SPEECH - PLI Copyright Law 2007 - Web 2.0



From PLI’s Course Handbook

Understanding Copyright Law 2007

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7

user generated content—

key issues

Marcelo Halpern

Latham & Watkins LLP

Marcelo Halpern is a Partner at Latham & Watkins LLP and is resident in the Chicago Office where he focuses his practice technology and intellectual property transactions. The author extends his thanks to Mark Tung of the firm’s Silicon Valley Office for his hard work and invaluable assistance in researching and drafting this article. Mr. Halpern can be reached at marcelo.halpern@ or (312) 876-7723.

© 2007 Marcelo Halpern, Latham & Watkins LLP

All rights reserved.

User Generated Content – Key Issues

Marcelo Halpern

Latham & Watkins LLP[1]

What is “User Generated Content”?

1 The old days of the Internet

1 Bulletin Board Systems

2 Usenet (started in 1980 – pre-Internet UUCP networks)

3 The Well (started in 1985 as a dial-up BBS)

2 World Wide Web

1 Created (~1990)

2 Mosaic (~1993)

3 Personal Web Pages

3 Peer-to-Peer File Sharing

1 Napster

2 Grokster

3 BitTorrent

4 Web 2.0

1 Weblogs (i.e., “Blogs”)

2 Social Bookmarking

3 Wikis

4 Podcasts

5 RSS feeds (and other forms of many-to-many publishing)

6 Social Networking

7 Mash-ups

5 Examples of User Generated Sites

1 Social Networking Sites – MySpace, Facebook, Linked-in

2 Discussions – “user comments” sections of sites, web-style bulletin board systems

3 Evaluations – Amazon User Reviews, Orbitz Hotel Reviews, Yelp

4 Advertisements – Craig’s List, Personal Ads, eBay

5 Distribution Sites – You Tube, Flickr, Blogs

6 Multi-Player Gaming Sites – World of Warcraft, Second Life

7 Wikis – Wikipedia

User Generated Content

1 What makes this different from traditional copyrighted works?

1 Relationship of Author to the Public

1 Invitation to provide real-time and public commentary on the author’s work.

2 Invitation to participate in the creation of the author’s work

3 At what point does the commentary become part of the work itself?

4 What right does the author have to incorporate commentary and criticism into subsequent versions of the work?

2 Relationship of the Author to Host

1 Makes the distinction of “Publisher,” “Editor” and “Distributor” central to the nature of the copyright rights

2 Not self-published like personal web pages

3 Not centrally distributed like commercial web pages

3 Relationship of Site Operator or Host to the Work

1 The level of participation by host of a site may affect the host’s relationship to the works and therefore the host’s potential copyright rights and/or liabilities.

2 Continuum of participation:

1 completely passive host – no censure at all

2 minimal filtering (e.g., removing pornography)

3 contribution to content

4 editing of content, with discretion to refuse user content, modify user content, or remove user content

3 Does host have any rights to the works?

4 Relationship of Authors to each other

1 Who is the Author of a work on a user-generated site?

2 Not a traditional “collective work” that is centrally organized by contract

3 Authors may not know one another or have any formal relationship

4 Author’s rights may be defined (and restricted) by click-through style agreements or terms of use.

5 Jurisdictional Issues – what law applies

1 Author’s location – Which author?

2 Web server location

3 Publisher / Editor / Distributor’s jurisdiction

4 Infringer’s jurisdiction (e.g., if someone infringes the copyright of the work)

5 Victim’s jurisdiction (e.g., if the work itself violates a third party proprietary right)

6 Electronic medium facilitates copying and blurring of the traditional elements of copyright

1 What is copying?

2 What is public display?

3 What is public performance?

4 What is a derivative work?

5 What constitutes fair use? Parody? Infringement?

6 What is the economic harm from copyright infringement in a medium where the works are made available for free?

2 Why is this important?

1 Who has the right to control the works?

1 Republication

2 Derivative works

3 Rights to derive revenues

2 Who has responsibility for the works?

1 Copyright infringement

2 Factual accuracy

3 Other legal claims - defamation, invasion of privacy, breach of confidentiality, etc.

3 Economic impacts

1 Because of the number of users, the number of works involved can be huge. And therefore harm (and legal or statutory damages) can be very large.

2 Example: in Google’s acquisition of YouTube for approximately $1.65 billion, approximately $200 million – over 12% of the purchase price – was put into escrow to cover potential legal liability.[2]

Copyright infringement

1 Direct Infringement (copying, public performance, public display through linking/embedding)

1 U.S. Copyright Law (17 USC § 106 et. seq.) – Under U.S. Law, copyright owners have the exclusive right to:

1 Reproduce the work (17 USC § 106(1))

1 While caching and storing of temporary copies on a local computer as part of the normal functionality of a web browser is no longer considered infringement, what about deliberately storing an offline copy of the contents of the site?

1 Archiving a site for historical purposes?

2 Making the archived copy publicly available after the original has been removed?

2 Alternatively, an image on a web site may be displayed through linking to another webpage. In this case, no copy of the image is made onto the website host’s server. However, the end user’s web browser combines the third party image with the rest of the web page – is that reproduction by the website owner?

2 Prepare derivative works based on the work (17 USC § 106(2))

1 The line between derivative work and a new original work has always been fuzzy, but is blurred further in sites that invite user participation.

2 Are parodies (or attempts at parody) new works or derivative works? Are they fair use?

3 Distribute copies of the work (17 USC § 106(3))

1 If a website owner simply links to a copyrighted work, in addition to arguably not making a copy (discussed above), has the website owner distributed the work? According to the court in Napster, this does not constitute distribution.[3]

2 Is providing the location or reference information of a copyrighted work considered distribution?

1 Probably not.

2 However, providing links to infringing copies of copyrighted works have been enjoined.

4 In the case of literary, musical, dramatic, and choreographic works, pantomimes and motion pictures and other audiovisual works, to publicly perform the work (17 USC § 106(4))

5 In the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to publicly display the work (17 USC §106(5))

6 In the case of sound recordings, to publicly perform the work by means of a digital audio transmission (17 USC §106(6))

2 Contributory Infringement – how the standards have evolved[4]

1 The seminal U.S. Supreme Court cases in this area are Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984) (often referred to as the Betamax Case) and Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

1 Sony established the principle that the sale of a product with substantial non-infringing uses does not establish contributory infringement.[5]

2 Grokster held that the distribution of a product capable of both infringing and non-infringing uses, with the clearly shown object of promoting copyright infringement, and actual copyright infringement by users of the product, may establish contributory infringement on the part of the distributor.

2 Elements of Contributory Infringement

1 In order for there to be contributory infringement, there must first be direct infringement to which the accused contributed.

2 The contributory infringer must actually know, or constructively know (i.e., deemed by the law to have known) that direct infringement is occurring.

1 Willful blindness may constitute constructive knowledge of infringement.

2 Because determining constructive knowledge turns on the intent of the contributory infringer and intent may be difficult to prove directly (any properly counseled defendant is not going to admit intent to infringe), factual inquiries become important.

3 Examples include:

1 What is the basic business model of the defendant? Does it rely on copyright infringement?

2 What if copyright infringement occurs, but is not the primary purpose of defendant’s business?

3 The contributory infringer must materially contribute to the actual direct infringement.

3 Inducement[6]

1 As with contributory infringement, in order for there to be inducement, there must be actual direct infringement.

2 The inducing infringer must act with the object of promoting infringement of copyrights.

3 The inducing infringer must be aware that end users are directly infringing the copyrights.

4 The inducing infringer must materially contribute to the actual direct infringement.

4 Vicarious

1 As with contributory infringement, in order for there to be vicarious liability for infringement, there must be actual direct infringement.

2 The vicarious infringer must have financial interest in the infringement.

1 Evidence of vicarious infringement are often based on the apparent business model of the alleged vicarious infringer.

2 For example, many websites, such as Google, Yahoo, rely on a large user base (website traffic) in order to be able to attract advertising revenue. If the alleged vicarious infringer is relying primarily on infringing copyrighted material to draw users to its site, then arguably it has a financial interest in the infringement.

3 This issue appears in the recently filed Viacom International v. YouTube, Inc. (SDNY Civ. Action No. 07-cv-2103, March 13, 2007) (hereinafter “YouTube”).

3 The vicarious infringer must have the right and ability to supervise the direct infringer. This has historically revolved around the ability to monitor or filter users’ postings. (See discussion on filtering below.)

5 Defenses to Indirect Infringement

1 In Sony, the Supreme Court considered the competing policies of protecting copyright owners’ interests and promoting the advance of new technologies. The case centered on whether Sony could be liable for contributory infringement due to its sale and distribution of a Betamax video cassette recorder, a product capable of substantial noninfringing uses. The Court found that the use of video cassette recorders to time-shift was a permissible non-infringing use. However:

1 The Court did not provide significant guidance on how much noninfringing use constitute “substantial noninfringing use.”

2 The Sony decision included a significant public policy argument, weighing the promotion of technological progress against copyright protection. This left later courts the ability to consider indirect infringement theories in a broader context of additional non-infringing benefits that may be provided by new technologies.

2 In Grokster, the Court again considered policy issues and concluded that the existence of substantial non-infringing uses is not an absolute defense to indirect infringement. Even if a technology is capable of substantial non-infringing uses, when other facts indicate that the promoter of the technology had as its primary objective the promotion of copyright infringement, indirect infringement may be found.

6 Damages

1 Statutory Damages

1 U.S. Copyright law provides for statutory damages of $750 to $30,000 per work infringed.[7]

2 Given the number of downloads or views of a song or video, this adds up in hurry. In YouTube, the complaint alleges that at least 150,000 different works have been infringed. This amounts to minimum statutory damages of $112.5 million (i.e., $750 * 150,000). The complaint alleges more than $1 billion in damages.

2 Actual Damages – may include:

1 Lost profits – may be very difficult to show for a work not ordinarily distributed in this way

2 Unjust enrichment of the infringer – also difficult to prove, but would likely include an analysis of advertising revenue earned in connection with views of the infringed material.

protections for Internet Service Providers

1 Digital Millennium Copyright Act (DMCA)[8]

1 DMCA provides safe harbor protection to Online Service Providers (OSP) from liability for

1 transitory digital network communications (§512(a))

2 system caching (§512(b))

3 information residing on systems or networks at the direction of users (§512(c)) – this provision is most directly implicated in connection with user generated content

4 information location tools (§512(d))

2 To be eligible for the DMCA safe harbor, an OSP must:

1 Adopt and reasonably implement, and inform users of, a policy that provides for termination in appropriate circumstances of users who are repeat infringers, and

2 Accommodate and not interfere with standard technical measures by which copyright owners may identify or protect copyrighted works.

3 To qualify for §512(c) safe harbor for user generated content, in addition to the foregoing, the OSP must show:

1 It has neither actual knowledge that its system contains infringing materials, nor an awareness of facts or circumstances (“red flags”) from which infringement is apparent;

2 It does not receive a financial benefit directly attributable to infringing activity that it has the right and ability to control;

3 Upon proper notification of infringement from the copyright holder, it expeditiously takes down or blocks access to infringing material.

4 Some open issues in the application of the DCMA in connection with User Generated Content

1 Who has the right to determine if a copyright infringement has occurred that would force the OSP to remove such content?

1 For example, is use of a copyrighted clip in an another work an act of copyright infringement or a protected parody?

2 If the allegedly infringed work is itself user generated, can the actual copyright holder be determined?

2 What constitutes an “ability to control” infringement?

1 Is an OSP required to actively seek control technologies?

2 If control technologies are available but prohibitively expensive, is the OSP required to use them anyway?

2 Lack of direct infringement – fair use

1 Indirect infringement requires proof of direct infringement

2 Users may avoid direct infringement through fair use

3 Fair use – 4 factors

1 Nature of the Use

1 Generally “socially desirable” uses, such as education or journalism, are more likely to qualify for fair use than commercial uses.

2 Courts will also consider whether the use is transformative or merely redistributive. Transformative uses add something new or alter the character or use of the work and are more likely to constitute fair use.

2 Nature of the Work

1 Takes into account the creativity involved in the work – taking of factual works are more likely qualify as fair use than taking fictional works.

2 Taking of published works is more likely to be fair use than taking of unpublished works.

3 Amount of Work Copied – copying the entire work verbatim is likely to be unfair (some courts view it as presumptively unfair), but copying small amounts for inclusion in another work (a review or criticism, for example) likely will qualify for fair use. However, taking the “heart of the work” may be unfair even it is small.

4 Market Effect

1 Often considered the most important factor in fair use.

2 Looks not just the defendant’s conduct, but whether widespread conduct like the contested conduct would substantively and adversely impact the potential market for the underlying work or the market for traditional or reasonable derivative works of the underlying work.

3 Note that actual impact on the market for the work doesn’t mitigate harm to a derivative market. This is the argument that many have used in support of file sharing – that the effect to increase the market for the underlying work. However the resulting destruction of the derivative market for online distribution could destroy the fair use defense for these practices.

Strategies for Hosts of User Generated Content

1 Pre-emptive Licensing

1 If the website owner is able to license content, then users can post copyrighted material under the terms of that license.

2 For example, YouTube reportedly has entered into a revenue sharing agreement with the NBA to allow certain users to post clips. YouTube also reportedly has agreements with Vivendi Universal Music Group, Sony BMG Music Entertainment, and CBS Corp. to address the posting of copyrighted materials.

2 Terms of Use

1 Most websites require users to agree to a set of terms and conditions in which the user agrees to grant a license to the website owner to use the material the user posts.[9]

2 MySpace – “By displaying or publishing (“posting”) any Content on or through the MySpace Services, you hereby grant to a limited license to use, modify, publicly perform, publicly display, reproduce, and distribute such Content solely on and through the MySpace Services.”

3 YouTube – “[B]y submitting the User Submissions to YouTube, you hereby grant YouTube a worldwide, non-exclusive, royalty-free, sublicenseable and transferable license to use, reproduce, distribute, prepare derivative works of, display, and perform the User Submissions in connection with the YouTube Website and YouTube’s (and its successor’s) business, including without limitation for promoting and redistributing part or all of the YouTube Website (and derivative works thereof) in any media formats and through any media channels. You also hereby grant each user of the YouTube Website a non-exclusive license to access your User Submissions through the Website, and to use, reproduce, distribute, prepare derivative works of, display and perform such User Submissions as permitted through the functionality of the Website and under these Terms of Service.”

4 YouTube goes further, asking user not to post copyrighted material. “In connection with User Submissions, you further agree that you will not: (i) submit material that is copyrighted, protected by trade secret or otherwise subject to third party proprietary rights, including privacy and publicity rights, unless you are the owner of such rights or have permission from their rightful owner to post the material and to grant YouTube all of the license rights granted herein; (ii) publish falsehoods or misrepresentations that could damage YouTube or any third party; (iii) submit material that is unlawful, obscene, defamatory, libelous, threatening, pornographic, harassing, hateful, racially or ethnically offensive, or encourages conduct that would be considered a criminal offense, give rise to civil liability, violate any law, or is otherwise inappropriate; (iv) post advertisements or solicitations of business; (v) impersonate another person.”

3 Filtering (Technological and other problems)

1 Technological filters are available for some types of media, but are imperfect at best. Consider how difficult it has been for technology to consistently identify unsolicited commercial email (i.e., Spam).

1 Technology may have problems with mixed media (e.g., videos are homemade, background music is copyrighted, especially if there’s background noise).[10]

2 Technology may also filter out parodies or otherwise qualified fair use.

2 YouTube has a deal with Audible Magic, a company that makes filtering technology to flag copyrighted content.

3 Invasive filtering may also jeopardize safe harbors that service providers or publishers/distributors enjoy, as it pushes the service provider further into the role of editor and publisher rather than mere distributor on which the safe harbors depend.

4 Satisfying safe harbor

1 One element of the DMCA safe harbor requires that website owner does not receive a financial benefit.

2 In order to meet this safe harbor, some sites have removed advertisements from pages that display user controlled content.

Non-copyright Issues (A decidedly non-exhaustive sampling)

1 Defamation

1 On some sites such as Yelp, which allows users to post reviews of local restaurants, stores, and other services, users have been threatened when posting negative reviews.

2 Is the website owner liable for the possible business impact of users’ negative reviews?

2 Misleading information

1 Users post information, often anonymously, and possibly without checking the accuracy of the information.

2 Is the website owner liable if readers rely on the misinformation to their detriment? Are general disclaimers enough? What responsibility, if any, does a website owner have for verifying accuracy of information?

3 Communications Decency Act of 1996[11]

1 The CDA protects providers and users of “interactive computer services” from being treated as publishers or speakers of content provided by third parties.[12]

2 Under the CDA, an internet service provider is generally immune from liability for publishing defamatory and other harmful material submitted by third party users.

3 However, the CDA does not provide immunity from copyright infringement. For that, one must look to the DMCA.

4 Protection of minors

1 The Child Online Protection Act (COPA)[13] imposes penalties on those who knowingly make any communication for commercial purposes that is available to any minor and that includes any material that is harmful to minors. However, it provides three affirmative defenses:

1 requiring the use of a credit card, debit account, adult access code, or adult personal identification number

2 accepting a digital certificate that verifies age,

3 any other reasonable measures feasible under available technology certain types of speech in order to protect children.

2 COPA also requires websites targeting children under 13 to obtain verifiable parental consent before collecting personal information from the minor.

3 Certain sections of the CDA also prohibit transmission of offensive material and patently offensive display to minors.

4 Certain provisions in COPA and the CDA relating to restrictions on content, however, have been held unconstitutional as a violation of free speech.[14]

5 Trademark Infringement and Dilution

1 User generated content can include works that infringe or dilute trademarks in the same way as user generated content can include copyright infringing. Similar questions apply with respect to the liability of the host or service provider for such infringements.

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[1] Marcelo Halpern is a Partner at Latham & Watkins LLP and is resident in the Chicago Office where he focuses his practice technology and intellectual property transactions. The author extends his thanks to Mark Tung of the firm’s Silicon Valley Office for his hard work and invaluable assistance in researching and drafting this article. Mr. Halpern can be reached at marcelo.halpern@ or (312) 876-7723.

[2] Press release filed on Form 8-K, November 13, 2006.

[3] See In re Napster, 377 F. Supp. 2d 796 (N.D. Cal. 2005) (rejecting plaintiff’s argument that making a work available to the public constitutes distribution under 17 USC § 106(3)).

[4] The seminal U.S. Supreme Court cases in this area are Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984) (often referred to as the Betamax Case) and Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

[5] See Sony, supra, and A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000), A&M Records v. Napster, Inc.,239 F.3d 1004, 1021 (9th Cir. 2001).

[6] See Grokster, supra.

[7] 17 U.S.C. § 504(c) (2007).

[8] 17 U.S.C. §512

[9] Best practice in this area is to require the user to affirmatively agree to the terms of use through some type of “click-through” mechanism rather than relying on a simple link on the page to notify the users of the terms.

[10] Technology, of course, continued to improve. A New York Times article reported that a product from Audible Magic was able to identify a two-minute clip of poor video quality from YouTube, drained of color with dialogue dubbed in Chinese, that appeared to have been recorded with a camcorder in a movie theatre. (“New Weapon in Web War Over Piracy,” New York Times, February 19, 2007

[11] 47 USC § 230

[12] While the CDA speaks of “publishers,” the California Supreme Court recently held that distributors are covered as well. Barrett v. Rosenthal, 146 P.3d 510 (Cal. 2006).

[13] 47 U.S.C. § 231 (2007).

[14] See Ashcroft v. ACLU, 542 U.S. 656 (2004) for COPA; and Reno v. ACLU, 521 U.S. 844 (1997) for CDA.

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