Friday, April 04, 2014

Next Great Copyright Act Conference, remedies

Remedies and Enforcement

Moderator: Mitchell Zimmerman, Fenwick & West LLP

To copyright maximalists, the entire population of the world seems to be Holmes’ bad man.

Corynne McSherry, Electronic Frontier Foundation

Broad agreement on need to fix, even if we don’t agree how. Statutory damages are out of whack with reality/real harm.  Other kinds of harms and how we punish them: if you shoplift 6 CDs or 4 DVDs in MA, your fine is $250.  If you evade a subway fare in NYC, $100.  If you sell tobacco to a minor, the fine is $200. Speeding, up to $300. These cause real harm. Campaign finance laws—harm to democracy—fine is $1000, if any such laws are left. These are bad things; it makes sense to deter them.  If you set a kitten on fire, you can be fined up to $2000.  We can agree that this is a very bad thing to do. But if we go by the fines, sharing a song without permission is worse than all of these together.  Up to $8000 per work—the statute says up to $150,000, but a jury has awarded that in Capitol Records v. Thomas.

Filesharing is what helped general public understand a bit about copyright and statutory damages. The amount was enough to get the judge in the case to plead with Congress to fix the law—pretty rare. 

RIAA called off its campaign, but other lawyers not constrained by public reaction decided that this looked like a good business model, and started sending out letters threatening lawsuit unless $3000 payment made; used statutory damages and result in Thomas as part of the threat.  Trolls have made millions doing this, at least according to a lead troll.

Strange, disproportionate, unnecessary, and causing harm beyond the filesharing context. Irrational penalties deter people with valid fair use claims from pursuing them, even when EFF is willing to take the case. No matter how many times she reassures them about the smallness of the downside risk, as soon as she says $150,000 they are too afraid to continue even with free lawyers. Chills innovation—if you have no rational way to evaluate magnitude of risk, you need quite a warchest.  Irrational penalties exacerbate other problems.  If you guess wrong—put up an orphan work and you’re not a library, your downside risk is too big.

Copyright’s purpose is not to chill innovation/speech; also they don’t work as deterrents. Consider filesharing. The scary damage awards did not stop filesharing, according to all reports.  Deters lawful uses, but not pirates.

Proposals: (1) No penalties with reasonable good faith belief that what you did wasn’t infringing; (2) get some ties to actual harm—minimal unless showing of actual harm; (3) no financial penalties for commercial/personal use; (4) clear reasonable guidelines on range, not just what judge or jury thinks is just.

Annemarie Bridy, University of Idaho Law School

Less is better: narrower scope/penalties could get us more deterrence and more public commitment to enforcement of IP rights.  History repeats: New/disruptive tech leads to panic among copyright owners; pressure to do something fast; criminal infringement liability expands.

For over 100 years, was exclusively civil cause of action. Then criminal infringement existed but was narrow and misdemeanor only. 1976: felony penalties for repeat offenders, then 1982 to first-time for some types of works, 1992 for all types of works. Internet age has given two watershed moments: 1997’s NET act, eliminating commercial motive as a prerequisite for criminal liability, for as few as 10 unauthorized copies. Then creation of IP enforcement coordinator office in 2009, leading to significant expansion of criminal enforcement and demands for permanent stream of public money. SOPA would have extended noncommercial felonies to cover public performance right; another proposal would’ve provided 5 years of prison for streaming 10 shows over 6 month period.

What would be rightsizing?  Think of the different dimensions.  Scope of conduct and scope of penalty.  Conduct: required mental state; nature of infringement (qualitative); amount (quantitative).  We currently require willfulness—with respect to the underlying act or with respect to commission of a crime?  Do we require financial gain/how do we define financial gain? Which exclusive rights? How much more than de minimis infringement do we require, in what amount of time?

Penalties: fines, prison time, and property forfeiture.

Find the right value for each—optimize both for deterrence and fit with social norms, as well as accommodation of competing law enforcement priorities. 

Costs of expansive criminalization: noneconomic costs include public perception that law doesn’t work/doesn’t fit about small-scale private infringement. This undermines respect/compliance. Chilling effects. Enforcement costs of enforcing against small-scale infringements outstrip economic harm to property owners.

Restore requirement of commercial motive for all criminal infringement, and limit liability to larger infringements. She thinks that the 50-60 actual prosecutions per year fit this already. Be mindful that every public enforcement shifts costs of enforcement from private parties to taxpayers. What are the opportunity costs of that increased public investment?

Pallante: Can safeguard free expression, due process, access, and respect for IP together. Uncontroversial: interest of authors intertwined with interest of public, not counterweight to public interest. At center of the equation. Fair return for author’s creative labor, but ultimate aim is stimulate creativity for the public good. Congress has duty to keep authors in its mind’s eye.

Professional photographers create many/most of the images the public sees every day—the public record.  Much of incentive to create would be lost without copyright.

Freelance photographers create the largest group of works but are least able to access the benefits of © because of high costs of litigation, small amounts of money at issue, and many infringers are aware of this situations and use it to their advantage. Disruption to business/emotional stress of litigation = more than most sole proprietors can afford. Most images aren’t registered before infringement, preventing statutory damages and atty’s fees from being on the table. Many infringers are beyond the law and DMCA is little deterrent; 1202 is rarely enforced; takedowns are required for each infringement instead of one notice per image.  Metadata is routinely stripped from images, either on upload or through other action.

Plus Coalition has the greatest hope for tracking orphaned images, but it’s underfunded/understaffed. Need copyright small claims court to create efficient and affordable redress of claims for a few thousand dollars or less. Copyright Office could run it; limited discovery; limited recovery; no appeal.  Constitutional questions, yes. But desire to have justice, not simply legislation, definitely.

Ability to register images from within digital asset management workflow would help.  Photographer could select images at end of shoot.  Could be deposited for ongoing identification.  Registrations should be image searchable instead of just by rightsholder or title. This would require changes in registration practice and Copyright Office database. Annual subscription fee allowing unlimited registrations for a flat fee would help. Elimination of published/unpublished would simplify registration and eliminate one of the most confounding parts of the process; already too complicated/no point.

Returning fair use to a case by case affirmative defense instead of a broadly applied right would be good too. Much of library/university community has now turned to fair use instead of orphan works.

It’s easier to steal images than to license them; people who wouldn’t shoplift think nothing of stealing intangible works. It’s next to impossible to convince them of value of digital property. They think what’s on the internet is free for taking.  Photography is a pleasant activity for sharing for many people, making the problem worse.  Visual artists want their images seen but want fair compensation—everyone has figured out how to make money from images but photographers.

Need for machine readable persistent identifiers that can’t be removed, but not currently on the horizon. Image recognition software may help, but still need to figure out what’s authorized, though 80% are unauthorized. Getty Images made 30 million images available for free: stay on Getty’s server and Getty gets info on where images appear, who views it, etc. – metadata more valuable than unmonetized images.  Getty can’t keep up with infringements; where does that leave the individual photographer? Inability to keep up makes image recognition a marginal tool.

PLUS: the picture licensing universal system. Universal glossary of trade terms that are machine readable, with customary licensing packages. Registry to connect rightsholders and info and will digitally manage automated licensing. Closer to persistent machine-actionable info than any other product on the market. Working with UK Copyright Hub, Copyright Office, and other partners. Represents rightsholders and consumers of images. It isn’t in business of licensing, though.

Extended collective licensing needs to be created to facilitate small internet uses (RT: not sure “facilitate” is the right word there, or maybe “uses” is the problem; try “monetize” or “payments” since the uses seem to be doing fine); this would contribute to income stream for rightsholders. Google & Pinterest would bear significant portion of fee burden. Patterned after SoundExchange.

Photographers are uniquely disenfranchised from their legal entitlement. Time for gov’t to step in to ensure preservation of our heritage and reasonable profit from their works.  Justice for individual rightsholders, not more legislation.

Peter Menell, UC Berkeley School of Law, BCLT

Menell points out that he couldn’t figure out how to license the picture he wanted to use—the image of a lynchpin.

Gary Becker’s seminal Crime and Punishment: An Economic Approach. If we’re trying to optimize social resources we’d use a high penalty with low enforcement, and people would be deterred. Nice idea, but may not be true.  1961: Register issued a report about damages; foundation of 1976 Act.  Traced back to 1790.  Key elements: value of copyright is by nature difficult to establish, which provides reason to depart from standard rule about actual damages. Only damages were license fee; often less than cost of enforcement; award of profits would also likely be inadequate.  Ensuring both compensation and deterrence was a problem.  Report was sure experienced jurists could balance the considerations at issue, but shouldn’t be compelled to award more than they consider reasonable just because multiple infringements are involved. 1976 Act followed that idea, and for most of the 25 years after that it didn’t present a big problem. Enabled ASCAP and BMI to go around and get people to take blanket licenses; no massive awards for failure to take licenses.

1998 case: the court agrees that statutory damages must be sufficient to deter and shouldn’t award minimum estimated losses—then district judge Sotomayor. But subsequent events dramatically changed our understanding of these issues. The perfect storm: SCt overturned congressional judgment that statutory damages should be in judges’ hands.  Combined with digital theft deterrence/copyright improvement act that ramped up damages to $150,000 work, plus Napster: beginning of natural experiment. Industry then targeted end users. Unleashed warfare: over 35,000 people were sued. Hard to characterize them as evil, just average/curious.

Bad remedies led to questionable interpretations—does the P have to prove that there was a download, not just an offer to upload?  Understandable that Judge Davis thought that interpretation made sense rather than putting Thomas through a horrible ideal, maybe there’s no liability.  Result: two trials, damages went up.  The regime is out of whack with what Congress thought in 1961; no one wanted to create a lottery system. Eventually, music industry backed away.

Over time as tech changes, we see balance shift.  What really shifted recently was social norms. Can’t think of law as Becker did; must think about backlash and response. When someone is unfairly accused of infringement, the damages aren’t enough to deter.  Even when we tried to correct abuses, we didn’t. When he goes to the Prince toddler video, he sees the comments: people who couldn’t determine which song it was; people who say copyright law is garbage; people who mock the idea of this video as substitution for a CD. When people hold law in contempt, there’s a problem.

Also, porn companies have picked up where the RIAA left off—bringing 1000s of defendants into one case, not even willing to pay multiple filing fees. They use the $150,000 number in the threat letter. Swamps the patent troll problem; hundreds of thousands of defendants.  Judge Wright called attention to the use of this threat to embarrass, and said he didn’t want to use the court as an extortion scheme. But it’s difficult because the statute exists and this is hard to distinguish from other cases.

Safe harbors: When he looks at the facts in some of these cases, where Veoh has set up a group working in Russia trying to strip porn out to protect the business—they asked “aren’t infringing videos the majority of Veoh?” Response: they’re unauthorized, but don’t use the term infringing—I’ll explain to you on the phone. Judge gave Veoh SJ; it should’ve survived, but because of statutory damages they were destroyed by their bills, even as they were trying to put tech in place. YT is a similar story with a bigger war chest.  YT: statutory damages are the elephant in the rule; judges are turned off by the prospect.

SOPA: another manifestation of an unpopular system. At this point copyright is a counterexample to Becker’s optimal enforcement scheme.

His suggestion, with something to offend everyone. In an ideal world, detecting infringement would be easy. Making available regime is a sensible rule, but we need to recalibrate damages. Small claims, without lawyers—more like traffic fines. Get people into licensing regimes. Fred Yen’s suggestion: deal with abuse too.

Once we open statutory damages, we can solve many other issues. Restore confidence; stop alienating consumers and judges; reduce litigation fees; build bridges to Silicon Valley. Why not think about notice and staydown as a trade for getting rid of statutory damages?  Truly safe harbor for building the tech, but avoiding distortions of copyright driven by fear of statutory damages. §512, orphan works, fair use all get on the table if we can talk about statutory damages.

Zimmerman: how much money does uncompensated online use cost photographers? Would these people be paying?

Mopsik: the truth is in the middle. Many members find unauthorized uses every day. There may be issues of model releases (models due compensation), or violations of exclusive licenses. Small uses by householders, blogs—he’s not particularly worried about those, but the uses with an income stream.  (I wish he’d tell the paparazzi photo trolls that they should leave blogs alone.)

Zimmerman: music industry has told us there’s a vast substitution effect, but far less clear with photos—masses wouldn’t consider paying licensing fees. What is the small claims court solving for?

Mopsik: frictionless licensing. Not interested in being punitive, but fair and reasonable compensation for usage.

Menell: copyright is about cultural norms, since Napster. No more going through turnstiles for access. Licensing is a goal. If we can’t do it, then we can move to levies, though that’s politically complicated.  Rebuild around formalities, tools, competition.  Ideally, people would gravitate towards norms of participation in a market. That’s happening now with music services. Motion pictures: shorter windows; people like some of the new services.  Being able to figure out how to license photos would be nice.

Bridy: how would blanket registration work?  Could the Office afford that?

Mopsik: our position was that we were trying to encourage registrations; it would only be for online use, not paper registrations; we were waiting for a number for what it would cost per year. Many photographers take a month’s work and register that in a single registration for one fee. Issues with independent economic value; different courts treat group registrations differently. Unique high-value images you might want to register alone. With sheer volume of images, that starts to get expensive for a sole proprietor.

Zimmerman: fee structure/financial needs of Copyright Office could be dealt with by other means.

Chris Sprigman: new occasional photographers; photographers who do it as an avocation, and are less motivated by money; wedding photographers who operate very differently than news photographers. How much is what’s going on the market under technology versus the copyright system?

Mopsik: capture/processing may be faster, but you do all the retouching etc. that used to be done by the processor—increased burden. Part of the stress photographers feel is change in business models. But there’s a difference between images created on demand to fulfill a client’s need, in the proper format, archived for client’s use—added value from photographer. Copyright is contributing to the stress. There are ways copyright and photographers could work better together, like registration API.

Q: is there a way to distinguish factual photographs and works that are more intended to be creative/more highly protected?

Mopsik: doesn’t like the form of the question—Richard Prince/appropriation artists copy ads.  To a photographer every image is unique.

McSherry: the key point isn’t the fact/fiction distinction, but grappling with the reality that we have so many copyrighted works circulating all the time, and reform should figure out how to align the law with the fact that everything is copyrighted and authors have a variety of interests, some of which involve money and others don’t. Learn from the troll problem: we don’t want a world with a lottery system.

Mopsik: our guys aren’t trolls but small individuals trying to make a living.

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