Tag Archives: Infringement

Are You Sirius?

As readers of this blog will recall, aging rockers Flo & Eddie filed three separate lawsuits alleging that Sirius XM has infringed certain state- or common law copyrights of a class of owners of sound recordings fixed prior to 1972. Sirius XM has filed a motion to transfer the California case, which was transferred from state to federal court, and the Florida case to the Southern District of New York.  While this legal maneuver is relatively uninteresting, the motion does indicate at least one defense that is likely to feature prominently in this and the related case filed by the so-called “major” record companies, – titled Capitol Records, LLC et al. v. Sirius XM Radio Inc., No. BC520981 – in California state court raising similar issues: laches.

Laches, an equitable defense based on the doctrine of estoppel, is the unreasonable delay in pursuing a right or claim that prejudices the opposing party.  According to Sirius XM’s motion,

Plaintiff apparently has become aggrieved by the distinction drawn by Congress in withholding copyright protection from its Pre-1972 Recordings; thus now, after decades of inaction while a wide variety of music users, including radio and television broadcasters, bars, restaurants and website operators, exploited those Pre-1972 Recordings countless millions of times without paying fees, it asserts a purported right under the law of various states to be compensated by Sirius XM for comparable unlicensed uses. Plaintiff’s multiple court filings constitute a form of lawsuit lottery in search of an elusive new state-law right that would radically overturn decades of settled practice.

The laches defense raises a number of interesting issues.  For example, since at least the late 1980s, almost all terrestrial radio stations have used digital copies stored on servers to originate performances; i.e., the days of “disc jockeys” spinning vinyl have been gone for decades.  Presumably, under Flo & Eddie’s complaint, these terrestrial radio broadcasters needed a license to make copies of Pre-72 recordings and, potentially, to perform them.

Terrestrial radio stations have been simulcasting performances over the internet for nearly 20 years, presumably implicating the right of performance by digital audio transmission that Flo & Eddie allege exist under certain state laws for Pre-72 recordings.  Has SoundExchange, which collects and distributes royalties under certain statutory licenses for the public performance of sound recordings by digital audio transmission, been collecting royalties from these terrestrial radio broadcasters and remitting such payments to Pre-72 artists?  Because federal copyright doesn’t apply to Pre-72 recordings, if SoundExchange were collecting such royalties it would owe the terrestrial radio simulcasters a refund. If SoundExchange hasn’t, why hasn’t Flo & Eddie sued terrestrial radio?

Flo & Eddie will undoubtedly respond that they had no way of knowing that they weren’t getting paid by Sirius XM until the most recent Copyright Royalty Board proceeding, at this pre-72 recordings were a significant issue.

[The allegations raised by SoundExchange against Sirius XM that Sirius XM was inappropriately deducting revenue from its royalty calculation to account for Pre-72 recordings are inapplicable in the context of a per-song royalty, where each Pre-72 recording can be identified and appropriately excluded from royalty calculations.  Per-song royalties have existed since at least 2008.]

The motion is here.

What Can Mr. Brainwash Teach Us About Girl Talk?

Thierry Guetta, a/k/a Mr. Brainwash, is back in court for allegedly using photographs of famous musicians without authorization.  This time, however, he’s managed to drag Google into his mess.

By way of background, Guetta was sued in 2010 in the Central District of California by Gene Friedman, a photographer who took one of the most iconic photographs in hip hop, featuring Run DMC:
Guetta made several derivative works, which he commercialized on t-shirts and postcards, including:


To create the Broken Records Work, Guetta caused a digital image of the Photograph to be altered so as to remove most of the detail from its subjects, leaving an outline of the group’s features. … Guetta then had the image projected onto a large piece of wood and painted the image onto the wood.  Thereafter, Guetta glued more than 1,000 pieces of broken phonograph records onto the painted wood. The result was a three-dimensional image of Run-DMC created entirely from broken records. (Defendant’s Motion for Summary Judgment)

Guetta claimed that his derivative works were either transformative (and, therefore, fair use under § 107) or did not use copyrightable portions of Friedman’s original (and, therefore, could not constitute infringement).

In this case, the District Judge disagreed with Guetta.  Regarding the question of whether the portions of the photograph copied were copyrightable, Judge Pregerson concluded the Friedman “selected and arranged the subjects. Although the court believes that no more is
required, the court also notes that [Friedman] made related decisions about light and shadow, image clarity, depth of field, spatial relationships, and graininess that were all represented in the copyrighted Photograph. [Friedman] also selected the background
and perspective of the Photograph, and all of these particular artistic decisions commulatively result in the Photograph.”  Having found the photo copyrightable, Judge Pregerson quickly concluded that Guetta had, indeed, infringed Friedman’s copyright.

Regarding Guetta’s claim that his use was fair because the works were transformative, Judge Pregerson again disagreed, concluding that “[Guetta] has not offered a transformative alternative use of the Photograph image. Both [Friedman] and [Guetta] are artists, and the image was used by both in works of visual art for public display. Although the statements made by those respective artworks and the mediums by which those respective statements were made differ, the use itself is not so distinct as to render Defendant’s use a transformation of Plaintiff’s copyright.”

Judge Pregerson’s opinion is below.

Now, Guetta finds himself a defendant again, this time being sued by the estate of James Marshall for allegedly doing exactly the same thing with Marshall’s photographs as he did with Friedman’s; i.e., taking the photo and manipulating it to look different, while still being able to recognize the artist-subject matter. (Marshall v. Guetta, 12-cv-3423-SJO (C.D. Cal.).  So why is Google on the hook?  According to the complaint,  Google held an event to launch its music service at Guetta’s studio, where Guetta installed a backdrop using blown-up derivative works of Marshall’s photos of John Coltrane and Jimi Hendrix.

Here is a side-by-side comparison of Marshall’s original photo and Guetta’s:

The Google event at Guetta’s studio with the allegedly infringing art in the background :

And, what does all this have to do with Girl Talk?  Peter Friedman argued here that the reason mash-up artist Girl Talk has not been sued by the record labels is because the argument that Girl Talk “transformed the copyrighted materials sufficiently that his work constitutes non-infringing fair use is just too good.”  Judge Pregerson’s opinion appears to undercut such arguments.  For example, Guetta’s transformation was such that the underlying work was still identifiable (i.e., Guetta’s intent was for viewers to recognize his art as depicting Run DMC or Coltrane or Hendrix, thus capturing the essence of the original photo).  The same is obviously true for Girl Talk, who relies on listeners’ recognition of the underlying songs to make his music more popular.  Extending Pregerson’s logic, both Girl Talk and the recording artists he samples are are “artists” and though “the statements made by those respective artworks and the mediums by which those respective statements were made differ, the use itself is not so distinct as to render Defendant’s use a transformation of Plaintiff’s copyright.”

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Mega-Hot – Megaupload Case Sparks Disney’s Summary Judgment Against Hotfile

The ripple effects of the federal government’s criminal copyright infringement case against piratical website Megaupload and its larger-than-life founder Kim Dotcom continue.  First, Disney used the indictment in its motion for summary judgment against Hotfile and its owner

Disney’s MSJ is below:
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Then Carpathia, the hosting company that leased Megaupload more than 1,100 servers on which 25 petabytes of Megaupload files are hosted, filed a motion in the government’s suit alleging it is paying $9,000 per day to maintain Megaupload’s files. According to its motion,

The parties who have so far claimed some interest in the data on the Mega Servers include: (1) Mega, which claims to need the data preserved for its defense and so that it may be returned to its customers; (2) the United States government, which has disclaimed a need for the data but objects to the transfer of ownership of the Mega Servers from Carpathia to Mega; (3) the Electronic Frontier Foundation (the “EFF”), which claims to represent the interests of end users who have non-infringing content stored on the Mega Servers and has requested that the data be preserved in order to facilitate its return to Mega users who have not engaged in copyright infringement; and (4) the Motion Picture Association of America (the “MPAA”), which, on behalf of its member studios, asserts a copyright interest in certain data purportedly located on the Mega Servers, has requested that Carpathia preserve the data in order to facilitate potential civil claims against Mega and the other Defendants in this action, and has indicated that it objects to any transfer of the data to third-parties

Carpathia is asking the court to use its discretion “under Fed. R. Crim. P. 16 and enter a protective order either: (1) allowing Carpathia to reprovision the Mega Servers after a brief period of access has elapsed; (2) requiring one or more of the parties to this action to take possession of the Mega Servers in exchange for reasonable compensation to Carpathia; or (3) requiring any and all interested parties to compensate Carpathia for the substantial costs of transporting and continuing to maintain the Mega Servers until the conclusion of this action.”

Carpathia’s motion is below:
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Now a civil action has been filed by Microhits, which claims to own “federally registered copyrights on sound recordings featuring the musical performances of the legendary Billie Holiday, Nat King Cole, Marvin Gaye, Frank Sinatra, AI Martino, Donny Hathaway, Rod Stewart, Muddy Waters, Howlin’ Wolf, Lightnin’ Hopkins, Junior Wells, Nina Simone, Louis Armstrong, Jerry Lee Lewis, Herbie Mann, and Bob James as well as such well-known modern artists as Missy Elliott, Christina Aguilera, Vanessa Hudgens” and Valcom, which claims to own “federally registered copyrights which includes feature films and television programs starring Denzel Washington, Bill Murray, Jackie Chan, Charlton Heston, Ronald Reagan, George C. Scott, Martin Sheen, Judy Garland, Bela Lugosi, John Carradine, Roy Rogers, Richard Chamberlain, Martin Landau, January Jones, Ryan Seacrest and many others.”  The plaintiffs are represented by the law firm Dunlap, Grubb and Weaver, the infamous plaintiff’s firm that brought mass John Doe lawsuits against BitTorrent users.

The Complaint is below:
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Kew-kew-kew-kew! Roscoe’s Owner Personally Liable for $204,000 Judgment for Unlicensed Public Performance

The Ninth Circuit, in an unpublished opinion, has affirmed a Central District of California’s granting of summary judgment in favor of music publishers whose works were publicly performed without proper license.  Range Road Music, Inc. v. East Coast Foods, Inc., 10-55691 (9th Cir., January 12, 2012).  The facts of the case are straightforward and similar to hundreds of other cases publishers bring against small businesses each year for unlicensed public performance.  In May, 2008, an investigator visited Roscoe’s House of Chicken & Waffles in Long Beach, California.  The investigator heard a band perform at least 4 songs and a DJ play another 4 songs from CDs.  Roscoe’s failed to obtain the necessary public performance licenses to perform these songs and the publishers filed suit for copyright infringement.

The defendants in this case, East Coast Foods, Inc. and Herbert Hudson, argued that the allegedly infringing performances actually occurred at The Sea Bird Jazz Lounge, which is located at the same address but operated as a separate business and owned by a separate company, Shoreline Foods, Inc..  Hudson, the sole officer and director of East Coast Foods and President of Shoreline Foods, was sued in his individual capacity.

The plaintiff publishers argued that East Coast Foods and Hudson were vicariously liable for the copyright infringement that occurred at The Sea Bird.  A defendant can be vicarious liable for copyright infringement if he “exercises the requisite control over the direct infringer and … derives a direct financial benefit from the direct infringement.” (at p. 5).  The District Court found that Hudson, as the sole officer and director of East Coast, did control the premises where the infringing performances occurred and did derive a financial benefit through the sale of food and liquor and was, therefore, vicariously liable for the copyright infringement that took place at Roscoe’s / Sea Bird.

In total, the District Court awarded the plaintiff publishers $203,728.22, which included $4,500 for each of the 8 infringements ($36,000) and attorneys’ fees and costs in the amount of $167,728.22.  Because he was found vicariously liable, Mr. Hudson is personally responsible for satisfying the entire $204,000 judgment.

The Ninth Circuit opinion is here:
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The District Court’s granting of summary judgment is here:
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The District Court’s award of fees is here:
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Mega Uploaded! Feds Shutter Site and Arrest Dot Com!

Regular readers will recall my recent post about Megaupload Ltd. v. Universal Music Group, Inc., 11-cv-6216-CW (N.D. Cal. Dec. 16, 2011), in which the alleged piratical website operator Megaupload moved ex parte for a temporary restraining order against record label UMG for “sabotaging [Megaupload’s promotional video] campaign through abuse of the notice and takedown procedures of the” DMCA.

Apparently, the Depart. of Justice has already made up its mind about Megaupload, filing a five-count indictment–including allegations of copyright infringement, conspiracy to commit money laundering and racketeering–and having four employees arrested in New Zealand, including Kim Dotcom, Megaupload’s outspoken leader.  Although Megaupload is headquartered in Hong Kong, some of the alleged pirated content was hosted on leased servers in Ashburn, Va., which the Feds used to claim jurisdiction in the Eastern District of VA.  The website, which claimed to have 50 million daily users and ranked in the top 20 most visited websites, was shuttered as well.  Visitors to the site were greeted with the following:

The Indictment is here
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Does the DMCA Work?

If you are a copyright owner, two recent cases involving the Digital Millennium Copyright Act (“DMCA”) must have you feeling like Mugato (Will Ferrell) in Zoolander:

[youtube http://www.youtube.com/watch?v=4DVAsmrwdtQ&w=560&h=315]

In UMG Recordings, Inc. v. Veoh Networks, Inc., No. 09-56777 (9th Cir. Dec. 20, 2011), the Ninth Circuit affirmed a Central District of California court’s order granting summary judgment to Veoh after determining that it was protected by the DMCA “safe harbor” limiting service providers’ liability for “infringement of copyright by reason of the 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.” 17 U.S.C. § 512(c).

In Megaupload Ltd. v. Universal Music Group, Inc., 11-cv-6216-CW (N.D. Cal. Dec. 16, 2011), alleged piratical website operator Megaupload moved ex parte for a temporary restraining order against record label UMG for “sabotaging [Megaupload’s promotional video] campaign through abuse of the notice and takedown procedures of the” DMCA.  Although the TRO motion was denied as moot, the underlying suit remains.

These two cases exemplify the Bizarro World the DMCA has become, in which the business models of service providers require copyright infringement on a massive scale (e.g., 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.”  UMG Recordings, Inc. v. Escape Media Group, Inc., 11-civ-8407 (Nov. 18, 2011, S.D.N.Y)), but labels get sued over takedown notices.

Megaupload v UMG

The Megaupload case involves a promotional video it made available on YouTube that included many famous celebrities and artists endorsing the Internet locker service.  In its complaint and application for a temporary restraining order Megaupload alleged that UMG filed a takedown notice with YouTube knowing that it did not own any copyright in the Megaupload video.  Before turning to the merits of Megaupload’s case, a word about the promotional video at issue…

If you thought the Rebecca Black video was annoying, wait until you see the Megaupload video:

[youtube http://www.youtube.com/watch?v=K9caPFPQUNs&w=560&h=315]

With lyrics such as the following, it rivals the lyrics to “Friday” (e.g., “Kickin’ in the front seat; Sittin’ in the back seat; Gotta make my mind up; Which seat can I take?”)

Users 1 billion
Per day 50 million
4 percent
of the Internet
Get the Mega Manager
Its 10 times faster
Bit by bit
It’s a hit
It’s a hit
Upload to me today
Send me a file

The Megaupload video features endorsements by several “famous” “celebrities” and artists, including Kasseem Dean (Swizz Beatz), Kanye West, Mary Jane Blige, Estelle Swaray (Estelle), Ciara Harris (Ciara), Jayceon Taylor (Game), Carmelo Anthony, Will Adams (Will.i.am), Kim Kardashian, Sean Combs (Diddy), Alicia Keys, Chris Brown, Floyd Mayweather, Jamie Foxx, Jonathan Smith (Lil Jon), Brett Ratner, Serena Williams, and Russell Simmons.  Megaupload claims that it obtained very broad releases from every artist who appears in its promotional video, including consents to record the artist’s “performance and interview (called the “Appearance”), editing it, and publishing it on the Internet through streaming media, precisely as [Megaupload] has done.”  Megaupload also claims that its releases grant it the right to

“copyright, record, reproduce, broadcast, distribute, edit, publish, exhibit, disseminate, couple and use in any way throughout the universe and in perpetuity the audio and/or visual portions of any videotape, film, pictures, negatives, prints, photographs, stills or other recordings of the Appearance, and any reproduction thereof.”  These celebrities also relinquished any right to inspect or approve any finished product or “derivatives thereof, or any subsequent uses made of the Appearance.”

Three things come to mind:

(1) Did Their Lawyers Review the Release?  I can’t imagine a lawyer from a white shoe entertainment firm such as Greenberg Traurig, Mitchell Silberberg & Knupp, or Fenwick & West, which represents Megaupload, letting a client sign a release that didn’t provide the artist—particularly an artist of the prominence appearing in the Megaupload video—with the right to inspect or approve the final product.

(2) Did Megaupload Pay These Artists?  Megaupload doesn’t say whether it paid for the celebrities to appear in the video, other than to note that it “invested heavily [in the video] to ensure that the music, number and selection of celebrities, and video design would appeal to a large audience that would then continue virally to spread the word.”  I find it hard to believe that Megaupload didn’t pay these artists a lot of money.  And this certainly wouldn’t be the first time artists took money and later regretted it.  Remember when Nelly Furtado, Mariah Carey, and Beyonce “discovered” that Saif al-Islam Gaddafi, who had paid each of them million dollar fees to perform at his parties in 2007, 2008 and 2009, respectively, was the son of ruthless Libyan dictator Muammar Gaddafi.  While appearing in a Megaupload video isn’t equivalent to performing for the son of the “mad dog of the Middle East,” it does suggest that artists are sometimes willing to be “naive and unaware,” as Mariah claimed she was, when a contract comes with a check for a million dollars.

(3) Do These Artists Even Know What Megaupload Is or Actually Use It?  Do we really believe that Lil’ Jon or Kim Kardashian personally spend any time uploading videos to the Internet?  (ok, maybe Kim used to, but those were the naughty kind)

The Problem with the DMCA

While this suit will probably unfold like the kerfuffle that ensued after Prince issued a DMCA takedown notice to YouTube over a home video Stephanie Lenz posted of her children dancing to Prince’s song “Let’s Go Crazy,” the suit signifies a broader problem with the DMCA.  The DMCA was intended to facilitate the legal distribution of digital copyrighted works and encourage investment in the Internet.  As the Senate Report explains

Due to the ease with which digital works can be copied and distributed worldwide virtually instantaneously, copyright owners will hesitate to make their works readily available on the Internet without reasonable assurance that they will be protected against massive piracy. Legislation implementing the treaties provides this protection and creates the legal platform for launching the global digital on-line marketplace for copyrighted works. It will facilitate making available quickly and conveniently via the Internet the movies, music, software, and literary works that are the fruit of American creative genius. It will also encourage the continued growth of the existing off-line global marketplace for copyrighted works in digital format by setting strong international copyright standards.

At the same time, without clarification of their liability, service providers may hesitate to make the necessary investment in the expansion of the speed and capacity of the Internet. In the ordinary course of their operations service providers must engage in all kinds of acts that expose them to potential copyright infringement liability. For example, service providers must make innumerable electronic copies by simply transmitting information over the Internet. Certain electronic copies are made to speed up the delivery of information to users. Other electronic copies are made in order to host World Wide Web sites. Many service providers engage in directing users to sites in response to inquiries by users or they volunteer sites that users may find attractive. Some of these sites might contain infringing material. In short, by limiting the liability of service providers, the DMCA ensures that the efficiency of the Internet will continue to improve and that the variety and quality of services on the Internet will continue to expand. (emphasis added)

When the Senate writes about “making available quickly … via the Internet” it clearly assumed that the copyright owners would be authorizing the “making available.” As the Senate Report emphasizes, the goal of the DMCA is to encourage (1) the Internet to become a “legal platform” for digital distribution of copyright works and (2) investments in the “speed and capacity” of the Internet.  From the perspective of the copyright owner, however, the recent jurisprudence regarding the obligations of the copyright owners and the service providers under DMCA is creating a frustrating situation where service providers appear to build their websites in response to the latest legal interpretation of the DMCA.  This is eerily reminiscent of the evolution of the audio file sharing services; i.e., as the result of lawsuits, Napster and its centralized server model gave way to Grokster and its distributed content model, which gave way to BitTorrent and its use of “swarms” to download a “bits” of a single file from many users simultaneously.

In a blog post, Megaupload’s Dotcom described the situation thusly:

“When one of the top artists endorsing Mega received a letter from the CEO of the RIAA with some active download links on Megaupload containing that artist’s music it was shocking at first. But in the same letter it was described how those links were found with a Google search. Giving Mega a hard time when we don’t even provide a search feature on Megaupload? It’s bizarre. And at the same time you find the world’s largest piracy index on Google and most other search engines. But hey, these guys are not rogue. They are just rich.” (emphasis added)  Dotcom’s comment describes exactly what is so frustrating about the DMCA.

How Does Megaupload Work?

In her recent order regarding Megaupload’s motion to dismiss a lawsuit brought by Internet pornographer Perfect 10, Inc., (Perfect 10, Inc. v. Megaupload Limited, 11-cv-191-IEG (SD. Cal. July 27, 2011) Chief Judge Irma Gonzalez of the federal District Court for the Southern District of California described Megaupload thusly (internal citations omitted)

After a file is uploaded to megaupload.com, Megaupload creates a unique Uniform Resource Locator (“URL”). The URL is the address of the file on the internet. Anyone with the URL can download the file from Megaupload’s servers. Megaupload and its users disseminate URLs for various files throughout the internet. In order to view, copy, or download such files from the Megaupload websites without waiting, users must pay a membership fee. … This much is clear: Megaupload allegedly stores billions of dollars of “pirated” full-length movies, songs, software, and images on its servers. Megaupload apparently depends on, and provides substantial payouts to, affiliate websites who catalogue the URLs providing access to the mass of “pirated” content on Megaupload’s servers. For example, at the affiliate search engine megaupload.net, users who perform a search are directed to Megaupload’s website and offered the opportunity to purchase a membership. Megaupload also encourages its users to upload materials through its “Rewards Programs.” Megavideo.com and megaporn.com have a rewards program called “Megaporn Rewards.” Megaupload.com also has a rewards program, which it runs in a similar fashion, stating:

The more downloads your files get, the more you can earn through our Megaupload Rewards program. Every qualifying download of one of your files will earn you a reward point. When you have reached a certain number of points, you can redeem them for premium status or even cash. There is no limit! And even better: The more downloads your files get, the more you can earn through our Megaupload Rewards program.

Megaupload offers $10,000 for 5,000,000 reward points.  So, while Megaupload doesn’t offer a search function as part of the Megaupload site itself, it has created a complex (and effective) means of cataloging all the content stored in its digital lockers.  Why would Megauload go to the trouble and expense of offering $10,000 bonuses in a rewards program rather than simply include a search function that would accomplish the same outcome?  I can’t believe that the one-time cost of incorporating search functionality is more expensive than the on-going expense of maintaining its rewards program.  The answer must lie in Megaupload’s lawyers reading of the safe harbor provisions of § 512, especially § 512(c), which as we will see in the next case the Ninth Circuit views as quite broad.

UMG v Veoh

Like YouTube and other Internet video aggregators, Veoh’s business model involved building a large user base by offering as much content as possible and later generate profits from paid advertising.  Just like its competitors, in order to aggregate the content necessary to build a user base large enough to monetize, Veoh allowed users to upload to the Veoh website without Veoh reviewing such videos[i], wherein the user would provide identifying information about the video, including its title, a description of its contents, a descriptive category (e.g., music), and keyword “tags” for the video.  The information and “tags” entered by the user became the video’s “metadata” and were used by Veoh to return search results initiated by other users of its service.  In addition, Veoh used recommendation software to return additional videos that might be of interest to a particular user based on that user’s past viewing history.

UMG objected to Veoh’s site because thousands of UMG’s music videos were uploaded without authorization.  Before the district court and on appeal, UMG argued that Veoh was not entitled to the safe harbor protection of § 512 because it engaged in activities beyond “storage at the direction of a user;” e.g., “Veoh’s infringement … arises by reason of its decision to copy, publicly perform, and distribute UMG’s protected works.”  As UMG argued in its appeal brief, “The District Court’s opinion absolves Veoh of responsibility for conduct as or more egregious than that which led to Napster’s, Grokster’s, or Kazaa’s liability.  Napster, Grokster, and Kazaa offered indices that helped their users find infringing content and obtain it from other users. But they neither stored the infringing files nor directly distributed those files, as Veoh did.”

In affirming the district court’s grant of summary judgment in favor of Veoh, the Ninth Circuit first considered what “by reason of the storage at the direction of a user” means under § 512(c)(1).  While UMG argued that “nothing in the ordinary definition of ‘storage’ encompasses” the automatic processes undertaken to facilitate public access to user uploaded videos,” the Ninth Circuit concluded that the notice and takedown provisions of § 512 would be meaningless if public access to uploaded videos weren’t contemplated by the DMCA safe harbor provisions.  As the Ninth Circuit explained,

Section 512(c) codifies a detailed notice and takedown procedure by which copyright holders inform service providers of infringing material accessible through their sites, and service providers then “disable access to” such materials. 17 U.S.C. § 512(c)(1)(A)(iii), (c)(1)(C) & (c)(3)(A)(iii). This carefully considered protocol, and the statute’s attendant references to “disabl[ing] access” to infringing materials … would be superfluous if we accepted UMG’s constrained reading of the statute. … Indeed, it is not clear how copyright holders could even discover infringing materials on service providers’ sites to notify them as the protocol dictates if § 512(c) did not contemplate that there would be access to the materials.

The legislative history does not seem to me, however, to support such a wide read of § 512(c).  In the Senate Report on the DMCA, the examples used to illustrate the types of behaviors in which a service provider might engage that could expose such service provider to liability is much narrower in scope than the actions of Veoh.  As the Senate Report states

In the ordinary course of their operations service providers must engage in all kinds of acts that expose them to potential copyright infringement liability. For example, service providers must make innumerable electronic copies by simply transmitting information over the Internet. Certain electronic copies are made to speed up the delivery of information to users. Other electronic copies are made in order to host World Wide Web sites.

When discussing § 512(c) in particular, the Senate Report notes “Examples of such storage include providing server space for a user’s web site, for a chatroom, or other forum in which material may be posted at the direction of users.”  The “chatroom or other forum” examples make sense, as the House Report on the DMCA indicated that “the [DMCA] essentially codifies the result in the leading and most thoughtful judicial decision to date: Religious Technology Center v. Netcom On-line Communications Services, Inc., 907 F. Supp. 1361 (N.D. Cal. 1995),” which held that a web-hosting service provider (as distinct from a website operator like Veoh) was not liable for direct copyright infringement where users posted materials to a Usenet site whose protocols automatically transmitted those materials.

By way of background, as explained in Arista Records LLC v. Usenet.com, Inc., 07-cv-8822 (S.D.N.Y. June 30, 2009),

The USENET network, created over twenty years ago, is a global system of online bulletin boards on which users (or “subscribers”) may post their own messages or read messages posted by others.  To obtain access to the USENET, a user must gain access through a commercial USENET provider … or an internet service provider.  Messages posted to the USENET are commonly known as “articles.”  Articles, in turn, are posted to bulletin boards called “newsgroups.”  Newsgroups often are organized according to a specific topic or subject matter, and are oftentimes named according to the subject matter to which the articles posted to the newsgroup relate.  The USENET is divided into nine major subject headings known as “hierarchies,” one of which is the alt.* hierarchy.  Content files known as “binaries,” which represent computer files such as images, videos, sounds, computer programs and text, are found in the alt.* hierarchy.  These binary files are encoded in text form for storage and processing, and require a software program to convert the text into a content file such as an image or music file.

It should be noted that Judge Baer granted Arista’s motion for summary judgment on both direct and secondary copyright infringement against Usenet.com.

The point of the above is that when Congress passed the DMCA, it envisioned a world in which users posted content in chatrooms and forums.  That is vastly different than the aggregation of content onto searchable websites the very purpose of which is to make it easy for people who did not upload content to view content uploaded by others, the copyright for which content is often owned by someone other than the user doing the uploading.

Compare § 512(d), which “provides a safe harbor that would limit the liability of a service provider that refers or links users to an online location containing infringing material or activity by using ‘information location tools,’ such as hyperlink directories and indexes.”  So, for example, Google enjoys a safe harbor when it returns search results that point to websites that contain infringing materials, just as Megaupload’s Dotcom notes in his blog post.  Would Veoh likewise qualify for a safe harbor if the search results that it returned were URLs on its website?  I think this juxtaposition explains, in part, why Megaupload decided not to include a search function as part of its locker service.

[i] It is true that Veoh’s terms of service included a provision whereby users represented that they owned all of the copyright in the uploaded content and affirmed that they would not upload copyrighted content without permission.

Dollar Dollar Bill Y’All – Attorneys Fees for Winning Defendants in Fair Use Wins

In two recent cases, federal district courts awarded attorneys’ fees to defendants in copyright infringement claims who prevailed on the basis of fair use.

I think the “fair use” defense is the most over-pled defense in copyright cases.  For example, in 2010, Warner Bros. Records sued the owner of the pornographic website Reality Kings, alleging that videos shot in nightclubs and private parties featured Warner’s copyrighted music.  In some videos, the “actors” allegedly lip-synch the song or perform sexual acts that link thematically with the track (for example, Katy Perry’s “I Kissed A Girl”).  According to Reality Kings attorney Marc Randazza, Reality Kings’ unauthorized use was “fair” because when you “… film in a live night club, you’re going to absorb some of the ambient sounds.  You are going to hear what the DJ is playing, and if someone can tell me how to shoot at a nightclub and police out the music in the background, I’m all ears.” (read more here).  Sometimes, however, a defendant’s use really is fair.  And, in even rarer cases, a defendant whose use is fair gets his attorneys’ fees back.

Seltzer v. Green Day, Inc., No. 10-2103 (C.D. Cal. Nov. 17, 2011)

By way of background, on March 23, 2010, Derek Seltzer, an artist, brought suit against Green Day for using Seltzer’s work, Scream Icon, as part of a video backdrop shown during live performances of Green Day’s song East Jesus Nowhere.  On August 18, 2011, the court granted summary judgment in favor of Green Day on all claims, finding that “the different visual elements added, including graffiti, a brick backdrop, and (especially) the large red cross over the image, considered in connection with the music and lyrics of East Jesus Nowhere, ‘add something new, with a further purpose or different character’ than Plaintiff’s original work.”

Green Day moved for its attorneys’ fees as the prevailing party under 17 U.S.C. § 505. (“In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.”).  The district court noted that “The pivotal inquiry is whether the successful defense furthered the goals of the Copyright Act.” Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994)

The court lays out the Fogerty factors a court considers when deciding whether to award attorney fees to the prevailing party:

These factors are: (1) the degree of success obtained; (2) frivolousness; (3) motivation; (4) the objective unreasonableness of the losing party’s factual and legal arguments; and (5) the need, in particular circumstances, to advance considerations of compensation and deterrence.

The court concluded that:

Just as John Fogerty’s defense of his copyright in “the Old Man Down the Road” vindicated his right and the right of others to compose music in the distinctive “Swamp Rock” style, Staub and the Green Day defendants’ successful defense of the video backdrop and the East Jesus Nowhere performance-experience secured the public’s access to these works and paved the way for the Defendants and others to manipulate and reinterpret street art in the creation of future multimedia compilations. See Fantasy, 94 F.3d at 556. Because the Defendants’ success “enrich[ed] the general public through access to creative works,” paved the way for the creation of new works, and furthered the Copyright Act’s “peculiarly important” interest in demarcating the boundaries of copyright law, the Court finds that the fair use defense of the video backdrop and the East Jesus Nowhere live performance implicated the ultimate interests of copyright and should be encouraged. See id.; Fogerty, 510 U.S. at 527 (defendants “who seek to advance a variety of meritorious copyright defenses should be encouraged to litigate them”). .

It probably didn’t help that Seltzer’s attorney had cited to an overturned case as binding precedent (“Plaintiff’s citation to Hustler, a case applying the “dual” standard rejected by the Supreme Court in Fogerty, edges close to an affirmative attempt to mislead the Court.”)

Brownmark Films, LLC v. Comedy Partners, 10-cv-1013 (E.D. Wis., Nov. 30, 2011),

In the South Park “What What in the Butt” case discussed here, the district court granted defendant Comedy Central’s motion to dismiss.  Comedy Central moved for its attorneys’ fees.  The district court noted the relevant 7th Circuit refinement of Fogerty:

According to the Seventh Circuit, the “two most important [of these] considerations…are the strength of the prevailing party’s case and the amount of damages or other relief the party obtained.” Assessment Techs. of Wisconsin, LLC v. Wire Data, Inc., 361 F.3d 434, 436 (7th Cir. 2004). Furthermore, the Seventh Circuit has specifically noted that, while “prevailing plaintiffs and prevailing defendants are to be treated alike,” the presumption in favor of awarding fees to a prevailing defendant is “very strong.” Id., at 436–37 (refining Fantasy, 510 U.S. at 534; citing Diamonds Star Building Corp. v. Freed, 30 F.3d 536, 506 (4th Cir. 1994)).

The district court determined that

The defendants’ fair-use argument was very strong, and Brownmark’s legal position was objectively unreasonable. The Court took the somewhat rare step of deciding this case at the motion to dismiss stage, precisely because the defendants’ fair-use defense was so strong, satisfying all four fair-use factors. First, the Court found that South Park’s work was a “clear” parody, which one could gather quickly and easily from watching the episode. Second, South Park’s version of the video was transformative, using the series’ own characters and a different recording of the song, even if the words and images were similar. Third, even with those similarities, South Park made many changes to the form of the original and used only enough lines to conjure up the original. South Park’s use was insubstantial. And, fourth, the Court found that South Park’s version of the video would not usurp the market for Brownmark’s original. In fact, in this respect, it is most likely that South Park’s use would have spurred demand for the original, making the viral video’s spread more rapid after its exposure to a national television audience. The satisfaction of these factors shows that the defendants’ case was very strong.

Inquiring further, the Court finds that Brownmark’s legal positions were also objectively unreasonable, and thus their position was frivolous.  … Further, the Court is convinced that Brownmark’s motivation in filing this suit was questionable. Not only was Brownmark’s position unreasonable, but it also waited nearly two years to file a lawsuit, only after being repeatedly rejected with warnings that South Park’s use was copyrighted. (Docket #34, Ex. B). This demonstrates an attempt by Brownmark to use the threat of litigation against the defendants as a sort of “sword of Damocles”—hanging by a thread over the heads of the defendants while Brownmark attempted to extract a licensing fee.

However, having decided that the defendants were entitled to attorneys’ fees, the court, in its discretion, decided to reduce the award because of Brownmark’s limited resources; the court decided to “impose a fee that is lower than the $31,525.23 reasonable amount; this final feewill be tied to Brownmark’s size and ability to pay.”  It does strike me as a bit counter intuitive to argue, as the court does, that Brownmark was essentially trying to extort Comedy Central, but shouldn’t pay all of Comedy Central’s legal fees, because Brownmark can’t afford it.

The Green Day order is below:
[scribd id=75510852 key=key-228ao6iveakkzm31dnx7 mode=list]

The South Park order is below:
[scribd id=75510869 key=key-hfbmxfyvwuu130gsg9n mode=list]

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]

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]

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:
[scribd id=70783836 key=key-donbq75x5dcyzcofosm mode=list]

[1] 1610 and 1630 “refer to a format of music delivery equal to CD-quality audio.”