Tag Archives: copyright infringement

Supreme Court Hands Down Critical Decisions in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLCand Rimini Street, Inc. v. Oracle USA, Inc.,Resolving Circuit Splits Over Interpretation of Copyright Act Provisions

It was an eventful day for copyright law on Monday, March 4, as the Supreme Court of the United States issued two unanimous opinions, both involving provisions of the Copyright Act.  The decisions were fittingly both issued on the 110th anniversary of the 1909 Copyright Act.

In the first case, Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC,No. 17–571, the Court, in an opinion authored by Justice Ginsburg, resolved a long-standing circuit split over whether a copyright owner can sue in federal court with only a copyright application in hand, or whether a completed registration is necessary.  The Court held that “registration . . . has been made” under Section 411(a) of the Copyright Act—and thus an infringement suit may be instituted—when the Copyright Office grants or denies registration after evaluating the copyright application (coined the “registration approach”) rather than when a copyright owner merely submits the application, materials, and fee required for the registration to begin processing (the “application approach”).

In the second case, Rimini Street, Inc. v. Oracle USA, Inc., No. 17-1625, Justice Kavanaugh delivered the option for the Court, holding that Section 505 of the Copyright Act, which allows a party to recover “full costs,” does not authorize appellate courts to award litigation costs beyond the categories enumerated by Congress in the general costs statute codified at 28 U.S.C. § 1821 and § 1920.  Such “costs” are limited to fees for the clerk and marshal; transcript, copyright, and docketing fees; disbursements for printing and witnesses; and the compensation of court-appointed experts and certain special interpretation services. The Court rejected Oracle’s position that “full costs” under Section 505 included expert witness fees, electronic discovery expenses, and jury consultant fees.

Both of the Court’s determinations are instructive, as they clarify the legal landscape for copyright litigants who have been grappling with inconsistent applications of the Copyright Act for years.

The “registration approach” adopted in Fourth Estateincentivizes copyright owners—more than ever—to register works with the Copyright Office and will likely incite an uptick in registrations. While there were many benefits to registration prior to this decision, now, if a copyright owner fails to register works prior to discovering an infringement, she will have to wait an average of seven months to sue (the Copyright Office’s average processing time), and the work may continue to be infringed without recourse in the interim.  There is, of course, the option of invoking the Copyright Office’s Special Handling process, but it comes with a $800 special handling fee, which may not be an attractive or feasible alternative for some.

Furthermore, creators who have yet to register works and are running up against the three-year statute of limitations for infringement may be out of luck if they file an application and the Copyright Office does not process it in time.  The best practice for content owners is to apply for registration as soon as possible, even before infringement is anticipated or suspected.  Those who have filed lawsuits based on applications that have not yet been processed should take advantage of the Special Handling process, if possible, otherwise the claim may ultimately be dismissed as untimely.

The limitation on recoverable fees fashioned by the Rimini Street decision may also have far-reaching implications, especially for individual creators and litigants who cannot bear high litigation costs without the chance for recovery.  The ruling sounded a death knell for a copyright litigant’s ability to recover fees for expert witnesses, electronic discovery platforms, and jury consultants, which have become increasingly prevalent in copyright cases in the digital age.

For example, while music and software cases have almost always involved experts, matters involving “viral” infringements often call for specialized experts to address novel copyright issues.  In such highly technical cases, retention of a knowledgeable expert may make or break the case, making the choice of whether to hire without the option for recovery of those fees all the more difficult, especially for those unable to afford the costs.  Additionally, as the use of e-discovery platforms has become nearly ubiquitous, payment for such services has become a necessity for a litigant to maintain an equal footing with their opponent.

The Rimini Street ruling will certainly force copyright litigants to face difficult decisions in how they want to proceed with their case, especially if they are facing an opponent with deep pockets who can afford to hire numerous experts, pay for e-discovery platforms, and retain jury consultants.  Clients should discuss their financial limitations with counsel before deciding to commence a copyright action or how to defend against a copyright action, as they may have to bear the burden of certain unrecoverable costs to prevail.

 

Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC

Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, United States Supreme Court, — U.S. –, 2019 WL 1005829 (March 4, 2019)

** This does not change the practice in many federal districts, such as NY,  that always followed the registration rule

On March 4, the Supreme Court ruled unanimously that a “‘registration … has been made’ within the meaning of 17 U. S. C. § 411(a) not when an application for registration is filed, but when the Register has registered a copyright after examining a properly filed application.”  As a result, suits for copyright infringement cannot be commenced until after the Copyright Office issues (or denies) a registration, but the Court noted that plaintiffs can seek damages for infringement that occurred before and after the registration was granted.

The Supreme Court affirmed the decision in the Eleventh Circuit which ruled in May 2017 that Fourth Estate was barred from bringing an infringement suit because it did not yet have the certificate of registration for its copyright, insisting that a litigant must wait to assert its rights until the registration was issued.  The Eleventh Circuit’s opinion explicitly recognizes the current circuit split between the “application” approach (a copyright owner may sue upon filing a complete application), followed by the Ninth and Fifth Circuits, and the “registration” approach (a copyright owner must wait until the application is processed and registration has been granted or denied), followed by the Tenth Circuit and now the Eleventh.  On June 28, 2018, the Supreme Court granted certiorari.

The Supreme Court based its ruling on its reading of §411(a), noting that the second sentence allows the Register of Copyrights to be sued upon refusal of registration, and adopting the application approach would make this provision “superfluous”.  In addition, Justice Ginsburg noted that Congress has also enacted a provision allowing for “pre-registration” for works, such as movies, which may be subject to infringement before registration is granted; these provisions would also be unnecessary if registration did not have to issue before litigation could commence.  Read in its entirety the statute contemplates that there is affirmative action required by the Copyright Office to effectuate registration, and not simply the submission by the right holder of a complete application.  The Court analogizes waiting for the registration to issue before commencing litigation as similar to having to exhaust administrative remedies.  Lastly, because damages from infringement before registration are available, the copyright holder can be made whole for any infringement that occurs from the creation of the work.

DMLA OPPOSES MARYLAND COPYRIGHT DEMAND LETTER BILL

On January 25, 2017 Nancy Wolff, along with representatives from Getty Images, the Copyright Alliance, MPAA, Comcast, BMI Music and others representing creators and owners of content, testified at a hearing against bill HR65 before the Maryland State Senate Finance Committee.

The Bill was trying to regulate copyright demand letters by preventing copyright owners from “making certain assertions of copyright infringement in bad faith”.  It also stipulated that a court might consider, among other factors, the absence of a certificate of copyright registration accompanying the letter s evidence of bad faith.  Read the entire story here.

 

 

DMLA Oppose MD State Law to Regulate Copyright Demand Letter

by Nancy Wolff, DMLA Legal Counsel

Sending copyright demand letters to users of images where no license is apparent has been a common practice of many DMLA members, even before images were distributed digitally. These demand letter s have been part of the copyright boot camp and form letters available to members to contact users and educate them about copyright misuse and to seek compensation if the images are not licensed.

On January 11, Maryland State Senator Edward Reilly (R) introduced a bill, HR 65 before the state legislature to regulate copyright demand letters. The bill is aimed at preventing copyright owners from “making certain assertions of copyright infringement in bad faith” and stipulates that a court may consider, among other factors, the absence of a certificate of copyright registration accompanying the letter as evidence of bad faith. The proposed remedies include the possibility of courts costs, attorney’s fees, and treble damages, including fees up to $50,000. On January 25, 2017 the Maryland State Senate Finance Committee held hearing on the bill. DMLA; Getty Images, the Copyright Alliance, MPAA, Comcast, BMI Music and other s representing creators and owners of content testified at the hearing as to the problems and burdens imposed by such a bill and provided written opposition. A copy of DMLA’s letter to the finance committee opposing the bill is [here]. The associations representing all the visual artists unanimously joined in the opposition as it would subject all copyright owner to unfair burdens in seeking compensation for infringements and violate federal copyright law. Joining our letter were the Society of Media Photographers (ASMP), National Press Photographers Association (NPPA), Professional Photographers of America (PPA), North American Nature Photography Association (NANPA), American Photographic Artists (APA), the Graphic Artist Guild (GAG) and Shaftel & Schmelzer.

Last week we learned that the Maryland Senate Finance Committee was not going to vote on the bill and as to not embarrass the member of the Finance Committee who had introduced the bill. Thanks to the Copyright Alliance for alerting us to so promptly so we could respond so quickly and for Getty Images for attending and speaking directly with Senator Reilly before the hearing. The entire content community mobilized to avoid a very problematic state bill. We will need to stay alert for other state legislatures who may feel the need to protect their citizens if complaints arise over copyright enforcement. Copyright is very different from patents and there is a push to stem what is known as patent trolling. We need to avoid being swept into the same category of bad actors. . The underlying cause in this bill seemed to be a lack of understanding as how images are licensed and the value of a rights managed image.

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SUPREME COURT AGREES TO TAKE ON COPYRIGHT CASE

by Nancy Wolff, DMLA Counsel

The U.S. Supreme Court has agreed to hear a case concerning when a prevailing party in a copyright case is entitled to recover its costs of litigation. Section 505 of the Copyright Act states that in copyright cases “the court in its discretion may . . . award a reasonable attorney’s fee to the prevailing party.” Because the law gives courts the discretion to award attorneys’ fees, over time several different standards have developed in the federal court system.

The Supreme Court has not considered this issue since 1994, when in Fogerty v. Fantasy, Inc. it rejected the tendency of some lower courts to engage in the “dual standard” of awarding generous fees to prevailing plaintiffs, while only awarding fees to prevailing defendants in extraordinary circumstances, such as when the plaintiff’s claim is deemed “frivolous” or in “bad faith.” The Court instead endorsed the three-factor analysis which looks to the “frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence. . . . so long as such factors are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner.”

Following the Fogerty case, courts began to award attorneys’ fees to defendants as well as plaintiffs which some say has been a deterrent to plaintiff’s initiating copyright cases against defendants for fear of losing and incurring the expense of attorney’s fees, particularly in hard cases involving fair use.

The present case, Kirtsaeng v. John Wiley & Sons, Inc., was before the Supreme Court only three years ago, albeit for an entirely different issue. In 2013, Supap Kirtsaeng, who had built a successful eBay business selling textbooks that he bought overseas, prevailed against a copyright infringement claim by the publisher John Wiley & Sons, Inc., and then sought to recover his attorneys’ fees. The Second Circuit Court of Appeals affirmed the district court’s decision to deny the motion for fees by focusing on the “objective reasonableness” of John Wiley & Sons’ pursuit of the case. Kirtsaeng, recognizing inconsistency among the circuit courts concerning the application of the three Fogerty factors, petitioned the Supreme Court to consider the appropriate standard for awarding attorneys’ fees to a prevailing party.

As the issue of attorney’s fees is significant in determining whether to bring copyright litigation or whether to settle a copyright infringement case, having guidance on this important issue from the Supreme Court and will be helpful to plaintiffs and defendants alike.

DMLA Participates in Various Meetings with the House Judiciary Committee

On November 3, Nancy Wolff, DMLA Counsel, attended the Rights Caucus for the House Judiciary Committee in Washington, DC.  The event was held in a Judiciary Committee hearing room in the Rayburn House Office Building.

The Creative Rights Caucus is a bi-partisan legislative “listening” committee co-Chaired by Representative Judy Chu (D-CA) and Representative Doug Collins (R-GA). It is dedicated to protecting the rights of content creators. More importantly, the Caucus aims to help the public understand that we cannot judge the entertainment industry by how well famous Hollywood or music stars are doing.

The event was organized by David Trust, Executive Director of the PPA (Professional Photographers of America), who also moderated the panel discussion. Panelists included photographer Denis Reggie, illustrator John Schmelzer, photographer Mary Fisk Taylor, graphic artist Lisa Shaftel, and photographer Michael Grecco.

There was an extraordinary turn-out of approximately 150 people and standing room only in the hearing room.

Afterwards Nancy joined the PPA and other association representatives in meeting some congressional staffers as well as Congressman Hakeen Jeffries of New York about the issues of the image licensing industry and about legislation to support a copyright small claims court and the modernization of the Copyright Office.

 

On November 10, 2015, Sarah Fix, DMLA President participated in a private meeting in Los Angeles bringing Members of the United States House of Representatives Judiciary Committee and their staff together with photographers and photo/visual editors representing ASMP, APA, DMLA and NPPA to discuss the marketplace realities facing professional photographers as small business owners and representatives of the creative class.

Organized and moderated by ASMP Executive Director, Tom Kennedy, it was a lively discussion covering a wide range of topics of concern to photographers including:

  • Modernization of the Copyright Office and the need to simplify copyright registration.
  • The creation of a Copyright Small Claims Court as a remedy for infringements that cannot realistically be pursued within the Federal court system.
  • The proliferation of infringement fostered by digital distribution systems and the commercial harm caused by such rampant infringements.
  • The challenges presented by “click-bait” sites whose entire business models are built around intentional infringement.

The House Committee seemed to respond well to the first-hand accounts from the presenters and generally agreeable to the ideas shared at the meeting including the Copyright Small Claims Court. It seemed clear that their legislative solutions would include individual creators.

 

DMCA Takedown Notices Require Fair Use Considerations

Lenz v. Universal Music Corp., Case Nos. 13-16106 and 13-16107, in the United States Court of Appeals for the Ninth Circuit.

 by Nancy Wolff and Josh Wolkoff, Cowan DeBaets Abrahams & Sheppard, LLP

The Digital Millennium Copyright Act (DMCA) was enacted in 1998 to address in part issues created by the internet and the widespread posting of content by users. In reforming the Copyright Act in 1978, the drafters thought that this Act would serve well into the future as it was content neutral but they could not foresee the way the Internet dramatically altered the way users exchanged content online and how perfect copies of copyrighted content could be virally distributed in seconds. Internet service providers (ISPs) were concerned with strict liability and monetary damages based on content posted by users and hosted on their servers over which they could not monitor and control. Section 512 of the Copyright Act was enacted to balance the concerns of ISPs and copyright owners. Qualified ISP were granted immunity from liability if they received a proper notice of infringement and expeditiously removed the infringing content.

There has been much litigation over the years regarding various aspects of the DMCA, including whether a copyright owner is required to consider whether the use made of the uploaded content is considered a fair use and not an infringement before issuing a takedown notice. Because of the massive amount of content uploaded by users, and the difficulty to search the ever increasing number of sites, content owners, including the music industry, employ technology to crawl the internet to find unlicensed content in order to end the ISP the requisite takedown notice.

A test case was brought in 2007 by Stephanie Lenz, a mother who sued Universal Music Group after YouTube removed a 29-second video of her toddler dancing to Prince’s “Let’s Go Crazy” in response to a DMCA takedown notice submitted by Universal Music Group, Prince’s music publisher. Not surprisingly, the Electronic Frontier Foundation, a pro user group supported Lenz in bringing this test case. Dubbed the “dancing baby case,” Lenz argued that her video was protected by the doctrine of fair use and that Universal’s takedown notice violated a section of the DMCA that provides liability for knowingly making material representations because it misrepresented that the video was infringing without considering fair use . Under the DMCA, a proper takedown notice must include a statement that the owner or its agent has a “good faith belief” that the use of the copyrighted work is not authorized under the law.

The case ultimately made its way to the Ninth Circuit Court of Appeals. An appeal the court was asked to examine whether fair use was a right under copyright and an authorized use, or a defense to infringement and unauthorized. In a significant ruling to content owners and ISP’s, the court issued a bright line rule that copyright holders must consider the fair use doctrine before issuing takedown notices to remove otherwise infringing content under the DMCA. The Court’s decision makes clear that a failure to do so can open the door to nominal monetary damages and attorneys’ fees for any material misrepresentations made (or improper procedures used) in the course of pulling content from service providers like YouTube. The court explained that fair use must be treated differently than other affirmative defenses because fair use is not merely an exception to an infringement – it is one that that is expressly “authorized by law” under Section 107 of the Copyright Act.

The Ninth Circuit took great pains, however, to qualify the thrust of its ruling, suggesting that it was “mindful of the pressing crush of voluminous infringing content that copyright holders face in a digital age.” In particular, a sender must only form a “subjective good faith belief” that the use is not a fair use or not authorized under the law. The inquiry “need not be searching or intensive” and, in fact, the Court recognized the role that computer algorithms and automated programs might play in making such fair use determinations and issuing proper takedown notices. The Ninth Circuit also confirmed that the question of liability for material misrepresentations does not hinge on whether or not the use is indeed a fair use: courts are “in no position to dispute the copyright holder’s belief even if [the court] would have reached the opposite conclusion.”

As a result content owners should review their notice and takedown procedures in order to ensure that their procedures give due consideration to potential fair uses. DMLA, in watching this case over the years, revised the declaration in its DMCA notice to include reference to a fair use review: I have a good faith belief that use of the material in the manner complained of herein is not authorized by COPYRIGHT HOLDER, its licensing representatives, or the law and is not a fair use.

Even if using recognition technology to find infringing uses, someone should review the use to determine if the use is a fair use or not. As fair use is determined on a case by case basis, and in not the easiest area of the law, the determination just needs to be made in good faith. As noted by the Ninth Circuit, it is not a material misrepresentation if a court might come out differently. Fair use is a judgment call after weighing the requisite four factors. DMLA has a webinar on fair use found [here] and the Copyright Office has published an index of fair use cases [http://copyright.gov/fair-use/]

*** You can find the DMCA takedown notice on the DMLA Document Library