Fifty Shades of Fair Use

by Jonathan Band on February 10, 2015

Fifty Shades of Grey, which is being released this Friday just in time for Valentine’s Day, is sure to be one of the top grossing films of the year. Depending on your point of view, fair use is to blame—or thank—for the existence of the Fifty Shades franchise.

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Far from Washington or any other place associated with Internet policy-making, a federal district court in Jackson, Mississippi is considering a case that could dramatically alter the regulation of Internet speech.  The case pits Google against the Mississippi Attorney General, Jim Hood, over the question of whether Hood can launch a sweeping investigation of Google after the search provider declined to block websites at Hood’s discretion, absent any court order.

Some background:  Among the leaks that resulted from the 2014 hack of Sony Pictures was the revelation of so-called “Project Goliath,” a secret initiative of major film studios and the MPAA.  The project involved enlisting State Attorneys General (AGs) like Hood in taking up one of Hollywood’s “key issues and asks” since the spectacular 2012 failure of the Stop Online Piracy Act (SOPA): extra-judicial site blocking.  As an article by The Verge makes clear, the funding of high-priced private law firms to ghost-write legal demands from AG Hood to Google was a major element of “Goliath.”  (It’s like Uber, but for State AGs.) MORE »

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Silent rage is the best way to describe my experience at London’s Gatwick Airport in December 2014, as I battled with the airport money-changers to get a dollar for every pound I handed over.

Needing US dollars to pay for a visa upon arrival in Vietnam, Moneycorp – the monopoly currency exchanger at the airport – had a license to legally pick-pocket me. With no pound sterling in my wallet, and no alternative provider or machine, Moneycorp could demand a 4 pound fee to withdraw 40 pounds from my credit card, a handling fee (because it was a small transaction) and leave me with a poor exchange rate. As I handed over the cash it felt like Groundhog Day: just the latest episode in a decade-long struggle through the endless fees and rules of banks and other parties to pay off credit cards in my native Australia, and access cash from ATMs in the world’s largest cities.

There are two ways to look at my Gatwick experience: 1) Thank heavens Moneycorp was there to save me in my hour of need or 2) Why was I paying roughly 20% commission for a service an ATM could have provided me for under 5%. Of course, it would be even better value if an airport vendor had been allowed to link up with an online currency service, letting me pick up my cash the same way I might collect a parcel.

A further question is: when does frustration cross into exploitation? And what are the roles innovators and policy-makers could play?

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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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Yesterday, the Federal Trade Commission (“FTC” or “the Commission”) released its long-awaited staff report on the Internet of Things (“IoT”), which was announced by Chairwoman Ramirez in her keynote at the 2015 State of the Net conference.  Building on a workshop held in 2013, the Commission’s report is a comprehensive look at the promise of Internet-connected everyday objects, the risks that they might pose to consumers, and the Commission’s recommended regulatory and legislative paths forward.  Fortunately for consumers, the Commission’s suggestions, born of a collaborative workshop with privacy groups and industry, do not approach the onerous attempts by the EU to regulate the IoT well-before it gained a market foothold, which DisCo covered way back in 2012.

20150108_144622First, a short primer.  The Internet of Things constitutes the growing wave of innovative technologies set to revolutionize the interactivity of the mundane products that we use every day.  Smartwatches and other wearable devices get the most press, but introducing connectivity to other traditionally “dumb” devices in our environments will make them all more personal, adaptive, and efficient.  Learning thermostats, networked refrigerators, Internet-enabled dog collars that track your pet’s location and wearable fitness trackers are already on sale, with driverless cars, wireless pacemakers, and home automation systems making their way to the main floor of this year’s Consumer Electronics Show (“CES”).

The FTC highlighted the array of benefits of connected devices early in its report.  Connected health devices can provide richer sources of data and improve preventative care for physicians and patients.  An adaptive thermostat coupled with automated lighting and security can reduce energy costs for homeowners and allow for remote monitoring of homes.  Connected cars can offer on-demand vehicle diagnostics to drivers and service facilities, real-time traffic information, and provide automatic alerts to first responders when airbags are deployed.  Eventually, self-driving cars may one day be widely available.  Each additional type of connected device can provide another convenience or efficiency in the everyday lives of users.

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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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