Third Circuit clarifies its ascertainability rule but doesn't remove it

Byrd v. Aaron’s Inc., 2015 WL 1727613, No. 14–3050 (3d Cir. Apr. 16, 2015)

 

The Byrds filed a putative class action against Aaron’s for violating the Electronic Communications Privacy Act of 1986. The court of appeals reversed the district court’s finding that the proposed class was not ascertainable.

 

Aaron’s rented a laptop to the Byrds.  They discovered that the laptop was delivering screenshots of websites they visited as well as pictures of users to Aspen Way (which collected for Aaron’s) through spyware called “PC Rental Agent,” which could also collect keystrokes. In total, “the computers of 895 customers across the country ... [had] surveillance conducted through the Detective Mode function of PC Rental Agent.”

 

The Byrds proposed two classes:

 

Class I—All persons who leased and/or purchased one or more computers from Aaron’s, Inc., and their household members, on whose computers DesignerWare’s Detective Mode was installed and activated without such person’s consent on or after January 1, 2007.

Class II—[The same, but including Aaron’s Inc. franchisees].

 

The district court concluded that the proposed classes were underinclusive because they did “not encompass all those individuals whose information [was] surreptitiously gathered by Aaron’s franchisees,” and overinclusive because not “every computer upon which Detective Mode was activated will state a claim under the ECPA for the interception of an electronic communication.”

 

The majority reasoned that the source of the circuit’s ascertainability requirement was “grounded in the nature of the class-action device itself.” A plaintiff must show that: (1) the class is “defined with reference to objective criteria”; and (2) there is “a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.” Plaintiffs don’t have to identify all class members at class certification—a plaintiff need only show that “class members can be identified.”

 

Carrera v. Bayer Corp. rejected certification of a class of consumers who purchased Bayer’s One–A–Day WeightSmart diet supplement in Florida. In that case, the court reasoned that retailer records and class member affidavits attesting to purchases of the diet supplement were insufficient.  Though retail records “may be a perfectly acceptable method of proving class membership,” the plaintiff’s proposed retail records did not identify a single purchaser of the Bayer diet supplement.  And affidavits risk relying on no more than potential class members’ say-so; there was no reason to think plaintiffs’ proposal for screening out false affidavits would work. “Remarkably, even the named plaintiff could not recall whether he had purchased the diet supplement.”

 

However, Carrera specified that “[a]lthough some evidence used to satisfy ascertainability, such as corporate records, will actually identify class members at the certification stage, ascertainability only requires the plaintiff to show that class members can be identified.” Thus, the court here said, “there is no records requirement.” Carrera stood for the proposition that “a party cannot merely provide assurances to the district court that it will later meet Rule 23’s requirements,” or propose a method of ascertaining a class without any evidence supporting the idea that the method will succeed.

 

Ultimately, ascertainability focuses on “whether individuals fitting the class definition may be identified without resort to mini-trials.”  This is closely tied to the provision of a proper class definition, using objective criteria and offering some assurance of “a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition,”  Ascertainability thus prepares a district court to “direct to class members the best notice that is practicable under the circumstances” if there is certification. 

 

The district court erred first by conflating standards governing class definition with the ascertainability requirement.  It next abused its discretion in determining that the proposed classes weren’t ascertainable because they were underinclusive, since non-buyers/lessees might have had their information surreptitiously gathered.  But the Byrds asked for a class of all buyers/lessees exposed to the program.  “[R]equiring such specificity may be unworkable in some cases and approaches requiring a fail-safe class.”  Having objective criteria isn’t the same as defining a class in terms of legal injury. Those who are injured but excluded from the class are simply not bound.  “Requiring a putative class to include all individuals who may have been harmed by a particular defendant could also severely undermine the named class representative’s ability to present typical claims.”

 

In addition, the district court abused its discretion in finding that the proposed classes weren’t ascertainable because they were “overly broad.” Defendants argued that the class wasn’t ascertainable because the definition was decoupled from the underlying allegations of harm. But predominance and ascertainability are separate issues. They also argued that the class was overbroad when putative members lack standing or haven’t been injured, but that again conflated ascertainability, predominance, and Article III standing.  Potential differences between the proposed class representatives and unnamed class members “should be considered within the rubric of the relevant Rule 23 requirements—such as adequacy, typicality, commonality, or predominance.” If defendants want to argue that all putative class members must have standing, that issue should first be decided by the district court.  (Nice dodge, there.)

 

The proposed classes of “owners” and “lessees” were ascertainable. There are “objective records” that could “readily identify” them, and finding to the contrary was abuse of discretion, as was the finding that “household members” weren’t ascertainable. The district court thought that this was too vague and hard to prove, but the Byrds argued that the plain meaning was “all of the people, related or unrelated, who occupy a housing unit,” as shown by multiple definitions used in government documents for census, taxation, and immigration purposes. Though these documents contained slight variations, there were various ways in which household members could be identified and verified.  A form similar to the government forms could be used to identify household members, and that was a “far cry” from an “unverifiable affidavit” or lack of a methodology to identify class members. Because the location of household members was already known, there were unlikely to be serious administrative burdens.

 

There will always be some level of inquiry required to verify class membership, but that doesn’t necessarily mean a mini-trial. “Carrera does not suggest that no level of inquiry as to the identity of class members can ever be undertaken. If that were the case, no Rule 23(b)(3) class could ever be certified.” Defendants argued that their due process rights were at risk, but the Byrds weren’t relying solely on unverified affidavits.  “Any form used to indicate a household member’s status in the putative class must be reconciled with the 895 known class members or some additional public records.”  Defendants could challenge the methods the Byrds used to identify them—after the other issues were resolved on remand.

 

Judge Rendell concurred to note that “the lengths to which the majority goes in its attempt to clarify what our requirement of ascertainability means, and to explain how this implicit requirement fits in the class certification calculus, indicate that the time has come to do away with this newly created aspect of Rule 23 in the Third Circuit. Our heightened ascertainability requirement defies clarification. Additionally, it narrows the availability of class actions in a way that the drafters of Rule 23 could not have intended.”  Paper trail requirements were ill-advised, because most low-value consumer class actions don’t involve such records. Judges worried about a mere say-so might require an affidavit from another household member, or a doctor, or something else.

The justifications for this rule were insufficient.  First, the claim that it avoided administrative burdens really meant “short-circuiting the claims process by assuming that when individuals file claims, they burden the court. But claims administration is part of every class action. Imposing a proof-of-purchase requirement does nothing to ensure the manageability of a class or the ‘efficiencies’ of the class action mechanism; rather, it obstructs certification by assuming that hypothetical roadblocks will exist at the claims administration stage of the proceedings.”

 

Denying certification to later avoid problems with notice also was senseless.  Rule 23 required the “best notice that is practicable under the circumstances.”  Potential difficulties with providing individualized notice to all class members shouldn’t be a reason to deny certification of a class. Due process is satisfied when notice is “reasonably calculated” to reach the defined class.

 

Finally, the Third Circuit expressed concerns for the due process rights of defendants, but “there is no evidence that, in small-claims class actions, fabricated claims impose a significant harm on defendants.” The chances of perjury to receive “a windfall of $1.59” were “far-fetched at best.” Although most injured people won’t take the effort to claim a few dollars, “in the aggregate, this sum is significant enough to deter corporate misconduct.” By “focusing on making absolutely certain that compensation is distributed only to those individuals who were actually harmed,” the Third Circuit’s ascertainability requirement “ignored an equally important policy objective of class actions: deterring and punishing corporate wrongdoing.”

 

The due process concern was also overblown because damages under Rule 23 are assessed in the aggregate, so whether an individual can show membership in a class doesn’t affect defendants’ rights to avoid paying more than they’re liable for. The related concern for diluting “deserving” class members’ recoveries “is unrealistic in modern day class action practice, and it makes little sense when used to justify the wholesale dooming of the small-value class action such that no injured plaintiff can recover at all.” This was in any event an implementation issue, not an ascertainability issue.  The Third Circuit’s rule cut at the heart of the class action mechanism, which makes the most sense when individual claims are small but aggregate injury is large.  As Judge Rakoff wrote, “[w]hile a rigorous insistence on a proof-of-purchase requirement … keeps damages from the uninjured, it does an equally effective job of keeping damages from the truly injured as well, and ‘it does so with brutal efficiency.’”

Territoriality is no bar to keeping up with the Kardashians in Kroma dispute

Kroma Makeup EU, Ltd. v. Boldface Licensing Branding, Inc., No. 6:14–cv–1551, 2015 WL 1708757 (M.D. Fla. Apr. 15, 2015)

 

A foreign licensee of a US trademark sued US citizens for alleged infringement abroad, and sued its licensor for refusing to share in the proceeds of a settlement in a separate lawsuit about the infringement.  The court here found that it had subject matter jurisdiction and that the foreign licensee could state a Lanham Act claim. Plus, the licensee could proceed against its licensor under a breach of contract theory.

 

Defendant Tillett owns a registration for Kroma for makeup, used for a premium, all-natural makeup brand. “Kroma products sell from between $19 and $100 and have been featured at high-profile fashion events throughout the United States and the world, including the Oscars and the Emmys.”

 

According to the complaint, Plaintiff Kroma EU had an exclusive license from Tillett to import and sell Kroma products in the EU, with a guarantee from Tillett that it owned the Kroma mark.  This was a thriving business by late 2012, with Kroma EU negotiating to place Kroma products in a number of upscale British and European retail stores.

 

Enter Khroma, a new makeup line backed by defendants Kim Kardashian, Kourtney Kardashian, and Khloe Kardashian and defendant Boldface. The new line was released in the US and Europe in late 2012, priced between $6 and $20.  It was of inferior quality compared to Kroma, and Kroma suffered severe consumer confusion.  Boldface sued Tillett for a declaration of noninfringement.  Tillett counterclaimed, and in 2013, the district court preliminarily enjoined Khroma.  Tillett and the other defendants eventually settled.  Prior to the settlement, Tillett allegedly promised to seek damages on Kroma EU’s behalf and sought information from Kroma EU regarding its claimed damages.  However, after winning the motion for a preliminary injunction, Tillett allegedly abandoned Kroma EU’s interests, and the ultimate settlement didn’t include a release of Kroma EU’s claims.

 

Thus, Kroma EU sued everybody, alleging trademark claims against Boldface and the Kardashian defendants, and promissory estoppel against Tillett. Boldface defaulted.

 

The Kardashian defendants suggested that Kroma EU lacked standing to bring vicarious trademark infringement claims because Tillett was the registrant and owner of Kroma in the US, and because Kroma EU couldn’t enforce either a registered or unregistered foreign mark.

 

Although a licensee doesn’t own the mark it licenses, §43(a) doesn’t require a “registrant,” but speaks of “any person who believes that he or she is or is likely to be damaged.” Thus, ownership is irrelevant, and “courts frequently find non-owners—such as manufacturers, competitors, distributors, and others—to have standing under § 43(a).”  Lexmark required “statutory standing”—what the court here characterized as “more of a refinement to what federal courts have called ‘prudential standing’ over the years.” (Of course Justice Scalia insisted that he wasn’t engaged in a “standing” inquiry at all, but this court, like many others, isn’t interested in changing the label.)

 

A plaintiff must demonstrate a cognizable “commercial interest in reputation or sales” to fall within § 43(a)’s zone of interest, and show that its injuries were proximately caused by the defendant’s wrongful conduct. Kroma EU was not trying to enforce a foreign trademark in a US court, but rather a domestic trademark.  (That skips over territoriality completely.  Kroma EU doesn’t have any rights to sell Kroma in the US, according to the description of the license.  The mark may have originated in the US, but when used in the EU it’s an EU mark.)  Kroma sufficiently satisfied the zone of interests tests because of its commercial interest in selling Kroma. “Kroma EU is exactly the type of commercial actor who § 43(a) of the Lanham Act envisions protecting.”  And Kroma EU alleged proximate cause: consumer confusion that cost it significant business and revenue.

 

Nor did res judicata bar Kroma EU’s claims, since Kroma EU was never a party to the prior litigation.

 

But did the Lanham Act reach the Kardashians’ conduct abroad? Steele v. Bulova Watch Co., 344 U.S. 280 (1952), held that the Lanham Act regulates not only domestic conduct, but also foreign conduct of U.S. citizens where the conduct involves U.S. commerce and does not otherwise interfere with the rights of foreign nationals in their own countries. Relevant factors: (1) whether the defendant is a U.S. citizen, (2) whether the foreign conduct had a substantial effect on U.S. commerce, and (3) whether adjudicating the claim would interfere with another nation’s sovereignty.

 

Because all the alleged conduct occurred outside the US, the Kardashians argued that there was no substantial effect on US commerce, and also they contended that allowing Kroma EU to proceed would interfere with the sovereignty of the United Kingdom and the European Union, as Kroma EU’s trademark interests are based under the laws of each entity and all of the alleged infringement occurred within these entities’ respective territorial boundaries.

 

U.S. citizens should not be allowed to “evade the thrust of the laws of the United States in a privileged sanctuary beyond our borders.”  Some courts call this the paramount factor. 

 

Moreover, Kroma EU alleged conduct with a substantial effect on US commerce.  If foreign conduct creates confusion among American consumers, there can be little doubt of a substantial effect on US commerce. This usually occurs when there’s intentional importation of infringing goods into the US, or when infringing goods seep into the US via third parties. In addition, the Eleventh Circuit also holds that the Lanham Act also protects non-American consumers from confusion created by American infringers. Babbit Electronics, Inc. v. Dynascan Corp., 38 F.3d 1161 (11th Cir.1994) (per curiam) (affirming extraterritorial application of the Lanham Act where a U.S. corporation purchased infringing products to sell exclusively to consumers in South America). Nonetheless, “global consumer confusion is insufficient by itself to sustain a finding of a substantial effect; there must be other connections to U.S. commerce.” Another connection can be found through a defendant’s significant commercial activity within the US to advance its infringing conduct abroad.

 

Kroma EU “more than adequately” alleged global consumer confusion, including failed negotiations with a high end retailer that stated that it didn’t want to be associated with the Kardashians or to be perceived as selling discount or inferior-quality products, along with other confused customers.  The court also inferred that Kroma EU suffered confusion in the US too.  (Except that it didn’t have any rights in the US!) “Because of Khroma’s pervasive Internet presence around the world, the Court can reasonably infer that some American consumers intending to purchase Kroma products were confused into purchasing deeply discounted European Khroma products through the European websites and that … these infringing makeup products seeped back into the United States.”  (But, had Kroma EU tried to sell back into the US, it would likely have violated its licensing agreement.) 

 

Plus, Kroma EU alleged significant commercial conduct by the Kardashians within the US to further their infringing activities in Europe. They engaged Boldface to make the Khroma line and exerted control over all aspects of the brand from within the US, chose the Khroma name, marketed the brand through their personal celebrity, etc. Given the policies underlying the Lanham Act—protecting consumers and securing the rewards of trademark—it was appropriate to find a substantial effect on US commerce. Given the defendants’ awareness of the Kroma mark, “U.S. trademark law has a considerable interest in protecting U.S. trademarks regardless of where an American infringer’s conduct occurs.”

 

Nor would enforcing Kroma EU’s interest interfere with the sovereignty of another nation, which generally occurs “where the parties are engaged in parallel litigation within the foreign nation or where the foreign nation takes action against the interest which the plaintiff seeks to assert in the United States court.” There’s no parallel litigation or foreign action against the marks here. Because Kroma EU is the licensee of a US mark, the US had the greatest interest in enforcing the mark.

 

As to the promisory estoppel claim, Kroma EU would need to show: (1) the plaintiff relied to its detriment on a promise made by the defendant, (2) the defendant should have reasonably expected the plaintiff to rely on the promise, and (3) injustice can be avoided only by enforcing the promise. However, promissory estoppel is unavailable where a written contract governs the parties’ relations. 

 

All exclusive trademark licensing contracts provide as a matter of law that the licensor is “under an implied good faith obligation not to do anything that would impair or destroy the value of [the] exclusive licensee’s rights.” The Eleventh Circuit has specifically held that a licensor must share its proceeds from the settlement of a trademark infringement action with its exclusive licensee where the exclusive licensee can show its damages. Thus, contract law could adequately fashion an appropriate remedy, making promissory estoppel unavailable.

 

But the plaintiff’s label for its claim was not dispositive. Kroma EU’s factual allegations clearly set forth a claim for breach of contract against Tillett.

Lanham Act injunctive relief available without proof of injury

Cascade Yarns, Inc. v. Knitting Fever, Inc., 2015 WL 1735517, No. C10–861 (W.D. Wash. Apr. 15, 2015)

 

This is another round of an “extensive” lawsuit between the parties, who compete to sell yarn. Relevant here are Cascade’s claims against KFI under the Lanham Act and Washington state law for for false advertising related to the country of origin labels on KFI’s Katia and Mondial yarns. KFI had previously admitted that certain yarns were sold by KFI in limited quantities in 2012 without labels properly reflecting their Chinese origins.

 

KFI argued that Cascade’s false advertising claims had to fail because Cascade had no evidence of injury, despite its assertion of sales diversion.  Cascade argued that it was pursuing a theory of disgorgement, which didn’t require direct injury. To get money damages, Cascade needed to show actual injury; literal falsity leads to a presumption of consumer deception, but not a presumption of damage to the plaintiff when the literal falsity is noncomparative and there are numerous competitors in the market. This principle avoids awarding plaintiffs a windfall that would be punitive rather than compensatory. “The fact that failure to designate country of origin may be actionable under the Lanham Act does not mean that any competitor in the market is entitled to recover.” Thus, the Lanham Act damages claim was dismissed.

 

In a footnote, the court rejected KFI’s argument that Cascade lacked Lanham Act standing under Lexmark. “Cascade’s allegations of lost profits and damage to its business reputation satisfy the requirements of Article III standing, and as a direct competitor alleging diversion of sales, Cascade meets the prudential standing requirements that its claim fall within the ‘zone of interests’ protected by the Act and that its alleged injuries be proximately caused by the Act’s violation.”

 

As for the availability of injunctive relief, competitors need not prove injury. “Cascade’s failure to raise a triable issue of fact as to causation and injury does not affect the viability of its Lanham Act claim to the extent that Cascade seeks injunctive relief.”  However, Cascade still needed to show the other elements of a false advertising claim.

 

The court first rejected KFI’s unclean hands defense. Although Cascade admitted to having briefly sold four King Cole yarns that were not properly labeled as to country of origin, that didn’t foreclose its claim for injunctive relief.  “Indeed, there is good reason to permit an injunction action to proceed where a monetary action would be barred: in the former case the Court must take into account the public’s interest in being freed from deceptive practices in addition to a litigant’s interest in being compensated where harmed by them.” (Query how this comports with eBay and Winter.)

 

KFI admittedly mislabeled three yarns when they were first imported in 2012, but they bore corrected labels by the end of 2012, and there was no evidence of further mislabeling. Cessation alone didn’t moot the claim for injunctive relief; the burden is on the defendant to show that its reform is “irrefutable and total,” and injunctive relief may also be appropriate for a terminated but willful violation. There was no evidence of willful violation here. “KFI has provided ample assurance that it will not again sell these three Mondial yarns without properly designating their Chinese origin.” Thus, the court wouldn’t “waste judicial resources in fashioning an entirely superfluous remedy” as to those yarns.

 

However, there was a genuine issue of material fact as to continued mislabeling of another variety of yarn. A witness admission that it was made in Turkey rather than Italy raised a question of proper labeling. KFI continued to list the yarn on its website “without assurance that any past mislabeling has been irrefutably addressed.” Cascade would be allowed to seek equitable relief from the court (not a jury).  The state law claims received the same treatment.

Campbell conference: beyond transformative use

Panel VII. Beyond Transformative Use—Other Fair and Permitted Uses (Moderator, Professor Gomulkiewicz) (partial: I had to leave early, sorry)

 

Gomulkiewicz: sometimes licenses get a bad rap but they can be a powerful engine for creativity.

Jessica Litman, University of Michigan: Campbell was set up and constrained by Sony.  Sony was filed only a few weeks after the 1976 Act became effective.  Issues Congress hadn’t considered: liability for personal uses; liability for manufacturers of devices. Members of Congress believed that personal copies were noninfringing; they assumed the extant 1909 Act and the Act they were working on wouldn’t reach those copies.  The scary new techs when Congress was working on the Act were photocopying and magnetic audiotape. Congress talked about them a great deal; consumers were using them extensively in the 1960s, and witnesses assured Congress that they wouldn’t face infringement suits. Instead they were worried about institutional/business substitutionary copying—most witnesses said we have copiers in the office and tape machines at home and think they’re great. Didn’t suggest liability for uses. Not arguing that Act contains implicit exception for personal copying: more modest argument—b/c Congress believed that personal copying didn’t mean liability, and b/c no one suggested device maker liability, Congress had no opportunity to craft relevant exceptions, limitations, or remedies.

 

The thrust of copyright owner lobbyists had still been to ensure that © rights were expressed in very broad language so that it would be clear that the same rules would apply to the next new scary technology.  So it became necessary to use fair use to protect individuals and device makers; Court ended up settling on noncommercial use = fair presumption, but the inverse presumption was disastrous, so 10 years later Souter disavowed Sony, without repudiating its result. Consumers meanwhile internalized the principle that recording was fair use; AHRA was supposed to give consumers a free pass for recording music. 

 

It became clear that applying the clear language of the statute wasn’t going to work in a lot of situations, but it was hard to get Congress to enact exceptions for clearly noninfringing uses b/c of fierce opposition from copyright owners.  E.g., Register of Copyrights suggested an express privilege for backing up copies on one’s computer, since backing up files is really important and people should do it.  §117 doesn’t do it if what you’re backing up is not a computer program. Probably it’s fair use, but then those copies are “lawfully made” and then those copies could be disposed of.  If it wasn’t lawfully made, but then we’re sending the message that this good, important, harmless thing is illegal, which is either bad for good data practices or for legitimacy or for both. Yet the opposition was vehement: no one is actually suing over this, so there’s no harm; any new exception to reproduction right, whatever it was, would pose a grave risk of encouraging rampant piracy.  Computer game makers suggested Congress should just repeal §117 entirely since media were now much more durable and no one needed to back up programs.

 

This story repeated again and again.  All new suggested exceptions are unnecessary and dangerous. Consider failure of telephone unlocking bills: everyone agreed it was fine and no one wanted to put it in the statute.  But there are always © owners who sue over stuff Congress didn’t intend to cover; that’s the point of the broad language. As © expands further, fair use has to stretch to match. If © owners mean that it’s important to constrain fair use to its mid-20^th c. limits, we need to constrain copyright accordingly, or have a host of new express exemptions and limitations that would make it feasible to make fair use relatively narrow.

 

Anthony Reese, U.C. Irvine: Campbell transformed factor three: seems to boil down to how much the D took and how important it was. Relatively easy in most cases to measure how much D took but gives little guidance on how much is too much.  SCt before Campbell had no guidance at all; Sony involved 100% copying.  Said that 100% didn’t have the “ordinary effect” of militating against fair use.  Harper & Row wasn’t much help either, b/c it was on the other extreme of the spectrum: 400 words out of 200,000, or 0.2% of the work.  Court acknowledges this is insubstantial in absolute terms but was “qualitative” heart. 

 

Campbell changes all that in a few swift strokes: reasonable in relation to the purpose of the copying.  He’s studied results in appellate cases, 61 in 21 years.  Reviewed 4 judgments on pleadings, 14 on preliminary injunction, 33 summary judgment, remainder trials.  Fair use found by 30 dcts, 26 not fair use, 1 mixed and 4 no reaching of merits.  Appellate: 24 fair use, 31 not fair use, 3 mixed and 3 merits not reached. Not all affirmances despite similarity.

 

Half the cases (52.5%) explicitly state the reasonableness principle, quoting Campbell directly or indirectly.  28 of 61 cases with one or more uses found fair, 22 of 28 state the reasonableness principle.  33 of 61 finding not fair, or dct erred in finding fairness, quote reasonableness in 10 of 33 cases. This says nothing about the direction of causation of course.

 

35 of 61 involve uses of P’s entire work. 15 Still images: 10 photos/5 graphics. 10 involve texts: 6 books/manuscripts/dissertations (remainder journal article, student paper, etc.); 10 TV programs, software, sculptural works, music, sound recordings (Swatch conference call)

Entire work case: 18 not fair use, 5/18 mention reasonableness.  Fair use/mixed 16: 13/16 mention reasonableness. (1 didn’t reach the merits.)

Heavy number of new tech uses involve entire work—search cases; plagiarism search case of iParadigms; Swatch conference call (new tech b/c Bloomberg wouldn’t have used the whole call in any other reporting medium); then Napster & Gonzales, two P2P filesharing cases. In all but the filesharing cases, there’s a finding of fair use with an express reliance on reasonableness. Campbell gives structure to analyze how much is too much.

 

Rebecca Curtin, Suffolk: Transactional origins of authors’ rights. Don’t mean to imply that commercial norms do or should equal legal norms. Statute of Anne expressed concerns about social value.  Nonetheless, interesting questions about origins, because if you look just at court cases and statutory recognitions of literary property, authors are invisible from 1557 to 1710 and then they pop up.  Was this a cover for publishers’ interest? Idea that commercial practices didn’t change used to suggest that reference to authors was a sham.

 

If you look at commercial practices before the Statute of Anne, looks less like a cover story and more like a business model.  Petition for copyright from Stationers: emphasizes detriment to authors, but also the importance of © to their ability to carry on their business to create alienability: authors who used to dispose of their copies for consideration or reserved some part for the benefit of themselves have been harmed by other printings.  What did they mean “reserved some part”?  Something more than mere conveyance of the physical manuscript, even before there was a concept of literary property.  (Couldn’t that just be payment over time, like a loan?)

 

Is there evidence on the Register that publishers thought about copyright, not just physical manuscripts, being purchased? Is there evidence of sharing of contingent value after publication?  Examples: never print again without consent of the author—dated 1607.  Atypical entry in the Stationers’ Register. Contracts became more complex over time, such as Milton’s 1667 contract.  Building the rise of the idea of literary property. Idea of subscription projects: authors extend into the market and interact w/readers: 1694 contract to translate Virgil w/upfront milestone payments. Printer agrees to make best efforts to get certain number of subscribers, preserve exclusivity for subscribers until the edition is done. Once orders are filled, Dryden (author) can advertise himself for a second subscription. And if the publisher failed to get the subscription fully subscribed, Dryden had clawback rights.  Conceptualizing author’s right prior to codification again.  Contract language doesn’t use “copy” terminology, but “sole benefit of printing.”  Other contract language resembles a covenant of seizin: given the investment, author may need to indemnify publisher if there’s no legal right to sell literary property.

 

Post 1710 contracts sound very similar.  “Copy” means more than the physical manuscript.

Campbell conference: IP and cultural expression

Panel VI. IP and Cultural Expression (Moderators, Professor Said and Professor Margaret Chon)

 

Mark McKenna, Notre Dame: Influence of Campbell outside copyright/in right of publicity: the First Amendment cases in which there’s an arguably expressive use of someone’s identity—movie, song, video games.  Courts use a lot of tests; consensus in TM developing around Rogers, but no such consensus exists in RoP despite the fact that these cases are almost always brought as RoP and §43(a) cases. One approach uses Rogers for both, which makes sense since Rogers itself involved both claims.

 

Comedy III is another option. But the problem is that a person is not a work, so it’s impossible to do a true transformativeness analysis. Courts don’t evaluate whether a defendant’s work is transforming the P’s identity, but rather how creative the d’s work is.  This means that this is essentially productive use; it’s a terrible approach to the RoP. It’s unclear whether we look at the creativity in depicting the person, or creativity in the work as a whole. The recent sports videogame cases make this conflict apparent.  You could ask how much of the work as a whole consists of the identity, but the courts don’t do that. That would still be a poor test because it would still be hard to know when a painting of a celebrity was protected. In both video game cases, creators were penalized for the realism of the game.  Suggests that least worthy would be biography and documentary film, which should be instead at the core of the First Amendment.  Of course a court is unlikely to find a violation here, but why not?  What work is transformative use doing?  Courts are actually judging the value of the work: video game exceptionalism notwithstanding SCt’s directive to the contrary.  That’s a story of Campbell’s influence, but not a happy one.

 

Lateef Mtima, Howard University: Hathitrust as template for social justice arguments in copyright.  If print-disabled access is non-transformative, but fair use, that opens other arguments. The EU doesn’t have flexible fair use, but rigid limitations.  Several cases in ECJ are doing the same thing of purposive interpretation: Decma v. Vandersteen: court has to interpret the application of the exceptions under Art. 5 of harmonization directive, as to whether or not an unauthorized use of an altered cartoon was a parody.

 

A social justice use, like the use of rendering books available to the blind, can be defended by looking at the objectives of an expressly articulated law or gov’t policy; there should be a nexus between the social utility objectives of the law or policy and the copyright law.  Finally, the last question is whether the specific use isn’t antagonistic to the overarching objectives of copyright.  The fourth fair use factor does look after the rights of the copyright holder, but we need to ask this again because copyright holders have noncommercial interests that should be respected. Often when copyright owners complain they’re getting no money we can sometimes point to noncommercial benefits they may nonetheless be getting. 

 

Access/cultural preservation is another worthy goal, for significant cultural events/documents, e.g., women’s rights events.

 

Christopher Newman, George Mason: Fair use is not holistic enough.  Factors still being weighed against each other, however minimally. Souter avoids this in Campbell; remains holistic, w/ glaring exception being factor two, the neglected middle child of fair use doctrine. Factor 2 = dean’s speech at graduation: a customary part of the ceremony, but has limited variation and no one ever expects to learn anything from it; its greatest virtue is usually that it’s short.  Kienitz: “Factor two is unilluminating” is the sum of the discussion.

 

Why? We’ve made the mistake of thinking that each factor must have weight rather than being a lens through which we should triangulate the whole. So we only say things that weigh for or against fair use.  Not only is Campbell’s factor two analysis incoherent, Souter goes on to say it’s irrelevant.  If the question is fairness, how do you decide the nature of the original work/what it was doing before it was transformed?  Ought to ground the rest of the analysis, rather than a factor that weighs for or against fair use. Should instead provide a qualitative baseline: calibrate the scale, not put a thumb on the scale. Instead these discussions take place under the rubrics of the other factors.  But it would improve analysis by making sure we’re taking the time to look at the problem from various distinct angles.  If we spent more time focusing on the original work on its own terms, we could ID and create bodies of doctrine showing works/characteristics of works that add to the analysis.

 

Why don’t we talk about what kind of work it is?  The ways in which we process and draw meaning from a work vary depend on type: music/writing. Amount of work necessary to transform may vary: relatively small alterations to an image may have a profound impact on its meaning in ways that wouldn’t happen w/text or sound.  Kelly etc. are often cited as complete copying cases, but actually the resolution was altered in ways that make transformation a more plausible conclusion. Be careful in analogizing types of cases across types of works. 

 

What’s the work’s expressive purpose?  Current analysis is undisciplined, failing to distinguish between the purpose of expression embodied in the work and all the instrumental ways in which that expression might be used.  Irrelevance of good faith: we want to be able to look at objective qualities of two works and not at what’s going on in people’s heads.  Expressive content of photos can be entirely unaltered—Dillon v. Doe, headshot of politician to ID her, used for the same purpose: to physically identify the person under discussion. The effort to convey positive/negative meanings was separate; there was no transformation.  You might say once a politician chooses to make an image identify her, that image is fair game. Okay. But then we need to know when secondary associations should be considered part of a work for fair use purposes.

 

Factor two could also ground the discussion of factor four. What kind of market are © owners trying to participate in, and how are they using it to further expressive aims? Doesn’t see why market has to mean economic value, but rather some other kind of gain.  We shouldn’t categorically opposed to let artists use exclusive rights to protect whatever idiosyncratic values they have. If artists want to be paid in attribution, and release work under CC licenses, then someone who copies w/o attribution shouldn’t win fair use automatically b/c there’s no market harm.

 

Moral rights through the back door? What I’m suggesting doesn’t increase scope of author’s §106 rights just because of objection.  Fair use is like nuisance law.  Requires actual harm to use & enjoyment of property, which isn’t limited to ability to profit. But owner doesn’t have carte blanche to define use & enjoyment—depends on the character of the neighborhood and the neighbors’ interests. Violation of a ban on criticism shouldn’t be honored, but that’s not true of all idiosyncratic values. So discuss what sorts of use & enjoyment authors value in this space, and is there any reason to stop them from using exclusive rights to further those values.

 

Betsy Rosenblatt, Whittier: Young women’s voices on fair use.  People make things they may not realize they’re making, including community or themselves.  Fanworks, overwhelmingly female communities under investigation. Deep dedication to gift economy.  In post-Campbell world, these fanworks pretty uncontroversially don’t infringe, even resisting the temptation to separate the factors out from each other. Transformative of meaning; noncommercial; small portions; don’t compete in the market.  There has never been a lawsuit about a noncommercial fanwork (despite threats and rumors).

 

Skin in the game: Organization for Transformative Works legal committee head; OTW runs the Archive of Our Own w/over 400,000 registered users, 1.3 million works, 5.8 million unique visitors/month. 107 responses to our call for fan stories to submit as part of our response to the USPTO/NTIA Green Paper call for comments on remix.  We had to depend on self-identification as women/girls. We only asked about benefits of creating remix, not drawbacks: reflects our pro-fanwork agenda.

 

We found very powerful trends in the responses. Particularly: creating fanworks provided unique opportunities for developing selfhood, emotional maturity, and professional skills.  Broad fair use permission for noncommercial derivative works promotes expression by often marginalized speakers and offers benefits otherwise unavailable.  Fandom helped them understand themselves. Many had a narrative of fandom as rescuer—literally lifesaving in some cases.  Felt they were not alone in the world; helped them find their voices; taught them to value their own expression and their own opinions, which served them later in life.

 

Women believed fandom allowed them to talk back to mass culture, especially one that didn’t adequately represent them. Claim agency around popular narrative, explore issues of gender and sexuality by working with popular characters; nonheteronormative narratives; issues of race and disability. Infinite diversity in infinite combination.  The derision of fanworks was often bound up with other negative attitudes towards feminine pursuits. The young writer in any genre will not start out good; she finds her voice and that’s a benefit.

Remix taught important skills—language, writing and editing w/ the system of beta reading in fandom, critical thinking, visual art, programming/coding, other fields that could be used in professional lives.  The rewards are support and feedback, a community/culture of learning. Transformativeness, because community that supports empowerment through changing the original, comes disproportionately from underrepresented groups.  Permission culture would make this all difficult/prohibitive.

 

Margaret Chon: Legal transplantation, examined by McKenna—we’ve seen this in other contexts such as the three-step test of Berne being implemented in national legislation.  Mtima is talking about similar issues: © looking outside of itself and even IP as a whole, towards other kinds of laws and policies.  Specifically the ADA.  Perhaps IP isn’t the be all and end all for innovation—think about leveraging and connecting other social policies.  McKenna isn’t a cheerleader for transplantation, whereas Mtima is.

 

Newman and Rosenblatt do deep dives into two fair use factors, which Leval urged us to consider as deeply connected.  Chon also has the tendency to handwave factor two; Newman’s project is to bring factor two back into the fold. Rosenblatt/Tushnet also dive deeply into the transformativeness factor: how do these two impact each other?  How would Newman’s approach deal with the Rosenblatt/Tushnet process-oriented approach to transformativeness.  Is there value to Newman’s approach for thinking about fanworks?

 

Breathing space may tie this all together.  We tend to think of this as tied to First Amendment/free expression goals, but “breathing space” is open enough to capture many ideas expressed on the panel.  Securing copyright is good, but one must not put manacles on science: quote from older case is her favorite part of Campbell.  Fair use had earlier precedents, not just in America.

 

McKenna: not averse to transplantation in itself. Courts often don’t think nearly carefully enough about what they’re doing when they transplant something. E.g., courts often pretend they’re just using tort principles in secondary liability cases, but they don’t. Most likely to go awry when court is unfamiliar with the borrowed-from body: Cal. SCt doesn’t get very many copyright cases! Likewise, the SCt doesn’t get many tort cases, but thinks it knows torts.  No rhyme or reason. Mtima wasn’t advocating borrowing willy-nilly but was arguing for borrowing w/relation to copyright.

 

Mtima: we all seem to be saying that the nature of the work matters.  The right type of access to works—being able to get them and then to reuse them—helps continue the evolution both individually and as a society.

 

Newman: People usually think about fair use w/regard to fan fiction as copyright being a looming, never materializing threat.  Newman takes strict view of idea/expression and thinks fanworks usually don’t count as derivative works.  Super rich depiction of artistic community: I’m curious to know to what extent is © useful, not because I have to shield myself from it, but perhaps because they want to keep it noncommercial/constitutive of their personhood.

 

Rosenblatt: Very suspicious of considering intent of original creator, but intrigued by considering purpose as something different from intent. Expressive substitution may not just be for what the original work says, but for what the original work does.  Wary of importing moral rights through the back door. But these communities depend on certain things they want their works to accomplish for themselves and others.  Recent ebooksTree issue of copying fanworks to attempt to convince people to pay for “free” ebooks. Fans definitely want their works to remain free.

 

Yen: If the phenomenon you observe with transformativeness in RoP cases mimics the problem w/transformative use being so broadly applied that it loses coherence and simply becomes a result announced in advance.  Public pressure to compensate NCAA players; this just happens to be our vehicle.

 

McKenna: it’s true, that seems influential—and I want them treated fairly too. But there is a core way in which it makes sense for copyright; it doesn’t make sense at all in the RoP.  It is in some ways announcing a result b/c it’s hard for Ds to win.  On the very same day the 9^th Circuit announced that the videogame wasn’t transformative for RoP purposes, it announced that it would use Rogers for 43(a) claims against the same conduct.

 

Besek: Factor two/coursepack cases: some texts are created specifically for the educational market; that’s an important aspect of their nature. Is there a place for the publishers’ goals? Courts have rejected authors’ own desires for wide dissemination as probative.

 

Newman: should start by understanding what role © actually plays in enabling and encouraging the people who are trying to cultivate the value of the work doing what they’re doing, which includes publishers/intermediaries. 

 

(RT: Barthes’ readerly and writerly texts as a factor two consideration?  That would tie in with the fan communities that respond to certain works. Except it turns out that almost texts can be writerly.  Newman might not be into that, b/c he seems to look at “purpose” as something objective about the creators/publishers, rather than purpose as function in the reader-writer interaction.  Readerly/writerly might fit into the fact/fiction, published/unpublished distinctions we have though.)

Campbell conference: copyright and music licensing

Panel V. Copyright and Music Licensing (Moderator, Dean O'Connor)

 

Peter Menell, U.C. Berkeley: We seem to approach fair use depending on how we approach our careers. Lawyers: fair use is attractive b/c it has so much potential.  Social science: not so perfect b/c it doesn’t solve core problems in many areas.  Selma: director concluded (whether correct or not) that she couldn’t use real MLK speeches. This is a lost opportunity to portray history, with no arts-promoting benefits.  Jimi Hendrix biopic opens without his music, thanks to copyright. Fair use needs help. 

 

Another pocket of law: mashup as the breakout musical genre of this generation, just as hip hop was of a previous area. Sampling was channeled into licensing but never achieved all that it could, since labels wouldn’t release uncleared content. Internet/digital tools: new wave didn’t need labels.  No big threats of lawsuits.  But then you can’t monetize and distribute—that’s the boundary.  Norwegian Recycling: example of pop subgenre.  Sees copyright as an impediment. If you make it to the top of the remix world, you can perform for $100,000 a night, but many people would like to put their work out in recorded form, and that’s hard to do with no ability to monetize. They can do it live b/c there’s no public performance rights in sound recordings and the clubs already have blanket licenses. (They may bring in recorded remixes but no one has made a stink about it.)

 

Remix is in state of unrelievable tension: some think it’s all fair use, others think it’s morally and legally indefensible.  Girl Talk sometimes takes big chunks; not clear how that would come out under fair use. Solution might be compulsory licensing, as several studies of remix artists suggest—artists are happy to share some of the revenue without being fettered in creation.  Cover right = kind of remix that is unfettered in that way.  Many might be fair uses, but covers don’t seem to bother people; help promote the older versions too.  Rethink our exceptions for revenue sharing: complement to fair use; use limitations with no ads, no synch.  No statutory damages for mashups.  There are objections but we won’t get perfection, and we’ve already been waiting years for some help. 

 

Moral rights: William Hung did a Xmas album; we live with the cover right.  We could be explicit that there’s no cutback on fair use.  Many remix artists would go along without demanding fair use rights—less pressure on the doctrine.

 

Eric Priest, Oregon: Music in China. Creators do produce works in China despite difficulty monetizing them. China’s film industry is booming.  Basically no money from online music. One revenue stream: exists by happy circumstance, b/c Chinese consumers happen to really like ringback tones.  Those aren’t piratable unless you hack your phone; centrally controlled by mobile provider. But mobile providers do a lot of record label style accounting, so record labels don’t get much, and artists get less still—2% of the revenue generated by the providers.  Labels lack leverage to renegotiate deals/enforce deals they already have b/c this is their sole source of revenue.

 

When there’s only one revenue stream, you force people to accept that stream.  As you get monopsony intermediaries, that vests tremendous power and leverage in that intermediary. We’re seeing glimpses of that in the US.  One Amazon, one Google, one dominant player per space—not clear who that’ll be in music distribution, though some will say YouTube has won. YouTube can say: agree to our terms or your videos will be private. Strongarm negotiating is part of the model, when revenue streams dry up.

 

Kristelia Garcia, Colorado: We don’t want to limit the cover right by forcing any distance at all from the first performance.  But what does that mean for other issues, like the Blurred Lines case?  We don’t normally see 10% similarity analysis in substantial similarity in music: what does it mean to say that Blurred Lines “sounds and feels” like Got to Give It Up?  Not at all clear how people are throwing around these musicological terms.  Also a bunch of nonsense phrases, including in instructions to the jury—“a constellation of distinctive and important elements,” “vocal and instrumental themes,” “unusual cowbell and instrumentation” as opposed to the standard cowbell, copying of “omission of guitar,” and use of male falsetto, which seems unfair. “The very essence of the work”?  Is that because it’s in the genre?  There is substantial similarity of feel in the works, but so what?  Sub Pop: Do you hope the artist you hear next sounds completely new?  Answer: No, we hope they sound like artists who sound like the artists we have who are already successful.  We have records to sell. Don’t have time to risk with artists doing completely new things.  Does that create risks of label mates suing each other?  Universal’s acts are suing each other: Marvin Gaye & Robin Thicke.  Substantial similarity is the equivalent of fair use in music; that’s the only tool we have.

 

Olufunmilayo Arewa, U.C. Irvine: Music and similarity. Part of what we’re dealing with is that a lot of music is very similar. Not just pop music: historically, a lot of music has been similar. We tend to interpret music through the lens of the canon: we ignore 1000s of composers in classical, blues, jazz.  But that means we forget a bunch of similarities. If you play a bunch of music from Robert Johnson’s time, it’s not clear how he differs from other contemporary artists, which is not to say he wasn’t a great artist.  Rise of African-American influence in music: popular western music used to sound very different, a century ago.  Not just in US.  Think of change in assumptions about how we create, which we don’t think about enough from a © perspective.

 

Lawyers and writing. We think about lyrics. But Campbell and other cases, when they talk about musical features, courts lose their way—much less sophisticated and nuanced. Reflects that lawyers are trained to focus on writing.

 

Notation, and its use in unintended ways in legal cases. Notation is a particular kind of writing with a specific historical trajectory of trying to write down Western art music, as something that singers and instrumentalists can both use. Rhythm is very hard to notate.  A lot of rhythm is learned orally, even today.  Notation is a shortcut, not a complete embodiment.  That impacts popular music today, because a lot of infringement cases are about the musical work. Courts would often play the music and tell jurors to abstract out different portions to get to some kind of essence. That’s very difficult, b/c there are important cognitive/perception aspects of music that we need to think carefully about. Music writings and music sounds are processed in different parts of the brain.  Reactions to music can be highly individualized.  Courts don’t have a good enough understanding of how writing v. sound is processed.  Notation is representation, and what it means varies a lot, especially for African-American music where the lead sheets don’t fully embody the written music.  Sound recording copyright doesn’t really help because most infringements aren’t verbatim copies of the sound recording.

 

Underlying assumptions. Need to think about the relationship between musical sound and musical writing. Influence of things like genre, musical perception/cognition. How do we think about and measure musical relationships.

 

O’Connor: example of musician who shows her bass playing by playing it over a recording of I Wanna Be Sedated—doesn’t fit into conventional categories, but maybe we want to allow it, including under Menell’s proposal.

 

Heald: Maybe one way to look at it is whether there are local borrowing norms that allow a certain amount of copying.  Argument: Berne should be held to mandate this b/c it says it’s permissible to quote a work lawfully made available to the public provided this conforms w/fair practice.  Not limited to just words.

 

Arewa: sounds good, but look at Rolling Stones, who borrowed heavily from blues traditions but then enforced heavily against, e.g., Bittersweet Symphony. 

 

Heald: maybe they’re hypocrites.

 

(Other discussion: the labels/publishers sue; their norms are different/are they even relevant since they benefit from the artists’ underlying acts?)

 

(I’m really intrigued by Garcia’s suggestion that substantial similarity serves the fair use role (well or badly) in music infringement cases. This gets to something often missed by ideas about parody/transformation that reduce it to criticism.  Sometimes quotation is a way of participation in a conversation; it doesn’t have to be critical for there to be a transformative new work created.  To the extent that similarities situate a work within a genre—similarities that might be called tropes or scenes a faire in non-music cases—they do serve one function of quotation that might in other contexts be analyzed as fair use.  The problem in music cases seems to be insufficient appreciation that substantial similarity is also serving the fair use role, though I’m not quite sure what should be done about that given that breaking out fair use would also require articulating the musical concepts that Arewa points out judges/courts don’t understand all that well.)

Campbell conference: Justin Hughes keynote

Closing Keynote Address: Justin Hughes

 

In a world of complex laws, like tax regulation, everyone likes the idea of a rule that’s both general and exculpatory—fun and safe because when you’re applying a multifactor test it’s very difficult to be clearly wrong. But fair use is also notorious because it’s a principal arena in the struggle between proponents and opponents of IP. The doctrine has an unstated and perhaps unconscious idea: the open ended possibility of the negation of copyright protection.  This is the source of fair use’s popularity among digerati and the source of the fear copyright owners have of fair use.

Don’t you mean an open-ended regulator of copyright protection where protection doesn’t advance the underlying purposes of ©?  No.  It’s a kill switch.  It’s not a device to withdraw © protection in all circumstances, at least not in a way we could make a policy decision about. It’s an iterative process, endless rollercoaster of expensive litigation. That’s what makes it a little bit scary but fun.

 

Many of us are concerned about how transformativeness has become so malleable, so dependent on what judge had for breakfast, that the twists and turns are getting quite wild. He thinks the doctrine will eventually sort this out, but wants to give a cautionary tale.

 

Where he doesn’t disagree necessarily w/result, but w/use of transformativeness: use of expert’s CV in legal case.  Consider SOFA Entertainment v. Dodger Productions: 7-second clip of the Ed Sullivan show introducing Four Seasons used in the musical Jersey Boys, projected onto the screen before the actors began performing. Court found transformation: used as biographical anchor and its biographical significance gave it new meaning, not just used for entertainment value. Clearly both works are works created and distributed/performed for their entertainment value.  Clip conveys mainly factual information about the group about to perform.  He doesn’t see any way you can say there’s a tremendous transformation: it was biographical/informational when it was originally broadcast.

 

Monge v. Maya district court is a poster child for transformativeness wandering the desert: four federal judges reached three different conclusions in a relatively simple case.  Monge, a Latina star, got discreetly married; a story ran about the marriage with photos. DCt granted sj on fair use; 9^th Circuit reversed over a vigorous dissent.  The dct found it transformative: photos were used not in original context, documentation of wedding night, but rather at confirmation of the accompanying text challenging repeated denials of the marriage.  Ct of appeals found only marginally transformative.  There’s mere wordplay to say that photos are transformed from documentation of wedding to confirmation of text saying people are married.

Then there’s White v. West, which seemed to conclude that putting something in a comprehensive database is grounds for a transformative use.  WW Norton would never have to pay for a royalty again in its anthologies!  Thus he is concerned that recent jurisprudence on transformativeness is becoming unwieldy. Not saying that the decisions are wrong, just that they were achieved the wrong way.

 

Low protectionists may see this as a good thing and even call for further expansion of transformativeness. Lea Shaver: translation should be recognized as transformativeness. But that would conflict with Berne Art. 8. 

 

Berne 9(2)/Trips Art. 13 is the three step test.  WTO dispute resolution panels say we apply it as it reads, with three steps: (1) certain special cases, (2) no conflict w/ normal exploitation, (3) no unreasonable prejudice to legitimate interests of right holder.  Lunney’s unitary analysis is popular with academics in Europe who think current version is too restrictive. Interpreted this way, defenders of copyright see three-step test as lynchpin of copyright/critics see it as Darth Vader.

 

Is the American fair use doctrine as embodied in §107 compliant?  I have always thought the answer is yes. I still think the answer is yes, though I was initially too simplistic.  Back in 1988, on accession to Berne, there was a lively debate about compatibility of American copyright with Berne; we gave up formalities.  Then there was fair use.  In 1988, then general director of WIPO, identified formalities as the only real incompatibility with Berne, suggesting that fair use was no problem. Six years later, the WTO was created and TRIPS extended the three step test to all exceptions and limitations in ©.  Absolutely no diplomatic fuss over whether US law would be compliant.  In early days, a few countries questioned the US about fair use.  Standard US response: while §107 may appear indeterminate, carefully developed 150 years of case law assures that §107 meets the requirements of the three-step test. 

 

More countries have adopted provisions at least inspired by §107: Sri Lanka, Singapore, Israel, South Korea and the Philippines; arguably Uganda, and Canada is moving in that direction. Not sure whether it’s a good thing for developing countries.  Their local judicial institutions may not be developed enough to exercise a balanced application of the doctrine. Makes WTO challenge to §107 more difficult, politically and probably juridically. Vienna Convention on Treaties: a treaty shall be interpreted in good faith in accordance with ordinary meaning and in light of subsequent practice.

 

But Ginsburg and Besek raise legitimate issues.  §107 passes the test because it is not an exception to be judged under the three step test. It is a mechanism to establish exceptions.  When significant courts rule the same way, or when the SCt weighs in, the result is a pretty clear rule. A little exception: e.g., parody.  At least as clear as the codified parody exceptions that exist in other countries.  Sega v. Accolade/Sony v. Connectix: an exception has clearly been established for intermediary copying to produce a new work.  With fair use we entrust judges to craft new exceptions to our copyright law, just as the Chinese court can issue sweeping interpretations of IP laws if the People’s Congress doesn’t act. TRIPS doesn’t require national legislatures to write the rules (though Berne does). WPPT and Beijing treaties likewise just say it’s for the members to do; WCT has a weird straddle. 

 

But Ginsburg and Besek have a point.  A whopper of a fair use decision could trigger a challenge, and the case would be about that decision/that new exception in American copyright law. As-applied challenges are possible. A broad fair use application to foreign works could trigger that showdown. Many in Geneva think only a SCt decision could be subject to dispute, but others think that the court of appeals should also possibly allow WTO proceeding.  Could be brought by someone we’re always dragging to the WTO as retaliation (China).

 

At the domestic level, our judges should be cognizant of our treaty obligations, properly interpreted: Charming Betsy doctrine.  An act of Congress ought never to be construed to violate the law of nations if any other possible construction remains. Congress regards IP treaties as non-self-executing—adamant about that w/Berne, TRIPS, and 1996 internet treaties. But many reasons related to separation of powers still exist to give effect to Charming Betsy: if a court believes that one interpretation “could” violate the three-step test, it should go with a different interpretation. 

 

Campbell: March 1994; TRIPS signed April 1994, effective Jan. 1995. We haven’t had a SCt fair use case since. Interface of foreign/domestic obligations will get more interesting over time.

Campbell conference: future of digital tech

Panel IV. Campbell and the Future of Digital Technologies (Moderator, Dean O'Connor)

 

O’Connor: output of one creative person becomes input for the next. Consider how copyright and fair use work in that system.

 

Robert Brauneis, George Washington University: How have new technologies influenced fair use jurisprudence?  (1) Personal copying and distribution and the personal/commercial distinction. Before Sony, there had never been a single published opinion on fair use in private noncommercial copying.  Non-networked tech brought personal copying to the attention of copyright owners, leading to fair use for some forms of personal copying.  Few decades later, networked computers challenged personal/commercial distinction. 

 

(2) Computer programming/functional works. Pre-Feist, there was a big branch of fair use jurisprudence devoted to ok uses of factual works; that faded as noncreative facts were excluded. But a new branch arose, dealing w/largely functional works and reverse engineering. 

 

(3) Nontraditional uses. Accessibility to the blind.

 

(4) Dissolution of the concept of the copy. New tech significantly eroded the role of the copy as the intuitive unit of consumption. Fair use will likely step in to mediate between the intuitive sense of exploitation versus formal reproduction.  In non-networked world, users typically acquired only one copy. Now many of us don’t know whether we own a copy of a work or not, since Spotify commingles local and streamed; we don’t know how many copies we own or where they’re stored or when another copy is being made—the cloud obscures, faithful to its name.  Correlatively, it doesn’t make sense to treat cloud syncing as we do printing another hardcover book. Reframe from copying to access/exploitation? But it’s more than a little difficult to create a new conceptual scheme and harder to get Congress to act; courts will mediate slippage between rights and practices that seem widespread and harmless, and they can call on fair use to do so.

 

Sandra Aistars, Copyright Alliance: Worth distinguishing b/t creating new copyrighted work and facilitating new tech.  Campbell worked very well for the former, but not so with new distribution models/purposes. The beauty of fair use is that it’s both flexible and case-specific; allows courts to consider all the nuance; guard against new set of reflexively applied presumptions w/negative effects on creativity.  (Ideological drift …)

 

Authors aren’t threatened by the concept of fair use, nor do they want to see it limited. Authors of all types need to facilitate the use of existing works, and celebrate contributions tech has brought to their lives. Tech innovators face similar challenges trying to get product/service launched and authors are sympathetic.  Seems to her odd, as June Besek noted, that partial copying by an individual artist is scrutinized more than massive full-on copying of entire works by commercial entities, which is presumed to be transformative b/c different purpose.

 

Intermediate copies are all lumped together. They can be used in ways not linked to traditional sources of income for copyright owners, or simply to design around existing law to avoid licensing.  Aereo is a good example of design-around.  Intermediate copies used to facilitate new products/services can have different impacts on different market sectors. Search engine that exposes artists to users is beneficial, but taken too far or applied specifically it might undermine the market or supplant the market for visual images entirely.  Should distinguish and not say all intermediate copies are created equal.

 

Do we need different approaches when a new work is created versus new purpose?  No. The four factors serve us well, allowing each use to be considered on its merits.  Interesting to hear Beebe’s empirical research indicating that it’s easier to predict outcome than some might have expected. She worries that it’s easier to make a decision based on nuanced analysis of four factors than it will be if we allow the trend to compress everything down into one test, bringing a tendency to be guided by perceptions of morality or social utility, which are far harder to predict. 

 

Yoko Miyashita, Getty Images: over 200,000 photographers, 100 million online and 85 million more in storage. When we talk about copyright, we mean creative, technical, highly skilled works that our photographers may put themselves in harm’s way to get.  We moved through technologies than now make anyone a photographer and a publisher. The universal language is imagery.  Part of that language is “like” and “share.”  For younger generations, using images is essential to speech and personality, not just a “nice to have.”  Genie’s out of the bottle.  We don’t want to be regarded as the ones who want to break the internet and not taken seriously.  Trying to take expression away from the public is a losing game.

 

We tried the enforcement route and we learned the hard way.  (Turns out they sent a letter to Corbis, despite cross-distribution agreement.) Unwinnable whack-a-mole, plus potential long term brand harm.  So we needed to evolve instead of becoming irrelevant. Getty Images Embed: 99% of content is available for free, for noncommercial purposes. Social sharing has been added to our images. Facebook, Twitter, Tumblr, Pinterest: adds watermark, link back to images, and information on license. We want user traffic, eyeballs, data: the currency of our marketplace.

 

Our biggest competitor is Google.  Among buyers who regularly license content.  9 out of 10 unauthorized users we speak to point to Google as their source of imagery.  Kelly v. Arribasoft & Perfect 10: what’s happened in search over 12 years.  We went from thumbnails, which used to have little links to the source site; now shows nothing but images like Getty Image search results. Then it goes to a beautiful large view with functions that have had a huge impact on us. The addition of larger images, and arrow features that allow you to toggle from one image to the next, has had a devastating impact on traffic for us.  Not going to get into the framing issue (by which she means whether framing implicates any §106 right). Easy to right click and save on a computer; they are the same size on a mobile device. They significantly reduce clickthrough rates for source sites.

 

This substitutes for eyeballs for all our paying customers who are licensing these images. We are bearing the cost of hosting those framed images when viewed that way.  Is it transformative or substitutional?  Look at the market harm.  Is this search or a wolf in search’s clothing?  (I’m gonna go with search.)  All we want is eyeballs, data—it’s negotiable currency.  Are these intermediate copies designed around existing law to avoid licensing? That’s a key question for us.  (And a weakness of the Aereo reasoning: should we say that Google search behaves as if it is making a copy, so we’ll consider §106 implicated?)

 

Matt Sag, Loyola University Chicago: The dissolution of the traditional concept of copying. Exchange of value b/t author and consumer was made easier/clean by first sale: money for copy.  Then public performance entered the field; broadcast as another source of value, so we get broadcast/cable retransmission rights, crowding around reproduction right but not really changing its significance. Then we get tech led by photocopier, disintermediating copying for businesses and consumers.  Then goes digital and networked.  Now it’s possible to look at when people stopped saying “the United States are” and said “the United States is” by copying the contents of an entire library: a nonexpressive use. The machine is the only one that sees it all. We’ve never had to think about copying not for expressive use before, but courts have handled it rather well.  There’s an interesting question about whether nonexpressive use should be considered transformative, or recognize it as a different form of fair use—latter would be cleaner, but Campbell is still important because it tells us that it’s not the loss of despotic dominion that’s a problem, but rather expressive substitution.

 

Jule Sigall, Microsoft: He’s not really worried about any of the stuff his family does, like using image search for personal communication/creating new meanings within the family. Think of all the things we use: Outlook, Powerpoint, image search, telephone lines, Photoshop, Skype. Tech becomes part of the speech.  These are our users. Where should we go to help answer questions about whether tech should permit these uses, how we should market the tech?  As the person who represented Kelly in Kelly v. Arribasoft, I got a painful lesson in trying to answer those questions using the basic structure of the Copyright Act—a set of broad rights designed to cover lots of stuff, with narrow exceptions (w/exception of fair use).  Presenting it that way left the court with a lot of disturbing questions, and thus justified the use of fair use.  You proceed at your peril as a copyright owner if you present a copyright infringement case w/out considering the kinds of things fair use considers—it’s just not effective advocacy.

 

It’s good for fair use to answer these questions, b/c it provides the most robust set of factors to answer the question of whether an activity is ok.  They can be misinterpreted, but they’re better than the other portions of the Act (compared to Netcom, which invented a volitional conduct requirement, or Cablevision on breadth of performance right). Not obviously complete or clear, but good set of precedents.  Fair use is right in the norm of predictability for laws that in-house counsel are asked to opine about.  When you look how my kids use the tech, there’s no going back to the old ways of “paraphrase or get a license.”  Not for them, not for the courts.  That doesn’t mean all fair use claims will succeed.  But fair use has plenty of applications now.

 

O’Connor: New tech always popping up, like livestreaming Periscope. Does it matter any more whether there are multiple copies, or just uses?

 

Sigall: Software has had the longest history with digital copying.  Industry is moving to offer products away from counting copies in the offering to the consumer.  Office 365 in the cloud. As a business matter, the ability for the user/customer to not think about copies is now the expectation—counting would be distraction/inconvenience.

 

Sag: it’s not the case that Google Book search à Napster.  But my computer backs up to the cloud. I have no idea how many copies of my authorized purchase I have floating around, and neither should the copyright owner. More ambiguity about where the copy resides = need to be less doctrinaire about “every copy is controlled/has independent value.”

 

Aistars: doesn’t matter unless you’re in a litigation posture where you have no other way to advance the argument other than claiming that there are multiple copies. It’s a distributional argument: how to divvy the pie up.  Consumer electronics were innovating in the 80s and 90s, in symbiotic relationship with the “content” industry to sell expensive devices.  The business model is now more about giving the content away and relying on the data to sell stuff.  Leads to more interaction for the user, but the creative work is subsidizing the ability to make those uses.  Not the same as 80s and 90s where nobody was capturing that value; tech innovators are capturing that value by showing ads/using that data.  (I think “nobody” here means “consumer surplus,” if I understand her properly.)

 

Brauneis: space and time shifting are quality enhancement technologies. Fox v. Dish: automatic ad skipping. Suppose all those technologies are fair use. One way of thinking: it doesn’t matter whether the © owner sells you a high balcony seat if through the use of tech you can make it a front row seat without having to pay more.  It’s not obvious that the answer is that there should be no differentiation between qualities or levels of access to work to improve social welfare.

 

O’Connor: we used to think of vinyl as lasting forever, and then it doesn’t.  Now we can, in the cloud. But am I buying a forever copy?  Or do I lose access if I don’t pay?

 

Sag: Peter DiCola has a good paper on this, the option value of music. Cassette: really a one or two year license.  (How badly does he treat those?)

 

Aistars: buying a new device to listen costs you something, whether it’s having to watch ads or lost data. If you are buying one, why not pay for the rest?

 

O’Connor: I don’t want to buy new devices.

 

Sag: consider logic: if a blind person has glasses that capture an image of a book and translate it into an audio version I can hear. Do I really need to pay for the book twice? The tech has enabled more increased value, but why should some of that value go to the book’s copyright owner for those digital images?

 

Aistars: would depend on what the manufacturer is doing in terms of gathering info about what the person’s reading, developing additional lines of business that depends on the interest of the underlying work to the consumer. In that case some share should go to the person who’s creating the work that the individual wants to read or hear.  (Wouldn’t that share be “the cost of the copy she bought”?)  Many people do want to upgrade over time. If you complain about having to buy in a new format, you should be equally upset about having to buy the new device to play it on, and she doesn’t see that happening in this new space. (That’s because of the classic excludability problem. The device is excludable without law; the sound recording is only excludable if the law forces tech makers to design that way. That’s why they feel and are different.)

 

Sigall: dual purpose tech raises issues (infringing and noninfringing). But since more and more stuff is more like an app on different platforms, it’s less about design of particular app or device or purpose. Challenge in this space is to say: everyone will use this for everything; that’s the world. Trying to segregate what you should/shouldn’t do is extremely difficult. Fair use is relatively good at this.  Subset of copyright owners tends to object; what about the rest of the copyright owners whose works flow through the tech? We have really bad info about the preferences of those owners. How do you as a tech provider segregate these, especially without a formalities system?  Some © owners don’t speak with all but the tech is all for everything.

 

Naeve: some © Act provisions are extremely reactive to tech—cf. §110.  Fair use is more open ended. Which is a better promoter of © policy?

 

Miyashita: you have to be flexible. We can’t anticipate 18 months ahead in new tech.

 

Aistars: both are promoters. You need flexible fair use to account for unanticipated events or one-off situations. There are situations where it’s been beneficial to have a more specific permitted use and in some cases have that use compensated. Would prefer not to have industry-specific terms in legislation, but in some other place.  (Presumably a reformulated Copyright Office.)

 

Sigall: interesting to see whether a plaintiff owner argues at a high level of abstraction where the tech doesn’t matter versus arguing about which server makes which copy. His sense is that it goes both ways all the time.

 

Brauneis: the longer a delay there is in legislative action, the more we will use the courts to make new law.

 

RT: public statistics on uptake of Getty Images?  Is Getty sending C&D or non-C&D letters to people who aren’t using it to switch people over?

 

Miyashita: we are sending letters.  Encouraging/highlighting the availability.  (But no answer on statistics on uptake, sigh.)

 

Heald: thought that Kelly is defensible but appalled by current Google image search. Is anyone litigating it?  Second, Hargreaves (UK) report—no changes in the absence of empirical data (RT: though note that the initial law was not adopted with the same rigorous standards). Is that a good idea?

 

Sigall: It’s hard to argue against policy based on empirical evidence, but the question is how you get it in timely and effective fashion. Can be very difficult.

 

Q: did Getty have photographers object to the Getty embed feature?

 

Miyashita: no.  We have to acknowledge practical reality of the types of uses for which embed and social sharing are ideal. Attribution, traffic, eyeballs, data, linkbacks start to make sense as overarching strategy.

 

Loren: also have questions about new image search.  Are you doing anything?  You have market power. You could choose the robot exclusion header.  Setting the law aside, there’s a business reality.

 

Miyashita: we could use robots.txt, but the 100s or 1000s of other licensees—there’s no means for them to exclude; publishers would have to implement robots.txt, and then the stolen sites would be the prominent results.  (That’s … not exactly true in that the publishers could implement robots.txt just for images, and allow text to be indexed.  And then there is the DMCA.)

 

Aistars: many people we work with are individual authors. To the extent there are ways to aggregate and get value from works, whether monetary or data/interaction, those are positive things.

 

Sigall: has seen interesting things happen around accommodating multiplicity of uses, fair and unfair.  Videogames.  Valve’s Steam platform: starts from ground-up understanding of what customers and users and creators all understand about what you can and can’t do. They accept fair limits because the platform has been built that way.  Create norms around usage that are more meaningful, enforceable, and practical than if you looked to the Copyright Act to mediate the transaction.

 

Samuelson: the role of TPMs and anticircumvention. When I read §1201 submissions from GM and the Auto Alliance, they have concerns about battery life and warranties, not about infringement. In the internet of things, TPMs may become a new set of issues; fair use circumventions already happen every day. How will TPMs and anticircumvention evolve?

 

Sag: most TPMs don’t work. When they’re circumvented, often won’t give rise to liability, for courts following Chamberlain and Lexmark. Attempts to use TPMs to control aftermarket could be an antitrust violation if you buy a single-brand lock-in theory. Lots of moving parts, and then there’s whether the Copyright Office should be writing regulations.  (Um, the answer is clearly no: what business of the Office is it how long the battery of your car lasts?)

 

Sigall: there’s a role for TPMs to preserve the rights of copyright owners. Valve uses TPMs in a pretty significant way, but they’ve built it to be flexible.  Tech is deployed in a social and communal setting that determines whether or not the tech works; the legal architecture sits in the broader community.  If you do it right you diminsh the need for circumvention.  You will have abuse of tech, abuse of legal protection. Safety valves: the © Office rulemaking, which gives us information about what’s working and what’s not. Chamberlain and Skylink also showed courts willing to create exemptions that didn’t exist in the statute. Don’t paint too broad a brush: TPMs aren’t going to save copyright owners or destroy users.  (Just uses.)

 

Brauneis: in a networked world, when you can keep important parts of the works on a remote server, the use of TPMs is less important. 

 

Aistars: TPMs can reassure authors into supporting new formats. Problematic when used for printer cartridges and garage door openers; courts have been able to get it right.