Did The Supreme Court Just Take A Sledge Hammer To Copyright's Statutory Damages?

from the possibly... dept

Last week, in a somewhat controversial decision in the TransUnion v. Ramirez case, the Supreme Court ruled, 5 to 4, that plaintiff's in a class action lawsuit did not have standing to sue under the Fair Credit Reporting Act (FRCA). The issue may seem wholly unrelated from copyright, but in reading through the decision, it's possible it could lead to a vastly different world for copyright going forward, because the same issues that the Court finds fault with in the FRCA also apply to copyright law -- and, indeed, it's the part of copyright law that is most widely abused in lawsuits.

I should be clear that I think the holding in the TransUnion case is problematic and seems... well... weird. But if what the majority decided is true, then I don't see how copyright's statutory damages can remain constitutional. Let's dig into the case to explore why. The majority opinion, written by Justice Kavanaugh gives the basic overview right upfront:

To have Article III standing to sue in federal court, plaintiffs must demonstrate, among other things, that they suffered a concrete harm. No concrete harm, no standing. Central to assessing concreteness is whether the asserted harm has a “close relationship” to a harm traditionally recognized as providing a basis for a lawsuit in American courts—such as physical harm, monetary harm, or various intangible harms including (as relevant here) reputational harm.

The issue in this case involved TransUnion's credit reports damaged people by flagging their reports to say that they might be listed on an Office of Federal Assets Control (OFAC) watchlist. Basically, if TransUnion thought that someone's name matched someone on the OFAC list, it would put that in their credit report. For a lot of people who aren't actually on the OFAC list, that can really suck. That resulted in this lawsuit. The court found that for those on that list who could show actual damage, they had standing. But, for others who were flagged by TransUnion, but could not show any actual harm, they did not have standing to sue.

In this case, a class of 8,185 individuals sued TransUnion, a credit reporting agency, in federal court under the Fair Credit Reporting Act. The plaintiffs claimed that TransUnion failed to use reasonable procedures to ensure the accuracy of their credit files, as maintained internally by TransUnion. For 1,853 of the class members, TransUnion provided misleading credit reports to third-party businesses. We conclude that those 1,853 class members have demonstrated concrete reputational harm and thus have Article III standing to sue on the reasonable-procedures claim. The internal credit files of the other 6,332 class members were not provided to third-party businesses during the relevant time period. We conclude that those 6,332 class members have not demonstrated concrete harm and thus lack Article III standing to sue on the reasonable-procedures claim.

The constitutional analysis focuses on the power of the judiciary to deal with actual cases and controversies:

Therefore, we start with the text of the Constitution. Article III confines the federal judicial power to the resolution of “Cases” and “Controversies.” For there to be a case or controversy under Article III, the plaintiff must have a “‘personal stake’” in the case—in other words, standing. Raines, 521 U. S., at 819. To demonstrate their personal stake, plaintiffs must be able to sufficiently answer the question: “‘What’s it to you?’” Scalia, The Doctrine of Standing as an Essential Element of the Separation of Powers, 17 Suffolk U. L. Rev. 881, 882 (1983).

To answer that question in a way sufficient to establish standing, a plaintiff must show (i) that he suffered an injury in fact that is concrete, particularized, and actual or imminent; (ii) that the injury was likely caused by the defendant; and (iii) that the injury would likely be redressed by judicial relief. Lujan v. Defenders of Wildlife, 504 U. S. 555, 560– 561 (1992). If “the plaintiff does not claim to have suffered an injury that the defendant caused and the court can remedy, there is no case or controversy for the federal court to resolve.” Casillas v. Madison Avenue Assocs., Inc., 926 F. 3d 329, 333 (CA7 2019) (Barrett, J.).

So, then the open question is whether or not a law that allows a private right of action over something that is a potential, but not concrete, harm meets the standard. And the majority decides it does not. And then, it goes even further, and notes that even if Congress creates a statutory "prohibition or obligation," courts can't just accept that as evidence of a concrete harm:

Importantly, this Court has rejected the proposition that “a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Spokeo, 578 U. S., at 341. As the Court emphasized in Spokeo, “Article III standing requires a concrete injury even in the context of a statutory violation.” Ibid.

Congress’s creation of a statutory prohibition or obligation and a cause of action does not relieve courts of their responsibility to independently decide whether a plaintiff has suffered a concrete harm under Article III any more than, for example, Congress’s enactment of a law regulating speech relieves courts of their responsibility to independently decide whether the law violates the First Amendment. Cf. United States v. Eichman, 496 U. S. 310, 317– 318 (1990). As Judge Katsas has rightly stated, “we cannot treat an injury as ‘concrete’ for Article III purposes based only on Congress’s say-so.” Trichell v. Midland Credit Mgmt., Inc., 964 F. 3d 990, 999, n. 2 (CA11 2020) (sitting by designation); see Marbury, 1 Cranch, at 178; see also Raines, 521 U. S., at 820, n. 3; Simon v. Eastern Ky. Welfare Rights Organization, 426 U. S. 26, 41, n. 22 (1976); Muskrat v. United States, 219 U. S. 346, 361–362 (1911).

As the Court then says explicitly, just because someone will have claimed to have violated a statutory cause of action that does not automatically mean there is a concrete harm:

For standing purposes, therefore, an important difference exists between (i) a plaintiff ’s statutory cause of action to sue a defendant over the defendant’s violation of federal law, and (ii) a plaintiff ’s suffering concrete harm because of the defendant’s violation of federal law. Congress may enact legal prohibitions and obligations. And Congress may create causes of action for plaintiffs to sue defendants who violate those legal prohibitions or obligations. But under Article III, an injury in law is not an injury in fact. Only those plaintiffs who have been concretely harmed by a defendant’s statutory violation may sue that private defendant over that violation in federal court.

Indeed, the majority argues that this is, fundamentally, a separation of powers issue:

In sum, the concrete-harm requirement is essential to the Constitution’s separation of powers. To be sure, the concrete-harm requirement can be difficult to apply in some cases. Some advocate that the concrete-harm requirement be ditched altogether, on the theory that it would be more efficient or convenient to simply say that a statutory violation and a cause of action suffice to afford a plaintiff standing. But as the Court has often stated, “the fact that a given law or procedure is efficient, convenient, and useful in facilitating functions of government, standing alone, will not save it if it is contrary to the Constitution.” Chadha, 462 U. S., at 944. So it is here.

The main dissent, written by Justice Thomas (it's an ideologically odd pairing: Justice Thomas with the three Justices most commonly found on the other end of the ideological spectrum: Justices Breyer, Sotomayor, and Kagan) is actually fairly compelling regarding the issue of concrete harm:

The principle that the violation of an individual right gives rise to an actionable harm was widespread at the founding, in early American history, and in many modern cases. See Uzuegbunam, 592 U. S., at ___–___ (slip op., at 5–8) (collecting cases); Havens Realty Corp. v. Coleman, 455 U. S. 363, 373 (1982) (“[T]he actual or threatened injury required by Art. III may exist solely by virtue of statutes creating legal rights, the invasion of which creates standing” (citing cases; brackets and internal quotation marks omitted)). And this understanding accords proper respect for the power of Congress and other legislatures to define legal rights. No one could seriously dispute, for example, that a violation of property rights is actionable, but as a general matter, “[p]roperty rights are created by the State.” Palazzolo v. Rhode Island, 533 U. S. 606, 626 (2001). In light of this history, tradition, and common practice, our test should be clear: So long as a “statute fixes a minimum of recovery . . . , there would seem to be no doubt of the right of one who establishes a technical ground of action to recover this minimum sum without any specific showing of loss.” T. Cooley, Law of Torts *271.3 While the Court today discusses the supposed failure to show “injury in fact,” courts for centuries held that injury in law to a private right was enough to create a case or controversy.

Thomas also goes back to the issue of statutory damages in copyright to prove his point:

The First Congress enacted a law defining copyrights and gave copyright holders the right to sue infringing persons in order to recover statutory damages, even if the holder “could not show monetary loss.” Muransky v. Godiva Chocolatier, Inc., 979 F. 3d 917, 972 (CA11 2020) (Jordan, J., dissenting) (citing Act of May 31, 1790, §2, 1 Stat. 124–125). In the patent context, a defendant challenged an infringement suit brought under a similar law. Along the lines of what TransUnion argues here, the infringer contended that “the making of a machine cannot be an offence, because no action lies, except for actual damage, and there can be no actual damages, or even a rule for damages, for an infringement by making a machine.” Whittemore v. Cutter, 29 F. Cas. 1120, 1121 (No. 17,600) (CC Mass. 1813). Riding circuit, Justice Story rejected that theory, noting that the plaintiff could sue in federal court merely by alleging a violation of a private right: “[W]here the law gives an action for a particular act, the doing of that act imports of itself a damage to the party” because “[e]very violation of a right imports some damage.” Ibid.; cf. Gayler v. Wilder, 10 How. 477, 494 (1851) (patent rights “did not exist at common law”).

But this example in the dissent now seems to serve the opposite point: and effectively argues that under the majority decision, copyright's statutory damages may not be available at all if a plaintiff cannot show "concrete harm."

That's a very big deal in the copyright context. For years, we've pointed out the problematic nature of statutory damages in copyright. Under copyright law, if the work is registered before the infringement, statutory damages are available. And the whole theory behind them is that it's supposedly difficult to show the concrete harm of infringement, and therefore, you don't need to show any actual harm to get statutory damages, and those damages are wholly unrelated to any actual harm. As we noted a decade ago, this makes it "too attractive to sue." Basically, the possible payout from statutory damages, without having show any actual harm or damages at all, is massively distortionary.

And, now, looking at this ruling, it seems that there's an open argument if copyright plaintiffs will now be able to rely on statutory damages if they can't show any harm at all. This wouldn't completely take away statutory damages, but would, at the very least require plaintiffs to show some kind of harm.

Of course, when it comes to copyright law, one of the things we've noted is that courts seem to ignore every other precedent and treat everything related to copyright as if it's different. And, if this issue ever comes back to the court, I'd predict we'd see that same thing again. Judges will bend over backwards to insist that copyright is somehow "different." And it's possible that the majority ruling has an escape valve for that: it mentions repeatedly that part of the way of judging whether or not there's concrete harm is whether or not the issue is "traditionally recognized as providing a basis of a lawsuit in American courts." And, as the Thomas dissent makes clear, that's definitely been the case for copyright law and statutory damages going back basically to the beginning.

However, I do wonder if there's another interesting opening here on that: while in the early 2000s, Larry Lessig pushed a variety of failed cases to try to argue that the massive changes brought about by more recent copyright law changes raised constitutional issues. The Supreme Court rejected those arguments (wrongly in my opinion), but I do wonder if this ruling in TransUnion, at the very least, raises questions about statutory damages under the 1976 Copyright Act, since it covers so much more content, for so much longer, than was "traditional" under copyright law for the first two centuries of the country.

Filed Under: concrete harm, copyright, ofac, ramirez, statutory damages, supreme court
Companies: transunion

In New 5Pointz Decision, Second Circuit Concludes That VARA Trumps The Constitution

from the immoral-rights dept

A few weeks ago there was news that a developer in New York City was being forced to dismantle twenty already-built floors in the building he built too high. If only he had thought to let some graffiti artists paint the walls of these excess floors, because then he could never take them down…

I say that, of course, in response to other recent news from New York: the Second Circuit has upheld the awful decision by EDNY to sanction a building owner millions of dollars for daring to paint the walls of his own building. And, in doing so, the Second Circuit has illuminated, in stark relief, what an unconstitutional disaster the Visual Artists Rights Act of 1990 (VARA) is.

But before explaining why, first here's some background. This decision, in Castillo v. GM Realty L.P., is the latest in the litigation over "5Pointz." In brief, a developer owned a building in Brooklyn that he wasn't doing anything with, so he let some graffiti artists paint its walls. Eventually he decided that he wanted to do something else with his building, and in response the graffiti artists sued him under VARA, because his plans would cause those paintings that hadn't already been destroyed by the artists [see p. 4] to now be destroyed by him. The district court refused to enjoin the building owner, however, so he went ahead and painted over them. Upon learning of the painting over, the district court then immediately had non-enjoiner's remorse and got so angry at the building owner for doing what it had let him do that it threw the book at him. In fact, it was $6.7 million dollars worth of book it threw in punitive statutory damages, because how dare that building owner paint the building he owned after the court said he could.

The appeals court decision doubles-down on all the problems with the original district court decision we flagged before, including how catastrophic it is for the future availability of public art to subject those who allow it on their property to such expensive consequences. It makes true the saying "no good deed goes unpunished" and will ensure that few will ever be inclined to offer such favors ever again.

We also highlighted the manifest unfairness of punishing the building owner for doing something that the court had cleared the way for. This unfairness itself presents a constitutional infirmity, particularly in light of the enormous statutory damages award granted, and then upheld, to punish the building owner.

Ultimately, the district court concluded that it could not reliably fix the market value of the destroyed paintings and, for that reason, declined to award actual damages. […] Nonetheless, the court did award statutory damages. It determined that statutory damages would serve to sanction Wolkoff’s conduct and to vindicate the policies behind VARA. [p. 8-9]

Statutory damages are already constitutionally suspect, especially when they are so severely inflated above any actual measure of harm, as was the case here, and especially when they appear to be punitive in nature, as was also the case here, because they function as quasi-criminal sanction without all the due process protections a finding of criminal liability is supposed to require.

But that's not the only constitutional problem with VARA that the decision highlighted. The decision made clear that it also fails on equal protection and First Amendment grounds.

The major issue that the appeals court considered was whether the district court was right in upholding the VARA claim. The crux of that analysis hinged on whether the destroyed paintings qualified as a work of "recognized stature." If they did, then they were protected from destruction by VARA, whereas if they did not qualify, then they would get no extra protection. [p. 13]

But think about the implications of the law. It means that the right to special protection for one's expression is only available for some expression, and whether it gets that protection pivots on the content of that expression. Laws are not supposed to be able to favor or disfavor expression. Yet, as this decision carefully – if perhaps inadvertently – explains, that's exactly what VARA does.

Whether a work is of recognized stature, and thus entitled to additional protection, hinges on its "high quality, status, or caliber." [p.14]. Contrast this special protection with regular copyright protection, which applies to any original work of authorship of any statutorily-enumerated type (literary work, musical work, etc.) fixed in any tangible medium, regardless of that particular work's quality. In other words, bad paintings are just as eligible for basic copyright protection as good paintings. But in the case of VARA, the moral rights provision inserted into the copyright statute, it is only the good paintings that get this extra protection, because the bad ones will never be able to achieve that stature. ("The most important component of stature will generally be artistic quality." [p. 14])

Of course, whether a work is of good quality or not is a matter of opinion. So who gets to decide? The court recognized that the "personal judgment of the court shouldn't be the determinative factor." [p. 14]. Instead it deferred to "the artistic community, comprising art historians, art critics, museum curators, gallerists, prominent artists, and other experts." [p. 14].

But ratifying the subjective opinion of others as the basis upon which to dole out special legal protections is no better than the court making the determination on its own initiative. First, the decision of what opinions to credit is at best arbitrary, as was the case here, where the court deferred to an opinion of a presumed expert who had not even seen the works:

Nor do we see merit in Wolkoff’s criticism of the court’s decision to credit the artists’ experts. As is almost always the case where competing expert testimony is adduced, the trier of fact accepts one side’s experts over the other’s. Judge Block did so here and gave sound reasons for his choice. Renee Vara, the artists’ expert, testified to the high artistic merit of the 5Pointz art but also testified that she had not seen the works before their destruction and had assessed them on the basis of images. We see nothing wrong and certainly nothing clearly erroneous with this approach, one well within a district court’s broad discretion to accept or reject evidence. [p. 22]

But even to the extent that the opinion the court adopts reflects a true consensus, it still means that popular expression gets more statutory protection than less popular expression, which is not something the First Amendment permits.

Worse, it means that certain people end up with more rights than others. As the court expressly noted, "[A] 'poor' work by an otherwise highly regarded artist nonetheless merits protection from destruction under VARA." [p. 14] In other words, some artists of poor works will get this bonus protection, yet some will be denied it, which puts VARA in conflict with the equal protection clause, which forbids this sort of legal favoritism.

The facts of this case illustrate the problem. The aerosol paintings at 5Pointz were "curated" by Jonathan Cohen. Cohen chose which artists could paint, what they could paint, where they could paint, and how long the paintings could remain. Yet despite his outsized role in the creation of the paintings in question – or, indeed, because of this role ("When the curator is distinguished, his selection of the work is especially probative." [p. 25]) – the court deferred to him as someone whose opinion on the worth of a work could be dispositive in determining whether it deserved these extra legal protections.

Next, Appellants object to the district court’s reliance on Jonathan Cohen’s testimony about his curation of the artwork. The district court reasoned that Cohen’s selection process, which involved review of a portfolio of an artist’s work and a plan for his or her 5Pointz project, screened for works of stature. Appellants, however, contend that this determination was irrelevant because Cohen made his evaluation before the artists painted their 5Pointz works. Nonetheless, the district court cogently reasoned that a respected aerosol artist’s determination that another aerosol artist’s work is worthy of display is appropriate evidence of stature. An artist whose merit has been recognized by another prominent artist, museum curator, or art critic is more likely to create work of recognized stature than an artist who has not been screened. This inference is even stronger where, as here, Cohen reviewed a plan for the subject work before allowing it to be painted. Accepting and crediting such testimony easily falls within a district court’s trial management responsibilities and in this instance involved no abuse of discretion or clear error. [p. 23-24]

There is no constitutional problem with the fact that Cohen played kingmaker with respect to what artists he allowed to exhibit at 5Pointz and which works could attain any sort of visibility. As an individual he is entitled to make these content-based decisions. What is not okay is for the courts to allow his personal opinion to acquire the imprimatur of the state to create extra rights for his favorites. As the Second Circuit set forth, this power appears to be what VARA allows. But it's not what the Constitution permits.

Filed Under: 2nd circuit, 5pointz, art installations, artwork, graffiti, moral rights, property rights, statutory damages, vara

Insanity (AKA Copyright Statutory Damages) Rules: Cox Hit With $1 Billion (With A B) Jury Verdict For Failing To Magically Stop Piracy

from the oh-come-on dept

We've highlighted the many problems with the various lawsuits against Cox Communications arguing that the company should be held liable for failing to wave a magic wand and stop all piracy from occurring on its service. The internet access provider was originally sued by music publisher BMG, and they got a judge who made it clear that he was not a fan of the internet, and didn't see why it should be a problem for anyone to be kicked off the internet at all. Cox lost the case mostly because the company didn't really follow its own internal repeat infringer policy. That ruling was upheld on appeal, leading the company to settle the case for $25 million.

Sensing an opportunity to cash in, all of the RIAA major record labels jumped in to sue Cox as well -- and got the same exact judge, Liam O'Grady. After a trial earlier this month, a jury has now awarded an absolutely astounding $1 billion damages verdict. The verdict is so preposterous and so disconnected from reality, that the math is wrong. The jury verdict document said that each infringed work should lead to statutory damages to the tune of $99,830.29. And there were 10,017 works infringed. And thus, the total was $1 billion on the dot:

Except that if you multiply those two numbers, the total would actually be $1,000,000,014.93. The jury's bad math saved Cox just about $15. Small favors.

Anyway, Cox has already made it clear that it will appeal, and I'd be stunned of such an amount held up. Everything about this is (1) crazy and (2) demonstrative of just how messed up and broken the "statutory damages" set up is for copyright. We've long wondered why statutory damages are even a thing in copyright, because they really don't make any sense. But the fact that statutory damages can go as high as $150k per work infringed -- even if there were literally no actual damages, raises significant 5th Amendment issues about due process (specifically, the wholly arbitrary nature of the jury award) and whether or not the award is "obviously unreasonable."

In a Supreme Court ruling almost exactly 100 years ago (St. Louis v. Williams), the Supreme Court ruled about obviously unreasonable awards, noting that there's a problem when "the penalty is 'arbitrary and unreasonable, and not proportionate to the actual damages sustained.'" That certainly seems to be the case here. After all, a basic recounting of the facts seems important here. Yes, Cox did not adequately follow its own repeat infringer policy, which may have lost it its DMCA safe harbors, but a jury verdict of over $30,000 per work infringed requires the jury to say that each and every infringement was willful by Cox. And that's crazy. Fucking up your own policies doesn't mean that you willfully infringed on every single work that someone shared via your network. Indeed, Cox was actually one of the more aggressive internet access providers in kicking people off for infringing.

Just to put this in perspective, the entire RIAA made just under $10 billion in 2018 in the US. IFPI reported that the total globally was $19.1 billion. And they want to now say that piracy of 10,000 songs on one ISP should grant them $1 billion? Honestly, the award is so insane, and so out of touch with reality, I actually wonder if the RIAA might come to regret it, as it makes the strongest case I've seen yet for the sheer unconstitutional nature of statutory damages, without any evidence of actual damages, for copyright infringement.

Filed Under: contributory liability, copyright, internet access provider, jury verdict, statutory damages, vicarious liability, willful infringement
Companies: cox, cox communications, riaa, sony music, universal music, warner music

CBS Sues Public Domain For Existing

from the or-something-like-that dept

Okay fine, CBS hasn't sued "the public domain" — but at this point I suspect that's only because they haven't figured out how to do so. In the mean time, they're suing a YouTube channel for copyright infringement after it posted sixteen public domain episodes of the Andy Griffith show. How, you ask? Isn't the public domain the, uh, public domain? Apparently not if you get creative with your lawsuit:

The episodes at issue in the suit fell into the public domain in the '90s because the copyright-renewal application was rejected for being filed too late and, according to the suit, that's one of the reasons Heldman thinks his posting them was legitimate.

... CBS attorney Jonathan Zavin argues that, because CBS holds valid and existing copyrights for the first 79 episodes of the series, the "copyrighted characters and numerous other original creative elements" that appeared in those episodes would still be protected in the middle episodes.

"Accordingly, the newly-added elements, and only the newly-added elements, of these Middle Episodes which did not previously appear in the first 79 episodes of The Andy Griffith Show (which remain protected by statutory copyright) have fallen into the public domain in the United States," he writes.

This is of course not the first time we've seen such an attempt to nibble (or chomp) away at the edges of the public domain. Other examples include the high-profile fight over Sherlock Holmes, and the recent loss over Wizard Of Oz promotional materials. But each is subtly different, and together they form a trifecta that snuffs out giant swathes of the public domain.

In the case of Sherlock Holmes, we've got the rule that early works falling into the public domain can be freely used, but if you're building on them or adapting them, you can't incorporate character traits or story points from later works that are still under copyright. While this still raises a huge host of "perpetual copyright" concerns, at its core it seems... somewhat reasonable. The Wizard Of Oz situation is similar, stemming from the idea that just because some materials from the film have fallen into the public domain doesn't mean everything else is fair game. But, it pushed the borders: the court didn't simply say that building on the public domain material with other still-copyrighted material from the film becomes infringing, but that building on it with anything or changing it in any way makes it infringing.

Those two rulings already represent pretty big victories for public domain haters, but you'll notice they are missing something. In both cases the courts, despite constraining the public domain in extreme ways, had to concede that just directly publishing the unaltered public domain material itself — the early Holmes stories, or the unregistered publicity materials from Oz — is not infringing. How could it be? They are public domain.

So along comes this new lawsuit, attempting to put another nail in the coffin. The episodes posted on YouTube weren't somehow expanded to draw upon material from other episodes, or for that matter from anywhere else. They were public domain material being posted in full online. And now CBS wants the court to say that's infringing because other episodes of the show are still under copyright, and that even though these 16 are in the public domain, they still count as derivative works of previous episodes. So, magically, posting public domain material to YouTube — something that should be completely and inarguably legal — becomes unauthorized distribution of a derivative work.

It gets crazier, too. You might think CBS would be satisfied pushing this theory on the basis that the episodes infringe on the very first episode, or perhaps a select handful that establish recurring characters and themes. Nope! The lawsuit claims that the 16 public domain episodes are derivative works of each of the 79 still-copyrighted episodes, individually. They are asking for nearly $12-million dollars — the maximum statutory damages per work infringed, multiplied by all 79 episodes.

Let that sink in.

And so once again we see the utter collapse of the idea/expression dichotomy. Copyright is supposed to apply to the fixed expression of an idea — such as each individual episode of a show, and the scripts and other materials underlying it. But if we slide the dividing line over a bit and say that "the character of Andy Griffith" or "the town of Mayberry" count as fixed expressions, then we have an absurd situation where basically nothing related to the show can be public domain until everything is (a day or two before forever, most likely). If we slide it further and say that one expression of those ideas can infringe on every single other expression of them individually, then I don't even have the words for how broken the system has become. It's a perversion of the entire idea of the public domain, and an utter betrayal of the already-lopsided contract that is copyright.

With any luck, the judge will reject this nonsense. So far, despite being pretty cooperative with the demands of rightsholders, courts have stopped short of saying "you cannot publish that public domain material at all", because even the most copyright-friendly judge seems to recognize that's a bridge too far. But even if CBS doesn't get all their wishes, I won't be surprised if the eventual ruling continues to chip away at the public domain, delineating new restrictions that have no reason to exist or planting landmines of legal language that will be unwittingly detonated by some future public domain miner.

But hey that's all secondary — the important thing is making sure nobody gets to watch sixteen episodes of a half-century-old TV show for free, right?

Filed Under: andy griffith, andy griffith show, copyright, derivative works, edward heldman, public domain, statutory damages
Companies: cbs

Commerce Department Wants To Fix Some Of The Worst Problems Of Copyright Law: Reform Crazy Damages

from the wonderful dept

A couple of years ago, the Commerce Department put out a somewhat problematic "Green Paper" on copyright, that at times seemed to have been pretty heavily influenced by the maximalist view of the world, without recognition of how widely copyright is abused. Lots of people responded to it with their concerns -- including an excellent response from (believe it or not) Hollywood screenwriters who actually pointed out the problems of copyright maximalism, statutory damages, abusive takedowns and attacks on fair use. I don't know if it was that letter that really influenced things, but the Commerce Department has now come out with its follow up "White Paper" and it's really quite good. It basically says that copyright's statutory damages are a huge mess and need to be fixed.

We've argued in the past how statutory damages are a big part of the reason why copyright law is so messed up. If you don't know, copyright law allows rightsholders to ignore actual damages (especially if they don't exist) and elect to go for "statutory damages" in which they can seek $750 to $150,000 per work infringed. And, of course, they always claim to go for the $150,000. And when you're talking about someone non-commercially sharing, say, 20 songs, and the fact that they could suddenly be on the hook for $3 million, it begins to be clear how copyright law seems totally divorced from reality. Those crazy statutory damages have a number of super damaging effects:

1. Massive chilling effects. Any hint of a lawsuit gets people to back down as the damages can be debilitating, even if there was no actual damage.
2. Copyright creep. People use copyright threats for reasons having nothing to do with actual copyright, such as to censor content they don't like, because they know that threat of statutory damages is so powerful.
3. Parasitic and abusive businesses, such as copyright trolling, which heavily relies on the threat of $150,000 in statutory damages per work to extort money from individuals.

Thankfully, there's been at least some recognition in Congress that maybe it's time to revisit statutory damages, and this new white paper from the Commerce Department should be quite helpful on that front. What's slightly amazing, honestly, is that some of the folks involved in the writing of the paper actually include some fairly well-known copyright maximalists, who have historically always pushed for expanding copyright law and been against fixing statutory damages.

In this paper, they don't ask for a total overhaul of statutory damages, like many of us feel would be appropriate, but still do push for reforms that recognize the widespread abuse and chilling effects of statutory damages (the paper even namechecks Righthaven and Prenda Law as examples of abusing statutory damages for copyright trolling). Key reforms the paper supports include expanding eligibility for "innocent infringement," which greatly lowers the statutory damages. Historically, courts almost never allow innocent infringement defenses. Expanding that would help out many cases of blatant trolling. But the big change is giving the courts much more discretion in determining the proper amounts for statutory damages, including a specific list of factors that judges and juries should be tasked to consider before determining an award -- and that includes both actual losses to the copyright holder and the "benefits" to the infringer.

The Task Force recommends that Congress enact a new paragraph in Section 504 of the Copyright Act specifying factors that must be considered when determining statutory damage award amounts. The aim is to ensure a greater degree of predictability in copyright infringement cases across the country and address some other concerns raised in this proceeding. In considering what factors should be included, we have drawn upon existing model jury instructions as well as federal case law. The Task Force considered proposing federal model jury instructions, but concluded that a statutory set of factors would be preferable since they will be binding on all courts. We believe that litigants and courts would be well-served by requiring consideration of a uniform set of factors designed to result in an appropriate award based upon the facts of each case.

The nine factors listed below are those that will most often be applicable in a statutory damages determination. We believe that they should be non-exclusive, so that courts are not foreclosed from considering other factors that may be relevant in a particular case.

The Task Force proposes a new clause in subsection Section 504(c)526 as follows: FACTORS TO CONSIDER -- In making any award under this subsection, a court shall consider the following nonexclusive factors in determining the appropriate amount of the award:

1. The plaintiff’s revenues lost and the difficulty of proving damages.
2. The defendant’s expenses saved, profits reaped, and other benefits from the infringement.
3. The need to deter future infringements.
4. The defendant’s financial situation.
5. The value or nature of the work infringed.
6. The circumstances, duration, and scope of the infringement, including whether it was commercial in nature.
7. In cases involving infringement of multiple works, whether the total sum of damages, taking into account the number of works infringed and number of awards made, is commensurate with the overall harm caused by the infringement.
8. The defendant’s state of mind, including whether the defendant was a willful or innocent infringer.
9. In the case of willful infringement, whether it is appropriate to punish the defendant and if so, the amount of damages that would result in an appropriate punishment.

When calculating the total award, all of these factors should be weighed holistically, in the context of the entire case, to ensure that the overall award is appropriate.

Frankly, that's a pretty good list overall. The fact that it includes whether the infringement was "commercial in nature" also seems like it could be super helpful in getting rid of many of the worst abuses. There are, of course, other potential improvements that can and should be made to statutory damages, but this is a good start, and it's great to see it come from the Commerce Department, that in the past seemed a little too smitten with Hollywood's love of statutory damages.

Separately, the paper also embraces the value of remixes in culture, and why fair use is so important for that to thrive. It doesn't recommend any changes to the law over that (which is too bad), but at least it's not the typical maximalist view of "remixes have no value, or should first be licensed entirely." It does suggest, however, that there be clearer "guidelines" to provide clarity over when fair use should be applied to remixes to at least take away some of the chilling effects of copyright threats.

Remixes make valuable contributions to society in providing expressive, political, and entertainment content. It is important that the copyright framework continues to allow the broad range of remixes to thrive, ensuring that a vibrant fair use space coexists with effective licensing structures. The Task Force concludes that the record has not established a need to amend existing law to create a specific exception or a compulsory license for remix uses. We have several recommendations that would make it easier for remixers to understand when a use is fair and to obtain licenses when they wish to do so. Specifically, the Task Force recommends pursuing three goals:

• The development of negotiated guidelines providing greater clarity as to the application of fair use to remixes;
• Expanding the availability of a wider variety of voluntary licensing options; and
• Increasing educational efforts aimed at broadening an understanding of fair use.

Those are decent recommendations to start with, and again, it's nice to see a real recognition of the importance and cultural value of remixes.

And, finally, the paper looks at the question of digital first sale rights, and whether or not there's a way to "preserve the benefits" of first sale rights (which allow you to, say, resell a book you bought without having to first get approval of the copyright holder). The paper basically says that it's too early to try to change the law on this issue. This may be the only somewhat disappointing aspect of the paper, as it seems to argue the typical maximalist response of "well, new licensing solutions should take care of that." But first sale rights are not just about licensing. And just because there may be easier licensing solutions, you're still creating a permission framework where previously the exchanges were permissionless. And that creates a market friction. However, the paper does recognize that there are some concerns here -- especially from libraries, and recognizes the issue may need to be revisited in the future.

Overall, it's a surprisingly good paper that (not surprisingly) doesn't go as far as I might have liked, but goes much further than I would have expected from the government these days.

Filed Under: commerce department, copyright rolling, first sale, ntia, reform, remixes, statutory damages

Sony's Own Copyright Infringement Shows How Broken Our Copyright System Is Today

from the because-of-course dept

It almost always seems to come out that the most aggressive "anti-piracy" people, companies and organizations are engaged in some form of copyright infringement themselves. There was Nicolas Sarkozy, former President of France who initiated the idea of a "three copyright strikes and you lose access to the internet" program, but who also apparently was mass pirating DVDs. Even the MPAA -- an organization whose entire reputation is basically wrapped up in its anti-piracy efforts -- has a history of infringing on others' copyrights when it's convenient. The latest example is Sony Pictures.

As we've been covering, Sony was among those involved in the MPAA's plot to attack Google by paying for state Attorneys General investigations into Google, a company that the MPAA still thinks isn't doing "enough" to stop piracy online. Yet, now it comes out that in The Interview -- a movie whose plotline has become intertwined with the Sony Hack -- Sony used some music that it did not license. The musicians in question are now threatening to sue:

Tiger JK and Yoon Mi-rae (a.k.a. Tasha Reid)'s agency FeelGhoodMusic said Friday in a press release that the two's duet piece, "Pay Day," is featured in the Seth Rogen/James Franco comedy, but a contract was never signed. About 10 to 15 seconds of the song appears in the film.

"There were initial discussions about including the song in the film score, but negotiations stopped so we were under the impression that it wasn't happening," said the press release. "It was only after the film was released that we became aware of the song's unauthorized use, without taking the appropriate and necessary steps to complete a contract with the artists."

The label also noted that the musicians were hesitant to license the music for this movie at all, given that "the film is a very sensitive topic in Korea." Oh really? I hadn't noticed.

Of course the likelihood of this ever getting to court is basically nil. Sony will pay up to make it go away quietly without a trial. And, as Sarah Jeong helpfully points out, Sony has insurance to pay for these kinds of mistakes.

The larger point here isn't even that Sony is a hypocritical assholish company when it comes to copyright (on both sides of the question). Rather, it's that the entire copyright system is broken, and this little incident demonstrates that once again in multiple ways:

First, if Sony were to get sued, it would face the exact same penalties as someone sitting at home who downloaded or shared an unauthorized copy of the same exact song. It's difficult to see how that's even close to reasonable, but that's the way copyright law is structured today, with no real way to distinguish between a blatant commercial abuse for use in a high profile movie, and totally non-commercial use by a fan. Either way, you're facing $750 to $150,000 in statutory damages (the cap is $30,000 if the infringement isn't "willful" -- but copyright holders will claim that the file sharer at home is willful infringement).

Second, it shows that everyone infringes all the time. Whether meaning to or not, it's actually fairly difficult to avoid infringing on copyrights. That's not to say that accidental copyright infringement is what's happening with file sharers or with Sony's use of the music here, but under the law, it's pretty much all the same. The fact that, as noted above, some of the biggest copyright system defenders are found out to infringe should highlight this issue pretty clearly. Even when you are a strong believer in copyright, there are going to be some situations in which you screw up and break the law. Given how frequently this happens, it certainly seems like the problem is with the law rather than all the people.

In the end, this story will quickly go away, because Sony will fork over some cash and everyone will forget this ever happened. But for someone at home who just wants to check out a movie, these kinds of threats and lawsuits can absolutely destroy them. And Sony doesn't care one bit about that.

Filed Under: copyright, infringement, statutory damages, the interview, tiger jk, yoon mi-rae
Companies: feelghoodmusic, sony

Since Copyright Is So Handy For Censorship, It's Tempting To Use It To Censor Lots Of Content

from the unrelated-to-creativity dept

Matt Schruers, over at the Disruptive Competition Project blog has a great post discussing the harm of the increasing pressure to abuse intellectual property law to do a variety of things that it was clearly never intended for. He calls this intellectual property's "immigration" challenge, noting that these uses have "at best, a tenuous relationship to 'promot[ing]... Progress.'" Why "immigration"? Plaintiffs are jumping into the copyright realm because it's more appealing than laws in other areas, even if what they're seeking to do has nothing to do with copyright. One popular misuse of copyright law these days is as an alternative means of dealing with revenge porn. You can understand why people gravitate to this tool -- especially when there appear to be limited other tools for dealing with such sites. But can anyone explain what using copyright to takedown revenge porn has to do with promoting the creation of new works?

As Schruers notes, a big part of the issue is that copyright law comes with such a giant club in the form of statutory damages, which make it quite a powerful tool in censoring content:

What is happening is that plaintiffs are migrating into IP territory. Why? In a word: remedies. When testifying before Congress on this subject in July, I briefly noted that IP remedies are so attractive that they attract plaintiffs from other areas of the law. Rather than forum-shop, potential plaintiffs jurisprudence-shop. Claimants come to IP seeking redress for concerns that they cannot vindicate elsewhere. In the physical world, immigration is usually an indication that the destination is more attractive. In fact, a large amount of migration occurs in search of better conditions, or opportunities, and the anecdotal evidence suggests that this “remedy immigration” is no different.

When it comes to remedies, intellectual property is the land of opportunity. Robust injunctions, sweeping doctrines of secondary liability allowing recourse against parties other than the wrongdoer, statutory damages, and the availability of rapid DMCA takedowns all encourage plaintiffs to reframe various misdeeds (or perceived misdeeds) as infringement complaints. In a world with a general uniformity of remedies, there would be little reason for plaintiffs to seek out greener pastures, but when the remedies are unmistakably stronger in another area of law, plaintiffs have a natural incentive to reframe their claims to take advantage of them.

He goes on to discuss the use of copyright law against revenge porn and the recent "celeb leaks," noting that many of the photos in question aren't really good targets for copyright law, since many are taken by others (selfies are the exception, generally). He compares that to the Garcia case, in which an actress was able to take down the entire (controversial) "Innocence of Muslims" video based on a highly questionable copyright claim. He compares that to another case, Monge v. Maya Magazines, in which a celebrity sought to suppress images of her secret wedding (which she did not take).

Both Monge and Garcia represent efforts to use post hoc IP claims to suppress information from the public. While the circumstances may make for sympathetic plaintiffs, no one seriously thinks the litigation is about authorship. This is why it is so odd that the weapon of choice to suppress content is a statute aimed, ironically, at encouraging publication.

Again, one can (and many probably will) argue that they sympathize with the folks making use of copyright in this manner. Perhaps because they are troubled by the situations all of them find themselves in, and the lack of what they feel to be appropriate remedies. But it's quite clear that copyright in these cases is being used for things that have nothing to actually do with copyright. If we want our public policy to work properly, part of that has to involve making sure that we don't twist and turn laws to cover things they should not.

A big part of the issue, frankly, goes beyond just the remedies aspect that Schruers highlights. It has to do with the fact that copyright has long been viewed as a First Amendment work-around. The conflict between copyright and the First Amendment is undeniable -- in fact, whole books have been written about it. Historically, the courts have brushed off these concerns however, arguing that things like "fair use" create a "safety valve." But what's really happening here is that people are recognizing a tool that has been effectively blessed as a "legal" way to get around the First Amendment and use the law to censor content they wish to suppress. People can argue over whether or not it's appropriate to suppress that material, but everyone should at least be willing to admit that copyright should be the wrong tool for this sort of thing no matter what.

Filed Under: celebrity nudes, censorship, copyright, first amendment, immigration, promote the progress, remedies, revenge porn, statutory damages

No, Every Person Does Not Owe The Movie & Music Industry $67 Million, But Copyright Is Still Broken

from the too-much-extrapolation dept

Two years ago, we wrote about Rob Reid's comic novel, Year Zero, in which a bunch of aliens realize they owe the Earth-music industry more than all the money in the universe due to their long-standing infringement of Earth music (and the statutory damages rate of $150,000 per infringement). Prior to the book coming out, Reid had also done a TED talk about the $8 billion iPod, noting just how much someone might owe the industry if they filled a (very old) iPod with infringing copies.

In a similar move, some folks at the Huffington Post have now estimated that every single man, woman and child on earth owes the combined music and movie industries on the order of $67 million. Each. Not cumulatively. Cumulatively, it would be $470,925,000,000,000,000,000 -- which is also 6.63 times the GDP of the entire planet.

Admittedly, there are some questionable extrapolations at play here. It's based off of a recent study, which also has some questionable assumptions. The research, by economists Joe Cox and Alan Collins, found that (like basically every other study in this space ever), that those who download tend to also spend more on content. But they also looked at the differences between people who download unauthorized music vs. those who download unauthorized movies. According to the HuffPo summary, the study apparently claims that "the average person has illegally downloaded approximately 2,900 music files and 90 movies." This same summary is given in a variety of other reports on the research too, but those numbers seem extremely questionable. They're simply way too high. If the study only involved looking at people who already admitted to unauthorized downloads, then it's more likely. But those numbers are way too high for the general population.

Separately, it's based on a survey of 6,000 people in Finland -- where the downloading habits may not be anywhere near representative of the wider population. And, surveys are notoriously unreliable about actually teasing out what people do. So those numbers are certainly suspect to start with -- and then extrapolating a group of pre-selected downloaders in Finland and arguing that is representative of the world does seem a bit crazy.

However, on the flip side, for the numbers calculation, the HuffPo reporters only used a multiplier of $22,500 per infringement, which is what Joel Tenenbaum had to pay, but which is well below the statutory maximum damages of $150,000. So, if their other calculations made sense (which they don't), the total could be even higher.

Obviously, all the numbers here are sort of junk and meaningless -- but even with the ridiculous numbers, the craziest of all still has to be the statutory damages that would make such a thing seem possible in the first place. There are so many areas where copyright law needs reform, but a massive one has to be on statutory damages. The idea that an individual downloading (or uploading) a single file for non-commercial purposes may be on the hook for anywhere from a few thousand dollars all the way up to $150,000 just makes no sense at all.

Filed Under: alan collins, copyright, extrapolation, joe cox, statutory damages

Siemens Goes Copyright Troll, Files Infringement Lawsuit Against 100 John Does

from the really-now? dept

While we've seen plenty of stories of movie/video companies (often porn companies) filing mass copyright infringement lawsuits against a large group of "John Does," generally more established companies have stayed away from the whole mass Doe copyright trolling game. It appears that Siemens is looking to change that. As noticed by the CopyrightClerk website, Siemens Product Lifecycle Management Software Inc. filed a mass infringement lawsuit against 100 John Does. It's not clear how Siemens found these individuals, but it only has IP addresses (which more and more courts have been ruling is simply not enough to identify alleged infringers). Furthermore, a growing number of courts have been rejecting mass Doe lawsuits, noting that it's improper to lump them all together into a single lawsuit, as the defendants are not connected.

In fact, what's really odd is that by joining them all together, Siemens may significantly limit any damages it might get. That's because it's effectively suggesting a single act of infringement across all defendants. And while the lawsuit seeks statutory damages "for each infringement of each Copyrighted Software," some lawyers have pointed out that 17 USC 504 (the part of copyright law dealing with statutory damages) limits the statutory damage award to "all infringements involved in the action, with respect to any one work." In other words, the total statutory damages for each work that is listed in the action has to be $30,000 (or $150,000 if willful). Thus, by lumping them all together, even if the court allows the joinder, it would be at most $150,000 per software infringed (the lawsuit lists 3 potential products), meaning that the defendants would be "jointly and severally liable" for the total amount -- but it's not like they'd get $150,000 from each of the 100 Does.

Filed Under: copyright troll, software, statutory damages
Companies: siemens, siemens product lifecycle management software

Musician Claims $5.2 BILLION In Damages In Copyright Infringement Lawsuit Against Apple, Amazon And CDBaby

from the also-seeking-alchemy-secrets-and-unicorn-foals dept

The laws surrounding IP can certainly be absurd, and the ever-extending copyright term has turned the phrase "for a limited time" into a joke in search of a punchline. But there's nothing so absurd as those who take these laws into their own hands, find a lawyer willing to represent fools and pursue supposed infringement in court.

Roland Chambers from South Carolina has filed a copyright infringement lawsuit against Apple, Amazon and CD Baby over 12 original pieces of copyrighted sound recordings and two pieces of original artwork for the album cover. Chambers is looking for Apple to pay the larger amount. In total, the plaintiff is seeking an insane amount of over 5.2 billion dollars.

That's not a typo. Billion. $5.2 billion or a little over $1.7 billion per defendant. How did these defendants arrive at the receiving end of damage claims that rival IP abuser Zynga's market cap? I don't know either, but here are some of the accusations from Chambers' filing. (All punctuation/spelling errors from the original.)

On or about July of 2001, Plaintiff provided Defendant #3 (CD Baby) with five (5) compact disc including 12 original pieces of copyrighted sound recordings and two (pieces of artwork for the album cover.

In consideration for the compact disc, Defendant #3 executed a consignment only contract, which included distribution of the five disc sent only, no reproduction clause, warehouse storage fees if not sold, and no ownership transfer of copyright.

*A true and correct copy of the Note is attached hereto as Exhibit A.

[Quick interjection: there is no Exhibit A. There are only "demand breakdowns" for every defendant. And there's no asterisk anywhere in the filing that might give some indication what "Note" refers to. From where it's placed, one would assume it would be a copy of the contract with CDBaby, but nothing is provided other than Chambers' claims and bad math.]

No payment was reported or issued to plaintiff for any of the five disc.

Plaintiff discovered the compact disc were still selling in March 2014 (beyond the quantity ever legally produced) and in various formats and demanded explanation, as well as payment.

CD Baby was to distribute disc and not authorized to create any reproductions; however, more than five disc exist today, and CD Baby is only definitely aware of the whereabouts of one (1) disc. A representative states one (1) disc was sold and (3) were likely recycled/destroyed. This leaves one more disc unaccounted for prior to counterfeit units being placed on the market.

From this point, Amazon and Apple are both accused of allegedly selling Chambers' music without authorization (listed as "ringtones" on Apple's damages worksheet) "far beyond the quantity" authorized. Chambers supposedly gave Apple three songs to stream ("to poll the audience"), but Apple went ahead and made his whole album available digitally. Amazon apparently did likewise despite receiving notice several times to remove the material.

Now, here's where things get really bizarre: the "statutory damages enhancement."


The astronomical $1.7 billion is based mainly on Chambers' mistaken belief that statutory damages are awarded daily. If the unauthorized tracks were available for 4,745 days (roughly 13 years), then multiplying that by $30,000 per day gets you $1.7 billion. Of course, statutory damages don't work like that, but it's sort of amazing he didn't go for willful infringement and bring the total damages sought to $25 billion. Why not? It's not like we're talking about real money, real math or a real application of statutory damages here.

Beyond the $30k per diem, Chambers throws in everything else he can think of. There's another $30k thrown on for "cost of statutory damages." There's $1 million per defendant for punitive damages "based on evidence," something which, at this point, is almost completely nonexistent. There's also another half-mil on the spreadsheet for using his two album pictures -- a number seemingly pulled out of thin air and tacked on to the total.

Because Chambers hasn't listed album or song titles in his complaint, it's hard to verify whether or not he actually registered the copyright on his creations. There aren't a ton of copyrights registered to "Roland Chambers," but there's not enough info available to confirm or deny Chambers' right to claim statutory damages.

Chambers is also asking for attorneys' fees to be paid if he wins. Considering the "enhanced" math shown above, I'd be very interested in seeing Chambers' invoices for filing costs and billable hours.

Filed Under: copyright, roland chambers, statutory damages
Companies: amazon, apple, cdbaby