In the Know - April 7, 2005

a bimonthly Public Knowledge update

Contents:

• Gigi in the House — Reflections on Grokster Day at the Supreme Court
• An Outpouring of Concern for Orphan Works
• How the Broadcast Flag Could Hurt
• Stay In the Know with PK’s RSS Feeds

Gigi in the House — Reflections on Grokster Day

PK President Gigi Sohn was inside the Supreme Court for the historic oral argument on the Grokster file-sharing case. Here are her thoughts on the events of the day, the argument and possible outcomes and consequences of a decision:

Tuesday, March 29, 2005 will go down as one of the most memorable days in the history of copyright law. On that day, the Supreme Court heard oral argument in MGM v. Grokster, which is perhaps the best-known case the Court will hear this term, and the biggest copyright case it has heard since the Sony Betamax case in 1984. This case has been the obsession of PK and just about every other organization, trade association and company that works on copyright policy for the past year or so. I had long stopped counting the number of panel discussions, press calls and meetings about the case — the day was finally here, and I was relieved and excited.

I wasn’t in the main courtroom, but was in the special overflow room for members of the Supreme Court Bar, which has its advantages. First, you are not subject to the silence and strict protocols of the Court’s stately courtroom. Before the argument started, everyone was networking and greeting old friends. Forget the work I brought to read — nearly five hours on line and in the court and I didn’t look at one word. After talking to a number of folks on both sides of the case, it was clear that just about everyone was very nervous.

Second, the acoustics are better in the overflow room, and because you cannot see the Justices, it actually forces you to listen more intently. To the extent that it is hard to recognize a Justice’s voice (it isn’t that hard, but Justices Kennedy and Breyer are tough to distinguish), all you needed to do is give a puzzled look to a colleague, and he or she would tell you.

And so, with a hush in the room, the Grokster oral argument began. Don Verrilli, the very talented advocate from Jenner & Block, opened on behalf of the entertainment industry. Almost immediately, Justices Stevens and Ginsburg jumped in — doesn’t Grokster have legitimate uses? Isn’t it used to share authorized and public domain files? Verrilli responded that it didn’t matter, because Grokster (and its co-defendant Streamcast Networks) “intentionally built and actively encouraged” infringement.

At that point, the Court’s most influential member, Justice O’Connor, came down squarely in the middle, as is her wont. She asked Verrilli if the “Court could reach the question of active inducement,” that is, whether Grokster engaged in specific acts that encouraged infringement. People in the overflow room looked at each other furtively. There was already a sense that active inducement would be a focus of this argument.

But even though he first raised the inducement issue, Verrilli was having none of it. He changed the subject — trying to get the Court to consider a new standard for secondary liability. He said that the “touchstone” for such liability is whether the “business [is] substantially built on infringement,” and what were the “relative portions” of infringing to non-infringing use.

At this point, Verrilli was besieged by skepticism from Justices Breyer, Scalia and Souter, who as Linda Greenhouse reported in the NY Times, is so adverse to technology that he still writes his opinions by hand. Justice Breyer asked if Verrilli was counsel to Xerox, or to Apple or to Gutenberg, could he recommend that they go ahead and build the copy machine, the iPod and the printing press under his standard? Not surprisingly, Verrilli answered with a definitive, “yes, yes and yes.” Justice Scalia asked whether an innovator had to know “going in what the balance is?” And Justice Souter fretted that Verrilli’s standard would equate to a “Sword of Damocles” hanging over the head of inventors. The Justices understood the importance of Sony’s bright line test to continued technological innovation.

Solicitor General Paul Clement, arguing for the United States on the side of the entertainment industries, was up next. He pitched the government’s test for secondary liability — whether a technology has a “commercially significant” non-infringing use. He didn’t get very far. What is the right balance for infringing versus non-infringing uses? 50-50, stated Clement. And how much time should you give a company to develop a non-infringing use, asked Justice Scalia. Justice Souter suggested, somewhat tongue-in-cheek, that perhaps the Court should adopt a “flexible rightness” doctrine so that new technologies don’t get sued right away.

When Richard Taranto, the seasoned Supreme Court solicitor representing Grokster and Streamcast began, he got no better treatment. Justice O’Connor once again raised the question of whether an active inducement test might be appropriate. Taranto answered that such a test was not found in copyright law. Justice Kennedy asked what was wrong with the entertainment industry’s “substantial use” test. Taranto responded that the Sony case was clear — the manufacturer of a technology cannot be held liable for the infringement of others if the technology is “capable of substantial non-infringing uses,” and that the record here demonstrated that Grokster had many lawful uses. But Justice Ginsburg was not buying that, stating that the “standard is not so clear.” She noted that the Sony Court went on to write another 13 pages after articulating the standard, and that one can’t “isolate one sentence” from that decision. Taranto pointed out that those 13 pages focused not on the liability standard, but on whether time shifting of TV programs was a fair use.

During the remainder of Taranto’s time, it was clear that a number of the Justices were troubled by Grokster’s business model, and were looking for a way to send the case back to the district court, perhaps to determine whether Grokster was guilty of active inducement. Justices Souter and Scalia asked about whether Grokster was “willfully ignorant” or “willfully blind” to infringement engaged in by those using its software. Justices Breyer and Stevens, who are likely to be Grokster’s most fervent defenders, asked about sending the case back for a determination on the inducement issue. But the most critical statement came from Justice Kennedy, who was troubled that “unlawfully expropriated property can be [Grokster’s] start-up capital.”

On rebuttal, Verrilli once again made it plain that his clients were not interested in an active inducement standard, even if Grokster were to be found liable under such a standard. When asked why such a standard wasn’t enough, Verrilli said that the next Grokster would simply build to avoid inducement liability. I found this discussion very telling — after all the talk over the past year about the alleged need to “get Grokster” and its ilk, the Court was trying to give the entertainment industry a way to do so, but it demurred. The industry’s intention, despite their many statements to the contrary, is clear — it is not so interested in “getting Grokster,” as it is interested in diluting the Sony standard in such a way that forces all technology companies to ask their permission before they develop new products.

After the argument ended, the vast majority of lawyers streamed out of the overflow room. As much as I wanted to stay and hear the next case, FCC v. Brand X — an important telecom case — there was a press conference on the steps of the Court that I wanted to hear, and, if possible, participate in. I waved goodbye to my communications law friends and proceeded to the mob on the steps of the Court building. It was quite a difference from the staid atmosphere inside the court! In addition to the press conference, which had a crowd of about seven people deep, protesters from both sides — songwriters supporting the entertainment industry, and our friends from CEA and elsewhere sporting “Save Betamax” T-Shirts, were on the plaza conducting their demonstrations. After my brief and unremarkable appearance at the press conference (I don’t think I could be seen over the microphones), a few turns with the CEA protesters, and chats with a bunch of reporters, I retired to relax with friends at the PK luncheon.

It has now been over a week since the oral argument, and of course, everybody has an opinion about how the case is going to come out. Some of those opinions are driven by hope, some by fear, and some by where the person works. Although you never can really predict how the Court is going to decide a case, one credible guess came from my PK colleague Mike Godwin, who didn’t attend the argument, but is just a very smart guy. He thinks that the Court will ask the parties for further briefing on what the proper standard for active inducement should be, in anticipation of the Court developing such a standard and sending the case back to the district court to determine Grokster’s liability under that standard. Given the Court’s distaste both for tinkering with Sony and for Grokster’s business model, this seems like a very plausible outcome. But who knows? At this point, all we can do is wait.

Mike Godwin’s thoughts on what may happen next:
http://www.godwinslaw.org/weblog/archive/2005/04/05/grokster-and-other-matters

A transcript of the oral arguments can be found at:
http://www.sims.berkeley.edu/academics/courses/is296a-2/s05/pdf/GroksterOA.pdf

Orphan Works Find Lots of Love

You do care about orphan works!! Over the past few weeks, PK, the Electronic Frontier Foundation (EFF) and Free Culture have hosted the web site, www.orphanworks.org, to help you submit ideas to the U.S. Copyright Office on how to deal with that frustrating situation when, as a creator, you can’t find who owns the rights to a work you would like to use in your own creation.

About 2/3 of the comments submitted came through the orphanworks.org web site — 475 of the 716 submitted. (No, we didn’t count them all. The Copyright Office helpfully numbered them for us.) Those comments came mainly from individuals who had trouble making use of orphan works. Your stories were fascinating, and provided the Copyright Office with just the type of real world experience that it can use when coming up with a recommended solution to making orphan works - works for which the copyright owner can’t reasonably be located - more accessible and available.

As we mentioned in the last issue, PK filed its own comments in the proceeding suggesting that Congress create a “reasonable effort” defense to infringement, and suggesting that Congress encourage, but not require, users to file with the Copyright Office a notice of intent to use an orphan work and a sworn statement describing the search made to find the copyright owner.

The Glushko-Samuelson Intellectual Property Law Clinic at the Washington College of Law, American University, suggested a framework used by many other commenters — that the burden of finding the copyright owner be put on the user, as opposed to requiring the copyright owner to register. The Clinic said the burden of the search should be on the user because users would normally have to undertake such research anyway, and that requiring an owner of an orphan work to maintain watch over its use “is almost oxymoronic.” The Clinic also disagreed with the approach to “unlocatable works” in Canada, which is to decide each copyright use on a case-by-case method.

There were some comments that did not follow that theme, however. The joint submission from Save The Music and Creative Commons recommended a mandatory registration scheme for copyright owners. Failure to register a work within 25 years would put the work into “orphan” status and could be used without permission and for a nominal fee under a default license applicable to all orphan works. Save The Music is a small group interested in the preservation of old Jewish music, and it told the Copyright Office that it “repeatedly encounters problems” finding rights holders because many of the works the group wants to digitize and put online were produced overseas and published by small companies which no longer exist.

The question of applying an orphan works designation to music came up in quite a few comments. The American Society of Composers, Authors and Publishers (ASCAP) said that the definition of orphan works should exclude musical works. ASCAP said its data base is so complete that there are no substantial difficulties in finding copyright holders. The Recording Industry Association of America made a similar argument.

But the Future of Music Coalition, American Federation of Television and Radio Artists (AFTRA) and American Federation of Musicians of the United States recommended a system modeled after Canada’s, in which more than 100 separate permissions for use have been issued, and suggested as well a specific license for records taken out of print by record labels.

Reply comments are due May 9.

PK’s comment is here:
http://www.publicknowledge.org/pdf/pk-comments-on-openworks.pdf

You can take your pick from the whole batch of submissions here:
http://www.copyright.gov/orphan/comments/index.html

The Reality of the Broadcast Flag

When Public Knowledge, the American Library Association and others challenged the FCC’s broadcast flag regulation, most of the discussion focused on whether the Commission had the power under the Communications Act to implement it. We argue, as you know, that the FCC exceeded its authority in crafting the current broadcast flag regime. That’s the legal argument, but it’s only half of the story.

Thanks to a filing our group made with the U.S. Appeals Court, D.C., on March 29, we were able to give some exposure to another part of the story — the harm to consumers, librarians, scholars, bloggers and others that will result if the broadcast flag scheme is implemented. Technically, the filing was made with the court to prove that our team has “standing” — that is, we fulfill the legal obligations necessary to be able to bring the case in the first place. In doing so, we have to show that our members, the librarians, consumer advocates, academics, and others who belong to the group, would be harmed if the broadcast flag scheme went forward. (Responses to our brief will be due April 12.)

The result was a document that set out, in great detail, what bad things would happen with the broadcast flag scheme. The whole filing is 102 pages, but you don’t have to read it all. The first 20 or so pages summarize the affidavits from individuals, and you can pick and choose among the compelling individual stories what you want to read.

With a great deal of help from all of the organizations on our side of the case (many, many thanks!), we submitted evidence of a number of activities that would be harmed by the FCC’s regulation, including:

1. Using the Internet for distance education. Some libraries, such as the one at North Carolina State University, are already using the Internet to transmit broadcast clips for classroom instruction, recording a Univision Spanish-language program for distance learning. A professor at American University in Washington, D.C., plans to make broadcast clips available to her students next year. The Vanderbilt Archives makes cable news programming available over the Internet to more than 100 Internet subscribers.
2. Internet town meetings. The Consumer Federation of America will be hampered in their Internet-based “town hall” style meetings. CFA conducted its first meeting last year with more than 200 participants, and one of the uses about which its members are excited is the ability to send instantly broadcast news clips on topics of interest during the conference. CFA has asked its technical staff to work on this project, and members will be able to use this feature — unless the broadcast flag takes effect.
3. Enhancing blogs. Stanford University Law Professor and PK Board Member Lawrence Lessig said he has posted news clips on his very popular blog in cases where the programs were relevant to an article he had posted, or in which he had commented on the program itself. PK member Carrie McLaren uses clips in the same way on a blog associated with a magazine she founded.
4. Testing DTV. The Electronic Frontier Foundation (EFF) uses broadcast HDTV segments to help its members learn how to build their own personal video recorders. Last year, EFF captured a segment of the film, Lord of the Rings, and made it available on its website for members to use while testing their home-brewed TiVo devices. The broadcast flag would foreclose that activity. One EFF member, Jack Kelliher, designs and markets an HDTV tuner card to support the EFF and other efforts to help consumers build their own personal recorders. The flag would require Kelliher to redesign his card, doubling his production costs.
5. Equipment replacement. The Vanderbilt News Archive at Vanderbilt University has invested more than $100,000 in recording studios used to capture news broadcasts off the air. Those studios include equipment that isn’t compliant with the broadcast flag. Vanderbilt said it would have to spend “substantial sums” to replace its current gear.

The supplemental brief is here:
http://www.publicknowledge.org/pdf/pk-bfcase-supplemental-brief.pdf

Here’s the court order:
http://www.publicknowledge.org/pdf/bf_order_on_standing_20050315.pdf

Briefly: The House Judiciary Committee is expected as soon as this week to file its report on S. 167, the Family Entertainment and Copyright Act of 2005. A second committee to which the bill has been assigned, the House Administration Committee (because of the Library of Congress provisions) is unlikely to take any action on the bill. Under normal circumstances, those two actions — the filing of the report and waiver by House Administration, would make the bill eligible for floor action. However, the House Energy and Commerce Committee is reportedly unhappy with some provisions of the bill and may ask for it to be referred there.

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For the best in blogging: www.Godwinslaw.org , by PK Legal Director Mike Godwin. From ruminations on Tarzan, to plots against America, to experiments with BitTorrent, its all here.