by Mike Masnick
Wed, Mar 26th 2014 8:01pm
by Mike Masnick
Tue, Mar 25th 2014 9:26am
Judge Highlights Bogus Collusion By ASCAP, Publishers In Rejecting Their Attempt To Jack Up Pandora's Rates
from the mafioso-techniques dept
The ruling clearly highlights just how obnoxious the publishers and ASCAP acted throughout this process, and how their actions not only were intended to harm Pandora, but also the very songwriters that ASCAP pretends to represent. ASCAP has done an amazing propaganda job of pretending that it's always looking out for songwriters -- when the simple fact is that it focuses on benefiting its giant publishers, often at the expense of songwriters. The key issue in this whole action was how ASCAP allowed publishers to selectively "withdraw" their rights from ASCAP and then effectively hold a gun to Pandora's head, saying that if Pandora didn't accept a new license directly with those publishers, it would be infringing (to make this work, the publishers also refused to even let Pandora know which songs had been withdrawn). ASCAP effectively encouraged this to happen, knowing that it could use this to jack up its own rates, even though, on its face, publishers withdrawing rights from ASCAP should be seen as bad for ASCAP. But withdrawing from ASCAP (even though ASCAP effectively encouraged it) is also bad for songwriters because the publishers aren't exactly good at paying songwriters (shocking), whereas at least ASCAP has some level of transparency. Even the judge highlighted the songwriters and publishers' interests here were not aligned, but ASCAP was still siding with the publishers.
But the really damning stuff comes from the things we highlighted earlier during the trial -- and the judge found those points quite damning. There was clear collusive behavior between the publishers and ASCAP, meaning that ASCAP's claims that those "independently" negotiated deals were not done in a true marketplace. It started with ASCAP boss, Paul Williams, trying to calm down angry songwriters, but flat out admitting that these "withdrawals" were all really about getting higher rates for everyone:
The large publishers were well aware of the discomfort that at least some writers felt with the new media withdrawals and made the following argument to convince them to come on board: if the major publishers could get higher license rates by direct negotiations with new media companies outside of ASCAP then those rates could be used in rate court litigation to raise the ASCAP license fees. The publishers found an ally on this issue in writer and ASCAP chairman Williams, who agreed with the new media rights withdrawal strategy. His email illustrates the strategy he pursued to get writers to support the publishers’ partial withdrawal of rights from ASCAP:In other words, far from real competition and a market rate, Williams was flat out admitting that he was encouraging publishers to leave his own organization, making life more difficult for the songwriters he claims to represent, just so they could set up these sham agreements (negotiated with a gun to Pandora's head) and then pretend there was a higher "market rate" to use at the rate court.My job is to make this transition as smoothly as possible in the board room . . . to assuage the fears of the writers who may see this as an ASCAP death knoll . . . . [W]e are in fact giving [the major publishers] the right to negotiate. The end result being that they will set a higher market price which will give us bargaining power in rate court.
This kind of behavior went to extreme levels, with Universal Music more or less threatening Pandora's lawyers with mafioso like claims, and then immediately emailing ASCAP folks, to talk about how the strategy of jacking up the rates was working, and how ASCAP should be strong, since Pandora was supposedly running scared and would settle quickly. This, you'll note, is not the behavior you'd see in a competitive market. It's the behavior of organizations colluding against Pandora.
The day after the rate court filing, UMPG’s Horowitz called one of Pandora’s attorneys at Greenberg Traurig. As Horowitz promptly memorialized in an email to ASCAP’s LoFrumento, HorowitzIn other words, this was all a coordinated effort, rather than actual market competition. The ruling further confirms the fact, as Pandora had publicly stated, that ASCAP and Pandora had actually agreed to terms on a rate, and then ASCAP backed out of the deal, suddenly demanding much, much higher rates, leaving Pandora in a difficult spot at the last minute on some negotiations.told [Pandora’s outside counsel], as a “friend” of the firm, that I thought both the firm and Pandora are completely tone deaf. That whether his firm has the legal right to rep Pandora in litigation, the firm has lost huge goodwill with writers and artists by doing so. And that filing now for a rate court proceeding against ASCAP . . . had the effect of unifying artists, writers, and PROs against Pandora.Horowitz also gave some advice to LoFrumento regarding ASCAP’s negotiating stance with Pandora. His advice boiled down to two words: be strong. Horowitz wrote:My take: [Pandora’s outside counsel] and Pandora are scared. They just want to settle with ASCAP and settle fast. Be strong. Time is on your side. Pandora is now under intense pressure to settle with ASCAP. They have to put this behind them. You can really push Pandora and get a much better settlement as a result. They are reeling. They will pay more, a lot more than they originally intended, to do that.Horowitz forwarded this same email to other ASCAP board members, including Sony’s Martin Bandier, and BMG Music Publishing’s Laurent Hubert. Besides these ASCAP Board members, Horowitz sent the email to David Israelite of the National Music Publishers Association (“NMPA”), which is a music industry trade group based in Washington, D.C. LoFrumento assured Horowitz that he was approaching Pandora with the mindset Horowitz advocated.
Either way, the judge makes it quite clear that he views ASCAP's activities as "coordinated" with the major publishers, rather than any sort of independent competitive market, as ASCAP had tried to tell the judge. Furthermore, the judge notes that the publishers, along with ASCAP, put Pandora in an impossible "gun to the head" kind of situation to agree to massive increases to the publishers, by withholding the list of songs that would soon be "infringing" if Pandora didn't agree to a much higher deal.
With only a few business days remaining in the year 2012, ASCAP refused to provide Pandora with the list of Sony works without Sony’s consent, which Sony refused to give. Without that list, Pandora’s options were stark. It could shut down its service, infringe Sony’s rights, or execute an agreement with Sony on Sony’s terms. Then, despite executing a confidentiality agreement with Pandora, Sony made sure that UMPG learned of all of the critical terms of the Sony-Pandora license. And LoFrumento admitted at trial that ASCAP expected to learn the terms of any direct license that any music publisher negotiated with Pandora in much the same way.The judge certainly finds Sony and ASCAP's behavior in withholding the list of songs it was withdrawing from Pandora incredibly suspect, and further that the testimony from Sony's representative was simply "not credible" on this issue.
[....] What is important is that ASCAP, Sony, and UMPG did not act as if they were competitors with each other in their negotiations with Pandora. Because their interests were aligned against Pandora, and they coordinated their activities with respect to Pandora, the very considerable market power that each of them holds individually was magnified.
Brodsky received this request for a list of the Sony works, but never responded. In their telephone conversations during the month of November, Rosenbloum reiterated the request for a list of works on several occasions but never got any response. Rosenbloum repeated the request once more at a breakfast meeting that he and Pandora’s Kennedy had with Sony’s Brodsky and Bandier on November 30. Again, Sony did not respond.The judge recounts how Pandora also tried to get the list from ASCAP directly, and ASCAP after conferring with Sony similarly refused to give Pandora the list. The ruling also details how when ASCAP broke the handshake agreement it had with Pandora, it basically left Pandora less than a week to come to terms with Sony or be at risk for huge liability for playing Sony songs that it couldn't remove since no one would give it a list. In other words, Pandora was given effectively less than 5 days to negotiate a deal with Sony, without even knowing the basic information it needed to know. When Pandora further asked for the list just so it could figure out how much of its music database would be covered by Sony's license, Sony again refused to give the list, but just said that about 30% of the music consisted of Sony and EMI combined.
The list of Sony works was potentially important for several purposes, and Pandora referred to those several purposes in its discussions with Sony. In addition to wanting to be able to remove the Sony works from its service if Pandora and Sony could not come to terms, Pandora needed the list so that it could understand how to apportion any payments between the EMI and Sony catalogues since the payments would apparently be made at two different rates. Pandora also wanted the list so it could evaluate whether the substantial, non-refundable advance that Sony was demanding would likely be recouped.
Sony had a list readily at hand, since the Compendium required that a publisher and ASCAP work together during the 90 day period before the effective withdrawal date to confirm precisely which works were being withdrawn. Sony understood that it would lose an advantage in its negotiations with Pandora if it provided the list of works and deliberately chose not to do so. Brodsky’s explanation at trial that he did not provide the list because he believed that negotiations were proceeding smoothly and did not want to impose an unnecessary “burden” on Sony’s staff is not credible. The negotiations were not going smoothly; the list had already been prepared and its production imposed no burden. As Brodsky recognized in his testimony, the list was “necessary” to Pandora in the event the parties did not reach a deal. Sony decided quite deliberately to withhold from Pandora the information Pandora needed to strengthen its hand in its negotiations with Sony.
Then there's the fact that Sony officials then leaked information about the deal terms all over the place, despite a confidentiality agreement.
By mid-January 2013, and despite the existence of a confidentiality agreement, Sony leaked the key terms of the Pandora license to the press. The headlines in three articles said it all: “Sony/ATV ‘Now Has the Power to Shut Pandora Down…’”; “Sony/ATV gets 25 percent increase in Pandora royalties”; and “Sony/ATV’s Martin Bandier on new ‘quite reasonable’ Pandora deal.” A New York Post article featured a photograph of Sony’s Bandier in shirt sleeves with a large cigar in his mouth, as it reported that Sony had “wrangled a 25 percent increase in royalties” for a one year license.The judge also notes that it's quite clear that, despite denials, Sony broke the confidentiality agreement and leaked these deal terms:
Although Brodsky denied knowing that anyone at Sony had leaked the terms of the license to the press, the evidence is that Sony did just that. Despite reporting dutifully that Sony had “declined” to comment on the terms of the deal, the articles referred to anonymous industry insiders as their source and quoted Bandier’s analysis of the deal. While Pandora had absolutely no interest in seeing the 25% hike in its rates known to other licensors, Sony hoped that its rate would be a jumping off point for the next publisher’s negotiations with Pandora, and it was. Pandora had its attorneys call Sony to complain of the breach of their confidentiality agreement.The whole ruling is quite a read. It shows over and over again how ASCAP and the big publishers basically did everything possible to collude and screw over Pandora, potentially harming songwriters in the process, by giving those songwriters less clarity and less information about licensing rates and how much they were owed. The claim from Universal that Pandora would regret going to rate court doesn't seem to have come about, as it's the publishers and ASCAP itself that have come out of this whole process with a massive black eye.
by Mike Masnick
Thu, Mar 20th 2014 7:32am
from the well-there-goes-that-one dept
The case then bounced around a bit, and with the appeals court ruling in the YouTube case, the judge in the MP3Tunes case withdrew the original ruling and decided to take another look. That's now resulted in a jury apparently finding that MP3Tunes was "willfully blind" to infringement. That's a troubling find on many levels. While the link above focuses on the jury also finding Robertson personally liable for "sideloading" songs, that part isn't all that surprising. Without thinking too deeply about it, it's no surprise that a jury would think that sideloading (moving songs found publicly online into a locker) might violate copyright law, even if it does raise some significant legal issues. Robertson made the rather valid point that it was impossible for him to know if the songs were infringing, especially since EMI itself was giving away songs for free, and knew that having such songs freely available increased sales. So to blame him for not knowing which songs were authorized and which were not seems unfair -- but the jury apparently disagrees.
What's much more concerning is this claim that an online locker service might be deemed "willfully blind" to infringement, even in the absence of things like DMCA notices. It raises serious questions for pretty much all cloud services that might store content, much of which may be covered by someone's copyright.
by Mike Masnick
Wed, Feb 12th 2014 8:59am
from the incredible dept
Yet, in the last few years, we've been covering the incredible and bizarre legal fight between ASCAP and Pandora, which has seen ASCAP stoop to amazing lows. You can read some of the basic background in some of our previous posts. A key part of this was that the major labels, key members of ASCAP, suddenly started "dropping out" of ASCAP in order to do licensing directly. At first we thought this was a sign of how the labels might be realizing that ASCAP was obsolete and out of touch, but it has since become clear that these "removals" were all something of a scam to force Pandora into higher rates.
What happened was that ASCAP and Pandora had first negotiated a higher rate than Pandora had agreed to in the past -- reaching a handshake agreement. However, before that agreement could be finalized, these labels started "withdrawing" from ASCAP in order to negotiate directly. As part of that, both ASCAP and the labels refused to tell Pandora which songs had been withdrawn, meaning that if Pandora accidentally played one of the withdrawn songs (again, without knowing which songs were withdrawn), it would face massive copyright infringement liability. With its back to the wall, Pandora was forced to agree to much, much higher rates with those labels who had "withdrawn" their songs -- and then those labels magically put their songs back in ASCAP... and then ASCAP claimed that those newly "negotiated" deals represented "true market" deals, and argued that in an open market, it deserved those kinds of crazy high royalty rates. Pandora pointed out that this pretty clearly violated the antitrust decree against ASCAP -- an argument that Pandora won in the first round.
The case is moving forward, and many more details have been revealed, highlighting just how slimy ASCAP and the major labels have been about this. It makes it quite clear that the "withdrawals" were never actually about the labels withdrawing their music from ASCAP, but what certainly looks like collusion to have labels "withdraw," put a gun to Pandora's head, get them to agree to massively higher rates to avoid a lawsuit, and then feed that info back to ASCAP, which would continue "managing" the songs, even though they had been "withdrawn."
This comes clear in Paul Williams' deposition. Given that all these major labels were apparently "withdrawing" all of their digital rights, you might think (1) that ASCAP would be upset since it was losing all its key labels and (2) that Williams might look at reducing the cost of his licenses, since apparently they would no longer have all these important songs. Not so. From the trial transcript, here's Pandora's lawyer explaining how Williams responded when they asked him about it at his deposition:
"Did you ever consider that ASCAP could charge a lower price and try to get more people to use the works left in ASCAP rather than have users use the higher priced EMI repertoire?"On top of that, it details how, even as these labels were "withdrawing," representatives from those very same labels/publishers still sat on ASCAP's board. As for that issue of the labels and ASCAP refusing to reveal what songs were being withdrawn, more evidence has come out during the case, showing that this was all part of the plan between the labels and ASCAP. In fact, they joked about it over email, which has now come out. During the opening, Pandora's lawyer told the story of Pandora seeking information about what songs were being withdrawn by Sony.
"Answer: Never once did that occur to me."
In other words, it was all about raising the rates. It was not about competition.
Your Honor, by the time Pandora asked for this information on November 1st, both ASCAP and Mr. Brodsky [Sony Executive VP] had in their possession this very list. The deposition testimony from ASCAP was that this list as is could have been delivered to Pandora within 24 hours were it only to get the go-ahead from Sony to do so. ASCAP never received the go-ahead.There's a lot more in there, but it seems abundantly clear that these labels "withdrawing" from ASCAP had nothing to do with competition or market rates. It appears that it had little to do with even withdrawing from ASCAP. Instead, it seems to have been designed from the start to basically screw over Pandora, in what certainly smells an awful lot like collusion, by forcing Pandora to pay exorbitant rates or suddenly face a massive copyright liability because no one would tell them what songs were being "withdrawn" from an existing licensing agreement. Then, ASCAP and the other labels could turn around and use those "agreements" pretending they represented a "market rate" to argue for higher rates at the Copyright Royalty Board, which is supposed to try to come up with a "market rate" for various licenses (even though the high rates were supposed to have a confidentiality agreement tied to them).
We cited much of the internal back-and-forth on this in our briefs... My favorite is the following exchange between Mr. DeFilippis and Mr. Reimer of ASCAP on December 19th, 2013, PX 193. You see the question being asked by Mr. DeFilippis: why didn't Sony provide the list to Pandora?
Mr. Reimer's response: Ask me tomorrow.
Mr. DeFilippis: Right. With drink in hand.
And the inference here is just incredible. This data was sitting there, your Honor, and nobody was willing to give it to Pandora.
Considering ASCAP's previous antitrust problems, this certainly looks... incredibly sketchy. And then it's ASCAP going around claiming that Pandora is somehow trying to game the system? The whole thing is incredible, and paints a really nasty looking portrait of the highly questionable games that ASCAP and the major labels/publishers played to try to force ridiculously high licenses on Pandora by setting up fake competition, and putting a gun to Pandora's head.
ASCAP has often come across as sleazy in the past, but the details coming out at this trial take it to a whole new level.
by Mike Masnick
Thu, Dec 19th 2013 12:35pm
from the terminate-this dept
Judge Shira Scheindlin (yes, the judge who recently got attention for killing NYC's stop and frisk program, and then being removed from the case for a rather bizarre claim of bias) has now ruled that the heirs of the authors of that song, John Frederick Coots and Haven Gillespie, cannot terminate the copyright assignment, currently held by EMI, and thus EMI gets to retain the rights to that jingle you can't get out of your head no matter how many times you try.
You can read the details of the ruling at the link above or embedded below. I don't have any particular problem with the details of the ruling itself. The whole termination process is a mess -- especially for pre-1978 works -- and this is yet another case where unclear contracts likely led to this result. The reason I'm bringing up this bit of Christmas music copyright fighting is just to note that the song was written in 1934, at which time the maximum copyright that Coots and Gillespie could have hoped for was 56 years (28 years upon registration, with another 28 years if they renewed). That means that for the two of them, the incentive of having that copyright (which they then assigned away to Leo Feist, Inc.) last until 1990, was clearly all the incentive they needed to write and release that song. Under the basic terms of the deal that the public granted to the copyright holder, in 1990, that song belonged in the public domain.
Of course, thanks to the 1976 Copyright Act -- which extended copyright terms massively -- and then the Sonny Bono Copyright Term Extension Act of 1998, which extended copyright terms, yet again, for another 20 years, the song didn't go into the public domain in 1990. Nor has it reached the public domain today, 23 years later. Nor will it reach the public domain for many more years -- potentially never, if the recording industry is successful in extending copyright terms, as many expect. However, it seems somewhat ridiculous that the work did not go into the public domain in 1990. That was the deal that was struck when it was written. The song was to become part of the public domain. That didn't happen and the public got nothing in return for not being given what it was promised.
So, go ahead and sing whatever Christmas songs you like this seasons, but remember that thanks to the recording industry and Congress, you better not pout, you better just pay up your royalties in perpetuity, because the public domain is never coming to this town if they can help it.
by Leigh Beadon
Tue, Apr 23rd 2013 1:24pm
from the letter-and-spirit dept
The last big news in the ongoing fight between Universal Music Group and Grooveshark (and its parent company Escape Media) came back in July, when a New York court rejected UMG's argument that the DMCA's safe harbors didn't apply to pre-1972 sound recordings, because, technically, those recordings are not covered by federal copyright law. This was in keeping with the ruling in the fight between EMI and MP3Tunes, and seemed most consistent with the intent of DMCA safe harbors.
Naturally, UMG appealed, and in doing so made some compelling arguments about the wording of the law. The appellate court agreed, and has now issued pretty much the opposite decision: pre-1972 sound recordings are not covered by the DMCA (pdf and embedded below) and thus Grooveshark has no DMCA safe harbors for such songs.
There are a few different parts to the ruling, but the core argument is straightforward: section 301(c) of the Copyright Act explicitly states that no "rights or remedies" under common law copyright on pre-1972 recordings shall be "annulled or limited" until 2067, and it's pretty hard to argue that the DMCA doesn't do that:
Initially, it is clear to us that the DMCA, if interpreted in the manner favored by defendant, would directly violate section 301(c) of the Copyright Act. Had the DMCA never been enacted, there would be no question that UMG could sue defendant in New York state courts to enforce its copyright in the pre-1972 recordings, as soon as it learned that one of the recordings had been posted on Grooveshark. However, were the DMCA to apply as defendant believes, that right to immediately commence an action would be eliminated. Indeed, the only remedy available to UMG would be service of a takedown notice on defendant. This is, at best, a limitation on UMG’s rights, and an implicit modification of the plain language of section 301(c). The word “limit” in 301(c) is unqualified, so defendant’s argument that the DMCA does not contradict that section because UMG still retains the right to exploit its copyrights, to license them and to create derivative works, is without merit. Any material limitation, especially the elimination of the right to assert a common-law infringement claim, is violative of section 301(c) of the Copyright Act.
For defendant to prevail, we would have to conclude that Congress intended to modify section 301(c) when it enacted the DMCA. However, applying the rules of construction set forth above, there is no reason to conclude that Congress recognized a limitation on common-law copyrights posed by the DMCA but intended to implicitly dilute section 301(c) nonetheless.
Under such circumstances, it would be far more appropriate for Congress, if necessary, to amend the DMCA to clarify its intent, than for this Court to do so by fiat.
Take note of that last bit, because this ruling has made it more true than ever. And that's where the problems come in. It seems pretty clear that there is some sloppy drafting in how the DMCA is written (which isn't a surprise), in that what you have is wording that can be read this way, even though it clearly goes against the intent and purpose of the DMCA. If the DMCA's safe harbors don't apply to pre-1972 recordings, then the DMCA's safe harbors no longer apply at all to any service that includes music. That can't be what Congress intended, even if the wording of the law can be read that way.
Thus, if you go strictly by the wording, while ignoring the intent, the logic of the decision is sound, but the implications are disturbing: as Grooveshark pointed out in their defense, this interpretation would gut the DMCA. One of the key purposes of safe harbors was to prevent online services from needing to proactively scan for infringing works, since that would drastically and unfairly limit their growth, and we wouldn't have things like YouTube today if that were the case. But if pre-1972 recordings (which is plenty of material) are not included, then user-generated content sites do have to scan everything. And while it might be somewhat easier to identify pre-1972 recordings than it is to identify infringing uploads, it would still be insanely prohibitive — not to mention the massive loss to our culture from having a huge chunk of music history mostly vanish from the internet.
It's a little unclear just how far-reaching this ruling will be (it's at the state level, and it is in itself explicitly contradicting the earlier MP3Tunes ruling, which it declares to be "wrongly decided") but the potential implications are huge. Exempting all pre-1972 recordings from the DMCA would impact all corners of the internet in a bad, bad way. The only optimistic thought is that perhaps it would force congress to revisit the law, and we could finally push for a Digital Millennium Copyright Act that actually works in the digital millennium.
by Mike Masnick
Mon, Apr 1st 2013 12:01pm
from the a-big-first-sale-loss dept
First, the court looks into the question of whether or not a transfer of a copyrighted file, where only one file remains at the end, still violates the "reproduction" right. That is, if Bob transfers a file to Alice, and Bob's copy of the file is immediately deleted, is that still a reproduction under the Copyright Act? The court says yes:
...courts have not previously addressed whether the unauthorized transfer of a digital music file over the Internet – where only one file exists before and after the transfer – constitutes reproduction within the meaning of the Copyright Act. The Court holds that it does.Of course, that same bit of the Copyright Act also makes clear that "copying" does not apply to purely digital files, but the court tap dances around that argument. Basically, it says whether or not there are more in the world is meaningless. All that matters is if a copy was made, even if the original was destroyed.
The Copyright Act provides that a copyright owner has the exclusive right “to reproduce the copyrighted work in . . . phonorecords.” Copyrighted works are defined to include, inter alia, “sound recordings,” which are “works that result from the fixation of a series of musical, spoken, or other sounds.” Such works are distinguished from their material embodiments. These include phonorecords, which are the “material objects in which sounds . . . are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” Thus, the plain text of the Copyright Act makes clear that reproduction occurs when a copyrighted work is fixed in a new material object.
Simply put, it is the creation of a new material object and not an additional material object that defines the reproduction right. The dictionary defines “reproduction” to mean, inter alia, “to produce again” or “to cause to exist again or anew.” See Merriam-Webster Collegiate Edition 994 (10th ed. 1998) (emphasis added). Significantly, it is not defined as “to produce again while the original exists.” Thus, the right “to reproduce the copyrighted work in . . . phonorecords” is implicated whenever a sound recording is fixed in a new material object, regardless of whether the sound recording remains fixed in the original material object.Basically, under this interpretation, you can never "transfer" a digital file. You can only make a reproduction under copyright law. And, yes, computers transfer files by making copies of them, but it seems a bit ridiculous that the whole concept of a transfer can be wiped out because of that. In fact, by this interpretation, even streaming (which still involves all the data being temporarily copied to your local computer) would count as reproduction. ReDigi pointed this out, noting the possibility of merely cleaning up your own hard drive being considered infringing, but the court buys Capitol Records's (EMI) argument that such uses are protected under other theories.
Moving on to the question of distribution, ReDigi doesn't deny that it's distributing files, but says that it's protected by fair use and (more importantly), first sale. Again, however, the court doesn't buy it. Part of the issue may be that ReDigi "abandoned" an argument it made earlier that merely transferring a file to a cloud locker for personal use is fair use, so it's left arguing that other aspects of its service are covered by fair use, but that's much more difficult under the basic four factors test. On this part, it's not that surprising that ReDigi failed to convince the court, as I'm not sure I see the fair use argument either.
The first sale part is where it gets more troubling. Effectively, the court wipes out first sale for digital goods, arguing that because (as above) each transfer is not really a "transfer" but a "copy," first sale doesn't apply. That is, first sale only applies to the initial "copy" "made under this title." But, the court argues, because the sale involves making a new copy, it's not covered by first sale.
In addition, the first sale doctrine does not protect ReDigi’s distribution of Capitol’s copyrighted works. This is because, as an unlawful reproduction, a digital music file sold on ReDigi is not “lawfully made under this title.” ... Moreover, the statute protects only distribution by “the owner of a particular copy or phonorecord . . . of that copy or phonorecord.” Here, a ReDigi user owns the phonorecord that was created when she purchased and downloaded a song from iTunes to her hard disk. But to sell that song on ReDigi, she must produce a new phonorecord on the ReDigi server. Because it is therefore impossible for the user to sell her “particular” phonorecord on ReDigi, the first sale statute cannot provide a defense. Put another way, the first sale defense is limited to material items, like records, that the copyright owner put into the stream of commerce. Here, ReDigi is not distributing such material items; rather, it is distributing reproductions of the copyrighted code embedded in new material objects, namely, the ReDigi server in Arizona and its users’ hard drives. The first sale defense does not cover this any more than it covered the sale of cassette recordings of vinyl records in a bygone era.That seems silly. Selling a legally purchased MP3 is absolutely nothing like selling a cassette recording of a vinyl record. When ReDigi points out that, under this interpretation, digital files have no first sale rights, the court hits back that this is not true. After all, it argues, you can still sell your hard drive with the original file on it. No, seriously. That's the court's response.
Section 109(a) still protects a lawful owner’s sale of her “particular” phonorecord, be it a computer hard disk, iPod, or other memory device onto which the file was originally downloaded. While this limitation clearly presents obstacles to resale that are different from, and perhaps even more onerous than, those involved in the resale of CDs and cassettes, the limitation is hardly absurd – the first sale doctrine was enacted in a world where the ease and speed of data transfer could not have been imagined.The court argues that if such an interpretation is ridiculous (though it argues it is not) then it's up to Congress to fix it.
With that out of the way, the court says that ReDigi is guilty of direct infringement, contributory infringement ("the court finally concludes that ReDigi's service is not capable of substantial noninfringing uses"), and vicarious infringement. Basically, a triple play and ReDigi is completely out of the inning. While I'm still not convinced about the fair use argument, the court basically killing off first sale for digital goods is a pretty big problem, and hopefully higher courts (or, dare we dream, Congress?) will fix such an obviously nutty ruling.
by Mike Masnick
Tue, Jan 22nd 2013 8:27am
from the well-look-at-that dept
Free Promotional MP3 of one song to the public for free download from Peter Moréns album (as do most indie labels). They would offer "Social Competence" for free download on touchandgorecords.com, Peter and Touch and Go's Myspace pages, plus encourage as many third party online zines, podcasts, blogs, major web portals to host the MP3 for free download on their site. We are being told that historically the track which is offered for free like this is usually still the top selling track in digital retail. They would like to offer this promotional MP3 download for nine months. After that initially period the promotional partners will replace the MP3 download with a stream for the duration of the license of the album including offering a stream of the song on their website and on their Myspace page and Peter's Myspace page, or until they decide to ask these partners to remove the stream.And yet, all this time, the RIAA keeps insisting that free music is a problem? Even as employees at the labels knew years ago that free was "so effective" as a promotional technique that it helped sell the same track much more.
The label has given us a further explanation of why they pursue this strategy. One promotional MP3 per album is the best way they can virally promote the album which will increase sales and thus revenue on the compositional side as well as the master recording side. This promotional technique has proven to be so effective, that virtually every free track they have issued from an album has maintained itself as the top selling track from the album. It also enables them to offer something from the album to the myriad of sites, blogs, podcasts out there that would be tempted to give away unauthorized materials, perhaps the entire album, if they do not have the option to feature a track that they offer to them. This control mechanism is vital to their methods of slowing piracy of albums.
by Glyn Moody
Wed, Jan 9th 2013 10:43am
from the thin-end-of-the-wedge dept
Even against a background of repeated attempts to censor the Net, it's still possible to become a little complacent about some of the actions being taken by the copyright industries. For example, many people probably feel that blocking a site like The Pirate Bay isn't really a problem because, after all, it's just one site, right?
A post on TorrentFreak explains why that's a dangerous attitude:
Copyright activists often warn that a ruling in one case has the potential to be leveraged elsewhere and the wedge can become thicker frighteningly quickly if issues aren't dealt with early on. It seems that a case currently underway in Ireland involving The Pirate Bay is proving that assessment correct.
That's because the recording labels want the Web block to be extended to other ISPs. Again, some might say: well, it's still just one site. But here's where things start to get serious. It's not just about one site any more:
At the moment customers of the Irish ISP Eircom cannot access The Pirate Bay since an uncontested 2009 High Court ruling orders the ISP to block the site. But that's just one ISP, some people will say, and it's easy to switch to another. Nice try.
The plaintiffs (technically EMI, Ireland) have told the court that they are looking to achieve more than just a blockade of the world's biggest torrent site. In fact, they have a list of 260 other "objectionable" websites they have identified that they would also like blocked if this attack on The Pirate Bay is a success.
And of course, if the industry manages to get the court to agree to 260 sites being blocked, you can be sure that it will be back with another few hundred, or a few thousand, at some point in the future. Because once the court rules that Web blocking is acceptable, it's easier to go back to ask for more censorship, citing that judgement. That's why it's important to remember it's never 'just' one Web block.
What started out with Eircom agreeing to have The Pirate Bay blocked could now potentially lead to a few other Irish ISPs having to follow suit. In a worst case scenario that could play out to all ISPs having to block 260 other sites on the music industry's hit-list. Which sites? Only they know.
by Mike Masnick
Tue, Jan 8th 2013 8:59am
from the promoting-music-is-piracy! dept
Either way, that lawsuit sat on the shelf for a while, as the judge suggested that it ought to await the outcome of the somewhat similar Viacom/YouTube lawsuit. After that lawsuit got sent back to the district court by the appeals court, the major labels are apparently getting restless and have sought to revive the case against Vimeo, by seeking a summary judgment in their favor.
The case is a bit more complex than the YouTube case, which may spell trouble for Vimeo (and owners IAC), but that doesn't mean that the labels are staying away from a whole bunch of absolutely preposterous arguments. The best thing that the labels have going for them in their argument is the fact that Vimeo employees posted videos that had infringing content. The DMCA safe harbors protect a website from user behavior, but not their own. So, legally, their argument seems a bit stronger on that front, but culturally, it still seems like a dumb argument, as highlighted by the singer's comments above. Most people don't think lipdubs should be illegal, because that seems silly. Lipdubs are about people celebrating and promoting the music they love in creative ways.
Really, that's the crux of this lawsuit. While Vimeo may be in legal trouble, it really highlights the basic cultural divide at issue here. People who put together lipdubs spent a ton of time and effort to creatively enhance the music they love and share it with the world in a cool manner, which does not replace the music, but tends to advertise it. For those unfamiliar with the basics of copyright, saying lipdubs are illegal just feels wrong, even if there may be some legal backing to it.
Making things perhaps somewhat trickier for Vimeo is the fact that it does somewhat aggressively monitor the content on its site for other issues, and doesn't allow a variety of other types of videos. The labels use this to imply that it is actively ignoring music copyright while blocking all sorts of other content:
Except for music, Vimeo strictly controls, monitors, and curates (in its words) the audiovisual works it copies, performs, and distributes. It prohibits – and uses its personnel and tools to review, monitor, and delete – all sorts of videos, including television programs, movies, and movie trailers, as well as “gameplay videos,” “commercial” videos (such as product promotions or real estate tours), “sexually explicit” videos, and “fan vids,” among others.... It enforces its discretionary and subjective guidelines to eliminate content that is not “Vimeoesque.”... All in order to mold its website and control its image.... Despite its pervasive involvement in and control of the content on its website, Vimeo does nothing to limit the infringing use of music on its website.That may sound damning, but it's not as strong as it sounds. Determining whether or not a video includes infringing music is not as simple as the paragraph makes it sound. Vimeo has no way of knowing whether or not the video maker properly licensed the song in question in most cases. The other things it monitors for are much easier for it to determine. This is a major issue that supporters of copyright law often ignore.
The labels' attack on lipdubs is really kind of ridiculous when you think about it:
One of the early “creations” by Vimeo’s founder was a video format in which he “lip synched” to a commercial, copyrighted recording, synchronized the recording into the video during editing, and uploaded the video, making it available to every Vimeo user.... He named this “a lip dub,” and it was promoted as the “signature” Vimeo video genre, something that “put us [Vimeo] on the map.” .... As Vimeo and its users know, these popular lip dub videos, by definition, copy and incorporate copyrighted music without consent or license. ... (If Vimeo “suddenly started to ban videos with copyrighted music, like lipdubs, then I would be pissed but I would have to realize it’s their final decision.”) That also is apparent from Vimeo’s instructions on its home page on how to create lip dubs.... (“Like a music video. Shoot yourself mouthing along to a song then synch it with a high quality copy of the song in an editing program.”).Of course, one could make an argument that many lipdubs could be considered fair use, as being transformative. But, the labels assume that, by default, they all must be infringing.
Lip dubs were heavily promoted. Vimeo provided a “Lip Dub Stars” channel, labeling it a channel “we like” and securing commercial sponsorship for it.... Lip dubs were featured as a “Vimeo Obsession” on Vimeo’s home page.... “Lip dub” became one of the top seven key words that drew visitors to Vimeo ..., and appeared (in several variants) in an internal chart of top “searches per day” on the Vimeo Website
Furthermore, among the more dubious arguments made by the labels is claiming that Vimeo's decision to not use a tool to filter out copyright infringement is the equivalent of "willful blindness." This is wrong. The law does not say that sites need to make use of filters and other tools to find possibly infringing works -- in part because a tool cannot properly assess if a work is infringing. They also make the argument that because Vimeo put "lip dub" in meta tags it's proof that they were promoting infringement. That seems very weak for a number of reasons, not the least of which is that search engines haven't used meta tags in ages. Also, the labels argue that because Vimeo offered licensable songs for sale to videomakers it knew that it was committing and encouraging infringement. This seems particularly bizarre. It's attacking Vimeo for actually doing the right thing and helping its users license music. But, just because they do that, it doesn't give them direct knowledge of whether or not users licensed music elsewhere. Oh yeah, the labels also -- ridiculously -- claim that pre-1972 songs are not subject to the DMCA, despite multiple courts rejecting this argument.
All that said, it still seems likely that Vimeo may have an uphill battle here. The fact that employees uploaded infringing works is going to make the case difficult, even if there are reasonable arguments for why they did it. The filing also has a bunch of quotes suggesting general awareness of infringement on the site, but "general" awareness is not enough to lose DMCA safe harbors. You need to be aware of specific infringement, and it's not entirely clear that that's true. There's one example of someone saying they weren't sure if something was licensed and offering to make a copy without music just to be safe, but that's not the same as knowing that the effort is definitely infringing. The other part that might come back to bite Vimeo is the lack of having a "repeat offender" policy for its DMCA takedowns. This is something that has tripped up others as well. The law requires such a policy, but it's unclear if Vimeo actually had one until about the time it was sued.
Still, it really does seem like this is yet another example of the labels fighting against how people enjoy culture today -- and how they help spread it. It's really shameful to see them on the attack, rather than figuring out ways to support it.