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Posted on Techdirt - 24 May 2017 @ 03:48pm

Senate Should Either Fix Or Get Off The Pot On Copyright Office Bill

The U.S. Senate is about to consider mostly pointless legislation that would make the nation’s register of copyrights—the individual who heads the U.S. Copyright Office, officially a part of the Library of Congress—a presidential appointment that would be subject to Senate confirmation.

While the measure has earned praise from some in the content industry, including the Motion Picture Association of America, unless senators can find better ways to modernize our copyright system, they really should just go back to the drawing board.

The Register of Copyrights Selection and Accountability Act of 2017 already cleared the U.S. House in April by a 378-48 margin. Under the bill and its identical Senate companion, the power to select the register would be taken away from Librarian of Congress Dr. Carla Hayden. Instead, the president would select an appointment from among three names put forward by a panel that includes the librarian, the speaker of the House and the majority and minority leaders of both the House and Senate. And the register would now be subject to a 10-year term with the option of multiple reappointments, like the Librarian of Congress.

The legislation is ostensibly the product of the House Judiciary Committee’s multiyear series of roundtables and comments on modernizing the U.S. Copyright Office. In addition to changes to the process of selecting the register, the committee had recommended creating a stakeholder advisory board, a chief economist, a chief technology officer, making information technology upgrades at the office, creating a searchable digital database of ownership information to lower transaction costs in licensing and royalty payments, and creating a small claims court for relatively minor copyright disputes.

Alas, while it’s billed as a “first step,” the current legislation gives up most of those more substantive reforms and instead amounts largely to a partisan battle over who will have the power to select the next register: Hayden, who was appointed by Barack Obama, or President Donald Trump.

Opponents argue the bill will make the register and the Copyright Office more politicized and vulnerable to capture by special interests, while ceding more power to the executive. They argue that vetting the register through the nomination process could delay modernization efforts. Hayden needs the position to be filled expeditiously to implement her modernization program, and Trump already faces a sizable confirmation backlog.

Meanwhile, proponents argue a more independent register, less tethered to the will of the Library of Congress, will make USCO more accountable. They say it will make the office run more efficiently and allow it to modernize. They also believe it will address important constitutional questions, such as the separation of powers and oversight by the president.

At the heart of these constitutional questions is the fact the Library of Congress has both significant legislative and executive functions. Housed within the legislative branch, it also sets royalty rates and rules on exemptions from the Digital Millennium Copyright Act. Critics have derided the Copyright Office for being slippery about whether it is serving a legislative or executive role, depending on who’s asking. The contention is that this unusual arrangement renders USCO a “constitutional chameleon.”

Of course, it is not uncommon for entities in one branch to perform the functions of another. The president has a role in the legislative process through his veto power. The International Trade Commission performs judicial functions, but is an independent agency housed within the executive branch. The federal government’s separation of powers is not absolute. But there does come a point where those lines become so blurred as to call the original classification into question. In that respect, Congress should consider taking certain functions—such as the Copyright Royalty Board or the Triennial Section 1201 Proceeding—out of the Copyright Office.

Some would propose moving the entire Copyright Office out of the Library of Congress and rendering it a standalone agency, which would elevate the register’s position to one of an officer of the United States. Under that highly controversial scenario, the Constitution’s Appointments Clause definitely would require the job be filled by the president. But for now, since the librarian still has ultimate authority over the substantive regulatory powers surrounding copyright, changing who appoints the register won’t change anything outside of a short-term political calculation of who the next register is.

The bottom line is that the current bill simply doesn’t do that much, good or bad. Making the position a presidential appointment is unlikely to speed up IT modernization efforts, at a time when the office has faced numerous setbacks and problems getting that IT infrastructure in place. The original policy proposal drafted by the House Judiciary Committee was a more comprehensive and substantial approach to modernization and many of its provisions were supported broadly. First step or not, this is a feeble try.

As the Senate considers the bill in the coming weeks, they should either amend the legislation so that it will do something to modernize copyright, or just jettison it entirely. As currently written, the bill serves no purpose, and Congress shouldn’t waste its time on it.

Sasha Moss is Technology Policy Manager for the R Street Institute

Posted on Techdirt - 19 September 2016 @ 09:41pm

How Pirates Shaped The Internet As We Know It

Today is “International Talk like a Pirate Day.” While it’s a lot of fun to act like a pirate, drink rum and catch up on Errol Flynn movies, piracy is also a serious issue with real economic and legal significance. As electronic devices become an increasingly ubiquitous part of our lives, the content we consume has moved from analog to digital. This has made copying ? as well as pirating ? increasingly easy and prevalent.

Adding fuel to the flames of this rising “pirate generation” has been the content industry’s recalcitrant and often combative attitude toward digital markets. Piracy, and the reactions to it, has had an immense impact on the daily lives of ordinary Americans, shaping their digital experience by determining how they can share, transfer and consume content.

As soon as electronic storage and communication technology was sufficiently developed, digital piracy became accessible. Whether it’s a song, movie, video game or other piece of software, you could suddenly reproduce it without having to steal it off a shelf or obtain any specialized machinery to counterfeit it. Additionally, if you wanted to listen to an mp3 of the latest Britney Spears album on your computer, there weren’t many lawful options. This led to a surge in online piracy and helped foster a culture of online file-sharing.

Out of this period came some ridiculous anti-piracy campaigns, but also major legislation both good and bad (such as the Digital Millennium Copyright Act, the Sonny Bono Copyright Term Extension Act and the Communications Decency Act) as well as legal battles that would set key precedents for how we access the digital world.

The music industry historically has a reputation for being hostile to, or at least slow to embrace, digital markets. Yet there were also some major artists who were early innovators in the space.

Before Spotify or iTunes, there was BowieNet. This music-focused internet service provider launched in July 1998 and gave users 5MB of space to create and share their own websites, content and chat. On BowieNet, according to Ars Technica: “[f]ans could get access to unreleased music, artwork, live chats, first-in-line tickets, backstage access, tickets to private, fan club-only concerts.” David Bowie saw the potential to help his fan base access his content and discuss it in a social way in the early days of the internet, before Facebook or Myspace. He remarked at the time: “If I was 19 again, I’d bypass music and go right to the internet.”

Bowie wasn’t the only early music pioneer of the internet. Prince was also an early unsung hero. In the early 2000s, he created NPG Music Group, later Lotusflow3r. He even won a Webby Lifetime Achievement Award in 2006. Unlike BowieNet, NPG and later Lotusflow3r provided releases of full albums.

As musicians and users were experimenting with new ways to share content on the internet, the United States was working with other World Intellectual Property Organization (WIPO) member countries to create the most comprehensive “digital” update to the Copyright Act. In 1998, President Clinton signed into law the Digital Millennium Copyright Act, which implemented U.S. WIPO treaty obligations, as well as several other significant titles (including the Vessel Hull Design Protection Act ? which pirates of the nautical variety might care about). Of particular importance were the sections providing for “safe harbor” (Sec. 512), which protected service providers from infringing content generated by their users, and “anti-circumvention” (Sec. 1201), which was meant to stop pirates from hacking digital rights management (DRM) and similar restriction technologies.

Indeed, it has not been smooth sailing. The DMCA has subsequently generated great controversy from civil society groups, internet companies and the content industry itself. As Cary Sherman, chairman and CEO of Recording Industry Association of America, stated back in 2015:

Unfortunately, while the system worked when isolated incidents of infringement occurred on largely static web pages?as was the case when the law was passed in 1998?it is largely useless in the current world where illegal links that are taken down reappear instantaneously. The result is a never-ending game that is both costly and increasingly pointless.

While lawmakers were hard at work trying to find ways to quell online piracy, the courts weren’t taking a nap. Indeed, going back to the 1980s, there were important judicial fights that would set the stage for how content would be handled on our electronic devices.

The U.S. Supreme Court’s 1984 Sony Corp. of America v Universal City Studios Inc. decision coined what is known as “time shifting,” referring to a user’s ability to record a live show using the Betamax to watch it later. The court’s decision set the precedent that a manufacturer would not be held liable for any contributory negligence or potential infringement where they did not have actual knowledge of infringement and their devices were sold for a legitimate, non-infringing purpose. As Justice John Paul Stevens wrote in the majority opinion:

One may search the Copyright Act in vain for any sign that the elected representatives of the millions of people who watch television every day have made it unlawful to copy a program for later viewing at home, or have enacted a flat prohibition against the sale of machines that make such copying possible. It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written.

But not everyone was so enthusiastic. Jack Valenti, former president of the Motion Picture Association of America said in a congressional hearing two years prior [regarding VHS technology]:

We are going to bleed and bleed and hemorrhage, unless this Congress at least protects one industry that is able to retrieve a surplus balance of trade and whose total future depends on its protection from the savagery and the ravages of this machine.

The 9th U.S. Circuit Court of Appeals would take another approach in 2000s A&M Records v Napster. The court affirmed the district court’s ruling that peer-to-peer services could be held for contributory infringement and vicarious liability. Even though their service merely facilitated the exchange of music as an intermediary, they were on the hook. Judge Marilyn Hall Patel wrote in the district court’s ruling:

?virtually all Napster users engage in the unauthorized downloading or uploading of copyrighted music; as much as eighty-seven percent of the files available on Napster may be copyrighted, and more than seventy percent may be owned or administered by plaintiffs

Napster lodged several defenses, including fair use, but the most important (in lieu of the Sony decision) was the concept of “space-shifting,” referring to the process of a user converting a compact disc recording to mp3 files, then using Napster to transfer the music to a different computer. Patel concluded Sony did not apply, because Napster retained control over their product, unlike Sony’s Betamax, which was manufactured and sold, but not actively monitored.
The courts would continue ruling in a similar manner as other peer-to-peer services found themselves in the courtroom. At times, users would be targeted. And in the 2003 case of In re: Aimster, the pirates’ bluntness for wanting to bring the music industry to its knees did not help the situation

What you have with Aimster is a way to share, copy, listen to, and basically in a nutshell break the law using files from other people’s computers?. I suggest you accept aimster for what it is, an unrestricted music file sharing database ? (posted by zhardoum, May 18, 2001)

Naturally with all of the music-sharing services were being shut down, the pirates found a new way to connect, share files and shape the industry. Which brings us to BitTorrent and websites like The Pirate Bay and Swepiracy. Torrenting does not require a central server, does not require direct streaming from one peer to another and the host does not contain any full file contents. All of the content received is from other users.

Sweden brought Pirate Bay to trial for both civil and criminal penalties. Per E. Samuelson, the site’s attorney, lodged the now-famous (and familiar, for U.S. copyright scholars) King Kong defense:

EU directive 2000/31/EC says that he who provides an information service is not responsible for the information that is being transferred. In order to be responsible, the service provider must initiate the transfer. But the admins of The Pirate Bay don’t initiate transfers. It’s the users that do and they are physically identifiable people.

The defense was unsuccessful. Which brings many questions to mind for future cases ? how will courts begin to rule with such complex systems of file transfer as fragmented torrents? Targeting users is widely unpopular, especially in the United States, where statutory penalties range from $750 to $300,000 per willful infringing use and $200 to $150,000 for non-willful infringement.

Efforts around the world have continually been made to combat piracy. But maybe it’s time we take a fresh look at the market. As the Copia Institute observed in a recent report, whenever there are new ways to share content legally, users ultimately respond by employing those technologies.

On this International Talk like a Pirate Day, let’s take a moment to remember the pirates and how they have helped shape the internet era. While CD sales and digital downloads may be declining, new streaming services are on the rise (vinyl records are also doing remarkably well). The digital revolution has, indeed, changed how we consume and access our music. It has given us access to (nearly) everything, through services like Spotify and Apple music, at a reasonable price and with unparalleled convenience.

From the consumer’s perspective, you now carry hundreds of hours of music on your phone and listen to it whenever you want ? no need for one of those bulky CD binders. The slot where the CD used to go in your car is now an auxiliary cable jack.

From an artist perspective’s, these are new challenges that require adaptation. Particularly in the case of music licensing, our pre-existing laws are unnecessarily complex, cumbersome and antiquated. However, innovative technologies and services are not to blame. Instead, we should seek new and equally innovative ways for artists to be compensated through more direct and transparent payments (such as Ujo).

While our copyright laws are far from perfect, we still have substantial freedom to remix, repurpose and share creative content online in a social context. This is essential to online free expression, digital commerce and the proper functioning of the internet itself. As additional discussions in Congress and in the courts move forward, let’s make sure we keep it that way.

Obtained from the Library of Congress:

This post was “pirated” from the R Street blog

Posted on Techdirt - 14 August 2015 @ 09:01am

Split Works Debate Raises Thorny Issues For Music Companies (And For The Rest Of Us)

Michael Corleone would understand. Just when music companies and their performance-rights organization (PROs) thought they were getting out from under supervision by the U.S. Department of Justice, the DOJ may be about to pull them back in.

For some time now, the DOJ’s Antitrust Division has been investigating whether to modify the special antitrust consent decrees that govern the two leading PROs: the American Society of Composers And Publishers (ASCAP) and Broadcast Music Inc. (BMI). These broad settlements, originally reached in 1941, were designed to prevent anti-competitive behavior by the music publishers and set the rules for how the PROs can operate. This includes licensing on non-discriminatory terms (preventing the PROs from blocking a radio station or music service from playing their songs).

The consent decrees have been modified before; BMI’s was amended in 1994 and ASCAP’s in 2001. But some music publishers argue these agreements are showing their age. The publishers and the PROs are hoping (and expressly asking) the DOJ to agree with their view that, here in the Internet Era, digital music doesn’t need so much government intervention. Some suggest the DOJ’s antitrust lawyers have shown sympathy to arguments for a “partial withdrawal” of digital copyrights from the consent-decree framework.

But new arrangements to replace that framework ultimately may pull the labels and PROs back in. Billboard reported recently that the DOJ may be considering revisions that impose an even tighter regulatory scheme. According to the report, the Justice Department circulated a letter letting ASCAP and BMI know it is considering allowing any single co-owner of a “split work” ? also known as a “fractional, “co-authored” or “co-pub” composition ? to issue a license for 100 percent of the work. This is in contrast to the current practice in the music industry, whereby everyone who has a piece of the copyright needs to agree to license the work. The music companies have let their resulting unhappiness be known, albeit only off-the-record.

Not everyone has been so unhappy with the DOJ trial balloon on split works. Billboard quoted streaming service Pandora as saying: “We appreciate that the Department of Justice is taking steps to prevent further anti-competitive behavior in music licensing.” Matt Schruers of the Disruptive Competition Project has framed the reported DOJ inquiry as actively pro-competition. Per Schruers, the music industry has created “artificial gridlock” among its rights-holders by allowing each co-author the power to unilaterally veto, but not unilaterally authorize, the license to use a copyrighted song. This means that a single rights-holder with only a small percentage of ownership in the work may pull the work when a licensing agreement ends, or deny a license to begin with.

These sorts of unilateral decisions by fractional rights-holders have been costly to services like Pandora Radio. Two years ago, Universal Music Publishing Group, owners of at least fractional rights in 20 percent of the music in the BMI catalog, withdrew its digital rights from BMI, a move that was followed by doubling the rates it sought to charge Pandora. And in another example, a different publisher, BMG, also withdrew its rights, but in this instance the result was Pandora took down all of BMGs wholly owned works and Pandora’s customers were cut off from a substantial trove of the BMG catalog.

Is this what Congress intended with its last major revision of the Copyright Act, back in 1976? It doesn’t appear so. Contemporary reports from the U.S. House summarizing the changes conclude:

“Under the bill, as under the present [pre-1976] law, coowners of a copyright would be treated generally as tenants in common, with each coowner having an independent right to use or license the use of a work, subject to a duty of accounting to the other coowners for any profits.”

That’s not always how split works licensing model operates today, as the UMG example demonstrates. To license use of a song, Internet companies may end up having to cut separate deals with each fractional rights-holder. More deals mean more transaction costs, as well as more potential dissenters with the power to scuttle those deals. The process is particularly onerous for new potential entrants to the digital market, and the leverage enjoyed by the major labels and publishers only grows as they continue to consolidate. Today, Sony alone controls nearly half of all royalties collected.

The purpose of copyright is not merely to provide monopoly revenue streams to content companies, but to ensure that creative works actually reach the public. Thus, for the DOJ to clarify obligations under the decades-old consent decrees could make sense. Allowing fractional rights-holders to authorize use of a work unilaterally is one potential avenue to untangle the complex web of rights in music and bring the licensing system more in-line with those of other copyrighted works with multiple authors.

To be clear, no one is asking to eliminate the consent decrees, even though all sides officially say they favor competition and the free market. Ironically, those who laud the competition they say would follow from allowing rights-holders to “partially withdraw” digital music rights tend to fear simplification of the system as a whole, precisely because would make competition among rights-holders more likely.

For instance, they oppose allowing fractional rights-holders to license joint-authored songs on grounds that this would create a “race to the bottom” in digital copyright licensing, lowering prices that could be commanded on the open market. Publishers and PROs thus must find a way to thread the needle in arguing both that the free market commands we let them partially withdraw digital rights and that the free market is lousy when co-authors compete with one another on price.

Any recommended modifications by the DOJ would have to be agreed to by the PROs and then approved by a court. In the meantime, we need a more robust public conversation around how to handle thorny issues like split works. Of course there’s an irreducible tension between (a) the “exclusive rights” held by rights-holders in their “writings and discoveries” (“exclusive rights” just means the power to “exclude” non-rights-holders’ use) and (b) the goal of the U.S. Constitution’s Progress Clause, which gives Congress the power to grant such rights to “promote the progress of science and the useful arts” for rights-holders and non-rights-holders alike.

There are a few things about which almost everyone in this conversation already agrees: markets should be competitive; the public has an interest in copyright; and public policy should meet its Constitutional aim to encourage both creative and technological innovation. We can’t help but wish, in navigating this thicket of thorny issues, we were discovering simpler arguments and simpler solutions.

Mike Godwin is General Counsel and Director of Innovation Policy at R Street Institute. Sasha Moss is a Google Policy Fellow at R Street Institute.

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