Moderator: Annemarie Bridy, University of Idaho College ofLaw
Jeffrey Mausner, former outside counsel for Perfect 10
Here as concerned citizen. DMCA safe harbor was supposed tolead to cooperation between copyright owners and OSPs to remove infringingcontent from the internet. Unfortunately, the safe harbor has been interpretedby courts in ways that favor infringers and greatly disadvantage copyrightowners. This has allowed OSPs to fail to cooperate and make billions frominfringement instead of copyright owners. Even though Google knows or shouldknow that it’s providing massive quantities of infringing images via Googleimage search and infringing songs/movies via search and YouTube and makingbillions, courts by and large haven’t held Google liable. Courts have allowedGoogle to allow anonymous infringers to post billions of dollars of obviouslycopyrighted works on Google’s servers and make money from infringing.
Google etc. are greatly damaging our country’s IP using amisguided interpretation of the safe harbor. Google’s business model is makingmoney off of others’ IP, owning virtually none of the IP it makes available tousers. That’s why users love Google:massive provision of free content belonging to others. Supporting this is shortsighted and will lead to less over time. Google’s power is unprecedentedcompared to railroads/robber barons. Google has unlimited money and can reachanyone with a computer to control/influence them—SOPA/PIPA.
Lamar Smith said of Google’s opposition: sought to obstructthe committee’s consideration of bipartisan litigation—no surprise givensettlement of case involving helping rogue websites distribute pharmaceuticals—$500million settlement. Not rogue employees. Google’s efforts to appear to controlunlawful ads were window dressing, continuing to allow Google to earn revenueseven as it professed to take action against the sites. Given Google’s record,its objection to authorizing a court to order a search engine not to directconsumers to foreign rogue websites is more easily understood.
Perfect 10 v. Amazon:9th Circuit said that there was no dispute that Google “substantiallyassists” websites to distribute infringing copies to a worldwide market, andassists users to access the content. Google knows or should know that infringing material is available on amassive scale, but continues to provide users with these, but it’s the safeharbor that allows this. Facilitatesinfringement by helping users to locate infringing materials; supportinginfringing sites by directing traffic to them.
Google provides vastly more links to infringing websites—moreto the Pirate Bay—than it does to legitimate websites—see allaboutgoogle.org. Also facilitates infringement by puttingGoogle ads next to infringing materials, which means it not only profits fromthe infringement, but helps infringing websites stay afloat as continuedsources of infringement. Got socked forit with pharma, but not yet for copyright.
Google also assists infringement via Blogger, providing nearcomplete immunity to anonymous infringers displaying Google ads. When copyright owners try to get infringingmaterials removed, Google uses the DMCA to make it difficult or effectivelyimpossible to do so rather than by using image recognition or other technologyGoogle has. Allows infringement toappear over and over in different locations. Google allows this because itmakes money.
If you search “I do not own” on Google, you get 1.6 billionresults: admits doesn’t own the content. (Ed. note: Hey, that’s a lot of noninfringingfan fiction (warning: first link I got goes to TVTropes and has terriblelegal analysis to boot!))
Google claimed Perfect 10 had to describe its images usingtext, not a copy of the image sent with a takedown notice. Pictures speak athousand words, but Google requires words to create a greater burden oncopyright owners. Antitrust issues as well.
Andrew Bridges, Fenwick & West LLP (on the other side ofPerfect 10 v. Google)
Will let the cases speak for themselves; Mausner has shownhow SOPA ought to have been named the Stop Google Act.
When I defend cases, I don’t put the safe harbor front ¢er. I litigate a lot of direct and secondary liability cases where I stayfocused on the underlying standards for direct, contributory, and vicariousinfringement, knowing that the safe harbor can be a shortcut on remedies. It’snot clear that much is safe about the safe harbor, in actual litigation. Whatone sees in cases is uncertainty about whether 512 is a safe harbor or areworking of the substantive liability standard. The safe harbor is relevantonly if a defendant has been adjudicated an infringer. The safe harbor is socomplicated that it costs more to litigate—more parts to the elements—than thesubstantive secondary liability. Mushiness is a real practical problem.
Moreover, it’s no safe harbor against criminalprosecution.
Ruling yesterday in UMG v. Veoh—major victory for safeharbor, also for Hollywood, because Veoh was destroyed by years of intensive,costly litigation. That safe harbor wasn’t very safe. Need something easier to use: if you pay 110%of your estimated taxes from last year, you’re safe. That safe harbor is nothing like the DMCA.Safe harbor hasn’t solved the problem it was meant to solve. The way courts havetreated it, wrestling with distinction between substantive standard and safeharbor, hasn’t been safe. Has encouraged business models that rely onthird-party content, which is important. But consider how it started: Netcom. Not a safe harbor decision, buta substantive liability standard, adapted for DMCA ostensibly to make peoplefeel more secure. But has it made anyone more secure?
Was disappointed that there was no award of attorneys’ feeshere in Veoh. The ability of companies to be destroyedwhile litigating safe harbors should have resulted in a fee award. Also foundit interesting that 3d party red flags are given more weight in defeating safeharbor than defective notices by the copyright owner. Often when 3d partieswrite in, they’re officious intermeddlers with little knowledge of the factualcircumstances—who’s the author, owner, uploader, etc.? The copyright owner isin the best position to provide those facts, but if someone floats in out ofthe blue saying “you’re infringing,” that shouldn’t be given weight as red flagknowledge. Expects to see copyrightholders promoting officious intermeddling. Make no mistake, the cases he’ve seen don’t involve neutral, modestlitigation arguments but “let’s kill the company even if we don’t win”arguments because killing the company is as good as or better than winning alegal judgment.
Michael Robertson, DAR.fm (also founder of mp3.com andmp3tunes)
Not an attorney, but has paid many.
While the record companies were talking about how evil hewas in court, suing him and driving his stock price down, they were alsooffering to buy his evil company. EdgarBronfman said that he sued mp3.com because he feared that it would become toopowerful. While 512 is interesting, atthe end of the day it’s all about money. Let’s ask if Google and YouTube havemade the world better: the answer is yes. Copyright is not about giving UMG more revenue; UMG has to competeagainst video games and movies. But is there more content today than yesterday?Absolutely.
The problems that exist are more with statutory damages—incentivesto sue Veoh and drag it out and hope to get an award of billions. Still, theDMCA served a purpose; the US is a leader in search, aggregation and storage.
Bridy: Legislative history talks about allowing secondaryliability doctrines to continue to evolve. Has that happened?
Bridges: It still is developing, but language on safe harborsounds so much like the vicarious liability standard that it led to argumentsthat there’d be no safe harbor for vicarious liability claims (just rejected by9th Circuit). So standards are evolving, but the distractions of theDMCA cases have caused attention to be drawn away. Also thinks that 9th Circuit hasgone off the rails on the whole underlying principles of vicariousliability. Vicarious liability existsacross a range of law; 2d Circuit had a correct formulation, but Fonovisa subtly modified the languageand divorced it from the underlying principle of respondeat superior and thingslike respondeat superior. No one is nowsaying “is Napster’s relationship to its customers like respondeat superior,”and there’s been a lot of dicta about vicarious liability that is wrongheaded. Partly there’s a lot of free-floatingthoughts about contributory/vicarious and mushing them together, and a separatemushing together of secondary liability and safe harbors. Better to analyze them distinctly.
Q: why is merging knowledge into vicarious liability a badidea?
Bridges: you won’t find a court saying this, but this is howI think: types are vastly different. Contributory = wrongful conduct that leadsto infringement. Vicarious = relationship-based liability; parent is responsiblefor child and employer for employee not because of supervision but therelationship itself is the basis of the liability, regardless of how well theemployer is supervising the employee. Original department store case in 2d Circuit,Shapiro,Bernstein, involved employment-like relationship with department store.
Q: but the reason for that was a public policy shift: theperson in that role has the ability to insure against losses, take steps tomake people whole. The people benefiting financially should be the ones thatare making sure that infringement isn’t taking place. (This would make moresense without statutory damages.)
Bridges: Where did that become copyright policy? Sony was very clear that copyrightsecondary liability came from general vicarious liability. FHA case, SCt said: Incases of federal statutory torts, courts may not impose vicarious liabilitybroader than the traditional tort. We’re starting to put moralizing and LearnedHand type negligence theory where it shouldn’t be. Original language: obvious and directfinancial interest in the exploitation ofthe copyrighted work plus the right and ability to supervise. I don’t have a direct financial interest inAmerican Airlines, but I receive a financial benefit from AA because it takesme places where I take depositions and make money. 9th Circuitmushed contributory and vicarious liability and gave us a problem.
Q: Robertson said statutory damages are the problem. Whatwould happen if in 3d party liability cases the only damages recoverable wereeither actual harm or disgorgement?
Mauser: Even statutory damages don’t make up for theattorneys’ fees that have to be expended to win the case. The problem isn’t big studio against little internetcompany; the real problem is mostly Google. Google is bigger than the movie studios and record companies thatdeveloped all the content, losing all their money to Google. There was going to be a §504 amendment toallow the court to use its discretion to award multiple statutory damages forcompilations, but when you’re up against the big guys even statutory damagesdon’t provide enough to go through the litigation, and you might not get yourattorneys’ fees even if you win. Googleis too big to sue.
Bridges: That hasn’t stopped Perfect 10 from suing lots ofother people. Courts do award attorneys’ fees for plaintiffs, a lot more thanfor defendants. I believe in statutorydamages for statutory claims, not for nonstatutory claims like secondaryliability. Statutory damages shouldreally be called fictitious damages—they’re completely divorced from realharm. Media companies have never triedto prove actual damages; have dodged discovery when he’s tried. Music company sued new media site one dayafter it signed a term sheet with another label; given the billions you owe us,it said, we’ll be satisfied with 60% of your company. Perfect 10 has demanded $4 billion and claimsto have lost $50 million over the course of its operations. Limewire: sought more in statutory damagesthan the recording industry had made since Edison made a phonograph—annual USbudget deficit. US claim against Megaupload: ½ a trillion dollars indamages. The US should give up the taxbusiness and go into copyright!
Statutory damages have perverted and corrupted the rest ofcopyright law; should put an absolute cap. SOPA/PIPA mantra was “piracy is areal problem and something must be done.” If so, there should be no problem proving actual damages.
Robertson: Viacom and YouTube would settle tomorrow with nostatutory damages; they’d figure something out. Game theory: statutory damages means fight to the death.
Bridges: rule of law and copyright exceptionalism/celebrityexceptionalism. Look at patent: what if we did $150,000/claim infringed, plusHomeland Security arresting patent infringers, and life plus 70 as the term.Copyright has gone out of balance by accident.
Q: possibility of a plaintiff with a losing case drivingdefendant out of business. Torts isheads I win, tails I break even. If there’s a probability of error, it pays tosue even the innocent and offer to settle. What if the losing P owed the D damages of 1/6 the amount P hadclaimed? Not fees, but damages for inflictingthe risk of a false award on the D.
Bridges: some countries require bonds by P, but part of feesof court.
Robertson: he likes that idea. Was CEO of firm that went bankrupt afterpaying attorneys’ fees. Big guys look at courts and say “I have more attorneysand money and I’ll wear you out.” I’ve been deposed 3 times in 7 ½ years overmp3tunes, and still going. This is a bigger problem than the DMCA.
Bridges: one thing making the DMCA a little irrelevant—majorshift from civil to criminal. Perfect 10 sued Megaupload; Megaupload showed upto defend and settled. Studiosoffloading litigation expense from plaintiff. Also, they killed Megaupload,which was all the victory they needed—won without a decision on the merits. Ina civil case, a preliminary injunction would’ve been conditioned on a bond toprotect Megaupload, but the government doesn’t have to post that bond. There’sa reason why it was the gov’t and not Hollywood who sued. I defended a casewhere the gov’t seized a domain name for secret reasons and secret time extensions—thegov’t killed a hip hop blog by seizing and never filing a forfeiture complaint.That’s where we are today. Megaupload claimed to comply with the DMCA; doesn’tknow whether it did or not and we’ll probably never know.
Q: Talked to Judiciary staffer—if the carveout is consistentwith Fonovisa, it gives nothing, soit has to be more like the NY standard, more equivalent to supervisorystandard. Staffer said yes. But what about financial control? She said: weenvisioned making money tied to the infringing material as opposed to thenoninfringing material. Congress made a conscious decision to create adifferent standard for the internet, as it did with the CDA §230. Mausner’s real complaint should be withCongress.
Robertson: Congressional Record has language on financialinterest to the same effect.
Q: Congress didn’t make a conscious decision to do anything.Let the movie companies have the language they wanted, and ISPs in 512(m), andlet them fight it out, as long as the campaign contributions kept coming.
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