Earlier today, I filed three Freedom of Information requests concerning the infamous "anti-piracy PSA" that Homeland Security's ICE division started placing on domains it seized. As we noted at the time, the videos were not new and not created by ICE. Instead, they were part of a campaign put together by New York City with the help of NBC Universal and the MPAA. The scripts of the videos were misleading, and I was troubled by the idea that the federal government would be playing corporately produced and funded propaganda, with the imprimatur of the Department of Homeland Security. I asked a series of friendly (non-aggressive) questions to Brian Hale, officially the spokesperson for ICE within the Department of Homeland Security about where they got the video and how much was paid for it. Hale and Homeland Security apparently decided not to comment at all, despite multiple email requests.
Separately, I made requests to the City of New York, to get their side of the story, but after being asked who I was reporting for, what "the nature" of my story was and who else I was talking to (all of which I answered honestly), I received no further response from the City of New York.
Thus, the three Freedom of Information requests -- filed using the new system from MuckRock.com, an open government tool that seeks to publish documents retrieved via such requests and which recently built a tool to make it easier to make such requests (which I'm now testing) -- are as follows:
The NY State law says that the city must respond to my request within five business days. DHS has a longer period of time to respond. Honestly, it's silly that I had to file such requests. Homeland Security could have easily cleared this up weeks ago by answering my simple questions concerning how the federal government licensed this video. The fact that it has refused to do so necessitated this formal approach, unfortunately.
Last week, a single three judge panel from the 9th Circuit appeals court heard two key appeals concerning the DMCA, and specifically the DMCA's safe harbors for service providers. Lawyer Michael Barclay attended both appeals and has an excellent report and analysis of each. It's not always easy to read the tea leaves of which way judges are leaning on appeals like this, but based on both appeals, and the details of both cases, if I had to guess, I'd say that the appeals court will uphold both lower court rulings, even if this seems slightly contradictory.
If you're not aware of the details of the two cases, the Veoh case is quite similar to the YouTube/Viacom case. Veoh was a video hosting website that ended up in a lawsuit with Universal Music, who not only sued the company, but sued a bunch of its investors as well (a tactic that the record labels have tried a few times, despite the fact that investors are shielded from liability for the actions of company management for very good reasons: otherwise you'd create a massive chill on investment). The judge wisely tossed the Veoh lawsuit, noting that the company was clearly protected by the DMCA safe harbors, and the separate action against the investors was also shot down. Of course, mainly because of this lawsuit, Veoh ran out of money and was forced to shut down. It ended up selling off its assets to some other company, but a "mystery funder" (I'll give you three guesses...) showed up and continued funding the appeal.
The IsoHunt case is one that has probably received more attention. IsoHunt is one of many BitTorrent search engines out there, and it was sued by the movie studios. Given similar lawsuits, it wasn't much of a surprise when IsoHunt lost, but there were elements of the ruling that were quite troubling. It was really the first big DMCA safe harbor lawsuit to make use of the "red flag" provisions of the DMCA. Most safe harbor cases have focused on whether or not the service provider responded to notices, but in this case, the court said that there were enough "red flags" that, even in the absence of notices, IsoHunt should have blocked certain files. This is problematic for any number of reasons, as it leaves an incredibly vague standard out there that is, in many ways, incompatible with the notice-and-takedown provisions of the DMCA. The only real way to reconcile these would be to say that red flags only apply to very specific infringing works, rather than the fact that infringement takes place on the site. Unfortunately, the court didn't really do that here. It also took certain statements from IsoHunt founder Gary Fung really out of context to support the claim that he was inducing infringement under the Supreme Court's Grokster standard for inducement.
It's interesting to see that IsoHunt's lawyer, Ira Rothken, even referenced the Veoh case in his opening remarks, trying to make the claim that IsoHunt has an even stronger case than Veoh, in that IsoHunt is a pure search engine and, unlike Veoh, doesn't host or control any of the actual content. Separately, he argued that the evidence presented for inducement by Gary Fung came from 2003, but the actual infringement in the case came in 2007 -- and suggested that you can't use general inducement for specific cases of infringement. Apparently, the court was skeptical on this. It would surprise me if the court found that convincing at all, as I don't think anything in previous inducement rulings have ever suggested the inducement has to be directly tied to the infringing files. Anyway, you can listen to the IsoHunt hearing below:
The Veoh hearing, on the other hand, appeared to go pretty strongly in Veoh's favor. Universal Music's argument appeared to be that the DMCA safe harbors are meaningless, because they're kinda annoying for Universal Music. That's a bit of an exaggeration, but not by much -- and the judges aren't buying it. Universal kicks it off by ridiculously claiming that the Veoh ruling would upend copyright law. That's simply not true, and the judges immediately called Universal's lawyer on this, pointing out that copyright law and the case law in the 9th Circuit clearly puts the burden on the copyright holder to file notices, rather than expect service providers to proactively police.
Universal also argued that the DMCA only applies to backend infrastructure service providers, not every other service providers. That's a massive uphill climb there, as no court has ever ruled that. Thankfully, the judges seemed rightfully skeptical, and pointed out that this would decimate the DMCA's safe harbors (exactly what Universal Music and the RIAA wants, of course). Finally, Universal Music tried to argue (again against all sorts of precedent) that since the DMCA was merely locking in common law precedent, vicarious liability could be interpreted broadly. Again, the judges seemed skeptical, noting that this would apparently destroy the DMCA's safe harbors. From Barclay's summary:
Judges Fisher and Berzon had problems with that interpretation. Judge Fisher said that under vicarious liability principles, most commercial web sites would satisfy the “financial benefit” provision, and since in response to a takedown notice they could remove the content, that would satisfy Marenberg’s interpretation of the control provision. Both Judges Fisher and Berzon told Marenberg that under his interpretation, the safe harbor would therefore go away: Judge Berzon told Marenberg his view of the statute “kind of blown the whole thing up.”
We've actually seen a weaker, less legalistic, version of this argument made here many times before. We see people argue all the time that, for example, YouTube must be liable because it makes some money from hosting, and thus is profiting from infringement. Except, that's not what the law says. YouTube isn't profiting from infringement. It's profiting (if it's profiting) from providing a service, which is hosting and displaying videos. It makes that money whether the works are infringing or not. If Universal's interpretation of the safe harbors is correct, there are no more safe harbors online, because any for-profit company loses all safe harbors. That's clearly not what Congress intended.
Either way, you can year the Veoh hearings below as well:
I still think that the appeals court will likely uphold both lower court rulings (though, I'm only about 70% confident on that...), even if it is a bit bizarre when you compare the two. IsoHunt doesn't host or transmit any infringing content. Veoh likely did. And yet Veoh has been deemed protected, while IsoHunt was not. That seems like a questionable outcome no matter what.
Michael Geist points us to the news that a bunch of lobbyists (mostly driven by Hollywood interests, it appears) are pressuring the European Parliament to just sign ACTA already. It appears that they're realizing that there's growing opposition to ACTA and serious concerns by some in the Parliament about just how much of an impact ACTA will have, and (most importantly) whether or not ACTA itself conforms with European law. The letter takes the usual IP bully tact of making totally ridiculous claims, such as saying that not signing it now would mean that it would "weaken the position of the EU viv-a-vis its international trading partners."
That, of course, makes absolutely no sense. Making sure a treaty (and yes, the Europeans, unlike the Americans, are willing to admit that it's a treaty) does not violate consumer rights or other laws seems like a prudent step to take. It seems odd that Hollywood lobbyists could possibly be against that. The only comprehensible reason to be against it is if you know that ACTA won't actually pass muster on review. Separately, I'm wondering just how it will weaken the EU's position with trading partners? Who exactly? Who's going to cut back on trading with the EU because it wants to make sure of the impact of ACTA? No one. Hopefully, most in the EU Parliament got a good chuckle out of this and moved on...
Ah, the blatant hypocrisy of the MPAA. The organization and its supporters freely and frequently throw around bogus claims about how it's important to give it all the things it wants in terms of copyright laws and protectionism in order to protect culture. For example, just look at how MPAA VP Greg Frazier responded to a question in Brazil about Brazil's newly proposed copyright laws by saying:
Now, if you do not believe in the value of creativity, the importance of protecting it and to reward those who produce, then maybe you can justify [copyright infringement]. But in this case, you'll be doing great harm to the culture."
You see, copyright is important to protect culture. In the very next question, he's then asked about Creative Commons and how it has great support in Brazil. And his response is completely the opposite:
Well, not sure. They [supporters of Creative Commons] do not always agree with what we preach. And you're talking about democratizing culture, this is not one of our interests. It really isn't my interest.
So, got that? The MPAA says culture is important... when it makes the MPAA money. Otherwise... eh... not so important.
Of course, what this is really about is that the MPAA got spooked by proposals to Brazilian copyright law last year that would have gone quite far in terms of making a much more reasonable copyright law. It would have done away with notice-and-takedown and said that service providers would only have to remove content with a court order. It would have created penalties for inhibiting fair use or the public domain. And the scariest proposal of all to the MPAA? One suggestion to completely legalize file sharing.
Now, if we want to discuss the cultural situation in Brazil -- something Frazier really didn't want to get into -- why not point to the massive success of technobraega music in Brazil. The technobraega trend really is a wonderful example of democratized culture, where the creators of this music go to great lengths to give it away free, encouraging people to share it widely, even supporting the creation of "counterfeit" CDs to help the music spread, knowing that the more it spreads, the better they can do with live shows. Technobraega music in Brazil is a huge phenomenon, and an excellent case study in how a music industry can thrive and make money without copyright concerns, with free sharing... and do so in a way that really does "democratize" culture. Exactly what the MPAA is most afraid of.
That's because the MPAA and the big studios it represents don't want to help protect "culture" at all. They want to help protect the limitations on culture, such that they get to continue acting as a gatekeeper to culture.
There has been a war of language and thought going on in the copyright debate for years. People think in language just as they speak in language, which is why content industry groups have gone to such lengths to pervert nuanced legal language into stacatto and misleading buzzwords crafted purely for public consumption. This language war is the reason why when I Google the word "piracy", the first page gives me the Wikipedia article for the war act of piracy and then in the news items I get a story about lawmakers wondering if search engines contribute to piracy.
Well, the MPAA, never shy to jump on the hyperbole train, is doing its best to make the debate about patriotism, rather than the actual issues, by cloaking itself in the American flag. Michael O'Leary, Vice President of the MPAA, spoke at a hearing with the House Judiciary Committee's Intellectual Property, Competition, and Internet Sub-Comittee (say that three times fast). Look at the whole quote first:
"The key foundation of American industry, the expectation that hard work and innovation is rewarded, is imperiled when thieves, whether online or on the street, are allowed to steal America's creative products and enrich themselves along the way. Rampant theft of American intellectual property puts the livelihoods of the workers who invest time, energy and fortune to create the filmed entertainment enjoyed by millions at risk; to these men and women and their families, digital theft means declining incomes, lost jobs and reduced health and retirement benefits. We believe that rogue sites legislation, combined with the Administration's work with intermediaries and enforcement by the IPR Center, will go a long way towards shutting down the unauthorized distribution of copyrighted works and close a gap in the intellectual property law."
Three sentences with so much intellectual dishonesty, subtle word games, and nationalism wrapped up in a tidy knot that it's sickening. First, to get it out of the way, note the word games being played through the legally incorrect use of the words "thieves", "steal", and "digital theft". This is the game they play with words and thought.
But more prominent is the plea for American nationalism in his words. Like so much bad policy before it, COICA legislation (which has been dutifully renamed "rogue sites legislation" by O'Leary, as the word games continue) is being wrapped by supporters in the flag. We've seen this movie before and we know how it works. The Patriot Act was wrapped in the American flag (more word games) because if the time spent saying, "This here bill is good for 'Merica" was spent actually explaining to people what it was, the public outcry would be heard loud and clear. It's the same with COICA, as the MPAA subtlely informs us that taking down "rogue" sites without true due process is somehow as American as Superman and apple pie (pay no attention to the innocents caught in the crossfire).
But as long as O'Leary wants us to pledge allegiance to flag of the Motion Picture Association of America, I have a couple of questions. Is applauding government censorship American? Is it American to push around our fellow nations of the world to adopt laws simply because our industry wants them to? Does the land of the free and the home of the brave really mean tucking your tail between your legs and running to daddy government because you don't know how to maximize your profit margins in the digital world?
I'll tell you what, O'Leary: I'll start taking lessons in patriotism from the MPAA about the same time I accept an invitation to the Ku Klux Klan's symposium on racial tolerance...
Ever since the Supreme Court's Grokster decision, in which it made up a non-legislative "inducement" standard for copyright infringement (a standard, it should be noted, that Congress had a chance to put into law, but declined), the entertainment industry has tried to expand what "inducement" actually means. In the entertainment industry's general definition, it appears to mean "anything we don't like" or "anything that challenges our existing legacy business models." Case in point: cyberlockers. The MPAA has been screaming about "cyberlockers" as this new horrible piracy scheme for a couple years now, ignoring (of course) that cyberlockers serve important and useful legitimate functions in allowing people to share large legal digital files. Like many people, I've used cyberlockers to share PowerPoint presentations, photos and videos I've taken. They're incredibly useful and have significant non-infringing purposes.
However, obviously, those tools can (and perhaps frequently are) used for infringement as well. But, we already have laws to deal with that. The DMCA's notice-and-takedown provision allows copyright holders to alert service providers, who then need to takedown the content. A couple months ago, however, the MPAA went after Hotfile, one of the larger cyberlockers out there, with what struck me as a surprisingly weak case. It was as if whoever wrote the filing didn't quite understand how cyberlockers work, made a bunch of (mostly really bad) assumptions, and then twisted the facts in the most ridiculous possible way to make a case that Hotfile "induces" infringement.
For example, the MPAA claimed that because Hotfile charges fees for premium service, that's a sign of inducement. But that makes no sense. Plenty of online services charge for premium accounts, and since there are real marginal costs here, it makes basic economic sense for cyberlockers to charge premium users for additional services. That has nothing to do with infringement. Separately, the MPAA tries to spin the fact that Hotfile encourages people to use it to share widely, claiming that no legitimate "backup" service would do that. But, the MPAA is (incorrectly) assuming that Hotfile is a backup service. It's not. It's a tool for sharing digital files. None of that adds up to inducement.
The Supreme Court tried to dance around the earlier Betamax ruling, in which it allowed the VCR to exist because it had "substantial non-infringing uses," by creating a specific "standard" for inducement, which (as standards go) is pretty vague:
"[O]ne who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties . . . [but] mere knowledge of infringing potential or of 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. The inducement rule, instead, premises liability on purposeful, culpable expression and conduct . . . ."
Basically, the Supreme Court says that you have to do something to specifically purposely encourage infringement. Just because your service is used for infringement, that doesn't cut it. Grokster and others lost because there were signs that they advertised or marketed their services specifically for infringement. In the Hotfile case, the MPAA didn't seem to be able to show that at all.
So it's not surprising that Hotfile is fighting back pretty hard on the lawsuit, pointing out that (1) it meets the Betamax standard of significant non-infringing uses, but (2) doesn't come anywhere near the inducement standard of purposefully inducing infringement. The company notes that it promptly responds to DMCA notices and is quick to take down content, once made aware that it's infringing. It notes that providing a legitimate data storage business is not against the law, and it doesn't appreciate the MPAA's insinuations. It goes through the specifics of the Grokster ruling, which clearly don't apply to Hotfile. In fact, they note that one of the reasons Grokster ran into trouble was because it didn't receive revenue directly from users -- and now the MPAA is trying to use the exact opposite argument (that Hotfile does get money from users) to argue it's the same as Grokster?
Similarly, it points out how the fact that Grokster, Isohunt, Limewire and others have had a search function has been one of the key points used against those services to "prove" inducement. The courts have reasoned that since they allow searches for any file, they're "inducing" infringement. Yet, with Hotfile, there's no search. That should settle the issue... but this is the MPAA we're talking about, and so they twist the lack of a search engine into a charge that Hotfile "concealed" the content its users uploaded.
Sued if you do. Sued if you don't.
This seems like a pretty strong filing in response to a clear attempt by the MPAA to twist and extend "inducement" theory way beyond what was intended by the Supreme Court. Hopefully the courts recognize this, but you never know when it comes to these kinds of cases. As Professor Eric Goldman is fond of pointing out, there's regular copyright law, and then there's file sharing copyright law, in which the judges creatively reintepret the law to make activities they don't like illegal, rather than following the actual law.
Either way, this case could become important in determining the boundaries of what really is "inducement." If the MPAA gets its way, it will effectively erase the Supreme Court's Betamax ruling, because it will mean that even if you have substantial non-infringing uses, if there are a lot of people using it for infringement, even if you did not push them to use your service for that particular reason, you automatically become liable. This is a complete fabrication by the MPAA who appears to effectively want to overturn the Betamax ruling here by suggesting that if enough people are infringing, you're automatically guilty of inducement, because any action you do (have a search engine? yes! don't have a search engine? yes!) is interpreted as inducement.
We've certainly suggested that Chris Dodd was making a big mistake by focusing on the MPAA's old talking points in his new role as chief of that lobbying organization. Rather than leading Hollywood to a future of new business models and smarter embrace of what consumers want, he's kicked things off by being anti-consumer, anti-technology and a supporter of previous policies that have failed massively. It's not exactly a recipe for success. Marty Kaplan, a professor at USC, is pointing all this out in a wonderful opinion piece, explaining to Chris Dodd why he's focused on the wrong things. He uses the recent SSRC Report to explain why Dodd is barking up the wrong tree in claiming that the two things to focus on are "education" and "enforcement," a two-pronged strategy that has failed to do anything useful for the industry for over a decade:
The problem with this is that there's no evidence that education works. There have been hundreds of vigorous anti-piracy educational campaigns all over the world -- more than 333 in developed countries alone as of 2009 -- and they've failed. It's not that consumers don't get that media piracy is wrong. They know what they're doing. They're weighing moral considerations against price and availability, and they're deciding to go with cheap (or free), and now.
[...]
Not only is there no evidence that education has been building a stronger "culture of intellectual property." There's also little evidence that enforcement works. Splashy raids haven't reduced piracy. Two weeks ago the judge in a lawsuit by 13 record companies against LimeWire called their demand for $75 trillion in damages "absurd," and the infringement judgments that have actually been handed down also haven't stemmed the tide of illicit file sharing. In the SSRC report's words, "Strengthening police powers, streamlining judicial procedures, increasing criminal penalties, and extending surveillance and punitive measures to the Internet": to date, none of them "have had any impact whatsoever on the overall supply of pirated goods."
Of course, we've pointed this all out as well, and the response has been for people to yell about how we're "defending piracy." Yeah, or trying to prevent Hollywood from continuing down a strategy that has been proven not to work. Instead, we agree with Kaplan that this is a business model issue, and if Dodd were a real leader, he'd actually help move Hollywood into new territory of embracing new business models and new technology:
Sooner or later -- and judging by Chairman Dodd's speech, it'll be later -- the industry will have to move from moralism to pragmatism. Their business model has been digitally disrupted, irrevocably, and they are already vulnerable to the kind of game-changing innovation, and carnage, that Apple's iTunes visited on the music industry. If the studios are lucky, before a Netflix or a Facebook does that to them they'll figure out that neither education nor enforcement will rescue them from creative destruction. Pivoting from Moses to merchant will be an awkward adjustment, but they will eventually be forced to conclude that their other options just aren't working. It won't matter that they have righteousness on their side. If they have to spend less on producing and distributing content, distraught fans won't repent of their downloading ways. If jobs are jeopardized, it will be just as wrenching, and just as stoppable, as the transformation that globalization and rising productivity are wreaking on the rest of the economy.
What will the new business model look like? It's hard to imagine that the sequenced distribution of product over a controllable period of time through an orderly series of "windows" -- venues and platforms and formats and pipes and territories, each with their own license deals and consumer prices -- will survive unbroken. In that future, a practical agenda for handling piracy is suggested by this 2009 comment from Robert Bauer, then director of special projects for the MPAA, as quoted in the SSRC report: "to isolate the forms of piracy that compete with legitimate sales, treat those as a proxy for unmet consumer demand, and then find a way to meet that demand."
Wow. Suggesting smarter business models that involve actually delivering customers what they want? Why that's just someone who is a piracy apologist, I guess...
When Zediva launched, we already knew it was going to face a legal fight from the MPAA and the movie studios. The company lets people stream movies they want to see, but tries to get around the legal licensing issues by only streaming directly from internet connected DVD players, playing legitimately acquired DVDs. Their argument is that it's really no different than renting a movie and bringing it to your own DVD player. And, perhaps, the Cablevision ruling in the US on remote DVRs gives them some support for their position. But, there was no way the industry was going to just let this go by without any sort of fight. And, so, the MPAA has now sued the company claiming that it's a "sham," and that Zediva is running an illegal video-on-demand service without the proper licenses. In some ways, this case could also impact the attempts by cloud music players to stream legitimate content without a license as well.
All of these situations -- the remote DVR, the remote DVD and cloud music players -- all involve the entertainment industry demanding extra payments for how you use legitimately purchased content. It's really quite amazing what a stunning sense of entitlement the entertainment industry has here. Even if you've legitimately purchased their content, they want to limit what you can actually do with it unless you pay another licensing fee. It's really quite ridiculous and shows the level of desperation these firms are reaching.
One of the amusing things that we've seen in following groups like the MPAA and the RIAA over the years is every time they try to claim that they're really doing what they do to support the independent artists out there. Both organizations represent the big studios and the big labels. But, to make themselves sound more sympathetic, they love to claim that their real concerns are in protecting the "small guys" out there. We've seen it a lot in the film industry, where the big studios and the MPAA guys love to claim their "real concerns" are about indie filmmakers. Just a few months ago, when I appeared on a panel at a big Hollywood event for independent filmmakers, one of my co-panelists was from the MPAA, and he tossed out that line about how the big studios were fine, but he was really concerned about the indies.
You would think, of all industries, the movie industry would be particularly careful about praising US government censorship of content, since it's not that far down the slippery slope until the government justifies censoring movie content as well. But, apparently, as long as it's on the "internet," it's fine to censor. The MPAA has come out, once again, with praise for Homeland Security's blatant censorship of websites without due process or any concern for prior restraint. Not only that, but the MPAA is delusional. It claims that seizing the URLs has "put illegal sites out of business" and also "raised public awareness."
First of all, nearly all of the sites seized for copyright infringement claims reappeared on other domains pretty quickly. So, claiming that these seizures put them out of business is simply incorrect. And if it's "raised public awareness" of anything, it's how the MPAA and the US government are censoring websites and eschewing the basic principles of due process. It's really amazing how many people have been following this story and realizing just how far the US government is going, and how ridiculous it is. There's simply no way to make that look good. This is making the MPAA and the US government look like bad third world dictators, seeking to censor websites that they don't like.
