Changes Coming for Copyright…

This year’s two-year Congressional House Judiciary Committee’s review of copyright “focused on music licensing, discussing recently introduced legislation that has the backing of the music industry. One proposal, the Fair Play, Fair Pay Act, would establish a performance right and also require all radio formats to pay royalties for the performance of pre-1972 recordings.

These changes to copyright are, for obvious reasons, supported by the musicians and recording artists. Royalties for playing their pre-1972 songs on the radio, in all radio formats no less, are a really good thing for them in that the royalties add additional income to the songwriter’s purse, enabling them to have at least a larger subsistence. It might even enable some of them to leave their day jobs to write music full time, which would add bounty to the music of the culture for which they write.

But wait. Let’s look at the radio stations for a minute. Radio is still a viable medium, but the radio industry has changed from the FCC-recognized model of the station and the broadcast tower and the receiver to the internet. There are literally thousands of shows run by people who want to do a radio show for whatever reason; some of those shows are talk shows, and some are music shows, and some are just junk. I worry about the music shows that play the oldies under this new law. These folks do not, as a general rule, follow the intricacies of the changes to copyright law, and, without proper publication and warning about this new royalty requirement, they could be caught in a vise from which they do not have the means to escape. I can see coming down the pike a reenactment of the RIAA vs. Music Downloaders huge number of cases of the early 2000s. That didn’t work well then; I see no reason why it would work better today.

Don’t get me wrong. I support this addition to the Copyright Act. I want to see songwriters get paid fairly for their contributions to the world, and I think that pre-1972 music should be compensated just as much as post-1972 music. However, I support the addition with the proviso that the public be thoroughly and completely noticed using communication means that they simply cannot miss getting something through even the foggiest radar about this new law. I want to see and hear discussion of this new copyright provision on the news, in the newspapers, on the radio, on PSAs, and all over Facebook and Twitter, and I want to see multiple iterations of the warnings that this new law can, and probably will, cause liability for a careless radio show host for a large bundle of preventable judgment money and attorneys’ costs. This new liability will be in effect even for a fly-by-night internet radio show host. These are the folks who stand to lose the most and who therefore need to see the warning of the effect of this new addendum to the Copyright Act.

The FTC Finally Targets an IP Troll

For any who don’t know, a “troll” is a company (and its lawyers) that sends out thousands of cease-and-desist letters threatening a lawsuit against a supposed infringer of that company’s supposed intellectual property. It’s a nasty practice that has brought the trolls (and their lawyers) many hundreds of thousands of dollars over the years. Finally, the Federal Trade Commission is beginning to protect the innocent public against these unscrupulous “licensing” demands.

American Broadcasting Companies vs. Aereo, Inc.

A couple of weeks ago, overshadowed by the Hobby Lobby decision, SCOTUS handed down a copyright decision that may substantially limit the ability of transmitters to transmit copyrighted broadcasts without a license to do so.

In American Broadcasting Cos. v. Aereo, Inc., 573 US ___ (2014), Aereo is a subscription broadcasting service that sold “…to its subscribers a technologically complex service that allows them to watch television programs over the internet at about the same time as the programs are broadcast over the air.” Slip Op. at 1. The technology is detailed in the case, so I do not reproduce it here; suffice it to say that through a complex series of technological events, each Aereo subscriber ends up having his or her own dedicated antenna through which copyrighted content is streamed to one computer only. The US District Court for the Southern District of New York, affirmed by the US Court of Appeals for the Second Circuit, found that this technology does not infringe the rights of the copyright holders of the shows that Aereo streams to its users because, first, Aereo does not “perform” within the meaning of the Copyright Act and, second, even if it does “perform,” it does not do so “publicly” because there is a dedicated antenna connected to only one computer, making the streaming a private showing, thus falling outside the “public” performance requirement of the Act to qualify as infringement.

SCOTUS disagrees. In a 6-3 decision delivered by Justice Breyer (the dissent comprises Justices Scalia, Thomas and Alito; all others concur in the majority opinion), the Court decreed that the 1976 Copyright Act was put in place, in large part, to overturn their decision in Fortnightly Corp v. United Artists Television, Inc., 392 US 390 (1968), which held that community-antenna television falls outside of the scope of the Copyright Act of 1952. Given the clear intent of Congress to make such activities fall very definitely within the scope of the Copyright Act, and given that Aereo’s activity are not substantially different from those of Fortnightly, the Court felt duty-bound to overturn the Court of Appeals for the Second Circuit’s holding that Aereo’s activities do not infringe copyright. SCOTUS holds for the plaintiff in determining whether (a) Aereo “performs” within the meaning of the Act and (b) Aereo performs “publicly” within the meaning of the Act.

There is language in the case that indicates that this case can be read narrowly, but this case puts rebroadcasters on notice: The act of rebroadcasting is a “transmission” within the meaning of the Act, and the viewer and broadcaster “perform publicly” within the meaning of the Act.

I advise my clients that it’s always easiest, best, cheapest to get a license to use the copyrighted works of others. This case just goes to show that this advice is still good.

The oral arguments on both sides are actually interesting for those of us who like copyright matters.

Raging Bull Laches On

The US Supreme Court has issued a decision in the Petrella v. MGM, 572 US ___ (2014).

The equitable doctrine of laches says that if a plaintiff waits too long before bringing a lawsuit, that suit cannot be heard. It’s a common-law version of a statute of limitations. Under a statute of limitations, a case can be forever dismissed because a case was brought too late. Under the equitable doctrine of laches, a case can be forever dismissed because the plaintiff failed to timely bring suit and the defendant was unduly prejudiced by the delay.

In Petrella, the movie Raging Bull (1980) is accused of infringing the copyright in a screenplay written and registered with the US Copyright Office in 1963. Raging Bull is, of course, based on the life of Jake LaMotta. LaMotta had a friend, a writer named Frank Petrella, who co-authored several works on which Raging Bull was based; the copyrights in those works were properly registered in the 1960s and 1970s. While Frank Petrella and his co-author of that screenplay assigned rights and renewal rights to United Artists (now a subsidiary of MGM) in 1979, when Frank died in 1981 (during the first term of the copyright on the Raging Bull screenplay), renewal rights reverted to Frank’s estate under Stewart v. Abend, 495 U.S. 207 (1990), and ultimately to his daughter and heir, Paula Petrella. Paula renewed the copyright in the only one of the three works on which Raging Bull is based in which she could do so, and is now the sole owner of that copyright. In 1998, Ms. Petrella sent notice to MGM that Raging Bull infringes her copyright and threatened suit. In January, 2009, that suit materialized with Ms. Petrella seeking monetary and injunctive relief limited to acts of infringement occurring on or after January 6, 2006 (that is, all acts that occurred within the three-year statute of limitations). MGM promptly answered with the defense of laches, claiming that the delay in filing from 1998 to 2009 was unreasonable and unduly prejudicial. The US District Court for the Central District of California granted the defense and dismissed the case on those grounds. Petrella appealed to the US Court of Appeals for the Ninth Circuit, who affirmed the District Court’s decision. She then appealed to the US Supreme Court, who granted certiorari.

The High Court reversed the decisions below. In a 6-3 decision, the Court decided:

The Ninth Circuit erred, we hold, in failing to recognize that the copyright statute of limitations, §507(b), itself takes account of delay. … [A] successful plaintiff can gain retrospective relief only three years back from the time of suit. No recovery may be hadfor infringement in earlier years. Profits made in those years remain the defendant’s to keep.

Brought to bear here, §507(b) directs that MGM’s returns on its invest­ment in Raging Bull in years outside the three-year win­dow (years before 2006) cannot be reached by Petrella. Only by disregarding that feature of the statute, and the separate-accrual rule attending §507(b), see supra, at 4–5, could the Court of Appeals presume that infringing acts occurring before January 6, 2006 bar all relief, monetary and injunctive, for infringement occurring on and after that date. See 695 F. 3d, at 951; supra, at 9–10.13 Moreover, if infringement within the three-year look-back period is shown, the Act allows the defendant to prove and offset against profits made in that period “deductible expenses” incurred in generating those profits.§504(b). In addition, the defendant may prove and offset “elements of profit attributable to factors other than the copyrighted work.” §504(b). The defendant thus may retain the return on investment shown to be attributable to its own enterprise, as distinct from the value created by the infringed work. See Sheldon v. Metro-Goldwyn Pictures Corp., 309 U. S. 390, 402, 407 (1940) (equitably apportioning profits to account for independent contribu­tions of infringing defendant). See also infra, at 19–22 (delay in commencing suit as a factor in determining contours of relief appropriately awarded).

Last, but hardly least, laches is a defense developed by courts of equity; its principal application was, and re­mains, to claims of an equitable cast for which the Legisla­ture has provided no fixed time limitation. See 1 D. Dobbs, Law of Remedies §2.4(4), p. 104 (2d ed. 1993) (here­inafter Dobbs) (“laches . . . may have originated in equitybecause no statute of limitations applied, . . . suggest[ing] that laches should be limited to cases in which no statute of limitations applies”). Both before and after the merger of law and equity in 1938, this Court has cautioned against invoking laches to bar legal relief. See Holmberg v. Armbrecht, 327 U. S. 392, 395, 396 (1946) (in actions at law, “[i]f Congress explicitly puts a limit upon the time for enforcing a right which it created, there is an end of thematter,” but “[t]raditionally . . . , statutes of limitation are not controlling measures of equitable relief ”); Merck & Co. v. Reynolds, 559 U. S. 633, 652 (2010) (quoting, for its current relevance, statement in United States v. Mack, 295 U. S. 480, 489 (1935), that “[l]aches within the term of the_statute of limitations is no defense [to an action] at law.”); County of Oneida v. Oneida Indian Nation of N. Y., 470 US 226, 244, n. 16 (1985) (“[A]pplication of the equitable defense of laches in an action at law would be novel indeed.”)

 The holding that laches cannot be used as an equitable defense within the period of the statute of limitations was made by only six of the Justices; the remaining three, who sit at the conservative end of the bench, disagree, stating:

[Laches] applies in those extraordinary cases where the plaintiff “unreasonably delays in filing a suit.” National Railroad Passenger Corporation v. Morgan, 536 US 101, 121 (2002), and, as a result, causes “unjust hardship” to the defendant. Chirco v. Crosswinds Communities, Inc., 474 F.3d 227, 236 (CA6 2007) (emphasis deleted). Its purpose is to avoid “inequity.” Galliher v. Cadwell, 145 US 368, 373 (1892). And, as Learned Hand pointed out, it may well be

“inequitable for the owner of a copyright, with full notice of an intended infringement, to stand inactive while the proposed infringer spends large sums of money in its exploitation, and to intervene only when his speculation has proved a success.” Haas v. Leo Feist, Inc., 234 F. 105, 108 (SDNY 1916).

Today’s decision disables federal courts from addressing that inequity.

In this case, I actually agree with the majority’s decision. I agree with Learned Hand’s comment that it’s not nice for a copyright holder to let the proposed infringer take the risk then swoop in to reap the rewards, but that is not what happened here. Raging Bull came out in 1980. MGM invested heavily in the film in the late 1970s and early 1980s. While yes, they still market the film today and they market it based on new technologies, the marketing expense has decreased dramatically because of the film’s popularity, awards status, and fame. Really, all MGM has to do is produce the film on a new technology and sales are virtually guaranteed. Also, Petrella does not seek damages for infringement that may or may not have occurred in the 1980s, 1990s or even the early 2000s; her suit seeks damages only within the confines of the statute of limitations, which I think moots the dissent’s quote of Judge Hand.

We certainly do not want to impose an unneeded inequity on any defendant, but I don’t think this decision does that. The inequity of delay is addressed through the statute of limitations. There is a time-certain period outside of which a defendant cannot be successfully sued. That limitation is placed on the plaintiff by statute. Today’s decision does not allow a plaintiff to sue outside of the statute of limitations, which keeps the delay to a minimum.

Wiley v. Kirtsaeng—Changing Copyright Ownership in the USA?

Wiley v. Kirtsaeng, S.Ct. Docket No. 11-697, one of the most important intellectual property matters to come before the Supreme Court in recent years, re-examines the “first sale” doctrine in copyright law. Stare decisis tells us that owners of the individual copies of copyrighted works are free to resell, lend, or give away their legal copies of books, paintings, software, DVDs, CDs, and so on without permission from the copyright holder, no matter where the copyrighted item originated. Now, though, book publishers, software companies, and the movie and music industries, who want to set different prices for different markets, argue that the doctrine should apply only to goods produced in the U.S.

John Wiley and Sons, a major textbook publisher, is doing battle over this very question with one Supap Kirtsaeng, a student from Thailand who studied at Cornell and USC. The case came into being when Kirtsaeng discovered that textbooks almost identical to those in the U.S. market were considerably less expensive in Asia. Being a money-hungry, entrepreneurial student, he had friends and family members send multiple copies of needed books to him, purchased at Asian prices, which he then resold to his fellow students at less than the cost of the US books but more than he paid for them. When Wiley discovered this, they sued Kirtsaeng for infringing their copyrights in the resold books; the Court of Appeals for the Second Circuit ruled in Wiley’s favor.

Kirtsaeng asks the High Court to reverse the Second Circuit’s ruling, arguing that the first sale doctrine prohibits Wiley from enforcing any copyright against the sale of any work that was previously sold.

This notion goes far beyond this one case. If the Nine Wise Ones decide that the First Sale Doctrine does not apply to copyrighted materials that do not originate in the USA, dissemination of copyrighted materials will need a massive overhaul. At this point, museums freely display copyrighted works; they would lose the ability to do that. Salvation Army and Goodwill Industries, who regularly resell copyrighted works at a deep discount, would be required to pay a royalty for resold works, which, necessarily, would raise the prices and have a heavy impact on cash-poor individuals. Ronald McDonald House, which freely lends copyrighted materials regularly to the families of very sick children staying with them, would have to charge a fee. Much of eBay’s business would come crashing down because the free exchange of already-purchased copyrighted works would be stifled. Even your neighborhood library would feel the pinch, and the free lending library would cease to exist.

And all because the publishers want to enforce different prices in different markets.

I don’t think much of this; I like free, community-supported lending libraries. I like being able to view modern art in museums. When I had cause several years ago to use the services of Ronald McDonald House, I very much appreciated the easy availability of DVDs and video tapes (that dates the time). The thought that the free lending and giving systems currently in effect would come to an end is an anathema to me.

Fair Use and Faulkner

The rightsholder for the works of William Faulkner sued — twice — over infringements of their copyrights.Although the suits were originally poo-poohed, the question asked by the two suits — what are the limits of fair use — is a question that has long plagued copyright holders and infringers alike. Maybe, just maybe, we’ll get a new signpost on the road map to determine what does and does not constitute fair use of a copyrighted work.

The copyrights for the works of William Faulkner, who won the Nobel Prize in Literature in 1949 and died in July, 1962, are handled by Faulkner Literary Rights, LLC, which filed suits against Sony Pictures Classics, Inc. and Northrop Grumman, Inc., a defense contractor, in two different Mississippi federal district courts in October 2012. In both cases, the rightsholder contends that the defendants should have asked them for a license to use Faulkner’s material. Both defendants respond that the cases are frivolous and their use is covered by the fair use doctrine. Sony may have a leg to stand on there, but Northrop Grumman is a defense contractor who ran an ad using Faulkner’s materials in a way that the rightsholder would not have consented to. Is that fair use, too? We shall see….

Copyright Alert System

Huh. Isn’t this interesting. The ISPs are initiating a six-strike system to help enforce copyright.

I’m glad to see the ISPs getting involved more proactively in the enforcement of copyright. The internet is a wonderful invention, but it does lend itself to infringement. Copying without permission is very, very easy in this online world, but that copying may infringe the rights of others. That’s how the recording industry made $millions from the “free” downloading of protected music.

Google and Publishers Settle Their Suit

Well this part of the suit against the Google Library Project is done. The American Association of Publishers (AAP) has settled with Google.

Google, as you may know, took on the ambitious project of digitizing libraries to make that content available online. The Google Books site provides book excerpts for free. Not unexpectedly, this project really bothered copyright owners, and the AAP, the Author’s Guild, photographers and visual artists and several individuals filed suit to stop the project in 2005.

Although the full terms of the AAP settlement are confidential, the settlement, importantly, allows publishers to opt in or out of Google Books, and thus in or out of the digitization project.

The AAP settlement still does not resolve the authors’ separate suits, which are still pending in the Southern District of New York, still presided over by Judge Chin (sitting by designation after his elevation to the Second Circuit Court of Appeals).

HathiTrust Copyright Case Rumbles On….

On September 12, 2011, what purports to be the largest copyright infringement suit in history was filed in the US District Court for the Southern District of New York. At stake are copyrights in digitized works of authorship. Filed by several authors’ guilds from several nations, the suit takes to task the University of Michigan, the University of California, the University of Wisconsin, Cornell University, and the HathiTrust, a partnership formed in 2008 “to contribute to the common good by collecting, organizing, preserving, communicating and sharing the record of human knowledge.” In other words, HathiTrust’s mission is to copy and distribute works of authorship. They have a digital archive of library materials, many of which are protected by copyright under the laws of the United States and other countries.

The universities and HathiTrust, of course, argue fair use. The works in question are so-called “orphan works” — works whose authors cannot be found. Only the University of Michigan has announced that it has suspended the digitization of potentially copyrighted works pending the outcome of the case.

Plaintiffs’ choice of venue is not accidental. They could have brought suit in Wisconsin, Michigan, California, or in any district where the HathiTrust has a member. However, the US District Court for the Southern District of New York encompasses New York City, home to the publishing industry. This court is well versed in copyright law and has a large volume of precedent cases that are favorable to copyright holders.

There was a procedural hiccup in the case not long ago; some defendants, who exist far away from New York City, wanted their depositions to be taken in their own home territory. The attorneys have settled that matter out, but the consequence of this skirmish is that the close of discovery has been pushed back until June 8. This tightens the schedule for summary judgment. US District Judge Harold Baer wanted the summary judgment motions to be fully briefed by July 20. I don’t know if that’s still reasonable, since allowing the necessary time for each side to respond to the other’s papers means that the motions must be filed in mid-June, which is too close for comfort to the end of discovery.

Since Judge Baer has taken July off (Article III judges can do that…), it might be wisest to allow the parties to take July to brief their motions. I doubt that will happen, but it would likely result in a much better product for the Judge to rule on when he comes back.

Meanwhile, this behemoth of a case (which is closely related to the Google digital library case) rumbles on, with next due dates in mid-June when summary judgment motions are due.

Village People Case: You Can Terminate Grants of Copyright, Regardless of Other Authors

Victor Willis, the former lead singer of the Village People, won a victory copyright case pending in the U.S. District Court for the Southern District of California. In Scorpio Music S.A., et al v. Victor Willis, publisher Scorpio Music said Willis was not entitled to terminate grants of his copyright interests in such hits as “Y.M.C.A.” and “In The Navy” under Section 203(a)(1) of the Copyright Act. The judge thought differently: Willis had the right to terminate his grants notwithstanding that there were other co-authors of the works at issue.

The music industry needs to take a deep gulp of air until such time as the case is appealed to the 9th Circuit Court of Appeals. The ramifications of this are huge.