Intellectual Property

A striking Variety cover article shows that there is considerable consensus within the film industry on its greatest challenge right now: innovating to stay relevant in a changing, disrupted marketplace. Unfortunately, that memo apparently hasn’t been circulated inside the Beltway.

On the cover of the January 28, 2015, issue of Variety, the phrase “Broken Hollywood” is superimposed over a cracked “H” from the iconic “Hollywood” sign. The editors explain that they chose this title for their cover story to convey the severity with which 22 industry leaders view the most pressing problems confronting the movie and television business, “which run the gamut from a declining movie audience — particularly among the vital younger demographic — and falling ratings in broadcast and cable TV, to an unacceptable lack of diversity in the creative ranks and executive suites, and inadequate audience measurement across platforms.”

The “luminaries” interviewed in the article discuss in great detail the viewing behavior of millennials, which they describe as tech-savvy, binge-watching cord cutters, cord-nevers, and heavy users of DVRs to skip commercials. However, nineteen of the 22 make no mention whatsoever of copyright infringement, and two (Harvey Weinstein of the Weinstein Co. and John Landgraf of FX Networks) mention infringement only in passing. Just one industry leader, MPAA chief Chris Dodd, focuses his comments on infringement. Dodd cites piracy as the greatest threat to Hollywood jobs, suggests Internet companies unaware of the infringement are “threats to our creative future,” and conflates online infringement with the Sony hack. Yet this isn’t what industry leaders raise in their interviews.

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We’re taking part in Copyright Week, a series of actions and discussions supporting key principles that should guide copyright policy. Every day this week, various groups are taking on different elements of the law, and addressing what’s at stake, and what we need to do to make sure that copyright promotes creativity and innovation.

As of January 20, The Interview grossed $40 million from online rentals and sales, on top of $6 million in box office sales. Sony Pictures decided to distribute the film online just days after it cancelled the film’s national theatrical release in response to terrorist threats from North Korea. The enormous online success of the film, months before it otherwise would have been distributed in that manner, significantly undermines one of the primary justifications for the long copyright term that keeps works out of the public domain, today’s Copyright Week theme.

The most obvious purpose for copyright protection is to provide authors with an economic incentive to create works. However, under the U.S. Copyright Act, the term of protection is life of the author plus 70 years (or 95 years from publication for a work with corporate authorship). An author obviously doesn’t benefit from a revenue stream after her death, and it is unlikely that the author’s knowledge that her great-grandchildren may receive royalties provides her with additional incentive to create.

Moreover, the various extensions to copyright term adopted by Congress have always applied retroactively. Clearly, there is no need to incentivize the creation of a work already in existence, particularly after the author’s death.

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We’re taking part in Copyright Week, a series of actions and discussions supporting key principles that should guide copyright policy. Every day this week, various groups are taking on different elements of the law, and addressing what’s at stake, and what we need to do to make sure that copyright promotes creativity and innovation.

The Supreme Court’s Aereo decision last year raised two significant questions for the tech industry. First, would lower courts apply the Supreme Court’s public performance holding narrowly only to services that looked like Aereo (which in turn looked to the Court like the community antenna services of the 1970s), as the Court directed, or would they apply it more broadly to other types of online services? Second, would lower courts interpret the Court’s reluctance to use the word “volition” as an indication that direct infringement liability did not require volitional conduct?

The summary judgment order in Fox v. Dish Network released earlier this week by the U.S. District Court for the Central District of California emphatically answered both of those questions in a manner favorable to the tech industry. (For detailed summaries of the decision, see here and here.) The district court rejected Fox’s suggestion that Aereo was “a game-changer that governs the outcome of its copyright claims….” The district court observed that “in an effort to cabin the potential over-reach of its decision,” the Aereo Court “specifically cautioned that its ‘limited holding’ should not be construed to ‘discourage or to control the emergence or use of different kinds of technology.” The district court carefully proceeded to distinguish the Dish Anywhere with Sling service from Aereo. (The Dish Anywhere service allows a subscriber to view a program recorded on his set-top box on another device.) In particular, the district court noted that Dish had a license to transmit programs to the subscriber’s set-top box, while Aereo did not have a license to transmit programs to the user’s computer.

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We’re taking part in Copyright Week, a series of actions and discussions supporting key principles that should guide copyright policy. Every day this week, various groups are taking on different elements of the law, and addressing what’s at stake, and what we need to do to make sure that copyright promotes creativity and innovation.

Last week at the Future of Music Coalition blog, Casey Rae discussed how transparency is so crucial in the music marketplace. ([1], [2])

As Casey points out, marketplace transparency is a necessary (but not sufficient) condition to ensure artists get a fair and competitive deal.

Digital services have similar needs.  Just as artists need accurate and reliable information to know they are receiving a square deal, music delivery services need accurate and reliable information to know what they can play, and what they’ll have to pay, and to whom.  Most (but not all) participants benefit from a more transparent marketplace.

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We’re taking part in Copyright Week, a series of actions and discussions supporting key principles that should guide copyright policy. Every day this week, various groups are taking on different elements of the law, and addressing what’s at stake, and what we need to do to make sure that copyright promotes creativity and innovation.

So far, the courts are taking Copyright Week very seriously. Yesterday morning the Ninth Circuit issued a favorable decision in Omega v. Costco, discussed here. Yesterday afternoon, a redacted version of the summary judgment order in Fox v. Dish Network was released. (We’ll discuss that decision in a separate post.) Finally, the U.S. District Court for the Central District of California issued a favorable decision in Rosen v. eBay last Friday. The Rosen decision included helpful holdings on the DMCA and fair use, the latter of which is today’s Copyright Week theme. In particular, the court employed the fair use doctrine robustly to vindicate first sale rights over e-commerce platforms.

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We’re taking part in Copyright Week, a series of actions and discussions supporting key principles that should guide copyright policy. Every day this week, various groups are taking on different elements of the law, and addressing what’s at stake, and what we need to do to make sure that copyright promotes creativity and innovation.

The fair use doctrine is an essential limitation on copyright which serves the public interest and benefits every sector of the U.S. economy.  As fair use expert Peter Jaszi told the House Judiciary IP Subcommittee last year, “Everyone who makes culture or participates in the innovation economy relies on fair use routinely – whether they recognize it or not.”

The economic impact is particularly significant.  Research commissioned by CCIA in 2011 concluded that industries depending upon fair use and related limitations to copyright generated revenue averaging $4.6 trillion, contributed $2.4 trillion in value-add to the U.S. economy (roughly one-sixth of total U.S. GDP), and employ approximately 1 in 8 U.S. workers.

A few examples of the many industries that depend on fair use are below:

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We’re taking part in Copyright Week, a series of actions and discussions supporting key principles that should guide copyright policy. Every day this week, various groups are taking on different elements of the law, and addressing what’s at stake, and what we need to do to make sure that copyright promotes creativity and innovation.

Today the U.S. Court of Appeals for the Ninth Circuit issued a decision making clear that copyright owners should not attempt to limit the first sale rights of users.

The decision is the latest installment in the litigation between Omega and Costco, which began in 2004. Costco, the discount retailer, sold luxury Omega watches without the authorization of the Swiss watchmaker. In an effort to prevent Costco from importing and selling its watches, Omega began engraving an “Omega Globe” logo on the back of its watches. When Costco started importing and selling the watches bearing the logo, Omega sued Costco for infringing the importation right under the Copyright Act. Costco responded that the importation right was a subset of the distribution right, and that the first sale doctrine provided it with an exception to the distribution right. The first sale doctrine provides that the distribution right with respect to any particular copy of a work extinguishes with the first authorized sale of that copy. The district court granted summary judgment in favor of Costco on the basis of the first sale doctrine. The Ninth Circuit reversed. It noted that the first sale doctrine applied only to copies “lawfully made under this title,” and interpreted that phrase to mean manufactured in the United States. Because the watches were manufactured in Switzerland, they were not “lawfully made under this title,” and the first sale doctrine did not apply.

Costco appealed to the Supreme Court. With Justice Kagan recusing herself, the Supreme Court in 2010 reached a 4-4 tie. This meant that the Ninth Circuit decision was affirmed for purposes of the Ninth Circuit, but was not binding precedent in the other circuits.

On remand, the district court once again granted summary judgment to Costco, this time on a copyright misuse theory. It found that Omega misused its copyright in the logo to expand its limited monopoly impermissibly to prevent the importation of the non-copyrightable watches. The Ninth Circuit also awarded Costco $396,000 in attorneys’ fees.

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We’re taking part in Copyright Week, a series of actions and discussions supporting key principles that should guide copyright policy. Every day this week, various groups are taking on different elements of the law, and addressing what’s at stake, and what we need to do to make sure that copyright promotes creativity and innovation.

The Library of Congress is in the process of conducting its sixth cycle of adopting exemptions to the Digital Millennium Copyright Act’s prohibition on the circumvention of technological protection measures (TPMs). The majority of the 27 proposed exemptions address situations far from Congress’s intended target of online infringement when it adopted the DMCA in 1998, indicating that Congress drafted the DMCA far too broadly, and that the Copyright Office is implementing the exemption process far too narrowly.

In an effort to protect the economic interests of copyright owners in the digital age, Congress prohibited people from hacking TPMs in order to get unpaid access to copyrighted works. However, the DMCA is worded so broadly as to prohibit owners of copies of works from circumventing the TPMs limiting access to their copies. Manufacturers of a wide range of devices have exploited this overbreadth to exercise after-market control over the devices in a manner that has nothing to do with copyright protection. Many devices include software essential to their operation. Manufacturers have placed TPMs on this software in an effort to tether the device to complementary networks or products. The DMCA makes unlawful the circumvention of these TPMs for the purpose of untethering the devices.

Congress recognized that there may be legitimate reason for circumventing TPMs, so it authorized the Librarian of Congress to conduct a rulemaking every three years to adopt appropriate exemptions to the DMCA’s circumvention prohibition. In this rulemaking cycle, 14 of the 27 proposed exemptions concern situations where the work protected by the TPM is a software component of a hardware device owned by the user. In other words, the exemption would allow the owner of a hardware product to make a use of her personal property obstructed by the DMCA.

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As Jon noted on Friday, the Supreme Court invited the views of the U.S. Solicitor General on whether to hear the Oracle v. Google case.  This suggests the Court is far likelier to review the Federal Circuit’s decision regarding copyright, interoperability, and the Java APIs (previously discussed here).

The Solicitor General (SG) coordinates the U.S. Government’s litigation before the Supreme Court, and the Court from time to time will invite the SG’s views on whether to take a case.  Roughly a dozen times a year, the SG is asked to file such briefs, in an order referred to by Supreme Court wonks as a “CVSG order” (which calls for the views of the Solicitor General).

Empirical evidence suggests that (a) this bodes well for the petition, and (b) that the substantive views of the SG can be influential.

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01/12/15 Update: The Court issued an invitation calling for the views of the U.S. Solicitor General, an act that shows interest in the case.  It suggests the Court is more likely to grant the petition, although it is now very unlikely to be heard this Term.


 

Today the Supreme Court conferences over whether to review the Federal Circuit’s decision in Google v. Oracle America. This is a welcome development because it provides the Supreme Court with the opportunity to overturn the Federal Circuit’s flawed decision relating to the protectability of the Java Application Program Interfaces (APIs) under copyright.

We previously discussed the Federal Circuit’s May 2014 decision here, here, here, and here. Google incorporated elements of the Java API in the Android API. Oracle acquired the rights in Java when it purchased Sun Microsystems, the company that developed Java. After the acquisition, Oracle sued Google for patent and copyright infringement. The district court dismissed the patent claims, and the case presently centers on the copyright claims. MORE »

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