Remastering Copyright

It’s not often that a copyright owner denies owning a copyright in order to press a case for copyright infringement. But that’s essentially the position ABS Entertainment found itself in its legal fight with CBS Radio over the broadcaster’s on-air use of sound recordings made prior to 1972, when recordings came under federal copyright protection. And now a federal judge in California has ruled that ABS is stuck with the consequences of the copyright it never claimed (h/t THR, Esq.)

His_Master's_VoiceThe ruling, if it stands up on the expected appeal, is fairly dripping with implications for music and broadcasting industries (both over-the-air and digital), but also for the film and video industry that makes use of sound recordings in audiovisual works.

Pre-1972 sound recordings have been the focus of considerable controversy in recent years. Prior to 1972, sound recordings were not protected by federal copyright law; only the musical compositions embodied in those recordings were protected. But in 1971 congress updated the law to extend federal copyright protection to sound recordings made after February 15, 1972.

The law continued to exempt over-the-air broadcasters from having to pay public performance royalties to the owners of sound recordings, however (publishers and songwriters get paid), to the dismay of the record labels, on the ostensible grounds that airplay helped promote the sale of records and therefore record companies didn’t need performance royalties. (The real reasons had more to do with the power that broadcasters once wielded in Washington, DC, and in some measure still do.) 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.

Seeing Red over copyright

Having failed to put forth a competitive consumer proposition to counter Redbox’s dollar-a-night DVD rentals, the studios are on the verge of accomplishing what, from the point of view of their own economic interests, is the next best thing: they have brought the rental kiosk operator to heel and effectively forced it to accept a 28-day window after street date before it begins loading their DVD releases into its ever-expanding red maw.

On Tuesday, Redbox and Warner Bros. announced an agreement to settle the litigation the kiosk company had brought against the studio last year. As part of the deal, Redbox agreed to a 28-day “vending” window and to limit sales of used Warner discs. In return, Warner will allow Redbox to acquire its releases at a lower cost and promised to “cooperate” with Redbox on possible future digital delivery ventures.

While Tuesday’s settlement applies only to Warner, it’s widely expected that similar deals are in the works with Twentieth Century-Fox and NBC Universal, which are involved in similar litigation with the Redbox. Assuming that happens, new releases will essentially disappear from Redbox kiosks.

Make no mistake. Redbox rentals were hurting DVD sales and undercutting the studios’ other revenue streams. Its dollar-a-night rentals accounted for roughly one of every five dollars consumers spent on DVDs last year, and it returned a far smaller share of that dollar to the studios than Wal-Mart sends them when it sells a DVD. And from the studios’ perspective, the trend lines were getting worse. Something had to be done. Read More »

RealNetworks' real mistake

One week  after Judge Marilyn Hall Patel decisively threw out its antitrust claims against the studios and DVD CCA in the RealDVD case, RealNetworks appears to be imploding. On Wednesday COO John Giamatteo abruptly left the company, and on Thursday founder Rob Glaser stepped down as CEO (he’ll remain chairman). Although Glaser’s move had apparently been planned for some time, it came sooner than he expected and appears not to have been voluntary.

While it’s possible the timing of the events is just a coincidence I wouldn’t bet on it. Investors cheered the news of the Glaser move, sending the stock soaring 17 percent in its wake (ouch!), presumably in anticipation of a new strategic direction for the company–one not quite as provocative and confrontational with respect to the content owners.

The whole RealDVD saga, in fact, has been a disaster for Real. Not only has it been unable to distribute the product, thanks to a restraining order and temporary injunction by the court, but the litigation with the studios over the DVD copying software has produced an unending series of legal setbacks for Real, of which last week’s ruling is merely the latest. Read More »

Authors Guild doesn't like the sunrise, blames the rooster

The Authors Guild is not impressed with Amazon’s opposition to the Google Books settlement.

In a 49-page brief (pdf) filed with Judge Denny Chin on Tuesday, the Kindle-maker warned of the potentially anti-competitive effects both of the blanket license in the agreement for Google to scan and sell orphan works and of the price-fixing power of the proposed Book Rights Registry, which Amazon described as a “cartel of authors and publishers” operating with “virtually no restrictions on its actions.”

The Authors Guild fired back the next day in a statement on the group’s web site:

Amazon’s hypocrisy is breathtaking.  It dominates online bookselling and the fledgling e-book industry.  At this moment it’s trying to cement its control of the e-book industry by routinely selling e-books at a loss.  It won’t do that forever, of course.  Eventually, when enough readers are locked in to its Kindle, everyone in the industry expects Amazon to squeeze publishers and authors.  The results could be devastating for the economics of authorship.  

Amazon apparently fears that Google could upend its plans.  Amazon needn’t worry, really:  this agreement is about out-of-print books.  Its lock on the online distribution of in-print books, unfortunately, seems secure.

Well now.

While authors and publishers have ample reason to be wary of Amazon’s market power, as I’ve argued in previous posts, the Guild is drawing an apples and bananas comparison in this case. It’s not as if Amazon came by its market power through nefarious, or even non-transparent means. Read More »