Name That MP3Tune:
Denial Ain’t Just a River in Egypt

Breaking: This morning, Judge Pauley of the Southern District of New York issued an opinion granting in part and denying in part (but mostly denying) the defendant’s motion for judgment as a matter of law in Capitol Records v MP3Tunes, in which the jury had found liability for copyright infringement and awarded over $48 million in damages.  The opinion is lengthy and fascinating, especially in its characterization of the parties, and particularly the defendant. This post summarizes the rulings on each issue and sprinkles in some of the court’s more colorful commentary. The entire 42-page opinion is definitely worth a read. In it, the court:

(1) Denied JMOL as to the jury’s finding of vicarious liability, because the evidence showed that the defendant received a financial benefit from the infringing conduct in the form of an expanded user base and additional subscriptions;

(2) Denied JMOL as to the jury’s finding of contributory infringement because the evidence showed the defendant’s constructive knowledge of infringement in a variety of ways;

(3) Denied JMOL as to the jury’s finding of so-called “tertiary liability” – the individual defendant’s secondary liability for the corporation’s secondary liability – and confirming that “tertiary liability” is a cognizable claim;

(4) Denied JMOL as to corporate liability under a theory of respondeat superior because executives seeded the MP3Tunes database with infringing tracks that attracted more users;

(5) Applied Viacom’s “exquisite” objective/subjective standard regarding red-flag knowledge and willful blindness, and granted JMOL as to the jury’s finding of infringement with respect to certain tracks because the defendant had no duty to affirmatively monitor its service under the DMCA;

(6) Denied JMOL as to the jury’s finding of contributory liability for allowing users to play tracks hosted by third-party sites through the user’s browser;

(7) Denied JMOL as to the jury’s finding of direct liability for the unauthorized reproduction of album cover art that MP3Tunes copied from Amazon each time a user uploaded tracks;

(8) Granted JMOL as to the jury’s finding of liability for the public display of cover art, because only one user was capable of viewing each copy of album cover (in so doing, the court declined to apply the Supreme Court’s recent ruling in Aereo because the Supreme Court specifically limited its holding in that case to substantially similar technologies);

(9) Granted JMOL in part as to the jury’s award of statutory damages for the infringement of cover art, holding that the plaintiff can only recover once for cover art and associated sound recording, not twice (because the Copyright Act limits an award of statutory damages to one award for all parts of a compilation);

(10) Denied JMOL as to the jury’s finding of unfair competition with respect to pre-1972 sound recordings (which are not covered by statutory copyright), because the evidence showed that the defendant misled users regarding legality of the service, and controlled the service;

(11) Denied the defendant’s Rule 59 request for a new trial, because the defendant failed to show that the verdict was “egregious or a miscarriage of justice”;

(12) Denied to remit the jury’s statutory damages award (which, depending on the song and theory of recovery at issue, ranged from $10,000 per song to $100,000 per song, and $15,000 per work of cover art), because of the defendant’s willful conduct and the need for deterrence; and

(13) Applied Gore to the jury’s punitive damages award on the plaintiff’s unfair competition claims and reduced the award from $7.5 million to $750,000, because it violated due process (the plaintiffs have the option to accept this reduced award or to retry the issue of punitive damages).

Whew! That’s a lot – but wait, there’s more! The court castigated the parties for what, by all appearances, was a scorched-earth litigation from start to finish. Here are a few choice quotes:

“A primary function of pre-trial litigation is to distill claims. Ultimately, the goal is to make a dispute understandable to a lay person. Despite this Court’s efforts to winnow the issues, the parties insisted on an 82-page verdict sheet on liability and a 331-page verdict sheet on damages that included dense Excel tables, necessitating at least one juror’s use of a magnifying glass. While the jury did its best, their assignment was beyond all reasonable scale.”

“Plaintiffs’ evidence on their most significant theories of liability – red flag knowledge and willful blindness – was sparse. And [defendant] Robertson – by his words, actions, and demeanor – came across as unworthy of belief.”

“This Court observed Robertson’s demeanor on the witness stand. No transcript can capture his whole affect; you really had to be there. In response to Robertson’s counsel’s first question, ‘Could you explain to the jury why you changed your name?’ – Roberson asked for a drink of water and then launched into a 735-word soliloquy . . .

Carried away on his own mystic transport, Robertson was overwhelmed with emotion and needed time to compose himself. Seizing the moment, his counsel posed a follow-up question: ‘Since you’re struggling, Michael, why don’t we move forward a little bit to the relationship between your birth father and your kids?’ Robertson responded with a 186-word finale . . .

This seemingly rehearsed, five-minute fable-like narrative left the jury nonplussed and Plaintiffs’ counsel shell-shocked. It was a dramatic presentation. Even if true, Robertson’s decision to spin this yarn backfired on him. The jury saw it for what it was – a transparent attempt to tug at their heartstrings. Plaintiffs’ counsel failed to appreciate what the jury grasped and reflexively moved for a mistrial claiming unfair prejudice. But Robertson’s manipulative conduct only prejudiced him and that prejudice was not unfair. In denying Plaintiffs’ motion, this Court observed, ‘[j]urors see through performances, and the Oscars are over for this year.’ The jury’s verdict demonstrated that this Court’s observation was spot on.”

Well then.  That’s quite a way to start the week.

The Seventh Circuit Is Not Impressed
Transformativeness? Whatevs

The Seventh Circuit is not impressed with the transformative use doctrine (cue graphics of Judge Easterbrook wearing a McKayla Maroney frown).  The court just issued an opinion giving the back of its hand to transformativeness, acknowledging only that the Supreme Court “mentioned it” in Campbell.  Nonetheless, the court granted summary judgment to the defendant on the ground that its antiauthoritarian poster did not interfere with the market for the plaintiff’s photograph under fair use factor 4.  Kienitz v Sconnie Nation LLC, issued today.

Monkey Shoot, Monkey Speak:
The Monkey Weighs In

I was indescribably relieved upon returning from my summer vacation to discover that we have not yet finished discussing the Monkey Selfie. No bona fide copyright lawyer could possibly want to see an end to this dispute. You can imagine my joy, then, when both the Copyright Office *and* the monkey himself (herself?) recently weighed in on the issue.

The Copyright Office issued a draft of the Compendium of Copyright Office Practices (3rd ed.) on August 19. The Compendium – a monumental undertaking – documents and explains Copyright Office practice and procedure, including with respect to registering claims to copyright. Chapter 300 addresses “Copyrightable Authorship: What Can Be Registered.” At Section 306, the Copyright Office clearly states, “The Office will not register works produced by nature, animals or plants. . . . Examples: A photograph taken by a monkey.”

Bananas! The monkey says. Perhaps counseled by the Cave Man Lawyer (h/t @boothsweet), and apparently having learned English from Cookie Monster, the monkey has his own highly entertaining views on the matter, which you can read here.

So Easy a Monkey Can Do It

To the delight of copyright lawyers everywhere, yesterday the infamous Monkey Selfie debate of 2011 revived itself in the wake of a transparency report issued by Wikimedia revealing that the organization refused a request by photographer David Slater to remove the photo from Wikimedia Commons. Slater traveled to Indonesia in 2011 to photograph macaque monkeys. By Slater’s own account, a monkey grabbed one of his cameras and began snapping photos, including this one . Slater apparently licensed the image for distribution, and later discovered that it had been uploaded to the Wikimedia Commons database. He demanded that Wikimedia remove the image, and the organization refused on the ground that Slater did not create the image himself and therefore does not own copyright in it. Slater’s demand, and Wikimedia’s refusal, came to light when the organization issued its transparency report. Copyright Twitter feeds everywhere immediately lit up like a Christmas tree.

Under U.S. copyright law, the author of a work is the one who created it. In wonky copyright terms, it is the person who fixed an original expression in a tangible medium. Here, Slater has publicly admitted that he did not create the photograph; the monkey. The United States Copyright Office takes the position that only human beings can be “authors.” Animals need not apply. Accordingly, this gives rise to the somewhat unusual situation where there appears to be no author as a matter of law, and thus no copyright ownership.

Of course, U.S. copyright law generally does not apply extraterritorially, and the image in question was created in Indonesia. Although both countries are signatories to the Berne Convention, which requires member nations to give each others’ nationals equal treatment under copyright law, the question of who owns the copyright in the image in the first instance may be governed by Indonesian law.

Slater has reportedly consulted with a U.S. attorney, and is supposedly considering pursuing an infringement action.

Last Call: Orphan Works and Mass Digitization

The Copyright Office is now accepting further public comments on the issue of orphan works and mass digitization. The Office held public meetings earlier this month, which, by various accounts, were heated at times. Interested members of the public wishing to submit comments can find more information and the electronic submission form here. Comments are due by April 14, 2014.

Now Playing:
the Bob & Tom Show!

 

The Copyright Office is hosting an excellent, *free* Copyright Year in Review program on December 4 at 2 p.m. It is open to the public – and did I mention it’s *free*? The panelists are the always knowledeable and witty Bob Clarida and Tom Kjellberg. Bob and Tom have been killing it at the annual Copyright Society meetings for well over a decade (as long as I’ve been in attendance) and their presentation is always a highlight of the meeting. This program is definitely worth your while if you’re going to be in DC on the 4th and would like to brush up on recent copyright developments. Alas, the rest of us will have to wait until next June at the Copyright Society Annual Meeting. Sign up now, thank me later!  http://www.copyright.gov/copyrightmatters/copy_litigation.html

Round One to HathiTrust – Wins fair use ruling

This lawsuit stems from the Google Book Project, an ambitious program launched by Google in 2004 to digitize the library collections of the University of Michigan, Harvard, Stanford, the University of Oxford and the New York Public Library and make the collections available for searching online. In 2008, a group of universities established HathiTrust as a repository to combine, archive and share their digital libraries, and make the collection available to the public. At the time of the commencement of suit, the repository reportedly contained 10 million volumes. The Authors’ Guild, an authors’ trade association, and other authors’ groups sued HathiTrust for copyright infringement and swiftly moved for a judgment on the pleadings that HathiTrust could not rely on the fair use defense to the claim of copyright infringement.

First the Court addressed the issue whether the fair use defense is available to library institutions, or whether such institutions are limited to the separate defense to infringement found in Section 108 of the Copyright Act and known as the “library exception.” The court concluded that “fair use does not undermine Section 108, but rather supplements it.” The court then addressed the four fair use factors: purpose and character of the use; nature of the copyrighted work; amount and substantiality of the portion taken in relation to the copyrighted work as a whole; and the effect on the market for or value of the copyrighted works. The court found:

1. Purpose and character of the use. The court found that the use that HathiTrust is making of the works is transformative because it serves an “entirely different purpose than the original works.” The purposed is “superior search capabilities rather than actual access to copyrighted material.”

2. Nature of the copyrighted work; amount and substantiality of the portion used. The second and third factors were not considered important, though the court rejected the plaintiffs’ contention that the uses could not be fair because they made use of the entire works at issue.

3. Market effect.  The court found that this factor weighed in favor of fair use for a number of reasons. The plaintiffs could not identify any specific quantifiable harm to the market to exploit their works, or any documents relating to such harm. The court noted that HathiTrust has implemented security measures in place to prevent wholesale infringing copying. Finally, the transformative nature of the use undercut any actionable market harm, as a copyright holder cannot preempt a transformative market.

Balancing all the factors, the court found the use fair.  The case has been appealed.  A more detailed discussion of the Google Book project can be found in my paper, “Fair of Foul? Mass Digitization and the Fair Use Doctrine,” submitted in connection with the AIPLA’s 2012 Spring Meeting and available at http://www.shadesofgraylaw.com/wp-content/uploads/2013/04/AIPLA-Paper-2012.pdf

Patently Fair or Patent Nonsense? Prior Art Submissions, Copyright and Fair Use

Last week I had the privilege of addressing the Dallas Bar IP Section on the subject of the current controversy over copyright and prior art submissions in patent prosecution. Four lawsuits have been filed by publisher John Wiley & Sons and the American Institute of Physics against law firms alleging copyright infringement for reproducing and distributing various scientific articles in the course of preparing and submitting patent applications. The lawsuits allege that the law firms violated copyright in the articles at issue by (1) making and distributing copies of the articles to the USPTO in connection with patent applications; (2) making additional copies of articles cited in patent applications; and (3) making copies of articles that they neither cited nor submitted to the USPTO for internal purposes. One of the cases apparently settled over the summer. In two of the remaining cases, the plaintiffs have amended their pleadings to drop the allegations concerning submissions to the USPTO, leaving only the allegations regarding internal law firm copying.

The copyright and patent communities have taken note of these lawsuits, and there is an ongoing discussion regarding whether the practices at issue constitute fair use of the articles in question. In January of 2012, the General Counsel of the USPTO issued a memorandum asserting that the accused practices constitute fair use, and the USPTO has intervened in two of the cases as a defendant and counterclaimant, seeking a declaration of noninfringement. In this post, I will give an overview of the fair use doctrine and apply it to the copying at issue in the prior art cases. Continue reading