On October 3, the United States Supreme Court declined to hear an appeal by ASCAP in which ASCAP sought to define the term “public performance” in Section 101 of the Copyright Act to include digital downloads of music from sites such as Yahoo! and RealNetworks. The decision not to hear the case by the Supreme Court left intact a Second Circuit ruling holding that digital downloads are not “public performances.”
ASCAP is a non-profit membership organization that represents composers, songwriters, and lyricists in licensing non-dramatic public performances of their work. Listen to Froggy 101? That’s a non-dramatic performance. Put “Ring of Fire” in a seemingly endless loop on the bar jukebox? Also, a non-dramatic performance. Got nosebleed seats to see The Boss? You get the picture.
In United States v. ASCAP, et al., ASCAP tried to expand the definition of public performance to include downloads of musical works. Defining public performances to include downloads would create a new revenue stream for ASCAP’s members worth tens of millions of dollars. Let’s look first at the definition of public performance under §101.
The Copyright Act defines a public performance in two parts:
How do downloads fit in to this definition? According to ASCAP, downloads “transmit or otherwise communicate a performance or display of the work.” Seems logical. However, let’s split the hair a little finer. The definition calls for the transmission of a performance of the work. Is the file downloaded by the user really a performance? The Second Circuit said no.
To arrive at this holding, the Second Circuit drew an important contrast between song downloads and streaming. In the latter, the music was heard by the user at the same time it was transmitted over the internet, much like a radio or television broadcast. Hence, streaming clearly results in a public performance of the work. By contrast, a download transfers a file to a computer and then the user listens to the file at his or her convenience. Since the download does not immediately result in a broadcast of the work, there has been no public performance.
Sometimes that shiny object lying on the ground isn’t the prize it appears to be.
There was a time when copyright owners had to observe certain formalities to maintain protection for their works of art. A single mistake resulted in a protected work falling into the public domain. Of course, once a work is in the public domain, anyone is free to use it. Of course nothing is black and white when it comes to copyright law and this is no exception.
In 1939, MGM released The Wizard of Oz. MGM registered a copyright in the film and it remains viable to this day. In connection with the release of the film, the studio created and released a variety of publicity materials, such as posters, still photographs, to promote the film. The studio failed to include proper copyright notices on the material and so it passed into the public domain. A Nevada company acquired some of this material which it then licensed for the manufacture of shirts, mugs, and other knickknacks, no doubt secure in its right to do so.
Not so fast. Warner, which now owns the copyright to the film, sued alleging infringement of the film copyright. The Eighth Circuit agreed, affirming the district court’s judgment in favor or Warner. Warner Bros. Entertainment v. X One X Productions, No. 10-1743. How did that happen?
The decision makes sense when you consider that copyright can exist in layers. For example, a sound recording carries with it multiple copyrights: the recording itself and the underlying compositions on the recording. So too with a film or television show, which quite often includes copyrighted background music. Even if one element of a copyrighted work falls into the public domain, the remaining elements still enjoy protection from infringement.
So how did the publicity materials violate the film copyright? To understand, we need to understand how a single work can implicate multiple copyrights. Take, for example, a CD. For each recorded track, there are at least two separate copyrights: the copyright in the actual recording and the copyright to the underlying composition. A television show or a film also typically has multiple layers of copyrights, whether in the use of recorded music as background or the use of pre-existing film or television clips.
Here, the additional layer was the use of the film characters in the publicity materials. Courts have routinely held that copyright protection can extend to characters where those characters have distinctive characteristics, such as visual look, speech, and mannerisms. Thus, it has been held that James Bond qualifies for copyright protection. Metro-Goldwyn-Mayer v. American Honda Motor Company, 900 F.Supp. 1287 (C.D. Cal. 1995). Where the film character is based on a literary character, as was true here, the protection is limited to the incremental expressions of character beyond that included in the underlying work. Of course, as the Court noted, literary works often allow for imagination in the embodiment of a character, which a film would typically take further.
This decision points out the importance of understanding how works can implicate many layers of copyright protection. Even when licensing material, you must take care to determine what other rights exist in the material you license and then take steps to license the additional material as well.
Peanut butter and jelly, coffee and donuts, bagels and cream cheese. All classic combinations. Law and funny? Well, not so much. A recent decision involving the animated series South Park gives us an opportunity to discuss parody as a fair use defense to claims of copyright infringement. Ok, so maybe South Park can’t make the law funny, but at least it comes from funny.
The case, Brownmark Films v. Comedy Partners, LLC , involved an internet video cleverly titled “What What (In the Butt).” The video, which the Eastern District of Wisconsin described as containing “an array of bizarre imagery,” went viral on YouTube, generating millions of hits. In an episode of South Park titled “Canada On Strike,” Butters makes an internet video in the hopes of going viral and getting rich in the process.
The original video qualifies for Copyright protection, since copyright protects art — even bad art. The South Park video unquestionably copies directly from the original video. Several visual elements from the original video and Butters repeats the phrase “What What (In The Butt)” just like the performer in the original video. Brownmark sued for infringement. Open and shut case, right?
Not so fast. In response to Brownmark’s claim for copyright infringement, the makers of South Park claimed fair use, arguing that their video was a parody of the original. The District Court agreed.
Fair use permits the use of copyrighted material “for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research.” 17 U.S.C. §107. Parody has long been recognized as a fair use under the Copyright Act. See, e.g., Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994) (Supreme Court held that 2 Live Crew parody of Roy Orbison’s “Pretty Woman” was fair use). But how can we tell the difference between parody and plain infringement?
Parody is an art form that uses imitation and exaggeration to poke fun at an artist, style or genre. The District Court easily found that the South Park episode was parody. The District Court held that the point of the South Park video was to “lampoon the recent craze in our society of watching video clips on the internet that are — to be kind — of rather low artistic sophistication and quality.” In addition, the District Court held that the South Park video actually transforms the original video by making it even more outrageous. So, the South Park episode is essentially a social commentary on our fascination with the internet and the video represents a central component of the commentary.
Of course, the law being what it is, establishing the parody does not end the analysis. The Copyright Act sets forth four factors that Courts typically look at to determine whether fair use has been established. Although the statute does not intend these to be exhaustive, they typically form the basis of the Court’s decision. The statutory factors include “the purpose and character of the use,” the amount of the original work used, and the effect of the use on the value of the original work.
Applying these factors, the District Court had no difficulty finding that the South Park video was fair use. The Court noted that the South Park video used only enough elements of the original video to make the reference clear and to establish the parody that was the point of the episode. The District Court further concluded that inasmuch as South Park sought to hold the original video — and the internet video craze in general — up for ridicule, there would be little to no impact on the value of the original work.
To my mind, one of the more fascinating aspects of Copyright Law is the statutory right of recapture. A recent rule adopted by the Copyright Office addresses a hypertechnical flaw in the statutory enactments of these rights by Congress. And, I suppose, it reveals me as a Copyright nerd.
First, let’s examine how the termination process works. Suppose you’re a new author trying to get a publishing deal. As an unproven author, you have little leverage in the negotiating process. You will more than likely have to agree to give away rights for the life of the copyright. Several years later, it turns out you’re John Updike — not literally, just literarily, and commercially. Now, in negotiations with publishers, you have substantially more leverage. But what about those early deals?
The Copyright Act permits authors, after a certain amount of time has passed and within a specific window of time, to terminate prior grants of rights so that they can be resold. So, that first book deal you did granting rights for the life of the copyright? You can cancel it and then resell those rights to the same publisher, or a different publisher, if you prefer.
As the Copyright Act has evolved and changed, so has the recapture right. Currently, the procedure exists in two separate statutes, §203 and 304 of the Copyright Act. §203 applies to any grants on or after January 1, 1978, the effective date of the 1976 amendments to the Copyright Act. §304 controls all grants for works that had an existing copyright as of January 1, 1978. Note that one statute is implicated by the date of the transfer, but the other is triggered by the date of the copyright.
Suppose that on December 31, 1977 you sign a contract with a publisher for an unfinished novel. On January 2, 1978, you complete and copyright the novel and deliver it to the publisher for publication. What statute governs your termination rights? §203 appears to be out, because the grant was made prior to January 1, 1978. Same too with §304, since the copyright did not exist prior to January 1, 1978. And herein lies the gap.
Although Congress certainly didn’t intend to create a class of works that would not enjoy termination rights, by establishing different criteria for the application of each provision, it did exactly that. To address this inequity, the Copyright Office has adopted a rule that transfers on the hypothetical would be accepted as terminations under §203. In support of the rule, the Copyright Office reasoned that a grant in a copyrighted work cannot be effective unless and until the work in question exists. So, our author who signed a contract on December 31, 1977 did not effectively make the transfer until January 2, 1978, the date that the work was completed.
This raises some important practical questions. First, the recordation of a termination notice is not a presumption of validity. Will Courts reach the same conclusion as the Copyright Office did and rule that §203 governs termination of the transfer described here? Can authors now provide an accurate date of creation to satisfy the requirement of §203, since under §304 it is the date of the transfer that is important? As the window for termination on these grants starts to open, Congress should provide clarity to rights-holders and grantees alike by clarifying the appropriate procedure.
I was pleased to participate in a panel discussing business and legal issues in literary translations moderated by the excellent Susan Bernofsky as part of the PEN International Festival. Here’s the video…
In December, I was invited to give a workshop to members of the Translation Committee at the PEN American Center. You can read excerpts here.
Burden of proof is as important to lawyers as location is in real estate. In United Fabrics International v. C&J Wear, Inc., Macy’s got a painful reminder of this fact, courtesy of the Ninth Circuit.
United held a copyright in a collection of fabric designs. One of these designs had been purchased by United from an Italian company and added to the collection. United sued Macy’s, along with several others, alleging infringement of its fabric designs. Defending the action, Macy’s argued that United’s registration was invalid owing to, in part, an alleged failure to establish clear chain of title. An invalid copyright registration, of course, would preclude pursuit of the infringement claim.
Here’s where the burden of proof fits in. United’s registered copyright is entitled to the presumption of validity. 17 U.S.C. §410(c). Since the copyright is presumed to be valid, it falls to Macy’s to prove otherwise. Macy’s sought to meet its burden by arguing that United failed to present evidence to establish the chain of title. The District Court agreed and dismissed United’s complaint.
Macy’s reliance on United’s failure to present evidence ultimately turned out to be a fatal flaw. Because its registration carries a presumption of validity, the Ninth Circuit held that Macy’s could not simply rely on United’s failure to present evidence to confirm the basis for the registration. Instead, Macy’s was obligated to present its own evidence to show that the presumption of validity is not valid. Since it did not, the Ninth Circuit reversed.
Macy’s may yet prevail, as the Ninth Circuit recognized that there may be sufficient evidence in the record to support the claim of invalidity. But that’s Macy’s trial now.
The United States Court of Appeals for the DC Circuit has turned back a challenge by the RIAA to the ringtone royalty structure established by the Copyright Royalty Board, which has the statutory mandate to set the rates for compulsory licenses.
The compulsory license provision of the Copyright Act permits anyone to create a new recording of copyrighted musical works for public distribution without the consent of the copyright owner. So, suppose you wanted to cover Lady Gaga’s Bad Romance, Section 115 of the Copyright Act permits it, provided that no part of the original sound recording is used.
In a compulsory license under Section 115, there is no agreement with the owner of the composition regarding royalties. Instead, the Copyright Act empowers a three-member panel called the Copyright Royalty Board to set reasonable royalties rates by balancing four factors: (1) maximizing the availability of works to the public; (2) providing a fair return of copyright owners; (3) balancing the relative roles of copyright owners and licensees; and (4) minimizing the disruption on involved industries.
In 2009, the Copyright Royalty Board established a royalty rate for ringtones at the rate of 24 cents per ringtone sold. The RIAA challenged the decision of the Copyright Royalty Board, arguing instead for a percentage based royalty. The RIAA raised two separate arguments.
First, the RIAA challenged the use of a penny rate rather than a percentage rate. The RIAA contended that a penny rate deviated from market contracts, which typically used a percentage rate to establish royalties. The Copyright Royalty Board typically favors the use of a penny rate as opposed to a percentage of revenue. Here, the DC Circuit agreed with the Copyright Royalty Board that the use of a penny rate more closely tied royalties to the nature of the right being licensed. Additionally, percentage rates are typically used where it is difficult to ascertain how much of a work is used, such as in the context of satellite digital radio. Ringtones, by contrast, can be easily measured on a per unit basis. By contrast, the RIAA’s percentage based model was substantially more complicated. Finally, using the penny rate for ringtones would be consistent with the manner of calculating royalties for phonorecords, which are also calculated on a penny rate.
Second, the RIAA argued that the penny rate is unreasonable in light of the falling prices for ringtones. Although finding the RIAA’s contentions to be shrill and unsupported by any evidence, it took those concerns into consideration when it declined to agree to a request by copyright owners to adjust the royalty rate annually for inflation.
Relying on the “safe harbor” provision of the Digital Millenium Copyright Act, Judge Louis Stanton of the United States District Court for the Southern District of New York turned down a suit by Viacom claiming massive infringement by Google on YouTube. The “safe harbor” provision was inserted in the DMCA as a means of protecting on-line service providers, like YouTube, from claims of infringement based upon infringing conduct by users of the service.
The “safe harbor” protection is found at 17 U.S.C. §512(c)(1)(A), et seq. and provides for limited liability if the service provider:
(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;
(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or
(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;
In addition to the above requirements, the service provider must not receive a financial benefit directly attributable to the infringing conduct and must also designate an agent to receive notifications of infringing conduct and provide that information to the Copyright Office which maintains a directory of such agents.
On competing motions for summary judgment, Judge Stanton found that Viacom had presented sufficient proof that a jury could find that YouTube not only knew but welcomed infringing material on its website. Therefore, the threshold inquiry is whether “actual knowledge” in §512(c)(1)(A)(i) can be proved by broad knowledge of infringing conduct or whether the statute requires actual knowledge of specific acts of infringement. Second, is general knowledge sufficient, under §512(c)(1)(A)(ii) to show knowledge of “facts or circumstances from which infringing activity is apparent.”
Judge Stanton resolved the question by looking at the legislative history of §512. Canvassing the House and Senate reports on the DMCA, Judge Stanton concluded that the actual knowledge requirement in §512(c)(1)(A)(i) requires knowledge of specific acts. A more relaxed standard of general knowledge, by contrast, would contravene the purpose of the DMCA by placing on service providers a burden to discover infringing material posted on their websites. This is particularly so in the case of YouTube where users upload 24 hours of content each minute.
But what about the “facts or circumstances” standard of §512(c)(1)(A)(ii)? Evidence that Google welcomed infringing material on YouTube would seemingly be the kind of “red flag” that §512(c)(1)(A)(ii) contemplates. Not so, held Judge Stanton. Even under the “red flag” standard, Judge Stanton held that general knowledge is insufficient to place a duty on Google to investigate potential infringing activity on YouTube. See also, Corbis Corp. v. Amazon.com, Inc., 351 F. Supp.2d 1090, 1108 (W.D. Wash. 2oo4) relied upon by Judge Stanton.
The impact of this decision is two-fold. First, it seems apparent that if service providers designate an agent and diligently remove infringing material upon receipt of a valid take-down notice, it will be virtually impossible to impose liability. Second, copyright owners, like trademark owners, have the burden to police potential infringing conduct and take the necessary steps to have the material removed.
On May 11, 2010, Judge Kimba M. Wood, a Federal judge sitting in the Southern District of New York, issued the latest smackdown on P2P networks.
In Arista Records, LLC v. Lime Group, LLC, a consortium of record labels won a resounding victory, holding LimeWire, its former CEO and sole director, and its largest investor, liable for direct and indirect copyright infringement.
The risk of operating a P2P network was made clear by the Supreme Court in MGM Studios, Inc. v. Grokster, which held that file sharing networks Grokster and StreamCast had engaged in massive direct and indirect copyright infringement by making available a system that allowed users to share copyrighted material in violation of the Copyright Act.
After Grokster, it is hardly surprising that the record labels succeeded in holding LimeWire liable. The Court’s decision holding its former CEO and sole director liable, however, merits some discussion. The Court based individual liability on the fact that the former CEO controlled and directed LimeWire’s infringing activity.
Of course, all businesses act at the direction of their owners and employees. Moreover, as a general rule, it is typically difficult to hold individuals liable for the acts of corporation — a key reason people create corporations. As the Court concluded, however, the law permits individuals to be held liable for copyright infringement where they exercise control over the infringing activities or they receive a substantial benefit from such infringement. This would probably not be the result in an attempt to hold individuals liable in a non-copyright infringement context.
The Public Domain 