Copyright Law - Eighth Circuit: Is Making Music Available on A Peer-to-Peer Network Copyright Infringement?

Copyright Infringement, Music Copyrights, Peer-to-Peer File Sharing, Statutory Damages, Injunctions

Capitol Records, Inc. v. Thomas-Rasset, 692 F.3d 899 (8^th Cir. September 11, 2012).  Record companies sued woman who copied copyrighted music files onto a file-sharing service and made songs available for others to copy for free.  First jury awarded $222,000.  New trial granted because of jury instruction that “making available” sound recordings violated Copyright Act regardless of whether there was actual distribution.  Second jury awarded $1.9 million.  Judge remitted award down to $54,000.  Record companies opted for new trial on damages and got $1.5 million.  On appeal, record companies wanted original $222,000 jury award and a ruling that “making available” a sound recording on a peer-to-peer network violates the Copyright Act, regardless of whether anyone downloads it.  Defendant challenged constitutionality of award and scope of injunctive relief against her.  Held: $220,000 jury award for copying with no profit motive constitutional and not shocking to the conscience.  Record companies’ request for ruling on “making available” right moot, even though district court enjoined Defendant from such activity because injunctions often encompass otherwise legal activities by persons who have shown proclivity to disobey the law and where enjoining only illegal act not capable of monitoring to protect victim.

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From EFF - "Anti-Counterfeiting Treaty Is a Sham"

What is counterfeiting?  In my humble estimation, it is knowingly making large quantities of exact copies of a trademarked, patented, or copyrighted good with the intention of selling such large quantities to defraud consumers and the rights holders.

Thus, any anti-counterfeiting treaty would have the elements:

1. exact copies or copies intended to be so similar that a consumer could not tell the difference;
2. protected goods;
3. large quantities (500?) (2,000?);
4. intent to defraud consumers and rights holders.

Some kid copying stuff to his Ipod is not counterfeiting.   Even 2,000 songs.

So anyone labeling a treaty "anti-counterfeiting" and that does not have the foregoing elements is trying to pull a scam on me.

So when I finally got around to reading the text of ACTA, I thought that I would find the concerns I'd seen floating around the internet to be a little overblown.

In fact, I think that the concerns of the EFF are understated.   I am not so concerned about confidential negotiations to give trade representatives some time to brainstorm.   But the text appears to be so one-sided as to appear to have been spoonfed by certain aggressive Hollywood rights-holders who don't think anyone can make fun of Mickey Mouse and that anyone crossing a border should be frisked for a fake Louis Vuitton handbag.

I am surprised that ISP's and technology users seem to have had so little input into the process.

A treaty that really is focused on anti-counterfeiting would have my support, if it is really necessary (Art 41 of TRIPS looks sufficient to me).  I really also don't see why we need to set up a new international bureaucracy to oversee this, the current institutions appear to be sufficient.

For a thoughtful, colorful analysis from the Canadian perspective, check out Canadian law professor Michael Geist's blog, particularly his audio powerpoint "The ACTA Threat".

A good discussion on the RIAA's wishlist at arstechnica here.

And if foreign Limewires are the concern, why not address that concern directly?

The text of EFF's action letter (reprinted in full below), together with an automated template for you to email a letter to your representatives in Congress can be found here.

As a matter of Capitol Hill etiquette, your letter should be cc'd to the USTR, or your concerns addressed to him in the first place.

EFF seems to be pretty much spot on in its analysis - it appears that US copyright holders are seeking to shift onto ISPs basically unlimited liability and the burdens for policing copyrights, subjecting US ISPs and intermediaries to liabilities in foreign jurisdictions for actions that federal judges have not held them liable for in the US.  The debate is difficult to follow, but wading through the January 18 draft I saw that the US Representative was advocating insertion of the words "substantially similar" in a particular provision.

What the hell is "inciting" copyright infringement?  Shouting "copy" in a crowded movie theater?

ACTA appears to be an attempt to tie Congress's hands in terms of domestic copyright legislation, rather than a legitmate attempt to pursue counterfeiting.

Before accepting the EFF's analysis whole hog, check out the USTR's website with a fact sheet here.  The USTR is Ron Kirk, whose website states:

•The ACTA is not about raising substantive standards of intellectual property protection (IPR) or specifying or dictating how countries should define infringement of those rights.


•The ACTA does not focus on private, non-commercial activities of individuals, nor will it result in the monitoring of individuals or intrude in their private sphere.

Accordingly:

- Civil liberties would not be curtailed by the ACTA.
- There is no proposal to oblige ACTA Parties to require their border authorities to search travelers' baggage for IPR infringing goods or their personal electronic devices for IPR infringing downloads.

- There is no proposal to oblige ACTA Parties to require internet service providers (ISPs) to terminate users' connections on the basis of accumulated allegations of online IPR infringement (the so-called "three strikes" rule).

A tidbit from the Official Text (full text found here)

ARTICLE 2.X: INJUNCTIONS



[1. ]In civil judicial proceedings concerning the enforcement of [copyright or related rights and trademarks] [intellectual property rights], each Party shall provide that its judicial authorities shall have the authority [subject to any statutory limitations under its domestic law] to issue [against the infringer an injunction aimed at prohibiting the continuation of the] [an order to a party to desist from an] infringement, including an order to prevent infringing goods from entering into the channels of commerce [and to law].14]



Option 2


[5. Each Party shall provide that its judicial authorities, [in appropriate cases], shall have the authority to order, at the conclusion of civil judicial proceedings [[at least in cases] concerning copyright or related rights infringement, [patent infringement,] or trademark counterfeiting] that the prevailing party be awarded payment by the losing party of court costs or fees and reasonable [and proportionate] attorney’s fees [, and any other expenses as provided for under that Party’s domestic law].15]

ARTICLE 2.2: DAMAGES



1. Each Party shall provide that:


(a) in civil judicial proceedings, its judicial authorities shall have the authority to order the infringer [who knowingly or with reasonable grounds to know, engaged in [infringing activity] of [copyright or related rights and trademarks] [intellectual property rights] to pay the right holder


(i) damages adequate to compensate for the injury the right holder has suffered as a result of the infringement; or


(ii) [at least in the case of copyright or related rights infringement and trademark counterfeiting,] [in the case of IPR infringements] the profits of the infringer that are attributable to the infringement, [which may be presumed to be the amount of damages] [and that are not taken into account in computing the amount of damages] [referred to in clause (i)]10


[which may be presumed to be the amount of damages referred to in clause (i)]; and


(b) in determining the amount of damages for [copyright or related rights infringement and trademark counterfeiting] [infringement of intellectual property rights], its judicial authorities shall consider, inter alia, any legitimate measure of value submitted by the right holder, which may include the lost profits, the value of the infringed good or service, measured by the market price, the suggested retail price, or [the profits of the infringer that are attributable to the infringement].


So if I understand correctly, if some Dutch kid emailed ONE copyrighted song to a Japanese kid, both the Dutch and Japanese ISPs would be shut down and each have to pay the RIAA for the injury plus the RIAA's attorneys fees?

The EFF letter:

EFF: Action Center
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Tell Your Lawmakers: "Anti-Counterfeiting" Treaty Is a Sham

The U.S. Trade Representative has spent the past two years working with other developed nations on a secret agreement allegedly designed to reduce the flow of fake physical goods across borders. However, the Anti-Counterfeiting Trade Agreement (ACTA) is really a ruse that gives the entertainment industry its wishlist of Internet copyright regulations and enforcement power.

Just look at some of the "anti-counterfeiting" measures included in ACTA. ACTA would set up a global framework that could:

Require Internet service providers (ISPs) to disconnect individuals accused (not convicted) of repeated copyright infringement;
Require ISPs to hand over their subscribers’ identities to copyright owners without any due process or judicial oversight;
Require ISPs to make potentially expensive modifications to their networks in an effort to prevent copyright infringement;
Prohibit the U.S. Congress from reforming the Digital Millennium Copyright Act (DMCA), which makes it a crime to defeat copy protection even when making a copy is perfectly legal;
Require all countries to implement DMCA-like laws for their own populations, without the benefit of fair use or other legal exceptions that provide a modicum of protection for speech;
Threaten potential innovators with outrageous financial penalties for copyright infringement; and
Criminalize even non-commercial uses of copyrighted materials.

Sounds a lot like a copyright law, not an "anti-counterfeiting" agreement, doesn't it?

ACTA is being negotiated by a handful of countries behind closed doors and is on track to be finished by the end of this year. Despite its potentially far-reaching impact for consumers and the future of the open Internet, the U.S. Trade Representative has claimed that it can shut out Congressional oversight by treating ACTA as a "sole executive agreement" under the President's executive power, rather than a treaty.

We can't sit back and let this fake "anti-counterfeiting" agreement become law! If your congressional representative is on one of the committees below that has oversight over the U.S. Trade Representative, tell your lawmaker not to be fooled by this chicanery and demand that ACTA be limited to addressing international counterfeiting.

Senate Finance Committee

Max Baucus, Montana
Jay Rockefeller, West Virginia
Kent Conrad, North Dakota
Jeff Bingaman, New Mexico
John Kerry, Massachusetts
Blanche Lincoln, Arkansas
Ron Wyden, Oregon
Charles Schumer, New York
Debbie Stabenow, Michigan
Maria Cantwell, Washington
Bill Nelson, Florida
Robert Menendez, New Jersey
Thomas Carper, Delaware
Chuck Grassley, Iowa
Orrin Hatch, Utah
Olympia Snowe, Maine
Jon Kyl, Arizona
Jim Bunning, Kentucky
Mike Crapo, Idaho
Pat Roberts, Kansas
John Ensign, Nevada
Mike Enzi, Wyoming
John Cornyn, Texas

House Ways and Means Trade Subcommittee

John S. Tanner, 8th Tennessee
Sander M. Levin, 12th Michigan
Chris Van Hollen, 8th Maryland
Jim McDermott, 7th Washington
Richard E. Neal, 2nd Massachusetts
Lloyd Doggett, 25th Texas
Earl Pomeroy, 1st North Dakota
Bob Etheridge, 2nd North Carolina
Linda T. Sanchez, 39th California
Kevin Brady, 8th Texas
Geoff Davis, 4th Kentucky
Dave G. Reichert, 8th Washington
Wally Herger, 2nd California
Devin Nunes, 21st California

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Yes, I would like to receive periodic updates and communications from EFF.


Remember me. What's this? Message
* Subject:

Dear [Decision Maker],


* Please personalize your message
As a consumer and constituent, I am very concerned about the Anti-Counterfeiting Trade Agreement (ACTA) being negotiated by the Office of the United States Trade Representative. The agreement's stated purpose was to coordinate a global effort to fight counterfeit products, but the language recently released by the U.S. Trade Representative -- after two years of secrecy vocally opposed by countless individuals like myself -- shows clearly that ACTA is really a copyright bill in disguise. This "wolf in sheep's clothing" could do serious harm to Americans' right to free speech and innovation on the Internet.

Just look at some of the "anti-counterfeiting" measures included in ACTA. ACTA would set up a global framework that could:

* Require Internet service providers (ISPs) to disconnect individuals accused (not convicted) of repeated copyright infringement;
* Require ISPs to hand over their subscribers' identities to copyright owners without any due process or judicial oversight;
* Require ISPs to make potentially expensive modifications to their networks in an effort to prevent copyright infringement;
* Prohibit the U.S. Congress from reforming the Digital Millennium Copyright Act (DMCA), which makes it a crime to defeat copy protection even when making a copy is perfectly legal;
* Require all countries to implement DMCA-like laws for their own populations, without the benefit of fair use or other legal exceptions that provide a modicum of protection for speech;
* Threaten potential innovators with outrageous financial penalties for copyright infringement; and
* Criminalize even non-commercial uses of copyrighted materials.

ACTA is being negotiated by a handful of countries behind closed doors and is on track to be finished by the end of this year. Despite its potentially far-reaching impact for consumers and the future of the open Internet, the U.S. Trade Representative has claimed that it can shut out Congressional oversight by negotiating ACTA as a "sole executive agreement" under the President's executive power, rather than a treaty.

Please don't be fooled by ACTA's dishonest name. ACTA is not about trade, and it is certainly not limited to counterfeiting. ACTA goes far beyond its original mandate of fighting counterfeit products, and it should not be allowed to damage the growth and development of American innovation. I urge you to protect the American public and insist that ACTA be limited to its purported purpose -- addressing counterfeit goods that pose serious health and safety concerns for consumers.




Sincerely,
[Your Name]
[Your Address]
[City, State ZIP]

Puerto Rican Frog Doll Knock-Offs: Interlocutory Appeal of Preliminary Injunction

In Coquico, Inc. v. Rodriguez-Miranda, 2009 WL 903954 (1st Cir. April 6, 2009) , the First Circuit Court of Appeals tackled in a copyright infringement action the important issue of whether a preliminary injunction stopping the distribution of stuffed plush dolls depicting the coqui comun - a common brown frog in Puerto Rico - should be upheld.   [A coqui is a frog (anuran) - this is not to be confused with the Puerto-Rican coquito, my favorite Christmas cocktail made from fresh coconuts].

When attorneys are asked to discuss the difference between the federal and state forums in New York, the availability of interlocutory appeals is usually cited as a difference.  An "interlocutory" appeal is one brought prior to the conclusion of the litigation (final judgment).  In litigation practice in the courts of New York State, many of the trial court's interlocutory rulings may be appealed to the Appellate Division.   In federal practice, appeals ordinarily lie only from final judgments.  28 U.S.C. 1291. That means if a U.S. District Court judge makes a series of adverse rulings, one may be forced to try an entire case before appealing any particular adverse ruling.

But certain interlocutory appeals are permitted.  For example, Rule 23(f) of the Federal Rules of Civil Procedure permits federal courts of appeals to consider interlocutory orders granting or denying class action certifications.   28 U.S.C. 1292(a)(1) authorizes interlocutory appeals from grants, continuances, modifications, refusals or dissolving injunctions, or refusals to dissolve or modify injunctions.

In Coquico, the First Circuit reviewed the decision from the District Court of Puerto Rico granting a preliminary injunction against a producer of stuffed frogs that produced coqui comun frogs substantially similar to those of Coquico's copyrighted frogs.   The defendant argued that since the coqui comun is found in nature, the only "original" elements were a brass ring, a Puerto-Rican flag on the coqui's underbelly, and a hang tag.   The defendant relied on the merger and scenes-a-fair doctrines.

The First Circuit rejected the defendant's arguments.  It found that the following element were protected:  1. distinctive stitching pattern; 2. idiosyncratic color combination; 3. pose; 4. placement of Puerto Rican flag on underbelly; 5. dimensions (combined with other elements).

The court was persuaded by the plethora of plush frogs produced by plaintiff.   The poor defendant did not even get its frog nature photos into evidence to support its claims that its coqui comun was just art imitating nature.

International Copyright CLE Program Online

I recently participated in a continuing legal education program at the New York County Lawyers' Association called International Copyright: What the U.S. Practitioner Needs To Know.

The CLE session is available on DVD from NYCLA or online at Lawline here. We had a great panel, moderated by Jay Kogan of D.C. Comics that included Axel Nordemann and Christian Czychowski from Boehmert & Boehmert in Germany, Johnny Chen of Divx, and Mario Sorensen Garcia from Brazil. Faculty bios here.

The program covered not only the legal concepts of international copyright and interpreting the treaties, but had a number of "real life" stories about how businesses working internationally protect and enforce copyrights.

My topic was "Foreign Copyrights in U.S. Courts".

The course description below:

Since United States copyrights are a major export, many practitioners are called upon to protect clients’ interests worldwide and negotiate licensing agreements requiring a knowledge of copyright regimes around the world. In-house counsel and outside counsel are also often called upon to assist U.S. clients in solving copyright problems worldwide.
This program identified the problems that arise for U.S. clients and provided drafting tips, together with a survey of the analytical tools and resources necessary for a U.S. practitioner to effectively craft practical solutions.

Encyclopedias of Facts About Fiction: J.K. Rowling and Harry Potter

Warner Bros. Entertainment Inc. v. RDR Books, --- F. Supp.2d ---, 2008 WL 4126736 (9/8/2008) S.D.N.Y., Patterson, J.

A Harry Potter fan created a lexicon, available on the internet. The lexicon was popular with everyone, including J.K. Rowling and the people who made films about her books. Rowling wrote on her website "This is such a great site that I have been known to sneak into an internet cafe while out writing and check a fact rather than go into a bookshop and buy a copy of Harry Potter (which is embarrassing)." But when the fan published a book with the website's contents, Rowling sued, claiming copyright infringement. The defense was "fair use".

The court found that the defendant copied from the Harry Potter books, and indeed, copied too much and too clumsily to qualify for the fair use. The defendant failed to properly use quotation marks to indicate "borrowed" text. Also, the defendant borrowed too much expression from the originals. Significantly, Rowling had already prepared two lexicon-type works "Fantastic Beast & Where to Find Them" and "Quidditch Through the Ages", and the defendant had borrowed verbatim many of Rowling's own definitions relating to her Harry Potter fantasy world.

The court noted that there is a usefulness and a demand for reference guides to fictional worlds written by third parties, such as Paul F. Ford's Companion to Narnia: A Complete Guide to the Magical World of C.S. Lewis's The Chronicles of Narnia.

After closely weighing the "fair use" factors, the court issued a permanent injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure against publication of defendant's book. The court found that where a prima facie showing of infringement was made, irreparable harm is presumed, but questioned whether that presumption had survived the U.S. Supreme Court's decision in eBay Inc. v. MercExchange LLC, 547 U.S. 388 (2006).

From the decision, it appears that the court was quite sympathetic to the defendant's apparent underlying goal of publishing a reference guide without Ms. Rowling's consent and was cognizant of the social utility of this type of publication. If the publisher had done a better packaging and editing job, had worked with the plaintiff to remove the more extensive borrowings, provide better citations and added a bit more "scholarly" commentary, it appears that the court would have found fair use.

As in most of these fair use cases, the devil is in the details.

Video Search Engines and Copyright Infringement: Rule of Thumb

If you go to http://www.ditto.com/ and type in "Napoleon Bonaparte" the video search engine will pull up twelve "thumbnail" images of the late, great Emperor. "Thumbnails" are small, low resolution images that since the Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir. 2003) have been assumed by courts to be commercially valueless. An example is found at left.

Enter "Perfect 10" a producer of photographs of naturally-beautiful naked women. Perfect 10 sued Google because Google operates a video search engine that gathers thumbnails in response to search queries.

Perfect 10 argued that it had created a market for thumbnails: selling thumbnails to users of cell phones who wanted to use naturally beautiful naked women as wallpaper.

Perfect 10 convinced a California District Court judge to enjoin Google from using its video search engine pending the outcome of the trial. The court found that Google's use of the thumbnails was probably copyright infringement and not "fair use" because of Perfect 10's new commercial use for the hitherto worthless thumbnails.

On May 16, 2007, in Perfect 10, Inc. v. Amazon.com, Inc., ---F.3d---, 2007 WL 1428632 (9th Cir. 2007), the Ninth Circuit reversed. The decision analyzed very carefully why gathering thumbnails, which are mere URL instructions, is really not copying (doesn't violate "display" right and doesn't violate "distribution" right of copyright owner), and how the video search engine's use of the original copyrighted works is "highly" transformative. A careful look at Napoleon's face above might lead the average viewer to agree.

Folks who obssess over Napster, Grokster and all of that will have a field day reading this decision which then covers secondary liability (contributory and vicarious infringement) (Google raised the argument that its video search engine had a substantial non-infringing use). Essentially Perfect 10's argument was that people other than Google were posting Perfect 10 images to their websites without permission and that Google's search engine was then re-copying and re-distributing these infringing works. The Ninth Circuit found that "Google could be held contributorily liable if it had knowledge that infringing Perfect 10 images were available using its search engine, could take simple measures to prevent further damage to Perfect 10's copyrighted works, and failed to take such steps."

N.B. - The Ninth Circuit found that Perfect 10 had not really shown that their market for thumbnails was being harmed by Google or that Google users were using thumbnails to create their own wallpaper. When a plaintiff who can show these facts comes back to court in a few years, we may have a new rule of thumb.

Copyright Injunctions - Fruit of the Infringing Tree Doctrine (Ch 11)

Chapter 5 of 17 U.S.C. provides for remedies for victims of copyright infringement. Section 502 permits injunctions:

§ 502. Remedies for infringement: Injunctions
(a) Any court having jurisdiction of a civil action arising under this title may, subject to the provisions of section 1498 of title 28, grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.
(b) Any such injunction may be served anywhere in the United States on the person enjoined; it shall be operative throughout the United States and shall be enforceable, by proceedings in contempt or otherwise, by any United States court having jurisdiction of that person. The clerk of the court granting the injunction shall, when requested by any other court in which enforcement of the injunction is sought, transmit promptly to the other court a certified copy of all the papers in the case on file in such clerk’s office.

Although the statute appears to give courts wide discretion in determining what terms of an injunction are reasonable, courts have narrowly tailored the available relief. The majority view is set forth in Kepner-Tregoe, Inc. v. Leadership Software, 12 F.3d 527 (5th Cir. 1994). That case was a "reverse-engineering case" in which a substantially similar infringing copy of licensed materials was created by a licensee. Then the licensee "surgically removed" infringing portions. The district court found, and the Fifth Circuit affirmed, that this "child of the infringement" could be enjoined from distribution because it still retained substantially similar selection and arrangement. But the Circuit court unequivocally struck down any attempts of the district court to enjoin future distribution of versions that might be non-infringing. A number of courts have struck down attempts to punish the infringer's "head start" gained by making infringing intermediate copies. See Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d 772 (5th Cir. 1999); Sony Computer Entertainment, Inc. v. Connectix Corp., 203 F.3d 596 (9th Cir. 2000). The Fifth Circuit made clear in Kepner-Tregoe that even if a licensee breached a license agreement by engineering its own competing software, that portion of the license agreement forbidding such activity might be void because such contracts are preempted by the Copyright Act. 12 F.3d at 538 citing Vault Corp. v. Quaid Software Ltd., 847 F.2d 255, 268-70 (5th Cir. 1988). Overreaching with your copyright, such as using it to protect uncopyrightable devices, is "copyright misuse" and is grounds for striking down an injunction. See, e.g., Alcatel, supra.

A plaintiff may have success in getting courts to enjoin non-copyrightable benefits or "fruits" gained from its infringing actions. See, e.g., Epic Metals Corp. v. Souliere, 181 F.3d 1280 (11th Cir. 1999). However, the majority of cases reject this approach, particularly in the area of reverse engineering where an infringing copy was made to develop a competing product or compatible device. See, e.g., Kepner-Tregoe.

Practice Tip for Lawyers: In seeking an injunction, there is a temptation to ask for the moon. A narrowly-tailored request for relief that focuses on actual infringing activities and copies stands a greater likelihood of being granted. Overreaching, even where supported by contractual language may backfire and subject you to claims of copyright misuse, particularly where the contract contravenes the Copyright Act.