When is news reporting fair use under copyright law?

Blogger claims fair use supports his challenge to DMCA takedown of YouTube video. But “news reporting” aspect of fair use can be tricky.

An embattled California pastor sent a DMCA takedown notice to YouTube over a video clip that a blogger used “to report accurately the relationship” between two organizations. The blogger sent a counternotification and explained that he believes copyright fair use protects him against the takedown (and apparently against infringement as well).

The blogger invokes, among other things, the news reporting aspect of fair use, which one finds set forth in Section 107 of the Copyright Act. A recent fair use case, Swatch Group Management Services Ltd. v. Bloomberg, 742 F. 3d 17 (2d Cir. 2014) might shed some interesting light on how news reporting plays into the analysis. In that case, the court found that defendant was protected by fair use when it distributed an audio recording of a company’s earnings call. Unlike many fair use cases, in which the analysis under the first factor (purpose and character of the use) becomes a question of whether the subsequent use is “transformative,” the court observes the following:

In the context of news reporting and analogous activities … the need to convey information to the public accurately may in some instances make it desirable and consonant with copyright law for a defendant to faithfully reproduce an original work rather than transform it.

A defendant may in some circumstances provide transformative material along with the faithful reproduction of an original work. But the absence of that transformative material will not disqualify a defendant from showing fair use:

[B]y disseminating not just a written transcript or article but an actual sound recording, [defendant] was able to convey with precision not only what [plaintiff’s] executives said, but also how they said it. This latter type of information may be just as valuable … as the former, since a speaker’s demeanor, tone, and cadence can often elucidate his or her true beliefs far beyond what a stale transcript or summary can show.

So we see that the news reporting aspect of fair use can be conceptually separated from transformative use.

There is a slippery slope risk here, and the court recognized that. It cited to the Supreme Court’s Harper & Row decision to observe that “[t]he promise of copyright would be an empty one if it could be avoided merely by dubbing the infringement a fair use ‘news report'”. In this case, however, the “independent informational value inherent in a faithful recording” carried the day. From this we see a rule or guide: use of a piece of content is more likely to be newsworthy if the piece of content itself, and not just the raw information within the content, is a news event.

Evan Brown is an attorney in Chicago advising clients on matters dealing with technology, the internet and new media.

DMCA’s protection of copyright management information applied to non-electronic works

The Digital Millennium Copyright Act (DMCA) provides safe harbors from copyright infringement liability for online service providers (17 U.S.C. 512) and makes it unlawful to circumvent technological measures that effectively control access to copyrighted works (17 U.S.C. 1201). A lesser-known (and lesser-litigated) provision of the DMCA (17 U.S.C. 1202) makes it illegal to intentionally remove or alter any copyright management information or to distribute copies of works knowing that copyright information has been removed or altered without authority of the copyright owner or the law. “Copyright management information” includes information conveyed in connection with copies of the work, such as the title and the name of the author.

A recent case from federal court in Florida considered whether this regulation of copyright management information in the DMCA applies only to electronic works intended for distribution over the internet, or whether it applies to more traditional works such as hard copy technical drawings. The court interpreted the DMCA broadly to apply to all kinds of works, whether on the internet or not.

Plaintiff alleged that defendant violated the DMCA by distributing copies of plaintiff’s drawings “knowing that [plaintiff’s] name had been removed therefrom and/or that another entity’s name had been added thereto.” Defendant argued that plaintiff failed to state a claim for a violation of the DMCA because the DMCA only applies to “technological” infringement. Defendant cited to Textile Secrets Intl’l, Inc. v. Ya–Ya Brand, Inc., 524 F.Supp.2d 1184 (C.D.Cal.2007), which found that § 1202(b) “was [not] intended to apply to circumstances that have no relation to the Internet, electronic commerce, automated copyright protections, or management systems, public registers, or other technological measures or processes as contemplated in the DMCA as a whole.” To read it otherwise, the court in that case reasoned, would contradict the “legislative intent behind the DMCA to facilitate electronic and Internet commerce.”

In this case, however, the court noted that other courts, focusing on the plain language of the DMCA, have held differently, and approved the DMCA’s application to non-technological contexts. See Murphy v. Millennium Radio Group LLC, 650 F.3d 295 (3d Cir.2011); Agence France Presse v. Morel, 769 F.Supp.2d 295 (S.D.N.Y.2011). Although in this case, as in Murphy, the legislative history of the DMCA was consistent with defendant’s interpretation, it did not actually contradict it. Instead, Section 1202(b) simply established a cause of action for the removal of, among other things, the name of the author of a work when it has been conveyed in connection with copies of the work.

So the court, as it found it was required to do, considered the statute’s plain meaning before it considered its legislative history. Under that analysis, it held that plaintiff’s allegations were sufficient to a state a claim for violation of the DMCA.

Roof & Rack Products, Inc. v. GYB Investors, LLC, 2014 WL 3183278 (S.D. Fla. July 8, 2014)

Evan Brown is an attorney in Chicago advising clients on matters dealing with copyright, technology, the internet and new media.

Is the Aereo decision a setback for innovation?

One of the big questions preceding the Supreme Court’s decision in the Aereo case earlier this week was whether a holding against Aereo would put cloud services into such a legally precarious position that the innovation and investment climate would chill. While the decision clearly makes Aereo’s use of its technology illegal, one should not be too quick to foretell a drastic impact on all hosted services. Here are some reasons why.

What cloud?

Let’s be clear about what we mean by “the cloud” in this context. Aereo’s technical model – which the court found to infringe copyright – captured over-the-air television content using one tiny antenna per customer, transcoded that content into one copy per customer, which Aereo stored and then streamed on-demand to the customer. The court found that model bore an “overwhelming likeness to the cable companies targeted by the [1976 Copyright Act]” to an extent that Aereo was “for all practical purposes a traditional cable system.” Aereo’s technological attempts such as the one-copy-per-customer method that it used to distinguish itself from traditional cable services were immaterial to the court. Aereo looked like a cable company, so the court treated it as one, with all the copyright consequences that go along with that status.

Aereo was a cloud service inasmuch as it stored the TV content and served it to its users when those users initiated the performances. It was the cable-like functions that got it into trouble, not necessarily the cloud-provider functions. That arguably leaves the rest of what we consider cloud services – online collaboration tools, centralized communications systems, most hosted applications, and the like – outside the scope of the court’s decision. Most software-as-a-service models, whether to the consumer or at the enterprise level, are unlike cable systems and thus likely stand clear of the sweep of the Aereo sickle.

The technology could live on.

One must also be sure to recognize that the court’s decision did not kill the technology altogether, but instead killed the use of the technology in the hands of one who does not have ownership or license to the content being delivered. Since the court found that Aereo’s service was “substantially similar” to cable systems, Aereo, its successors, or other players in the space could look to monetize the technology while paying the compulsory licenses that Section 111 of the Copyright Act spells out in dizzying complexity. Or the broadcasters and other content stakeholders could acquire Aereo-like technology and use it to supplement the other means of content delivery currently at play. In either scenario, the needs for investment and innovation in providing infrastructure (as well as the need for clarity on network neutrality) remain firmly intact.

The real likely effect.

This is not to say that Aereo will have no effect on development of technology in areas outside the particular facts of the case. The court’s decision expands the class of online intermediaries who may be liable for direct copyright infringement. In that respect, the case differs from other important technology-provider copyright cases like the Betamax case, Grokster and the Cablevision case. In those cases, the main question before the courts was whether the providers were secondarily liable for the infringement committed by their users. In Aereo, however, the question was whether Aereo itself was liable for infringement committed by providing the technology to others. The Supreme Court held that Aereo was a direct infringer because its functionality so closely resembled a cable company.

So the court has given copyright plaintiffs some new, additional angles to consider when pursuing infringement litigation against technology providers. Does the technology so resemble the technical model of a cable delivery system, particularly from the perspective of the end user, such that it de facto publicly performs the works delivered by the system? If so, then the Aereo test forbids it. Moreover, the case fuzzies the relatively bright line that began to be drawn almost 20 years ago with Religious Technology Center v. Netcom, requiring that for an internet intermediary to be liable for direct infringement, it need undertake some volitional conduct in furtherance of the infringement. That fuzziness will no doubt embolden some plaintiffs who otherwise would not have seen the potential for a cause of action against future defendant-innovators.

In reality, few platforms are likely to actually get “Aereoed” in litigation. The ones at greatest risk will be those that facilitate access to streaming content provided by others. But the fact that ultimate liability may not lie against a provider will likely do little to stop aggressive copyright plaintiffs from trying out the theory against all forms of remote storage providers. That’s the problem Justice Scalia identified in his dissent when he said the decision “will sow confusion for years to come.” Let’s hope that’s mostly an overstatement.

Evan Brown is an attorney in Chicago advising clients on matters dealing with technology, the internet and new media.

No infringement means no injunction in software dispute

Former members of a limited liability company, who participated in the development of four pieces of software while a part of the company, sued the LLC and its remaining members for copyright infringement. Defendants moved for summary judgment, arguing that plaintiffs’ infringement claims must fail because defendants had not used the allegedly copyrighted software outside of the licensing agreements the LLC signed while plaintiffs were still with the company. The court granted defendants’ summary judgment motion.

Plaintiffs agreed that the software had not been used outside the license agreements with companies the LLC had entered while plaintiffs were with the company. But plaintiffs still sought injunctive relief with respect to their infringement claims.

To demonstrate copyright infringement, plaintiffs were required to prove “(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 362, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991)). In this case, plaintiffs essentially conceded that the second element of the Feist test was not met.

The court cited Arista Records, LLC v. Doe 3, 604 F.3d 110, 117 (2d. Cir.2010)) to note that in the second Feist element, “the word copying is shorthand for the infringing of any of the copyright owner’s five exclusive rights described in 17 U.S.C. § 106”. Those exclusive rights allow the owner to: (1) reproduce the copyrighted work; (2) prepare derivative works based upon the copyrighted work; (3) distribute copies of the copyrighted work; (4) perform the work publicly; and (5) display the copyrighted work. Because plaintiffs conceded that defendants had not used the software outside of the license agreements with its customers that were made while plaintiffs were still a part of the LLC, defendants had not infringed on plaintiffs purported exclusive rights.

Plaintiffs nevertheless claimed that they were entitled to injunctive relief to prevent defendants’ potential future use of the copyrighted software. Plaintiffs were required to show that: (1) they had suffered an irreparable injury; (2) that remedies at law were inadequate to compensate that injury; (3) that the balance of hardships warranted a remedy in equity in favor of plaintiffs; and (4) that the public interest would not be disserved by a permanent injunction.

Here, plaintiffs conceded that they had not suffered an injury – the copyrights had not been infringed. Instead, plaintiffs were arguing for a prospective injunction to prevent defendants from infringing upon a copyright for which there was no evidence defendants intended to infringe. The court denied the injunction, holding that a prospective injunction could be entered only on the basis of current, ongoing conduct that threatened future harm.

Brightharbour Consulting, LLC v. Docuconsulting, LLC, 2014 WL 1415186 (N.D.Ga. April 14, 2014)

Evan Brown is an attorney in Chicago, advising clients in technology transactions, intellectual property disputes, and other matters involving the internet and new media.

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