Copyright Unbalanced: From Incentive to Excess (9 page)

At the same time, criminalization has significant costs, and these costs are particularly high when online intermediaries—as opposed to those who directly infringe copyright—are targeted.

The distinction between an innovative online media service and a rogue site can be rather subtle. Consider Megaupload and YouTube. Both store and redistribute creative works submitted by users. Both claim to comply with the “notice and takedown” regime specified by the Digital Millennium Copyright Act. Both offer cash payments to the uploaders of popular content.

And both have non-infringing uses. For example, the Electronic Frontier Foundation is representing Kyle Goodwin, an Ohio videographer who used Megaupload as a backup service for his videos. Goodwin experienced a hard drive crash shortly before Megaupload was shut down. As a result, the Carpathia servers hold the only remaining copies of his commercially valuable videos.

This isn’t to say that Megaupload is necessarily a legitimate business and Kim Dotcom an innocent victim. But the exact line between an infringing file-sharing service and a legitimate cloud storage service is far from clear. Cloud storage services are the latest in a long list of once cutting-edge technologies, including the VCR, MP3 players, cloud music services, book search engines, and online video sites, that have faced accusations of copyright infringement. Most of these innovations eventually prevailed in court. But it wasn’t obvious ex ante that they would prevail. And society benefitted from the fact that entrepreneurs in each of these categories were willing to push forward despite the legal risks.

A particularly poignant example is the case of My.MP3.com, a precursor of modern cloud music services like Google Play and Amazon Cloud Player. Launched by entrepreneur Michael Robertson at the turn of the century as part of his company MP3.com, it was not a file-sharing service. It merely allowed users to upload music from CDs they already owned so that they could listen to their music from other Internet-connected computers. But to cope with the limited bandwidth of its day, the company took what proved to be a fatal shortcut. Rather than requiring users to upload the entire contents of a CD, it took a “fingerprint” and then instantly stocked the user’s online locker with music previously ripped from MP3.com’s own copy of the same CD. A district court judge found that the service infringed copyright law, forcing it to shut down. The decision may have set back the introduction of cloud music services by a decade; Amazon and Google finally entered the market in 2011.

The threat of civil liability already gives entrepreneurs strong incentives to follow the law. Adding criminal penalties may cause them to become excessively risk-averse, depriving consumers of valuable innovations. The founders of YouTube might have thought twice about launching a video website in a world where Napster founder Shawn Fanning and MP3.com founder Michael Robertson were serving prison sentences for criminal copyright infringement. We might have somewhat less piracy in that world, but we’d also have a lot less innovation in digital media technologies.

Indeed, there are already signs that the prosecution of Megaupload is causing more mainstream file-hosting services to curtail their functionality. A few days after the Megaupload raid, two file-hosting services, FileSonic and Fileserve, disabled the file-sharing feature of their sites.
³⁴
Of course, major content companies would applaud these decisions. But such functionality has legitimate as well as illegitimate uses. Its legality ought to be determined by a judge after hearing arguments for both sides. The threat of criminal prosecution has short-circuited that process.

The rapid pace of technological progress means that the line between legitimate and illegitimate online intermediaries—between the YouTubes and the Groksters—is likely to be a fine one for the foreseeable future. That makes it all the more critical that copyright law be developed incrementally through the case-by-case adjudication of civil lawsuits. Supreme Court rulings like
Sony
and
Grokster
made the law more predictable by giving future entrepreneurs notice of what the law requires. In contrast, when copyright enforcement is done by asset seizures and criminal prosecutions, the rule of law becomes irrelevant, since prosecutors can destroy the target business long before the case reaches trial.

Criminal prosecutions of online intermediaries, and especially the seizure of assets prior to conviction, threaten the rule of law and online innovation. Congress should repeal the asset-forfeiture provisions of the PRO-IP Act and revise copyright law to make it clear that only direct copyright infringement—not the operation of a site used for infringement by users—can result in criminal sanctions.

NOTES

1
.    Sony Corp. of America v. Universal City Studios, 464 U.S. 417 (1984).

2
.    MGM Studios, Inc. v. Grokster, Ltd. 545 U.S. 913 (2005).

3
.    Matt Richtel, “The Napster Decision: The Overview; Appellate Judges Back Limitations on Copying Music,”
New York Times
, February 13, 2001,
http://www.nytimes.com/2001/02/13/business/napster-decision-overview-appellate-judges-back-limitations-copying-music.html
.

4
.    Andrew Zipern, “Internet: Napster Suspends Service During ‘Upgrade,’”
New York Times
, July 3, 2001,
http://www.nytimes.com/2001/07/03/business/technology-briefing-internet-napster-suspends-service-during-upgrade.html
.

5
.    MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

6
.    Eric Bangeman, “StreamCast Loses File-Sharing Suit,”
Ars Technica
(blog), September 28, 2006,
http://arstechnica.com/business/2006/09/7852
/.

7
.    Nate Anderson, “No More ‘Hee Haw’: eDonkey Taken to the Glue Factory,”
Ars Technica
(blog), September 13, 2006,
http://arstechnica.com/information-technology/2006/09/7733
/.

8
.    Eric Bangeman, “Kazaa Ponies Up to Settle with Music Publishers,”
Ars Technica
(blog), November 1, 2006,
http://arstechnica.com/business/2006/11/8130
/.

9
.    Ryan Paul, “MPAA Turns Attention to USENET, Takes On Torrentspy, Isohunt, Others,”
Ars Technica
(blog), February 24, 2006,
http://arstechnica.com/uncategorized/2006/02/6253-2
/.

10
.  Nate Anderson, “1 Down, 5 to Go? IsoHunt Neutered by U.S. Judge,”
Ars Technica
(blog), May 24, 2010,
http://arstechnica.com/tech-policy/2010/05/1-down-5-to-go-isohunt-neutered-by-us-judge
/.

11
.  David Kravets, “Copyright Lawsuits Plummet in Aftermath of RIAA Campaign,”
Wired
(blog), May 18, 2010,
http://www.wired.com/threatlevel/2010/05/riaa-bump
/.

12
.  Jacqui Cheng, “MPAA Sues Hotfile for ‘Staggering’ Copyright Infringement,”
Ars Technica
(blog), February 8, 2011,
http://arstechnica.com/tech-policy/2011/02/mpaa-sues-hotfile-for-copyright-infringement-on-a-staggering-scale
/.

13
.  Lydia Palla Loren, “Digitization, Commodification, Criminalization: The Evolution of Criminal Copyright Infringement and the Importance of the Willfulness Requirement,”
Washington University Law Quarterly
77 (1999): 842.

14
.  18 USC § 2323.

15
.  United States Department of Justice, “Federal Courts Order Seizure of 150 Website Domains Involved in Selling Counterfeit Goods as Part of DOJ, ICE HSI and FBI Cyber Monday Crackdown,” press release, November 28, 2011,
http://www.justice.gov/opa/pr/2011/November/11-ag-1540.html
.

16
.  Ben Sisario, “Hip-Hop Copyright Case Had Little Explanation,”
New York Times
, May 12, 2012,
http://www.nytimes.com/2012/05/07/business/media/hip-hop-site-dajaz1s-copyright-case-ends-in-confusion.html
.

17
.  Mike Masnick, “More & Bigger Mistakes Discovered in Homeland Security’s Domain Seizures,”
Techdirt
(blog), December 22, 2010,
http://www.techdirt.com/articles/20101222/02112912376/more-bigger-mistakes-discovered-homeland-securitys-domain-seizures.shtml
.

18
.  Timothy B. Lee, “Waiting on the RIAA, Feds Held Seized Dajaz1 Domain for Months,”
Ars Technica
(blog), May 4, 2012,
http://arstechnica.com/tech-policy/2012/05/waiting-on-the-riaa-feds-held-seized-dajaz1-domain-for-months
/.

19
.  “Sports Streaming / Torrent Links Site Victorious in Court,”
TorrentFreak
(blog), May 10, 2010,
http://torrentfreak.com/sports-streaming-torrent-links-site-victorious-in-court-100510
/.

20
.  David Kravets, “U.S. Faces Legal Challenge to Internet-Domain Seizures,”
Wired
(blog), June 13, 2011,
http://www.wired.com/threatlevel/2011/06/domain-seizure-challenge
/.

21
.  Henry Hyde,
Forfeiting Our Property Rights
(Washington, DC: Cato Institute, 1995).

22
.  Near v. Minnesota, 283 U.S. 697 (1931).

23
.  Calero Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663 (1974).

24
.  United States v. James Daniel Good Real Property, 510 U.S. 43 (1993).

25
.  Rob Fischer, “A Ninja in Our Sites” (includes comments by Hana Beshara),
American Prospect
, December 15, 2011,
http://prospect.org/article/ninja-our-sites
.

26
.  “TV-Links Triumphs with Landmark E-Commerce Directive Ruling,”
TorrentFreak
(blog), February 12, 2010,
http://torrentfreak.com/tv-links-triumphs-with-landmark-e-commerce-directive-ruling-100212
/.

27
.  Timothy B. Lee, “Big Content’s Latest Antipiracy Weapon: Extradition” (includes comments by Julia O’Dwyer),
Ars Technica
(blog), July 21, 2011,
http://arstechnica.com/tech-policy/2011/07/big-content-unveils-latest-antipiracy-weapon-extradition
/.

28
.  David Kravets, “Feds Shutter Megaupload, Arrest Executives,”
Wired
(blog), January 19, 2012,
http://www.wired.com/threatlevel/2012/01/megaupload-indicted-shuttered
/.

29
.  Nate Anderson, “Why the Feds Smashed Megaupload,”
Ars Technica
(blog), January 19, 2012,
http://arstechnica.com/tech-policy/2012/01/why-the-feds-smashed-megaupload
/.

30
.  Timothy B. Lee, “Kim Dotcom Lawyer Blasts U.S. Government’s ‘Pattern of Delay,’”
Ars Technica
(blog), May 25, 2012,
http://arstechnica.com/tech-policy/2012/05/kim-dotcom-lawyer-blasts-us-governments-pattern-of-delay
/.

31
.  Nate Anderson, “Mega-Victory: Kim Dotcom Search Warrants ‘Invalid,’ Mansion Raid ‘Illegal,’”
Ars Technica
(blog), June 28, 2012,
http://arstechnica.com/tech-policy/2012/06/mega-victory-kim-dotcom-search-warrants-invalid-mansion-raid-illegal
/.

32
.  U.S. Constitution, art. 1, sec. 8.

33
.  Mike Masnick and Michael Ho,
The Sky Is Rising: A Detailed Look at the State of the Entertainment Industry
, white paper sponsored by the Computer and Communications Industry Association, January 2012,
http://www.techdirt.com/skyrising
/.

34
.  Ryan Paul, “FileSonic Has Disabled File Sharing in Wake of Megaupload Takedown,”
Ars Technica
(blog), January 22, 2012,
http://arstechnica.com/tech-policy/2012/01/filesonic-has-disabled-file-sharing-in-wake-of-megaupload-takedown
/; Jon Brodkin, “More Megaupload Fallout: FileServe Shutters File-Sharing Service,”
Ars Technica
(blog), January 23, 2012,
http://arstechnica.com/gadgets/2012/01/more-megaupload-fallout-fileserve-shutters-file-sharing-service
/.

Christina Mulligan

I
N MID-JULY 2012,
a Mitt Romney campaign ad hosted on YouTube was forcibly removed from the site, over the protests of the Romney campaign.
¹
The removal resembled a similar incident that occurred in 2008, when YouTube blocked several John McCain ads for more than 10 days, despite the McCain campaign’s pleas that YouTube put the ads back up.
²

In both cases, YouTube removed the ads in response to claims that they violated someone’s copyright. Under the Digital Millennium Copyright Act, YouTube can be held liable for copyright infringement if it doesn’t remove videos upon notification that someone believes the video infringes his or her copyright. Therefore, YouTube has a very strong business interest in immediately taking down anything someone claims is copyright-infringing.

The Romney ad featured news headlines claiming President Barack Obama rewarded campaign donors and lobbyists with political positions, access to political leaders, and stimulus funds. In the background, it played a sound clip of Obama singing a single line from Al Green’s song “Let’s Stay Together”: “I’m so in love with you.” Music publisher BMG had the ad removed because it claimed the clip of Obama singing Green’s song violated its copyright.
³
Four years earlier, the McCain campaign ads had been removed because they incorporated news clips from CBS, Fox, NBC, and the Christian Broadcasting Network.
⁴

The Romney and McCain ads were not actually copyright-infringing. Indeed, the inclusion of President Obama’s singing and the news clips qualify as “fair uses”
⁵
of copyrighted works under the Copyright Act—meaning that Romney’s and McCain’s campaigns didn’t need the copyright holder’s permission to use the clips. Their videos weren’t illegal—yet YouTube still censored the ads for several days.

The campaign ad debacles illustrate just one of the problems with the Digital Millennium Copyright Act, but there are many others. This chapter explores a few of them. The first section explains what the DMCA does and how it works. The second describes the DMCA’s effects on competition and on fair uses of copyrighted works. The third situates the DMCA in the history of liberty of the press, and the final section discusses how the DMCA chills freedom of expression.

Understanding how the DMCA threatens free expression and free competition requires a quick overview of the law. The DMCA has two primary parts: the anticircumvention provisions and the safe harbors for Internet and online service providers, which will be considered in turn.
⁶

The anticircumvention provisions concern the legal treatment of bypassing or “circumventing” what have become known as technical protection mechanisms. TPMs act like digital locks on content such as software, movies, music, and e-books, that control who can access the material and how the material can be used.

TPMs can require an owner to type in a password or code to watch, read, or listen to material, or can “tether” a device or piece of content to a computer on the Internet that is controlled by a copyright holder. Tethered works have to call home, metaphorically speaking, and check that access is permitted before granting it to a user.
⁷
(One might recall early iTunes music and current iTunes movies as examples of media with this characteristic. In order to play a rented or purchased movie, the account that purchased it must be signed in to iTunes. When a person signs in, his or her computer “calls home” to Apple, and Apple’s computers validate the account’s password, permitting the movie to be played.) TPMs can also limit functionality, such as by preventing someone from printing a paper copy of an e-book, or by only allowing someone to access a work for a certain period of time.

Before the DMCA, copying digital works without permission already constituted prima facie copyright infringement, and could be punished by statutory fines of up to $100,000 per infringement.
⁸
(This amount was increased to $150,000 in 1999.)
⁹
But content owners, such as record labels and motion picture producers, feared that despite these fines they would lose control of their content as computers became more powerful and the Internet became more popular. Computers and the Internet would make the copying and sharing of movies, music, and software substantially easier.

One strategy to prevent such loss of control, they realized, would be to add TPMs, or digital locks, to content, so that software and digital content could only be used or copied with the copyright holder’s permission. These measures not only would prevent illegal copying, but also could be used to prevent all copying, including copying for fair-use purposes, such as copying and pasting a long passage from an e-book for use in a book review or term paper.

But the problem with locking up content is that it can sometimes be unlocked without permission—often fairly easily. Before the DMCA, a person or corporation could legally build a device or write computer code to unlock content and remove any controls that copyright holders had placed on it.

But copyright holders didn’t want to risk losing control of digital content, when there was so much more potential to control copyrighted works than there had ever been before. Neither traditional analog technology nor the copyright statute had ever granted copyright holders control over how lawfully made copies could be used. But TPMs and digital rights management technology meant that companies could license limited-time-use movies and e-books, or movies and books that could only be accessed under certain circumstances or on particular machines. Fast-forwarding through commercials could be prohibited. Copies could be controlled long after they were sold: in one notorious case, Amazon actually deleted copies of George Orwell’s
1984
from customers’ Kindles when it realized the copies had not been properly licensed.
¹⁰
Whereas analog technology simply didn’t allow a publisher to control how many times you read a book or how many photocopies of a favorite poem you made, digital technology could do it.

The way for copyright holders to secure control of digital works was to amend the Copyright Act to forbid both the circumvention of TPMs and the development of circumventing technology. This amendment became the first of two key sections of the DMCA. The second key section of the DMCA, which ultimately became section 512 of the Copyright Act, was negotiated in the face of opposition by Internet and online service providers to the DMCA’s anticircumvention provisions and to the Clinton administration’s white paper on intellectual property rights.
¹¹
Section 512 provides significant immunity to Internet service providers, in light of the white paper’s assertion that almost any digital copy constitutes a prima facie violation of the copyright statute.
¹²
It provides a “safe harbor” for Internet and online service providers who transmit copyrighted material over the Internet, who store copyright-infringing material at the direction of a user, or who link to infringing material. Whereas the white paper’s interpretation of the Copyright Act would have rendered every Internet and online service provider directly liable for the copyright-infringing actions of its users, the safe harbor immunizes providers from liability if they comply with certain requirements in the statute.

In order to qualify for the safe harbor, providers that store or link to content must participate in what is known as “notice and takedown,” which essentially means that providers must “take down” content after they are notified that it may be copyright-infringing. Section 512 provides a host such as YouTube or a search engine such as Google with immunity from liability for hosting copyright-infringing videos uploaded by a user, or for linking to webpages containing copyright-infringing material. In return, these service providers must remove the material or link if asked by a copyright holder. In the case of a service provider, such as YouTube, that stores material at the direction of users, the provider must notify the user that material has been taken down, and the user has the option to give “counter-notice” that the material is not infringing, in which case the material can be restored 10 days after the counter-notice is received.
¹³
There is no obligation for a search engine to notify parties that their material has been removed from its search index, nor are there counter-notification procedures written into the law that provide a process for restoring such links.
¹⁴

With the addition of section 512, President Clinton signed the DMCA into law on October 28, 1998. The final version of the anticircumvention amendments contained two provisions.

First, in what became section 1201(a) of the Copyright Act, the law prohibited people from “circumventing” a TPM that controlled access to a copyrighted work—or, in other words, from breaking digital locks without permission.
¹⁵
There was no exception for circumventing a work for traditional fair uses, such as comment, criticism, or parody, or to access a public-domain work that was controlled alongside a copyrighted work. Rather, the statute allowed the Librarian of Congress to carve out exceptions to the circumvention prohibition via a triennial rulemaking procedure.
¹⁶

Second, in what became section 1201(b), the creation of tools (usually software) to facilitate circumvention was also forbidden, even if the tools were necessary to make certain fair uses of the copyrighted material.
¹⁷
Neither the Librarian of Congress nor any other regulatory body has the power to issue exceptions to the 1201(b) prohibition. Thus, while the librarian can announce an exception that would allow individuals to circumvent a TPM, it remains perversely illegal for any third party to create a tool to allow them do so.
¹⁸
For example, the exceptions currently allow a visually impaired person to enable a computer to read a protected e-book out loud. But unlocking an e-book’s read-aloud function requires someone to write software to gain access to the e-book. Most people don’t have the skills to do this and would have to rely on programs written by others. But under 1201(b), it is illegal for a third-party programmer to write a computer program to access the read-aloud function of a locked-up e-book, even though a visually impaired person could legally use that software if he or she acquired it.

Remedies for civil violations of the anticircumvention provisions are up to $2,500 of statutory damages per act of infringement, or the “actual” damages incurred (in other words, the actual amount of financial damage suffered due to the circumvention).
¹⁹
But the injunctive and criminal remedies are where the DMCA really has bite. Courts are empowered to enjoin the use, dissemination, or creation of anticircumvention devices to prevent or restrain circumvention,
²⁰
and upon finding a violation of the anticircumvention provisions, to order “the destruction of any device or product involved in the violation that is in the custody or control of the violator.”
²¹
Repeated violations of section 1201 can result in triple damages.
²²

The criminal penalties for violating section 1201 are much more significant. “Any person who violates section 1201 … willfully and for purposes of commercial advantage or private financial gain … shall be fined not more than $500,000 or imprisoned for not more than 5 years, or both, for the first offense.”
²³
The punishment can be doubled for subsequent offenses.
²⁴

Section 1201 not only makes certain technologies illegal, but also reduces competition among technology makers. How this works is best illustrated by comparing how technology interacted with copyrighted material before and after the DMCA. When the VHS cassette tape was introduced, any company could legally produce a VCR that could play the tape on a television set. VHS tapes were not burdened with technical protection mechanisms; when moviemakers started selling films on VHS tapes, their content was not scrambled or locked up. As a result, many different companies could produce VCRs and compete with one another to make the best product.

In contrast, DVDs are encoded with a technical protection mechanism called the Content Scrambling System, or CSS. In order to play a DVD, a device needs to decode the scrambled contents of the DVD. CSS was cracked in 1999, and the decryption program, called DeCSS, was made available on the Internet.
²⁵
DeCSS was beneficial not only to those who wanted to copy DVDs illegally, but also to anyone who wanted to copy portions of DVDs for fair uses—people such as film professors and students. But due to section 1201, an aspiring producer of DVD players could not simply incorporate DeCSS into a player without violating the law. DVD players can only legally descramble CSS with permission from the industry group that licenses the CSS standard, the DVD Copy Control Association (DVD CCA).
²⁶
And the Copy Control Association will only license DVD players if the players’ manufacturer agrees to respect competition-restricting regional codes and restrictions on fast-forwarding through opening ads.
²⁷
In addition to acting as a gatekeeper for DVD player manufacturers, the DVD CCA also discourages computer users from switching to alternative operating systems. For example, no licensed DVD playing software is currently available for the Linux operating system, although PC and Apple users can easily play their DVDs legally.
²⁸
This means that Linux users who purchase a DVD at a Target store cannot legally play it on their computers.