Microsoft Word - Menell Comments - Music Licensing Study -- Docket No. 2014-03 5-23-2014

Peter S. Menell

Koret Professor of Law

Director, Berkeley Center for Law and Technology

University of California, Berkeley School of Law

686 Simon Hall, MC 7200

Berkeley, CA 94720

(510) 642-5489

[email protected]

23 May 2014

U.S. Copyright Office

Library of Congress

Re: Comments of Professor Peter S. Menell – Music Licensing Study

Docket No. 2014–03

In response to the March 17, 2014 Federal Register Notice (78 Fed. Reg. 14739) soliciting

comments on the Copyright Office’s “Music Licensing Study,” I submit these comments solely

on my own behalf as an intellectual property law scholar.

Prefatory Remarks

Before turning to the specific enumerated questions posed in the Federal Register Notice,

it will be useful to put the music licensing study in a broader perspective. As I explored in the

Annual Brace Lecture – “This American Copyright Life: Reflections on Re-equilibrating

2014) (hereinafter cited as “This American Copyright Life”) (page proofs attached) – the Internet

has profoundly altered the functioning of the copyright system over the past 15 years. Many of

the substantial changes have occurred since the enactment of the Digital Millennium Copyright

Act of 1998. While the Internet’s capacity has substantially reduced the age-old costs of

distributing works of authorship, the promiscuity of Internet distribution has produced

unprecedented enforcement challenges.

These changes have had particularly significant impacts on the music marketplace. While

Internet functionality opened up new distribution modes (such as iTunes, Pandora, and Spotify), it

also fueled rampant unauthorized distribution of copyrighted musical works and sound

recordings.

As “This American Copyright Life” explains (pages 237-48), copyright law is but one

component of society’s larger content governance ecosystem. Technology, markets, and social

norms also play important roles. Whereas technological and legal protections effectively

channeled consumers into markets for copyrighted works throughout much of copyright law’s

history, file-sharing technologies have afforded Internet users easy access to all manner of

copyrighted works without the need to go through market institutions. Technology companies

and copyright industries have sought to “compete” with such unauthorized access through new

online services – such as iTunes, Vevo, Pandora, and Spotify – but with only limited success. The

level of unauthorized distribution of copyrighted works remains high.

Improving the functioning of music licensing markets is critical to the efficacy of the

particular content marketplaces – such as Massively Multiplayer Online Role-Playing Game

(MMORPG) platforms – the music marketplace has proven far more resistant to technological

solutions. See Peter S. Menell, Envisioning Copyright Law’s Digital Future, 46 N.Y.L. School L.

Rev. 63, 121 n.168,165, 178-79 (2002-2003) (discussing the failure of the Secure Digital Music

Initiative (SDMI)). The carrot of robust, fairly priced music services will prove far more effective

than the stick of costly, aggressive civil enforcement campaigns against end users in bringing

many music fans back into authorized online music services. See “This American Copyright

Life” (pages 218-35, 325-37).

These considerations lead me to call attention to three areas of inquiry: (I) establishing

robust registries for licensing music; (II) promoting fair and balanced music streaming services;

and (III) channeling mash-up creativity into authorized markets.

I. Copyright Notice as the Foundation for Music Licensing (Topic 24)

The availability of transparent, accessible, and easily searchable registries of copyrightable

works would provide a foundation for robust music licensing. See generally Peter S. Menell &

Michael J. Meurer, Notice Failure and Notice Externalities, 5 J. Legal Analysis 1 (2013). Due to

the lack of registration requirements and reliable databases for tracking music ownership, music

services incur duplicative and high costs in efforts to build digital music markets. They also face

unnecessary liability for inadvertently distributing works without requisite authorization.

Life” at 310-12. Databases should be standardized and easily accessible to the public.

II. A Fair and Balanced Licensing Platform for Music Streaming Services (Topics 18-21)

Digital and Internet technology have brought about the capacity to afford widespread

access to the proverbial “celestial jukebox” – universal access to all sound recordings through

convenient technologies. Consumers are increasingly migrating from downloading music toward

streaming services, such as Spotify, Pandora, and Beats. It seems likely that this transition will

continue. Once consumers become accustomed to these services, their music listening habits

adapt as they develop playlists and integrate music listening with social networking. These

services achieve many of the aspirations of music fans.

Yet the adoption of these services and their ability to promote musical creativity are

hampered by distortions in the music marketplace. Most music fans will not join a streaming

service unless it offers a relatively broad catalog, including sound recordings controlled by the

major record labels. As I explain in “This American Copyright Life” (pages 258-63, 327-32), the

major record labels have leveraged their control of the “legacy” catalog to disadvantage not only

their own artists but also independent artists. This equilibrium undermines artist and consumer

support for an authorized celestial jukebox, the best antidote to music piracy. More generally, it

deprives future creators of the promise of earning an appropriate return on their creative efforts.

Addressing this fundamental distortion is critical to building a fair and balanced marketplace for

creative musical artists in the Internet Age.

III. Promoting Mash-Ups (Topic 17)

Like rhythm and blues, rock ‘n roll, rap, and hip hop, mash-ups of previously recorded

music have emerged as the latest musical genre. Yet this genre operates largely beyond any

authorized marketplace. The costs of negotiating the many licenses that would be needed to clear

such works is prohibitive for many mash-ups. See generally Kembrew McLeod & Peter DiCola,

Creative License: The Law and Culture of Digital Sampling (2011). Furthermore, just as

consumers have the option of obtaining copyrighted works outside of legitimate channels in the

Internet Age, they also have the ability to produce and distribute mash-ups. Consequently, much

of the mash-up culture flourishes through unauthorized channels.

While some have suggested that mash-ups do not require permission because they qualify

for fair use treatment, such a legal interpretation would deprive the creators of the works being

sampled any share of the social value that they create beyond possible modest promotional value.

I suggest in “This American Copyright Life” (pages 318-24) that there could be substantial value

in developing a compulsory license for mash-ups. By so doing, Congress would encourage

younger generations to participate in authorized marketplaces for musical works. The creators of

such mash-ups could more easily derive income from their creative efforts while providing added

value to creators of works that are sampled. While such a regime would be more complicated

than the present cover license and would authorize greater adaptation, failure to open up such a

channel for this new and increasingly popular genre means that creators of the sampled works will

see little if any income for such uses. Developing a robust and flexible regime for mash-ups

would, like the cover license, promote new forms of cumulative creativity while providing more

appropriate encouragement and compensation to those whose works are sampled.

Respectfully submitted,

Peter S. Menell

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This American Copyright Life 201

THIS AMERICAN COPYRIGHT LIFE:

REFLECTIONS ON RE-EQUILIBRATING COPYRIGHT

FOR THE INTERNET AGE

by P

ETER

S. M

ENELL

ABSTRACT

This article calls attention to the dismal state of copyright’s public

approval rating. Drawing on the format and style of Ira Glass’s “This

American Life” radio broadcast, the presentation unfolds in three parts:

Act I – How did we get here?; Act II – Why should society care about

*Koret Professor of Law, University of California at Berkeley School of Law and

co-founder and Director, Berkeley Center for Law & Technology. I owe special

thanks to David Anderman, Mark Avsec, Robby Beyers, Jamie Boyle, Hon. Ste-

phen G. Breyer, Andrew Bridges, Elliot Cahn, David Carson, Jay Cooper, Jeff

Cunard, Victoria Espinel, David Given, Jane Ginsburg, Paul Goldstein, Jim Grif-

fin, Dylan Hadfield-Menell, Noah Hadfield-Menell, Scotty Iseri, Dennis Karjala,

Rob Kasunic, Chris Kendrick, Mark Lemley, Larry Lessig, Jessica Litman, Rob

Merges, Eli Miller, Neal Netanel, Hon. Jon O. Newman, Wood Newton, David

Nimmer, Maria Pallante, Shira Perlmutter, Marybeth Peters, Gene Roddenberry,

Pam Samuelson, Ellen Seidler, Lon Sobel, Chris Sprigman, Madhavi Sunder, Gary

Stiffelman, Pete Townshend, Molly Van Houweling, Fred von Lohmann, Joel

Waldfogel, Jeremy Williams, Jonathan Zittrain, and the participants on the Cyber-

prof and Pho listserves for inspiration, perspective, provocation, and insight; and

Claire Sylvia for her steadfast love, encouragement, and support. None of these

people bear responsibility for what follows — and I suspect many will disagree

with some or all of what I have to say. My hope is that the dot product of the

reactions achieves the golden mean.

Following my presentation of the Brace Lecture, I had the opportunity to re-

prise the lecture at Cardozo Law School, George Washington Law School (and the

D.C. Chapter of the Copyright Society), Hebrew University, Indiana University,

the Northern California Chapter of the Copyright Society, Sony Pictures, Tel Aviv

University, U.S. Copyright Office, University of California at Berkeley, University

of California at Davis, University of California (Hastings), University of Penn-

sylvania, and the USC Intellectual Property Conference Speakers’ Dinner. I thank

Shyam Balganesh, Stefan Bechtold, Bob Brauneis, Ben Depoorter, Kristelia Gar-

cia, Naomi Jane Gray, Justin Hughes, Linda Joy Kattwinkel, Joesph Liu, Mike

Mattioli, David Morrison, Maria Pallante, Madhavi Sunder, Aimee Wolfson, Felix

Wu, Christopher Yoo, and the numerous law students and copyright professionals

who shared their reactions.

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202 Journal, Copyright Society of the U.S.A.

CONTENTS

ACT I: HOW DID WE GET HERE? ........................... 207

A. Copyright Enforcement in the Analog Age............ 210

B. The Gathering Digital Copyright Storm ............... 214

C. The Perfect Copyright Storm ......................... 216

D. The Digital Copyright Enforcement Saga.............. 218

ACT II: WHY SHOULD SOCIETY CARE ABOUT

A. Content Governance: From the Analog Age to the

Internet Age ......................................... 237

B. Reflections on Popular Music and Independent Film in

the Internet Age ..................................... 239

1. Popular Music: Creators Caught in a Dual Vise . . . 239

2. Popular Films: Anytime, Anywhere, and Free ..... 254

C. The Copyright/Internet Paradox ...................... 257

1. Digital Music Platform Pathology ................. 258

2. Digital Film Platform Pathology................... 263

ACT III: HOW DO WE IMPROVE COPYRIGHT’S PUBLIC

APPROVAL RATING (AND EFFICACY)? ............. 264

A. Legislative Agenda ................................... 268

1. Dual Enforcement Regime........................ 268

a) Non-Commercial/Small-Scale Infringers ....... 269

(1) Re-calibrating Statutory Damages ......... 272

(2) Expanded Subpoena Power for Detecting

File-Sharers ............................... 273

(3) Confirming the Making Available Right . . . 274

(4) Encouraging Responsibility for Web Access

Points .................................... 277

(5) A Small Claims Processing Institution for

File-Sharing Infringements ................ 277

b) Commercial/Large Scale Infringers ............ 278

(1) Re-calibrating Statutory Damages ......... 279

(2) Instituting Balanced Public Enforcement . . 283

(a) A Balanced Public Enforcement

Process ................................. 295

(b) Working Collaboratively Across the

Content and Technology Sectors ........ 297

Promote Copyright Protection .......... 301

c) Whistleblower Bounties ....................... 303

2. Promoting Cumulative Creativity.................. 305

a) Academic Research ........................... 306

b) Digital Archiving and Search.................. 308

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This American Copyright Life 203

c) Orphan Works ................................ 310

d) Operationalizing Fair Use ..................... 312

e) Experimental and Self-Expressive Use ........ 314

f) Photography of Public Art .................... 316

g) Remix Compulsory License ................... 318

h) Enhanced Penalties for Abuse of the Notice

and Takedown System ........................ 324

B. Market-Based Solutions .............................. 325

1. The Grand Kumbaya Experiment ................. 327

2. Graduated Embrace .............................. 332

CONCLUSIONS ................................................ 337

I am deeply honored to deliver the Brace Lecture, which has long

served as a platform for celebrating, understanding, and addressing the

challenges of the copyright system.

I dare say that at no time in the Brace

Lecture’s forty-two year history, or for that matter, copyright law’s 300

year history, has the copyright system been more severely criticized as

being out of touch and out of date.

We are now thirteen years since Napster’s revolutionary appearance

— what seems like an eternity in the rapidly evolving Internet Age. My

law students have come of age in the post-Napster era. Netizens who were

in high school when peer-to-peer functionality went viral are now beyond

the age at which no one should be trusted.

We have since seen the rise of

innumerable file-sharing and cyberlocker services. The emergence of the

Internet as a principal platform for distributing works of authorship has

Prior Brace lecturers include many of the most influential copyright jurists,

practitioners, and academics. I have had the honor to learn from and, in

two cases, collaborate with prior Brace lecturers — David Nimmer, Paul

Goldstein, Mark Lemley, and Jane Ginsburg. I also want to recognize

special debts to the Honorable Stephen G. Breyer and the Honorable Jon

O. Newman. I had the opportunity to write my first article on copyright law

— Tailoring Legal Protection for Computer Software, 39

TAN

. L. R

1329 (1987) — in a seminar led by then-Judge, now Justice, Breyer. His

economic and policy orientation resonated with my graduate studies in law

and economics and has provided a valuable foundation throughout my

career. Following law school, I had the privilege to clerk for Judge Newman

on the U.S. Court of Appeals for the Second Circuit. His deep interest in

own understanding, appreciation, and interest in this extraordinary and

dynamic field.

The 1960s phrase “Don’t Trust Anyone Over 30” was first uttered by Jack

Weinberg, a UC Berkeley student involved with the Free Speech

Movement, in an interview with the San Francisco Chronicle in 1964. See

Don’t Trust Anyone Over 30, Unless It’s Jack Weinberg,

ERKELEY

AILY

LANET

(Apr. 6, 2000), http://www.berkeleydailyplanet.com/issue/2000-04-

06/article/759.

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204 Journal, Copyright Society of the U.S.A.

focused public opinion on copyright law like at no other time in

Online Piracy Act (SOPA) revealed, the glare of public opinion can be

harsh.

For those reasons, I would like to begin this year’s Brace Lecture by

calling attention to a topic that has not attracted much attention at such

staid gatherings: copyright’s public approval rating. For reasons that I will

explain, the public’s perception of the copyright system has become

increasingly central to its efficacy and vitality. I believe that copyright’s

role in promoting progress in the creative arts, freedom, and democratic

values depends critically upon restoring public support for its purposes

and rules.

Rather than approach this lecture as merely an opportunity to present

an academic paper, I have chosen a more personal and confessional

approach. I hope that this will be more entertaining than a traditional

lecture. But more importantly, I hope that my journey will better

communicate the difficult challenges confronting the copyright system and

reveal key insights for sustaining and improving it.

The confessional aspect of my story revolves around my struggle with

what I will call technology-content schizophrenia

— a disorder that has

not yet been recognized by the American Psychiatric Association.

From

my earliest memories, I was drawn to both technological innovation and

artistic creativity. As an adolescent, rock ‘n roll music inspired “My

Generation,”

providing an outlet and voice for our frustrations and desire

to rebel against the injustice that surrounded us. Bob Dylan’s anthems

brought the values of the civil rights and anti-war movements into popular

See

RAM

INNREICH

, T

IRACY

RUSADE

: H

OW THE

USIC

NDUSTRY

’

AR ON

HARING

ESTROYS

ARKETS AND

RODES

IVIL

IBERTIES

(2013).

The American Heritage Dictionary of the English Language defines

“schizophrenia” as “[a] situation or condition that results from the

coexistence of disparate or antagonistic qualities, identities, or activities.”

Definition of Schizophrenia,

MERICAN

ERITAGE

ICTIONARY

, http://

education.yahoo.com/reference/dictionary/entry/schizophrenia (last visited

Nov. 4, 2013).

See

. P

SYCHIATRIC

’

, D

IAGNOSTIC AND

TATISTICAL

ANUAL OF

ENTAL

ISORDERS

(5th ed. 2013).

See My Generation,

IKIPEDIA

, http://en.wikipedia.org/wiki/My_Generation

(last visited Nov. 4, 2013). Pete Townshend’s anthems would feature

prominently in my formative years. He told Rolling Stone magazine that

“‘My Generation’ was very much about trying to find a place in society.”

See id.

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This American Copyright Life 205

culture. How better to understand the Nixon years than through Pete

Townshend’s “Won’t Get Fooled Again?”

At the same time, rock ‘n roll fueled my interest in the technology for

reproducing and performing music. Movies, television shows, and books

transported me from a drab, homogeneous suburban New Jersey

neighborhood to all parts of the globe, historical moments, diverse

cultures, and futuristic and distant planets. Calculators and primitive

computers were the most tantalizing toys. Creative arts and technology

coexisted without conflict during my formative years. I enjoyed tinkering

with technology and art, from building stereo amplifiers to making mix

tapes, as much as I loved the music that blasted from my homemade stereo

speakers and customized car stereo. Both music and technology shaped

my values and interests.

As a graduate student, my frustration with the exorbitant cost of

IBM’s Personal Computer led me to the economics of network

technologies and intellectual property and antitrust law. I came to see that

expansive copyright protection for computer software could undermine

both rapid innovation and network externalities.

These experiences led

me, more than two decades ago, to lay the groundwork for a research,

teaching, and public policy center focused on law and technology at the

University of California at Berkeley. We envisioned the Berkeley Center

for Law & Technology (BCLT) as a place to support both technological

innovation and expressive creativity.

Shortly after BCLT’s formation, students approached me about

expanding the curriculum to include entertainment law. BCLT had

recently hosted one of the first conferences on “Digital Content” and it

was increasingly clear that the future of the Internet would be as much

about the content that flowed through this extraordinary network as the

network itself. Although my intellectual property research up until that

time had focused on software protection, I embraced the students’

“Won’t Get Fooled Again” appeared as the final track on The Who’s 1971

album Who’s Next. It captured the frustration, hypocrisy, and cynicism of

the power structures defining our era — “We were liberated from the fall

that’s all, But the world looks just the same”; “meet the new boss, same as

the old boss” — punctuated by the greatest scream in rock ‘n roll history (in

my humble opinion).

See Peter S. Menell, Tailoring Legal Protection for Computer Software, 39

TAN

. L. R

. 1329 (1987).

BCLT’s mission statement has been “to foster the beneficial and ethical

understanding of intellectual property (IP) law and related fields as they

affect public policy, business, science and technology.” About Berkeley

Center for Law & Technology,

ERKELEY

ENTER FOR

ECHNOLOGY

http://www.law.berkeley.edu/5065.htm (last visited Nov. 4,

2013).

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206 Journal, Copyright Society of the U.S.A.

suggestion and began teaching a course exploring the role of intellectual

property in the entertainment industries.

Things were chugging along well. The dot-com explosion enabled

BCLT to build a strong foundation with connections to both Silicon Valley

and Hollywood. Yet growing rancor over the Commerce Department’s

White Paper

and the WIPO Copyright Treaties

created controversy,

although it was largely confined to industry experts and policy wonks.

Even the passage of the Digital Millennium Copyright Act

did not

This calm would change suddenly mid-1999. The release of Napster’s

file-sharing software would bring the two pillars of my life into conflict.

By the first session of my Introduction to Intellectual Property class in

January 2000, nearly all of my students had been swept up by the Napster

tsunami. When I posed the question of how this technology might affect

the flow of creative works, my students were incapable of seeing past the

euphoria of gaining access to nearly any sound recording at zero cost

through Napster’s charismatic technology.

And I would have to admit

that sixteen-year-old me would have found this technology comparably

irresistible.

Digital technology would bring about more than merely easy (and

free) access to popular music, movies, and television shows. Digital

advances enabled the population at large to easily and seamlessly remix or

mash-up copyrighted works, appealing to a universal human desire to

engage, connect to, and personalize creative works. Sixteen-year-old me

would have adored these tools, just as the current version of me has

embraced digital technology for teaching, entertainment, and self-

expression.

This lecture shares my struggle to make sense of these apparently

conflicting ideals — juxtaposing the importance of intellectual property

protection for promoting creative arts with the inherent human desire to

gain access to and engage creative works. It uses remix tools and

See

RUCE

A. L

EHMAN

, U.S. P

ATENT AND

RADEMARK

FFICE

NTELLECTUAL

ROPERTY AND THE

ATIONAL

NFORMATION

NFRASTRUCTURE

: T

EPORT OF THE

ORKING

ROUP ON

NTELLECTUAL

ROPERTY

IGHTS

(1995) [hereinafter IPNII White Paper],

available at http:// www.uspto.gov/web/offices/com/doc/ipnii/ipnii.pdf.

See WIPO Copyright Treaty, Dec. 20, 1996,

S. T

REATY

. N

105-17, 36

I.L.M. 65 (1997); WIPO Performances and Phonograms Treaty, Dec. 20,

1996,

S. T

REATY

. N

. 105-17, 36 I.L.M. 76 (1997).

Pub L. No. 105-304, 112 Stat. 2860.

See Lior Jacob Strahilevitz, Charismatic Code, Social Norms, and the

Emergence of Cooperation on the File-Swapping Networks, 89

. L. R

505 (2003).

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This American Copyright Life 207

transformative appropriation to illuminate the copyright system’s difficult

adaptation to the Internet Age.

Drawing on the format and the style of Ira Glass’s “funny, dramatic,

surprising, and true” This American Life radio broadcast,

I have

fashioned “This American Copyright Life” into a three part story: Act I —

How did we get here?; Act II — Why should society care about

ACT I: HOW DID WE GET HERE?

It is useful to ask why copyright’s public approval rating has not, until

the past decade and a half, attracted much attention. The answer lies

largely in the evolution of technologies for distributing creative works. I

offer a perspective which, judging from the age profile of the audience,

might spark some nostalgia. Many of us first experienced the copyright

system during an era in which the options for accessing copyrighted works

were limited. Films were released to motion picture theaters and eventu-

ally broadcast on television. Television shows were available at designated

times through television broadcasts. Recorded music was available at re-

cord stores or broadcast on radio. Books could be found in bookstores or

libraries.

In that bygone era, consumers had relatively little awareness of, or

interaction with, the copyright system. We did not think much about the

do much with copyrighted works beyond experience them. We anxiously

awaited new films, albums, novels, magazines, comic books, and television

shows. To the extent that we considered the “copyright system” as such,

our views largely paralleled our enjoyment of the works that content in-

dustries produced. If we liked the content, the system was working.

In my own case, the products of the content industries were deeply

engaging and inspiring. I still vividly remember seeing my first episode of

the original Star Trek series while at a sleepover with my much older (a

few years) cousins. Gene Roddenberry’s extraordinary voyages of the

Starship Enterprise — “to boldly go where no man has gone before” —

had a profound influence on my social values and interest in technology.

Rebellious rock ’n roll music spoke to “My Generation”

— fueling our

innate adolescent desire to question authority and think independently. I

See

HIS

MERICAN

IFE

http://www.thisamericanlife.org (last visited Nov. 4,

2013).

“My Generation” is the title of The Who’s classic 1965 anthem. See My Gener-

ation,

IKIPEDIA

, http://en.wikipedia.org/wiki/My_Generation (last visited

Nov. 4, 2013). It was named the eleventh greatest song by Rolling Stone

magazine. Although I was too young to have been in the original audience

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208 Journal, Copyright Society of the U.S.A.

don’t know how I would have survived the anxieties, indulgences, and con-

tradictions of “teenage wasteland” without Pete Townshend’s rock bal-

lads

or Bob Dylan’s forthright poetry. If the copyright system promoted

this art, then I was a fan. But frankly, I had little reason to think much

about the connection between copyright and the inspiring music, film,

literature, and art that captivated and shaped me.

This is not to say that I did not seek to use technology as a means to

gain greater access to and enjoyment of copyrighted works. Popular music

and Hollywood’s visions of a just technological/digital future fueled my

precocious techie tendencies. I sought out the latest in recording technol-

ogy, experimented with primitive computers, and repaired and recon-

structed bicycles (and later a very used, abused, and largely rusted out

Fiat). Along with a friend, I built stereo amplifiers and high fidelity speak-

ers and designed and installed home and car stereo systems. I subscribed

to Stereo Review and many a record club (only to quit as soon as I sur-

passed the minimum requirements needed to secure the heavily dis-

counted albums). I spent a lot of time in record, stereo, hardware, and

electronics shops with my close friend and partner in mischief Chris Ken-

drick. We experimented with the primitive recording technologies of the

time, producing quite a few mix tapes.

It was not entirely surprising, therefore, when Robby Beyers, a high

school classmate who was an avid photographer, approached me about

“mixing” the soundtrack for a multi-screen slide show that he was plan-

ning for our high school graduation. Copyright infringement never

crossed my mind as Chris and I spliced together popular, copyright-pro-

tected musical compositions and sound recordings. We recorded this early

“mash-up” — featuring a clip from the soundtrack of the then-popular

television series Mash — on one track. Robby used a primitive computer

to place dissolve commands for the six carousel projectors on the other

track. The resulting show was a great success, bringing tears to the eyes of

parents, graduating seniors, and teachers alike. I don’t recall anyone sug-

gesting that we had violated copyright law — and in any case, the statute

for this song, it became a favorite as my appreciation for The Who’s music

grew.

“Teenage wasteland” is the most resonant refrain from The Who’s classic

“Baba O’Riley.” See Baba O’Riley,

IKIPEDIA

, http://en.wikipedia.org/

wiki/Baba_O%27Riley (last visited Nov. 5, 2013). It was released on The

Who’s Who’s Next, one of the two most memorable albums of my youth.

The Who’s rock opera Quadrophenia, released in 1973, offered a deeper,

more personal, sociological, and psychological perspective for my genera-

tion. The use of the “quadrophonic” metaphor and story-telling device

(four distinct and contradictory voices) resonated with confused teens strug-

gling to find their identity in a world defined by conventional molds.

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This American Copyright Life 209

of limitations has long since passed.

The overwhelming sentiments were

admiration for youthful ingenuity and the wonders of “modern” technol-

ogy — a “computerized” slide show. And perhaps that extraordinary

show — owing principally to Robby’s vision and talent — helped some of

our classmates better appreciate those of us who avoided the high school

spotlight.

Thus, if one were to have gauged my opinion as well as public opinion

of “My Generation” regarding the copyright system at that time, it would

no doubt have been neutral to overwhelmingly positive, as depicted in Fig-

ure 1. “My Generation” did not see copyright as an oppressive regime.

We thrived in ignorant bliss well below copyright’s enforcement radar and

were inspired by content industry products.

The situation could not be more different for adolescents, teenagers,

college students, and netizens today. Many perceive copyright to be an

overbearing constraint on creativity, freedom, and access to creative

works.

Although they might recognize copyright’s role in producing

works that they enjoy, they consider copyright laws to be punitive, chilling,

backward, and poorly attuned to the needs of their generation. I don’t, at

this juncture of the lecture, want to evaluate their perceptions and emo-

tions but rather to examine the reasons for this shift in perceptions. As

the foregoing personal history suggests, I relate to my students and my

teenage/twenty something sons in their passion for copyrighted works and

their desire to use technology to enhance their enjoyment of creativity and

to express themselves. I am moved by some of Hollywood’s releases, anx-

See 17 U.S.C. § 507 (2012).

Robby would go on to earn his B.S. in Chemical Engineering and M.S. and

Ph.D. in Materials Science at Stanford, where he became the photographer

for Stanford’s irreverent marching band. We would reconnect for two years

while I pursued a Ph.D. in economics at Stanford. Robby subsequently au-

thored more than forty technical papers, including invited review articles

for Solid State Physics and the Annual Review of Materials Science and led a

group at IBM’s Almaden Research Center, becoming a co-inventor on sev-

eral patents, including the basic patent on single-wall carbon nanotubes.

Although I had him pegged for a Nobel Prize, his career took a surprising

turn in the mid-1990s when he enrolled at Santa Clara University’s night

law school. Robby completed his J.D. in 2000 and M.B.A. in 2001. He is

now a partner in a leading Silicon Valley IP law practice, where he develops

patent portfolios for a number of computing and Internet-related

companies.

See

AMES

OYLE

, T

UBLIC

OMAIN

: E

NCLOSING THE

OMMONS OF THE

IND

(2008);

AWRENCE

ESSIG

, F

REE

ULTURE

: H

EDIA

SES

ECHNOLOGY AND THE

AW T O

OCK

OWN

ULTURE AND

ONTROL

REATIVITY

(2004);

IVA

AIDHYANATHAN

, C

OPYRIGHTS AND

OPYWRONGS

, T

ISE OF

NTELLECTUAL

ROPERTY AND

OW IT

HREATENS

REATIVITY

(2001);

AWRENCE

ESSIG

, C

ODE AND

THER

AW S O F

YBERSPACE

(2000).

\\jciprod01\productn\C\CPY\61-2\CPY202.txt unknown Seq: 10 1-MAY-14 10:19

210 Journal, Copyright Society of the U.S.A.

Figure 1

100

1960 1970 1980 1990 2000 2010

Source: completely made up; but possibly accurate

iously await broadcasts of The Big Bang Theory and Modern Family, cher-

ish great novels, and hope for new Foo Fighters releases.

This Act sets the stage for understanding why the post-Napster gener-

ation’s perceptions of the copyright system are far more important to the

functioning of the copyright system than were the perceptions of “My

Generation.” The story begins with the development of the copyright en-

forcement regime during the Analog Age — a period in which copyright

enforcement played a relatively modest role in the overall functioning of

the copyright system. We will then trace how the rules and institutions

that developed in the Analog Age backfired in the Internet Age.

A. Copyright Enforcement in the Analog Age

For much of the last century, the technology of reproducing works of

authorship as well as business practices made enforcement manageable. It

was costly to reproduce books and relatively easy to detect large-scale

piracy. Booksellers had ongoing relationships with publishers. Hence

they would have a lot of explaining to do if their competitors were selling

large amounts of best sellers and they had no sales. Purchasing supplies

from unauthorized sources exposed the renegade bookseller, thereby

jeopardizing their critical business relationships. Without the ability to hit

substantial volume, book piracy was a marginal business at best in devel-

oped economies with copyright laws.

Motion picture studios had an even tighter grip over their distribution

chain. They did not sell their product. Rather they leased film reels to

theaters and were paid based on box office revenues. The major problem

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This American Copyright Life 211

that the industry experienced was “bicycling”

— unscrupulous theater

owners who would “bicycle” films around the corner to another venue and

sneak in some off-the-books shows. The film industry hired investigators

to look for advertisements of such showings. The impact on the industry

was modest.

The music industry faced two substantial enforcement issues — com-

pliance with the public performance right and, much later, record piracy.

Music composers and publishers formed the American Society of Com-

posers, Authors and Publishers (ASCAP) in 1914 to protect public per-

formance rights. Through a series of test cases, ASCAP established broad

protection for musical compositions.

It was able to attract many of the

leading composers and music publishers of the day, enabling them to offer

a “blanket” license scaled to the business and institutions publicly per-

forming ASCAP compositions.

The idea was to charge a relatively mod-

est percentage fee across a large base of entities performing copyrighted

musical compositions in ASCAP’s growing inventory and use sampling

methods to divvy up the pool. The blanket system greatly economized on

enforcement costs, but entailed a large education and enforcement cam-

paign. The model began to generate substantial net revenue for distribu-

tion as the radio industry took off in the 1930s.

See

ERRY

EGRAVE

, P

IRACY IN THE

OTION

ICTURE

NDUSTRY

(2003); see

Bernard R. Sorkin, A Geriatric View of Motion Picture Piracy, 51

J. C

OPY-

RIGHT

’

237, 237 (2003).

See, e.g., Herbert v. Shanley, 242 U.S. 591 (1917) (holding that hotels and res-

taurants which performed music must compensate composers even if pa-

trons are not charged separately for the musical entertainment); Jerome H.

Remick & Co. v. General Electric Co., 16 F.2d 829 (S.D.N.Y. 1926) (radio

broadcasts); Buck v. Lester, 24 F.2d 877 (E.D.S.C. 1928) (motion picture

theaters); Buck v. Milam, 32 F.2d 622 (D. Idaho 1929) (dance hall); Buck v.

Jewell-La Salle Realty Co., 283 U. S. 191 (1931) (hotels).

See Robert P. Merges, Contracting into Liability Rules: Intellectual Property

Rights and Collective Rights Organizations, 84

. L. R

1293, 1328-40

(1996).

After initially offering the nascent industry low rates, ASCAP ramped up its

rates over 400% between 1931 and 1939. See American Society of Compos-

ers, Authors and Publishers,

IKIPEDIA

http://en.wikipedia.org/wiki/Ameri

can_Society_of_Composers,_Authors_and_Publishers (last visited Nov. 4,

2013). When ASCAP sought to double its rates again in 1940, radio broad-

casters formed a boycott of ASCAP music and formed the rival perform-

ance rights organization, Broadcast Music Inc. (BMI), to compete with

ASCAP. See

USSELL

ANJEK

, P

ENNIES

ROM

EAVEN

: T

MERICAN

OPULAR

USIC

USINESS IN THE

WENTIETH

ENTURY

(1996). By that

year, the broadcasting industry was bringing in over $200 million in gross

revenues, of which $4 million or about 2% was being paid out to ASCAP.

See Marcus Cohn, Music, Radio Broadcasters and the Sherman Act, 29

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212 Journal, Copyright Society of the U.S.A.

Like bookstores, record stores were disinclined to vend unauthorized

pirated goods. The record labels had long-term relationships with distri-

bution channels and could detect substantial variations in sales.

It was against this backdrop that Congress set out to draft compre-

hensive copyright reform — what would eventually become the Copyright

Act of 1976 — in the mid 1950s. In 1955, Congress authorized appropria-

tions over the next three years for comprehensive research and prepara-

tion of studies by the Copyright Office as the groundwork for general

revision. It was expected that this reform would be completed by the early

to mid-1960s. The bulk of the reform was completed by 1965, but contro-

versy over the treatment of the nascent cable television industry delayed

passage. The end of the story is well known — the long and complex

A significant part of the copyright system’s pathology relates to the

statutory damages regime, so it will be worthwhile tracing the develop-

ment of those provisions. From the nation’s founding, Congress has pro-

vided for the award of statutory damages for copyright infringements.

As Congress would explain in the lead-up to the 1976 Copyright Act, the

“need for this special remedy arises from the acknowledged inadequacy of

actual damages and profits in many cases” due to the inherent difficulties

of detecting and proving copyright damages.

What Congress had in

mind was the public performance of music. The Register of Copyright’s

1961 Report noted that

[i]n many cases, especially those involving public performances, the only

direct loss that could be proven is the amount of a license fee. An award

of such an amount would be an invitation to infringe with no risk to the

infringer.

Based on these considerations, the Register concluded that the princi-

ple of statutory damages appropriately serves to assure adequate compen-

L.J

. 407, 412-13 (1941). Radio royalties comprised about two-thirds of AS-

CAP revenues at that time.

See

ILLIAM

S. S

TRAUSS

, S

TUDY

. 22, T

AMAGE

ROVISIONS OF THE

OPYRIGHT

, (1956)

, reprinted in 1

MNIBUS

OPYRIGHT

EVISION

EGISLATIVE

ISTORY

at ix-32 (George S. Grossman ed., 2001) (summariz-

ing the development of copyright damages law through the 1909 Act); see

also Stephanie Berg, Remedying the Statutory Damages Remedy for Secon-

dary Copyright Infringement Liability: Balancing Copyright and Innovation

in the Digital Age, 56 J.

OPYRIGHT

’

265 (2009).

See

U.S. C

OPYRIGHT

FFICE

, R

EPORT OF THE

EGISTER OF

OPYRIGHTS ON

THE

ENERAL

EVISION OF THE

U.S. C

OPYRIGHT

102 (July 1961)

[hereinafter cited as “Register’s 1961 Report”].

See id.

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This American Copyright Life 213

sation for harm and “to deter infringement.”

The Register further

explained that:

the courts should, as they do now, have discretion to assess statutory

damages in any sum within the minimum and maximum [ranges]. In ex-

ercising this discretion the courts may take into account the number of

works infringed, the number of infringing acts, the size of the audience

reached by the infringements, etc. But in no case should the courts be

compelled, because multiple infringements are involved, to award more

than they consider reasonable.

Accordingly, Congress ultimately retained, with some updating and revi-

sion, statutory damages for copyright infringement.

This deterrent regime worked relatively well throughout copyright

law’s long history. The risk of incurring large fines channeled restaurants,

See id. at 103.

See id. at 105.

See Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541 (codified at 17

U.S.C. § 504). The 1976 Act provided that:

(1) Except as provided by clause (2) of this subsection, the copyright

owner may elect, at any time before final judgment is rendered, to

recover, instead of actual damages and profits, an award of statutory

damages for all infringements involved in the action, with respect to

any one work, for which any one infringer is liable individually, or for

which any two or more infringers are liable jointly and severally, in a

sum of not less than $250 or more than $10,000 as the court considers

just. For the purposes of this subjection, all the parts of a compilation

or derivative work constitute one work.

(2) In case where the copyright owner sustains the burden of prov-

ing, and the court finds, that infringement was committed willfully,

the court in its discretion may increase the award of statutory dam-

ages to a sum of not more than $50,000. In a case where the infringer

sustains the burden of proving, and the court finds, that such infringer

was not aware and had no reason to believe that his or her acts con-

stituted an infringement of copyright, the court it its discretion may

reduce the award of statutory damages to a sum of not less than $100.

The court shall remit statutory damages in any case where an in-

fringer believed and had reasonable grounds for believing that his or

her use of the copyrighted work was a fair use under section 107, if

the infringer was: (i) an employee or agent of a nonprofit educational

institution, library, or archives acting within the scope of his or her

employment who, or such institution, library, or archives itself, which

infringed by reproducing the work in copies or phonorecords; or (ii) a

public broadcasting entity which or a person who, as a regular part of

the nonprofit activities of a public broadcasting entity (as defined in

subsection (g) of section 118) infringed by performing a published

nondramatic literary work or by reproducing a transmission program

embodying a performance of such a work.

17 U.S.C. § 504 (1976).

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214 Journal, Copyright Society of the U.S.A.

bars, dance halls and other establishments publicly performing copy-

righted works into licensing arrangements with the collecting societies. It

also discouraged commercial infringement enterprises. The problem of

non-commercial infringement rarely arose because of the inherent difficul-

ties of reproducing high quality copies of records, books, and films and

finding scalable commercial outlets for counterfeit goods in the analog

age. Copyright industries rarely if ever needed to pursue consumers for

tempered by judicial discretion garnered broad support in the delibera-

tions over the 1976 Act and did not galvanize significant public opposition

before the Internet Age.

Serious concerns about record piracy would not emerge until the ad-

vent of home taping equipment in the 1970s.

As “My Generation”

learned, vinyl was a successful technological protection measure.

Reel

to reel decks were cumbersome and even a high quality Teac

™

cassette

deck introduced substantial distortion. And copies of copies were awful.

Tape piracy simply did not scale. The main usage of home taping was for

music portability — car stereos and the Sony Walkman, which did not

reach the market until 1980.

B. The Gathering Digital Copyright Storm

ter I graduated from high school as a result of a startling new consumer

technology: the video cassette recorder (VCR).

The Sony Betamax

would for the first time allow consumers to record a show on one channel

while they watched a show on another. Instead of embracing the VCR,

The British Phonographic Industry launched an anti-infringement campaign in

the 1980s with the slogan “Home Taping Is Killing Music.” See Home Tap-

ing Is Killing Music,

IKIPEDIA

http://en.wikipedia.org/wiki/Home_Taping

_Is_Killing_Music (last visited Nov. 4, 2013). The logo portrayed a cassette-

shaped skull and cross bones with the words “And It’s Illegal.” It is unclear

whether the campaign discouraged home taping, but it did generate some

amusing ridicule. The Dead Kennedys left the back side of their “In God

We Trust Inc.” cassette blank. The caption read: “Home taping is killing

record industry profits! We left this side blank so you can help.” Other

parodies included: “Home Sewing Is Killing Fashion” and “Home Taping Is

Killing the Music Industry, and It’s Fun.”

See Peter S. Menell, Envisioning Copyright Law’s Digital Future, 46

N.Y.L.

. L. R

. 63, 103-06 (2002).

See generally Peter S. Menell & David Nimmer, Unwinding Sony, 95

. L.

941 (2007) (chronicling the litigation over the VCR). Tensions be-

tween the technology and content were playing out within Washington cir-

cles, see, e.g.,

’

OMM

’

NON

ECHNOLOGICAL

SES OF

OPYRIGHTED

ORKS

, F

INAL

EPORT

(1978) (photocopying and com-

puters), but those debates were far removed from average consumers.

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This American Copyright Life 215

Universal Studios became concerned about how this new consumer tech-

nology might affect one of its technology business ventures — a multi-

million dollar, but still nascent, investment in videodisc technology. Vide-

odisc promised to create a market for pre-recorded video content, much

like phonorecords. As conceived at the time, however, videodisc technol-

ogy would not have recording capability.

As a result, Universal sought to persuade Sony, with whom it had

other business dealings, to drop its VCR business plans. When Sony de-

clined, Universal sued for copyright infringement with the support of

much of Hollywood. The litigation, which would drag on for eight years

and two arguments to the Supreme Court, raised serious questions for the

public over Hollywood’s exertion of power over consumer electronics in-

novators and the consuming public. The ultimate resolution — rejecting

Universal’s lawsuit — quelled public concerns and the copyright system

once again faded from public consciousness.

Such concerns would surface again surrounding the introduction of

Digital Audio Tape (DAT) technology into the United States in the late

1980s. I had just finished my clerkship with Judge Newman and was em-

barking on an academic career when the Office of Technology Assessment

(OTA), a research arm of the U.S. Congress, invited me to serve on the

Our charge was to study

the prevalence of home copying of copyrighted works and to assess policy

options. A consumer survey conducted for our panel in 1988 determined

that approximately 40% of Americans over the age of 10 had taped re-

corded music in the past year — principally for the purpose of “space

shifting” (listening to compact discs on car cassette players). Most of

those surveyed considered this to be an acceptable behavior. Although

music copyright owners expressed concern about the prevalence of home

taping and that the introduction of DAT technology into the United States

would result in rampant piracy, concerns subsided with the passage of the

Audio Home Recording Act (AHRA)

a short time later. This legisla-

tion largely insulated consumers from liability while requiring modest

technological restrictions on devices and providing for new revenue

streams for copyright owners (levies on media and devices). When the

DAT format failed to gain favor in the commercial marketplace, the rela-

tively low level public expressions of concern subsided.

Ongoing advances in computer technology combined with the rollout

of the Internet in the early to mid 1990s gradually raised tensions over

U.S. C

ONGRESS

, O

FFICE OF

ECH

. A

SSESSMENT

, C

OPYRIGHT AND

OME

OP-

YING

: T

ECHNOLOGY

HALLENGES THE

, OTA-CIT-422 (1989)

See Pub. L. No. 102-563, 106 Stat. 4237 (1992) (codified at 17 U.S.C.

§§ 1001–10).

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216 Journal, Copyright Society of the U.S.A.

fora and among the cognoscenti — content industry organizations, con-

sumer electronics manufacturers, and a nascent group of digital media and

Internet companies and coalitions.

After the unsuccessful 1994 criminal prosecution of David

LaMacchia, an MIT student who had allegedly facilitated massive piracy

by operating a free online bulletin board service widely used for sharing

copyrighted computer software and videogames, Congress enacted the No

Electronic Theft (NET) Act in 1997.

The NET Act expanded criminal

anything of value, including other copyrighted works, and reproduction or

distribution in any 180-day period of copyrighted works with a total retail

value of more than $1,000. In addition, the NET Act ramped up penalties.

The House Report highlighted the economic and employment costs of

software piracy to the software industry and the expanded piracy threats

posed by the Internet.

Congressional hearings emphasized the need to

confront the non-economic motivations of self-aggrandizing “Robin

Hood”-like computer hackers.

The NET Act passed without attracting

much public attention outside of a relatively small circle of computer

scientists.

C. The Perfect Copyright Storm

The legislative sentiments expressed during the NET Act delibera-

tions in combination with new copyright legislation and a surprising Su-

preme Court decision would soon create conditions for the “Perfect

(Copyright) Storm.”

No Electronic Theft (NET) Act, Pub. L. No. 105-147, 111 Stat. 2678 (1997); see

Eric Goldman, A Road to No Warez: The No Electronic Theft Act and

Criminal Copyright Infringement, 82

. L. R

. 369, 373-77 (2003).

See

H.R. R

. N

. 105-339, at 4 (1997); see also Rep. Howard Coble, The

Spring 1998 Horace S. Manges Lecture – The 105th Congress: Recent Devel-

opments in Intellectual Property Law, 22

OLUM

.-VLA J.L. & A

RTS

269

(1998) (reprinting the House Report with some additional commentary by

Rep. Coble).

See 143 Cong. Rec. S12,689, S12,691 (daily ed. Nov. 13, 1997) (statement of

Sen. Kyl) (targeting software pirates who seek notoriety instead of money);

143 Cong. Rec. H9883, H9886 (daily ed. Nov. 4, 1997) (statement of Rep.

Cannon) (targeting “Robin Hood” types); 143 Cong. Rec. H9883, H9885

(daily ed. Nov. 4, 1997) (statement of Rep. Frank) (the Act aims at “seri-

ously maladjusted” individuals who infringe not for profit but to show their

smarts and get attention).

I borrowed the title from the infamous Halloween Nor’easter of 1991 — the

confluence of a seasonal North Atlantic storm system that combined with

Hurricane Grace to bring about a devastating storm off the New England

coast. Sebastian Junger’s best-selling novel, The Perfect Storm (1997),

chronicled the destruction of the Andrea Gail and loss of its fishing crew.

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This American Copyright Life 217

ing the groundwork for a new copyright regime for the digital age. Presi-

dent Clinton established the Information Infrastructure Task Force

(“IITF”) in 1993 to develop a comprehensive framework. The IITF pro-

duced a “white paper” calling for strengthening copyright protections and

prohibiting circumvention of technological protection measures put in

place by copyright owners.

The nascent ISP industry organized opposi-

tion to the draft 1995 legislation, resulting in the bills stalling in committee.

The Clinton Administration took its proposals to the World Intellectual

Property Organization’s (WIPO) diplomatic conference the following

year. A compromise was achieved with negotiators agreeing to the anti-

circumvention provision in conjunction with safe harbors for Internet ser-

vice providers (ISPs).

Congress would implement the WIPO copyright

treaties in the Digital Millennium Copyright Act of 1998 (DMCA).

Meanwhile, in a decision driven by forces unrelated to the digital age

that would significantly affect digital copyright enforcement, the Supreme

Court ruled in Feltner v. Columbia Pictures Television, Inc.

that the Sev-

enth Amendment required that the determination of statutory damages

fall within the province of the jury in copyright cases in which a party had

requested a jury trial. This had the practical effect of thwarting Congress’s

intent to have experienced jurists exercise discretion in awarding statutory

damages

and increasing the uncertainty surrounding statutory damage

awards. Congress would compound this effect by enacting the Digital

Theft Deterrence and Copyright Damages Improvement Act of 1999,

ramping up the statutory damage range to $30,000 per infringed work and

up to $150,000 per infringed work for willful infringement.

These developments set the stage for the “Perfect Copyright Storm”

— a strong deterrent copyright regime with potentially massive civil penal-

ties administered by lay jurists, expanded criminal liability, and new and

untested safe harbors. The storm’s catalyst came from rapid advances in

digital and Internet technology and broadband rollout.

George Clooney and Mark Wahlberg would star in Warner Bros.’s 2000

dramatization of the story. The film’s release coincided with copyright law’s

perfect storm.

See IPNII White Paper, supra note 10; cf. Pamela Samuelson, The Copyright

Grab,

IRED

(Jan. 1996), http://www.wired.com/wired/archive/4.01/white

.paper_pr.html.

See WIPO Copyright Treaty, Dec. 20, 1996,

S. T

REATY

. N

. 105-17, 36

I.L.M. 65 (1997); WIPO Performances and Phonograms Treaty, Dec. 20,

1996,

S. T

REATY

. N

105-17, 36 I.L.M. 76 (1997).

Pub. L. No. 105-304, 112 Stat. 2860.

523 U.S. 340 (1998).

See Register’s 1961 Report, supra note 25, at 105.

Pub. L. No. 106-160, 113 Stat. 1774.

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218 Journal, Copyright Society of the U.S.A.

The Internet storm struck with unprecedented ferocity in mid 1999.

Napster’s peer-to-peer file sharing service captivated America’s youth,

providing nearly instantaneous, convenient, and free access to an unprece-

dented collective archive. Anyone with a computer and access to the In-

ternet could share and access just about any sound recording. Prior to

Napster, the Internet was a useful curiosity. After Napster, the Internet

was exciting. For that reason, I view Napster’s arrival as the birth of the

digital copyright. Peer-to-peer technology would quickly encompass all

manner of works of authorship.

The perfect copyright storm would unfold over more than a decade as

of a dynamic of promiscuous distribution platforms unlike anything seen

before or anticipated. As bandwidth, storage capacity, and computer

speed continued to improve, the challenges of enforcing copyright law

continued to grow.

All of the storm planning that went into the WIPO

little to prepare netizens, online service providers, and copyright owners

for the onslaught. The storm surge knocked out much of the music copy-

right system in one fell swoop. The next decade would reveal many in-

sights about the interplay of copyright enforcement and public perceptions

of the copyright system.

D. The Digital Copyright Enforcement Saga

Most of my students found file-sharing both irresistible and wonder-

ful. Professor Lawrence Lessig warned of content owners locking down

the Internet and freedom of expression.

Several other scholars called

upon Congress to establish compulsory licenses for file-sharing.

Hollywood looked to invoke copyright law’s deterrence regime and to

cash in on its investments in stronger remedies. Napster sought to test the

DMCA’s online service provider safe harbor and Sony’s staple article of

commerce doctrine.

The Recording Industry Association of America (RIAA) won the ini-

tial battle, resulting in Napster’s demise by July 2001. But the war was

See Napster,

IKIPEDIA

http://en.wikipedia.org/wiki/Napster (last visited Nov.

4, 2013).

See Menell, supra note 31.

See

AWRENCE

ESSIG

, T

UTURE OF

DEAS

: T

ATE OF THE

OMMONS

IN A

ONNECTED

ORLD

200 (2001).

See

ILLIAM

W. F

ISHER

III, P

ROMISES

EEP

: T

ECHNOLOGY

, L

AND

THE

UTURE OF

NTERTAINMENT

(2004); Neil Weinstock Netanel, Impose a

Noncommercial Use Levy to Allow Free Peer-to-Peer File Sharing, 17

ARV

. J.L. & T

ECH

. 1 (2003).

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This American Copyright Life 219

only just beginning as more versatile file-sharing networks had emerged.

Of perhaps greater import, the RIAA was suffering heavy casualties in the

court of public opinion. Their most effective spokespersons — recording

artists — were divided

and angered by record labels’ latest machinations

to undermine their interests.

The litigation between the RIAA and Nap-

ster produced a steady flow of news reports fanning the flames of discon-

tent over the recording industry’s enforcement efforts.

Most file-sharers did not perceive their actions to be immoral.

Even

those netizens who recognized that file-sharing treated artists unfairly

See Brad King, While Napster Was Sleeping,

IRED

(Jul. 24, 2001), http://www

.wired.com/news/mp3/1,1285,45480,00.html (noting that “Napster’s chief ri-

vals — Kazaa, Bearshare, Audiogalaxy and iMesh — have seen significant

upswings in their traffic”).

See Courtney Love, Courtney Love Does the Math: The Controversial Singer

Takes on Record Label Profits, Napster and “Sucka VCs”,

ALON

(Jun. 14,

2000), http://www.salon.com/2000/06/14/love_7; Janis Ian, The Internet De-

bacle – An Alternative View,

ERFORMING

ONGWRITER

AGAZINE

(May

2002), http://www.janisian.com/reading/internet.php; John Borland, Rapper

Chuck D Throws Weight Behind Napster,

C—

NET

(May 1, 2000) (seeing

Napster as a unique promotional tool for lesser known artists), http://news

.com/2100-1023-239917.html.

See David Nimmer & Peter S. Menell, Sound Recordings, Works For Hire, and

the Termination-of-Transfers Time Bomb, 49

J. C

OPYRIGHT

’

387, 388-

93 (2001) (chronicling the RIAA’s backroom deal-making that resulted in a

“technical amendment” to the Copyright Act cutting off recording artists’

right to terminate transfers of copyrights; and the decision to rescind the

amendment when it came to light just as Napster emerged and labels

needed artists’ support); Lital Helman, When Your Recording Agency

Turns into an Agency Problem: The True Nature of the Peer-to-Peer Debate,

50 IDEA 49, 51 (2009) (observing that “the anti-file-sharing course adopted

by the music industry is best understood as an agent-principal problem. It is

aimed at strengthening the control for the agents, namely the record com-

panies’ control over the market, to the detriment of the principals, namely

the artists.”); Note, Exploitative Publishers, Untrustworthy Systems, and the

Dream of a Digital Revolution for Artists, 114

ARV

. L. R

. 2438 (2001)

(highlighting the historic subjugation of creators by publishers and record

labels).

See Declan McCullagh, Napster’s Million Download March,

IRED

EWS

(Mar. 28, 2001); http:// www.wired.com/news/politics/0,1283,42676,00.html

Amy Harmon, Napster Users Mourn End of Free Music,

N.Y. T

IMES

, Nov.

1, 2000, at C1; Amy Harmon, The Napster Decision: The Reaction; Napster

Users Make Plans for the Day the Free Music Dies, N.Y.

IMES

, Feb. 12,

2001, at C1; Amy Harmon, Online Davids vs. Corporate Goliaths, N.Y.

IMES

(Aug. 6, 2000), http://www.nytimes.com/library/review/080600nap

ster-review.html; Declan McCullagh, Digital Copyright Law on Trial,

IRED

EWS

(Jan. 18, 2000), at http://www.wired.com/news/politics/o,1283

,33716,00.html.

See Ram D. Gopal, & G. Lawrence Sanders, Digital Music and Online Sharing:

Software Piracy 2.0?, 46

OMM

OF THE

ACM

107, 116 (2003) (finding “no

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220 Journal, Copyright Society of the U.S.A.

wondered why the recording industry was unable to roll-out user-friendly

authorized music websites. Although the major record labels had been

planning their own online music stores before Napster’s emergence,

their efforts lacked the variety, functionality, and flexibility of peer-to-

peer networks.

By the time that the major labels opened their catalogs

up to Apple’s iTunes Music Store in April 2003,

many music fans had

become accustomed to file-sharing.

Soon after Napster’s demise, the RIAA targeted the next wave of file-

sharing services — Grokster, Morpheus, and KaZaA — filing suit in the

Central District of California in October 2001. In April 2003, Judge Ste-

phen Wilson held that even though these defendants “may have intention-

ally structured their business to avoid secondary liability for copyright

infringement, while benefitting from the illicit draw of their wares,” they

nonetheless fell within the Sony staple of commerce safe harbor because

their file-sharing services were capable of substantial non-infringing use.

The RIAA vowed to appeal Judge Wilson’s decision, but an appeal could

take years and might well result in the judgment being affirmed. Thus, the

RIAA faced a difficult decision — whether to sue file-sharers.

Like many intellectual property scholars, I was thrust into public de-

bate over these difficult issues. I had been invited to prepare a paper on

the question “Can Our Current Conception of Copyright Law Survive the

Internet Age?” in honor of the Honorable Jon O. Newman, the judge for

whom I had clerked, at the celebration of his thirty years on the Federal

bench.

I was invited to moderate a panel at the April 2002 Computers,

Freedom & Privacy (CFP) Conference on “Copyright and Innovation: The

significant deterrent effect on music piracy through legal and education

campaigns”); John Leland, Praise God and Pass the Music Files,

N.Y. T

IMES

(Apr. 25, 2004), http://www.nytimes.com/2004/04/25/weekinreview/ideas-

trends-praise-god-and-pass-the-music-files.html (quoting a Christian rock

music downloader opining: “[i]f the money went into the artist’s pocket, I’d

have more of a dilemma. But the companies make enough money.”); Geof-

frey Neri, Note: Sticky Fingers or Sticky Norms? Unauthorized Music

Downloading and Unsettled Social Norms, 93

. L.J

. 733, 742 (2005).

See infra text accompanying notes 161–63.

See Menell, supra note 31, at 172-73.

See iTunes Store,

IKIPEDIA

, http://en.wikipedia.org/wiki/ITunes_Store.

See Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 259 F. Supp. 2d

1029, 1046 (C.D. Cal. 2003).

See Justin Hughes, On the Logic of Suing One’s Customers and the Dilemma of

Infringement-Based Business Models, 22

ARDOZO

RTS

& E

. L.J. 725

(2005).

See Symposium – Judge Jon O. Newman: A Symposium Celebrating His Thirty

Years on the Federal Bench and an Occasion to Reflect on the Future of

N.Y.L. S

. L. R

1 (2002-2003).

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This American Copyright Life 221

P2P Experience.”

And perhaps most challenging of all, my older son

Dylan, who was nearing his twelfth birthday, couldn’t understand why I

was not as enthusiastic as he and his friends about file-sharing technology.

Did I not support his love of technology and music? Of course I did, but I

also worried about incentives for the next generations of creators — in-

cluding him. Let’s just say that this was not the response he was looking

for.

Whereas many in the academy had quickly taken sides and formu-

lated solutions, I was genuinely conflicted about the larger policy issues.

The Internet was developing rapidly and I did not feel that we had enough

information about the interplay of the Internet and creative ecosystems to

make definitive judgments about the proper course. It would take some

time to see how the online marketplace responded. My hope was that

competition and technological advance would bring about a balanced solu-

tion, but it was clear that competing with free was complicating the task of

start-ups, like emusic.com, to gain a foothold while pushing the major la-

bels to explore licensing. I was teaching a course on intellectual property

in the entertainment industries and was disheartened by the changes un-

folding in the Bay Area music community. My colleagues working in the

music field were moving to other pursuits as funding for “baby bands”

dried up. I had started an annual conference on “Digital Music” at the

Berkeley Center for Law & Technology and was dismayed by the deep

and growing rifts between Silicon Valley and Hollywood, labels and artists,

and law students and copyright law. I was passionately in the middle, per-

haps the loneliest place of all.

This angst prompted me to explore the larger institutional forces

shaping copyright law in my contribution to the symposium honoring

Judge Newman. The resulting article

— then the longest of my career at

105 pages — avoided the simple answers and advocacy that many were

offering. It systematically examined the technological changes, industry

structures, legal environment, and evolving social and political landscape.

Notwithstanding the dynamism of these forces, the article concluded that

the digital revolution could be seen increasingly to shift resources and

pressure for reform toward copyright enforcement, new business models

and platforms, antitrust concerns, and a more general transformation of

The best that I could foresee was an uncertain enforcement war of attri-

tion in which technology, markets, politics, and social norms would deter-

mine the path forward.

See

OMPUTERS

, F

REEDOM AND

IRACY

ONFERENCE

, P

ROGRAM

(Fri-

day, Apr. 19, 2002), http://www.cfp2002.org/program/friday.shtml.

See Menell, supra note 31.

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222 Journal, Copyright Society of the U.S.A.

The CFP conference panel would delve directly into that abyss. The

conference posed the following topics:

The P2P lawsuits are piling up: Napster, Scour, Aimster, Morpheus. Al-

though the rhetoric is about piracy, the litigation is about technology. In

every P2P case to date, copyright owners have targeted the technologists,

instead of the end-users doing the infringing. What does this mean for the

peer-to-peer industry, and what lessons should be drawn by other tech-

nology innovators? Are we entering a world where technologists will be

held liable for the activities of their end-users?

The panel comprised Fred von Lohmann from the Electronic Frontier

Foundation, Sarah Deutsch from ISP Verizon, and Frank Hausmann from

Centerspan, a company developing a walled (digital rights management),

authorized, content distribution platform.

Fred began the discussion by

noting that he was co-counsel on behalf of Morpheus in the large file-

sharing litigation case unfolding in Los Angeles.

He then sketched the

state of litigation involving peer-to-peer technology, summarizing the

Napster, Scour, Grokster/Morpheus/KaZaA, ReplayTV, MP3Board.com,

and ISP-related notice and take-down and repeat infringer termination lit-

igation. He concluded with the following observation:

Finally the last category, and strangely enough, the empty category is any

lawsuits or legal action against end-users. We have not yet seen, at least I

have not heard, any public, publicly disclosed lawsuits against actual

peer-to-peer users, end-users of peer-to-peer software, even though eve-

ryone admits it’s really they who are infringing copyright. Everyone else

on this list that we see on this list, the most that you can say about them,

is perhaps that they have some secondary or indirect liability because of

their involvement. In none of the cases involved here, well with the ex-

ception of ReplayTV for some weird reasons that are not really that im-

portant, but all of these cases use copyright theories that involve so-called

contributory or vicarious liability. In other words, you’re going to be held

responsible for what your end-users are up to. We have not seen any

litigation yet against the actual end-users who are sharing “Blackhawk

Down” or whatever it might be that is causing all this trouble.

After Frank described Centerspan’s technology and Sarah discussed

service providers’ perspectives regarding peer-to-peer issues, I probed

See Panel on Copyright and Innovation: the P2P Experience, Association for

Computing Machinery (ACM), 12th Annual Computers, Freedom & Pri-

vacy Conference, San Francisco, California (Apr. 19, 2002), http://www

.cfp2002.org/program. An audio recording of the panel is available on the

ACM’s Web site under the “Source Materials” tab: http://dl.acm.org/cita-

tion.cfm?id=543482.564564&coll=DL&dl=ACM&preflayout=tabs. [herein-

after “CFP 2002 Panel Recording”].

That litigation would eventually result in the Supreme Court’s decision in

MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

See CFP 2002 Panel Recording, supra note 62, beginning at 17:22 (time

signature).

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This American Copyright Life 223

Fred’s comment about it being “strange” that content owners had not yet

sued end-users over peer-to-peer activity. I began by noting the three

words animating the conference: “computers, freedom, privacy.” I then

proceeded:

I can interpret his presentation as, well, the problem is people [con-

tent owners] are aiming at the deeper pockets, the intermediaries, the

creators or inventors/innovators, and perhaps they should direct their en-

ergy down to the bottom or the decentralized. But from a societal stand-

point, I mean that is in some ways the greatest threat to privacy in that it

would require discovery, it would require invading the household. And

so it’s not as if privacy problems could be solved. There’s another side,

perhaps a more cynical interpretation of your comment which is we dare

them because we think that will shift the political balance and we’ll be

able to push some other objectives. But if I took your suggestion literally,

it would be a disaster for personal privacy and could potentially, espe-

cially in this post-terrorism world, dramatically shift what we do consider

our most sacred places. I don’t feel so exposed with regards to our ISP,

but I do feel very exposed with regards to my hard drive. And how do

you resolve that?

After acknowledging that this was a “fair point,”

Fred proceeded to

explain that content owners “are hunting the wrong target and in the

course of doing so are going to cause enormous collateral damage” by

chilling technology innovators. He analogized suing peer-to-peer enter-

prises to holding Detroit automobile manufacturers “liable for every per-

son that speeds in America because they sell cars capable of speeding.”

Fred then addressed what he termed the “harder question”: whether con-

tent owners should “be going after end-users?”

Well, you know frankly that is not in my mind such a radical statement —

right, that’s always been the rule in copyright. If there are pirates, you

find and, you know, go after the pirates. And that’s always been the rule

and it’s certainly been true to have someone singled out and sued,

whether criminally or civilly, for copyright infringement is absolutely an

enormous invasion in that person’s life. However, it’s an invasion that

has always been contemplated under the law.

I was surprised to see him go down this path. I shifted to another

angle — what did the panel think about a system whereby enforcement

focused on the “middle layers [of the content distribution ecosystem] so

that we as individuals in our homes don’t worry about the specter of gov-

ernment coming in and searching our files.”

Frank jumped in to talk

about the importance of educating children not to steal copyrighted con-

tent, while noting that “if you are a thief, [the government] can get an

See id. at 57:21.

See id. at 58:54.

See id. at 1:00:11.

See id. at 1:02:00.

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224 Journal, Copyright Society of the U.S.A.

order and come and search your hard drive and prosecute you for that, as

Fred was saying. I personally believe that the end-user should be prose-

cuted. I don’t think that the service provider should be dragged into this

. . . .”

Fred then responded to my suggestion that suing end-users was a cyn-

ical strategy aimed at generating a political backlash at the cost of substan-

tial invasion of privacy interests and disruption:

And I’ll say in response to Peter I do have what he refers to as the more

cynical view. I’m sure that I actually think of it as the more democratic

view, which is that, you know, the last surveys that I have seen suggested

that there are upwards of 40 million Americans are using the various file-

sharing, you know, software products that are available. And I first want

to say let’s not leap to the conclusion that they’re all guilty of copyright

infringement because I think that’s unfair as well. There are perfectly

legitimate uses for technologies like this. There are. Small publishers

have reasons to want access to this kind of efficiency as much as big pub-

lishers do. So, yeah, sure, a large number of them are probably infring-

ers. Now, if we actually lived in a world where content owners had to

decide — do I sue 40 million Americans or do I come with some other

solution that more adequately balances my business needs with, you

know, the reality of technology, I am pretty confident that either they

would go and innovate as they did when the VCR arrived and find a way

to deliver content that is compelling to consumers, that drives the pirates

essentially out of business, which they did effectively with the VCR. And

frankly, I think that they are in the midst of doing that with the DVD

right now. Warner Home Video has said they’re going to sell all of their

DVDs for less than $10 per title, at that moment I don’t think there’s

going to be as much need to spend eight hours downloading a low quality

film from a peer-to-peer file-sharing network. You know, there are ways

to do this and I’m confident that if the choice was to sue 40 million Amer-

icans or go out there and do the work to come up with compelling prod-

uct, they would find compelling products.

Fred then noted that there are other solutions, such as compulsory

licenses, to consider.

He then returned to the political catalyst theme: “I

do think that the notion that 40 million Americans are nothing better than

common thieves, you know, copyright law is a statute that is decided upon

by a majority of our representatives in Congress. And, you know, it can

be changed.”

Sarah interjected that content owners “rarely ever sue the

end-user. Even just a few targeted suits, not that I would like to see this,

but I think that it would at least send the message across.” I suggested

that Fred might welcome suits against users to provoke a popular backlash

against Internet copyright enforcement to 40 million people that it’s ille-

See id. at 1:04:09.

See id. at 1:04:31.

See id. at 1:06:28.

See id. at 1:06:06.

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This American Copyright Life 225

gal.”

Fred concurred that “a few targeted suits would certainly clarify

the message.”

It was perhaps not that surprising that Sarah and Frank deflected at-

tention from their clients and mentioned the possibility of suing end-users.

But when EFF’s senior copyright attorney publicly calls attention to the

“strangely” “empty category” of lawsuits against end-users, comments that

content owners “are hunting the wrong target,” observes that suing end-

users would not be “such a radical statement” in view of the fact going

after the pirates has “always been the rule” in the copyright field, ex-

presses that the privacy invasion of suing end-users is “an invasion that has

always been contemplated under the law,” acknowledges that a “large

number [of 40 million American file-sharers] are probably infringers,” and

notes that “a few targeted suits would certainly clarify the message,” the

press takes notice.

As a copyright policy scholar, I was rather surprised

by these statements. Just as I was not as quick as many of my academic

colleagues to jump on the Napster bandwagon, I was deeply skeptical

about the wisdom of suing end-users.

My third challenge — dealing with my older son’s desire to use file-

sharing technology to quench his thirst for music — proved the most fulfil-

ling. Everyone in the family received iPods for Chanukah that year. We

spent our vacation ripping our massive CD collection onto the family com-

puter and filling in gaps in the catalog at record stores. And by the follow-

ing spring, the iTunes Music Store opened. The kids got part of their

allowance in iTunes. It turns out that an iPod and iTunes were even better

than Grokster — at least to nine- and twelve-year-old kids. Crisis averted

just in time.

By September 2003, four months after Judge Wilson’s Grokster deci-

sion and the opening of the iTunes Music Store, the RIAA filed its first

suit against end users of file-sharing technology. Although our family was

spared, the RIAA targeted 261 file-sharers in its first action,

prompting

the Electronic Frontier Foundation to initiate a new campaign: “RIAA v.

See id. at 1:07:33.

See id. at 1:08:19.

See Copyright,

ASHINGTON

NTERNET

AILY

(Apr. 23, 2002) (quoting Fred’s

statement that search of alleged infringers’ devices is “an invasion that’s

contemplated in the law . . . . A few targeted lawsuits would get the mes-

sage across”); see also Brian Garrity, Victory Eludes Legal Fight Over File

Swapping The Music Industry May Win a Few Battles While Losing Multiple

Logistical Wars,

ILLBOARD

Apr. 13, 2002, at 86 (quoting Fred von Loh-

mann stating: “[i]f this fight were really about stopping piracy, you would

have expected some pirate to actually be sued.”).

See Amy Harmon, The Price of Music: The Overview: 261 Lawsuits Filed on

Music Sharing,

N.Y. T

IMES

, Sept. 9, 2003, at A1.

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226 Journal, Copyright Society of the U.S.A.

The People.”

The record companies intended to test copyright law’s de-

terrence theory, eventually suing 35,000 defendants.

The lawsuits managed to scare the bejesus out of the recipients,

friends, and acquaintances of the many recipients. But it did not achieve

compliance with copyright law. Figure 2 tracks per capita record sales in

the United States from 1973 through 2008. The average number of albums

purchased per person in the United States steadily rose — with some dips

due to economic downturns and the disco era (good for dance clubs; bad

for record sales) — from 1973 through 1999, doubling from just under

three albums per year to nearly six albums per year. Over the ensuing

decade, per capita sales would drop more than half to below 1973 levels.

Although some economists contend that the precipitous decline in record

sales following 1999 had nothing to do with file-sharing,

many empirical

studies indicate otherwise.

Furthermore, the litigation proved to be especially costly in term of

legal fees, legal doctrine, and most importantly, public opinion. Although

the overwhelming majority of defendants settled with payments of $3,000

to $5,000,

several defendants sought to defeat these lawsuits by arguing

that it is not enough for the copyright owners to prove that a forensic

investigator hired by the copyright owner had located one of its sound

recordings in the defendant’s share folder and downloaded the file.

Rather, they maintained that the Copyright Act’s distribution right cannot

See RIAA v. The People: Five Years Later,

LECTRONIC

RONTIER

OUNDA-

TION

(2008)

, https://www.eff.org/wp/riaa-v-people-five-years-later.

See Felix Oberholzer-Gee & Koleman Strumpf, The Effect of File Sharing on

Record Sales: An Empirical Analysis, 115

J. P

. E

CON

. 1 (2007).

See Stan J. Liebowitz, The Metric is the Message: How Much of the Decline in

Sound Recording Sales Is Due to File-Sharing? 9 (2011), available at http://

jindal.utdallas.edu/files/filesharing-metrics-11-2.pdf (reviewing the major

studies of file-sharing and concluding that more than half attribute all of the

decline in record sales to file-sharing and that much of the remainder attri-

bute half of the decline to file-sharing); Stan J. Liebowitz, File Sharing: Cre-

ative Destruction or Just Plain Destruction?, 49 J

.L. & E

CON

. 1 (2006); cf.

Peter DiCola, Money from Music: Survey Evidence on Musicians’ Revenue

and Lessons for Copyright Incentives, 55

RIZ

. L. R

. 301 (2013); Joel

Waldfogel, Copyright Protection, Technological Change, and the Quality of

New Products: Evidence from Recorded Music Since Napster, 55

J. L. &

CON

. 715 (2012) (finding that although recording industry revenues and

profitability declined precipitously following Napster’s introduction, “there

is no evidence that the quality of new recorded music has suffered from a

withdrawal of creative effort”; although noting that other technological

changes might spur even greater creative output and these effects might not

carry over to other creative industries such as motion pictures).

See Copy-wrong! Unpacking the $1.92M Downloading Verdict,

WSJ B

LOG

(Jun. 27, 2009), http://blogs.wsj.com/law/2009/06/27/copy-wrong-unpacking-

the-192m-downloading-verdict.

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This American Copyright Life 227

Figure 2

Albums Sales (per capita/annum)

be established without proof that a third party — i.e., someone other than

an authorized forensic investigator — had actually downloaded the file

from that defendant’s share folder. Given the architecture of the Internet

and privacy concerns, such proof would substantially raise the cost of pur-

suing enforcement against end users.

The first wave of cases to address this defense held that merely mak-

ing copies of copyrighted works available without authorization violated

the distribution right.

In 2008, the pendulum swung in the opposite di-

rection. Atlantic Recording Corp. v. Brennan cast doubt on the “making

available” theory, observing that “‘without actual distribution of copies

. . . there is no violation [of] the distribution right.”

A little more than a

month later, Judge Gertner issued a detailed analysis of the scope of the

distribution right. London-Sire Records, Inc. v. Doe 1 inclined toward a

requirement of actual distribution, observing that “[m]erely because the

defendant has ‘completed all the steps necessary for distribution’ does not

necessarily mean that a distribution has actually occurred.”

Shortly after

the London-Sire decision, Judge Wake squarely rejected the “making

available” theory.

See, e.g., Universal City Studios Prods., LLP v. Bigwood, 441 F. Supp. 2d 185

(D. Me. 2006); Warner Bros. Records, Inc. v. Payne, No. W-06-CA-051,

2006 WL 2844415 (W.D. Tex. Jul. 17, 2006); Motown Record Co., LP v.

DePietro, No. 04-CV-2246, 2007 WL 576284 (E.D. Pa. Feb. 16, 2007).

534 F. Supp. 2d 278, 282 (D. Conn. 2008).

542 F. Supp. 2d 153 (D. Mass. 2008).

See Atlantic Recording Corp. v. Howell, 554 F. Supp. 2d 976 (D. Ariz. 2008).

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228 Journal, Copyright Society of the U.S.A.

More significantly, the record industry became a pariah among its

prime consumer demographic in the most important court — the court of

public opinion. Litigation against a high school cheerleader,

grandpar-

ents,

and many other sympathetic defendants

took a heavy toll on the

recording industry’s public approval.

Even after the record industry re-

versed course and halted new direct enforcement actions,

the hemor-

rhaging continued as the industry continued to pursue two cases already in

the pipeline through trial.

Capitol Records accused Jammie Thomas of sharing more than 1,000

copyrighted songs through the KaZaA file-sharing network in 2005. Dick-

ens foretold how the litigation would turn out.

After Ms. Thomas de-

clined the RIAA’s settlement offer, Capitol Records filed suit for willful

violation of copyright law. The case pitted the RIAA seeking $150,000 for

each of twenty-four copyrighted sound recordings against a defiant single

mother of modest means represented by pro bono counsel. After the jury

returned a verdict of $9,250 per work, totaling $222,000, Judge Davis or-

See David Kravets, Threat Level: RIAA Litigation – Former Teen Cheerleader

Defies RIAA Over $7,400 File Sharing Tab,

IRED

(Oct. 20, 2008), http://

www.wired.com/threatlevel/2008/10/riaa-seeks-7400.

See The 14 Most Ridiculous Lawsuits Filed by the RIAA and the MPAA,

RAINZ

http://brainz.org/14-most-ridiculous-lawsuits-filed-riaa-and-mpaa.

See id.

See Ben Depoorter, Alain Van Hiel, & Sven Vanneste, Copyright Backlash, 84

S. C

. L. R

. 1251, 1283-89 (2011) (arguing that enforcement-based strat-

egies seeking disproportionate sanctions are counterproductive for deter-

ring file-sharing of copyrighted works); M˚ans Svensson & Stefan Larsson,

Social Norms and Intellectual Property: Online Norms and the European

Legal Development 59 (2009), available at http://lup.lub.lu.se/luur/

download?func=downloadFile&recordOId=1510388&fileOId=1515776 (re-

porting social norms do not hinder illegal file sharing); Jason R. Ingram &

Sameer Hinduja, Neutralizing Music Piracy: An Empirical Examination, 29

EVIANT

EHAVIOR

344, 359 (2008) (finding that “almost 90 percent of

sample respondents believed that downloading unauthorized music files

was an appropriate behavior”); Yuval Feldman & Janice Nadler, The Law

and Norms of File Sharing, 43

IEGO

L. R

. 577 (2006); Ben Depoor-

ter & Sven Vanneste, Norms and Enforcement: The Case Against Copyright

Litigation, 84

. L. R

. 1127 (2005); Steven A. Hetcher, The Music In-

dustry’s Failed Attempt to Influence File Sharing Norms, 7

AND

. J. E

. L.

& P

RAC

. 10 (2004)

See Sarah McBride & Ethan Smith, Music Industry to Abandon Mass Suits,

ALL

J. (Dec. 19, 2008), http://online.wsj.com/article/SB1229660388360

21137.html.

See

HARLES

ICKENS

, B

LEAK

OUSE

(1853) (telling a story of long-running

litigation depleting a vast estate). Dickens’ classic was modeled in part on

his own frustrations seeking to enforce copyright protection on his earlier

books. See Bleak House,

IKIPEDIA

, http://en.wikipedia.org/wiki/Bleak_

House (last visited Nov. 4, 2013).

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This American Copyright Life 229

dered a new trial on the ground that he misinstructed the jury as to the

scope of the distribution right.

Following retrial, the jury found Ms.

Thomas-Rasset

liable for willful copyright infringement of all twenty-

four sound recordings at issue and awarded the plaintiffs statutory dam-

ages of $80,000 per song, resulting in a total award of $1.92 million. On

post-trial motions, Judge Davis determined that the damage award was

“monstrous and shocking” and remitted the jury award to $54,000 (treble

the minimum willful statutory damage level ($750 per work) times twenty-

four works)).

The plaintiffs offered Ms. Thomas-Rasset the opportunity

to settle the matter by donating $25,000 to a musician’s charity of her

choosing, which she declined.

The jury in the third trial awarded $1.5

million in statutory damages, which Judge Davis again reduced to $54,000

as the “maximum award consistent with due process.”

The Eighth Cir-

cuit Court of Appeals reversed the District Court’s reduction of the award

and reinstated the award of $222,000, the amount awarded by the jury in

the first trial.

The second end-user file-sharing trial took place in Judge Gertner’s

courtroom in July 2009.

Like the Thomas case, this case attracted tre-

mendous publicity as Joel Tenenbaum, a graduate student at Boston Uni-

versity, and his appointed counsel, Harvard Law School Professor Charles

Nesson, sought to turn the trial into a referendum on copyright policy. I

came to see this drama as Legally Blonde 3,

an even more farcical ac-

count of Harvard Law School than the Hollywood prequels.

During

pretrial proceedings, Mr. Tenenbaum denied any wrongdoing and even

See Capitol Records, Inc. v. Thomas, 579 F. Supp. 2d 1210, 1216-25 (D. Minn.

2008).

Ms. Thomas was married in the interim.

See Capitol Records, Inc. v. Thomas-Rasset, 680 F. Supp. 2d 1045, 1049 (D.

Minn. 2010).

See Greg Sandoval, Jammie Thomas Rejects RIAA’s $25,000 Settlement Offer,

C—

NET

(Jan. 27, 2010), http://news.cnet.com/8301-31001_3-10442482-261

.html.

See Capitol Records, Inc. v. Thomas-Rasset, 799 F. Supp. 2d 999 (D. Minn.

2011) (holding that an award above three times the statutory damages mini-

mum of $750 per work violates the Due Process Clause of the U.S.

Constitution).

See Capitol Records, Inc. v. Thomas-Rasset, 692 F.3d 899 (8th Cir. 2012).

See Greg Sanoval, Joel Tenenbaum Follows in Jammie Thomas’ Footsteps,

C—

(Jul. 28, 2009), http://news.cnet.com/8301-1023_3-10298079-93.html.

See Legally Blonde (2001),

IMD

, http://www.imdb.com/title/tt0250494; Le-

gally Blonde 2: Red, White & Blonde (2003),

IMD

http://www.imdb.com/

title/tt0333780.

See Peter S. Menell, File-Sharing Copyrighted Works Without Authorization: A

Misguided Social Movement,

EDIA

NSTITUTE

(Feb. 17, 2010), http://www

.mediainstitute.org/new_site/IPI/021710_FileSharingCopyrighted.php.

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230 Journal, Copyright Society of the U.S.A.

suggested that the files in question might have been shared by others, in-

cluding a visitor to the family home, family friend (possibly a visitor from

Burkina Faso), foster son, or burglar.

100

After much jockeying over the

scope of the distribution right, the fair use defense, and a slew of other

issues, Mr. Tenenbaum ultimately confessed to uploading and download-

ing copyrighted sound recordings on various peer-to-peer networks.

101

a result, Judge Gertner directed a verdict on liability, leaving for the jury

only the issue of statutory damages.

102

The jury awarded $675,000 (based

on $22,500 for each of the thirty works litigated). Judge Gertner later re-

duced the amount to $67,500 on the grounds that the jury award violated

due process.

103

The First Circuit reversed.

104

On remand before Judge

Rya Zobel,

105

the court reinstated the $675,000 award,

106

which the First

Circuit affirmed.

107

These cases poured salt into the wounds opened by the mass litigation

campaign. They reinforced the perception that copyright law disserves the

public: it deprives consumers of easy access to a broad catalog of music,

imposes grossly disproportionate penalties on those caught file-sharing,

and does little to support the artists.

Other copyright enforcement actions fueled public and computer re-

searcher animus toward the copyright system. In 2001, the Federal gov-

ernment arrested and jailed Dmitry Sklyarov, a Russian computer

programmer visiting the United States to give a presentation on “eBook’s

Security – Theory and Practice” for allegedly violating the anti-circumven-

100

See Affidavit in Support of Motion to Dismiss and in Support of Motion for

Summary Judgment at 2, Sony BMG Music Entm’t v. Tenenbaum, Civil Ac-

tion No.07-CV-11446 (D. Mass.) (filed Nov. 16, 2007), available at http://

joelfightsback.com/wp-content/uploads/487.pdf.

101

See Ben Sheffner, Tenenbaum Takes the Stand: I Used P2P and Lied About It,

RS TECHNICA

(July 30, 2009), http://arstechnica.com/tech-policy/news/

2009/07/tenenbaum-takes-the-stand-i-used-p2p-and-lied-about-it.ars.

102

See Ben Sheffner, Copyrights & Campaigns, Plaintiffs Win Tenenbaum Case;

Court Considers Rule 50 Ruling; Grants Directed Verdict on Copyright Lia-

bility,

OLLYWOOD

(July 31, 2009), http://thresq.hollywoodreporter

.com/2010/03/new-litigation-campaign-targets-tens-of-thousands-of-bittor

rent-users.html.

103

See Sony BMG Music Entm’t v. Tenenbaum, 721 F. Supp. 2d 85, 116 (D. Mass.

2010).

104

See Sony BMG Music Entm’t v. Tenenbaum, 660 F.3d 487 (1st Cir. 2011)

(holding that district court violated principle of constitutional avoidance

and inappropriately bypassed issue of common law remittur).

105

Judge Gertner retired from the bench in the interim.

106

See Sony BMG Music Entertainment v. Tenenbaum, 2012 WL 3639053 (D.

Mass 2012 Aug. 23, 2012).

107

See Sony BMG Music Entertainment v. Tenenbaum, 719 F.3d 67 (1st Cir.

2013).

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This American Copyright Life 231

tion provision of the DMCA.

108

The prosecution confirmed concerns in

the computer field that the DMCA threatened researchers and free

speech. Within days of the arrest, the “Free Dmitry” movement gained

salience, leading to a boycott of Adobe products, the commercial entity

behind the arrest. The government dropped all charges against Skylarov

on the condition that he testify against ElcomSoft, his employer. A jury in

San Jose, California found ElcomSoft not guilty of all four charges under

the DMCA.

109

Litigation over YouTube’s video-sharing service added further fuel to

the public’s ire over copyright law. Like Napster before it, YouTube

quickly emerged following its 2005 launch as one of the most charismatic,

popular, and viral websites in history.

110

Consumers could now share and

enjoy all manner of engaging, amusing, informative, and entertaining

videos at the touch of their computer for free. And although much of

what YouTube hosted was truly “user-generated” content, users were also

uploading clips from their favorite television shows and motion pictures. I

came to learn of Comedy Central’s The Daily Show with Jon Stewart

through YouTube.

YouTube would enter the realm of not just public acclaim but also

financial jackpot when Google acquired the start-up for $1.65 billion in

November 2006.

111

Within a few months, Viacom would file a lawsuit

seeking $1 billion for “brazen” copyright infringement,

112

producing yet

another Dickensian copyright battle aimed at an incredibly popular In-

ternet service. The potential for further disproportionate remedies may

108

See United States v. ElcomSoft and Sklyarov,

IKIPEDIA

, http://en.wikipedia

.org/wiki/United_States_v._ElcomSoft_and_Sklyarov (last visited Nov. 4,

2013).

109

See Matt Richtel, Russian Company Acquitted of Digital Piracy,

N.Y. T

IMES

(Dec. 18, 2002), http://www.nytimes.com/2002/12/18/technology/18DIGI

.html.

110

See Youtube Serves up 100 Million Videos a Day Online,

USA T

ODAY

(Jul. 16,

2006), http://usatoday30.usatoday.com/tech/news/2006-07-16-youtube-

views_x.htm.

111

See Andrew Ross Sorkin & Jeremy W. Peters, Google to Acquire YouTube for

$1.65 Billion,

N.Y. T

IMES

(Oct. 9, 2006), http://www.nytimes.com/2006/10/

09/business/09cnd-deal.html?_r=0.

112

See Viacom International Inc. v. YouTube, Inc.,

IKIPEDIA

http://en.wikipedia

.org/wiki/Viacom_International_Inc._v._YouTube,_Inc. (last visited Nov. 4,

2013).

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232 Journal, Copyright Society of the U.S.A.

well have led the courts to distort copyright law.

113

The litigation contin-

ues to drag on like Jarndyce v Jarndyce.

114

Content industry efforts to take down YouTube videos that qualify as

fair use has further undermined the copyright system’s legitimacy. Take

the case of Stephanie Lenz, a young parent who posted a twenty-nine sec-

ond clip of her adorable baby boogying to a nearly unrecognizable song on

YouTube.

115

Her intention was merely to share this adorable camcorder

video with friends and family. It turns out that the song in the background

was Prince’s Let’s Go Crazy. The audio quality of the video was so poor

that I did not even recognize the background music. It is difficult to see

how this posting was not fair use. It is even more difficult to understand

why Prince would object.

Nonetheless, Prince ordered his record label, Universal Music Group

(UMG), to file a takedown notice.

116

YouTube removed the “Dancing

Baby” video and notified Ms. Lenz of the removal based on UMG’s in-

fringement allegation. The controversy came to EFF’s attention and they

agreed to fight UMG’s takedown request. Ms. Lenz sent YouTube a

DMCA counter-notification

117

asserting that the video made fair use of

the Prince sound recording and requesting that the video be reposted,

which YouTube did several weeks later. Thereupon Prince threatened to

sue.

118

Stephanie Lenz and EFF decided to take matters into their own

hands and filed a lawsuit seeking declaratory relief that the video was not

infringing and seeking damages for misuse of the DMCA takedown pro-

cess.

119

Like the Viacom v. YouTube litigation, Lenz v. UMG continues to

drag on more than six years after the case was filed. The “Dancing Baby”

video remains available on YouTube and has attracted more than one mil-

lion views. The infant depicted in the video is now seven years old. I

periodically visit the website to see the comments. Here is a recent

collection:

113

See Peter S. Menell, Judicial Regulation of Digital Copyright Windfalls: Mak-

ing Interpretive and Policy Sense of Viacom v. YouTube and UMG Record-

ings v. Shelter Capital Partners,

EDIA

NSTITUTE

(May 3, 2012), http://

www.mediainstitute.org/IPI/2012/050212.php.

114

See Bleak House,

IKIPEDIA

http://en.wikipedia.org/wiki/Bleak_House.

115

See “Let’s Go Crazy” #1,

UBE

, http://www.youtube.com/watch?v=N1KfJ

HFWlhQ (uploaded Feb. 7, 2007).

116

See Lenz v. Universal Music Corp.,

IKIPEDIA

http://en.wikipedia.org/wiki/

Lenz_v._Universal_Music_Corp (last visited Nov. 4, 2013).

117

See id.

118

See Mike Collett-White, Prince to Sue Youtube, Ebay over Music Use,

EUTERS

(Sep. 13, 2007), http://www.reuters.com/article/2007/09/14/us-

prince-youtube-idUSL1364328420070914?.

119

See Lenz v. Universal Music Corp., 572 F. Supp. 2d 1150 (N.D. Cal. 2008).

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This American Copyright Life 233

Shit! I was just going to Best Buy and purchase this very Prince CD . . .

when suddenly the song came on YouTube! I’m Saved! Now I won’t buy

the CD and just listen to this one instead, and keep my money in my

pocket. Thanks piracy! (29 thumbs up)

fry and forces the big businesses to back the fuck off. (12 thumbs up)

I wonder if your [sic] a [sic] still fan of Prince after he did this

I can’t even tell what artist that is, let alone what song. UMC must’ve put

forensic specialists on it to even figure out it [sic] they owned it. Strange

days.

Stephanie Lenz is a hero. I wish she’d taken UMC for $10 million.

In 2010, Righthaven LLC joined the digital copyright enforcement

lottery by entering into agreements with news organizations to scour the

Internet for copies of their stories and file lawsuits demanding $75,000 and

surrender of the domain name.

120

Like Prince and UMG, Righthaven

paid little heed to concepts like fair use. Even more troubling, Righthaven

lacked legal authority to pursue some of its cases. The scheme began to

unravel when Judge Roger Hunt ruled that Righthaven lacked standing to

sue for copyright infringement because the news organizations retained

control of the copyrights.

121

Judge Hunt ordered Righthaven to pay sanc-

tions. Other problems ensued, driving Righthaven into insolvency.

122

The

adverse publicity surrounding this campaign further denigrated the pub-

lic’s view of copyright protection

123

and distorted the law.

124

120

See Dan Frosch, Enforcing Copyrights, for a Profit,

N.Y. T

IMES

, May 3, 2011,

at B1, available at http://www.nytimes.com/2011/05/03/business/media/03

righthaven.html?; Righthaven,

IKIPEDIA

, http://en.wikipedia.org/wiki/

Righthaven (last visited Nov. 4, 2013).

121

See Steve Green, Judge: Righthaven Masquerading as a Company,

EGAS

(Jul. 14, 2011), http://www.vegasinc.com/news/2011/jul/14/judge-fines-right

haven-5000-misleading-court-over-.

122

See Mike Masnick, Righthaven Loses Again; Told To Pay $34,045.50 In Legal

Fees, T

ECHDIRT

(Aug. 16, 2011), http://www.techdirt.com/articles/20110815/

17441215537/righthaven-loses-again-told-to-pay-3404550-legal-fees.shtml;

Righthaven, supra note 120.

123

See Nate Anderson, Law & Disorder/Civilization & Discontents: Copyright

Troll Righthaven Finally, Completely Dead, A

RSTECHNICA

(May 9, 2013),

http://arstechnica.com/tech-policy/2013/05/copyright-troll-righthaven-fi-

nally-completely-dead (quoting defense counsel: “Copyright law exists to

protect the creative process, and to reward authors — not to create illegiti-

mate shakedown schemes.”).

124

See Shyamkrishna Balganesh, The Uneasy Case Against Copyright Trolls, 86

. L. R

. 723, 742 (2013) (noting that when courts “realized their inabil-

ity to curb Righthaven under other principles, a few courts — desperate for

a solution and finding none [ ] — began to interpret fair use in extremely

liberal terms. These courts effectively exempted conduct that would have

been considered infringement in relation to any other plaintiff.”)

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234 Journal, Copyright Society of the U.S.A.

If you thought that the digital copyright enforcement saga could not

get any more sordid, you would be mistaken. Beginning in 2010, enter-

prising copyright enforcement lawyers came up with a new shakedown

scheme. File lawsuits against thousands of porn file-sharers and threaten

to disclose their identity unless they paid hefty settlements.

125

Like the

RIAA file-sharing cases, the porn file-sharing cases have inundated the

federal courts,

126

leading some judges to express revulsion at the tactics.

Judge Otis Wright II has seen enough of these lawsuits to become an ex-

pert in their underlying economic structure:

The Court is familiar with lawsuits like this one. These lawsuits run a

common theme: plaintiff owns a copyright to a pornographic movie;

plaintiff sues numerous John Does in a single action for using BitTorrent

to pirate the movie; plaintiff subpoenas the ISPs to obtain the identities

of these Does; if successful, plaintiff will send out demand letters to the

Does; because of embarrassment, many Does will send back a nuisance-

value check to the plaintiff. The cost to the plaintiff: a single filing fee, a

bit of discovery, and stamps. The rewards: potentially hundreds of

thousands of dollars. Rarely do these cases reach the merits.

127

This disturbing pattern led him to declare that:

[t]he federal courts are not cogs in a plaintiff’s copyright-enforcement

business model. The Court will not idly watch what is essentially an ex-

tortion scheme, for a case that plaintiff has no intention of bringing to

trial. By requiring Malibu to file separate lawsuits for each of the Doe

Defendants, Malibu will have to expend additional resources to obtain a

nuisance-value settlement—making this type of litigation less profitable.

If Malibu desires to vindicate its copyright rights, it must do it the old-

fashioned way and earn it.

128

Somewhat like the Righhaven actions, Malibu lacked the rights to bring

these infringement actions, leading Judge Wright to impose sanctions on

the law firm bringing the case and referring them for possible criminal

prosecution.

129

125

See Sarah Jacobsson Purewal, Copyright Trolls: 200,000 BitTorrent Users Sued

Since 2010,

ECH

IVE

(Aug. 9, 2011), http://www.techhive.com/article/

237593/copyright_trolls_200_000_bittorrent_users_sued_since_2010.html;

Eriq Gardner, New Litigation Campaign Quietly Targets Tens of Thousands

of Movie Downloaders,

OLLYWOOD

. (Mar. 30, 2010), http://

thresq.hollywoodreporter.com/2010/03/new-litigation-campaign-targets-

tens-of-thousands-of-bittorrent-users.html.

126

See Rachel Storch, The Adult Film Industry and the New Wave of Peer-to-

Peer Copyright Suits (unpublished manuscript May 2013) (on file with

author).

127

Malibu Media, LLC v. John Does 1 through 10, at *3, 2012 WL 5382304 (C.D.

Cal. 2012 June 27, 2012).

128

Id. at *4.

129

See Ingenuity 13, LLC v. John Doe, 2013 WL 1898633 (C.D. Cal. 2013 May 6,

2013) (beginning sanction opinion with a quotation from Spock in Star Trek

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This American Copyright Life 235

The public’s disenchantment with the copyright system reached a re-

cord low in the lead up to congressional consideration of the Stop Online

Piracy Act (SOPA)

130

— draft legislation aimed at combating foreign

rogue websites. The outrage culminated in concerted blackouts and dem-

onstrations of opposition of many popular websites (Wikipedia, Reddit,

Mozilla, Google) that contributed to Congress shelving the legislation.

131

Here is my perception of copyright law’s public approval rating over the

course of my life.

Figure 3

SOPA

100

1960 1970 1980 1990 2000 2010

Source: completely made up; but possibly accurate

II: The Wrath of Khan (1982): “The needs of the many outweigh the needs

of the few.”); Joe Mullin, Law & Disorder/Civilization & Discontents –

Prenda Hammered: Judge Sends Porn-Trolling Lawyers to Criminal Investi-

gators Lawyers Who Obfuscated for Years Face Disbarment and an $81,000

Fine, A

RSTECHNICA

(May 6, 2013), http://arstechnica.com/tech-policy/2013/

05/prenda-hammered-judge-sends-porn-trolling-lawyers-to-criminal-investi-

gators; Mike Masnick, Bad Day For Prenda Continues: Judge Rejects Stay,

Adds $1k Per Day For Each Day They Don’t Pay Up, T

ECHDIRT

(May 21,

2013), http://www.techdirt.com/articles/20130521/15164823159/bad-day-

prenda-continues-judge-rejects-stay-adds-1k-per-day-each-day-they-dont-

pay-up.shtml.

130

H.R. 3261, 112th Cong. (2011).

131

See Amy Goodman, The SOPA Blackout Protest Makes History: An Unprece-

dented Wave of Online Opposition to the SOPA and PIPA Bills Before Con-

gress Shows the Power of a Free Internet,

UARDIAN

(Jan. 18, 2012),

http://www.theguardian.com/commentisfree/cifamerica/2012/jan/18/sopa-

blackout-protest-makes-history.

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236 Journal, Copyright Society of the U.S.A.

ACT II: WHY SHOULD SOCIETY CARE ABOUT COPYRIGHT’S

PUBLIC APPROVAL RATING?

of “My Generation” largely because “we” — America’s teenagers of the

1970s — lacked the technological tools and wherewithal to access, remix,

and share copyrighted works on any substantial scale. Vinyl operated as

an effective technological protection measure. Sneaking into movie thea-

ters did not liberate the film for all to see. Video capture technology was

science fiction.

That is not to say that we did not try to use technology to express

ourselves (and circumvent control). As much as we tried, however, the

quality of mix tapes was not nearly as good as the originals — and we

cared about fidelity as well as “free.” The attraction of mix tapes had

more to do with playing disc jockey, assembling favorite songs by mood,

and space shifting — recording music for car stereos and portable cassette

music devices (the Sony Walkman).

132

Thus, copyright’s public approval rating did not much matter in that

primitive technological era. If “My Generation” wanted music, film, and

books, we had to go through a market. Advances in digital technology

have dramatically changed that ecosystem. What separates “My Genera-

tion” from the “Post-Napster Generations” is not values or tastes; rather it

is their technological ability to personalize, customize, remix, and trans-

form copyrighted works and their ability to operate outside of content

market gatekeepers. Today’s youth as well as everyone else has alterna-

tives to theater box offices, television networks, music stores, and book

stores. As a result, the efficacy of the copyright depends critically upon its

public approval rating.

133

For the first time in the more than 300 year

history of copyright protection, consumers have choices and power. And

for the first time, copyright (not technology) is the primary limit on their

ability to exercise these choices.

134

132

It is worth noting that copyright owners lacked the technology to detect such

FFICE

ECH

. A

SSESSMENT

, supra note 32, finding that such copying did not

adversely affect industry revenues. The Internet has facilitated infringe-

ment as well as technology for detecting it, further bringing users and own-

ers into conflict.

133

As Professor Lessig suggested long ago, “West Coast Code” can trump “East

Coast Code.” See

AWRENCE

ESSIG

, C

ODE AND

THER

AW S O F

YBER-

SPACE

53 (1999).

134

See Joseph P. Liu, Copyright Law’s Theory of the Consumer, 44

B.C. L. R

397 (2003).

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This American Copyright Life 237

A. Content Governance: From the Analog Age to the Internet Age

Throughout history, content industries have functioned in response to

technological and institutional forces. The development of all of the major

content industries trace back to key technological innovations that made

possible the instantiation and dissemination of expressive works. The

printing press enabled publishing, leading eventually to the development

of copyright protection as a means for authors and publishers to appropri-

ate a return on their investment in writing, typesetting, and distributing

manuscripts.

At any point in time, the level of creative expression depends on the

interplay of the technology for creating, reproducing, and disseminating

works of authorship, the ability of businesses to commercialize such works,

legal protections for creative works (including enforceability conditions),

as well as social norms. Figure 4 illustrates these forces.

Figure 4

Content Governance Ecosystem

$1.00

Social

Norms

Markets

Legal

Protection

Technology

Creative

Expression

For much of the past century, these forces made for a relatively robust

ecosystem for numerous forms of creative expression. The publishing,

film, and sound recording industries prospered in the twentieth century.

The printing press enabled publishers to reproduce books at relatively low

marginal cost; a large network of booksellers brought these products to

markets; and copyright law effectively discouraged book piracy. The film

industry could protect their products by controlling exploitation through

leases to theaters; copyright law played a relatively small role given the

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238 Journal, Copyright Society of the U.S.A.

difficulty of gaining access to films. And the sound recording industry

thrived in part because of the difficulty of making copies of sound record-

ings until well into the twentieth century. Federal copyright law did not

even protect sound recordings until 1971. Yet protections for musical

compositions, the relative unavailability of consumer copying technology

until the 1970s, the loss of fidelity through copying, and the monitoring of

record stores supported a robust marketplace.

Even without copyright protection, a content industry can flourish if

technological means (encryption) or market means (contract, reputation)

can limit unauthorized distribution of creative expression. And even if

tent that works can be copied and distributed without detection or effec-

tive enforcement.

Through my formative years, the technological and institutional con-

ditions effectively channeled even “My [rebellious] Generation” into con-

tent markets. Many of us would have relished the free access to our

favorite albums, movies, and books. But technological and market reali-

ties stood in our way. Social norms had little effect on the content govern-

ance equilibrium.

The digital revolution has activated the social norms quadrant of the

content governance ecosystem. Before the digital revolution, individuals

did not have the need or opportunity to develop any norms regarding cop-

yright. Because the technological constraints were so strong, there effec-

tively were no norms that were not already enforced by technology and

market forces. In a matter of months, file-sharing services, followed by

Bittorrent and cyberlockers, provided an inexhaustible, nearly universal

repository of copyrighted works for the post-Napster generations. That’s

not to say that other forces exert no force. Technological protection mea-

sures continue to serve various content industries, such as video games.

And online market places (such as iTunes, Amazon, Netflix, Spotify, and

Hulu) have gained salience. But there is little question that the function-

ing of the content governance ecosystem depends more on social norms

than at any other time in copyright history. If that ecosystem is to function

well not just for access but also as an engine of creative expression, then

we will need to understand social norms.

135

See Depoorter, Van Hiel & Vanneste, supra note 88, at 1283-89 (arguing that

enforcement-based strategies seeking disproportionate sanctions are

counterproductive for deterring file-sharing of copyrighted works); Sven-

sson & Larsson, supra note 88; Ingram & Hinduja, supra note 88, at 359

(finding that “almost 90 percent of sample respondents believed that

downloading unauthorized music files was an appropriate behavior”); Feld-

man & Nadler, supra note 88; Depoorter & Vanneste, supra note 88; Tom

R. Tyler, Compliance with Intellectual Property Laws: A Psychological Per-

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This American Copyright Life 239

B. Reflections on Popular Music and Independent Film in the Internet

Age

The contours of social norms are notoriously difficult to assess. They

are suffused across enumerable age, regional, social, and economic com-

munities.

136

We talk about baby boomers (those born after World War II

through the early 1960s),

137

Generation X (those born between the early

1960s and the early 1980s),

138

and Millennials, also known as Generation

139

(those born between the early 1980s and the early 2000s). As a late

Baby Boomer, I must draw on exposure to my students and children —

bona fide Millennials — as well as a variety of professional experiences to

understand the forces shaping the post-Napster content governance

ecosystem.

1. Popular Music: Creators Caught in a Dual Vise

As noted previously,

140

I was struck by the speed at which many aca-

demics reached clear and firm conclusions about how Napster would affect

the music industry.

141

Perhaps due to my training as an economist (em-

spective, 29

N.Y.U.J. I

’

L. & P

. 219, 220, 234 (1997) (observing that

the difficulties concerning gaining compliance with intellectual property law

are typical of the problems involved in a wide variety of areas; and that

“reliance upon threats of punishment to enforce intellectual property laws

is a strategy that is likely to be ineffective”); see generally

R. T

YLER

EOPLE

BEY THE

(1990) (explicating a multi-faceted psycholog-

ical framework for understanding compliance with law).

136

See

DWARD

HEUNG

, B

ABY

OOMERS

, G

ENERATION

AND

OCIAL

Y-

CLES

, V

OLUME

1: N

ORTH

MERICAN

ONG

WAVES

(2007);

EIL

OWE

ILLIAM

TRAUSS

, G

ENERATIONS

: T

ISTORY OF

MERICAS

UTURE

1584

2069

(1991).

137

See Baby Boomer, Wikipedia, http://en.wikipedia.org/wiki/Baby_boomer (last

visited Nov. 4, 2013);

ANDON

ONES

, G

REAT

XPECTATIONS

: A

MERICA

AND THE

ABY

OOM

(1980).

138

See Generation X,

IKIPEDIA

, http://en.wikipedia.org/wiki/Generation_X (last

visited Nov. 4, 2013); cf.

OUGLAS

OUPLAND

, G

ENERATION

X: T

ALES FOR

CCELERATED

ULTURE

(1991).

139

See Generation Y,

IKIPEDIA

, http://en.wikipedia.org/wiki/Generation_Y (last

visited Nov. 4, 2013);

EAN

M. T

WENGE

, G

ENERATION

: W

ODAY

’

OUNG

MERICANS

ORE

ONFIDENT

, A

SSERTIVE

, E

NTITLED

—

AND

ORE

ISERABLE THAN

VER

EFORE

(2006);

ILLIAM

TRAUSS

& N

EIL

OWE

, M

ILLENNIALS

ISING

: T

EXT

REAT

ENERATION

(2000); Gen-

eration Y,

16 (Aug. 30, 1993).

140

See supra, Section I(D).

141

See

ESSIG

, supra note 47; Fisher, supra note 44; Netanel, supra note 48; see

also Mark A. Lemley & R. Anthony Reese, Reducing Digital Copyright In-

fringement Without Restricting Innovation, 56

TAN

. L. R

. 1345 (2004);

Raymond Shih Ray Ku, The Creative Destruction of Copyright: Napster and

the New Economics of Digital Technology, 69

U. C

. L. R

. 263 (2002);

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240 Journal, Copyright Society of the U.S.A.

phasizing that there is no such thing as a free lunch) or knowing how six-

teen year-old me would have responded to free music, I was more cautious

in judging the broader ramifications of the digital revolution than many of

my academic colleagues. On the one hand, the allure of online access to a

universal catalog was hard to resist. Furthermore, MP3.com demonstrated

that new artists could reach vast audiences without the need for record

labels. On the other hand, it was difficult to see how songwriters and re-

cording artists could recoup the time, energy, and costs — albeit reduced

by advances in digital technology — of creating and marketing their crea-

tivity. I was deeply conflicted and felt that we needed some time to see

how these technological shocks would reverberate through, and likely al-

ter, the ecosystem.

The reality was literally brought home when my older son, then a pre-

cocious adolescent, arrived home from school one day to tell me about this

great technology called Napster. Dylan had been brought up listening to

the great music of my youth — The Who, Bob Dylan, The Beatles, Led

Zeppelin, The Rolling Stones, Eric Clapton, Boston — and was develop-

ing his own interests (Green Day) and learning to play guitar. He also

loved computers and the Internet. It was only natural that he would see

Napster as a dream come true.

Whereas most parents worry about the “sex” talk with their children,

intellectual property professionals have an additional worry — the file-

sharing talk. Although Dylan seemed to understand the logic of what I

had to say, he was not too happy when I indicated that we were going to

resist the Napster temptation. I promised that we would come up with a

solution. As noted previously,

142

Steve Jobs came to my rescue (as well

as the rescue of the recording industry).

While this moral dilemma was avoided in our family, it was clear from

discussions with my law students and music industry trends that most Mil-

lennials were drawn to file-sharing like bees to honey. At first, there were

few online alternatives to Napster and the other file-sharing services that

would follow in its wake. But even as authorized online services like

iTunes emerged, the music industry witnessed unprecedented annual de-

clines in record sales (including digital revenue streams). Attorneys and

music industry professionals whom I had gotten to know were increasingly

pessimistic. The San Francisco Bay Area’s baby band marketplace —

which had nurtured dozens of bands from Jefferson Airplane through

Green Day — was drying up.

Glynn S. Lunney, Jr., The Death of Copyright: Digital Technology, Private

Copying, and the Digital Millennium Copyright Act, 87

. L. R

813

(2001).

142

See supra, Section I(D).

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This American Copyright Life 241

It was about this time (2006) that I received an inquiry from a Bay

Area antitrust lawyer with whom I was acquainted. He asked if I could

assist his son, a Brown University undergraduate who was lead singer,

songwriter, and guitarist for an up-and-coming New England-based band

called Zox. In particular, he was hoping that I could help the band land a

major record label deal. He also knew that Eli was thinking about law

school. I offered to help. His dad sent me their latest CD (“The Wait”)

and Eli’s contact information.

I was immediately struck by Zox’s violin-laced Reggae rock and imag-

inative songwriting. Moreover, my sons — who were thirteen and sixteen

at the time and avid musicians and music fans — were also taken with

Zox’s music. Eli joined us for dinner over the winter break and we came

to appreciate his extraordinary musical talent first-hand as well as the

challenges faced by budding popular musicians.

I spent the following week reaching out to contacts in the music in-

dustry, which confirmed what I had been hearing. Major record labels

were in free fall since Napster’s emergence and there was little funding for

“baby bands.” I was sorry to pass along the disappointing news to Eli. I

offered to help him in thinking about career paths — music and law —

and we agreed to stay in touch.

Zox would continue creating music for another year. They had an

independent record label deal with SideOne Dummy Records. Their re-

cord sales were anemic (by pre-Napster standards), but they were filling

clubs in New England and getting positive reviews for their recorded mu-

sic and live shows. Eli would visit my IP in the Entertainment Industries

class that winter to discuss the challenges of pursuing a music career as an

independent band — having to be a jack-of-all-trades (songwriting, per-

formance, artwork, marketing, roadie, merchandise).

Zox was approaching an important career decision. Its third album

(Line in the Sand) was nearing release. Eli was in his last year of college

and had been accepted to top law schools; Zox’s drummer had been ac-

cepted to a top business school. They hoped that Zox could break

through, but also recognized that time was running out if they were to

retain other career options. They decided to defer graduate school for a

year to see if they could get to the next level as a band. If it worked, they

would stick with it. If it did not pan out, then they would confront the fork

in the road.

Line in the Sand received glowing reviews,

143

but the year on the

road proved difficult. The band more than covered their costs, but the

financial and emotional toll of touring was significant.

143

See, e.g., Tony Sclafani, Zox: Line in the Sand,

ATTERS

(Feb. 14, 2008),

http://www.popmatters.com/review/zox-line-in-the-sand; Hey Mr. Light

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242 Journal, Copyright Society of the U.S.A.

Eli would enroll at Stanford Law School in fall 2008. Midway through

the year, he mentioned that Zox would be doing a reunion show back in

Providence on Memorial Day weekend and suggested that our family

might want to see the performance. It just so happened that Dylan would

be finishing his first year of college in Boston and my spouse’s twenty-fifth

college reunion at Brown University was taking place that very weekend.

We purchased flight and concert tickets. I asked Eli if we might drop by

the club earlier in the day to see the band set-up.

As much as I had grown to appreciate Zox’s music, I perceived, based

on Eli’s modesty and Zox’s modest record sales, that the band had a mod-

erate-sized fan base. I was expecting that the reunion concert would take

place at a medium-sized club — perhaps a few hundred people. Imagine

our surprise when we arrived at Lupo’s — one of Providence’s premier

concert venues — to a marquee announcing: “Zox – Sold Out Show.”

When we returned that evening, the crowd — approximately 2,000

raucous fans packed into a large converted theater — exploded when Zox

took the stage. It felt like a Springsteen concert. From the band’s opening

note, the crowd joined in singing the lyrics of every song. The energy grew

throughout the evening as the band renewed a deep bond with an appreci-

ative fan base. Crowd surfers hovered above the mosh pit throughout the

evening as the theater expressed its admiration. The evening flew by.

My kids emerged from the mosh pit drenched in sweat and the feeling

that mild-mannered Eli was a rock star. I left the theater wondering how a

band could bestow so much joy and yet struggle to survive. When I re-

turned to Berkeley, I explored reviews of Zox’s music

144

and surfed the

Man, Zox: Take Me Home,

PUTNIK

USIC

(Jan. 14, 2005) (“They sound

like Sublime meets Dave Matthews; mixing punk, reggae, rock and classical;

which adds up to a very unique sound.”) http://www.sputnikmusic.com/re-

view/129/ZOX-Take-Me-Home; Zox

, J

ASE

, http://www.jambase.com/

Artists/15677/Zox/Bio (last visited Nov. 4, 2013; Zox,

EEDS

USIC

CENE

http://www.leedsmusicscene.net/article/7497 (last visited Nov. 4, 2013).

144

Writing in PopMatters, an online cultural magazine, reviewer Tony Sclafani

summed up Line in the Sand as “both memorable and significant, stellar

musicianship, and an overall impassioned tone.” See Tony Sclafani, Zox:

Line in the Sand

, P

ATTERS

(Feb. 14, 2008), http://www.popmatters.com/

review/zox-line-in-the-sand. He compared Eli’s voice to “a more down-to-

earth version of Bono,” noting “the band’s top-flight songwriting . . . that

puts the group over the top. Whether writing personal anthems like “Line

in the Sand” or tear-jerking ballads like “The Wait (Part II)”, Miller sounds

like he’s firing on all cylinders this time around, filling every verse, chorus

and bridge with memorable hooks and lyrics. It helps that Miller has Swain

to weave sinewy violin lines around his melodies and guitar work. The in-

novative combo of Swain fiddling while Miller burns is what pushes ZOX

out of the category of revivalists and into the realm of innovators.” He

notes, somewhat prophetically, that “[m]aybe the band knew it had to push

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This American Copyright Life 243

countless fan comments posted on Zox’s YouTube videos. Not surpris-

ingly, most of the fan comments were unabashedly positive: “you conquer

all”; “:) love it”; “Absolutely an amazing video and song. Thanks for mak-

ing some original music to listen to!”; “WHY ISN’T ZOX

FAMOUS?!?!!?!?”

As I was scrolling through the love fest, one comment jumped off my

computer screen: “Does anyone have this mp3?” My jaw dropped. Here

was a celebration of the Zox fans in which one of the participants had no

qualms about asking other fans how to get a copy of a song — which was

available through iTunes, Amazon, and the band’s website — without pay-

ing. In essence, “can another fan help me to rip off the band?”

I was initially encouraged by AngryFuriousMonkey’s response: “Hey,

here’s an idea: BUY THE DAMN CD ALEADY!” To which the re-

quester recommended “ANGER MANAGEMENT.” AngryFurious-

Monkey relented: “There’s nothing wrong with downloading. I do it

constantly. If you look harder, you might be able to find the mp3. But,

you can also BUY THE DAMN CD!”

It was then that I realized that the post-Napster generations might not

even perceive the moral or economic dimensions of file-sharing.

145

This

was not a situation — as in the early Napster days — where an authorized

digital version of a song might not be available at all. And even the fan

who questioned the requester acknowledged that he or she downloaded

“constantly.” Yet in perusing other Zox video pages, one sees fans

bemoaning that the band no longer performs and has not released new

music: “They’re putting on a 10 year reunion show in RI August 13th

[2011]@ Lupos. Its going to be their only show this year, possibly their last

show for a very long time. : \ i LOVE zox!”; “One of the best bands I’ve

seen live! Hope they come out with new music SOON!”; “They’ve been on

the mainstream circuit (at least to some degree) since around ‘04. I first

itself with this release or risk second-tier status forever. Miller’s lyrics on

the title track show him casting about for a change in his life: ‘People keep

on saying that I’ve got potential / Lately I haven’t been feeling all that spe-

cial / How I’m gonna turn it around’. ZOX may just start to feel special

when the CD’s first single, ‘Goodnight’, hits college radio. An acoustic bal-

lad of the highest order, it reworks the cynical kiss-off vibe of Green Day’s

“Time of Your Life” into a more positive message of also finding something

better ahead. The mix of minor and major chords is gorgeous, and its laun-

dry list of descriptive phrases as evocative as the Jam’s transcendent ‘That’s

Entertainment’. Swain’s violin sounds like it’s sobbing during its solo, and

there’s a synth line that glues together the verses that’s as unexpected as it

is catchy. Judging from a clip on YouTube, it’s already a concert favorite.”

145

See Ingram & Hinduja, supra note 88, at 359 (2008) (finding that “almost 90

percent of sample respondents believed that downloading unauthorized

music files was an appropriate behavior”); Svensson & Larsson, supra note

88; Depoorter & Vanneste, supra note 88.

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244 Journal, Copyright Society of the U.S.A.

heard them at a small concert at DePauw in Indiana. They’re definitely

one of the best bands out there . . . unfortunately they seem to have gone

into hiding since? mid-‘09.”

This story captures a key aspect of the pathology affecting creative

industries in the Internet Age: Fans don’t perceive a connection between

file-sharing and the economic challenges facing creative artists.

Internet pundits and even some recording artists have contributed to

this perception. In 2008, Wired Editor Chris Anderson foretold the tri-

umph of “freeconomics”: “the trend lines that determine the cost of doing

business online all point the same way: to zero.”

146

He proclaimed that

“[a] decade and a half into the great online experiment, the last debates

over free versus pay online are ending. In 2007 The New York Times went

free; this year, so will much of The Wall Street Journal.”

147

Whereas

“free” was once a “marketing gimmick” or a cross-subsidy, the Internet

has produced a “full-fledged economy” that rewards those who give away

creative works. Anderson noted that “[o]ffering free music proved suc-

cessful for Radiohead, Trent Reznor of Nine Inch Nails, and a swarm of

other bands . . . that grasped the audience-building merits of zero. The

fastest-growing parts of the gaming industry are ad-supported casual

games online and free-to-try massively multiplayer online games. Virtually

everything Google does is free to consumers, from Gmail to Picasa

. . . .”

148

Andersen’s 2009 book, Free: The Future of a Radical Price, ex-

pounded on this theme to much fanfare and acclaim.

149

146

See Chris Anderson, Free! Why $0.00 Is the Future of Business,

IRED

AGA-

ZINE

: 16.03 (Feb. 25, 2008), http://www.wired.com/techbiz/it/magazine/16-

03/ff_free?currentPage=all.

147

See id.

148

See id.

149

It should be noted that Thom Yorke (Radiohead), Trent Reznor, the New

York Times, and the Wall Street Journal would later bemoan the “Free”

model. See Greg Sandoval, Radiohead, Nine Inch Nails, and Other Digital

Pioneers Sour on ‘Pay What You Want’ Music: Audiences Have Come to

Expect Free Tracks, but They’re Not Paying the Bills,

ERGE

(Mar. 4,

2013), http://www.theverge.com/2013/3/4/4054634/musics-pay-what-you-

want-pioneers-wour-on-giving-away-songs; Thom Yorke, Trent Reznor and

a Chorus of Artists Speak Out for an Ethical and Sustainable Internet,

RICHORDIST

: A

RTISTS FOR AN

THICAL AND

USTAINABLE

NTERNET

(Sept. 6, 2013), http://thetrichordist.com/2013/09/06/thom-yorke-trent-

reznor-and-a-chorus-of-artists-speak-out-for-an-ethical-and-sustainable-in-

ternet; Trent Reznor: ‘Radiohead Inspired Me to Return to a Major Label’,

NML (Oct. 15, 2012), http://www.nme.com/news/radiohead/66647; David

Skok, A Market-Driven Comeback for High-Quality Reporting,

IEMAN

OURNALISM

(Dec. 20, 2012), http://www.niemanlab.org/2012/12/a-mar-

ket-driven-comeback-for-high-quality-reporting; see Sam Gustin, New York

Times Prepares Digital Paywall, Tiered Pricing,

IRED

(Jan. 24, 2011),

http://www.wired.com/epicenter/2011/01/times-paywall; Seth Mnookin, The

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This American Copyright Life 245

These assertions contribute to the file-sharing social norm — free is

not just good for me, but good for the artists and the economy. Like those

generations that preceded it, the post-Napster generations possess the in-

credible human capacity for rationalizing their self-interest. In fact, some

sociologists suggest that Millennials may have a heightened capacity for

being “entitled.”

150

But I don’t need that added contributing factor. Six-

teen-year-old me would have been drawn to that rationalization. Moreo-

ver, given the inherent non-rivalrous quality of digital goods, unauthorized

copying can appear like a victimless crime. Unlike with theft of physical

property, no one is deprived of a copy when a file is shared. Therefore

ethical instincts about physical property do not necessarily apply and

hence arguments based on “theft,” as content companies publicized, did

not ring true and were mocked.

151

The nature of the harm is more diffuse

and manifests in the incentives for future creative output.

Thus, there are good reasons, however, to question Andersen’s cele-

bration of free.

152

Even though the cost of distributing expressive creativ-

ity has fallen precipitously in the Internet Age, the cost of producing

compelling content remains significant. And although concert revenue has

risen significantly during the past decade, the majority of that revenue

goes to a relatively small pool of megastars and legacy bands.

153

The next

wave of artists struggles mightily to makes ends meet. Conveying that

message to Millennials is not easy.

Kingdom and the Paywall,

N.Y. M

(Jul. 24, 2011), http://nymag.com/

news/media/new-york-times-2011-8; Stephen J. Dubner, Wall Street Journal

Paywall Sturdier than Suspected, FREAKONONOMICS.COM (Jan. 24,

2008), http://www.freakonomics.com/2008/01/24/wall-street-journal-paywall-

sturdier-than-suspected.

150

Based upon personality surveys, Professor Jean Twenge sees Millennials as

possessing a greater sense of entitlement and narcissism than prior genera-

tions. See

EAN

M. T

WENGE

, G

ENERATION

: W

ODAY

’

OUNG

MERICANS

ORE

ONFIDENT

, A

SSERTIVE

, E

NTITLED

–

AND

ORE

ISERABLE

HAN

VER

EFORE

(2007).

151

See Stuart P. Green, When Stealing Isn’t Stealing,

N.Y. T

IMES

Mar. 28, 2012, at

A27.

152

See Tim Kreider, Slaves of the Internet, Unite!,

N.Y. T

IMES

(Oct. 27, 2013),

http://www.nytimes.com/2013/10/27/opinion/sunday/slaves-of-the-internet-

unite.html;

OBERT

EVINE

, H

IGITAL

ARASITES

ESTROYING

THE

ULTURE

USINESS

AND

OW THE

ULTURE

USINESS

IGHT

ACK

(2011);

ARK

ELPRIN

, D

IGITAL

ARBARISM

: A W

RITER

’

ANI-

FESTO

(2009);

OBERT

EVINE

, F

REE

IDE

: H

IGITAL

ARASITES

ESTROYING THE

ULTURE

USINESS

AND

OW THE

ULTURE

USINESS

IGHT

ACK

(2011); Malcolm Gladwell, Priced to Sell: Is Free the Fu-

ture?,

ORKER

(Jul. 6, 2009); Peter S. Menell, 2014: Brand Totalitari-

anism, 47

U.C. D

AVIS

. L. R

787 (2014).

153

See Alan B. Krueger, The Economics of Real Superstars: The Market for Rock

Concerts in the Material World, 23

J. L

ABOR

CON

. 1 (2005).

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246 Journal, Copyright Society of the U.S.A.

In 2009, I came across a video entitled “How’s the Album Selling?”

154

that captured the moral aspects of file-sharing in a way that spoke comi-

cally and honestly to the post-Napster generation. The video opens with

Scotty Iseri finishing his set at the “Dive Bar.” Following some tepid ap-

plause, a colloquy unfolds:

Male Fan (coolly): Dude . . . awesome show.

Scotty (modestly): Thanks, thanks very much.

Male Fan: So how much for your CD?

Scotty: It’s six bucks.

Male Fan (outraged): DUDE, SIX BUCKS. BRO, COME ON!

Scotty (apologeti- Dude, it’s six bucks.

cally):

Male Fan (outraged): BRO, RADIOHEAD GAVE AWAY

THEIR ALBUM FOR FREE.

Scotty (incensed): DO I LOOK LIKE FUCKING RADI-

OHEAD TO YOU?

Male Fan (exasper- OK, calm down, here’s your six bucks,

ated): Jesus. . . . Hey, I got a buddy who’d be into

this. Do you mind if I burn him a copy?

Scotty (sheepishly): Kind of

Male Fan: Seriously

Scotty: Kind of, yea . . . but what am going to do

about it?

Male Fan (arro- THAT’S RIGHT, WHAT ARE YOU

gantly): GOING TO DO ABOUT IT?

Scotty: I mean that I would like anyone who wants

to listen to it get a copy, but . . .

Male Fan (arro- BUT WHAT?

gantly):

Scotty: You know, I mean it cost me three bucks to

burn the CD and print out a label and put it

in a case. And then, you know, I wrote the

songs and played all the instruments and

recorded the music and spent many a Satur-

day night hunched over my laptop getting

the EQ on the ukelele just right instead of

having sex with my fianc ´e . . . so I figure

that’s worth about three bucks too.

154

The video was produced by and featured Scotty Iseri.

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This American Copyright Life 247

Male Fan (geekly): But, OK, but Chris Andersen in Wired said

the future of music is free and you can make

a living by touring and giving away your

music online . . .

Scotty (outraged): CHRIS ANDERSEN CAN BITE MY

TINY, TATTOOED, HALF-JAP ASS.

YOU TELL CHRIS ANDERSEN TO

GIVE HIS BOOKS AWAY FOR FREE

155

AND MAKE HIS MONEY PLAYING IN

SHITTY CLUBS IN PROVO, UTAH

WHERE THE FOUR DOLLAR COVER

CHARGE GOES STRAIGHT TO THE

BAR AND THE ONLY WAY TO MAKE

GAS MONEY TO THE NEXT TOWN IS

IF SOME DRUNK PICKS UP A COPY OF

THE CD.

Male Fan (geekly): Hang on. It says Creative Commons on the

back. So . . . doesn’t that mean that I can

just give this away for free.

Scotty (frustrated): No, that . . . You’re awfully well-informed

for a drunk frat guy in a bar.

Make Fan: I was a hipster my freshman year of college.

Scotty: Got it.

Male Fan (geekly): OK, but what about this recent article by

Kevin Kelly that Cory Doctorow put up on

boingboing that said for an artist to make a

living in the 21st century you only need one

Scotty (interrupting, exasperated, and with rising anger):

Look, look . . . just take this CD. Just take

it. I hope you like it. Burn copies for your

friends. Put it up on Bittorrent. It’s fine, it’s

fine, it’s fine. AND YOU OUT THERE

(pointing at camera), YOU OUT THERE

ON THE INTERNET. YOU WANT A CD,

EMAIL ME, EMAIL “I DON”T HAVE

SIX BUCKS @ GMAIL.COM” WITH A

SUBJECT LIKE CHRIS ANDERSEN

SAYS YOU’LL GIVE ME FREE SHIT.

AND I’LL SEND YOU THE GOD

DAMNED CD.

155

Note: Chris Andersen did make his book available for free for a short time;

but later went on to sell several hundred thousand copies.

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248 Journal, Copyright Society of the U.S.A.

Male Fan (sheep- Maybe it’s not very good.

ishly):

Scotty (frustrated): That’s entirely possible and probably more

likely. Do you want the CD or not?

Male Fan (confi- Nah, I’ll just download it later. Thanks Bro.

dently): (Walks away)

Female Fan walks up Oh my God, Oh my God, that was so funny

(in valley girl . . . . I totally saw you last year in Salt Lake

accent): City and I totally bought your CD.

Scotty (modestly, Thanks, thanks very much.

cringing):

Female Fan: Is this the new one (CD)?

Scotty: Yep, it is. It’s six dollars.

Female Fan: Cooool. Thaaaaanks. I’m gonna post this

one online too. My friends just loved it . . .

Scotty: (looking quizzically into the camera)

Scotty Iseri’s video captures critical aspects of the social norms affect-

ing the music industry: the rationalization (“Chris Andersen in Wired said

the future of music is free and you can make a living by touring and giving

away your music online”), the indignance (WHAT ARE YOU GOING

TO DO ABOUT IT?), and the cluelessness (“I’m gonna post this one

online too”).

The video also captures aspects of the policy debate. When I first saw

this video, it reminded me of conversations that I periodically had with

Fred von Lohmann, formerly of the Electronic Frontier Foundation (EFF)

and now employed by Google. I would articulate economic and moral

justifications for channeling file-sharing into markets, to which Fred would

essentially say — file-sharing is here to stay: WHAT ARE COPYRIGHT

OWNERS GOING TO DO ABOUT IT? While I could understand his

response as a prediction of how self-interest might play out in the highly

promiscuous Internet ecosystem, I struggled to see how this was good for

promoting creative expression. I could not understand why EFF did not

use its considerable bully pulpit within the post-Napster generations to en-

courage ethical behavior as digital content channels emerged.

I would have to admit, however, that even more robust digital content

markets might not transmit market demand effectively to creative artists.

The entertainment field has long been plagued by content industry in-

termediaries short-changing artists through accounting practices and

backroom legislative deals.

156

In mid 2008, I received an inquiry that would bring this aspect of the

content governance ecosystem into clearer focus. A transactional en-

156

See supra, note 51.

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This American Copyright Life 249

tertainment lawyer representing F.B.T. Productions, which was in the

midst of litigation regarding Emimen’s digital royalties, called to see if I

would advise them about the custom and practice in the music industry.

Jeff and Mark Bass discovered Marshall Mathers (better known as

Eminem, his stage name) as a teenager and signed him to a production

deal before he was known outside of the Detroit rap scene.

157

Jeff would

co-write several of Eminem’s biggest hits and F.B.T. — short for “Funky

Bass Team” — produced his break through albums The Slim Shady LP

(1999), The Marshall Mathers LP (2000), The Eminem Show (2002), and 8

Mile (2002). As a result, F.B.T. had a financial stake in Eminem’s record

contract and music publishing royalty streams. Eminem’s career took off

just as the digital revolution unfolded. He had been the top selling artist

of the decade at the time of the litigation.

158

The dispute related to digital revenues (such as iTunes downloads and

ringtones) owed to F.B.T. My initial reaction after reviewing the pertinent

contracts was that F.B.T. did not need my assistance. The royalty provi-

sion provided a rate in the 18 to 20% range based on the “full price

records sold . . . through normal retail channels,” with volume escalations.

The provision then stated:

Notwithstanding the foregoing: . . . On masters licensed by [the record

label] to others for their manufacture and sale of records or for any other

uses, your royalty shall be an amount equal to fifty percent (50%) of our

net receipts from the sale of those records or from those other uses of the

masters.”

159

157

See Eminem,

IKIPEDIA

, http://en.wikipedia.org/wiki/Eminem (last visited

Nov. 4, 2013);

NTHONY

OZZA

, W

HATEVER

I A

: T

IFE

AND

IMES OF

MINEM

14-24 (2003); Gary Eskow, The Bass Brothers and

Eminem,

(Aug. 2, 2000, 12:00 PM), http://mixonline.com/mag/audio_

bass_brothers_eminem.

158

See Best of the 2000s: The Decade in Charts and More,

ILLBOARD

, http://www

.billboard.com/articles/news/266420/artists-of-the-decade (last visited Nov.

4, 2013) (citing Eminem as the best-selling artist of the 2000s). As of 2012,

Eminem placed third on the list of top-selling digital artists of all time at

42.29 million digital tracks, behind Rihanna (47.5 million), and the Black

Eyed Peas (42.4 million). See Rihanna Now the Biggest Digital Artist of All

Time,

ABC N

EWS

ADIO

(Jan. 6, 2012), http://abcnewsradioonline.com/mu-

sic-news/2012/1/6/rihanna-now-the-biggest-selling-digital-artist-of-all-time-1

.html

159

See Memorandum of Points and Authorities in Support of Plaintiffs’ Motion

for Summary Judgment, F.B.T. Prods., LLC v. Aftermath Records, Case

No. CV 07-03314 PSG (Dec. 3, 2008) at 1 [hereinafter “F.B.T. MSJ Brief”];

ONALD

S. P

ASSMAN

, A

EED TO

NOW

BOUT THE

USIC

USI-

NESS

176 (4th ed. 2000) (stating that “[t]he royalty on coupled product that’s

licensed to someone else by your record company is usually 50% of the

company’s licensing receipts”).

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250 Journal, Copyright Society of the U.S.A.

Since Apple and other digital retailers must have had licenses to

reproduce and distribute digital copies of the sound recordings — other-

wise, they would be infringing the sound recording and musical composi-

tion copyright — it was clear that the “Masters Licensed” clause applied

and the labels should have been paying 50% of net receipts on digital

transactions through Apple and other digital licensees. I advised F.B.T.’s

counsel that this was a clear contractual provision under which F.B.T.

should have been paid under the “Masters Licensed” clause for digital

downloads and indicated that they did not need my assistance on such a

clear question.

Nonetheless, F.B.T.’s counsel requested that I work with them to re-

spond to the aggressive litigation and expert barrage that they were facing.

As I delved into the case, I came to realize why Universal Music Group —

the world’s largest record label — waged such an unrelenting fight. The

1998 Eminem-Aftermath contract reflected standard industry practice at

the time, with the label paying a relatively low royalty rate on albums

manufactured and sold by the label (the “Records Sold” clause) and 50/50

split of net receipts on licenses to third parties (the “Masters Licensed”

clause).

160

The economic logic was straightforward: where the label did

more work in manufacturing, distributing, and marketing the recording, it

derived a larger share of the proceeds. The principal master licenses had

been for films and television programming and greatest hits albums, but

there was no reason why this clause — on the record label’s form contract

— should not apply to revenue from iTunes transactions.

By 1998, UMG had opened a specialized unit to plan entry into the

emerging digital marketplace.

161

It would eventually launch Pressplay, a

joint venture with Sony Music Entertainment.

162

As an owner of this ser-

160

See Passman, supra note 159, at 108, 176.

161

It was initially called the Electronic Commerce and Advanced Technologies

(eCAT) and renamed eLabs in 2000. See DataPlay Board of Directors

Elects Universal eLabs President Lawrence Kenswil,

USINESS

IRE

(Aug.

1, 20001), http://www.thefreelibrary.com/DataPlay+Board+of+Directors+El

ects+Universal+eLabs+President+Lawrence. . .-a063798201. In a 2012 in-

terview, Mr. Kenswil would comment that “there was a general reluctance

to outsource by licensing if you could do it yourself.” See

RAM

IN-

NREICH

, T

IRACY

RUSADE

: H

OW THE

USIC

NDUSTRY

’

AR ON

HARING

ESTROYS

ARKETS AND

RODES

IVIL

IBERTIES

51 (2013),

available at http://mediacommons.futureofthebook.org/mcpress/piracycru

sade.

162

See Technology Briefing Internet: Pressplay to Start Today,

N.Y. T

IMES

(Dec.

19, 2001); Lori Enos, Online Music Service Duet Renamed ‘Pressplay” Amid

Talk of Sony Exit,

E-C

OMMERCE

IME

(Jun. 12, 2001), http://www.ecom-

mercetimes.com/story/11174.html; Pressplay offered consumers 300 streams

and thirty downloads per month for $9.95 a month, or 1,000 streams, 100

downloads and twenty songs that could be burned onto a CD or transferred

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This American Copyright Life 251

vice, UMG could arguably treat digital download transactions under the

“records sold” clause of its record deals. Napster’s rapid emergence dis-

rupted this game. Pressplay limped out of the starting gate and failed to

gain traction in the marketplace,

163

eventually providing Steve Jobs with

the leverage to persuade UMG and the other major record labels to li-

cense their sound recordings to the iTunes Music Store.

164

In conjunction

with the popular iPod device,

165

iTunes succeeded in selling millions of

downloads, which would precipitate the battle over digital revenues.

By licensing their catalogs to Apple’s iTunes Music Store, UMG and

the other major record labels exposed themselves to artists contending

that download sales should be treated under the more favorable “Masters

Licensed” clause of the standard agreements. Nonetheless, they con-

tended that the “Records Sold” clause applied to digital downloads

through licensee-third party online vendors

166

while at the same time un-

to a portable player, for $24.95 a month. See Catherine Greenman,

BASICS; Streaming Fishing: A Guide to Net Radio,

N.Y. T

IMES

(Apr. 18,

2002), http://www.nytimes.com/2002/04/18/technology/basics-stream-fishing-

a-guide-to-net-radio.html?pagewanted=all&src=pm.

163

Pressplay and MusicNet, the other label-owned and developed online service,

failed for a variety of reasons, including the challenge of competing with

Napster and other “free” peer-to-peer services as well as technological lim-

its on consumer autonomy, limited catalog selection, and low-quality audio.

See Dan Tynan, The 25 Worst Tech Products of All Time,

PCW

ORLD

(May

26, 2006), http://www.pcworld.com/article/125772.-3/the_25_worst_tech_pro

ducts_of_all_time.html; see Adam Lashinsky, Saving Face at Sony,

OR-

TUNE

, Feb. 21, 2005, at 79 (reporting that Pressplay “initially failed to li-

cense music from competing labels and as a result never attracted many

users” and was eventually abandoned); Menell, supra note 31, at 172-74;

Fred Goodman, Will Fans Pay for Music Online?, 17

OLLING

TONE

(Jan.

31, 2002) (noting notable limits on consumer autonomy).

164

See Chris Taylor, Invention of the Year: iTunes Music Store,

IME

(Nov. 16,

2003), http:// www.time.com/time/specials/packages/article/0,28804,1935038_

1935059_1935086,00.html; Thomas K. Grose, Sing When You’re Winning,

IME

(Feb. 18, 2006), http://www.time.com/time/magazine/article/0,9171,116

1172-2,00.html (noting that “the big breakthrough came from Apple, which

finally convinced millions of consumers to pay for downloadable music”).

165

TEVEN

EVY

, T

ERFECT

HING

: H

OW THE I

HUFFLES

OMMERCE

ULTURE

AND

OOLNESS

(2006)

166

See Letter to Heads of the Major Record Labels from 27 Artist Attorneys

(Mar. 24, 2004) (stating that “[r]ather than recognize the arrangements be-

tween the major labels and independent electronic distributors as licensees,

for which we feel there can be no bona fide legal dispute, and paying our

clients according to the applicable [“masters licensed”] provision of their

contracts, all five major record labels have adopted the position that paid

downloads are equivalent to sales of CDs through retailers”).

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252 Journal, Copyright Society of the U.S.A.

dertaking a campaign to renegotiate active catalog artist agreements to

exclude digital downloads from the “Masters Licensed” clause.

167

Eminmen’s record deal put F.B.T. in an unusually favorable position

to challenge UMG’s royalty payments. Dr. Dre’s UMG sub-label After-

math Records signed Eminem through F.B.T. Productions to a record deal

in 1998. A 2000 novation placed Emimen in a direct contractual relation-

ship with Aftermath Records while retaining F.B.T.’s royalty stream and

accounting right. With Eminen’s career skyrocketing following chart-top-

ping records and a starring role in the autobiographical film 8 Mile, After-

math sought a new, longer-term agreement in 2003.

By that time, UMG had entered into an agreement with Apple Com-

puter authorizing sale of UMG recordings through the iTunes Music Store.

Consequently, UMG (and its affiliated sub-labels) sought to require all

new and renegotiated recording agreements with artists to contain a provi-

sion excluding digital downloads from the “Masters Licensed” clause.

Recognizing Eminem’s strong bargaining position, his attorney declined to

alter that clause and it carried over to the 2003 agreement.

168

Following an accounting that revealed that UMG was not compensat-

ing F.B.T. at the 50/50 rate, F.B.T. filed suit. In an ironic twist, the attor-

neys representing both sides of the 2003 contract — Gary Stiffelman on

behalf of Eminem and Peter Paterno on behalf of Aftermath Records

169

— had signed a letter to the heads of the major record labels stating that

the standard “Masters Licensed” clause covered digital downloads from

167

See

ONALD

S. P

ASSMAN

, A

EED TO

NOW

BOUT THE

USIC

USI-

NESS

158-59 (6th ed. 2006) (stating that “[a]fter a lot stumbling arounds, the

industry has settled into a routine. Under all the deals made in the last few

years, and in the renegotiations of older deals, [the recording artist] get[s

its] royalty rate applied to the amount received by the company [for digital

downloads, streaming-on-remand, ring tones and ring backs, non-interac-

tive webcasting, satellite radio, and podcasting].”).

168

There were some inconsequential alterations, such as renumbering paragraphs.

See F.B.T. MSJ Brief, supra note 159, at 4-5.

169

The explanation for this unusual circumstance was that Dr. Dre — who began

his music career as a recording artist — chose to use his attorney (Peter

Paterno) rather than UMG attorneys to negotiate Aftermath deals. Peter

Paterno’s career centered around artist representation, with the band

Metallica as one of his chief clients. See Music Fans Must Rebel Against

Greedy Record Labels,

EWS

COM

(Feb. 26, 2002), http://www.foxnews

.com/story/2002/02/26/music-fans-must-rebel-against-greedy-record-industry

(stating that “Music industry attorney Peter Paterno has become the first

guy to call when doing a Napster-related story. Metallica and Dr. Dre are

among his clients. . . . Twice in the past week, Paterno has lashed out at

those who exchange music on the Internet. . . . ‘If I was running a record

company, as opposed to the wimps that are running one, I’d say, “You know

what, I have no interest in compromising, and I’m going to go sue Little

Johnny who’s downloading this stuff.”’”)

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This American Copyright Life 253

third parties. Nonetheless, UMG did all that it could to fight their part-

ners over this issue. They succeeded at trial,

170

but lost resoundingly at

the Ninth Circuit:

the agreements unambiguously provide that “notwithstanding” the

Records Sold provision, Aftermath owed F.B.T. a 50% royalty under the

Masters Licensed provision for licensing the Eminem masters to third

parties for any use. It was undisputed that Aftermath permitted third

parties to use the Eminem masters to produce and sell permanent

downloads and mastertones.

171

The bulk of active artists were forced to give up this provision, meaning

that they see precious little from digital downloads. Moreover, they have

been pushed into so-called “360 Deals” which will make it more difficult

for them to gain artistic and commercial independence.

172

Many back cat-

alog artists — those not releasing new records — who were not pressured

to renegotiate are seeking higher royalties on digital downloads.

173

* * * * * *

170

See Amy Kaufman, Eminem Loses Case to Universal Music Group,

RAP

(Mar. 6, 2009), http://www.thewrap.com/media/article/eminem-loses-case-

universal-music-group-1750.

171

See F.B.T. Prods., LLC v. Aftermath Records, 621 F.3d 958, 967 (9th Cir.

2010); Sharon Waxman, Updated: Eminem Wins Royalties from Universal,

UMG Will Fight It,

RAP

(Sept. 3, 2010), http://www.thewrap.com/

media/column-post/breaking-eminem-wins-royalties-universal-appeal-

20615.

172

See Daniel J. Gervais, Kent M. Marcus & Lauren E. Kilgore, The Rise of 360

Deals in the Music Industry,

ANDSLIDE

40 (Mar./Apr. 2011). This is not to

say that some established artists have not done well through 360 deals. Ma-

donna and Jay-Z have obtained large advances for signing these contracts.

It is less clear that lesser-known acts, which do not see large advances, will

ultimately benefit from these arrangements. See id.

173

See Eriq Gardner, Judge Declines Universal Music Group’s Bid to Dismiss

Class Action Over Digital Revenue,

ILLBOARD

(Nov. 2, 2011) (citing a

study by the Future of Music Coalition that “estimated that the difference

in interpretation just for music downloaded off of iTunes alone could be

$2.15 billion”), http://www.billboard.com/biz/articles/news/1162202/judge-

declines-universal-music-groups-bid-to-dismiss-class-action-over; Christo-

pher Morris, F.B.T. Settles with UMG, Aftermath: “Eminem Case” Cited as

Precedent for Other Digital Royalty Suits,

ARIETY

(Oct. 29, 2012), http://

variety.com/2012/music/news/f-b-t-settles-with-umg-aftermath-1118061395

(noting that “[t]he F.B.T. case had been closely watched, for several class

actions and individual suits had been launched in the wake of the appellate

decision by artists — most of them heritage acts with contracts dating in

many cases back to the ’70s — who claimed they were also entitled to

higher digital royalties. In nearly all cases, the actions cited the appellate

decision as a precedent.”).

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254 Journal, Copyright Society of the U.S.A.

Figure 5

Caught in a Dual Vise

These experiences revealed the dire ecosystem facing songwriters and

performing artists in the Internet Age. As depicted in Figure 5, they are

being squeezed by two powerful and determined forces. Fans came to see

recorded music as essentially a free good. They have little compunction

about downloading and sharing digital files. They rationalize

“freeconomics” as good for artists as well as themselves. On the other side

of the vise, and compounding the file-sharing rationalization,

174

record la-

bels were willing to go to extraordinary lengths to short-change recording

artists

175

— losing sight of how such machinations would undermine the

marketplace for music as well as copyright’s legitimacy among consumers

and recording artists. This pathology is self-reinforcing. Consumers’ file-

sharing norm is reinforced by the perception (and reality) that record la-

bels exploit artists. File-sharing reinforces corporate pressures to short-

change artists.

2. Popular Films: Anytime, Anywhere, and Free

The effects of file-sharing and social norms on the film industry un-

folded later than the music industry due to the large size of feature length

digital motion picture files and the use of DVD encryption in digital re-

lease of film products. They would, however, reach dramatic proportions

in 2009. That was the year in which Kathryn Bigelow’s acclaimed indepen-

dently produced film, The Hurt Locker, garnered six Academy Awards

including Best Picture and Best Director at the Academy Awards yet un-

derperformed any prior Best Picture winner. The staggered theatrical dis-

174

Many fans wonder why they should pay for music if artists are just getting

ripped off by their labels anyway. See supra, Section I(D).

175

See supra, Section I(D).

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This American Copyright Life 255

tribution played a role, but unauthorized distribution through BitTorrent

swarms and cyberlockers unquestionably hurt The Hurt Locker.

176

A short time later, I would gain a first-hand account of the challenges

facing independent filmmakers from a UC-Berkeley colleague. Ellen

Seidler is an experienced broadcast journalist and filmmaker with ties to

UC-Berkeley’s Graduate School of Journalism. Her directing credits in-

clude the award-winning “Fighting for Our Lives – Facing AIDS in San

Francisco,” narrated by Linda Hunt and appearing on PBS. Ellen would

become an unlikely crusader for copyright enforcement.

177

Her story

about producing an independent film illustrates the opportunity and chal-

lenges for artists in the Internet Age.

In 2007, Ellen and Megan Siler set out to pursue a dream that they

shared — producing a lesbian romantic comedy. Any film project entailed

involved risk, but a project of this nature was especially challenging. It

would not gain widespread theatrical distribution and hence would need to

rely upon alternative distribution channels. Ellen and Megan believed

that the digital marketplace (DVDs and authorized Internet streaming and

downloads) in conjunction with film festival showcases could provide a

viable means for recouping the substantial investment. They scraped to-

gether the financing from their own savings and mortgaging assets and

handled many of the production tasks themselves. Their film, And Then

Came Lola, premiered to a sold-out audience at the San Francisco Frame-

line LGBT Film Festival and was screened at dozens of film festivals

around the world. It garnered glowing reviews: “A lesbian film done right

. . . . Fast-paced, energetic and fun!”

178

“A sugar rush of a lesbian movie

176

A substantial contributing factor to the theatrical shortfall was that The Hurt

Locker was publicly released in Italy and elsewhere more than six months

before its U.S. theatrical release. See The Hurt Locker,

IKIPEDIA

, http://

en.wikipedia.org/wiki/The_Hurt_Locker (last visited Nov. 4, 2013). Copies

made their way onto unauthorized channels long before it was available

through key authorized markets. See The Hurt Locker Producers to Take

on Pirates,

EWS

COM

(May 13, 2010), http://www.news.com.au/technol

ogy/the-hurt-locker-producers-to-track-down-pirates/story-e6frfro0-122586

5968935 (observing that “The Hurt Locker made just $18 million in the US

and $47m worldwide after being leaked onto the internet more than five

months before its U.S. release”)

177

See Schuyler Velasco, Pop-Up Piracy: Indie Filmmaker Speaks Out,

ACK-

STAGE

: T

CTOR

’

ESOURCE

(Jul. 6, 2010), http://www.backstage.com/

news/pop-up-piracy-indie-filmmaker-speaks-out.

178

See Jim Teit, Off to the Cinema; Q-Fest Arrives in Philly,

NBC P

HILADEPHIA

(Jul. 10, 2009), http://www.nbcphiladelphia.com/the-scene/archive/One-of-a-

Kind-Q-Fest-Opens-Today.html.

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256 Journal, Copyright Society of the U.S.A.

. . . . Funny, campy and wildly imaginative.”

179

They were on track to

repay their debts.

Unfortunately, Ellen and Megan had not foreseen the emergence of

advertising-driven cyberlocker services geared toward content piracy when

they embarked on their film project. Within a day of the German DVD

release, And Then Came Lola showed up on unauthorized websites

throughout the world. Ellen’s life quickly shifted from filmmaker to anti-

piracy forensics geek. She was soon spending two to three hours per day

ferreting out unauthorized links — multiplying into the thousands — and

trying to use the Digital Millennium Copyright Act’s takedown system to

staunch the unauthorized flow. But no sooner did she request that a copy

be taken down that more copies appeared on the same service. She even

found copies dubbed in foreign languages; such was the economic motiva-

tion for posters.

Recognizing that this whack-a-mole approach was doomed to failure,

Ellen turned to the underlying economic drivers. A new cyberlocker busi-

ness model was driving a lot of the unauthorized traffic. Kim Dot Com’s

Megaupload service was a principal source of the problem. Its founder

claimed to have a billion users and accounted for 4% of global Internet

traffic at the height of its success. MegaUpload relied on legitimate busi-

nesses placing advertisements through ad networks within the cyberlock-

ers. Those who could attract Internet users to their cyberlockers could

earn revenue through the ad networks. So did MegaUpload. And how

better to attract eyeballs to a cyberlocker than by hosting popular films

and television shows and posting those links in chat rooms throughout the

Internet.

By the time that I caught up with Ellen, her life had been transformed

into the role of anti-piracy crusader. She went from making films and con-

tributing directly to culture to speaking out about who profits from online

piracy — developing videos about the economic drivers of piracy, blog-

ging, maintaining a website devoted to the challenges facing film-

makers,

180

and appearing on radio talk shows to discuss the connection

between piracy and profits.

The effects of film piracy are particularly grave because unlike sound

recordings, which don’t typically require large financial outlays, many of

the most valuable films require substantial capital investment. When I

179

See Danielle Riendeau, Review of “And Then Came Lola”,

FTER

LLEN

COM

(Aug. 24, 2009), http://www.afterellen.com/review-of-and-then-came-lola/

08/2009.

180

See Who Profits from Piracy,

IRATES

, http://popuppirates.com (last

visited Nov. 4, 2013);

NDIE

: C

OPYRIGHT

& C

REATIVE

ULTURE

–

OMMENTARY

, M

EMES AND

ORE

, http://voxindie.org (last visited Nov. 4,

2013).

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This American Copyright Life 257

asked Ellen if she planned to pursue further independent film projects, she

laughed. The experience of producing And Then Came Lola, only to

struggle to repay the loans and watch as others profited from her hard

work, chilled her expression.

C. The Copyright/Internet Paradox

For most of the history of copyright protection, authors and perform-

ing artists have struggled to find a sustainable way of supporting their art.

The problem was not the lack of effective protection; it was the challenge

of producing, manufacturing, marketing, and distributing the copyrighted

product — a book, a film, a sound recording. They inevitably had to rely

upon intermediaries, who typically took a large portion of the revenue.

How could an author distribute a book without a publisher who could

promote the project and manufacture and distribute it to a large network

of bookstores? How could a musician produce, manufacture, market, and

distribute a record without a major record label to ensure that thousands

of copies would be in the right stores as the song hit the radio airwaves?

How could a filmmaker finance, produce, and distribute a film without a

major studio?

That is why we have come to see the copyright system as revolving

around content industries — essentially the intermediaries that have con-

nected creators and consumers. For most of the twentieth century, the

content industries focused as much or more on the intermediaries — the

publishers, studios, broadcasters, and record labels — as the authors, art-

ists, and actors. Creators had to break through this phalanx in order to

reach the audience.

Advances in digital technology have substantially reduced the role of

the intermediaries separating creators and fans. Eli Miller and Ellen Seid-

ler — like many other talented and resourceful artists and authors — are

role models for what the copyright system aims to encourage: direct com-

merce between creators and fans. Yet digital technology has created new

challenges that rival the old.

181

Although Eli and Ellen can reach large

audiences directly, the promiscuity of Internet technology erects new chal-

lenges to their economic sustainability. Both, unfortunately, have moved

on to other livelihoods notwithstanding their desires to pursue creative

181

Cf. The Songwriters Association of Canada’s Proposal to Monetize the Non-

commercial Sharing of Music (updated Mar. 2011) (“Music file-sharing is a

vibrant, open, global distribution system for music of all kinds, and presents

a tremendous opportunity to both creators and rights-holders. Additionally,

once a fair and reasonable monetization system is in place, all stakeholders

including consumers and Internet service providers will benefit substan-

tially.”), http://www.songwriters.ca/proposaldetailed.aspx (last updated Jan.

2011).

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258 Journal, Copyright Society of the U.S.A.

projects and the apparent desire of their fans for them to create music and

film.

I have come to see the content governance ecosystem as a paradox.

The very technologies that empower creators and enable them to reach

vast audiences without the intermediaries of old make it ever more diffi-

cult to achieve an adequate reward for their investments in producing art.

What we are seeing is a shift in the creative ecosystem toward alternative

financing mechanisms, with advertising-based models as the primary driv-

ers. Such models, however, distort the art and manipulate the audience.

182

I believe that what creators want is a fair compensation system based on

the popularity of their art; and what consumers want is easy access to crea-

tive original art at a competitive price.

I don’t intend to suggest that there has been no progress in these di-

rections. We are seeing the emergence of innovative symbiotic distribu-

tion platforms — such as iTunes, Spotify, Hulu, and Netflix — that

enhance the digital content marketplace.

183

Nonetheless, these markets

are plagued by complex pathologies that undermine public respect for the

1. Digital Music Platform Pathology

The emergence of the Napster platform demonstrated the technologi-

cal possibility of a true celestial jukebox in mid 1999. Although Napster

had not licensed the content flowing through its system, it nonetheless

proved to the music-loving public that they could seamlessly gain access to

any musical track through an Internet connection. Once such a tantalizing

possibility had been revealed, the public was not going to be content with

anything less. This did not necessarily mean that such an extraordinary

technology had to be free. But it had to be available, user-friendly, and

reasonably priced.

Unfortunately, the byzantine structure of music copyright and the

music industry as well as antitrust law posed tremendous challenges in

achieving what consumers came to expect. The emergence of the radio

industry provides the closest analogy. It took several decades to develop

and implement a workable licensing structure.

184

This system has oper-

ated since the 1950s under a complex antitrust consent decree. In the An-

alog Age, consumers had no alternative to regulated radio channels and

182

See Menell, supra note 152.

183

See Paul Sloan, Spotify: Growing Like Mad, Yet So Far to Go,

C—N

(Mar.

12, 2013), http://news.cnet.com/8301-14013_3-57573394/spotify-growing-

like-mad-yet-so-far-to-go.

184

See

USSELL

ANJEK

, P

ENNIES

ROM

EAVEN

: T

MERICAN

OPULAR

USIC

USINESS IN THE

WENTIETH

ENTURY

(1996).

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This American Copyright Life 259

hence they had no choice to wait for the slow evolutionary processes of

business licensing and legal oversight to run their course.

The Internet Age afforded music industry titans no such luxury. If

then technology entrepreneurs and consumers would create their own. As

noted previously,

185

UMG and other music companies were in the plan-

ning phases of digital music services in the late 1990s. They hoped to use

digital rights management technology to build a controlled digital jukebox.

But once consumers got a taste of Napster, many would have none of the

clunky, fragmented, tethered music services being offered by the major

record labels. Pressplay and MusicNet limped out of the starting gate and

quickly failed as ventures.

Napster’s rapid emergence forced the major record labels and music

publishers to pivot their strategy,

186

which produced the historic Apple

iTunes licensing deals with much of the industry. This business model,

however, achieved only limited market scope. It did wonders for Apple’s

iPod sales, but only modestly offset the recording industry’s revenue de-

cline. Even after Napster’s shutdown, consumers continued to flock to

other peer-to-peer services from Grokster to Grooveshark. The music in-

dustries gradually expanded licensing of music to a broader range of ven-

dors, but competing with free was a challenge. Each of the services had

limitations and drawbacks.

Spotify, introduced in parts of Europe beginning in 2008 and

launched in the United States in mid 2011, comes closest to offering con-

sumers a vast authorized catalog (approximately 20 million songs) on a

wide range of devices through a user-friendly interface — featuring con-

sumer playlists, integration with preference-based playlists, radio stations,

and social media integration.

187

All of these features are available

through Spotify’s Premium Service for $9.99 per month. A more limited

service is available for $4.99 per month. And Spotify is available for

“free” through an ad-supported system. As of March 2013, Spotify re-

ported 6 million paying subscribers worldwide.

188

Its entire user base (ad-

supported and paid subscribers) reached 24 million active users in March

2013.

189

185

See supra, Section II(B)(1).

186

See Amy Harmon, Grudgingly, Music Labels Sell Their Songs Online,

N.Y.

IMES

, July 1, 2002, at C1.

187

See Spotify,

IKIPEDIA

, http://en.wikipedia.org/wiki/Spotify (last visited Nov.

4, 2013).

188

See Paul Sloan, Spotify: Growing Like Mad, Yet So Far to Go,

C—N

(Mar.

12, 2013), http://news.cnet.com/8301-14013_3-57573394/spotify-growing-

like-mad-yet-so-far-to-go.

189

See id.

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260 Journal, Copyright Society of the U.S.A.

Nonetheless, Spotify does not fulfill all of the critical desires of cre-

ators and consumers, which undermines its success as an alternative to

unauthorized distribution. Although Spotify offers an innovative inter-

face, the per-stream payment to artists has proven disappointing.

190

David Byrne estimates that a four person band with a 15% royalty on

Spotify streams would need to stream nearly a quarter of billion perform-

ances per year in order to sustain a minimum wage of $15,080.

191

Rather

than agreeing to a transparent royalty model, the labels obtained a $500

million advance from Spotify for the right to license their catalogs in the

U.S.

192

and took an equity position — with a “a possible sale of shares by

the label would end up in the proverbial ‘blackbox’ (non-attributable reve-

nue that remains with the label).”

193

Meanwhile, “indie labels . . . as op-

190

See Sven Grundberg, Spotify Reveals the Math Behind Its Music Royalties;

Streaming Service Pays Less than a Penny for Each Use,

ALL

. J.

(Dec.

3, 2013), http://online.wsj.com/news/articles/SB1000142405270230367080457

9236292495590448; (reporting payments of between .6 and .84 cents per

song stream, but noting that this amounted to over $500 million in 2013,

much of which goes to record labels); Ben Sisario, As Music Streaming

Grows, Royalties Slow to a Trickle,

N.Y. T

IMES

(Jan. 28, 2013), http://www

.nytimes.com/2013/01/29/business/media/streaming-shakes-up-music-indus-

trys-model-for-royalties.html (as corrected Jan. 31, 2013) (reporting that

“Spotify generally pays 0.5 to 0.7 cent a stream for the paid tier, which re-

sults in $5,000 to $7,000 per million plays”). Spotify and its defenders re-

spond that it provides a substantial payout to music copyrights owners. See

Sloan, supra note 160 (reporting that Spotify pays out 70% of its revenue to

music copyrights owners); see also Mike Masnick, Myth Dispensing: The

Whole “Spotify Barely Pays Artists” Story Is Bunk,

ECHDIRT

(Jun. 26,

2012), http://www.techdirt.com/articles/20120622/16193319442/myth-dispens

ing-whole-spotify-barely-pays-artists-story-is-bunk.shtml.

191

See David Byrne, The Internet Will Suck All Creative Content out of the World,

UARDIAN

(Oct. 11, 2013), http://www.theguardian.com/music/2013/

oct/11/david-byrne-internet-content-world?CMP=twt_gu (noting that “[f]or

perspective, Daft Punk’s song of the summer, ‘Get Lucky’, reached

104,760,000 Spotify streams by the end of August: the two Daft Punk guys

stand to make somewhere around $13,000 each. Not bad, but remember this

is just one song from a lengthy recording that took a lot of time and money

to develop.”).

192

See id.

193

See Helienne Lindvall, Behind The Music: The Real Reason the Major Labels

Love Spotify,

ONDON

: T

UARDIAN

(Aug. 17, 2009), http://www

.theguardian.com/music/musicblog/2009/aug/17/major-labels-spotify; Steve

Guttenberg, Is Spotify Unfair to Musicians?,

C—N

(Oct. 17, 2011), http://

news.cnet.com/8301-13645_3-57540964-47/is-spotify-unfair-to-musicians;

Robert Andrews, It’s Time for Transparency on Music Streaming Rates,

PAID

ONTENT

(Nov. 16, 2011), http://paidcontent.org/2011/11/16/419-its-

time-for-transparency-on-music-streaming-rates; Spotify Should Give Indies

a Fair Deal on Royalties,

UARDIAN

(Feb. 1, 2011), http://www

.theguardian.com/media/pda/2011/feb/01/spotify-royalties-independents; cf.

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This American Copyright Life 261

posed to the majors . . . receive no advance, receive no minimum per

stream and only get a 50% share of ad revenue on a pro-rata basis.”

194

Because the legacy catalog is essential to Spotify’s viability, the major

labels were able to demand an equity stake and royalty regime that not

only ensures that their own artists are marginalized but also that indepen-

dent artists (i.e., those not controlled by the majors) don’t see a reasonable

share of digital music revenues.

195

These tactics mirror the machinations

in the F.B.T. litigation.

196

Although major record labels have clout be-

cause of their catalog, the artists responsible for that catalog will be hard-

pressed to derive a fair share.

197

These patterns are playing out on new subscription platforms as well.

Merlin, an organization that represents global digital rights for indepen-

dent artists, expressed concern that indies are being unfairly treated in

negotiations with subscription services because major labels demand large

advances on royalties based on their physical goods market share.

198

Mer-

lin contends that this approach unfairly treats independent labels, whose

artists don’t compete as effectively at physical good retailers. Basing pay-

ments on this baseline, as opposed to digital market share, artificially in-

flates major labels’ market share. Furthermore, recording artists are

preparing to bring lawsuits in Sweden against Universal Music Group and

Warner Music over the distribution of Spotify royalties.

199

These patterns create a pathology that undermines the content gov-

ernance ecosystem. Some of the most popular recording artists — includ-

ing Adele, Black Keys, Coldplay, deadmau5, Rihanna, Taylor Swift, and

Masnick, supra note 165 (noting that “Spotify pays labels, not artists. And

labels aren’t always great about paying artists”).

194

See Lindvall, supra note 193.

195

See Masnick, supra note 190 (noting that there are “legitimate concerns about

how Spotify splits up its proceeds between major labels and indies, since the

majors have an equity stake”).

196

See supra, Section II(B)(1).

197

See Dave Morris, Spotify’s Miracle Growth Undermined by Artists’ Revolt,

LOBE AND

AIL

(Aug 5, 2013), 2013 WLNR 19230580 (commenting that

“if and when [Spotify] does IPO — rumours have swirled for several years,

and valuations have approached $3-billion (U.S.) — it will have to reconcile

with musicians, and right now, they seem further apart than ever”).

198

See Janko Roettgers, Merlin CEO: Major Labels Are Setting New Music Ser-

vices Up to Fail,

PAID

ONTENT

(Oct. 12, 1013), http://gigaom.com/2013/10/

12/merlin-ceo-major-labels-are-setting-new-music-services-up-to-fail/?utm_

source=General+Users&utm_campaign=78be9f7b95-c%3Amed+d%3A10-

15&utm_medium=email&utm_term=0_1dd83065c6-78be9f7b95-99121857.

199

See Artists to Sue Labels over Streaming Earnings in Sweden,

USIC

ALLY

NFORMATION AND

TRATEGY FOR THE

USIC

USINESS

(Oct. 28, 2013),

http://musically.com/2013/10/28/artists-to-sue-labels-over-streaming-earn-

ings-in-sweden.

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262 Journal, Copyright Society of the U.S.A.

Thom Yorke — have kept their new releases off Spotify and other digital

services in the hopes of attracting greater revenue from CD and digital

download sales.

200

Other classic artists who control their masters — in-

cluding AC/DC, Aimee Mann, the Beatles, Garth Brooks, and Led

Zeppelin — have refused to allow their music to stream on authorized

services.

201

The unavailability of such popular releases on the celestial

jukebox, in turn, frustrates, confuses, and disillusions the very consumers

who have joined an authorized service and fuels unauthorized downloads

and streams of these artists’ music. Furthermore, other artists have deni-

grated Spotify, with Thom Yorke of Radiohead proclaiming that Spotify is

“the last desperate fart of a dying corpse”

202

and David Byrne declaring

that “[t]he internet will suck all creative content out of the world.”

203

200

See Andrew Orlowkski, Radiohead’s Thom Yorke Pulls His Own Music off

Spotify,

EGISTER

(Jul. 15, 2013), http://www.theregister.co.uk/2013/07/

15/thom_yorke_spotify_no; Kia Makarechi, Black Keys: Sean Parker Is an

A**hole, Spotify Isn’t Fair to Artists,

UFFINGTON

OST

(Mar. 28, 2012),

http://www.huffingtonpost.com/2012/03/28/black-keys-sean-parker-spotify-

asshole_n_1384882.html; Robert Andrews, Interview: Spotify Exec on Roy-

alties and Keeping Labels Happy,

PAID

ONTENT

(Dec. 10, 2012), http://

paidcontent.org/2012/12/10/interview-spotify-exec-on-royalties-and-keep-

ing-labels-happy.

201

See Charles Arthur, Thom Yorke Blasts Spotify on Twitter as He Pulls His

Music,

UARDIAN

(Jul. 15, 2013), http://www.theguardian.com/tech-

nology/2013/jul/15/thom-yorke-spotify-twitter; David Gritten, Aimee Mann

Interview: “I Don’t Make Money from Spotify”,

ELEGRAPH

(Jan. 24,

2013), http://www.telegraph.co.uk/culture/music/rockandpopfeatures/

9822192/Aimee-Mann-interview-I-dont-make-money-from-Spotify.html.

202

See Alex Young, Thom Yorke: Spotify Is “the Last Desperate Fart of a Dying

Corpse”,

ONSEQUENCE OF

OUND

(Oct. 3, 2013), http://consequenceof-

sound.net/2013/10/thom-yorke-spotify-is-the-last-desperate-fart-of-a-dying-

corpse; see also Arthur, supra note 176 (quoting Yorke’s tweet: “Make no

mistake, new artists you discover on Spotify will not get paid. Meanwhile

shareholders will shortly be rolling in it. Simples”). Yorke responded to the

suggestion that his “rebellion is only hurting your fans,” that he was “stand-

ing up for our fellow musicians.” See id. Nigel Godrich, Radiohead’s pro-

ducer, notes that:

Making new recorded music needs funding. Some records can be made in

a laptop, but some need musician[s] and skilled technicians. Pink Floyd’s

catalogue has already generated billions of dollars for someone (not nec-

essarily the band) so now putting it on a streaming site makes total sense.

But if people had been listening to Spotify instead of buying records in

1973 I doubt very much if Dark Side [of the Moon, Pink Floyd’s record-

breaking album released that year which sold [ ] millions of copies] would

have been made. It would just be too expensive.

See id.

203

See Byrne, supra note 166. Other artists see Spotify as a more promising fu-

ture. See Helienne Lindvall, Dave Stewart: Thom Yorke Was Wrong –

Songwriters Should Worship Spotify,

UARDIAN

EDIA

LOG

(Sep.

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This American Copyright Life 263

Notwithstanding promising growth rates,

204

subscriptions to authorized

services remain anemic and unauthorized services continue to attract a

large following.

2. Digital Film Platform Pathology

As in the music industry, file-sharing accelerated the development of

authorized Internet services by and in conjunction with film and television

content owners. iTunes expanded beyond music into downloads of video

content. Netflix, which began as a mail-order DVD rental business,

shifted to a streaming service. Several studios combined to introduce

Hulu. HBO and some cable providers have afforded their customers with

broader access to their programming over the Internet.

These services have attracted a growing portion of would-be file-shar-

ers through convenient, reasonably priced subscription plans and original

programming. Nonetheless, the copyright owners and broadcasters under-

mine consumer confidence in the authorized content channels through

fragmentation, limited availability of programming, and other restrictions

that limit consumers’ ability to access what they want, when they want it,

at a fair price.

205

The obvious explanation is that such windowing enables

the content owner to maximize profit through price discrimination. In the

pre-Internet Age, consumers had little choice if they wanted to see the

programming other than to wait. The Internet, however, provides another

option — file-sharing.

This development puts copyright owners and broadcasters to a choice.

And some enterprises have followed the control model. As a result, shows

like HBO’s Game of Thrones — which appeals to a demographic that is

particularly able to use file-sharing technology — has become the most

pirated show.

206

Jeff Bewkes, head of Time Warner, the studio that pro-

27, 2013), http://www.theguardian.com/media/media-blog/2013/sep/27/dave-

stewart-thom-yorke-spotify (reporting that Dave Stewart, songwriter, pro-

ducer, and performer with the Eurythmics, has gone from being critical of

Spotify to embracing it).

204

See Sloan, supra note 163 (reporting 44% growth of paid music service sub-

scriptions to 20 million in 2012).

205

See Leigh Beadon, Dear HBO, Netflix Et Al: Fragmenting Online TV Lets

Piracy Keep Its Biggest Advantage,

ECHDIRT

(Jan. 16, 2013), http://www

.techdirt.com/articles/20130114/18442221671/dear-hbo-disney-netflix-et-al-

fragmenting-online-tv-lets-piracy-keep-its-biggest-advantage.shtml; Mike

Masnick, Warner Bros., MGM, Universal Collectively Pull Nearly 2,000

Films from Netflix to Further Fragment the Online Movie Marketplace,

ECHDIRT

(May 2, 2013), http://www.techdirt.com/articles/20130430/223616

22903/warner-bros-mgm-universal-collectively-pull-nearly-2000-films-net-

flix-to-further-fragment-online-movie-market.shtml.

206

See Ernesto, Top 10 Most Pirated TV-Shows of the Season,

ORRENT

REAK

(Jun. 22, 2013), http://torrentfreak.com/top-10-most-pirated-tv-shows-of-

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264 Journal, Copyright Society of the U.S.A.

duces the show, celebrates this distinction by suggesting that it is “better

than an Emmy.”

207

Such cynicism by an industry leader, however, over-

looks the challenges faced by independent filmmakers that don’t have the

wherewithal of a major studio. It also reinforces the legitimacy of unau-

thorized access and erodes the copyright foundation supporting the full

range of professional creators.

208

A better long-term solution should wel-

come consumers to more convenient authorized channels,

209

something

HBO and Showtime have been unwilling to do.

* * * * *

Advances in digital technology have altered the content governance

ecosystem irreversibly. Unlike the ecosystem in which “My Generation”

came of age, consumers now play an active role in the functioning of the

music or film, a large and growing swath of netizens can obtain those prod-

ucts through unauthorized channels. Neither efforts to shut down services

capable of non-infringing use nor carpet-bombing of consumers are feasi-

ble or desirable. The copyright system cannot rely on a simple deterrence

model to achieve compliance. The past decade has demonstrated that

Congress cannot put the Internet genie back in the bottle merely through

ramping up statutory damages. Content owners need to tap into what fans

truly value about their industries — creativity and independence — and

the copyright system must afford consumers greater access and freedom of

expression. A central goal of copyright reform should be to make the sys-

tem understandable and acceptable to new age creators and consumers.

ACT III: HOW DO WE IMPROVE COPYRIGHT’S PUBLIC

APPROVAL RATING (AND EFFICACY)?

From its inception more than 300 years ago, copyright law has granted

reproduction and publication rights to encourage authors and publishers

to pursue and disseminate creative expression. In its modern incarnation,

the-season-130622 (reporting Game of Thrones as the most downloaded TV

show on BitTorrent during spring 2013, estimating 5.2 million downloads of

Game of Thrones compared with 5.5 million TV viewers).

207

See Todd Spangler, Time Warner’s Bewkes: Piracy of HBO “Game of

Thrones” Is “Better Than an Emmy”,

ARIETY

(Aug. 7, 2013), http://variety

.com/2013/digital/news/time-warners-bewkes-piracy-of-hbo-game-of-

thrones-is-better-than-an-emmy-1200575271.

208

See I Tried to Watch Game of Thrones and This Is What Happened,

ATMEAL

http://theoatmeal.com/comics/game_of_thrones.

209

See Andrew Wallenstein, Time to Free HBO Go from Its TV Shackles: Enough

Stonewalling, HBO – Let Consumers Pay for Broadband-Only Subscrip-

tions Before It’s Too Late,

ARIETY

(Mar. 29, 2013), http://variety.com/

2013/digital/news/time-to-free-hbo-go-from-its-tv-shackles-1200329375.

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This American Copyright Life 265

it promotes free expression by relying upon market competition,

210

as op-

posed to patronage or government funding, to support the creative arts.

promotes free and independent expression and provides a forum for over-

coming prejudice and bigotry. It has long supported investigative journal-

ism — the Fourth Estate that provides a vital check on corruption and

abuse of power, and promotes democratic values.

If copyright is to continue to serve these vital functions in the Internet

Age, it will be because all of the institutions governing its operation —

digital technology, markets, political institutions, and especially social

norms — work together to support well-functioning markets for creative

enterprise as well as breathing room for free expression and nurturing suc-

cessive generations of creators.

As Act II emphasized, “freeconomics” has emerged as a dominant

social norm in the Internet Age. If consumers opt out of legitimate mar-

kets, the creative engine will not grind to a halt. But the creative ecosys-

tem will change in undesirable ways — from the loss of independent,

professional creators to distortion of the creative process. Advertising will

increasingly dominate the creative process, relegating art and consumers

to the roles of advertising vehicles and targets. As some have suggested,

“if you are not paying, then you are the product.”

211

Journalistic indepen-

dence will give way to overt and covert consumer persuasion.

210

Professor James Grimmelman characterizes copyright’s ethical default princi-

ple in market terminology:

The basic ethical expectation of copyright is that authors and audiences

respect each other and meet in the marketplace. Authors behave well

when they create and offer works that enrich the audience’s intellectual

and cultural lives. Audiences behave well when they offer authors the

financial support needed to engage in creative work. The exchange is

commercial, voluntary on both sides, reciprocal, and respectful.

James Grimmelmann, The Ethical Visions of Copyright Law, 77

ORDHAM

L. R

. 2005, 2014 (2009).

211

See Menell, supra note 128 <Brand Totalitarianism>; Scott Goodson, If You’re

Not Paying for It, You Become the Product,

ORBES

(Mar. 5, 2012), http://

www.forbes.com/sites/marketshare/2012/03/05/if-youre-not-paying-for-it-

you-become-the-product; Olivia Solon, You Are Facebook’s Product, Not

Customer,

IRED

(Sept. 21, 2011), http://www.wired.co.uk/news/

archive/2011-09/21/doug-rushkoff-hello-etsy; Nathan Newman, You’re Not

Google’s Customer – You’re the Product: Antitrust in a Web 2.0 World,

UF-

FINGTON

OST

(Mar. 29, 2011), http://www.huffingtonpost.com/nathan-new-

man/youre-not-googles-custome_b_841599.html;

HOMAS

O’

GUINN

, C

HRIS

LLEN

, & R

ICHARD

J. S

EMENIK

, A

DVERTISING AND

NTEGRATED

RAND

ROMOTION

81-82 (4th ed. 2006); Randal C. Picker, The Digital Video Re-

corder: Unbundling Advertising and Content, 71

U. C

. L. R

. 205 (2004);

Matthew Savare, Where Madison Avenue Meets Hollywood and Vine: The

Business, Legal, and Creative Ramifications of Product Placements, 11

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266 Journal, Copyright Society of the U.S.A.

unworkable and counterproductive in the Internet Age. For those rea-

sons, even the best organized and most powerful copyright owners have

largely abandoned the use of enforcement against end users. Many of

those who continue to wield the statutory damage cudgel are widely

viewed as opportunists looking for undeserved windfalls. As a result, the

statutory damages regime is bringing down the very system it was intended

to support. Opportunistic enforcement has distorted the interpretation of

212

Rather than enhancing copyright protection, the en-

forcement tools developed for the analog era are increasingly sullying cop-

yright law’s public approval without deterring unauthorized distribution.

Furthermore, popular forms of art — such as music mash-ups — sig-

nificantly operate outside of copyright markets.

213

New generations of

creators and consumers see the copyright system as a relic or worse, the

problem. In the current content governance ecosystem, a recording artist

is likely to covet a Pepsi endorsement deal more than a recording

contract.

214

UCLA

. L. R

. 331, 333-34 (2004);

COTT

ONATON

, M

ADISON

INE

(2004).

212

See Peter S. Menell, Judicial Regulation of Digital Copyright Windfalls: Mak-

ing Interpretive and Policy Sense of Viacom v. YouTube and UMG Record-

ings v. Shelter Capital Partners (May 1, 2012), available at http://papers.ssrn

.com/sol3/papers.cfm?abstract_id=2049445; Shyamkrishna Balganesh, Fore-

seeability and Copyright Incentives, 122

ARV

. L. R

. 1569 (2009).

213

EMBREW

CLEOD

& P

ETER

ICOLA

, C

REATIVE

ICENSE

THE

AW AND

ULTURE OF

IGITAL

AMPLING

196-201(2011).

214

See Ben Sisario, In Beyonc´e Deal, Pepsi Focuses on Collaboration,

N.Y. T

IMES

Dec. 9, 2012, at B4 (reporting that “[o]ver the last decade many consumer

brands have been taking more active roles with artists, particularly in pop

music”; PepsiCo “has embarked on a hybrid project with Beyonc ´e that will

include standard advertising like commercials as well as a multimillion-dol-

lar fund to support the singer’s chosen creative projects” estimated at $50

million). Sisario writes that although bands “always risk fan disapproval

when shaking hands with big corporations[,] with record company budgets

diminished, Madison Avenue money is often seen as essential.” He quotes

a top marketing executive at PepsiCo: “We recognize that there have been

massive disruptions in music industry: lower investment in artist develop-

ment, fewer points of distribution, financial constraints. We look at those

disruptions as opportunities for Pepsi.” See id.; see also Kia Makarechi, Jay-

Z, Samsung Reportedly Eying $20 Million Deal,

UFFINGTON

OST

(Jun. 4,

2013), http://www.huffingtonpost.com/2013/06/04/jay-z-samsung-deal-20-

million_n_3383317.html (stating that “[m]onths after Beyonce inked a $50

million, multi-faceted deal with Pepsi, Jay-Z and Samsung are said to be

locking in a $20 million package that would see the rapper collaborating on

multiple projects with the tech giant”)

It should be noted that Pepsi’s deal is not confined to “superstar” artists.

Pepsi “will also play a role in selecting local talent as opening acts at various

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This American Copyright Life 267

The continued vitality of the copyright system depends not on aggres-

sive and uncritical enforcement against Internet users or the wielding of

statutory damages to derive windfalls from file-sharers or technology com-

panies but on promoting fairly priced, flexible, on-demand, user-friendly

services and encouraging platform and device entrepreneurs to develop

symbiotic technological advances, such as iTunes, YouTube (with Conten-

tID), Facebook, Spotify, Dropbox, Netflix, Twitter, Hulu, and Pinterest. It

is unrealistic to expect overworked federal courts to manage millions of

courts — to restrain innovative communication technologies.

These lessons emphasize the importance of remaking copyright law to

appeal to the post-Napster generations as well as to digital entrepreneurs

that seek balanced ecosystems for technological innovation and the crea-

tive arts. This refocusing ought not to be seen as capitulation but rather

the natural evolution of copyright protection. Consumers ultimately care

about the quality and convenience of creative works. And technology en-

trepreneurs seek to offer superior services, which increasingly involve hav-

ing content strategies that align with content creators. Apple, Sony,

Netflix, Google, Amazon, Time-Warner, and Comcast increasingly span

the content-technology divide, creating the opportunity for greater symbi-

osis. Copyright law must continually be re-equilibrated to strive for bal-

ance within the digital ecosystem.

This final Act offers a multi-institutional agenda aimed at restoring

of gaining the post-Napster generations’ participation in content markets

that are competitive, fair (to creators and consumers), and user-friendly.

Section A sketches out a broad set of legislative proposals to modernize

experiment addressing the dual vise plaguing the music marketplace.

Such reforms need to be complementary. Copyright enforcement

alone cannot restore copyright’s public acceptance or efficacy. Rather, it

must complement market shifts that encourage consumers to join user-

friendly services. Each consumer that participates in a music and video

service is one fewer enforcement problem, thereby effectuating copy-

points around the world” to better reach “savvy young consumers.” See

Sisario, supra. Pepsi’s market executive expressed confidence “that its mu-

sic projects, like ‘Tonight Is the Night’ by the little-known rapper and singer

Outasight — which sold 1.1 million copies after a push in 2010, when the

song was featured in a commercial and Outasight appeared on the Pepsi-

sponsored show ‘The X Factor’ — bring a return on investment. ‘We be-

lieve all that transfers into brand equity for Pepsi, and, ultimately, sales.’”

See id.

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268 Journal, Copyright Society of the U.S.A.

right’s creativity-promoting mechanism, reducing enforcement costs, and

obviating divisive legislative initiatives.

A. Legislative Agenda

The public interacts with the copyright system in two principal ways

—through their enjoyment of copyrighted works and their use of copy-

righted works as inputs in creative, research, and personal activities. The

first mode implicates enforcement. The second implicates the scope of

1. Dual Enforcement Regime

Content industries have tended to see copyright enforcement along

one dimension: stronger sanctions translate into stronger enforcement.

This follows a standard theoretical economic model of law enforcement.

215

The past fifteen years provided a stress test of this theory. The theory did

not hold up well.

As Act I chronicled, this deterrent regime was rarely put to much of a

test during the Analog Age because the media on which copyrighted

works were instantiated — paper, canvas, vinyl, and celluloid — were in-

herently difficult and costly to reproduce and the content industries could

control access — through theatrical turnstiles and broadcasting. The pri-

mary area of copyright enforcement concerned public performance of mu-

sical compositions by commercial establishments — bars, restaurants,

clubs, hotels, and radio stations. The statutory damages cudgel worked

relatively well in persuading these small and medium-sized businesses to

take blanket licenses from ASCAP and BMI.

By the turn of the century, the Internet empowered anyone to access

and distribute just about any copyrighted work at the touch of a computer

device. The recording industry hoped that the statutory damages cudgel

could discourage online service providers and end users from acting upon

that temptation. But as charismatic technologies like Napster and You-

Tube emerged, the pent-up consumer demand for unrestricted access to

copyrighted works proved torrential — literally and figuratively.

Even putting aside the challenge of competing with free, the delay in

getting user-friendly, authorized services of the breadth available through

unauthorized channels up and running led many consumers to file-sharing.

Suing consumers proved unworkable and unpopular. Courts were disin-

clined to open the floodgates to disproportionate sanctions — whether

against file-sharers or the developers of new services that arguably fell

215

See William M. Landes & Richard A. Posner, The Private Enforcement of Law,

4 J.

EGAL

TUD

1 (1975); Gary S. Becker, Crime and Punishment: An

Economic Approach, 76 J.

. E

CON

. 169 (1968).

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This American Copyright Life 269

within the Sony or DMCA OSP safe harbors. Efforts to push courts to-

ward undeserved windfalls led to broad interpretation of the safe harbors.

The past fifteen years has demonstrated that the deterrence enforcement

model on which the 1976 Copyright Act is based does not function as in-

tended in the Internet Age.

The solution lies not in further ramping up sanctions but in a more

variegated enforcement regime that distinguishes between different clas-

ses of actors in the content marketplace and uses nudges and carrots as

well as the occasional stick. Copyright enforcement should encourage

consumers to participate in a growing competitive marketplace for con-

tent, cumulative creators to pursue original and transformative projects,

and innovators to develop balanced, symbiotic technologies. It should not

be seen as an enforcement lottery — threatening crushing liability against

file-sharers, experimental artists, and technology entrepreneurs.

It is useful to distinguish between two classes of enforcement targets:

(1) non-commercial, small-scale infringers such as individual file-sharers

and cumulative creators; and (2) commercial and larger-scale individuals

and enterprises such as platform developers who facilitate widespread

a) Non-Commercial/Small-Scale Infringers

We have gone through several phases in the fifteen years since Nap-

ster’s emergence.

216

In the initial period, consumers faced a choice — ob-

tain copyrighted works through authorized markets (with few authorized

and limited online options available) or partake in the unlimited, free un-

authorized online file-sharing networks. As iTunes and other services

emerged, an authorized digital marketplace developed, although file-shar-

ing remained strong. Beginning in 2003, the recording industry engaged in

an aggressive public campaign against file-sharers resulting in significant

costs and public backlash. In late 2008, the industry pulled the plug on this

effort and gradually expanded the range of authorized channels and eased

the restrictions on consumer freedom. This was spurred in part by techno-

logical advances (better devices and software) and improvements in

broadband access. At this point, the major content industries have aban-

doned aggressive direct enforcement against file-sharers and have empha-

sized ways of channeling consumers into a growing range of authorized

channels.

Nonetheless, a fringe contingent of content owners and en-

trepreneurial lawyers continue to pursue disproportionate remedies

against file-sharers in the hopes of getting rich. These opportunistic

“troll” schemes undermine the copyright system’s legitimacy in the eyes of

216

See supra, Section I(D).

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270 Journal, Copyright Society of the U.S.A.

the courts and the public without supporting the creation of new expres-

sive works.

The high fine/low enforcement cost deterrence model is poorly at-

tuned to the challenges of the Internet Age. While this model may have

functioned effectively in motivating restaurants, bars, and nightclubs to

take ASCAP and BMI blanket licenses, it fails in channeling Internet Age

consumers into content markets. The use of disproportionate cudgels

breeds resentment, which is particularly dangerous in a technological era

in which unauthorized access is a viable alternative and the use of such

cudgels is costly and prone to numerous judicial impediments. Copyright

law can better encourage a norm of participation in a robust marketplace

through nudges as opposed to cudgels. Copyright law should address gar-

den variety file-sharing not through costly and complex federal court pro-

ceedings but instead through streamlined, higher detection probability,

low-fine means — more in the nature of parking tickets, with inducements

and nudges to steer consumers into better (e.g., subscription) parking

plans.

The hope for such an approach is not to support an army of digital

meter maids but rather to shift consumers into a growing array of competi-

tively priced parking plans. We have an interesting window into how con-

sumers might feel about this approach. In 2011, DigitalRights Corp.

(DRC) instituted an online enforcement campaign on behalf of copyright

owners offering file-sharers the opportunity to settle a copyright infringe-

ment allegation for $10 per infraction.

217

Their approach diverged from

prior initiatives

218

in that the DRC notices emphasize the availability of a

settlement amount that is “reasonable for both you and the copyright

holder”

219

rather than crushing liability. DRC is able to communicate this

message at relatively low cost. Rather than filing an action against the ISP

217

See Jeff John Roberts, $10 Settlement Offers: The Entertainment Industry’s New

PAID

ONTENT

(Sep. 23, 2011), http://paidcontent.org/

2011/09/23/419-10-settlement-offers-the-entertainment-industrys-new-copy-

right-tactic (noting that some copyright owners authorized DRC to apply an

“amnesty scale” or quantity discount with lower settlement levels for multi-

ple infringements). DRC has since raised the settlement price to $20 per

infringement. See Sample Settlement Agreements,

IGITAL

IGHTS

, http://di

gitalrightscorp.com/joomla/index.php?option=com_content&view=article&

id=71&Itemid=278.

218

See Ernesto, Automated Legal Threats Turn Piracy Into Profit,

ORRENT-

REAK

(Jun. 28, 2009), http://torrentfreak.com/automated-legal-threats-

turn-piracy-into-profit-090628; Ernesto, GetAmnesty.com: MPAA Extortion

at its Finest,

ORRENT

REAK

(Aug. 27, 2007), http://torrentfreak.com/

getamnestycom-mpaa-extortion-at-its-finest

219

See Enigmax, “$10 Music Piracy Fine: A Fair Deal or Just Another Cheap

Trick?, T

ORRENT

REAK

(Sep. 24, 2011), http://torrentfreak.com/10-music-

piracy-fine-a-fair-deal-or-just-another-cheap-trick-110924.

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This American Copyright Life 271

hosting the copyrighted work without authorization, it merely sends a

DMCA takedown notice, which the ISP is obliged to pass on to its cus-

tomer. The notice contains a link to DRC’s website, which generates the

settlement offer. There is no direct compulsion, but rather an opportunity

for the file-sharer to settle this matter inexpensively and quickly.

A critical question is whether this approach is likely to breed further

resentment against copyright owners. A day after news of this approach

broke, the blog TorrentFreak — not considered one of the more copy-

right-friendly online communities — ran an entry entitled $10 Music

Piracy Fine: A Fair Deal Or Just Another Cheap Trick? about the DRC.

220

The story began by presenting DRC’s approach in a forthright manner,

but went on to chastise DRC for using “the same old anti-piracy scare

tactics”: noting the Copyright Act’s potentially large statutory damage

limit; implying that failure to settle may affect the file-sharer’s Internet

service; and emphasizing that DRC’s clients include many deceased song

writers and recording artists.

Not surprisingly given the TorrentFreak audience and the tone of the

latter part of the piece, many commenters took potshots at copyright en-

forcers and the copyright system. But there was some more reflective and

balanced threaded discussion indicating that this direction for copyright

enforcement was more acceptable than prior enforcement approaches.

Eddy wrote:

Before reading this I thought it seemed a good idea, the reality is a bit

different but the initial idea would seem to make economic sense to all

concerned.

Let me say that first I am not just a file sharer but also own a small tor-

rent site, so you know where I am coming from and not a copyright troll.

If we take this idea as genuine [which this particular one isn’t] it could be

the answer to the sharing problem.

Let’s stop bullshitting each other, we all know we shouldn’t be getting

things for free, but we do, cause we can. We also all know, despite what

we all keep sayiing, that the vast majority of IP’s collected ARE genuine.

So lets take that on board and pretent for a minute that they are all genu-

ine . . . for the sake of this argument.

I download a movie and get caught, I have downloaded thousands but

they got me this time. . .they send me a letter informing me that I have

broken the law [debatable] and to clear this up quickly I should pay for

the file i got [film, music whatever], not stupid greedy money, just the

RRP[

221

] price of the product I downloaded. £10.00 for a dvd. Use the

email as a legal agreement, [they agree not to persue if I pay, they drop

the case and no furthur action is taken].

220

See id.

221

RRP is an acronym for “Recommended Retail Price.”

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272 Journal, Copyright Society of the U.S.A.

I get a film for the RRP, they get the money for the film [like they wanted

in the first place] and I use a proxy in future.

I like to think that filesharers are fair minded people, if these guys meet

us half way when they catch us, instead of trying to rape us financially,

maybe everything could work out for both sides.

I know I am just speculating cause at the end of the day these guys arent

really interested in stopping piracy, its all about the dollars . . . gimme

gimme gimme.

Henrik Eriksson opined:

Personally I think this is a fair deal. A scam, sure, but still a fair deal.

They caught you in the act. You pay, skip 1 or 2 beer[s] in the weekend,

and that’s it. You have paid for what you downloaded, they got their

money, a reasonable amount, and everyones happy.

My major beef with the industry is that they fight the technology, and

force you to the brink of ruin so you have to beg for money on the street

when they catch you. With this they can still get the money, and we can

download without fearing being the bum down the street.

Sure, the actual evidence collection might improve quite a bit, but this is a

totally acceptable common grounds until they do I believe.

Randy_Lahey writes:

I’d pay a $10 fine if caught on the torrents, and I’d be willing to wager

that most people would too. Imagine how much money they would make

if the penalty was more realistic? It’s not like the content creators are

going to see any of it anyway, whether its $10 or $10,000.

These comments reveal a greater openness among a skeptical constituency

toward copyright enforcement as well as concerns about fairness to artists.

As the major copyright industries have come to realize, the high fine/

low administrative cost model does not achieve copyright compliance.

Furthermore, it undermines the system’s legitimacy. It makes sense to

shift copyright protection to a low fine/streamlined enforcement system.

The larger goal would be to channel consumers into content markets.

More moderate remedies in conjunction with streamlined enforcement is

more likely than expensive judicial enforcement to achieve copyright law’s

goals.

(1) Re-calibrating Statutory Damages

For these reasons, I would like to see statutory damage remedies sub-

stantially curtailed for non-commercial, small-scale infringers such as file-

sharers and cumulative creators. Caps on statutory damages ought to be

in a range to enable enforcement against recalcitrant offenders, but far

below the $150,000 per work upper bound for willful infringement cur-

rently in the statute. In addition, the range ought to reflect the quantity of

works being infringed, bearing in mind that the goal of the law is to chan-

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This American Copyright Life 273

nel infringers into authorized market channels and not to generate wind-

falls.

222

Congress can ensure more consistent and predictable remedies by

establishing file-sharing remedy guidelines (or delegating authority to es-

tablish such guidelines to an appropriate body). This would also have the

advantage of removing the uncertainty created by the Supreme Court’s

Feltner decision.

223

In conjunction with these changes, Congress should substantially re-

duce the impediments to and costs of enforcing copyright protection in

garden-variety file-sharing cases. The following changes would make it

easier for copyright owners to detect and resolve file-sharing infringement

claims: (1) expansion of the § 512(h) subpoena power to reach peer-to-

peer and related technologies; (2) clarification of the scope of protection;

(3) encouraging responsibility for web access points; and (4) institution of

a streamlined small claims processing institution for handling file-sharing

matters.

(2) Expanded Subpoena Power for Detecting File-Sharers

When Congress passed the DMCA in 1998, it included a provision

(§ 512(h)) enabling copyright owners to determine the identity of a person

storing copyrighted works on an Internet server directly from the online

service provider without the need to file a court action.

224

This stream-

lined procedure was intended to afford copyright owners a rapid, low cost

tool to police the Internet. At that time, the Internet functioned predomi-

nantly as a server-client system in which computer clients accessed web-

site-hosted content.

225

The next year, Napster’s peer-to-peer architecture enabled any client

computer to function as a searchable and accessible website. As a result,

the accessible domain of the Internet expanded beyond conventional serv-

ers to the memory devices of all computers connected to the Internet

through peer-to-peer software. Napster’s particular technology enabled

222

Cf. Balganesh, supra note 212, at 1633 (arguing that copyright law ought not

reward copyright owners with windfalls from unforeseeable uses of their

works).

223

See Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998); supra

text accompanying notes 42-44.

224

See 17 U.S.C. §512(h) (2012).

225

See Recording Indu. Ass’n of Am., Inc. v. Verizon Internet Servs., Inc.,

351 F.3d 1229, 1238 (D.C. Cir. 2003) (observing that “the legislative his-

tory of the DMCA betrays no awareness whatsoever that internet users

might be able directly to exchange files containing copyrighted works.

That is not surprising; P2P software was ‘not even a glimmer in anyone’s

eye when the DMCA was enacted.’” (quoting In re Verizon Internet

Servs., Inc., 240 F. Supp. 2d 24, 38 (D.D.C. 2003)).

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274 Journal, Copyright Society of the U.S.A.

searches for music files encoded in the .mp3 format. The next wave of

peer-to-peer networks included many more file formats.

When copyright owners sought to invoke § 512(h) in pursuit of file-

sharers using peer-to-peer technology, the D.C. Circuit found that the text

of the statute did not allow this provision to be stretched beyond identify-

ing those storing copyrighted materials on the online service providers’

servers.

226

The court was equally clear, however, that “Congress had no

reason to foresee the application of § 512(h) to P2P file sharing, nor did

they draft the DMCA broadly enough to reach the new technology when

it came along. Had Congress been aware of P2P technology, or anticipated

its development, § 512(h) might have been drafted to reach such ad-

dressable corners of the Internet.”

227

The court concluded by noting that

it was:

not unsympathetic either to the RIAA’s concern regarding the wide-

spread infringement of its members’ copyrights, or to the need for legal

tools to protect those rights. It is not the province of the courts, however,

to rewrite the DMCA in order to make it fit a new and unforeseen in-

ternet architecture, no matter how damaging that development has been

to the music industry or threatens being to the motion picture and

software industries. The plight of copyright holders must be addressed in

the first instance by the Congress . . . .

228

In moving copyright’s file-sharing enforcement regime toward a low

fine/low cost enforcement model, Congress should remove needless costs

in identifying unauthorized file-sharing. As with § 512(h), this expanded

subpoena power should include safeguards to prevent abuse.

229

(3) Confirming the Making Available Right

If the copyright protection is to work effectively with much more

modest remedies, then copyright owners and the judiciary system should

not devote undue resources to adjudicating garden-variety disputes. As

litigation against file-sharers unfolded a decade ago, defendants latched

upon a questionable means of raising copyright owners costs — by con-

226

See id. at 1234-37 (finding that the “text of § 512(h) and the overall structure of

§ 512 clearly establish . . . that § 512(h) does not authorize the issuance of a

subpoena to an ISP acting as a mere conduit for the transmission of infor-

mation sent by others”).

227

See id. at 1238.

228

See id.

229

See 17 U.S.C. § 512(f) (2012) (imposing liability upon “any person who know-

ingly materially misrepresents . . . that material or activity is infringing”);

§ 512(h)(2)(C) (requiring a “sworn declaration to the effect that the pur-

pose for which the subpoena is sought is to obtain the identity of an alleged

infringer and that such information will only be used for the purpose of

protecting rights under this title”).

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This American Copyright Life 275

tending that copyright owners had to prove not only that defendants had

made copyrighted works available to others through file-sharing networks

but also that other netizens had actually downloaded the files. This argu-

ment in no way justified the act of placing the latest release by a recording

artist in a share folder that was accessible to millions. Yet it offered the

strategic advantage of raising discovery costs. Ironically, tracing the distri-

bution of files on the Internet would have posed a substantial threat to

privacy interests.

As I have explored elsewhere at length,

230

this contention rests on a

misunderstanding of Congress’s intention in replacing copyright law’s his-

toric “publication” right with the “distribution” right in the 1976 Act. The

legislative history of the 1976 Act revealed that Congress intended to

broaden the historic rights to “publish” in crafting the right to distribute.

The reason is subtle but completely understandable in historical context:

Under the 1909 Act regime, “publication” served two principal purposes

— as a foundational exclusive right and the trigger for federal protection

(and loss of common law protection).

231

In order to avoid the potentially

harsh effects of publication without proper copyright notice (loss of com-

mon law protection and forfeiture of federal statutory protection), courts

evolved a confusing and roundly criticized set of doctrines distinguishing

of investive and divestive publication. Congress chose the term “dis-

tribute” merely to avoid that confusion and expressed unequivocally its

intention to retain and broaden the prior rights to publish and vend. Fur-

thermore, Congress intended the distribution right to parallel the statutory

definition of “publication.”

232

The text and legislative history surrounding the Sound Recording

Amendments Act of 1971 show that Congress intended to incorporate a

“making available” right in U.S. copyright law for the purpose of deterring

record piracy — a purpose which was broadened in the 1976 Act to reach

all forms of unauthorized distribution.

233

The legislative history of the

1976 Act also reveals that Congress drafted the exclusive rights broadly so

as to avoid their erosion as a result of unforeseen technological

changes.

234

Thus, faithful interpretation of the distribution right would enable a

righted work has been placed in a publicly accessible share folder without

authorization. Nonetheless, the wording of the statute is open to the inter-

230

See Peter S. Menell, In Search of Copyright’s Lost Ark: Interpreting the Right

to Distribute in the Internet Age, 59

J. C

OPYRIGHT

’

1 (2011).

231

See id. at 37- 38.

232

See id. at 41-42, 44-46.

233

See id. at 50-51.

234

See id. at 43-44.

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276 Journal, Copyright Society of the U.S.A.

pretation that the distribution right requires proof of actual receipt of an

unauthorized copy.

235

Although such proof could be established circum-

stantially,

236

the need to put on such a case needlessly inflates the costs of

I struggle to understand why copyright law would put owners to such

a costly and invasive requirement in garden-variety file-sharing cases. I

am not aware of any valid reason for a person to place the entirety of a

recently released sound recording, motion picture, or book in a share

folder available to a large audience without authorization. As best I can

understand, the best argument for requiring proof of actual receipt of

shared works is as a response to the threat of excessive punishment for

file-sharing under present law. I share that concern, but not the indirect

means of addressing it, which is why I advocate substantially reducing the

statutory damages range as applied to non-commercial, small-scale in-

fringement activity. With this adjustment, Congress establishes in the

clearest possible terms that making copyrighted works available through

file-sharing networks violates the Copyright Act, subject, of course, to lim-

iting doctrines, defenses, exemptions, and other limitations. So doing

would streamline the procedures for adjudicating file-sharing cases. Copy-

right owners would be eligible for summary judgment of liability by estab-

lishing ownership of the copyrighted work and that the work was made

available through a share folder associated with the defendant. Damages

235

Section 106 reads:

Subject to sections 107 through 122, the owner of copyright under this

title has the exclusive rights to do and to authorize any of the following:

* * *

(3) to distribute copies or phonorecords of the copyrighted work to the

public by sale or other transfer of ownership, or by rental, lease, or lend-

ing; * * *

17 U.S.C. § 106 (2012). The plain meaning of “distribute” arguably entails

receipt by a third person, but there is good reason to interpret the term in a

more copyright-oriented manner. Webster’s dictionary refers to

“spread[ing] out or scatter[ing]” as in “distributing magazines to subscrib-

ers” and “market[ing] (a commodity).” See

EBSTER

’

HIRD

NTER-

NATIONAL

ICTIONARY OF THE

NGLISH

ANGUAGE

, U

NABRIDGED

660

(Philip Babcock Gove ed., 1961, 1993). The means clause of § 106(3) — “by

sale or other transfer of ownership, or by rental, lease, or lending” — is also

subject to a range of interpretations. See Menell, supra note 230, at 55.

There seems ample justification to test these ideas against the 1976 Act’s

legislative history, which strongly supports a “making available”

interpretation.

236

See David O. Carson, Making the Making Available Right Available, 33

OLUM

. J.L. & A

RTS

135, 155 (2010); Robert Kasunic, Making Circumstan-

tial Proof of Distribution Available, 18

ORDHAM

NTELL

. P

ROP

. M

EDIA

. L.

J. 1145 (2008).

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This American Copyright Life 277

could also be resolved without trial (assuming no other defense) if the

(4) Encouraging Responsibility for Web Access Points

One line of defense in file-sharing litigation is that an individual other

than the person who controls a wireless network is responsible for the

unauthorized activity. This could happen, for example, if a network is un-

secured or if someone hacked it. These factual questions can be compli-

cated, greatly adding to the costs of enforcement.

Part of the problem lies in the lack of accountability norms relating to

Internet ports. There could be value in developing standards for ensuring

that those who operate hubs take responsibility to ensure that they are not

misused. This could come in the form of service requirements, security

protocols, and liability for misuse of the network. For example, the Copy-

right Act could subject wireless network operators (including households

with wireless Internet access) to bear capped strict liability (e.g., up to

$500) for unauthorized file-sharing that occurs through their hub.

(5) A Small Claims Processing Institution for

File-Sharing Infringements

As currently configured, copyright enforcement entails federal court

civil litigation — a costly, time-consuming process.

237

Simply filing a civil

complaint costs $400. While the federal civil enforcement system might

have made sense to protect the interests involved in copyright cases that,

in theory, could result in damages in the tens of thousands of dollars per

copyrighted work infringed, this gold-plated adjudication institution is not

well-suited to a “parking ticket” regime for file-sharing enforcement.

With the damage range reduced substantially, an alternative regime — in-

volving online claims processing — could more appropriately achieve effi-

cient and fair enforcement.

238

* * * * * *

It is important to bear in mind that the streamlined enforcement re-

gime outlined above is intended as a complement to, rather than a substi-

tute for, well-functioning content markets. It would serve as a better

calibrated judicial backstop for addressing file-sharing infringements. In

237

See

U.S. C

OPYRIGHT

FFICE

, C

OPYRIGHT

MALL

LAIMS

: A R

EPORT OF THE

EGISTER OF

OPYRIGHTS

1-2 (Sept. 2013), available at http://www.copy

right.gov/docs/smallclaims/usco-smallcopyrightclaims.pdf.

238

The Copyright Office has recently proposed the establishment of a general,

consensual, streamlined small claims process. See

U.S. C

OPYRIGHT

FFICE

supra note 237. I am envisioning a more focused process aimed specifically

at file-sharing violations.

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278 Journal, Copyright Society of the U.S.A.

contrast to the present system, this new regime would not threaten crush-

ing liability or produce windfalls. Rather it would be calibrated to impose

just enough cost upon file-sharers to encourage participation in what is

hoped will be a growing competitive marketplace for content. It will be

important for content companies to use carrots rather than sticks to entice

consumers into that marketplace. The re-calibrated copyright enforce-

ment system would replace menacing, unwieldy cudgels with mildly irritat-

ing twigs. Such a “parking ticket” approach to non-commercial, small-

scale copyright infringements would better promote public understanding

and acceptance of copyright protection as a balanced regime.

b) Commercial/Large-Scale Infringers

Although the 1976 Act enforcement regime did focus on commercial

infringement issues, technological advances have rendered much of its ap-

proach obsolete. The predominant issue is no longer public performances

of musical compositions in restaurants and bars but rather all manner of

Internet businesses that profit directly and indirectly from unauthorized

distribution of copyrighted works. Various legislative updates — including

the NET Act and the DMCA — have augmented the 1976 Act enforce-

ment regime, but have not achieved the effectiveness and balance sought.

As illustrated by the rapid emergence of file-sharing, user-generated

websites, and cyberlockers, digital enforcement challenges develop quickly

and affect the broad spectrum of copyrighted works. Three problems have

plagued the enforcement regime: (1) the challenges of addressing broad

scale, on-line, cross-border infringement; (2) the difficulty of interpreting

and applying the DMCA’s safe harbor provisions; and (3) the astronomi-

cal threat of liability posed by copyright law’s statutory damage provisions.

These problems result in massive under and over enforcement. At one

extreme, a vast array of copyright owners can find themselves facing ram-

pant piracy through cross-border websites such as MegaUpload. At the

other, exciting online services — such as YouTube — can face billion dol-

lar liability claims without evidence of harm to copyright owners.

These problems reflect the challenges of regulating activity on a

borderless frontier and imprecision of an enforcement regime developed

for a simpler bygone technological era. The cross-border enforcement

problem goes beyond private enforcement tools. The interplay of ambigu-

ous statutory provisions and untethered statutory damages creates the po-

tential for opportunistic windfalls which produce Dickensian litigation.

Unfortunately, there are no simple solutions to these problems. The

Internet’s extraordinary capacity to enable people throughout the world to

communicate freely and broadly as well as its rapid technological advance

caution against the use of blunt tools to regulate online activities. Yet fail-

ure to act quickly to staunch unauthorized distribution of valuable, crea-

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This American Copyright Life 279

tive works undermines the markets for valuable, costly projects. Unless

society is to abandon copyright as a driver of expressive creativity, there

must be effective and balanced tools for protecting copyrighted works in

the promiscuous, dynamic, and significantly anonymous Internet

ecosystem.

I offer three approaches for improving copyright enforcement against

large-scale, commercial enterprises: (1) re-calibrating statutory damages to

avoid windfall opportunism; (2) developing a balanced public enforcement

regime for dealing with broad-scale infringing activities; and (3) introduc-

ing whistleblower bounties to elicit evidence of illegal activity.

(1) Re-calibrating Statutory Damages

Even if the high fine/low administrative cost deterrence has not oper-

ated as economic theorists predicted to rein in consumer file-sharing, it

might nonetheless work in dealing with larger-scale, commercial infring-

ers. The experience of the past decade, however, suggests otherwise.

activities, especially in the context of innovative distribution platforms.

The DMCA insulates a broad range of online services from copyright lia-

bility.

239

The contours of these exemptions, however, are notably opaque,

resulting in the potential for astronomical damage requests if a service

falls outside of DMCA’s safe harbor. Content owners have seized on this

exposure as a way to discourage innovative technologies and to reap wind-

falls. Such efforts to impose crushing liability on innovative distribution

platforms have fed public perceptions that copyright law is extortionate

and wasteful.

240

As in file-sharing cases against individuals, dispropor-

tionate damage requests in cases against large, commercial enterprises

have backfired and undermined the public’s and judiciary’s perception of

the copyright system. Re-calibrating the statutory damages regime for the

Internet Age is critical to restoring support for copyright protection.

The disproportionate awards sought in several high profile cases ap-

pear to have led courts to interpret the DMCA’s safe harbors expansively

239

See 17 U.S.C. § 512 (2012).

240

See Liz Shannon Miller, Google’s Viacom Suit Legal Fees: $100 Million,

IGAON

(Jul. 15, 2010), http://gigaom.com/2010/07/15/googles-viacom-suit-

legal-fees-100-million (reporting that Google’s legal fees reached $100 mil-

lion or more as of three years ago); Viacom’s Expensive Suit,

ORBES

(Mar.

8, 2007), http://www.forbes.com/2007/03/27/youtube-viacom-google-tech-

cx_ll_0328google.html (reporting that Viacom’s $1 billion lawsuit against

Google could generate $350 million or more in legal fees).

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280 Journal, Copyright Society of the U.S.A.

— arguably beyond what Congress intended.

241

The introduction to the

Second Circuit’s YouTube opinion offers a telling clue:

242

The plaintiffs alleged direct and secondary copyright infringement based

on the public performance, display, and reproduction of approximately

79,000 audiovisual ‘clips’ that appeared on the YouTube website between

2005 and 2008. They demanded, inter alia, statutory damages pursuant to

17 U.S.C. § 504(c) . . . .

243

Section 504(c) provides for the award of “not less than $750 or more than

$30,000” per infringed work and up to $150,000 per work for willful in-

fringement in the court’s discretion

244

— creating a liability range from

$59 million to nearly $12 billion. Under the Supreme Court’s decision in

Feltner v. Columbia Pictures Television, Inc.,

245

the determination of stat-

utory damages is a question for a jury. The Ninth Circuit’s decisions in

UMG Recordings v. Shelter Capital Partners

246

also lean toward an ex-

pansive view of the DMCA safe harbors.

247

And even though the court in record companies’ enforcement action

against LimeWire granted summary judgment on liability,

248

Judge Wood

characterized the plaintiffs’ damages theory that could “reach into the tril-

lions” — “more money than the entire music recording industry has made

since Edison’s invention of the phonograph in 1877” — as “absurd.”

249

The resulting media coverage fanned the flames of rapacious copyright

owner greed.

250

If those who develop technology that can be used to infringe copy-

rights are exposed to potentially crushing liability — as befell Napster,

MP3.com, ReplayTV, Grokster, and LimeWire — it seems reasonable to

surmise that digital technology innovators would invest their resources

241

See Menell, supra note 113.

242

See 17 U.S.C. §512(c) (2012).

243

Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19, 26 (2d Cir. 2012).

244

See 17 U.S.C. § 504(c) (2012).

245

523 U.S. 340 (1998).

246

See UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006 (9th

Cir. 2013); UMG Recordings, Inc. v. Shelter Capital Partners LLC, 667 F.3d

1022 (9th Cir. 2011).

247

See Menell, supra note 113.

248

See Arista Records, LLC v. Lime Group, LLC 784 F. Supp. 2d 398 (S.D.N.Y.

2011).

249

See Arista Records, LLC v. Lime Group, LLC, 784 F. Supp. 2d 313, 317

(S.D.N.Y. 2011).

250

See Jaikumar Vijayan, RIAA Request for Trillions in LimeWire Copyright Case

Is “Absurd,” Judge Says,

OMPUTERWORLD

(Mar. 25, 2011), http://www

.computerworld.com/s/article/9215074/RIAA_request_for_trillions_in_

LimeWire_copyright_case_is_absurd_judge_says.

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This American Copyright Life 281

and energies elsewhere.

251

Yet there has been no shortage of tantalizing

new digital technologies — from the iPod to image search engines, You-

Tube, Facebook, Google’s Book Search, BitTorrent, iPhone, iPad, Kindle,

and Twitter — that could be (and have been) portrayed as facilitating cop-

yright infringement. The relatively modest capital requirements associ-

ated with innovation in digital distribution technologies, research and

social norms, risk and liability-insulating institutions, and the importance

of technological advance in fields unaffected by copyright liability dampen

the chilling effects of disproportionate copyright liability.

252

Nonetheless, these countervailing forces in no way justify dispropor-

tionate damages. Absent serious under-detection or under-enforcement

of copyright infringement,

253

actual harm. The technologies exerting the largest effects on copyright

owners can often be identified with relative ease. Copyright owners can

and do use the same techniques as consumers to find unauthorized copies

of their works. Where those alleged infringers can be haled into U.S.

courts, it is difficult to see the need for disproportionate damage remedies;

and certainly not of the unprecedented scale being sought in the Internet

Age. Statutory damages might still be useful as a means for reducing the

costs of proving actual damages. Nonetheless, the levels should be cali-

brated to approximate actual damages. At a minimum, the statutory dam-

age levels should be scaled to the number of works affected. A copyright

statutory damages “sentencing commission”

254

could develop and adapt

target ranges for copyright damages. Copyright owners always have the

option of proving actual damages.

The YouTube case is instructive. Three young programmers who had

experienced success as early employees of PayPal developed the idea for a

video-sharing technology in 2005. They were able to attract venture capi-

tal, launched a website later that year, and quickly became a household

251

See Michael A. Carrier, Copyright and Innovation: The Untold Story, 2012

. L. R

891(2012); Robert Hof, Ten Years of Chilled Innovation,

USI-

NESS

EEK

(Jun. 29, 2005), http://www.businessweek.com/print/technology/

content/jun2005/tc20050629_2929_tc057.htm; Mark A. Lemley & R.

Anthony Reese, Reducing Digital Copyright Infringement Without Restrict-

ing Innovation, 56

TAN

. L. R

. 1345 (2004).

252

See Peter S. Menell, Indirect Copyright Liability and Technological Change, 32

OLUM

. J.L. & A

RTS

375 (2009).

253

See A. Mitchell Polinsky & Steven Shavell, Punitive Damages: An Economic

Analysis, 111

ARV

. L. R

. 869, 887-96 (1998) (justifying higher damage

awards where it is difficult to trace the source of harm-producing activity);

supra text accompanying notes 42-44 and 80-105.

254

Cf. Comprehensive Crime Control Act of 1984, Pub. L. 98–473, 98 Stat. 1976

(establishing the U.S. Sentencing Commission, an independent judicial

branch agency responsible for establishing and updating sentencing guide-

lines for the federal courts).

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282 Journal, Copyright Society of the U.S.A.

name. As emails that emerged in subsequent copyright infringement liti-

gation indicated, the founders were a bit loose in their adherence to copy-

right law. They hoped to attract a lot of eyeballs as well as potential

acquirers. They wildly succeeded, posting thousands of user-uploaded

videos a day, receiving over 100 million views per day, and obtaining an

acquisition by Google for $1.65 billion within a year of launch.

YouTube also attracted copyright infringement lawsuits — filed by

Viacom, the English Premier League, and numerous others. The Viacom

suit alleged that YouTube hosted more than 150,000 unauthorized clips of

its material that had been viewed “an astounding 1.5 billion times.”

255

sought $1 billion in statutory damages.

What was far less clear was the damage caused to Viacom and others.

As noted earlier,

256

I was first introduced to the brilliance of Jon Stewart

through user uploads on YouTube and soon became a loyal Viacom cus-

tomer. I regularly view the Daily Show (as well as its spinoff, The Colbert

Report), through our cable provider and Viacom’s website.

Shortly after the YouTube acquisition, Google developed ContentID,

a sophisticated technology for screening unauthorized user-uploaded

videos. Viacom has agreed that this technology eliminates infringement

problems prospectively but it nonetheless continues to seek a veritable

statutory damages lottery jackpot through ongoing litigation. Yet the only

winners here appear to be the lawyers — who have earned hundreds of

millions of dollars in litigation fees.

As best I can tell, this Dickensian litigation continues to be driven by

the windfall possibility created by statutory damages. Even though the

Second Circuit has effectively cabined Viacom’s potential recovery,

Viacom has little choice but to continue the battle or risk facing a massive

attorney fee award should it lose the case outright. A better calibrated

damages regime would likely have brought this case to a far quicker and

less expensive resolution.

Content owners might defend wielding the statutory damages cudgel

in cases such as this one on the grounds that only the threat of crushing

liability was going to persuade Google to develop and implement Conten-

tID technology. Yet it appears that Google had significant independent

motivation to implement this technology; it has proven to be a great

means of monetizing advertising in conjunction with and to the benefit of

role in Google’s wise decision to develop a symbiotic technological plat-

255

See Declan McCullagh, YouTube’s Fate Rests on Decade-old Copyright Law,

C—N

EWS

(Mar. 13. 2007), http://news.cnet.com/YouTubes-fate-rests-

on-decade-old-copyright-law/2100-1028_3-6166862.html.

256

See supra, text accompanying note 110.

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This American Copyright Life 283

form,

257

it is not at all clear that a rational copyright damages system

would not have achieved comparable technological innovation. And it

might have done so in a manner that did not distort the DMCA’s safe

harbor regime, to the broader detriment of content owners.

I am more inclined to the view that this episode illustrates the litiga-

tion principle that “pigs get fat, hogs get slaughtered.”

258

The theoretical

availability of astronomical statutory damages has undermined the balance

sought in the DMCA’s safe harbor regime. A more rational damages re-

gime could have produced more rational litigation, with parties identifying

the gains from compromise. Instead, the potential for vast, undeserved

transfers of Internet-generated wealth produced a scorched-earth court

battle and deepened distrust between the content and technology sectors.

And more to the central theme of this lecture, opportunistic use of statu-

tory damages has undermined public respect for the copyright system.

Thus, a better calibrated statutory damages regime would better serve

both content and technology industries, as well as the public-at-large. But

such a system can only go so far. Where alleged infringers cannot effec-

tively be hauled into U.S. courts, even the optimal damages regime cannot

produce effective copyright enforcement. That brings us to the role for

public enforcement.

(2) Instituting Balanced Public Enforcement

The challenges of enforcing copyright protection in a global,

borderless Internet Age reached front page news in early 2012 as Congress

neared a vote on the Stop Online Piracy Act (SOPA).

259

Working largely

behind the scenes and without input from the technology sector or the

public, content industries orchestrated potentially draconian legislation

aimed at curbing copyright infringement through foreign websites. The

proposed legislation authorized the Attorney General to commence in

personam and in rem proceedings to block “foreign infringing” websites,

including requiring that search engines “take technically feasible and rea-

sonable measures, as expeditiously as possible . . . designed to prevent the

foreign infringing site from resolving to that domain name’s Internet Pro-

257

See Peter S. Menell, Design for Symbiosis: Promoting More Harmonious Paths

for Technological Innovators and Expressive Creators in the Internet Age, 55

OMM

OF THE

ACM

, No. 5, 30-32 (May 2012).

258

See Idiom: Pigs Get Fat, Hogs Get Slaughtered,

SING

NGLISH

COM

http://

www.usingenglish.com/reference/idioms/pigs+get+fat,+hogs+get+slaugh

tered.html (explaining that this idiom is used “to express being satisfied

with enough, that being greedy or too ambitious will be your ruin”).

259

See Stop Online Piracy Act (“SOPA”), H.R. 3261, 112th Cong. (2011); see also

Preventing Real Online Threats to Economic Creativity and Theft of Intel-

lectual Property Act of 2011 (“Protect IP Act” or “PIPA”), S. 968, 112

Cong. (2011).

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284 Journal, Copyright Society of the U.S.A.

tocol address.”

260

The legislation also authorized copyright owners to use

a notice process to require that American online service providers block

access to foreign infringing websites.

261

SOPA would also have criminal-

ized streaming of copyrighted works.

262

In the days leading up to the con-

gressional vote,

263

a broad range of technology companies, civil

libertarians, and legal scholars attacked the bill for suppressing speech,

violating due process, undermining the security and stability of the In-

ternet, weakening online service provider safe harbors, and unduly ex-

panding copyright protection.

264

An unprecedented groundswell of online

opposition brought the legislation to ignominious defeat.

265

Even before SOPA gained salience, the U.S. Department of Justice

had embarked on a multi-faceted, international enforcement campaign

targeting “websites and their operators that distribute counterfeit and pi-

rated items over the Internet, including counterfeit pharmaceuticals and

pirated movies, television shows, music, software, electronics and other

merchandise, as well as products that threaten public health and

safety.”

266

“Operation in Our Sites” has resulted in the seizure of over

1,700 website domains.

267

This unprecedented use of public resources to

260

See SOPA, supra note 259, § 102. SOPA also authorized the Attorney General

to bar payment processors from completing payment transactions to foreign

infringing websites and Internet advertising services from advertising on

such sites. See id.

261

See id. § 103. SOPA also authorized copyright owners to bar payment proces-

sors from completing payment transactions to foreign infringing websites

and Internet advertising services from advertising on such sites. See id.; Sto-

pOnline Piracy – Stopping SOPA: A Backlash from the Internet Community

Against Attempts to Rein in Content Thieves,

CONOMIST

(Jan. 21,

2012) http://www.economist.com/node/21543173.

262

See SOPA, supra note 259, § 201.

263

See Grant Gross, Lawmakers Seem Intent on Approving SOPA, PIPA,

PCW

ORLD

(Jan. 5, 2012), http://www.pcworld.com/article/247339/lawmak

ers_seem_intent_on_approving_sopa_pipa.html.

264

See Jenna Wortham, A Political Coming of Age for the Tech Industry,

N.Y.T

IMES

, Jan. 17, at A1, available at http://www.nytimes.com/2012/01/18/

technology/web-wide-protest-over-two-antipiracy-bills.html?pagewanted=

all.

265

See Jonathan Weisman, After an Online Firestorm, Congress Shelves Antipiracy

Bills,

N.Y. T

IMES

, Jan. 20, 2012, at B6, available at http://www.nytimes.com/

2012/01/21/technology/senate-postpones-piracy-vote.html?ref=copyrights.

266

See Nat’l Intell. Prop. Rts. Coordination Ctr., Operation In Our Sites, available

at http://www.iprcenter.gov/reports/fact-sheets/operation-in-our-sites/view

(last visited Nov. 4, 2013),

267

See News Release, U.S. Immigration and Customs Enforcement, Houston HIS

Seizes 89 Websites Selling Counterfeit Goods (Dec. 20, 2012), ICE, https://

www.ice.gov/news/releases/1212/121220houston.htm (reporting that 1,719

domain names have been seized under Operation In Our Sites since the

program began in June 2010).

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This American Copyright Life 285

enforce copyright protection signals a significant shift in the allocation of

authority between private and public enforcement.

268

These developments reflect the inherent difficulties of protecting

copyrighted works in a dynamic Internet Age as well as the growing ten-

sion between copyright protection and other core values — such as free-

dom of expression and due process. It is almost laughable to think that

the major enforcement concern troubling the 1976 Act drafters was public

performances of musical compositions in restaurants, bars, and nightclubs.

The challenge of addressing foreign infringing websites, as well as

other Internet Age developments, calls for a broad reassessment of copy-

right enforcement institutions and approaches. This section first traces

private and public system. It then suggests ways in which the range and

integration of public and private enforcement tools can be improved to

better balance copyright protection, First Amendment, and due process

concerns.

Throughout most of its history, copyright’s enforcement regime has

centered on private enforcement. In many contexts, the principal impacts

of copyright infringement affected one or a few copyright owners and the

law used tort-based remedies as the enforcement driver. Where there

were economies of scale and scope in enforcement, as in the case of musi-

cal compositions, authors and publishers joined forces to police violations

and enforce copyright protection.

269

That is not to say that copyright law has lacked criminal enforcement

provisions. Congress established criminal liability for willful, commercial

exploitation of dramatic and musical compositions in 1897 to address the

difficulty of enforcement of copyright protection against traveling per-

formers.

270

Congress expanded criminal liability to all willful copyright

infringements for profit in the 1909 Act,

271

but criminal copyright prosecu-

tions were only rarely pursued.

272

Congress included criminal penalties in

268

See generally A. Mitchell Polinsky & Steven Shavell, The Economic Theory of

Public Enforcement of Law, 38

J. E

CON

. L

. 45 (2000) (surveying the law

and economics literature on public versus private law enforcement).

269

See Robert P. Merges, Contracting into Liability Rules: Intellectual Property

Rights and Collective Rights Organizations, 84

. L. R

. 1293 (1996)

(discussing the emergence of ASCAP as a collective enforcement

institution).

270

See Act of Jan. 6, 1897, ch. 4, 29 Stat. 481 (classifying such acts misdemeanors

punishable by imprisonment of up to one year); I. Trotter Hardy, Criminal

. & M

ARY

ILL

. J

. 305, 315 (2002).

271

See Copyright Act of 1909, ch. 320, 35 Stat. 1075 (authorizing fines up to

$25,000 and imprisonment up to one year).

272

See

ILLIAM

S. S

TRAUSS

, S

TUDY

. 24: R

EMEDIES

THER THAN

AMAGES

FOR

OPYRIGHT

NFRINGEMENT

128 (1959).

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286 Journal, Copyright Society of the U.S.A.

the Sound Recording Act of 1971,

273

and largely carried the 1909 Act’s

criminal enforcement provisions to the 1976 Act with increased

sanctions.

274

The advent of the videocassette recorder opened up new avenues for

persuaded Congress to pass the Piracy and Counterfeiting Amendments

Act of 1982,

275

which increased criminal sanctions. As advances in digital

technology in the 1990s greatly expanded the scale, modalities, and com-

plexity of copyright infringement, Congress expanded criminal copyright

liability to deal with the threats.

276

At the urging of the computer

software industry, Congress passed the Copyright Felony Act of 1992,

277

significantly expanding criminal sanctions for willful infringement of all

copyrighted works.

278

Yet in one of the first criminal Internet copyright infringement cases,

United States v. LaMacchia,

279

the government sought to use the wire

fraud statute

280

rather than the Copyright Act to pursue the operator of a

computer bulletin board service distributing copies of copyrighted

software. The reason for this strategy was that the defendant lacked a

profit motive.

281

The court characterized David LaMacchia, a twenty-one

year old MIT student, as a computer hacker

282

— implying that he was

merely following a hacker credo of sharing code.

283

Prior to the Internet,

273

Pub. L. No. 92-140, 85 Stat. 391.

274

See 17 U.S.C. § 506 (2012); United States v. Moran, 757 F. Supp. 1046, 1050

(D. Neb. 1991); Note, Criminalization of Copyright Infringement in the Dig-

ital Era, 112

ARV

. L. R

1705, 1708-09 (1999).

275

Pub. L. No. 97-180, 96 Stat. 91 (1982); see Mary Jane Saunders, Criminal Copy-

right Infringement and the Copyright Felony Act, 71

ENV

. U. L. R

. 671,

687 (1994).

276

See Hardy, supra note 270, at 317-23.

277

Pub. L. No. 102-561, 106 Stat. 4233.

278

Congress added counterfeiting of copyrighted works a racketeering office

under the Racketeer Influenced and Corrupt Organizations (RICO) Act in

1996. See Anticounterfeiting Consumer Protection Act of 1996, Pub. L. No.

104-153, 110 Stat. 1386.

279

871 F. Supp. 535 (D. Mass. 1994).

280

See 18 U.S.C. § 1343 (2012).

281

The Copyright Act’s criminal provisions required proof of “commercial advan-

tage or private financial gain.” 17 id. § 506(a).

282

See LaMacchia, 871 F. Supp. at 536-37 (noting that the defendant was a young

MIT student/computer hacker).

283

The “hacker ethic” is “a belief that ‘access to computers . . . should be unlim-

ited and total’ and ‘all information should be free.’” Robert L. Dunne, De-

terring Unauthorized Access to Computers: Controlling Behavior in

Cyberspace Through a Contract Law Paradigm, 35

URIMETRICS

. 1, 10

(1994) (quoting Dorothy Denning, Concerning Hackers Who Break into

Computer Systems, Paper Presented at the 13th National Computer Secur-

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This American Copyright Life 287

such Robin Hood-type activity could not reach a global audience. Judge

Stearns sensed that such behavior posed a serious threat to the copyright

system.

284

Nonetheless, the court granted the defendant’s motion to dismiss the

case,

285

relying on the Supreme Court’s decision in Dowling v. United

States holding that the wire fraud statute could not be interpreted to en-

croach on copyright’s domain without clear indication that Congress so

intended.

286

While praising the government’s purpose in prosecuting

LaMacchia,

287

Judge Stearns nonetheless noted that the government’s in-

terpretation of the wire fraud statute would “criminalize the conduct of

not only persons like LaMacchia, but also the myriad of home computer

users who succumb to the temptation to copy even a single software pro-

gram for private use.”

288

He invited Congress to address this issue, ob-

serving that “[c]riminal as well as civil penalties should probably attach to

willful, multiple infringements of copyrighted software even absent a com-

mercial motive on the part of the infringer. One can envision ways that

the copyright law could be modified to permit such prosecution. But, ‘“[i]t

ity Conference, Washington, D.C. (Oct. 1-4, 1990)); see also The Mentor,

The Hacker Manifesto (1986), http://www.mithral.com/~beberg/manifesto

.html (“This is our world now . . . the world of the electron and the switch

. . . . We make use of a service already existing without paying for what

could be dirt-cheap if it wasn’t run by profiteering gluttons, and you call us

criminals. We explore . . . and you call us criminals. . . . Yes, I am a criminal.

My crime is that of curiosity. . . . My crime is that of outsmarting you,

something that you will never forgive me for. I am a hacker, and this is my

manifesto. You may stop this individual, but you can’t stop us all . . . .”);

Hacker Manifesto,

IKIPEDIA

, http://en.wikipedia.org/wiki/Hacker_Manifes

to (last visited Nov. 4, 2013).

284

See LaMacchia, 871 F. Supp. at 545.

285

See id. at 537-39.

286

473 U.S. 207 (1985). Justice Blackmun observed that Congress has chosen to

tread cautiously in crafting copyright enforcement, relying “chiefly . . . on

an array of civil remedies to provide copyright holders protection against

infringement” while mandating “studiously graded penalties” only in those

instances where Congress has concluded that the deterrent effect of crimi-

nal sanctions was required. See id. at 221; LaMacchia, 871 F. Supp. at 545

(quoting 3

ELVILLE

B. N

IMMER

& D

AVID

IMMER

, N

IMMER ON

OPY-

RIGHT

, § 15.05 at 15–20 (1993)).

287

LaMacchia, 871 F. Supp. at 844 ( noting that “the government’s objective is a

laudable one”); 845 (commenting that “[i]f the indictment is to be believed,

one might at best describe his actions as heedlessly irresponsible, and at

worst as nihilistic, self-indulgent, and lacking in any fundamental sense of

values”).

288

See id. at 845.

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288 Journal, Copyright Society of the U.S.A.

is the legislature, not the Court which is to define a crime, and ordain its

punishment.’”

289

Notwithstanding concerns about bringing the activities of college

pranksters within the felony realm,

290

Congress closed the “LaMacchia

loophole” in the No Electronic Theft Act of 1997.

291

This so-called “NET

Act” extended criminal infringement to willful “reproduction or distribu-

tion [of copyrighted works], including by electronic means, during any 180-

day period, of 1 or more copies or phonorecords of 1 or more copyrighted

works, which have a total retail value of more than $1,000,”

292

which

removes any mens rea (motive) component. It also stiffened the criminal

penalties applicable to copyright infringement committed through elec-

tronic means.

293

Congress viewed prosecutorial discretion in whether to

pursue the matter and judicial restraint in sentencing as critical to achiev-

ing appropriate enforcement.

294

The NET Act substantially raised the profile of criminal prosecution

in copyright law’s enforcement toolbox just as the Internet Age was taking

hold.

295

A year later, the DMCA added further criminal enforcement

tools as part of the anti-circumvention provisions.

296

In 1999, the Clinton

Administration established the National Intellectual Property Law En-

289

See id. (quoting Dowling v. United States, 473 U.S. 207, 214 (1985) (quoting

United States v. Wiltberger, 18 U.S. (5 Wheat.) 76, 95 (1820))).

290

See 143 Cong. Rec. S12689-90 (daily ed. Nov. 13, 1997) (statement of Sen.

Hatch).

291

Pub. L. No. 105-147, 111 Stat. 2678-80 (codified as amended at 17 U.S.C. § 506,

18 U.S.C. § 2319, and 28 U.S.C. § 994).

292

See 17 U.S.C. § 506(a)(2) (2012).

293

See 18 id. § 2319.

294

See 143 Cong. Rec. S12,689 (daily ed. Nov. 13, 1997) (statement of Sen. Hatch)

(“I am also relying upon the good sense of prosecutors and judges. Again,

the purpose of the bill is to prosecute commercial-scale pirates who do not

have commercial advantage or private financial gain from their illegal activ-

ities. But if an over-zealous prosecutor should bring and win a case against a

college prankster, I am confident that the judge would exercise the discre-

tion that he or she may have under the Sentencing Guidelines to be lenient.

If the practical effect of the bill turns out to be draconian, we may have to

revisit the issue.”).

295

See Note, Criminalization of Copyright Infringement in the Digital Era, 112

ARV

. L. R

. 1705 (1999).

296

See 17 U.S.C § 1204 (2012) (providing that “[a]ny person violates section 1201

[circumvention of technological measures] or 1202 [false copyright manage-

ment information] willfully and for purposes of commercial advantage or

private financial gain — (1) shall be fined not more than $500,000 or impris-

oned for not more than 5 years, or both, for the first offense; and (2) shall

be fined not more than $1,000,000 or imprisoned for not more than 10

years, or both, for any subsequent offense”).

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This American Copyright Life 289

forcement Coordination Center

297

within the Department of Homeland

Security’s Immigration and Customs Enforcement (ICE) service to coordi-

nate investigations and prosecutions and communicate information about

these activities within the government and with the public.

298

In 2000, At-

torney General Janet Reno announced broad new criminal enforcement

initiatives aimed at digital copyright infringement as well as other forms

on Internet-based criminal activity.

299

The following year, Attorney Gen-

eral John Ashcroft established ten “Computer Hacking and Intellectual

Property” (CHIP) units aimed at computer hacking and pirating intellec-

tual property.

300

These initiatives led to the break-up of several notorious software dis-

tribution rings. In 1999, federal agents brought down “Pirates With Atti-

tude” (PWA), considered to be the “oldest and most sophisticated band of

software pirates in Internet history.”

301

It operated 13 FTP (file transfer

protocol)

302

servers hosting over 30,000 software programs.

303

A Decem-

ber 2001 raid by federal agents in twenty-seven cities broke the

297

The National Intellectual Property Law Enforcement Coordination Center

would be renamed the National Intellectual Property Rights Coordination

Center (NIPRCC).

298

See Treasury/Postal Appropriations Bill, Pub. L. No. 106-58, Section 653 (1999)

(establishing NIPLECC);

U.S. P

ATENT

& T

RADEMARK

FFICE ET AL

., T

ATIONAL

NTELLECTUAL

ROPERTY

NFORCEMENT

OORDINATION

OUNCIL

NNUAL

EPORT

2000, available at http://www.uspto.gov/web/

offices/dcom/olia/niplecc.

299

See Attorney General Janet Reno, Protecting Intellectual Property in the Digi-

tal Age, Symposium of the Americas (Sept. 12, 2000), available at http://

www.usdoj.gov/archive/ag/speeches/2000/91200agintellectualprop.htm.

300

See Lisa M. Bowman, U.S. to Cybercriminals: You’re Going Down,

C—

NET

(July 20, 2001), http://news.cnet.com/U.S.-to-cybercriminals-Youre-going-

down/2100-1001_3-270322.html.

301

See Darryl van Duch, Eyes on ‘Pirates’ Trial in Chicago,

’

L.J

. (New York

City), Mar. 26, 2001, at B1.

302

See File Transfer Protocol

IKIPEDIA

, http://en.wikipedia.org/wiki/

File_Transfer_Protocol.

303

See Press Release, U.S. Department of Justice, Leader Of Software Piracy

Sentenced To 18 Months In Prison (May 15, 2002), http:// www.cybercrime

.gov/rothbergSent_pirates.htm.

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290 Journal, Copyright Society of the U.S.A.

“DrinkorDie” software piracy ring.

304

Many more prosecutions involving

computer software and motion pictures followed.

305

Based on the first few years of NET Act prosecutions, Professor Eric

Goldman concluded that the actions “appear generally consistent with

Congress’ objectives for the Act” and, contrary to some predictions,

306

have not resulted in overreaching prosecutions against de minimis offend-

ers.

307

He noted, however, that the NET Act did not appear to have

curbed software piracy,

308

although the piracy baseline would have in-

creased substantially in the years following passage of the NET Act as a

result of vastly expanded broadband penetration, software products, and

Internet usage. The pertinent question is whether the NET Act reduced

piracy relative to no public enforcement, which seems likely.

The major reason why infringement of software (including video

games) has not been substantially higher has been the use of digital rights

management, frequent updating, and the large size of such programs.

Even Internet motion picture piracy remained relatively modest in the

early to mid 2000 period due to DVD encryption, the large file size of

films, the reduced quality of shared versions, and the difficulty of porting

films to large screens for viewing.

These technological restraints faded with growing broadband cover-

age and the advent and spread of BitTorrent.

309

Introduced in mid 2001,

BitTorrent enabled much more rapid transfer of large files. As illustrated

by the difficulties Kathryn Bigelow (The Hurt Locker) and Ellen Seidler

(And Then Came Lola) experienced in marketing their independent

films,

310

the advent of cyberlocker sites such as MegaUpload and Rapid-

Share in the mid 2005 to 2009 time period brought pirated feature films

within the reach of most Internet users.

304

See Robert Lemos, U.S. Plans New Raids on File Swappers,

EWS

COM

(Dec. 12, 2001), http://news.com.com/2100-1023-276885.html; Associated

Press, Feds Zero in on Piracy Ring,

IRED

(Dec. 11, 2001), http://http://

www.wired.com/news/politics/0,1283,49026,00.html; DrinkorDie Leader

Pleads Guilty,

EUTERS

(Feb. 27, 2002), http://www.wired.com/news/polit

ics/0,1283,50715,00.html.

305

See Eric Goldman, A Road to No Warez: The No Electronic Theft Act and

Criminal Copyright Infringement, 82

. L. R

. 369, 381-92 (2003) (chron-

icling a wave of prosecutions between 2001 and 2003).

306

See Andrew Grosso, Legally Speaking:The Promise and Problems of the No

Electronic Theft Act, 43

OMM

OF THE

ACM

, 23, 26 (Feb. 2000), http://

cacm.acm.org/magazines/2000/2/7736-legally-speaking-the-promise-and-

problems-of-the-no-electronic-theft-act/fulltext. .

307

See Goldman, supra note 305, at 393-96.

308

See id. at 396-99.

309

See BitTorrent (software),

IKIPEDIA

, http://en.wikipedia.org/wiki/BitTorrent_

%28software%29 (last visited Nov. 4, 2013).

310

See supra, text accompanying notes 178-80.

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This American Copyright Life 291

These and related concerns would prompt Congress to pass the Pri-

oritizing Resources and Organization for Intellectual Property (PRO-IP)

Act of 2008.

311

This legislation ramps up civil and criminal penalties, with

much higher limits for repeat offenders. It also established an Intellectual

Property Enforcement Coordinator (IPEC) office within the Executive

Office of the President to coordinate anti-piracy efforts across relevant

Federal agencies (Department of Justice, Office of Management and

Budget, Department of Homeland Security, Federal Bureau of Investiga-

tion (FBI), Immigration and Custom Enforcement (ICE), Customs and

Border Protection, the Patent and Trademark Office, the Office of the

U.S. Trade Representative, and the U.S. Copyright Office), foreign gov-

ernments, private companies, and public interest groups to implement the

best strategies to foster and protect invention and creativity. The IPEC

has been responsible for developing and implementing a Joint Strategic

Plan to combat counterfeiting and piracy.

As part of these efforts, the IPEC coordinated “Operation in Our

Sites,” leading the ICE and the Department of Homeland Security to seize

hundreds of websites alleged to traffic in unauthorized copyright content

and counterfeit goods. The seizure of domains containing allegedly in-

fringing copyrighted materials proceeds according to the following

steps:

312

(1) ICE agents download or stream suspicious content; (2) ICE

agents then check with rights holders to verify that the content is pro-

tected; (3) ICE and NIPRCC present this evidence to the Department of

Justice, which determines whether there is adequate basis to obtain a

seizure order for the website in question; (4) investigators determine

whether the domain name is registered in the United States; (5) ICE and

NIPRCC present affidavits to a federal magistrate judge; (6) the federal

magistrate judge determines whether there is probable cause to support

infringement; (7) the magistrate judge grants a seizure order that is served

on the domain name registry (as opposed to the website operator); (8) the

domain name registry must restrain and lock the domain name pending

completion of the forfeiture proceeding and transfer the domain name’s

title, rights, and interests to the U.S. government; and (9) the registry must

redirect the domain to a web page operated by the U.S. government dis-

playing a plaque stating that the website has been seized.

313

Among the

factors that the Department of Justice considers in determining whether to

seize a website are the popularity of the site, whether it is commercial in

311

See Pub. L. 110-403, 122 Stat. 4256 (2008).

312

See Karen Kopel, Operation Seizing Our Sites: How the Federal Government Is

Taking Domain Names Without Prior Notice, 28

ERKELEY

ECH

. L.

J. 859,

875-76 (2013).

313

The plaque states that the seizure is pursuant to 18 U.S.C. §§ 981 and 2323.

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292 Journal, Copyright Society of the U.S.A.

nature, whether it is profitable, and whether seizure would have a substan-

tial impact on piracy.

314

These seizures have raised concerns about freedom of expression, due

process, and chilling effects on technological innovation.

315

The owner of

a website that has been seized under this process cannot challenge the

decision until after the website has been transferred to the government.

Only then is the website owner afforded an opportunity to challenge the

validity of the affidavit supporting the seizure. The government bears the

burden of proof in such proceeding.

316

The website owner may also de-

mand return of the property by writing directly to ICE.

317

If ICE does not

return the website within fifteen days, the owner can petition the U.S. Dis-

trict Court in which the seizure warrant was issued or executed.

Several ICE domain seizures illustrate the due process, free expres-

sion, and overbreadth problems. In November 2010, the government

seized eighty-two domains alleged to be engaged in the sale and distribu-

tion of counterfeit goods and pirated works.

318

The seizures included sev-

314

See Brian T. Yeh, Online Infringement and Counterfeiting: Legislation in the

112th Congress, 1099

PLI/P

693, 704 (2012).

315

See Letter from Sen. Ron Wyden to John Morton, Director, U.S. Immigration

and Customs Enforcement, and Eric Holder, Attorney General (Feb. 2,

2011), available at http://wyden.senate.gov/download/?id=103d177c-6f30-

469b-aba8-8bbfdd4fd197 (expressing concern that the seizure procedure

“could stifle constitutionally protected speech, job-creating innovation, and

give license to foreign regimes to censor the Internet”); Letter from Rep.

Zoe Lofgren to John Morton, Director, U.S. Immigration and Customs En-

forcement (Apr. 7, 2011), available at http://lofgren.house.gov/images/sto-

ries/pdf/letter_to_morton_4-7.pdf; Letter from Rep. Zoe Lofgren, Rep.

Jared Polis & Rep. Jason Chaffetz to Eric Holder, Attorney General, and

Secretary Napolitano (Aug. 30, 2012), available at http://lofgren.house.gov/

images/Letter_to_AG&uscore;Holder_ 083012.pdf; Promoting Investment

and Protecting Commerce Online: Legitimate Sites v. Parasites. Part 1: Hear-

ing Before the H. Comm. on the Judiciary, Subcomm. on Intellectual Prop-

erty, Competition, and the Internet, 112th Cong. 37 (2011), available at http://

judiciary.house.gov/hearings/hear_03142011.html (statement of David

Sohn, Senior Policy Counsel, Center for Democracy & Technology, raising

concerns about mitigating factors and overbreadth not being adequately

considered); David Makarewicz, 5 Reasons Why the US Domain Name

Seizures Are Unconstitutional,

ORRENT

REAK

(Mar. 12, 2011), http://tor-

rentfreak.com/5-reasons-why-the-us-domain-seizures-are-unconstitutional-

110312.

316

See 18 U.S.C. §983(c)(1) (2012).

317

See Promoting Investment and Protecting Commerce Online: Legitimate Sites v.

Parasites, Part II: Hearings Before the H. Subcomm. on Intellectual Prop-

erty, Competition, and the Internet, 112th Cong. 117 (2011) (statement of

John Morton, Director, ICE).

318

See Immigration and Customs Enforcement News Release: ICE Seizes 82

Website Domains Involved in Selling Counterfeit Goods as Part of Cyber

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This American Copyright Life 293

eral rap and hip hop blogs showcasing new artists tagged by an RIAA

representative as pirate sites.

319

Dajaz1.com allegedly posted pre-release

songs owned by RIAA member labels. Yet these songs had apparently

been “leaked” by record label promotional representatives for marketing

and publicity.

320

Thus, the website seized had authorization to post the

works. Even after this mistake was revealed within a few weeks by the

New York Times,

321

the government delayed more than year before un-

ceremoniously returning the domain.

322

As later unsealed documents

would reveal, the delay resulted from ICE waiting for the RIAA to pro-

vide evidence establishing that the postings of the songs were illegal.

323

Such evidence never materialized.

324

The owner and users of the blog lost

more than a year of activity without justification.

325

And while the gov-

Monday Crackdown (Nov. 29, 2010), http://www.ice.gov/news/releases/1011/

101129washington.htm.

319

See Mike Masnick, More & Bigger Mistakes Discovered in Homeland Secur-

ity’s Domain Seizures,

ECHDIRT

(Dec. 22, 2010), http://www.techdirt.com/

articles/20101222/02112912376/more-bigger-mistakes-discovered-homeland-

securitys-domain-seizures.shtml.

320

See Ben Sisario, Piracy Fight Shuts Down Music Blogs,

N.Y. T

IMES

(Dec. 13,

2010), http://www.nytimes.com/2010/12/14/business/media/14music.html?_r

=1&.

321

See id.

322

See David Kravets, Feds Seized Hip-Hop Site for a Year, Waiting for Proof of

Infringement,

IRED

(May 3, 2012), http://www.wired.com/threatlevel/2012/

05/weak-evidence-seizure; Mike Masnick, Breaking News: Feds Falsely Cen-

sor Popular Blog for over a Year, Deny All Due Process, Hide All Details,

ECHDIRT

(Dec. 8, 2011), http://www.techdirt.com/articles/20111208/082252

17010/breaking-news-feds-falsely-censor-popular-blog-over-year-deny-all-

due-process-hide-all-details.shtml.

323

See Mike Masnick, RIAA Tries To Downplay Its Role In The Feds’ Unjustifi-

able Censorship of Dajaz1, Techdirt (May 8, 2012), http://www.techdirt.com/

articles/20120507/16073718821/riaa-tries-to-downplay-its-role-feds-unjustifi-

able-censorship-dajaz1.shtml [hereinafter “Unjustifiable Censorship”); Mike

Masnick, Judge Lets Feds Censor Blog for Over a Year So the RIAA Could

Take Its Sweet Time,

ECHDIRT

(May 3, 2012), http://www.techdirt.com/arti-

cles/20120502/16575418746/judge-lets-feds-censor-blog-over-year-so-riaa-

could-take-its-sweet-time.shtml.

324

See Ben Sisario, Hip-Hop Copyright Case Had Little Explanation,

N.Y. T

IMES

(May 6, 2012), http://www.nytimes.com/2012/05/07/business/media/hip-hop-

site-dajaz1s-copyright-case-ends-in-confusion.html?_r=3&.

325

See Mike Masnick, Breaking News: Feds Falsely Censor Popular Blog for over

a Year, Deny All Due Process, Hide All Details,

ECHDIRT

(Dec. 8, 2011),

http://www.techdirt.com/articles/20111208/08225217010/breaking-news-feds-

falsely-censor-popular-blog-over-year-deny-all-due-process-hide-all-

details.shtml.

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294 Journal, Copyright Society of the U.S.A.

ernment asserts that it “followed all proper procedure,”

326

it is difficult to

see how this episode accords with justice.

In February 2011, ICE’s joint operation with the Department of Jus-

tice’s Child Exploitation and Obscenity Section executed “seizure war-

rants against 10 domain names of websites engaged in the advertisement

and distribution of child pornography.”

327

While pursuing a laudable

goal, ICE agents mistakenly seized all domains registered under mooo

.com, a registry that allows individuals and small businesses to register

“username.mooo.com” subdomains. As a result, all 84,000 mooo.com sub-

domains were redirected to a website warning:

This domain name has been seized by ICE — Homeland Security Investi-

gations pursuant to a seizure warrant issued by a United States District

Court under the authority of Title 18 U.S.C. 2254.

Advertisement, distribution, transportation, receipt, and possession of

child pornography constitute federal crimes that carry penalties for first

time offenders of up to 30 years in federal prison, a $250,000 fine, forfei-

ture and restitution.

328

ICE later released a statement notice explaining that “[d]uring the course

of a joint DHS and DOJ law enforcement operation targeting ten websites

providing explicit child pornographic content, a higher level domain name

and linked sites were inadvertently seized for a period of time.”

329

Al-

though the websites were restored, the owners lost three days of activity

and could well have been injured by the suggestion that their website was

associated with child pornography.

330

These incidents, even if exceptional, illustrate problems with the

framework of public enforcement in the Internet Age. Although some

view the entire government domain name seizure effort as fundamentally

326

See Sisario, supra note 324. Counsel for Dajaz1.com questions that assertion.

See Unjustifiable Censorship, supra note 323.

327

See Press Release, Joint DHS-DOJ “Operation Protect Our Children” Seizes

Website Domains Involved in Advertising and Distributing Child Pornogra-

phy (Feb. 15, 2011), http://www.dhs.gov/news/2011/02/15/joint-dhs-doj-oper

ation-protect-our-children-seizes-website-domains-involved; Operation Pro-

tect Our Children,

IKIPEDIA

http://en.wikipedia.org/wiki/Operation_Pro

tect_Our_Children (last visited Nov. 5, 2013).

328

See Steven Mostyn, 84,000 Websites Wrongly Culled for Child Pornography,

ECH

ERALD

(Feb. 28, 2011), http://www.thetechherald.com/articles/

84-000-websites-wrongly-culled-for-child-pornography/12837.

329

See Thomas Claburn, ICE Confirms Inadvertent Web Site Seizures,

NFORMA-

TION

EEK

(Feb. 18, 2011), http://www.informationweek.com/security/vul

nerabilities/ice-confirms-inadvertent-web-site-seizur/229218959.

330

See id.; Corynne McSherry, ICE Seizures Raising New Speech Concerns,

LEC-

TRONIC

RONTIER

OUNDATION

(Feb. 16, 2011), https://www.eff.org/deep

links/2011/02/ice-seizures-raising-new-speech-concerns.

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This American Copyright Life 295

misguided,

331

I believe that government enforcement can and should play

a substantial role in copyright protection in the Internet Age. The govern-

ment is uniquely situated to act quickly and effectively. It can also address

the collective action problem posed by websites that can infringe indis-

criminately across wide swaths of expressive creativity. And unlike pri-

vate enforcement, public enforcement brings in the element of

prosecutorial discretion.

Independent filmmakers like Ellen Seidler or even substantial motion

picture studios have little chance against vast infringing enterprises like

MegaUpload or the Pirate Bay. And any gains they achieve in curbing

piracy will largely fall to others. Enforcement in the Internet Age presents

a classic free rider problem. Content owners that wait by the sideline will

reap comparable gains to those that incur enforcement costs. Thus, the

government can act as an efficient collective enforcement institution. But

in order to harness these comparative advantages over private enforce-

ment, the government must earn the respect of the public. It must deal

fairly with all affected parties and exercise prosecutorial discretion in a

neutral manner.

The entire copyright public enforcement enterprise needs to be re-

thought from the standpoints of building public acceptance and sustained

effective progress. I recommend a three-pronged approach for establish-

ing legitimacy, balance, and effectiveness: (1) the development of a hybrid

public enforcement model to augment criminal enforcement that inte-

grates stronger due process and civil law elements; (2) expanded efforts to

work across the content and technology sectors to identify consensual

cross-industry solutions to enforcement challenges; and (3) more transpar-

ent and balanced approaches to international copyright protection.

(

)A B

ALANCED

UBLIC

NFORCEMENT

ROCESS

The existing enforcement institutions have developed largely through

a criminal law framework that is not well tailored to the complex and

evolving online copyright enforcement challenges or the importance of

public acceptance of the copyright system in the Internet Age. While the

criminal model may be appropriate for dealing with warez rings,

332

it is

too heavy-handed for many policing Internet activities.

I propose that rather than viewing public enforcement of copyright

through the traditional criminal law lens, we view government enforce-

331

See id.

332

Professor Goldman questions the effectiveness of criminal enforcement of

warez rings. See Goldman, supra note 35. While his observations make

sense, it is not clear that there is a good enforcement alternative. Further-

more, there likely has been a deterrent effect, even if such rings continue to

evolve.

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296 Journal, Copyright Society of the U.S.A.

ment more generally as a complement to private enforcement — as a

means for dealing with those problems that cannot be handled effectively

through private infringement actions. Those problems include pursuing

infringing websites targeting U.S. interests that are beyond U.S. jurisdic-

tion, confronting infringing websites that affect a wide swath of copyright

owners (thereby creating a collective action problem), and combating in-

fringing activities that require rapid response. The enforcement proce-

dures should be matched to the particularities of these problems.

It is beyond the scope of this lecture to explore all of the design de-

tails of an optimal regime, but I will trace the main contours. Outside of

those contexts in which urgent action might be required — for example,

where a film that has not yet been released or is in first-run theatrical

release is being pirated or where the operators of a pirate website are

likely to be out of reach of private enforcers or judgment-proof — the

government should provide target websites with an opportunity to re-

spond to a seizure request. Moreover, those requesting seizure should

bear the costs of false positives. The government should institute a bond-

ing mechanism that to fund compensation for those website owners who

are inappropriately targeted.

333

Such procedures would discourage exces-

sive enforcement and afford those wrongly accused with more than a bu-

reaucratic “never mind.” It would also introduce safeguards against

excessive enforcement.

More generally, the costs of these operations ought to be shared

among the illegal operators (to the extent that their assets can be reached)

and the beneficiaries of the enforcement activities — the content indus-

tries. Thus, recoveries of assets in enforcement proceedings as well as a

modest revenue-based fee on those industries that stand to benefit from a

collective enforcement effort could provide sustainable funding for gov-

ernment copyright enforcement efforts. Although the public-at-large

should benefit from a better functioning copyright system, the public

might not view this initiative as a high priority. Raising the costs of public

efforts. If affected industries are not willing contribute to such efforts,

then perhaps the need is not so acute.

At the same time, the government should strive for transparency and

insulation from undue influence in carrying out these activities.

334

There

can be serious appearances of impropriety when the government engages

in secretive enforcement activities with industry organizations whose

333

A provision analogous to 17 U.S.C. § 512(f) providing for liability for those

who misuse the DMCA notice and takedown procedure would make sense.

As noted below, however, see infra Section III (A)(2)(viii), the § 512(f) pro-

cess could be improved.

334

See Kopel, supra note 312, at 900.

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This American Copyright Life 297

members stand to gain from public enforcement.

335

The enforcement pro-

cess requires evidence from the affected parties. But safeguards should be

put in place to ensure that the investigative process is objective and

responsibly administered. Full contemporaneous transparency would ob-

viously not work for sting operations and some other urgent enforcement

activities, but the complaint process, pertinent evidence, and interaction

with complainants ought to be available where feasible to operate as a

check on the exercise of government power.

In the end, government copyright enforcement should build trust in

the copyright system and government institutions. Tone, transparency,

and willingness to admit and provide compensation for mistakes should be

the highest order. Flawed enforcement efforts reinforce larger concerns

about government trampling of free expression and due process rights.

Dajaz1.com’s lawyer characterized the treatment of his client — who was

subjected to secret proceedings — as a form of “digital Guantanamo.”

336

When the government makes mistakes, it should own up to them and

make recompense. Copyright enforcement is not a sensitive national se-

curity issue. The worst that can happen is that a film reaches illicit chan-

nels before its theatrical release, which while costly to the producers of the

film, is not life threatening. Outside the realm of serious criminal activity,

public copyright enforcement should be a civil process that balances harms

to copyright owners and harms to website operators.

(

ORKING

OLLABORATIVELY

CROSS THE

ONTENT AND

ECHNOLOGY

ECTORS

The government can also play an effective role in facilitating cross-

industry efforts to address copyright enforcement challenges.

337

Such

agreements provide alternatives to costly litigation

338

and legislative pro-

visions that become obsolete.

339

As legitimate Internet content distribu-

tion models have emerged, many more technology companies stand to

gain from consumers accessing content from legitimate sources. Author-

ized vendors — such as iTunes, Amazon, YouTube, Netflix, and Spotify —

experience greater traffic and commerce to the extent that illegal alterna-

tives are harder to access. ISPs can better manage their traffic when con-

335

See, e.g., Unjustifiable Censorship, supra note 323; McSherry, supra note 330.

336

See Unjustifiable Censorship, supra note 323.

337

See Menell, supra note 257, at 30-32.

338

Epic litigations over user-generated content websites and Google book search,

see Authors Guild v. Google, Inc., 770 F. Supp. 2d 666 (S.D.N.Y. . 2011),

illustrate how adversarial processes can drag out, drain coffers, and hamper

introduction of innovative technologies.

339

The DMCA failed to anticipate the development of Web 2.0 services, resulting

in expensive and inconclusive litigation.

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298 Journal, Copyright Society of the U.S.A.

sumers access content from legitimate sources. As ISPs integrate

distribution and content businesses, they will see even greater direct bene-

fits from reduced piracy.

340

The cross-industry effort to establish the Principles for User Gener-

ated Content Services encouraged the development and implementation

of effective filtering technologies for user-upload websites.

341

Although

Google did not formally join this initiative, the ContentID system that it

deployed for YouTube follows the UGC Principles. In March 2011, Youku

.com, China’s leading Internet television company, joined the initiative.

342

This is a particularly encouraging development in light of the special chal-

lenges of addressing piracy in China.

343

340

Following the 2011 merger of Comcast, a cable and Internet company, and

NBC Universal, a content company, Comcast’s CEO acknowledged a shift

in outlook on online copyright enforcement. See Kenneth Corbin, Comcast

Set to Enter Copyright Wars,

ATAMATION

COM

(Jan. 27, 2010), http://www

.datamation.com/cnews/article.php/3861096/Comcast-Set-to-Enter-Copy-

right-Wars.htm (quoting Brian Roberts: “We are now going to be on both

sides of [the whole question of piracy].”). Similarly, Sony Corporation,

which prevailed in the hard-fought battle over the video cassette recorder,

Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984),

took a more conciliatory approach to piracy concerns after it acquired mo-

tion picture and record labels in the late 1980s. See Sony Completes $3.4

Billion Acquisition of Columbia,

L.A. T

IMES

(Nov. 8, 1989), http://arti-

cles.latimes.com/1989-11-08/business/fi-1040_1_columbia-pictures (noting

the acquisition of Columbia Pictures Entertainment Inc., the film and tele-

vision studio); Columbia Records,

IKIPEDIA

http://en.wikipedia.org/wiki/

Columbia_Records (last visited Nov. 4, 2013) (noting that Sony acquired

Columbia Records in 1988). Rather than litigate over digital audio tape

technology, Sony collaborated with content owners in crafting the Audio

Home Recording Act of 1992. See Pub. L. No. 102-563, 106 Stat. 4237

(codified as amended at 17 U.S.C. §§ 1001–1010).

Scholars have criticized legislative deal-making as political capture. See Lewis

Kurlantzick & Jacqueline E. Pennino, The Audio Home Recording Act of

1992 and the Formation of Copyright Policy, 45 J

. C

OPYRIGHT

’

497

(1998); see generally Jessica Litman, Copyright Legislation and Technologi-

cal Change, 68

. L. R

. 275 (1989). Compromises growing from cross-

industry mergers, however, are more likely to promote social welfare than

backroom deals with one industry group. The larger concern is activating

and involving diffuse and less well-organized interests. See

ANCUR

L-

SON

, T

OGIC OF

OLLECTIVE

CTION

(1971). The Internet has awak-

ened and helped to organize more of those interests.

341

See Note, The Principles for User Generated Content Services: A Middle-

Ground Approach to Cyber-Governance, 121

ARV

. L. R

. 1387 (2008).

342

See Press Release, Youku Joins Broad Coalition in Support of UGC Principles

(Mar. 7, 2011), http://ir.youku.com/phoenix.zhtml?c=241246&p=irol-

newsArticle&id=1536305.

343

See Vincent Brodbeck, Using the Carrot, Not the Stick: Streaming Media and

Curbing Digital Piracy in China, 19

B.U. J. S

. & T

ECH

L. 127 (2013).

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This American Copyright Life 299

The Intellectual Property Enforcement Coordinator has encouraged

development of memoranda of understanding and comparable initiatives

aimed at preventing enforcement problems and costly litigation.

344

June 2011, major credit card companies and payment processors reached

an agreement on voluntary best practices to reduce sales of counterfeit

and pirated goods.

345

The best practices are designed to cut off financial

services to websites distributing infringing goods. The agreement provides

mechanisms to investigate complaints and remove payment services from

sites that continue to operate unlawfully. It also provides appeal mecha-

nisms during and after the investigation phase and both before and after

any action is taken.

346

In July 2011, leading ISPs (AT&T, Comcast, Cablevision, Verizon,

and Time Warner Cable) and major and independent music labels and

movie studios reached an agreement to reduce online piracy through what

has been called “graduated response.”

347

Under the agreement, ISPs will

notify subscribers, through a series of alerts, when their Internet service

accounts appear to be misused for infringement on peer-to-peer networks.

The agreement contains safeguards to ensure the accuracy of detection

methods and afford users opportunities to challenge accusations of im-

344

See

U.S. I

NTELLECTUAL

ROP

. E

NFORCEMENT

OORDINATOR

, 2011 J

OINT

TRATEGIC

LAN ON

NTELLECTUAL

ROPERTY

NFORCEMENT

6, 46-47

(Mar. 2012), available at http://www.whitehouse.gov/sites/default/files/omb/

IPEC/ipec_annual_report_mar2012.pdf;

U.S. I

NTELLECTUAL

ROP

. E

N-

FORCEMENT

OORDINATOR

, 2013 J

OINT

TRATEGIC

LAN ON

NTELLEC-

TUAL

ROPERTY

NFORCEMENT

36 (June 2013), available at http://www

.whitehouse.gov/sites/default/files/omb/IPEC/2013-us-ipec-joint-strategic-

plan.pdf [hereinafter IPEC 2013 Joint Strategic Plan).

345

See

U.S. I

NTELLECTUAL

ROP

. E

NFORCEMENT

OORDINATOR

, 2011 J

OINT

TRATEGIC

LAN ON

NTELLECTUAL

ROPERTY

NFORCEMENT

46 (Mar.

2012), available at http://www.whitehouse.gov/sites/default/files/omb/IPEC/

ipec_annual_report_mar2012.pdf.

346

Andrew Bridges, attorney for Dajaz1.com, notes that his law firm has “ob-

served a number of instances in which companies received threats of termi-

nation based on accusations by rights holders and had to argue for their

continued participation in the payment networks.” See Andrew P. Bridges,

SOPA Didn’t Die. It Just Became Soft SOPA.

ENWICK

& W

EST

2013 I

N-

TELL

. P

ROP

. S

UMMER

ULL

3 (Sept. 25, 2013), available at http://www.fen-

wick.com/FenwickDocuments/IP_Bulletin_Summer_2013.pdf. Mr. Bridges

does not indicate, however, the extent to which this initiative has reduced

piracy. It remains to be seen whether this approach will provide a better

balance in the marketplace.

347

information.org/sites/default/files/Momorandum%20of%20Understanding

.pdf; see Annemarie Bridy, Graduated Response American Style: “Six

Strikes” Measured Against Five Norms, 23

ORDHAM

NTELL

. P

ROP

. M

EDIA

& E

. L.J. 1 (2012).

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300 Journal, Copyright Society of the U.S.A.

proper activity. Professor Annemarie Bridy sees the initiative in mixed

terms:

On the positive side, it does not involve content blocking or filtering, and

it is unlikely to result in even a temporary suspension of Internet access

for any accused repeat infringer. In addition, it does not require ISPs to

monitor subscriber traffic or to turn over identifying information about

individual subscribers to copyright owners. Finally, it provides an oppor-

tunity to appeal a finding of repeat infringement to an independent re-

viewer before any sanction is imposed, without foreclosing the possibility

of judicial process.

On the negative side, there are insufficient safeguards in [copyright

alert system] to insure the accuracy of allegations of infringement, the

fairness of the independent review process, and the independence and

expertise of the various “independent experts” the MOU requires [the

Center for Copyright Information] to consult. Moreover, there is no way

for the public to know whether the program is meeting the goals estab-

lished for it in the MOU.

348

It remains to be seen whether this approach will achieve its goals, but

there can be little doubt that it offers a more balanced approach to illegal

file-sharing than the mass litigation that unfolded from 2003 through 2008.

As I discuss below,

349

I would encourage the industries to take a more

conciliatory approach than graduated response — what I call graduated

embrace.

In July 2013, the IPEC announced promulgation of “Best Practices

for Ad Networks to Address Piracy and Counterfeiting”

350

by the Interac-

tive Advertising Bureau and leading ad networks.

351

As noted by Susan

Molinari, Google’s Vice President for Public Policy and Government

Relations:

[u]nder these best practices, Ad Networks will maintain and post policies

prohibiting websites that are principally dedicated to selling counterfeit

goods or engaging in copyright piracy from participating in the Ad Net-

work’s advertising programs. By working across the industry, these best

practices should help reduce the financial incentives for pirate sites by

348

See Bridy, supra note 347, at 67.

349

See infra, Section III(B)(2).

350

See Best Practices for Ad Networks to Address Piracy and Counterfeiting,

http://2013ippractices.com (last visited Nov. 4, 2013).

351

Victoria Espinel, Coming Together to Combat Online Piracy and Counterfeit-

ing, Office of Management and Budget (July 15, 2013),

FFICE OF

ANAGE-

MENT AND

UDGET

, http://www.whitehouse.gov/blog/2013/07/15/coming-

together-combat-online-piracy-and-counterfeiting (announcing that 24/7

Media, Adtegrity, AOL, Cond ´e Nast, Google, Microsoft, SpotXchange, and

Yahoo!, with the support of the Internet Advertising Bureau, collaborated

in establishing self-regulating best practices for their ad networks).

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This American Copyright Life 301

cutting off their revenue supply while maintaining a healthy Internet and

promoting innovation.

352

This initiative promises a less draconian, more flexible approach to piracy

enforcement.

(

ALANCED

NTERNATIONAL

FFORTS TO

ROMOTE

OPYRIGHT

ROTECTION

A third prong of public enforcement concerns international initia-

tives, ranging from foreign enforcement cooperation and interdiction ef-

forts to copyright and trade treaties. IPEC and NIPRCC coordinate with

INTERPOL and foreign enforcement agencies to investigate and enforce

353

IPEC, the Patent and Trademark Office (PTO), and the

U.S. Trade Representative (USTR) play central roles in promoting en-

forcement of U.S. intellectual property rights abroad through trade policy

tools.

354

The USTR conducts an annual compliance review of intellectual

property protection and market access practices in foreign countries.

355

The negotiation of international trade agreements relating to intellec-

tual property enforcement has been vigorously criticized for lack of trans-

parency and public participation as well as substantive flaws.

356

These

problems undermine public support for international enforcement

initiatives.

More importantly, the U.S. has tended to treat international IP and

trade treaties much the way the recording industry treated consumers fol-

352

See Susan Molinari, Ad Networks Agree on Industry Best Practices to Combat

Piracy and Counterfeiting,

OOGLE

UBLIC

OLICY

LOG

(Jul. 15, 2013),

http://googlepublicpolicy.blogspot.com/2013/07/ad-networks-agree-on-in-

dustry-best.html.

353

See About Us Partners,

ATIONAL

NTELLECTUAL

ROPERTY

IGHTS

OOR-

DINATION

ENTER

http://www.iprcenter.gov/about-us (last visited Nov. 4,

2013);

IPEC 2013 J

OINT

TRATEGIC

LAN

, supra note 344, at 25-26, 30-31.

354

See

IPEC 2013 J

OINT

TRATEGIC

LAN

, supra note 344, at 27-30.

355

The USTR’s annual report is conducted pursuant to Section 182 of the Trade

Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of

1988 and the Uruguay Round Agreements Act. See

FFICE OF THE

U.S.

RADE

EPRESENTATIVE

, 2013 S

PECIAL

301 R

EPORT

(May 2013), available

at http://www.ustr.gov/sites/default/files/05012013%202013%20Special%203

01%20Report.pdf.

356

See Michael Blakeney, Covert International Intellectual Property Legislation:

The Ignoble Origins of the Anti-counterfeiting Trade Agreement (ACTA), 21

ICH

. S

. I

’

. L. R

. 87 (2013); Michael Geist, ACTA’s State of Play:

Looking Beyond Transparency, 26

. U. I

’

L. R

. 543 (2011); Eddan

Katz & Gwen Hinze, The Impact of the Anti-Counterfeiting Trade Agree-

ment on the Knowledge Economy: The Accountability of the Office of the

U.S. Trade Representative for the Creation of IP Enforcement Norms

Through Executive Trade Agreements, 35

ALE

J. I

’

L. O

NLINE

(2009).

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302 Journal, Copyright Society of the U.S.A.

lowing the emergence of peer-to-peer technology — as enforcement

problems.

357

Much of the rhetoric surrounding the issue emphasizes ex-

pressive creativity as an export/balance of trade issue for our nation; not as

a critical economic and social policy for all nations. If the U.S. wants the

developing world to respect intellectual property protection, those nations

need to have a stake other than as paying consumers.

As nations develop domestic creative industries, they are more recep-

tive to embracing laws protecting content of other nations

358

— a lesson

the United States appears to have forgotten. Charles Dickens was initially

welcomed on his tour of the United States in the 1840s as a hero of the

common man.

359

The press and the public turned on him, however, as he

sought to use this platform to promote copyright protection for foreign (as

well as domestic) authors.

360

It was only after the U.S. developed a robust market for homegrown

expressive creativity that international protection became a priority.

361

U.S. treaty and trade negotiators should celebrate and nurture Bollywood,

Nollywood, and other creative communities as a primary focus for achiev-

ing global copyright protection. The U.S. should not be seen as an IP bully

on the international stage but rather as a genuine partner willing to lend a

hand up to nations willing to support their creative industries.

362

Such a

policy has the added bonus of promoting free expression and democratic

ideals.

357

This is not surprising in view of the political economy of copyright policy. The

major content industries perceive these issues through a narrow and myopic

lens. They have taken the expedient course of emphasizing domestic em-

ployment concerns and balance of trade as opposed to promoting expres-

sive creativity.

358

See

UBERT

J. C

LARK

, T

OVEMENT FOR

NTERNATIONAL

OPYRIGHT IN

INETEENTH

-C

ENTURY

MERICA

(1960) (observing that the United States

did not afford intellectual property legislation for non-U.S. citizens until its

economy developed).

359

See Sherri L. Burr, The Piracy Gap: Protecting Intellectual Property in an Era

of Artistic Creativity and Technological Change, 33

ILLAMETTE

L. R

245, 248 (1997).

360

See Gerhard Joseph, Charles Dickens, International Copyright, and the Discre-

tionary Silence of Martin Chuzzlewit, 10

ARDOZO

RTS

& E

. L.

J. 523

(1992); see Edward G. Hudon, Literary Piracy, Charles Dickens and the

American Copyright Law, 50

. B

’

J. 1157 (1964); Lawrence H.

Houtchens, Charles Dickens and International Copyright, 13

. L

ITERA-

TURE

18 (1941); James J. Barnes,

UTHORS

, P

UBLISHERS AND

OLITICIANS

UEST FOR AN

NGLO

-A

MERICAN

OPYRIGHT

GREEMENT

1815–1854

(1974).

361

See Clark, supra note 358.

362

See Sean Pager, Accentuating the Positive: Building Capacity for Creative In-

dustries into the Development Agenda for Global Intellectual Property Law,

. U

NIV

. I

’

L. R

. 223 (2012).

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This American Copyright Life 303

c) Whistleblower Bounties

As the challenge of online file-sharing has developed, technology

companies have advocated pursuing bad actors rather than those who de-

velop innovative technologies.

363

Unfortunately, it is often difficult to

separate the good actors from the bad.

364

In the context of technologies

like user-generated content web portals or book search, it is often exceed-

ingly difficult to know where the line is drawn. The Sony staple article of

commerce doctrine, DMCA OSP safe harbors, and fair use doctrine can

be difficult to navigate.

In some cases, however, the line between legal and illegal activity is

relatively easy to ascertain but the intent and actions of the actors can be

illusive. Take, for example, the case of Grooveshark, a popular online mu-

sic streaming service that offers a broad music catalog, including major

label releases. Although Grooveshark does not have licenses from the

merely hosts these files at the behest of users and expeditiously removes

copyrighted works for which it lacks authorization when it receives legiti-

mate takedown requests.

365

Putting aside whether the DMCA safe harbor

extends this far,

366

the service would clearly run afoul of copyright law if

Grooveshark employees knowingly uploaded copyrighted music to the

service.

So imagine if a Grooveshark employee were to acknowledge that:

363

See Mark Lemley & Anthony Reese, Reducing Digital Copyright Enforcement

Without Restricting Innovation, 56

TAN

. L. R

. 1345 (2004).

364

See Jane C. Ginsburg, Separating the Sony Sheep from the Grokster Goats:

Reckoning the Future Business Plans of Copyright-Dependent Technology

Entrepreneurs, 50

RIZ

. L. R

. 577 (2008).

365

See Mike Masnick, Grooveshark Insists It’s Legal; Points Out That Using

DMCA Safe Harbors Is Not Illegal,

ECHDIRT

(Apr. 20, 2011), http://www

.techdirt.com/articles/20110419/11434013962/grooveshark-insists-its-legal-

points-out-that-using-dmca-safe-harbors-is-not-illegal.shtml.

366

Grooveshark contends that the prevalence of major label hits being promoted

by its “Popular” button does not send up any “red flag” signaling apparent

infringing activity. According to one of Grooveshark’s vice presidents, the

“popular list” is merely “an automated list of songs, based on day-to-day

activity on our site.” “This isn’t a list that we are going out of our way to

put together. We have really no direct control of the songs that pop up in

the ‘popular’ section.” Perhaps Grooveshark employees, including those

maintaining the website, never monitor that page or traffic on the site. Per-

haps they do not know that many of the most popular artists are on major

record labels that are suing them for copyright infringement. That would be

astonishing for a company that advertises itself as “the world’s largest inter-

national community of music lovers” that is actively seeking licensing deals

from record labels. Or perhaps they are willfully blind to what is going on.

See Peter S. Menell, Jumping the Grooveshark (Dec. 21, 2011), available at

http://www.mediainstitute.org/new_site/IPI/2011/122111.php.

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304 Journal, Copyright Society of the U.S.A.

[w]e are assigned a predetermined amount of weekly uploads to the sys-

tem and get a small extra bonus if we manage to go above that (not easy).

The assignments are assumed as direct orders from the top to the bottom,

we don’t just volunteer to ‘enhance’ the Grooveshark database.

367

This statement, if true, would establish that Grooveshark was not eligible

for the DMCA safe harbor and was directly liable for copyright infringe-

ment. The statement was posted to Digital Music News, a music and tech

industry news blog, by a person purporting to be an anonymous

Grooveshark employee.

368

Grooveshark served Digital Media News with

a subpoena seeking information about the identities of the poster as a well

as correspondence with the major record labels. Digital Media News re-

fused to comply on First Amendment grounds. The litigation between re-

cord labels and Grooveshark has languished for several years.

Another enforcement problem concerns darknets

369

and private tor-

rent sites,

370

which use anonymizing technology and invitation-based

screening to avoid detection. Such activity operates below general search

engine radar and hence is significantly more difficult to detect. The effects

of such activity on content markets are likely to be smaller because files

are not accessible to the public-at-large. Furthermore, the individuals that

participate in these channels are technology savvy and especially resistant

to having their digital freedom limited. Nonetheless, their activity violates

ies into more public channels.

Traditional copyright enforcement lacks the tools to surface these vio-

lations effectively. One solution would be to reward those with informa-

tion about illegal activity who come forward with pertinent evidence. The

367

See Ben Sisario, Digital Notes: Grooveshark Copyright Suit and Its Unusual

Evidence, N.Y.

IMES

(Jan. 18, 2012), http://mediadecoder.blogs.nytimes

evidence.

368

See id.

369

See Peter Biddle, Paul England, Marcus Peinado, and Bryan Willman, The

Darknet and the Future of Content Distribution, ACM Workshop on Digi-

tal Rights Management. (Nov 2002), available at http://msl1.mit.edu/ESD10/

docs/darknet5.pdf.

370

See Bod ´o Bal ´azs, Set the Fox to Watch the Geese: Voluntary IP Regimes in

Piratical File-Sharing Communities, in

IRACY

: L

EAKAGES FROM

ODER-

NITY

(Martin Fredriksson & James Arvanitakis eds., 2013) Andy, Why Pri-

vate Torrent Sites Have Strict Copyright Enforcement Rules,

ORRENT

REAK

(May 11, 2013), http://torrentfreak.com/why-private-torrent-sites-

have-strict-copyright-enforcement-rules-130511 (explaining that “private

torrent sites” — of which there are possibly thousands — utilize invite-only

walls so as to prevent detection).

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This American Copyright Life 305

False Claims Act (FCA)

371

offers a potentially useful model.

372

This stat-

ute uses the prospect of gaining a share of eventual recovery from enter-

prises that defraud the government as a mechanism to elicit evidence of

fraud. While the particularities of the FCA could not be carried over to

mation used in enforcement has been extrapolated to private software

Software and Information Industry Alliance (SIIA) offer bounties to those

who report software piracy.

373

This has facilitated direct enforcement and

likely deterred infringing activity.

374

2. Promoting Cumulative Creativity

Beyond these structural and substantive adjustments to copyright’s

enforcement regime, Congress can better promote creativity by updating

In some contexts, this can be accomplished by adjusting copyright law’s

default rules to make it easier for follow-on creators to license underlying

works. In others, this can be accomplished by curtailing the scope of rights

in underlying works in ways that will not discourage primary incentives.

Many of copyright’s rules developed for an analog age stand in the way of

rapid creative advance made possible by digital technology. New technol-

371

See False Claims Act, ch. 67, 12 Stat. 696 (1863) (current version codified at 31

U.S.C. §§ 3729-3733); see generally

LAIRE

M. S

YLVIA

, T

ALSE

LAIMS

: F

RAUD

GAINST THE

OVERNMENT

(2d ed. 2010).

372

See Patricia Meador & Elizabeth S. Warren, The False Claims Act: A Civil War

Relic Evolves into a Modern Weapon, 65

ENN

. L. R

. 455 (1998)

373

See Mark Malven, Technology: Software Piracy Watchdogs Offer Up to $1 mil-

lion Bounty to Corporate Whistleblowers,

NSIDE

OUNSEL

(Nov. 19, 2010),

http://www.insidecounsel.com/2010/11/19/technology-software-piracy-

watchdogs-offer-up-to-1; Ken Fisher, BSA Announces $1 Million Reward

for Piracy Snitches,

RSTECHNICA

(Jul. 2, 2007), http://arstechnica.com/

tech-policy/2007/07/bsa-announces-1-million-award-for-piracy-snitches.

The BSA and SIIA provide online forms for reporting software piracy. See

BSA, https://reporting.bsa.org/r/report/add.aspx?src=us&ln=en-us (last

visted Nov. 4, 2013); see SIAA, https://www.siia.net/piracy/report/re-

port.asp? (last visited Nov. 4, 2013).

374

See Whistleblowers Can Be Rewarded for Turning in Boss for Computer

Crimes,

CBS B

REA

(Sep. 5, 2013), http://sanfrancisco.cbslocal.com/

2013/09/25/whistleblowers-can-be-rewarded-for-turning-in-boss-for-com-

puter-crimes (reporting that the BSA settled eight piracy cases in the U.S.

last year involving more than $2.5 million in pirated software and that a

percentage of the fines go to informants as a reward); Robert J. Scott, BSA

— The Software Alliance “Whistleblower” Radio Ads Focus on Omaha,

Portland, Salt Lake City, and Tampa,

PRW

(Mar. 12, 2013), http://www

.prweb.com/releases/2013/3/prweb10521211.htm (offering audit services in

response to the advertisements soliciting whistleblowers).

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306 Journal, Copyright Society of the U.S.A.

ogies remove many of the historic impediments to dissemination of re-

search and development of new works that build upon the old. Loosening

several of copyright law’s protection doctrines while making minimal de-

mands on copyright owners to maintain up-to-date digital records of their

ownership interests could greatly increase the value of existing works

while unleashing a vast wave of new creativity. This section highlights a

non-exhaustive range of promising reform possibilities.

a) Academic Research

demic scholarship into the same bucket as J.K. Rowling novels and much

else, notwithstanding the stark motivational differences between these cat-

egories of writing. Novelists rely on the market to support their craft.

They rely on royalties (sometimes advanced by publishers). If their books

don’t sell, they don’t get paid. Academics, by contrast, get paid a salary to

do academic research and write articles. They do not earn royalties from

sales of the journals containing their works.

Yet for much of the history of copyright protection, these differences

did not present much of a problem. The costs of publishing, marketing,

and distribution scholarly journals required funding that copyright protec-

tion helped to generate. The revenues from selling academic journals

helped to support the professional societies that peer-reviewed these

works. Copyright protection supported this infrastructure. In this way,

monopoly pricing and limitations of access.

Now that advances in digital technology have largely eliminated the

costs of publishing, marketing, and distributing scholarly journals, the case

for copyright protection of academic scholarship is much attenuated if not

eliminated.

375

In fact, copyright protection can delay the spread of aca-

demic research which can have undesirable effects on research, access to

medicine, and a large range of social purposes.

376

The low cost of distributing academic scholarship and scientific re-

search has fueled a vast open access movement.

377

The Internet provided

375

See Jorge L. Contreras, Confronting the Crisis in Scientific Publishing: Latency,

Licensing, and Access, 53

ANTA

LARA

L. R

. 491 (2013); Steven

Shavell, Should Copyright of Academic Works be Abolished?, 2

J. L

EGAL

NALYSIS

301 (2010); Jessica Litman, The Economics of Open Access Law

Publishing, 10

EWIS

& C

LARK

L. R

. 779 (2006); Theodore C. Berg-

strom, Free Labor for Costly Journals?, 15 J

. E

CON

. P

ERSP

183 (2001).

376

See Sean Flynn, Aidan Hollis, & Mike Palmedo, An Economic Justification for

Open Access to Essential Medicine Patents in Developing Countries, 37

J.L.

. & E

THICS

184 (2009).

377

See Mikael Laakso, Patrik Welling, Helena Bukvova, Linus Nyman, Bo-

Christer Bj ¨ork & Turid Hedlund, The Development of Open Access Journal

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This American Copyright Life 307

a quantum leap in open access publishing, which continues to grow rap-

idly. The Public Library of Science (PLoS) hosts a family of science jour-

nals.

378

The Social Science Research Network has become a central

repository for a wide range of social science, humanities, business, and

legal scholarship.

379

The Directory of Open Access Journals lists nearly

10,000 journals across 122 nations making available over 1.5 million arti-

cles.

380

Many open source publications utilize Creative Commons licenses

that authorize uses that might otherwise be restricted by copyright law.

381

The National Academies Press, publisher for the National Academy

of Sciences, Institute of Medicine, and other arms of the National Acade-

mies, has provided free online full-text editions of their books alongside

priced, printed editions since 1994. The National Academies Press sees

free online access as a means to promote print sales.

382

Although open access continues to expand and blunt the overreach of

tinued availability, scope, and duration of copyright protection deserves

careful reconsideration. Copyright protection for academic research in-

creasingly serves purposes contrary to copyright’s purpose of promoting

progress in technological innovation and expressive creativity. Commer-

cial publishers have raised journal prices and slowed the spread of

knowledge.

This is not to say the solution is easy. For example, it might be diffi-

cult to distinguish between journal articles, for which copyright law no

longer serves valuable purposes, and academic books, which do rely on

Publishing from 1993 to 2009, 6

ONE 1 (2011), http://www.plosone

.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0020961. Peter Su-

ber maintains a timeline of the open access movement, tracing policies back

several decades. See Timeline of the Open Access Movement,

PEN

CCESS

IRECTORY

, http://oad.simmons.edu/oadwiki/Timeline (last visited Nov. 4,

2013).

378

See

UBLIC

IBRARY OF

CIENCE

, http://www.plos.org (last visited Nov. 4,

2013).

379

See

OCIAL

CIENCE

ESEARCH

ETWORK

, http://www.ssrn.com (last visited

Nov. 4, 2013). It slogan — “Tomorrow’s Research Today” — captures a key

benefit of online and open dissemination: speed.

380

See

IRECTORY OF

PEN

CCESS

OURNALS

(

data baed on October 2013),

http://www.doaj.org (last visited Nov. 2, 2013).

381

See

REATIVE

OMMONS

, http://creativecommons.org (last visited Nov. 4,

2013). For example, PLoS applies the Creative Commons Attribution (CC

BY) license, under which authors retain ownership of the copyright for

their content, but allow anyone to download, reuse, reprint, modify, dis-

tribute and/or copy the content as long as the original authors and source

are cited. No further permission is required from the authors or the publish-

ers to make these uses.

382

See Open Access,

IKIPEDIA

http://en.wikipedia.org/wiki/Open_access (last

visited Nov. 4, 2013).

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308 Journal, Copyright Society of the U.S.A.

matic changes that digital technology has brought to publishing, the time is

ripe to re-examine copyright law’s treatment of academic research — a

field in which rapid and unrestricted dissemination is particularly vital to

promoting progress and economic motivations diverge from the underly-

ing assumptions of the copyright system.

b) Digital Archiving and Search

Within a short time, Internet technology created a vast repository of

knowledge that could be searched quickly and effortlessly from anywhere.

Yet much of the most valuable knowledge remains outside the Internet —

in books, journals, and other documents.

Google’s bold announcement in December 2004 that it intended to

scan, digitize, and make universally searchable the collections of leading

libraries

383

promised to bring the timeless aspirations of enlightened socie-

ties within reach. The project offered the beginning of a new era for schol-

ars, authors, and other users of recorded knowledge. For public domain

works, users would be able to retrieve and download the full documents.

For works still under copyright protection, Google would provide a few

sentences surrounding the search term as well as information about where

the work could be procured legally (publisher sites, bookstores, and librar-

ies). Just a few years ago, the cost and time required to digitize and render

searchable ten percent of the vast stock of written human knowledge was

thought to be prohibitive. Yet Google committed to making extensive col-

lections of some of the world’s leading libraries available within less than a

decade and without any public expenditure.

384

Shortly after Google’s announcement, leading publishers and authors

complained that Google’s project infringed their copyrights and requested

that Google delay scanning any copyright protected works until an agree-

383

See Press Release, Google, Google Checks Out Library Books (Dec. 14, 2004),

http://www.google.com/press/pressrel/print_library.html.

384

Google projects that it can scan thirty-two million volumes in ten years time.

Jeffrey Toobin, Google’s Moon Shot,

ORKER

, Feb. 5, 2007, at 30.

While Google has not disclosed an estimated cost of scanning thirty-two

million volumes, some estimate it will cost $750 million. Jonathan Band,

The Google Library Project: Both Sides of the Story, 1

LAGIARY

6, 13

(2006), available at http://quod.lib.umich.edu/p/plag/images/5240451.0001

.002.pdf. Other estimates put the cost at as little as $10 per volume. Elisa-

beth Hanratty, Google Library: Beyond Fair Use?, 2005

UKE

L. & T

ECH

0010, ¶1 (2005), available at http://www.law.duke.edu/journals/dltr/arti

cles/2005dltr0010.html.

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This American Copyright Life 309

ment could be negotiated.

385

The Authors Guild, followed shortly by five

commercial publishers, brought suit alleging that Google’s Book Search

Project infringed their copyrights “by unlawfully reproducing and publicly

distributing and displaying copies of such works.”

386

The President of the

American Association of Publishers asserted that while “Google Print Li-

brary could help many authors get more exposure and maybe even sell

more books, authors and publishers should not be asked to waive their

long-held rights so that Google can profit from this venture.”

387

Ironically, authors and publishers stand to gain tremendously from

having their works indexed and searchable through Google’s Book Pro-

ject. Many publishers have authorized Google to include their works.

Nick Taylor, a successful author and former president of the Authors

Guild, offered the following vignette:

Last fall, not long after the Authors Guild sued Google for copyright in-

fringement in its library scanning program, an author approached me at a

cocktail party. His name is Warren Adler, and he wrote The War of the

Roses, among many other excellent novels. ‘What you’re doing is all

wrong,’ he said. By scanning our books, making them searchable online

and providing links to bookstores, Google was letting people find them

and perhaps buy them. Objecting to that kind of exposure was like ob-

jecting to sunlight on flowers. He was so committed to this point of view

that he had had all of his books digitized and made available online.

388

Taylor also invoked Google’s General Counsel’s point that information

wants to be discovered. Nonetheless, he defended the lawsuit not as a way

to stop Google’s project, but rather as a way for authors to get paid.

389

After eight years of costly litigation, it remains unclear whether the

authors will get paid. What is clear is that the public’s access to this valua-

ble functionality has been delayed and authors and publishers have likely

lost out on additional book sales.

390

Rather than endure further legal

385

See Chris Gaither, Google Puts Book Copying on Hold,

L.A. T

IMES

, Aug. 13,

2005, at C1 (noting that publishers felt an opt out option would not protect

their copyrights).

386

Complaint at ¶38, McGraw-Hill Cos. v. Google, Inc., No. 05-CV-8881, 2005

WL 2778878 (S.D.N.Y. Oct. 19, 2005).

387

Press Release, Assoc. of Am. Publishers, Publishers Sue Google over Plans to

Digitize Books (Oct. 19, 2005), available at http:// www.publishers.org/

press/releases.cfm?PressReleaseArticleID=292.

388

See Nick Taylor, Manges Lecture: The Prospects for Copyright in a Bookless

World, 30

OLUM

. J.L. & A

RTS

185, 187-88 (2007).

389

See id. at 188.

390

In November 2013, the district court ruled that the Google Books project con-

stitutes fair use. See Authors Guild, Inc. v. Google Inc., 954 F. Supp. 2d 282

(S.D.N.Y. 2013). The case is currently on appeal to the Second Circuit. See

Dara Kerr, Authors Guild Appeals Decision in Google Books Copyright

Suit,

C—N

(Dec. 30, 2013), http://news.cnet.com/8301-1023_3-57616380-

93/authors-guild-appeals-decision-in-google-books-copyright-suit.

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310 Journal, Copyright Society of the U.S.A.

wrangling over whether Google’s Book Search Project qualifies as fair use,

Congress should confront the potential opportunities and risks of digital

technology preemptively and directly to strike the appropriate balance be-

tween protection of works of authorship on the one hand and accessibility

and preservation on the other.

391

By focusing on the economic, social,

and cultural benefits of building a comprehensive publicly searchable

database of literary and artistic works, Congress can effectuate the over-

arching purposes of “promoting progress” and preserving human knowl-

edge without sacrificing the beneficial economic incentives afforded by

guards to prevent piracy of in-copyright works, would fuel markets for

copyrighted works while making accessible the vast stock of knowledge to

current scholars and authors and preserving the largest possible record for

future generations.

c) Orphan Works

The functioning of the copyright system relies on the market not only

to support primary creators, but also as a means of promoting cumulative

creativity. Every generation of artists draws inspiration and borrows from

those who came before. This is especially true in the digital age as a result

of the extraordinary tools available for integrating and remixing prior cre-

ativity into new works. The fair use doctrine provides some leeway for

such borrowing, but it is notoriously vague. What constitutes transforma-

tion is often in the eye of the beholder. And cumulative creators cannot

easily gauge the perceptions of yet-to-be-determined judges or jurors.

Furthermore, cumulative creators might want to go beyond that uncertain

line, in which case they need permission from the copyright owner.

In order for such transactions to occur, the follow-on creator must be

able to identify and communicate with the copyright owner. But due to

the long duration of copyright and the absence of requirements to register

and maintain copyright ownership records, locating the appropriate

counter-party(ies) can be a costly, and in some cases, impossible task. This

tracing difficulty has come to be known as the orphan work problem —

works that might still be copyright-protected but for which the cumulative

creator cannot, after a good faith effort, locate the rightful copyright

owner to seek permission. It is particularly vexing for historians and docu-

mentary filmmakers who seek to use vintage photographs in telling the

most vivid and accurate account. The problem also arises for rap and hip

hop artists seeking to incorporate prior sound recordings. These cumula-

tive creators face a stark choice: omit the work or run the risk of an owner

391

See Peter S. Menell, Knowledge Accessibility and Preservation Policy for the

Digital Age, 44

OUS

. L. R

1013 (2007).

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This American Copyright Life 311

emerging and facing defense costs, possible injunctive relief blocking their

entire integrated work, and potentially large statutory damages.

The Copyright Office has been exploring this issue for a long time,

392

but without tangible results. The impasse continues to plague the creative

ecosystem and sends a disheartening message to new generations of

creators.

The copyright system is often analogized to property systems. Those

systems, however, not only create rights but also but also impose responsi-

bilities on property owners.

393

Absentee owners risk loss of their rights.

structive correctives, such as re-instituting formalities,

394

expanding immu-

nities,

395

and developing a copyright analog to adverse possession.

396

Advances in digital identification technologies over the past decade

have created promising means for addressing the orphan work problem.

These technologies have the ability to identify audio, textual, graphic, and

visual works at low cost and with high precision. Audible Magic Corpora-

tion was among the first to develop sophisticated acoustic fingerprinting

technologies. It now provides audio and content identification tools to

companies seeking to track digital media and identify and block infringing

content. Shazam offers an application that allows a mobile phone to iden-

tify almost any sound recording. YouTube’s ContentID (AudioID and

VideoID) system enables content owners to block, monetize, and track

usage of their works within YouTube’s expanding online ecosystem.

These technologies provide the framework for a universal copyright

notification system. If all copyrighted works were digitized and registered,

potential users of copyrighted works could employ relatively inexpensive

and now commonplace optical scanning and audio devices to identify the

A mandatory copyright registration and digital deposit system would

provide the foundation for a robust digital clearance system for copyright

392

See Maria A. Pallante, Orphan Works & Mass Digitization: Obstacles & Op-

portunities, 27

ERKELEY

ECH

. L.J.

1251 (2012);

U.S. C

OPYRIGHT

FFICE

EPORT ON

RPHAN

ORKS

.gov/orphan/orphan-report.pdf.

393

See Michael A. Carrier, Cabining Intellectual Property Through a Property

Paradigm, 54

UKE

L.J

. 1, 52-144 (2004); Jacqueline Lipton, Information

Property: Rights and Responsibilities,

56 F

. L. R

135, 148 (2004).

394

See Christopher Sprigman, Reform(aliz)ing Copyright, 57

TAN

. L. R

. 485

(2004).

395

See Lydia Pallas Loren, Abandoning the Orphans: an Open Access Approach

to Hostage Works, 27

ERKELEY

ECH

. L.J

. 1431 (2012).

396

See Katherine Moran Meeks, Adverse Possession of Orphan Works, 33

L.A. E

. L. R

1 (2012-13).

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312 Journal, Copyright Society of the U.S.A.

owners and users.

397

Suppose, for example, that a documentary film-

maker was seeking to use photographic works of unknown provenance.

Under a decentralized safe harbor regime (and assuming no actual knowl-

edge of the photograph’s copyright status and ownership), the filmmaker

would scan the work using specified technology. If the scan did not pro-

duce a match, then she would be able to use the work without fear of

injunctive relief.

398

Furthermore, the scan would reduce costs in locating

true owners if a universal registration system were in place. As with other

orphan work proposals, various forms of liability rules could be developed

(ranging from zero to fair market value) to address any legitimate copy-

right holder who comes forward.

d) Operationalizing Fair Use

practice. The fair use doctrine recognizes “a privilege in others than the

owner of the copyright”

399

constituting an implied consent by the author

“to a reasonable use of his copyright works . . . as a necessary incident of

the constitutional policy of promoting the progress of science and the use-

ful arts.”

400

The doctrine seeks to accommodate criticism, comment, news

reporting, teaching, scholarship, and research, among other purposes. In

practice, however, the doctrine’s vague and subjective contours,

401

the

lack of pre-clearance institutions,

402

financing and insurance concerns,

403

397

See Peter S. Menell & Michael J. Meurer, Notice Failure and Notice Externali-

ties, 5

J. L

EGAL

NALYSIS

1, 50-51 (2013).

398

This system could create some problems for low-resolution copies of works,

but such concerns are likely to be manageable. Documentary filmmakers

(and other users) have an incentive to obtain high quality versions of

whatever they use. Although this system would not resolve fair use and

bargaining breakdowns, it does resolve the problem of using untraceable

works.

399

Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 549 (1985); see

17 U.S.C. § 107 (2012).

400

Harper & Row, Publishers, 471 U.S. at 549.

401

See 2

AUL

OLDSTEIN

, G

OLDSTEIN ON

OPYRIGHT

§ 12.1, at 12:3 (3d ed.

2005) (“No copyright doctrine is less determinate than fair use.”); David

Nimmer, The Fairest of Them All, 66

& C

ONTEMP

. P

ROBS

. 263, 263

(2003).

402

See Menell & Meurer, supra note 397, at 12, 24-25, 38.

403

See

ICHAEL

C. D

ONALDSON

, C

LEARANCE AND

OPYRIGHT

: E

VERYTHING

EED TO

NOW FOR

ILM AND

ELEVISION

29 (3d ed. 2008) (warning

that “[e]ven documentaries, which are usually in the public interest, should

not cavalierly incorporate uncleared footage from the films of others. Clear

your film clips with a license or solid fair-use opinion from an attorney ap-

proved by the E&O [Errors and Omissions] insurance companies in ad-

vance because lawsuits are expensive. It can be even more expensive to

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This American Copyright Life 313

404

and the costs of litigation

make it difficult for many creators to rely on fair use.

405

Thus, a familiar

refrain in professional creative communities is “if in doubt, leave it out.”

Fair use serves somewhat effectively in cases in which the uses are

very modest and in a few distinct areas where the law is relatively clear.

406

But, by and large, the doctrine functions largely as a shield in litigation

when defendants overlooked a potential clearance issue.

407

Fair use is increasingly important for cumulative creativity in the In-

ternet Age. Digital technology has empowered anyone to remix art and

the Internet has opened vast content distribution channels. Creators no

longer need to go through traditional professional gatekeepers — publish-

ers, studios, broadcasters, and record labels. They can reach a massive

audience through all manner of user-generated content websites. Most of

such activity will fly under the radar. Nonetheless, the potential copyright

liability exposure can be substantial. Moreover, some budding creators

will want to determine the line between permissible and impermissible

conduct. Thus, the time is ripe to develop constructive tools for creators

to go beyond mere guesswork in evaluating copyright risks involved in

incorporating copyrighted works in their cumulative projects.

No solution can quickly, costlessly, and accurately resolve fair use de-

terminations, but there are many promising reforms that can better bal-

ance the competing interests than the present system: (1) a “Fair Use

Board” to afford creators the opportunity to pre-clear uses or at least ob-

tain some immunity for uses that were favorably vetted by an expert

body;

408

(2) reduced remedies or immunity for use of orphan works;

409

(3)

remove a section of your film at some point in the future if a court rules

against you.”).

404

See Molly Van Houweling, Distributive Values in Copyright, 83

EXAS

L. R

1535 (2005) (discussing the disproportionate impact of copyright remedies

on independent artists)

405

See

ONALDSON

supra note 403, at 29, 363-67

; P

ATRICIA

UFDERHEIDE

ETER

ASZI

, U

NTOLD

TORIES

: C

REATIVE

ONSEQUENCES OF THE

IGHTS

LEARANCE

ULTURE FOR

OCUMENTARY

ILMMAKERS

(2004) (exploring

the copyright-clearance challenges faced by documentary filmmakers);

Nancy Ramsey, The Hidden Cost of Documentaries,

N.Y. T

IMES

, (Oct. 16,

2005), http://www.nytimes.com/2005/10/16/movies/16rams.html (discussing

the film Tarnation).

406

See Pamela Samuelson, Unbundling Fair Uses, 77

ORDHAM

L. R

. 2537

(2009).

407

See, e.g., David Kravetts, Hangover Tattoo Infringement Lawsuit Settles,

IRED

(Jun. 22, 2011), http://www.wired.com/threatlevel/2011/06/tattoo-

flap-settled.

408

See Michael W. Carroll, Fixing Fair Use, 85

N.C. L. R

1087, 1123-27 (2007);

David Nimmer, A Modest Proposal to Streamline Fair Use Determinations,

ARDOZO

RTS

& E

. L.J

. 11, 12 (2006) (proposing a panel of “Fair

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314 Journal, Copyright Society of the U.S.A.

bright-line “fair use harbors” to provide assurance in particular settings;

410

(4) using fee-shifting as a means of penalizing copyright owners who un-

reasonably withhold consent or pursue dubious infringement actions;

411

and (5) adjusting damage awards to reflect the uncertainty surrounding

fair use law.

412

None of these proposals achieves all of the goals, but each

of them could make the fair use doctrine more operational. Many of the

reforms would be complementary.

e) Experimental and Self-Expressive Use

Digital technology has vastly expanded everyone’s ability to engage

with copyrighted works in their daily lives. Anyone can express them-

selves and their appreciation or disgust with the creative works of others

through various modes of social media. This has brought forth a tremen-

dous amount and range of fan fiction, Web pages, videos, and other works

that incorporate copyrighted material.

413

Such cumulative creativity runs

smack into copyright law’s right to prepare derivative works

414

as well as

Use Arbiters” appointed by the Register of Copyright); David A. Simon,

Teaching Without Infringement: A New Model for Educational Fair Use, 20

ORDHAM

NTELL

. P

ROP

. M

EDIA

& E

. L.

J. 453, 527-50 (2010) (proposing

a more limited institution focused on evaluating fair education uses of copy-

righted works); Jason Mazzone, Administering Fair Use, 51

. & M

ARY

395, 415-21 (2009) (proposing two models of administrative regulation

of fair use).

409

See Joshua O. Mausner, Copyright Orphan Works: A Multi-Pronged Solution

to Solve a Harmful Market Inefficiency, 12 J

. T

ECH

. L. & P

’

395, 398

(2007); Orphan Works Act of 2006, H.R. 5439, 109th Cong. (2006) (limiting

remedies against users who “performed and documented a reasonably dili-

gent search in good faith to locate the owner of the infringed copyright”);

cf.

EGISTER OF

OPYRIGHTS

, R

EPORT ON

RPHAN

ORKS

95-112 (2006),

available at http:// www.copyright.gov/orphan/orphan-report.pdf.

410

See Gideon Parchomovsky & Kevin Goldman, Fair Use Harbors, 93

. L.

. 1483 (2007).

411

See Peter S. Menell & Ben Depoorter, Using Fee Shifting to Promote Fair Use

and Fair Licensing, 102

. L. R

. 53 (2014).

412

See Menell & Meurer, supra note 397, at 45-46.

413

See Steven A. Hetcher, Using Social Norms to Regulate Fan Fiction and Remix

Culture, 157

U. P

. L. R

1869 (2009); Anupam Chander & Madhavi Sun-

der, Everyone’s a Superhero: A Cultural Theory of “Mary Sue” Fan Fiction

as Fair Use, 95

. L. R

. 597 (2007); Rebecca Tushnet, Legal Fictions:

. L.A. E

. L.

651 (1997). See, e.g.,

ICTION

NET

http://www.fanfiction.net (last

visited Nov. 4, 2013); Star Trek FanZines,

TAR

REK

: T

RIGINAL

E-

RIES

, http://www.sttos.net/sttos/eng/zines.php (last visited Nov. 4, 2013).

414

broadly to include:

a work based upon one or more preexisting works, such as a translation,

musical arrangement, dramatization, fictionalization, motion picture ver-

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This American Copyright Life 315

other so-called exclusive rights. The fact that social media can reach enor-

mous audiences opens up such fan creativity to potentially significant

liability.

The good news is that most copyright owners have not pursued the

vast majority of fan creativity.

415

And for good reason. It is rarely a good

idea to sue your customers.

416

In most contexts, fan fiction provides the

owners of the original works with free online marketing and fan engage-

ment. This sustains interest in the franchise

417

and increases demand for

new works from the authorized source. Even putting aside the potential

for adverse publicity, the cost of policing fan activity would be

astronomical.

Many copyright owners draw the enforcement line at commercializa-

tion.

418

Lucasfilm pursues those who seek to commercialize Star Wars

merchandise and other creative works.

419

Castle Rock Entertainment

sion, sound recording, art reproduction, abridgment, condensation, or any

other form in which a work may be recast, transformed, or adapted. A

work consisting of editorial revisions, annotations, elaborations, or other

modifications which, as a whole, represent an original work of authorship,

is a “derivative work”.

See id. § 101.

415

See Edward Lee, Warming up to User-Generated Content, 2008

U. I

. L. R

1459 (2008).

416

See, e.g., Kieren McCarty, Warner Brothers Scraps Harry Potter Legal Actions:

Regrets Any Misunderstandings,

EGISTER

(Mar. 19, 2001) (reporting

that “Warner Brothers appears to have extended the olive branch to the

operators of all Harry Potter fan sites, following its decision to withdraw

from legal action against [a fifteen-year-old fan]”), http://www.theregis

ter.co.uk/2001/03/19/warner_bros_scraps_harry_potter.

417

In 2007, Lucasfilm released tools to support fan-created remixes. Jeffrey Ulin,

one of Lucasfilm’s attorneys, explained that the mash-ups are “part of keep-

ing the love of ‘Star Wars’ and the franchise alive. We’re really trying to

position ourselves for the next 30 years.” See Sarah McBride, Make-It-

Yourself “Star Wars”: Lucasfilm Will Post Clips From Film Saga on the

Web, Inviting Fans to Edit at Will,

ALL

. S

. J

. (Mar. 24, 2007), http://on-

line.wsj.com/news/articles/SB117997273760812981.

418

See id. (noting that Lucasfilm pursues those who seek to commercialize Star

Wars merchandise and other creative works); see, e.g., Press Release, Lucas-

film Ltd., Lucasfilm Ltd. Wins Major Copyright Infringement Lawsuit

Against Star Wars Stormtrooper Pirate (Oct. 11, 2006), http://www.lucasfilm

.com/press/news/news20061011.html; Lucasfilm, Ltd v Media Market

Group, Ltd 182 F. Supp. 2d 897 (N.D. Cal. 2002) (seeking to block a porno-

graphic parody of Star Wars).

419

See, e.g., Press Release, Lucasfilm Ltd., Lucasfilm Ltd. Wins Major Copyright

Infringement Lawsuit Against Star Wars Stormtrooper Pirate (Oct. 11,

2006), http://www.lucasfilm.com/press/news/news20061011.html; Lucasfilm,

Ltd v Media Market Group, Ltd 182 F. Supp. 2d 897 (N.D. Cal. 2002) (seek-

ing to block a pornographic parody of Star Wars). (Full disclosure: I served

as an expert witness on U.S. copyright law in the U.K. enforcement action.

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316 Journal, Copyright Society of the U.S.A.

took action against the author and publisher of book containing trivia

questions about the Seinfeld show.

420

Warner Bros sued Steven Vander

Ark and the publisher of “The Lexicon,” an encyclopedia of Harry Potter

trivia.

421

liability for expressive, non-commercial activities. While express and tacit

support for such engagement by major media companies has eased con-

cerns about copyright infringement, a formal statutory safe harbor for

non-commercial fan fiction and related activities (e.g., fan sites, Pinterest)

would encourage more such activity as well as send an affirming message

to new and existing generations of fans. The fair use doctrine does not

provide clear enough authorization for this activity.

More generally, the copyright law ought to authorize, or at least cabin

or eliminate statutory damages with respect to, non-commercial educa-

tional and experimental uses of copyrighted works. Often the best way to

learn a musical instrument or develop artistic or creative writing skill is to

imitate the works of others. Yet these acts, if publicly performed or re-

corded and uploaded to a social media website, create risk of copyright

liability. The past decade indicates that copyright owners need not worry

about these uses. Fan fiction has enriched their coffers. More impor-

tantly, there is no better way to promote progress than to nurture artistic,

musical, and literary skills among the next generation of creators.

f) Photography of Public Art

works

422

creates tension that makes little sense in a world in which much

of the population is equipped with a phone camera that enables them to

shoot photographs and video and immediately post them to all manner of

social networking websites.

423

Anyone ought to be able to photograph

Lucasfilm prevailed in its effort to enforce the U.S. judgment against a prop

maker from the first Star Wars film who started selling storm trooper cos-

tumes. Nonetheless, the U.K. Supreme Court denied Lucasfilm relief under

the U.K. law on the ground that the costumes constituted industrial designs,

protection for which expires after twenty-five years. See Lucasfilm, Ltd v.

Ainsworth, [2011] UKSC 39).

420

See Castle Rock Entm’t, Inc. v. Carol Publ’g Group, 150 F.3d 132 (2d Cir.

1998).

421

See Warner Bros. Entm’t, Inc. v. RDR Books, 575 F. Supp. 2d 513 (S.D.N.Y.

2008).

422

See 17 U.S.C. §§ 101 (definition of “pictorial, graphic and sculptural works”),

102(a)(5) (2012).

423

See Bryce Clayton Newell, Freedom of Panorama: A Comparative Look at In-

ternational Restrictions on Public Photography,

44 C

REIGHTON

L. R

. 405

(2011).

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This American Copyright Life 317

their friends and family near public art and post the image on Facebook

without risk of liability. Although fair use would likely govern these situa-

tions, copyright law ought to provide a clear carve-out.

Motion picture studios have long agonized over shooting “on loca-

tion” out of concern for inadvertently capturing publicly viewable copy-

righted works and having to fend off a lawsuit. The producers of Batman

Forever learned this lesson the hard way when the artist who designed a

streetwall and courtyard space sued for depiction of this “sculptural work”

in the background of a few scenes in the film.

424

Although sculptors and

billboard artists rarely pursue such claims — likely due to copyright’s de

minimis and fair use doctrines

425

— the lack of a clear statutory exclusion

for such activities imposes significant costs on the public and motion pic-

ture studios without any discernible benefit in terms of the incentives to

create public art.

An analogous exemption was expressly built into copyright law when

the U.S. extended protection to architectural works in 1990.

426

Section

120(a) provides:

Pictorial Representations Permitted. The copyright in an architec-

tural work that has been constructed does not include the right to prevent

the making, distributing, or public display of pictures, paintings, photo-

graphs, or other pictorial representations of the work, if the building in

which the work is embodied is located in or ordinarily visible from a pub-

lic place.

427

The legislative history explains that:

[t]hese uses do not interfere with the normal exploitation of architectural

works. Given the important public purpose served by these uses and the

lack of harm to the copyright owner’s market, the Committee chose to

provide an exemption, rather than rely on the doctrine of fair use, which

requires ad hoc determinations.

428

424

See Leicester v. Warner Bros., 232 F.3d 1212 (9th Cir. 2000) (presenting a cau-

tionary tale in which .)

425

See Davis v. The Gap, Inc., 246 F.3d 152, 173(2d Cir. 2001) (observing that

“[t]he de minimis doctrine is rarely discussed in copyright opinions because

suits are rarely brought over trivial instances of copying”); Pierre N. Leval,

Nimmer Lecture: Fair Use Rescued, 44

UCLA L. R

. 1449, 1457-58 (1997)

(noting that certain questions fall in the category of “[q]uestions that never

need to be answered. If [they] did need to be answered, I believe the answer

would be provided by the doctrine of de minimis non curat lex . . . .”).

426

See Architectural Works Copyright Protection Act, Pub. L. No. 101-650, § 706,

104 Stat. 5133 (1990) (codified at 17 U.S.C. §§ 101, 102(a), 106, 120, 301(b)).

427

17 U.S.C. § 120(a) (2012).

428

See H.R

. R

. N

101-735 (1990) (Copyright Amendments Act of 1990), re-

printed in 1990 U.S.C.C.A.N. 6935, 6953.

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318 Journal, Copyright Society of the U.S.A.

The House Report notes the benefits to tourism,

429

scholarly research,

430

and general public interest

431

and that it would not appreciably affect in-

centives to create the artistic work.

432

Congress should extend this exemption to photographing any publicly

viewable art, perhaps subject to the limitation that the photographer is not

making commercial use of a non-transformative reproduction — such as

selling faithful reproductions as posters.

433

Museums and other institu-

tions would retain the ability to restrict photography on their premises, but

the permissibility of photographing in public spaces — which most people

assume — would be codified in copyright law.

g) Remix Compulsory License

Even before digital technology spawned revolutionary changes in the

distribution of copyrighted works, it supplied extraordinary tools for creat-

ing new works of authorship. Rap, Hip Hop, and Mash-up genres of music

owe much to digital technology — synthesizers, drum machines, samplers,

and music workstations.

434

As reflected in my “My Generation’s” fascina-

tion with mix tapes, the human desire to combine and remake predates

digital technology. The development of synthesizers and sampling ma-

chines unleashed entirely new creative genres.

Hip Hop music traces its roots back to 1970s era DJs using dual turn-

tables. Electronic dance music, disco, and industrial music followed in the

1980s. By the late 1980s, rap artists were appropriating samples as the

429

See id. (noting that “[m]illions of people visit our cities every year and take

back home photographs, posters, and other pictorial representations of

prominent works of architecture as a memory of their trip”).

430

See id. (noting that “numerous scholarly books on architecture are based on

the ability to use photographs of architectural works”).

431

See id.; see also Architectural Design Protection: Hearing on H.R. 3990 and

H.R. 3991 Before the Subcomm. on Courts, Intell. Prop., and the Admin. of

Justice of the House Comm. on the Judiciary, 101st Cong. 70-71 (1990)

(statement of Ralph Oman, Register of Copyrights and Associate Librarian

of Congress for Copyright Services) (noting that pictorial representations of

architectural works “serve a valuable public interest”).

432

See id. (noting that pictorial uses “do not interfere with the normal exploita-

tion of architectural works” and “the lack of harm to the copyright owner’s

market”); cf. Balganesh, supra note 212 (arguing for copyright law to con-

sider foreseeability in analyzing the scope of copyright protection).

433

See Andrew Inesi, Images of Public Places: Extending the Copyright Exemp-

tion for Pictorial Representations of Architectural Works to Other Copy-

righted Works, 13

J. I

NTELL

. P

ROP

. L.

61, 86-89 (2005).

434

See Sampler (musical instrument),

IKIPEDIA

http://en.wikipedia.org/wiki/

Sampler_(musical_instrument) (last visited Nov. 4, 2013); Remix,

IKIPEDIA

, http://en.wikipedia.org/wiki/Remix (last visited Nov. 4, 2013).

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This American Copyright Life 319

background for their poetic flourishes. Hip hop grew out of and expanded

the genre.

Remixed music does not fit comfortably within copyright law’s “ex-

clusive rights” regime. In what has been referred to as the “golden age of

sampling,”

435

spanning from roughly 1987 to 1992, American Hip Hop

music gained a foothold in the culture without attracting much scrutiny

from owners of the copyrighted works being sampled.

436

It was an under-

ground genre that did not attract much notice from the major labels. But

with its growing success, record labels began to take notice and the

“golden age” came to a close with copyright lawsuits and demand let-

ters.

437

The era of unrestrained sampling passed even as the Hip Hop

genre went mainstream. The major labels acquired and developed Hip

Hop sub-labels and developed customs and practices for licensing digital

samples.

438

Many Hip Hop entrepreneurs welcomed commercial

opportunities.

439

The extra layer of negotiation imposed by seeking copyright permis-

sion, however, constrained the genre and many of the pioneers left or al-

tered their sampling practices to live within copyright law’s “exclusive

rights” constraints. Based upon extensive interviews, Kembrew McLeod

and Peter DiCola concluded that “[b]y the 1990s, high costs, difficulties

negotiating licenses, and outright refusals made it effectively impossible

for certain kinds of music to be made legally, especially albums containing

hundreds of fragments.”

440

But as Napster demonstrated, America’s cultural freedom is not so

easily cabined. Telling artists that they cannot do something likely pro-

pelled further hacking of the copyright system. Within a few years, Gregg

Gillis, who performs under the name “Girl Talk,” was building a following

435

See

CLEOD

& D

ICOLA

supra note 213, at 19-26.

436

Robert Levine, Steal This Hook? D.J. Skirts Copyright Law,

N.Y. T

IMES

, Aug.

7, 2008, at E1 (noting that the Beastie Boys and Public Enemy introduced

their sampled compositions “when record companies were paying less at-

tention to these legal issues”).

437

The Sixth Circuit’s dubious interpretation of the Copyright Act in Bridgeport

Music, Inc. v. Dimension Films, 383 F.3d 390 (6th Cir. 2004), concluded with

the admonition: “Get a license or do not sample.” See id. at 398.

438

Major record labels began signing Hip Hop artists as they developed fan bases.

See Def Jam Recordings,

IKIPEDIA

, http://en.wikipedia.org/wiki/Def_Jam_

Recordings (last visited Nov. 4, 2013). The most successful Hip Hop artists

were given sub-labels within the major record label umbrellas. See, e.g.,

Aftermath Entertainment,

IKIPEDIA

(describing Dr. Dre’s sub-label within

Universal Music Group).

439

Cf. Susan Berfield, The CEO of Hip Hop,

. W

., Oct. 27, 2003, at 90,

available at http://www.businessweek.com/stories/2003-10-26/the-ceo-of-hip-

hop.

440

See

CLEOD

& D

ICOLA

, supra note 213 at 28.

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320 Journal, Copyright Society of the U.S.A.

entirely outside of the copyright system. His first album, Secret Diary,

appeared in 2002 on the Illegal Art label.

441

His break-through third al-

bum, Night Ripper (2006), would go on to critical acclaim

442

and earned a

Wired Magazine Rave Award.

443

Just when it seems like mashups are played out — or playing dead, thanks

to litigious record labels — along comes Girl Talk (n ´ee Gregg Gillis). For

last year’s album Night Ripper, the laptop mixologist used more than 250

samples from 167 artists. Raps by Ludacris rub up against a Boston riff,

the Ying Yang Twins whisper over the Verve’s ‘Bittersweet Symphony.’

As the album became an indie sensation, Gillis resigned himself to the

inevitable cease-and-desist order. But it never materialized. ‘Labels are

starting to realize that something like Night Ripper isn’t going to hurt

their artists,’ Gillis says. ‘If anything, it will promote them.’ Gillis is also

famous for his uninhibited live shows — on YouTube, you can watch him

crowdsurfing and stripping down to his skivvies between sessions spent

pounding the keyboard of his Toshiba Satellite M115 laptop. And while

the 25-year-old from Pittsburgh still has a day job as a biomedical engi-

neer, he’s also remixing tracks for major-label artists and planning his

next album. ‘I’m jumping on a plane to London to do a show with Beck

and flying back to get in the cubicle Monday morning. It’s pretty

bizarre.’

444

441

See Illegal Art,

IKIPEDIA

, http://en.wikipedia.org/wiki/Illegal_Art.

442

See Sean Fennessey, Girl Talk: Night Ripper (Illegal Art; 2006),

ITCHFORK

(Jul. 17, 2006), http://pitchfork.com/reviews/albums/9208-night-ripper (not-

ing that “the idea that two songs blender-ized can recombine to create

something wholly new is thrilling in theory, but the execution is usually

sloppy or samey, either simply aligning two similar beat structures or pair-

ing up two completely disparate tracks for the slapstick novelty of a jokey

title,” and then praising Night Ripper for “cram[ing] six or eight or 14 or 20

songs into frenetic rows, slicing fragments off 1980s pop, Dirty South rap,

booty bass, and grunge, among countless other genres. Then he pieces to-

gether the voracious music fan’s dream: a hulking hyper-mix designed to

make you dance, wear out predictable ideas, and defy hopeless record-

reviewing”).

443

See Angela Watercutter, The 2007 Rave Awards: Music: The Synthesizer –

Gregg Gillis — Girl Talk,

IRED

(Apr. 4, 2007), http://www.wired.com/cul

ture/lifestyle/multimedia/2007/04/ss_raves?slide=10.

444

See id. My reproduction of the entirety of the Wired review may well exceed

the fair use privilege. But including it in a scholarly work that amplifies the

theme of remixing copyright law to better accommodate the Internet Age

hopefully has a transformative character. And does Wired magazine want

to pursue such an action? It seems to cut against a lot of their editorializing,

but they could then feature our case in their “Threat Level” feature. See

Threat Level: Privacy, Crime and Security Online,

IRED

, http://www.wired

.com/threatlevel. I’ll run the risk.

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This American Copyright Life 321

The Pitchfork review of Night Ripper concludes ominously: “[d]ue to its

overwhelming number of unlicensed sources, Night Ripper is practically

begging for court drama.”

445

Gregg Gillis would give up his day job the following year and has

enjoyed an extraordinary music career entirely outside of the copyright

system.

446

Many other remix artists have followed his example, producing

an entire musical genre that flourishes outside of copyright law’s permis-

sion-based practices. Recording artists and record labels complain about

such defiance, but few have been willing to test the limits of fair use.

Remix artists earn their primary income from live shows. Copyright own-

ers and remix artists have achieved a detente of sorts. One of the effects,

however, has been to marginalize the copyright system and further reduce

its relevance for the post-Napster generations.

This equilibrium strikes me as better than the nuclear option (mass

litigation) and the lock down option (every use requiring permission), but

suboptimal in a variety of respects. As a fan of Girl Talk’s remixes, I ap-

preciate both his creativity and the creativity of works on which his com-

positions are built. Both contribute value. In an idealized intellectual

property system featuring cumulative creativity, society would likely share

consumers’ willingness to pay among the creative inputs.

447

But therein

lies the rub. When we have a tremendous number of parties, each possess-

ing “exclusive rights,” the transaction costs skyrocket.

448

We experienced

such a system following the wave of copyright sampling cases in the early

to mid 1990s and it constrained the creative ecosystem. Artists like Girl

Talk have thrived only by exiting the system entirely.

A compulsory license for remix music potentially offers an attractive

solution for all parties. Such a regime would not resolve the inevitably

case-specific fair use questions, but it could offer a sweet spot in which

445

See Fennessey, supra note 442.

446

See D.X. Ferris, Gregg Gillis Talks About the Continuing Popularity of his

Mashup Project, Girl Talk,

IVERFRONT

IMES

(Jan. 13, 2011), http:// www

.riverfronttimes.com/2011-01-13/music/girl-talk-interview-2011-gregg-gillis-

tour-dates-st-louis-pageant; Zachary Lazar, The 373-Hit Wonder,

N.Y.

IMES

., Jan. 9, 2011, at 38 (noting that when Gillis released his latest

album All Day for free download on the Internet, extremely heavy

download traffic led to server crashes and headlines on MTV stating “Girl

Talk Apologizes for Breaking the Internet”).

447

See

ETER

S. M

ENELL

& S

UZANNE

COTCHMENT

, I

NTELLECTUAL

ROPERTY

1476, 1499

, H

ANDBOOK OF

AW AND

CONOMICS

(A. Mitchell Polin-

sky & Steven Shavell eds. 2007).

448

See

ICHAEL

ELLER

, T

RIDLOCK

CONOMY

: H

UCH

WNER-

SHIP

RECKS

ARKETS

, S

TOPS

NNOVATION

AND

OSTS

IVES

(2008).

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322 Journal, Copyright Society of the U.S.A.

based system for more fairly allocating value among creators.

449

Such a

system could provide a sustainable and adaptable ecosystem for promot-

ing art and commerce.

I envision such a system as an expansion of the Copyright Act’s § 115

cover license which permits anyone to record a musical composition that

has previously been distributed to the public under the authority of the

a formula specified in the statute. The current rate in 9.1¢ for a standard

(five minutes or less) length song, with escalations for longer songs.

450

The remix compulsory license would need to go well beyond the § 115

license in several respects. First, it would have to afford remix artists the

opportunity to alter the work.

451

Secondly, it would need to license the

sound recording as well as the musical composition.

Under a hypothetical Remix Compulsory License Act (RCLA), a

remix artist seeking to develop a sound recording that comprises more

than five existing sound recordings would be eligible for a compulsory li-

cense by paying 18.2¢ for a five-minute song (or less; with escalations for

longer songs) into the RCLA Fund. The basic idea is that the remixer

would be building his or her work on both musical composition and sound

recording works and hence the baseline for the entire work should be

double the musical composition cover license rate. By making the com-

pulsory license rate 100% of the baseline for just the musical composition

value of the remixed work (assuming that the musical composition and

sound recording copyrights were treated symmetrically). Thus, by paying

18.2¢, the remixer could clear all sample licenses needed for a mashup of

five minutes (or less).

In order to obtain the compulsory license, the remix artist would be

required to register the remixed work with the Copyright Office along

with a detailed, per second explication of what prior musical compositions

and sound recordings were used. The Copyright Office would, through

notice and comment rulemaking, develop a formula for dividing revenue

among the musical composition and sound recording owners. (The Copy-

right Office would also work with the music publishing and sound record-

ing industries to develop a comprehensive database of protected works

449

Cf. Menell & Depoorter, supra note 411 (noting that creative artists typically

care most about expressive freedom and getting their projects accom-

plished; and that many would prefer fair licensing over uncertain and costly

litigation).

450

See U.S. Copyright Office, Mechanical License Royalty Rates (rev. Jan. 2010),

available at http://www.copyright.gov/carp/m200a.pdf.

451

Section 115 does not permit cover artists to change the “basic melody or fun-

damental character of the work.” See 17 U.S.C. § 115 (2012).

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This American Copyright Life 323

and tools for identifying owners of tracks that are sampled.)

SoundExchange - which administers statutory licenses for sound recording

copyrights and allocates revenues - would be responsible for allocating the

RCLA Fund to eligible musical composition and sound recording owners.

In order to make this new regime effective, the RCLA would create

some categorical fair use safe harbors and limitations. For example, the

RCLA might categorically exempt any sample of less than five seconds

from liability. The purposes of these fair use safe harbors and limitations

would be to channel remix artists and consumers into a market for remix

music.

I had the opportunity to test this proposal last spring. I was invited to

moderate a panel on “Sampling, Mixes, & Mashups.”

452

We were fortu-

nate to have not just the usual suspects — law professors and practicing

attorneys — but two successful DJs who perform under the stage name

“Rock-It! Scientists.”

453

With some trepidation, I tossed out the RCLA

proposal to the DJs. They said that the model “would be appealing” to

them; “it would be a direction for the industry to go.”

454

I don’t want to suggest that RCLA would perfectly resolve the ethi-

cal, economic, and legal issues surrounding remix music. As things stand,

DJs operate in a legal limbo and have found some profitable niches in the

live performance marketplace. Traditional composers and recording art-

ists don’t see direct compensation for this use of their work and complain

about the distortion of their work,

455

yet they might enjoy some promo-

tional benefits from having back catalog music discovered by new genera-

tions. Record label marketing staffs are operating in the background,

feeding tracks to DJs and websites to promote label-released music. Mu-

sic fans are gravitating away from copyright-based markets and developing

norms and practices that undermine the legitimacy of copyright

protection.

452

TANFORD

ECHNOLOGY

EVIEW

(last visited Nov. 4, 2013).

453

See

OCK

-I

! S

CIENTISTS

, http://therockitscientists.com (last visited Nov. 4,

2013).

454

For a video of the panel, see STLR Symposium: Digital Copyright — Sam-

pling, Mixes, & Mashups, YouTube (Mar., 26, 2013), http://www.youtube

.com/watch?v=u6uzlvhEs0U. My presentation of the proposal can be found

in the segment beginning at 7:01 and running to 11:09. The colloquy about

the proposal can be found at 1:21:00 to 1:26:27. I also recommend the DJs’

discussion of how the major record labels tacitly support their works as a

means of promoting their own releases. See segment from 1:15:34 to

1:21:00.

455

Cf. Elizabeth Adeney, The Sampling and Remix Dilemma: What Is the Role of

Moral Rights in the Encouragement and Regulation of Derivative Creativ-

ity?, 17

EAKIN

L. R

335 (2012).

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324 Journal, Copyright Society of the U.S.A.

Many scholars have come to see all remix art as fair use.

456

While I

recognize the transformative aspect of this work, I worry that society risks

losing a balanced ecosystem for fairly supporting and promoting the full

range of creative inputs.

457

The blanket license system that developed for

licensing musical compositions to radio broadcasters and other public per-

formance institutions contributed to the flourishing of musical creativ-

ity.

458

My hope in proposing the RCLA is that an analogous approach

could provide a framework for constructive dialogue among all of the af-

fected communities — traditional songwriters and recording artists, remix

DJs, record labels, and music fans — about how to best promote creativity

and creative freedom in the Internet Age.

h) Enhanced Penalties for Abuse of the Notice and Takedown

System

The other side of the enforcement coin concerns abuse of the notice

and takedown system. The DMCA afforded web users a cause of action

for damages, including costs and attorneys’ fees, incurred by the alleged

infringer as a result of a knowing and material misrepresentation that ma-

terial posted to a website is infringing.

459

Unfortunately, this right has

proven to be ineffective as a practical matter. Although the federal court

rejected Universal Music Group’s argument that it need not consider

whether a use is fair in order to vindicate this right in Stephanie Lenz’s

action against Universal Music Group in the dispute regarding her dancing

baby,

460

the resulting litigation costs and modest remedies warn off those

unfairly accused of infringing copyright law from pursuing a misrepresen-

tation claim.

456

See Kerri Eble, This Is a Remix: Remixing Music Copyright to Better Protect

Mashup Artists, 2013

U. I

. L. R

661 (2013

); L

AWRENCE

ESSIG

EMIX

: M

AKING

RT AND

OMMERCE

HRIVE IN THE

YBRID

CONOMY

14 (2008).

457

Cf. Robert M. Vrana, The Remix Artist’s Catch-22: A Proposal for Compulsory

Licensing for Transformative, Sampling-based Music, 68

ASH

. & L

. 811 (2011).

458

See

ANJEK

& D

AVID

supra note 184; Robert P. Merges, Contracting into Lia-

bility Rules: Intellectual Property Rights and Collective Rights Organizations,

. L. R

. 1293, 1328-35 (1996) (explaining that “ASCAP’s rise paral-

leled the growth of radio, and later television. From its original 9 members,

the membership grew to 1,000 composers in 1941, 3,000 in 1958, 17,800 com-

posers and 4,800 publishers in 1977, and over 31,000 composers and approx-

imately 24,000 publishers [by 1996]”).

459

See 17 U.S.C. § 512(f) (2012).

460

See Lenz v. Universal Music Corp., 572 F. Supp. 2d 1150 (N.D. Cal. 2008)

(rejecting copyright owner’s motion to dismiss on the grounds it was not

required to consider the fair use doctrine in filing a takedown notice).

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This American Copyright Life 325

Just as copyright law saw statutory damages as an appropriate tool for

addressing under-enforcement of copyright protection and as a means to

deter infringement, the argument can be made that copyright law ought to

provide enhanced penalties in order to deter improper takedown notices.

Perhaps Congress should extend the same enforcement tools that it uses in

§ 504(c) — enabling victims of improper takedown requests to obtain up

to $150,000 per improper takedown notice.

As much as my sixteen-year-old alter ego might love such a vindictive

approach, I do not seriously propose imposing on copyright owners such

an untethered damage remedy. But I do think that this thought experi-

ment illustrates the imbalance of the present copyright enforcement re-

gime. Congress should revisit statutory damages with an eye towards

channeling consumers into the marketplace and discouraging copyright

owners from chilling free speech and self-expression.

olive branch. Their industries are hurt and the reputation of the copyright

system tarnished when companies pursue ridiculous takedown efforts.

Content industries would gain far more in good will than they would lose

in verdicts from such a change in the law.

* * * * * *

This set of proposals would offer hope to future generations of cre-

ators that copyright protection supports their desires while minimizing

transaction costs and affording copyright owners fair compensation for

their contributions to cumulative creativity. It also affords members of the

public the ability to express themselves and engage with content without

risk of liability. As the next section explores, some of the most promising

and complementary adjustments to content ecosystems must come from

changes in the content marketplace.

B. Market-Based Solutions

The past decade established that legal sanctions alone cannot achieve

compliance with copyright law.

461

In fact, aggressive enforcement may

well have backfired.

462

Nor does “educating” consumers seem to be much

461

See Tyler, supra note 135, at 220, 234 (observing that the difficulties concerning

gaining compliance with intellectual property law are typical of the

problems involved in a wide variety of areas”; and that “reliance upon

threats of punishment to enforce intellectual property laws is a strategy that

is likely to be ineffective”); see generally

YLER

supra note 135.

462

See Depoorter, Van Hiel, & Vanneste, supra note 88, at 1283-89; Svensson &

Larsson, supra note 88; Ingram & Hinduja, supra note 88; Feldman & Nad-

ler, supra note 88; Depoorter & Vanneste, supra note 88; Justin Hughes, On

the Logic of Suing One’s Customers and the Dilemma of Infringement-Based

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326 Journal, Copyright Society of the U.S.A.

good either.

463

The legislative proposals that I have sketched are not ends

unto themselves but rather more appropriate enforcement tools and de-

fault rules aimed at channeling consumers into robust markets for expres-

sive creativity. In order to achieve these ends, however, the marketplace,

social norms, and technological advance must pull in complementary

directions.

Competition, technological advance, and market response to techno-

logical, social norm, and cultural disruption have spurred tremendous mar-

ketplace changes over the course of the past decade. Once the recording

industry came to realize that it could not dictate the terms and conditions

of digital channels, record labels and music publishers began to license a

growing variety of online services. Many film and television copyright

owners have expanded online availability of their works. These initiatives

have vastly expanded the content marketplace and there is renewed opti-

mism in content industries.

Yet there is still a tremendous amount that can be done to welcome

the post-Napster generation to the marketplace. As explored earlier,

there are inherent structural impediments to achieving a robust, user-

friendly, and fair (to creators) marketplace — the dual vise of the music

industry and film industry windowing orientation. Consumers will be

more willing to participate in a marketplace that fairly rewards creators

and affords easy access to what is already available on illegal websites.

464

Business Models, 22

ARDOZO

RTS

& E

. L.J.

725, 731-35 (2005) (dis-

cussing the music industry’s lawsuits against individual consumers and their

effect on deterring infringement and increasing awareness of copyright

law); Steven A. Hetcher, The Music Industry’s Failed Attempt to Influence

File Sharing Norms, 7

AND

. J. E

. L. & P

RAC

. 10 (2004); Tom R. Tyler &

John M. Darley, Building a Law-Abiding Society: Taking Public Views

About Morality and the Legitimacy of Legal Authorities into Account When

Formulating Substantive Law, 28

OFSTRA

L. R

. 707 (2000).

463

A comprehensive study of piracy across a broad range of nations concluded

that:

[w]e see no evidence that [clarifying for students that file-sharing of copy-

righted music is piracy] will have any impact on practices. We see no real

‘education’ of the consumer to be done. . . . Efforts to stigmatize piracy

have failed. . . . Although education is generally presented as a long-term

investment in counteracting these attitudes, the lack of evidence for their

effectiveness is striking.

See

. S

. R

ESEARCH

OUNCIL

, M

EDIA

IRACY IN

MERGING

CONO-

MIES

33-34 (Joe Karaganis ed., 2011).

464

See Tyler, supra note 135, at 234 (emphasizing the need “to create a moral

climate that clearly associates various forms of intellectual property law

with public morality”); Danwill David Schwender, Reducing Unauthorized

Digital Downloading of Music by Obtaining Voluntary Compliance with

Industry, 34

T. J

EFFERSON

L. R

225 (2012).

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This American Copyright Life 327

Moreover, by re-plumbing revenue flows in the content industries fairly,

content industries can look to recording artists to promote these plat-

forms. As things stand, artists do not see much point in advocating ser-

vices that do not provide them with much compensation. In a more robust

marketplace with money flowing to artists in proportion to consumer de-

mand, creators can then focus their energies on their art and consumers

and not on advertisers. It would produce a virtuous, self-reinforcing

ecosystem. Intermediaries could earn more as the pie grows, although less

as a percentage. New artists would see the potential for sustainable liveli-

hoods tied to their ability to attract fans.

Thus, the next major breakthrough in building online content markets

needs to come from establishing a transparency between creators and con-

sumers and improving the accessibility of digital content. Structural im-

pediments to these objectives undermine the overall economic

performance of the content industries. This last section confronts these

enormous challenges with two provocative, and hopefully constructive,

approaches.

1. The Grand Kumbaya Experiment

Act II closed with the image of a dual vise in which creators are

squeezed between fans who do not participate in critical content markets

and rapacious record labels that minimize artists’ share of the revenue pie.

Even as extraordinary new technologies for accessing music online have

become available, a vicious cycle has emerged in which some of the most

popular artists have pulled their music. Moreover, artists have seen little

reason to promote these platforms and some have denigrated them. The

messages to consumers are: “The only reason to participate in these mar-

kets is because their convenience is worth the price”; “Don’t expect artists

to see any real income from your participation in the marketplace”; and

“Copyright protection doesn’t promote art, it merely enriches greedy

corporations.”

While overreaching by record labels was certainly true for “My Gen-

eration,” record labels actually did more to support the creative environ-

ment in that technological age. They produced and recorded albums,

manufactured product, marketed music, and distributed records. They

orchestrated a complex supply chain, justifying a relatively large share of

revenue. As noted in Act I, “My Generation” did not have much choice

about whether to participate in the marketplace. If we wanted a record,

we had to go through an authorized channel — whether a record store or a

record club.

The recording industry still controls the online marketplace not be-

cause they carry out many of the essential economic functions of the sup-

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328 Journal, Copyright Society of the U.S.A.

ply chain

465

but because of the immense power that the legacy catalog

confers. No online service can achieve economic viability without licenses

to a substantial portion of the legacy collection. Even young fans want to

be able to stream the classics. And through this power, the major record

labels have structured online royalties in such a way that their own artists

but also independent artists are unlikely to see a fair share.

I realize that the concept of “fairness” is vague and subjective. What

I am trying to get at is how the economic services would be valued in a

truly competitive marketplace. Record labels used to have a primary role

in that marketplace. An upstart artist had no chance of reaching a broad

marketplace without a partner who could fund and produce a master re-

cording, manufacture copies, market the recording and get radio air play,

and ensure that there were sufficient units available in record stores at the

time that the recording hit the air waves. Digital technology has largely

eliminated most of those functions, which should mean two things: (1) the

cost of recorded music should fall; and (2) the share going to the artist

should rise. The former has come to fruition. The real cost of music has

fallen substantially over the past several decades. But the latter ramifica-

tion has not materialized. If anything, things have gotten worse.

A second critical economic point is that the total size of the pie de-

pends on consumers’ perception of fairness. Compliance with the law —

which translates into participation in authorized online content markets —

depends on consumers’ views regarding the morality and legitimacy of the

economic system. This is particularly true for online information goods

which consumers can easily acquire illicitly.

Structural features of the music marketplace have stranded artists, la-

bels, and consumers in a sub-optimal equilibrium. Many consumers re-

main outside of the marketplace — gaining music through file-sharing and

assuaging any guilt with the thought that the artist would not see any sig-

nificant compensation from the fan’s participation in the marketplace.

Artists see little economic return for their efforts and labels’ revenues are

depressed. Pundits tell consumers that the answer lies in concert tickets,

advertising, and merchandise; freeconomics is the opiate of the masses.

Yet the most valuable form of musical enjoyment — passive, on-demand

streaming through portable devices — largely goes uncompensated.

The solution — even for record labels — lies in introducing fairness

to artists into the online music marketplace. What artists, record labels,

465

Artists today will typically produce and deliver the final product to a record

label. Labels specialize in marketing. They have shifted to 360 deals as a

way of controlling more of the total music revenue. Many artists go without

major label representation. Unfortunately, they face the copyright/Internet

paradox, see supra, Section II(C), and the power that major labels exercise

over online music services.

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This American Copyright Life 329

and technology companies have not recognized is that by failing to achieve

a more equitable and transparent system for pricing and distributing reve-

nue, society cannot reach the ideal point: widely adopted and fairly priced

services that attract the vast numbers of consumers who enjoy recorded

music. Such an equilibrium would stanch the piracy problem while allevi-

ating pressure for punitive copyright remedies. As the post-Napster gen-

eration joins balanced content services, the problems that have been

plaguing the content and technology companies subside.

Re-structuring the economic terms of trade in the music industry

could potentially lift all boats. If artists could get a reasonable share of

income from new services, consumers could be more readily enticed to the

marketplace. Consumers could feel better about their market participa-

tion. Artists would start seeing serious income to the extent that fans

streamed their songs. Labels would see greater income, even as their

share of the pie were to fall. Technology companies would see a lessening

of pressures to ramp up copyright enforcement. If online digital services

could grow from the anemic levels of today

466

by an order of magnitude

— from 6 million paid subscribers to 60 million — then there would be

more than enough for everyone to celebrate. And the enforcement con-

cerns would recede.

The potential for re-shaping the music marketplace could be gauged

through what I will call the “Grand Kumbaya Experiment.” What I have

in mind is an Internet pledge of support for re-negotiating the revenue

split between labels and artists if, and this is a big “if,” a large segment of

consumers committed to participating in a state-of-the-art music service

that fairly compensated artists. The technology for enabling consumers to

have access to the full music catalog through a range of user-friendly de-

vices now exists, as Spotify has demonstrated. What is lacking is an equi-

table way of distributing the revenues.

Interested consumers would go to a website to sign the pledge. They

would conditionally provide their credit card information. The pledge

would take the following form:

If by Dec. 31, 2014, 60 million fans worldwide commit to a premium mu-

sic subscription service (of $10 per month) that pays artists 50% of total

gross revenue to be distributed based on streaming levels, then I agree to

pay $10 per month to participate in such service for at least a year.

If the goal were achieved, the recorded music industry would see $7.2 bil-

lion per year from this one revenue source. The non-royalty costs of such

a service would not be very high due to the wonders of digital technology.

466

See Sloan, supra note 183 (reporting that Spotify, the largest on-demand music

service, had reached a 6 million paying customers worldwide as of March

2013).

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330 Journal, Copyright Society of the U.S.A.

Total worldwide music industry revenue reached $16.5 billion last year,

only a modest portion of which comes from subscription services.

467

This

bump alone would produce record growth in music industry revenues. As

norms and practices evolved, such services could be expected to grow.

And it is unlikely that consumers will drop the service after one year.

Once consumers get used to these services, they tend to stick with them.

Furthermore, if artists are getting a fairer shake, social norms would likely

reinforce remaining on such a service.

Such an approach would have the ability to draw creative artists to

the cause. Rather than staying on the sidelines or criticizing online ser-

vices, artists would have economic motivation to encourage their fans to

join the online marketplace. Technology companies should support these

efforts as a means for increasing the marketplace for their services as well

as constructive means for defusing pressure to ramp up copyright enforce-

ment. President Obama could tout this initiative as a constructive and col-

laborative way of addressing a divisive economic issue. And Jon Stewart

and Steven Colbert could celebrate a solution to the hypocrisy that has

abounded surrounding these issues.

The pledge could fail for two principal reasons. First, consumers

might not be willing to participate. And if that were true, then at a mini-

mum we would learn valuable information about where consumers’ hearts

lie. This problem has aspects of a classic collective action problem. My

hope is that through a broad-based campaign, we would inspire and reveal

the better side of human nature. I would hope to enlist President Obama,

the Stewart/Colbert nations, the tech sector (Google, Facebook, Apple,

Yahoo, and, of course, Spotify and Beats), as well as the Electronic Fron-

tier Foundation to support the pledge. We could also encourage recording

artists — Bob Dylan, Bruce Springsteen, Lady Gaga, Eminem, Pete Town-

shend, Katy Perry, Dave Grohl, Lars Ulrich, . . . — to throw a “summer of

love” series of free concerts calling attention to the pledge as a way for

fans to show their commitment to building and sustaining a robust artist

community.

468

467

See Eric Pfanner, Music Industry Sales Rise, and Digital Revenue Gets the

Credit,

N.Y. T

IMES

(Feb. 26, 2013), http://www.nytimes.com/2013/02/27/

technology/music-industry-records-first-revenue-increase-since-1999.html?_

r=0;

’

NOFTHE

HONOGRAPHIC

NDUS

., IFPI D

IGITAL

USIC

E-

PORT

2013: E

NGINE OF A

IGITAL

ORLD

(2013), available at http://www

.ifpi.org/content/library/dmr2013.pdf.

468

See Nathan Ingraham, Pink Floyd Drummer Sings Spotify’s Praises, Says

Streaming ‘Might Work’ for Artists,

ERGE

(Sept. 26, 2013), http://www

.theverge.com/2013/9/26/4774774/pink-floyd-drummer-sings-spotifys-praises

(quoting Nick Mason saying “[w]e’d like to see a standard rate of at least

50/ 50 split between the record company and the artist [for streaming

revenues]”)

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This American Copyright Life 331

The second problem could arise if the pledge achieves its goal of gain-

ing the commitment of 60 million fans worldwide to a much fairer music

marketplace. There is nothing requiring record labels to renegotiate their

deals with their recording artists or online services. I would, of course, like

to see the labels make that commitment up-front. But even if they de-

clined, shame and, more importantly, Wall Street, would come into play.

One would hope that record labels would see more benefit in maximizing

shareholder value than in thumbing their noses at recording artists and

consumers.

469

But if the labels refused the pledge, Wall Street forces —

such as famed corporate raider Carl Icahn or the technology sector —

might sweep in to take over record labels and do what would be most

beneficial to shareholders (as well as consumers, recording artists, and the

public-at-large). Furthermore, policymakers would see that major label

executives are holding back progress and be less supportive of their

initiatives.

The Grand Kumbaya Music Internet pledge is akin to a collective and

sustained Kickstarter campaign. It would function as a form of consumer

collective action. Music fans would have a vehicle to communicate en

masse their dissatisfaction with the current state of the music industry and

their desire to participate in a more just music ecosystem. Whereas the

massive online protest of SOPA communicated opposition to regulating

the Internet, the Grand Kumbaya Music Internet pledge would speak to

the virtues of an ethical copyright system for the Internet Age.

Hopefully the time is ripe for fans, artists, tech companies, and record

labels to come together in writing a new social contract for the music in-

dustry. Even noted adversaries Lars Ulrich, Metallica’s drummer and one

of the music industry’s most outspoken critics of Napster (and file-shar-

ing),

470

and Sean Parker, the Internet entrepreneur who co-founded Nap-

469

See id. (reporting that Nick Mason expressed that both the labels and the art-

ists would benefit from an increased presence by musicians on the board of

record labels to make sure their voices are heard).

470

Recalling the time he first heard of Napster and the sharing of music files over

the Internet without authorization, Lars Ulrich told Metallica’s manager

“Maybe we should go over there and . . .’.’ He punched his hand three

times with his fist. The band’s attitude at the time was: “You f—- with us,

we’ll f—- with you.” See Greg Sandoval, Metallica Joins Spotify, Buries the

Hatchet with Sean Parker,

C—N

(Dec. 6, 2012), http://news.cnet.com/

8301-1023_3-57557576-93/metallica-joins-spotify-buries-the-hatchet-with-

sean-parker. Metallica led the charge to sue Napster and took on the most

visible public face of artist dissatisfaction with file-sharing. See Ryan

Buxton, Metallica Drummer Lars Ulrich Recalls Battle With Napster: “They

F—ked With Us, We’ll F—k With Them” (VIDEO),

UFFINGTON

OST

(Sep. 24, 2013), http://www.huffingtonpost.com/2013/09/24/metallica-napster

_n_3984374.html.

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332 Journal, Copyright Society of the U.S.A.

ster, have recently found common ground.

471

Having Metallica license

their catalog to Spotify in conjunction with Ulrich’s endorsement of the

service helps to heal the rift between the content and technology indus-

tries and reinforces Spotify’s reputation as a legal alternative to piracy.

The Grand Kumbaya Music Internet pledge would enable Lars and Sean

to scale their collaboration to the entire music ecosystem.

2. Graduated Embrace

As noted previously,

472

a group of major ISPs (SBC, AT&T, Com-

cast, Verizon, CSC, and Time Warner Cable) and leading content industry

organizations (RIAA and MPAA) entered into a Memorandum of Under-

discourage unauthorized distribution of copyrighted works. Such a regime

is often referred to as a “graduated response” in that copyright owners and

ISPs escalate sanctions with repeat offenses.

473

The signatories to this

MOU committed to implement an escalating system of alerts in response

to alleged infringing activities: (i) an Educational Step Copyright Alert;

(ii) an Acknowledgment Step Copyright Alert; and (iii) a Mitigation Mea-

sure Copyright Alert Step. The Mitigation Step can include a reduction in

upload/download transmission speeds, a step down to a lower tier service,

redirection to a landing page until the matter is resolved, and restrictions

on Internet access. The MOU provides for “warning bells” along the alert

steps as well as an appeals procedure.

This graduated response system provides a foundation for ISPs and

and less piracy-prone Internet ecosystem. It builds a balanced enforce-

ment system into ISP activities. As this experiment unfolds, the parties

471

See Sandoval, supra note 470.

472

See supra, text accompanying notes 347-48.

473

To provide a deterrent against online illegal file-sharing, Chile, France, Taiwan,

South Korea, and the United Kingdom have recently introduced the so-

called graduated response system or are in the process of doing so. See

’

NOFTHE

HONOGRAPHIC

NDUS

., IFPI D

IGITAL

USIC

EPORT

2011: M

USIC AT THE

OUCH OF THE

UTTON

3, 19 (2011); Kaitlin Mara, UK

Passes Internet Access-Limiting Bill for Alleged IP Infringers,

NTELLEC-

TUAL

ROPERTY

ATCH

(Apr. 8, 2010, 12:11 PM), http://www.ip-watch.org/

weblog/2010/04/08/uk-isps-required-to-limit-internet-access-for-ip-infring

ers. For discussions of the gradated response system, see generally An-

nemarie Bridy, Graduated Response and the Turn to Private Ordering in

Online Copyright Enforcement, 89

. L. R

. 81 (2010); Eldar Haber, The

French Revolution 2.0: Copyright and the Three Strikes Policy, 2

ARV

. J.

PORTS

& E

. L

. 297 (2011); Alain Strowel, Internet Piracy as a Wake-up

Call for Copyright Law Makers – Is the “Graduated Response” a Good Re-

ply?, 1 WIPO J. 75; Peter K. Yu, The Graduated Response, 62

. L. R

1373 (2010).

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This American Copyright Life 333

will be able to learn more about the ecosystem and how to adapt these

techniques to better channel consumers into the legitimate marketplace.

While this approach has the potential to be more constructive, and

certainly less counter-productive, than the RIAA lawsuits against 35,000

end users during the past decade, I worry that the tone of the campaign

could reduce the effectiveness of the enterprise. Most parents learn that

telling their teenage children what to do often produces undesired re-

sults.

474

It is often better for parents to listen and be supportive of their

children even as they gently steer them in other directions.

The ISP-content industry “graduated response” program partially re-

flects this lesson. The organizers of the program have gone to great

lengths to introduce balance into the program’s operation, which is part of

the reason it has taken a long time to launch. Nonetheless, the campaign

is often referred to as the “six strikes” campaign and it does have a judg-

mental quality.

I would urge a more progressive concept: “graduated embrace.”

Rather than criticizing Internet users for participating in file-sharing, the

messaging should welcome the file-sharers’ appreciation for the content

owners’ works and steer them to authorized services, perhaps with a dis-

count coupon for joining. To the extent that a work is not available

through such a service, that ought to trigger the copyright owner to re-

think their online distribution model. The goal should be to maximize

availability of content through user-friendly and reasonably priced

services.

There will inevitably be circumstances where studios resist making

works available through online channels immediately. The film industry

has been built on large-budget motion pictures appearing first in theaters.

Studios have shortened those windows and moved toward global (“day

and date”) theatrical release so as to reduce online piracy across mar-

kets.

475

And as home theaters become more like public theaters, theatri-

474

Cf.

HOMAS

ORDON

, P

ARENT

FFECTIVENESS

RAINING

: T

ROVEN

RO-

GRAM FOR

AISING

ESPONSIBLE

HILDREN

(2000);

DELE

ABER

LAINE

AZLISH

, H

OW TO

ALK

IDS

ILL

ISTEN

(1999).

475

See Justin Kroll, Paramount Ramps Up Day-and-Date VOD Plans for Indies,

ARIETY

(Jul. 30, 2013), http://variety.com/2013/film/news/paramount-

ramps-up-day-and-date-vod-plans-for-indies-1200569981; Nathan Blaisdell,

“Day-and-date” Film Release. What It Is. Why It’s the Future.

INEMA

(Mar. 11, 2013), http://5thcinema.com/blog/2013/03/day-and-date-release

(discussing the role of online piracy in pushing independent studios to shift

to day and date release, but noting that major studios “will probably take

longer, although there are signs that they’re starting to pay attention”);

Daniel Miller, Sundance 2012: The Day-And-Date Success Story of “Margin

Call”,

OLLYWOOD

EPORTER

(Jan. 18, 2012), http://www.hollywood-

reporter.com/news/sundance-2012-margin-call-video-on-demand-zach-

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334 Journal, Copyright Society of the U.S.A.

cal release will decline in economic importance. The theater business has

shifted more toward Imax, 3-D, and other qualities that are not available

in homes.

Studios evaluate the costs and benefits of exclusive theatrical release

and other windowing choices based on the short run profit and loss trade-

off. Such a calculation, however, overlooks the negative impact that

windowing has on social norms and perceptions of the morality and legiti-

macy of the copyright system. Studios and the industry at large should

directly consider the heavy cost on everyone in the industry of works being

unavailable through online channels. The industry should value the long-

term benefits of improved public approval that would flow from greater

authorized accessibility of copyrighted works.

Table 1 shows the availability of the ten most pirated movies for the

week ending October 21, 2013. None of these films were available for

streaming, only two were available for digital rental, and three were avail-

able for digital purchase. While this data does not justify pirating, it high-

lights the limited authorized availability of pirated films. By holding

released films back from authorized digital channels, the film industry

loses more of the market to piracy and reinforces consumers’ engaging in

illicit access.

Even the comments of one of the industry’s leading figures seem to

legitimize piracy and undermine a shift in social norms toward authorized

channels. As noted earlier,

476

the head of Time Warner characterized hav-

ing the most pirated show (Game of Thrones) as “better than an emmy.”

Rather than segment markets through windowing, the film and television

industries need to look at the broader benefits of channeling consumers

into a more balanced ecosystem that responds to consumers’ understanda-

ble desires for what they want when they want it through a user-friendly

interface at a reasonable price point.

477

quinto-283033; Steven Mallas, Time Warner, Apple Love “Day-and-Date”

Movie Release – and So Should Investors,

AILY

INANCE

(May 1, 2008),

http://www.bloggingstocks.com/2008/05/01/time-warner-apple-love-day-and-

date-movie-release-and-so-s (reporting that Time Warner CEO Jeff Bewkes

“seemed satisfied that experiments with the strategy worked out well, prov-

ing that issues of cannibalization are overblown and that the margin scena-

rios [video on demand typically earn studios substantially more than DVD

on a per view basis] are too cool to ignore”).

476

See supra, text accompanying note 207.

477

Cf. Andrew Wallenstein, Comcast Developing Alternative to ‘Six Strikes”,

A-

RIETY

(Aug. 5, 2013), http://variety.com/2013/digital/news/comcast-develop-

ing-anti-piracy-alternative-to-six-strikes-exclusive-1200572790 (reporting

that Comcast is pitching the television industry on a plan to convert illegal

downloads to legal transaction opportunities by pushing a pop-up message

with links to purchase or rent content that is being accessed illegally).

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This American Copyright Life 335

Table 1

Most Pirated Movies of the Week Ending Oct. 21, 2013

Availability Through

Authorized Channel

Digital Digital

Film Release Date Streaming Rental Purchase

1. Man Of Steel June 10, 2013 no no no

2. Pacific Rim July 12, 2013 no yes yes

3. Despicable Me 2 July 3, 2013 no no no

4. White House Down June 28, 2013 no no no

5. The Lone Ranger June 22, 2013 no yes no

6. Kick-Ass 2 August 14, 2013 no no no

7. Elysium August 8, 2013 no no no

8. 2 Guns August 2, 2013 no no no

9. The Internship June 7, 2013 no no yes

10. Monsters University June 21, 2013 no no yes

Sources: piracydata.org, TorrentFreak, http://torrentfreak.com/category/dvdrip; Can I

Stream It, http://www.canistream.it.

Kevin Spacey, the star of House of Cards, Netflix’s break-through

over the Internet original series, succinctly proposed a cure for this

pathology:

478

[T]hrough this new form of distribution, we have demonstrated that we

have learned the lesson that the music industry didn’t learn. Give people

what they want, when they want it, in the form they want it in, at a rea-

sonable price and they’ll more like pay for it rather than steal it. Well

some will still steal. But I think that we can take a bite out of piracy.

479

Professor Marty Kaplan, Director of the Norman Lear Center at the

USC Annenberg School for Communication and Journalism, observes that

“[i]t’s hard to imagine that the sequenced distribution of product over a

controllable period of time through an orderly series of ‘windows’ — ve-

nues and platforms and formats and pipes and territories, each with their

478

See Mike Masnick, Kevin Spacey: Give Users Control, What They Want, When

They Want It, At A Fair Price, And Stop Worrying About Piracy,

ECHDIRT

(Aug. 26, 2013), http://www.techdirt.com/articles/20130824/22031324306/ke-

vin-spacey-give-users-control-what-they-want-when-they-want-it-fair-price-

stop-worrying-about-piracy.shtml.

479

Kevin Spacey Urges TV Channels to Give Control to Viewers,

ELEGRAPH

UBE

HANNEL

(

Aug.

23, 2013),

http://www.youtube.com/watch?v=p0

ukYf_xvgc&desktop_uri=%2Fwatch%3Fv%3DP0ukYf_xvgc&nomobile=1.

\\jciprod01\productn\C\CPY\61-2\CPY202.txt unknown Seq: 136 1-MAY-14 10:19

336 Journal, Copyright Society of the U.S.A.

own license deals and consumer prices — will survive unbroken.”

480

sees responding to consumer demand, as opposed to scaring, educating, or

shaming consumers into not pirating, to be the way forward. Robert

Bauer, Director of Projects for the MPAA, recognized as much in 2009,

advocating a strategy “to isolate the forms of piracy that compete with

legitimate sales, treat those as a proxy for unmet consumer demand, and

then find a way to meet that demand.”

481

Riffing off the title of Netflix’s popular new original series, “Orange is

the New Black,” New York Times reporter Brian Stelter cleverly re-

marked that “content is the new black”

482

or, better yet, “easily and le-

gally accessible content is the new black.” Netflix has seen rapid

subscription growth since the release of its high quality, bingeable, original

programming. It has reached 40 million subscribers worldwide (30 million

domestic), surpassing HBO’s domestic U.S. subscription level for the first

time.

483

The stock market appears sanguine about Netflix’s disruptive

business model, driving its stock price up 440 percent in the past year

484

a market capitalization nearly a third the market value of Time-Warner

Inc., HBO’s wide-ranging parent corporation.

485

The stock market is far

from perfect, but Netflix does point in a promising direction for creators

and consumers. The sooner content industries can build robust online

marketplaces for their products, the sooner piracy fades in importance.

486

480

See Marty Kaplan, Moses, Media Piracy and the MPAA,

UFFINGTON

OST

(Apr. 3, 2011), http://www.huffingtonpost.com/marty-kaplan/moses-media-

piracy-and-th_b_843317.html.

481

See

. S

. R

ESEARCH

OUNCIL

, supra note 463, at 66.

482

See Brian Stelter, Netflix Hits Milestone and Raises Its Sights,

N.Y. T

IMES

, Oct.

21, 2013, at B1, available at http://www.nytimes.com/2013/10/22/business/

media/netflix-hits-subscriber-milestone-as-shares-soar.html?_r=0.

483

See Claire Atkinson, Netflix Stock Soars, US Subscriber Count Passes HBO’s,

N.Y. P

OST

(Oct. 21, 2013), http://nypost.com/2013/10/21/netflix-stock-soars-

us-subscriber-count-passes-hbos. Netflix still lags HBO’s 114 million sub-

scribers worldwide subscriber base and $1.6 billion in net income. See

Stetler, supra note 482.

484

See Stetler, supra note 482.

485

Netflix’s market capitalization as of October 21, 2013 was approximately $19

billion. Time-Warner’s market capitalization — which includes New Line

Cinema, Time Inc., Turner Broadcasting System, The CW Television Net-

work, TheWB.com, Warner Bros., Cartoon Network, CNN, DC Comics,

Hanna-Barbera, and Castle Rock Entertainment in addition to HBO, was

valued about $64 billion on that date.

486

It appears that Time-Warner may be getting the message. See Todd Spangler,

Comcast Offers HBO Without Other Cable Channels in Bundle Aimed at

Cord-Cutters and Cord-Nevers,

ARIETY

(Oct. 25, 2013), http://variety.com/

2013/biz/news/comcast-becomes-first-pay-tv-distributor-to-offer-hbo-with-

out-basic-cable-1200761863.

\\jciprod01\productn\C\CPY\61-2\CPY202.txt unknown Seq: 137 1-MAY-14 10:19

This American Copyright Life 337

CONCLUSIONS

Throughout most of copyright history, the public’s view of the copy-

right system exerted little force on its functioning. Due to the difficulties

of reproducing paper, vinyl, and celluloid as well as the relative ease of

policing content markets, consumers had few options other than to access

copyrighted works through authorized channels. The Internet has broken

that mold, freeing consumers to find and share copyrighted works with

ease and relatively low risk of detection. The first thirteen years of living

in this era has revealed that copyright law’s principal tool for preventing

unauthorized distribution of copyrighted works — deterrent enforcement

through statutory damages — is largely counter-productive in a technolog-

ical age in which consumers can easily circumvent content markets.

By not shifting to a more balanced enforcement regime, adjusting

user-friendly market channels, policymakers and content industries risk

further alienating the post-Napster generations. The touchstone for re-

forming copyright law and market institutions should be welcoming, sup-

porting, and embracing future creators and consumers. By recognizing the

essential role of social norms in the operation of the Internet Age content

governance ecosystem, policymakers and industry leaders can re-equili-

brate copyright law and content markets to motivate the next generation

of creators and engage the next generation of consumers.

Although copyright law principally relies upon market mechanisms to

promote a vibrant creative culture, markets alone cannot bring about the

ideal ecosystem. While reinvigorated copyright formalities and other mar-

ket supporting institutions can enhance the functioning of copyright law,

various technological, economic, social, and distributive factors require a

nuanced and responsive mix of regulatory adjustments as well as govern-

ment oversight and a larger public role in copyright enforcement. Such

regulatory tools will have an increasing role to play in the seamless, pro-

miscuous, networked technological era to come.

487

Thus concludes “This (my) American Copyright Life,” a cautionary

tale that recognizes the moral, economic, and social virtues of copyright

protection as well as the dysfunctionality of the current copyright system

in the Internet Age. Every person has his or her “copyright life.” I worry

that too many post-Napster “copyright lives” are disheartening. The goal

of this story has been to offer a sensible path for restoring faith in the

487

See Peter S. Menell, Governance of Intellectual Resources and the Disintegra-

tion of Intellectual Property in the Digital Age, 26

ERKELEY

ECH

. L.J.

1523 (2011).