A kind of magic? Tenenbaum damages shrunk by 90%

US District Judge Nancy Gertner has slashed the federal jury award made against convicted file sharer Joel Tenenbaum by 90 percent, ruling that the award of $22,250 per infringed work could not withstand scrutiny under the Due Process Clause and was “unconstitutionally excessive’’ in light of what she described as the modest harm caused to the record labels whose works were infringed. She cut the award to from $675,000 to $67,500, one-tenth of the original sum. Judge Gertner said

“There is no question that this reduced award is still severe, even harsh .... It not only adequately compensates the plaintiffs for the relatively minor harm that Tenenbaum caused them; it sends a strong message that those who exploit peer-to-peer networks to unlawfully download and distribute copyrighted works run the risk of incurring substantial damages awards.’’

Judge Gertner’s maths to get to a figure of $22,250 damages for each act of infringement went like this

- statutory damages must bear a reasonable relationship to the actual damages
- the actual damage sustained by plaintiffs was no more than $30
- the benefit to the defendant was in the neighborhood of $1500
- it was permissible to treble the minimum statutory damages due to defendant's wilfulness

However the Boston Globe reports that the Judge Gertner believes that reduction also sends an equally important message that the constitutional protection against grossly excessive punitive awards in civil suits protects not only big corporations but “ordinary people like Joel Tenenbaum’’. Congress, she said, never envisioned that the Digital Theft Deterrence Act of 1999 would expose people like Tenenbaum to huge statutory damages for violating copyright law through illegal file sharing.

The major label’s trade body, Recording Industry Association of America (RIAA) issued a statement saying, “With this decision, the court has substituted its judgment for that of 10 jurors as well as Congress’’ saying that it would “contest this ruling’’.

Judge Gertner’s decision to reduce jury damages mirrors that in the case against Minnesota single mum, Jammie Thomas-Rasset who faced a jury award of $1.9 million. Earlier this year, the judge in that case reduced a jury award of $1.9 million in favour of the recorded music industry to $54,000 in her second trial, and the industry offered to settle the case with her for $25,000. However, Thomas-Rasset rejected the settlement, and the case is now poised to go to trial for a third time. Whether Tenenbaum decides to appeal is open – his lawyer, Havard law professor Charles Nesson said he is inclined to appeal the $67,500 award as still unconstitutionally excessive to the First Circuit Court of Appeals but must speak first with his client. Tenenbaum to reporters he had not read the decision and whilst he welcomed any reduction but he could not afford $67,500 either.

http://beckermanlegal.com/pdf/?file=/Lawyer_Copyright_Internet_Law/sony_tenenbaum_100709Decision.pdf
http://www.boston.com/news/local/massachusetts/articles/2010/07/10/file_sharing_damages_reduced_tenfold/
and lots of interesting comments here in the blogsphere http://recordingindustryvspeople.blogspot.com/2010/07/675000-verdict-reduced-to-67500-in-sony.html

And see 'A copyright ruling no one can like' at http://news.cnet.com/8301-31001_3-20010428-261.html

Copyright and contract

SABIP, the UK's Strategic Advisory Board for Intellectual Property Policy, published a report entitled "The Relationship Between Copyright and Contract Law" at the end of last week. This report, prepared by Estelle Derclaye, Martin Kretschmer, Marcella Favale and Richard Watt, is available online -- so there's no excuse for not reading it. The executive summary, a trim 20 pages of which many are blank or sparsely populated by text, can be accessed here, while the full report (a hefty 180 pages) lives here. The report was presented to a number of stakeholders at a workshop in March 2010, the proceedings of which you can peruse at your leisure here. Estelle Derclaye has indicated that she'll be pleased to answer any questions and address any pertinent comments. You can email her here.

By sheer coincidence I received a copy of another work on the same topic, Copyright, Contracts, Creators: New Media, New Rules, this week. The author is Giuseppina D'Agostino and the publisher is Edward Elgar. Giuseppina, Associate Professor in Canada's prestigious Osgoode Hall Law School, York University, is also the founding director of IP Osgoode. According to the book's publishers,

"The digital world has put content within arm’s reach of desire [What a lovely metaphor! Even though most digital content is undesirable to most internet users, the subjective element of one's own desire, reified in the content of one's choice, is rare further than a handful of clicks away]. No longer can an author be satisfied that her intellectual property is safely encased in a bound book, nor can a photographer know where his work will be displayed or shared, nor can a writer rest assured that her article will be consumed in the intended magazine or newspaper [It must be assumed that no content carrier or publisher has been resting assured for some while now]. The Internet-fueled recycling of existing works into new media is the greatest challenge to copyright law.

Copyright, Contracts, Creators evaluates the efficacy of current copyright law to address the contracting and use of creative works. It looks in particular at freelance works and argues that their copyright treatment on a national and international level is inadequate to resolve ambiguities in the contracting and uses of the work. Giuseppina D’Agostino discusses how historically laws and courts were more sympathetic to creators, and how the Internet revolution has shifted the scales to favor owners [a controversial position, which may depend on one's sectoral standpoint as well as the type of work created]. Consequently, creators often find themselves at opposing ends with copyright owners, and in a disproportionately weaker bargaining position that places tremendous strain on their livelihoods. She argues that this predicament puts society at risk of losing its most valued asset: professional creators. The author calls for a new framework to justify legislative provisions and resolve ambiguities while suggesting principles and mechanisms to address the inadequate treatment of freelance work ...".

This is a refreshing and challenging approach to a subject which has attracted relatively little systematic research and where both case law and commercial practice have had a substantially ad-hoc feel about them. It also provides ammunition that may be said to support both sides in the sporadic debate as to whether freelance creators benefit more from the freedom of the little-regulated marketplace as in common law countries or from the more moral and norm-driven approach of continental Europe. Definitely worth a good read.

Bibliographic data: xviii + 320 pages. Hardback. ISBN 978 1 84720 106 5. Price £79.95 (with online discount from the publisher £ 71.96).

BT and TalkTalk take on the DEA

British ISPs Talk Talk and BT have asked the High Court for a Judicial Review to clarify the legality of the country's recently passed Digital Economy Act, which includes provisions requiring ISPs to police file-sharing and which introduces the much debated ‘Three Strikes’ procedure which ultimately may result in subscribers who indulge in illegal file sharing or other infringing activities having their bandwidth reduced or even their internet connection terminated.

The ISPs say the law was "rushed through" with "insufficient scrutiny” and they are asking the Court to clarify whether the U.K. law conflicts with Europe's e-commerce directive, which limits liability of offences committed by ISP subscribers, giving protection similar to the "safe harbour" provisions of the U.S. Digital Millennium Copyright Act. TalkTalk boss Charlie Dunstone told reporters: "We think the previous government's rushed approach resulted in flawed legislation. That's why we need a judicial review

The two ISPs also believe the provisions of the Act that require ISPs to disconnect repeat file-swappers unfairly target larger ISPs, as they only apply to firms with more than 400,000 subscribers with Andrew Heaney from TalkTalk saying “It means we could have huge swathes of customers moving to smaller ISPs to avoid detection.”

It will be interesting to see if this all ends up with a reference to the European Court of Justice on one more more of the points of law raised. In the 2008 case of Promusicae v Telefonica, the ECJ said that it was up to national courts to perform the balancing act of protecting both copyrights and in this case privacy rights. And here the ECJ was ruling on whether, under European law, there was any obligation on ISPs to reveal the identities of suspected file-sharers.

TalkTalk have been vocal in their opposition to three strikes but BT are newer to the fray: BT's Industry Policy Director Simon Milner said yesterday that "every film downloaded from The Pirate Bay or the dozens of other sites offering unlicensed content is a lost sale for BT Vision", but added that when it came to the wider issue of online copyright protection "this is their [the copyright owners'] business: it's up to them to find a solution to their business problems, it's not principally our problem".

UK Media regulator OfCom is currently consulting key interest groups on how a three-strikes might work under the provisions of the DEA.

Young Guns Go For It

On Thursday Night (8th July) Berwin Leighton Paisner kindly hosted one of the regular bi-monthly BLACA meetings (British Literary and Artistic Copyright Association) and this one had a particular twist – the topic was copyright but seen through the eyes of two young copyright professionals, the joint winners of BLACA’s 2010 competition, the prize being the chance to make this presentation!

Chaired by Professor Alison Firth (University of Surrey), the first presentation was from Mark Smith, a newly qualified solicitor at Osborne Clark, and was simply titled “Copyright in the Digital Age”. I won’t dwell on the detail as this and the following presentation will both be available soon on BLACA’s website at http://www.blaca.org/ . Suffice to say, they are both well worth a read and Mark gave a professional speech in a wide ranging presentation. The second presentation was by Ed Cameron , who comes from a science background and has just completed a MSc in the Management of Intellectual Property at Queen Mary College, University of London. Ed focussed on the Digital Economy Act in a presentation titled “The Digital Economy Act - are ISPs under Attack?”. This Blogger has to admit he has not really looked at the finer details of the enforcement provisions of the DEA (particularly those referred to as the ‘three strikes’ system), and Ed did, where there was clarity in the Act, makes some sense of what look like rather complicated enforcement provisions. As with Mark’s presentation, read the detail online.

The sometimes challenging question and answer session was deftly handled by Prof. Firth and a recurring theme was the role of the collection societies in new business models, along with the need to educate the consumer and some comment on the failure of domestic and even the pan-European copyright regimes to provide effective enforcement tools for content owners in the global digital age. I have to say I thought both of the speakers did really well – a brave challenge for two young men who were students this time last year – faced with a room that included some well seasoned copyright lawyers ..... and a few less seasoned ones as well!

Details on this year's BLACA prize can be found at http://www.blaca.org/prize.htm

Jurisdictional tactics: Penguin v American Buddha

Sometimes it seems as if the internet transcends physical space. But no – it’s just in a lot of different places. Consequently when copyright is infringed online, claimants may find they are faced with a choice of where to sue.

American Buddha operates free online ‘libraries’: Penguin USA say four of their titles have been made available to these libraries’ members without authorization. Penguin has sued, but not in Arizona, where American Buddha are based – in New York. At first instance, American Buddha successfully challenged the jurisdiction of the NY district court but Penguin appealed to the Second Circuit Court of Appeals. They in turn are now referring the question to the New York Court of Appeals... Why hasn’t Penguin sued in Arizona? Perhaps because the copyright jurisprudence of the Second Circuit is more predictable and favourable to right owners than that of the Ninth.

New York state law allows jurisdiction over an out-of-state party who commits a tort in the state, or commits a tort outside the state that causes injury within NY. Penguin is not pursuing the first of these. The district court said Penguin ‘appears to recognize that “in the case of web sites displaying infringing material the tort is deemed to be committed where the web site is created and/or maintained” ’ – a take on international copyright law that is not shared in all corners of the world.

Instead, Penguin wants to argue that American Buddha’s infringements outside the state have caused them harm within NY. The question for the court is: if the alleged copyright infringements cause injury to Penguin, where does that injury take place? The district court believed the injury would be where the infringement occurred – i.e. American Buddha’s servers.

To prove that American Buddha’s alleged copyright infringement had caused injury within NY, Penguin might perhaps have argued that American Buddha had caused a loss of customers in Manhattan. Penguin, however, seems to be focusing on a different kind of injury. The argument is that the infringements cause harm to their copyrights, which are held in New York. This reasoning relies on the notion that copyrights have a physical location for jurisdictional purposes.

Why would Penguin pursue this philosophically challenging line of attack? Presumably the damages obtainable in relation to harm to the copyrights generally could apply to loss of sales anywhere, not just those in the Big Apple? The discerning internet forum shopper is on the lookout for a jurisdiction where he can mop up all the disparate infringements in one go. Usually that would mean suing the defendant where he is resident but could this be another way?

From Papers to Plaques

It’s one of the proudest moments of your life.  You sit down to breakfast, open the newspaper and there she is, your daughter looking back at you from the page, smiling proudly with her award in hand.  Being a doting parent, you want to give her something special by which to remember this achievement and show her how proud you are.  A quick search online and you find the perfect gift, that article, bright and shiny on a special plaque from That’s Great News!

Seems like a great business idea, but it’s almost exactly what’s gotten That’s Great News into some trouble with a news company called GateHouse Media.  The only difference, the news clippings came from an online news site rather than a paper one.

Evan Brown over at Internet Cases has brought to our attention this new case in the US involving the infringement of Creative Commons licensed materials from one of GateHouse’s websites.  Filed last Wednesday in the Northern District of Illinois (the area that includes Chicago) the complaint lists claims of copyright and trademark infringement, unfair competition and breach of contract.  (Evan’s post questions why GateHouse chose to file a breach of contract claim.  If you are interested in this discussion, see the comment section of his post.) 

Without being able to see the complaint, we can only speculate about GateHouse’s arguments.  The material that GateHouse claims Thats’ Great News! infringed was licensed under a CC NonCommercial NoDerivs license (BY-NC-ND).  So we might suppose that GateHouse will argue that That’s Great News!’s use of GateHouse’s material was a derivative work and that it was commercial.

The problem with a derivative use argument in this case is that the facts closely resemble the facts of another case, a case of binding precedent in the 7th Circuit.  (For non-US/non-attorneys, appeals from the Northern District of Illinois go to the 7th Circuit Court of Appeals.)

That’s Great News!’s use of putting newspaper articles on plaques and selling the plaques is very similar to putting notecards on tiles and selling the tiles.  The 7th Circuit has already decided that putting notecards on tiles does not equal the creation of derivative works and does not result in copyright infringement.  (Short Lee v. A.R.T. Company opinion here.)*

This leads into the problem with a commercial use argument.  While That’s Great News! is making money selling the plaques with news stories, that does not necessarily mean That’s Great News! is violating the terms of GateHouse’s license.  Creative Commons licenses do not affect any uses that are allowed under regular copyright, i.e. they do not prevent fair use, even commercial fair use.  If the court follows the reasoning in Lee v. A.R.T. and decides that That’s Great News!’s use is not a derivative work and is not infringing, it will not matter that That’s Great News! makes money selling its plaques.

As Eric Goldman pointed out on Evan’s post, this is not the first time GateHouse Media has brought a suit for infringing uses of its CC-licensed materials.  In 2008, Gate House sued The New York Times for copyright and trademark infringement, unfair competition and breach of contract, as well as false advertising, trademark dilution and unfair business practices.The two companies settled the case in early 2009. 

Perhaps this case will settle, too.

 

*Note: There is a circuit split in the United States with respect to facts like the notecard-tiles and whether than is a derivative work.  The 9th Circuit has held that it is a derivative work.  See Mirage Editions v. Alburquerque Art.

(As always, my post here is for The 1709 Blog and is not on behalf of, or representing the opinions of, Creative Commons.)

Tuesday shorts

If you've nothing better to do tomorrow and you find yourself in Central London, why not pop in to Atlantic House, Holborn Viaduct, at 5.30pm for 6pm, courtesy of Hogan Lovells International LLP, to hear Cambridge IP Professor Lionel Bently speak on "The future of European copyright". It's an AIPPI gathering and you can get the details from AIPPI UK's website here. Drinks will take place afterwards. Admission is £20 for non-members, but free for members.


"Member States Discuss Key Copyright Issues" is the title of a recent media release from the World Intellectual Property Organization. Essentially, WIPO Members don't share the same views on all subjects, it seems. This blog's favourite line is "During a late night discussion, agreed language for final conclusions proved elusive".

Thanks, Jeff John Roberts, for this link to news that Canadian lawyers are suing media barons Thomson Reuters for copyright infringement. This is a class action on behalf of the entire Canadian legal profession, alleging that the defendant copies publicly available court filings, including pleadings, affidavits and notices of motion, which are prepared by lawyers but which are then made for available for download to subscribers via its Litigator service. On payment of the subscription fee, the user is authorised to copy and edit those documents -- but at no time are the authors of these documents informed that their documents are copied, sold, or reproduced. Cheekily, the defendants decorate each download with the legend "© Thomson Reuters Canada Limited or its Licensors. All rights reserved." This action is worth watching, if only for its entertainment value.

Money for old tracks: a reader asks

One of our readers has written to ask the 1709 Bloggies if they have any advice or experience that they can bring to bear on this little problem.

A British-based advertising agency has been approached by the American Federation of Musicians (AFM) in relation to its use of US music tracks. It seems that the AFM is asking for backdated payments on behalf of background artists who contributed to those music tracks, for example as backing singers ot musicians.

This agency has assumed that the normal procedure adopted by agencies in the UK when they want to use music tracks is (1) contact the music publisher and (2) contact the recording company to seek permission to use the sound recording. When it uses British music, it generally contacts the Musicians Union, which confirms how much to pay with regard to background artists. However, where US music is concerned, this agency has not been contacting the AFM, because it didn't know it had to -- a belief that was reinforced by assurances from some of the recording companies. The UK agency has also heard that the reason why advertising agencies in the US contact the AFM to arrange for payment in relation to use of background artists is because they have already made an agreement with the AFM to do so.

The UK agency therefore asks as follows:
(1) if it isn't a signatory to the agreement that was signed between the AFM and US agenices, does it still need to pay?
(2) does the answer to (1) change if the practice for some time has been that it never had to pay? and
(3) if it does have to pay, will it have to pay the backdated sums? and
(4) likewise, if it has to pay, what proof if any does the AFM need to bring in order to establish how much it should pay (right now, it seems, the AFM is asking for what appears to be an arbitrary sum, based on little proof of how many background artists were actually involved in a track).

The UK agency adds that it has heard that advertising agencies in Canada are facing the same payment requests from the AFM.

Can any readers offer any practical or legal guidance here?