Turin, 29 Août – 2 Septembre 2001
Turin, August 29 - September 2, 2001
Turin, 29 de Agosto - 2 de Septiembre de 2001


COMMISSION DU DROIT DES DIVERTISSEMENTS
COMMISSION ON ENTERTAINMENT LAW
COMISION DE DERECHO DEL OCIO
 

ENTERTAINMENT ON THE INTERNET-
    Recent Developments: The United States Perspective
 

Paul D. Supnik
30 août 2001      9595 Wilshire Boulevard,
August 30, 2001            Suite 201
30 de agosto 2001                                     Beverly Hills, California 90212-2502
Telephone: (310) 859-0100
Facsimile: (310) 859-0177
e-mail: ps@supnik.com
web site: www.supnik.com

© UIA 2001
 

ENTERTAINMENT ON THE INTERNET, THE UNITED STATES PERSPECTIVE
 by
Paul D. Supnik


 


INTRODUCTION
 
Entertainment issues on the Internet have primarily developed on a case-by-case basis.  New ways of delivering entertainment are being placed in use and then challenged by competing rights holders.  Significant litigation so far has been funded through the RIAA (Recording Industry Association of America) and the Motion Picture Association of America and their member companies.  Though an appellate court decision has now been rendered in connection with the Napster case, variations on file sharing activity and litigation continues.  The effect of the Napster litigation in a significant way has resulted in attempts by emerging companies with their varying business models to enter into various forms of licensing agreements with rights holders.

The inability of the legal system to be completely effective in connection with claims of rights holders has resulted in seeking technological ways to limit uses which are made of copyrightable material.  Thus, various encryption schemes and watermarks continue to be used and developed.

Since neither the technological approach nor the legal approach have been entirely satisfactory, the combination of the two continue to be promoted by the rights holders to maintain control over copyrighted use of materials.

The following is a review of some of the more important developments through cases and other activity involving the legal issues of entertainment on the Internet in the United States.

NAPSTER

An appellate decision in the Napster case was released February 12, 2001.    The Ninth Circuit agreed with the district court that the record companies presented a prima facie case of copyright infringement entitling plaintiffs to a preliminary injunction.  The panel also agreed that Napster’s use of copyrighted material was not fair use.  Napster may be held secondarily liable for direct copyright infringement by contributory copyright infringement (knowingly encouraging and assisting users to infringe, and materially contributing to the infringing activity) and vicarious copyright infringement (Napster has a direct financial interest in users infringing activity and retains the ability to police its system for infringing activity).

However, the scope of the injunction by the district court was too broad and the case was remanded to the District Court. The District Court issued the following modified injunction substantially as follows :

2. Plaintiffs shall provide notice to Napster of their copyrighted sound recordings by providing for each work:

   (A) the title of the work;

   (B) the name of the featured recording artist performing the work ("artist name");

   (C) the name(s) of one or more files available on the Napster system containing such work; and
 
   (D) a certification that plaintiffs own or control the rights allegedly infringed. Plaintiffs shall make a substantial effort to identify the infringing files as well as the names of the artist and title of the copyrighted recording.

   3. All parties shall use reasonable measures in identifying variations of the filename(s), or of the spelling of the titles or artists' names, of the works identified by plaintiffs. If it is reasonable to believe that a file available on the Napster system is a variation of a particular work or file identified by plaintiffs, all parties have an obligation to ascertain the actual identity (title and artist name) of the work and to take appropriate action within the context of this Order.

   4. The Ninth Circuit held that the burden of ensuring that no copying, downloading, uploading, transmitting or distributing of plaintiffs' copyrighted works occurs on the system is shared between the parties. The court "placed the burden on plaintiffs to provide notice to Napster" and imposed on Napster the burden "of policing the system within the limits of the system." See A&M et al. v. Napster, 2001 U.S. App. LEXIS 1941, No. 00-164001, slip op. at 2206 (9th Cir. Feb. 12, 2001). It appears to the court on the basis of the factual representations by the parties at the March 2, 2001 hearing that it would be difficult for plaintiffs to identify all infringing files on the Napster system given the transitory nature of its operation. This difficulty, however, does not relieve Napster of its duty. The court anticipates that it may be easier for Napster to search the files available on its system at any particular time against lists of  copyrighted recordings provided by plaintiffs. The court deems that the results of such a search provide Napster with "reasonable knowledge of specific infringing files" as required by the Ninth Circuit. See id. at 2205.
 
   5. Once Napster "receives reasonable knowledge" from any source identified in preceding Paragraphs 2, 3 or 4 of specific infringing files containing copyrighted sound recordings, Napster shall, within three (3) business days, prevent such files from being included in the Napster index (thereby preventing access to the files corresponding to such names through the Napster system).

   6. Within three (3) business days of receipt of reasonable notice of infringing files, Napster shall affirmatively search the names of all files being made available by all users at the time those users log on (i.e., prior to the names of files being included in the Napster index) and prevent the downloading, uploading, transmitting or distributing of the noticed copyrighted sound recordings.

   7. Plaintiffs may provide to Napster in advance of release the artist name, title of the recording, and release date of sound recordings for which, based on a review of that artist's previous work, including but not limited to popularity and frequency of  appearance on the Napster system, there is a substantial likelihood of infringement on the Napster system. Napster shall beginning with the first infringing file block access to or through its system to the identified recording. As Napster presently has the capability even without enhancing its technology) to store information about and subsequently screen for a particular recording, the burden is far less and the equities are more fair to require Napster to block the transmission of these works in advance of their release. To order otherwise would allow Napster users a free ride for the length of time it would take plaintiffs to identify a specific infringing file and Napster to screen the work.

   8. Within five (5) business days of the date of this Order, and within five (5) business days of service of notice by plaintiffs as provided in Paragraphs 2 or 6 of this Order, Napster shall serve upon plaintiffs and file with the court a Report of Compliance identifying the steps it has taken to comply with this Order.

   9. If in implementing this preliminary injunction the parties dispute the ability of Napster or of the Napster system to carry out the duties established under this Order, the parties may set the matter for hearing before the court. However, such disputes will not operate to stay this injunction or afford relief from it. The court may appoint an independent third party to serve as a technical expert to assist the court in connection with the dispute.

   10. Notification by plaintiffs pursuant to this Order shall be provided to Napster in the format such records are kept in the ordinary course of business.

   11. This order is effective immediately, a bond in the amount of Five Million Dollars ($5,000,000.00) already having been posted with the court.
 
DECSS

In the audiovisual area involving motion pictures and television, the Motion Picture Association of America has taken action in several areas.  While one might think that a statute prohibiting encryption (the Digital Millennium Computer Act), 17 USC §1201 et seq., might not be particularly controversial, and use of decoding devices would simply seem to be unlawful in themselves, various organizations have opposed aspects of encryption legislation.

Universal Studios, Inc. v. Reimerdes   involves the publishing of a software utility to deencrypt a DVD encryption scheme.  The DVD Copy Control Association licenses "CSS" (content scramble system) to manufacture DVD hardware disks and related products.  The purpose of the system is to provide an anti-piracy scheme to DVDs.  2600 Enterprises published a software utility "DeCSS" for de-scrambling the CSS encryption system for DVDs.  This utility makes it possible to break the CSS code on DVDs making it possible for motion pictures in the DVD format to be decrypted, copied onto a computer hard drive for further distribution over the Internet or otherwise in perfect digital format.  This essentially allows the worst possible nightmare of the Motion Picture Association to be realized -- digitally perfect copies of major motion pictures to be digitally available for copying or Internet distribution.  Various studios and entertainment entities filed suit against 2600 Enterprises, Inc., Shawn C. Reimerdes and Roman Kazan seeking among other things, injunctive relief.

A preliminary injunction was issued by the District Court in New York enjoining the defendants from continuing to provide DeCSS to the public.  After a preliminary injunction was issued, the defendants though apparently stopping the distribution of the decrypting utility program, encouraged others to make the program available and provided actual links on their website to the program.  The interesting issue in the context of the United States is whether the First Amendment was a defense to this activity.

In the United States, the First Amendment to the United States Constitution is considered as the cornerstone of the United States form of democratic institution.  The First Amendment prohibits the Federal Government from interfering with freedom of speech.  The defendants in the trial court argued that the Digital Millennium Copyright Act when applied to prevent public and dissemination of DeCSS violates the First Amendment to the Constitution in two ways.

First, they argued that the computer code is protected speech and the Digital Millennium Copyright Act prohibition of dissemination of DeCSS violates the defendants' First Amendment rights.

Second, they contended that the Digital Millennium Copyright Act is unconstitutionally overbroad because its prohibition of dissemination of decryption technology prevents third parties form making fair use of plaintiffs encrypted works and is vague.  Also, defendant argued that prohibiting linking which makes DeCSS available is unconstitutional for the same reasons.  The court found that the program does more than simply convey a message like any computer program.  It is a series of instruction causing a computer to perform a particular sequence of tasks which in the aggregate decrypt CSS protected files.  Thus, it has a distinctly functional non-speech aspect in addition to reflecting thoughts of programmers.  The reason that Congress enacted anti-trafficking provisions of the DMCA had nothing to do with suppressing ideas of computer programs and everything to do with functionality, preventing people from circumventing technological access control measures.

The analogy was that this prohibited the possession of burglar tools that had nothing to do with preventing people from expressing themselves and everything to do with preventing burglaries.  Any impact on the dissemination of the programmer’s ideas is purely incidental to overriding concerns of promoting the distribution of copyrighted works in digital form.  The court granted a permanent injunction and declaratory relief to the plaintiffs.  The case is currently on appeal.  Some of the issues raised on appeal argued that the court should use a less restrictive alternative test by focusing its attention on the Audio Home Recording Act of 1992.  It also argued that the injunction could in effect threaten criticism of new technology as a result on the injunction against linking.
 
The defendants also argued that the effects of the decision would be to permit the Digital Millennium Copyright Act to be used to obtain control over works in the public domain.

ICRAVETV.COM

The ICRAVE case  involved retransmission of Canadian television programming over the Internet.  A coalition of ten motion picture and three broadcasting companies filed a complaint against ICRAVE TV and various related individuals and companies in the U.S. District Court for the Western District of Pennsylvania.  The defendants broadcast streaming television programming from Canada supposedly to Canadian residents.  However, in determining whether someone was a Canadian resident, that determination was made by typing in the user's telephone number.  Since anyone can type in the phone number with a Canadian area code, anyone in the United States could effectively use the website and download material without authorization.  The parties have apparently settled this agreement and the settlement agreement appears in the Motion Picture Association's website along with findings of fact and conclusions of law and the injunction.  Proof that U.S. citizens did access website was the arguable basis upon which jurisdiction in the United States was obtained.

RECORDTV.COM

One focus of developing activity in connection with audio-visual works on the Internet relates to the ability of copyright holders to control the manner in which their content is viewed.  Three cases in the spectrum of sorting out those issues can be seen going from the ICRAVE TV case, to the RECORDTV.COM case, and finally to personal television devices such as TIVO and Ultimate TV.

When the videocassette recorder was becoming popular, a test case was brought in the studios against the hardware manufacturers, what is now generally referred to as the "Beta Max" case.  That case, which went to the U.S. Supreme Court essentially held that it was fair use for individuals to be able to videotape on-air broadcasts for personal use primarily for time shifting purposes.

In the RecordTV case , a startup website RECORDTV.COM set up by a computer programmer in Southern California sought to provide a web based equivalent of a video cassette recorder.  David Simon, the founder of RecordTV acclaimed that his website acted just like a VCR, worked like a VCR and should fall under the legal exemptions as a VCR.  The manner in which it operates is that the individual accessing website views a television programming schedule such as you would find in TV Guide, and then the website essentially would record the television program digitally.

While functionally, the effect is the same, that is, an individual has the opportunity to at their home, record a television program at a later point in time.  The involvement of defendant, RecordTV created a higher profile than that of the hardware manufacturers, Sony, and presumably with considerably less resources to fight of the legal battle which it ensued.  The difference is that a commercial venture, RecordTV was engaging in mass copying of programs even though they were viewed only by the individual who sought the specific programming for recording as the digital internet metaphor for the virtual VCR.

While Sony was targeted as a potential contributory infringer of copyright infringing works, arguably the website's activity did not appear quite so attenuated as possibly that of Sony.  The Sony Beta Max case , probably not considered an easy case, may very well have pushed RecordTV over the line if it was allowed to proceed to trial and appeal.  In RECORDTV.COM, the MPAA and the studios resolved the case after nine months of litigation by stipulated injunction entered on April 13, 2001, in the United States District Court of Los Angeles.  RECORDTV.COM agreed to pay no damages, $50,000.00 as a partial payment of the studio's attorneys fees and agreed not to implement it on its online VCR absent a written agreement.

The importance of trademark law should not be underestimated in its ability to act as an additional driving wedge in bringing some of the cases to a conclusion.  In the RecordTV case, the complaint included claims for trademark infringement of the plaintiff's trademark, that is the trademark of the studios, in advertising its website.  That may be an overlooked issue sometimes on the part of the plaintiff which may be available to help the plaintiff move into a positive position.  Some of the alleged claims of trademark infringement arose simply from the use of the name of the studios and the names of the television programs.

Under United States law, the names of television programs are protectable both under common law and by registration of those titles.  Generally, the rule is that a title of a single show is generally not registerable, though a series of programs is generally registerable as a title.  As the case was settled, there was not an opportunity to reach some of these issues, however, one of the issues present in connection with the use of a title on a website is that of the potential defensive nominative of fair use.  Thus, otherwise, it is acceptable for example to record the shows for time shifting purposes, only way in which a consumer would be able to identify which show it is that a person is watching would be to identify by a particular name of a show.  This is known as "nominative fair use" and was successfully used as a defense in various cases recently both involving those dealing with fan clubs  and in connection with Internet metatag cases, though the defense has not always been successful.

The theme running through these cases is that where there are large scale mass duplications of copyright materials through the Internet, any claims of fair use are likely to disappear.  In such event, these cases are likely to be characterized as a large scale theft of copyrighted materials and what initially seems to be a form of an innocuous business plan for an Internet start up suddenly becomes opportunity for ___ by the collecting organizations.

SCOUR.COM

Another nemesis of the Motion Picture Association and the RIAA as well is that of SCOUR.COM.  Like Napster, it is a file sharing service which searches other users hard drives and finds a variety of different type of files on hard drives for delivery to other users that have requested the search.  The types of files that can be exchanged are not limited to music files as on Napster but include audio and video recordings and other files.  The service makes no distinction according to the MPAA between the exchange of authorized material and copyrighted material.  Video content is possible, it permits the exchange of full-length bootleg feature films.  While the technology today is such that it may take a long time to download a video material to constitute a feature film, the time to do that shrinking and the concern is that in due course, it may not be so inconvenient or costly to take the time to transfer enough digital content to make up a full length theatrical feature.

The SCOUR complaint  filed by a coalition of studios, record companies, music rights holders, allege four different types of copyright infringement claims.

First, was a set of claims for copyright infringement and of audiovisual material.  By way of example, Universal City Studios, Inc. asserted a claim for infringement of the motion picture, "Erin Brochovich" and Metro Gold-Meyer Studios, Inc.  asserted a claim of infringement of the "Thomas Crown Affair," (1999).

A second type of infringement asserted was for copyrighted sound recordings.  By way of example, BMG, dba RCA Records Label, asserted a claim for infringement of "Ants Marching" by the Dave Matthews Band specifying copyright registration SR 213-171.

In the United States, in order to file a complaint for copyright infringement in a United States court, it is necessary that the claim for copyright be registered with the copyright office as a prerequisite to filing the lawsuit.  In the Complaint, the common practice is to identify the specific registration certificate number.  The lawsuit also identified certain applications pending, for example, for Christina Aguillera's song and reference to a new release, in which an application was not even filed.

Of particular interest to those outside of the United States is the identification of a work of Radiohead, Carma Police, asserted by Capitol Records, Inc. then identifying a specific copyright registration, a reference was made to a "Berne Convention work".  Under United States copyright law, while works of U.S. origin require registration as a prerequisite to filing a lawsuit for copyright infringement, Berne Convention works, and certain others, that is typically those works which have an origin outside the United States and are somehow tied into a treaty system with the United States and are excused from the requirement of registration of the copyrighted work as a prerequisite for filing a lawsuit for copyright infringement in the United States.

A third class of claims are based on pre-1972 sound recordings.  Under U.S. copyright law, pre-1972 sound recordings are not protected by federal copyright law but are protected by state unfair competition law.  So for example, claims were asserted for infringement of the Jimmy Hendrix recording, such as "Purple Haze" by UMG Recordings, Inc.

Finally, claims were asserted for infringement of underlying copyrighted musical compositions resulting from public performance and distribution and reproduction of those musical compositions.  For example, a copyright plaintiff, Jerry Leiber and Mike Stoller asserted a claim for a musical composition, "Jail House Rock", identifying the copyright certificate number and the renewal certificate.

Under the law in the United States for copyrights existing prior to 1978, musical compositions as well as other copyrighted works were registered for an initial term of twenty-eight (28) years followed by a renewal term, which at one time was twenty eight years and ultimately became extended to a period of forty-seven (47) years at the time the so-called 1976 Copyright Act effective January 1, 1978 was instituted.  At one time, renewal in copyright had to be obtained and if not the work went into the public domain.  That is no longer the case.  Now, renewal of the copyrighted works is optional.

AIMSTER

Aimster  is another website which is a target of litigation by the RIAA.  According to Aimster, it is an equivalent of instant messenger service which allows users to connect to choose files which are available for downloading.  Aimster according to the RIAA is a Napster clone.  Aimster claims that there software is an instant messenger service which allows users to only trade files with buddies while the RIAA says it works like Napster and Aimster facilitates the transaction by allowing users to connect to Aimster servers and choose which files to make available for downloading.  Unlike Napster, however, files other than sound recording files can be downloaded and obtained.

After scheduled meetings between Aimster and the RIAA was cancelled, Aimster filed a declaratory relief lawsuit in the United States District Court in Albany.  At the time of this paper is being submitted in June 2001, the court had just denied the RIAA motion to transfer the case to the Southern District of New York, the forum of choice for the RIAA.

WEBCASTING

The other area which is currently of significant interest in the Internet issues relates to webcasting and the scope of webcasting under current law and Copyright Office regulations.  Two different types of webcasting are AM/FM webcasting and interactive webcasting.  AM/FM webcasting is essentially the retransmission of AM/FM radio signals through the medium of the Internet.  The Digital Performance Right Act ("DPRA"), established certain new exclusive rights in the case of sound recordings to perform copyrighted works publicly by means of a digital audio transmission.  An exclusive right was set forth in Section 106(6) of the Copyright Act and the new statute also created certain exemptions in Section 114 of the Copyright Act.  There are essentially three (3) aspects of implementing that exclusive right in Section 114.

Professor Robert Gorman in "Copyright Liability of Broadcasters for Webcasting their AM/FM Radio Signals," argues that Congress' purpose in enacting the exemption for non-subscription broadcast transmission was to carry out the preexisting immunity of radio stations regarding sound recordings for their over the air broadcasts when stations were contemplating moving from analog broadcasting technologies to digital.
 
The second category of digital performances of sound recordings was for essentially subscription radio.  It set up a compulsory or statutory license to be set by negotiation or by an arbitration panel convened by the Copyright Office.
 
The third category, for which there is full liability, unless there is a license, is for interactive webcasting services, which essentially involves demand digital transmission of sound recordings, sometimes referred to as "The Celestial Jukebox".  Importance of webcasting was not treated particularly in any serious fashion in 1995 when the DPRA was enacted.  However, by 1998 when the Digital Millennium Copyright Act was enacted, Congress made modifications and several respects to the DPRA.  From the three aspects of the DPRA, that is, the exemption of rebroadcast over of AM/FM signals, primarily because they were generally of a localized nature, compulsory license for existing but developing technology such as subscription audio services and exclusive rights for new services such as interactive on demand transmissions.

One of the problems of webcasting is that it is global in nature, and thus, for example, when there is essentially retransmission of AM/FM broadcast over the web, they are essentially deprived of their localized character and then become essentially worldwide transmissions and are of a different character than the original broadcast.  Thus, Professor Gorman argues that AM/FM webcasts are either subject to the 114 statutory license or subject to the exclusive rights of sound recordings of the copyright owners.

With that in mind, the RIAA has taken a position that AM/FM webcasts are not exempt.  One of the interesting questions currently being explored is the extent to which the Copyright Office may delegate rule making authority interpretation of statutory law.

A number of websites have attempted to provide interactive web services which allow the user the opportunity to have input in the selection of music received over the web.  Since this is perceived as interactive type of webcasts which are not subject to exemption under the various provisions of the DPRA as modified by the Digital Millennium Copyright Act, those webcasters have been the subject of litigation actions by the RIAA.  The RIAA argues that the ability to select the types of music to exclude specific artists from the mix of music is not exempt.

The Digital Media Association (DiMA) sought an amendment under a rule that would expand the current definition of the word “service” to state that a service is not “interactive” simply because it gives the consumer a degree of control over the programming.  The Copyright Office denied that petition.

-------------
1.   Paul D. Supnik practices copyright, trademark and entertainment law in Beverly Hills, California.  He is a past chair of the Intellectual Property and Entertainment Law Section of the Los Angeles County Bar Association and President of the Los Angeles Copyright Society.  Further information and references may be found in his website at www.supnik.com.
2.  A&M Records, Inc., v. Napster, Inc., 239 F.3d 1004;(9th Cir. 2001).
3.  A&M Records, Inc. v. Napster, Inc., 2001 U.S. Dist. LEXIS 2186,
4.  82 F. Supp 2d 211 (SDNY 2000), 111 F. Supp. 2d 294 (SDNY 2001).
5.  Twentieth Century Fox Film Corp. v. ICRAVETV, 2000 U.S. Dist. LEXIS 11670; 53 U.S.P.Q. 2d (BNA) 1831; Copy. L. Rep. (CCH) P28,030, February 8, 2000.
6.   The decision in the IcraveTV case may be found on the press release section of the MPAA website, http://www.mpaa.org/Press/.
7.  The complaint and settlement agreement in the RecordTV.com case may be found on the press release section of the MPAA website at www.mpaa.com/press.
8.  Sony Corporation Of America Et Al. v. Universal City Studios, Inc., 464 U.S. 417, 104 S. Ct. 774, 78 L. Ed. 2d 574 (1984).
9.   (New Kids On the Block v. Gannett Satellite Information Network, Inc., D/B/A/ Usa Today, Inc., 971 F.2d 302 (9th Cir. 1992).
10.  The SCOUR.COM complaint is also available on the MPAA website, press release section, www.mpaa.com/press.
11.   Abovepeer Inc. v. Recording Industry Association of America, 01-CV-0632 (N.D.N.Y. 2001).
12.  FR Doc. 00–31458 Filed 12–8–00