Transcript Entertainment and Media: Markets and Economics Intellectual Property Principles and Background 4:A - 1(39) Property RIghts.

Entertainment and
Media: Markets and
Economics
Intellectual Property
Principles and Background
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Property RIghts
Intellectual Property Rights
Ownership: Congress may give them to the
public (constitutional)
 Forms: Copyrights, Patents, Trademarks,
Service Marks
 Defense: The civil court system
 Challenges to rights: The USPTO, Copyright
Office, Appeals and Supreme Courts
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Property RIghts
Copyrights
What: Literature, music, drama,
pantomime, choreography, pictures,
movies, other AV, architectural design,
computer programs
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Requirements
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Fixation: Transmission medium (? Music can be in
sound form, not written down)
Copyrightable subject matter: Expression, not the
ideas themselves (e.g., computer programs, not the
algorithm, which is patentable)
Originality; not necessarily uniqueness
Authorship: Some “spark” of creativity or originality
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Property RIghts
Copyright = Right to Copy
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Right to reproduction
Not the right to usage – this is not a patent
Not the right to control the use of the content
Property RIghts
Terms of Copyrights
 Life of the author +70 years, up from 50
 Mickey Mouse, post Walt Disney: 1999, now 2019. (The Sonny Bono Law)
 Revenge: Winnie the Pooh, purchase rights by Disney (after a court battle)
 Original offer, $150M – until 2006
 Changed life to 2026, cost rose to $340M
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Property RIghts
Legal Stuff in the Music World
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Composer (C): Rights to the song
Performer (P): Rights to the performance
Unauthorized sale infringes on both C and P.
Unauthorized play infringes on composer, not performer.
(Performers cannot prevent public play of lawfully purchased copies,
but composers can.)
Mandatory licenses: The “first sale” exhausts the copyright holders
interest. A lawful buyer can resell their copy without permission, or
give it to a friend.
Blockbuster bought its DVDs at retail and rented them out.
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Enter NAPSTER!
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Property RIghts
Brave New World
 Infinite reproducibility reduces MC to 0
 Digital Millennium Copyright Act
 Changes the need for “copyright protection”
 The positive marginal cost of making copies
has until now protected owners of
copyrighted materials. Making 1,000,000
copies of a piece of music or a book or a
movie was hard. Now it isn’t.
 Finding a million friends to give the million
copies to is much easier than it used to be.
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Property RIghts
Napster Set Several Precedents
and Focused Attention on Others
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Napster.com
Central depository vs. peer to peer (Gnutella)
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One Napster “problem” was the central server
Peer to Peer changed this aspect.
The burglary tools defense
The sky is falling on the music business
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Property RIghts
The DMCA
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Protects copyright holders by providing a
mechanism to pursue violators who copy content
to the web with the assistance of services (such
as Napster).
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Provides safe harbor protection to ISPs from
the illegal activities of their users.
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Property RIghts
A&M et al. v. Napster, Inc., 9th Circuit,
2001 – Injunction Mandated
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Burglary Tools Defense: OK if you make burglary tools, not if you help
people steal copyrighted music
The users committed the copyright infringement:
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Users are infringers, not Napster (not denied by Napster)
Users who upload file names to the index on the server violate the copyright
holder’s distribution rights.
Users who download files violate the copyright holder’s reproduction rights.
Napster argued it was “Fair Use.” Was it “fair use?”
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Generally requires the work to be “transformed” by the use, not just copied.
Rejected. This was just copying – not fair use.
Generally rejected when the use is commercial. Use was commercial – property
taken to avoid paying for it. (Does not require the copies to be offered for sale.)
May be accepted if copies are only in part. These were in whole. Harm
caused to the market makes the use commercial.
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AEREO. Burglar?
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Price Discrimination
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Burglary Tools Defense Rejected?
The 2nd Circuit said NO. Aereo can intercept and rebroadcast the signals.
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Property RIghts
Supreme Court Will Hear After April 22, 2014
It's clear why the broadcast networks hate Aereo. Up to 10% of their revenue now comes from licensing
fees that the cable companies pay for the rights to carry their programming. It's less clear, at least from
the consumer viewpoint, how It could be illegal to offer a service that sounds like a souped-up modern
version of the old rabbit ears on top of the television.
After all, about 7% of Americans still get broadcast television over an antenna, according to the latest
figures from the Consumer Electronics Association. (About 83% pay a cable subscription fee.)
Nobody's accusing them of piracy. And, after all, isn't broadcast television supposed to be "free" TV, as
opposed to "premium" TV?
But that's consumer logic, not lawyer logic. It's also pretty much the logic used by Aereo to defend its
business. Consumers may buy antennas to receive television broadcasts for private entertainment.
Aereo rents them an antenna and keeps it at a remote location.
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Property RIghts
Supreme Court Will Hear
After April 22, 2014
Lawyer logic -- as expressed in a brief filed with the Supreme Court by
ABC, CBS, Fox, and NBC -- argues that Aereo's business is the sale
of broadcast television programming. And that, they argue, constitutes
"unauthorized exploitation of the copyrighted works of others."
Interestingly, that suggests that Aereo's service might be legal, if it
were just supplying aerials that transmit programming. But by storing
programming in a cloud-based DVR, the networks argue, it is
retransmitting content in violation of one piece of copyright law.
Burglary
Tools
While we're splitting hairs, Aereo argues that its tiny remote antennas
serve the same purpose as the old rabbit ears on top of the television.
But one of its biggest opponents responds that all the antennas for an
entire city share a common facility, which represents an integrated
system. Unfortunately for Aereo, that argument was made by the US
Justice Department, which is siding with the broadcast networks in this
case.
The broadcast networks have gone so far as to threaten to remove
their programming from the free broadcast spectrum and recreate
themselves as pay-TV networks, if Aereo wins its case. The National
Football League and Major League Baseball, fearing for their license
fees, say they may move their programming from broadcast to cable if
Aereo isn't stopped.
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11/12/14
Property RIghts
A&M et al. v. Napster, Inc., 9th Circuit,
2001 – Injunction Mandated (cont.)
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Why did Napster argue on behalf of the users? Napster
argued that the users, not Napster, did the burglary. We
only taught them how to use the burglary tools.
Napster claimed it was liable only for vicarious
contribution to the copyright infringement, not for the
infringement itself. Finding against Napster requires first
finding that users really did infringe on the copy rights.
(“Secondary liability for copyright infringement does not
exist in the absence of direct infringement by a third
party.”)
Fair use was rejected.
Property RIghts
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Property RIghts
Fair Use? Probably Not
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Blurred Lines sounds suspiciously like Marvin Gaye’s Got to Give It Up.
(Also Funkadelic’s Sexy Ways owned by Bridgeport Music Inc.)
Robin Thicke/Pharell Williams vs. Estate of Marvin Gaye
Thicke has sued Gaye’s descendants preemptively. Possible arguments:
(1) Idea/expression dichotomy The idea/expression dichotomy says copyright protects the
expression of an idea, not the idea itself. The Supreme Court in Feist stated that “[t]he most
fundamental axiom of copyright law is that ‘[n]o author may copyright his ideas[.]’”
(2) Merger doctrine This is the related principle that, when there are a limited number of ways of
expressing an idea, none of those expressions can be protected by copyright, otherwise the
rights-holder would have a potential monopoly on the underlying idea, as no one could develop
another expression of the idea that would differ sufficiently from the protected expression. (You
can’t copyright the rules to a game and thereby patent the game.)
(3) Scènes à faire This is another related doctrine that recognizes that certain elements of a
work are not protected by copyright when they are mandated by or customary to the genre, and so
fundamental that they should not be owned.
(4) De minimis This is a defense that says that the amount that was taken was so limited and
insignificant that it was trivial and not actionable. This defense notably failed against Bridgeport in
the 6th Circuit, but this case is in the jurisdiction of the 9th Circuit. It does not seem like this
doctrine would be likely to be raised in this case.
(5) Fair use: If copyright is found to be infringed, an argument could be made that the use was a
fair use and transformative. Mashup artists like Girl Talk assert that they are protected under the
fair use doctrine, but non-parody fair use decisions in the music realm appear to be rare
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http://www.project-disco.org/intellectual-property/082013-why-did-robin-thicke-file-alawsuit-over-blurred-lines/
Property RIghts
Not a viable defense. Napster tried it. The labels did not ask for a
new business partner.
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Property RIghts
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Property RIghts
As testimony progressed, the jury learned that the song of
the summer earned its composers close to $17 million, of
which over $5.6 million went to Thicke, about $5.2 million
went to Williams and about $700,000 went to T.I. (the rest
went to record companies). Williams also earned $4.3 million
in publishing from the song and $860,000 for being its
producer, according to The Hollywood Reporter. The
amounts were revealed since the Gayes were seeking a
portion of those profits as well as some of Thicke's touring
revenue. They also discussed the reported $900,000 Thicke
made for "Love After War," the song that allegedly borrowed
from Gaye's "After the Dance." The Gayes' lawyer claimed
they were owed in the neighborhood of $40 million worth of
damages.
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Property RIghts
Fair Use
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Fair use by Professor William Greene
(1) Small part of the website; change of form moved to course
notes, added material
(2) Not using in an attempt to earn money
The concept of fair use: Use of
parts of copyrighted material for
certain purposes.
Recent Relevance: Commercial
value of posted videos to
YouTube even if not to the
person who posts the material
Fair use by Napster was
rejected.
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Property RIghts
A&M et al. v. Napster, Inc., 9th Circuit, 2001 –
Injunction Mandated (cont.)
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Napster’s Fair Use Argument on behalf of users.
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Sampling: Users intended to buy the music. Fact rejected.
Argument that this usage increased sales of CDs was rejected as
irrelevant, even if true. Copyright holder is not deprived of the right
because Napster can increase sales.
Space shifting: Users use Napster to get MP3s off CDs they
already own. Rejected. A precedent exists (recording TV, Sony
Betamax), but space shifting does not allow shifting the copy to
millions of partners.
Permissive redistribution: They had permission. True, but
irrelevant. The music for which they had permission was not part of
the case.
Fair use was rejected.
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Property RIghts
A&M et al. v. Napster, Inc., 9th Circuit,
2001 – Injunction Mandated (cont.)
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Contributory Liability – Vicarious Liability
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Did Napster know it was contributing to copyright
infringement? Of course.
Did Napster contribute materially to the copyright
infringement? Without question
Direct financial benefit to Napster?
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Definitely to the users.
Not obvious with respect to Napster. Napster had no idea
how to make money. Apparently so, however.
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Property RIghts
A&M et al. v. Napster, Inc., 9th Circuit,
2001 – Injunction Mandated (cont.)
One last try:
 Audio Home Recording Act – users can copy
material for their own use. (Videotaping TV)
Rejected.
 DMCA (1998), Safe Harbor Provisions – ISPs
are protected. Nice try. Napster was not an ISP
and not protected by Safe Harbor.
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Property RIghts
The Safe Harbor Provision Appeared
in Viacom vs. YouTube
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Viacom and YouTube (Google). YouTube
successfully argued for Safe Harbor Status.
What is the issue?
What is the role of the DMCA?
Property RIghts
Music Sharing
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Napster, 2000-2001 (the
arsonist)
Napster 2002 (the phoenix?)
KazAa, Morpheus (the enemy)
MP3, PressPlay, MusicNet (the
also rans)
Where is this medium going?
(the future) Spotify, Slacker, etc.
Technology is evolving as the
law tries to catch up.
Licensed customizable radio (performances) and iTunes (downloads) have
provided a viable platform that consumers accept instead of stealing music.
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Property RIghts
Did File Sharing Hurt the Music Business?
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Oberholzer and Strumpf study: “The Effect of File Sharing on Record Sales: An
Empirical Analysis” (Harvard Business School, March, 2004), updated Journal of
Political Economy, 2007
NYT and elsewhere on the web, 4/5/04)
“95% of music downloads are illegal” (Financial Times, 1/22/10)
Illegal music downloads are 'on the rise' Around 7.7m people have illegally
downloaded music this year, according to research commissioned by the British
record industry's trade association. Its latest report suggests more than 1.2bn
tracks were pirated or shared, costing the industry £219m.
(BBC Entertainment News, 12/10, 2010.
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Property RIghts
A Model of Album Sales
Sit  (measured album effects)   Dit  (sales decay factor)
 (unmeasured album effects)  uit
Dit  (measured album effects)   Sit  (sales decay factor)
 (internet "weather" effects")
 (unmeasured album effects)  uit
Sit = sales of album I in month t
Dit = number of downloads in month t.
Is γDit a large effect? Statistical results say no, and positive!!
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Property RIghts
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Property RIghts
SOPA and PIPA: Attention turns
to the movie industry
Stop Online Piracy Act: Proposed in 2011. Died early in 2012.
Protect Intellectual Property Act: 2012. Never went anywhere.
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Property RIghts
SOPA Provisions
The beating heart of SOPA is the ability of intellectual property owners (read:
movie studios and record labels) to effectively pull the plug on foreign sites
against whom they have a copyright claim. If Warner Bros., for example, says
that a site in Italy is torrenting a copy of The Dark Knight, the studio could
demand that Google remove that site from its search results, that PayPal no
longer accept payments to or from that site, that ad services pull all ads and
finances from it, and—most dangerously—that the site's ISP prevent people
from even going there.
...which would go almost comedically unchecked...
Perhaps the most galling thing about SOPA in its original construction is that it
let IP owners take these actions without a single court appearance or judicial
sign-off. All it required was a single letter claiming a "good faith belief" that the
target site has infringed on its content. Once Google or PayPal or whoever
received the quarantine notice, they would have five days to either abide or to
challenge the claim in court.
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http://gizmodo.com/5877000/what-is-sopa
Property RIghts
Trademarks - Requirements
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Denotes source or origin for specific good (trademark),
service (service mark), membership (collective mark),
standard (certification)
Use in interstate commerce
Continuous – trademarks lapse if not used
Distinctive
Nonfunctionality – can’t be used to create a patent on
the product (Amdahl sought but failed to trademark
‘Amdahl Red’)
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Property RIghts
Apple Corps vs. Apple Inc.
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The 1991 settlement outlines the rights each company has to the Apple trademark.
While Apple Corps was given the right to use the name on any "creative works
whose principal content is music", Apple Computer was given the right to use the
name on "goods or services...used to reproduce, run, play or otherwise deliver
such content," but not on content distributed on physical media. In other words,
Apple Computer agreed that it would not package, sell or distribute physical music
materials.
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In September 2003, Apple Computer was sued by Apple Corps again, this time for
introducing iTunes and the iPod which Apple Corps believed was a violation of the
previous agreement by Apple not to distribute music. Some observers believe the
wording of the previous settlement favors Apple Computer in this case. Other
observers speculate that Apple Computer may be forced to offer a much larger
settlement this time which may even result in Apple Corps becoming a major
shareholder in Apple Computer or, perhaps may result in Apple Computer splitting
the iPod and related business into a separate firm.
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The trial opened on March 29, 2006 in the UK. In opening arguments, Apple
Corps' lawyer said that in 2003, shortly before the launch of Apple's on-line music
store, Apple Corps rejected a $1 million offer from Apple Computer to use the
name on the store.
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Property RIghts
Apple Wins (?)
Apple Computer Wins Apple Corp lawsuit:May 8, 2006 07:59 EDT
Apple Computer has won the lawsuit filed by Apple Corp.
of The Beatles fame, reports Reuters. Apple Corps originally
filed the lawsuit, saying that Apple Computer violated a 1991
trademark agreement by getting into the music business.
"Apple Computer argued in court hearings in London earlier
this year that iTunes was primarily a data transmission
service, which is permitted by the agreement," notes the
story. "The 1991 out-of-court settlement, which included a
US$26 million payment by Apple Computer, set out areas in
which each party would have exclusive use of their
respective fruit-shaped logos. 'I find no breach of the
trademark agreement has been demonstrated,' Mr Justice
Mann said in his judgment. 'The action therefore fails.'
Apple Corps has said that no decision has been made as to
when The Beatles songs might be available for purchase
online, notes Reuters. In addition, Apple Corps said it would
appeal the decision and Apple Computer was awarded court
costs.
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Property RIghts
Patents for Despair.Com
:-(
Albert Firkus, co-editor of
IP Monthly, offered a less
dire assessment of the
grant, "Whether the
issuance is a dangerous one
remains to be seen. What is
certain, however, is that it
appears that someone has
finally bested patent
5,443,036 for most
ridiculous intellectual
property filing in history."
https://www.youtube.com/watch?v=9JHozURbBlM
Maybe not. See U.S. Patent 6,293,874.
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Property RIghts
U.S. Patent 5443036 (11/2/93)
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Property RIghts
Patents
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Patentable: processes, machines, manufactures,
compositions of matter,… (just about anything –
yellow bean, method of exercising a cat, surgical
moves)
Useful
New
Original (prior art must be verified)
Nonobvious
Property RIghts