DMCA

Slippery SOPA

Copyright Critics of the failed Stop Online Piracy Act and the Protect IP Act (SOPA/PIPA) have been having some fun with some internal RIAA and IFPI materials regarding the music industry’s anti-piracy efforts that leaked to TorrentFreak last week. Part of the cache includes a PowerPoint presentation delivered by RIAA deputy general counsel Victoria Sheckler to IFPI members back in April (pdf).

The critics are taking particular delight in Sheckler’s acknowledgment that the laws were “not likely to have been effective tool[s] for music.” Here’s the PPT slide summarizing the SOPA/PIPA debate:

While perhaps a bit embarrassing for the RIAA, I don’t find the revelation terribly surprising. The bills weren’t really crafted with music in mind; most of the online piracy the music industry is concerned about occurs over peer-to-peer networks, which were not the targets of the bills.

Rather, the bills were crafted by the MPAA, as a tool against movie piracy. Though P2P networks are responsible for a certain amount of movie piracy, more of it these days involves digital locker services, mostly based outside the U.S., like Megaupload, which were the main targets of SOPA and PIPA. As data contained elsewhere in Sheckler’s presentation show, digital lockers make up only about 6 percent of what the music companies regard as piracy, compared to 23 percent Read More »

YouTube Court: Viacom Dios

The lesson for content owners from yesterday’s smackdown of Viacom by U.S. District Court Judge Louis Stanton in its lawsuit against YouTube/Google should be clear (which, of course, is no guarantee it will be): stop bringing DMCA  safe-harbor suits against online service providers. It’s not working, and it’s past time to get on with plan B.

The Viacom case can now be added to a string of cases –beginning with Perfect 10 v. CCBill in 2007 and including Io Group v. Veoh (2008), and UMG v. Veoh (2009) — in which courts have refused to impose liability or additional procedural requirements on service providers beyond the strict language of the § 512 (c) safe-harbor provisions. Though The Media Wonk is not a lawyer, it sure seems like there’s a pattern developing here, and it’s not a favorable one for the content industries.

Unlike Grokster and LimeWire, which, as Judge Stanton noted in yesterday’s opinion, involved peer-to-peer file-sharing networks that are nowhere addressed in the DMCA, Veoh and YouTube are precisely the sort of web hosting services Congress envisioned and intended to protect from liability in drafting the DMCA, as Stanton also noted. He went to great length, in fact,  to emphasize the point, giving over whole pages in his opinion to long excerpts from the 1998 House and Senate committee reports on the law detailing exactly how Congress intended the language in § 512 of the statute to be construed by courts. The only real question was whether the standard industry practices YouTube followed regarding notice-and-takedown and the handling of repeat infringers meet the procedural requirements spelled out in the statute to qualify for safe-harbor protection. Like the Veoh courts before him, Stanton said they do.

Not surprisingly, Viacom didn’t see it that way. In a statement issued after the decision was handed down it seemed to suggest that it has YouTube just where it wants ‘em:

We believe that this ruling by the lower court is fundamentally flawed and contrary to the language of the Digital Millennium Copyright Act, the intent of Congress, and the views of the Supreme Court as expressed in its most recent decisions.   We intend to seek to have these issues before the U.S. Court of Appeals for the Second Circuit as soon as possible.  After years of delay, this decision gives us the opportunity to have the Appellate Court address these critical issues on an accelerated basis. We look forward to the next stage of the process.

The best case scenario for Viacom would obviously be a win in the Second Circuit, which carries a lot of weight in judicial circles on copyright matters. That might create enough of a split with the Ninth Circuit, which handed down the Perfect 10 case and where both Veoh courts are located, to tempt the Supreme Court to take up the issue at some point and give content owners a favorable ruling.

I can’t speak definitively to the legal likelihood of that scenario actually playing out. But again, to a layperson it seems like a long shot. Four courts have now pointedly refused to impose liability or new procedural requirements on service providers beyond the strict language in the statute, and zero courts have agreed to.

It’s possible, of course, that things could go differently in the Second Circuit, and the court (or the Supreme Court) will create a new legal standard in which a general awareness that unfettered copyright infringement is occurring on a platform is sufficient to disqualify a service provider from the § 512 safe harbor.

My question is: how much would that actually help Viacom? What sort of remedy, apart from monetary damages, would the court impose? It’s not going to erase the safe harbor language from the statute, so the principle of limited liability for service providers would remain. The best case for Viacom would be if the court were to create some new procedural requirements for service providers to qualify for the safe harbor, such as mandatory filtering. That would give Viacom and other content owners far more leverage in negotiating with service providers over the use of their content.

Since filtering is nowhere mentioned in the statute, however, that seems like a heavy lift for the court. If content owners really want mandatory filtering, I think they’re going to have to go to Congress.

That would mean reopening the DMCA, however, which means opening a gigantic can of worms from which all sorts of unpredictable outcomes could crawl. In the meantime, deals with YouTube and other online service providers that could profit Viacom, however imperfectly, are not getting cut.

It’s possible that, some day, Viacom will get a better deal out of the courts, if not from the YouTube case than from some other. But hoping for a three-way bank-shot is not much of a business plan.

Join me at the first Digital Breakfast DC on Oct. 1

The Media Wonk will be hosting the first Digital Breakfast DC conference on Oct. 1 in, not surprisingly, Washington, DC. The topic for the panel is Using Tech to Safeguard Content and IP. Panelists include Rick Cotton, general counsel of NBC Universal, Prof. Peter Jaszi of Washington College of Law at American University, Jon Baumgarten, partner with Proskauer Rose, Bill Rosenblatt of GiantSteps Media and the irrepressible Chris Castle an entertainment attorney from LA who is appearing on behalf of Arts + Labs.

digital-breakfastDebating points will include the implications of the FCC’s net neutrality rulemaking for filtering and other online anti-piracy efforts, the French three-strikes law, Veoh’s recent court victory and its implications for UGC and the over/under line on when we’ll see the new White House IP Czar named. All packed into a fast-paced one hour. Plus bagels.

Click here to register today!

Redbox, RealDVD and Hollywood’s long stuggle with consumer demand, Part I

There’s something about the video rental market, to borrow a phrase from Barack Obama, that causes the studios to get all wee-weed up.

Back in 1983, not long after the Hollywood studios began, ever-so tentatively, to release movies on the newly introduced half-inch videocassette for watching at home, they were horrified to discover that some enterprising video shop owners had begun renting the cassettes for a few bucks a night, sparing their customers the need to shell out $30 or $40 for a movie they might watch only once. Worse for the studios, the video shops had not licensed the right to rent movies and were not sharing any of their rental earnings with the studios.

Hollywood huffed and it puffed but, in fact, the video shops had the law on their side, specifically Section 109 of the U.S. Copyright Act of 1976, which provides that:

[T]he owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

In other words, the rental shops didn’t need a license, and the studios couldn’t stop them from renting. So Hollywood did what copyright owners had done at least since the introduction of radio: they went to Congress to get the law changed more to their liking.

Never mind consumers’ manifest interest in renting movies.

In the sausage factory of Capitol Hill, the repeal of Section 109, known colloquially as the First Sale Doctrine, became twinned with a separate studio initiative to outlaw the use of VCRs to record TV programs, or, short of that, to impose a royalty levy on VCRs and blank tapes to “compensate” copyright owners for such copying.

In 1984, however, with the legislative battle still raging, the U.S. Supreme Court threw a wrench into the works by handing down its decision in the famous Betamax case, which held that recording TV shows off the air with a VCR for private use was perfectly legal and that no royalty payment was required. With that, the studios’ effort to ban or tax recording equipment died in Congress, and with it its legislative twin, repeal of the First Sale Doctrine.

The studios were not ready to make their peace with rentals, however. Their next move was to implement a series of ever-more baroque “rental plans,” which involved various schemes to try to distinguish between “rental” cassettes and “sale” cassettes, including the use of different color plastics for the cassette shells. Thus, “rental” cassettes were red, while “sale” cassettes were blue.  The idea was that “rental” cassettes would not actually be sold to rental stores but licensed, thereby pulling an end-run around the First Sale Doctrine. Since the stores would never legally own the cassettes, they could not unilaterally exercise their right to rent them under Section 109 of the copyright statute. Instead, they were compelled to pay a “royalty” to the studio on each rental transaction. Read More »

The studios just say 'no'

The studios and the DVD Copy Control Assn. (DVD-CCA) are on a legal roll. On successive days last week they won a preliminary injunction against RealDVD and a reversal on appeal in the Kaleidescape case (The Media Wonk has been on another assignment so I’m only just getting aroundto blogging this now). The two courts found, inter alia:

  • The CSS license and technical specifications “unambiguously rule out” (RealDVD) the making of permanent digital copies of DVDs and prohibit the playback of the DVD’s content without the original disc in the tray.
  • The technical specifications in the CSS license are indeed part of the CSS license agreement and it was the “unambiguous intent” of the parties that those specifications barred the creation of permanent digital copies  (Kaleidescape).
  • The anti-circuvention provisions of the DMCA clearly and plainly tipped the balance of copyright law in favor of copyright owners and trumped any fair use analysis (RealDVD).

The studios really couldn’t have asked for more.

Kaleidescape-collection-to-systemSo, now what? Now that the studios have won most of the key legal points and preserved the integrity of the CSS license  (at least for now), what will they do with them?

Alas, probably nothing very useful.

As long-time readers of The Media Wonk know, the DVD-CCA has been attempting to devise a comprehensive system for allowing “managed copying” of DVDs for the better part of four years–a process that has thus far produced little apart from the Kaleidescape and RealDVD litigation. Based on the most recent discussions, in fact, Media Wonk’s sources suggest, negotiators seem farther than ever from a comprehensive solution. Read More »