Friday, August 07, 2009

IPSC: Copyright

Michael Birnhack

Whose Bratz Is It? The Integration of Copyright and Employment Law

Modes of cultural production: medieval patronage—sponsored creativity; 18th century—romantic author; 20th century—corporate, hierarchical production; 21st century—peer production. But corporate model is still dominant, at least in some industries. Who should own the copyright made within a workplace context? How should the law intervene?

Bratz dolls: Mattel designer Bryant moved to MGA, which produced Bratz. Mattel won $100 million, including copyright infringement verdict; unclear what the copyright infringement was for (drawings?).

Miller: Supervisor of quality control lab at CP Chemicals, computerizing analytical data. At home, wrote software that assisted in calculations. He left the firm; ruling: employer owned the copyright.

US version: work for hire. Germans: ownership remains with the employee, who can allow exploitation for limited purposes and there are other restrictions which require case by case application. This shows that there is a spectrum between employer ownership and (inalienable) employee ownership. The German model is on the paternalistic side. In the middle: joint ownership, shop right, alienable ownership in author, and variants. So, where should we allocate ownership?

Tasini: authors supposedly won, but look what happened even before the decision: contracts were changed immediately on a global level—journalist friends of his working in Israel called him and asked why they were being asked to sign new contracts. NYT deleted 115,000 articles written by freelancers as a result of the decision. Lesson: even if the law intervenes, there will be a Coasean corrective transaction: smooth, immediate, and costless to the employer. The cost was externalized to the authors, who won the case but lost future rights, and to the public, which lost ability to get materials out of the NYT archive.

Look at employment law, not agency law, for lessons. Contrast to copyright law. Different concepts of copyright: efficiency/incentive; personality theory/moral rights; labor theory/Locke. Employment law: laissez-faire and fairness are dominant accounts. Employment generally features unequal bargaining power. This can be various kinds of market failures, resulting in employee’s inability to affect the contract. Internal factors: bounded rationality; information deficiencies. External factors: lock-in costs; labor market.

Solutions: allocation to employee? We could see this as a penalty default rule. For the employer to get the rights, the employee has to agree, and the salience to the employee is heightened: the employee will recognize that s/he has rights and will demand a premium to surrender them. However, with unequal bargaining power and other info problems, the employee will always surrender the rights without even reading the form; what’s the point of reading the form when you know you have to accept the terms?

Under copyright, incentive theory says that copyright corrects market failure by responding to the risks of producing works. He identifies two kinds of risks: production and marketing.

What are the typical cases? We should allocate ownership to the body that bears the risk. We should look for typical cases and avoid allocations that will immediately be corrected, e.g. Tasini allocations. Consider the employer, the employee, and the work. Is the employer in the content industry, or is it CP Chemicals? Is the employee hired to make works, or to do some other function? (Bryant was hired to make dolls, while Miller was hired to perform quality checks.) Proper result: Mattel should own the Bratz, but Miller should have owned his software. This is close to the current American work for hire doctrine, but is a more conceptually satisfying construct than relying on agency law.

Brian Carver

Why License Agreements Do Not Control Copy Ownership: First Sale and Essential Copies

I liked the paper and think it would be very useful to practitioners working in the area.

License/sale distinction is likely to come up in 3 cases in the 9th Circuit: promotional CDs; Blizzard/WoW Glider; and AutoCAD software. The law is a mess because of failure to appreciate the distinction between copy ownership and copyright ownership. Promo CDs and AutoCAD: court held that resellers could use the first sale doctrine to avoid liability. Blizzard: court found defendant secondarily liable for infringement because people who buy WoW at Best Buy and have the CDs inserted into their computers are not owners of software.

The correct approach to copy ownership should be logically correct; must respect precedent; must respect congressional choices; and would hopefully make sense.

What does a “license” mean? Copyright owners are using it to mean “transfer a tangible object in which a copyrighted work is embodied, for a specified period of time or perpetually, without transferring title to the object, while providing some copyright permission.” But this isn’t one of the exclusive rights granted: the copyright owner has the right to distribute copies by sale, other transfer of ownership, rental, lease, or lending. This is a form of distribution that copyright owners just made up. They say it’s not a sale or other transfer of ownership, but it’s also not rental; nor is it lease or lending, which have to involve a predefined term of possession. It can’t sensibly be determined to be perpetual, but in these cases perpetual possession of the object is given.

So what are copyright owners doing? The entire notion of distribution by license fails. Solution: §202: ownership of a copyright is distinct from ownership from ownership of the material object. You can transfer a copy with no transfer of any copyright rights. The first sale cases: Bobbs-Merril etc. The SCt just affirmed patent exhaustion in Quanta, and we should respect the idea of preserving first sale, and also consider whether any of these contractual provisions are preempted.

It strains copyright’s public credibility to say that purchasers of the game disk don’t own the disk even when they can destroy it, throw it away, etc. Right approach: look at whether the buyer gets perpetual possession, which is the key distinction from a lease. Perpetual possession = sales.

Q: UCC has given rise to lots of sale/lease cases.

A: There are lots of things that don’t make it into these cases that courts should be drawing on.

Olufunmilayo Arewa

The Rise of Nollywood: Distribution, Business Development, and Intellectual Property

Nigerian film and TV industry emerged in the late 1970s, during a time of economic collapse. Grass-roots growth. No cinemas in Nigeria—people couldn’t leave their homes because of bandits. Cost of film led Nigeria to be leading user of digital film. 12 domestic films released in 2001 in Francophone Africa—the rest of the African market is small.

Nollywood: 40 movies/month and dozens of TV dramas, shot in Lagos. Melodramas, filled with adultery, bribery, and local mysticism. Bestselling Osuofia in London sold 500,000 authorized copies, possibly millions more. Filmmakers adopt new tech as soon as it becomes available, antithesis to typical African film production, which was expensive with gorgeous production values. $250 million business employing 200,000 people—interesting development model and democratization of cultural production. Also reflects size of Nigeria’s domestic market: 1 in 4 Africans is Nigerian.

Significant amount of political/social control and censorship of films in Africa. Will force changes to films. Nollywood deals with controversial topics not dealt with in print: corruption, HIV/AIDS, drugs, violence, but no sex.

There is no reliable electricity in Nigeria; a significant portion of the population lives on less than $1 a day. Price of single video CD is less than $2.5, $4 over the internet in foreign markets.

Why did it succeed? Domestic market; large pool of actors; drama of Nigerian life. Many films (44%) are in English, Yoruba and Hausa films also circulate in Africa. 2x the number of films released by Hollywood in recent years. Who watches them? People in Nigeria and other African countries; immigrants; Satellite cable channels—Africa Magic is 80% Nollywood. One Zambian said her children started to sound like Nigerians because they watched the films so often.

Business models: small budgets, $15-25,000 per film. Little control over distribution, much unauthorized distribution. If a film is a hit, it’s often insufficiently available because of limited DVD production capacity and poor Nigerian road infrastructure. Typically distributed in 15,000 DVDs with no copy protection.

Unauthorized distribution is a key element of Nollywood success, facilitating viral growth. Enabled by limited copyright enforcement in Nigeria. Nigeria generally indifferent to IP; will that change?

Was very useful in emerging business, but may be problem in maturing industry. 70% of revenue possible, it’s estimated, is lost due to piracy. Take estimates with grain of salt though.

Where is the real value in the supply and distribution change? Film producers should think about how to monetize piracy: embedded ads, strategies to profit from distribution to otherwise hard-to-reach audiences. Branding strategies to distinguish legit from unauthorized. Robust financing models and improving distribution networks more generally.

Cheng Lim Saw

The Case for Criminalizing Primary Infringements of Copyright Infringement - Perspectives from Singapore

Singapore has recently criminalized certain acts of infringement. New section implementing FTA with US. Lack of commercial motive is now irrelevant, as it is in the US. UK distinguishes between uploading and downloading—uploading a significant number of files may be punished criminally, but downloading may not be. European parliament has adopted the view that private infringement by personal, nonprofit purposes will not attract criminal liability. So jurisdictions worldwide are divided.

Why criminalize when civil penalties are available? He begins with the harm principle: criminalization is justified when activities cause harm. A serial downloader with tens of thousands of files causes significant economic harm to lots of copyright owners. Look what happened to the Virgin Megastore and Tower Records: economic losses. Also, disregard for IP will break down the IP system and its incentive functions as a whole.

It is also inherently immoral to infringe. Copyright is expressly recognized by statute as a form of personal property. The relationship between the owner and his property is moral, and founded on justice. An infringer has taken something that belongs to the copyright owner: unjustly enriched at the expense of a copyright owner, like the thief who steals a CD from a store. If it is morally wrong to steal for private, noncommercial purposes, then it is morally wrong to infringe.

He is not sure the RIAA’s strategy of stopping suing individuals is the right strategy for the future.

Mark Schultz: Some distinctions between physical theft and infringement: Potential for physical conflict; likelihood of lost commercial benefit to property owner; and clarity of offense.

A: We are really talking about infringements that are significant in extent, not single acts. Incorrigible downloaders = fair compromise.

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