In WPIX, Inc. v. ivi, Inc. 10 Civ. 715(SDNY Feb 22, 2010), Judge Naomi Reice Buchwald granted a preliminary injunction under the Second Circuit's standard set forth in Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010). I analyzed the Salinger case here. It's always fun to see whether a preliminary injunction has affected a litigant's operations, but as you can see from the image from http://www.ivi.tv/ above, ivi.tv is still going great guns.
ivi TV is a web-based service that took television broadcasts from around the country and let you watch them on your computer. Sounds great, but ivi claimed that it was entitled to do so under 17 USC 111 which is a provision giving "cable systems" the right to retransmit broadcasts under compulsory licenses. Judge Buchwald noted that such a license would cost about $100 per year.
The opinion is long and sets out the history of compulsory licensing of cable retransmissions, if you care for that type of thing. Noteworthy for plaintiffs is that Judge Buchwald notes at one point that a plaintiff's inability to show irreparable harm is indeed proof of irreparable harm.
It appears obvious to us that defendants have unwittingly demonstrated why the harm they present to plaintiffs is irreparable. There can be no dispute that by taking away viewers from sanctioned entities which compensate or otherwise obtain permission from plaintiffs for the use of their works, defendants are intruding on plaintiffs’ copyrights and taking away business opportunities. This being the case, one might wonder why it is that plaintiffs have not “submitted” specifically identifiable, enumerated, and quantified harms, as defendants seem to believe is necessary. The logical conclusion is that plaintiffs have not made such “submissions” because they cannot specifically demonstrate or quantify the harm that ivi has caused. There is no way to know how many people have used ivi rather than sanctioned methods to watch plaintiffs’ programming, or how many people have used ivi to watch programming that should not have been available in their geographic area. Furthermore, even if we could determine these numbers, we would still not be able to ascertain the precise financial impact on the plaintiffs.
Defendants contend that because plaintiffs cannot specify the harm, it must be speculative. In contrast, we find that it is because the harms are unquantifiable, and [sic] thus irreparable.
For procedure wonks, you will note that the decision involves a first-filed action in Washington State. The action before Judge Buchwald was a second-filed action in New York. Judge Buchwald correctly deferred to the first-filed judge to determine whether or not the case was an "improper anticipatory filing" which is not entitled to the traditional first-to-file rule.
I cover the first-filed suit rule (which is not so simple), otherwise known as the prior action pending doctrine in the Copyright Litigation Handbook, Chapter 6: Cease and Desist Letters and Declaratory Judgment Actions.
In Recording Indus. Ass'n of America, Inc. v. Librarian of Congress, --- F.3d --- (D.C. Cir. June 22, 2010), the D.C. Circuit upheld the Copyright Royalty Board's imposition of late fees on the RIAA when it fails to pay copyright owners.
The issue arises in the case of "compulsory licenses" - that is where someone uses a musical work without the owner's permission. Like a cover band recording a Led Zep tune without the band's permission. The DC Circuit's decision has a nice explanation of compulsory licensing and how it works. Excerpt below in italics:
Most songs played on the radio, sold on CDs in music stores, or digitally available on the Internet through services like iTunes embody two distinct copyrights-a copyright in the “musical work” and a copyright in the “sound recording.” See 17 U.S.C. § 102. The musical work is the musical composition-the notes and lyrics of the song as they appear on sheet music. The sound recording is the recorded musical work performed by a specific artist.
Although almost always intermingled in a single song, those two copyrights are legally distinct and may be owned and licensed separately. One party might own the copyright in the words and musical arrangement of a song, and another party might own the copyright in a particular artist's recording of those words and musical notes.
This case involves licenses in a limited category of copyrighted musical works-as opposed to sound recordings. Section 115 of the Copyright Act allows an individual to make and distribute phonorecords (that is, sound recordings) of a copyrighted musical work without reaching any kind of agreement with the copyright owner. That right does not include authorization to make exact copies of an existing sound recording and distribute it; if a musical work has been recorded and copyrighted by another artist, a licensee “may exercise his rights under the [§ 115] license only by assembling his own musicians, singers, recording engineers and equipment, etc. for the purpose of recording anew the musical work that is the subject of the [§ 115] license.” 2 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 8.04[A], at 8-58.5 (2009). For example, a § 115 licensee could pull together a group of musicians to record and sell a cover version of Bruce Springsteen's 1975 hit Born to Run, but that licensee could not make copies of Springsteen's recording of that song and sell them.
The § 115 licensing regime operates in a fairly straightforward manner. When a copyright owner distributes work “to the public,” § 115's provisions are triggered. 17 U.S.C. § 115(a)(1). Once that occurs, anyone may “obtain a compulsory license to make and distribute phonorecords of the work” under § 115 so long as the “primary purpose in making [the] phonorecords is to distribute them to the public for private use.” Id. Assuming the copyright has been registered with the Copyright Office, the licensee owes the copyright owner a royalty for every phonorecord “made and distributed in accordance with the [§ 115] license.” Id. § 115(c)(2). For purposes of the Copyright Act, a phonorecord is “distributed”-and an obligation to pay the copyright owner a royalty created-when “the person exercising the [§ 115] license has voluntarily and permanently parted with” the phonorecord. Id . In other words, the licensee's sale of its recording of the copyright owner's work triggers the royalty payment obligation. See Nimmer § 8.04[H][1], at 8-77.
Because the § 115 license issues without any agreement between the copyright owner and the licensee, the system needs a mechanism to figure out how much the licensee owes the copyright owner and what the terms for paying that rate should be. Although that mechanism has changed over time, the Copyright Royalty Board currently serves as the rulemaking body for this system. See generally Procedural Regulations for the Copyright Royalty Board, 70 Fed.Reg. 30,901 (May 31, 2005) (discussing the history of royalty ratemaking). The Board is a three-person panel appointed by the Librarian of Congress and removable only for cause by the Librarian.FN1 The Board sets the terms and rates for copyright royalties when copyright owners and licensees fail to negotiate terms and rates themselves. See Nimmer § 7.27[C], at 7-243.
FN1. RIAA has not raised a constitutional challenge to the method of appointment of the members of the Copyright Royalty Board. Cf. Intercollegiate Broad. Sys., Inc. v. Copyright Royalty Bd., 574 F.3d 748, 755-56 (D.C.Cir.2009); SoundExchange, Inc. v. Librarian of Congress, 571 F.3d 1220, 1226-27 (D.C.Cir.2009) (Kavanaugh, J., concurring).
As relevant here, the Copyright Act requires the Board to set “reasonable terms and rates” for royalty payments made under the § 115 license when the parties to the license fail to do so. 17 U.S.C. § 801(b)(1). When establishing terms and rates under that license, the Copyright Act requires the Board to balance four general and sometimes conflicting policy objectives: (1) maximizing the availability of creative works to the public; (2) providing copyright owners a fair return for their creative works and copyright users a fair income; (3) recognizing the relative roles of the copyright owners and users; and (4) minimizing any disruptive impact on the industries involved. Id. § 801(b)(1)(A)-(D).
At specified intervals, the Board holds ratemaking proceedings for licenses issued under the Copyright Act. Section 115 ratemaking proceedings can occur every five years “or at such other times as the parties have agreed.” Id. § 804(b)(4).
In 1996, the parties with an interest in the § 115 license (such as the Recording Industry Association of America, the Songwriter's Guild of America, and the National Music Publishers' Association) agreed on various terms and rates for the compulsory license. They also agreed that the settlement with respect to those terms and rates would expire 10 years later. In 2006, after the parties found they could not reach a new compromise, the Board instituted proceedings to set certain terms and rates governing the operation of the § 115 license. The process was long and complicated, involving 28 days of live testimony, more than 140 exhibits, and more than 340 pleadings, motions, and orders. See Mechanical and Digital Phonorecord Delivery Rate Determination Proceeding, 74 Fed.Reg. 4510, 4511 (Jan. 26, 2009).
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HT to Mike Masnick of Techdirt. Not only is Dan Pink's video by RSA Animate (embedded below) thought-provoking and relevant to whether or not money stimulates creative activity. It is also relevant to the core purpose of the Copyright Act and arguments raised in defense of draconian copyright: whether or if financial incentives stimulate creativity. Studies by the Federal Reserve and MIT raise the question of whether financial incentives actually decrease creativity.
Anyone trying to get more productivity out of an organization without spending more money ought to take these studies very seriously.
Far Copyleft folks see copyrighted works as mere free raw materials for creating new works. The far Copyright folks see a copyrighted work as a sacred, inviolable and untouchable iconic thing that may only be accessed when, how, for how long and as often as the copyright owner dictates.
Far Copyright folks see a copyright as a complete monopoly from which windfall profits are to be extracted every time a new technology emerges to make a consumer's old licensed copy of a work obsolete or every time a consumer wants to use or dispose of the copy as he or she sees fit. The first sale doctrine lets us resell a car we've purchased without paying the manufacturer. Restraints on the alienation of property are disfavored in the common law because this blocks free economic activity.
Should we have to pay a German copyright holder because we want to make fun of Hitler using the German copyright holder's ridiculously earnest economic exploitation of the Hitler theme in the film Downfall? Or does the exploiter of a theme have to take crap from people who want to laugh at them or laugh at sometimes serious, sometimes silly themes using them?
The issue I think was wrongly decided in Dr. Seuss v. Penguin Books, a Ninth Circuit case decided in 1997. Here is how the court handled the issue of parody? It is the rule in this Circuit that though the satire need not be only of the copied work and may . . . also be a parody of modern society, the copied work must be, at least in part, an object of the parody, otherwise there would be no need to conjure up the original work. . . . By requiring that the copied work be an object of the parody, we merely insist that the audience be aware that underlying the parody there is an original and separate expression, attributable to a different artist.
* * * We now turn our attention to The Cat NOT in the Hat! itself. The first two pages present a view of Los Angeles, with particular emphasis on the connection with Brentwood, given the depiction of the news camera lights. The story begins as follows:
A happy town Inside L.A. Where rich folks play The day away. But under the moon The 12th of June. Two victims flail Assault! Assail! Somebody will go to jail! Who will it be? Oh my! Oh me!
The third page reads: "One Knife? / Two Knife? / Red Knife / Dead Wife." This stanza no doubt mimics the first poem in Dr. Seuss' One Fish Two Fish Red Fish Blue Fish: "One fish / two fish / red fish / blue fish. Black fish / blue fish / old fish / new fish." For the next eighteen pages, Katz writes about Simpson's trip to Chicago, the noise outside Kato Kaelin's room, the bloody glove found by Mark Fuhrman, the Bronco chase, the booking, the hiring of lawyers, the assignment of Judge Ito, the talk show interest, the comment on DNA, and the selection of a jury. On the hiring of lawyers for Simpson, Katz writes:
A plea went out to Rob Shapiro Can you save the fallen hero? And Marcia Clark, hooray, hooray Was called in with a justice play. A man this famous Never hires Lawyers like Jacoby-Meyers. When you're accused of a killing scheme You need to build a real Dream Team. Cochran! Cochran! Doodle-doo Johnnie, won't you join the crew? Cochran! Cochran! Deedle-dee The Dream Team needs a victory. These stanzas and the illustrations simply retell the Simpson tale. Although The Cat NOT in the Hat! does broadly mimic Dr. Seuss' characteristic style, it does not hold his style up to ridicule. The stanzas have "no critical bearing on the substance or style of" The Cat in the Hat. Katz and Wrinn merely use the Cat's stove-pipe hat, the narrator ("Dr. Juice), and the title (The Cat NOT in the Hat! ) "to get attention" or maybe even "to avoid the drudgery in working up something fresh." Acuff-Rose, 114 S. Ct. at 1172. While Simpson is depicted 13 times in the Cat's distinctively scrunched and somewhat shabby red and white stove-pipe hat, the substance and content of The Cat in the Hat is not conjured up by the focus on the Brown-Goldman murders or the O.J. Simpson trial. Because there is no effort to create a transformative work with "new expression, meaning, or message," the infringing work's commercial use further cuts against the fair use defense. 9 Id. at 1171.
So if I want to draw former President George W. Bush as Mickey Mouse and parody him by placing him in a Mickey/Minnie scenario, by this logic Disney can stop me from engaging in this core political speech because I am not making fun of Mickey, only of the former President.
How to permit political speech, promote creativity and maximize economic welfare for both copyright creators and society in general are questions implicated in these debates, with the cultural pendulum slowly swinging towards the Remix culture camp. There are a few signs that legal culture is moving in that direction, with judges taking a more expansive view of fair use.
When the Copyright Society had its convention in New Orleans a few years back, I was struck by the plight of Jazz musicians: they didn't have the right to a compulsory license. So a bunch of white kids doing an exact cover of a Led Zep tune can force Led Zep to license the song at a cheap rate.
But Jazz - which remixes, rearranges and is an art form that is derivative - can't get a compulsory license, and the changes and modifications to the original can't be protected without an additional license from the copyright owner - even though a sound recording in a cover song can.
According to the jazz musicians, the licensing practices of copyright owners have put them out of making a living and basically strangled their creativity. It was a heartbreaking presentation. Jazz and its successors which rely on sampling, borrowing, remixing - all activities emanating from African-American traditions - have been severely penalized, to the point of practical extinction.
The Remix movie- with a white kid p/k/a Girl Talk at its center - shows how new technologies open up new creative possibilities. And as white kids start looking to play a kind of American jazz with video, it is more likely that the courts will be more reluctant to penalize and criminalize that activity.
The video below is also a great example of using art to make a sound recording come alive through a new layer of creative labor.
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