Chapter Twenty One | Intellectual Property: Copyrights

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Purpose Of Copyrights

Copyright law, as with all laws made pursuant to the authority granted by Article 1, Section 8 of the Constitution, is “… [t]o promote the Progress of Science and useful Arts …”. Justice Douglas, writing for the majority in U.S. v. Paramount Pictures, wrote “The copyright law, like the patent statutes, makes reward to the owner a secondary consideration.” In Fox Film Corp. v. Doyal, 286 U.S. 123, 127, (1932) Chief Justice Hughes spoke as follows respecting the copyright monopoly granted by Congress, “The sole interest of the United States and the primary object in conferring the monopoly lie in the general benefits derived by the public from the labors of authors.”

Justice Douglas continued, “It is said that reward to the author or artist serves to induce release to the public of the products of his creative genius. But the reward does not serve its public purpose if it is not related to the quality of the copyright. Where a high quality film greatly desired is licensed only if an inferior one is taken, the latter borrows quality from the former and strengthens its monopoly by drawing on the other. The practice tends to equalize rather than differentiate the reward for the individual copyrights.” (See U.S. v. Paramount Pictures, 334 U.S. 131, 158 (1948)).

Copyright law protects “… original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” A work of authorship includes (1) literary works; (2) musical works, including any accompanying words; (3) dramatic works, including any accompanying music; (4) pantomimes and choreographic works; (5) pictorial, graphic, and sculptural works; (6) motion pictures and other audiovisual works; (7) sound recordings; and (8) architectural works (17 U.S.C. §102(a)).

The owner of a copyright has “… the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.” (17 U.S.C. §106).

Limitations

There are, however, limitations on how far that protection extends beyond the original work. According to the statute, copyright protection does not “… extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied …” that is embodied in such an original work (17 U.S.C. §102(b)).

Subject Matter

The subject matter of a copyright, as described above, includes “… compilations and derivative works …” but protection of “… preexisting material in which copyright subsists does not extend to any part of the work in which such material has been used unlawfully.” Protection of such works only includes material “… contributed by the author …” rather than “… preexisting material employed in the work, and does not imply any exclusive right in the preexisting material.” (17 U.S.C. §103(a) and (b)).

Reproduction And Derivatives

The owner of a copyright has exclusive rights to reproduce, prepare derivative works based upon the copyrighted work, distribute copies by sale or other transfer of ownership, or by rental, lease, or lending, perform the copyrighted work publicly, display the copyrighted work publicly, and perform the copyrighted work publicly by means of a digital audio transmission (17 U.S.C. §106).

Ownership

Anyone who creates a work is considered the author of that work. In the event that the work is created as a “work for hire” then the organization that sponsored the work is considered the author. A “work made for hire” is defined in §101 as “a work prepared by an employee within the scope of his or her employment …” For example, the coders who created the MacOS did so as employees or independent contractors of Apple. As a result, their work and the cumulative product outcome known as MacOS are considered “works made for hire” pursuant to §101 of the Copyright Act. Thus, the “author” of the MacOS is considered to be Apple.

However, remember an important distinction, copyright embraces only the original expression not any extensions of the original idea. The Feist case examines the necessity of originality when granting a copyright.

 

Case Study

Feist Publications, Inc. v. Rural Telephone Service Co., Inc.

Supreme Court Of The United States, 499 U.S. 340 (1991)

Procedural Posture

Petitioner publishing company sought review by certiorari of a judgment of the United States Court of Appeals for the Tenth Circuit, which affirmed a grant of summary judgment in favor of respondent phone company in a suit by respondent against petitioner for copyright infringement that arose after petitioner published a directory compiled with information taken from the white pages compiled and published by respondent.

Overview

Respondent sued petitioner for copyright infringement because petitioner had used information contained in its white pages in the compilation of its own directory. The court reversed a grant of summary judgment in favor of respondent because the selection, coordination, and arrangement of respondent’s white pages did not satisfy the minimum constitutional standards for copyright protection. Specifically, the court found that respondent’s white pages, which contained only factual information, i.e., phone numbers, addresses, and names listed in alphabetical order, lacked the requisite originality because respondent had not selected, coordinated, or arranged the uncopyrightable facts in any original way.

Summary

A telephone company that was a certified public utility providing telephone service to several communities in Kansas, and that was subject to a state regulation requiring all telephone companies operating in the state to issue annually an updated telephone directory, published a typical telephone directory, consisting of white pages and yellow pages. The white pages listed in alphabetical order the names of the telephone company’s subscribers, together with their towns and telephone numbers. The telephone company obtained the data for its white pages from the company’s subscribers, who were required to provide their names and addresses when applying for telephone service from the company. A publishing company, which specialized in areawide telephone directories covering a much larger geographical range than did directories such as that of the telephone company, offered to pay the telephone company for the right to use its white pages listings, but the telephone company refused to license its listings to the publishing company. Subsequently, the publishing company used the telephone company’s white pages listings without the telephone company’s consent. Although the publishing company sought to obtain additional information, such as street addresses, for the listings that it took from the telephone company’s white pages, many of the listings in the publishing company’s areawide directory that covered part of the telephone company’s service area were identical to listings in the telephone company’s white pages. In a copyright infringement suit brought by the telephone company against the publishing company, the United States District Court for the District of Kansas, explaining that courts had consistently held that telephone directories were copyrightable, granted summary judgment to the telephone company (663 F Supp 214). The United States Court of Appeals for the Tenth Circuit, in an unpublished opinion, affirmed the District Court judgment for substantially the reasons given by the District Court (916 F2d 718).

On certiorari, *** it was held that (1) the names, towns, and telephone numbers listed in the white pages were not protected by the telephone company’s copyright in its combined white and yellow pages directory, because the listings in the white pages were not original to the telephone company, since (a) the listings, rather than owing their origin to the telephone company, were uncopyrightable facts, and (b) the telephone company has not selected, coordinated, or arranged these uncopyrightable facts in an original way sufficient to satisfy the minimum standards for copyright protection–under either the Federal Constitution’s Article I, 8, cl 8, which authorizes Congress to secure for limited times to authors the exclusive right to their respective writings, or the Copyright Act of 1976 (17 USCS 101 et seq.), which provides copyright protection for original works of authorship–given that the telephone company’s selection and alphabetical arrangement of the listings lacked the creativity necessary to demonstrate originality; and (2) because the telephone company’s white pages listings lacked the requisite originality for copyright protection, the publishing company’s use of the listings could not constitute copyright infringement.

Decision

Alphabetical listings of names, accompanied by towns and telephone numbers, in telephone book white pages held not copyrightable; thus, nonconsensual copying of listings held not to infringe on copyright.

Outcome

The court reversed the judgment.

The Supreme Court in Feist affirmed that owners’ original expression is not only protected but also that copyright “… encourages others to build freely upon the ideas and information conveyed by a work.” The Court noted that the principle known as the idea/expression or fact/expression dichotomy, is appropriately applied to all works of authorship. And, where applied to a factual compilation, “… assuming the absence of original written expression, only the compiler’s selection and arrangement may be protected; the raw facts may be copied at will. This result is neither unfair nor unfortunate. It is the means by which copyright advances the progress of science and art.” (See Feist, 499 U.S. 340 at 349-350).

Sources of Law

The Copyright Act of 1790, passed by the Second U.S. Congress, was the first federal copyright statute and established U.S. copyright protection with term of 14 years and provided living owners with an option for one 14-year renewal. This act provided protection only to U.S. citizens. The Copyright Act of 1831 was the first major statutory revision of copyright law. It added musical compositions to the list of protected works and extended the initial term of protection to 28 years with an option for one 14 year renewal. The Copyright Act of 1909 represented a substantial revision, extending the initial term to 28 years with the option of renewal for one additional 28-year term. The Townsend Amendment of 1912 added a new form of expression, motion pictures, to the list pf protected works. Although the 1909 Act was revised by the Copyright Act of 1976, it remains the effective for all copyrights granted before the 1976 Act took effect.

The Copyright Act of 1976 (17 U.S.C. §102, et seq.) remains the primary federal law governing copyrights and has been amended several times. The Act regularized the term of copyright protection by eliminating the potential of multiple terms and creating a system of one term running from the work’s creation and continuing for a term consisting of the life of the author plus 70 years after the author’s death. The Act also provides protection for unpublished works and preempts state laws governing copyright. (17 U.S.C. §301, 303).

Two more amendments to the 1976 acre have been adopted by Congress. The Copyright Renewal Act of 1992 eliminated the need for affirmative action by the copyright holder, i.e., filing a renewal application. This amendment had the effect of providing protection for the full term available without the owner’s action. The Copyright Term Extension Act of 1998 (CTEA), often ridiculed as the “Mickey Mouse Protection Act,” extended copyright protection terms to 95/120 years or life plus 70 years. So, the term of protection for works “… created on or after January 1, 1978 …” there is presently “… a term consisting of the life of the author and 70 years after the author’s death.” In the case of a joint work prepared by two or more authors who did not work for hire the Act provides “… a term consisting of the life of the last surviving author and 70 years after such last surviving author’s death.” And, for anonymous works, pseudonymous works, or works made for hire the Act provides “… a term of 95 years from the year of its first publication, or a term of 120 years from the year of its creation, whichever expires first.” (17 U.S.C. §302).

Notice, Registration and Enforcement

Copyright protection of a work arises automatically at the moment of fixation; in other words, as soon as the work appears in some fixed and tangible form. “A work is “fixed” in a tangible medium of expression when its embodiment … is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” (17 U.S.C. §101).

Pursuant to the Berne Convention, signed by the U.S. in 1989, there is no requirement for completion of a registration process. However, completion of the federal registration process provides some distinct advantages. Certain damages are only available where the work was registered within ninety days of initial publication or prior to any alleged infringement.

Even though a work is protected once it is created and fixed in a tangible form, there are advantages to registration. Registration establishes a public record of the copyright claim and is necessary for works of U.S. origin before an infringement suit may be filed in court. If registration is completed before or within five years of publication, it establishes prima facie evidence in court of the validity of the copyright. Statutory damages and attorney’s fees will be available to the copyright owner in court actions if registration is made within three months after publication of the work or prior to an infringement of the work. If not, only an award of actual damages and profits will be available to the copyright owner.

The inclusion of a copyright notice on materials distributed in the U.S. is optional. If a notice is included on the work, §401 requires that it be “… affixed … in such manner and location as to give reasonable notice of the claim of copyright” and must include:

  1. the symbol © (the letter C in a circle), or
  2. the word “Copyright, or
  3. the abbreviation “Copr.”; and
  4. the year of first publication of the work; in the case of compilations, or derivative works incorporating previously published material, the year date of first publication of the compilation or derivative work is sufficient. The year date may be omitted where a pictorial, graphic, or sculptural work, with accompanying text matter, if any, is reproduced in or on greeting cards, postcards, stationery, jewelry, dolls, toys, or any useful articles; and
    the name of the owner of copyright in the work, or an abbreviation by which the name can be recognized, or a generally known alternative designation of the owner. (17 U.S.C. §401).

Correct examples of copyright notices would include:

  • © 2017, I A.M. Owner, or
  • Copyright 2017, I A.M. Owner, or
  • Copr. 2017, I A.M. Owner

Infringement

Any copyright owner has the right to bring a legal action against an alleged infringer. Copyright infringement arises whenever a work is distributed, copied, displayed, modified, a derivative is prepared work or performed in public. “In order to establish infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” (See Feist, 499 U.S. 340, 362).

Direct Infringement

Direct infringement arises when a person deliberately, and without authorization, engages in the activities described above. For example, if you make a copy of this textbook without the copyright owner’s permission, you will have violated the exclusive right to reproduce and have therefore committed copyright infringement. Likewise, if a music listener makes a copy of a digital music file and shares it with friends, a violation of the exclusive right to reproduce and distribute has occurred. (See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (2001). Of course, proof of infringement may be difficult, particularly with digital materials. For instance, a copyright owner would be required to show that the alleged infringer both had access to the original work and that they were substantially similar.

The Aereo case resolved a dispute between a provider of an innovative rebroadcasting technology and traditional broadcast media providers. Aereo’s service allowed its subscribers to view over-the-air television on Internet-connected devices. The Court found that the service violated the copyrights of the owners.

 

Case Study

American Broadcasting Companies, Inc. v. Aereo, Inc.

Supreme Court Of The United States, 134 S. Ct. 2498 (2014)

Procedural Posture

Petitioners, a group of television producers, distributors, and broadcasters, sued respondent, an entity that streamed petitioners’ programs to subscribers over the Internet, claiming copyright infringement. The district court denied petitioners’ request for an order enjoining respondent from providing copyrighted programs to subscribers, and the U.S. Court of Appeals for the Second Circuit affirmed. The U.S. Supreme Court granted certiorari.

Overview

Petitioners claimed that respondent violated their rights under the Copyright Act by selling a service that allowed subscribers to watch television programs over the Internet at about the same time the programs were broadcast over the air. A divided panel of the Second Circuit found that respondent did not perform “publicly” within the meaning of the Transmit Clause of the Copyright Act, 17 U.S.C.S. § 101, because it used technology which allowed it to stream programs to each subscriber by sending a private transmission that was available only to that subscriber. The U.S. Supreme Court disagreed. Changes Congress made to the Copyright Act in 1976 were intended to overturn the Supreme Court’s decisions in Fortnightly Corp. v. United Artists Television, Inc. and Teleprompter Corp. v. Columbia Broadcasting System, Inc., and under those changes respondent performed petitioners’ copyrighted works publicly when it streamed the works to subscribers.

The Copyright Act of 1976 gives a copyright owner the exclusive right to perform a copyrighted work publicly. 17 U.S.C.S. § 106(4). The Act’s Transmit Clause defines that exclusive right as including the right to transmit or otherwise communicate a performance of a copyrighted work to the public, by means of any device or process, whether the members of the public capable of receiving the performance receive it in the same place or in separate places and at the same time or at different times. 17 U.S.C.S. § 101.

Decision

Business that sold service which allowed subscribers to watch television programs over Internet at about same time programs were broadcast held to violate copyrights of television producers and broadcasters.

Outcome

The Supreme Court reversed the Second Circuit’s judgment and remanded the case. 6-3 Decision; 1 dissent.

The question before the Court in Aereo was whether the copyright clause of the Constitution allows a company to transmit television programs to its paying viewers over the internet without the permission of the broadcasting network being viewed. The Court found that Aereo’s actions violated the rights of the owner of the copyrights in question.

Contributory Infringement

Contributory infringement is really a form of secondary liability for direct infringement. A person need not engage in behavior that directly infringes on another’s copyright, “… one infringes contributorily by intentionally inducing or encouraging direct infringement, (see Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (CA2 1971), and infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it,” (see Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307 (CA2 1963)). Although “[t]he Copyright Act does not expressly render anyone liable for infringement committed by another, these doctrines of secondary liability emerged from common law principles and are well established in the law… .” (see Sony Corp. v. Universal City Studios, 464 U.S., at 434, 486).

The Sony case resolved one of the early disputes raised by the introduction of a disruptive technology that posed a challenge to an entrenched system and addressed the issues of contributory infringement.

 

Case Study

Sony Corporation Of America v. Universal City Studios, Inc.

Supreme Court Of The United States, 464 U.S. 417 (1984)

Procedural Posture

Petitioners appealed a judgment of the United States Court of Appeals for the Ninth Circuit holding petitioners liable for contributory infringement in respondents’ suit against petitioners for copyright infringement in violation of the Copyright Act, 17 U.S.C.S. § 101 et seq.

Overview

Petitioners manufactured and sold home video tape recorders. Respondents owned the copyrights to television programs broadcast on public airwaves. Respondents sued petitioners for copyright infringement, alleging that because consumers used petitioners’ recorders to record respondents’ copyrighted works, petitioners were liable for the copyright infringement allegedly committed by those consumers in violation of the Copyright Act, 17 U.S.C.S. § 101 et seq. The district court held in favor of petitioners. The appellate court reversed. The U.S. Supreme Court held that petitioners demonstrated a significant likelihood that substantial numbers of copyright holders that licensed works for broadcast on free television would not object to having such broadcasts recorded for later viewing by private viewers. The recorders were therefore capable of substantial non-infringing uses and respondents’ sale of the recorders to the general public did not constitute copyright infringement.

Decision

Sale of home video tape recorders to the general public did not constitute contributory infringement of copyrights on television programs since there was a significant likelihood that substantial numbers of copyright holders who license their works for broadcast on free television would not object to having their broadcasts time-shifted by private viewers and the plaintiff copyright holders did not demonstrate that time-shifting would cause any likelihood of non-minimal harm to the potential market for, or the value of, their copyrighted works.

Outcome

The judgment in favor of respondents was reversed where petitioners, as manufacturers of video recorders, did not infringe copyrights.

Vicarious Infringement

Vicarious infringement is another form of secondary liability for direct infringement. A party “… is vicariously liable for the actions of a primary infringer where the defendant (1) has the right and ability to control the infringer’s conduct, and (2) receives a direct financial benefit from the infringement.” (see Fonovisa, Inc. v. Cherry Auction, Inc.; Richard Pilegard, Et Al, 76 F.3d 259 (1996)).

Shapiro is a landmark case on vicarious liability. The court there was faced with a copyright infringement suit against the owner of a chain of department stores where a concessionaire was selling counterfeit recordings.

 

Case Study

Shapiro, Bernstein & Co., Inc., Et Al. v. H. L. Green Company, Inc.

United States Court Of Appeals For The Second Circuit, 316 F.2D 304 (1963)

Procedural Posture

Plaintiffs challenged a district court’s dismissal of their claims against defendant, a record seller accused of copyright infringement.

Overview

Plaintiffs were the copyright proprietors of several musical compositions. Defendant was a company with a record department in each of its stores. Third party defendant was a record manufacturer and dealer who sold records in defendant’s stores. Plaintiffs sued third party defendant for manufacturing knock off records, which were copies of plaintiffs’ records, and selling them without a license. Plaintiffs prevailed on their claims against third party defendant but their suit against defendant was dismissed. The appellate court held defendant liable for illegal sales, even in the absence of intent to infringe, on the basis that knowledge was imputed to defendant. The court further stated that defendant’s liability would stem from a finding that third party defendant was also liable for unlawful sales. The case was reversed and remanded.

Outcome

The court granted plaintiffs’ claim for relief from the district court’s dismissal of their claims against defendant, a record seller accused of copyright infringement, and the case was remanded for further proceedings on the issue of illegal sales.

Inducing Infringement

Inducement arises when a person persuades or influences someone to act. Grokster developed a second generation peer-to-peer file sharing software that allowed users to share digital music, and other types of digital files, knowingly providing the means for users to engage in infringing behavior. The Court found that Grokster facilitated copyright infringement. This case addresses an issue raised by the rise of new and different ways to infringe on copyrights.

 

Case Study

Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.

Supreme Court Of The United States, 545 U.S. 913 (2005)

Procedural Posture

Petitioner copyright holders sued respondent software distributors, alleging that the distributors were liable for copyright infringement because the software of the distributors was intended to allow users to infringe copyrighted works. Upon the grant of a writ of certiorari, the holders appealed the judgment of the United States Court of Appeals for the Ninth Circuit which affirmed summary judgment in favor of the distributors.

Summary

Two companies that distributed free software, which allowed computer users to share electronic files through peer-to-peer networks (that is, directly with each other, rather than through central servers), were sued by a group of copyright holders–who (1) alleged that the distributors had knowingly and intentionally distributed their software to enable users to infringe copyrighted works in violation of the Copyright Act (17 U.S.C.S. §§ 101 et seq.), and (2) sought damages and an injunction–where, although the distributors’ software could be used to share any type of digital file, users of the software had mostly used it for unauthorized sharing of copyrighted music and video files.

Discovery revealed that (1) billions of files were shared across peer-to-peer networks each month; and (2) the distributors were aware that users of their software used it primarily to download copyrighted files. Moreover, the record included evidence that the distributors (1) clearly had voiced the objective that software recipients use the software to download copyrighted works; and (2) had actively encouraged infringement by, for example, promoting themselves as alternatives to another file-sharing service that had been sued by copyright holders for allegedly facilitating copyright infringement.

Although the distributors received no revenue from users of their software, the distributors generated income by selling advertising space, and then streaming the advertising to the users (so that, as the number of users increased, the value of the distributors’ advertising opportunities increased). There was no evidence that the distributors had tried to filter copyrighted material from users’ downloads or otherwise to impede the sharing of copyrighted files. ***

Overview

The distributors were aware that users employed their free software primarily to download copyrighted files, but the distributors contended that they could not be contributorily liable for the users’ infringements since the software was capable of substantial noninfringing uses such as downloading works in the public domain. The U.S. Supreme Court unanimously held, however, that the distributors could be liable for contributory infringement, regardless of the software’s lawful uses, based on evidence that the software was distributed with the principal, if not exclusive, object of promoting its use to infringe copyright. In addition to the distributors’ knowledge of extensive infringement, the distributors expressly communicated to users the ability of the software to copy works and clearly expressed their intent to target former users of a similar service which was being challenged in court for facilitating copyright infringement. Further, the distributors made no attempt to develop filtering tools or mechanisms to diminish infringing activity, and the distributors’ profit from advertisers clearly depended on high-volume use which was known to be infringing.

Under the “inducement rule” being adopted, for copyright, by the United States Supreme Court in the case at hand, one who distributed a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, going beyond mere distribution with knowledge of third-party action, was liable for the resulting acts of infringement by third parties using the device, regardless of the device’s lawful uses, as:

(1) One infringed contributorily by intentionally inducing or encouraging direct infringement–and infringed vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it–for, although the Copyright Act (17 U.S.C.S. §§ 101 et seq.) did not expressly render anyone liable for infringement committed by another, these doctrines of secondary liability had emerged from common-law principles and were well established.

(2) Although Sony Corp. of America v. Universal City Studios, Inc. (1984) 464 U.S. 417 *** in which the Supreme Court had absolved a distributor of video cassette recorders (which the court had found capable of substantial noninfringing uses) from copyright liability for third parties’ use of the recorders–limited imputing culpable intent as a matter of law from the characteristics or uses of a distributed product, (a) nothing in Sony required courts to ignore evidence of intent if there was such evidence; and (b) the case had not been meant to foreclose rules of fault-based liability derived from common law.

(3) Thus, where evidence went beyond a product’s characteristics or the knowledge that the product might be put to infringing uses–and showed statements or actions, such as advertising, a directed to promoting infringement–Sony’s “staple-article rule” would not preclude liability.

(4) Because the inducement rule premised liability on purposeful, culpable expression and conduct, the rule did nothing to compromise legitimate commerce or discourage innovation having a lawful promise, for under the rule a distributor would not be subjected to liability for merely (a) knowing of infringing potential or of actual infringing uses; or (b) performing ordinary acts incident to product distribution, such as offering customers technical support or product updates.

Decision

One who distributes product, capable of lawful and unlawful use, with clearly shown object of promoting copyright infringement held liable for copyright infringement by third parties using product.

Outcome

The judgment affirming the grant of summary judgment to the distributors was vacated, and the case was remanded for further proceedings.

Defenses to Infringement

The “Fair Use” and the “First Sale” doctrines are defenses to claims of copyright infringement. §107 of the Copyright Act states that the “… fair use of a copyrighted work … for purposes such as criticism, comment, news reporting, teaching, scholarship, or research …” is not copyright infringement. The determination of fair use must consider:

  1. the purpose and character of the use, including whether such use is commercial,
  2. the nature of the copyrighted work,
  3. the amount and substantiality of the portion used, and
  4. the effect of the use on the potential market for the copyrighted work.

The Campbell case evaluated whether the commercial nature of a parody of a Roy Orbison song was fatal to the application of the fair use standard.

 

Case Study

Campbell v. Acuff-Rose Music, Inc.

Supreme Court of the United States, 510 U.S. 569 (1994)

Procedural Posture

Petitioners, a rap music group being sued by respondent, the corporate owner of an original rock ballad, sought review of the judgment of the United States Court of Appeals for the Sixth Circuit, which reversed a grant of summary judgment in favor of petitioners after finding the commercial purpose of petitioners’ parody of respondent’s song had prevented it from being a fair use under the Copyright Act of 1976, 17 U.S.C.S. § 107.

Overview

Petitioners, a rap music group, were sued by respondent, the corporate owner of an original rock ballad, for copyright infringement. Petitioners claimed the song was a parody entitled to fair use protection under the Copyright Act of 1976, 17 U.S.C.S. § 107. The court below found the commercial purpose of petitioner’s parody had prevented it from being a fair use. That judgment was reversed on appeal because the Court found it was error for the court below to have concluded that the commercial nature of petitioners’ parody had rendered it presumptively unfair. The Court held that no such evidentiary presumption was available to address either § 107(1), the character and purpose of the use, or § 107(4), market harm, in determining whether transformative use, such as parody, was a fair one. The Court held that a parody’s commercial character, which tended to weigh against a finding of fair use, was only one element that should be weighed in a fair use enquiry. Therefore, the court below was found to have given insufficient consideration to the nature of the parody under the fair use factors as set forth in § 107 in weighing the degree of copying.

Outcome

The judgment was reversed and remanded upon the Court’s finding that the court below had erred in concluding the commercial nature of petitioners’ parody had rendered it presumptively unfair. The Court held that a parody’s commercial character was only one element that should be weighed in a fair use enquiry.

The “First Sale” Doctrine also limited the rights of copyright owners. §109(a) of the Act describes an exception to the exclusive right to distribute copies of the protected work. Essentially, this doctrine limits the ability of the copyright owner to its resale, transfer, or use by a purchaser. That said, it only limits the distribution right, not any of the others, including copy, public performance, creation of derivative works, etc. In order for the doctrine to apply ownership is necessary. The doctrine does not “… extend to any person who has acquired possession of the copy or phonorecord from the copyright owner, by rental, lease, loan, or otherwise, without acquiring ownership of it.” (17 U.S.C. §109(d)).

Of course, as with many things, the advent of digital versions of various products present challenges to the existing legal regime. There are two important questions to address when considering the “sale” of a digital work.

First, is it a sale of the original work or just a transfer of a copy. In other words, digital works can be copied easily and at near-zero cost. So, if the purchaser of the physical music record, or physical book for that matter, sells or gifts their copy, they would be delivering their original, and only, owned copy. In the digital space, however, the purchaser of a music file from iTunes or an eBook from Amazon could simply make a copy of that digital file and sell that duplicate rather the original.

The second question that must be addressed relates to whether a “purchaser” of a digital work is actually taking an ownership interest when the work is sold. In the pre-digital age, the purchase of a product, e.g., a book, record, or picture, would actually mean taking possession of a physical manifestation of that product. The sale would represent a transfer of ownership from the seller to the buyer thus meeting the statutory requirement of “ownership” mentioned above. In a digital marketplace, most commercial sellers of digital content use an End User License Agreement (EULA). The use of the EULA means that the transaction grants a license to use the digital product rather than a transfer of ownership. Since the transaction is not a “sale” but the grant of a “license,” the First Sale Doctrine will not apply.

Remedies for Infringement

The Copyright Act prescribes certain remedies for infringement including injunctions and money damages.

§502 authorizes “Any court having jurisdiction of a civil action …” under the Act to “… grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.” A plaintiff might seek a temporary injunction in an effort to prevent the infringing behaviors and reduce the damage those behaviors might cause to the plaintiff’s office. The temporary injunction might become permanent if the plaintiff prevails.

While an infringement action is pending, §503 allows a court to take into its custody any infringing copies of the protected works, any articles that may have been used to produce the infringing copies, and any records documenting the manufacture, sale, or receipt of things involved in the alleged infringement.

Infringers are liable for “… actual damages and any additional profits of the infringer … “ or statutory damages under §504. In order to establish to “… the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.” These kinds of damages may be difficult to prove so §504 provides for statutory damages “… in a sum of not less than $750 or more than $30,000 as the court considers just.” In the event that the infringement is committed willfully, the court in its discretion “… may increase the award of statutory damages to a sum of not more than $150,000.” Further, §505 authorizes the court, in its discretion, to allow “… the recovery of full costs by or against any party …” and reasonable attorney’s fees as part of the costs.

The Act also provides for criminal penalties where the infringement was committed willfully:

  • for purposes of commercial advantage or private financial gain;
  • by the reproduction or distribution, including by electronic means, during any 180–day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000; or
  • by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution. (17 U.S.C. §506).

Digital Issues in Copyright

The transition to a digital economy has, and will, continue to impact copyright law. There are several statutes that address these digital developments.

No Electronic Theft Act of 1997 (NET Act)

Congress, in an effort to address increasing claims of “piracy”, i.e., infringement of digital copyright protected works, amended the Copyright Act with passage of the NET Act. These amendments addressed a loophole in the criminal penalties available under the Copyright Act by amending §506 to make criminal prosecution available even where there was no “… commercial advantage or private financial gain …” shown. (17 U.S.C. §506). It is a federal crime to reproduce, distribute, or share copies of electronic copyrighted works even if the person acts without commercial purpose and/or receives no private financial gain. Prior to the NET Act, intentional infringers of digital works over the Internet did not face criminal penalties unless they enjoyed “… commercial advantage or private financial gain …” (17 U.S.C. §506). Copyright infringement by electronic means now carries a maximum penalty of three years in prison and a $250,000 fine.

Digital Millennium Copyright Act of 1998 (DMCA)

The DMCA addressed several issues of importance in the digital space. It amended the Copyright Act to bring it into conformance with two World Intellectual Property Organizations (WIPO) treaties, the Copyright Treaty and the WIPO Performances and Phonograms Treaty.

It also added Chapter 12, Copyright Protection and Management Systems to the Copyright Act. This chapter prohibits person(s) from circumventing “… a technological measure that effectively controls access to a work …” and producing and sharing “… any technology, product, service, device, component, or part thereof, that is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work …” protected by the Act. The term “… to “circumvent a technological measure” means to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner …”

In other words, the revisions make the creation or uses of anything that allows a person to hack the Digital Rights Management (DRM) controls that limit access to digital products subject to civil and criminal penalties, even if no actual infringement occurs.

Most notable, though, is the creation of “safe harbors” for online service providers (OSP) and internet service providers (ISP). One of the great strengths of the internet is its use as a platform to share information. Of course, that strength provides nearly unlimited opportunities for infringement of copyright protected works.

Pursuant to the DMCA, a service provider is “… an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received…” or “… a provider of online services or network access, or the operator of facilities therefor …“ (17 U.S.C. §512(k)).

Service providers “… shall not be liable for monetary relief, or … for injunctive or other equitable relief, for infringement of copyright by reason of the provider’s transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider …” (17 U.S.C. §512(a)). For example, if an OSP or ISP acts only as a conduit, meaning they do modify the user’s traffic, they are free from liability.

Service providers will also not be liable where they provide “… storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider does not have actual knowledge that the material or an activity using the material on the system or network is infringing … is not aware of facts or circumstances from which infringing activity is apparent; or upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material …” Note, the service provider cannot receive a financial benefit directly related to the infringing activity. If or when a service provider is notified of claimed infringement, pursuant to the “notice and takedown” provision in the Act, the provider must respond “… expeditiously to remove, or disable access to, the material that is claimed to be infringing …” (17 U.S.C. §512(c)).

 

Ethical Considerations

Blackwood’s Book

Professor Blackwood has worked all summer to curate the supplementary materials for her new course, Climate Change: Hoax or Catastrophe. She has, to a large degree, relied on only two sources for her curation work. She has reproduced, and plans to use, materials that are only remotely related to the specific subject matter of her course. Also, unfortunately, she has not made a concerted effort to accurately source those materials and will likely be unable to offer attribution for most of the curated materials. What ethical issues are present in these circumstances?

 

Questions

  1. What is the purpose of a copyright?
  2. What are the exclusive rights of the owner of a copyright?
  3. When does a work become fixed?
  4. What is the difference between direct and contributory infringement of a copyright?
  5. Why is the DMCA important?