Digital Copyright II

Intro to IP – Prof. Merges

3.8.2012 [Originally scheduled for 3.5.2012]

Makeup class

• Friday March 16, 1 – 3 pm

• Room 140 (here!)

Major Themes

• Copyright enforcement strategies and liability theories intertwined

• Grokster as a starting point for indirect infringement analysis

• Congressional action: SOPA, PIPA, etc.

Grokster

• Specific facts

• Holding

• Implications . . .

Grokster network architecture

IPNTA 5th p. 686

The supernode (or indexing computer) searches its own index and may communicate the search request to other supernodes. If the file is found, the supernode discloses its location to the computer requesting it, and the requesting user can download the file directly from the computer located.

Index: Computer 0172 has song # 4503

MGM commissioned a statistician to conduct a systematic search, and his study showed that nearly 90% of the files available for download on the FastTrack system were copyrighted works. Grokster and Stream-Cast dispute this figure, [and argue] that free copying even of copyrighted works may be authorized by the rightholders. They also argue that potential noninfringing uses of their software are significant in kind, even if infrequent in practice. – IPNTA 5th 686

The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement.

Specific evidence

• Streamcast: specific alternative to Napster• Goal is to get sued• Internal monitoring of copyrighted song

availability• Emphasize availability of copyrighted

materials in ads (search for © song, e.g.)

No evidence of filtering

[T]here is no evidence that either company made an effort to filter copyrighted material from users’ downloads or otherwise impede the sharing of copyrighted files. Although Grokster appears to have sent e-mails warning users about infringing content when it received threatening notice from the copyright holders, it never blocked anyone from continuing to use its software to share copyrighted files.

District court ruling

• SJ for Grokster/Morpheus

• “Distributing that software gave rise to no liability in the court’s view, because its use did not provide the distributors with actual knowledge of specific acts of infringement.”

On Appeal

9th Circuit: [D]istribution of a commercial product capable of substantial noninfringing uses could not give rise to contributory liability for infringement unless the distributor had actual knowledge of specific instances of infringement and failed to act on that knowledge.

Sup Ct: Logic of Indirect Liability

When a widely shared service or product is used to commit infringement, it may be impossible to enforce rights in the protected work effectively against all direct infringers, the only practical alternative being to go against the distributor of the copying device for secondary liability on a theory of contributory or vicarious infringement.

Inducement vs. vicarious liability

• Inducement: encourage or direct infringement

• Vicarious liability: permit or fail to stop infringement when one has the right to do so

• IPNTA 5th p. 690

Sony in Grokster

• The Grokster court says the 9th Circuit misread Sony

• NOT a safe harbor for any technology that has substantial noninfringing uses

• Only a doctrine of implied intent or indirect proof of intent

• [Sony] was never meant to foreclose rules of fault-based liability derived from the common law. – IPNTA 5th p. 692.

• [W]here evidence goes beyond a product’s characteristics or the knowledge that it may be put to infringing uses, and shows statements or actions directed to promoting infringement, Sony’s staple-article rule will not preclude liability.

Holding p. 693

[O]ne who distributes 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, is liable for the resulting acts of infringement by third parties.

NOT just infringing potential or actual instances of infringement

SOPA, PIPA

• Stop Online Piracy Act (HR 3261, Oct. 26, 2011)

• PIPA, Senate version

• Direct remedies for overseas infringement hubs

Direct remedies

• Seize domain names, prevent them from operating as hubs for infringing streaming and downloading

• Prevent linking to prohibited domain names by search engines, payment services, etc.

Objections to SOPA

• Censorship of domain names; intrusion into search engine operations (removing domain names from search results etc.)

• Overreaching: seizure of domain name for domain only partially infringing

Perfect 10 v. Amazon

• Facts

• Holdings

Which Rights Are Infringed?

Perfect 10 claims that Google’s search engine program directly infringes two exclusive rights granted to copyright holders: its display rights and its distribution rights …. – IPNTA 5th at 705

Display right

• Infringed by Google’s use of thumbnail images

• Not by inline framing – not a direct copy

Distribution right

• Not infringed by Google

• Links to copyright owner’s images not a distribution of images

IPNTA 5th at 708 Although an image may have been created originally to serve

an entertainment, aesthetic, or informative function, a search engine transforms the image into a pointer directing a user to a source of information. Just as a “parody has an obvious claim to transformative value” because “it can provide social benefit, by shedding light on an earlier work, and, in the process, creating a new one,”Campbell, 510 U.S. at 579, 114 S.Ct. 1164, a search engine provides social benefit by incorporating an original work into a new work, namely, an electronic reference tool.

Compare to Texaco case

• Effect on the market?

• Different types of works/different portions taken/less transformative in Texaco?

Two sets of ideas

• Better integration of liability into product design

• Private, mutual deals between ISPs and content industries

• Lital Helman and Gideon Parchomovsky, The Best Available Technology Standard, 111 Colum. L. Rev. 1194 (2011)

• Webhosts' liability should be guided by the “Best Available Technology” principle, according to which webhosts that employ the best filtering technology available on the market will be immune from liability for copyright infringement.

Voluntary Graduated Enforcement

ISPs

Voluntary MOU – ISPs and Content Industries

A reasonable, alert-based approach may help to protect legal rights granted by copyright and stem the unlawful distribution of copyrighted works, while providing education, privacy protection, fair warning and an opportunity for review that protects the lawful interests of consumers. -- http://www.copyrightinformation.org/sites/default/files/Momorandum%20of%20Understanding.pdf

Korean War memorial

The tide turning?

The U.S. postage stamp based on a photograph of the Korean War Veterans Memorial statues on the National Mall did not constitute a transformative fair use of the copyrighted statues under the Copyright Act, the U.S. Court of Appeals for the Federal Circuit ruled Feb. 25 (Gaylord v. United States, Fed. Cir., No. 2009-5044, 2/25/10).