Copyright

The Visual Artist Rights Act (VARA) is one of the least litigated sections of the Copyright Act. It is notable because this is the only area of copyright law in the U.S. that gives effect to what is known as the "droit morale" or moral rights. Moral rights are recognized and enforced across Europe and are part of the base line standards provided for by the Berne Convention.[ref]Berne Convention for the Protection of Literary and Artistic Works (Paris Text 1971)[/ref] That treaty at article 6bis provides that: "Independently of the author's economic rights, and even after the transfer of the said rights, the author shall have the right to claim authorship of the work and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the said work, which would be prejudicial to his honor or reputation." On February 12, 2018, a District Judge took the unprecedented action of awarding $6.75 million dollars in statutory damages for what could only be described as a "mass mutilation" of 45 works of graffiti art.[ref]Cohen, et al v. G&M Realty L.P.. United States District Court, E.D. New York. 2018 WL 851374[/ref] The case pitted numerous graffiti artists who were responsible for the creation of the graffiti mecca known as "5Pointz" against the owner of the building, Gerald Wolkoff. One would think that since graffiti art is at the very least a trespass against property, the owner of the building would be able to do whatever he wanted with his building. You'd be wrong. At least in this case. For its part, the VARA does contemplate that some works of art can be attached to buildings, and provides a methodology for what to do when the building might be sold and then demolished to make way for a new building. The relevant sections provide that the author has the right "(B) to prevent any destruction of a work of recognized stature, and any intentional or grossly negligent destruction of that work is a violation of that right."[ref]17 U.S.C. 106A (a)(3)(B)[/ref] So, first up, nothing would prevent the destruction of the building, and the art attached to it, unless the art was of a "recognized stature." The problem is that the text of VARA does not define what is and what is not a work of "recognized stature." The only thing that VARA says is it has to be a work of the visual arts, which is explicitly and thoroughly defined. A "work of the visual arts" has to exist in a single copy, or not more than 200 signed and consecutively numbered copies by the author, and not be "any poster, map, globe, chart, technical drawing, diagram, model, applied art, motion picture or other audiovisual work, book, magazine, newspaper, periodical, data base, electronic information service, electronic publication, or similar publication" [ref]17 U.S.C. 101[/ref] Since the graffiti art in question was a single copy, indeed the only copy of the work, and not in one of the banned categories, the art qualifies as a "work of the visual arts." So what follows is a textbook case of how a simple written agreement would have saved a lot of time, money, attorneys fees, and at the present time $6.75 million dollars in damages. The Court recites the following facts: "What became 5Pointz originated as Phun Phactory in the early 1990s. The warehouses were largely dilapidated and the neighborhood was crime infested. There was no control over the artists who painted on the walls of the buildings or the quality of their work, which was largely viewed by the public as nothing more than graffiti. This started to change in 2002 when Wolkoff put [Plaintiff Jonathan] Cohen in charge. Cohen and several other artists also rented studio space in the warehouse buildings. Collectively, they worked to improve conditions. Wolkoff recognized the merit of the art. As he acknowledged: ‘I liked it and they did more and more and I thought it was terrific. They were expressing themselves.' (citation omitted) And he approved of the job Cohen did in curating the art: ‘I have no feelings even today against Jonathan Cohen. I thought he was terrific handling my building. ... Anything to do with art I left up to Jonathan. He had good taste in the artists that came there.' (citation omitted) Until Wolkoff decided over a decade later that the economic climate was ripe to convert the site into luxury condos, he and Cohen had a copacetic relationship. But nothing was ever reduced to writing and Wolkoff only verbally laid out three rules for what could be put on the walls: no pornography, no religious content, and nothing political. In his role, Cohen established a system of rules for both the creation and curation of the art, spending seven days a week without pay to bring 5Pointz to fruition. Cohen oversaw the site, kept it clean and safe, allotted wall space, and explained the site's rules and norms to new artists. Over time, crime in the neighborhood dropped and the site became a major attraction drawing thousands of daily visitors, including busloads of tourists, school trips, and weddings. Movie, television, and music video producers came; it was used for the 2013 motion picture Now You See Me, starring Jesse Eisenberg and Mark Ruffalo, and was the site of a notable tour for R&B singer Usher."[ref]Cohen, et al v. G&M Realty L.P..at 6[/ref] For these latter uses, Wolkoff realized according to the Court "hundreds of thousands of dollars" in licensing fees.[ref]Cohen, et al v. G&M Realty L.P..at 18[/ref] Yet one complicating factor was that 5Pointz was never static. The graffiti was constantly being over-painted with new graffiti. It was Cohen who decided what parts of 5Pointz became "permanent" artwork, and what parts could be painted over. This resulted in more than 10,000 works of art being intentionally destroyed under the direction of Cohen. [ref]Cohen, et al v. G&M Realty L.P..at  8[/ref] This process of selection, or perhaps "non-destruction" was a highly determinative factor in the Court's decision declaring the works to be of "recognized stature."[ref]Cohen, et al v. G&M Realty L.P..at 12[/ref] This reasoning seems flawed to me. The way, according to the Court, that certain pieces of art achieved "recognized stature" was that they were given prominent places by Cohen and then were protected from being painted over by the very same person. This means that one person and one person only determined what was worth saving and what deserved being painted over. The pieces that remained became famous because some of them faced the 7 train, which means millions of people saw them,[ref]Cohen, et al v. G&M Realty L.P..at 8[/ref] not necessarily because of any large consensus of artistic worth. What was the quality of the works Cohen allowed to be destroyed by being painted over? This can never be known. And isn't this the same form of destruction the Plaintiffs claim is the wrong complained of in their suit? Nevertheless, once word of Wolkoff's proposed destruction leaked out, the Plaintiffs filed an unsuccessful petition to have 5Pointz a culturally significant landmark.[ref]Cohen, et al v. G&M Realty L.P..at 8[/ref] When that failed, their VARA suit followed. For his part, Wolkoff claimed, and claimed consistently, that the artists knew that eventually the buildings, many of them dilapidated and in poor condition, would be torn down.[ref]Cohen, et al v. G&M Realty L.P..at 8[/ref] If only Wolkoff had the foresight to have drafted a written agreement, stating those very simple terms. This is because VARA contemplates that if the art is made part of a permanent structure, a written agreement between the author and the owner of the building that the work might be destroyed as a part of a general demolition, the author no longer has the right to object under 106A (a).[ref]17 U.S.C. 113 (d)[/ref] Or, if Wolkoff had simply given the artists 90 days written notice to come in and remove their works (if possible) that would have been sufficient to terminate the artist's moral rights.[ref]Id.[/ref] Instead of taking these simple acts, Wolkoff engaged in a strategy that is certain to make your case go down the tubes in a hurry: do everything you can to piss off the Judge. Wolkoff prevailed at the preliminary injunction stage, paving the way for the ultimate destruction of the buildings. Not content with this victory and not even bothering to wait for the Judge's written opinion, he had all of the graffiti immediately whitewashed, effectively destroying it.[ref]Cohen, et al v. G&M Realty L.P..at 1[/ref] This left the Plaintiffs no other remedy than to proceed to trial on the issue of damages alone. Compounding this disrespect of the Court, at the damages trial, Wolkoff proved to be a lousy witness. "Although the Court believes that Wolkoff in the main testified truthfully, he was a difficult witness. He frequently ignored or challenged instructions by the Court. He was argumentative and prone to tangents and non-responsive answers. Eliciting coherent testimony was a chore and was only achieved after the Court threatened to hold him in contempt."[ref]Cohen, et al v. G&M Realty L.P..at 6[/ref] In another part the opinion, the Court calls Wolkoff's testimony "callous."[ref]Cohen, et al v. G&M Realty L.P..at 17[/ref] And finally, there's this: "Wolkoff's recalcitrant behavior was consistent with the manner by which he testified in court. He was bent on doing it his way, and just as he ignored the artists' rights he also ignored the many efforts the Court painstakingly made to try to have him responsively answer the questions posed to him. From his testimony, the only logical inference that the Court could draw from Wolkoff's precipitous conduct as soon as the Court denied the artists' preliminary injunction application was that it was an act of pure pique and revenge for the nerve of the plaintiffs to sue to attempt to prevent the destruction of their art. This was the epitome of willfulness."[ref]Cohen, et al v. G&M Realty L.P..at 17[/ref] So bend over, Mr. Wolkoff, because here comes the Courts' boot aimed straight at your butt. This finding of willfulness is cited by the Court to award enhanced statutory damages. Plus, the Court goes the full limit, $150,000 per work infringed, unprecedented in any copyright case I have read recently where the Defendant was not in default. The Court first accepts Wolkoff's expert testimony that "because of the unique challenges and costs of selling those artworks at 5Pointz which were the size of a building wall, they did not have a provable market value. The Court agrees and holds that plaintiffs failed to establish a reliable market value for their works. Therefore, the Court does not award actual damages."[ref]Cohen, et al v. G&M Realty L.P..at 15[/ref] So lacking any actual damages, the Court then turns to statutory damages. Here's where the Court starts to go off the tracks. The Court states: "When determining the amount of statutory damages to award for copyright infringement, courts consider: (1) the infringer's state of mind; (2) the expenses saved, and profits earned, by the infringer; (3) the revenue lost by the copyright holder; (4) the deterrent effect on the infringer and third parties; (5) the infringer's cooperation in providing evidence concerning the value of the infringing material; and (6) the conduct and attitude of the parties."[ref]Cohen, et al v. G&M Realty L.P..at 18[/ref] For this proposition, the Court cites to a case involving the illegal reproduction of sound recordings. But these are hardly the same thing. Actually, it's very hard to say that Wolkoff infringed the work of the artists at all. He didn't copy, distribute, perform or display any of the artist's work without their permission. This leads the Court to try to shoehorn traditional infringement analysis into a moral rights case. For example: "[Wolkoff] indirectly profited when the value of the site increased from $40 million to $200 million as soon as the variance was obtained. Destroying 5Pointz allowed Wolkoff to realize this gain. He also charged licensing fees to film at the site that netted him hundreds of thousands of dollars. Because Wolkoff realized significant profits by violating VARA, this factor cuts in favor of a high statutory damages award."[ref]Cohen, et al v. G&M Realty L.P..at 18[/ref] The problem with this reasoning is two-fold. The increase in the value of the property was not due to anything that the artists did. The increase in value was due to the fact that Wolkoff was able to obtain a zoning variance, not the value of the artwork. Destroying the art did not "enable" him to realize this gain, for if he had merely given notice and waited the 90 days, he could have destroyed many of the 5Pointz works without liability, as noted above. Next up, the licensing fees. Part of the reason that people wanted to film there was the presence of the art. But obviously in order to film on his property, they needed the permission of the property owner. But ultimately, all of this occurred before Wolkoff whitewashed the art. It was not his violation of VARA that gave rise to these fees. All of these fees were realized before the big paint-over occurred. Next up is the wide disparity between the actual damages and the statutory award. Recall that the Court ruled the Plaintiffs had failed to prove any actual damages, or in other words, zero. Yet, on the other end is the unheard-of award of maximum statutory damages on every single piece of 45 works. This is certainly going to be challenged on appeal. How can there be zero liability on one end and $6.75 million dollars of liability on the other end? On that question, the Court seems to have overlooked what it wrote in its previous opinion denying the preliminary in junction: "Moreover, plaintiffs' works can live on in other media. The 24 works have been photographed, and the court, during the hearing, exhorted the plaintiffs to photograph all those which they might wish to preserve. All would be protected under traditional copyright law, see 17 U.S.C. § 106 (giving, inter alia, copyright owners of visual works of art the exclusive rights to reproduce their works, to prepare derivative works, and to sell and publicly display the works), and could be marketed to the general public—even to those who had never been to 5Pointz."[ref]Cohen, et al v. G&M Realty L.P..at 988 F.Supp.2d 212 United States District Court, E.D. New York. 2013[/ref] Lastly, the Court isn't helping itself when it makes this admission: "If not for Wolkoff's insolence, these damages would not have been assessed. If he did not destroy 5Pointz until he received his permits and demolished it 10 months later, the Court would not have found that he had acted willfully. Given the degree of difficulty in proving actual damages, a modest amount of statutory damages would probably have been more in order."[ref]Cohen, et al v. G&M Realty L.P.. at 19[/ref] In other words, the Defendant's a jerk and I'm going to stick it to him. Even though the Defendant acted in a devious and malicious manner, I would not be surprised if this award is not reduced on appeal. In the very same Circuit, notorious willful infringer Joel Tennebaum only got socked with $20,000 per work infringed.[ref]Sony BMG Music Entertainment v. Tenenbaum 719 F.3d 67 (First Circuit Court of Appeal 2012)[/ref] Again, a simple written agreement could have prevented all of this. Giving the required notice to the artists to come and remove their work (for which they bear the expense) would have reduced the amount of damages. The old saying of "an ounce of prevention is worth a pound of cure" was never truer than in this case. It will be interesting to see what the Court of Appeals says, because given Wolkoff's conduct in this case, I don't see him giving up at this point.

"[T]he evidence shows that Cox's decisions not to terminate had nothing to do with ‘appropriate circumstances' but instead were based on one goal: not losing revenue from paying subscribers."[ref]BMG Rights Management (US) LLC v. Cox Communications, Inc. United States Court of Appeals, Fourth Circuit. February 01, 2018 --- F.3d ---- 2018 WL 650316 at page 20[/ref] Well, it doesn't get much clearer than that, does it? I have written about the Cox/ BMG lawsuit before.[ref]14 Strikes and You're Out! (Maybe): How Cox Communications Lost its DMCA Safe Harbor[/ref] If you are unfamiliar with the facts of the case, you probably should start there, then meet me back here. The District Court had ruled that because of a total lack of enforcement of Cox Communications' overly generous DMCA termination policy (14 strikes and you're out…maybe) that Cox had lost its "safe harbor" from copyright infringement suits. Subsequently, a jury came back with a $25 million dollar verdict against them.[ref]BMG Rights Management (US) LLC v. Cox Communications, at 6[/ref] This must have stung doubly, because Cox's insurance company had filed suit against them to deny coverage for this, calling Cox's policy an "intentional business decision" to block and ignore copyright infringement notices sent to it by the record company BMG.[ref]14 Strikes and You're Out! (Maybe): How Cox Communications Lost its DMCA Safe Harbor and endnote #3[/ref] The Fourth District Court of Appeals has largely affirmed this ruling. While Cox gets a retrial on certain issues, it will have no safe harbor to fall back on. The dispute begins with BMG using the company Rightscorp to send the infringement notices. "Rightscorp, Inc., which monitors BitTorrent activity to determine when infringers share its clients' copyrighted works. When Rightscorp identifies such sharing, it emails an infringement notice to the alleged infringer's ISP (here, Cox). The notice contains the name of the copyright owner (here, BMG), the title of the copyrighted work, the alleged infringer's IP address, a time stamp, and a statement under penalty of perjury that Rightscorp is an authorized agent and the notice is accurate… Rightscorp also asks the ISP to forward the notice to the allegedly infringing subscriber, since only the ISP can match the IP address to the subscriber's identity. For that purpose, the notice contains a settlement offer, allowing the alleged infringer to pay twenty or thirty dollars for a release from liability for the instance of infringement alleged in the notice. Cox has determined to refuse to forward or process notices that contain such settlement language. In the fall of 2011, Cox decided to ‘blacklist' Rightscorp, meaning Cox would delete notices received from Rightscorp without acting on them or even viewing them. BMG hired Rightscorp in December 2011—after Cox blacklisted Rightscorp. Thus, Cox did not ever view a single one of the millions of notices that Rightscorp sent to Cox on BMG's behalf."[ref]BMG Rights Management (US) LLC v. Cox Communications, at 8-9[/ref] This last point is important, and goes to the issue of "willfull blindness." Cox made a conscious decision to ignore all notices from Rightscorp. On appeal, Cox contended that they still had safe harbor because they actually didn't have to terminate any subscribers at all. Cox argued that this is because none of them had been found to be an infringer by a Court of law. And since the DMCA speaks in terms of "repeat infringer," a Cox customer did not have to be terminated unless it had been found guilty of copyright infringement multiple times in multiple court cases.[ref]BMG Rights Management (US) LLC v. Cox Communications, at 12[/ref] Think about this for a second. Under this theory, no ISP could ever be held liable for contributory infringement, even if it knew that a subscriber was actively and massively using their service to infringe copyrights. Only if that person had been sued for copyright infringement multiple times and lost multiple times, would an ISP have to terminate them. This theory is essentially a "get out of jail free" pass to all ISPs. No copyright holder would take the time to do this. Litigation is too time consuming and expensive. The result would be an open invitation to ISPs to sit back and do nothing, which is clearly not the intent of the DMCA. The Court was not buying it. "[T]he DMCA itself provides that ISPs who store copyrighted material are generally not liable for removing ‘material or activity claimed to be infringing or based on facts or circumstances from which infringing activity is apparent, regardless of whether the material or activity is ultimately determined to be infringing.' Id. § 512(g)(1) (emphases added). This provision expressly distinguishes among three categories of activity: activity merely ‘claimed to be infringing,' actual ‘infringing activity' (as is apparent from ‘facts or circumstances'), and activity ‘ultimately determined to be infringing.' The distinction between ‘infringing activity' and activity ‘ultimately determined to be infringing' in § 512(g) shelters ISPs from being liable for taking down material that is ‘infringing,' even if no court ‘ultimately determine[s]' that it is infringing—because, for example, the copyright holder simply does not file a lawsuit against the person who uploaded the infringing material. As this provision illustrates, Congress knew how to expressly refer to adjudicated infringement, but did not do so in the repeat infringer provision."[ref]BMG Rights Management (US) LLC v. Cox Communications, at 13[/ref] Further the Court ruled: "The legislative history of the repeat infringer provision supports this conclusion. Both the House Commerce and Senate Judiciary Committee Reports explained that ‘those who repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others should know that there is a realistic threat of losing that access.' H.R. Rep. No. 105-551, pt. 2, at 61 (1998); S. Rep. No. 105-190, at 52. This passage makes clear that if persons ‘abuse their access to the Internet through disrespect for the intellectual property rights of others'—that is, if they infringe copyrights—they should face a ‘realistic threat of losing' their Internet access. The passage does not suggest that they should risk losing Internet access only once they have been sued in court and found liable for multiple instances of infringement. Indeed, the risk of losing one's Internet access would hardly constitute a ‘realistic threat' capable of deterring infringement if that punishment applied only to those already subject to civil penalties and legal fees as adjudicated infringers."[ref]BMG Rights Management (US) LLC v. Cox Communications, at 14[/ref] Next, Cox contends that since it did not have "actual knowledge" that their subscribers were infringing, that they were under no obligation to terminate them.[ref]BMG Rights Management (US) LLC v. Cox Communications, at 17[/ref] This, of course, ignores the fact that as noted above, they had taken steps to completely ignore the notices of infringement in the first place. Again, the Court was not buying it: "That argument misses the mark. The evidence shows that Cox always reactivated subscribers after termination, regardless of its knowledge of the subscriber's infringement. Cox did not, for example, advise employees not to reactivate a subscriber if the employees had reliable information regarding the subscriber's repeat infringement. An ISP cannot claim the protections of the DMCA safe harbor provisions merely by terminating customers as a symbolic gesture before indiscriminately reactivating them within a short timeframe."[ref]Id.[/ref](emphasis added) Further, Cox's own conduct undercut their argument: "Cox failed to provide evidence that a determination of ‘appropriate circumstances' played any role in its decisions to terminate (or not to terminate). Cox did not, for example, point to any criteria that its employees used to determine whether ‘appropriate circumstances' for termination existed. Instead, the evidence shows that Cox's decisions not to terminate had nothing to do with ‘appropriate circumstances' but instead were based on one goal: not losing revenue from paying subscribers."[ref]BMG Rights Management (US) LLC v. Cox Communications, at 20[/ref] Cox did win one point on appeal, which mandated a retrial. The District Court ruled, and instructed the jury, that Cox would be liable for contributory infringement if Cox "knew or should have known" of the infringing activity.[ref]BMG Rights Management (US) LLC v. Cox Communications, at 23[/ref] The Court of Appeals held that this standard, which is equivalent to simple negligence, sets the bar too low.[ref]BMG Rights Management (US) LLC v. Cox Communications, at 30[/ref] Instead, the Court of Appeals ruled that in order to prove contributory infringement one must prove either actual knowledge or willful blindness to actual knowledge, because "the law recognizes willful blindness as equivalent to actual knowledge."[ref]BMG Rights Management (US) LLC v. Cox Communications, at 25[/ref] (citation omitted) I suspect on retrial, that this standard will not be too hard to overcome. Remember that Cox refused to even read all notices that came from Rightscorp after the spring of 2011.[ref]BMG Rights Management (US) LLC v. Cox Communications, at 9[/ref] BMG did not hire Rightscorp until the fall of 2011, so Cox never considered, or even read for that matter, any of BMG's millions of notices sent to them.[ref]Id.[/ref] Nothing shouts "willful blindness" than absolutely refusing to read a communication that has been sent to you, and millions of communications on top of that. For its part, the Electronic Frontier Foundation criticizes this decision because the ISP should not have to become "the copyright police."[ref]BMG v. Cox: ISPs Can Make Their Own Repeat-Infringer Policies, But the Fourth Circuit Wants A Higher "Body Count"[/ref] Yet, in the very same post, it suggests the ISP should act aggressively against copyright owners who have the temerity to oppose the wholesale infringement of their work. "But nothing in the decision forbids an ISP from standing up for its customers by demanding strong and accurate evidence of infringement, and reserving termination for the most egregious cases—even if that makes actual terminations extremely rare."[ref]Id.[/ref] "Standing up for its customers by demanding strong and accurate evidence?" How is this NOT becoming "the copyright police?" And reserving termination for the "most egregious cases" was not the intent of Congress. Let's read this again: "Both the House Commerce and Senate Judiciary Committee Reports explained that ‘those who repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others should know that there is a realistic threat of losing that access.' H.R. Rep. No. 105-551, pt. 2, at 61 (1998); S. Rep. No. 105-190, at 52."[ref]Id. at endnote 8[/ref] Those who "repeatedly abuse their access" "should know that there is a realistic threat of losing that access." Nowhere does it say only in the "most egregious cases." This is why the EFF takes the extreme position that internet access is a basic human right, a position mocked by the District Court. ""I read the (EFF) brief. It adds absolutely nothing helpful at all. It is a combination of describing the horrors that one endures from losing the Internet for any length of time. Frankly, it sounded like my son complaining when I took his electronics away when he watched YouTube videos instead of doing homework. And it's completely hysterical."[ref]Judge Mocks Public Interest Concerns About Kicking People Off Internet, Tells Cox It's Not Protected By The DMCA[/ref] The take home message here is that the DMCA is broken and needs fixing. The DMCA envisioned that there would be co-operation between the tech interests and the creative community in removing infringing material or preventing its dissemination. Hardly has an assumption by Congress been shown to be so spectacularly wrong. Just as Google hides behind their incredible passive aggressive tactics for preventing a simple takedown notice,[ref]How to Send a Takedown Notice to Google in 46 (or more) Easy Steps![/ref] so did Cox Communications in taking extreme, and ultimately meritless interpretations of the law, simply to protect their bottom line. So… wouldn't it be ironic if the second jury awards BMG more than $25 million? Stay tuned.