Copyright Reform Green Paper Draws Raft Of Comments From All Sides of Disputes

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By Anandashankar Mazumdar  

Nov. 19 --The National Telecommunications and Information Administration has received in the neighborhood of 80 submissions in response to the U.S. Department of Commerce's July green paper, “Copyright Policy, Creativity, and Innovation in the Digital Economy.”

The 122-page report by the department's Internet Policy Task Force proposed that music licensing reform was necessary to “spur rather than impede the development of new business models for the enjoyment of music online” (148 PTD, 8/1/13).

The paper addressed three broad issues:

• “Maintaining an Appropriate Balance,” regarding rights and exceptions to copyright law, with a focus on public performances, currently at issue in a number of court cases, the most highly publicized being WNET v. Aereo Inc., 712 F.3d 676, 106 U.S.P.Q.2d 1341 (2d Cir. 2013) (63 PTD, 4/2/13).

• “Keeping Rights Meaningful in the Online Environment,” with respect to enforcement and differentiating abuses by “individual file sharers“ and “secondary liability for large-scale online infringement.”

• “Moving Licensing Online,“ regarding both the opportunities provided by having online mechanisms to assist in licensing and recordation and the difficulties of building online business models under the existing schemes.

 

A public meeting on the issues is set for Dec. 12 and the pre-meeting comments were due Nov. 13. Post-meeting comments are due Jan. 10.

Commenters addressed a variety of issues, including creators' rights and consumer rights.

Comments by the Recording Industry Association of America Inc. included a lengthy defense of statutory damages as a necessary deterrence to infringement, but allowed for consideration of alternatives that might also deter such activity.

For example, should “those who can reasonably foresee that their digital services are likely to be used for infringing activity have an obligation to mitigate against that risk?” the RIAA asked.

Regarding the first sale doctrine, the RIAA said that due consideration must be given to the matter before applying it to digital goods. Specifically, according to the comment, in exchange for giving up first sale rights, consumers of digital goods enjoy certain benefits that are not available to consumers of physical goods, such as lower pricing, simultaneous usage, lending with securing return, sharing, and access models such as streaming and other cloud-based services.

“These benefits do not exist in the same manner in the physical world, and mandating that all digital models come bundled with a resale right would distort the marketplace,” the RIAA said.

Regarding remix rights, the RIAA recognized that some kinds of remixes--depending on the specific circumstances--could be protected as fair use. However, it stressed that creators should not be denied the right to protect their integrity and vision by prohibiting use of their works “to deliver messages that are likely to tarnish the artist's reputation or that unacceptably dilute the value or meaning of the original recording.”

This was in contrast with the Organization for Transformative Works, which submitted an 80-page document, explicating the importance of remixing to the culture. The comments concluded that the “current legal framework is generally favorable to remix, especially noncommercial remix”--particularly in the form of fair use--but that any reform “should have the protection of remix cultures as a key goal.”

However, the comment singled out for criticism Section 1201 of the Digital Millennium Copyright Act, which it labeled an “example of what not to do.” The organization said:

Under §1201, taking short clips from DVDs in order to make a noncommercial remix is illegal even though the resulting work is a fair use. The Librarian of Congress can grant short-term exemptions to this prohibition though they must be renewed through a complicated and difficult process every three years. Vidders were not the target of §1201, and suppressing noncommercial remix isn't necessary to anticircumvention law--as two rounds of successful exemptions demonstrate--but they were collateral damage, unable to assert fair use defenses when any test of those defenses would expose them to absolute liability for circumvention.  

 

Section 1201 is an example of unnecessary complexity affecting nonprofessionals and contributing to popular distaste for copyright law. Because the vast majority of vidders are amateurs who engage in video creation as a hobby, they are unlikely to have access to copyright counsel to explain the subtleties of the DMCA to them and are usually unaware of the counterintuitive nature of circumvention liability as applied to DVDs. Vidders--especially the tens of thousands of young people who are inventing and reinventing the form for themselves, without an established connection to a larger community--risked becoming liable or having their fair uses suppressed simply because the did what seemed like the fairest thing for the copyright owner and paid for a copy from which they could clip, rather than downloading an unauthorized copy without copy protection. As a result, many vidders were unknowingly violating §1201(a)(1) in the absence of an exemption. Indeed, the few remixers who did know about the DMCA were pushed into illegitimate markets.  

 

The organization urged consideration of adopting best practices when it comes to video remixing and even consideration of a safe harbor for noncommercial video remixes.

“However the copyright reform project proceeds, it is vital that it not ignore the legitimate interests of the remixers who are working in every form of media,” the comment concluded. “The are the future of our culture. Artists, not lawyers, should determine the shape of works to come.”

 

The Consumer Electronics Association reliably took a different perspective on many of these issues. Primarily, the CEA focused on the disincentive to innovation caused by the uncertainty surrounding secondary or inducement liability that might be created by the development of new technologies.

This “chilling effect” is hardened by the existence of statutory liabilities, according to the comment. The CEA also criticized “novel” claims brought by copyright holders against services providers such as Sirius XM Radio, Cablevision, and Aereo.

Regarding the notice-and-takedown regime, the CEA's comments mirrored the frustration of the RIAA, which focused on the effort needed to police online services, with concerns about whether takedown notices were legitimately sent.

Regarding digital first sale rights, the CEA noted that because rapid technological development makes formats obsolete quickly, the right to transfer works to new formats without authorization of copyright holders is critical to preservation of cultural heritage.

The Computer and Communications Industry Association focused its comments primarily on the issue of statutory damages, which, it acknowledged, has a punitive purpose.

However, “Even in cases where a punitive mechanism is appropriate, it is doubtful that any additional marginal deterrence is achieved by multiplying judgments tenfold,” the CCIA said. “To whatever extent statutory damages deter misbehavior in this case, they also deter investment by creating substantial uncertainty and risk.”

The Songwriters Guild of America Inc. advocated the creation of a new administrative entity for adjudicating small copyright claims. Under the current system, according to the SGA, small creators “have no effective remedy for on-line infringement” if they do not have the resources to fight expensive battles in federal court.

Digital performance rights organization SoundExchange Inc. urged legislators to eliminate the exemption that traditional terrestrial broadcast radio and television stations get from paying performance royalties to recording artists.

Regarding facilitating digital uses, SoundExchange urged the development of standards for embedding copyright management information in sound recordings and to help the Copyright Office make its registration data available for use by copyright holders as well as users.

SoundExchange also complained of rampant non-compliance with statutory license terms, such as late or unpaid royalties.

Another PRO, Broadcast Music Inc., started by addressing the issue of facilitating online music licensing. It commented that all American PROs, like European ones, should be permitted to offer performance and mechanical rights bundled together, which the American Society of Composers, Authors and Publishersis currently prohibited from doing under its current consent decree.

Ascap's own comments also addressed this issue, and labeled the consent decrees that Ascap and BMI operate under as “outdated” and hindering digital licensing.

BMI also criticized the interpretation of public performance rights that have led up to the Cablevision and Aereo decisions, which, it said, “have the effect of eroding the public performing right and the corresponding income of content creators, while concurrently undermining the robust licensing environment for digital transmissions of public performances.”

Furthermore, BMI said that downloaded transmissions--not just streamed transmissions--should also be subject to the public performance right.

The comment described the current DMCA safe harbor system as “broken.” According to BMI, takedown notices were not meant to be the primary vehicle for combating infringement online, but rather just a “safety valve.” The comment said:

It must be stressed that the notice-and-takedown provision in the DMCA is not a “system” for remedying infringements online at all. Rather it was intended to be the minimum obligation of Internet service providers (“ISPs”) who otherwise had met three important thresholds for safe harbor protection. In other words, even a disinterested ISP with no knowledge and no complicit role in infringements must, at a minimum, respond to a notice letter from a copyright holder. Unfortunately, the case law to date has morphed this safety valve into the one and only requirement that ISPs must observe. This is all the more problematic because the concept of what an ISP is has itself morphed to include major media entertainment providers. It is clear that merely requiring an ISP to take down an infringing work from which it profits with: (a) no obligation on the part of the ISP to insure against a repeat posting, (b) no liability for prior infringements, and (c) no incentive to license the work to begin with, does not constitute a copyright infringement “remedy” by any stretch of the imagination. Congress surely did not envision 7 million takedown letters being sent to Google alone by beleaguered copyright owners each week, especially ones to ISPs that have no obligation to prevent the instant and rampant reposting of the self same works on the services of the self same ISPs.  

 

BMI suggested that the standard for liability be based on the traditional standard for vicarious infringement--control and benefit--without any requirement of specific knowledge of infringement. Requiring specific knowledge renders ineffective the concept of constructive or “red flag” knowledge, the comment said.

On the issue of remixes, Ascap said that no legislative action is necessary because all remixes are derivative works under federal law and that copyright owners should continue to have the right to deny or permit the use of their works for such purposes.

“The intersection of creativity and derivative usage is not a new concept, and current copyright doctrines traditionally used to balance the two--such as substantial similarity, de minimus usage and fair use--are adequate to address users' rights in the digital age,” Ascap said.

The Owners Rights Initiative stressed its interest in ensuring that the first sale doctrine survives the transition from physical goods to digital goods.

Specifically, it said that it “believes that manufacturers should not be permitted to use software licenses to interfere with the resale of products.” It noted that software licenses are used in a variety of ways that interfere with resale, such as prohibiting transfer of such licenses, withholding updates from transferees, or bundling maintenance costs.

“The legal fiction on which these restrictive practices is based is that the pre-installed software is licensed, not sold, to the purchaser of the hardware in which the software is installed,” according to the comment. “The manufacturers argue that because the purchaser is merely a licensee of the copy of the software, it does not have rights that normally accrue to the owner of a copy, such as the first sale doctrine or the right to make temporary internal copies necessary for the operation of a computer.”

The organization said that this problem will spread as more and more goods incorporate pre-installed software. It advocated amending copyright law such that “the statutory rights provided under Title 17 apply to lawful possessors of software when that software is pre-installed in other products, and that these rights cannot be waived by contract.”

The Owners Rights Association is a coalition of about 20 entities and associations including the American Free Trade Association, the American Library Association, the Computer and Communications Industry Association, eBay Inc., Etsy, Overstock.com, Powell's Books, and Redbox.

ReDigi Inc. of Boston, a reseller of digital goods, filed a comment that began with a lengthy preamble disputing the assumptions behind some of the language of the request for comments. Specifically, ReDigi objected to the idea that the first sale doctrine must be “extended” to digital goods. According to the comment, it should be recognized that such rights already apply to digital goods.

The comment said that the problem is created by the fact that “reproduction” and “distribution” are separate rights and that the first sale doctrine applies only to distribution. However, in order to distribute digital goods, it is necessary to reproduce them. Thus, according to ReDigi, the scope of the term “reproduction” should be “clarified” so that it does not interfere with transfer of digital goods.

According to the comment, the secondary market in creative works enabled by the first sale doctrine has a potential that “far exceeds the size of the market in new object transactions.”

Under current conditions, ReDigi said, the benefits of the first sale doctrine are minimal: “the few copyright monopolies that exist are doing a good job at swaying the legal system in an effort to control their revenue streams while stifling creativity and preventing the fair trade of digital goods in America.”

Many of the views of the Owners Rights Association and ReDigi were echoed in a joint submission by the Center for Internet and Society at Leland Stanford Jr. University and the Electronic Frontier Foundation.

Public Knowledge also addressed remixes, first sale, and statutory damages, but also urged the task force to consider “refinement of its existing compulsory license policies.” Specifically, the comment urged consideration of the benefits of compulsory licenses, and how they “can be beneficial to smaller artists and rightsholders.”

Comments by the Center for Democracy and Technology warned that a process of establishing best practices for the notice-and-takedown system should not be used to “alter the fundamental assignment of roles and responsibilities” under the DMCA. Specifically, the CDT objected to any attempt to shift the burden of identifying online infringement, which the DMCA currently puts on copyright holders.

The CDT acknowledged that copyright holders might find this “frustrating,” but noted that they were in the best position to defend their rights. It also encouraged a focus on the problem of takedown notices that were incomplete or inaccurate.

Regarding statutory damages, the CDT said that the “current regime threatens disproportionate sanctions against individual infringers” and also “threatens excessive damages for businesses seeking to offer new, innovative services.”

Like other commenters, the CDT also sought a more predictable legal environment for remixers, on the basis that relying on fair use “involves a high-stakes legal gamble.”

Google Inc. focused its comments on the issue of the video remix culture, since its YouTube's content identification service was identified in the Commerce Department's request for comments. Google touched on its perception of the importance of video remixes to the culture and briefly detailed how YouTube's Content ID offers a “win-win-win solution.”

While it was originally viewed as a method of fighting online piracy, Google said, Content ID now helps content owners generate revenue from videos posted to YouTube. However, Google warned that it could not be relied on as a complete solution to infringement.

Ebay Inc. submitted comments stating that it did “not believe that there is any reason to revisit at this time the intricate set of obligations and protections embodied in the DMCA's notice and takedown system, which have, over time, proven to be both balanced and effective.”

As of Nov. 18, the commenters include:

• Associations: The Computer and Communications Industry Association, the American Association of Independent Music, the American Free Trade Association, the American Society of Composers, Authors and Publishers, the Association of American Publishers, the Center for Democracy and Technology, the Consumer Electronics Association, the Consumer Federation of America, Creative Commons, American Commitment (with the Center for Individual Freedom, the Digital Library, the Discovery Institute, Frontiers of Freedom, and the Property Rights Alliance), the Digital Media Association, the Digital Right to Repair Coalition, the Entertainment Software Association, the Future of Music Coalition, the Global Intellectual Property Center, the Independent Film and Television Alliance, the Information Technology and Innovation Foundation, the Institute for Policy Innovation, the Internet Association, the Internet Commerce Coalition, the Library Copyright Alliance, the Motion Picture Association of America, the National Cable and Telecommunications Association, the National Music Publishers' Association (with the Nashville Songwriters Association International and the Church Music Publishers Association), New Media Rights, the Ohio Library Council, the Organization for Transformative Works, the Owners' Rights Initiative, Public Knowledge, the Recording Industry Association of America Inc., and the Songwriters Guild of America Inc.

• Companies: Broadcast Music Inc., the Califa Group, the Copyright Clearance Center Inc., DeviantArt, eBay Inc., Google Inc., Gropen Associates Inc., ReDigi Inc., SoundExchange Inc., and Wattpad (WP Technology Inc.).

• Individuals: Andrew P. Bridges, Kimberly A. Brosan, Christan M. Bulin, Marilynn Byerly, Kim Bahnsen, Rowena Cherry, Tanya Denckla Cobb, Zeke Crater, Cynthia Dennis, Carrie Devorah, Mary Emmons, Samantha Evangelho, Jason L. Hardin, Joseph Harris, Candice M. Hughes, Nesha Jones, Derek Khanna and John Tehranian, Frank Lowney, Deborah Macgillivray, Andrew R. Mancuso, Michael Masnick, John Edwin Miller, Richard Naylor, Stephanie Osborn, Karen Ranney, Meredith Schwartz, Thomas D. Sydnor II, Larry Wilt, and Ahmed Khalifa Al Yousif.

• Academic institutions: The Center for Internet and Society at Stanford (with the Electronic Frontier Foundation), Juneau Public Libraries, the Libraries of the College of Saint Benedict (with Saint John's University), and the University of Michigan Library.

 

 


Text is available at http://www.ntia.doc.gov/federal-register-notice/2013/comments-received-department-commerce-green-paper-11132013.

 

To contact the reporter on this story: Anandashankar Mazumdar in Washington at amazumdar@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com