belatedly: more energy drink precedent

Hansen Beverage Co. v. Innovation Ventures, LLC, 2009 WL 6597891 (S.D. Cal.)

This December 2009 opinion just showed up in my Westclip search, and it addresses an area of interest to me so I’m including it.

Hansen moved to dismiss defendant’s false advertising counterclaim. Defendant, dba Living Essentials, produces a two-ounce “energy shot” under the 5-Hour Energy brand. Hansen produces energy products under the names Hansen, Monster, and Lost.

First, Hansen argued that Living Essentials was actually, and illegitimately, attempting to enforce the FDCA. The allegations were that Hansen’s ads were false and misleading in that they (1) promoted Hansen products as a way to get intoxicated; (2) misled as to calorie and sugar content; (3) misled as to energizing effect; and (4) misbranded Hansen products as dietary supplements. So, do these claims require interpretation and enforcement of FDA regulations on a matter on which the FDA has not yet ruled? Or has the FDA taken a position such that the court can determine whether a statement is false, whether or not that requires reference to FDA standards/definitions?

On intoxication, Living Essentials argued that Hansen markets its products as safe to mix with alcohol or for young children to consumer. Hansen “allegedly posts alcoholic drink recipes on its website, targets youths by sponsoring young athletes at sports events, and promotes at college campuses, bars, and nightclubs.” This is allegedly dangerous because it leads to more drinking and because Hansen doesn’t disclose the caffeine or guarana content of its products. Hansen’s products are thus allegedly “adulterated” in violation of California’s Sherman Law because they “present an unreasonable risk of illness or injury when used as directed or marketed.” California hasn’t approved the use of energy products as “food additives” to alcohol.” Moreover, promotion of products labeled “dietary supplements” as intoxicants allegedly constitutes misbranding.

The court found that this claim was not solely governed by the FDCA or FDA regulations, which don’t cover the use of caffeinated drinks as alcohol mixers. Nor was it clear that the FDA has attempted to deal with this issue, or even has the responsibility do so. Hansen itself noted that the FDA has never regulated what consumers can do with food they have bought. The core of the falsity/misleadingness claim was that the suggestion that it’s safe to mix caffeinated beverages with alcohol is false. Living Essentials can use FDA regulation to establish the standard or duty defendants allegedly failed to meet. Moreover, it can establish the falsity of this claim through other evidence.

Calorie/sugar content statements: Many of Hansen’s products are sold in 16-ounce cans that supposedly contain two servings, such that the nutrition information on the labels is based on 8-ounce servings. But the cans are allegedly promoted to be, designed to be, and customarily are consumed in one sitting, making the calorie, sugar, and related content information deceptive. So, Hansen’s ad statements include: “experience a can ... to achieve the benefits of 100 mg of EGCG,” “half the caffeine of regular coffee” but “Twice the buzz of a regular energy drink,” and “It’s definitely not soda but you can still down the whole 16-oz can.”

This was mostly a matter for the FDA, which has promulgated regulations on proper serving size. However, to the extent that Hansen misled consumers into thinking its products are twice as effective as competing products when they were really just twice as large, this claim was not precluded.

Energizing effect: Hansen made statements such as: “It’s a wicked mega hit that delivers twice the buzz of a regular energy drink,” “Lo-Carb Monster Energy still delivers twice the buzz of a regular energy drink, but only has a fraction of the calories,” “Java Monster ... half the caffeine of regular coffee. Twice the ‘Buzz,’” “works, tastes, and mixes as good as the original, but with only 10 calories” and provides “the energy you need to party all night with just 10 calories.” Living Essentials alleged that these statements were false or misleading based on the products’ ingredients and generally accepted principles of biochemistry, pharmacology, and physiology. The truth or falsity of these statements didn’t require interpretation or enforcement of the FDCA or its regulations.

Dietary supplements: Living Essentials argued that Hansen was misbranding by labeling its beverages as dietary/energy supplements but promoting them as conventional foods and alcohol mixers in violation of the FDCA and the Sherman Law. This was a straightforward misbranding best resolved by the FDA.

Hansen also argued that the state-law causes of action were preempted by the FDCA. Basically, for these purposes, the law preempts any state food & drug regulation laws that aren’t identical to federal law and saves those that are. The unfair competition claim under California law was predicated on the violation of another law, the Sherman Law. Without getting into the gory details, the court determined that the requirements of the California Sherman Law were identical to the federal law and thus the state-law claims weren’t preempted, even though there’s no private remedy for FDCA violations in themselves. Result: there is a private cause of action for conduct that also violates the FDCA, adding potential enforcers beyond the FDA; Congress may not have wanted direct private enforcement of the FDCA, but there’s insufficient reason to think it wanted to control how states could provide for enforcement of their own identical food & drug laws. See In re Farm Raised Salmon Cases, 72 Cal.Rptr.3d 112 (2008) (addressing the same situation).

Hansen then challenged Living Essentials’ standing under the Lanham Act, which in the 9^th Circuit requires a commercial injury that is competitive. Allegations of competitive injury are sufficient when they allege that false or misleading statements tend to divert business from plaintiff to defendant. It’s undisputed that the parties are direct competitors in the energy product business; Living Essentials sufficiently pled a tendency to divert sales.

What about standing under California law? Here the requirement was injury in fact and lost money or property. The court found that Living Essentials sufficiently pled lost money or property caused by Hansen’s allegedly false or misleading ads and labeling.

Then Hansen argued that the counterclaim failed to meet Rule 9(b)’s requirement to plead fraud with particularity. Here, however, the counterclaim didn’t sound in fraud because Living Essentials didn’t specifically allege fraud, fraud wasn’t essential to the counterclaim, and Living Essentials didn’t rely entirely on a unified course of fraudulent conduct (founded on intent to mislead) as the basis of the claim.

The only allegations that could be construed as fraud-based were those that Hansen “knew or should have known” that its representations about energizing effect were false. The court found that these allegations were adequately pled: Living Essentials provided the specific content of the statements and identified the products on which they could be found. The allegations that the statements were false based on the products’ ingredients and “generally accepted principles of biochemistry, pharmacology and physiology” were specific enough to provide the required notice.

Puffery: Hansen argued that its statements were nonactionable, subjective and nonquantifiable puffery, particularly statements about providing “twice the buzz” and the drinks’ capacity to help a user “party all night.” The court disagreed. At this point in the proceedings, it was a factual question whether “buzz” can be quantified or whether it is merely subjective.

Disclosing names and the First Amendment

Doe v. Reed, -- S.Ct. --, No. 09-559, 2010 WL 2518466 (June 24, 2010): Many interesting things to say about this case upholding the facial validity of disclosure of the names/addresses of people who sign petitions that are placed on the ballot, but I was struck most initially by a bit in the dissent by Justice Thomas:

A referendum supported by only one person’s signature is a nullity; it will never be placed on the ballot. The Doe petitioners recognized as much when they—and more than 120,000 other Washingtonians—joined … to effect Protect Marriage Washington’s “major purpose” of collecting enough valid signatures to place Referendum 71 on the general election ballot. For these reasons, signing a referendum petition amounts to “‘political association’” protected by the First Amendment.

This Court has long recognized the “vital relationship between” political association “and privacy in one’s associations,” NAACP v. Alabama ex rel. Patterson, 357 U. S. 449, 462 (1958), and held that “[t]he Constitution protects against the compelled disclosure of political associations and beliefs,” Brown v. Socialist Workers ’74 Campaign Comm. (Ohio), 459 U. S. 87, 91 (1982).

Now, I see the free speech argument. But I’m fascinated by the idea that signing a petition is political association, in that it offers essentially no opportunity to interact with other signatories, no back-and-forth, no continuity—nothing that I think of as “association.” Signers are like books on a library shelf; they may be about the same topic, but it’s not as if they’re actually informing each other or expanding knowledge just by being side by side. And I can’t help but wonder where this impoverished view of association comes from. Is it a function of extreme individualism, where individuals and their views are presumed to be complete before even encountering other people, so that the point of association is just to increase the volume of speech? Or is it from the broader political culture? We’ve seen the rise of many ways of outsourcing/specializing the labor of doing politics in the past few decades; if giving money/signing is all you need to do and the career folks will take it from there, you don’t need to think of arguments or strategies or anything else.

(Okay, fine, there was one other thing I noticed: find the flaw in the syllogism, which I present to you in its entirety from Justice Alito's concurrence: "Third, the experiences of other States demonstrates that publicly disclosing the names and identifying information of referendum signatories is not necessary to protect against fraud and mistake. To give but one example, California has had more initiatives on the ballot than any other State save Oregon.")

CIP: legislative update and Patry

Panel 5: Conservation and Expansion: Legislative Updates

Kimberly Bonner, executive director, Center for Intellectual Property, UMUC (Moderator)

Steve Worona, director of policy and network programs, EDUCAUSE

Higher Education Opportunity Act (HEOA): What the law doesn’t say: original proposal would have had Secretary of Ed. be the copyright enforcer for the university system, identifying top DMCA-notice-getters and singling them out to review their plans to prevent illegal downloading and requiring them to implement technology-based deterrence. But number of notices has nothing to do with the amount of infringement; doesn’t vary with time of year, new business models for tracking claimed infringements, etc. Almost nothing of this proposal made it into the law. Also not in the law: requirement that every institution “thoroughly analyze its computer network” to determine whether it is being used to transmit “copyrighted works.” How long would it take to determine that? Well, you can’t not transmit copyrighted works. (This partakes of a long tradition in the content industry, demonstrated also in Greg DePriest’s presentation yesterday, to say “copyrighted” when meaning “produced by the major content industry players.” They sure like everything about the rise of copyright rights, except for the parts where other people might have copyrighted works worth thinking about.) BBC blogger interviewed the legislator, who says the language came from the MPAA.

Conference report: tech-neutral, not favoring or requiring any particular tech measures because tech changes a lot. Each institution should be able to have its own plans for complying, including those that prohibit content monitoring.

HEOA requires three things, as of July 1, 2010: (1) implement a plan to effectively combat the misuse of its networks (language was the result of a big fight, taking out “prevent” and “detect,” the former of which was impossible and the latter of which would require content monitoring); (2) use one or more technology-based deterrents; (3) periodically review plan to assess its effectiveness based on relevant assessment criteria (which doesn’t mean it has to do better each year, just that it still has to effectively combat misuse—if infringement generally goes up).

You have to offer legal alternatives; the university can determine what that means—does not mean you must contract with a provider to offer a site license; the day this was announced, Ruckus, the only provider of such a contract went out of business. iTunes does not offer site licenses, and putting Apple out of business on college campuses couldn’t have been the intent. So, legislative history means providing a list of alternatives and being sure not to block those alternatives. Educause has a list of alternatives, which the regs say can be used for compliance. Finally, you have to provide information to your community on the civil and criminal penalties for violating copyright and the policies you have. There is set language summarizing copyright law that you can use that was worked up by consensus.

Regs ID four types of tech-based deterrents, one or more of which may be sufficient. (1) Bandwidth shaping, done by almost all campuses, whether for compliance or not; (2) traffic monitoring; (3) accepting and responding to DMCA notices, done by everyone; (4) commercial product designed to block filesharing. He reiterates: one may be enough. You are likely already in compliance.

We have always done more than required, acting as if we were stored content providers when we’re not; commercial ISPs don’t do as much.

Problem: people arrive on campus having been sharing files since third grade; need education. HEOA: opportunity to take a careful look at what we’ve been doing all along, document it, put it in a set form, and show what we’ve been doing. Almost entirely self-assessed. No reporting requirements other than the general certification that we are following DoE regs that registrar fills out every year. Allows innovation of BAYOU—be aware you are uploading. Allows outsourcing of IST.

When ill-conceived laws are proposed by people without our best interests at heart, it’s still possible to do ok.

Maria Pallante, Copyright Office: This Congress has not been focused on our issues. Subcommittee on IP has been abolished, and IP is now before the full Judiciary Committee, which has a lot on its portfolio, which is why we haven’t been able to restart orphan works/§108 reform, but are meeting with them a lot and trying to tee them up. §108 is where we really need reform; the executive report is divided into areas of consensus and areas where everyone agrees there is a need but can’t agree on what to do. Libraries should be able to use private contractors to exercise their rights, for example. There should be some criterion for qualifying as a library—some public interest benefit. Etc.

Really exciting question: what can libraries do in terms of public access/site display? There were no recommendations from the §108 study group; Copyright Office’s recommendations are tied up in GBS, because we don’t want a for-profit company to be able to do something libraries can’t.

International issues: Berne’s three-step test is an issue when proposing limits/exceptions for things like mass digitization. Easier to pass when you’re dealing with public-oriented institutions. But if you’re a museum, you almost certainly need a for-profit publisher to distribute your book for you. Harder to justify an exception for them under the three-step test. Which means that the museum is going to be asked to indemnify the publisher. (I don’t think this is what the three-step test means, and I’m assuming she omitted a number of steps in her reasoning for purposes of the presentation. Among other things, there is no indication that Berne is directly applicable to a private lawsuit/private rights, so if there were an exception in the Copyright Act that applied, any problem would be the US’s and not the publisher’s or the museum’s.) So then we think about collective licensing. A mandatory license for any actor meeting the criteria (libraries at the top of the list) who wants to make a use within the specific purposes outlined (that aren’t already fair use). In Europe, they’re ahead of us, because they don’t have fair use; libraries etc. are used to licensing everything including preservation; but then again they also have more funding from the government to pay for digitization.

Possibilities: further activism to require or encourage library exceptions/limitations, starting with on what’s going on around exceptions/limitations for the visually impaired. Let libraries send special-format books across borders, to places with no exceptions of their own.

Brandon Butler, director of public policy initiatives, ARL: ACTA and Victoria Espinel’s report from this week on IP enforcement. Good and troubling news on both.

ACTA: Not from any established international forum. Negotiating about tariffs is usually secret; this was negotiated as a trade agreement and thus kept secret. This made people very nervous. Finally it was made public, assuaging some fears—does not require amendment to US law. Problem: there are a lot of things that are in US law that aren’t in ACTA that are important to the way copyright law works; ACTA only has the restrictions, not the protections for libraries, etc. Net effect is to produce something very different from US law for people elsewhere—all of the hammers for content owners and none of the shields for users.

A lot of the agreement really is about counterfeiting. Drugs etc.—if you figured out balance in the internet chapter of the agreement, or get rid of it, opposition would go away and we could get counterfeiting taken care of. Internet chapter exports statutory damages and secondary liability but without any of the US’s restrictions like fair use, which protects Google here. Elsewhere, secondary liability is very limited, and damages are usually actual damages; Google can survive losing a few cases in Belgium—weak penalties balance out lack of exceptions. ACTA changes the penalties and the liability of information organizers without adding the exceptions.

Europeans also want GI provisions, which may tank the whole thing (so raise a glass of sparkling wine to the Europeans!).

IP enforcement coordinator, Victoria Espinel, position created by the PRO-IP act. Ended up in OMB; some rightsholders felt she should be in a place with more guns, but OMB’s business is coordinating agencies so he thinks it’s the right place. Joint strategic plan, just released: encourages private action by ISPs but preserving the norms of free speech, fair process, legitimate competition, and the privacy of users. In his opinion, this means no three strikes because of the significant interference with free speech without judicial factfinding. Report endorses incentives of copyright, but also the ways in which fair use generates creativity as well—building upon others’ work is not the thing to target. The report emphasizes balance, fairness, and process.

Espinel in recent hearing recognized that there’s a lot more to IP enforcement than P2P. Counterfeit drugs and other goods are a vital focus. Also a question about the data/assumptions behind lost profits claims from industry—is a download really replacing a $30 purchase? A lot of studies presume a one-to-one substitution rate, which is ludicrous. GAO pointed out that there is no good data, even though we’re sure it’s bad. Still, Congress relies on these studies claiming hundreds of thousands of jobs lost and billions of dollars. There are further rounds on these issues coming!

Pallante: note that the Obama administration is friendlier to balance than we’ve seen in a while. It’s tiring to fight, but you do have to show up for the fight. We are really proud of our exceptions and limitations. It would be easier for American businesses if they existed other places, just from a business efficiency perspective. Complication: the way the legal regime has worked to date is treaty with minimum rights, and you’re free to go home and choose limits/exceptions. Americans are very good at showing up on Capitol Hill and asking for exceptions. What if a country doesn’t have our democracy/Constitution (First Amendment)/history of common-law development? Is ACTA the right vehicle to export limitations? Should we instead be doing more education/model laws? Is it fair to ask the trade representative to include all sorts of exceptions in a counterfeiting measure? (I would ask: Is it fair to ask the trade representative to include internet provisions in a counterfeiting measure?)

Keynote Address: William Patry, Senior Copyright Counsel, Google, Inc.

Copyright Panics and the Copyright Wars

It’s not true that those who push for ever-greater rights are pro-copyright and those who resist are anti-copyright. False binaries. Shameful rhetorical ploy to call people “copyright haters.” Personal vilification is a blood sport in DC. “You’re either with us or you’re against us.” There are heroes and villains and nothing in between. It’s ok to question the mission.

Canada recently introduced a copyright reform bill, to much praise and some criticism on anticircumvention rights, which don’t have exceptions for things that are authorized in the analog world like format-shifting and time-shifting. In a speech defending this provision, a minister of commerce said that opponents don’t believe in copyright at all, pretend to be experts but find any excuse to drum up fear, mislead, misdirect, push people in the wrong direction and undermine a comprehensive effort to get things right. Technical, nonsensical, fearmongering opposition. (Clearly referring to Michael Geist, though Patry did not name him, nor did he even name Canada.) Opponents become archetypal Other, strange people not just unlike us but dangerously so. Best thing to do: confront them, defeat them.

Wars need weapons: courts, legislatures, international agreements, even language. The first casualty, as in all wars, is truth. Another casualty: loss of faith in our laws. We want them to be fair, fit to purpose, and accountable to reality. People don’t respect and won’t follow laws that conflict with the reality of their own lives. We also want effective laws. Tom Tyler’s work: why do people obey law? He’s written on compliance with copyright law specifically. Calls into question the idea that harsher remedies will lead to more compliance. The threat of being caught and punished is not a key driver of compliance. You would have to have an amazing number of police, high certainty of punishment, and high severity of punishment—intolerable in a democratic society. China has executed a number of people for copyright infringement; some copyright owners applauded that, but it’s not going to happen here (and, I might note, has not necessarily done what copyright owners hoped in China, either).

Effectiveness of IP laws depends on voluntary cooperation. So how do you get it? When he was drafting legislation, he’s embarrassed to admit, he didn’t think about that. What’s the difference between 5 years in jail and 10 for criminal infringement?

First, figure out what the public thinks is fair. You don’t want to pass laws based on a survey or on focus groups. But substantial divergence from fairness means noncompliance. Even show suits against a few violators won’t work in those circumstances.

Second, procedural legitimacy. People want to believe that laws were passed in a fair way. Those who wanted a say were able to have it before a decision was made, and decisionmakers genuinely listened and considered. Then, people will generally follow the law even if they disagree, though of course there will still be lawbreakers who can legitimately be punished. Note the controversy around ACTA’s non-transparent nature. No one is well-served by international agreements regarded as illegitimate.

Law is not an answer to business problems. A disturbingly high percentage of copyright law disputes are in fact business problems. We’re fooling ourselves (and have been for the last 30 years) when we think that we can change our laws in ways that lead to better business solutions. A faith-based, morality-focused approach to copyright won’t work. Policymakers have accepted the idea that we create our own reality: extending copyright term 20 years will lead to the creation of more works. That’s just demonstrably false, and yet we treated it as if we were true. Saying that you need to make out the case for more rights doesn’t mean you can’t do so, just means you have to make your case like everyone else.

He heard someone say that giving money to corporations must mean that they’d create more: but that’s ridiculous. Corporations have a duty to maximize money, not creativity. Even if all you do is make movies, you’ll be deciding on what will give you the most money over a very short term. It’s not 95 years. That sort of belief, that if you simply throw money at corporations, you’ll get a better result, is pure faith.

Morality and language in the faith-based approach: showed a clip of Jack Valenti in a talk at Duke from 2003, a great lobbyist. Said the same thing behind closed doors as he did in public. His talks were efforts to create moral panics: exigency that could only be dealt with by giving his clients what they wanted. This is what Patry wants to analyze and advocate against.

In response to questions, Patry expressed hope for recognition of the utility of formalities—you could require some sort of formality before enhanced damages/damages beyond reasonable royalty would be available. Another change: realization that collective administration of rights is the only way forward for various genres, most clearly photographers and musicians. Copyright has always been equated with control, spurring top-down forms of regulation. And the assumption has been that control equals money, so that if you take away control you take away money (and if you have control you will get money). But you can’t control any more; a control focus in copyright will not work. Should skip straight to the money. Those people who love to create will do so anyway; if you care about the money, skip the nonenforceable exclusive right and focus on what reality is digitally: the need to get people paid. Collective administration of rights is probably the only efficient way to do that.

CIP: Google Book Search and User-Generated Content

Panel 1: Reuse, Recycle, Rethink: The Impact of Google Book Search

Panelists:

Peter Jaszi (Moderator), American U. Law: Scanning as benefit to libraries and incidentally to authors (for whom snippets might lead to purchases)—copyright owners however saw it differently. Note massive evolution of project from inception to settlement. One key question for discussion: is the GBSettlement good for culture?

David Balto, senior fellow, Center for American Progress: Antitrust issues are the teeny tail on the big dog. Ask who is complaining? You can tell whether something is good or bad for consumers by answering that question. The loudest complaints against the GBS come from Amazon, which wants to charge a fortune for access to the books Google wants to provide more cheaply. If a competitor is complaining, it’s good for consumers. Settlement is good, thinks it will be approved by the court.

Lateef Mtima, Howard Law: This is just one move in the ongoing readjustment of rights that characterizes the history of copyright. (Though I note that he spoke about what Congress has done to respond to technology in the public interest much more than what private actors have done; Jessica Litman’s writing on the ways in which private actors have simply decided to ignore the law as written is relevant here.) Among the things we need to take into account are subdivision of rights in new ways, combined with term extension—how do you find/aggregate the rights? Even if you know the publishing co. and the co. is still in business, it might not have the e-publishing rights.

When we don’t know what the lost author would want, what should we do? Should we presume the author wants wide dissemination? Or should we presume she wants to maximize control in the hopes of maximizing revenue? With individual authors as owners of rights, the former is a better presumption—approach orphan works from an opt-out perspective. Marybeth Peters says that turns copyright law on its head, but he thinks it respects authorship more. We don’t have the author in front of us, as the copyright law contemplates; we have to interpret and guess what the author would want. In keeping with the law’s objectives, we should presume the author would go for dissemination.

History of social justice issues around IP—African-American entrepreneurs unable to capture full value of their work because of refusals to deal by whites/lack of access to credit. Can’t ignore that in talking about rights.

Maria Pallante, Copyright Office: Doesn’t think the settlement will be approved. Expects a roadmap from Judge Chin for an acceptable settlement within the framework of class action law. The DoJ statement of interest is a little divided; starts with praising the settlement’s goals—a lot of support for a registry that would allow licensing and micropayments; pressure on authors/publishers to make themselves known (is this impermissible formality under Berne?)—people are a little impatient with the perspective of some rightsholders that they don’t need to do anything with a published work to make themselves known/findable. Settlement would help with access for the blind.

Settlement also creates a new procedure for orphan works. Right now the law is strict liability no matter how good your search is; on the table is a legislative model that would remove liability for individual diligent searches. But clearance on a large scale with multiple rightsholders is infeasible. She thinks that the registry system is something for Congress to look at, not the courts. To be fair, the argument is that Congress hasn’t done so, and Google has; the government doesn’t agree that this is proper. It would create a benefit just for Google—ability to use works with no liability; could anyone ever catch up? Just because Google invested in a fair use argument, does it deserve this?

Government position: scale it back; scope is too broad. Underlying litigation was a fair use debate: scanning books for a plausible fair use, snippets. Before the court is a broader proposal to sell books, sell subscriptions, etc. Google couldn’t have done this legally without consent. This is a class action question, not a copyright question. The settlement isn’t sufficiently tied/anchored to the underlying litigation. Scale it back, settle what was at issue; create new business models, but you can’t force people into them. Settlement rewrites authors’ contracts from 1923 on—the contracts don’t talk about digital rights; publishers don’t know if they own the rights; GBS just says by fiat how the split will work. Members of the class didn’t knowingly hire these parties to rewrite their contracts going forward.

Orphan works—adequacy of representation. Google scanning is ongoing, which seems like a compulsory license for one entity. If Google hasn’t scanned your book yet, do you have a ripe claim? Similar with foreign authors: if you’re affected by this but don’t know it, there’s an adequacy of representation issue.

Balto: Doesn’t trust government involvement with innovation. What Google’s done is create the landscape for access to wide varieties of information; other alternatives will arise. Even if that wasn’t true, he can think of few endeavors with as much risk and requiring as much investment as GBS; hard to see Google’s monopoly profits. Google’s being forced to protect authors’ financial interests, not its own monopoly profits. Google is also taking steps to get permission from authors.

Scope of the initial claims: frequently, in the course of litigation, settlements are prospective, settling the underlying conduct. You don’t want just to stop one instance of bad conduct, but you do want to resolve future conflicts.

Pallante: To clarify, she doesn’t know whether Google seeks permission. In the scope of the settlement, prior search would not be necessary (that is, if I understand her correctly, after the Registry tries to find the owner and fails, you don’t need to update the search ten years later; I think also she/the Copyright Office objects to the fact that scanning proceeds before the search is complete). The Authors Guild says that they think they’ll find most of the authors if there is a check waiting. There’s some experience with photocopying, trying to find people to whom royalties are due; some recipients freak out and think it’s a scam. It’s all about scale and who the beneficiaries of scale should be. We also have international treaty issues. Suppose we decide we love opt-out so much we want to extend it to universities/libraries (don’t other countries have these regimes?).

Mtima: The problem with much of the opposition is that 98% is too theoretical. (Like the possibility of a massive oil spill from offshore drilling? What could possibly go wrong with outsourcing regulation to the private sector? Okay, look, I am more on the side of GBS than not, but it’s far from crazy to worry about unmaterialized-as-yet risks.) Show him a perfect class action resolution. Also, remember that copyrights are not absolute. Real property rights are limited too. The author doesn’t have the exclusive right to determine who will read her work. Anyone who can get ahold of the book can read it. Reproduction and distribution, on the other hand, should be compensated.

Balto: there’s something disconcerting about our two alternatives. The chances of Congress effectively grappling with these issues is the chance I have of flying unaided to the moon. Then GBS is an unwieldy class action structured by a group of lawyers (unlike law in Congress, of course).

Pallante: Government agonized over this, but concluded that class action law doesn’t let you go this far beyond the underlying dispute. A properly defined and adequately represented class can settle a lawsuit over past conduct and also license a somewhat broader range of conduct. Nevertheless, class action settlements must be subject to reasonable limits to ensure they’re resolving actual controversies. Fullscale text sales weren’t within the scope of the controversy.

Why should Google be able to sell for profit books that were once in libraries due to taxpayer money, and libraries can’t? Why not have an opt-out system that would benefit everyone, and start with educational and library uses?

Mtima: He doesn’t think it has to be only Google.

Pallante: for others to do it, we need legislation, and legislation that broad is very unlikely (see: orphan works). We have international standards that are of concern.

Mtima: there are so many business models, and so many assertions that they were infringing, many of which fell apart when tested. We shouldn’t let claims that “you’re building a business through infringement” be dispositive. Many scholars wish Google would have stuck with its fair use claims.

Balto: He agrees this is a public good, but he’s suspicious of claims from proponents that we’ll get another opportunity (like an overeager salesperson). If it fails, Google will either have to litigate or lobby. Wouldn’t having more players at the table for fair use or legislative reform raise the likelihood that we’d get a decent settlement?

Pallante: Europe has accepted that mass digitization is a social good that should be explored with an acceptance of cost. Congress doesn’t yet grasp the goal of mass digitization. In Europe, she asked the head of the Copyright Union about orphan works—they want to do it before the Americans digitize their culture.

Panel 2: The Changing Landscape: Social Media, P2P Filesharing and Culture

Rebecca Tushnet (Moderator)

Questions: What is really happening on campus with filesharing and similar activities? What is this piracy people are always talking about (Adrian Johns’ recent book Piracy makes a fascinating case that IP is defined around, and after, “piracy”), and what should people in the educational community be thinking about, especially knowing that teaching and research are likely not what’s first on the minds of the people designing and implementing new technologies and business models? In particular, how should we think about the new legal requirements in the HEOA and the idea of “graduated response,” the PR-based renaming of “three strikes” proposals?

Greg DePriest is VP, Technology Policy for NBC Universal, where his main responsibilities lie in the area of digital content protection.

How big a problem is piracy? Every 16 seconds we detect & verify our content being shared/transferred on P2P network within the US. The US is only 10% of the global internet piracy issue, and we detect only about 10% of the infringement out there—we feel pretty confident about those numbers. Sysco, P2P is growing 16% through 2014; 75% more than today; roughly 39% of consumer internet traffic at the end of 2009. One click hosting is also growing (compare to P2P), which means cyberlockers and streaming sites like YouTube—there will be a transition from P2P to these other means.

On campus: Illinois State, April 2007. Mainstream: 42% of students in residence halls engaged in likely infringement, most likely music; 24,000 titles; each user averaged 18 titles; no legitimate use detected.

Huge problem: need to use tech to fix a problem that tech created. Three snapshots of our content on UGC sites like YouTube, DailyMotion, Veoh. In mid-2007, most of the content was found on US sites. Early 2008, UGC sites began to check before posting and filter out copyrighted content depending on wishes of copyright owner; NBC content fled to China as of mid-2009, with Megavideo an aberration—servers in US but headquartered offshore. Lesson: Tech works. (Is that the lesson?)

Recommendations: establish a tone that filesharing is unacceptable. Teach students to remove P2P software from PCs; students may not know it’s running. Use existing tech; don’t forget about your wireless networks when developing a plan to effectively combat filesharing—you can choose your own metric: recidivism; number of notices you are receiving. May wish to separate residential network from research network, allowing P2P on the latter. Block P2P and provide students with a day pass to do WoW upgrades or Linux or the like. Other schools use a box to detect transfer of copyrighted content and send students an email warning them, keeping track of who’s been dinged and escalating if there’s no change. Reduce bandwidth available for filesharing. Use DNS to warn students before permitting them to visit known pirate sites like Rapidshare, MegaUpload, OpenBittorrentTracker, etc. Michigan uses a system: be aware you’re uploading—sends an email to students who are detected using P2P systems.

Jim Burger, attorney at Dow Lohnes specializing in representing technology companies on IP, licensing, communications and government affairs, thus everything he does is relevant to this panel. These views are however his own.

Education on copyright is desirable. HEOA is misconceived and we are happy to tell you offline how to comply. But the problem is defining the threat. Threats are relative, shifting, and depend on context. What’s the impact? We have no proof that the business/economic problem is a big one, though there is no doubt that there is some loss. Multiple studies going multiple ways. GAO took a hard look and concluded that there’s a sizable problem but we don’t know the economywide impacts; difficult if not impossible to quantify. Huge numbers is not the same thing as huge impact. The copyright law is designed to spur creation; what is happening given this incredible amount of piracy? Book publishing surged, albums doubled, movies globally went up by 33%.

What happened to the record industry, then? There is a problem: a decline in music. It wasn’t until they killed Napster in 2001 that the industry started to lose sales. But also in that first period, DVD sales went through the roof. Then music singles sales went through the roof. People just started spending entertainment money differently. (This reminds me of the debate over newspapers. Piracy/copying isn’t the real problem; the problem is that people don’t want to pay for most of what newspapers want to sell.) Infringement online is wrong, and requires educational response, but also requires business models. P2P is passe; numbers are declining rapidly. Other things are taking its place—including legitimate cheap rentals and streaming. Netflix—friend or foe? If you can rent a blockbuster for $1, then we become a nation of renters; serious business impact. Netflix will be in 10% of TV households by 2010, and projection is that DVD shipments will fall off and streaming will replace it exponentially fast.

Time Warner says transition to Blu-Ray will be extremely good for us. But there are also concerns about trading analog dollars for digital pennies. At digital dimes now, but that leaves a lot of ground uncovered. Problem: sale is more profitable than rental. Electronic sellthrough in particular is super-profitable. (I paid $9.99 for Up for Grabs, a great movie about baseball and property law; that’s hard to see as anything but pure profit for the distributor.)

HEOA tells universities to pay to protect their property. If their numbers are right, why wouldn’t they pay a few million for you to install the tech to save them billions? He objects to cost-shifting to universities. We don’t even know how much money is lost. If the movie industry doesn’t execute correctly, it will do badly, but it’s not the fault of those meddling kids and their dog.

Jim Griffin, who operates the OneHouse consulting firm: self-describes as “the digital media guy.” His work focuses on the digital delivery of art, and before OneHouse his activities included running the tech department at Geffen Records.

We need a sustainable economy of ideas. We need to make it faster, easier, and simpler to pay for ideas, art, knowledge, and culture. We’ve made it extraordinarily difficult to pay. To the extent that business model depends on stopping copying, or getting paid when copies are made, we need a new business model. Few people now think of photocopying as requiring compensation, and yet copyright law does. But we don’t have controls on photocopying machines; tech advance has made that irrelevant/impossible.

It’s alarming that we can say that paying for music/movies/books is clearly voluntary. It’s not required. A civilized society can’t survive long with payment for art, innovation, culture purely voluntary. Yet it’s still more abhorrent to condition access on the size of someone’s wallet or their parents’ wallet. We shouldn’t use money to allocate the fruits of knowledge; then we are deprived of those seeds being planted. If we proposed libraries today, the believers would clearly be considered communist for taking tax money, buying things for people, and giving them away. A child should be able to read any book, watch any video, hear any song without worrying about paying; we are the ones who benefit.

Rising tide of digitization cuts a shorter path from source to destination, just as with a river; those who were at the bends are undoubtedly sad, as are those in the path of the new, more direct route. So long as that content is a product, we’ll think of digitization as theft. He hates the term “consumer.” A house is consumed by fire. Consuming decrements supply, as buying a physical record did from the store’s inventory. A downloader grows supply. We are transitioning from product to service; let go of the notion that there is less after we have taken some.

Part of the problem is gender. The content industries have largely been run by men. The notion of consummating serial relationships with consumers without even knowing their names is a guy’s idea of a good idea. Amazon is a woman; it remembers your size and eye color; it wants to start a relationship that never ends. We have to be in the business of making relationships; but we can’t let go of product just yet when we’re making billions off selling objects and the installed base of players for those products will last past his lifetime.

Creativity is moving from center to edge. Licensing was formerly something for the center of the network: the cable head-end, the TV network. You could take a compass and draw a line around distribution. Today the power of the press has moved to the edge. A woman who picks up a HD camera to watch her toddler prance around the carpet with a song playing in the background should not expect to know she’s violated a licensing regime; that’s ridiculous. Campus networks too are disappearing as increasingly devices are wireless and hooked into a GSM network. Controlling copying on campus is hardly the point when most students live off-campus. If you solved the problem of access on-campus, it would need to follow them on vacation, visiting parents, etc.

Rightsholders must enumerate their rights to be respected. We have to have registries if we have to ask permission. Harry Fox Agency has less than half the content and won’t even stand behind the list it offers if you get sued. We have no registry and until we enumerate our rights we can hardly expect them to be protected.

It is essential we give rightsholders antitrust and competition relief to work together, coming together into pools that make licensing easier, faster, and simpler. (Comment: not cheaper? No, didn’t think so.) Sports leagues have exemptions, but not music publishers—even though you can’t find half of the relevant publishers. A recipe for disaster.

It’s not just music or ideas. Working with Mendelay: software that treats PDFs the way the rest of the world treats mp3s. Let’s help people organize files and find/share scholarly research. You know when you see a popular song on a network that it is probably owned and shouldn’t be shared without permission, but a scholarly work is different: may be open access per its funder; may be owned by the author who wants it shared; etc. There have been no lawsuits over sharing scholarly materials. And it’s going 3D: a kid in Sweden scanned his father’s handcuff key and released it on a filesharing network: now anyone with a fab lab ($3000) can make that key. Now apply that to medical instruments or medical tests. Should we stand in the way of sharing ideas for medical tests? Don’t let focus on music and movies distract from the overall environment.

RCA Victor created the lateral cut disc for music; decided jazz was not music. Little company sued for the right to make lateral cut discs. Learned Hand said plaintiff deserved a license; result: first two albums were Jelly Roll Morton and Louis Armstrong. We’ve seen this problem solved before; the anomaly will be if we don’t use known methods of solving it. Acousticàelectric was a far greater change than analogàdigital; in an acoustic world, an artist could only be heard in the same room. Loudspeakers, then radio, then TV, then cable and satellite: every single medium was licensed with a collective license, a pool and a way to split it up, not with control. All paid for without control: actuarial blanket licenses. We should address copyrisk the same way we address other risks: pooling money as in an insurance fund. We can’t stop copying or count every copy that gets made.

My Q: Given that content in the charts DePriest showed seemed to migrate to China, does it show that tech works or that law is the key?

DePriest: the UGC sites that elected to abide by UGC principles, primarily in US and Western Europe, and then our content moved to China. Localizing content in China is not so bad because then it can go government-to-government.

Burger: it’s a game of whack-a-mole, though. The issue is product v. service, and the problem is that we’re used to huge profits from products. Asking universities to put in physical controls that kids will work around is a waste of time and money.

Griffin: attack the motive and not the mechanism. We destroyed people’s motives to copy with widespread licensing—you could now get Star Trek easily without copying at home.

DePriest: DVRs?

Griffin: we let it go after we watch it. We don’t make huge video collections anymore.

DePriest: video is the only justification for a terabyte hard drive. Whack-a-mole is a fact of life. Of course tech isn’t static; why should infringement tech be any different from virus software or any machine with an operating system?

Burger: the problem with whack-a-mole is who pays for it? Why shouldn’t the content companies pay for whacking the mole, not the university? Usually you pay to protect your own property. The bus company isn’t asked to pay for security guards at the mall because the bus brings shoplifters.

Griffin: problem is that you can’t find outlier copyright owners; major content owners are willing to grant site licenses, but they’re not blanket enough to be worthwhile in many cases. (This conversation is the mirror image of the GBS discussion previously.)

DePriest: it’s your network as an educational institution, you should pay to protect it. Flows on the network need protection too. (Are they your flows?) NSF gives away hundreds of millions a year to protect networks, and nothing to protect the data on them. An interstate highway with no state troopers. (Note that the state trooper analogy is a bit different—it’s about using law to change behavior in the physical space; speed bumps are a different type of response to behavior you don’t like. I cover this a little in My Library.)

Q: why single out higher ed? We’re 4% of file sharing in America; why single us out? About 90% of the notices I get (identifies as DMCA agent) are for activity on the wireless network. He doesn’t actually have to do anything about that; can really only identify 5-10% of those people; and those people presumably go home to other network providers like Verizon, but those providers aren’t under the same constraints as campuses.

Burger: because they could.

DePriest: We’re all in this together. Need cooperation from ISPs, whether universities or Verizon, and device makers. We want Verizon to hold its subscribers accountable. You need some authentication on your wireless network to extend the teachable moments.

Q: Worried about licensing substituting for fair use: why should you have to pay if the use is fair?

Me: I agree that this is a major theoretical, even moral, problem with some proposals. On the other hand, a system that roughly tracks copying could probably get acceptable practical results. You should always be able to avoid paying for your parody of Gone with the Wind or Sarah Palin's book.

Burger: Most of these proposals are really targeted at private use (rather than transformation).

CIP Symposium: Fair Use Trends

University of Maryland University College Center for Intellectual Property 2010 Symposium

Fair Use Trends: Madelyn Wessel, J.D., Special Advisor to the University Librarian and Liaison to the General Counsel, University of Virginia

Identified various misconceptions teachers might hold (some of which, it should be noted, were not historically misconceptions and are so only because of the expansion, often unintentional, of copyright to cover ordinary interactions between teachers and students, which are now often carried out in digital forms). One important misconception: if you buy one copy of a test/teaching instrument, you can automatically make as many copies as you have students. Deep tensions between the public good of access and the private interest in compensation. Fair use is one key way of balancing these interests.

Also: Section 110(1) and 110(2) dealing with face to face and distance education; Section 121: special formats for persons with disabilities. Points out that Section 120’s allowance of photographs of architecture taken in public spaces isn’t the law everywhere, for example France.

Section 110 is a first resort, before fair use. Use digital objects, clips, etc. in portfolios, exams, and so on. But faculty and students are used to liberty in the context of the classroom—110(1) enables that. But the limitations of 110(2) are much more severe. The DMCA and other provisions come into play; the likelihood of discovery is greater and so are the stakes. Fair use can be the most critical asset and should be asserted/preserved, but it is sometimes necessary to get permission.

Fair use neither excludes commercial uses nor protects all educational uses. Notes that the Supreme Court provided the entire lyrics of both songs involved in Campbell v. Acuff-Rose. Campbell spurred confusion about the role of fair use as affirmative defense/exception. Supreme Court was concerned with market harm; market harm has to come from substitution, not from other effects on the market. Campbell is not a great help today in remix of popular media. “Heart of the work” remains an important thread in these cases—an iconic moment.

Assessing fair use and images: purpose and character can be difficult—Koons made a $5 million painting using, as he likes to do, works of unknown/“little people” and had it deemed a fair use. Nature of the work: photos are generally considered creative; paintings, sculpture, and architectural designs always are. (Comment: This is why the nature of the work factor is really unhelpful if you consider it centered around the creative/factual divide; to be protected by copyright, a work has to have protectable creative expression and thus anything other than extraction of pure facts, which isn’t infringing in the first place, will always be disfavored under this factor. We might do a lot better to think harder about the “nature of the work” being published/unpublished and the work’s genre—software programs pose special considerations, for example.) Photographers are very aggressive/energized about rights, trying to license; that has an impact on courts’ treatment of fair use claims. So, in Blanch v. Koons for example, Koons won but the court noted that Koons didn’t take background elements that were a part of the original photo’s composition.

Koons invites courts to look deeply into artistic motivations: Koons did it because copying had a genuine creative rationale, not just laziness/attention-seeking/desire to avoid the drudgery of working up something fresh. This is not a free pass. She thinks Koons had a better rationale for his use in Blanch than his use in Rogers; I don’t think that makes sense—there was a clear reason to take an existing example of the banal to highlight the banality of popular culture; creating a new photo not authentically from that popular culture would have detracted from the force of the critique.

Cariou v. Prince, an undecided case filed in 2008, in which a photo of a man’s face was used in a collage. So is it a reasonable market to sell rights to reuse a photo in a collage where manipulations have been performed on the components?

Fairey v. AP: Fairey lied about the source of the Obama image he used for his iconic Obama HOPE poster—AP’s complaint showed all the merchandise it showed up on. AP argued that it was more than willing to license tote bags, etc. (Not sure this claim is believable given that AP hardly wants to be associated with a political party, even if we accept that AP was willing to license transformations and not just reproductions.) Fairey has licensed photos before, apparently, and has also sued other artists for copying. Manny Garcia, the photographer, meanwhile has sued claiming that the photo was not a work for hire (meaning that the hypothetical AP license would have done Fairey no good). Fairey’s depositions have been postponed because of potential criminal violations. Takeaway: DO NOT LIE about the source of your images.

Images in traditional publishing: oddly perhaps, seems to be going much better for defendants than using manipulated images in art. Bill Graham v. Dorling Kindersley. DK’s unwillingness to agree to Bill Graham Archive’s excessive licensing quote did not weigh against it. Why didn’t DK just pay $17,500 for 7 images as requested and go home? The answer seems to have been that the publisher was dealing with a work with thousands of images, and the publisher publishes a lot of books like this; it thought its use was fair. If it had paid $2500/image in the book, rights would have cost $2 million before any other costs came in. This was not just principle but survival. (I note also that BGA’s demands may also have been problematic in that it seems that BGA wanted to get cross-licensed by the Grateful Dead to release concert footage for commercial sale, which the Grateful Dead didn’t want to allow; this is not a traditional type of licensing and thus arguably BGA wasn’t participating in the traditional licensing market.)

Court also liked that the copy was made in the context of a timeline—a recontextualization, almost a remix; the copy was also small so that you couldn’t recreate a commercially significant poster from the image in the book. Other key factors: only a few images from a large collection were used. They were scattered throughout a 480-page book with lots of other visual materials. Thus, the fact that whole images were used was not a problem. The display itself was artistic (collage).

Note that licensing is an issue: if you can’t get to the objects you want to use without agreeing to a restrictive license, your fair use argument is in trouble. Students/professors get access by way of their IP addresses; they aren’t aware of the licensing that goes into that access, and then they copy/remix in ways that are affected by the licensing.

Kelly v. Arriba Soft: thumbnails in a database were transformative. Mass digitization projects as transformative, serving a different function than the initial photos. Implications for things like scanning book covers and putting thumbnails up to assist patrons in finding them—useful for things like special collections, helping people understand what’s available. Use of such thumbnails for search and retrieval is perfectly reasonable even when you wouldn’t use a high-res image.

Some fair use myths but often have a strong pedigree in older case law. They may be gone/partially gone but should not be forgotten. New cases need to be integrated: you can use a whole image/work under certain circumstances, despite what you might have learned (no 25% rules). Consider also the impact of technology. Another myth: fair use is dead. Not all copying requires permission, despite what some say! Publishers who say that all quotes require authorization are wrong and should be questioned in individual cases.

The market myth: just because a market exists for a work doesn’t eliminate fair use. If they’ve figured out how to sell it in tiny increments, fair use still exists. Likewise, if you ask permission and are refused, it may still be fair use. The fourth fair use factor is not the only fair use factor.

Burden of proof/risk myths: the supposed presumption against fair use, even for institutions of higher education. The fear of copyright damages being huge.

The misapplication of Basic Books and Princeton University Press—these are cases about independent commercial entities, not classroom uses or acts taken by nonprofit educational institutions themselves. The burden of proof on market harm may shift to a copyright owner for noncommercial uses.

Courts are beginning to understand that intenret functionality may require copying whole works. Size matters: use tech to control size, quality, access to a full high-quality image and enhance the chances of being found fair.

Courts are getting more comfortable thinking about new forms of art. Thinking more openly about the role of copyright in creative culture and the purposes of copyright. Less willing to accept claims from copyright holders to have “occupied the field”—Bill Graham and the recent A.V. v. iParadigms (anti-plagiarism software). Corporate criticism was fair use, when a disgruntled employee blogged and circulated “wanted”-style postcards—even though the employee used whole photos, it wasn’t for the same purpose as the original corporate glamor shots.

Barton Beebe’s study: when the first and fourth factors both favor fair use, usually in educational contexts, a finding of fair use was basically inevitable.

Big change threading its way through courts on injunctive relief also may have important effects on behavior.

But see Gaylord v. US—no fair use of sculpture in photo of sculptures in snow used on stamp; despite contract with designer saying that the sculpture was work for hire owned by the US government.

The next big fair use clashes: course reserves litigation at Georga State (which also is affected by sovereign immunity; the only remedy is injunctive relief and not damages; current guidelines at Georgia State are pretty similar to many other institutions’ policies and thus there is a lot at stake in the litigation for other institutions). Video streaming dispute at UCLA. To what extent is student learning transformative within the meaning of the case law? How important is nonprofit status? Will courts take §107 seriously given the existence of §110 which exempts some teaching activities entirely? (She thinks the plain statutory language supports Georgia State by talking about “multiple copies for classroom use”; she thinks this may be less helpful for streaming—though streaming also involves multiple copies.) Will campus licensing decisions begin to influence what courts view as markets that must be respected?

Q: What is a classroom? That’s shifting.

A: Definitional difficulties for “classroom” and “course” are profoundly important to these disputes—UCLA has made the argument that the media studies lab is an extension of the classroom. Streaming may comply with §110(1) to the extent that it is equivalent to face-to-face. The TEACH Act itself shows what a struggle this is—trying to enable distance learning, but takes away with one hand what it gives with another; the requirement of downstream controls was something everyone knew at the time was technologically impossible and yet it was built into the statute. Tech people can prevent her from downloading content but not a really smart 13-year-old. (Of course the statute need not be read to require perfect security; the DMCA’s anticircumvention provisions themselves don’t require DRM to work very well to be covered by the law, and it would be odd if educational institutions had to do better than self-interested music companies.)

Q: big question about dissertations—making dissertations with 3d-party included content available in an institutional repository. We always thought about fair use in dissertations in a particular way; how does the fair use calculus change?

A: ProQuest has standards, which she thinks were drafted by Kenneth Crews. ProQuest’s position is that it now has to act like a standard publisher, with permission for everything. Some publishers have standards for what they consider fair use. The broader the access, the more you have to worry about permissions. Limiting access to campus or to scholarly work group can help.

E-reserves: what’s the significance of constitutional purpose of access. How important are new mechanisms enabling the sale of ever-smaller units of information? Can markets ever be ignored? Is one part of higher education at war with another? How much should inequality in information resources be considered? Serials as a percentage of budget: Harvard spends one-third of its budget, which is huge; but most can’t afford anything near that and are still getting slammed on serial costs. Huge disparities in expenditures between rich and poor colleges. Huge numbers of institutions get under 1000 total periodicals available on campus. For poor institutions, the Georgia State case could be devastating in terms of access to information.

Streaming: §110(2) allows streaming entire nondramatic literary or musical work, and “reasonable and limited portions of any other work.” This uncertainty makes it far from clear that §110(2) actually works, which makes it worthwhile to explore whether you can extend the classroom of §110(1). Also changes in how education is delivered really are changing the classroom.

Q: what is UCLA streaming? Is it created specifically for educational use?

A: Doesn’t know the details, but that may be part of the argument. A spectrum of video works are involved. One nonprofit nondramatic works producer argues that it makes available a digital license that UCLA should be using.

Fair use and scholarship: The Rebecca Clarke Reader was a book by a musicologist who got into a bad fight with the heir of her subject, and the book was recalled over 94 lines in a 241-page book. Individual lines, short quotations from unbpublished materials, used in scholarly analysis—the publisher determined that it had to be pulled. Lawrence Lessig: fundamental problem that author contracts require permission for everything because publishers are too afraid of lawsuits, whether legitimate or not; a court most likely would have found the use to be fair.

Too Much Too Young, book about popular music by Sheila Whitely; book had been printed when publisher was threatened by the Jimi Hendrix estate. Author was told she had to get permission for every excerpt or quotation, no matter how short, despite the fact that all were used for scholarly analysis. The publisher did have guidelines for fair use of poetry and prose, but it determined that these guidelines (with which she complied) didn’t apply to music. The book was delayed two years, with scholarly material removed due to lack of permission.

Another anonymous anecdote: publisher of literary journal determined that every quote from poetry, no matter how small, requires permission. This is the “end of literary criticism” according to the editor. The publisher (a bigger press that had acquired a smaller, less conservative press) said its “hands were tied” due to the law—but pushing back actually worked in getting fair use guidelines. But she still sees a lot of permission-for-everything author contracts.

When we fight for fair use: Carol Schloss and the Lucia Joyce case; Schloss’s book as published after accommodating Stephen Joyce’s threats was criticized for failing to provide sufficient support, so she wanted to make her supporting material from the Joyce Archives public, and did so on a website, defying Stephen Joyce and his aggressive threats. She achieved a declaratory judgment and a fee award.

Sound recordings: rights in recordings fixed before Feb. 15, 1972 are covered by state law. EMI Records v. Premise Media (N.Y. Sup. Ct.): 15-second excerpt from Lennon’s Imagine; the court decided to allow fair use of pre-1972 sound recordings under a common law analysis. Compare: the Sixth found that sampling even a single note is infringing (which does not preclude a fair use analysis, only a de minimis analysis).

Video and film: not clear how much will be considered fair. Cases going both ways in biography and news (Reginald Denny) contests. In her opinion there’s no way to predict the outcome of cases involving music and film—both the specific facts and the specific judges matter. In one case, use of 85 seconds of an opera performance from a 2 hour film in a nonprofit foundation’s film broadcast to public TV channels was found unfair because even the educational, noncommercial use was outweighed by the possibility of licensing revenue. This is what makes Best Practices from the Center for Social Media so good. Key principles: (1) transformation/different purpose and (2) amount and nature taken should be reasonable in light of the purposes of the use.

Her perspective: scholarship using reasonable/limited portions of other works should essentially be, intrinsically, fair use. That is, case-by-case factors wouldn’t have much additional purchase because other issues are not dispositive once the type of use (scholarly) and the amount (reasonable in light of the use) are established.

Final note on other rights: Property rights, such as control over a physical object like a photograph. Artist’s sale of work does not sell the copyright. License and contract issues: her university works hard to include fair use provisions in contracts/licenses. Elsevier, in response to many years of complaints, has come up with a pretty reasonable license template for author-contributors and for licensed materials for her campus.

Ironies: iTunesU agreements require permissions, even though iTunes benefits from fair use. So do Google, Microsoft, YouTube web environments. If you encourage students to upload content, are you educating them about third-party permissions issues? (Well, copyright owners are unlikely to be third-party beneficiaries of these contracts; hard to imagine that there is any risk beyond a takedown.) Some grants require permissions for everything used.

Other realities: many content providers like publishers, nonprofit associations, etc. require permissions anyway even if your claim to fair use is strong. We advise that people document the source of all their content throughout the research process. Grad student shouldn’t spend five years on a dissertation and then be unable to submit it to ProQuest for failure to source properly. Work with students/faculty early and often and prepare to make fair use arguments.

She advises people to get copies of publisher guidelines early and often—many won’t give guidelines to the author at the outset of the process unless the author asks. If you’re writing art history, you need to know this early on. Phenomenon she’s seen a lot: author got $150 permission for an image in the past; new agreement with publisher requires author to secure e-publication rights, and suddenly the cost is $1500. She suggested asking the publisher if they were really going to publish an e-edition; if the publisher says no, the author should not have to pay out of pocket for a right that the publisher has no plans to use.

Q: Google Book settlement?

A: UVa was an early partner library. Would have been a great fair use case, though she finds settlement understandable from a risk perspective. She can’t really predict what will happen, other than that it will take a long time with appeals etc.

Note: The Rebecca Clarke Reader is available on Google Book Search. The author apparently ended up self-publishing.

Q: It’s a good idea to take advantage of the §504(c) limitation on remedies for educational institutions with a good-faith belief in fair use. That certainty of limited exposure allows you to flex the fair use muscle. Suggestion for best practices? She (not a lawyer) has people document and file their fair use inquiry—Kenneth Crews’s fair use checklist.

A: Documentation is important, and she likes Crews’s approach. Publishers’ position in Georgia State litigation is that this is not a substitute for a full, four-factor evaluation by a lawyer. Publishers don’t pay much attention to this in the context of scholarly publishing.

Q continued: our thesis office now accepts the checklist filled out by a student as sufficient, now that it’s part of our training.

A: Also consider documenting zealous attempt to get permission where applicable.

Q: also helps you make a fair use decision if you’re dealing with an orphan work—a failed attempt to find the person can factor into your fair use calculus.

A: yes, and inability to purchase a copy of an out-of-print work can be taken into account in a fair use determination; might decide to digitize the work or a portion thereof and allow students access for a particular class.

ACTA communique

The DRAFT statement below reflects the conclusions reached at a meeting of over 90 academics, practitioners and public interest organizations from five continents gathered at American University Washington College of Law, June 16-18, 2010. The statement is now open to endorsements.

The latest version of the draft communiqué is now posted to a public blog post at: http://wcl.american.edu/pijip/go/acta-communique

Please share the draft with others, circulate on your blogs, etc.

THIS DRAFT STATEMENT IS NOW OPEN FOR INDIVIDUAL AND ORGANIZATIONAL ENDORSEMENTS AS WELL AS EDITING COMMENTS.

• Please send signatures to: acta.declaration@gmail.com

• Please send edits to: pijip@wcl.american.edu

EDITING SUGGESTIONS

WILL BE ACCEPTED UNTIL NOON MONDAY JUNE 21. THE FINAL TEXT WITH EDITS INCLUDED WILL BE RELEASED BY 5PM MONDAY JUNE 21.

THE FINAL STATEMENT WILL BE RELEASED TO THE PUBLIC WITH ENDORSEMENTS ON WEDNESDAY JUNE 23 AT 10AM. ENDORSEMENTS WILL BE ACCEPTED UNTIL JUNE 23 AT 9AM.

ENDORSEMENTS:

WE WILL ACCEPT PROVISIONAL ENDORSEMENTS NOW. ENDORSERS WILL BE GIVEN THE OPTION TO OPT-OUT WHEN THE FINAL TEXT IS CIRCULATED BY 5PM MONDAY JUNE 21.

FOR INDIVIDUAL ENDORSEMENTS, SEND YOUR NAME, TITLE AND ORGANIZATION AND PLACE (CITY, COUNTRY) OF OCCUPATION to acta.declaration@gmail.com

FOR ORGANIZATIONAL ENDORSEMENTS, ENTER THE NAME OF THE ORGANIZATION AND PLACE(S) (CITY(IES), COUNTRY(IES)) IN WHICH THE ORGANIZATION HAS OFFICES to acta.declaration@gmail.com.

INDIVIDUALS WITHIN SIGNATORY ORGANIZATIONS MAY ENDORSE AS INDIVIDUALS AS WELL AS BEING PART OF THE ORGANIZATIONAL ENDORSEMENT.

PLEASE CIRCULATE WIDELY.

This DRAFT statement reflects the conclusions reached at a meeting of over 90 academics, practitioners and public interest organizations from five continents gathered at American University Washington College of Law, June 16-18, 2010. In the days following the meeting, the statement received the individual and organizational endorsements listed below, and is still open for further endorsements at www.pijip.org

The meeting, convened by American University's Program on Information Justice and Intellectual Property, was called to analyze the official text of the Anti-Counterfeiting Trade Agreement (ACTA), released for the first time in April, 2010, after years of secretive negotiations. The text was released in the context of public criticism of the process and presumed substance of the negotiations (see Wellington Declaration, EU Resolution on Transparency and State of Play of the ACTA Negotiations). Negotiators claim that ACTA will not harm significant public interests.

We find that the terms of the agreement threaten numerous public interests, including nearly every concern specifically disclaimed by the negotiators in their announcement.

The proposed agreement is a deeply flawed product of a deeply flawed process.

What started as a proposal to coordinate customs enforcement offices has morphed into a massive new international intellectual property (IP) and internet regulation with grave consequences for the global economy and governments' ability to promote and protect public interests.

Any agreement of this scope and consequence must be based on a broad and consultative process and reflect a full range of public interest concerns. As detailed below, this text fails to meet these standards.

Recognizing that the terms of the agreement are under negotiation, a fair reading of the proposed text as a whole leads to our conclusions that ACTA:

THE INTERNET
-Encourages internet service providers to police users of the internet without adequate court oversight or due process;

-Globalizes 'anti-circumvention' provisions which threaten innovation, competition, open source business models, interoperability, copyright exceptions, and user choice;

FREE TRADE AND ACCESS TO MEDICINES
-Disrupts the free trade in legitimate generic medicines and other goods, and sacrifices the foundational principle that IP rights are territorial, by requiring customs authorities to seize goods in transit countries even when they do not violate any law of the producing and importing countries;

-Does little or nothing to address the problem of medicines with insufficient or wrong ingredients as the majority of these are not IP but regulatory system problems.

-Extends the powers of custom officials to search and seize a wide range of goods, including computers and other electronic devices, without adequate safeguards against unwarranted confiscations and privacy invasions;

-Extends 'ex officio' border search and seizures from willful, commercial scale trademark counterfeiting to a broad range of intellectual property infringements, including “confusingly similar” trademark violations, copyright infringement standards that require interpretation of "fair use" or similar user rights, and even to patent cases which frequently involve complex questions of law and fact that are difficult to adjudicate even by specialist courts after full adjudicative processes;

FUNDAMENTAL RIGHTS AND FREEDOMS
-Will curtail full enjoyment of fundamental rights and liberties, including rights to privacy and the protection of personal data, health, access to information, free expression, due process and presumptions of innocence, cultural participation, and other internationally protected human rights;

SCOPE AND NATURE OF IP LAW
Distorts the balance fundamental to IP law between the rights and interests of proprietors and users, including by

• introducing very specific rights and remedies for rights holders without correlative requirements to provide exceptions, limitations, and due process safeguards for users;
• shifting enforcement from private civil mechanisms to public authorities and third parties, including to customs officials, criminal prosecutors and internet service providers -- in ways that are likely to be more sensitive to proprietary concerns and less sensitive to user concerns;
• omitting liability and disincentives for abuses of enforcement processes by right holders; and
• requiring the adoption of automatic damages assessments unrelated to any proven harm;

-Alters the traditional and constitutionally mandated law making processes for IP by:

• locking in and exporting controversial aspects of US and EU enforcement practices whcih have already proven problematic, foreclosing future legislative improvements in response to changes in technology or policy;
• requiring substantive changes to intellectual property laws of a large number of negotiating countries.

INTERNATIONAL TRADE AND DEVELOPMENT
-Will disproportionately harm development and social welfare of the poor, particularly in developing countries, including through raising unjustifiable trade barriers to imports and exports of needed medicines and other knowledge embedded goods;

-Contains provisions inconsistent with the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement);

-Conflicts with the World Trade Organization Doha Declaration on TRIPS and Public Health and World Health Assembly Resolution 61.21 by limiting the ability of countries to exercise to the full flexibilities in the TRIPS agreement that can promote access to needed medicines;

-Circumvents and undermines the commitments agreed to under the World Intellectual Property Organization development agenda, particularly recommendation 45 committing to “approach intellectual property enforcement in the context of broader societal interests and especially development-oriented concerns," and "in accordance with Article 7 of the TRIPS Agreement";

INSTITUTIONAL ISSUES
-Creates a new and redundant international administration for IP issues outside of WIPO or the WTO with broad powers but limited transparency, threatening multilateralism in international IP norm setting;

-Encourages technical assistance, public awareness campaigns, and partnerships with the private sector that appear designed to promote only the interests of IP owners;

CONCLUSIONS ABOUT THE DEMOCRATIC PROCESS

The current process for considering public input into ACTA is fundamentally flawed in numerous respects. In many countries, the only consultations taking place are with select members of the public, off-the-record and without benefit of sharing the latest version of the rapidly changing text. There is little possibility that a fair and balanced agreement that protects and promotes public interests can evolve from such a distorted policy making process.

Governments, right holders and civil society should have an open and evidence-based discussion on the right strategy to confront willful commercial scale trademark counterfeiting and commercial scale copyright piracy. This discussion should take place in multilateral and national open and on-the-record forums with access to current negotiating text so that all interested stakeholders can participate.

ENDORSEMENTS

• Please send signatures (individual or Organization, City, Country) to: acta.declaration@gmail.com
• Please send edits to: pijip@wcl.american.edu

[INDIVIDUALS WITHIN SIGNATORY ORGANIZATIONS MAY ENDORSE AS INDIVIDUALS AS WELL AS BEING PART OF THE ORGANIZATIONAL ENDORSEMENT.]