Zediva DVD Streaming Service Infringing or Not?

Zediva recently captured the attention of copyright commentators with its new streaming movie service.  Zediva Streams New Releases Through Copyright Loophole, by Ryan Singel, captures the essence of what the service is about.  As soon as a movie is released on DVD, Zediva buys it, then rents it and a DVD player to you.  The DVD and DVD player remain in Zediva’s data center and the movie is streamed to you over the Internet so that you can see it on PC, Mac or Google TV devices with Adobe Flash.  You can’t download or copy the DVD – that’s a violation of Zediva’s Terms of Use.  The service is designed to allow movie watchers to see DVD releases sooner than they could on Nexflix, which has agreed not to rent out movies in the first month they are available on DVD.  According to Singel, Zediva doesn’t have any licensing agreements with the studios and does not intend to seek any.

Zediva’s FAQs draw analogies between its service and brick and mortar DVD rental stores. Perhaps Zediva’s founders and attorneys think Zediva’s service is noninfringing for the same reason a brick and mortar store’s service is noninfringing.  The first sale doctrine (17 USC §109)  allows the owner of a particular copy of a copyrighted work to sell or dispose of that particular copy without regard to the copyright owner.  That is why lending libraries and DVD rental stores are noninfringing uses of works.  Section 109 specifically excludes sound recordings and computer programs from the first sale doctrine and that is why you can’t rent a music CD or a computer program.  A software license can seem like a rental, but it is not.  You get a license because the copyright holder or someone authorized by the copyright holder grants you one.  With a rental, a third party rents something to you without the authorization of the copyright holder.

James Grimmelmann argues against Zediva’s success in That Zediva Thing? It’s So Not Going to Work. Grimmelmann makes the point that the first sale doctrine is a defense only to distribution and display rights and is irrelevant to a performance right claim.  The Copyright Act gives the copyright owner the right to perform the copyrighted work publicly.   

To perform or display a work “publicly” means —

(1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or

(2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

17 USC §101 

Grimmelmann compares two cases, Columbia Pictures Industries v. Redd Horne  and Cartoon Network LP, LLLP v. CSC Holdings, Inc. In Redd Horne, a video store rented video tapes together with private viewing rooms where its customers could view the videos.  The court held that was a public performance that could be prohibited by movie studio copyright owners.  In Cartoon Network, Cablevision offered a “cloud” DVR service in which a customer could record a TV show to a remote DVR system and have it played back to her TV set later on.  The court in Cartoon Network held that this was not a public performance.

Grimmelmann explains that the distinguishing factor in the two cases is that in Cartoon Network, each customer viewed a distinct copy, whereas in Redd Horne, the video store owner kept showing the same copy over and over again to different people.  So long as the customer views her own distinct copy, it is not a public performance.  There is certainly support for this interpretation in the Copyright Act, in which members of the public can “receive it [the performance] in the same place or in separate places and at the same time or at different times.”  Grimmelmann also thinks it’s significant that Zediva keeps physical control of its DVDs at all times, just as the video store in Redd Horne kept physical control of the videos at all times.  The customers in Cartoon Network controlled their viewing times.  Netflix and video store customers physically control the DVDs they rent.

Can Zediva get around these distinct copy and viewing in different places at different times predicaments?  A unique feature of the Zediva service is that once a customer starts watching a movie, that particular DVD of the movie is not available for other customers to use.  Zediva buys its DVDs and does not copy them.  A Zediva customer has up to two weeks to finish watching her movie.  She can even watch the movie again during those two weeks.  If she wants to stop in the middle and continue the next day at the same place in the movie, she can.  Are these differences enough to take Zediva from the Redd Horne result to the Cartoon Network result?

Even if Zediva clears the above hurdles, lack of control over the end users could turn a streamed DVD into an unauthorized public performance of that DVD.  How will Zediva police its users so that they do not publicly perform the streamed movies by playing them on screens in places open to the public, such as bars or other retail establishments?  Zediva’s Terms & Conditions of Use indicate that “public performance of any kind” is not allowed, but does not define “public performance.”  That language seems inadequate for anyone trying to prevent unauthorized public performances.

Finally, could this be the same kind of streaming as the illegal streaming that was targeted by the Obama Administration’s white paper and was the subject of last week’s post?  No, it could not.  Criminal streaming under the Copyright Act requires that the infringement occur after the motion picture has been released and before “copies for sale to the general public in the United States in a format intended to permit viewing outside a motion picture exhibition facility” are made available.  17 USC §506(a)(3)(B). Zediva streams DVDs it purchases after the movie has been released on DVD.

“Illegal Streaming” a Felony? White House White Paper Directed at Activity that is Already Criminal

The White House recently issued a white paper on intellectual property enforcement legislative recommendations. I read the white paper after reading White House wants new copyright law crackdown, by Declan McCullagh. McCullagh states, “The White House today proposed sweeping revisions to U.S. copyright law, including making “illegal streaming” of audio or video a federal felony and allowing FBI agents to wiretap suspected infringers.”  I think a more accurate description is to say that the White House requests Congress to enact measures that increase the ability of the federal government to prosecute conduct that is already criminal and involves the use of intellectual property.

The white paper recommends changes in the following categories:

  • Increasing the statutory maximum sentences for crimes involving economic espionage and drug offenses under the Federal Food, Drug and Cosmetic Act (FFDCA), particularly for counterfeit drug offenses.
  • Increasing the range of U.S. Sentencing Guidelines for intellectual property offenses for crimes involving (1) the theft of trade secrets and economic espionage, (2) trademark and copyright offenses when infringing products are knowingly sold for use in national defense, national security, critical infrastructure, or by law enforcement, (3) intellectual property offenses committed by organized criminal enterprises/gangs, (4) intellectual property offenses that risk death or serious bodily injury and for offenses involving counterfeit drugs and (5) repeat intellectual property offenders.
  • Legislative changes to give enforcement agencies the tools they need to combat infringement by (1) clarifying that, in appropriate circumstances, infringement by streaming, or by means of other similar new technology, is a felony, (2) authorizing Homeland Security (DHS) to share pre-seizure information with rightholders and (3) giving law enforcement authority to seek a wiretap for criminal copyright and trademark offenses.
  • Legislative changes to allow DHS to share information about enforcement activities with rightholders and information about and samples of circumvention devices with rightholders post-seizure.
  • Legislative changes to improve U.S. enforcement efforts involving pharmaceuticals, including counterfeit drugs.
  • Legislative changes increasing U.S. Customs and Border Protection’s (CBP) authority to issue administrative penalties.
  • A legislative change to create a right of public performance for copyright owners for sound recordings transmitted by over-the-air broadcast stations.

The white paper discusses increasing sentences and enabling law enforcement to use newer technology tools than those currently authorized to detect conduct that is already a crime.  Regarding infringement by streaming, the white paper states:

Existing law provides felony penalties for willful copyright infringement, but felony penalties are predicated on the defendant either illegally reproducing or distributing the copyrighted work.  Questions have arisen about whether streaming constitutes the distribution of copyrighted works (and thereby is a felony) and/or performance of those works (and thereby is a not a felony). These questions have impaired the criminal enforcement of copyright laws.  To ensure that Federal copyright law keeps pace with infringers, and to ensure that DOJ and U.S. law enforcement agencies are able to effectively combat infringement involving new technology, the Administration recommends that Congress clarify that infringement by streaming, or by means of other similar new technology, is a felony in appropriate circumstances.

Not all infringing streaming is a crime or “illegal streaming.”  Many people would say that the peer to peer streaming the U.S Supreme Court condemned in MGM v. Grokster  is “illegal streaming.”  That case, however, is about the extent to which the providers of software that could be used for non-infringing purposes could be held liable for the end users’ infringing uses.  Grokster was a civil copyright infringement case and there is no suggestion in the court’s opinion that MGM thought Grokster committed a crime.  The type of “illegal streaming” that is discussed in the white paper is streaming that is used by criminals to further their crimes. 

Presently, infringing downloading can be a criminal offense when it is willful.  17 USC §506.  An infringer acts “willfully” when she has knowledge that the act is infringing or recklessly disregards the possibility of infringement.  Subsection 506(a)(1)(C) provides that a person who willfully infringes a copyright commits a criminal infringement

by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.

To that extent, “illegal streaming” is already a crime and can be a felony under 18 USC §2319(d) and 18 USC §3559(a). The white paper proposes to clarify when “illegal streaming” is a felony and when it is not.

The white paper does not advocate increasing copyright and trademark protection and enforcement across the board.  Instead, it distinguishes activity that is more commonly thought of as a less serious violation.  For example, with respect to enhancing the offense level for a defendant who knowingly sells infringing products for military or other critical uses,

The Administration also recommends adding an application note to the provision to ensure that sales that only indirectly impact national defense or security, law enforcement functions, or critical infrastructure are not swept into the provision. Thus, a sale of counterfeit semiconductors for use in a military system qualifies for the enhancement; the sale of a counterfeit toner cartridge for a computer printer used at military headquarters would ordinarily not.

The changes proposed in the white paper are not sweeping changes to copyright law, but rather more modest changes to aid law enforcement and to protect people from truly harmful intellectual property infringements such as occur with counterfeit drugs.

Fixation in Copyright Does Not Extend to Wild Flower Garden

The Visual Artists Rights Act of 1990  (VARA) protects artists’ rights of attribution and integrity for a limited subcategory of copyrightable “visual art” works.  VARA is the United States’ attempt to comply with the Berne Convention for the Protection of Literary and Artistic Works, a treaty the United States ratified in 1989.  The Berne Convention protects authors’ and artists’ moral rights.  Moral rights include the right to claim authorship (attribution) and the right to prevent alteration of a work that would be prejudicial to the author’s honor or reputation (integrity).  The 7th Circuit recently declined to protect an artist’s moral rights claim under VARA for a flower garden he created.  Seventh Circuit:  No Moral Rights in Flower Gardens Under VARA, by Ray Dowd, briefly describes the court’s ruling and shows a picture of the garden.

Here is a short recap of Kelley v. Chicago Park District.  Chapman Kelley is an artist who originally was known for painting landscapes and flowers, but switched to planting large outdoor wild flower displays.  In 1984, the Chicago Park District Board of Commissioners granted him a permit to install a wild flower display across 1.5 acres of parkland in Grant Park.  The permit was extended a number of times through 1994.  After that, the display remained in Grant Park without a permit.  Problems caused by insects, rabbits and weeds beset the garden over time.  In 2004, Park District officials met with Kelley to discuss problems with the garden and decreasing the size of the garden.  The Park District then reduced the size of the garden and changed its shape.  Kelley filed suit under VARA.

The 7th Circuit’s decision in Kelley focused on “fixation,” which is separate from VARA, although the court discussed VARA first.  The circuit court disagreed with the district court’s VARA analysis and devoted the first half of its opinion to providing its own VARA analysis.  Since the court decided the case on the copyright “fixation” requirement and not on VARA, the VARA analysis is dicta and not authoritative.  However, the court’s VARA discussion contributes positively to the ongoing VARA discussion.  For example, the court disagrees with the First Circuit’s holding in Phillips v. Pembroke Real Estate, Inc. that “site-specific art is categorically excluded from VARA” and points out some of the inconsistencies in that opinion.  The court also emphasized that VARA protects a subset of works protected by the Copyright Act and that to receive VARA protection, a work must first be copyrightable under the broader Copyright Act.

A work must be fixed to receive copyright protection.

Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.

The Copyright Act defines the word “fixed.”

A work is “fixed” in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. A work consisting of sounds, images, or both, that are being transmitted, is “fixed” for purposes of this title if a fixation of the work is being made simultaneously with its transmission.

The court declared “a living garden lacks the kind of authorship and stable fixation normally required to support copyright.”  The court made two important points about fixation:

  • Fixation is an explicit constitutional requirement
  • Certain works of conceptual art stand outside of copyright protection

The Copyright Clause  of the United States Constitution speaks of “authors” and their “writings.”  There must be fixation for there to be a writing.  Since some art cannot be fixed in such a way, it does not qualify for copyright protection. 

A living garden like Wildflower Works is neither “authored” nor “fixed” in the senses required for copyright.

[A] garden is simply too changeable to satisfy the primary purpose of fixation; its appearance is too inherently variable to supply a baseline for determining questions of copyright creation and infringement.

The essence of a garden is its vitality, not its fixedness. It may endure from season to season, but its nature is one of dynamic change.

The court distinguished between a garden as a copyrightable work of art and a plan for a garden designed by a landscape designer.  When the landscape designer uses text, diagrams and drawings to plan a garden, the garden plan is embodied in a fixed and tangible copy that can be protected by copyright.

The court explicitly did not rule that only works that are static or fully permanent can be copyrightable or that copyrighted works cannot incorporate natural or living elements.

Fair Use in AP Fairey Dispute but not in Cooks Source Magazine Controversy

In writing posts for this blog, I receive helpful feedback from Dee, my partner, and staff members at LexBlog.  In response to my post AP and Fairey Fair Use Dispute Resolved, one of the LexBlog staff members asked me how the AP/Fairey fair use situation differs from the Cooks Source Magazine controversy.  The specific question was whether my argument in the AP/Fairey post that Fairey created the market for the AP photo is valid when the editor of the Cooks Source Magazine was severely criticized online for copying a web article, editing it to improve it and publishing it in the magazine without permission.  The editor of Cooks Source Magazine arguably created a greater market for the web article.  The argument that the editor of Cooks Source Magazine helped the writer by copying her online article is invalid as a defense to copyright infringement, so why is a similar argument in the AP/Fairey case not also invalid?

For readers unfamiliar with the Cooks Source Magazine controversy, Caitlin Fitzsimmons provides a nice description in Cooks Source Magazine Forced to Close, Following Facebook Backlash.  Monica Gaudio posted a story called A Tale of Two Tarts  on the Gode Cookery website.  She discovered that Cooks Source Magazine republished the article without her permission.  When Ms. Gaudio contacted Judith Griggs, the editor of Cooks Source Magazine, about the infringement, she was told that content on the web is in the public domain and she should compensate Ms. Griggs for editing the story.  This account of the story was posted by Ms. Gaudio on her blog under Copyright Infringement and Me.  Ms. Griggs and the magazine became the subject of enough negative reaction on the Internet that the magazine lost advertisers and was forced to go out of business.

Ms. Gaudio points out on her blog that the Gode Cookery webpage displays a copyright notice.  A writing on the Internet is protected by copyright law even though it does not display a copyright notice.  Copyright is created by the act of fixing an original work in any tangible medium of expression, such as posting an article on a website.  The use of a copyright notice has the benefit of eliminating the innocent infringer defense.  For example, the copier cannot credibly argue that she thought the copied work was in the public domain if it contains a copyright notice.  Most of the material posted on the Internet is not in the public domain.  The general rule for copying material from the Internet is that if you didn’t write it, the copyright belongs to someone else and that if you want to repost it or republish it without infringing the copyright, you need to get permission.

Getting back to the question from the first paragraph, how is it that creating the market for a copyrighted work is a valid argument in the AP/Fairey case but not in the Cooks Source Magazine controversy?  There are some important differences between the two cases.  Firstly, the Cooks Source editor admitted copying Gaudio’s article and did not claim fair use.  Instead, she reportedly made the outrageous claim that material posted on the web is in the public domain.  Secondly, in a fair use case, the statute requires the court to consider “the effect of the use upon the potential market for or value of the copyrighted work.”  So in a fair use case, arguing that the copier created the market for the original work is a valid argument, as the court is required to examine the market for the original work.

What makes a case a fair use case?  It starts off with the alleged infringer claiming fair use.  Fair use is not merely copying, but creating a derivative work.  A derivative work is based on a preexisting work and involves recasting, transforming or adapting the preexisting work.  Creating a derivative work is one of the exclusive rights reserved to the copyright owner.  Fair use is a defense to copyright infringement, hence the name of the fair use statute:  “Limitations on exclusive rights:  Fair use.” 

Fair use is not an available defense for the Cooks Source editor, as she argued that the web article was in the public domain.  The fair use defense does not apply unless there is first an infringement.  If something is in the public domain, it is not copyrightable and the Copyright Act does not apply.  There can be no copyright infringement of a work in the public domain.  In the AP/Fairey case, Fairey made an AP photo of Obama into a stylized poster.  Whether Fairey’s transformation of the AP photo into a new work was sufficient to gain the protection of the fair use statute is the unanswered question from the AP/Fairey case.

AP and Fairey Fair Use Dispute Resolved

The dispute between artist Shepard Fairey and the Associated Press over Fairey’s use of an AP Obama photo to create his “Hope” poster generated intense debate over the question:  “What is fair use?”  On a human interest level, the opposing forces of the AP, the giant content owner, versus Fairey, the artist, made for a good story.  Fairey deserves respect for asserting his fair use rights, for filing the declaratory judgment lawsuit and for not backing down.  The declaratory judgment action was reported in AP Says it Owns Copyright to Street Artist’s Obama HOPE Image, by Debra Cassens Weiss. The AP gets credit, too, for having sense enough not to be as heavy-handed as it could have been in pursuing its claim of copyright ownership.

Fairey and the AP recently settled their dispute.  Copyright Dispute over AP Photo in Obama Poster is Resolved with Deal to Collaborate, by Debra Cassens Weiss, sets out the nutshell version of the settlement.  Both sides maintain the validity of their positions. 

Fair use can be a confusing concept.  It started out as a common law doctrine, but was codified in §107 of the Copyright Act.  Fair use purposes include criticism, comment, news reporting, teaching, scholarship and research.  The list is not exclusive.  Four factors are considered in evaluating whether the use is a fair use:

  • the purpose and character of the use
  • the nature of the copyrighted work 
  • the amount and substantiality of the portion used in relation to the copyrighted work as a whole
  • the effect of the use upon the potential market for or value of the copyrighted work

This dispute focused on “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.”  The greater the portion of AP’s photo that Fairey used, the less likely that Fairey would succeed in his fair use claim.

How much of the AP’s photo did Fairey use?  He used the whole thing.  The focus of the dispute involves just one of four factors, but all factors “shall” be considered, according to the statute.  Another of the fair use factors is “the effect of the use upon the potential market for or value of the copyrighted work.”  What was the effect of Fairey’s use on the potential market for or the value of the AP’s photo?  Arguably, Fairey’s use created the market value for the original.  The original is not an interesting photo.  A photo that probably would have been stuck in the archives somewhere, never to be seen again, has repeatedly circulated around the world due to Fairey’s poster and to the Fairey/AP dispute.  Associated Press Settles Copyright Lawsuit Against Obama ‘Hope’ Artist, by David Kravets, compares the images involved.

In the future, Fairey and the AP will share rights in the Hope image, they will collaborate on new images that Fairey will create from AP photos and Fairey will get a license from the AP to use its images.  Although neither party conceded its position, the settlement seems like a recognition that Fairey created whatever market exists for the AP photo and that Fairey could have avoided the dispute by obtaining a license.  The AP website contains information on how others may obtain rights to use its photos.  Many of the photos are available royalty free. 

Anticircumvention Provisions: Another side of the DMCA

Most people know of the Digital Millennium Copyright Act (DMCA) as a result of its takedown notice and safe harbor provisions.  Those provisions generate frequent discussion, particularly in the wake of a high profile case such as Viacom International, Inc. v. YouTube, Inc. YouTube’s motion for summary judgment in the face of Viacom’s claims of intentional, direct and vicarious copyright infringement was granted on the basis that YouTube was protected by the §512(c) safe harbor.

Anticircumvention is a less well-know side of the DMCA.  The DMCA anticircumvention provisions prohibit hacking software designed to prevent unauthorized copying, for example.  Antcircumvention was one of the topics in I Like (Big) Bots and I Cannot Lie: Bots as Copyright Infringement and DMCA Violations, an excellent post by Drew Boortz on Developing Concerns. Boortz described a recent case in which, as he saw it, the Ninth Circuit ruled that the copyright owner’s right to guard against unwanted access is one of the rights in the copyright bundle and was created by the DMCA. For those who have always believed that §106 defines the copyright bundle of rights, that’s an amazing ruling!   For me, the most intriguing part of the post was Boortz’s reference to the DMCA exemptions.

The DMCA implements two World Intellectual Property Organization treaties and contains five titles. Section 1201 incorporates the anticircumvention provisions. The first sentence reads, “No person shall circumvent a technological measure that effectively controls access to a work protected under this title.”  Under a 2001 court ruling, this meant that people were prohibited from using a decryption computer program to bypass the encryption features of a motion picture DVD so that they could freely copy the DVD. One of the arguments against technologic measures used to protect copyrighted works is that they prevent the fair use of those works.

That seems like a pretty straightforward prohibition, right?  Not so fast!  Section 1201(a)(1) also provides for a rulemaking procedure designed to soften the impact of the circumvention prohibition by exempting users of certain classes of copyrighted works from application of the prohibition.  Every 3 years, the Librarian of Congress, with input from the Register of Copyrights and the Assistant Secretary for Communications and Information of the Department of Commerce, sets the rules for the next three years.  The most recent set of rules became effective on July 27, 2010. If the exemptions change every three years, what does that mean for people who have built businesses or livelihoods that depend on the existence of one or more exemptions?

Six classes of works are currently exempt from the circumvention prohibition. Technical protections for motion pictures on DVDs can now be circumvented solely to allow the incorporation of short portions of the film into new works for the purpose of criticism or comment.  The use is limited to educational uses by college and university professors and certain students, to documentary filmmaking and to noncommercial videos.  It looks like some of the people who may have decrypted DVDs for fair use purposes prior to 2001 joined forces to persuade the Librarian of Congress to grant them an exemption. Other classes of exempt works include circumventing computer programs on wireless phones to enable application interoperability and to allow owners of used handsets to access a wireless network, and circumventing controls on personal computer video games to fix security bugs. I wonder how many similarly situated groups of potential fair users there are who could benefit from such an exemption.  It seems that taking advantage of the rule setting process is a great strategy for those who want to make fair use of copyrighted materials that are currently protected by technical measures.