Copyright

On September 17, 2014, Judge Jesse Furman dismissed world renowned artist Roger Dean's lawsuit against James Cameron and the motion picture Avatar.[ref]Dean v. Cameron, 2014 WL 4638355, Southern District of New York, 2014[/ref] If the name Roger Dean does not strike an immediate chord, be assured you have doubtlessly seen his work. He is best known for designing album covers and artwork for the band Yes, including the albums "Fragile," "Close to the Edge," "Relayer" and "Keys to Ascension."[ref]Roger Dean (artist)[/ref] He has also designed album covers for Uriah Heep, Asia, and Gentle Giant.[ref]Id.[/ref] Dean had alleged that the movie had copied elements from 14 of his paintings. These allegations were nothing new. Immediately upon the release of Avatar, numerous commentators noticed the similarity between Dean's work and the depiction of the planet Pandora in Avatar.[ref]Avatar Sparks New Interest In The Strange Visions That Inspired It[/ref] So obvious was the connection that Cameron was directly asked about it in an interview with Entertainment Weekly.[ref]'Avatar': Your Questions Answered[/ref] "Where did Cameron get the idea for the floating mountains? Was that from a Yes album cover? ‘It might have been,' the director says with a laugh. ‘Back in my pot-smoking days.'"[ref]Id.[/ref] I had very much the same experience when I watched Avatar. In particular, this scene immediately reminded me of Dean's cover to Yes' "Keys to Ascension." The Avatar scene is on top. Dean's art is on the bottom.

Before we enter into a full-fledged analysis of the Judge's decision, I must give the following cognitive bias alert: I am a huge fan of both the band Yes and Roger Dean's work. I have two of his books. So feel free to view my analysis through that prism. In my mind, the issue here is a test for infringement called "total concept and feel." The Second Circuit, which governs the District Court here, appears to be the originator of this test.[ref]Reyher v. Children's Television Workshop, 533 F.2d, Second Circuit Court of Appeals 1976[/ref] "Total concept and feel" arises because a "defendant may infringe on the plaintiff's work not only through literal copying of a portion of it, but also by parroting properties that are apparent only when numerous aesthetic decisions embodied in the plaintiff's work of art...are considered in relation to one another."[ref]Tufenkian Import/Export Venture v. Einstein Moomjy, 338 F.3d 127, at 134,Second Circuit Court of Appeals 2003[/ref] The Court here, makes a passing reference to the test of total concept and feel, but engages in absolutely no discussion of its elements or how they might apply to this case. This is a serious error in my opinion. Instead, the Court hamstrings Dean's case by insisting that only the individual paintings standing alone can be compared to Avatar and not Dean's body of work, stating "[n]othing in the Copyright Act or Second Circuit case law supports the view that a plaintiff's entire oeuvre, or even an aggregated portion of it, may be used as the point of comparison where the works included therein bear little or no relation to one another beyond ‘style.'"[ref]Dean at page 7 (citations are made to the original pagination of the opinion)[/ref] To say that a principle lacks support is not the same thing as saying the position is untenable. In fact, a District Court in California allowed the aggregation of elements from the (at the time) 16 James Bond films.[ref]Metro-Goldwyn-Mayer, Inc. v. American Honda Motor Co. 900 F.Supp1287, District Court for the Central District of California 1995[/ref] There, in granting the Plaintiff's motion for preliminary injunction, the Court specifically referenced elements from 5 different James Bond films.[ref]Id. at 1298[/ref] Next, the Court in Dean cites to the authority that "the underlying issue [is] whether a lay observer would consider the works as a whole substantially similar to one another."[ref]Dean at page 7 [/ref] Then two pages later, in a complete about face, states that the numerous examples of persons commenting on the similarities between Dean's work and Avatar are irrelevant. "It is well established, however, that the opinions of third parties—even experts—are irrelevant to a determination of substantial similarity."[ref]Dean at page 9[/ref] And yet, four pages later, the Court reverses itself again and pats itself on the back in that "the Court confidently conclude[s] that no average lay observer would recognize Avatar as having been appropriated from the copyrighted work,"[ref]Dean at page 13[/ref] despite the numerous examples to the contrary. If you are unsure on this point, do a search for "Roger Dean and Avatar" and take a look at the results. The final nail in the coffin for Dean's case appears to be the Court's belief that since Dean's work is a painting and therefore static, and Avatar's is a motion picture, and therefore fluid, one cannot be substantially similar to the other.[ref]Dean at 11[/ref] "[T]he fact that the "Hallelujah Mountains" appear in ‘a wholly dissimilar and dynamic medium, in which camera angles, lighting, and focus are changing' rapidly, [citation omitted] no reasonable jury could find that Defendants' and Plaintiffs' works are substantially similar."[ref]Id.[/ref] The Court then cites generally to a case, Warner Bros. v. American Broadcasting Cos.,[ref]720 F.2d 231, Second Circuit Court of Appeals 1983[/ref] which does not really support the proposition for which it is being cited. Let's go back to the fact that Cameron is admittedly familiar with Dean's work. Therefore, the question of access can be presumed, and in fact the Court agrees with this presumption.[ref]Dean at 7[/ref] Yet, remember, this is not summary judgment; this is a motion to dismiss. The judge has allowed no discovery at this point. No depositions have been taken of any of the persons who did the design work on Avatar. So, in the Court's own words "[t]o survive the motion, the complaint must "state a claim to relief that is plausible on its face."[ref]Dean at 5[/ref] So, we have access, plus the similarities which are plainly obvious to many people. The following are side to side comparisons provided by the Court in an appendix to the opinion. Dean's image is on the left. Avatar's is on the right. The Court makes much of the fact that Avatar's floating boulders are covered with vegetation, while Dean's are bare.[ref]Dean at 11[/ref] However, beyond that, the composition of the two has several similarities: 1) the floating boulders 2) the line of boulders starts out heading right, then veers left 3) a tall tree at the midpoint of the frame and 4) another large floating mass appears in the upper left quadrant. This seems to suggest that Dean's work was copied and then altered, which would make it a derivative work, and which would have required Dean's permission. Dean's image is on the left. Avatar's is on the right. This painting is very famous and was part of the multi-gatefold album "Yessongs."Agreed that one is a mountain and one is a tree. But the shape of the tree and that of the mountain almost duplicate each other, right down to the size and shape of the gap in the structure midway right of the shaft. Also, look at the placement of the images within the frame. Also, there is this. Dean's painting… And the corresponding image from Avatar. After a while, the coincidences begin to pile up. These "coincidences" all point to the same source: Roger Dean. So, I think at this stage of the pleadings that Roger Dean has at least stated a "plausible claim" that his work has been copied, with varying degrees of similarity, by those responsible for the art direction of Avatar. Certainly, he has stated a plausible claim that the "total concept and feel" of his work has been appropriated "by parroting properties that are apparent only when numerous aesthetic decisions embodied in the plaintiff's work of art...are considered in relation to one another."[ref]See note 8, supra[/ref] The Court tacitly admits as much when it states "the commentators cited by Plaintiff may well be correct that Defendants—wittingly or unwittingly—took some inspiration from Plaintiff, or even copied elements of his works in making their film."[ref]Dean at 13[/ref] This is the precise reason why the standard of "total concept and feel" is so important to this case, a standard which was virtually ignored by the Court, save for one passing reference. It would have been better to have the suit go forward. The discovery would then center on the persons responsible for creating these images. Precisely where and how did they come up with ideas and resulting visual images that wound up on screen? Perhaps we can then learn what the true source of the images is. The Court trots out the old trope that "[t]he copyright laws do not protect styles," but it is apparent that Dean's work is more than a "style." His subject matter is indeed "otherworldly" in that it depicts familiar objects such as trees and mountains, but in shapes and settings and with certain properties which are unknown on planet Earth. One such example is not only the floating land mass, but a source-less waterfall contained within that floating land mass, as seen here. Dean's image is on the left. Avatar's is on the right. All in all, there is far too much smoke to totally discount the existence of a fire, especially at the Motion to Dismiss stage of the case. As for the "court of public…opinion"[ref]Dean at 14[/ref] referred to by the Court, they have already weighed in and found the Defendant guilty. As one commentator put it, "[t]here is some convincing evidence of borrowing, shown here in the photos above and below and this has been discussed exhaustedly in forums online. Whether the might of the teams of lawyers representing Cameron and Fox will win, remains to be seen.[sic] We feel it would be sensible for Cameron to admit to being inspired by Mr. Dean's work, give him a title credit and a few million and bury it."[ref]Artist Roger Dean Sues Avatar Director James Cameron Over Plagiarism[/ref]

This blog has been running for three months now, and I want to thank everyone for their kind comments, and those who paid me the ultimate compliment by linking to my blog posts. Now it's time to take a look back at two topics which continue to generate debate.

"Transformative Use" Theory Rejected

Back on August 6, 2014, I devoted my blog post to the absolute mess that the "transformative use" test has made of fair use.[ref]Marching Bravely Into the Quagmire: The Complete Mess that the "Transformative" Test Has Made of Fair Use[/ref] In particular, I argued that the finding of transformative use was largely pushing the right of the author to control derivative works right out of the copyright statute. While I would be immensely flattered if my blog post influenced the decision yesterday by the Seventh Circuit Court of Appeals,[ref]Kienetz v. Sconnie Nation, LLC, 2014 WL 4494835, Seventh Circuit Court of Appeals 2104[/ref] I must confess that eventuality is extremely unlikely. Nevertheless, the unanimous opinion of the Seventh Circuit took exactly the same position I took in criticizing the Second Circuit's reasoning in Cariou v. Prince.[ref]Cariou v. Prince, 714 F.3d 694, 706 (2d Cir.2013)[/ref] The Seventh Circuit stated "[w]e're skeptical of Cariou's approach, because asking exclusively whether something is "transformative" not only replaces the list in § 107 but also could override 17 U.S.C. § 106(2), which protects derivative works. To say that a new use transforms the work is precisely to say that it is derivative and thus, one might suppose, protected under § 106(2). Cariou and its predecessors in the Second Circuit do no tex-plain [sic] how every "transformative use" can be "fair use" without extinguishing the author's rights under § 106(2). We think it best to stick with the statutory list." The Court later commented "The fair-use privilege under § 107 is not designed to protect lazy appropriators. Its goal instead is to facilitate a class of uses that would not be possible if users always had to negotiate with copyright proprietors. (Many copyright owners would block all parodies, for example, and the administrative costs of finding and obtaining consent from copyright holders would frustrate many academic uses.)"[ref]Kienetz v. Sconnie Nation, LLC, 2014 WL 4494835, Seventh Circuit Court of Appeals 2104[/ref] The Court nevertheless goes on to find fair use, in a case of where a copyrighted photograph of the Mayor of Madison, Wisconsin was reproduced on a T-shirt with a political comment directed at the Mayor, largely finding no harm to the market for the copyrighted work: "[A]s we have mentioned… [the photographer] does not argue that defendants' acts have reduced the value of this photograph, which he licensed to… [the Mayor] at no royalty and which is posted on a public website for viewing and downloading without cost."[ref]Id.[/ref] Alas, over in the District Court for the Southern District of New York, controlled by Second Circuit precedent, the transformative use test still holds sway. In the closely watched case of Fox News Network v. TVeyes, Inc.,[ref]Fox News Suffers Major Legal Defeat to TVEyes[/ref] the Judge was so enamored of the "transformative use" of TVeyes' copying and indexing service, that he held that the transformative use completely overruled the importance of factor two (nature of the work used) and factor three (the amount and substantiality of the taking).[ref]Opinion at page 21[/ref] This flies in the face of the Supreme Court ruling in Campbell v. Acuff-Rose Music, that one factor cannot act as a trump to the remaining three factors.[ref]Campbell v. Acuff-Rose Music, 510 US 569, Supreme Court of the United States 1994. " In giving virtually dispositive weight to the commercial nature of the parody, the Court of Appeals erred"[/ref] Indeed, as Terry Hart, over at the Copyhype website, notes, the Judge even waxed poetic over the "public benefit" to a service that is not available to the general public.[ref]Fox News v TVEyes: Fair Use Transformed[/ref] Nevertheless, I do agree with the overall outcome, as I do not see that TVeyes' indexing service is a realistic replacement for the market for Fox News' services. At least now, with a split between two Courts of Appeals, perhaps the Supreme Court will now take up the "transformative use" test, and give us some clear cut guidance on exactly what they meant when they first mentioned transformative use in Campbell.

Malibu Media Marches On

My July 2, 2014 blog post examined the facts underlying BitTorrent file sharing cases, with a particular focus on the tactics employed by so-called "copyright trolls."[ref]Copyright Infringement Litigation Over BitTorrent File Sharing: Truth or Troll?[/ref] In order to be a true copyright troll, the troll must make no effort to actually litigate the case. A copyright troll is only interested in using the subpoena power of the Court to extort settlements. This was the tactic employed by the Prenda Law firm, which since my blog post has suffered numerous Court setbacks and seems to be collapsing under the weight of Court imposed monetary sanctions.[ref]Lightspeed Media v. Smith, 2014 WL 3749128 Seventh Circuit Court of Appeals 2014[/ref] However, Malibu Media marches on, and has collected at least two more judgments outside of the one won in the Eastern District of Pennsylvania in 2013.[ref]Malibu Media, LLC v. Does, 2013 WL 3948812, Eastern District of Pennsylvania 2013[/ref] The first was a default judgment obtained in the Northern District of Indiana, where it was awarded $36,000.00 for the infringement of 24 copyrighted videos, at a rate of $1,500.00 per work infringed.[ref]Malibu Media, LLC v. Cowham, Slip Opinion, Northern District of Indiana[/ref] Also awarded was $1,607.00 in attorneys fees and costs. They also received summary judgment in a contested hearing in the Western District of Michigan.[ref]Malibu Media, LLC v. Bui, Case No. 1:13-CV-162 District Court for the Western District of Michigan, Southern Division[/ref] This case was notable because the defendant claimed he had no idea how BitTorrent worked, and therefore had no idea that what he was doing was infringing. He managed to say this with a straight face even though he wound up with 57 of the Plaintiff's copyrighted videos on his computer. While the Judge dismissed his intention as irrelevant to the question of liability, there is a bit of method to this madness. The Copyright Act's section regarding statutory damages provides that "[i]n a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200."[ref]17 USC 504 (c)(2)[/ref] Remember though, that this award is per work infringed and that $200 multiplied by 57 works is still $11,400.00, plus attorneys fees and costs. Yet if the benchmark award in the same Circuit is $1,500.00 per work infringed, that would mean the statutory damages would be $85,500.00, plus attorneys fees and costs, a savings of nearly $75,000 to his client if he can pull off this rather cheeky defense. Another strange defense that has cropped up in the Malibu Media cases is that some Defendants are claiming that the actors in Malibu Media's videos are underage and thus the videos constitute illegal child pornography. Why anybody would claim this is puzzling, because if the allegation is true, this would mean that the defendants knowingly downloaded and retained child pornography, making them as criminally liable as Malibu Media. As of this blog post, Malibu Media files more copyright infringement suits than anyone else.[ref]The Biggest Filer of Copyright Lawsuits? This Erotica Web Site[/ref] As quoted by the New Yorker magazine, Ben Depoorter, a professor at the University of California, Hastings College of Law, noted "If you're filing three lawsuits per day, that very much looks like an abusive model. Some judges may say this looks like a business model. On the other hand, infringement is infringement."[ref]Id.[/ref]

The ugly side of the internet was on vivid display last week. One or more persons still unknown engaged in a prolonged hacking attack to access the personal photographs of various celebrities in which they appeared fully or partially nude, including academy award winning actress Jennifer Lawrence, model Kate Upton, actress Kirsten Dunst, actress Mary Elizabeth Winstead,[ref]Jennifer Lawrence 'iCloud' Hack: How Did It Happen, And Should You Be Worried?[/ref] and Olympic Gymnast Mykala Maroney.[ref]The Leaked Photos Of McKayla Maroney Were Taken When She Was Underage, And Reddit Is Freaking Out[/ref] These photos were then leaked over the internet for all to see. In the case of British TV actress, Jessica Brown Findlay, a short sex tape was posted.[ref]How Google helped web users watch the Downton star sex tape: Search giant criticised after link to video appeared on first page of searches[/ref] The package of photos and videos had apparently been floating around the dark corners of the internet for some time, under the title "Major Win."[ref]Celeb hacker 'on the run': FBI investigates as mystery man who calls himself 'OriginalGuy' claims responsibility for stealing hundreds of stars' nude photos[/ref]  That a sickening invasion of peoples' privacy is seen as a "major win" tells you a lot about the hacker community that is responsible for this. Mykala Maroney, Ariana Grande and Victoria Justice all denied the pictures were authentic, since faking a nude photo of a celebrity is all too easy in the era of Photoshop. Grande insists that the photos are not of her and has not backed off that claim.[ref]'Who thought they were actually me?' Ariana Grande shares sexy selfie after claiming leaked photos were fake and telling fans her 'a** is a lot cuter'[/ref] Justice later admitted they were real, and threatened legal action.[ref]Victoria Justice Is Taking Legal Action After Nude Photo Hack[/ref] Maroney also later admitted the photos were real, but with a twist. She was only 16 when the photos were taken, making them illegal child pornography.[ref]The Leaked Photos Of McKayla Maroney Were Taken When She Was Underage, And Reddit Is Freaking Out[/ref] The photos were first leaked to a website known as 4Chan, a site, according to Jonathan Bailey at Plagiarism Today, which is an "anonymous message board that is infamous for shocking and offensive content."[ref]3 Count: 4Chan 4 Takedown[/ref] From there, the package spread to Reddit, under the sub-reddit tag of "The Fappening," a title combining the words "happening" with "fap," a slang term for masturbation.[ref]4Chan Will Now Remove Awful Images-If They're Copyrighted[/ref] The Fappening proved so popular that the enormous amount of visitors to Reddit looking for the photos threatened to crash the entire Reddit site.[ref]Time to talk[/ref] The distribution of these photos was illegal on at least four levels:

• They were the result of the illegal hack of private databases
• They were an invasion of privacy
• They were infringements of copyright
• In the case of Mykala Maroney, they were illegal child pornography

There was no doubt that the images were protected by copyright, and the celebrities had the right to demand their removal. The photos were either "selfies" in which the celebrity owned the copyright, or someone intimately involved with the celebrity took the photo and could assert a copyright claim. Reddit asserts it was under no legal obligation to prevent the posting of such illegal material in the first place, all because of the DMCA.[ref]Every Man Is Responsible For His Own Soul[/ref] Under the DMCA, Reddit has "safe harbor" immunity against any copyright infringement liability that comes from user posted content.[ref]17 USC 512[/ref] Their only obligation is that once informed by a DMCA takedown notice, they are to act "expeditiously to remove, or disable access to, the material."[ref]Id.[/ref] What constitutes an "expeditious" time is subject to debate. For its part, the ever helpful Google listed the Jessica Brown Findlay sex video on the very first page of search results for her name for more than eight hours.[ref]How Google helped web users watch the Downton star sex tape: Search giant criticised after link to video appeared on first page of searches[/ref] It was viewed over 500,000 times, and then copied to social media and pornography sites, where it received another 600,000 hits.[ref]Id.[/ref] Google has now pushed that particular search result back, but not removed it.[ref]Id.[/ref] The website that hosted the material has now removed it,[ref]Id.[/ref] but clearly the damage has been done. The digital nature of the file ensures that it is still out there on the internet somewhere. Reddit did respond to the DMCA takedown notices, only to find the material instantly re-posted.[ref]Time to talk[/ref] This is the phenomenon known as "whack-a-mole" which was discussed in a previous blog post.[ref]DMCA "Takedown" Notices: Why "Takedown" Should Become "Take Down and Stay Down" and Why It's Good for Everyone[/ref] These, of course, generated another stream of takedown notices, which in turn, of course, generated another stream of re-postings.[ref]Time to talk[/ref] The constant game of whack-a-mole not only consumed vast resources of time and effort by the Reddit staff, but due to the constant re-posting of photos of Mykala Maroney, which constitute child pornography, exposed Reddit to serious criminal liability.[ref]Id.[/ref] In the end, Reddit gave up and banned the entire thread, and all resulting subthreads.[ref]Every Man Is Responsible For His Own Soul[/ref] Of course, the Fappening package is still available from the Pirate Bay, and is their most popular download.[ref]Celeb Nude Leaks and the Future of Privacy and Copyright[/ref] This demonstrates the unintended consequences of the DMCA takedown provisions. If there was strict liability, most of this would never have happened, as such obviously infringing and illegal material would not have been allowed to be posted in the first place. It would not prevent illegal posting totally because there are always people like the Pirate Bay, who could not care less that they are invading people's privacy and distributing child pornography. By placing the burden on the copyright holders to police the internet, the DMCA ensures that infringing material will be posted and available for at least a period of time sufficient to ensure that the illegal copy is widely disseminated. The rule that the takedown must happen "expeditiously," again ensures that the illegal copy remains available after the notice is received, until the website gets around to removing it. In one documented instance, this took months.[ref]One small victory against Google Blogspot movie piracy, yet many more battles remain[/ref] And lastly there is the whack-a-mole problem. The DMCA only provides that the web site take the material down. It does not place any duty on the website to take down re-posts, unless of course they get another DMCA takedown notice. This is a process which just repeats and repeats as if it is a film loop. What is interesting is the outrage that the Fappening has produced. It is a bit of a curiosity when one considers the fact that what happened to celebrity photos is no different than what copyright content providers have been facing for years. David Lowery at the Trichordist observes, "The same mentality and arguments that make it acceptable to hack and post personal photos have been used as an excuse to ignore the massive, for profit, theft of personal copyrighted works for more than a decade. Neither is acceptable. As the future of music is tied to ad funded piracy, so is privacy tied to internet profits by the same lack of personal consent."[ref]Our Songs = Your Photos & Privacy: After a Week of "Whack-a-Mole" Reddit Bans Celebrity Photo Forums[/ref] Usually any attempt to protest the large scale hijacking of copyrighted works devolves into a debate on the merits of copyright in general, with the inevitable charge that content creators are somehow dinosaurs riding a failed business model. Absolutely none of those arguments apply here, yet the result is exactly the same. The material is copied and passed around the world with a total disregard for the rights of the people involved, and when removed, it is re-posted, time and time again. Plainly, the whole "copyright is dead" line of thought is merely an excuse to engage in illegal conduct that people wish to do anyway. As Jonathan Bailey of Plagiarism Today eloquently put it, "When the rights and wishes of others are easy to ignore and "because I can" becomes a valid reason to do something, no one is safe." …"And that is the scary thing. Today it's Jennifer Lawrence, tomorrow it could be you, your spouse, your best friend or your child."[ref]Celeb Nude Leaks and the Future of Privacy and Copyright[/ref] Copyright is the one tool that one has that has the chance to be effective against malicious hacking such as the Fappening, and its partner in crime "revenge porn," i.e. the deliberate posting of nude and sexually explicit photos of a former romantic partner to get back at them.[ref]Why Revenge Pornography Matters[/ref] As opposed to the only other available methods, namely lawsuits and trying to convince a State or Federal prosecutor to take action, a DMCA notice can be done rather quickly, though, as pointed out above, not so quick as to eliminate the problem. Yet to be truly effective, takedown needs to be "take down and stay down" as proposed by my previous blog. Otherwise, more Fappenings will occur, and the result will be the same. There is one interesting postscript to all of this. The site that started it all, 4Chan, may be in for some serious liability here. It seems that since their website operates to remove all posts very quickly (presumably in an effort to constantly drive traffic to the site) they neglected to appoint a registered agent to receive DMCA takedown notices. [ref]4Chan Will Now Remove Awful Images-If They're Copyrighted[/ref] The appointment of a DMCA registered agent is an absolute requirement to receive safe harbor protection.[ref]17 USC 512 (c)(2)[/ref] So, 4Chan has no safe harbor, and can be held directly liable for the infringing material posted on its site. Let's hope that one of these aggrieved ladies makes them pay royally for this shameful violation of their privacy.

Earlier this year, the Supreme Court of the United States decided the case of Kirtsaeng v. John Wiley & Sons, Inc., [ref]133 S.Ct 1351 (2104)[/ref] and held that section 109 of the Copyright Act, also known as the "first sale doctrine," applied to physical copies of books which were acquired abroad.[ref]Id.[/ref] I spoke about this holding with an old friend from law school, who represents a major book publisher. His opinion was that the holding would ultimately not cause much harm to the publishing business, as everything was moving to "e-books," which were going to be acquired online, under a license, rather than a sale. This is the model that the computer software industry has been riding for years. Since your copy of your computer program was acquired by license, not by sale, you have no right of resale.[ref]Vernor v. Autodesk, Inc. 621 F.3d 1102 Ninth Circuit Court of Appeals (2010)[/ref] It has also been held that the first sale doctrine does not extend to digital files.[ref]Capitol Records, LLC v. ReDigi, Inc. 934 F.Supp.2d 640 Southern District of New York (2013)[/ref] The holding was made narrowly, namely that the first step in "reselling" a digital file was making an unauthorized copy.[ref]Id. at 650-651[/ref] Yet the court could have reached the same conclusion by holding that a purchase from iTunes is a license, not a sale to which the first sale doctrine would not apply in any event. So, since we now know that the first sale doctrine does not apply to the digital realm, is the doctrine of fair use the next to go? It seems that the movement in that direction has already been made. Kevin Smith holds a position equivalent to mine at Duke University, where he is the Scholarly Communications Officer.[ref]Scholarly Communications @ Duke - About[/ref] He recounts in his blog an attempt by Universal Music Group to restrict library uses of a recent recording by Gustavo Dudamel and the Los Angeles Philharmonic of Hector Berlioz's famous work, the Symphonie Fantastique.[ref]Planning for musical obsolescence[/ref] Sold only as a digital download from iTunes, it is licensed for "personal use" only.[ref]Id.[/ref] Under Section 108 of the Copyright Act, a library has certain rights to make archival copies of sound recordings. However, the Copyright Act also provides that this right can be superseded by "contractual obligations assumed at any time by the library or archives when it obtained a copy or phonorecord of a work in its collections."[ref]17 USC 108 (f)(4)[/ref] So, it would seem that the license would cancel out the statutory rights granted to the library by Congress. Mr. Smith goes on to recount efforts of the University of Washington to get UMG to license the recording, which was met with restrictions that only 25% of the work would be licensed for a $250 "processing fee" with additional charges to come.[ref]Planning for musical obsolescence[/ref] That's pretty outrageous for a musical work which is in the public domain, for which there are numerous other recordings available.[ref]Berlioz: Symphonie Fantastique[/ref] So, any library wishing to have a good quality recording, will avoid this recording completely. So what about educational exemptions? Section 110 allows me to perform complete works in the course of face-to-face teaching activities. Am I now prevented from doing so because of the restrictions that it be for personal use only? Section 110(2), also known as the TEACH Act allows me as a not for profit educational institution to digitally transmit all of a non-dramatic musical work. Is this now off the books as well? And, ultimately, what of fair use itself? Section 107 provides for two general areas in which the exclusive rights of copyright give way to larger concerns. The first of this is free speech, so the section provides that uses for purposes of criticism, commentary and news reporting are all favored. The second area is education, so purposes such as teaching (including multiple copies for classroom use), scholarship and research are all favored uses. In Cambridge University Press v. Becker, three scholastic textbook publishers sued the Board of Regents of Georgia State University for 126 counts of copyright infringement.[ref]863 F.Supp 1190, at 1201, District Court for the Northern District of Georgia (2012)[/ref] All of the counts were excerpts from books that were digitized and placed online. While the Court found the uses were fair use in all but five cases, the question arises: if the books had been obtained electronically, and by license not by sale, could the publishers in effect have said "No copying allowed," "Not even a little bit" and "Fair use defense is hereby waived?" Two Circuit Courts of Appeal have considered the question of whether a license, as opposed to a sale, can effectively waive the right of the licensee to engage in fair use. Both have answered the question in the affirmative.[ref]Davidson & Associates v. Jung, 422 F.3d 630, Eight Circuit Court of Appeals (2005); Bowers v. Baystate Technologies, Inc. 320 F.3d 1317, Court of Appeals for the Federal Circuit (2003)[/ref] The two cases involved reverse engineering of computer programs. Reverse engineering has been held to be "fair use" under the Copyright Act.[ref]Atari Games Corp. v. Nintendo of America, Inc., 975 F.2d 832 Court of Appeals for the Federal Circuit (1992)[/ref] The licenses for both programs prohibited reverse engineering by the licensee. The defense claimed that the breach of contract claims for violating the "no reverse engineering" portion of the license, were effectively pre-empted by Federal Copyright Law.[ref]Baystate at 1323[/ref] "A state cause of action is preempted if: (1) the work at issue is within the subject matter of copyright as defined in §§ 102 and 103 of the Copyright Act, and (2) the state law created right is equivalent to any of the exclusive rights within the general scope of copyright as specified in § 106."[ref]National Car Rental Systems v. Computer Associates International, Inc. 991 F.2d 426 Eighth Circuit Court of Appeals (1993)[/ref] The Court of Appeals for the Federal Circuit explained it this way: "The Copyright Act provides that "all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright ... are governed exclusively by this title." 17 U.S.C. § 301(a) (2000). The First Circuit does not interpret this language to require preemption as long as "a state cause of action requires an extra element, beyond mere copying, preparation of derivative works, performance, distribution or display."[ref]Baystate at 1324[/ref] Applying this to the reverse engineering cases, reverse engineering is not equivalent to any the exclusive rights of Section 106 and therefore not pre-empted by the Copyright Act. The partial dissent in Baystate went even further: "I nonetheless agree with the majority opinion that a state can permit parties to contract away a fair use defense or to agree not to engage in uses of copyrighted material that are permitted by the copyright law, if the contract is freely negotiated."[ref]Baystate at 1337[/ref] This holding was later cited adopted in full by the Eighth Circuit,[ref]Davidson at 639[/ref] and the District Court for the Western District of Texas.[ref]Neon Enterprise Software, LLC v. International Business Machines Corp. WL 2036674 Western District of Texas (2011)[/ref] Applying this rationale to other uses, a violation by a licensee of an agreement not to use a computer program to process data by third parties was not pre-empted by the Copyright Act.[ref]National Car Rental Systems v. Computer Associates International, Inc. 991 F.2d 426 Eighth Circuit Court of Appeals (1993)[/ref] Similarly, a license agreement not to make commercial use of a database licensed for consumer use only, was also not pre-empted.[ref]ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 Seventh Circuit Court of Appeals (1996)[/ref] But does this really settle the question? Consider the following proposition: In my license agreement, I provide that you as the licensee may not engage in any public negative commentary, negative news reporting or negative criticism of my book, musical composition, computer software and the like. This flies in the face of not only Section 107 of the Copyright Act, which specifically says one can engage in criticism of commentary of the work, and even borrow from the work to do so, but the free speech rights guaranteed by the First Amendment. Yet the case law may lead us to the conclusion that this is enforceable. The ability to engage in criticism and commentary is not equivalent to the rights contained in Section 106, and thus is not pre-empted by the Copyright Act. But can people really contract away free speech? Yes, this is done every day when legal disputes are settled and the parties agree not to disclose the terms of the settlement agreement to third parties, and not to discuss the terms publicly, and not to say disparaging things about the other party, with penalties for violations.[ref]See e.g. Baella-Silva v. Hulsey, 454 F.3d 5, First Circuit Court of Appeal (2006) ; Nwachukwu v.St. Louis University, 114 Fed. Appx 264, Eighth Circuit Court of Appeals (2004); United States v. Glens Falls Newspapers, Inc., 160 F.3d 853 Second Circuit Court of Appeals (1998)[/ref] What makes this scenario all the more likely is that virtually no one reads the license agreement before clicking "I accept." Did you know that you are prohibited under the terms of the iTunes End User License Agreement (EULA) from using the iTunes software in the development of nuclear, chemical or biological weapons? Yes, you are.[ref]You Can't Use iTunes To Make Nuclear Bombs And Wage Chemical Warfare[/ref] But the circumvention of a "no criticism" clause should be fairly easy, without having to go to Court over whether such a blatant overreach into restricting free speech would be found to be legal. I simply purchase a copy of the book, music or software, and then let you evaluate it. Since the license runs to me, not to you, you are free do so. "A copyright is a right against the world. Contracts, by contrast, generally affect only their parties; strangers may do as they please, so contracts do not create ‘exclusive rights.'" [ref]ProCD at 1454[/ref] One would hope that the potential for public backlash against a "no criticism license" would prevent someone from attempting this, but my guess is that somewhere down the road someone is going to try it. The more real possibility is that the ability of a downstream user to engage in fair use by making excerpts is going to be threatened by the use of restrictive licensing. This is one of the latent underpinnings of the Georgia State case. Remember that all 126 counts were related to material that was digitized and placed online.[ref]Id. at endnote 12[/ref] Additionally, the not listed, but nominal Plaintiff in this action was the Copyright Clearance Center, a business devoted to selling digital excerpts of textbooks, who was paying 50% of the legal fees incurred by the Plaintiffs.[ref]Id. at 1212-1213[/ref] The outcome was a rather stinging defeat for the Plaintiffs. Only five uses by Georgia State were found to be infringing, due to the application of the laws regarding fair use. The case is now on appeal to the Eleventh Circuit. Should the Eleventh Circuit largely affirm the judgment of the District Court, I will guess that an effort will be made to reduce fair use by restrictive licensing. Under Section 107, I as an educator am allowing to make "multiple copies for classroom use," as long as the use is not so expansive as to violate the four factors which govern fair use. In addition, Section 110 (2), known as the TEACH Act, allows me to place reasonable and limited excerpts online for students enrolled in my class to use. So now, in order to protect their market share, will the textbook publishers provide in their e-book licenses that no copying and no excerpts are allowed at all, no matter how small? Will this stand up to a legal challenge? As discussed above, the Courts have said that you can contract around fair use, but only if the contract restriction is not equivalent to one or more of the exclusive rights under Section 106. Then, the Copyright Act will pre-empt the State breach of contract claim. So, if a publisher were to place a restriction that no copying and no excerpts were to be allowed, and digital excerpts could not be made nor posted for teaching purposes, this would seem to be equivalent to three of the exclusive rights: 106 (1) [the right] to reproduce the copyrighted work in copies or phonorecords; the publication right of 106 (3) namely [the right] to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; and 106 (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, [the right] to display the copyrighted work publicly. Since the downstream restrictions would be largely equivalent to the exclusive rights protected by Section 106, then the Copyright Act would pre-empt the license agreement, and the ability to claim the protections of fair use would be revived. Please don't get too excited, for there is a way around this. When I was in private practice, I issued countless licenses for client's songs to be recorded by others, known in the music business as a "mechanical license." The inherent problem was what to do if someone stopped paying the client. The rate for mechanical licenses was pennies, just 9.1 cents per copy sold. So, unless a huge amount of copies were sold, and not paid for, it would not be worth going into Court for breach of contract. The solution to this was to provide in the license that if payment was delinquent, that the license could be cancelled. If the license was cancelled, and the record company continued to distribute copies of the song, this would constitute copyright infringement, with the potential for statutory damages being now available. This is the tactic that I believe the publishers will take. And I don't think that I'm giving away any great ideas, the publishers have smart lawyers on their staffs as well. The license will contain language to the effect that, if violated, the publisher has the right to cancel the license. If cancelled, then the educational institution would then have to delete all electronic copies and excerpts for the digital e-book, sound recording, computer program or what have you from its computer networks. You can't keep the copies, because remember this is a license to use, and not a sale, and the first sale doctrine does not apply. Failure to do so, and continued use of the previously licensed materials, would constitute actionable copyright infringement, with no fair use defense, because there would be no copies which were lawfully retained. So, the possibility that licensing will put a hamper on fair use is more than mere speculation. It's just a matter of time before some publisher is going to try this. Will the economic reserves of the publisher be enough to stave off the backlash from the major universities? The solution is not readily at hand. Though Congress is looking to revamp the Copyright Act, it would be a tough sell to lobby for a remedy to something that is not yet a problem. So, I guess we're just waiting for that shoe to drop.