Copyright Trolls

            We tend to want to think of Copyright Law as a dignified business.  Therefore I was shocked recently to discover that nearly forty percent (40 percent) of the copyright infringement litigation in this country involves the adult entertainment industry. 

            From my research (honestly) I see that companies such as Malibu Media (perhaps the largest player in this game) offer their videos for sale on the Internet.  Some unscrupulous users then employ file-sharing software to copy and share their films (does this sound familiar to the music industry?).  Much like the RIAA litigation of several years ago these companies have found ways to trace the infringements to various ISP addresses.  They then file copyright infringement lawsuits against the owners of these IP addresses (identified as John Doe in the complaint).  The defendants are then given the option to pay statutory damages (which can range from $750.00 to $30,000 or defend the claim in court.  Of course the next step is discovery in which the John Doe's real name gets revealed, leading to the possibility that the hapless defendant gets named in a federal lawsuit for downloading porn. 

            This really is a moral dilemma.  On the one hand copyright infringement is stealing, whether you're talking about an artist's life work or pornography and the adult film industry certainly has a right to protect its assets.  But the fact that the Copyright Act allows for the collection of statutory damages (at a minimum of $750.00 per title) and attorneys fees means that the plaintiffs are getting something of a windfall each time they are successful in these suits.  Some judges have taken note of this and there seems to be a new niche developing in defending against these suits. Of course even though they're not always victorious, litigating the claim for an innocent defendant (i.e. a grandparent or someone with an unsecure Wi-Fi connection) can be expensive.  The worst part to me is that these plaintiffs are holding this extra leverage over the defendants (pay up or suffer public humiliation. 

            These copyright owners have been called "copyright trolls" (defined as “an owner of a valid copyright who brings a copyright infringement action not to be made whole but rather as a primary or supplemental revenue stream") (see DeBriyn – Shedding Light on Copyright Trolls, 19 U.C.L.A. Ent. L. Rev. 79 (2012). I don't know if I would necessarily go that far.  Certainly no one accused the record companies of being trolls when they unleashed their torrent of lawsuits against file sharers (they were accused of many things but I don’t recall the word “trolls” being used.   But for some reason I find it shocking that this type of litigation constitutes so much of the federal court's docket.  However, it does demonstrate that there are a lot of ways to make money in the entertainment business. 

Quiz Time

Every year, I teach a course in Music Industry Law and Copyright Law. I like to give pop quizzes just to see if the students are paying attention. Here's a question which always blows their minds.

1. John Cage was a respected American avant-garde composer. One of his most famous pieces was called “4’33””, which consisted of him staring at a piano for four minutes and 33 seconds. The piece contained no music whatsoever. Is this work capable of copyright protection? If so, why?  If not, why not?

For those of you following along at home, , what do you think the correct answer is?

The Intersection of Copyright Law and Collection Law or Bow Wow Wow Yippee Yo Yippee Yea Part 2

One could create an entire law school curriculum on the legal battles of George Clinton.  The latest reported case from the United States Court of Appeals for the Ninth Circuit illustrates the unique relationship between entertainment law, copyright law and creditor's rights.

            Apparently George Clinton owed his former lawyers, Hendricks & Lewis over 1.7 million dollars in legal fees.  The firm sued Clinton, received a judgment and was able to convince the trial court to appoint a receiver and take custody of four of Clinton's iconic master recordings including "The Electric Spanking of War Babies" and "One Nation Under A Groove" for the purpose of maximizing "the income stream from the Funkadelic master sound recordings without selling or otherwise permanently disposing of the copyrights".  (Note that this is different from the initial press reports that seemed to indicate that the law firm ended up with ownership of the masters).  The goal apparently is for the receiver to exploit the recordings, pay the judgment creditor and then return the masters to Clinton.

            The copyright portion of the case is fascinating.  Clinton signed the typical recording agreement with Warner Brothers in 1975 acknowledging that the records were "works made for hire" or alternatively agreeing that he had assigned all rights in the recordings to the label.  Warner Brothers in turn reassigned the recordings to Clinton in 1993. 

            Clinton argued that the assignment of his recordings by the Court to the receiver violated Section 201(e) to the Copyright Act which prevents authors from "involuntary transfers" of their copyrights.  However Section 201(e) clearly states that it only applies "when an individual author's ownership of a copyright or of any of the exclusive rights under a copyright has not been previously transferred voluntarily by that individual author."  By the terms of the Warner Brothers agreement Clinton was either not the original "author" of the sound recording or being the original author he voluntarily assigned his rights to the record company, thereby losing the protections of Section 201(e). 

            The case is primarily relevant  because it establishes the important point that in some instances copyrights can be subject to execution to satisfy judgments and that although copyright is in the  exclusive domain of federal law the courts will look to state law to interpret how the execution will proceed from state to state.  This is important to both collection lawyers and to artists and writers and other copyright owners seeking to protect their copyrights in the event of litigation.

Is 17 USC 205(e) a Trap for the Unwary? Advice to Puiblishers and Administrators

Not long ago I was involved in what should have been a routine lawsuit over a collection of past-due royalties.  At some point during the litigation the other side brought up 17 USC 205(e) as a possible defense.

            For the unaware this little-discussed section of the Copyright Act states:

A non-exclusive license, whether recorded or not, prevails over a conflicting transfer of copyright ownership if the license is evidenced by a written instrument signed by the owner of the rights licensed…and if

(1)        the license was taken before execution of the transfer; or

(2)        the license was taken in good faith before the recordation of the transfer and without notice of it.

            Section (1) is a no-brainer but Section (2) is a potential landmine as it gives a possible defense of innocent infringement in a case where a licensee claims to have acquired rights without notice of the prior assignment (for example from an artist or a songwriter).

            I researched the statute pretty carefully and could find no reported cases dealing with it specifically although there are plenty of cases that explore similar territory and those cases generally come down on the side of the copyright owner (see for example Douglas v. Hustler Magazine, Inc., 769 F.2d 1128 and Symnatec Corp v. CD Micro, LLC, 286 F. Supp. 2d 1265) which states plainly “failure to record an assignment of copyright is not available as a defense to infringement”.

            Nonetheless despite the comfort these cases offer this odd statute does seem to present some kind of defense in those rare cases where a licensee could actually prove that it  had no knowledge of a prior transfer of copyright ownership.  The lesson here for all publishers and administrators should be to always record copyright assignments and related documents as soon as possible after execution.

17 USCA Sec. 411(a) and the law of Unintended Consequences

A couple of weeks ago, I attended an end of the year Continuing Legal Education seminar which featured two respected Nashville attorneys, Jim Harris  and Richard G. Sanders discussing an ongoing copyright infringement case they were involved in.  The case was a bit technical and the discussion initially focused on aspects of the Digital Millennium Copyright Act.  I was about to fall victim to one of those mid‑afternoon slumps when the discussion suddenly turned to the dreaded Section 411(a) of the Copyright Act.

            I was surprised to discover that the plaintiff’s attorney in this case had fallen victim to the same procedural problem I had recently faced.  Section 411(a) of the Copyright Act states that “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.”  Thus, as we constantly tell our clients and  students, while your copyright exists from the moment the work is first fixed in a tangible medium of expression, you can’t protect it (i.e. you can’t get into court) until the work is actually registered.

            What does this actually mean?  There is a split in the federal circuits as to what it takes to satisfy the registration requirement. In the 9^th Circuit, the registration requirement is met once the owner files the application to register the work with the copyright office.  Unfortunately our circuit, the 6^th Circuit currently follows the narrower approach, which requires the actual completion of the registration process before a plaintiff is allowed to proceed with his or her lawsuit.

            The odd part of this whole scenario is that Section 411(a) allows a party to go forward with a lawsuit even if the registration is refused.  Many commentators, including Nimmer have pointed out that if such is the case, the 9^th Circuit approach makes the most sense. 

            The problem of course is that the registration process can take a long time (especially in this era of government shutdowns and sequesters) and the damage caused by an infringer can be potentially fatal while the applicant waits for his registration certificate.  (There is an expedited registration process but many would find the fee $760.00 to be cost prohibitive.)

            I guess the policy argument here is that Congress intended to encourage registration by making it a prerequisite to filing an infringement lawsuit but it appears that many copyright owners choose not to register their work – or in some cases are not even aware that their work is protected by copyright until an actual infringement has occurred.

            In the case I was involved in, the court initially dismissed our complaint for infringement without prejudice. (this means that we could refile the lawsuit as soon as we received the registration certidicate).  I filed a motion to reconsider and while the court was considering this motion my registration certificate magically appeared, allowing the case to proceed to a successful conclusion.  Nonetheless I think that the requirement of actual registration under Section 411(a) is an outdated unworkable restriction which has the unintended consequence of causing harm to many plaintiffs.  In this context, the 9^th Circuit position seems much more fair. Congress should amend this section of the Copyright Act.