Computer Ethics, Summer 2012

Corboy Law 602; Tuesdays & Thursdays, 6:00-9:00
Week 2, Class 3
      

Readings

Read all of chapter 1 and the first three sections of chapter 4
  
Read Chapter 2, on privacy

  
Michael Eisner's June 2000 statement to Congress (edited, from Halbert & Ingulli 2004).

Jammie Thomas-Rasset

Jammie Thomas-Rasset had her case go to trial (the first RIAA case to reach a jury trial; Tenenbaum's July 2009 trial was the second) and she lost and was ordered to pay $220,000. But Judge Michael Davis rethought this issue, and in in September 2008 rejected the "offered for distribution" theory, and ordered a new trial. Alas, the new trial reached a judgement against Thomas of $1.9 million ($80,000 per song). The judge then lowered the amount to a total of $54,000, and the RIAA allegedly offered to settle for half that. But Thomas-Rasset did not, and in November 2010 there was a third trial leading to a total damage award of $1.5 million. In July 2011 the judge reduced this to $54,000; the RIAA may appeal.

See http://www.citypages.com/2011-02-16/news/jammie-thomas-rasset-the-download-martyr (Feb 2011).

Joel Tenenbaum case

Joel Tenenbaum was caught downloading files by the RIAA, and was offered their past settlement offer, typically about $5000. He chose to fight. He got Harvard Law professor Charles Nesson to take his case pro bono; Nesson also involved his law-school class. They put up a vigorous and spirited defense before Judge Nancy Gertner.

They lost.

When it came time to assess damages (July 31, 2009), the jury decided $22,500 per track was fair, for a total of $675,000. Oops.

Actually, a core part of Tenenbaum's defense, and the central part of his appeal, is that the damages (and settlement offer) were disproportionately high, and not tied to actual damages. Normally, when you sue someone, all you can ask for is actual damages. Actual retail cost of music tracks is about $1. Tenenbaum got socked with 22,500 times actual damages!

Tenenbaum's case was the second RIAA case to go to trial. Jammie Thomas-Rasset was first; in her first case the verdict was $222,000. Thomas-Rasset got a new trial; the second verdict was $1,920,000.

Moral: think hard about settling early.

Tenenbaum's music downloading appeared to be both intentional and egregious; he had actually been sharing some 800 songs. However, it was done when he was a student.

An interesting point about the case is how the judge dismissed the fair-use claim based on the legal theory that fair use could not apply after Apple opened its iTunes store; that is, once it became possible to buy individual tracks, file-sharers lost any claim to fair use. That is, the underlying justification for "fair use" was that mp3 tracks were otherwise unavailable. Tenenbaum's appeal in part is about the idea that until iTunes dropped DRM its music tracks were still not really comparable to downloaded ones.

What do you think of this Fair Use argument?

See http://arstechnica.com/tech-policy/news/2009/07/o-tenenbaum-riaa-wins-675000-or-22500-per-song.ars. and the links at the end to earlier articles.

Judge Gertner reduced the damage award by 90%. Judges usually do this through a process known as remittitur, meaning that the damage award was simply too high. Gertner, however, argued that the full award was unconstitutionally high. The First Circuit dismissed this argument, and sent the case back to Gertner with the remittitur option open.

The Supreme Court on May 21, 2012 refused to hear Tenenbaum's appeal that Gertner's constitutional argument should not have been dismissed. So the case is back in Gertner's court. Tenenbaum can still appeal her final decision, though, and can still raise this constitutional argument.


It's really hard to generate much sympathy for the RIAA methods.
Consider, though, the theory that file sharing is a violation of their copyrights, and that such individual lawsuits are the ONLYway to proceed.

What's unfair about this process? What is fixable, within the constraints of the US legal system?

Some things to think about:
There is  a good blog about these lawsuits by Ray Beckerman, attorney, at recordingindustryvspeople.blogspot.com. Here's a quote there by Judge Lloyd of San Jose, CA:

the court will not assist a plaintiff who seems to have no desire to actually litigate but instead seems to be using the courts to pursue an extrajudicial business plan against possible infringers (and innocent others caught up in the ISP net). Plaintiff seeks to enlist the aid of the court to obtain information through the litigation discovery process so that it can pursue a non-judicial remedy that focuses on extracting “settlement” payments from persons who may or may not be infringers. This the court is not willing to do.

As we shall see, the RIAA has moved on from these lawsuits, but the movie industry is picking up the slack.


RIAA-2

The RIAA has officially given up on filing lawsuits against infringers, at least for now; they announced this policy in December 2008, just after the Tenenbaum case (lawsuits still in the pipeline will continue). The new policy is to work with ISPs to
See http://www.wired.com/epicenter/2008/12/riaa-says-it-pl.

Why would ISPs want to go along with this plan? Here are a few reasons:
  1. file-sharers are also huge bandwidth hogs. (Linux users are too, but there aren't enough of us to matter. (How many times a day do you rebuild your kernel?)) The broadband business model basically gives every customer the ability to download several dozen gigabytes a day, but the hope is that most customers will actually download somewhere in the range of dozens of megabytes a day. File-sharers who download movies pretty solidly put themselves in the heavy-downloaders camp, tying up resources for everyone.
  2. The ISP might get sued. The RIAA probably wouldn't win, but it would be an expensive hassle.
  3. It's the Right Thing To Do. Knowingly cooperating with copyright infringement is wrong.
  4. The RIAA might decide to sue only customers of ISPs that have not cooperated with the cutoff proposal
  5. Eventually, the RIAA is likely to press for laws requiring ISPs to cooperate. Better get started now. Think about SOPA-2 (a mandatory ISP-cooperation rule is apparently not part of SOPA-1).


The RIAA model today

While the RIAA has officially gotten out of the business of suing everyone, the US Copyright Group (USCG) has stepped up to the plate, having begun operations in early 2010. They follow the RIAA model, suing ISPs for the identities of subscribers and then sending settlement letters. USCG does this at the behest of individual movie producers; they have gone after downloaders of The Hurt Locker, for example. Many of the Hurt Locker cases were later dropped, likely over jurisdictional issues.

This program ran into a snag when, in March 2011, US District Court Judge Harold Baker (Central District, Illinois (Urbana)), in the case VPR Internationale v Does, ruled that "an IP address is not a person", and that he would not grant subpoenas of user names associated with given IP addresses. The ruling not to grant the subpoena was issued in March, but the explanation was not entered until April 29. Judge Baker cited FBI raids on child-pornography suspects, who turned out to be innocent but who had had their wifi hijacked. It remains to be seen whether other District Court judges go along with this approach. The ruling closes with a technical legal point:

In its order denying the motion for expedited discovery, the court noted that until at least one person is served, the court lacks personal jurisdiction over anyone. The court has no jurisdiction over any of the Does at this time; the imprimatur of this court will not be used to advance a “fishing expedition by means of a perversion of the purpose and intent” of class actions.

Note that VPR Internationale is an adult-film publisher; it is likely that part of their strategy was that users contacted would settle promptly in order to avoid public embarrassment.

In May 2011, some 23,000 users were receiving settlement offers for downloading the movie The Expendables. Many if not all these users were likely discovered before Judge Baker's March ruling.

As with the RIAA lawsuits, usually someone must be serving as an upload point in order to have their IP address captured. Bittorrent users generally do that. You can prevent that, but if all the uploaders are gone then nobody can download.



New Zealand recently passed a law mandating the ISP-cutoff approach to file-sharers. See here.

France has a three-infringement-strikes-and-you're-disconnected law, known as HADOPI. As of October 2011, 60 French users had reached their third strike: http://torrentfreak.com/60-french-isp-account-holders-on-their-third-strike-for-internet-piracy-111003. However, it remains unclear whether anyone has yet been disconnected. In December 2011 the membership of the HADOPI commission apparently fell below the necessary quorum for further actions; if so, new appointees would need to be approved before disconnections.

England now has a similar law, which in March 2012 survived a Court of Appeal challenge.

In all these cases, the subscriber can be cut off for infringing activities by some other user. That said, the subscriber does get (usually) three notices.



Righthaven

The strategy of Righthaven appears to make copyright lawsuits into a profit center; see https://www.eff.org/deeplinks/2010/09/righthavens-own-brand-copyright-trolling. Righthaven allegedly scours the internet for newspaper articles posted by bloggers, and then contacts the publisher to buy the rights to the story involved. They then sue the blogger.

This is clearly an attempt to use copyright lawsuits for profit. Note that when bloggers post articles, they usually have at least some claim to Fair Use; they are essentially never posting articles to get around copyright restrictions.

Pornography

The adult-film industry has also begun going after filesharers. Here they rely in part on the embarrassment factor to urge defendants to settle. The EFF has been fighting these lawsuits on privacy grounds. The usual problem is then to dismiss for a lack of personal jurisdiction have been successful. This is not somet economical discovery of the identities of large numbers of internet users known only by IP address. See https://www.eff.org/cases/west-virginia-copyright-troll-lawsuits.

Despite claims in the press, it is not clear that the adult-film industry lawsuits in fact represent an attempt to profit from user filesharing. However, the attempt to consolidate thousands of user identifications in a single lawsuit suggests that the lawsuits may be much less attractive if the plaintiffs are required to file the lawsuits individually.

See also the following on adult-film attorney Evan Stone: http://arstechnica.com/tech-policy/news/2011/09/sanctioned-p2p-lawyer-fined-10000-for-staggering-chutzpah.ars



Bill O'Reilly on Intellectual Property (also on Privacy): http://www.youtube.com/watch?v=hCSaF4KC3eE.

O'Reilly is actually talking about the person who downloaded (and publicized) Sarah Palin's email, during the 2008 election. However, many of O'Reilly's points apply to how "intellectual property" can be a misleading concept.

Bill's correspondent is attorney Megyn Kelly. Kelly acknowledges that it is indeed a "federal offense to access email without authorization", but goes on to say that the web site is probably ok [~2:00 minute mark]. O'Reilly responds with "they're trafficking in stolen merchandise" and compares it to if "you steal somebody's car".

At 3:13, he says there is "no difference between taking a person's letter out of the mailbox and taking someones email off their internet site".

Is there a difference?



Michael Eisner, CEO of Disney, testifying before Congress in June 2000: (as included in Halbert & Ingulli, CyberEthics, 2004)

Eisner's statement remains a pretty clear example of a particular point of view, even if some of his concerns are a bit dated. He does use "intellectual property" as if you're just supposed to assume it's the same as physical property. His comments about "Pirates of Encryption" are a bit odd, especially considering that the goal of many encryption crackers was and is the ability to play purchased DVDs on arbitrary (eg linux) systems. Note that he appears to equate that with credit-card theft.

[Although Eisner's remarks supposedly are from 2000, he refers to the 2003 movie Pirates of the Carribean.]

Disney believes in technology
5 rules:
     1. legislative mandate for technological fixes
     2. international protection
     3. public education - many don't know it is wrong
     4. use appropriate technological measures
     5. appropriate pricing
            does free copying drive down prices?

DISCUSSION: Do you agree with Mr Eisner?

Conversly, does Disney engage in theft by overpricing (cf Eisner's 5th rule)

Some side issues:

Can the FILM industry survive on the napster model?

Here we get into ECONOMICS. Thirty years ago, the movie industry income from selling recordings was zero, and the industry did fairly well. That said, it seems likely that going back to those days would be impossible.

From 2002 to 2008, the film industry grossed more in DVD sales than at the box office. However, that trend reversed in 2009. It is not clear whether filesharing is a significant factor, or, for that matter, legal on-demand downloads (which are not counted as DVD sales). (TV rights in the past were often as large as box-office; I do not know if that trend has continued but I doubt it.)
Figures in billions (http://www.reuters.com/article/2010/01/05/us-dvd-idUSTRE5BU0HS20100105):


 box office
 DVD, other sales
 rental (all forms)
2008
 8.99
 10.06
 1.20
2009
 9.87
 8.73
 1.27

I've had trouble finding more recent numbers.


Other ethics/economics questions:
Check out http://thepiratebay.org. O brave new world!


Napsterized Video Games

What about the market for video games that run on a general-purpose computer, rather than a console, and which do not require a subscription fee to access a central server? Supposedly the main reason this market has all but collapsed is that it is much too easy to defeat copy protection, and with games running $50 each, there is considerable incentive to do this.

If this is true, it would be an example of how inability to enforce copyrights led to collapse of a market.

Console games represent, in a sense, a move by game makers to hardware-based copy protection.

(To be sure, game consoles also offer a standardized hardware platform and guarantee high-performance graphics, but most personal computers these days have high-performance graphics. Many of the most successful PC-based games in fact involve registration and monthly fees (Second Life (which can be played for free), World of Warcraft).)


Digital Restrictions Management

(aka Digital Rights Management)

How does DRM fit into the scheme here? Is it a reasonable response, giving legitimate consumers the same level of access they had before? Or is it the case that "only the legitimate customers are punished"?

The general idea behind DRM is to have
  1. encrypted media files, with multiple possible decryption keys
  2. per-file, per-user licenses, which amount to the encrypted decryption key for a given file
  3. player software (the DRM agent) that can use some master decryption to decrypt the per-file decryption key and then decrypt the licensed file. The DRM agent respects the content owner's rights by not allowing the user to save or otherwise do anything with the decrypted stream other than play it.
The last point is the sticky one: the software must act on behalf of the far-away content owner, rather than on behalf of the person who owns the hardware it is running on. Open-source DRM software is pretty much impossible, for example; anyone could go into the source and add code to save the decrypted stream in a DRM-free form. Windows too has problems: anyone cat attach a debugger to the binary DRM software, and with enough patience figure out either what the decryption key actually is, or else insert binary code to allow saving the decrypted stream.

iPods, iPads, kindles, nooks, DVD players, and other closed platforms are best for DRM. Under windows, DRM is one of the issues leading Microsoft towards "secure" Palladium-style OS design under which some processes can never have a debugger attached. ("Protected processes" were introduced into Vista/win7.)

Most DRM platforms allow for retroactive revocation of your license (presumably they will also refund your money). This is creepy. Content providers can do this when your device "phones home", when you attempt to download new content, or as part of mandatory software upgrades.

Note that the music industry, led by iTunes, no longer focuses on DRM sales. E-book readers, however, are still plunging ahead. One iPad market-niche theory is that the machine will provide a good platform for DRM-based movies and books.
 
Some older DRM mechanisms are based on the "per-play phone-home" model: the DRM agent contacts the central licensing office to verify the license. This allows, of course, the licensing office to keep track of what you are watching and when. This raises a significant privacy concern. I have not heard of any recent systems taking this approach.

Another major DRM issue is that different vendors support different platforms. DRM might require you to purchase, and carry around with you, several competing music players, in order to hold your entire music library.

Perhaps the most vexing real-world DRM problem is that licenses are inevitably lost, sooner or later. Keeping track of licenses is hard, and moving licensed content from one iPod to the next (eg to the replacement unit) is nontrivial. If the first iPod is lost or broken, and Apple no longer supports the license, your content is lost. When Wal*Mart switched to selling non-DRM music a year ago, they also dropped support for the DRM music they'd sold in the past, meaning that those owners would see their investment disappear whenever their current hardware platform needed to be replaced. They would not get automatic upgrades to DRM-free versions.

Traditional CDs have a shelf life of (it is believed) a few decades, and traditional books (at least on acid-free paper) have a shelf life of centuries. Compare these to DRM lifetimes.

Digital music sales are currently often without DRM, probably because everyone wants their music library to be "portable". Movies, however, usually are subject to DRM (and sometimes pretty onerous DRM); nobody really thinks you need to have a portable movie library.

See also http://xkcd.com/488.

General copyright law rules

Different categories may be (and usually are) subject to different rules. See http://copyright.gov/title17 for (voluminous) examples.

A local copy is at http://cs.luc.edu/pld/ethics/copyright2007.pdf.

There is a good overview (intended for paralegals) at http://nationalparalegal.edu/public_documents/courseware_asp_files/patents/menu_patents.aspx. The examples here are mostly from the legal mainstream, avoiding bleeding-edge controversies such as Viacom v YouTube.
 
Rules for theatrical performances are tricky: these are ephemeral performances! Videotaping a performance may violate actors' rights.  The usual issue is rights of the director.
 
Copyright is held by the creator unless:
 
Copyright covers expression, not content. 
Famous case: Feist Publications v Rural Telephone Service:
    (Feist v Rural) (1991, Justice O'Connor): the phone book is not copyrightable.
(some European countries DO have "database protection". Gaak!!)
More info on Feist below
 
Note that if you buy a copy, you have right of private performance (so to speak; there's no special recognition of it), but not public.

First Sale doctrine: after you buy a copy, you can re-sell it. Copyright law only governs the "first sale". There is an exception for software, but not for music and movies.
 
Who owns the copyright? The creator, unless it is a "work for hire", or the copyright is sold.

Fair Use:
This idea goes back to the constitution: the public has some rights to copyrighted material. Limited right of copying for reviews, etc

Good-faith defense protects schools, libraries, archives, and public broadcasts (but not me and Joel Tenenbaum); this limits statutory damages to $200 IF infringement was "reasonably believed" to be fair use. Note that, in the real world, this strategy doesn't usually apply (though it probably means that schools don't get sued much; it's not worth it.) Section 504(c)(2)(i).

In other cases, statutory damages may be reduced to $200 if the "infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright".

Statutory damages are a flat amount you can ask for at trial instead of actual damages. See Section 504. Part of the theory is that by asking for statutory damages, you do not have to prove the number of copies made. But note the effect on the RIAA cases: actual damages might be in the range of $1/track, if you're downloading for personal use, while statutory damages go up to $30,000/track. Statutory damages were created in an era when essentially all copyright cases that reached the legal system involved bulk commercial copying. If a DVD street vendor is arrested, statutory damages make sense, because of the likelihood that a rather large number of copies have been sold in the past. But file-sharing is about single copies.

On the other hand, the RIAA uses these enormous statutory damages to discourage file-sharing by others.
   
Title 17 United States Code, Chapter 5, Section 504, Paragraph (c) Statutory Damages. —

(1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just.

This was written to address large-scale commercial copyright infringement. Should it apply to personal use? The legal objection is usually the huge disconnect between actual damages and statutory damages.

Laws (highlights only):

1790 copyright act: protected books and maps, for 17 years. "The earth belongs in usufruct to the living": Thomas Jefferson [the earth is for the use of the living]

1909 copyright act: a copy has to be in a form that can be seen and read visually. Even back then this was a problem: piano rolls were the medium of recorded music back then, and a court case established that they were not copyrightable because they were not readable.

1972: Sound recordings were brought under Copyright. But coverage was retroactive, and now lasts until 2067. There are NO recordings in the public domain, unless the copyright holder has placed them there.

1976 & 1980 copyright acts: mostly brings copyright up to date. The 1976 act formally introduced the doctrine of Fair Use, previously carved out by court cases, and formally covers television broadcasts.

1988: US signed the Berne Convention, an international copyright treaty. We held out until 1988 perhaps because Congress didn't believe in some of its requirements [?]. The1989 Berne Convention Implementation Act brought the US into conformance with Berne convention; its most famous consequence was perhaps no longer requiring a copyright notice on works.

[Berne Convention has since become WIPO: World Intellectual Property Organization, a U.N. subsidiary.

WIPO: one-state-one-vote + north-south divide => rules harming interests of poor countries were blocked. Example: pharmaceutical patents
 
As a result, some international IP agreements are now under the jurisdiction of the WTO (World Trade Organization), which the first-world nations control more tightly.
 
Who has jurisdiction over IP law could be hugely important: the third world is generally against tight IP law, while the first world is generally for it (at least governments are)
 
Brief comment on treaty-based law:  A judge may work harder to find a way not to overrule a treaty, than to find a way not to overrule an ordinary law.


1996: Communications Decency Act: not really about copyright, but it will be important to us later.

1997: No Electronic Theft act: David LaMacchia case (above); criminalizes noncommercial copyright infringement if the value exceeds $1000 and the infringement was willful.
 
In 1994, mp3 file sharing had not yet become significant.

1998: Digital Millenium Copyright Act passes. the two best-known and/or most-controversial provisions:
2005: recording movies in a theater is now a felony.

2008: Pro IP act
The "compilation clause" was eventually deleted; it might have lead to an increase in statutory damage claims by allowing plaintiffs to count each track of an album as a separate infringement; without this change, albums can only count as a single infringement. In practice, nowadays this is seldom relevant.

This law may also make it easier for rights-holders to sue owners of a computer for infringement even when some third party is known to have done the infringing without the consent or knowledge of the computer owner; this describes the situation of Deborah Foster, sued unsuccessfully in 2004 by the RIAA, who was able to convince the judge that the downloading was likely done by her estranged adult daughter.

The 2008 Pro IP act does allow the Justice Department to sue infringers on behalf of copyright holders; to date, the DoJ has shown no interest in suing individual infringers for personal use. If someone steals a CD, then the DoJ (or, more likely, the state in question) can bring criminal proceedings, not just a lawsuit.


Some Famous Copyright Cases

Wikipedia famous copyright cases:
    http://en.wikipedia.org/wiki/List_of_leading_legal_cases_in_copyright_law.

Copyright and traditional music

A quote from http://www.edu-cyberpg.com/Music/musiclaw2.html:

John and Alan Lomax, who also devoted themselves to collecting and preserving traditional folk music, took the controversial step of copyrighting in their own names the songs they collected, as if they had written the songs themselves. They even copyrighted original songs collected from other singers, such as Leadbelly's "Good Night Irene."

The Leadbelly incident occurred under the pre-Berne rules, where first-to-register meant something, even if you were registering the copyright of someone else's work.

 
1964: Irving Berlin et al. v. E.C. Publications, Inc.: "Mad Magazine case"

    Mad Magazine published "sung-to-the-tune-of" alternative lyrics for popular songs.
    District court ruled in MAD's favor on 23 of 25 songs.
    2nd Federal Circuit decided in MAD's favor on all 25 songs.



Sony v Universal City Studios, 1984, discussed previously.


1985, Dowling v United States, 473 U.S. 207

Supreme Court

Paul Dowling ran a bootleg record company, as an Elvis fan. SCOTUS agreed with his claim that what he did was not "theft" in the sense of "interstate transportation of stolen property", or fraud in the sense of "mail fraud". This was an important case in establishing that copyright infringement was legally not the same as theft (or, more specifically, that the illegal copies could not be equated with "stolen property"). However, the distinction was rather technical, addressing only whether a federal law on interstate transport of stolen property could be applied.

From the Supreme Court decision, http://laws.findlaw.com/us/473/207.html

The language of 2314 [the interstate-transportation-of-stolen property act] does not "plainly and unmistakably" cover such conduct. The phonorecords in question were not "stolen, converted or taken by fraud" for purposes of 2314. The section's language clearly contemplates a physical identity between the items unlawfully obtained and those eventually transported, and hence some prior physical taking of the subject goods. Since the statutorily defined property rights of a copyright holder have a character distinct from the possessory interest of the owner of simple "goods, wares, [or] merchandise," interference with copyright does not easily equate with theft, conversion, or fraud. The infringer of a copyright does not assume physical control over the copyright nor wholly deprive its owner of its use. Infringement implicates a more complex set of property interests than does run-of-the-mill theft, conversion, or fraud

It follows that interference with copyright does not easily equate with theft, conversion, or fraud. The Copyright Act even employs a separate term of art to define one who misappropriates a copyright: ... 'Anyone who violates any of the exclusive rights of the copyright owner ... is an infringer of the copyright.'

Dowling's criminal copyright-infringement conviction still stood. Note that Dowling's case clearly met the first item of USC §506(a)(1), namely     
    (A) for purposes of commercial advantage or private financial gain;
This was the standard that the courts ruled did not apply in the David laMacchia case.

1991,  Feist Publications v Rural Telephone Service

Supreme Court
    (Feist v Rural) (1991, Justice O'Connor; decision: http://www.law.cornell.edu/copyright/cases/499_US_340.htm)
    phone book is NOT copyrightable.
Paragraph 8:

This case concerns the interaction of two well-established propositions. The first is that facts are not copyrightable; the other, that compilations of facts generally are.

The decision then goes on to explain this apparent contradiction. First, the essential prerequisite for copyrightability is that the matter be original. Some compilations are original, perhaps in terms of selection criteria or presentation. The phone book displays no such originality. There is more starting at ¶ 22 (subsection B); Article 8 of the Constitution is referenced in ¶ 23. The gist of O'Connor's opinion is that, yes, copyright law does go back to the Constitution, and has to be considered. In ¶ 26, she writes,

But some courts misunderstood the statute. ......

What really matters is not how you register your copyright, but whether your work is original.

In 27, O'Connor directly addresses the Lockians among us: she explicitly refutes the "sweat of the brow" doctrine (which, at the time of the Feist decision, was a popular theory in legal circles and even a precedent in some cases).

Making matters worse, these courts developed a new theory to justify the protection of factual compilations. Known alternatively as “sweat of the brow” or “industrious collection,” the underlying notion was that copyright was a reward for the hard work that went into compiling facts.

Instead, O'Connor held that it was originality that mattered.

In ¶ 32: "In enacting the Copyright Act of 1976, Congress dropped the reference to “all the writings of an author” and replaced it with the phrase “original works of authorship.”"

¶ 46 states exactly what Feist did [emphasis added]. You can do it too.

There is no doubt that Feist took from the white pages of Rural's directory a substantial amount of factual information. At a minimum, Feist copied the names, towns, and telephone numbers of 1,309 of Rural's subscribers. Not all copying, however, is copyright infringement. To establish infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.

Bottom line, ¶ 50:

The selection, coordination, and arrangement of Rural's white pages do not satisfy the minimum constitutional standards for copyright protection. As mentioned at the outset, Rural's white pages are entirely typical. ... In preparing its white pages, Rural simply takes the data provided by its subscribers and lists it alphabetically by surname. The end product is a garden-variety white pages directory, devoid of even the slightest trace of creativity.

Pamela Samuelson wrote in her paper "The Generativity of Sony v Universal: The Intellectual Property Legacy of justice Stevens"

The Register of Copyrights characterized Feist as having “‘dropped a bomb’” on U.S. copyright law 17 because it upset settled expectations of publishers of directories and databases who had long relied on “sweat of the brow” copyright caselaw.



1991: Basic Books, Inc. v. Kinko's Graphics Corporation
Federal District Court, NY
Just because it's been published in a book does not mean you can use it freely in teaching a course. This was considered relatively obvious; nobody appealed.

1993: Campbell v Acuff-Rose Music, relating to the 2 Live Crew parody of Roy Orbison's Pretty Woman. 2 Live Crew tried to get a license, but were denied; they then decided they did not need one. The District Court found for 2 Live Crew and the Circuit Court found for Acuff-Rose. The Supreme Court agreed that the parody was Fair Use, but apparently not on general principles; they explicitly stated that parody was not automatically Fair Use. However, they found for Fair Use despite the statement in the Sony decision that commercial use was presumptively UnFair Use. Much of the decision dealt with the four-factor analysis: the parody song used the tune of the original, and its first line. As for the Effect on the Market factor, the Supreme Court recognized that parodies seldom if ever compete with the original. The Supreme Court sent the case back for resolution of some details, at which point the case was settled. Apparently 2LC did end up paying a licensing fee. It also appears that the Campbell song was intended to some degree to poke fun directly at Orbison's song, not to be general social satire.

1999: Estate of Martin Luther King, Jr., Inc. v. CBS, Inc.

MLK's "I have a dream" speech is not in the public domain. The legal issue was that the speech was delivered in 1963, before the 1989 Berne Convention Implementation Act; however, the copyright was not registered until after the speech. In the pre-Berne era, publication before copyright could make copyright impossible. The technical issue: did giving the speech constitute "general" publication or "limited" publication?

2000: UMG v MP3.com
    Federal District Court, NY
The court implicitly rules that you can't download copies even if you already own a copy, but that might not have been the central issue.


MGM v Grokster, 2005

StreamCast, purveyor of morpheus, was another defendant. Limewire was not, but they shut down soon after the decision was announced. (Limewire recently lost a contributory-infringement case; damages ended up at $105 million after the RIAA had at one point asked for $75 trillion).

This decision introduced the doctrine of copyright inducement.

This case left the Sony SNIU framework intact, despite MGM's arguments against it. Indeed, the justices took pains to argue that the Grokster situation was very different than Sony's.

See http://w2.eff.org/IP/P2P/p2p_copyright_wp.php for a lengthy article analyzing the decision.
The decision syllabus is at http://www.law.cornell.edu/supct/html/04-480.ZS.html, with links to Souter's opinion.
 
Note that the District Court and the Ninth Circuit granted summary judgement to Grokster! That is, they felt Grokster's case was very strong under the Sony doctrine.

As for the Supreme Court, the decision points out [emphasis added]

The record is replete with evidence that when they began to distribute their free software, each of them clearly voiced the objective that recipients use the software to download copyrighted works and took active steps to encourage infringement.

Justice Souter then opened his decision with the following:

Held: One 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, going beyond mere distribution with knowledge of third-party action, is liable for the resulting acts of infringement by third parties using the device, regardless of the device’s lawful uses.
 
This is known as the theory of copyright inducement, or contributory infringement; the intentional encouragement of infringement.

Contributory infringement is similar to "aiding and abetting" liability: one who knowingly contributes to another's infringement may be held accountable. The Sony precedent might have blocked this, but if your stated primary goal is unlawful (as was Grokster's), you lose.

Justice Souter also raised the possibility of vicarious liability: profiting from the infringement of others while not interfering with it. Vicarious liability is derived from the same legal principle that holds an employer responsible for the actions of its employees.

Despite offsetting considerations, the argument for imposing indirect liability here is powerful, given the number of infringing downloads that occur daily using respondents’ software. When a widely shared product is used to commit infringement, it may be impossible to enforce rights in the protected work effectively against all direct infringers, so that the only practical alternative is to go against the device’s distributor for secondary liability on a theory of contributory or vicarious infringement.

It is not clear whether vicarious liability played a role in the Grokster ruling per se.

Unlike copyright inducement, vicarious liability would apply even if Grokster had not been actively encouraging copyright infringement. Note that part of the issue here is the practicality (or lack thereof) of going after individual users.
 
"Filtering" argument: if an ISP fails to implement blocking or filtering, they have vicarious liability.

MGM had been hoping to get Sony v Universal overturned. In this they failed. Paragraphs (b) and (c) in the syllabus addresses the Sony precedent. The bottom line is that, while the Sony SNIU doctrine remains, Grokster went further (paragraph c):

The rule on inducement of infringement as developed in the early cases is no different today. Evidence of active steps taken to encourage direct infringement, such as advertising an infringing use or instructing how to engage in an infringing use, shows an affirmative intent that the product be used to infringe, and overcomes the law’s reluctance to find liability when a defendant merely sells a commercial product suitable for some lawful use.

But nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability derived from the common law.

Note that paragraph (d) begins: "On the record presented, respondents’ unlawful objective is unmistakable."

Finally, the court was unanimous in ruling that Grokster was liable for inducement. The 5-4 split was over whether Sony needed formal modification, with the answer being no for the time being.

What if Grokster had not actively induced users to engage in copyright infringement? Would that have gotten them off the hook? The site vidtomp3.com allows people to rip the sound from YouTube videos. Mostly this is infringing. But vidtomp3 has the following disclaimer:

This tool is designed to be used in compliance with each sites ToS and local and national copyright laws. We do not support piracy. Only rip the sound or use youtube downloader from none-copyrighted sources.

Does this get them off the Grokster hook? Because, although everyone knows how to use vidtomp3 for piracy, they don't actually say it?

Baase points out on page 218 (1st paragraph) that the DMCA has eroded this doctrine of SNIUs-make-it-ok; under the DMCA, circumvention of copy protection is illegal even if it has SNIUs. But this applies only to circumvention, not other potentially infringing uses.

At the top of page 216, Baase points out that it is not just computer technology that leads to societal debates about whether the technology should be banned. Drugs, guns, and power tools are also in this category. However, computer technology can often be spread at zero cost, with no clearly identifiable responsible "manufacturer", and sometimes there is a Free Speech issue as well.



2006-07 Da Vinci Code case: (actually filed in England, which has different laws): authors Leigh & Baigent of the 1982 book Holy Blood, Holy Grail lost their suit against Dan Brown. They had introduced the theory that Mary Magdalene was the wife of Jesus and that Mary and Jesus have living heirs. This was a major plot element used in Brown's 2003 book The Da Vinci Code. Did Dan Brown violate copyright?

Not if it was a "factual" theory, which is what the judge ended up ruling.

Reverse engineering

Many reverse-engineering cases are based on copyright, and on the Sony v Universal case in particular. (Note the irony that Sony, then on the side of copyright infringers, is now involved in aggressive legal attempts to ban software and hardware that enables infringement of PS3 games.)

Sega Enterprises v Accolade, Ninth Circuit, 1992: Accolade made copies of the Sega ROM and reverse-engineered it. Accolade won.

Sega argued that all four Fair Use factors were in their favor. The Ninth Circuit dismissed much of this, pointing out that copies of Sega's program were not being distributed at all, and were not even being used for infringing game play within Accolade. The copies were made only to create new games; Accolade's only "harm" to Sega was as competitor. The Ninth Circuit did cite the Sony decision regarding the possibility that an entire copy might in some cases be fair use, and that "[w]hen technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of this basic purpose [to stimulate artistic creativity for the general public good]" (in turn quoting an earlier copyright case).

Atari Games v Nintendo, 1992: another reverse-engineering case; also won by the defendant

Sony Computer v Connectix, 2000: Connectix copied Sony BIOS and reengineered it so that Sony Playstation games could be played on a computer.

Bottom line: the courts have had a pretty strong history of not allowing copyrights to interfere with reverse engineering. Note that these cases are about pre-DMCA copyright law (the DMCA officially acknowledges a right to reverse engineering, §1201(f)), and are also not about license claims made by the plaintiff (that is, that the license terms of the software forbid reverse-engineering).

A note on the 2010 Sony hack

In January 2010, George "geohot" Hotz (first to jailbreak the iPhone) published the root key for the PlayStation 3. In general, all playstation software must be signed with this key. Having the root key allows third-party developers to create software unlicensed by Sony, but it also allows for the playing of pirated games. (Sony licensing is not cheap.)

Sony sued, alleging violation of the DMCA among other things. They settled in April 2011; Hotz is required not to engage in PS3 code disassembly or reverse-engineering, and not to discuss the settlement beyond that. In the course of the lawsuit, Sony asked for the IP address of everyone who had viewed Hotz's YouTube post about the hack.

Another group, fail0verflow, has also been hacking the PS3.

Hotz's technique involved using the "OtherOS" feature of the PS3 that allowed running linux; Sony promptly removed that. This action in turn appeared to have triggered a widespread hacking effort against Sony (not by Hotz), with the group "Anonymous" in the forefront (another group was Lulzsec). Anonymous was apparently responsible for obtaining the names (and email addresses and other information) of ~75 million customers. They may also have been responsible for the tampering that led Sony to shut down the PlayStation Network for over a month beginning in April 2011.

In September 2011, Sony supposedly modified their Terms of Service for the PlayStation Network requiring users to waive their rights to class-action lawsuits in the event that their personal information held by Sony is compromised.

Are individuals and groups such as Hotz and Anonymous criminals? Is Sony's response heavy-handed? Or is it a legitimate effort to protect the intellectual-property rights of third-party developers?

DMCA, 1999

This law extends copyright to boat hulls. Who paid for that? Section 1301.
 
Perhaps the primary focus is to implement the WIPO treaty of the year before.
 
The DMCA provides legal protection for copy protection; it provides (severe) penalties for even speaking about circumvention (eg supplying online explanations); these are called 'anti-circumvention measures' (a circumvention method is a way around copy protection).

See §1201(a)(1)(A), and also §1201(a)(2):
(2) No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that—
 
    [We will return to these later under the topics of "speech" and "rights of computer owners"]
     
The DMCA provides limited exceptions for those doing "legitimate" encryption (not "security") research. See Section 1201g. Note in particular 1201(g)(2)(C) (making a good-faith effort to obtain authorization), and 1201(g)(3): Factors in determining exemption (especially (B)).
 
Mandates macrovision-brand copyprotection for VHS tape
 
Allows petitioning the Library of Congress to approve exceptions to the anti-circumvention rules; in cases where these have seriously impacted non-infringing use. Examples: when equipment to support the anti-circumvention measure (eg dongle, certain disk drive, certain hardware platform) is obsolete.

Dmitry Sklyarov was arrested on July 16, 2001 after his DEFCON presentation related to breaking Adobe's e-book anticircumvention measures. He was held in prison for three weeks (until August 6), and then required to remain in the US until December 13, 2001.

His Russian employer, Elcomsoft, sold software that allowed users to bypass Adobe's copy protection on e-books. Sklyarov was charged for this. Adobe issued a press release stating that "the prosecution of this individual in this particular case is not conducive to the best interests of any of the parties involved or the industry."

On December 17, 2002, a Federal jury found Elcomsoft not guilty.

Note that at no time did the US government allege that any of Sklyarov's or Elcomsoft's activities were carried out within the US. This is not an uncommon situation regarding jurisdiction.

OCILLA

DMCA Contains OCILLA: Online Copyright Infringement Liability Limitation Act
This act protects ISPs from claims when users put up infringing material. It establishes the legal framework for "takedown notices". Also for "putback notices", but there are more stringent rules for the latter.
 
Who is Loyola's Takedown agent? See the small "Copyright & Disclaimer 2009" link at the bottom of the main luc.edu page, leading to http://luc.edu/info/copyright_disclaimer_2008.shtml, and then to a mailto: link to "our DMCA agent".
 
Summary of Takedown/Putback process
Takedown request must have 
The ISP must take down material "promptly", and notify the user. The user can respond with a putback request, which must contain the following:
The ISP then can put material back after 10 business days (to give original complainant time to file a lawsuit). If a suit is filed, the material stays down. If a suit is filed at that time or later, it will be filed against the user and not the ISP.
    
OCILLA does not protect end-user in any way; in fact, it puts a burden on the end-user. It does protect the ISP
    
OCILLA also specifies rules about subpoenas to ISPs for end-user identity; these were what the RIAA first used.
 
Why do you think blackboard is so popular? Hint: not because it's easy to use.


Cases related to DMCA/OCILLA

YouTube was founded in early 2005 by Chad Hurley, Steve Chen and Jawed Karim. The original model was as a forum for funny home videos, but this did not quite attract the attention for which the founders had hoped.

YouTube's core defense is that they are happy to take down whatever is requested, but that they cannot monitor everything. According to court documents in the Viacom lawsuit (below), 24 hours of video were uploaded every minute; costs to monitor all that video for infringing potential are staggering.

Is YouTube an example of "good" sharing or "bad" sharing??

See Baase pp 219-222

Youtube was sued in 2007 by Time-Warner; negotiations are continuing but Youtube has apparently agreed to the principle of some kind of cut of revenues. In December 2008 [?], Warner was back to demanding that its music videos not be available. (I'm not completely certain of the dates). On August 19, 2009, the parties announced a settlement that would allow Warner to post lots of their clips on Youtube, subject to the following:
It looks like Warner finally gave up on the last item.

See http://finance.yahoo.com/news/Time-Warner-and-YouTube-Reach-iw-2585532384.html?x=0&.v=1.

How does http://www.vidtomp3.com affect this issue? Does it matter where vidtomp3.com is? Are they the bad guys here? Should we even be discussing vidtomp3.com?


IO Group v Veoh Networks

Veoh was a lot like YouTube: users could upload video. IO Group found its videos there, and sued in 2006. There was no evidence Veoh had encouraged the uploading of copyrighted videos, although they did remove an option (directed at third parties) to "report possible copyright infringement". IO apparently felt that the fact that their copyrights were registered meant that Veoh should have known about them.

The District Court granted summary judgement to Veoh.

Veoh went on to bankruptcy (Chapter 7) and general withdrawal from the user-posted-content market.

Viacom v Youtube

This case was filed in March 2007. Note that the case is now Viacom v Google, as Google has purchased Youtube.

Viacom also sued Youtube, and held out for more than Warner. This case has not yet come to trial (though it may nonetheless be over). Google (Youtube's owner) has cited OCILLA in its defense; Viacom is still trying to claim statutory damages. Question: does Youtube try to "induce" users to upload protected stuff? This remains a major unsettled issue; see MGM v Grokster.

Here's a July 2008 BusinessWeek article on the case:
http://www.businessweek.com/technology/content/jul2008/tc2008073_435740.htm.

Here's a January 2009 blog on the case:
http://copyrightsandcampaigns.blogspot.com/2009/01/viacom-v-youtube-viacoms-anti-piracy.html.

Here's a March 2009 blog, addressing (among other things) the fact that Viacom's discovery motions involve in excess of 12 terabytes of data: http://www.digitalmedialawyerblog.com/2009/03/controlling_discovery_in_digit.html.

Here's a March 2010 story, including several internal youtube emails about how aggressive they should be on rejecting copyrighted content: http://www.dailyfinance.com/story/company-news/viacom-v-youtube-google-a-piracy-case-in-their-own-words/19407896. For example:

On July 19, Chen wrote to Hurley and Karim: "Jawed, please stop putting stolen videos on the site. We're going to have a tough time defending the fact that we're not liable for the copyrighted material on the site because we didn't put it up when one of the co-founders is blatantly stealing content from from other sites and trying to get everyone to see it." Four days later, Karim sent a link to the other founders, and Hurley told him that if they rejected it, they needed to reject all copyrighted material. Karim's reply: "I say we reject this one but not the others. This one is totally blatant."

A July 29 email conversation about competing video sites laid out the importance to YouTube of continuing to use the copyrighted material. "Steal it!" Chen said , and got a reply from Hurley, "hmmm, steal the movies?" Chen's answer: "we have to keep in mind that we need to attract traffic. how much traffic will we get from personal videos? remember, the only reason our traffic surged was due to a video of this type."

Here's another March 2010 blog, which makes some interesting points about how time is on Youtube's side, and how Viacom has made some major tactical errors: http://blog.ericgoldman.org/archives/2010/03/viacom_v_youtub.htm.

First, YouTube has repositioned itself over the years from "video grokster" to Good Internet Citizen, with Predominately Non-Infringing Uses:

Perhaps more importantly, the intervening time has been good to YouTube as a business and as a brand. In this sense, compare Grokster to YouTube. At the time of the Grokster cases, it was still very much an open question whether Grokster would ever evolve into a tool where legitimate activity dominated. While we might still have had that same question about YouTube in 2006, by 2010 YouTube has answered that question resoundingly. YouTube’s business practices have matured, everyone has had positive legitimate experiences with YouTube (even behind-the-curve judges), and it’s clear that major legitimate players have adopted YouTube as a platform for their legitimate activities. For example, YouTube’s brief makes the point that all of the 2008 presidential candidates published YouTube videos as part of their campaign. I’m guessing no 2004 presidential candidates used Grokster for campaign purposes.

But Viacom has  tremendously undermined their case that Youtube should have been able to tell which Viacom videos were forbidden, by being unable to tell themselves!

In YouTube’s case, I could not get over that Viacom has TWICE withdrawn clips from its complaint. I thought the first time Viacom did that was embarrassing and damaging to Viacom’s case, but then Viacom admitted that it didn’t catch all of its errors on the first withdrawal and therefore had to make a second withdrawal of clips. WTF? How hard it is for Viacom to accurately determine which clips it has not permitted to show on YouTube? Whether it intended to or not, Viacom has answered that question to its detriment: hard enough that an entire brigade of extremely expensive lawyers obligated to do factual investigations by Rule 11 can’t get the facts right the first OR SECOND time. For me, this undercuts Viacom’s credibility to its core. ... Viacom’s failings have proven to the judge that it’s too hard—too hard for lawyers charging upwards of $1k an hour despite having unrestricted access to accurate information in their clients’ possession, and clearly too hard for YouTube’s slightly-above-minimum-wage customer support representatives with no such information advantages.

Finally, there is an allegation (at the dailyfinance.com site above, not the ericgoldman.org site) that Viacom itself was doing much of the uploading of its material, for marketing purposes:

Google's brief recites in great detail Viacom's use of YouTube as a promotional engine for its products, explaining how Viacom hired at least 18 marketing firms to upload video on its behalf in order to distance itself from the uploading and make it appear that the videos were genuine, grassroots uploads. Viacom would "rough up" the video to make it look pirated, and would even send its employees off-site to places like Kinko's so that uploading would occur from computers untraceable to Viacom.

Discussion

What do you think of the OCILLA defense here? One point that has been made is that, while OCILLA might block a financial claim, it might not block a Viacom request for a court restraining order that Youtube desist completely. But that was before Viacom's mistake, above.

Now consider www.vidtomp3.com. Many bands allow music videos to be uploaded to youtube, as "advertising", likely on the assumption that the music will be difficult to download; Youtube has certainly (and intentionally) chosen a setup to make downloading of video nonobvious. But vidtomp3.com makes downloading easy! It is true that the encoding rate is usually relatively low (64kbps?), but it's still a great bargain.

Also note vidtomp3's disclaimer:

This site is in no way associated with myspace, youtube or any of the other video sites we support. This tool is designed to be used in compliance with each sites ToS and local and national copyright laws. We do not support piracy. Only rip the sound or use youtube downloader from none-copyrighted sources.

Is this an honest sentiment, or is it a "grokster defense"?

Finally, note that vidtomp3 has run into significant problems in recent years (since 2010 sometime?) with unrestrained advertisers. One strategy is advertisers who display a button that says click here to download, which is either more prominent than the actual button or entirely obscures it.

Viacom v Google District Court ruling, June 2010

US District Court, Southern District of New York

Judge Stanton

Dated June 23, 2010

Summary Judgement was granted to Google (owner of Youtube): Viacom's case cannot continue. (The Second Circuit has now overturned this part of the decision, below)

From the decision (at http://cs.luc.edu/pld/ethics/viacom_v_youtube_sj_2010.pdf)


From plaintiff's submissions on the motions, a jury could find that the defendants not only were generally aware of, but welcomed, copyright-infringing material being placed on their website. Such material was attractive to users, whose increased usage enhanced defendants' income from advertisements displayed on certain pages of the website, with no discrimination between infringing and non-infringing content.

Plaintiffs claim that .. "Defendants had 'actual knowledge' and were 'aware of facts or circumstances from which infringing activity [was] apparent,' but failed to do anything about it."

However, defendants designated an agent, and when they recieved specific notice that a particular item infringed a copyright, they swiftly removed it. It is uncontroverted that all the clips in the suit are off the YouTube website, most having been removed in response to DMCA takedown notices.

Thus, the critical question is whether the statutory phrases "actual knowledge that the material or an activity using the material on the system or network is infringing," and "facts or circumstances from which infrining acttivity is apparent" in §512(c)(1)(A)(i) mean a general awareness that there are infringements (here, claimed to be widespread and common), or rather mean actual or constructive knowledge of specific and identifiable infringements of individual items.

Here is §512(c)(1)(A) of the copyright act:

(c) Information Residing on Systems or Networks at Direction of Users.—

(1) In general. — A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, 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, if the service provider -

(A)(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing; [and]

     (ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

     (iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

(B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and

(C) upon notification of claimed infringement ... responds expeditiously to remove... the material that is claimed to be infringing [the takedown]

All three of A, B, C must be met. C is the takedown part; that's easy. Viacom has argued that YouTube violated B by being advertising-supported. Most sites are advertising-supported; should clause B be interpreted to mean such sites should not receive immunity? Or should not automatically receive immunity, which is a major problem in that the "safe harbor" is no longer very safe?

Still, Viacom's primary claim is that Youtube violated (A): they did have actual knowledge that infringing was going on. The logic of (A) is tricky: YouTube is ok if they don't have actual knowledge, and are not aware of facts or circumstances from which infringing is apparent, and if they find out about infringing, they remove it.

The judge ruled that YouTube/google did meet the standard of (A)(i) and thus were not liable: actual knowledge doesn't mean that you know it's going on wink wink nudge nudge, but that you have knowledge of specific infinging items.

In other words, the judge upheld the OCILLA takedown defense very broadly.


Here are some notes on the decision. The House Report on the OCILLA part of the law described clause A(ii) as

a 'red flag' test. A service provider need not monitor its service or affirmatively seek facts indicating infringing activity. However, if the service provider becomes aware of a 'red flag' from which infringing activity is apparent, it will lose the limitation of liability if it takes no action.

This could be interpreted as a looser standard than "actual knowledge [of specific infringing content]" test of part (i), that Google prevailed on. Later [p 13], again quoting the House Report,

Under this standard, a service provider would have no obligation to seek out copyright infringement, but it would not qualify for the safe harbor if it had turned a blind eye to "red flags" of obvious infringement.the defendants not only were generally aware of, but welcomed, copyright-infringing material being placed on their website

YouTube/Google did just that. But then [p 14], quoting the House Report,

The important intended objective of this standard is to exclude sophisticated "pirate" directories -- which refer Internet users to other selected Internet sites where pirate software, books, movies, and music can be downloaded or transmitted -- from the safe harbor. Such pirate directories ... are obviously infringing because they typically use words such as "pirate", "bootleg', or slang terms in their URLs and header information to make their illegal purpose obvious to ... Internet users. ... Because the infringing nature of such sites would be apparent from even a brief and casual viewing, safe harbor status ... would not be appropriate.

So what does a "red flag" have to be? YouTube was not "obviously" a pirate site, but certainly the existence of infringing content was very well known. Although parts of the Congressional Reports quoted above do suggest that YouTube/Google had met the "red flag" test, existing case law generally suggests otherwise. And a "safe harbor" provision is of little use if it does not come with an "objective standard" (a term used in the Congressional Report).

On page 15, Judge Stanton concludes from all this that

The  tenor of  the  foregoing provisions  is that  the phrases “actual knowledge that the material or an activity” is infringing, and “facts or circumstances” indicating infringing activity, describe knowledge of specific and identifiable infringements of particular individual items.  Mere knowledge of prevalence of such activity in general is not enough. ... To let knowledge of a generalized practice of infringement in the industry, or of a proclivity of users to post infringing materials, impose responsibility on service providers to discover which of their users’ postings infringe a copyright would contravene the structure and operation of the DMCA.

Page 17: "if investigation of ‘facts and circumstances’ is required to identify material as infringing, then those facts and circumstances are not 'red flags'." In other words, to be a red flag the infringing has to be obvious.

On page 20 of the decision the judge says

General knowledge that infringement is 'ubiquitous' does not impose a duty on the service provider to monitor or search its service for infringements.



Appellate Court

The Second Circuit handed down its ruling partially reversing Judge Stanton on April 5, 2012. Judge Stanton had granted YouTube summary judgement; the Second Circuit argued that there was enough evidence that YouTube had indeed known of specific instances ofinfringment that the case should go to a jury.

The Second Circuit upheld the District Court's decision that Viacom would have to prove that YouTube had "knowledge or awareness of specific infringing activity"; that is, YouTube would have had to know about some specific items, not just that infringing videos were being uploaded. They reasoned in part from A(iii) above, where to remove something it has to be, well, specific. The Second Circuit also affirmed that the Safe Harbor provision would, if it applied, block all claims against YouTube, including for contributory infringement.

But the Second Circuit felt that the question of whether YouTube did have actual knowledge of infringing should go to a jury. The Court was impressed by YouTube's own data that 60% or more of the content was copyrighted, with only 10% of that being authorized. Even this, though, was, by itself, not enough. But there was substantial circumstantial evidence that YouTube was definitely aware of specific infringing content it hosted. There were internal company rankings of content, and surveys of infringing content for which YouTube was bidding on the legitimate rights. And there were all those emails. Here's another from Karim:

As of today [2006][,] episodes and clips of the following well-known shows can still be found [on YouTube]: Family Guy, South Park, MTV Cribs, Daily Show, Reno 911, [and] Dave Chapelle [sic].” Karim further opined that, “although YouTube is not legally required to monitor content . . . and complies with DMCA takedown requests, we would benefit from preemptively removing content hat is blatantly illegal and likely to attract criticism.

Many other emails identify specific clips that the founders believed to be infringing.

Willful Blindness

But then the Second Circuit goes on to consider the doctrine of "willful blindness", apparently based roughly on the "blind eye" language of the Congressional Report. A blind eye test might in practice be rather different from a red flag test, even though both phrases are in the same sentence in the Congressional Report. A red flag is something you have to look for (or can be expected to notice readily); a blind eye is intentionally not following up on reasonable suspicions. Willful blindness is stronger. The Second Circuit has asked the District Court to determine whether YouTube "made a 'deliberate effort to avoid guilty knowledge'".

Although Viacom has made much of this "willful blindness" clause, it does not seem to play a major role in the decision. If the District Court (and jury) finds at trial that there was no specific knowledge of infringement after all, then it seems to me that finding willful blindness would be even harder.

Finally, the appellate court rejected Viacom's arguments that YouTube's thumbnail creation, conversion of uploaded files to uniform formats and similar automated activity constituted activity beyond "storage at the direction of a user". This may be an important issue: the ruling states that what matters is that users initiate the content uploading, not that there isn't some later post-processing.