Copyright

HBO's series Game of Thrones has been one of the most popular TV series for quite some time.[ref]Game of Thrones Piracy Hits Record High Despite HBO's Stand-Alone Service[/ref] It is also one of the most pirated shows for that same period of time.[ref]Game of Thrones Piracy Surges to New High[/ref] One the first (and most popular) blog posts here cited the fact that 1.5 million people had illegally downloaded Game of Thrones' second episode within hours of it airing.[ref]Copyright Infringement Litigation Over BitTorrent File Sharing: Truth or Troll?[/ref] Over time, it gets worse. This year, the premiere drew 8 million viewers. It also drew 13 million pirates.[ref]Game of Thrones Piracy Surges to New High[/ref] What makes it interesting is those 13 million pirates could have, if they wanted to, watched the show legally, for free.[ref]About HBO NOW[/ref] The excuses for piracy of Game of Thrones all just got blown out of the water. The same tired excuses for piracy get repeated over and over:

• The content (whatever it's form) is too expensive, so I just take it for free.
• HBO does not make it available in my country at the same time in the US, so I just take it for free.
• I don't want to have to pay for a cable subscription and for HBO, so I just take it for free.

Google, for its part, also repeats the same tired excuse for piracy over and over: "Google's advice for the best way to combat piracy? Content owners should provide ‘better, more convenient, legitimate alternatives.'"[ref]Google Positions Itself as a Leader in Fighting Web Piracy: Company has been taken to task for not doing enough to fight copyright issues[/ref] Google, BitTorrent pirates, meet "HBO NOW." Like Netflix, you can now get HBO streamed directly to you.[ref]About HBO NOW[/ref] "To use HBO NOW in your browser, you need a laptop or desktop computer running either Mac OS X version 10.6 or later, or Microsoft Windows Vista or later. In addition, you'll need one of the following support browsers updated to at least the version shown:

• Internet Explorer 10
• Safari 7
• Chrome 37
• Firefox 31"[ref]What devices is HBO NOW compatible with?[/ref]

I think that covers a large majority of those who have been using BitTorrent to download Game of Thrones. So what does this service cost? Currently, $14.99 a month,[ref]How much does HBO NOW cost?[/ref] a lot less than a pirate is probably paying for their internet connection. In addition, HBO is offering up a free trial period.[ref]Id.[/ref] So, as this article in Entertainment Weekly succinctly pointed out: "HBO offered a 30-day free trial of the service in April that subscribers could cancel at any time—so users could have binged the entire series legally and for free."[ref]Game of Thrones Piracy Hits Record High Despite HBO's Stand-Alone Service[/ref] And here's the kicker: For regular HBO subscribers, HBO made the premiere of Game of Thrones available in 170 countries at the same time.[ref]Game of Thrones to Finally Air Around the World at the Same Time[/ref] So, effectively, HBO has called Google's bluff. HBO did exactly what Google recommended: they set up an easy, convenient and inexpensive way to deliver their programming. And guess what, people still pirated the work to the tune of 13 million people. HBO called the pirates' bluff as well. Going beyond cheap and easy, HBO made the premiere of Game of Thrones available during a free trial and made it available virtually everywhere simultaneously. And guess what, more people pirated Game of Thrones than watched it legitimately. Face it; pirates take stuff because they can get something of value for free, without any real fear of negative repercussions, either by way of a lawsuit or the local gendarmes showing up at their door. Which is what would happen if you took something of value without paying for it if it were a tangible object. As a final note, in a situation fraught with irony, the pirate BitTorrent site Demonoid is now blocking people who try to access their site with their Ad-Block software turned on.[ref]Demonoid Blocks Adblock Users - Fair or Fail?[/ref] "Demonoid informs [Torrent Freak] that ad revenue has decreased a lot plus the site has had difficulty collecting money from affiliates. The site can accept donations via Bitcoin but Demonoid says that users are reluctant to use it. ‘We need to implement some measures, or we face closure,' the site concludes."[ref]Id.[/ref] At least one outraged pirate has stated that he will now "boycott the site."[ref]Id.[/ref] You mean to tell me there is no honor among thieves? Welcome to the modern internet world.

The case of Adjmi v. DLT Entertainment[ref]2015 WL 1499575 U.S. District Court for the Southern District of New York 2015[/ref] pitted the production company behind the 1970's sitcom Three's Company against the play 3C, which it contended illegally copied many aspects of the popular sitcom. Once again, the specter of "transformative use" threatens to make meaningless the author's right to control derivative works. Given that the Three's Company case was being tried in the Southern District of New York, the outcome was hardly surprising. This district is under the rule of the Second Circuit Court of Appeals, a court entirely smitten with the broadest possible interpretation of the "transformative use" test. As seen previously on this blog,[ref]Marching Bravely Into the Quagmire: The Complete Mess that the "Transformative" Test Has Made of Fair Use[/ref] with the Second Circuit's decision in Cariou v. Prince [ref]714 F.3d 694 Second Circuit Court of Appeals 2013[/ref] "the… [court] decide[d] that it is no longer necessary for the new work to comment on the borrowed work or popular culture. In other words, it need not be a commentary on anything. ‘We agree with [Defendant] that the law does not require that a secondary use comment on the original artist or work, or popular culture, and we conclude that twenty-five of Prince's artworks do make fair use.'  For this rather breathtaking departure from previous case law, there is not one single citation to any authority as to why this is so."[ref]Marching Bravely Into the Quagmire: The Complete Mess that the "Transformative" Test Has Made of Fair Use citing 714 F.3d 694 Second Circuit Court of Appeals 2013[/ref] To recall just a bit, Three's Company concerned Jack, an aspiring chef, Chrissie, a dim-bulb blonde minister's daughter and Janet, a brunette florist, who share an apartment together in a platonic relationship.[ref]Three's Company[/ref] The "situation" that the comedy revolved around was that Jack, in order to remain in the apartment, had to pretend that he was gay, so as not to be forcibly removed by the ultra-conservative Mr. Roper.[ref]Id.[/ref] The set-up of 3C is nearly identical. The male lead is an aspiring chef, the blonde female is a minster's daughter and the brunette female is a florist.[ref]2015 WL 1499575 at page 6[/ref] 3C, even though it clearly is derived from Three's Company (which itself is derived from a British sitcom Man About the House)[ref]Three's Company[/ref] does take the step of changing all of the lead characters' names. The only real twist in the set-up is that the male lead character, Brad, really is gay.[ref]2015 WL 1499575 at page 9[/ref] 3C came to the attention of DLT Entertainment when the play was produced off-Broadway in 2012. The run proved successful enough that Adjmi, the playwright, had received offers to publish and license 3C.[ref]2015 WL 1499575 at page 1[/ref] Upon receipt of DLT's cease and desist, he filed a declaratory judgement action for a finding of non-infringement.[ref]2015 WL 1499575 at page 1[/ref] In the opinion, the Court engages in a lengthy recitation of the plots of several episodes of Three's Company and then compares it to the screenplay of 3C. All through this, the Court continually refers to 3C as a "parody" of Three's Company, when in fact it seems that 3C is not a parody at all. Dictionary.com defines parody as "a humorous or satirical imitation of a serious piece of literature or writing."[ref]Dictionary.com-parody[/ref] The Free Dictionary defined parody as "A literary or artistic work that uses imitation, as of the characteristic style of an author or a work, for comic effect or ridicule."[ref]The Free Dictionary-parody[/ref] Utilizing the Court's own recitation, there is very little that is funny or humorous about 3C. The Court continually informs the reader that 3C is "dark" and "a nightmarish version" of Three's Company, which reimagines the show in a "darker, exceedingly vulgar manner."[ref]2015 WL 1499575 at page 13[/ref] "3C proceeds in a frenetic, disjointed and sometimes philosophical tone. It is often difficult to follow and unrelentingly vulgar. The same could not be said of any episode of Three's Company."[ref]2015 WL 1499575 at page 14[/ref] How is this a parody? The Court continually cites to Acuff-Rose v. Campbell,[ref]114 S.Ct. 1164 Supreme Court of the United States 1993[/ref] the Supreme Court case that started the whole "transformative" mess. Problem is, the song "Hairy Woman" was a parody of "Pretty Woman." It ridiculed the song through the use of humor. It is very hard to see how 3C is a parody of Three's Company. The Court also calls the Eleventh Circuit case of The Wind Done Gone a parody of Gone With the Wind, which it clearly was not.[ref]Suntrust Bank v. Houghton Mifflin 268 F.3d 157 Eleventh Circuit Court of Appeals 2001.[/ref] Also, the Court ignores this warning from the Supreme Court in the very same opinion. What is not permissible are instances where the copier merely "uses [the material] to get attention or avoid the drudgery in working up something fresh…"[ref]114 S.Ct. 1164 Supreme Court of the United States 1994 at 117[/ref] To me, it seems that 3C is guilty on both counts. 3C uses Three's Company both as a method for attracting attention to itself, by referencing the TV show in its title, and using the very well-known plot points of the TV sitcom to avoid having to create new characters, new backstories and new situations. It could have made its sociological and political points very clearly without the wholesale lifting from Three's Company. Using instantly recognizable set-ups, characters, themes, plots and backstories just made Adjmi's work a lot easier. As to the four "fair use" factors, once again the finding that 3C is "transformative" virtually trumps all other factors in the eyes of the Court. "The purpose and character analysis assumes that the alleged parody will take from the original; the pertinent inquiry is how the alleged parody uses that original material."[ref]2015 WL 1499575 at page 12[/ref] Once again, the Court is assuming that 3C is in fact a parody, when in fact is seems that 3C is using the familiar framework and plot points of Three's Company to make sociological, political and ethical points unrelated to Three's Company. Predictably, the Court finds 3C "highly transformative" and that "[t]his determination weighs heavily in a finding of fair use."[ref]2015 WL 1499575 at page 14[/ref] It dismisses the second factor, "the nature of the copyrighted work," in two paragraphs ruling that "this factors weighs in favor of DLT, but assumes less importance in the overall fair use analysis."[ref]Id.[/ref] As to the third factor, the amount and substantiality of the portion used, the Court doubles down on the whole idea that 3C is a parody. The Court admits that "3C copies extensively from Three's Company" but reminds us that "the Court of Appeals has consistently held that a parody under the fair use doctrine is entitled to more extensive use of the original work that is ordinarily allowed under the substantial similarity test (citation omitted)."[ref]Id.[/ref] As for the fourth factor, market harm, the Court again reverses its own logic by declaring that 3C is so different from Three's Company that there is no market harm. It quotes a review of 3C which calls it a reworking of the "original fluffy good humor into deep dysthymia and near suicidal depression, using absurdism and existentialism overdoes with Chekovian angst."[ref]2015 WL 1499575 at page 16[/ref] Again, this is a parody? It seems that within the Second Circuit and the Southern District of New York, the right of the author to control derivative works under 106(2) no longer exists. As long as the work is judged to be "transformative," it need not even comment on the original. Shouldn't the author have the right to object to taking from its work for interpolation into a "darker" and "exceedingly vulgar" reworking that even the Court admits frequently makes no sense. If it does not have the right to object, then what does the right to control derivative works under 106(2) mean? Apparently, it means nothing, as long as a Court can wave its magic wand and utter the spell "transformative" making the author's rights vanish from the Copyright Act.

What do YouTube, Pandora and Spotify have in common? Yes, they are all streaming services, but what links them together is that none of them earn a profit. Wait, let's go further. They have never earned an annual profit in all the years they have been in business. Google purchased YouTube in 2006 for $1.6 billion dollars.[ref]YouTube: 1 Billion Viewers, No Profit[/ref] Despite having one of the world's most cash rich businesses as their owner, and despite $4 billion in revenue, YouTube in the nine years since its purchase has never turned a profit.[ref]Id.[/ref] And then there's Pandora. In 2011, it lost $9 million. In 2012, it lost $36 million, and in 2013, it lost $41 million.[ref]Will Pandora and Spotify Ever Make Money?[/ref] Not to be outdone by its main competitor, Spotify is winning the race to the bottom. According to this article in The Trichordist,[ref]How To Translate an Article on Spotify Finances into Non Magic Unicorn Math[/ref] citing this article in The Wall Street Journal,[ref]Spotify Nears Deal to Raise $400 Million at $8.4 Billion Valuation[/ref] Spotify is going back to its investors and asking for another $400 million in funding. This is the seventh time it has had to ask investors for more money.[ref]Id.[/ref] In 2010, Spotify lost $38 million. In 2011, it lost $59 million. In 2012, it lost $78 million.[ref]Will Pandora and Spotify Ever Make Money?[/ref] What is truly incredible is the losses are getting bigger while the revenue increases. During the period noted above, Spotify increased its revenue from $98 million to $575 million.[ref]Id.[/ref] For Pandora, its revenue increased from $267 million to $638 million. And here's the kicker. At the same time that Pandora was losing $41 million, it paid its top 20 executives $57 million in compensation.[ref]How much money did Pandora Media Inc's executives make?[/ref] In the same period that Pandora's annual loss quadrupled, it increased executive compensation 383.2%.[ref]Id.[/ref] (N.B. This site is updated daily so the numbers may change.) As noted previously on this blog, Pandora's solution for its mounting losses is to petition the government to lower the rate that it pays to musical artists,[ref]Streaming Hits a Dam: Taylor Swift Says "Not So Fast," Sirius XM Loses Again and Flo and Eddie Sue Pandora[/ref] instead of figuring out that, just maybe, they have a bunch of bungling executives who are vastly overpaid. This leads some observers to conclude that the "free streaming" model simply does not work. As this article from The Motley Fool points out: "[A] report published by Generator Research last year concluded that the streaming business in its current state was ‘inherently unprofitable' and that ‘no current music subscription service — including marquee brands like Pandora, Spotify, and Rhapsody — can ever be profitable, even if they execute perfectly.'"[ref]Will Pandora and Spotify Ever Make Money?[/ref] Yes, both Spotify and Pandora have pay tiers. But the majority of the subscribers are on free tiers. For example, Spotify has 15 million paid users against 45 million free users.[ref]How To Translate an Article on Spotify Finances into Non Magic Unicorn Math citing Spotify Nears Deal to Raise $400 Million at $8.4 Billion Valuation[/ref] The fundamentals simply are not there. It's the pay sites that make the real money. According to the April 15, 2015 issue of Bloomberg BNA's Patent Trademark and Copyright Law Daily, "per-song rates are much lower [on free services]. While the record industry made $1.6 billion in revenue from companies that run paid subscription services, it brought in just over half that-$641 million-from companies that offer only free music." Let's compare these facts against some of their competitors. Sirius XM makes a profit ($65 million in 4Q 2013)[ref]Sirius XM Posts Sharp Drop in 4Q Profit[/ref] and is actively buying back its stock on the open market.[ref]Does Sirius XM Holdings Inc.'s $2.2 Billion Buyback Make Sense?[/ref] Netflix, a YouTube competitor, made $350 million in 2013[ref]Opinion: Netflix hits a bump on the way to TV-streaming dominance[/ref] and is on track to achieve a 32% U.S. profit margin by 2016.[ref]Id.[/ref] How are Netflix and Sirius XM succeeding where YouTube, Pandora and Spotify are failing? Simple. They charge everyone for their services. You don't pay, you don't get. Netflix has 50 million paid users.[ref]Id.[/ref] Spotify has 45 million free users. It's not hard to see where the problem is. Beginning with Napster, the Internet has promoted the idea of "everything has to be free." With its corollary "and if it's not free I will feel no remorse about simply taking it." Whatever happened to the notion of requiring people to pay for something that has value? Lots of newspapers are putting content behind "paywalls," where you have to pay to read the content. Fair enough. It costs money to generate that content. But of course, this is the internet where everything has to be free. I did a Google search for "how to get around paywalls" and Google spit back what it said were 56,000 results on how to do exactly that. Yet is seems that demanding that you be paid for your creative work does get positive results. "Although the [New York Times] paywall is extremely easy to circumvent, subscription rates have exceeded expectations. While some predicted that users would be unlikely to begin paying for content that previously had been free, the New York Times reported that it had more than 100,000 subscribers in just the first month. This not only defied expectations, but also made a powerful case for the argument that users are willing to pay for content that could be accessed freely in other ways."[ref]Theresa M. Troupson YES, IT'S ILLEGAL TO CHEAT A PAYWALL: ACCESS RIGHTS AND THE DMCA'S ANTICIRCUMVENTION PROVISION New York University Law Review 90 N.Y.U. L. Rev. 325 April, 2015[/ref] So, Pandora and Spotify, it seems you need to forget the "everything must be free" ethos of the internet if you want to stay in business. Yes, it does seem that your business plan is DOA unless you switch to an all pay tier like Sirius XM and Netflix. Your problem is not, as the Wall Street Journal hinted, that the payouts to the artists are too large. A grocery store can make a profit with a razor sharp margin of only 1% on the goods they sell.[ref]What Is the Profit Margin for a Supermarket?[/ref] The difference is, they expect you to pay for everything you take from the store. And since the grocery store is not the Internet, taking something without paying for it gets you a nice ride in a police car.

We are all familiar with the way any fact can be "spun" in the media. In a recent case involving yet another courtroom tilt over BitTorrent file sharing, you could write as a headline:

COURT IMPOSES SANCTIONS ON COPYRIGHT TROLL MALIBU MEDIA!

Or you could write

MALIBU MEDIA DEFEATS APPEAL BY BITTORRENT DEFENDANT!

And both would be correct. On March 26, 2015, the Eleventh Circuit Court of Appeals issued what looked to be an important ruling on the endless stream of litigation over BitTorrent file sharing. However, on closer examination, there are problems with the ruling that make its further application unclear. The case, Malibu Media v. Pelizzo,[ref]Malibu Media v. Pelizzo or 2015 WL 1346241[/ref] involved an appeal by a successful defendant in a BitTorrent lawsuit. He challenged the District Court Judge's determination that despite being the prevailing party, he was not entitled to have Malibu Media pay the attorneys' fees and costs he incurred in his successful defense. The plaintiff, Malibu Media, should be familiar to faithful readers of this blog.[ref]Copyright Infringement Litigation Over Bit Torrent File Sharing: Truth or Troll?[/ref] Malibu Media, an adult film company operating under the brand name "X-Art," files more copyright infringement lawsuits than any other person or corporation in the United States.[ref]Copyright Blog Update: Court of Appeals Rejects "Transformative Use" Test & Malibu Media Marches Along[/ref] As usual, Malibu Media used "geo-locater" technology to determine the location of an IP address that was using BitTorrent to download a "genuinely phenomenal number of films."[ref]Malibu Media v. Pelizzo, Eleventh Circuit Court of Appeals 2015 WL 1346241[/ref] In response to a subpoena from Malibu Media, Pelizzo's internet service provider (ISP) identified Pelizzo as the person to whom that IP address was assigned. This was a unit owned by Pelizzo in a 700 unit condominium.[ref]Id.[/ref] Pelizzo denied the allegations, stating that while he owned the unit, he did not live there,[ref]Id.[/ref] and further alleged that he was out of the country when the infringements occurred, offering copies of his passport and visas as proof.[ref]Malibu Media v. Pelizzo, Order Overruling Defendants' Objections, Adopting Magistrate's Report and Recommendations, and Closing Case U.S. District Court for the Southern District of Florida Case 1:12-cv-22768-PAS Document 58 Entered on FLSD Docket 03/28/2014 at page 4[/ref] Based upon this evidence, Malibu Media took the deposition of a representative of Hotwire, Pelizzo's ISP. It was at this deposition that it became apparent that the ISP had probably fingered the wrong person.[ref]Id. at 2[/ref] Malibu Media offered to dismiss the case. Pelizzo's attorney in turn demanded that Malibu Media pay $17,500 in accrued attorneys' fees to not oppose the motion for dismissal.[ref]Id.[/ref] From there, the case descended into what attorneys call a "pissing contest." This is when the egos of the legal counsel involved cause them to take hyper-aggressive or immovable positions, rather than move to a sensible resolution of the case. For Malibu Media's part, it was sending out volumes of discovery requests for a case that obviously needed to be dismissed.[ref]Malibu Media v. Pelizzo, Report and Recommendation RE: Defendants' Verified Motion for Attorneys fees and Costs U.S. District Court for the Southern District of Florida Case 1:12-cv-22768-PAS Document 53 Entered on FLSD Docket 02/18/2014 at 4[/ref] For Pelizzo's part, it was refusing Malibu's offer to dismiss the case and pay $13,000 in attorneys' fees, instead demanding $24,000 in fees.[ref]Id. at 5[/ref] Malibu Media moved for a voluntary dismissal, which was granted with the Court retaining jurisdiction to consider the ward of attorneys' fees.[ref]Id.[/ref] Pelizzo filed a motion "seeking an award of fees against [Malibu Media] pursuant to the Copyright Act and/or an award of fees as a sanction against Plaintiff's counsel pursuant to 28 U.S.C. § 1927."[ref]Id.[/ref] Unlike many parts of the world, where in civil litigation the loser is expected to pay the winner's attorneys' fees (the so-called "English rule"),[ref]English rule (attorney's fees)[/ref] in America, each side is expected to pay their own attorneys' fees regardless of who wins.[ref]Id.[/ref] The only exception to this is if there is "loser pays" language in a contract between the parties or there is language in a statute to that effect. The Copyright Act is one of those laws. Section 505 of the Copyright Act reads as follows: "In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs." Note that the statute says "may," not "shall." This makes the award of attorneys' fees discretionary, not mandatory. In his Motion for Fees, Pelizzo advanced these theories:

• "[Malibu Media] is motivated by the desire to extort settlements out of and funds from innocent internet users who, in order to avoid the embarrassment associated with being accused of infringing adult video content, are willing to pay [Malibu Media] to go away without regard to the merits of its case."[ref]Order Overruling Defendants' Objections, at 3[/ref]
• The investigative techniques used by Malibu Media to identify infringers are inherently unreliable and the therefore the suit is frivolous.[ref]See generally Order Overruling Defendants' Objections, at 5, Report and Recommendation at 9[/ref]
• "[Once Malibu Media] was provided with passport and visa documentation demonstrating that Mr. Pelizzo had not been in the United States for a range of dates including February 6, 2012, [their] claims became frivolous."[ref]Order Overruling Defendants' Objections, at 4[/ref]

In other words, Malibu Media is an evil "copyright troll" and deserves to be punished. Neither the Magistrate, nor the District Court Judge was buying any of it.

• "[Pelizzo] has not directed the Court to any evidence that would support even an inference that [Malibu Media] filed this suit to shame [Pelizzo] into a pre-suit settlement. [Pelizzo] has not provided a single communication from [Malibu Media] wherein it sought to settle this matter in exchange for thousands of dollars either before or after filing suit."[ref]Report and Recommendation at 7[/ref]
• "[It] remains unrefuted that someone using the IP address named in the pleadings infringed 14 movies a total of 337 times prior to the commencement of this suit and 25 movies a total of 549 times by the time the infringement ceased. (citation omitted) [Pelizzo] makes a half-hearted attempt to undermine the detection methods employed by IPP Limited, but those methods have been relied upon in hundreds of lawsuits across the country and by law enforcement to locate criminals."[ref]Report and Recommendation at 9[/ref] To that, the District Court Order added: "This conclusion is based upon the affidavit of a twenty-two year veteran of the Palm Beach County Sheriffs' Department. Eleven of Officer, and later Detective Paige's years with the Sheriffs' Department were spent in the computer crimes unit."[ref]Order Overruling Defendants' Objections, at 5[/ref]
• "Expecting [Malibu Media] to immediately dismiss the lawsuit upon receipt of [Pelizzo's] affidavit explaining he was out of the country during the time of infringement is unrealistic. At a minimum, [Malibu Media] would have been well within its rights to test the veracity of [Pelizzo's] assertions through discovery. [Pelizzo] cites no authority for the proposition that the pursuit of this lawsuit became objectively unreasonable the moment [Pelizzo] came forward with potential exculpatory evidence. Further, the Court finds [Pelizzo's] assertion that [Malibu Media] should have dismissed this action immediately following Murphy's deposition on March 13, 2013, confounding since the record reflects that is exactly what [Malibu Media] attempted to do. It was only because of [Pelizzo's] demand for all of its costs and attorney's fees ($17,500) that the matter was not dismissed at that time."[ref]Report and Recommendation at 10[/ref]

The magistrate recommended that no "prevailing party" attorneys' fees be awarded to Pelizzo.[ref]Report and Recommendation at 16[/ref] However, Malibu Media did not get away scot-free. The magistrate found that Malibu Media had acted in a manner constituting "bad faith and a willful abuse of the judicial process"[ref]Report and Recommendation at 15[/ref] by "threatening protracted, future litigation"[ref]Id.[/ref] at a time when it was clear the matter should have been dismissed along with asking Pelizzo's attorney "to inform his client that he would be penniless at the conclusion of this case while also owing [Malibu Media] hundreds of thousands of dollars."[ref]Id.[/ref] While Pelizzo might have been thrilled about the stinging rebuke of Malibu Media's attorney, he was doubtlessly less thrilled with the amount awarded as a sanction, only $6,815.50,[ref]Report and Recommendation at 16[/ref] or about half of what he had been offered previously by Malibu Media to settle the matter. He filed objections to the Report and Recommendation of the magistrate. The District Court Judge denied all of his objections and adopted the findings of the magistrate. He appealed to the Eleventh Circuit Court of Appeals hoping for a better result. It was not forthcoming. In a terse and rather curious opinion, the Eleventh Circuit held the following:

• "We find no abuse of discretion in the district court's conclusion under Section 505 and Fogerty that Malibu's subjective motivation for filing suit was not improper or that the suit was not frivolous, the first two Fogerty factors. To whomever the subject IP address was subscribed, it is undisputed that a genuinely phenomenal number of films was being downloaded using it."[ref]Malibu Media v. Pelizzo, Eleventh Circuit Court of Appeals 2015 WL 1346241 at page 2[/ref]
• "We also find no abuse of discretion in the district court's conclusion that Malibu, up to a point, acted in an objectively reasonable manner and in a manner that served the purposes of the Copyright Act: compensation and deterrence. (footnote omitted) Contrary to Pelizzo's assertion, Malibu could not have been expected simply to take his word for the fact that he had not infringed Malibu's copyrights, given the substantial evidence implicating Pelizzo."[ref]Id.[/ref]
• "If Malibu's claims were properly brought and properly maintained, then they properly served the purposes of the Copyright Act."[ref]Id.[/ref]

This decision is curious for a number of reasons. First, the Court seems to be pulling its punches. Saying that the District Court did not "abuse its discretion" is not the same thing as holding that the District Court ruling was completely correct. This only means that the District Court did not make "a clear error in judgment."[ref]Id.[/ref] Second, the opinion of the Eleventh Circuit is marked "do not publish."[ref]Id. at 1[/ref] This is important as the decision is now not considered binding precedent that must be followed by District Courts within the Eleventh Circuit.[ref]FRAP 36. Entry of Judgment; Notice[/ref] Here is the text of the Eleventh Circuit rule: "11th Cir. R. 36-2 Unpublished Opinions. An opinion shall be unpublished unless a majority of the panel decides to publish it. Unpublished opinions are not considered binding precedent, but they may be cited as persuasive authority."[ref]Id.[/ref] This is significant. One of the main defense strategies in BitTorrent litigation is to attack how the Defendant is located and identified. "An IP address is not a person," is their mantra. Of course, this is correct, but the Plaintiff's response points out it can lead you to the correct person, and at least one Judge has observed that the films did not download themselves. Somebody had to be at the computer to make this happen. The District Court in Pelizzo found that the methodology was reliable and let the case go forward. As noted in my previous blog post, Judge Ursula Ungaro, a judge in the same District as the Pelizzo case was tried, takes the exact opposite position, namely "There is nothing that links the IP address location to the identity of the person actually downloading and viewing Plaintiff's videos and establishing whether that person lives in this District."[ref]Malibu Media, LLC v. John Doe, Case no. 1:14-cv-20213-UU (Southern District of Florida)[/ref] This decision has been cited by many BitTorrent defendants in an effort to get their case dismissed at the outset. If the Pelizzo decision was published, it seems it would have the effect of over-ruling Judge Ungaro's position. Since it is unpublished, it can only be cited as persuasive precedent that her position is incorrect. So now the precedential value of the Eleventh Circuit decision has been reduced by quite a bit. If you are potentially a Plaintiff in a BitTorrent lawsuit, and you are going to file your case in the Southern District of Florida, whether your case will go forward or not depends entirely on which Judge that it lands in front of. A curious result indeed.

I'll just have to admit it. I was wrong. With two teenage sons at home, you could hear my frequent exhortations to put down the video gaming controller and find something more constructive to do, like the ever unhelpful parental suggestion of "read a book." These pleas were frequently accompanied by me adamantly stating "you aren't going to be able to make a living playing video games." I was wrong. Meet PewDiePie.[ref]PewDiePie[/ref] His real name is Felix Arvid Ulf Kjellberg, and he lives in Sweden. According to Forbes Magazine, he makes $4 million a year…(ugh)… playing video games.[ref]YouTuber 'PewDiePie' Is Making $4 Million A Year[/ref] How? He videos himself playing the games, along with live video of the game being played, adds his own commentary that "has been described by various outlets as goofy, energetic, obnoxious and filled with profanity,"[ref]PewDiePie[/ref] then uploads them to his YouTube channel. As of February 2015, his channel had 34.8 million subscribers, and his videos have been watched more than 8 billion times.[ref]Id.[/ref] If one partners with Google to throw a few advertisements in front, then you have a serious money making operation. Welcome to the strange world of "Let's Play" videos. Now perhaps this will mark me as a hopelessly out of touch old fogey, but I would think that the fun would be in playing the game, not watching someone else play a game. Yet I see my kids, on their computers and smart phones, doing exactly that - watching videos of other people playing video games accompanied by the video guys laughing loudly at their own jokes and a healthy dose of what seems like never ending streams of profanity. What this really amounts to is the creation of a derivative work, done entirely without permission of the creators of the games themselves. And the video game producers are starting to take notice. This March 27, 2015 article in Wired magazine details the problem.[ref]Why Does Nintendo Want This Superfan's YouTube Money?[/ref] They recount the experience of a girl referred to as Anela (not her real name) who made several popular videos of Nintendo games, and started her own YouTube channel which now has 50,000 subscribers. Exactly how Nintendo found out is unclear, but either because of a DMCA claim by Nintendo or a Content ID match, her videos are still monetized, but now Nintendo takes the revenue.[ref]Id.[/ref] The article paints a very sympathetic portrait of Anela, suggesting that she is but a hapless teenager, but a closer look reveals her to be around 21-22 years old. As seen above, these videos can generate serious income, and Nintendo, which has lost money for the last three years,[ref]Id.[/ref] is no longer content to look the other way. This brings us back to two topics that have made the pages of this blog before: the "transformative use" test[ref]Marching Bravely Into the Quagmire: The Complete Mess that the "Transformative" Test Has Made of Fair Use[/ref] and the vagaries of Google's Content ID system.[ref]Google Is As Google Does: How Google Cheats Both Sides of the DMCA Takedown Process[/ref] One could make an argument that since the videos add commentary of the game player, that the result is "transformative" and thus fair use. My reply would be that whether something is ultimately judged to be "transformative" depends largely on where the suit is filed. If it is filed in New York, where the Second Circuit holds sway, then your chances are pretty good. If it is filed in Chicago, where the rulings of the Seventh Circuit control, I'd say you're out of luck. So let's take a look at our four fair use factors: PURPOSE AND CHARACTER OF THE USE: The argument will be that the commentary, plus including the visuals of the person playing the game is "transformative" and thus fair use. But just labelling something "transformative" is not a trump card that makes it automatically fair use, even in the Second Circuit. One has to evaluate the level of the commentary. From my observation, most of the commentary is of the "whoa dude, look at that!" variety and the ever helpful "Arrgh! He's after me! &*^$&^$@#@##&%!!!" One commentator described PewDiePie's "commentary" as follows "[PewDiePie's] chosen mode of sharing his critique happens to be ribald entertainment, an unmediated stream of blurted jokes, startled yelps, goofy voices, politically incorrect comments, and pretty much nonstop profanity."[ref]PewDiePie citing Rob Walker (3 September 2014). "PewDiePie Is the Most Popular YouTube Star in the World. Why?". Yahoo!.[/ref] Yes, the Second Circuit has opined that the commentary need not be on the work borrowed,[ref]Cariou v. Prince 714 F.3d 694 Second Circuit Court of Appeals 2013 at 698[/ref] it seems to me the experience is no different than if you were actually sitting in the room with the person playing. So the mere switching on a camera and pointing it at yourself is a "transformative" act? I'm not convinced. NATURE OF THE WORK USED: The video games themselves are highly commercial, definitely for profit and definitely not educational, scientific, or technical. Though in practice, both the Second Circuit and the Eleventh Circuit have openly given short shrift to this factor. THE AMOUNT AND SUBSTANTIALITY OF THE TAKING: Here's where the "transformative" argument takes its biggest hit. As the Wired magazine piece points out: "YouTube has an informative page on fair use that specifically calls out a review of the game Drake and the 99 Dragons by user ProJared as an example of a video that it says does not constitute an infringement of game publisher Majesco's copyright. The 17-minute review makes extensive use of clips of the game, with running commentary. "Let's Play" videos are not so clear-cut. The main difference is they often are quite long—if a game takes 20 hours to play, the video may well be 20 hours long."[ref]Why Does Nintendo Want This Superfan's YouTube Money?[/ref] This undercuts "transformative use" in two ways; first, it takes way more than necessary in order to make their critical point. Next, since the clips are so long, they will undoubtedly not only take large portions of the work, but inevitably take the "heart of the work" as well. And by taking such a large portion of the work, may act as a market substitute for the work, as seen in the next section. NEGATIVE MARKET EFFECT ON THE COPYRIGHTED WORK : First off, the "Let's Play" video maker clearly understands that there is profit to be made by placing ads before the video, and these profits owe a substantial amount to the creativity of the game maker whose product they are appropriating. "Anela's attitude mirrors that of many YouTubers: Whattya gonna do? For all the hours she invests making the videos, the footage does belong to Nintendo. ‘I can't really say to Nintendo, you don't own this at all, this is mine,' she says."[ref]Id.[/ref] Plus, one of the main factors in a video game's popularity is the factor most often called "replay-ability." Once you have played the game, and gone through all the levels, do you want to play it again? Similar to a movie that you've seen once - do you want to watch it again? Sports games, such as the Madden NFL series or NBA2K, feature endless varieties of replay, because you can continually match up different teams against each other, or even create wholly hypothetical teams if you wish. This is not so much the case with "story" games. They can have alternative paths, based upon the choices you make, and even have alternate endings, but the possibility exists that having seen a "Let's Play" video, you are then not interested in purchasing the game since you already know its secrets. Also perhaps having the plot points revealed to you through "Let's Play" you 1) feel you've already played the game, 2) discover you don't like the plot or 3) don't like how the game plays, and decide not to purchase the game. Of course the opposite will be claimed, namely that the "Let's Play" video promotes sales of the video game in question. "If you've got a high-quality game and you give it to a guy like PewDiePie, you've just gotten your video game in front of millions of people without having to pay the kind of money big publishers usually pay to get their game in front of millions of people… It seems to me to be highly beneficial to let YouTube do its own thing."[ref]Id.[/ref] In my view, the amount and substantiality of the taking weighs heavily against fair use. One could make their critical point using far less of the material than is present in your typical "Let's Play" video. Now let's turn to Google's ever-shifty handling of the takedown process, as previously discussed in this blog.[ref]Google Is As Google Does: How Google Cheats Both Sides of the DMCA Takedown Process[/ref] Remember, Google has sole discretion to decide whether a DMCA notice to YouTube, which has been made the subject of a counter-notice, will be acted upon. "Unless the copyright owner files an action seeking a court order against the Content provider, member or user, the removed Content may be replaced, or access to it restored, in 10 to 14 business days or more after receipt of the counter-notice, at YouTube's sole discretion."[ref]YouTube Terms of Service at paragraph 8 (B) emphasis added.[/ref] Also recall that Google has agreements with certain content providers that mandate that they, not Google, have final say over whether your Content ID or DMCA counter-notice will be acted upon. "Under these contracts, we may be required to remove specific videos from the site, block specific videos in certain territories, or prevent specific videos from being reinstated after a counter notification. In some instances, this may mean the Content ID appeals and/or counter notification processes will not be available."[ref]Videos removed or blocked due to YouTube's contractual obligations[/ref] So, in other words, if you have uploaded a "Let's Play" video to YouTube, Google's decision, or that of the Content ID participant is final, with no appeal by you. So while it would be easy to blame the big copyright content players for the predicament of the "Let's Play" video makers, it's really Google and YouTube's TOS that doom you, which like most people, you probably never bothered to read. Why not split the revenue between the game creator and the "Let's Play" video maker? This would seem to be a win-win. And it seems that Nintendo has offered this to "Let's Play" makers. Yet, for some reason, this offer is being scoffed at by the gamer community. Back to the Wired magazine article: "Earlier this year, it announced the Nintendo Creators Program. If your video or YouTube channel contains content from an approved "whitelist" of games, you can enter the program. That entitles the company to 40 percent of the ad revenue on your video or 30 percent of the revenue on your channel. Nintendo approves all videos before they go live and can alter the terms of the deal "arbitrarily," according to its terms of service. It sounds more than a bit like a protection racket. "A lot of critics and reviewers are concerned," says Zack Scott, a maker of Let's Plays who's had videos flagged by Nintendo. "I don't know what's going to happen to people who cannot sign up to be an affiliate."[ref]Why Does Nintendo Want This Superfan's YouTube Money?[/ref] A protection racket? Nintendo does not have to make this offer at all. They can, as this article readily demonstrates, have your video removed, for which you will get nothing, or take your monetized content, for which you also will get nothing. It seems to me that Nintendo is doing the right thing by cutting you in, and allowing you to share in the profits. Again, what the Internet at large does not understand, is adding something to a copyrighted work, and taking large portions of it, all without permission, does not suddenly make it "yours." Video games are expensive to make, and Nintendo has created some of the most iconic characters in gaming. So maybe people are interested in your commentary, but the main attraction is that it has famous gaming characters, like Mario, Luigi, Bowser, Princess Peach, etc. You had no involvement in creating these valuable characters, but now somehow you feel that you should be able to take and trade on this value for your own personal profit, and Nintendo, (which as noted above lost money for three years running), should just leave you alone. Internet logic…sheesh.