Summary of Parts One and Two: The essential balance of copyright between incentives for creators and the feeding of a rich and unlicensed public domain has been undone by a long series of misguided efforts to save copyright by making its rules both stronger and less enforceable at the same time. The industry’s tactics have backfired, eroding what was left of any moral authority for obeying the law. And that was the chief (and most efficient) mechanism for enforcement all along.

The repeated and retroactive extension of copyright terms, largely at the behest of the Disney Corporation, has had the unintended consequence of creating a nation of felons, both technically and in spirit. According to one provocative study by John Tehranian, we all violate copyright unintentionally many times a day. And to the extent we realize it, we don't care.

To return to the parking analogy, the result of these legal changes has been to paint every curb a red zone—it's now illegal to park anywhere. The result is not perfect enforcement of copyright but its opposite. No one obeys the law or thinks they ought to. Getting caught is more or less a random event, and rational consumers won't change their behavior to avoid it.

The center will not hold. Large media holding companies are becoming desperate, expending their resources not to find new ways of making money but to secure passage of increasingly draconian laws (SOPA) and treaties (ACTA) that give them more, largely unusable new powers. Even if passed, these legal tools will do little to improve legal enforcement. But they are certain to cause dangerous and unintended new harms.

At the same time, the marketing machines of these same companies have convinced us that our right to enjoy content is inherent—the American Way. Once offered, we imagine free content should always be free, even if the rightsholder changes its mind or intended all along to attach conditions to consumption based on time or place or the ability to associate mechanisms, such as advertising, that allowed for indirect revenue generation.

Americans don't understand that subtlety, and rightsholders have given them no reason to try. Public education efforts have been pathetic. Instead of teaching consumers the costs and dangers to the delicately-balanced system from copyright infringement, they emphasize moral and legal prohibitions that are rightly perceived by consumers as petulant, cynical, and amusingly out-of-touch.

These campaigns, for starters, say nothing about the economics of content production and distribution. They are morality tales, narrated by fabulists who pride themselves, in their day jobs, on their mastery of manipulation and misdirection. It's as if Darth Vader sat down with preschoolers to talk about why they shouldn't throw stones at the Death Star because of the potential for property damage.

Consider just a few examples below: YouTube's mandatory copyright "school" for violators and the classic 1992 "Don't Copy that Floppy:"


Clearly, not much has changed over the last twenty years in efforts to change public perceptions and behaviors. The Hollywood that can produce blockbuster movies somehow can't make a PSA that isn't a self-parody.

I think the public can be educated, and should be. Here's where I part company with those who reject copyright altogether. The theory of copyright—limited monopoly in exchange for a rich public domain—is still a good one, and the system created by the English, adapted by early Congresses, had the virtue of being largely self-enforcing and therefore efficient.

It is the 20th and 21st century imbalance in copyright, and not copyright itself, that must be fixed. And it can be fixed. There is a way out of this dangerous and increasingly tense cold war between content industries and their customers. Here's a simple three-step solution:

1. If rightsholders want consumers to obey the law and support their preferred business model, they first need to stop making it impossible for consumers to follow the rules. Copyright needs to be weakened, not strengthened.
2. Content industries need to end the stalling and excuses—perhaps understandable in 1998, when I first wrote about digital distribution in "Unleashing the Killer App," but not now, nearly fifteen years later. They need to embrace digital media and new channels fully, even if doing so means tolerating a considerable amount of unauthorized distribution and reuse as working models for profit-generation rapidly evolve.
3. Public education needs to focus not on self-righteous indignation but on collaborating with consumers on finding ways to compensate creators for the value of their work. If consumers understood the economics of content creation and distribution, and given an easy way to cooperate, they'd do it.

Ironically, there's every reason to believe that embracing a relaxed copyright regime and encouraging creative reuse would actually generate more revenue for creators. That, in any case, has been the lesson of every form of new media to be invented in the last hundred years or more.

Each of them was initially resisted and branded as illegal and immoral. Each of them—from the player piano to the photocopier to the VCR to the Internet—has instead offered salvation and riches to those who figure out the new rules for working with them and not against them. (Hint: network effects rule.) Rightsholders consistently confuse each fading media technology with the true value of the content they control. The medium is not the message.

For now, industry apologists—the MPAA, the RIAA, the U.S. Chamber of Commerce and others—are caught in a dangerous cycle of denial and anger. A growing number of consumers refuse to follow the current rules. So they lobby to make the rules stronger and the penalties more severe, amping up the moral rhetoric along the way.

But this only serves to starve the public domain more, undermining the basic principles of copyright. With the system increasingly out of balance, self-enforcement becomes even less likely. The law is impossible to obey, and rarely enforced. So consumers make up their own rules, for better or worse, with expensive and unnecessary casualties piling up on both sides.

Eventually, consumers and creators find the right balance and the most effective forms of compensation, regardless of the industry's efforts to cut off their nose to spite their face.

Then along comes another disruptive technology and a new round of customer innovation, and the cycle starts all over.

Rights holders remain stubbornly parked in the same old spots, afraid that if they move their vehicles at all they'll be doomed to circling the block forever, unable to stop until they permanently run out of gas.

The rest of us, meanwhile, are happily enjoying our flying cars.

The United Nations recently announced the lateset members to its "multistakeholder advisory group" on the issue of "internet governance." As they state, there are 56 members in the group, 33 of which are new. Considering that this is a group that is supposedly planning to act as stakeholders for "governing" the internet, you would hope that it would actually be representative of, you know, internet users. In fact, the press release from the UN states:

"The Advisory Group members are from all stakeholder groups and all regions, representing Governments, the private sector, civil society, academia and technical communities."

But when you look down the actual list, a different story appears. It looks like the list is pretty much dominated by government "IP" officials, as well as people from telcos, and then people in the domain name registration field. And then there's an exec from the world's largest patent trolling firm, Intellectual Ventures. Oh, and the VP of Global Public Policy Europe for Disney. Because I'm sure we're all comfortable letting Disney determine how the internet should be governed. Are these really the people we want "governing" the internet? There is at least someone from ISOC (the Internet Society), but I'm having a hard time seeing this as a group of people who should actually represent the public in terms of "governing" the internet.

When the MPAA came out with its annual report about the movie market worldwide, it showed that China was a huge growth market. However, now it appears that perhaps some of that growth was the result of Hollywood studios bribing Chinese officials. For years, China has limited how many Western movies can be released in the country. While Hollywood loves to decry all of the "piracy" in China, much of it is due to the fact that the movies can't be released there under the law. That's a situation where the problem is not piracy, nor the MPAA itself (even as it whines about Chinese piracy), but local laws. However, there has been a loosening of those restrictions lately -- and the SEC is exploring whether or not that came about due to bribes from the studios:

The Securities and Exchange Commission has sent letters of inquiry to at least five movie studios in the past two months, including News Corp's 20th Century Fox, Disney, and DreamWorks Animation, a person familiar with the matter said.

The letters ask for information about potential inappropriate payments and how the companies dealt with certain government officials in China, said the person, who was not authorized to speak publicly about the letters.

That said, there is an interesting tidbit in the Reuters article about all of this, that really serves to highlight how ridiculous the MPAA's fight against "piracy" is. It shows that despite the fact that piracy is rampant for Hollywood movies -- once the MPAA was able to get legit movies into the country, people flocked to the theaters. In other words, despite the cheaper pirated options -- or even free options -- people have no problem paying for the legit product when it's offered in a quality fashion:

China's booming middle class is increasingly willing to pay tickets prices for a cinema experience, forgoing cheap pirated DVDs and free internet downloads.

Once again, this seems to demonstrate why the problem is not piracy. If consumers are offered what they want in a reasonable manner, they are more than willing to pay -- and the Hollywood studios seem to recognize this implicitly (which is why they may have bribed Chinese officials to release authorized versions in that market, even with "piracy" being so common).

After the US shutdown of Megaupload, we noted that there were serious issues with the indictment, in that the US Attorneys seemed to make all sorts of leaps of logic to make their case, and it suggested that they had come into the case with a pre-determined idea (take the site down), and then cherry picked and distorted evidence to make the case. For example, we noted that the indictment used the lack of a search engine on Megaupload to indicate that it was a "criminal conspiracy," because it was "hiding" the infringement on the site. But that made little sense, considering that previous cases had found that having a search engine was an indication of inducement, and made a site against the law. The US government seemed to be saying that having search is inducement, but not having search makes you a conspiracy. That's crazy.

Kim Dotcom is continuing to make his case publicly, sharing a bunch of details of why he's confident that he'll win and why the US Government's case is wrong. In particular, he takes aim at the claims that he's guilty of direct infringement for uploading and sharing some songs. He claims that the government misses the fact that he uploaded songs he owned, but he never actually shared them publicly:

“A link distributed on December 3, 2006 by defendant DOTCOM links to a musical recording by U.S. recording artist ’50 Cent’. A single click on the link accesses a Megaupload.com download page that allows any Internet user to download a copy of the file from a computer server that is controlled by the Mega Conspiracy,” the indictment reads.

Dotcom told TorrentFreak that the file in question wasn’t infringing at all. He explained that he actually bought that song legally, and that he uploaded the file in private to test a new upload feature. He quickly picked a random file from his computer, which turned out to be this song.

“The link to the song was sent using the private link-email-feature of Megaupload to our CTO with the file description ‘test’. I was merely testing the new upload feature,” Dotcom said.

“The URL to this song had zero downloads. This was a ‘private link’ and it has never been published,” he added.

That raises questions about whether or not you can upload your own music for private use -- but given things like Google's Music locker and Amazon's music locker, it seems that lots of companies let you do something quite similar. That said, I would imagine the government's response is just the fact that such a system lets you offer up "private links" means that it's a form of distribution. However, it does make the government's case a little trickier.

Separately, Dotcom reveals that the large movie studios, who were the key source pushing for the indictment in the first place, were eager to work with Megaupload and the company had relationships with many of those companies. There are full emails there, including Disney offering up an alternative agreement to Mega's terms of service, and Warner Bros. asking for easier ways to upload its content (and talking about being able to share key movie content). The WB email is pretty damning:

Hello Megavideo,

My name is Joshua from the Warner Bros. Advanced Digital Services department. I would like to know if your site can take a Media RSS feed for our syndications. We would like to upload our content all at once instead of one video at a time.

Thank you for your time and funny content,

Joshua D. Carver

This is, certainly reminiscent of the revelation that while Viacom was freaking out over YouTube and suing, its marketing people were uploading tons of clips, and that Viacom was so confused that it actually sued YouTube over clips it had uploaded itself.

All that said, I still think that Kim Dotcom's decision to fight this in the press is a huge mistake. Even though he makes it out like he's fighting the MPAA -- and I'm sure they were absolutely behind much of this -- he's really fighting the US Attorneys, a part of the Justice Department, and they don't deal well with things like this. They can be incredibly vindictive and are focused solely on winning the case, not on what the public thinks. They'll use everything Dotcom says publicly and turn it against him.

Along those lines, for all the parallels discussed to the YouTube case, or even the Hotfile case, it's important to recognize the key difference. Those cases were civil cases between two private parties, where the end results could be injunctions or monetary awards over copyright infringement charges. Megaupload's founders are facing criminal conspiracy charges, which are an entirely different ballgame. Yes, the conspiracy charges are based on copyright infringement, but arguing solely about the copyright infringement part misses the main thrust of the government's case. The conspiracy charge is why they can do something ridiculous like claiming the lack of a search engine is evidence of a crime (even if having a search engine is evidence of inducement). Having all of this rest on the "conspiracy" charge means that the rules in this case are different, and the evidence just needs to show conspiracy -- not necessarily focus on the infringement aspects.

I think that Dotcom and his lawyers absolutely should be making these points in court to show that the conspiracy angle falls down when you scratch beneath the surface. Furthermore, they should probably be making the case that, at best, this should have involved a civil copyright lawsuit. But fighting a criminal conspiracy charge as if it's the same thing as a civil copyright infringement dispute is a mistake, and it's one that federal prosecutors will jump on and exploit strongly. Dotcom is right to point out that there's a serious conflict of interest in the fact that Neil MacBride, the former anti-piracy boss for the Business Software Alliance, is leading the case against him -- but arguing that right now isn't going to do him any favors. MacBride is a smart guy, and he'll use all of this against Dotcom.

I think there are a lot of serious issues raised by this case, and I think the government has massively overreached in its indictment. But I do worry (quite a bit) that Dotcom's decision to take his arguments to the press first may backfire and could taint the case, where having strong legal arguments to counter the government's questionable claims are really really important.

You may recall a lawsuit we wrote about last year, involving some questions about which parts of The Wizard of Oz movie were public domain, and which were still under copyright. It's a bit confusing. The books are public domain, having first started being released in 1899. No doubt about that. But the movie, made in 1939, is still under copyright. And here's the tricky part: which parts do the copyright cover? Technically, things directly from the book should be public domain -- but any creative additions put into the movie (such as the ruby red slippers...) can be covered by copyright, and held by Warner Bros.

So, here's the problem. Disney (not WB) has decided that it's going to make a movie out of The Wizard of Oz -- which it has titled Oz, the Great and Powerful. And it appears that WB wants to do everything possible to make life hellish for Disney if it moves forward on this plan. The first step? According to Eriq Gardner over at THResq, it was to quietly apply for a trademark on "The Great and Powerful Oz." Note the similarity to what Disney has called its movie. Except, it turns out Disney was sitting pretty... having filed for a trademark on its version of the phrase/title... a week earlier. Thus, Disney has the lead here and WB's application got tossed.

The THResq piece questions if WB was planning to make wider use of trademark to try to prevent things like this from happening, avoiding the fact that the copyrights on the works have long gone into the public domain.

In the past year, Warners has been one of the most aggressive filers of oppositions at the USPTO's Trademark Trial & Appeal Board. Especially over The Wizard of Oz.

For instance, the company has gone after potential merchandise associated with Dorothy of Oz, a $60 million-budgeted animation film scheduled to be released later this year by Summertime Entertainment.

Warners also has attacked registrations on a series of neuroscience books entitled "If I Only Had A Brain," a restaurant called "Wicked 'Wiches Wickedly Delicious Sandwiches," a clothing line known as "Wizard of Azz," Halloween costumes under the brand name "Wicked of Oz," and dozens of other Oz-related marks.

It goes on to talk about one ongoing case in particular, concerning a company selling wines in Kansas that it's named after aspects of the Wizard of Oz. The company is claiming (correctly) that the book is in the public domain. But WB is claiming it doesn't matter, because public domain only applies to copyright.

While that case continues, you can bet that WB won't let Disney just go ahead and make this movie without putting up a bigger fight.

Five years ago, we wrote about Gary Friedrich, the creator of the comic book character Ghost Rider, and how he was suing tons of companies, claiming that the copyrights associated with Ghost Rider had reverted back to him in 2001. As we noted at the time, there were some questionable things about his lawsuit -- including the fact that he waited years until after a movie and video game had been created and released before suddenly going legal about it. However, apparently Marvel (owned by Disney), in its ultimate vindictiveness, turned around and countersued Friedrich and won, leading to a ridiculous situation: Friedrich, who is broke, is now supposed to pay Marvel $17,000 for Ghost Rider merchandise he had sold in the past. He also isn't supposed to say that he's the co-creator of Ghost Rider any more if saying so involves him getting any kind of commercial advantage.

The full ruling in the case makes it clear that Friedrich's copyright claims were suspect in the first place, as it appears he clearly handed over the copyrights on the character to Marvel. The legal stipulation covers the specific terms, including the $17k payment, and the injunction against using the words "Ghost Rider" in connection with the sale of any goods, merchandise or services (i.e., "pay to get the signature of the creator of Ghost Rider!").

While Friedrich appears to have clearly overreached in his initial claim, the vindictiveness of Marvel/Disney is pretty ridiculous here. There's simply no reason for the company to demand $17k from a broke Friedrich, and (on top of that) make it that much harder for him to actually earn the money to pay them. As some are pointing out, you should remember this story the next time big companies claim they want to strengthen copyright law to "protect the content creators."

We've been pointing out for months that the entertainment industry -- who more or less wrote SOPA & PIPA -- has done everything it can to deny both the tech industry and consumers any seat at the table. Many of us have asked to take part, or suggested that the backers of SOPA & PIPA open up the process -- as Senator Wyden and Rep. Issa did with their OPEN Act -- allowing the public to comment on it, suggest specific changes, and actually have a real debate on the bill, rather than handling it all in the back room. Multiple times, MPAA boss Chris Dodd has suggested that Hollywood is more than happy to sit down with folks in Silicon Valley to talk over the issues related to the bill -- though, when a bunch of us offered to do just that, somehow Dodd wasn't so welcoming.

Turns out he wasn't the only one. California Senator Dianne Feinstein -- despite coming a bit late to the game in recognizing the concerns of the tech industry -- has been trying to make up for lost time by trying to "broker a peace" between the North and the South. We'd been hearing some rumors that Feinstein had actually been trying to set up just such a meeting -- given her role covering both Silicon Valley and Hollywood -- but that Hollywood was blocking all attempts, and it appears that's now been confirmed by reporter Zach Carter:

After that story ran, Feinstein attempted to broker a compromise, calling both tech companies and film studios.

Walt Disney Co. President and CEO Bob Iger declined the invitation on behalf of content providers. "Hollywood did not feel that a meeting with Silicon Valley would be productive at this time," said a spokesperson. The meeting took place with only tech companies present. Feinstein, once a reliable vote for the existing version of Protect IP, is now working hard to amend the bill, according to Senate Democratic aides.

Basically, this claim of wanting a bill that works for everyone is all a facade that Hollywood puts up in order to pretend that it's open to input on these bills when it's clearly not. At all. Instead, as has been the case all along, the MPAA and the big Hollywood studios have arrogantly believed that they wrote the bill, they have the votes, so why should they waste time on petty little things like real discussions with real experts? When the actual opportunity -- at the behest of a US Senator no less -- to meet with the tech community came along, the Hollywood guys flat out ignored it and said they weren't interested. If that doesn't tell you everything you need to know about how the industry views this bill, it's time to start paying closer attention.

It appears that Disney's Pixar division is engaged in two separate, but interesting, trademark battles (though the two are quite different). The first involves a Canadian oil company that decided to call its new division Pixar Petroleum. Turns out that Pixar isn't happy about that and is taking legal action. One of the points raised is that Pixar chief John Lasseter is a big proponent of alternative fuels and may not like any association with an oil company. Of course, that alone doesn't make for a reasonable trademark claim. In fact, I'm wondering if there is a reasonable trademark claim here at all. Trademarks cover the specific industries in which you use the mark in commerce, and despite movies like Cars, it seems like a pretty big reach to suggest that digital animation studio Pixar is in the same industry as oil producing Pixar. While it might cause a doubletake, I'm not sure that any of your traditional morons in a hurry would actually think that the characters from Toys were setting up oil refineries in Canada.

In this second dispute, Pixar finds itself on the other side of the coin. The major league baseball team, the Atlanta Braves, are apparently trying to dispute Pixar's attempt to register Brave as a trademark. Pixar wants the name because it's releasing a movie with that name. Of course, the baseball team doesn't actually hold a registered trademark on just "Brave." Instead its registered marks are on the plural version. This doesn't entirely exclude their protest, as they can argue a common law trademark or a likelihood of confusion.

Either way, I'm at a loss as to where the confusion would be here as well. I don't see anyone going to see the Pixar movie and then being disappointed that it wasn't a baseball game.

Disney recently released the fourth entry of the Pirates of the Caribbean on DVD. With this, the full force of Disney's marketing muscle is on the loose. This includes enforcement of a clause in Depp's contract that prevents any ABC affiliate from interviewing him if it relates to any non-Disney film.

Otm Shank writes in to let us know that the Austin based KVUE, an ABC affiliate not owned by Disney, attended a premiere of Depp's new movie The Rum Diary but was not allowed to interview him. As pointed out by TVSpy, KVUE reporter Shelton Green said:

We came here expecting to talk with one of the biggest names in Hollywood. But apparently Disney doesn't want Johnny Depp’s new movie, premiering here at the Paramount, to get more exposure than his newest 'Pirates of the Caribbean' movie. So they didn't allow us to interview him, nor did they allow us to get video of him.

Is there really a point to this embargo? I don't think so. By enforcing this embargo on ABC affiliates, Disney is not helping to promote its films, but is rather forcing these local stations to lose value with their viewers. Which do you think most viewers and fans of Johnny Depp want to watch, a report about not being able to interview Johnny Depp or an interview with Johnny Depp? I guess Disney doesn't care about the fans of the actors they work so hard to 'protect'.

For a little over a week now, we've been receiving emails from various actors and musicians, telling us that they've been getting emails from various entertainment industry giants, telling them to join a new "grassroots" coalition called CreativeAmerica, whose main purpose is to advocate for passing the PROTECT IP censorship bill. The whole thing is clearly an astroturf campaign. It was registered via domains-by-proxy to hide who really bought the domain name. It highlights the video that was secretly created and owned by NBC Universal. It includes the totally false claim that "there's no such thing as a free movie."

If you dig into the website to figure out who's really behind it, it claims that it's a "grassroots organization," but fails to name a single creative individual who was behind putting the group together. Instead, it lists out the following companies and organizations who really put the site together (amusingly, they even block you from cutting and pasting this part, so I just retyped it -- meaning I circumvented their DRM... come at me, entertainment industry):

CBS Corporation, NBC Universal, the Screen Actors Guild, Sony Pictures Entertainment, Twentieth Century Fox, Viacom, the Walt Disney Company and Warner Bros. Entertainment

Well, well. That's not a grassroots effort, folks. Now, the site also includes various unions, including the American Federation of Television and Radio Artists, the Directors Guild of America and the Screen Actors Guild and IATSE (stage hands, etc.). But these are the old school, out of touch unions that who have done little to nothing to help their members adapt to the times (often doing the opposite). Do we see any of the actually creative folks who have embraced new technologies, new methods of distribution and new business models? Nope.

In the meantime, how can the website seriously claim that it's a grassroots effort when it has every single major Hollywood Studio behind it. Do they think that people are stupid? And should we remind people that these are the same studios who have all sorts of scammy tricks for "Hollywood accounting" to make sure even the most successful films are never seen as profitable, allowing them to avoid paying royalties to the actual creative folks.

Next, if you dig into the website, they have a "send a letter to your elected officials" thing. And the real evidence that it's not a real grassroots effort? Just like other faux grassroots efforts, those agreeing to send the letter have no option to edit the letter. When groups like Demand Progress and EFF let you send letters about PROTECT IP, they let you edit them to your liking -- trusting people to express themselves.

But, this "Creative America" apparently does not trust its own members to be creative. The letter is 100% locked down. You can only send their text. Honestly, if a group supposedly representing creators won't even let its own members express themselves freely, you know that it's not actually about protecting "creative" America.

This is not a grassroots effort. This is not about protecting "Creative America." This is about protecting a few megacorporations who are scared of new innovations, afraid of their dwindling monopoly rents, and trying to force the rest of the world to go back to the way things used to be.