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July 29, 2009

Is Court's Rebuke of Fair use in Tenenbaum P2P Case a Win for Fair Use?

According to a recent report from Arstechica, Judge Nancy Gerntner has thrown out the fair use claims in the file sharing trial of Joel Tenenbaum. The trial has been something of a circus due to attempts to broadcast the hearing over the Internet and a fairly bitter relationship between Harvard Law Professor Charlie Neeson and the Judge. She threw out their fair use defense as a matter of law in the hours just before the trial started.

Her ruling reads, in part:

To be sure, this Court can envision certain circumstances in which a defendant sued for file-sharing could assert a plausible fair use defense. Indeed, an amicus brief previously filed in this consolidated action by the Berkman Center at the Harvard Law School (on which Defendant's counsel was a signatory) outlined some of those circumstances—for example, the defendant who 'deleted the MP3 files after sampling them, or created MP3 files exclusively for space-shifting purposes from audio CDs they had previously purchased.' The Court can also envision a fair use defense for a defendant who shared files during a period of time before the law concerning file-sharing was clear and paid outlets were readily available.

The advent of the internet in the late 1990s threw a number of norms into disarray, offering sudden access to a wealth of digitized media and giving the veneer of privacy or anonymity to acts that had public consequences. At the beginning of this period, both law and technology were unsettled. A defendant who shared files online during this interregnum but later shifted to paid outlets once the law became clear and authorized sources available would present a strong case for fair use. It might matter, too, who the defendant shared files with—his friends, or the world—as well as how many copyrighted works, and for how long.

But the Defendant has offered no facts to suggest that he fits within these categories. He is accused of sharing hundreds of songs over a number of years, far beyond the infancy of this new technology or any legal uncertainty.


The outcome will be hard on the defendant. Mr. Tenenbaum has admitted to file sharing (which was a much better choice than Jamie Thomas' hard drive issues). Without any factual evidence on fair use to try and befuddle the jury, the case comes down to the need to document ownership of the copyrighted works and assess damages. The damage portion of the case could prove interesting, if Prof. Nesson can convince judge or jury that the statutory damage range violates the Eighth Amendment because it bears no relation to the value of the songs copies or the economic harm caused by any particular file sharer. (Each individual should not be responsible for the cumulative economic impact of peer-to-peer file sharing, assuming arguendo that the illegal sharing was one of the causes of the music industry's economic collapse.)

But Judge Gertner's denial of fair use is more generous than most. Her ruling adds additional support to the idea that sampling might be acceptable, that using peer-to-peer as a technological work-around for content owned in other formats (think albums and 8-tracks, not just CDs), or because the law was unclear when the technology was first introduced all suggest a very broad vision of fair use.

The ruling does nothing for Mr. Tenenbaum. I can only assume his lawyers were much more circumspect about the small likelihood of success with him in private than the rather blustery approach they have taken in public. But the ruling says a good deal about the expansion of fair use as a consumer protection statute, which is a significant expansion from its meaning during the past 40 years. The ruling is mindful that fair use must have its limits and protect the rights of copyright owners, but it goes further than most to recognize the interest of consumers as well.

The approach suggests that the court may pay more attention to the issue of damages than has been given in the past. So this case is still not over.








July 20, 2009

Amazon's next Kindle class action suit

Only days after Amazon changed its refund policy in an attempt to settle a class action suit over Kindle eReader covers that had a habit of cracking the screens on the computers, Amazon finds itself in murky legal water after using its embedded software to delete books from consumer's Kindles that had been improperly sold to those customers.

As first reported by the New York Times, Drew Herdener, explained by e-mail that the company which uploaded the books to the Kindle Store had not acquired the rights to sell the books in the Kindle format.  “When we were notified of this by the rights holder, we removed the illegal copies from our systems and from customers’ devices, and refunded customers,” he said.

Oops.

Of course Amazon was obligated to immediately stop selling the bootleg copies of the books. It could even face copyright violations for the sales of those books. Worse still, it might have been obligated to inform the purchasers that they  had unintentionally purchased illegal copies and were responsible to destroy the illegal copies or face their own copyright liability. At that point, of course, Amazon would also be expected to refund the cost of those books and perhaps offer a coupon to those customers as a goodwill gesture.

But Amazon skipped the step where it informed its customers of the customer's obligation not to keep bootleg books. Instead, Amazon used its software to delete the books directly from the Kindle. As the New York Times correctly pointed out, the Terms of Service do not give Amazon the rights to exercise the self-help it just chose to use.
Use of Digital Content. Upon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times, solely on the Device or as authorized by Amazon as part of the Service and solely for your personal, non-commercial use. Digital Content will be deemed licensed to you by Amazon under this Agreement unless otherwise expressly provided by Amazon.
Amazon's license does not include either self-help or revocation. If the Kindle is a networked computing device of the type protected by federal law, then the tampering with the content stored on that device could potentially be considered a federal crime. More likely, however, the interference with the devices done in a manner beyond the terms of service agreement will be considered a violation of the Federal Trade Commission Act.

Section 5(a) of the FTC Act, which provides that "unfair or deceptive acts or practices in or affecting commerce...are...declared unlawful." It is a broad, general catch-all. It was the statute that forced Sony to stop putting hidden encryption software on its music CDs, and will serve well in this case. Section 5(b) allows for administrative processes. Expect the FTC to respond to consumer complaints with an administrative process and an agreement by Amazon not to use its software tether in this manner ever again. Amazon will also pay a fine and the adminstrative costs of the investigation.

Whether this will satisfy the lawyers lining up to bring the class action lawsuit in this case remains to be seen. But I doubt it.

Given that the books deleted include George Orwell's Nineteen Eighty-Four, the lesson of a corporation being able to delete (or at least technologically - to alter) the text of a purchased book should not be lost on anyone. (A second irony is that a website has Orwell's complete works online.) This is more than a mere gaff. Amazon needs to be found liable for this mistake by a court or administrative process that makes it clear that companies cannot retain this right in their terms of service agreements.

So perhaps we should be thankful for the blunder Amazon has made. Deleting copies of Nineteen Eighty-Four should serve to provide another reminder of the liberties we take for granted and the technologies that have the potential to put those liberties at risk.




Comic-Con's Coming - the future of Entertainment


On July 22nd, the 40th anniversary of Comic-Con will grace San Diego with its assortments of Wizards, Warlocks, Elves, Demons, Vampires, Warriors, along artists, writers, software programmers, and filmmakers. A funny thing happened to the costumed prom for geeks and freaks - the event has grown into the cultural touchstone of new media.

The film program feature over sixty films - not counting the special screenings and other film events outside of the competition. (Self-interest disclosure: My client, Derrick Comedy will be presenting a panel and more regarding their upcoming release of Mystery Team.)

The striking aspect of Comic-Con's breadth is the way in which Internet culture has shifted towards Comic-Con's agenda. Comic books are not necessarily a larger industry than at other times in history. Comics have waxed and waned in different eras. But comics do not lend themselves to e-book readers and may have some resilience to avoid digitization. At the same time, comics have come to dominate epic film making. Comic books are inherently visual and easy to conceptualize on the big screen. Filmmakers should never give screenplays to prospective investors. They are simply too difficult to translate into the finished product and tend to read very flat. Comic books, on the other hand, translate the power and pacing of film on the page.

In addition to film, comic books translate elegantly into video games and virtual worlds, an increasingly critical aspect of modern culture. Comic book characters have come alive on game consoles and computer screens for years. With better avatar software and increasingly interoperable software platforms, the superheros, villains, monsters and myths are freeing themselves from their creators' formats to populate computers and devices of the audience's choosing.

So look to Comic-Con as a the new harbinger of taste. And remember to sharpen your broadsword.



July 14, 2009

Britan's "15 Certificate" rating results in two Bruno releases

According to a report in the L.A. Times, the upcoming British release for Bruno, the Sacha Baron Cohen mockumentary, will be released with both an 18+ rating and a 15 certificate, which allow those over 14 to see the film. The 15-certificate version will remove certain sexually explicit scenes identified by the British Board of Film Classification as inappropriate for the younger audience.


The L.A. Times points out that the British Board of Film Classification is a governmental rating board rather than the MPAA's CARA system which is voluntary for film distributors and technically voluntary for the exhibitors as well. The discretion of exhibitors makes this distinction largely illusory, however, since failure to abide with a company's adopted voluntary rating system is illegal in various jurisdictions.

The strategy of releasing multiple versions of the film theatrically is something that will be watched. The combination of "R-Rated" and unrated films is quite common for DVD release and adding both "R" and "NC-17" versions to a release for select markets is a strategy that could further entice audiences and erode the market barriers that exist for NC-17 films in the U.S.

July 08, 2009

NEA announces spending of $50 million stimulus dollars to 631 organizations


As reported by the Americans for the Arts:
The National Endowment for the Arts (NEA) announced their direct grants as part of the $50 million federal economic stimulus recovery package. The NEA will distribute $29.775 million to 631 nonprofit arts groups nationwide.  This is in addition to the 63 state and regional sub-grants previously awarded in April, totaling $19.8 million. 


A complete list of the grants can be seen here.

Under the rules established by the NEA, 40% of the stimulus funds were distributed to State arts agencies and regional arts organizations and 60% to qualifying nonprofit organizations. The primary use of the funds is for job retention. The NEA provided a registration period for agencies to seek the funding, in blocks of $25,000 or $50,000.

So far, the funding seems to have avoided reigniting the culture wars of the 1990's when a handful of controversial funding choices were used as leverage to politicize the agency. Critics, however, will watch the spending of these dollars closely to see that they meet the federal guidelines. Others will scrutinize the activities of the recipients with an eye on the programming.

If the model proves successful, it could mean a return to legitimizing art expenditures and embracing a culture of excellence. If the recipients find themselves caught up in political controversies, however, it could lead to a new round of culture debates during the midterm elections.

For now, at least, the 631 agencies have a few more dollars and a bit of help during the continuing great recession.

July 07, 2009

New Choices to Pay for Webcasts

SoundExchange and a group of Internet "Pureplay" webcasters today agreed upon a new royalty formula to keep the Internet-only radio stations alive on the Net. Pureplay stations are those stations that exist only through Internet music streaming; those that have no terrestrial or sattelite versions,

Authorized by the Webcaster Settlement Act of 2008, the agreement will have the force of law once it is published in the Federal Register.  Webcasters can elect to use this new settlement instead of the 2007 rates set by the Copyright Royalty Board. It uses a revenue sharing formula so that the costs of broadcasting are tied to the income generated by the broadcaster.


For this settlement, the agreement affects three rate classes are large pureplay webcasters, small pureplay webcasters (defined as those earning $1.25 million or less in total revenues with a cap on music streamed) and pureplay webcasters that provide bundled, syndicated or subscription services
. It does not address the concerns of microwebcasters with revenues below the $1.25 million threshhold.

As presented by SoundExchange "SoundExchange views these newly negotiated rates as an experimental structure intended to provide an innovative approach for a particular genre of webcasters and does not consider these terms indicative of fair market rates. Time will tell if revenue sharing is the right move for both the recording community and webcasters,” added John Simson, Executive Director of SoundExchange.

The settlement provides a floor of $25,000 in royalties, so it applies to companies with significant revenue.


The newest settlement is only one of a myriad of potential licensing schemes available for Internet broadcasters. At the other end of the pay spectrum, non-commercial, tax exempt charities (501(c)(3) organizations), pay only $500 plus a usage fee for programming in excess of 159,140 aggregate tuning hours in any given month.

The settlement remains good news that the Internet tubes will continue to be stuffed with music: at rates webcasters can afford - and hopefully with payments that will reach the artists.

Happy Listening.





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