NewYorkUniversity
LawReview

Issues

Topic

Copyright Law

Results

Termination Rights in the Music Industry: Revolutionary or Ripe for Reform?

Chase A. Brennick

When Congress passed the Copyright Act of 1976, it enacted Section 203, which allows authors to terminate transfers of the copyright in their works thirty-five years after the transfer. Congress intended this to be the author’s “second chance” after having made a disadvantageous first deal, either due to a lack of bargaining power or an inability to predict the work’s future value. Within the music industry, the impact of Section 203 has been contested, with some arguing that it will fundamentally shift the balance of power between recording artists and songwriters (the authors) and record labels and music publishers (the transferees), and others expecting that the provision will provoke contentious litigation of Section 203’s statutory exceptions. Because the first works reached termination eligibility in 2013, the effects of Section 203 remain unclear. In this Note, I argue that, even if an author circumvents the statutory exceptions, Section 203 is largely ineffective because several factors prevent a clean severance of the relationship between the author and transferee. Complications related to jointly authored works, the jurisdictional limitation to the United States, and contract provisions that survive post-termination create a situation where the author may regain his or her U.S. copyrights but will remain tethered to the transferee. Although an author could theoretically self- administer his or her U.S. copyrights or transfer these rights to a new transferee, the economically rational option is to retransfer the copyrights to the original transferee. This result precludes any significant impact on the music industry’s power dynamics, despite Congress’s (and the authors’) initial hopes that Section 203 would be a tool for change.

CopyFraud

Jason Mazzone

Copyfraud is everywhere. False copyright notices appear on modern reprints of Shakespeare’s plays, Beethoven’s piano scores, greeting card versions of Monet’s Water Lilies, and even the U.S. Constitution. Archives claim blanket copyright in everything in their collections. Vendors of microfilmed versions of historical newspapers assert copyright ownership. These false copyright claims, which are often accompanied by threatened litigation for reproducing a work without the “owner’s” permission, result in users seeking licenses and paying fees to reproduce works that are free for everyone to use.

Copyright law itself creates strong incentives for copyfraud. The Copyright Act provides for no civil penalty for falsely claiming ownership of public domain materials. There is also no remedy under the Act for individuals who wrongly refrain from legal copying or who make payment for permission to copy something they are in fact entitled to use for free. While falsely claiming copyright is technically a criminal offense under the Act, prosecutions are extremely rare. These circumstances have produced fraud on an untold scale, with millions of works in the public domain deemed copyrighted, and countless dollars paid out every year in licensing fees to make copies that could be made for free. Copyfraud stifles valid forms of reproduction and undermines free speech.

Congress should amend the Copyright Act to allow private parties to bring civil causes of action for false copyright claims. Courts should extend the availability of the copyright misuse defense to prevent copyright owners from enforcing an otherwise valid copyright if they have engaged in past copyfraud. In addition, Congress should further protect the public domain by creating a national registry listing public domain works and a symbol to designate those works. Failing a congressional response, there may exist remedies under state law and through the efforts of private parties to achieve these ends.

Fair Use and Innovation Policy

Robin A. Moore

New technologies such as the VCR and Google Book Search can change the way copyrighted works are used, thereby making their innovators rich. Copyright owners are aware of these riches and often strategically sue the technology companies with the aim of gaining a share of the money. This dynamic—an innovator investing to create a new technology and a creator of a copyrighted work then suing for her share of the profits—creates an investment incentive problem. The dual goal of promoting the efficient creation of both new copyrighted works and new technologies that augment those works requires us to choose a legal rule that divides the gains from these new technologies between authors and innovators. The fair use doctrine—the statutory rule that allows some types of copyright infringement—is the legal rule that is used to do this dividing. However, economic theories of copyright law do not contain an analysis of investment incentives. This Note analyzes the effects fair use has on the incentives to create copyrighted works and to invest in technologies that affect those works.

Safe Harbor Startups: Liability Rulemaking Under the DMCA

Brian Leary

This Note presents two arguments. First, the Digital Millennium Copyright Act’s (DMCA) liability safe harbors are inapposite for private cloud services. Private cloud services are increasingly common offerings where consumers upload content, such as music, movies, or books, to personal cloud storage space, then download or stream that content to a multitude of devices. Although granting safe harbor immunity from secondary liability for user infringement would further the DMCA’s policy to promote technological innovation, doing so would completely ignore the DMCA’s other policy—to protect copyright. Currently, the DMCA protects copyright through its notice-and-takedown procedures, but these provisions depend on the ability of copyright holders to monitor users’ public actions—an impossibility on private cloud services. Second, the private cloud services problem is symptomatic of a larger problem in the DMCA: Its regulatory-like detail and specificity undermine its application to new technologies. The solution to both problems is an administrative one: Delegate rulemaking power to narrowly define safe harbor qualification when new technologies, like private cloud services, are valuable but also both ripe for infringement and unaddressed by the DMCA.

Penalty Default Licenses: A Case for Uncertainty

Kristelia A. Garcia

Research on the statutory license for certain types of copyright-protected content has revealed an unlikely symbiosis between uncertainty and efficiency. Contrary to received wisdom, which tells us that in order to increase efficiency, we must increase stability, this Article suggests that uncertainty can actually be used to increase efficiency in the marketplace. In the music industry, the battle over terrestrial performance rights—that is, the right of a copyright holder to collect royalties for plays of a sound recording on terrestrial radio—has raged for decades. In June 2012, in a deal that circumvented the statutory license for sound recordings for the first time ever, broadcasting giant Clear Channel granted an elusive terrestrial performance right to a small, independent record label named Big Machine and agreed to pay royalties where no such legal obligation exists. This result not only improves upon many of the statutory license’s inefficiencies but is also the opposite of what we would expect given both the tumultuous history surrounding the rights at issue and the respective parties’ bargaining positions. It suggests an underexplored mechanism at play: uncertainty. Using the statutory license for sound recordings and the Clear Channel–Big Machine deal to motivate the analysis, this Article argues that bounded uncertainty—such as uncertainty about the future legal status of terrestrial performance rights and uncertainty about future digital business models—converts a statutory license into a “penalty default license.” Just as penalty default rules encourage more efficient information exchange between asymmetrical parties, penalty default licenses encourage more efficient licensing among otherwise divergent parties by motivating them to circumvent an inefficient statutory license in favor of private ordering. While not without its drawbacks, which previous work identified and ameliorated, private ordering improves upon the statutory approach, resulting in greater efficiency not only for the parties involved but for society overall. Recognition of the role that uncertainty plays in converting an inefficient statutory license into a penalty default license that improves market efficiency while mitigating inequality has implications beyond the statutory licensing context. It suggests a revision in the way we view the relationship between uncertainty and efficiency. Specifically, it shows that when coupled with a penalty default, uncertainty can bring greater efficiency to the marketplace by encouraging private ordering—with its tailored terms and responsiveness to rapid legal and technological change—while mitigating concerns about inequality and gamesmanship.

Anticompetitive Use of Administrative Trials in Bargaining Over Patent Rights

Susan Navarro Smelcer

In response to widespread concerns about the extent to which “trolls” distort the patent process and other deficiencies in the patent system, Congress created two new administrative trial processes by which a third party may challenge the validity of a patent in a more streamlined and less costly way than through a civil trial. Unfortunately, the very features that made these administrative quasi-judicial proceedings efficient also make them ripe for anticompetitive abuse. This behavior is especially problematic when it comes to bargaining over licenses for patents recognized as a “standard” or deemed to be “essential” to a particular industry. In this context, instituting administrative trials to determine patent validity may actually create an inequality in bargaining strength that allows the potential licensee to extract rents from the patent holder—especially if that licensee possesses market power.

This Note explores the source and nature of these anticompetitive harms and recognizes that, as currently applied by the courts, antitrust law cannot be used to reach these abuses. Noerr-Pennington immunity shields firms from exposure to antitrust liability with respect to most government interactions, with only narrow exceptions for sham petitioning and litigating activity. In the patent context, these exceptions are far too narrow and make antitrust liability functionally unobtainable. In particular, this Note argues that the “sham litigation” exception to Noerr-Pennington should be expanded to encompass a wider range of litigation tactics—including instituting an administrative proceeding—to deter anticompetitive behavior that distorts both bargaining over patent licenses and the market more broadly.

Enabling Life

Eileen M. Woo

Many biotechnology products are living organisms that are essentially “made” by a trial and error process of directing evolution in a laboratory. Decades ago, the Supreme Court in Chakrabarty settled the threshold question of patent eligibility for life forms, stating clearly that living things are patentable. Nevertheless, the fact that nature assists inventors so heavily in the process of inventing a useful new organism raises the question of whether such organisms meet patent law’s enablement requirement—that a patent application must teach a person of ordinary skill in the art how to make and use the invention without undue experimentation. This Note argues that the enablement requirement has been overlooked for patents to genetically engineered organisms, and proposes solutions for updating this requirement to properly incentivize the creation of socially beneficial living things, without allowing inventors to bar access to products of nature.

The Copy Process

Joseph P. Fishman

There’s more than one way to copy. The process of copying can be laborious or easy, expensive or cheap, educative or unenriching. But the two intellectual property regimes that make copying an element of liability, copyright and trade secrecy, approach these distinctions differently. Copyright conflates them. Infringement doctrine considers all copying processes equally suspect, asking only whether the resulting product is substantially similar to the protected work. By contrast, trade secrecy asks not only whether but also how the defendant copied. It limits liability to those who appropriate information through means that the law deems improper. This Article argues that copyright doctrine should borrow a page from trade secrecy by factoring the defendant’s copying process into the infringement analysis. To a wide range of actors within the copyright ecosystem, differences in process matter. Innovators face less risk from competitors if imitation is costly than if it is cheap. Consumers may value a work remade from scratch more than they do a digital reproduction. Beginners can learn more technical skills from deliberately tracing an expert’s creative steps than from simply clicking cut and paste. The consequences of copying, in short, often depend on how the copies are made. Fortunately, getting courts to consider process in copyright cases may not be as far-fetched as the doctrine suggests. Black-letter law notwithstanding, courts sometimes subtly invoke the defendant’s process when ostensibly assessing the propriety of the defendant’s product. While these decisions are on the right track, it’s time to bring process out into the open. Copyright doctrine could be both more descriptively transparent and more normatively attractive by expressly looking beyond the face of a copy and asking how it got there.