanical rights. These restrictions reflect that the legislation is defined to empower MROs and ensure an orderly market for them, ostensibly, in Peter's view, with residual benefits upstream and downstream.

7.Restrictions on Statutory Damages. The one salutary aspect of the proposed legislation is that it limits an award of statutory damages to MROs to the situation where the MRO has published on its web site the name of the song as being available for licensing. However it would need to be clarified that the other requirements for statutory damages also apply, and that an MRO must have proper legal standing to bring suit.

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Register of Copyrights Marybeth Peters testified today before the House Judiciary Committee's Subcommittee on Courts, the Internet and IP, on the issue of music licensing reform.

She advocates repeal of the compulsory license under Section 115, which provides for statutory licensing of nondramatic musical works for the making and distribution of physical phonorecords and digital phonorecord deliveries. Her testimony includes a discussion draft of proposed legislation titled the "21st Century Music Reform Act".

Excerpts:

"As a matter of principle, I believe that the Section 115 license should be repealed and that licensing of rights should be left to the marketplace, most likely by means of collective administration."

"My proposal, tentatively entitled the 21st Century Music Reform Act, addresses many of the above-identified problems and attempts to strike the appropriate balance between the rights of copyright owners and the needs of the users in a digital world. The overarching purpose is to remove the statutory barriers which presently inhibit the music industry's ability to clear rights in order to open the licensing structure to free market competition."

"This proposal effectively substitutes a collective licensing structure for the existing Section 115 compulsory license. It accomplishes this by setting forth rights and obligations for the newly-defined music rights organizations ("MRO"). The basic defining characteristic of an MRO is that it is authorized by a copyright owner to license the public performance of nondramatic musical works. But in fact, the proposed legislation would authorize the MRO to license the reproduction and distribution rights as well. An MRO would be authorized, and required with respect to digital audio transmissions, to license the reproduction and distribution rights of any nondramatic musical work for which it was authorized to license the public performance right."

This proposal needs careful review. Peters indicates in her testimony that: "As always, my focus is primarily on the author. The author should be fairly compensated for all non-privileged uses of his work." However we hope that the public interest side of the copyright equation is being considered by the Copyright Office in this proposal.

Except for the consent-decree issues with the public performance societies, a collective licensing approach could ostensibly be done today without legislation -- this proposal appears to focus on eliminating the assurance that a license can be had, as well as the statutory rate for same. According to Peters: "I recognize that if the proposal is enacted, some current music industry participants may have to adjust their business practices to maintain their current levels of profitability without the artificial rate ceiling afforded by the statutory license."

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The House Judiciary Committee's Subcommittee on Courts, the Internet and IP is holding an oversight hearing tomorrow, June 21, at 10am EDT on the "Copyright Office's Views on Music Licensing Reform". A live webcast of Marybeth Peter's testimony is available.

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An interesting case in the Northern District of California alleges that the Berkeley Historical Society is attempting to assert copyright interests in public domain works - by limiting the usage that a patron may make of its historical photograph collection.

In Schwartz v. Berkeley Historical Society, (3:05-cv-01551) local historian Richard Schwartz has sued the Berkeley Historical Society (BHS) over the use of public domain photographs in promoting his book, Berkeley 1900. However it looks like the case will be settled before the complaint is answered - leaving us without any further discussion of this interesting issue. A joint stipulation has extended the time for BHS to answer the complaint due to a pending settlement that is expected to be concluded by June 22nd.

Schwartz signed a one-time use agreement to use various public domain photographs from BHS's collection. The agreement provides that: "Berkeley Historical Society photo prints or digital copies may not be published in any form without paying a fee and signing a one-time use agreement."

The use agreement limited him to use in the book for a five-year term. Schwartz gave a local merchant copies of some of the photos to display in his window in order to promote the book. According to the allegations in the complaint, the BHS demanded that the photos be removed from the store window - on the basis that the use violated the contract.

The complaint seeks declaratory relief that the use agreement is unenforceable on the grounds that:

"Any contract that prohibits an individual from copying works that are in the public domain is unenforceable because enforcement of such contract is prohibited by the Copyright Act and its preemption clause, 17 U.S.C. Section 301."

The case of course brings to mind ProCD v. Zeidenberg, in which the 7th Circuit held that a shrink-wrap limiting usage rights to public domain phone listings was enforceable. Copyright preemption analysis under Section 301 looks at whether there is an extra element that makes the state law claim qualitatively different from the underlying copyright claim.

The Court reasoned that: "Contracts . . . affect only their parties; strangers may do as they please, so contracts do not create 'exclusive rights.'" The district court's opinion, which was overruled, stated that: "Plaintiff cannot use a standard form contract to make an end run around copyright law."

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Snocap has announced the public opening of its new digital rights registry for artists and labels, after previously announcing that it has signed Universal Music Group, Sony BMG, EMI and various independent labels. This is Shawn Fanning's new take on enabling P2P music after Napster, along with co-founders Jordan Mendelson and Ron Conway. Industry veteran Chris Castle is SVP and General Counsel. Investors include Ron Conway, Morgenthaler Ventures and WaldenVC. See Snocap's FAQ for more.

The registry enables a rightsholder to authorize online distribution of recordings with self-selected DRM controls. It will be interesting to see if we will look back on this later and find that Snocap has done for Internet licensing of sound recordings what ASCAP, BMI and the Harry Fox Agency have done for enabling mass licensing of musical compositions. At present SoundExchange collects and distributes statutory royalties for public performances of sound recordings by qualified parties such as webcasters, but a voluntary collective rights registry for digital distribution of sound recordings is a real advance.

Via the Digital Music Weblog.

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The Electronic Frontier Foundation has published a Legal Guide to Blogging, which is an excellent summary that should raise awareness about legal issues among bloggers and other online publishers. Unfortunately without doing a deep dive you can't address the tough issues -- for example fair use -- I would have liked for them to emphasize that fair use serves as a defense to copyright infringement -- but hopefully the guide will serve as a roadmap to steer people away from inadvertently incurring legal risk. It's certainly admirable to be on the cutting edge making law, but you would want people to be fully informed in making decisions that send them down that road.

Via Dan Gillmore's Blog.

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We recently caught up with David Nimmer, who was gracious enough to give us a bit of his time when he recently visited the Bay Area.

CK: What are the best and worst things about doing the treatise?

DN: The worst thing is that it is like constantly climbing a mountain three times a year and when you reach the summit starting over. The best thing is - I love it!

CK: What would your father say about the copyright act as we know it today?

DN: I wrote a 185 page article on this last year in the UCLA Law Review, called "Codifying Copyright Comprehensively."

CK: The article was published as part of the annual tribute to Professor Melville B. Nimmer. The citation is 51 UCLA L. Rev. 1233 (available on LEXIS). The article is an entertaining and thought-provoking must-read for students of copyright law. It includes a number of "Melville B. Nimmer" postulates, one of which appears to state an answer to the above question:

"The flexibility and pristine simplicity of a corpus of judge-made copyright law implanted upon a statutory base consisting of general principles is vastly preferable to a body of detailed rules reminiscent of the Internal Revenue Code." 51 UCLA Law Rev. at 1267.

Later in the article, David Nimmer comments that:

"The sad moral is that ultra-complicated statutory schemes fail to serve the interests of even those who draft them and lobby for their adoption. The progression of amendments . . . has bequeathed to the Copyright Act an incoherent body of rules purporting to lay down minute governance for every situation cognizable at enactment, but failing of necessity to contemplate most situations, even ones that in fact started to arise a matter of mere weeks later. Far more preferable would be for Congress to have enunciated less and for courts to have followed it more." 51 UCLA Law Rev at 1367.

CK: What about the Napster investor liability litigation?

DN:See my 185 page article. I have analysis there of the Napster case, in which I concluded that the 9th Circuit got it wrong, that Napster should not have been liable. In terms of outcome of the investor liability case, as a treatise writer I deal with a deluge of decisions, so I focus on predicting the past, not the future.

CK: In the article, Professor Nimmer argues that Napster could have qualified for the 512(d) safe harbor under the DMCA - the exception for "referring or linking users to an online location containing infringing material or infringing activity, by using information location tools, including a directory, index, reference, pointer or hypertext link." He faults the 9th Circuit's decision finding Napster liable:

"Yet the panel itself found liability in part on the tacit basis that 'infringing activity is apparent.' That ruling would seem to punish Napster's management for lacking clairvoyance that the many open issues of first impression would ultimately be resolved adversely to the company." 51 UCLA Law Rev at 1366.

CK:If you were to broker a peace between Silicon Valley and Hollywood, what would you do?

DN:I would demand that everyone go to Tahiti and spend three days in role-playing taking the opposite side, and with ample Mai-Tai's, and see what perspective develops. I would volunteer for that.

CK:Any other thoughts?

DN:There's a saying in Jewish mysticism that means "there are many portals to God". In this context, there needn't be a one-size solution. Come at it non-dogmatically, versus dictating a new global solution.

CK: Thanks David, you are one cool treatise writer. This article is my new bedside reading.

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SAG and AFTRA announced that have reached tentative agreement with video game companies over new interactive agreements, on the eve of a pending announcement of the results of a strike authorization vote by both unions.

The unions were tabulating votes on whether to strike yesterday, and apparently concluded it was preferable to quickly make a deal. The unions will not be revealing the results of the vote, but you have to assume that the interactive talent voting did not want to go on strike. SAG required a 3/4 vote and AFTRA a 2/3 to go on strike, with all votes due June 7. SAG had recommended a strike to its membership by a 12-11 vote, whereas AFTRA had made no recommendation.

The new deal does not include any residuals, which was the big point in dispute when the talks broke off May 13. The unions apparently had sought a 1% residual on games selling over 400,000 units. In exchange for giving up on profit participation, the unions garnered an immediate increases of 25% in minimum fees, with an ultimate increase of 36% over the course of the agreement. AFTRA noted prior to the vote that in the past entertainmente talent had used strikes or serious strike threats to gain residuals, but in this case with only 20% of the video game industry organized, labor did not necessarily have the power to shut down production to achieve its demands.

The new agreements once ratified will go into effect on July 1, 2005 and continue 3 1/2 years until December 31, 2008. The interactive contract covers voice-over talent, singers, dancers and performance capture performers.

The announcement highlighted the following deal terms:

*An immediate 25 percent increase in minimum wages from $556 to $695 for a four-hour session for up to three voices with increases in subsequent years, bringing the daily rate up to $759.

*Double time pay after six hours (previously ten hours) for three-voice performers.

*A 7.5 percent increase in contributions to the unions' benefits plans, bringing the rate up to 14.3 percent.

*15-25 percent gains in rates for remote delivery and integration.

*Payment to actors for reuse of performances in promotional films longer than 12 minutes.

*A specified rest period for each hour spent recording.

*Payment window shortened from 30 to 12 business days.

*Pre-work notification to actors performing in stressful sessions.

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HB 4023, the Illinois video game legislation that would ban the sale of violent and sexual video games to minors, went to the governor for signature today. Given that Governor Blagojevich previously endorsed the legislation, it is expected that he will sign it.

In contrast, the California video game bill, AB 450, was put on inactive status last week by its sponsor.

HB 4023 has three parts. First, the bill would amend the criminal code to ban the knowing ditribution to minors of materials deemed harmful to minors. These are defined as materials of any kind, not limited to video games, that include nudity or other sexual content and (i) predominantly appeal to the prurient interest in sex of minors; (ii) are patently offense in terms of what is suitable for minors; and (iii) lack serious artistic, scientific or other value for minors. This would seem to track the existing law in terms of legislating a kiddie version of obscenity laws. In 1968, in Ginsberg v. New York, the US Supreme Court ruled that a lower obscenity standard can be applied to minors and survive first amendment challenge as long as adult access to such materials is not unduly burdened.

Second, the bill includes an enactment called the "Sexually Explicit Video Games Law". This would also ban the sale or rental of such materials to minors. The bill requires an "18" label on these video games and posting of notices by retailers about the ESRB ratings system.

Third, the bill includes an enactment called the "Violent Video Games Law". This is the most controversial part of the bill because of the substantial first amendment issues involved,Download file.

As with the California violent video game bill, the bill recites that minors who play these games may experience aggressive tendencies and reduction of frontal lobe brain activity that controls behavior, and that the state has a number of compelling state interests in deterring access to violent video games by minors.

The bill defines violent video games as games that

"include depictions of or simulations of human-on-human violence in which the player kills, seriously injures, or otherwise causes serious physical harm to another human, including but not limited to depictions of death, dismemberment, amputation, decapitation, maiming, disfigurement, mutilation of body parts, or rape."

The bill has the same sanctions as the sexual video game bill.

Given the three-prong approach to this legislation, it would seem that these enactments are positioned as severable in the event of legal challenge and potential invalidation of the violent video game piece.

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The 6th Circuit has issued an amended opinion,Download file, in the sampling case of Bridgeport Music, Inc., v. Dimension Films, which confirms the court's earlier decision last fall and further clarifies its reasoning. The court adopted a "bright-line" rule for sampling of digital music, holding that all digital copying of sound recordings constitutes infringement, subject to any affirmative defenses such as fair use.

The rule may have been influenced by the fact that the litigation involved nearly 500 counts of infringements against around 800 defendants for use of unauthorized samples in rap music recordings. The lower court had reached the contrary result, finding that no reasonable juror, even one familiar with the works of George Clinton, would recognize the source of the sample used from Clinton's P-Funk song,"Get Off Your Ass and Jam" without being told.

The court concluded that no de minimis or substantial similarity inquiry should be undertaken when the defendant has not disputed that it made the digital sample. The court interpreted Section 114(a) of the Copyright Act, which limits the reproduction right in sound recordings to copying the "actual sounds fixed in the recording," to necessitate this result: "If you cannot pirate the whole sound recording, can you 'lift' or 'sample' something less than the whole. Our answer to that question is in the negative."

These conclusions are thought-provoking. Isn't it the point of the de minimis doctrine that recourse for otherwise actionable conduct will not be granted because of their minimal nature - i.e., you would not be arguing de minimis unless you had copying? "De minimis non curat lex" means that the law does not concern itself with trifles. See the old law school limerick on point.

It also seems somewhat unusual to read a limitation on the exclusive rights in sound recordings as a basis for imposing strict liability for copying. While liability for unauthorized digital sampling may well have been the right result, absent an affirmative defense or de minimis exception, it might have been useful to review other cases involving undisputed digital copying of photos or video. Professor William Patry and Ernest Miller each have interesting comments on this case.

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We recently caught up with UCLA law professor Neil Netanel, who gave us a bit of his time following our dialogue at the USC IP Law Institute. Neil is known, among other things, for his law review article that proposes a levy on P2P file sharing. The article was published in 2003 in the Harvard Journal of Law and Technology. We thank Neil for his time and hopefully he will comment on this post if he sees anything he'd like to clarify.

CK: You're based in LA but have more of a Silicon Valley perspective. What's that like?

NN: I've talked about this article for a couple of years now before a wide variety of audiences. I really enjoy presenting it before musicians, technologists, and different perspectives. In general that sharpens the analysis. I do find that when there's someone from the recording industry association, they are like Pravda, complete party line.

CK:Can you go into more detail about how your P2P levy would work? Usually you see utopian manifestos on the Pho list on this.

NN: Basically the levy would be imposed on any equipment or service the value of which is substantially enhanced by privileged P2P file sharing. There would be an administrative proceeding before the copyright office tribunal to determine who would be subject to the levy and for how much. I think PCs would be covered, and I say this even though substantial issues are involved. I would err on the more inclusive side. Everyone in the chain would have some piece of 100% of the levy allocated to it. This would be so to prevent distortion and also for equity reasons. I would limit the privilege to personal noncommercial file sharing.

CK: But Hollywood has no interest in a solution that takes away their control.

NN:You're right about that, and this is far more extensive and inclusive than the previous compulsory licenses. To date distinct industries have addressed specific issues with compulsory licenses. With P2P, right now it is music, followed by video, but also there's text and graphics, so we have the problem of lots of different interest groups. No one knows where this is going, and P2P could swamp all other methods of distribution. So we're talking about the possibility that this could be the dominant paradigm for copyright. To your point about control, part of my proposal is that noncommercial transformative uses should be included. The gray album, mash-ups, remixes would be covered, as long as they are being distributed noncommercially.

Continue Reading...

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Judge Patel has ruled on Bertelsmann's summary judgment motion and rejected the notion that indexing songs on Napster was direct copyright infringement, a significant victory for the defense,Download file, but let the case go forward based on theories of infringement by Napster users. The court also certified class action status by music publishers affiliated with the Harry Fox Agency against Bertelsmann,Download file.

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It looks like Marty Ingels (actor husband of Shirley Jones) might want to think about blogging. Ingels just lost a case before the California court of appeals, Ingels v. Westwood One Broadcasting Services, Inc.,Download file, in which he sued for age discrimination because a popular Los Angeles radio host, Tom Leykis, did not want Ingels on his call-in show. Apparently Ingels formerly had his own radio show, and often calls into radio stations under the pseudonym Paul Russo.

The trial court granted a motion to strike his claim under the California Anti-SLAPP law (Code of Civil Procedure Section 425.16), which protects against lawsuits that threaten free speech. The appeals court upheld the ruling, on the grounds that the case involved free speech, and Ingels was not able to demonstrate he would succeed on his discrimination claim. The court found that although the relevant law (Unruh Civil Rights Act, Civil Code Section 51) did cover Ingel's claim, his rights were not violated, because in fact he did get put on the air and he did get to talk to the host, even though it was clearly not the ideal conversation from Ingel's point of view. The court granted Westwood One an award of its attorneys' fees.

Here are excerpts of their on-air exchange from the opinion:

"THE CALLER: Hey, Tom, I hope you got an answer for me. I had to actually muscle my way in here, because I am older than your demographic.

"TOM LEYKIS: You're not just older than my demographic, you're the grandfather of my demographic.

"THE CALLER: What's that got to do with what's in my brain and what I have to say?

"TOM LEYKIS: Because we're not aiming at people your age, Pops.

"THE CALLER: What does that mean, 'aiming at'? I --

"TOM LEYKIS: Very simple: it's called targeted demographics, Pal.

"THE CALLER: Okay. That's all business. Now, I got a valid job (unintelligible) --

"TOM LEYKIS: I don't really care if you have a valid point. You know what, the bottom line is, our audience is young men.

"THE CALLER: Why is that?

"TOM LEYKIS: Because every radio station has a particular targeted audience.

"THE CALLER: That's got to do with commercial stuff, though --

"TOM LEYKIS: Right. And that's what we do: We sell advertising here, in case you didn't notice.

"That's the business I'm in. I'm not in the business of trying to appeal to people like you calling from a rest home or a card room.

* * * *

"TOM LEYKIS: I don't really care how smart you are, Pal. You know what, we have a targeted demographic on this program; you don't fit it, period. You're way too old, Pops. You don't belong on the air. Call a big band station. Call somebody else, please. Don't call here.

"It's called targeted demographics. 'Oh, it's all about advertising, isn't it?' Yes. Yes it is. Do you hear how many commercials are on this show? We sell lots of advertising, because we have got a targeted demographic that people want to buy, and it doesn't include people who don't go out and ride motorcycles and drive expensive cars and drink beer. Ha, ha, ha."

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The USC IP Law Institute had a lively panel earlier this week on the subject of "The Copyright Owner's Arsenal Against Infringement." The panel included record industry lawyer Russell Frackman of Mitchell, Silberberg, UCLA law school professor Neil Netanel, and David Nimmer of Irell & Manella. We were on the planning committee for this event.

Professor Netanel is the author of a law review article advocating a non-commercial use levy to enable free P2P file sharing, as an alternative to the impasse we find ourselves in as a society with respect to copyright enforcement. He argued that the rhetoric about infringers as "thieves and pirates" doesn't ring true and thus undermines the recording industry strategy. He also noted that in terms of domestic GNP, Hollywood is completely dwarfed by technology and telecom interests, so as a society we should be cautious about blocking innovation in the name of artist rights.

Will the RIAA/MPAA litigation strategy be successful? Professor Netanel commented that in Silicon Valley (as opposed to Los Angeles), audiences take for granted that there's no way to stop unlicensed P2P. He also noted that it's a global problem - there will be leakage even if enforcement and education efforts are successful in the United States. His sardonic sound byte about Hollywood enforcement efforts: "Give the guys credit for trying, but they should not give up looking for alternative business models."

Professor Nimmer challenged whether enforcement of IP rights necessarily threatens innovation. He pointed out that radio did not die after a mechanism to compensate publishers was developed. He suggested that it would seem to be in the interest of the recording industry to develop a vehicle to take advantage of P2P, since they are interested in making money.

Russell Frackman has a sense of humor: "No microphone - don't want to use anything technological." Frackman made clear that he was not speaking about substantive litigation or on behalf of his clients.

He pointed out that the technology simply outstrips the law, with the prime example being the Sony Betamax decision. He called Betamax a "round hole" with the Internet being a "square peg".

He also commented on the global nature of the Internet, and related issues of jurisdiction, choice of law and enforcement. In the same way that the technological evolution from Napster led us to Grokster, he noted a similar evolution in terms of internationalization. Napster was a US company, with shareholders, officers and servers in the US, whereas Kazaa and Sharman are companies based in the Netherlands and Australia, incorporated in the island nation of Vanuatu with servers somewhere outside of US. So this international aspect will become more important if liability ends up being found in US courts.

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Ernest Miller comments on the Induce Act Blog's report on H.R. 2048, the Public Domain Enhancement Act, which was introduced in Congress last week. The bill would require payment of a $1 fee to maintain copyright protection after 50 years, and then again each 10 years thereafter.

The bill has been referred to the House Committee on the Judiciary. Besides political issues, there is the question whether the maintenance fees would violate Article 5 of the Berne Convention, which is the treaty obligation that prohibits formalities in copyright protection. However the bill limits this maintenance fee regime to published United States works, in an apparent workaround based on the distinction in Article 5 between protection in and outside the country of origin:

Article 5 Rights Guaranteed: 1. and 2. Outside the country of origin; 3. In the country of origin; 4. "Country of origin"

(1) Authors shall enjoy, in respect of works for which they are protected under this Convention, in countries of the Union other than the country of origin, the rights which their respective laws do now or may hereafter grant to their nationals, as well as the rights specially granted by this Convention.

(2) The enjoyment and the exercise of these rights shall not be subject to any formality; such enjoyment and such exercise shall be independent of the existence of protection in the country of origin of the work. Consequently, apart from the provisions of this Convention, the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country where protection is claimed.

(3) Protection in the country of origin is governed by domestic law. However, when the author is not a national of the country of origin of the work for which he is protected under this Convention, he shall enjoy in that country the same rights as national authors. . . .

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The National Music Publishers Association has moved its headquarters to Washington, D.C. as of today. See release. This reflects the new leadership of Washington insider David Israelite, who has recently testified before Congress that a "level playing field" is needed in terms of how music publishers are faring in digital licensing as compared to the record companies. The move to D.C. is clearly a practical move but also arguably a symbolic one, from New York, home of the arts, to D.C., home of the United States Code, i.e., Title 17, the Copyright Act, which you could say is pretty much the entire agenda (plus international treaties, of course). The offices of the Harry Fox Agency, the NMPA's licensing affiliate, remain in New York.

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A recent case out of the Southern District of New York hits close to home - Bill Graham Archives, LLC v. Dorling Kindersley Limited,Download file. File it under "warm relations" in the Bay Area music community. It is a fair use case in which the publisher of the book titled "Grateful Dead: The Illustrated Trip" was found not liable for copyright infringement for using some of the Bill Graham Archive's concert posters in the book. Seven concert posters were used in the book as small "thumbnail" reproductions, to commemorate concert events as part of a timeline throughout the book of Grateful Dead history.

Grateful Dead Productions (GDP) tried to clear the posters. The first response from Bill Graham Archives (BGA) was that it would grant permission if GDP would allow it to create CDs and DVDs out of its archived recordings of Dead concerts. This was rejected, the publisher then contacted BGA, and the second response was that they were "open to negotiating" a licensing agreement within "industry standards" based on quantity of books being printed.

The publisher went off to try to find another way to clear the rights, but ended up with several posters still needing clearance. When the publisher contacted BGA again, BGA offered to clear the images for $2500 each. This offer was not taken, and BGA threatened "the most aggressive action possible."

All of this apparently rubbed District Judge George Daniels the wrong way. In assessing the fair use factors under Section 107 of the Copyright Act, he took into account a factor not enumerated in the statute - the good faith of the defendant in seeking a license - and said this weighed in favor of the defendants in the equitable balance of fair use.

With respect to the four fair use factors under the statute, the Court held that "On balance, the factors in defendants' favor are controlling in this instance since the purposes of copyright are best served by permitting transformative uses that foster the creation of new works."

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SAG and AFTRA announced yesterday that negotiations have broken off over their interactive media contracts with the video game industry. Yesterday was the end of the contract extension period that was agreed to in April. This also coincides with E3 Expo starting in LA next week and a union protest rally that is scheduled. A strike is a definite possible at this point.

The unions cite an unwillingness of the game developers to entertain any type of profit participation for talent. The unions apparently had asked for a 1% residual on games that sell more than 400,000 units. Their argument is that residuals are standard in the entertainment industry, and that talent should share in the upside on the most successful games. Game revenues exceed domestic box office receipts, according to SAG president Melissa Gilbert.

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The MPAA issued a press release yesterday about the law suits it has filed against various tv-oriented BitTorrent traffic sites. These sites actually touch the infringing content, unlike BitTorrent itself, which just distributes the software. These suits are the musical interlude while the MPAA waits on the Grokster ruling that is expected in June.

The press release notes that some torrent sites that have already been shut down now carry the MPAA warning statement, "You can click but you cannot hide." And it says that they want to work with those sites to offer legal content to end users, "like it does with Napster."

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The one-year statute of limitations in defamation cases is not absolute, as reflected in Hebrew Academy of San Francisco v. Goldman,Download file, which was decided yesterday by the California Court of Appeals. The case was brought almost ten years after publication of the disputed statements.

The statements, which were derogatory to the Hebrew Academy and a rabbi there, were part of an oral history of Jewish philanthropy in the Bay Area published by the University of California. The oral history had only a very limited distribution, primarily to research libraries, and the disputed statements were not referenced or published on the Internet.

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Once again thanks to Miguel Helft, we learn that AB 450 was reconsidered today by the California Assembly's Arts & Entertainment Committee, and passed on a 6-4 vote. The bill appeared to be DOA yesterday for the want of one vote. The bill, introduced by Speaker pro Tem Leland Yee, would ban the sale of extremely violent video games to children under 17.

The turn-around looks like the result of some political maneuvering through substitution of a Committee member, as well as an implementation of the powerful "family-values-trump-special-interests" algorithm, which was recently at play in the Family Entertainment and Copyright Act (signed by Bush in April addressing Hollywood's resistance to ClearPlay's movie-sanitizing technology). However neither the Committee chair, Ed Chavez, nor vice-chair, Audra Strickland, supported the bill.

If the bill keeps up this momentum and is enacted into law, without doubt we will soon see the substantial First Amendment issues before a court. The State would have the burden of justifying the need for this restraint on speech through social science evidence. "Studies prove that playing these violent video games are bad for kids mental and physical health," according to Jim Steyer, founder of Common Sense Media, a non-profit focused on children and media that has a white paper on the subject.

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It looks like AB 450, the California bill that would ban extremely violent video games, may have died in committee today, so it may never get to a court for First Amendment review. According to a press release from the office of Assemblyman Leland Yee, who sponsored the bill, it failed to pass by one vote. However the bill was granted reconsideration, which means it has another chance at passage later this week.

Hearings were held today in the California State Assembly Committee on Arts, Entertainment, Sports, Tourism and Internet Media. Supporters, including the Girl Scouts Council of California, accused the Commiteee of taking the side of industry.
According to the legislative analysis, which provides a good summary of the relevant issues, the bill was opposed by a long list of industry trade groups, including the Entertainment Software Association, MPAA, RIAA and VSDA, as well as the ACLU. See the VSDA position statement on media violence, and the ACLU's comments to the FCC on the impact of violent media on children.

Excerpts from Yee's press release (thanks to Miguel Helft!):

Specifically, the legislation called for ending the sale and rental of violent video games that depict serious injury to human beings in a manner that is especially heinous, atrocious, or cruel, to persons who are 16 years of age or younger. Under Yee's proposal those who violated the act may be liable in an amount of up $1,000 for each violation. In addition, such described video games would have to be labeled, "This game may not be sold to anyone under 17 years of age."

According to the Federal Trade Commission, nearly 70 percent of thirteen to sixteen year olds are able to purchase M-rated (Mature) video games, which are designed for adults. Ninety-two percent of children play video or computer games, of which about forty percent are rated M. Mature-rated games are the fastest growing segment of the 10 billion-dollar video game industry; in fact the top selling games reward players for killing police officers, maiming elderly persons, running over pedestrians and committing despicable acts of murder and torture upon women and racial minorities.

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The California Assembly is holding hearings tomorrow on AB 450, which would ban the sale of extremely violent video games to minors. The San Jose Mercury News published an editorial today (registration required) coming down in favor of the bill. The bill is opposed by video game and film industry trade groups. The bill was introduced by Leland Yee, who has a doctorate in child psychology, and the bill is now before the Committee on Arts, Entertainment, Sports, Tourism and Internet Media, chaired by Ed Chavez and vice-chaired by Audra Strickland.

The bill applies to video games that include killing, maiming, dismembering or sexual assualts where the virtual harm inflicted is especially heinous, cruel or depraved in that it involves torture or serious physical abuse.

Other lawmakers have tried to ban violent video games, but those attempts have failed on First Amendment grounds. Last year, the State of Washington had its statute invalidated and previously city ordinances in St. Louis and Indianapolis were thrown out. In order to survive the "strict scrutiny" of a First Amendment challenge, unless the content involves obscenity, the government must show that the restriction serves a compelling state interest, is narrowly tailored to address that interest, and is not void for vagueness.

In the Washington case, Video Software Dealers Association v. Maleng, Download file, the Court invalidated a statute that prohibited violence against peace officers in video games, mainly on the grounds that there was not sufficient social science evidence to show the harmful effects of video games on children. The court made the following salient comments:

"Given the nationwide, on-going dispute in this area, it is reasonable to ask whether a state may ever impose a ban on the dissemination of video games to children under 18. The answer is 'probably yes' if the games contain sexually explicit images, and 'maybe' if the games contain violent images, such as torture or bondage, that appeal to the prurient interest of minors."

The court provided a road map of sorts as to how to potentially survive a First Amendment challenge, and it appears that the draftsmen of AB 450 may have taken some guidance from the court about the following key considerations:

"-- does the regulation cover only the type of depraved or extreme acts of violence that violatea community norms and prompted the legislature to act? -- does the regulation prohibit depictions of extreme violence against all innocent victims, regardless of their viewpoint or status? And --- do the social scientific studies support the legislative findings at issue?"

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The Harry Fox Agency recently announced that so far this year it has already signed over 100 licensees to its bulk music download licensing program, bringing the total number of licensees to over 300. Most of the licensees are record companies, such as Hollywood Records and Walt Disney Records. Record companies generally pass these licenses through to online distributors such as iTunes to enable the sale of digital downloads at retail.

We recently spoke with Lauren Apolito, Vice President of Business Development and Rob Auritt, of the HFA legal team, about the significance of this bulk licensing program, and we thank them for their time and hopefully they will comment on this post if they see anything they'd like to clarify.

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This according to the Washington Post today.

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Senate Bill 167, the Family Entertainment and Copyright Act, was presented to President Bush today for signature. We've summarized the legislation in prior posts, and a general summary is also available from Congress.

One hot topic about the legislation is the fact that it criminalizes willfully "making available" pre-release content over the Internet. The bill would amend Section 506(a) of the Copyright Act to add the following to criminal infringement:

"by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution".

As discussed in a prior post as well as a thoughtful recent post by Susan Crawford, the issue of whether "making available" is a violation of the distribution right is unsettled.

You may recall that in 1995, back during the Clinton administration, the Commerce Department's White Paper on National and Global Information Infrastructure recommended amending the distribution right under copyright to expressly cover transmissions. This was resisted by ISPs and others who feared increased liability.

But later, in 1997, the U.S. signed two treaties in which the "making available" right is made express -- the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT).

For example, Article 12 of the WPPT, which applies to recorded music, conflates the distribution right with "making available" of copies for sale or transfer, subject to the first sale doctrine, while Article 14 of the WPPT states that:

"Producers of phonograms shall enjoy the exclusive right of authorizing the making available to the public of their phonograms, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them."

Possibly due to the earlier controversy about amending the distribution right, the implementing legislation in 1998 for these treaties, the Digital Millennium Copyright Act (DMCA), did not include any amendments to this effect, and because the treaties are not self-executing, to date the "making available" language has not found its way into the Copyright Act. It should be noted that it is not necessarily required that these changes be made to the U.S. Code, insofar as the U.S. has some discretion in determining its compliance with treaty obligations, in the same way that the U.S. has not implemented wholesale "moral rights" legislation to comply with its treaty obligations.

Canadian law has taken another approach to the "making available" controversy in the context of music litigation, insofar as Canada has not signed the WPPT. The blog for Pam Samuelson's P2P law course at Berkeley has more on this.

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One aspect of S. 167, the Family Entertainment and Copyright Act, which has cleared both houses, is that it may impact the scope of the exclusive distribution right under copyright law. The bill would amend Section 506(a) of the Copyright Act to add the following to criminal infringement:

"by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution"

Whether "making available" over a public computer network is the same thing as "distribution" is an open question under the law, because "distribution" is not defined in the Copyright Act, and the exclusive right of distribution under Section 106(3) is enumerated as

"to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease or lending"

and does not expressly include the concept of "offering" a work for distribution.

In Hotaling v. Church of Jesus Christ of Latter-Day Saints, a library made unauthorized copies of the church's copyrighted works available to the public. There the Fourth Circuit found that this was a violation of the distribution right, based on the library's listing the work in its index and making it available to the public.

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Senate Bill 167, the Family Entertainment and Copyright Act, was passed in the House of Representatives on April 19, after being passed in the Senate in February. The bill was sponsored by Senator Orrin Hatch (R-UT), who is known for his active involvement in copyright legislation, and co-sponsored by Lamar Alexander (R-TN), John Cornyn (R-TX), Dianne Feinstein (D-CA) and Patrick Leahy (D-VT).

The bill includes the Family Movie Act of 2005, which addresses the use of technology by viewers in their private homes to skip portions of movies that they deem offensive. The House Report, H.R. 109-33, says: "The Committee strongly believes that, subject to certain conditions, copyright and trademark law should not be used to limit a parent's right to control what their children watch in the privacy of their own home."

The House Report also states that the content-skipping exemption is not intended to address commercial-skipping devices, which would still be subject to legal challenge. And it reports that the Judiciary Committee reviewing the legislation had hoped to hear testimony from film directors regarding their moral rights claims relating to content-skipping, but "no director was willing to testify."

S. 167 also includes the Artists' Rights and Theft Prevention Act of 2005 (a/k/a the ART Act), which creates criminal penalties under Title 18 of the U.S. Code for knowing use or attempted use of video recording devices to record or transmit a copy of motion pictures made from performances in movie theaters. The House Report says that fair use is not a defense to violation of the ART Act.

Possession of a video recording device in a theater will be considered as evidence but is not sufficient to support a conviction. Theaters have immunity from civil or criminal prosecution for detaining suspects for the purpose of questioning or summoning law enforcement, as long as there is reasonable cause for the detention, and the detention is done in a reasonable manner for a reasonable period of time. The House Report says this is a companion to shopkeeper privilege statutes under State law.

The ART Act expands criminal liability for willful copyright infringement, by imposing this liability for making a work available on a computer network accessible to members of the public, if the work has not yet been commercially released in copies to the public. This applies to computer programs, music and audiovisual works.

S. 167 also contains the National Film Preservation Act of 2005 and The Preservation of Orphan Works Act. These would re-authorize the National Film Preservation Foundation, and create an exemption from infringement for libraries and archives for so-called "orphaned" works that are motion pictures, musical works and pictorial, graphical or sculptural works.

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The Family Movie Act, which is part of S. 167, the Family Entertainment and Copyright Act that was introduced in Congress earlier this year, appears to have some momentum. The Act would legalize the ClearPlay technology that enables families to watch movies without the profanity, nudity and other aspects not consistent with "family values." The technology is currently the subject of litigation, Huntsman v. Soderbergh, with the motion picture studios and the Directors Guild of America.

The bill would exempt home skipping of movie content from trademark or copyright infringement, as well as the computer programs that enable this. The Register of Copyrights has testified before Congress that in order to have an infringing derivative work, a fixed copy of the edited version must be created, whereas in the case of ClearPlay the edited version is not fixed but instead is merely performed for the home viewer by controls programmed to automatically skip play-back of offending portions of a movie.

The bill almost passed last term, but it got caught up with a dispute over whether boxing regulation should be federalized. The bill has passed the Senate and gone on to the House, where last week it was reported out of committee and referred to the Union Calendar or Committee of the Whole, which means that the entire House is reviewing the bill through an expedited process.

The House Report on the bill includes a "minority view" by Representative Howard Berman of California. He complains that the bill takes sides in the ClearPlay dispute, and that private negotiations should be allowed to resolve the matter. He does provide a nice summary of the status of these negotiations for anyone interested in the case. Hollywood had offered to license ClearPlay the sanitized airplane or television versions of its films, but resisted granting ClearPlay permission to create its own sanitized versions.

S. 167 also includes provisions that would criminalize unauthorized in-theatre video-recording of movies, re-authorize the National Film Preservation Foundation, and create an exemption from infringement for libraries and archives for so-called "orphaned" works.

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The Screen Actors Guild (SAG) has announced that its guild agreement covering video games and other interactive productions has been extended until May 13, 2005. The same applies to AFTRA's interactive agreement (American Federation of Television and Radio Artists). These collective bargaining agreements were due to expire on April 15, which potentially could have resulted in a work stoppage. Instead, SAG and AFTRA are continuing to negotiate with Electronic Arts and other video game publishers on successor agreements during this extension period.

Certainly you would expect that residuals would be a major issue on the table. The current agreement, which has been extended twice, does not require payment of residuals to talent. By not requiring residuals in the past, which are standard in film and television, the guilds may have been trying to expand their reach in the interactive industry, in order to build a base to increase their leverage in the future. However given that the contract has been extended twice on this basis, it is possible that the guilds may now be trying to draw the line on this issue, even at the risk of driving some publishers to non-guild productions.

Complicating matters is the fact that unlike in the film and television industries, there is no collective body representing the video game publishers at the table. Also, it is generally believed that the percentage of talent that works under guild terms in the video game industry is much lower than in traditional media, which suggests a different balance of bargaining power than in traditional media.

Check out the reports in SAG Watchdog and on the Association of Talent Agent's newstand.

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A recent case, Capitol Records v. Naxos of America,Download file, confirms that the State of New York recognizes common law copyright, the somewhat obscure cousin of the federal copyright law, and holds that common law copyrights can exist even if a work is in the public domain elsewhere in the world.

Generally speaking, the subject of common law copyrights does not come up much unless you are a music lawyer dealing in pre-1972 sound recordings or a bona fide copyright geek. From the latter perspective, the case is worth reading as an excellent summary of the evolution of the copyright system from English law, through the founding of our federal government, and into today.

For various reasons federal copyright protection for sound recordings was not enacted until 1971, with effect on February 15, 1972, and then only on a prospective basis. As a result, pre-1972 sound recordings continued to rely on common law copyrights, which had their basis in 18th century English law. And some state courts, including New York, had ruled that common law copyrights could endure perpetually. Whereas the general rule was that common law copyrights terminate on publication, the courts found that sale of records was not such a "publication" for technical reasons and therefore could endure perpetually.

The technical basis was due to a Supreme Court decision in 1908, White-Smith v. Apollo, which held that a music roll for mechanical pianos was not a copy and publication, because it was not in human-readable form, and thus was rather a performance. This logic was extended to consider a phonograph record as nothing but a captured performance of a composition. Because it was thus possible that these common law copyrights might endure perpetually, a compromise was enacted as Section 301(c) of the Copyright Act to preempt common law protection 75 years later, on February 15, 2047.

Today, when some question the proper duration of statutory copyrights under the "free culture" banner, it is somewhat breathtaking to be reminded that common law copyrights might have endured perpetually but for this legislation. This also reflects that copyright clearance and determination of what is in the public domain worldwide can present distinct legal complexities and traps for the unwary.

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In a hard luck story for MGM Studios and Universal City Studios that is probably noteworthy only for the kernel of human drama it contains, the U.S. Court of Appeals for the District of Columbia Circuit has ruled (Download file) that the studios are not entitled to millions of dollars in statutory royalties for calendar year 2000 because they sent in their claims one and two days late, respectively. Do you get the sense that somebody might have been fired over this?

Copyright Office regulations required the claims to be mailed in July, and if not received by August 1, to be evidenced by a July U.S. postmark or a stamped postal receipt, with no exceptions. MGM's claim was received on August 2, and Universal's on August 3. The ruling of the Court was simply: "And under those regulations, the studios are out of luck." With a healthy dose of parental chiding, the Court noted: "The studios ran a considerable risk by mailing their claims, presumably, in the last days of July; they ran another risk by failing to have their claims postmarked by the U.S. Postal Service."

The Court provided this stirring account of the salient events: "The studios heard nothing from the Copyright Office until November 2001, when each received word that their claims would not be accepted unless they could produce a receipt with a July U.S. Postal Service date stamp. Even at this remove, we can sense the intensity of the searches that these letters must have precipitated, but neither studio was able to locate a receipt. Lacking a receipt, the studios mobilized their lawyers."

Under the Copyright Act (Sections 111 and 119), cable and satellite

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Ernest Miller has a good piece about this statement by Donald Verilli, lawyer to the music and motion picture industries in the Grokster oral arguments:

"The record companies, my clients, have said, for some time now, and it's been on their Website for some time now, that it's perfectly lawful to take a CD that you've purchased, upload it onto your computer, put it onto your iPod."

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There were some moments of levity during the oral arguments before the Supreme Court in MGM v. Grokster. Justice Breyer was questioning Donald Verrilli, the lawyer for the music and motion picture industries, on whether their proposed test to replace the Sony Betamax doctrine would be workable:

Breyer: "Are you sure, if you were the counsel to the creator of the VCR, that you could recommend, given the use, copying movies, that we should ever have a VCR? Are you sure that you could recommend to the iPod inventor that he could go ahead and have an iPod, or, for that matter, Gutenberg, the press? I mean, you see the problem."

Verilli: "I think my answer to . . . those question are : yes, yes, yes and yes. [Laughter].

Breyer: "Because in each case - for all I know, the monks had a fit when Gutenberg made his press." [Laughter]

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Recaps of oral arguments in the Grokster case yesterday provided exhaustive accounts of the proceedings. Bloggers who attended the hearings provided early reports, including Lyle Denniston of SCOTUS blog who posted highlights, as well as Timothy Armstrong who provided commentary.

The transcript of the oral argument reflects that the music and movie industries, as well as the United States Solicitor General, were advocating for an interpretation of the Sony Betamax doctrine that would require a review of the percentage of infringing uses.

According to the petitioner's attorney, Donald Verrilli: "the numbers, the relative proportions of use, are relevant." This approach had been advocated in the dissent to the Sony decision back in 1984.

Verrilli argued: "If there's vast-majority infringing use, and you continue to operate your business with the knowledge that there's vast-majority infringing use, then you've got liability. For closer cases, Verilli said, "you look at - to see what kind of business model the defendant is operating under."

Justice Souter challenged: "Well, there's never evidence at the time the guy is sitting in the garage figuring out whether to invent the iPod or not."

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In Silvers v. Sony Pictures EntertainmentDownload file,the Ninth Circuit Court of Appeals has ruled that the right to sue for copyright infringement cannot be transferred separately from ownership of the copyright. Nancey Silvers sued Sony alleging that the motion picture "Stepmom" infringed the copyright in a screenplay she had written called the "The Other Woman." She had written the screenplay as a "work-made-for-hire," and the owner of the copyright screenplay had executed an "Assignment of Claims and Causes of Actions" to Silvers.

Although contract claims are generally assignable under common law, the Court held that the copyright law is a creature of statute and therefore the common law rules do not apply. Instead the Court looked to Section 501(b) of the Copyright Act, which provides that the "legal or beneficial owner of an exclusive right under a copyright" is entitled to bring suit for any infringement "committed while he or she is the owner of it." The Court followed a Supreme Court case interpreting a similar provision of the patent law to find that this precludes any but the copyright owner or exclusive licensee from bringing suit.

This case reflects that agreements to assign or exclusively license copyrights should include appropriate provisions to ensure that the assignee has all necessary rights to bring infringement suits and has the right to join the assignor as party plaintiff if necessary for standing purposes for claims that have accrued prior to the transfer.

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The briefs by petitioners in the MGM v. Grokster case, which is being argued tomorrow, as well as amicus briefs submitted by others who support reversal of the Grokster decision, reflect a mixed bag in terms of legal approaches.

The motion picture and recording industry petitioners in the case argue that the Sony Betamax exemption from contributory infringement liability should apply only if the principal or primary use is noninfringing. These petitioners also argue that the Betamax exemption should not apply to vicarious infringement liability, on the grounds that the ability to redesign the product constitutes sufficient control to justify liability.

However the songwriter petitioners and some amici, including the sports leagues, argue that Sony Betamax should not apply if there are substantial infringing uses and available means to prevent them. This approach follows the 7th Circuit's Aimster decision. Other amici argue that the Sony Betamax exemption should apply if there is a reasonable possibility of substantial noninfringing uses.

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The voting patterns of the Supreme Court on copyright cases in the last decade or so reflect that most of the cases have been decided unanimously or by comfortable voting margins.

In the recent cases that were not unanimous, Eldred v. Ashcroft (2003) and New York Times v. Tasini (2001), there were just two dissenters: Justice Stevens and Justice Breyer. Justice Stevens wrote the majority opinion in the 5-4 Sony v. Universal case (with Rehnquist part of the dissent), so it will be interesting to see how the voting comes out in MGM v. Grokster.

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Chief Justice Rehnquist is reportedly back in action hearing arguments, including ostensibly the MGM v. Grokster arguments up next week.

Rehnquist was part of the dissent in the Sony v. Universal case back in 1984. The case was decided by a 5-4 majority. Justice Stevens wrote the majority opinion, which was joined by Justice O'Connor. The other Justices (Scalia, Kennedy, Souter, Thomas, Ginsburg and Breyer) were not on the Court at the time.

The dissent would have remanded the case for a finding of fact to determine the percentage of VCR recordings that are infringing. According to the dissent:

"if a significant portion of the product's use is noninfringing, the manufacturers and sellers cannot be held contributorily liable for the product's infringing uses. . . . If virtually all of the product's use, however, is to infringe, contributory liability may be imposed; if no one would buy the product for noninfringing purposes alone, it is clear that the manufacturer is purposely profiting from the infringement, and that liability is appropriately imposed."

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The Senate has established a Subcommittee on Intellectual Property Law, chaired by Senator Orrin Hatch. Hatch was previously chair of the Judiciary Committee, which handled IP matters at the full committee level, but has been succeeded in that position by Arlen Specter.

The committee's jurisdiction includes (1) Intellectual property laws, including those affecting patents, copyrights and trademarks; (2) Oversight of the U.S. Patent and Trademark Office; (3) Oversight of the U.S. Copyright Office; and (4) Oversight of the intellectual property laws, treaties and policies affecting international trade.

Membership consists of seven Republicans including Hatch (UT), Kyl (AZ), DeWine (OH), Graham (SC), Cornyn (TX), Brownback (KS), and Coburn (OK) - and six Democrats including Leahy (VT, ranking Democrat), Kennedy (MA), Biden (DE), Feinstein (CA), Kohl (WI) and Durbin (IL).

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MGM v. Grokster is scheduled for argument before the U.S. Supreme Court on March 29th.

The question presented, as framed by the petitioner motion picture studios, is:

"Whether the Ninth Circuit erred in concluding, contrary to long-established principles of secondary liability in copyright law (and in acknowledged conflict with the Seventh Circuit), that the Internet-based "file sharing" services Grokster and StreamCast should be immunized from copyright liability for the millions of daily acts of copyright infringement that occur on their services and that constitute at least 90% of the total use of the services."

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