Big News for Small Copyright Claims?

Copyright Office considers new proposals for a copyright small claims court, but specifics are still lacking.

The story is familiar to many artists.  A freelance photographer is surprised to find that an online service has reproduced a number of copyrighted images from her website.  She reaches out to the organization with phone calls, offers to license her work for what she considers a reasonable fee, and drafts her own “cease and desist” letter.  These all go unanswered.  Realizing that her only remedy may be to sue, she seeks out an attorney who will file her case in federal court.  But the case is too small; attorneys’ fees are high; it would take at least a year to litigate; and the recovery, if she wins, is uncertain.  In the end, she simply gives up.

In 2006, the United States Copyright Office brought stories like these to the attention of Congress.  In a statement before the subcommittee on intellectual property, the Office noted the costs associated with the federal court system, which has exclusive jurisdiction over copyright cases, and concluded that “[it] is reasonable to ask whether federal courts are hospitable to most small claims.”  Two years later, Congress directed the Office to study the creation of a special network of courts that would hear low-value copyright claims.  As part of its research, the Copyright Office asked for input from interested parties in the creative community.  That commenting period just ended on October 19, and the opinions of artists’ rights organizations, corporations, and intellectual property scholars are ready for review.

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Copyright owners, such as the photographer in our example, would generally like to see an inexpensive, easily accessible forum with robust powers to grant and enforce judgments.  Reduced cost and ease of access, they argue, will lead to meaningful enforcement of intellectual property rights.  On the other hand, some worry about the potential danger to small-scale defendants who often settle rather than engage in expensive, lengthy litigation, even if they have valid defenses.  They suggest that a copyright small claims court may end up a mechanism for powerful interests to extract settlements from unsophisticated defendants.

Proposals submitted thus far address these concerns and others.  Foremost among them are the questions of how independent a court of small claims would be, whether it would limit the role of attorneys and the discovery process, whether it would be a voluntary option or mandatory, and where the cap on monetary damages would be placed.

Although the debate continues, a consensus has emerged with respect to at least some of these issues.  For example, a majority of commentators agree that such a court should be instituted outside the federal court system, either at the Copyright Office, or as an independent administrative agency.  State courts do not present a viable alternative since their dockets are already crowded and state court judges have relatively little experience with copyright law.  However, the field is far less unified when it comes to the questions of attorneys, attorneys’ fees, the permissible amount of claims, and the right of appeal.

Recently, the United Kingdom instituted its own “small claims track” in the Patents County Court, which may offer some insight.  The “small claims track” provides a venue for suits under £5,000 where neither lawyers nor experts are required and the rules of evidence are less strict.  Further, judges may grant either monetary damages or permanent injunctions, but are prohibited from entering preliminary injunctions or awarding attorneys’ fees in excess of £200.

While copyright holders laud the UK’s new “small claims track,” it is unlikely that a comparable court will be established in the United States any time soon.  As a next step, panels in New York and Los Angeles will meet next month to consider specific aspects of the many proposals offered.  As the discussion progresses, the many questions raised are sure to receive a hard look from interested parties, and the debate is bound to intensify.

Update: the Copyright Office is extending the time to submit requests to participate in the public meeting to consider remedies for small copyright claims in Los Angeles on November 26 and 27, 2012. Requests to participate are now due by November 9, 2012.

For more information, see www.copyright.gov/docs/smallclaims

An Expanded Scope for the Copyright Misuse Defense?

We are often reminded that the basis for U.S. copyright law is the short provision of the Constitution giving Congress the “Power…To Promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” [Art. 1, Section 8] 

This constitutional source says that the “monopoly” granted must be temporary, and that the restraints (under copyright and patent law) should serve a particular purpose, the promotion of knowledge and art. Still, over the years, the duration of those “temporary restraints” (exclusive rights) has been increasing. 

It is also not apparent that the constitutional purpose is a consistently observed guiding principle. Some argue there is too fierce a trend currently toward expanding copyright and its enforcement. At the same time, increased copyright vigilance has been regarded by others as a necessity given the ready distribution and easy duplication afforded by digital technology.

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[1] Other invocations of the copyright misuse defense served a similar purpose. In Alcatel U.S.A., Inc. v. DGI Technologies, Inc., 166 F.3d 772 (1999), the Fifth Circuit allowed a copyright misuse defense when the holder of a copyright in software licensed its use only on the condition that the licensee use the software only on the copyright holder's hardware. In DSC Communications Corp. v. DGI Technologies, 81 F.3d 597 (1996), another Fifth Circuit case, a license prohibiting the development of a competing microprocessor card was found to be copyright misuse.

President or Pirate? The DMCA Takedown War of the Presidential Campaigns

In what has been described by some as over-zealous enforcement of copyright, BMG (the large German publisher) forced YouTube to take down a Mitt Romney campaign video because it included footage of President Obama singing Al Green’s “Let’s Stay Together.”

The Romney video followed the Obama campaign’s release of a political ad featuring Mitt Romney’s off-key rendition of “America the Beautiful" as underscored to images of off-shore employment out-sourcing. Romney’s campaign used the Al Green song to attack Obama for his relationship with lobbyists and campaign fundraisers. YouTube pulled down the Romney ad after BMG, the music publisher that owns the copyright in the “Let’s Stay Together” composition, filed a copyright takedown notice under the Digital Millennium Copyright Act (DMCA). Not wanting to look like it was playing politics and only targeting the Romney ads, BMG also sent notices to YouTube to take down the original news footage clips of Obama singing the song.[1] The Obama campaign met no similar copyright opposition to its attack ad because the copyright to “America the Beautiful,” first released in 1910, has expired and that musical composition is now in the public domain.

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The Power of One: Some Issues in the Application of Complex Copyright Transfer Termination Rights

Authors – even the more successful composers, painters, writers, and other creatives – are familiar with the early career financial struggles that come with devoting oneself to creative work before that “big break.”  

An author’s initial negotiations with publishers, producers and distributers often have a “David & Goliath” character, with the author concerned not to overplay his or her hand, or just truly lacking bargaining power. 

I wrote more about this here on my company blog.

2nd Circuit’s Safe Harbor Ruling Influences 9th Circuit to Reconsider: What’s an ISP to do?

Many Internet Service Providers (ISP) assume that take-down requirements with respect to copyright claims are fairly standard and that they can readily avoid copyright liability for posts by users by following some simple rules. The activity in the Courts on the Circuit Courts on this issue shows otherwise.

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Art Imitates Art: “Pictures Generation” Artist Richard Prince and Fair Use

The Fair Use doctrine allows others to use copyrighted material without the copyright holder’s permission under certain circumstances. It sets limits on the exclusive rights copyright law grants copyright owners: the rights to reproduce, distribute, perform, display and make derivative works. Originally a judicially created exception[1], Congress incorporated the fair use exception as a defense into the Copyright Act of 1976 under section 107. 

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France Gives the "Feu Vert" to Google Books

The United States has yet to reach an agreement over the Google digital books project, but France, a literary haven and copyright devotee, has forged ahead. With what its supporters have praised as a tool for bringing out-of-print books into the hands of new readers, the Google digital books project has sought to digitally scan collections of current and out-of-print books to create a massive digital collection on Google’s database.

Similar to the Author’s Guild class action lawsuit against Google for the alleged infringement of thousands of copyrights, the French Publishers Association and the Société des Gens de Lettres, an authors’ group, filed a lawsuit charging that Google’s digital book scanning infringed French copyright laws. However, the French publishers and authors’ group have recently dropped their six-year lawsuit and reached an agreement that would allow Google to scan books and offer digital copies for sale. This agreement will make France the first country to have an industry-wide standard for digitizing books.

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Google Disclosures

Last month Google announced a new addition to its website’s Transparency Report. 

Google has decided to release information on the number of requests it recieves from copyright owners (and the organizations that represent them) to remove Google Search results that allegedly link to infringing content. 

Google's senior copyright counsel Fred von Lohmann writes on Google's blog, “We believe that openness is crucial for the future of the Internet. 

When something gets in the way of the free flow of information, we believe there should be transparency around what that block might be.” It’s no surprise that entertainment giants are at the top, notably, Microsoft Corporation, NBC Universal, British Recorded Industry and the RIAA. 

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Viacom v. YouTube Brings About a Sea of Change in the Safe Harbor

Over the past decade, websites and Internet Service Providers (ISPs) have learned to rely on the takedown procedures of the Digital Millennium Copyright Act (DMCA) in order to generally avoid copyright infringement liability imposed by content owners. 

ISPs have been able to shield themselves from all liability form their users posting infringing material by having a proper takedown system in place. But, a recent Second Circuit case undermines that level of confidence in takedown procedures. The Second Circuit Court of Appeals is the first U.S. court to decide that ISPs may still be liable for copyright infringement even after complying with the takedown provisions of the DMCA.  

As a result, the underlying questions remain: should intermediaries be held liable for their users infringing actions? If so, then to what extent?  Where does the law now draw the line? How can a website owner or ISP best protect itself when posting content provided by others?

I write more about this here

German Court Ordered Google to Do More to Prevent Copyright Violations on YouTube

A German court ordered Google to install filters on its YouTube services in Germany in order to detect and stop people from accessing copyright infringing material.

I wrote about the Google decision on my own website

The First Sale Doctrine: Made in the U.S.A. Only?

The Supreme Court decided on Monday, April 16, to hear a case about a Cornell student from Thailand who thought he could finance his education (and more) by reselling to U.S. students textbooks that he bought in Thailand. What could be wrong with that?

The first sale doctrine in copyright law allows purchasers of any copyrighted work to resell or use the particular copy in many ways without the copyright holder’s permission. It is codified in section 109(a) of the Copyright Act, stating “the owner of a particular copy…lawfully made under this title…is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy.” It is because of the first sale doctrine that entities such as libraries, used books and video game stores, and sellers on eBay are allowed to lend, sell or lease the books and games they have purchased.

With the Cornell Student from Thailand, the Supreme Court has taken the opportunity to clarify the applicability of the first sale doctrine to copyrighted goods manufactured in a foreign country. The justices have decided to review Kirtsaeng v. John Wiley & Sons, Inc., involving textbook maker John Wiley & Sons and Thai national Supap Kirtsaeng, who was studying at Cornell University at the time he resold the textbooks. Supap had his family send him copies of Wiley textbooks purchased abroad, and then resold them on eBay at a profit, without the publisher’s consent, sometimes called “gray marketing”. Because the evidence shows Supap profiting $900,000 to $1.2 million in sales, it is likely that he was running a business on this model.

The publisher sued, and Supap asserted the first sale doctrine defense. A New York Federal jury agreed with the publisher’s position that the first sale doctrine did not apply, and awarded Wiley & Sons $600,000 in damages for copyright infringement. The Second Circuit affirmed the decision on appeal, and now the case awaits a Supreme Court ruling.

Supap is making arguments similar to those that Costco made in Omega S.A. v. Costco Wholesale Corp., claiming that by not allowing the first sale doctrine to apply to foreign manufactured copyrighted goods, the law effectively incentivizes U.S. based manufacturers to flee to foreign countries in order to gain total control over the distribution of their goods in the U.S. market. By manufacturing outside the U.S., copyright owners effectively escape the first sale doctrine and thereby limit what little control purchasers would have had in the copy.

Librarians, museums and archives throughout the U.S. are watching this case closely as it has the potential to restrict how libraries loan foreign printed books. Will libraries be able to continue to lend imported books held in their collection or will this now violate the copyright holder’s right to distribute?

The impact could even run into markets outside of libraries and second hand stores. The advocacy group Public Knowledge writes in a blog post that, “many cars contain copyrighted computer programs, so used-car sales for foreign-manufactured automobiles would become illegal” if they resold the programs (along with the used car) without the copyright owner's permission.

The legal debate is over the meaning of “lawfully made under this title” in the language of the first sale provision. In 2008, the Ninth Circuit held it to mean “made in the U.S.A.” in Omega S.A. v. Costco Wholesale Corp.. The court reasoned that because the U.S. Copyright Act does not apply outside the United States, a first sale doctrine could not either. In that case, because Costco had imported and resold discounted Omega watches not made in the U.S.A., the first sale doctrine did not apply. Therefore, Omega still had the exclusive right to control distribution in the United States and could require that Costco get its permission. The Supreme Court then affirmed the standard on a 4-4 split vote in 2010, leaving the Ninth Circuit’s decision intact without setting a clean nationwide precedent.

For now, publishers, intermediaries and consumers wait to see how much control the current Supreme Court will decide to give to U.S. publishers and distributors in the U.S. distribution of their foreign-produced content.