McGucken v. Pub Ocean: McGucken is an accomplished photographer. He photographed a lake that materialized at Death Valley. He shared the photos to Instagram. Pub Ocean owns several websites, such as “magellantimes” and “maternityweek”. It hired a freelance writer to write about the phenomenon documented by McGucken. Pub Ocean then published an article titled “A Massive Lake has Just Materialized in the Middle of One of the Hottest Places on Earth”. The article contained several of plaintiff’s photographs. Pub Ocean did not seek permission from McGucken, but the article did credit him by linking to his Instagram page.

McGucken moved for summary judgment on the fair use defense. The court denies plaintiff’s request. In a surprise move, it grants summary judgment to defendant even though Pub Ocean did not formally request summary judgment.

Factor one: The court says defendant’s use is transformative. Only ten of forty-four pages of the article discuss McGucken’s photos. The article “includes commentary and other pictures . . . and the added writing gives context to the photos beyond what is already apparent.” The court acknowledges the use was commercial but says the transformative nature of defendant’s use tips the first factor in favor of fair use.

Factor two: The second factor is not “terribly significant,” and the court says it weighs slightly against fair use.

Factor three: Although the entirety of the photos were used, the court says the context still tips the third factor towards fair use:

The article’s additions to Plaintiff’s photos express ideas (figuratively) and display images (literally) beyond what Plaintiff expressed in his photographs. That is unlike the magazine in Monge [v. Maya Magazines], in which the purpose of the entire piece was to display the wedding photos. In other words, the use of wedding photos in the article was “not just substantial, it was total.”

Factor four: The court acknowledges that a market exists for plaintiff’s photos, but the transformative nature of defendant’s use “mutes” the degree of market substitution.

McGucken is appealing the ruling against him. He has a reasonable chance of success on appeal.

Werner v. Red Blue Media: In sharp contrast to Pub Ocean, another judge in the same district (the Central District of California) grants a plaintiff’s request for summary judgment as to fair use. This case involved a photographer who focuses on “dangerous stunts,” “exotic animals,” “sideshow eccentricities,” and “people who have overcome obstacles.” Red Blue Media owns and controls several websites, including “Guff” and “Memes”. Plaintiff discovered the use of his photos in articles covering the following topics:

• “FemSkin”
• “The Snuggery”
• “Dillie the Deer”
• “Goatee the Surfing Goat”
• “Giraffe Woman”

Plaintiff’s photographs were used in seven articles. Some of the articles contain only one photograph with a brief caption. Others appear to be “listicles”. Still others include longer narratives with photographs “interspersed” among the text.

Factor one: The court says the first use is at best neutral. The articles present the subjects in exactly the same light as the photographs. While there is some written commentary, it is at best minimally transformative. The fact that defendant profited from and selected “unique subject matter” (that is also the subject of the photos) makes the use “particularly exploitative”.

Factor two: The court says there is some doubt regarding publication status. Still, the works are creative and not the result of fortuitous captures. The second factor weighs slightly against fair use.

Factor three: The entirety of the work was copied. The court notes that defendant “could have covered the . . . phenomena discussed in the articles . . . without including the entirety of the photographs.” This factor weighs strongly against fair use.

Factor four: The fourth factor also weighs against fair use:

Unrestricted and widespread conduct of the sort Defendant engaged in would destroy the market for licensing Plaintiff’s work. If anyone could reprint Plaintiff’s photographers for readers interested in strange and unusual people and images, the licensing market simply would not exist. Because the commentary simply reiterates that the subjects are unusual, Defendant’s articles are a market substitute for competing articles and other kids of reprints.

The court finds for plaintiff on the fair use issue and rules against defendant on liability.

Wilfullness: The court also finds that plaintiff has established willfulness on the record before it. The fact that defendant did not remove the photos after receiving notice and the fact that defendant did not have an ostensible good faith basis for using the images are decisive to the court. Net result: the court will conduct a jury trial solely to set the amount of damages.

Philpot v. Independent Journal Review: Philpot is suing the Independent Journal Review over a Ted Nugent photo taken by Philpot. Philpot is a serial litigant. As documented in several cases, he posts his photos to Wikimedia and then sues defendants for not providing the attribution required by the Wikimedia license. In this case, IJR published the photo in an article (“signs your dad is a conservative? He ‘hearts the nuge’..”) but did not provide the requisite attribution.

IJR initially moved to dismiss, which the court denied, then filed a motion for summary judgment. The court grants the motion, upholding IJR’s fair use defense.

IJR raised issues with Philpot’s registration (that it contained both published and unpublished photographs). The court says there are factual disputes as to validity of the registration. However, the court applies the fair use factors and finds IJR is entitled to summary judgment based on fair use:

Defendant’s use of the Photograph satisfied . . . the criteria for fair use . . . as it was clearly used  for purposes such as comment, news reporting, [and] teaching, . . . not an infringement of copyright. It was part of a commentary on issues of public concern that placed it in a new context to serve a different purpose. As such, the Photograph had a transformative use. As in MRC [another case where a court found against Philpot on the same issue] there was de minimis commercial gain to, and lack of a financial motive by, the Defendant, no demonstrable market or financial injury to Philpot or bad faith or negligent use of the Photograph, particularly in light of the terms under which Philpot allows the use of his photographs, and the attribution to Philpot reachable from the Article, albeit indirectly.

__

These three rulings illustrate that courts continue to rely on subtle factual differences in resolving the question of fair use. Perhaps it’s stating the obvious, but it can’t hurt to have reminders of this. In all three instances, the court is addressing a similar phenomenon. Someone goes out and grabs a photo online and uses it to “illustrate” an article. As the rulings demonstrate, this is a risky practice at best from a legal standpoint.

Werner and McGucken were issued within weeks of each other. It’s interesting to see two courts dealing with the same body of precedent and very similar facts come to opposite results. It would have been nice to see the later ruling (Werner) grapple with the earlier one. It would have also been nice to see the court attach an article or two as an appendix.

Philpot arises in a slightly different factual context. The court appears influenced by the fact that Philpot allows his photos to be used freely, and thus there is no market for his photographs. (Chip Stewart covers the phenomenon of suing over CC licenses here: “Beware the Copyleft Trolls“. It’s an issue that has gotten the attention of the Creative Commons community itself, which is considering ways to address it.)

I blogged about the practice of embedding. While this could be a possible workaround, the recent uncertainly regarding the legality of embedding makes this of limited utility.

Finally, the Copyright Claims Board is scheduled to go live at the end of this year: “Copyright Office Issues Final Rule for Small Claims Expedited Registration Procedures and FOIA Conforming Amendment“. It will be interesting to see what the CCB does with fair use and whether the parties decide to opt in.

Case citations:

McGucken v. Pub Ocean, 20-cv-01923-RGK-AS (C.D. Cal. July 21, 2021)

Werner v. Red Blue Media, 20-cv-01024-SVVV-AFM (C.D. Cal. Aug. 9, 2021)

Philpot v. Independent Review Journal, 20-cv-00590-AJT-TCB (E.D. Va. Aug 18, 2021)

Related posts:

Blogger Loses Copyright Ruling Over Photo…But No Mention of the CC-BY-SA License!–Von Der Au v. Imber

Photographer Sues for Failure to Provide Creative Commons-Required Attribution–Philpot v. WOS

Fair Use for “Meme” Can’t Be Decided on Motion to Dismiss—Philpot v. Alternet Media (Guest Blog Post)

The post When is it Fair Use to Use a Photo to “Illustrate” an Article? appeared first on Technology & Marketing Law Blog.

Last week, the U.S. Court of Appeals for the Ninth Circuit held that California Civil Code section 980(a)(2), which grants “exclusive ownership” of a sound recording fixed before February 15, 1972, to its “author,” provides only an exclusive right of reproduction and distribution, and does not provide an exclusive right of public performance. Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No. 17-55844 (9th Cir. Aug. 23, 2021).

The ruling overturns a “seismic” district court ruling from 2014 that I wrote about in a previous blog post, one that “threaten[ed] to undo a 75-year-old consensus that state law does not provide a public performance right for sound recordings.” It also marks the likely end of an eight-year campaign by Flo & Eddie (owners of the sound recording copyrights of the band “The Turtles”) to obtain royalty payments for digital broadcasts and streaming of pre-1972 sound recordings under state law. After their initial courtroom success in 2014, Flo & Eddie suffered a series of defeats, as both the New York Court of Appeals and the Florida Supreme Court held that their states’ common-law copyrights did not include public performance rights. (See my previous blog post on the New York ruling.) But much like George Washington’s army, even though Flo & Eddie lost many individual battles, they ultimately won the war, as their quixotic litigation campaign prompted Congress to grant protection to pre-1972 sound recordings equivalent to that provided to newer sound recordings under federal copyright law. This was accomplished by the enactment in 2018 of the Classics Protection and Access Act (now codified at 17 U.S.C. § 1401), in Title II of the Hatch-Goodlatte Music Modernization Act.  (See my analysis of the Classics Protection and Access Act.)

So why were the two parties still fighting about California law, after enactment of the federal legislation?  This litigation was a residual action (commenced in 2013) that concerned public performances that occurred before the Classics Protection and Access Act was enacted.  It was certified as a class action on behalf of a large number of sound recording copyright owners (but excluding the major record labels, which had already entered into a separate settlement with Sirius XM).  The parties had entered into a contingent settlement that provided a large amount of money if Flo & Eddie succeeded in establishing state-law public performance rights in all of the three actions (California, New York, and Florida), varying amounts of money if they succeeded in only one or two of the states, and a small amount of money if Flo & Eddie failed in all three actions.  Because the performances took place before the Classics Act was enacted in 2018, the lawsuit was preempted by federal law only if royalties or a settlement had been paid; but the contingent settlement could not be paid until the underlying law was determined.  Hence, the only money directly at stake in the residual action was royalties for past digital performances of sound recordings under California law.

In the interests of full disclosure: I authored an amicus brief in this case (as I did in the other Flo & Eddie cases) on behalf of 15 copyright and intellectual property law professors, arguing three major points: first, because the phrase “exclusive ownership” in the statute dated back to its enactment in 1872, it should be construed in accordance with the copyright law of that time, when sound recordings did not exist and musical work copyright owners did not have any public performance rights; second, for eighty years it was considered settled law that there was no public performance right in published sound recordings; and third, because broadcast signals cannot be confined to the borders of a state, recognizing a public performance right under state law would violate the dormant Commerce Clause.  I was therefore extremely pleased that the Ninth Circuit not only cited our amicus brief (slip op. at 14 & 17), but also relied on our analysis of the first two points in deciding in favor of Sirius XM Radio, Inc.

Background

If you are new to this issue, you should read my prior blog posts on the issue, and in particular, the six points in the “Background” section of my original post.  To summarize very briefly: 1) copyright law distinguishes between a musical work (the notes and the words) and a sound recording (a particular recorded performance), granting a separate copyright to each; 2) sound recordings were not added to the federal copyright act until February 15, 1972; 3) pre-1972 sound recordings were still protected against reproduction and distribution under state law (usually state common law, but statutory law in California); 4) despite one ruling to the contrary in Pennsylvania, the Second Circuit held in 1940 that there was no common-law public performance right in published sound recordings, a ruling that was widely accepted nationwide; 5) when sound recordings fixed on or after February 15, 1972 were added to the copyright act, Congress still did not grant them a public performance right; and 6) in 1995, Congress did grant sound recordings a public performance right in digital audio transmissions (streaming and satellite), but it excluded audiovisual transmissions (which usually have to get “sync” licenses anyway) and it exempted traditional AM/FM radio.

(If you fully understand those six points already, you’re ready to move on.  If not, go back and read the “Background” section in my original post for more detail.)

One thing that I omitted from my original post was the evidence that the 1940 Whiteman decision (holding there was no public performance right in published sound recordings) was widely accepted as the de facto norm.  Owners of sound recordings (record labels) repeatedly lobbied Congress, asking Congress to enact a public performance right for sound recordings, specifically because they lacked any such right under existing law (according to their own testimony).  They specifically cited classic pre-1972 sound recordings (including Bing Crosby’s classic 1942 recording of “White Christmas”) in their arguments.  Also, the California statute at issue had been on the books since 1872, and it had existed in its current form since 1982. The notion that there was already a public performance right under state law, that everyone had accidentally overlooked for the past 80 years (or even the past 40 years), was almost ludicrous.

Almost.  The problem with Flo & Eddie’s argument was that it wasn’t completely crazy, except to someone steeped in this history. When the lawsuit was first filed, it was clear that rights in pre-1972 sound recordings were governed by state law, not federal law.  And even though all of the cases arising under the California statute and New York common-law involved reproduction and distribution rights, the language of the California statute, and dicta in many of those cases, was broad enough to include public performance rights.  Moreover, sound recording copyright owners had an ahistorical-but-plausible explanation why those rights hadn’t been used before: economics.  Back when sales of records, cassette tapes, and CDs were the primary means of making money, radio airplay was considered free advertising for record labels.  But as record and CD sales dried up, and streaming became the primary means of making money, the disparate treatment of pre-1972 sound recordings (which were earning nothing) and 1972-and-later sound recordings (which at least got streaming revenue from digital audio transmissions) became too obvious for performers and record labels to ignore.

Flo & Eddie Change the Landscape

Flo & Eddie, Inc., is owned by two founding members of the 1960s band The Turtles.  Their biggest hit was the 1967 song “Happy Together.” On Aug. 1, 2013, they filed a class-action lawsuit in Los Angeles Superior Court under California Civil Code section 980(a)(2).  Flo & Eddie then filed two similar suits in federal court, under New York common law in the Southern District of New York (Aug. 16, 2013), and under Florida common law in the Southern District of Florida (Sept. 3, 2013). On September 11, 2013, five major record labels (ABKCO Music & Records, Capitol Records, Sony Music Entertainment, UMG Recordings, and Warner Music Group) filed a similar lawsuit in state court in California.

The California cases were promptly removed to federal court on the basis of diversity.  One year later, on Sept. 22, 2014, the federal district court rendered its original “seismic” ruling, holding that “exclusive ownership” in California Civil Code section 980 included public performance rights. Two months later, Flo & Eddie won a ruling that New York common law included public performance rights.  62 F. Supp. 3d 325 (S.D.N.Y. 2014). The New York ruling was certified for immediate appeal. While that appeal was pending, the district court certified the California case as a class action (on May 15, 2015).  One month later, on June 22, 2015, Sirius XM won a ruling that Florida common law did not include public performance rights.

A few days later, Sirius XM announced that it had reached a settlement with the five major record labels (which controlled roughly 80% of the pre-1972 sound recordings at issue), agreeing to pay $210 million for the right to broadcast their pre-1972 sound recordings through the end of 2017.  That settlement left Flo & Eddie’s lawyers representing a class of only about 20% of the pre-1972 sound recording copyright owners. But they had lost a lot of their leverage, because Sirius XM could continue playing the vast majority of pre-1972 sound recordings, and it could simply stop playing the remaining ones.

In April 2016, the Second Circuit certified the question of New York law to the New York Court of Appeals (the highest court in New York).  Two months later, the Eleventh Circuit certified the question of Florida law to the Florida Supreme Court. Meanwhile, the class action in California proceeded with notice to the class. A trial was scheduled for November 2016.

On the eve of trial in the California action, the parties announced they had reached a contingent settlement. The deal was complex, with contingencies depending on the ultimate outcome of appeals in each of the three actions. It provided for an immediate payment of $25 million in royalties to the class. In addition, Sirius XM would pay an additional $5 million for each of the three cases if Flo & Eddie prevailed on appeal. Finally, Sirius XM also agreed to pay royalties for future public performances (for ten years) at a rate of 5.5% of gross revenue (less the amount due to the major record labels); but the rate would be reduced by 2% if Sirius XM won on appeal in New York, by 1.5% if it won in Florida, and by 2% if it won in California. All told, the settlement was worth a minimum of $25 million, and a maximum of about $99 million ($40 million fixed, and up to $59 million in estimated royalties through 2028) if Flo & Eddie won all three cases. That gave the parties 74 million reasons to continue fighting in each of the three states.

The Tide Turns

One month later, on December 20, 2016, the New York Court of Appeals reached its decision, holding 4-2 that there was no common-law right of public performance in New York. (For the specifics of that ruling, see my commentary.) Accordingly, the Second Circuit reversed the district court and dismissed Flo & Eddie’s claims.  849 F.3d 14 (2d Cir. 2017).

In March 2017, in a separate case filed by Flo & Eddie against Pandora, the Ninth Circuit certified the issue of California law to the California Supreme Court. 851 F.3d 950 (9th Cir. 2017). (The case against Pandora reached the Ninth Circuit first because Pandora raised the issue in a motion to strike under California’s anti-SLAPP law. SLAPP stands for “strategic lawsuit against public participation.”)  Two months later, in May 2017, the district court approved the contingent settlement agreement in the Sirius XM cases.  In accordance with the contingent settlement, Sirius XM filed its appeal in the Ninth Circuit in June 2017; but the appeal was stayed pending the outcome of the appeal in the Pandora case.

In October 2017, the Florida Supreme Court ruled that Florida common law does not recognize an exclusive right of public performance. Accordingly, the Eleventh Circuit affirmed the district court’s dismissal of Flo & Eddie’s claims.

Congress Gets Involved

The disparate treatment between pre-1972 sound recordings and those fixed on or after Feb. 15, 1972, did not escape the notice of Congress.  Even before the Central District of California issued its original “seismic” ruling in 2014, nine members of Congress had introduced the “Respecting Senior Performers as Essential Cultural Treasures Act” or the RESPECT Act. H.R. 4772 (113th Congress).  In April 2015, four members of Congress introduced the Fair Play Fair Pay Act, H.R. 1733 (114th Congress), which would not only have extended digital audio transmission rights to pre-1972 sound recordings, but also would have repealed the exemption for traditional AM/FM radio.  Neither bill made it to a hearing.

In the 115th Congress, however, things heated up.  In July 2017, the “Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society Act,” or the “CLASSICS Act,” was introduced in the House.  H.R. 3301. The bill was intended to grant federal protection to pre-1972 sound recordings.  In February 2018, the same bill was introduced in the Senate.  S. 2393.  In May 2018, Senator Ron Wyden introduced the “Accessibility for Curators, Creators, Educators, Scholars, and Society to Recordings Act” or the “ACCESS to Recordings Act,” S. 2933, a similar bill that would have extended federal statutory copyright to pre-1972 sound recordings. Eventually, the two bills were combined into the Classics Protection and Access Act, which was enacted on October 11, 2018, as Title II of the Hatch-Goodlatte Music Modernization Act of 2018.

The Classic Protection and Access Act, codified at 17 U.S.C. § 1401, extended federal protection to pre-1972 sound recordings that is equivalent, but not identical, to federal statutory copyright for sound recordings fixed on or after February 15, 1972.  For details concerning this legislation, see my previous blog post on the Act.

The Act contained two preemption provisions. First, the Act preempts all state-law causes of action arising on or after the date of enactment for any use of pre-1972 sound recordings, including digital audio transmissions, except that it stays neutral with regard to state-law actions (if any) for public performances based on non-subscription broadcast transmissions of sound recordings that are not digital audio transmissions.  (In other words, it leaves the door open for state-law causes of action based on analog transmissions or audiovisual digital transmissions.) 17 U.S.C. § 301(c).  Second, the Act preempts all state-law claims that arose before the date of enactment, only for digital audio transmissions or reproductions, and only if statutory royalties or a settlement was paid (or if the transmission would have been exempt).  17 U.S.C. § 1401(e).  As a result, the Act did not automatically moot the certified questions in the Pandora case that were then pending in the California Supreme Court.

Nonetheless, the California Supreme Court decided to duck the issue.  It dismissed the certified questions, writing: “In light of the enactment of United States Public Law No. 115 264, the ‘Orrin G. Hatch-Bob Goodlatte Music Modernization Act,’ resolution of the questions posed by the Ninth Circuit Court of Appeals is no longer ‘necessary to … settle an important question of law.’”  No. S240649 (May 22, 2019). When the Pandora case returned to the Ninth Circuit, the court wrote:  “Whether the MMA applies to and preempts Flo & Eddie’s claims … cannot be answered on the record before us. The resolution of this issue depends on various unanswered factual questions …”  Accordingly, the Ninth Circuit vacated the district court’s ruling on Pandora’s anti-SLAPP motion and remanded the case to the district court. 789 Fed. Appx. 569 (9th Cir. 2019).

On remand, the district court again rejected Pandora’s anti-SLAPP motion. It held that the case did not arise from Pandora’s First Amendment activity (reproducing and broadcasting pre-1972 sound recordings), but from Pandora’s failure to pay compensation for those activities. It also ruled that Pandora’s broadcasts were not “in connection with a public issue or topic of public interest,” as required by California’s anti-SLAPP law. Cal. Code Civ. Proc. § 425.16(e). Finally, it ruled that 17 U.S.C. 1401(e)(1), which “preempts any claim of common law copyright or equivalent right under the laws of any State arising from a digital audio transmission or reproduction that is made before the date of enactment of this section of a sound recording fixed before February 15, 1972,” did not apply to claims that were already pending in court on the date of enactment. Pandora immediately filed an interlocutory appeal, which is still pending in the Ninth Circuit.  In January 2021, Pandora’s motion to stay the appeal pending the outcome of the Sirius XM case was granted.

The Remaining Issues

After the dust had settled, what remained at stake in the California action against Sirius XM under the contingent settlement was: 1) an additional fixed payment of $5 million if Flo & Eddie prevailed on the appeal, and 2) a royalty of 2% of gross revenues (less the amount paid to the major record labels) for the period between January 1, 2018 and October 11, 2018 (the date of enactment of the Music Modernization Act, which preempted state-law claims prospectively).  The California action was fully briefed in the second half of 2020.  Oral argument was held on February 8, 2021 (coincidentally, on my birthday!).

The California action was brought under California Civil Code section 980(a)(2), which provides:

The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior sound recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound recording.

(The exclusion for “sound-alike” recordings is consistent with federal law for post-Feb. 15, 1972 sound recordings.  17 U.S.C. §114(b).)

The district judge reasoned that “exclusive ownership” included all rights to which a copyrighted work could be put, including public performances; and that since there was only one express exclusion (for “cover” recordings), no other exclusions could be implied.

The Ninth Circuit, however, accepted our “textualist” argument that since the phrase “exclusive ownership” had existed without change since Civil Code section 980 was first enacted in 1872, the court should construe the phrase in accordance with the common law at that time:

To answer this 21st century question about the obligations of satellite radio stations, we must rewind back almost 150 years and look to the common law in the 19th century when California first used the phrase “exclusive ownership” in its copyright statute. At that time, no state had recognized a right of public performance for music, and California protected only unpublished works. Nothing suggests that California upended this deeply rooted common law understanding of copyright protection when it used the word “exclusive ownership” in its copyright statute in 1872. So we do not construe “exclusive ownership” [today] to include the right of public performance.

Slip op. at 4-5.

In 1872, sound recordings did not exist, and there was no public performance right for published musical works.  Anyone who bought a copy of the sheet music could perform a song in public without payment of any royalties.  In 1856, Congress enacted a statutory public performance right for dramatic works only.  Because state law governed unpublished works, however, this statute applied only to published dramatic works.  Suddenly, owners of unpublished dramatic works began to claim a common-law right of public performance in their works.  Prior to 1872, however, most such cases were unsuccessful.  It was not until after 1872 (and in particular, after Ethan Drone’s influential 1879 treatise) that courts began to recognize a public performance right in an unpublished dramatic work.  See Jessica Litman, The Invention of Common Law Play Right, 25 Berkeley Tech. L.J. 1381 (2010).  Indeed, at the time California’s statute was expressly limited to unpublished works only.

Put another way, no court as of 1872 had recognized the right of public performance under any nascent understanding of [state] copyright law. So when California first enacted its copyright statute in 1872, the term “exclusive ownership” almost certainly did not include a right of public performance. Rather, “exclusive ownership” referred, and still refers, to the owner’s common law copyright in an unpublished work to reproduce and sell copies of that work.

Slip op. at 16.  Moreover, California Civil Code 980 had been copied word-for-word from David Dudley Field’s proposed Civil Code for the state of New York (1865); and, as noted above, in 2016 the New York Court of Appeals held that there was no common-law right of public performance under New York common law.  Slip. op. at 17-18.

When radio first became common, performers began to claim a common-law right of public performance in their sound recordings.  In 1937, in Waring v. WDAS Broadcasting Station, 194 A. 631 (1937), the Pennsylvania Supreme Court held that state common law prevented the unauthorized broadcast of phonograph records (when the legend “Not Licensed for Radio Broadcast” was printed on the records); but in 1940, in RCA Mfg. Co. v. Whiteman, 114 F.2d 86 (2d Cir. 1940), the U.S. Court of Appeals for the Second Circuit, in an opinion by Judge Learned Hand, held that common-law copyright prevented only the duplication of a sound recording, and that sale of phonograph records exhausted any common-law right to prevent the unauthorized broadcast of the recording (notwithstanding the same restrictive legend).  When the Supreme Court denied certiorari, that was that: “Judge Hand’s opinion was [accepted as] the last word on the legality of broadcasting sound recordings.” Kevin Parks, Music and Copyright in America: Toward the Celestial Jukebox 121 (ABA 2012).  Ever since, performers and record labels have tried to get Congress to overturn that decision; but it has held firm.

“Of course, Flo & Eddie and its amici contest this interpretation. But they fail to direct us to a single case in which a court recognized a discrete property interest in the post-sale performance of a sound recording.”  Slip op. at 19.  “In short, the lack of a judicially recognized right of public performance across dozens of states [with the exception of Pennsylvania] underscores that no such right ever existed under the common law.”  Slip op. at 21-22.

The Implications of the Ruling

In my original post, I lamented that the district court’s ruling “threatens to undo a 75-year-old consensus that state law does not provide a public performance right for sound recordings.”  I also wrote:

The Register of Copyrights has recommended that Congress bring pre-February 15, 1972 sound recordings under federal law…. Doing so at the federal level makes sense.  Litigating the existence of a public performance right on a state-by-state basis, when such a right was assumed not to exist for over 75 years, does not.

I am pleased that after eight years of expensive litigation, courts and legislators have reached the same conclusion.  Courts in New York and Florida led the way by denying a right of public performance under state law, putting the issue back in the hands of Congress.  Had Congress not brought pre-1972 sound recordings into parity with later sound recordings, either the Ninth Circuit or the California Supreme Court might have been tempted to interpret Civil Code section 980 more literally, in the interests of fundamental fairness.  Now that Congress has acted, and the Ninth Circuit has rejected the claim under California law, the issue should be put to rest.

Flo & Eddie’s action against Pandora remains pending; but the Sirius XM ruling will undoubtedly be applied against Flo & Eddie under principles of collateral estoppel.  Moreover, since the ruling was made in a certified class action, it is binding on any sound recording copyright owners that did not “opt out” of the litigation.  Sound recording copyright owners could still try in other states, but the combination of the preemption provisions in the Music Modernization Act and the statute of limitations makes such actions extremely unlikely.

Federal law still does not recognize a public performance right for sound recordings in audiovisual transmissions; but those are usually considered part-and-parcel of the “sync” licenses that have been obtained to reproduce the work on the soundtrack.  The major remaining bone of contention is traditional AM/FM radio.  Even though most radio broadcasters also simulcast their analog signals in digital form, there is an express exemption for such broadcasts in federal law.  17 U.S.C. § 114(d)(1).  Broadcasters will not give up their federal exemption lightly.  But as a result of the Flo & Eddie cases, sound recording copyright owners will have to persuade Congress, instead of trying to rewrite history through creative interpretations of state law.

The post A Seismic Ruling Undone: California’s Sound Recording Copyright Statute Does Not Include Public Performance Rights—Flo & Eddie v. Sirius XM (Guest Blog Post) appeared first on Technology & Marketing Law Blog.

Sinclair owns a bunch of television stations. It embedded the video as part of an article talking about the “starving polar bear going viral.” This article was posted on the Sinclair website and the video was embedded in the article. Nicklen alleges that the article (and embedded video) was posted to the website of various local affiliates of Sinclair.

Nicklen sued Sinclair Broadcast Group and others. Sinclair moved to dismiss, and the court addresses two questions.

Is Embedding a Display?: Under the Copyright Act, display

“means to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process or, in the case of a motion picture or other audiovisual work, to show individual images nonsequentially.”

The first question is whether embedding the video on Sinclair’s website was a “display” that requires the permission of the copyright owner. The court (Judge Rakoff) looks to the history of the statute and notes that originally a more limited display right was contemplated but was put aside in favor of a broader display right. The court notes the language of section 106 reflects an intent to be “technology-neutral”.

Some of the arguments the court fielded:

• Sinclair raised the server rule as recognized by Perfect 10. The court rejects this approach, saying the Ninth Circuit’s approach relegates the display right to a “subset of the reproduction right.”
• The court also notes that the server rule distinguishes between a copy “possessed by the infringer and showing a copy possessed by someone else.”
• Finally, the court says that Perfect 10 is factually distinguishable because (1) it involved a search engine, and (2) the images in question required an affirmative act on the part of the user to display.
• It’s “farfetched” that rejecting the server rule will “grind the internet to a halt”.
• The court also does not like Sinclair’s argument that the author could maintain control over dissemination by making their account private: “The Sinclair Defendants argue that an author wishing to maintain control over how a work is shown could abstain from sharing the work on social media, pointing out that if Nicklen removed his work from Instagram, the Video would disappear from the Sinclair Defendants’ websites as well. But it cannot be that the Copyright Act grants authors an exclusive right to display their work publicly only if that public is not online.” The court concludes that authors can’t be forced to make a choice between putting their works online and losing control over “display” of those works.

Fair use: The court also grapples with fair use. Citing to Barcroft and McGucken, the court says that the “photograph itself is the subject of the story” so this weighs in favor of fair use. The second factor is neutral. The third factor cuts against fair use since the entirety of the video was used. Finally, the court says there is a real possibility of market harm to Nicklen’s work:

However, the Sinclair Defendants’ use of the copyrighted video, if widespread, would harm the licensing market for Nicklen’s video. There would be no need for news outlets to license the video at all if each outlet could, without Nicklen’s prior authorization, embed the video from Instagram or Facebook. Unlike a parodic use, widespread adoption of the Sinclair Defendants’ use could overtake the market for Nicklen’s video. Accepting as true Nicklen’s allegations that he licensed the Video to “almost two dozen entities both in the United States and throughout the world,” this factor weighs against fair use.

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Use of content posted to social media has generated many posts on this blog, starting with AFP v. Morel. When writing about that case, I noted that use within the platform’s ecosystem is unlikely to create liability to downstream users. I also flagged that the server test likely insulates the embedding of social media content:

A sidenote on the implied license issue. There’s a big difference between “embedding” content or hot-linking — which courts would probably find is not infringing, based on application of the “server test” — and actually downloading/copying content to your own servers. The key question in this context is where is the content hosted. Check out Professor Goldman’s post on Perfect 10 v. Google and Amazon, as well as this post by Fred von Lohmann of the EFF for an explanation of the server test as it’s been treated by the Ninth Circuit. I haven’t taken a close look at Twitter’s latest “embedded tweets” feature, but I would expect that as with embedded YouTube videos, there’s no serious question of infringement here. There’s a world of difference between the embedded Tweets feature which Twitter recently rolled out, and what AFP did here.

Judge Rakoff joins other Southern District of New York judges, including Judge Forrest in Goldman v. Breitbart, in throwing a huge monkey wrench into the above. Instagram also did not help matters, as Tim Lee notes in this article: “Instagram just threw users of its embedding API under the bus.”

The court flags that the server rule may be key to the effective functioning of the internet, although it ultimately sweeps asides the concerns raised by Sinclair. This ruling of course won’t likely be the last word. The Brietbart case teed up the issue of embedding but ended with a whimper. Perhaps this ruling will end up on appeal to the Second Circuit (and beyond). As Eric notes, this ruling will get the attention of possible amici.

Separately, there’s a lawsuit pending against Instagram in the Northern District of California where copyright owners argue Instagram is liable for facilitating infringement on a large scale. Instagram has filed a motion to dismiss, but the briefing is not yet complete: “Instagram Asks Court to Delete Users’ Suit Over Embed Feature.” Does that lawsuit suddenly appear viable in light of the ruling in this case? (Venue as required by the terms of use aside, I wonder if plaintiffs in that case considered suing in the Southern District of New York?)

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Eric’s Comments: The “server test” prioritizes form over substance, i.e., from the viewer’s standpoint, the image appears on their screen, and they don’t care where it came from or how it got there. But isn’t all of copyright law form over substance? (Except the Aereo case, which stands out as an outlier). The server test recognizes that all the linking site does is provide a pointer to a third-party source. It simply tells the viewer’s browser “there’s more stuff, and here’s where to find it.” This opinion doesn’t give full recognition to this technological architecture. I’m also troubled by this judge’s predictions about the lack of adverse consequences. The judge only heard from the parties; there are many more who absolutely will be impacted by the rejection of the server test, and they were not in court to express their interests. Assuming this case goes up on appeal, I hope amici will fill some of that information gap.

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Case citation: Nicklen v. Sinclair Broadcast Group, Inc., No. 20-cv-10300 (JSR), 2021 WL 3239510 (S.D.N.Y. July 30, 2021).

Related posts:

Is It OK to Embed Instagram Photos? ¯\_(ツ)_/¯

Instagram’s TOS Authorizes Third-Party Embedding of Photos–Sinclair v. Mashable

In-Line Linking May Be Copyright Infringement–Goldman v. Breitbart News

Court Definitively Rejects AFP’s Argument That Posting a Photo to Twitter Grants AFP a License to Freely Use It — AFP v. Morel

Court Rejects Agence France-Presse’s Attempt to Claim License to Haiti Earthquake Photos Through Twitter/Twitpic Terms of Service — AFP v. Morel

Ninth Circuit Opinion in Perfect 10 v. Google and Amazon

The post Judge Rakoff: Embedding Social Media Content is a “Display” Under the Copyright Act appeared first on Technology & Marketing Law Blog.

The video depicted its award as the well-known Emmy statuette with a coronavirus replacing the atom in the holder’s hands:

The Television Academies, who own the IP rights to the statuette, targeted the video with a DMCA notice to YouTube, which YouTube honored. Goodman counternoticed. It’s not clear if YouTube honored the counternotice, but the video is unavailable now (perhaps as part of YouTube’s crackdown on COVID misinformation?). The Television Academies sued Goodman for copyright infringement, trademark infringement and dilution, and defamation. Goodman counterclaimed for 512(f) and violation of New York’s anti-SLAPP law. The court rejects Goodman’s motion to dismiss.

Copyright Infringement/Fair Use. The Crony graphic appeared as the video’s thumbnail image and in the video’s first 10 seconds, so it was not a de minimis use.

The Crony graphic also doesn’t qualify for fair use:

• Nature of Use. It wasn’t transformative because “a simple side-by-side comparison of the Emmy Statuette and the Crony Graphic confirms that the Crony Graphic retains the dominant and essential aesthetic elements of the Emmy Statuette.” It also has the same purpose of functioning as an award. The video doesn’t qualify as a parody because the video never mentioned the Television Academies. (Indeed, I think this is a good example of a satire). The Television Academies adequately alleged commercial use because the video linked to Goodman’s Patreon and SubscribeStar accounts, where Goodman commercializes his works. UGH: the meme that “links-make-editorial-work-commercial” rears its ugly head again.
• Nature of Work. Goodman conceded that the statuette is “arguably creative.”
• Amount Taken. Goodman took the whole statuette and just replaced the item in its hands, plus “Defendant has not shown that it was necessary to use the Emmy Statuette.”
• Market Effect. “Plaintiffs have adequately alleged that they suffered actual and reputational harm through Defendant’s association of the Emmy Statuette with dangerous misinformation about the COVID-19 pandemic.” UGH, no.

It’s pretty jarring to see how this court remixes the increasingly awful Second Circuit jurisprudence on fair use. I think it would have been helpful if the court anchored its fair use finding on the fact that the Crony graphic was a satire, not a parody, because the fair use jurisprudence on satire is quite copyright owner-favorable. But the court never mentions the word “satire” once, which pushes the court to adopt other less-rigorous fair use doctrinal tools.

Trademark Dilution. The Crony graphic doesn’t qualify for the “parody” exclusion to  trademark dilution. In a footnote, the court adds that the graphic doesn’t qualify for trademark fair use because Goodman used the mark to promote his own services, which the court says are the Crony Awards. UGH. This circular logic reminded me a little of one of my least-favorite trademark cases of all time, the SMJ Group, Inc. v. 417 Lafayette Restaurant case.

Trademark Infringement. The court does a brief multi-factor consumer confusion analysis:

• The trademark is strong
• “the Emmy Statuette and the Crony Graphic are nearly identical; the Crony Graphic depicts the same winged figure holding a globe-shaped object in the same dimensions, proportions, and colors as the Emmy Statuette. Indeed, Defendant admits to using ‘the entire’ Emmy Statuette in the Crony Graphic.”
• There is competitive proximity because Goodman hosted an awards show (the Crony Awards video)
• No evidence Goodman will bridge the gap
• No evidence of actual confusion, but the “striking similarity” could suggest a false association. Really?
• “Because Defendant does not dispute that it copied the entire Emmy Statuette to create the Crony Graphic, the Court finds a presumption of bad faith to be appropriate here.” UGH.
• No evidence re. differences in quality of goods.
• “Plaintiffs have adequately alleged that a member of the general online public ‘might see the EMMY Statuette Design as used by Defendant and mistakenly believe that there is a link between Plaintiffs and Defendant or find the association offensive, thus tarnishing the mark.'” UGH, this is like a moron-in-a-hurry analysis; and what does tarnishment and offensiveness have to do with consumer confusion?

All told, “Plaintiffs have plausibly alleged a probability of confusion,” so motion to dismiss denied.

In theory, Goodman might fare better at summary judgment when the standards of review are more favorable than a motion to dismiss. However, given the tenor of this court’s opinion, Goodman will almost certainly need a plan B.

NY Anti-SLAPP Counterclaim. The court says the NY law doesn’t apply in federal court because it “imposes a different, and higher, burden on the plaintiff at the pleading stage than the Federal Rules of Civil Procedure.” Goodman may not be a great exemplar of SLAPP victims, but we desperately need a federal anti-SLAPP law.

512(f). When the Television Academies sent the takedown notice to YouTube, there is no evidence they knowingly made a misrepresentation about the infringement. Another 512(f) claim fails.

Case citation: National Academy of TV Arts and Sciences v. Multimedia System Design, 2021 WL 3271829 (S.D.N.Y. July 30, 2021)

Prior Posts on Section 512(f):

* 512(f) Preempts Tortious Interference Claim–Copy Me That v. This Old Gal
* 512(f) Claim Against Robo-Notice Sender Can Proceed–Enttech v. Okularity
* Copyright Plaintiffs Can’t Figure Out What Copyrights They Own, Court Says ¯\_(ツ)_/¯
* A 512(f) Case Leads to a Rare Damages Award (on a Default Judgment)–California Beach v. Du
* 512(f) Claim Survives Motion to Dismiss–Brandyn Love v. Nuclear Blast America
* 512(f) Claim Fails in the 11th Circuit–Johnson v. New Destiny Christian Center
* Court Orders Rightsowner to Withdraw DMCA Takedown Notices Sent to Amazon–Beyond Blond v. Heldman
* Another 512(f) Claim Fails–Ningbo Mizhihe v Doe
* Video Excerpts Qualify as Fair Use (and Another 512(f) Claim Fails)–Hughes v. Benjamin
* How Have Section 512(f) Cases Fared Since 2017? (Spoiler: Not Well)
* Another Section 512(f) Case Fails–ISE v. Longarzo
* Another 512(f) Case Fails–Handshoe v. Perret
* A DMCA Section 512(f) Case Survives Dismissal–ISE v. Longarzo
* DMCA’s Unhelpful 512(f) Preempts Helpful State Law Claims–Stevens v. Vodka and Milk
* Section 512(f) Complaint Survives Motion to Dismiss–Johnson v. New Destiny Church
* ‘Reaction’ Video Protected By Fair Use–Hosseinzadeh v. Klein
* 9th Circuit Sides With Fair Use in Dancing Baby Takedown Case–Lenz v. Universal
* Two 512(f) Rulings Where The Litigants Dispute Copyright Ownership
* It Takes a Default Judgment to Win a 17 USC 512(f) Case–Automattic v. Steiner
* Vague Takedown Notice Targeting Facebook Page Results in Possible Liability–CrossFit v. Alvies
* Another 512(f) Claim Fails–Tuteur v. Crosley-Corcoran
* 17 USC 512(f) Is Dead–Lenz v. Universal Music
* 512(f) Plaintiff Can’t Get Discovery to Back Up His Allegations of Bogus Takedowns–Ouellette v. Viacom
* Updates on Transborder Copyright Enforcement Over “Grandma Got Run Over by a Reindeer”–Shropshire v. Canning
* 17 USC 512(f) Preempts State Law Claims Over Bogus Copyright Takedown Notices–Amaretto v. Ozimals
* 17 USC 512(f) Claim Against “Twilight” Studio Survives Motion to Dismiss–Smith v. Summit Entertainment
* Cease & Desist Letter to iTunes Isn’t Covered by 17 USC 512(f)–Red Rock v. UMG
* Copyright Takedown Notice Isn’t Actionable Unless There’s an Actual Takedown–Amaretto v. Ozimals
* Second Life Ordered to Stop Honoring a Copyright Owner’s Takedown Notices–Amaretto Ranch Breedables v. Ozimals
* Another Copyright Owner Sent a Defective Takedown Notice and Faced 512(f) Liability–Rosen v. HSI
* Furniture Retailer Enjoined from Sending eBay VeRO Notices–Design Furnishings v. Zen Path
* Disclosure of the Substance of Privileged Communications via Email, Blog, and Chat Results in Waiver — Lenz v. Universal
* YouTube Uploader Can’t Sue Sender of Mistaken Takedown Notice–Cabell v. Zimmerman
* Rare Ruling on Damages for Sending Bogus Copyright Takedown Notice–Lenz v. Universal
* 512(f) Claim Dismissed on Jurisdictional Grounds–Project DoD v. Federici
* Biosafe-One v. Hawks Dismissed
* Michael Savage Takedown Letter Might Violate 512(f)–Brave New Media v. Weiner
* Fair Use – It’s the Law (for what it’s worth)–Lenz v. Universal
* Copyright Owner Enjoined from Sending DMCA Takedown Notices–Biosafe-One v. Hawks
* New(ish) Report on 512 Takedown Notices
* Can 512(f) Support an Injunction? Novotny v. Chapman
* Allegedly Wrong VeRO Notice of Claimed Infringement Not Actionable–Dudnikov v. MGA Entertainment

The post Satirical Depiction in YouTube Video Gets Rough Treatment in Court appeared first on Technology & Marketing Law Blog.

Before mid-2022, the Copyright Office will deploy a new adjudicatory function called the Copyright Claims Board (CCB). The CCB will be dominated by claims over alleged online infringement, so it’s a major development for online copyright law.

Overview of the CCB

Currently, all federal copyright infringement claims must be filed in federal court. However, sometimes the likely damages award from a successful federal copyright lawsuit will be less than the attorneys’ fees and other costs to litigate it. To alleviate this burden, judges in copyright cases have the discretion to shift attorneys’ fees to a prevailing party (17 U.S.C. §505; Kirtsaeng v. John Wiley & Sons, Inc., 136 S. Ct. 1979 (2016)), but only if copyright owners register their copyrights before infringement occurred or within three months of first publication. As a result, copyright owners can face insurmountable financial and logistical barriers to enforce their copyrights.

In an effort to increase access-to-justice, Congress created the CCB in a bill called the CASE Act. It passed in December 2020, when the CASE Act was attached to an unrelated spending/COVID19 relief bill that politically Congress had to pass. The CCB is structured like a “small claims” court for low-value copyright infringement claims.

The CCB is part of the Copyright Office, reflecting the office’s existing expertise in copyright law. However, the Copyright Office is technically part of the Library of Congress, which itself is part of Congress. Due to Constitutional separation-of-powers principles, the legislative branch can’t operate a judicial function. To get around this, the CCB proceedings are nominally “voluntary” to the litigants. Copyright owners can choose federal court if they prefer, and defendants can “opt-out” of a CCB proceeding within 60 days, in which case the copyright owner must sue in federal court if it wants to proceed. Libraries and archives can categorically preemptively opt-out of CCB jurisdiction; all other defendants can opt-out only on a matter-by-matter basis. Defendants who don’t timely “opt-out” are deemed to have “voluntarily” consented to the CCB’s jurisdiction and will be bound by the outcomes accordingly. It remains to be seen if the courts agree that this opt-out approach solves the separation-of-powers problem.

CCB Procedures

(As of July 1, 2021, the Copyright Office is in the process of developing the CCB’s regulations).

The CCB can only hear cases over the infringement or noninfringement of works and 512(f) claims (discussed later). The Copyright Office may issue regulations to limit the number of CCB proceedings a copyright owner can bring in any year.

To keep costs down, CCB hearings will be done remotely. Discovery is typically limited to document production, interrogatories, and requests for admission.

Federal courts typically require the copyright owner to have a copyright registration in hand before suing (see 17 U.S.C. §411 and Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881 (2019)). In contrast, a copyright owner can initiate a CCB proceeding before obtaining a registration. However, the proceeding won’t go forward until the copyright owner applies for a registration; and the CCB will not issue its determination until the registration issues.

When a copyright owner initiates a proceeding, the CCB will do a preliminary screening to “ensure that the claim complies with this chapter and applicable regulations.” (Among other things, if the claim is against an entity protected by the Section 512 safe harbor, the copyright owner must affirm that the defendant failed to honor a takedown notice). If the claim passes the initial screening, the copyright owner will be authorized to serve process. The Copyright Office will issue regulations about an explanatory notice to defendants that must accompany service.

After the board issues a determination in a proceeding, a party may request a reconsideration “if the party identifies a clear error of law or fact material to the outcome, or a technical mistake.” If that doesn’t work, the party may appeal to the Register of Copyrights. The Register may reverse the CCB’s determination only when the CCB “abused its discretion in denying reconsideration of the determination.” Appeals of the Register’s decision can go to a federal district court, which may reverse the Register only if “the Copyright Claims Board exceeded its authority or failed to render a final determination concerning the subject matter at issue.” These high appellate review standards are intended to reduce the parties’ adjudication costs, but in practice they make it difficult or impossible to reverse an initial CCB determination on appeal.

Limits on Remedies

The CCB cannot issue injunctions. It can award a maximum of $30,000 in damages. For copyrighted works registered on a timely basis, the CCB can award statutory damages of up to $15,000 per work (max of $30,000 per proceeding). For other works, the CCB can award statutory damages of $7,500 per work (max of $15,000 per proceeding). Copyright owners will be drawn to the potential for statutory damages for works that do not qualify for statutory damages in federal court. Attorneys’ fee shifts can be awarded only for certain “bad faith conduct” in CCB proceedings. The Copyright Office has the power to create even more streamlined adjudicatory procedures when damages claims are less than $5,000.

Why Defendants Will Opt-Out

The CCB is supposed to benefit defendants by being cheaper than federal court and capping their potential damages. Nevertheless, defendants will routinely choose to opt-out of the CCB because:

• Opting-out calls the copyright owner’s bluff. Will they be willing to spend extra money to take the case to federal court? If not, the matter will fade away quietly. One countervailing risk: if federal courts view a defendant’s opt-out as a factor to justify §505 fee-shifts to copyright owners (because the defendant could have saved everyone time and money by accepting the CCB’s jurisdiction), then the opt-out will become substantially riskier.
• Defendants will fear that CCB’s decisions will tilt towards copyright owners, a common stereotype of the Copyright Office generally.
• Defendants will worry that the CCB won’t consider all applicable defenses, or that key exculpatory evidence will be unavailable due to the limited discovery options.
• The appeals mechanism is too limited to correct bad initial rulings.
• If the copyright owner is seeking statutory damages for copyrights but didn’t make a timely registration to qualify for such damages in federal court, the defendant’s financial exposure in federal court could be less than in the CCB.
• If the copyright owner initiated the CCB proceeding near its statute of limitations deadline but doesn’t have a copyright registration in hand, opting-out could cause the case to become time-barred.

IF YOU ARE A DEFENDANT IN A CCB CASE, YOU ALMOST CERTAINLY WILL WANT TO QUICKLY OPT-OUT OF THE CCB.

How the CCB Will Foster Trolling

The CCB is a brand-new legal procedure. Most people have never heard of it. Furthermore, many defendants in CCB proceedings will be unsophisticated about legal matters. They will not have ready access to affordable legal counsel, they will be unsure of how to opt-out (or they will miss the deadline), and they will be scared that litigating in federal court will be more expensive and riskier.

Copyright owners can take advantage of defendants’ naiveté and unfamiliarity by making extortionate demands at several stages:

• Before initiating a CCB proceeding.
• After filing the CCB proceeding but before service. Most demand recipients will have no idea that the complaint will be reviewed by the CCB for proper form and that service hasn’t been authorized yet.
• Along with service. At that point, the copyright owner will have to provide the Copyright Office’s official notice explaining the CCB, but there’s no guarantee that notice will appease the defendant’s fears.

Copyright owners can send demands at the first two stages even if they never apply for a copyright registration for the subject works.

Thus, the CCB gives copyright owners the grounds to assert credible and intimidating legal demands that will scare many recipients into paying up. Expect copyright owners, especially photographers upset about online republications of their photos, to send out a high volume of threats to bring CCB proceedings coupled with “modest” settlement offers that defendants may view as cheaper than gambling on potentially $30,000 in damages. Much of this activity will take place outside the CCB’s purview, so any restriction on the number of CCB proceedings per year won’t curb this trolling. It seems inevitable that the CCB issues will become a regular part of every Internet lawyer’s practice.

The post A Summary of the Copyright Claims Board (CCB) [Excerpt from my Internet Law casebook] appeared first on Technology & Marketing Law Blog.

One point I could have amplified more (I was under some tight word count limits): Takedowns of allegedly inauthentic media would target primary sources, but sometimes we need to see the evidence for ourselves, not just hear it described. In particular, people with privilege can use their position, and any implicit credibility it conveys, to cast doubt on the facts unless the facts are incontrovertible.

For example, former Rep. Katie Hill sued over the publication of intimate images that contributed to her departure from Congress. The court granted the defendants’ anti-SLAPP motion, explaining why we needed to see the images, not just hear about them:

the intimate images published by Defendant spoke to Plaintiff’s character and qualifications for her position, as they allegedly depicted Plaintiff with a campaign staffer whom she was alleged to have had a sexual affair with and appeared to show Plaintiff using a then-illegal drug and displaying a tattoo that was controversial because it resembled a white supremacy symbol that had become an issue during her congressional campaign. Accordingly, the images were a matter of ‘public issue or public interest.’…

Plaintiff has failed to carry her burden establishing that there is a probability of success on the merits on her claim under Civil Code section 1708.85. Section 1708.85(c)(5) provides for an exception from liability for images which are a matter of public concern. Here, Defendant has established that the images are a matter of public concern, as they speak to Plaintiff’s character and qualifications for her position as a Congresswoman, allegedly depicting an extramarital sexual relationship with a paid campaign staff member, the use of illegal drugs by a sitting Congresswoman, and a tattoo similar to the symbols formerly used by white supremacists.

Plaintiff’s argument that the images are not a matter of public concern because Defendant could have simply described the images rather than publishing them is unpersuasive, as the fact that information to be gleaned from an image may be disseminated in an alternative manner does not equate to a finding that the image itself is not a matter of public concern. …

The two photos at issue here are nowhere as explicit as the sex video tape in the Michaels case, and are not morbid as the photos in Jackson were described. The photos show a sitting Congresswoman engaging in conduct some might consider highly inappropriate and perhaps unlawful, with one exhibiting Plaintiff’s tattoo which looks similar to the symbols formerly used by white supremacists. The facts of which these photos speak are about Plaintiff’s character, judgment and qualifications for her congressional position.

Hill v. Heslep, 20STCV48797 (Cal. Superior Ct. April 7, 2021) (emphasis added).

My contribution to the colloquy only addressed some policy concerns of a notice-and-takedown scheme. A notice-and-takedown scheme would also face potentially significant Constitutional concerns (the anti-IMDb law isn’t perfectly analogous, but it’s representative of the problems) and, if the laws were implemented at the state law, Section 230 preemption as well.

The abstract:

Inauthentic media depictions can harm a person’s privacy and reputation and pose a risk to broader society, as well. “Deepfake” technology allows the creation of a type of inauthentic media using “deep machine learning” techniques, using a computer to quickly swap or simulate faces, voices, and movements.

In a blog post on the YourWitness Blog (yourwitness.csulaw.org), Professor Christa Laser argues that Notice and Takedown procedures available in copyright law can be expanded to protect persons from deepfakes. Professor Eric Goldman thinks that such a reform would inhibit the dissemination of truthful information.

The post Should We Adopt a Notice-and-Takedown Scheme for Deepfakes and Other Inauthentic Media? appeared first on Technology & Marketing Law Blog.

* Kid Car NY, LLC v. Kidmoto Techs. LLC, 2021 WL 466975 (S.D.N.Y. Feb. 9, 2021):  “At the motion to dismiss stage, Kidmoto has plausibly alleged more than just the purchase of a competitor’s mark as a search engine keyword standing alone. The Counterclaim alleges that Kid Car purchased “KIDMOTO” as keyword on Google and that by using ‘kid car’ in the resulting advertisement there is a likelihood of consumer confusion.”

* RVC Floor Decor, Ltd. v. Floor and Decor Outlets of America, Inc., 2021 WL 1163117 (E.D.N.Y. March 18, 2021)

The Google AdWords purchase too may not alone evidence bad faith. Defendant’s acquisition of the “Floor Decor” search term could simply reflect savvy business sense in the Information Age: it is self-explanatory why Defendant Floor & Decor purchased search terms for a permutation of its own tradename. And the Defendant’s failure to “negative keyword,” i.e., deactivate, the term “Floor Decor” from its AdWords could be viewed as a failure to self-flagellate – which does not entail bad faith. But New York’s common law unfair competition cause of action is “adaptable and capricious.” “It has been broadly been described as encompassing ‘any form of commercial immorality,’ or simply as ‘endeavoring to reap where (one) has not sown,’; it is ‘taking the skill, expenditures and labors of a competitor,’ and ‘misappropriati(ng) for the commercial advantage of one person … a benefit or “property” right belonging to another.’ ” It is not confined to Defendant’s decision to adopt its mark. And it is assessed not by viewing acts in isolation but upon the totality of the evidence, including their timing…

* Caraway Home, Inc. v. Pattern Brands, Inc., 2021 WL 1226156 (S.D.N.Y. April 1, 2021). “Caraway’s final three claims are for trademark infringement, unfair competition and false designation, and trademark dilution under the Lanham Act as a result of Defendant’s purchase of the Caraway Mark so as to advertise Equal Parts when consumers searched for the term ‘Caraway’ in Google’s search engine. Caraway has adequately pled trademark infringement with respect to these claims.”

* Snyder’s Lance, Inc. v. Frito-Lay North America, 2021 WL 2322931 (W.D.N.C. June 7, 2021). This is a long-running battle over whether the term “pretzel crisps” is generic. (Spoiler: after dozens of pages, the court says it is generic). Some interesting discussion on the use of Google and Twitter to determine genericness:

Plaintiffs also offered evidence of Google searches and social media mentions on Twitter to support their position that PRETZEL CRISPS is not generic. Specifically, Plaintiffs’ attorneys’ employee Mr. Lauzau (whose work and conclusions the Court criticized with respect to media references above) conducted a Google search for the term “pretzel crisps” in October 2018 that he alleges shows “based on my review of results” that 87 (90%) of the first 97 results “used the term PRETZEL CRISPS as a trademark or referred directly to Princeton Vanguard’s product.” With respect to Twitter, another of Plaintiffs’ law firm’s nonattorney staff members (Elliot Beaver) conducted a subjective review of social media mentions of “Pretzel Crisps” on Twitter from April 1, 2018 through October 24, 2018 and concluded that a majority of tweets (63%) “referenced the PRETZEL CRISPS brand in a non-generic fashion.”

However, the Court does not find either the Google search or the Twitter analysis persuasive on the issue of genericness. First, as discussed above, these searches have only a limited usefulness in establishing whether PRETZEL CRISPS is generic due to the more than a decade (and $50 million in advertising and marketing expenditures) that has passed since the challenged registration of the mark in 2005. Again, the repeated use of ordinary words cannot give a single company a proprietary right over those words, even if an association develops between the words and that company.

…the vast bulk of the Google search results simply identify websites of large companies offering PRETZEL CRISPS for sale. Again, there is no dispute that Plaintiffs have developed a very large business selling their pretzel product; however, the typical commercial sales efforts associated with that business – including the websites featured in the Plaintiffs’ Google search, do not reflect consumer perceptions of genericness….

merely referencing Plaintiffs or their hashtag does not necessarily make the use of “pretzel crisps” in a tweet a brand reference. As with the Google search results discussed above, use of the disputed product name in the normal course of business communications, here on Twitter, does not reveal whether or not a consumer understands the product name primarily as a brand or a type of goods. Instead, it just reflects consumer engagement with the product…

* Soter Technologies, LLC v. IP Video Corporation, 2021 WL 744511 (SDNY Feb. 26, 2021). A company used [competitortrademark].com to redirect to its website. The court says this may be a trademark violation, including because it could qualify as initial interest confusion.

* Archi’s Acres, Inc. v. Whole Foods Market Service, Inc., 2021 WL 424286 (S.D. Cal. Feb. 8, 2021):

Plaintiffs argue that Defendants have caused “initial interest confusion whereby consumers were seeking Plaintiffs’ products and were lured to Defendants’ stores, at which they were unable to purchase Plaintiffs’ products and instead purchased a product sold by Defendants.”

The Court finds that Plaintiffs have not alleged sufficient likelihood of confusion to survive Defendants’ Motion to Dismiss and instead only establish the mere possibility of diversion.

* Dent v. Lotto Sport Italia SpA, 2021 WL 242100 (D. Az. Jan. 25, 2021). Domain name owners awarded nearly a quarter-million for defeating a failed attempt at reverse domain name hijacking.

Copyright 

* Bell v. Eagle Mountain Saginaw Independent School District, 2021 WL 1151706 (N.D. Tex. March 26, 2021). A stinging rebuke against a serial copyright plaintiff’s lawsuit against a school district for tweeting a motivational statement. The court holds that the school district qualified for fair use and ordered the plaintiff to pay attorneys’ fees. Prior blog post on a Bell lawsuit.

* Fellner v. Travel 4 All Seasons, CV-19-01719-PHX-DJH (D. Ariz. Sept. 29, 2020):

Defendant did not reproduce the Article to attempt to gain a financial benefit to Plaintiff’s detriment or for any nefarious reason. Defendant simply thought that the topic of pickleball on cruise ships would be interesting to the relatively few readers who visited his website. There is no evidence to suggest that Defendant’s use of the material was anything other than fair

* Stebbins v. Polano, 2021 WL 2682339 (N.D. Cal. June 30, 2021): Dismissing a 512(f) claim: “Plaintiff alleges that Defendant’s Counter-Notice claiming fair use was false and frivolous, and that Defendant’s pattern of harassment suggests that Defendant’s video was meant to harass, not parody. However, the facts as alleged do not plausibly suggest that any misrepresentation in Defendant’s Counter-Notice was knowing. The allegations more plausibly suggest that Defendant believed his use of Plaintiff’s video was fair use, and that such a belief might have been reasonable.”

* Variety: Inside the Dirty Business of Hit Songwriting

* Vice: John Deere Promised Farmers It Would Make Tractors Easy to Repair. It Lied.

Patents

* Bloomberg Law: IBM’s Patent Income Slips as Companies Resist ‘Godfather’ Deals

The post 1H 2021 Quick Links, Part 1 (IP) appeared first on Technology & Marketing Law Blog.

The court (another strong opinion by Judge Koh) grants RedBubble’s motion to dismiss many of the claims.

Contributory Copyright Infringement. The legal standard is whether the “Defendant knew or had reason to know of specific acts of infringement,” not just generalized knowledge of infringement (citing, primarily, Luvdarts v AT&T). Thus, the plaintiff’s allegation that it “notified” RedBubble of infringement isn’t good enough to identify specific acts of infringement. The allegation that RedBubble had “specific knowledge” of the goods offered on its site was too conclusory.

Contributory Trademark Infringement. The legal standard is whether the defendant “(1) knew of acts of direct infringement, and (2) exercised the requisite level of control over the means of infringement.” The court says “Plaintiff does not allege that Defendant had contemporary knowledge of which particular postings on Defendant’s website infringed upon Plaintiff’s trademarks.”

Trade Dress. “Plaintiff fails to list the concrete elements that constitute the alleged trade dress.” Photos in the complaint aren’t enough.

Unfair Competition. The court applies the standard 3-part test for Section 230:

• ICS Provider. The plaintiff alleges RedBubble is an “ecommerce system” and that’s close enough to an ICS provider. Cite to Joseph v. Amazon.
• Publisher/Speaker. The plaintiff alleges that RedBubble facilitates online transactions, and that’s close enough to La Park La Brea v. Airbnb.
• Third-Party Content. The plaintiff alleges that third-party users created storefronts to sell the offending items.

The plaintiff alleged that RedBubble should lose Section 230 because it provides various e-commerce support services to its merchants and takes a cut. The court disagrees, citing Free Kick Master and La Park La Brea. The court sidestepped some obviously conflicting precedent, including the Bolger and Loomis cases.

The court will let the plaintiff amend the complaint, and it appears the plaintiff can add some new facts to the complaint. So I look forward to blogging the ruling on the next motion to dismiss. It appears RedBubble did not try to dismiss the direct copyright and direct trademark claims, so we have yet to hear the court’s thoughts about those. Still, this is a good ruling for RedBubble, which appears to be having more success in court than some of its print-on-demand rivals.

Case citation: YZ Productions, Inc. v. RedBubble, Inc., 2021 WL 2633552 (N.D. Cal. June 24, 2021)

Related posts:

* IP Lawsuits Against Print-on-Demand Vendors Continue to Vex the Courts–OSU v. Redbubble & More
* Another Tough Ruling for Print-on-Demand Vendors–Sid Avery v. Pixels
* Print-on-Demand Vendor Doesn’t Qualify for DMCA Safe Harbor–Feingold v. RageOn
* CreateSpace Isn’t Liable for Publishing Allegedly Infringing Uploaded Book–King v. Amazon
* More Evidence That Print-on-Demand Vendors May Be Doomed–Greg Young Publishing v. Zazzle
* Section 230 Doesn’t Protect Print-on-Demand Vendor–Atari v. Sunfrog
* Online Marketplace Defeats Trademark Suit Because It’s Not the “Seller”–OSU v. Redbubble
* Zazzle Loses Copyright Jury Verdict, and That’s Bad News for Print-on-Demand Publishers–Greg Young Publishing v. Zazzle
* Trademark Injunction Issued Against Print-on-Demand Website–Harley Davidson v. SunFrog
* DMCA Safe Harbor Doesn’t Protect Zazzle’s Printing of Physical Items–Greg Young Publishing v. Zazzle
* CafePress May Not Qualify For 512 Safe Harbor – Gardner v. CafePress
* Cafepress Suffers Potentially Significant Trademark Loss for Users’ Uploaded Designs
* Life May Be “Rad,” But This Trademark Lawsuit Isn’t–Williams v. CafePress.com
* Print-on-Demand “Publisher” Isn’t Liable for Book Contents–Sandler v. Calcagni
* Griper Selling Anti-Walmart Items Through CafePress Doesn’t Infringe or Dilute–Smith v. Wal-Mart
* CaféPress Denied 230 Motion to Dismiss–Curran v. Amazon

The post RedBubble Gets Another Favorable Ruling–YZ Productions v. RedBubble appeared first on Technology & Marketing Law Blog.

Last week, the Texas Supreme Court held that “the violation of a copyright, without more, is not a taking of the copyright,” and affirmed the dismissal of Olive’s inverse condemnation claim.

UH allegedly downloaded Olive’s photograph from his website, removed the CMI, and posted it to its website. When Olive discovered the removal years later, UH complied with his demand to cease and desist, but he sued for damages anyway. Because he could not sue in federal court (under Allen v. Cooper, the State has sovereign immunity), he sued in state court for inverse condemnation. (Texas has waived its sovereign immunity for “takings” claims.)

The court notes that scholars disagree whether copyright should be treated as “property” for Fifth Amendment purposes; but it assumes arguendo that it is treated as property. A “taking” can be a physical taking or a regulatory taking. Either way, to determine whether it is a “taking,” a court ordinarily conducts a fact-specific “ad hoc” inquiry using a multi-factor balancing test. But permanent physical occupation is a “per se” taking without a multi-factor analysis.

Olive cited Horne v. Dep’t of Agriculture, 576 U.S. 350 (2017), for the proposition that “takings” law does not distinguish types of property; but the Texas Supreme Court says that in context, the Supreme Court was referring to personal property versus real property. Intangible property is potentially different. The precedent is Ruckelshaus v. Monsanto, 467 U.S. 986 (1984), using multi-factor “ad hoc” analysis to determine that trade secrets were “property” subject to a taking.

The court notes that the government did not take “possession and control” of the copyright, nor is the copyright “physically occupied” because it is intangible. A “per se” violation would be taking the entire bundle of sticks, not just one strand in the bundle. The copyright still has value: the right to exclude others (non-state actors) from reproducing the work, and the right to license its use. The copyright owner can still transfer the copyright to others for compensation.

Thus, “[a]llegations of copyright infringement assert a violation of the owner’s copyright, but not its confiscation, and therefore factual allegations of an infringement do not alone allege a taking.” Because there is no taking, Texas retains its sovereign immunity, and the case was properly dismissed.

Case citation: Jim Olive Photography v. University of Houston System, No. 19-0605 (Tex. Supreme Ct. June 18, 2021)

The post State Government’s Alleged Copyright Infringement Wasn’t a “Taking”–Jim Olive v. University of Houston (Guest Blog Post) appeared first on Technology & Marketing Law Blog.

Now, in 2021–12 YEARS AFTER THIS LAWSUIT STARTED–the district court applies the Second Circuit’s red flags standard. The news is mostly good for Vimeo. If the parties have an interest in settling, the financial value of remaining videos should be small enough to facilitate a meeting of the minds. I expect instead that the Second Circuit will see this case again.

Background on the 2016 Second Circuit’s Ruling 

In 2016, the Second Circuit said that to have disqualifying “red flags” of infringement,

the service provider must have actually known facts that would make the specific infringement claimed objectively obvious to a reasonable person.

A “reasonable person” isn’t a music or legal expert:

The mere fact that an employee of the service provider has viewed a video posted by a user (absent specific information regarding how much of the video the employee saw or the reason for which it was viewed), and that the video contains all or nearly all of a copyrighted song that is “recognizable,” would be insufficient for many reasons to make infringement obvious to an ordinary reasonable person, who is not an expert in music or the law of copyright.

This may sound like it largely collapses the distinctions between “actual knowledge” and “red flags,” to which the Second Circuit said ¯\_(ツ)_/¯:

If the facts actually known by an employee of the service provider make infringement obvious, the service provider cannot escape liability through the mechanism of the safe harbor on the ground that the person with knowledge of those facts never thought of the obvious significance of what she knew in relation to infringement. Plaintiffs further argue that this understanding of red flag knowledge reduces it to a very small category. Assuming this is so, it is of no significance.

Furthermore, the Second Circuit put the burden of proof on the plaintiffs to establish the disqualifying evidence of red flags. However, to help the plaintiffs, the Second Circuit green-lighted discovery on these matters:

[the] copyright owner is entitled to discovery in order to obtain the specific evidence it needs to sustain its burden of showing that the service provider did in fact know of the infringement or of facts that made infringement obvious

Guess what the plaintiffs did in response to that invitation?

The Latest Ruling

Here we are, 5 years after the Second Circuit ruling, and both sides filed for summary judgment motions after presumably lots of expensive discovery. The court digests the legal standards from the Second Circuit rulings in this case and the EMI v. MP3tunes case as:

to surmount the safe harbor on summary judgment, Plaintiffs must demonstrate that Vimeo employees possessed facts that would enable them to identify the presence of copyrighted material in each of the Videos-in-Suit. They also bear the burden of demonstrating that Vimeo employees knew how to distinguish infringement from fair or authorized use, and that they were able to do so for each Video-in-Suit.

The court says “Plaintiffs have largely failed to satisfy this burden.”

Employee Knowledge of Copyright Law. “some employees at the company were broadly familiar with the concept of copyright and that there was some general awareness within the company that copyright infringement was occurring on Vimeo.com. Neither showing is sufficient to raise a triable issue of fact as to red flag knowledge, considering Plaintiffs’ failure to impute this knowledge to the employees that screened the Videos-in-Suit…At most, Plaintiffs’ evidence permits an inference that some Vimeo employees may have been broadly familiar with concepts such as fair use. Such evidence does not, on its own, permit the Court to infer that this knowledge armed employees with the ability to distinguish infringements from authorized or fair use with respect to any of the Videos-in-Suit.”

Employee Interactions with User Uploads. Citing lots “needles-in-haystack” evidence produced through exhaustive discovery, the plaintiffs tried EIGHT different ways of establishing red flags of infringement. None of them worked.

• Music Credits. 300 videos contained the artists’ names or song titles in the postings’ title, description, tags or comments. The court says that permits an inference that the music is copyrighted, but doesn’t confirm if the upload was authorized or not.
• Likes, Duration, and Start Time. “Even if there was proof that a Vimeo employee watched the entirety of that video—which depicts Christina Aguilera performing ‘Genie in a Bottle’ live at a concert in Kiev and was tagged as such—that showing does not on its own demonstrate knowledge of facts making infringement objectively obvious under Vimeo III’s strict standard. This is so because knowledge of the likelihood that Christina Aguilera would authorize, for distribution on the internet, footage of a live performance from Ukraine cannot automatically be imputed to Vimeo employees. Absent some evidence of Vimeo-employee knowledge on this subject—for example, that Christina Aguilera has not issued any licenses of her concert footage, or even that performing artists generally do not authorize distribution of their concerts—the Court cannot presume that this particular case of infringement would be objectively obvious to the Vimeo employee that watched this video.”
• Comments. Employee comments on allegedly infringing videos don’t confirm that the employees knew the videos were unauthorized or unlicensed.
• Whitelisting (not allowing users to flag videos for review because an employee has already determined the video’s compliance with the TOS). “There is no evidence that the whitelisting-review process involved any analysis of licensing or fair use.”
• Burying (“de-emphasizing a video that is ‘not exemplary of ‘Vimeoesque’ content'”). No evidence that this was done because of a belief the video infringed.
• Channels and Employee Inducement. Putting a spotlight on videos only shows the employees knew of their content. Encouraging lip-dub videos doesn’t confirm awareness of infringement because the videos could be fair use.
• Interactions after C&Ds/Complaint Filing. “The fact that an artist’s copyright was previously infringed on Vimeo does not suffice to indicate to an employee whether use of that artist’s work in a subsequent video is authorized. The situation might differ if Plaintiffs had adduced evidence that Vimeo employees possessed so-called categorical knowledge about the licensing practices of particular artists. Had Plaintiffs’ initial complaints indicated that Coldplay had not authorized any of its music for use on Vimeo or similar platforms, for example, then proof that a Vimeo employee recognized a Coldplay song on its platform may suffice to establish red flag knowledge.”
• Employee Involvement in Video Creation. Employees participated in the creation of 3 videos. The court says Vimeo could have red flags in one of those cases, but Vimeo didn’t because of the possibility of fair use.

The court summarizes: “These modes of interaction with infringing videos say nothing about the employee’s knowledge as to whether the use of such music was authorized or fair. They therefore do not suffice to show that Vimeo employees were aware of facts that would make infringement ‘objectively obvious.'”

This ruling gets at the heart of the issue exposed by the Viacom v. YouTube litigation, which ran in parallel with this case for several years before settling. In that case, Viacom’s marketing team uploaded videos–in some cases deliberately making them look like they were “stolen.” How was YouTube supposed to know? Viacom’s legal department didn’t even know, because they keep flagging their co-workers’ uploads. And Viacom’s team had a secret and ever-changing policy about which “infringing” videos to ignore because those videos were good marketing or not worth the bother. How was Viacom supposed to know? The bottom line is that Internet services can’t tell what’s uploads are authorized by the labels or not in the absence of proper takedown notices. And recall from UMG v. Veoh how UMG claimed that every song from artists like Britney Spears was presumptively infringing, when in fact UMG only controlled part of the artists’ catalogs and thus had no right to speak about how the other catalog owners choose to manage their rights. Thus, while the Capitol v. Vimeo standard for red flags is stringent, it still properly acknowledges the impossible adjudicatory position that Internet services find themselves in.

Employee-Uploaded Videos. Employee-uploaded videos may not qualify as “stored at the direction of a user.” There are 26 videos in that category. Assuming those are the only videos left at issue, and assuming a per-video infringement damages amount of $10k, that would leave a total remaining case value of about a quarter-million–a small fraction of how much each party is likely to spend on further proceedings in this case. So that number should be low enough to facilitate a settlement if both sides cooperate.

Conclusion

As many of you already know, lawsuits like this aren’t really over the merits of Vimeo’s practices. That could have been resolved a decade ago. Instead, this lawsuit is one of several designed to structurally undercut the DMCA’s online safe harbor. That’s why the plaintiffs never sent takedown notices in the first place. (If they had, Vimeo would have honored them and the case would have never started). This lawsuit’s goal has always been to find cracks in the safe harbor so that copyright owners can sue Internet services without ever sending takedown notices. That goal makes settlement impossible.

As an added bonus, the huge defense costs of this lawsuit send a message to all UGC services–they better raise millions of dollars of extra investments to afford the lawfare that’s coming for them. That lawfare knocked Veoh out of the marketplace a long time ago, cost YouTube (in the Viacom case) over $100M to file its summary judgment motion, and surely discouraged many other entrepreneurs from entering the market. It’s remarkable Vimeo has lasted this long. Copyright owners’ determination to get more control over UGC than Congress gave them in the DMCA is a good reason why YouTube has emerged as a dominant player in the UGC video space. Few others can afford the legal fees necessary to compete.

Case citation: Capitol Records LLC v. Vimeo LLC, 2021 WL 2181252 (S.D.N.Y. May 28, 2021)

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