Judge Wake Surprises -- Holds Back RIAA for the Moment

Judge Wake surprises. That is, he suprises me, at least. This is not surprising in the sense that Federal Court judges face imposing very terrible fines on individuals for copyright infringement in file sharing, and he statute provides little room for them to show any mercy.

How did he surprise? By taking on the difficult issue of proving infringement through deemed distribution. Some background first.

Copyright infringement requires actual distribution of the copryighted work. As Judge Wake notes, "[t]he general rule, supported by the great weight of authority, is that 'infringement of [the distribution right] requires an actual dissemination of either copies or phonorecords.' Nat’l Car Rental Sys. v. Computer Assocs. Int’l, Inc., 991 F.2d 426, 434 (8th Cir. 1993). See also Perfect 10, Inc. v. Amazon.com, Inc., 487 F.3d 701, 718 (9th Cir. 2007)" The buzz has been around the Fourth Circuit's library case, Hotaling, where, by placing the copyright works for use by the public was enough to prove distribution because they failed to keep records. The record companies wanted to analogize the library to a shared file on one's computer.

The crafty Judge Wake said no, though. Judge Wake noted that the Ninth Circuit, in Perfect10, agreed with the district court’s conclusion that distribution requires an "actual dissemination," consistent with the language of the Copyright Act. Judge Wake says the Ninth Circuit rejects Hotaling. Judge Wake emphasizes that Hotaling is inconsistent with the Copyright Act.

Further, Judge Wake discards the argument that an offer to distribute are not sufficient to meet the distribution requirement. Judge Wake says that "[t]he scope of the term distribution is only defined within § 106(3) itself, as a “sale or other transfer of ownership” or a “rental, lease, or lending” of a copy of the work. The plain meaning of that section requires an identifiable copy of the work to change hands in one of the prescribed ways for there to be a distribution." The record companies argued that the word "distribution" would be equated with "publication."

So? There were 54 copyrighted tunes in the Defendant's shared folder. The Plaintiffs downloaded only 12. The Court allowed these 12 as an investigative scheme. The Defendant has other defenses, but damages have been reduced from 54 times the minimum amount ($750) to 12 times that amount.

Good (or lucky) Drafting Wins: “Now or Hereafter Known”

Joey Ramone sued Walmart and Real Network over downloading songs he wrote. The problem? Mr Ramone had a recording agreement with Ramones Productions who licensed the works. Mr Ramone had authorized Ramones productions to use the works and exploit them in “forms of reproduction” which were “now or hereafter known.” The Court said that covered digital forms and was the most reasonable reading of the agreement. Sorry Joey. Punked. I should say Joey's estate: Joey died in 2001.

RIAA Sues Project Playlist

As one attorney said, "another day, another RIAA lawsuit." What is different about this one?

Project Playlist gives users the opportunity to find, play and share music with others for free, as well as allowing them to embed personalised playlists on their social networking homepages on sites such as MySpace and Facebook, according to the lawsuit. It's "Terms of Service" states:

Project Playlist is an information location tool and social networking website that provides users with an integrated set of services to (i) enable users to locate music files hosted on websites controlled by third parties for promotional or other legal purposes, (ii) stream those legally posted music files using the Project Playlist music player (the “Player”) so the music can be heard, (iii) create hyperlinks to legally posted music files discovered by the user and add those hyperlinks to the Project Playlist search index, (iv) create and publish a series of such hyperlinks to form playlists on a member’s webpage, (v) share those playlists with friends and browse other members playlists on other members’ web pages by embedding the Player in other webpages, where permitted, (vi) purchase music found using the Project Playlist search engine or browsing other members playlists, (vii) obtain current information about new song releases from music blogs, (viii) obtain current information on the popularity of songs as measured by frequency of appearance on other members’ playlists, and (ix) network with other members through a variety of social networking and communications tools.

The record companies claim that: "In short [Project Playlist's] entire business amounts to nothing more than a massive infringement."

What does Project Playlist say about copyright?

Project Playlist is an information location tool intended to help you find and enjoy music legally posted by others on the Internet. Project Playlist intends to organize in its search index location information about music posted on the Internet for promotional and other legal purposes to serve artists and their fans. Project Playlist is also committed to respecting the legitimate interests of copyright owners. Therefore, where possible, Project Playlist negotiates reasonable copyright licenses that also respect the public’s legitimate interest in gaining access to public information and preserving the freedom and functionality of the Internet. Project Playlist pays performance royalties to ASCAP, BMI and SESAC, the three performance rights organizations (“PSOs”) based in the Untied States.

It appears that Project Playlist is used, like a VCR, for legitimate non-infringment purposes and purports to pay royalties. Stay tuned.

Fairly Harry Potter

A lexicon presents the language of a field or area. The "HP Lexicon" began as a website where contributors collected information about people, places, and things that inhabit the Harry Potter universe. Those who care about these things Harry Potter regard it as the most complete and authoritative guide to the world of Harry Potter, and it attracts upwards of 25 million visitors per year. The HP Lexicon’s editor decided to publish the HP Lexicon in book form, and RDR Books agreed to do so. Ms J.K. Rowling and Warner Brothers filed suit against RDR, alleging claims for copyright and trademark infringement, and seeking to stop publication of the book.

The issue is fair use, the most misunderstood area of copyright law. Judge Posner has noted that "copying that is complementary to the copyrighted work (in the sense that nails are complements of hammers) is fair use, but copying that is a substitute for the copyrighted work (in the sense that nails are substitutes for pegs or screws), or for derivative works from the copyrighted work . . . is not fair use." Ty Inc. v. Publications International, 292 F.3d 512 (7th Cir. 2002). His economic approach is not really codified in the law, but it does focus on the core concept: is the new work a substitute for the copied work. Following Judge Posner's logic, the Lexicon seems to complement rather than replace Ms Rowling's works, and to do her no harm.

But first, fair use. Judge Posner aptly points out that the statute confuses rather than helps. It says that "the fair use of a copyrighted work... for purposes such as criticism, comment, news reporting, teaching ... scholarship or research, is not an infringement of copyright." 17 U.S.C. § 107. In deciding whether a particular use is fair, the "factors to be considered shall include(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work." This is a list, not a test. So, what is the judge in the Harry Potter case to do?

That is easy enough -- right. Often courts confuse the "sweat of the brow" as the source of copryightable material. It is not. It is just the originality and expression, no matter how difficult or easy the effort, that is protected. The real issue for Ms Rowling is whether the Lexicon infringes her rights to develop derivative works. The Copyright code defines a derivative work as "a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted." 17 U.S.C. § 101. Does producing a Lexicon in book form compete with the rights of Ms Rowling and her empire to produce her own Lexicon as a derivative work? Yes; but is a Lexicon a derivative work? That is, does it recast, transform, or adapt the work?

Deemed Distribution of Nude Women . . . I Mean Pictures . . .

The internet, occasionally, has been used to disseminate pictures of nudity. Whether art or free expression, it is distribution, and if the material is copyrightable, then the owner has the right to their distribution. So, does the Ninth Circuit's analysis of pictures of nude women help us understand the copyright issues relating to file sharing?

Perfect10 sues Google, objecting to their use of the Perfect10 pictures in the Gooogle system. Actually, Perfect10 asserts infringement of its display rights, which really does not help us understand file-sharing issues if the files are not pictures, but music. And the Ninth Circuit discusses the genealogy case, Hotaling, and Napster for its analysis.

The Ninth Circuit panel states that "Perfect 10 incorrectly relies on Hotaling v. Church of Jesus Christ of Latter-Day Saints and Napster for the proposition that merely making images 'available' violates the copyright owner’s distribution right. Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (4th Cir. 1997); Napster, 239 F.3d 1004. Hotaling held that the owner of a collection of works who makes them available to the public may be deemed to have distributed copies of the works. Hotaling, 118 F.3d at 203. Similarly, the distribution rights of the plaintiff copyright owners were infringed by Napster users (private individuals with collections of music files stored on their home computers) when they used the Napster software to make their collections available to all other Napster users. Napster, 239 F.3d at 1011-14." The Ninth Circuit panel calls this "deemed distribution."

Since Google did not have a copy of Perfect10's nude women, but linked to them, the Ninth Circuit reasoned that Google could not distribute copies. File sharers do own a copy of the work. They are a big step down the road to deemed distribution.

Next,the even bigger hurdle, contributory infringement. “One infringes contributorily by intentionally inducing or encouraging direct infringement, and infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.” Grokster, 545 U.S. at 930.

File Sharing . . . Do Students Really Have Direct Knowledge?

So the big issue is whether merely placing copyrighted files in a shared folder available to others over the internet infringes the copyright owner's exclusive right to distribute the copyrighted work. But "distribute" is a term of art in the copyright statutes, meaning the exclusive right "to distribute copies ... of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending." 17 U.S.C. § 106(3). Applying the statute, placing a copyrighted file in a shared folder, for public use, seems to show intent to transfer ownership (in contrast to, say, placing the files in a folder accessible only by yourself). This still begs the question of whether an actual transfer must be shown.

The Napster case in the Ninth Circuit approaches this differently, focusing on contributory copyright infringement. “[O]ne who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a ‘contributory’ infringer.” Gershwin Publ’g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir. 1971); see also Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996). The Ninth Circuit explains, in Napster, that "liability exists if the defendant engages in “personal conduct that encourages or assists the infringement.” Matthew Bender & Co. v. West Publ’g Co., 158 F.3d 693, 706 (2d Cir. 1998). The Ninth Circuit then stated that Napster had direct knowledge of actual infringement, and the walls came tumbling down. Does this "direct knowledge" requirement apply to the student file sharer using a service like Limeware?

File Posting or File Sharing? Which is Illegal?

So put yourself in the position of a judge. The record industry brings to you the head of the local college student. The copyright statutes bring you statutory damages of $750 per violation at a minimum. It is the copyright version of sentencing guidelines, leaving you a complete lack of discretion.

It has to be tough to be the judge. If this does not seem right, what do you do? Well, tighten the liability standards. And that is the question judges now face in file-sharing cases.

Judge Nancy Gertner of Boston felt that "merely exposing music files to the Internet is not copyright infringement" because those doing so could claim "they did not know that logging onto the peer-to-peer network would allow others to access these particular files." Judge Kenneth Karras in New York said just the opposite, that placing a copyrighted music file in a computer folder shared by peer-to-peer software users could amount to illegal publication of it.

At issue is what level of proof is required: just making the copyrighted digital files available on a shared network, or a showing that the digital files were actually shared. Judge Neil Wake of Phoenix is addressing this very issue in Atlantic v. Howell. The Howells contend that their file-sharing program was "not set up to share" and that the files were "for private use" and "for transfer to portable devices, that is legal for 'fair use.'" Judge Wake initially rejected their argument, but is now re-considering. But first, the Church of Jesus Christ of Latter Day Saints and Napster.

Yep. The Mormon Church was sued for placing an unauthorized copy of a genealogicial work in its collection and including the copy in its catalog or index system, making the copy available to the public. The District Court said this was not enough, but the Fourth Circuit reversed. It reasoned that "[w]hen a public library adds a work to its collection, lists the work in its index or catalog system, and makes the work available to the borrowing or browsing public, it has completed all the steps necessary for distribution to the public," violating §106(3). So, is a shared folder on limeware a "public library?" Judge Hall, in dissent, reads the statute, and says "the owner of a copyright does not possess an exclusive right to 'distribute' the work in any conceivable manner; instead, it has the exclusive right 'to distribute copies ... of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending [.]' 17 U.S.C. § 106(3)." He notes that all use was in the library, and perhaps should be copyright infringement even if the work was not lent, but just used in the library; but, under the statute, it is not illegal distribution because Congress said "lending" is required. He's the minority in the Fourth Circuit, though.

But what about that public file? If another uses the folder, it seems like that would be lending the file. That fails to answer the question of what needs to be proved: merely an offer or an actual file-share? If one plays a song in the presence of another, is that lending? If the file remains only on your hard disk, but another plays it remotely, is that lending? The Ninth Circuit already has discussed file sharing in Napster, has it not? And everyone knows Napster. Or do they?