Monthly Archives: November 2011

How UMG Got Its Groove[shark] Back…

In another installment of the “We Saw This Coming,” UMG Recordings (“UMG”) has sued Escape Media Group, Inc. (a/k/a “Grooveshark”), along with several of Grooveshark’s executives personally. (UMG Recordings, Inc. v. Escape Media Group, Inc., 11-civ-8407 (Nov. 18, 2011, S.D.N.Y.).

The Grooveshark website is very slick, with an easy to navigate UI.  A search for the artist Jay Z, whose sound recordings are owned and distributed by UMG, results in a list of songs by that artist.  A user can click on any song in the list to start it playing (i.e., on-demand).  Users can create a playlist, “share” the song through Facebook or Twitter, and even buy the song on Amazon or iTunes.  UMG alleges in its complaint that Grooveshark has “no license for the overwhelming majority of the sound recordings available through the Grooveshark website, and [has] no license from UMG for any of its sound recordings.”

More damaging than its general allegations of infringement, UMG alleges that Grooveshark’s executives personally uploaded infringing works and/or directed Grooveshark employees to do the same.  For example, UMG alleges that Samuel Tarantino, Grooveshark’s CEO, personally uploaded 1,791 songs, Paul Geller, SVP, uploaded 3,453 songs, John Ashenden, VP, uploaded 9,195 songs, Chanel Munezero, Software Engineer, uploaded 20,756 songs, and Nikola Arababjiev, Quality Assurance, uploaded 40,243 songs.

UMG attaches several emails to its complaint that it alleges support its case that Grooveshark made the business decision to engage in unauthorized use in an effort to quickly build its following.  For example, Sina Simantob, a principal at Highlander Wealth Services and Chairman of Grooveshark, in an email to Drew Lipsher, a partner at media VC firm Greycroft, stated “we bet the company on the fact that it is easier to ask for forgiveness than it is to ask for permission. … I think [Grooveshark has] a real chance to settle with UMG within a year and by that time [Grooveshark will] be up to 35m uniques and a force to be dealt with.”  In an email to Dr. Jia Gottlieb, who runs the oldest holistic medical clinic in Colorado, Simantob writes “… we are achieving all this growth without paying a dime to any of the labels.”

UMG also attaches what it purports to be a comment left by a Grooveshark employee in response to a story about Grooveshark on the website Digital Music News.  The alleged employee writes

“We are assigned a predetermined about of weekly uploads to the system and get a small extra bonus if we manage to get above that (not easy). The assignments are assumed as direct orders from the top to the bottom, we don’t just volunteer to ‘enhance’ the Grooveshark database.”

Grooveshark’s EULA has some interesting language, especially if UMG’s allegations that Grooveshark executives personally uploaded unlicensed content.  For example, the site’s policy states

Unless we indicate otherwise, you grant EMG and its affiliates a nonexclusive, royalty-free, perpetual, irrevocable, and fully sublicensable right to use, display, perform, reproduce, publish, and distribute such User Content throughout the world via the Service. You grant EMG and it affiliates the right to use the name that you submit in connection with such User Content. You are solely responsible for any necessary payments that may become due to any third parties as the result of your posting of or linking to the User Content and EMG’s use thereof. (emphasis added)

The EULA goes on to define what types of User Content should not be uploaded to the Service

The following is a partial list of the kind of User Content that is illegal or prohibited on the Service. Prohibited User Content includes but is not limited to content that: … (v) consists of an illegal or unauthorized copy of a copyrighted work, such as sound recordings, musical compositions and videos in which you do not personally own the copyright (including CDs and tracks you may have purchased), or otherwise do not have the necessary authority from the copyright owner(s); …. EMG reserves the right to investigate and take appropriate legal action in its sole discretion against anyone who violates this provision, including without limitation, removing the offending User Content from the Service and terminating the membership of such violators.

Its never good when your executives are alleged to be knowingly violating their own terms of service.  Grooveshark settled with EMI and its internal documents indicate it wants to settle with UMG.  However, my guess is UMG is in no mood to reward Grooveshark for its past business decision to launch without a license.  However, as I said, the UI is pretty slick (I personally think its much cleaner and easier to navigate than Spotify) and I can see this site becoming quite popular.  Look for UMG to own most of Grooveshark before this is all over.

The complaint is below:
[scribd id=73915034 key=key-2nccqwrphyc9os3m8q32 mode=list]

Copyright Office Announces Priorities

Priorities and Special Projects of the United States Copyright Office:
October 2011 – October 2013

The United States Copyright Office has an ambitious agenda for the next two fiscal years.  The Office recently released an 18 page report, describing its 17 priorities and 10 special projects for next two fiscal years, October 2011 through October 2013.  The Office does emphasize that priorities and special projects may change, reflecting dynamic world events as well as changes in the legal system and technologies.

As background, the U.S. Copyright Office, housed within the Library of Congress, is the world’s largest database of copyrighted works and ownership.  All catalog records, from 1978 until the present, are both available and searchable online.  The Office is currently digitizing works from 1870 (the year the Office was founded) through 1978.

Last year, 2011, the office processed more than 700,000 copyright claims and had an annual budget of $54 million.  65% of this budget was met by fees for services and 35% came from tax dollars.  However, the Office is quick to point out that it provides copyright deposits for the Library of Congress that they would, otherwise, have to purchase.  These Library of Congress copyright deposits are valued at $33 million, annually.

17 United States Copyright Office Priorities in a Nutshell

The Office lists 17 priorities, for the next two fiscal years, dividing the tasks into four categories, including research studies, legislative works, trade relations, and administrative works.

Studies

  • Small Claims Solutions for Copyright Owners:  The Office will investigate less expensive ways for copyright owners to enforce their claims; though, recovery for copyright violation may have financial caps.
  • Legal Treatment of Pre-1972 Sound Recordings:  Because works published before February 15, 1972 don’t have federal copyright protection, the Office will research the effects of providing such protection and the best way to go about doing so.
  • Mass Book Digitization:  The Office will research the effects of mass book digitization; and, use the results of their study as the foundation for future research and policy discussions.

Legislative Works

  •  Rogue Websites:  The Copyright Office will explore the best way to deal with websites (especially foreign originated websites) that infringe U.S. copyright law, including pursuing those businesses which make money by enabling copyright infringement such as credit card, domain name, search engine, and internet advertising companies.
  • Illegal Streaming:  The Office will support Congress in new legislation focused on blocking copyright violations that evolve as technology evolves, such as illegal streaming.
  • Public Performance Right in Sound Recordings:    By working with Congress, the Office will try to reconcile the disparity between internet music and airwave music; internet music is subject to royalties; whereas, music, broadcast over the airwaves, is not.
  • Orphan Works:  The Office will support Congress is determining a means to bring orphan works to the public; currently, orphan works (i.e. those whose rightful owner cannot be identified) are essentially hidden from the public.
  • Copyright Exceptions for Libraries:  The Office will draft recommendations for expanding current section 108, which affords libraries and archives freedom from copyright law restrictions for the good of society.  Because of the advance of technology (i.e. digital works), current law is not sufficient; the Office will also explore whether current and future freedoms should be afforded to museums, as well.
  • Market-Based Licensing for Cable and Satellite Retransmission:  The Office will work with Congress to consider the phase out of copyright laws which granted leniency to cable and satellite companies to aid in their initial growth; market-based licensing will be considered.

Trade and Foreign Relations

  •  World Intellectual Property Organization (WIPO):  The Office will continue to support and work with WIPO on a myriad of projects, including educational conferences, meetings, and training.  The Office will continue to represent the U.S. government at WIPO events. Current WIPO issues include:  (a) developing text for a proposed treaty to further protect audiovisual performers; (b) possible international instruments for the dissemination of materials (within countries and across borders)for blind, visually impaired, and print disabled persons, and (c) possible international instruments pertaining to the protection of broadcast signals. The Office is also working with other Library of Congress staff and with U.S. publishers on U.S. participation in the Trusted Intermediary Global Accessible Resources Project (TIGAR), a voluntary pilot project involving cross-border licensing of accessible works for visually impaired persons.  In addition, the Office is participating in Intergovernmental Committee deliberations on the possible international recognition of and protection for traditional cultural expressions, as well as other copyright projects approved by the Committee on Development and Intellectual Property.
  •  Trans-Pacific Partnership and Other Trade Priorities:  The Copyright Office will continue to support the Office of the United States Trade Representative and other executive branch agencies by providing substantive copyright analysis to U.S. negotiators in multilateral trade and treaty deliberations.

Administrative Law Practice

  • Prohibition on Circumvention of Measures Controlling Access to Copyrighted Works:  The Office is currently examining the issue of the Library of Congress allowing certain circumvention of copyright protections, deemed illegal under the DMCA, for non-infringing uses.
  • Electronic System for the Designation of Agents under the DMCA:  The Office is seeking more efficient ways to keep an accurate list of designated agents for copyrighted works.
  • Review of Group Registration Options:  The Office is seeking to create a system for the registration of groups of copyrighted items such as a compilation of photographs or other unpublished collections.
  • Registration Options for Websites and Other Forms of Digital Authorship:  The Office is seeking to create a system for the registration of digital works that are updated on consistently such as blogs and websites.
  • Electronic Administration of the Statutory Licenses:   The Copyright Office will continue its efforts to make the account statements of cable and satellite operators readily available to the public, via a website portal.
  • Recording Notices of Termination of Copyright Transfers:  The Office will explore the conditions under which termination of copyright transfer for “Gap Grants” may be effectuated.  “Gap Grants” are copyright transfers that were effectuated before January 1, 1978 for works created after 1977.

10 United States Copyright Office Priorities in a Nutshell

The Copyright Office lists 10 priorities for the next two fiscal years; all tasks are undertaken to improve the efficiency and quality of the workings of the Office.

  • Study of Fees and Services:  The Copyright Office has commenced a study of the costs it incurs and the fees it charges with respect to the registration of claims, recordation of documents, and other public services.
  • Revision of the Compendium of Copyright Office Practices:  The Compendium is the primary internal guidebook followed by Copyright Office registration specialists and is the recognized authority consulted by copyright owners, legal practitioners, and the courts.
  • Technical Upgrades to Electronic Registration:  Copyright Office staff from across divisions will engage in a series of targeted meetings with business and information technology experts in the copyright industries to discuss enhancements and improvements to the Office’s electronic registration and recordation services.
  • Dialogues and Roundtables with Copyright Community:  The Register of Copyrights, along with members of the Office’s legal staff, will meet regularly with participants in the marketplace to discuss developments in business and technology and the role of copyright law in facilitating the creation and dissemination of creative works.
  • Research Partnerships with Academic Community:   In recognition of the importance of scholarly research, the Copyright Office will develop opportunities for law schools and universities interested in collaborating with the Office on research projects, subject to the highest standards of scholarship.
  • Revision of Copyright Office Website:  The Copyright Office is undertaking a major revision of its public website, www.copyright.gov, with support from the Library of Congress.
  • Public Outreach and Copyright Education:  The Office is in the process of building a business plan for copyright education, including opportunities for on-site exhibitions, events and collaborations, with the goal of implementing a series of new education projects.
  • Business Process Reengineering of Recordation Division:  The Copyright Office will explore the best ways to update the recordation of copyrights.
  • Public Access to Historical Records:  A major challenge for the Office is how to make historical copyright records searchable and available online. These records (some 70 million in total) date from 1870 through 1977.
  • Skills Training for Copyright Office Staff:  The Office has launched an internal work life project to begin to address important issues that relate to ensuring a dynamic and effective workforce, through education and training.

If you’d like to review the entire 18 page document of the U.S. Copyright’s Office Priorities and Special Projects for 2012 and 2013, here is the link for your convenience.  In addition, click this second link, if you would like to Contact the Copyright Office

 

The Risk of Having Unprotected Porn…

Who knew?  Apparently, some circuits do not recognize copyright infringement claims involving pornography.  District Judge William Young (D. Mass.) recently denied motions to quash John Doe IP address subpoenas involving alleged unauthorized reproduction and  distribution of Liberty Media’s adult film “Corbin Fisher AmateurCollege Men Down on the Farm.”  In a footnote, Judge Young noted,

It is undisputed that Liberty Media is a distributor of lawful, albeit hardcore, pornography, and the Motion Picture is itself hardcore pornography. Notably, it is a matter of first impression in the First Circuit, and indeed is unsettled in many circuits, whether pornography is in fact entitled to protection against copyright infringement. Copyright protection in the United States was “effectively unavailable for pornography” until the landmark decision by the Fifth Circuit in Mitchell Brothers Film Group v. Cinema Adult Theater, 604 F.2d 852, 854-55, 858 (5th Cir. 1979) (holding that the Copyright Act neither explicitly nor implicitly prohibits protection of “obscene materials,” such as the films at issue there, and rejecting the defendant’s affirmative defense of “unclean hands”). See also Jartech, Inc. v. Clancy, 666 F.2d 403, 406 (9th Cir. 1982) (stating, in the context of copyright infringement of a pornographic film, that “[p]ragmatism further compels a rejection of an obscenity defense” because “obscenity is a community standard which may vary to the extent that controls thereof maybe dropped by a state altogether”). Compare Devils Films, Inc.v. Nectar Video, 29 F. Supp. 2d 174, 175-77 (S.D.N.Y. 1998) (refusing to exercise its equitable powers to issue a preliminary injunction against infringement of pornographic films and “commit the resources of the United States Marshal’s Service to support the operation of plaintiff’s pornography business,” holding that the films were “obscene” and illegally distributed through interstate commerce), with Nova Prods., Inc. v. Kisma Video,Inc., Nos. 02 Civ. 3850(HB), 02 Civ. 6277(HB), 03 Civ. 3379(HB), 2004 WL 2754685, at *3 (S.D.N.Y. Dec. 1, 2004) (holding that the question of whether particular pornographic films are “obscene” is one of fact for the jury, and that, even were the films deemed to be obscene, it would not prevent their protection under a valid copyright) (citing Jartech, Inc., 666 F.2d 403; Mitchell Bros., 604 F.2d 852). Congress has never addressed the issue by amendment to the Copyright Act. See Ann Bartow, Pornography,Coercion, and Copyright Law 2.0, 10 Vand. J. Ent. & Tech. L 799,833 (2008). This issue, however, is not presently before the Court and the Court expresses no opinion on it here.

Of course, there is nothing in the Copyright Act that exempts porn from its protections.  Specifically, § 102 of the Act defines the “subject matter” that may qualify for protection:

(a) Copyright protection subsists, in accordance with this title, in 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. Works of
authorship include the following categories:
(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.
(b) In no case does copyright protection for an original work of authorship 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 in such work.

Pornographic movies would appear to qualify under § 102(a)(6).  As the Mitchell Bros. court noted,

The legislative history of the 1976 Act reveals that Congress intends to continue the policy of the 1909 Act of avoiding content restrictions on copyrightability. In recommending passage of the 1976 Act, the House Judiciary Committee stated:

The phrase “original works of authorship,” (§ 102) which is purposely left undefined, is intended to incorporate without change the standard of originality established by the courts under the present copyright statute. This standard does not include requirements of novelty, ingenuity, or Esthetic merit, and there is no intention to enlarge the standard of copyright protection to require them.

H.R.Rep.No. 1476, 94th Cong., 2d Sess. 51, Reprinted in (1976) U.S.Code Cong. & Admin.News pp. 5659, 5664 (emphasis added).

It will be interesting to see how this plays out in the First Circuit.

Judge Young’s decision is below:
[scribd id=72713189 key=key-y3bhxa8kyzc9pb2grw3 mode=list]

Viacom v. YouTube Update: Second Circuit Asks Questions and Gets Answers

It is pretty rare for a court of appeals to request additional briefing post oral argument.  It is even more rare in a case like Viacom v. YouTube, where literally hundreds of pages of briefing were filed by the parties and their respective friends of the court before arguments were heard.  But that is exactly what the Second Circuit did on October 25, asking the two sides to answer the following two questions:

(1) whether and how the red-flag knowledge provision would apply under the Defendants’ “specific” knowledge construction of § 512(c)(1)(A); and

(2) whether YouTube’s “syndication” of videos to third parties falls outside the scope of safe harbor protection for activities that occur “by reason of . . . storage at the direction of a user” under § 512(c)(1).

YouTube responded to the first question thusly:

[T]o disqualify a service provider from the safe harbor for a given instance of infringement, a plaintiff must show that the service provider (a) was actually aware of facts or circumstances (b) from which that particular infringement would have been apparent to a reasonable person, and (c) failed to expeditiously remove the infringing material of which it had such awareness.

YouTube responded to the second question as follows:

By formatting users’ videos so that they can be viewed from its servers using various third-party devices, YouTube has “simply established a system whereby software automatically processes user-submitted content and recasts it in a format that is readily accessible to its users.

Viacom, in contrast, answers the first question by noting that

Because awareness of “infringing activity” requires less specificity than “actual knowledge” of “infringing material,” a website operator who “welcome[s]” and is aware of infringing activity on its site – here in the range of 75-80% of views according to YouTube’s own analyses – clearly satisfies § 512(c)(1)(A)(ii) even if it avoids knowing most of the specifics. And though operators do not have an independent obligation to monitor their sites for  infringement, once they have this kind of awareness of infringing activity they have a duty to act to address the problem under § 512(c)(1)(A)(iii).

Finally, Viacom answers the second question as follows:

YouTube’s users plainly did not direct YouTube to enter into lucrative revenue sharing
deals with Apple and other mobile device providers, or to make the entire library of YouTube videos—including all previously uploaded videos—available on these new  media platforms.  Syndication thus clearly falls outside the scope of § 512(c) and the defense is forfeited as to all copyrighted works that YouTube distributed over third party platforms.

If I were lawyers for YouTube, I would be worried that the Second Circuit requested additional briefing.  More importantly, I would be extremely worried at the specific questions the Second Circuit asked, which suggests some reluctance on the Court’s part to accept the apparent consequences of YouTube’s formulation of § 512 and the burdens / responsibilities that formulation places on copyright owners v. website operators.

All the relevant documents are below.

Second Circuit’s Request for Additional Briefing
[scribd id=72690033 key=key-h3t3zv916qtercilj4l mode=list]

YouTube’s Response
[scribd id=72690047 key=key-129gmf26o9p7w4p2bphl mode=list]

Viacom’s Response
[scribd id=72690057 key=key-m2r7lfogeipyayrefog mode=list]

ZFT Zapped: District Court Rules Against Frank Zappa’s Widow

The Zappa Family Trust (“ZFT”) was, indeed, zapped on August 17, 2011 when the District Court for the Southern District of New York squashed their attempts to collect, among other awards, $150,000 per alleged copyright infringement from Ryko, a subsidiary of Warner Music Group.  In a Memorandum and Order, dated August 17, 2011, Judge William H. Pauley, III granted Ryko’s motion for summary judgment, in part and denied in part.  Zappa’s motion for summary judgment was denied.

Frank Zappa released more than sixty albums before his death in 1993, including Burnt Weeny Sandwich, Weasels Ripped My Flesh, and Joe’s Garage Acts I, II and III.  After his death, all rights, title and interests in his sound recordings passed to ZFT.  In 1994, ZFT entered into an agreement with Ryko (the “1994 Agreement”), pursuant to which Ryko paid $20 million for “certain rights in and to the actual versions and mixes of the sound recordings commercially released or exploited with the authority of Zappa prior to October 6, 1994.”  The 1994 Agreement did contain certain restrictions on Ryko’s ability to exploit the masters; i.e., paragraph 12.11 of the 1994 Agreement provides that “[n]o remixes, edits, changes in technical standards or other changes will be made by Ryko to the Subject Masters which would impact the integrity of the work as embodied in 1610 or 16301 final version of each of the Subject Masters delivered.”[1] (italics mine)

Zappa’s widow, Adelaide Gail Zappa, brought suit against Ryko as the sole trustee of ZFT, which owns the rights to Zappa’s music.  Specifically, ZFT alleged that Ryko marketed specific Zappa recordings in ways not allowable under their 1994 agreement.  ZFT further alleged Ryko failed to properly account for mechanical royalties.  Ryko counterclaimed with copyright infringement and breach of contract claims of its own.

Significant to the Court was the lack of specificity defining the term, “technical standard.”  In fact, there was no definition.  The 1994 agreement specified, in part, that Ryko could not exercise its right to exploit the Zappa music in a way that changed the technical standard of Zappa’s work.

The Court specifically addressed digital downloads and vinyl records; and, found that digital downloads might be a violation of the agreement; but the extrinsic evidence used to interpret the violation of Zappa’s “technical standard,” was inconclusive.  In addition, the Court found that vinyl records, commonly used throughout Zappa’s career, were not a degradation of Zappa’s music

The Court dismissed other ZFT claims based on the ambiguity of terms in the 1994 agreement and as being barred by a 1999 settlement between ZFT and Ryko.   Other ZFT claims were barred because ZFT failed to show copyright violation, they were improperly raised, or ZFT provided insubstantial evidence.

The Court’s order is below:
[scribd id=70783812 key=key-1hgs90z0n0xaevbd0020 mode=list]

The 1994 Agreement is below:
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[1] 1610 and 1630 “refer to a format of music delivery equal to CD-quality audio.”