Tuesday, May 03, 2016

Copyright Office 512 Roundtable: Scope and Impact of Safe Harbors

Scope and Impact of Safe Harbors
Official description: Scope of entities and activities covered by safe harbors; incentives (and disincentives) for creators, copyright owners, online providers, investors, and users; impact on licensing activities; effectiveness of remedies, including ability to proceed in federal court in case of disputed notice or misrepresentation; economic impact on creators, copyright owners, service providers and copyrighted works; relevant empirical data; and other pertinent issues.
KTC: Purpose to protect innocent service providers: is that what DMCA protects now?  Definition correct, too broad, too narrow?
Lisa Willmer, Getty Images: scope is too broad: supposed to be true tech services providing the pipes behind the scenes. Now it’s those engaged in storage and display who bear no costs or responsibility while content draws users to their sites and generates ad revenue. Different cost structure than other legit content companies who compensate creators.
Jeff Walker, Sony Music: Broad safe haven for non-passive entertainment platforms to offer content to consumers. I negotiate w/legit platforms as well as partners who use the safe harbor, and we have Hobson’s choice to accept less than fair value or go to broken notice and takedown. Most DSPs we approach to say they need a license, they say they aren’t interested; when we start to send takedowns, they are willing to negotiate, but they will offer only small amounts. Our business shrunk 50% since the advent of the DMCA while platforms continue to grow.
KTC: If you think that the covered service providers are too broad, is the issue that the statute is too broad in its definition or is it courts too broadly interpret who should qualify?
Matthew Schruers, Computer & Communications Industry Association: Not sure where “innocence” resides in 512.  Service providers that comply w/the statute receive its protections.  Statute was intentionally broad. Congress didn’t intend to lock in only 1998 service providers and structures.  Two clear specific categories: (a) and then (b)-(e): broad understanding and expectation that services would grow. Broadband under (a), and virtually every other kind—info location tools, info residing online at user direction which encompasses many other platforms; that was intentional broad scope.  Not useful to try to circumscribe; not in statute; economically destructive b/c it prevents change from 1998 configurations. This is our largest service exporter, trillions in commerce every year.
Ellen Schrantz, Internet Association: Statute and courts must keep it broad to avoid favoring incumbents over new companies. Most of our companies didn’t exist in 1998 or even 5 years ago.  Investors, VCs are unwilling to boost new services in uncertain regulatory environment. It’s been proven that one of the best way to stop infringement is to grow the legal licensed market.  That reduces piracy and should be encouraged.
Maria Schneider, musician: Safe harbor is a privilege, not a right.  When they created the DMCA, nobody conceived that a company like Google’s empire would become the most powerful asset in the world.  Odd that this is built on abuse of copyright.  Yet they guard their IP like Fort Knox.  YT grew by influencing user behavior. Infringers are allowed to monetize illegal content; there are no checkpoints; allowed to put up full albums which isn’t fair use. Blind eye to obvious infringement. Offering to pay atty’s fees; misleading users on fair use. Demonizing and intimidating musicians… the list goes on.
Natalie Madaj, National Music Publishers’ Association: Much to broad: they’re content distributors not service providers: Soundcloud and YT use DMCA as a weapon to negotiate below market rates. I handle licensing, and in licensing negotiations we have a choice to accept low rates or continue to police; mostly we take that small amount of money to members’ ultimate detriment.
Troy Dow, Disney: purposely broad, but also designed to distinguish good actors from bad within broad categories; courts have misapplied the standards to include people who do more than hosting to manipulating and creating distribution channels for content.  Cases where 9th Cir. applied (a) to a hosting service in the form of a Usenet service, hosting material for 14 days.  Ellison.  Netcom held that Usenet services could be held accountable, but courts now apply (a) to Usenet, so no notice and takedown. In each bucket, courts have applied it to wrong ISPs.
Joseph DiMona, Broadcast Music, Inc.: Safe harbor should be limited to innocent services; applied far too broadly. There’s always been a mere conduit exception in §111. But now websites claim and game the safe harbors. Shouldn’t be eligible if they actively induce entertainment content posting when they well know the rights aren’t held by users [isn’t that already outside the DMCA?]; require users to grant ISP license rights; license along with the users; failing to use commercially reasonable tech that’s available at decent prices; those should keep you off safe harbor island.  His opinion: look hard at definition of direct financial benefit in the modern world. What we see now: using entertainment content as giveaway for selling search, merchandise, data mining, other types of content.
Sarah Deutsch, Mayer Brown: Was intentionally broad to cover all kinds of ISPs, hosts, conduits, providers of facilities.  There was no discussion about passive or innocent ISPs. The definitions go to the functions of the ISP; how much control you had—hosts had duty to take down and immunity from good faith takedown.  512(l): failure to qualify for safe harbor doesn’t necessarily mean they’re liable for infringement.
Matthew Barblan, Center for the Protection of Intellectual Property: Important to keep in mind innocent ISPs and other purpose of DMCA, chief of which is creating online ecosystem where © owners can safely disseminate their works w/o fear of being stolen or infringed. We’ve heard from creative community that the second purpose is not being fulfilled. Blame is overly broad scope of the safe harbors.  Hard to imagine Congress intended this.  Ability of search engines to continue to index a site like Pirate Bay when there are millions of takedown notices; clearly targeted at infringement.  Senators explicitly recognized that there shouldn’t be a safe harbor for a site like that. Yet courts allow search engines to continue w/o fear of losing safe harbor. Sites that post UGC: courts have interpreted safe harbors so that even general awareness of 50-60% infringing content isn’t enough to lose the safe harbor—that leads to the inefficiencies of the DMCA.
Sandra Aistars, Arts and Entertainment Advocacy Clinic, George Mason University School of Law: Dow, DiMona, etc. are right.  Independent creators say the environment that currently exists for enforcement, whether created by courts or by parties involved, is leading to disincentive to create. Obligations of statute have been interpreted too narrowly.
Allan Adler, Association of American Publishers: Saw on previous panel that basically anyone can set up shop on the internet, and as long as they have a designated agent and a repeat infringer policy and respond to actual notifications, they qualify for the safe harbor. The problem with that is that there are sites that have active business models in which they invite users to upload attractive material, largely films, music, books.  So they can earn money through ads or subscriptions. And yet they still claim safe harbor protection. Congress should consider whether the ISP employs a business model or site structure that attacts infringing uploads and if so takes reasonable measures to prevent that. You should look to see whether it allows anonymous uploads. Whether they reward/incentivize popular infringing content. Whether they allow uploader to get links to publicly distribute. Whether they allow unlimited downloading by anonymous third parties unknown to the user.  Hotfile dealt with that, but Congress should do more.
KTC: A couple of people mentioned licensing.  In your view, does the DMCA regime negatively impact licensing? Ability to negotiate w/ISPs.
Willmer: yes.  Sites tell us to send takedowns, cutting short negotiations.  Win-win = still less than fair market value.
Walker: more licensing: in our conversations w/Apples & Spotifys their #1 complaint is that they’re competing w/free. They pay rates that allow us to create the content, while safe harbor reliant platforms contribute miniscule amounts of money to the business.  Whack a mole is now about all the different sites all entertainment platforms we have to have conversations w/one by one, frustrating from a commercial perspective, b/c they won’t pay enough to actually justify the use of the content. Made more from sale of vinyl than it made from sal
RT, OTW: Quick reminder: wanting to license doesn’t entitle you to license.  HathiTrust.  Statutory damages demands would otherwise have shut down the internet: that was the point of having a takedown procedure rather than requiring everyone to license.
JC: for fair use sites, I understand. What about a site that’s just loading up full length movies, books, sound recordings.
RT: I don’t think they’d survive under 512 any more than Grooveshark and Hotfiles did. You’d find the evidence of inducement in discovery.
JC: but what if they were complying really well with the DMCA?
RT: then they wouldn’t be behaving in the way described by the content owners complaining.  YT starts out not clear about its business model—the first video is a guy at the zoo. The fact that people use it in various ways, including for infringement, at one point in time doesn’t mean that’s what it stays.  Business model emerges; shouldn’t be shut down b/c it was used for a lot of infringement at one time, and Congress very clearly wanted to ensure that would happen.
Schruers: Hypos for real cases that haven’t been brought and the sites haven’t been exonerated under the DMCA aren’t good examples. Viacom is a case in which their own people were uploading Viacom works to the YT site, so it’s not a great example of a case that should have come out the other way.
Is licensing even germane to a 512 conversation? Maybe, but need to consider that.
Schneider: Independent musicians can’t play this game. I wasn’t accepted into Content ID.  Bad to call YT a legit company, and all you have to do is type in “no infringement intended,” drivel the same as Fred von L’s copyright basics video which is completely inaccurate assessment of fair use—constant intentional misleading of people on this site.  I’m going to tell composers not to try this. 80% of songwriters in Nashville have quit.
Walker: had similar experiences w/sites that use DMCA as a weapon to avoid licensing entirely.  Q why you don’t just sue about disagreeing with DMCA interpretation. Our goal is to license, not to sue; Congress wasn’t trying to encourage litigation.  [Congress also wasn’t trying to get it so you didn’t have to sue if you thought someone was violating the law.]
Adrienne Fields, Artists Rights Society: Cheaper than you can purchase from legit publishers—publishers used to license large print runs, but now on demand b/c can’t compete with Etsy and eBay’s on demand models. Those sites offer items on any type of media. Can have work printed on canvas, aluminum, any size, shipped directly from Eastern Europe or China; sites protect user privacy. If you’re lucky enough to search and find actual address, the user ignores you b/c they don’t have the same concerns as legit business owners—hobbyists or career infringers b/c they know they can hide behind ISP claiming safe harbor. In the real world, when a demand letter is sent, often we get settlements or licenses after the fact. When it comes to infringement online, almost never get settlement/license after the fact.
Sarah Feingold, Etsy, Inc.: 1.6 million active sellers on Etsy, 86% women, most with home based businesses. Q about licensing: what she sees handling takedown notices; sometimes sellers are naïve and might think something is ok and the other party thinks its infringement; notices can get communication and licensing started. Don’t put everyone into the same bucket. Small businesses can flourish b/c of the DMCA.
KTC: content ID/voluntary licensing: does Etsy have any plans to allow licensing to take place in that way?
Feingold: DMCA is a floor, not a ceiling. Content ID cost $50 million; we use technology and have a dedicated team and work w/rights holders. But Content ID is really expensive and burdensome and we’re still small.
Dow: Hotfile lost that case on vicarious liability b/c they didn’t have repeat infringer policy; they adopted a policy after that. If you fast forward that to the point they did—court went on to discuss narrow focus on identifying specific infringement; single links to infringing files w/o removing files. We have sites that cause significant trouble; sent 35,000 on Avengers to one single site and it didn’t work.  That was a site designed to ensure persistent availability of content.  That impacts licensing discussions. 
KTC: does DMCA affect willingness to license?
Dow: people have looked to pirate sites to decrease willingness to pay.
DiMona: rare things have value; they eliminate scarcity, which can’t help but hurt the value. [Which is why bottled water failed as a business model and still can’t charge as much as soda.]
Barnum: Copyright owners have always had to negotiate compared to the black market.  Black market is now the #1 streaming service in the world, not just Russian cyberlocker.  When you go to a service that wants to legit license your content, price will be based on amount v. getting it free on YT. Until we resolve that, there will be serious problems w/licensing. [But we should all impose Content ID on the internet.]
Aistars: People who use work to illustrate online publication know there’s no effective remedy and no reason to negotiate a license. At best the artist sends a DMCA license. That’s a lost licensing opportunity.  Middle-class artists: we had a conversation w/a photog who said they weren’t sure of that b/c most photogs don’t make it into the middle class. Filmmaker whose film came out on Netflix, iTunes, in app purchases—ironically, as soon as it was out there, it began to be available for free on illegitimate sites.  Ironically, the ads served on her work were for Netflix—but they’re being undercut by those sites.
Michael Weinberg: think about 512 in context of not YouTube and not Google.  There’s a whole other universe of other ISPs like Shapeways using the space 512 creates. Shapeways users are pro designers selling their goods online. There isn’t a way they could to this w/o a service like Shapeways. If you want to print a nylon dress, you can either buy a ½ million dollar printer or go to a service like us. Takedown process would be nothing compared to the process you’d have to go through to clear rights if we didn’t have 512 protection—the kinds of guarantees you would have to give would be ridiculous. We are empowering designers worldwide.  One of the shocking things that happened at Shapeways: some designers infringe, and we forward to users—the percentage who reacted w/excitement and joy that there was finally someone they could talk to about a license was shockingly high. Facilitating licensing in an unpredictable ways.
Petricone: Tale of 2 Cities is continuing. Licensing and broad interpretation is to promote the progress of science & useful arts. Look at just about any area of entertainment industry, new content is growing at a tremendous rate. 3 million books in one year up from 250,000.  1700 films worldwide in 1995; now it’s 7000. Video game industry is blooming. Household spending on entertainment is increasing and content is exploding. Success of safe harbors should be determined on this basis.
KTC: contrasting that with what Schneider had to say: any distinction about who’s making it now. Fewer artists?  [No, but they might be making less b/c of competition.]
Petricone: DOL says 53,000 said primary occupation was musician, now 60,000; self employed musicians grew at faster rate—45% more independent musicians in 2014 than 2005.
Schwartz: acknowledge lower barriers to entry for independent and individual artists. W/our companies, there are millions of creators and artists that otherwise would not have access to national or global or even local markets w/o platforms that rely on 512. Would have needed backing from major players, but now don’t.  Incentives of DMCA-Plus voluntary measures: there’s a logical fallacy b/t those systems not being perfect and the fault of the DMCA. Since our companies filed companies, several have introduced/updated voluntary measures; they can do that b/c of DMCA provided certainty.  More fundamental point: wouldn’t exist w/o DMCA.
Schneider: Find me ten musicians who say they’re doing better now than 2000.  Music Answers campaign: musicians are desperate to shine a light on what’s going on. The studies—many musicians read that article and were shocked.  [Many people were shocked when their favored political candidate didn’t win. We’re cloistered people these days.]
KTC: counternotice process: appropriate? Does it protect against improper notice?
Weinberg: only works if it’s only ©.
Tushnet: Women and minority creators are often suspicious of how a big system will treat them. May decline to counternotify even when sure of fair use.  Our 600,000 creators are not disincentivized; they’re freed to find their audiences.
Schruers: Counternotices aren’t used, but that doesn’t mean that all those takedowns are ok. It’s important to recognize that there are complaints on rightsholders’ behalf. There are also user constituencies with serious concerns about being deterred from counternoticing, not to mention the cooling off procedure/delay in putback.
Schwartz: recent Urban study: counternotice problems; 1/3 notices improper in some groups.
Flaherty: we don’t get that many counternotices, but they are important for balance. Staying down for 10 days
Madaj: Shifts burden to file sue in federal court; that’s a big burden for artists. We receive bad counternotices.
Feingold: almost 7000 takedowns; 568 counternotices; the reason is that people are absolutely intimidated by the process—they write to us and say it’s David v. Goliath. Very important; we’re also seeing people claiming © and TM and we see that as abuse.
JC: what is intimidating?
Feingold: contact information, consent to sue—feel like they’ll be sued.
JC: is that maybe a judgment they wouldn’t win? [Extensive aside: Why isn’t that a question she asked of the notice submitters who didn’t sue after a counternotice, or after their notices were rejected, or after they sent a bunch of notices and saw a business model based on infringement?  It is absolutely true that, as we were told in the morning, most individuals don’t have the money to go through a lawsuit, but that affects lots of people on both sides of this issue.  Content owners say they rarely get counternotifications so there must be no problem with over-takedowns; but then they say it wasn’t worth it for them to sue when they actually got a counternotification even though it was still an infringement, so the existence of the counternotification isn’t evidence of a mistake or wrongdoing.  They shouldn’t have it both ways.  I’m sure the content companies do believe they’re in the right, just like many individuals who receive takedowns.  But it makes no sense to assume that the content companies are always right when there’s no counternotice and that they’re still always right when there is a counternotice.  Realistically, both the low levels of counternoticing and the low levels of lawsuits post-counternotice show only that litigation in the US is scary and expensive, not that most notices are accurate or that most counternotices are.  I just want to avoid the inconsistency that, to be fair, exists on both sides here w/r/t the relevance of lack of lawsuits—as Schruers said, it’s very hard to evaluate the merits of the unfiled lawsuit, but that also feeds into questions about due process and the function of a DMCA notice as an automatic injunction etc.]
Feingold: from my perspective—often I pray they counternotice, b/c there is clear fair use. People are intimidated by the entire process.
Dow: we receive counternotices and may have to sue—that affects our strategy of what to send. Perhaps © owners are reluctant to sue and uploaders are reluctant to counternotice, showing we have a balance.  [Interesting that he didn’t think that reflected a balance when it came to those rogue sites they haven’t sued on the front end.]
Barblan: secret, unverified survey in Urban—no real data.  Questionable counternotices. Narrow in what it looks at. Problematic in determination of what’s fair. Important not to draw policy conclusions from that study b/c there’s work to be done. [Instead, draw policy conclusions from the anecdotes of my artists.]
Aistars: small claims process might address this. Indiv. artists/creators could use it.

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