Update: Senate Judiciary Committee Chairman Urges Payment Processors to Deter Online Copyright Piracy

copyrightwarningIn our October 2, 2014 post, Profit, Not Ideology, Motivates Cyberlockers that Facilitate Copyright Infringement, we noted that a Digital Citizens Alliance study found that 29 out of the 30 cyberlockers it reviewed accepted payment using a MasterCard or Visa credit card. We urged those payment processors to follow the example of PayPal, which has worked aggressively to deny such piracy-facilitating sites the use of its service.

Today, the current Chairman of the Senate Judiciary Committee, Senator Patrick Leahy, added his influential voice to those pressing for further MasterCard and Visa action. He sent letters to the CEOs of those businesses asking them to swiftly review the complaints against those cyberlockers and to ensure that payment processing services offered to those sites, or any others dedicated to infringing activity, cease.”

Senator Leahy also made the important point that not only do the payment processors “unwittingly contribute” to cyberlockers’ profitability, they also “lend[ ] the sites a harmful imprimatur of legitimacy” by allowing their logos to appear on the sites. He continued, “A consumer wondering whether a site is offering lawful access to copyrighted content may easily trust the cyberlocker’s legitimacy if world-respected payment processors service the site.”

Copyright and Patent Holders Advance Separate Market-Based, Self-Help Initiatives

copyrightIntellectual property (IP) rights and innovation are inextricably intertwined. It’s not surprising, then, that in the spirit of innovation, some IP owners have taken proactive steps to advance and defend their own property rights. They understand that reliance on current or future government action is no panacea. In separate developments this past week, some of the world’s most successful copyright holders adopted a creative approach to bolster those rights, while leaders of three different patent “self-help” entities explained their unique strategies at a Washington Legal Foundation (WLF) briefing.

Copyrights and WhereToWatch. Pirated online file peddlers and their apologists routinely argue that they are meeting consumers’ unfulfilled demand for affordable access to digital music, movies, and TV shows. As we noted in a WLF Legal Pulse post last month, however, “Huge music libraries can be accessed for free or low cost at outlets such as Spotify, Pandora, Amazon Music, and iTunes. Online options for TV and movie content continue to multiply. Copyright-infringing consumers can no longer claim that they seek pirated content because it isn’t digitally available for a reasonable price.” A September 23, 2014 report by KPMG provides empirical supports that argument. It found, for instance, that 96% of the top 20 movies for the years 2000 to 2010 were available through legal online distributors. Also, 96% of television’s top 100 shows in 2012 were available. Continue reading

Profit, Not Ideology, Motivates Cyberlockers that Facilitate Copyright Infringement

copyrightwarningInformation wants to be free” is a standard rejoinder to criticism of online entertainment piracy. Such a sentiment may motivate some copyright thieves, but profit, not ideology, drives the proprietors of “cyberlockers” whose business is trafficking pirated entertainment content. A recent study by the Digital Citizens Alliance (DCA)—”Behind the Cyberlocker Door“— has laid bare that reality. These websites generate profit margins that lawful businesses can only dream of, and they do so on the backs of countless workers in the music, movie, and television industries.

DCA analyzed data from the 15 top direct download cyberlockers and 15 top streaming cyberlockers. It found that 78% of the files on the direct download sites, and 84% on the streaming sites, were infringing content such as music, movies, and TV shows. Total annual revenue for the 30 businesses was $96.2 million, which averages out to $3.2 million a site. The average profit ratio of the direct download sites was 63.4%, with one site enjoying 88.5%. For the streaming cyberlockers, the average ratio was 87.6%, with the highest coming in at 96.3%.

Much like people who run the illicit cyberlockers, some of those who unlawfully access and share copyright-protected content may claim to be advancing an extreme public commons ideology or “sticking it to Big Entertainment,” but the volume of such piracy reflects a baser motivation. Pirated content consumers’ catchphrase shouldn’t be “information wants to be free;” it should be  “we want free information.” Continue reading

Update: Ninth Circuit Ruling a Final End to Copyright “Troll’s” Legal Charade?

copyrightNearly two years ago, in a Legal Pulse post and a WLF Legal Opinion Letter, we discussed the strong judicial response to the copyright litigation scheme pursued by a company called Righthaven LLC. Righthaven was created at the behest of newspaper-owning media company Stephens Media as a vehicle to sue bloggers and other online information outlets which had reprinted articles originally published in Stephens’ newspapers. Thankfully rather than pay the copyright troll’s “toll,” several bloggers refused and Righthaven sued them.

Federal District Judge Philip Pro dismissed Righthaven’s suit for two reasons.  First, because the agreement between Stephens Media and Righthaven assigned only the right to sue potential copyright infringers, Righthaven did not have the exclusive rights needed to possess standing to sue. Second, the bloggers’ reprinting of articles constituted fair use under federal law. Several days after this ruling, Judge Pro ruled that Righthaven had to pay $34,000 in attorneys’ fees. In a separate but related case, a federal judge sanctioned Righthaven $5,000 for failing to disclose its financial ties to Stephens Media.

Apparently not embracing the modified maxim “it’s time to quit while you’re behind,” Righthaven decided to spend more money on legal fees and appealed its loss to the U.S. Court of Appeals for the Ninth Circuit.

In an appropriately terse opinion yesterday, the Ninth Circuit panel unanimously affirmed Judge Pro on the issue of standing. Circuit Judge Clifton initiated his opinion with a reference to an Abraham Lincoln story about a lawyer who tried to “establish that a calf had five legs by calling its leg a tail.” As Lincoln observed, “calling a tail a leg does not make it so.” Similarly, just because Righthaven called itself a copyright owner does not mean it in fact is.

The court essentially went on to restate the very clear legal standards relied upon by District Judge Pro. Regretfully for bloggers and other online information providers, the court vacated the portion of Judge Pro’s ruling that the reprinting activity constituted fair use, since the case could be dismissed on procedural grounds.

Update: Copyright Trolling Becomes Increasingly Financially Hazardous

A Nevada federal court recently found Righthaven LLC responsible for $34,000 in attorneys’ fees.  This onerous judgment couldn’t have fallen on a more deserving group – Righthaven is a copyright troll notorious for suing bloggers and forum posters who have excerpted from or copied articles from other sites to share with their friends or the general public. 

Washington Legal Foundation has sounded out against trolls many times in the past (see e.g. this criticism of patent trolls: Patent Troll Forces Online Music Sellers, Buys to Pay a Toll), including an August 5 WLF Legal Opinion Letter, , Selling Legal Standing? Righthaven LLC And The Judiciary’s Response To Copyright Trolling, in which this description of Righthaven’s unsavory practices can be found: 

In bringing these suits, Righthaven exploits a loophole in the Digital Millennium Copyright Act (DMCA), which states that for user-generated sites to have a “safe harbor” they must fill out a form and pay $100 to register a DMCA “takedown agent” with the U.S. Copyright Office. Righthaven targets those websites whose proprietors have not done that.  The first notice accused infringers receive is a complaint threatening damages of up to $150,000 and confiscation of their website’s domain name. The violations that trigger this are often trivial, such as posts or comments generated by site visitors. Many of Righthaven’s targets are owners of small, low-trafficked blogs who do not possess the financial resources to challenge Righthaven in court. This “shoot first ask questions later” approach routinely compels defendants to quickly settle. Since 2010, Righthaven has filed over 300 suits, and although none have yet succeeded, about 100 have ended in settlement.”

But the worm has turned.  In Righthaven v. Hoehn Judge Philip M. Pro ruled that Righthaven had no standing to bring the case and that even if they did, Hoehn’s use of the text in question constituted fair use.  Then, only days ago, the Judge ruled that Righthaven should pay $34,000 for Hoehn’s attorneys’ fees. 

Befitting its character, Righthaven audaciously tried to wriggle its way out of the payment by declaring that since it did not have standing in the case, the court did not have jurisdiction to compel Righthaven to pay the fees.  Judge Pro disagreed and ordered that the fees be paid by September 14.

For more on this topic, see Ars Technica, TechDirt, and VegasInc.

Update: Federal Judge Sets Deadline for New Proposed Settlement of Google Book Scanning Suit

“They are very complicated, complex issues, requiring us to delve into them in the dog days of summer,” a lawyer for Google Inc. reportedly said to U.S. Judge Denny Chin in a hearing today on the status of settlement talks between Google and author and publisher plaintiffs.

It’s been four months since Judge Chin rejected the litigants’ first attempt to settle charges that Google violated copyrights in the process of scanning books for its digital library. As we opined in March, addressing all of Judge Chin’s concerns would be a monumental task. No doubt the parties’ gaggle of lawyers have been piling up billable hours seeking an approvable solution, but Judge Chin is frustrated by the lack of progress.  He was quoted as saying, “I’m a little bit concerned. This is a six-year-old case.” He wants them to spend even more focused time in their air-conditioned offices and conference rooms.

So to cajole things forward, the judge set a September 15 deadline.  If the case isn’t “resolved or close to resolved in principle” by then, Judge Chin will set “a relatively tight schedule for discovery.”  Perhaps other than being forced to use the Bing search engine on their computers and smartphones, the last thing Google executives likely want to do is litigate this case. The plaintiffs similarly have numerous incentives to settle, but after so many authors and publishers objected to the original settlement, the plaintiffs’ lawyers may have changed their opinion on what is equitable since March.

What do you think?

Image Source Page: http://www.rascodog.com/scoop/dog-poop-days-of-summer/

. . . Or Not to Be?: Class Action Do’s and Don’ts from the Google Book Search Settlement Ruling

Cross-posted by Forebs.com at On the Docket

After many months of pondering, Judge Denny Chin, previously of the U.S. District Court for the Southern District of New York and now of the U.S. Court of Appeals for the Second Circuit, decided that the proposed settlement involving Google’s Book Search (GBS) project was not “fair, adequate and reasonable.”  Though there is much good in widespread digital access to the world’s books, Judge Chin wrote, he was very “troubled” (a word that shows up frequently in his 48-page ruling) by how this copyright lawsuit settlement would reach that goal.

Washington Legal Foundation (WLF) filed objections to the settlement in 2009.  While we are disappointed that the judge disagreed with our objection – that the notice provided about the settlement to the absent class members was legally inadequate – we were honored that Judge Chin specifically cited WLF’s objection in his opinion as a reference to those who advocated the opposing point of view.

Judge Chin’s decision directly impacts thousands of book authors and publishers. But it is also important for a number of broader principles and strategies in the realm of class action litigation that could affect thousands more future plaintiffs and defendants.  Here are some class action settlement “do’s and don’ts” drawn from the lawsuit, its settlement, and the judge’s opinion: Continue reading