The renegotiation of the North American Free Trade Agreement (NAFTA) may be receiving most of the spotlight in trade news these days, but the current U.S. Administration has also set ambitious goals for trade outside of NAFTA in 2018. Last July, U.S. Trade Representative Lighthizer announced that the U.S. would begin discussions with the Republic of Korea regarding changes to the U.S.-Korea Free Trade Agreement (KORUS). The talks continued on January 5 following Korea’s completion of domestic negotiating procedures in late December.
Last week, the content industry launched a new coalition—ACTION for Trade—dedicated to keeping Internet intermediary safe harbors out of the renegotiated North American Free Trade Agreement (“NAFTA”). Matt Schruers noted in a recent DisCo post that such an effort would break with existing law and Congressional direction in trade promotion legislation. It also would break a nearly 20-year-old bargain brokered by Senator Orrin Hatch, now the chairman of the Senate Finance Committee. This bargain, first embodied in the Digital Millennium Copyright Act (“DMCA”), has been replicated in U.S. free trade agreements with sixteen countries.
Congress enacted the safe harbor system in 1998 as one title of the much broader DMCA. This broader statute, in a separate title, established prohibitions on the circumvention of technological protection measures. These two titles were adopted together to create a balanced approach to copyright enforcement in the Internet environment. They represented a carefully negotiated compromise between diverse stakeholders.
As negotiators converge on Ottawa to resume talks over updating the 1994 North American Free Trade Agreement (NAFTA), content interests have barraged U.S. trade officials with letters demanding that the U.S. Government abandon critical balancing mechanisms in the agreement’s copyright chapter, regarding fair use and safe harbors for Internet services.
How these issues are resolved is critical, since it will affect Internet and technology industries’ support for the IP chapter of the agreement, and potentially NAFTA itself.
There are two major moving parts here: (1) whether USTR undermines well-established safe harbors for online intermediaries, and (2) whether USTR abandons the policy of promoting balanced copyright in free trade agreements.
As previously noted here, acceding to Hollywood and recording industry demands would break with existing U.S. law, and Congressional direction in trade promotion legislation. This would also walk back priorities that were laid out by USTR itself earlier this year. Nevertheless, some in the entertainment industry are urging U.S. negotiators to do exactly that, at the risk of crossing red lines for Congress, negotiating partners, and various U.S. stakeholders.
Efforts to update the North American Free Trade Agreement (NAFTA) have been on a fast track, as U.S., Canadian, and Mexican negotiators have maintained an aggressive schedule to reboot the 1994 trade agreement.
As a new round of negotiations approaches, intellectual property issues have moved to the fore. With negotiations resuming in Mexico at the end of this week, music industry rightsholders have increased pressure on the Administration to defy Congressional directives on IP in Trade Promotion Authority. In some cases, content industry interests have pushed provisions that would extend beyond U.S. law.
The pressure for an aggressive copyright agenda out of step with U.S. law first became evident during June hearings on negotiating priorities. Recording industry interests have since doubled down on this with advertisements renewing those demands.
The high profile IP dispute over Google’s reimplementation of the Oracle-owned Java API in Android software is headed back to a federal appeals court after a jury handed a unanimous loss to Oracle last summer. So what’s the issue this time?
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A quick refresher: the case began following Oracle’s 2010 acquisition of Sun, which held the copyrights to Java. Oracle sued Google on various IP claims later that year. The basis for the suit was that in developing Android, Google had created its own version of the programming language called Java, a toolset that programmers use to write code. In order to enable other developers to program on Android, Google employed the same names, organization, and functionality in Android as is used in the Java API (“application programming interface”) — the protocols by which software programs communicate.
In June 2012, following a jury trial, Judge William Alsup in the Northern District of California ruled that the Java API “packages” copied by Google were not copyrightable. According to Alsup’s holding, Android may have “replicated the overall name organization and functionality of 37 [out of 166] packages in the Java API.” However, these protocols — themselves only 3% of the 37 packages — did not qualify as copyrightable since to extend that protection would provide control over “all possible implementations of the taxonomy-like command structure” used by programmers to write code. (Fun fact: Judge Alsup taught himself Java for purposes of hearing the case.). MORE »
“To make the EU’s single market fit for the digital age”, by “bringing down barriers to unlock online opportunities” was one of the priorities of the current European Commission. This objective would be reached by “improving access to digital goods and services”, creating “an environment where digital networks and services can proposer” and by “ensuring that Europe’s economy, industry and employment take full advantage of what digitisation offers”.
This objective raised the hopes of the tech industry, often struggling with 28 different regulations when trying to scale their operations across the European Union. Unfortunately, the legislative proposals published by the Commission for the past year have not lived up to the tech industry’s expectations. In short, after disappointing audiovisual and telecom proposals, the Commission’s proposal for a Directive on copyright in the Digital Single Market marks the end of the Commission’s Digital Single Market ambitions.
With this copyright proposal, the European Commission has, in fact, bowed to the lobbying of legacy industries on four crucial issues, to the detriment of users’ fundamental rights, the growth of European startups, creativity and innovation.
Firstly, this proposal undermines the e-Commerce Directive, cornerstone of Europe’s digital economy, by implying that websites promoting or optimising the display of user generated content would fall out of the scope of the limited liability regime for intermediaries. In practice, most hosting websites created after 2000 would become liable for content uploaded by their users, thereby freezing innovation, free speech and investments.
DisCo readers may remember that, last February, my colleagues Matt Schruers and Jakob Kucharczyk explained that Europe’s highest court, the Court of Justice of the European Union (CJEU), would have to rule on a case about hyperlinks that could decide the fate of the World Wide Web in Europe. They were not joking around.
Well, yesterday the CJEU published its ruling on GS Media (C-160/15) – and it’s as bad as we feared it could be. But let’s take a step back first.
Under EU copyright law, the “communication to the public” of a work (comprised of two cumulative criteria, an “act of communication” to “a public”) is an exclusive right of the rights holder. Therefore, over the past few years, the CJEU tried painfully to answer the question of whether posting a link violates copyright law.
To sum up quickly, the CJEU ruled several years ago in a case called Svensson that links – i.e., the single most important feature of the Internet – were within the scope of copyright protection, as they were “acts of communication”. However, the case dealt with a situation where a website was linking to legal content, freely accessible and posted with the authorisation of the rights holder. Therefore, the Court concluded logically that no copyright infringement had taken place as linking to this content did not communicate it to “a new public”. (For more details, please see our detailed analysis here and here). But one crucial question was left open – what about linking to content posted online without the authorisation of the rights holder?
This morning Google released an updated “How Google Fights Piracy” report, an extensive survey of how assorted Google products, including YouTube, fight intellectual property rights infringement. Building on a previous report in 2014, the 60-page document details how rightsholders can use tools to control or monetize unauthorized activities online in relation to search, YouTube, Google’s Play Store, and advertising.
Initial coverage focused on the report having revealed that YouTube has paid over $3 billion dollars to music industry stakeholders, labeling this a “rapid, significant increase” over payments in 2014.
This comes at a time when the video hosting platform is under pressure to pay out more in licensing negotiations. The report also notes that YouTube’s Content ID system alone has produced $2 billion for partners. In addition to framing the debate over private licensing arrangements, these data points highlight the absurdity of misrepresentations earlier this summer that musicians were receiving more money from vinyl records than streaming. These data points also underscore the scope of opportunity as players in the highly competitive video platform industry jockey for a growing pool of industrially-financed and individual creator content.
The impressive returns from Content ID reflect the economic significance of so-called “DMCA-Plus” systems like Content ID. While most online platforms comply with the 1998 Digital Millennium Copyright Act (DMCA) “notice-and-takedown” system, some more sophisticated platforms have gone above and beyond what the DMCA requires. These approaches are sometimes referred to as “DMCA-Plus” to indicate that online services perform additional services for rightsholders, beyond simple DMCA compliance.
These contractual “super-structures” built on top of DMCA compliance programs can provide new licensing opportunities for rightsholders. Today’s report points out that some 90% of copyright claims on YouTube result in monetization, such that half of the music industry’s YouTube revenues derive from claimed content. In short, as DMCA-Plus systems expand across the economy, rightsholders may be poised to receive billions in royalties.
As this market grows, so too does the incentive to misuse these DMCA-Plus tools. Pages 45-46 of the report note several egregious examples of DMCA abuse by those seeking to suppress information or competitors. As previous DisCo coverage has noted, such problems have already been extensively documented. With more and more money on the table from DMCA-Plus systems like Content ID, the need for meaningful penalties for abusive takedown claims will only grow.
Nevertheless, the challenges posed by abusive takedowns are one discrete challenge in the broader context of an entirely new revenue stream for creative industries, one which could not exist but for the DMCA.
This morning the Commerce Department’s Internet Policy Task Force released a long-awaited “White Paper on Remixes, First Sale, and Statutory Damages.” The paper stems from a July 2013 “Green Paper” on copyright issues, which DisCo covered here. Following the Green Paper, Commerce convened 4 regional roundtables in mid-2014 to hear from stakeholders on three copyright subjects flagged for further review: (1) remix, (2) first sale, and (3) statutory damages. That process and related notices for comment led to today’s report.
So what does it say? While it’s hard to do a 100+ page paper justice in a few sentences, in short, the paper is supportive of remix culture and consumers’ rights to resell what they own (the first sale doctrine), but doesn’t recommend any changes to copyright law to facilitate these activities, or to respond to changes resulting from digital technology. On statutory damages, however, the Task Force does suggest copyright law should be updated. It points to reforms that could help courts and juries determine more equitable damages, and that would mitigate the chill on investment and innovation that disproportionate damages causes. (Commerce also expresses support for a small claims copyright process, a subject that the Copyright Office explored in a 2013 report.) MORE »
There’s no sense in beating around the bush: Robert Reich’s NYT editorial on Friday, “Big Tech Has Become Way Too Powerful” indicates that when it comes to intellectual property (IP) and antitrust law, he doesn’t know what he’s talking about. This isn’t a normative critique of Reich’s antitrust views, but rather an objective assessment of Reich’s limited grasp of the basic facts and law here.
The thrust of Reich’s argument is that large Internet platforms are misusing intellectual property rights to maintain unfair advantages in the marketplace, and this needs to be reined in. He begins with the premise that the “most contested policy issue” in regulating Internet platforms is intellectual property, and that “information and ideas are the most valuable forms of property.”
Quite simply, Reich doesn’t know what intellectual property is. Neither information nor ideas are — in themselves — IP. Ideas have to be “reduced to practice,” which may earn you a patent, or expressed in a work of authorship, which will get you a copyright. Mere ‘information’ doesn’t qualify for either. (Closely held information might rise to acquire trade secret protection, but Reich doesn’t consider that.) More to the point, Reich incorrectly states “without government decisions over what [intellectual property] is, and who can own it and on what terms, the new economy could not exist.”
While Reich is correct that governments define the boundaries of intellectual property, the relationship between IP and the new economy is not what Reich thinks. He suggests that the temporary monopolies granted by the U.S. Government in the form of IP rights are the secret to U.S. Internet platforms’ historic success. They’re not. If there’s any lesson to take away from Internet competition, it is that openness, not exclusion, characterizes the historic successes of the Internet. The growth of the Internet is often attributed to the fact that Internet pioneers made conscious decisions not to claim IP rights in their respective contributions. Today, anyone can enter an Internet market, and competition is always a click away. Highly successful Internet platforms aren’t maintaining their market positions by enforcing their government-granted rights to exclude the competition. Instead, they’re providing compelling services open to all, upon which others may build and innovate, which are in many cases free to the user.
In fact, anyone following intellectual property politics for the last 10 years would know that the Internet industry has been at the forefront of efforts to reform a widely criticized, out-of-control patent system and an imbalanced copyright system — with limited success due to entrenched opposition from more politically seasoned sectors like Hollywood and Pharma. On many days, headlines in the New York Times will frame the relationship between IP and the Internet sectors as a fractious, often adversarial one. Yet reading Reich would leave you thinking that Internet platforms are in the Church of St. Patent, praying the rosary to Our Lady of Perpetual Copyright Term Extension. MORE »