Intellectual Property

While reading Variety’s eye-opening article explaining how successful young performers are reaching a new generation through Internet platforms, you might have come across producer Kurt Sutter’s (potentially NSFW) open letter savaging Google about piracy allegations.  Sutter, who produces the FX drama “Sons of Anarchy,” announces the search company is “in the process of systematically destroying our artistic future.”

The attack is uncomfortably wedged between Variety’s impressive coverage of the rise of the Internet content creators, and stars on Google’s YouTube in particular.  In fact, Variety published a survey this morning which concluded that YouTube stars are more popular than “mainstream” celebrities among teens.  Hollywood, however, has no idea who these new stars are — a disconnect likely to widen as more young Americans cut the cord and trade the remote for the smartphone.  Amidst other coverage, one article concludes, “[Internet video brands] AwesomenessTV and Vice could very well be the next mega-brands; they demand our attention now”.

It’s difficult to square Sutter’s dire predictions that we will look back with regret on “the magical days when creatives flourished” when the several preceding articles highlight creativity flourishing on the Internet.  Situated as it is inside what might be called Variety’s Disintermediation Issue, Sutter’s f-bomb fusillade says nothing so loudly as ‘get off my lawn.’

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SarahFeingold2012If you’re in the market for some original Aboriginal dot paintings, or an even more esoteric item, like a bed for your pet rat that’s shaped like a slice of cake, you’re in luck: It’s likely that Etsy, the giant, 24/7 online version of the weekend crafts market will have something on offer that will appeal to you.

Etsy, if you hadn’t heard, is one of the world’s fastest-growing ecommerce platforms that has successfully managed to tap into the latent market for easily-accessible, hand-crafted and vintage goods. Since its founding in Brooklyn in 2005 by Robert Kalin, Chris Maguire, Haim Schoppik and Jared Tarbell, it’s mushroomed into a global, 500-person company with more than 40 million members, more than a million shops selling more than $1.35 billion worth of goods in 2013. Etsy charges 20 cents for each item published on the platform for up to four months and a 3.5 percent fee on the sale of each item. Its current CEO is Chad Dickerson, the company’s former chief technology officer. Its investors include Accel Partners, Hubert Burda, Index Ventures, and Union Square Ventures.

Sarah Feingold, a jeweler and metalsmith who also happens to be a lawyer, is a member of Etsy’s core team who’s been through almost the whole journey. Feingold is from a family of artists and first became interested in copyright law when she wanted to find out more about how to protect her creations. That led to a professional interest, law school at Syracuse University, authoring an e-book for artists on copyright basics and what they should be doing to protect their works, and then eventually a job as an attorney at Etsy. Like a lot of startups, Etsy didn’t have an in-house lawyer in 2007. Feingold saw an opportunity, knocked on the company’s doors and managed to convince Kalin that she was the person that they didn’t know they were looking for. Today, Feingold is part of a team of four. She’s an in-house counsel who focuses on intellectual property issues, and works alongside Hissan Bajwa, another in-house counsel. Althea Erickson is the company’s public policy director, and Jordan Breslow is the firm’s general counsel.

Etsy has grown into an important avenue of sustaining livelihoods for creative people. At the same time, the open nature of the Internet, and the rise of entities in Asia that can quickly copy and mass manufacture designs by artisans have made copyright a burning issue of importance for many in the community. It’s not hard to find online discussions between various Etsy sellers debating the limits of fair use, or others sharing their experiences of receiving cease and desist letters.

However, like any other online platform that hosts third-party content, Etsy is subject to the Digital Millennium Copyright Act (DMCA). The company acts as an impartial conduit that does not get involved in the merits of the hundreds of infringement claims and counterclaims that flow into Etsy’s offices.

As the company’s chief in-house IP counsel, Feingold handles the DMCA takedown requests, and counter-notices, among other things. Her advice to sellers is to educate themselves as much as possible about copyright policy so that they understand both their own rights, and also understand the complexities of the factors at play when courts judge what is and isn’t fair use.

Below in an edited Q&A, Feingold discusses the DMCA and fair use.

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Jonathan’s post continues DisCo’s ongoing coverage of the Aereo case.  Last week, Prof. Michael Carrier wrote a post for DisCo on the possible effect of Aereo on investment.  Previously, DisCo writer Matt Schruers guest-posted on SCOTUSblog about how Aereo creates uncertainty for the cloud.

One of the great attractions (or frustrations) of copyright law is that it is based on metaphysical distinctions. The most obvious of these is the idea/expression dichotomy. The Second Circuit in Computer Associates v. Altai observed that “drawing the line between idea and expression is a tricky business.” Judge Learned Hand, one of the leading copyright jurists, stated that “nobody has ever been able to fix that boundary, and nobody ever can.” He also noted “no principle can be stated as to when the imitator has gone beyond copying the ‘idea’ and has borrowed its expression. Decisions must therefore inevitably be ad hoc.”

Other similarly metaphysical (and ad hoc) distinctions in copyright law are whether the idea and the expression have “merged,” whether two works are “substantially similar,” and whether a use is fair. And after the Supreme Court’s decision in American Broadcasting Cos. v. Aereo, we can add the identification of who is the volitional actor to this list of abstract, ad hoc determinations.

One of the conceptual flaws of the Second Circuit’s decision in Aereo was that the Second Circuit never decided definitely who was the “volitional actor,” i.e., who was doing the transmitting, Aereo or the subscriber. The Second Circuit focused just on the fact that a particular copy was being transmitted to only one subscriber, ignoring the question of who was transmitting it to the subscriber. As a result, the parties talked past one another in the briefing before the Supreme Court, with the broadcasters assuming that Aereo was the volitional actor, while Aereo assumed that the subscriber was the volitional actor. Several of the amicus briefs, including the one I filed on behalf of the Center for Democracy and Technology, and those filed by CCIA and law professors David Post and James Grimmelmann, stated that the starting point of any copyright analysis was identifying who was the volitional actor—who was the party that would be treated as the direct infringer, as opposed to a secondary infringer.

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The Supreme Court recently held that Aereo, a service allowing subscribers to watch broadcast TV on Internet-connected devices, infringed copyright law by publicly performing protected works. Although the Court promised that its ruling was “limited,” that may not be the case. To shed light on Aereo’s impact, this post highlights my research into copyright law and innovation, which foreshadows harms to innovators, reduced venture capital, and increased litigation from heightened ambiguity.

My research uncovered the relationship between copyright and innovation in the music industry through interviews of 31 high-ranking officials from technology companies, the recording industry, and venture capital firms. I traced the effect of litigation including Napster, the first case to punish a peer-to-peer (P2P) service, and one in which the court required filters that were 100% effective in blocking copyrighted works.

I learned that Napster had a significant effect on innovation and investment in the music industry. Venture capitalists and entrepreneurs were “scared away” from the area, which was “too risky.” And the decision led to a venture capital “wasteland,” “graveyard,” and “lost decade,” with “a pall over companies getting funded.”

Relatedly, innovators who tried to comply with the law were blocked by the copyright holders. One innovator introduced a service that he believed was “completely legal to the letter and to the spirit” of the law, but still “got hit across the head with a hammer.” Another, who offered a service that was “able to block close to 100%” of the files the record labels requested, lamented that he was “getting set up by the RIAA [Recording Industry Association of America]” with an “ultimatum” that “you cannot have any of our material being downloaded on our website—100%.” And a third, offering a service that had investors with “deep entertainment interests” and was “first of kind” in implementing compliance procedures, witnessed its offer of a “blank check” rejected by the labels, which “just wanted us dead.”

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(cross-posted from the CCIA blog)

Achieving a modern copyright regime that is apt for a digitally connected continent requires a strategic vision. The leak of the European Commission’s White Paper on copyright policy which appeared this week has a strategic vision – unfortunately, one which seems to see copyright as an instrument of industrial policy designed “to ensure a balanced distribution of value among market players”. It is conceptually wrong to pick winners and losers in the marketplace via copyright rules. While copyright rules were not designed to do this, the Commission’s White Paper seems to suggest that this is a legitimate vision based on the ‘perception’ of some claiming that they are not getting a fair share from the online economy.

At the same time statements on the “sustainability of value chains that are based on copyright works” raise questions on what the Commission envisions to legislate for. Copyright rules should neither try to protect existing business models nor try to prevent new market developments and innovations – even if they are very disruptive for some players. In fact, the White Paper implies that all value online comes from professionally produced content industries. It fails to provide evidence on the new, pro-active role of consumers and new creators who are part of a dynamic, rapidly evolving landscape for creative content. Contrary to certain statements, this landscape is increasingly driven by digital technology enabling the creative sector to thrive. In addition, traditional content industries like books, music, audiovisual and video games have grown over the past years, largely driven by digital distribution chains and formats.

A strategic vision should include a proper balance in the copyright framework. Creativity must be incentivized and rewarded without, however, undermining legitimate interests of users and the broader development of a thriving digital economy in Europe. Establishing balance in copyright is not only for the purpose of addressing market failures. Making sure that copyright does not collide with fundamental rights and leaving enough breathing space for Europe’s digital innovators are examples of two other compelling reasons for balance in copyright.

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120921_KTQgala_HeadShot_11Life Itself,” Kartemquin Films’ highly-acclaimed documentary about the late movie critic Roger Ebert, debuts in theaters this July 4 weekend, and it’ll contain clips from Ingmar Bergman’s movie “The Silence,” Martin Scorsese’s “Who’s That Knocking At My Door,” and Russ Meyer’s “Beyond the Valley of the Dolls.”

Thanks in part to an ongoing campaign undertaken by Kartemquin Films’ Co-Founder and one of “Life Itself”’s Executive Producers Gordon Quinn, the documentarians didn’t have to license all of the clips.

“Life Itself,” and several other documentaries, such as “The Trials of Muhammad Ali,” would not have been possible without the filmmakers being able to rely on the legal concept of fair use, because licensing footage and archival materials would have been prohibitively expensive, Quinn said in a recent interview.

In 2004 and 2005, Quinn and a group of his peers, working alongside industry lawyers and academics, produced a 10-page guide entitled: “Documentary Filmmakers’ Statement of Best Practices in Fair Use.”

The project came about after an animated 2004 conversation between American University’s Professor of Communications Patricia Aufderheide and Quinn in Amsterdam as they were attending the International Documentary Festival. The professor told Quinn that documentarians didn’t have to live in a “clearance culture,” and that he and his colleagues ought to reset the expectations about fair use and licensing by creating industry standards, educating industry players and asserting their rights.

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The long-awaited Aereo opinion is out.  The Second Circuit was reversed 6-3, and it’s not encouraging for the cloud industry, as we feared.  (This appears to be 2(a) in Matt’s list of possible outcomes, more of a broad reversal than a narrow reversal.)

Matt has written several posts on how this case impacts the cloud industry ([1], [2]).  He explained that while the broadcasters may not intend to go after the cloud, any argument that attempts to just eliminate Aereo would also implicate cloud services.  And in fact, several members of the Supreme Court were concerned at oral argument (which I attended) with the effect of this decision on the cloud, although this was not sufficiently represented in the majority opinion.

The United States government had filed an amicus brief arguing that the Court could find Aereo unlawful while simultaneously not threatening the cloud, but as Matt explained, this is not possible.  (The majority, however, appears to have been persuaded by the U.S. government’s argument, as I explain below.)

Not only does this decision against Aereo potentially affect the cloud industry for legal reasons, but it is likely to deter investment in innovative new services.  The certainty provided by Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2008)) (popularly known as Cablevision) led to additional investment in U.S. cloud computing companies ranging from $728 million to $1.3 billion during the two years after the decision.  (Cablevision also happens to be the case that Aereo’s business model heavily relies upon.  As explained below, the majority does not cite the case, which is odd.)  Today’s decision may mean that the next Aereo is unable to secure funding from investors.  And that’s bad for everyone.

Some initial takeaways from the majority opinion:

First of all, the split was unique for copyright cases.  The majority opinion was written by Justice Breyer, who has often been on the side of limited copyright and increased innovation.  (See, e.g., his opinion in Kirtsaeng, and his dissents in Eldred and Golan.)

1. Breyer starts off by calling Aereo a “technologically complex service”

This is not a good start.  That is reminiscent of the ‘Rube Goldberg’ argument, but Aereo should not be faulted for designing a system that complies with the law.  The majority does not even cite the main precedent Aereo relies on, Cablevision, except for in a parenthetical.  This signifies that a results-oriented decision is to follow, rather than one that follows the law.  It also may implicate the broader cloud storage industry, if how the technology works does not matter to the Court.

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The French have a wonderful saying, la plus ça change, plus c’est la même chose, which roughly translates to “the more things change, the more they remain the same.” That’s an apt description of current, high-profile wrangling in the United States about music licensing under federal copyright law. Despite all the jarring changes to the recording industry over the past decade — remember Tower Records? — it’s the same issues and (mostly) the same players as always, arguing over a Rube Goldberg-like system of arcane complexity.

Tomorrow the House of Representatives (specifically the Judiciary Committee’s Subcommittee on Courts, Intellectual Property and the Internet) will hold a second round of hearings on music licensing. This inquiry coincides with a recent announcement by the Justice Department that it will review — and solicit public feedback on — the 73-year-old antitrust decrees that govern ASCAP and BMI, two groups which act as licensing clearinghouses for a range of outlets that use music, including radio stations, websites and even restaurants and doctors’ offices. As the New York Times has observed, “billions of dollars in royalties are at stake, and the lobbying fight that is very likely to unfold would pit Silicon Valley giants like Pandora and Google against music companies and songwriter groups.” MORE »

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As the IP nerd vigil over Aereo continues, let us take a minute to survey what potential outcomes might look like.  So, if World Cup prognostication isn’t for you, this post should get you started on the next best thing: Supreme Court tea-leaf reading.

The Court’s Aereo decision will issue on a Thursday or Monday between now and June 30.  The case could be resolved as early as tomorrow morning, but the fact that it was argued so late in the term may produce a correspondingly late decision date.  I’ll assume you know how Aereo got to the Supreme Court; if not, try this post and infographic surveying the Aereo litigation. Below I describe how the most probable outcomes would look, plus a few unlikely results.

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Back in May, Los Angeles-based startup Vyclone invited mobile users to shoot four-minute multi-angle videos of themselves dancing and lip-syncing to the Canadian artist Kiesza’s infectious pop hit “Hideaway,” and to upload the footage and share it with their friends on their other social media platforms.

Just a few years ago, this invitation from the collaborative social video startup would have been seen as an invitation to infringe upon Kiesza’s copyrights. However, this announcement is a partnership between the artist and the startup, and it’s part of a broader online social media strategy.  The Vyclone partnership attempts to integrate the artist’s work and her fans’ enthusiasm into one seamless experience – something that’s already happening on YouTube and elsewhere.

The promotion reflects the dramatically different media and technology landscape going into the second decade of the 21st century, as record labels and artists are finally figuring out how they might monetize the passion of their fans and their desire to reinterpret and share their multimedia opinions of artists’ and other kinds of creators’ work. “Hideaway” was published as a YouTube music video early this February. The counter reports that it’s been played 27.6 million times. Dozens of YouTube remixes with ads run against them, have proliferated.

None of this is accidental: The International Federation of the Phonographic Industry (IFPI), an international trade group that represents the recording industry, said in its 2014 digital music report that YouTube is “the most used music service in the world,” and that monetized user-generated content brings in more revenues than record labels’ official videos on the platform.

All this has developed after at least four decades of what historically had been underground fan activities – underground because these fans weren’t clear on what the legality of their re-interpreted works were.

One sub-genre of this fandom are “vidders,” people who splice portions of their favorite television shows and movie moments together and set them to music. According to an online fan wiki called Fanlore.org, the practice can be dated as least as far back as a 1975 recording of a musical slide show at a Star Trek convention.

Fast forward to today, and “vidding” is just one genre of multiple kinds of fan-generated activity online that mash up popular published works. Much of this activity today is legal in the United States in part because of legal advocacy by several digital rights advocacy organizations, one of which is the grassroots group the Organization for Transformative Works (OTW) founded in May 2007.

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