On March 6, the House Judiciary subcommittee with jurisdiction over intellectual property issues approved H.R. 4279, a bill aimed at strengthening intellectual property (I.P.) enforcement. But first the subcommittee made an important modification — it agreed to delete a highly controversial section concerning statutory damages in infringement cases involving compilations.

This is a welcome change. As I described in an earlier blog post, raising potential statutory damages in compilations cases is unnecessary and would increase risks for innovators. The Copyright Office hosted a roundtable discussion on this specific issue in January, at which many parties aired concerns. Meanwhile, proponents were unable to point to any actual cases where current law caused damages to be unreasonably low.

The subcommittee made a few other useful tweaks. For example, it offered a clarification of provisions calling for forfeiture of property used to commit infringement, requiring law enforcement authorities to show a “substantial connection between the property and the offense.” The full list of language modifications can be found by clicking this link..

All of this represents significant progress. Going forward, it will still be important to carefully consider the bill’s reorganization of the federal government’s I.P. enforcement structure. The bill would create a new division within the Department of Justice focused solely on I.P. enforcement, and a new “U.S.I.P. Enforcement Representative,” modeled on the existing U.S. Trade Representative (USTR). CDT supports vigorous enforcement of I.P. law, but these kind of major changes warrant more discussion. DoJ, for example, has cautioned against them.

One footnote to the subcommittee meeting is that the Chairman, Rep. Howard Berman, stated that he intends to hold a hearing and then move legislation on the “orphan works” problem. It would be good to see the subcommittee return to this issue.

Reports that the music industry is now claiming that it’s illegal to “rip” songs from a CD you own and put them on your hard drive are cropping up all over the Internet. Many of those reports point to a Washington Post article as the source of this news; meanwhile, a posting on Slashdot raised the issue a couple of weeks earlier.

The story feeds quite nicely into the popular perception of the Recording Industry Association of America (RIAA) as overreaching, extreme in its views, and hopelessly out of touch with the realities of the current Internet-based marketplace. And it would indeed be remarkable if the RIAA were to start suing consumers for transferring their lawfully purchased CDs into MP3 format to use on their computers and portable devices. But it’s not happening. The whole story is essentially a red herring.

The truth is, nobody is “going after” any consumer for ripping CDs onto a computer. The alarm stems from a single sentence that appears on page 15 of an RIAA filing in a case focused on peer-to-peer file sharing. The defendant is being sued for allegedly distributing songs to other P2P users by putting the songs in his KaZaA shared folder, not for ripping songs from CDs. The sentence itself may raise questions: “Once Defendant converted Plaintiff’s recording into the compressed .mp3 format and they are in his shared folder, they are no longer the authorized copies distributed by Plaintiffs.” But this lone sentence, taken out of context, hardly represents evidence of a new legal position, much less a new front in the RIAA’s legal campaign.
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Back in 2005, CDT filed a complaint with the Federal Trade Commission against two Web sites that claimed to offer “100% Legal” music downloads. In reality, the sites essentially provided access to popular peer-to-peer file sharing networks, where copyright infringement is common. But because the sites charged subscription fees, in addition to making claims of legality, it wasn’t hard to see how consumers might mistake the sites for legitimate, licensed services. The FTC agreed that there was deception going on, filed a lawsuit, and eventually reached a settlement.

Every now and then, CDT gets an email thanking us for bringing the complaint. Typically, the email explains that the Internet user was considering plunking down money to one of the sites named in the complaint, but first did a quick search on the site name. Up popped the CDT complaint–alerting the user that subscribing to the site wouldn’t necessarily buy the user lawful access to the promised music. So the email says, in effect, “thank you for warning me so I wouldn’t waste my money.”

That got us thinking, maybe there are other sites out there that Internet users could misperceive as licensed, fee-based music services, when in fact the sites have no such license. Such sites not only dupe individual consumers; by sowing confusion, they undermine the development of the legitimate online music marketplace. But bringing lots of FTC complaints would be cumbersome, and not all such sites make such blatantly deceptive claims as “100% legal.”

Through the magic of search engines, however, the mere presence of the original complaint on our site was providing useful information to people doing a quick pre-purchase inquiry. So we figured if we listed other sites likely to confuse consumers, search engines would find those, too, and we could provide a useful warning to people seeking information about a broader range of sites.

That’s the genesis of CDT’s new “Music Download Warning List.” We did some searches for terms like “music download” and investigated some of the sites that popped up. We found over 30 sites that we think could leave Internet users with a mistaken impression about what the sites are really offering. More details about the specific criteria we used are included with the list itself.

We hope to grow this site and have it be a tool consumers can use if they’re at all concerned about the claims being made by a music download site. There are probably other sites that could qualify of course, the Internet is a big place, but we think our list is a good place to start.

Last week the House subcommittee with jurisdiction over intellectual property issues held a hearing on H.R. 4279, an I.P. enforcement bill introduced last month by Judiciary Committee Chairman John Conyers.

CDT does not have any problem with efforts to provide additional resources for I.P. enforcement. Adding more prosecutors tasked or trained for I.P. enforcement is fine, so is reorganization aimed at providing better coordination. And efforts to address the tricky problem of foreign I.P. enforcement–such as the bill’s provisions to deploy I.P. attachés and enforcement coordinators to key embassies and countries– make sense.

It was clear from the hearing, however, that section 104 of the bill is highly controversial. Section 104 would increase potential damages in cases involving works in a compilation, by allowing courts to treat the different items in a compilation as separate works eligible for separate damages. So infringing a website or a software program with multiple component parts could end up getting treated as multiple violations, not just one.

This provision seems just plain unnecessary. Statutory damages already can get sky-high. Moreover, courts already have ample discretion to adjust damages to reflect whatever factors they consider relevant. So the impact on actual damages assessed against actual pirates in court would likely be nil. In practice, the main effect of section 104 would be to increase the theoretical maximum damage amount that a rights holder can wave around when trying to exert pressure for settlement of a legitimate business or legal dispute. That may hurt innovation, because risk-averse innovators may be intimidated from standing their ground even when their legal position is relatively strong.

The hearing touched on a few other parts of the bill. For example, there was some debate about the bill’s proposal to eliminate copyright registration as a prerequisite to criminal enforcement against infringement.

But I was struck by how little the hearing focused on the bill’s provisions calling for a fundamental restructuring of the federal government’s I.P. enforcement structure. The bill would create a new division within the DoJ devoted solely to I.P.; the new division would be on par organizationally with existing units such as the Criminal Division, Civil Division, Antitrust Division, and Civil Rights Division. And it would create a new “United States Intellectual Property Enforcement Representative,” modeled on the U.S. Trade Representative, within the Executive Office of the President. These are major institutional changes, and the DoJ witness at the hearing cautioned against them.

At a minimum, the pros and cons of this kind of large-scale reorganization merit careful scrutiny as this bill moves forward.

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A couple of weeks ago, a group of commercial copyright owners and operators of several user-generated content (UGC) services issued a set of Copyright Principles for UGC Services. To their credit, these principles include “the accommodation of fair use” among the goals. The main thrust of the principles, however, is to call on UGC sites to take more active responsibility for preventing users from posting infringing content — and in particular, to implement filtering technologies to identify unauthorized copyrighted content automatically. The principles go into significant detail about how UGC sites should combat infringement, while the nods to fair use consist of little more than bare references. For example, the shortest of the fifteen principles is number six, which reads in its entirety: “When sending notices and making claims of infringement, Copyright Owners should accommodate fair use.”

Stating a general commitment to accommodating fair use is certainly welcome. But it doesn’t provide any guidance on the tricky practical questions concerning what such a commitment actually means and how to make it real and effective. Accommodating fair use is not a straightforward task, particularly where companies are relying on automatic filtering tools. Filtering tools may be able to identify unauthorized copyrighted content, but they can’t parse the nuances of fair use.

Today, EFF and several other organizations released a set of principles aimed squarely at providing more detailed guidance for the fair use side of the UGC equation. These Fair Use Principles for User Generated Video Content call for granting a “wide berth” for uses that are creative and noncommercial in nature (e.g., using a clip as part of an original video, as opposed to just posting a verbatim copy of the clip); targeting any automatic, technology-based blocking to cases that appear to involve verbatim copying, while providing for human review of cases where the content appears more mixed; and providing effective ways for content creators to dispute the conclusions of automatic filters or content owner takedown notices. Clearly these are important ideas. In particular, human review of close cases and meaningful mechanisms for individuals to challenge erroneous takedowns or blocking seem like essential elements of any serious scheme to leave room for fair use.
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Fox News has apparently sent Sen. John McCain a cease and desist letter for his campaign’s use of 19 seconds of video of the Senator taken from a debate hosted by Fox News in a campaign ad (available here). Fox’s claim that the political ad violates its copyright strains credulity. If the use of a 19 second clip from a 90 minute televised debate incorporated into a political ad is not fair use, then what is?

The question to Fox News is, are there any circumstances where the network would acknowledge fair use of debate footage? Is there something about this particular advertisement that they contend is distinguishable from other uses of short clips for political debate and commentary? Or are they making an argument that candidates who participated in televised political debate (as compared to ordinary citizens) are not entitled to claim fair use of short clips for political purposes? If so, why?

Because frankly we can’t see it. Yes, the clip did make its way into a political ad. And yes, he did cherry pick one of the few “newsworthy” (or at least entertaining) moments in the debate. But if Senator McCain can’t use 19 seconds from that debate in a political ad, it’s difficult to imagine that anyone can claim fair use of any one of the 5400 seconds from that debate.

The only good thing that may come from this incident is that members of Congress may finally begin to grasp the importance of fair use to a democratic society. Nothing focuses the mind of a politician like a cease and desist letter aimed at a political advertisement.

Google and YouTube have been saying for quite some time that the video-sharing service was working on technology to scan video uploads for material that could infringe copyright. YouTube has now announced the launch of its “Video Identification” tool, albeit in Beta form.

This is a significant development. Commercial copyright owners have long complained that YouTube is awash in infringing videos, and that the DMCA’s “notice-and-takedown” process amounts to a cumbersome and ongoing game of whack-a-mole. They have argued that YouTube should filter out infringing material on the front end — before it gets posted — rather than waiting for content owners to find each infringing posting and send a formal request for it to be taken down. The law doesn’t currently require that, but YouTube’s new tool appears to be a major step in that direction.

YouTube’s announcement leaves a lot of open questions — and the details on the official Google blog and YouTube’s Video Identification page are pretty sketchy. Our understanding is that the system will use some kind of digital fingerprinting technology to check video uploads against a database of copyrighted material submitted by copyright holders. If a match is found, what happens next will depend on whether the copyright holder has asked to block all uploads, allow them for promotional purposes, or “monetize” them (presumably by sharing in revenues from advertising).

From CDT’s viewpoint, the questions that immediately come to mind relate to accuracy and fair use. YouTube is a marvelous platform for free expression, and we wouldn’t want to see legitimate user-created videos misidentified and blocked. And even if the system never wrongly identifies a video clip, what will happen when users incorporate short clips of commercial video content into their own videos, for purposes of criticism or commentary? That’s classic fair use activity. But if the YouTube technology identifies even short clips of copyrighted material within a longer video, such fair use activity could be flagged and perhaps blocked. How the system handles fair use activity, and how users are able to navigate the fair use issues in practice, will be extremely important.

This is a tricky challenge; the case-by-case nature of fair use makes it impossible to translate neatly into an automated process. YouTube should explain to its user community how it will deal with this difficult problem. At a minimum, it seems clear that the video identification system should include some opportunity for users to challenge a positive match on either accuracy or fair use grounds. We understand that the system may in fact include a process for that, but more details are needed. And for that opportunity to be meaningful, users will need some links to balanced information about fair use, so that they can make a reasonably educated judgment about whether their activity is in fact permissible. It also could be useful for the system to include some way to monitor any potential impact on fair use — perhaps a mechanism for users to report cases where they were blocked or dissuaded from posting videos that they believe to be fair use. (more…)

Classic examples of “fair use” often focus on personal, largely non-commercial activities — like quoting or excerpting copyrighted content as part of a school project, or recording a television episode for private viewing at a later time. Public interest advocates also stress the crucial role of fair use in promoting such civic values as free expression.

But the benefits of fair use, and of balanced copyright law generally, aren’t limited to the non-commercial sphere. All those private, individual activities add up, and they form the basis for important markets — after all, somebody has to make, market, and sell the gizmos and services that make those individual activities possible. In the age of computers and the Internet, moreover, all kinds of fully legitimate activities require data to be copied and manipulated in various ways. The online economy is heavily dependent on fair use, and fair use provides essential breathing space for emerging digital economy innovations.

A new report commissioned by the Computer and Communications Industry Association (CCIA), “Fair Use in the U.S. Economy,” seeks to quantify the contribution to the economy of industries that depend on fair use and other limitations included in copyright law. The numbers it comes up with are large — in 2006, industries relying on fair use (broadly defined to as legal limitations to the exclusive rights granted under copyright law) accounted for $2.2 trillion or 16.6 percent of gross domestic product. Interestingly, in tallying these numbers the study follows a methodology developed by the World Intellectual Property Organization for estimating the economic contribution of copyright-related industries.

The key take-home point is that fair use isn’t just a quaint little concept that has been tacked onto copyright’s framework of rights and incentives for largely extraneous, non-economic reasons. Promoting the growth of an information age economy requires both rights and protections for copyright owners and appropriate limitations and exceptions to those rights. Hopefully the new study will prompt more attention and awareness concerning the economic benefits of balanced copyright policies.

The Computer and Communications Industry Association (CCIA) today filed an FTC complaint about inaccurate copyright warnings. If you watch major league sports, chances are you can recite some of the warnings from memory — for example, “accounts and descriptions of this game may not be disseminated without express written consent.” CCIA argues that warnings associated with certain sports telecasts, movie DVDs, and books misrepresent federal law by overstating the copyright holder’s exclusive rights and ignoring key limitations like fair use, exemptions for classroom use, and the legal principle that facts and ideas may not be copyrighted.

It’s true that copyright in general and fair use in particular often turn on subtle and imprecise distinctions, with the result that interpretations of the law differ. So coming up with a completely “objective” copyright warning may be difficult. But it’s equally true that many copyright warnings don’t seem to make any effort whatsoever to paint an accurate picture of the law, under any good faith interpretation.

CDT has argued for some time that public education about copyright is a key component of a sound copyright policy for the digital age. Certainly that means educating citizens about what constitutes infringement and why engaging in infringement is wrong. But the CCIA petition highlights the risk of highly slanted or partial education. A real education campaign should be focused on giving the public a greater understanding of the contours of copyright law and of why copyright matters — not parading around a scary caricature of the actual law. Good faith efforts at education will require an appropriate balance.

Incidentally, the NFL is one of the parties CCIA names in today’s FTC complaint. On the subject of aggressive copyright claims in the football arena, the Green Bay Packers apparently invoke copyright to limit linking to their (public) Web pages, according to this blog post.

CDT on Friday joined with a substantial group of public interest advocates and industry associations — from EFF to the U.S. Telecom Association and many others — in filing a brief in the federal appeal concerning Cablevision’s plan to deploy a “remote digital video recorder” service. The service would act just like a TiVo or other DVR device, except that it would store recorded programs on a server at a remote location instead of on a hard drive inside a small black box sitting next to the consumer’s television. But a lower court held that Cablevision can’t deploy the service because it would violate copyright.

Hopefully the participation of so many signatories on the brief will send a message to the court that there’s more at stake here than just the fate of a particular DVR product. The lower court’s decision in this case runs roughshod over the important distinction between a person who makes a copy himself and a person who provides the means — say, a xerox machine or a VCR — for someone else to make a copy. That may sound technical, but it’s an important distinction. Those who offer machines or services with perfectly lawful uses shouldn’t be on the hook every time someone uses them in an illegal way. Unfortunately, the lower court’s decision implies that this key principle of copyright law shouldn’t apply to modern services that deliver some capabilities remotely.

That kind of remote capability isn’t some kind of rare quirk. We’re living in a networked world. Services and devices of all kinds will connect to and be offered over the Internet, with little regard for geography. So there is no reason that the law should fixate on the physical location of the machines used to deliver a service. Location really isn’t important; liability for a machine that uses remote components connected by the network should be evaluated under the same principles that apply to any other machine with copying capabilities.

So the precedent here is important. With any luck, the court will see the serious implications of the decision below and reject its flawed reasoning. Check out our Policy Post from April for further details on this critical case.