2. 1 CPTWG MEETING #102 March 8, 2007 Legislative/Litigation Update Jim Burger jburger@dowlohnes.com CPTWG MEETING #102 March 8, 2007 Legislative/Litigation Update Jim Burger jburger@dowlohnes.com

3. 2OverviewOverview n Legislative/Regulatory Issues u Fair Use Act (H.R. 1201) u Perform Act (S. 256) u Canadian MP3 Player Levy u WIPO Update n Litigation u Atlantic Recording Corp. v. XM Satellite Radio Inc. n Fair Use, and DRM u Fair Use Issues u DRM Issues n Legislative/Regulatory Issues u Fair Use Act (H.R. 1201) u Perform Act (S. 256) u Canadian MP3 Player Levy u WIPO Update n Litigation u Atlantic Recording Corp. v. XM Satellite Radio Inc. n Fair Use, and DRM u Fair Use Issues u DRM Issues

4. 3 Legislative/Regulatory Issues

5. 4 Fair Use Act (H.R. 1201) n Introduced by Reps Boucher and Doolittle u Limit statutory damages for copyright infringement to cases where “no reasonable person could have believed” that unauthorized use was lawful u Prevent liability for creation or distribution of hardware devices if they are “capable of substantial commercially significant noninfringing uses” n Introduced by Reps Boucher and Doolittle u Limit statutory damages for copyright infringement to cases where “no reasonable person could have believed” that unauthorized use was lawful u Prevent liability for creation or distribution of hardware devices if they are “capable of substantial commercially significant noninfringing uses”

6. 5 Fair Use Act (cont.) n Bill would create 6 new DMCA exemptions to allow: u Academic use of compilations u Users to skip through “commercial or personally objectionable content” in a work u Transmission of a work over a home or personal network (exemption does not allow circumvention of technology designed to prevent “mass, indiscriminate redistribution”) u Access to public domain works that are part of a compilation consisting primarily of public domain works u Access to a work of “substantial public interest” for the purpose of “criticism, comment, news reporting, scholarship or research” u Library or archive to “preserve or secure a copy or to replace a copy that is damaged, deteriorating, lost, or stolen” n Note: On Feb. 21, CRS released report on DMCA Exemptions n Bill would create 6 new DMCA exemptions to allow: u Academic use of compilations u Users to skip through “commercial or personally objectionable content” in a work u Transmission of a work over a home or personal network (exemption does not allow circumvention of technology designed to prevent “mass, indiscriminate redistribution”) u Access to public domain works that are part of a compilation consisting primarily of public domain works u Access to a work of “substantial public interest” for the purpose of “criticism, comment, news reporting, scholarship or research” u Library or archive to “preserve or secure a copy or to replace a copy that is damaged, deteriorating, lost, or stolen” n Note: On Feb. 21, CRS released report on DMCA Exemptions

7. 6 Perform Act (S. 256) n Reintroduced Jan. 11 by Sen. Feinstein u Nearly identical language as bill introduced last term u Proposed law would obligate webcasters, digital audio subscription services, and satellite radio to: F Pay “fair market value” for music F Use “readily available and cost-effective technology” to prevent piracy u Would prohibit these entities from authorizing, causing, enabling, or inducing users to make copies of satellite radio content n Reintroduced Jan. 11 by Sen. Feinstein u Nearly identical language as bill introduced last term u Proposed law would obligate webcasters, digital audio subscription services, and satellite radio to: F Pay “fair market value” for music F Use “readily available and cost-effective technology” to prevent piracy u Would prohibit these entities from authorizing, causing, enabling, or inducing users to make copies of satellite radio content

8. 7 Canadian Levy on MP3 Players n Canadian Private Copying Collective urging Copyright Board to impose levy on iPods/MP3 players u Levy would increase compensation to artists for private copying of their works u Levy would range from $4.25 ( 30GB) n Second attempt at levy: u Court rejected first attempt; ruled that levy on “digital audio recording devices” does not apply to MP3 players u Revised proposal would trigger levy by classifying MP3 players as “audio recording media” n Canadian Private Copying Collective urging Copyright Board to impose levy on iPods/MP3 players u Levy would increase compensation to artists for private copying of their works u Levy would range from $4.25 ( 30GB) n Second attempt at levy: u Court rejected first attempt; ruled that levy on “digital audio recording devices” does not apply to MP3 players u Revised proposal would trigger levy by classifying MP3 players as “audio recording media”

9. 8 WIPO Broadcasting Treaty n Background u February 8, 2006 Rights-Based Draft u General Assembly - October 2006 F If consensus on signal-based approach, DipCon in Nov ‘07 n 1 st Special Session January 17-19, 2007 u Chair issued “non-paper” discussion points F Signal-based approach, scope, objectives F Objects and definitions F Rights and protections u Chairman’s Draft for Second Special Session - June 2007 n Background u February 8, 2006 Rights-Based Draft u General Assembly - October 2006 F If consensus on signal-based approach, DipCon in Nov ‘07 n 1 st Special Session January 17-19, 2007 u Chair issued “non-paper” discussion points F Signal-based approach, scope, objectives F Objects and definitions F Rights and protections u Chairman’s Draft for Second Special Session - June 2007

10. 9 WIPO Broadcast Treaty – The US Senate n Senators Patrick Leahy and Arlen Specter letter to Copyright Office and PTO expresses concern over most recent draft of treaty n Senators interpret the treaty as granting a 50 year exclusive right n Senators concerns over broadcast right: u limits fair use of content u Adds uncertainty to consumer use u Restricts rights of content owners u May create unintended intermediary liability n Senators claim treaty inconsistent with U.S. law; urge support for narrower signal theft approach to protecting broadcaster signals n Senators Patrick Leahy and Arlen Specter letter to Copyright Office and PTO expresses concern over most recent draft of treaty n Senators interpret the treaty as granting a 50 year exclusive right n Senators concerns over broadcast right: u limits fair use of content u Adds uncertainty to consumer use u Restricts rights of content owners u May create unintended intermediary liability n Senators claim treaty inconsistent with U.S. law; urge support for narrower signal theft approach to protecting broadcaster signals

11. 10 LitigationLitigation

12. 11 Atlantic Recording Corp. v. XM Satellite Radio Inc. (S.D.N.Y. 2007) n XM player allows subscribers to build music libraries from recorded music u Music industry claims XM offering unauthorized music download service u XM argued player merely enables users to exercise fair use rights to record radio broadcasts; protected by AHRA F AHRA excludes liability for makers of “digital audio recording devices” and for noncommercial recording by consumer n Court rules XM and subscribers not protected by AHRA: u AHRA does not apply to music “leased” to consumers who pay subscription fees for broadcast u XM acting as distributor and broadcaster of music, but only paying royalties as a broadcaster n XM player allows subscribers to build music libraries from recorded music u Music industry claims XM offering unauthorized music download service u XM argued player merely enables users to exercise fair use rights to record radio broadcasts; protected by AHRA F AHRA excludes liability for makers of “digital audio recording devices” and for noncommercial recording by consumer n Court rules XM and subscribers not protected by AHRA: u AHRA does not apply to music “leased” to consumers who pay subscription fees for broadcast u XM acting as distributor and broadcaster of music, but only paying royalties as a broadcaster

13. 12 Fair Use & DRM Issues

14. 13 Fair Use Issues n Israel holding hearings on revising copyright law u Amended fair use statute would adopt non- exhaustive four-factor approach similar to US law § 117 of U.S. Copyright Act F Lists examples of permitted uses (e.g., research, criticism, news reporting, quotation or teaching) F Minister of Justice may recognize specific conduct as fair use n Israel holding hearings on revising copyright law u Amended fair use statute would adopt non- exhaustive four-factor approach similar to US law § 117 of U.S. Copyright Act F Lists examples of permitted uses (e.g., research, criticism, news reporting, quotation or teaching) F Minister of Justice may recognize specific conduct as fair use

15. 14 Fair Use Issues (cont.) n German music industry pushing for restrictions on private copying rights in revised German copyright law: u Limit private copying to one generation by owner of original work u Prohibit software allowing users to record specific tracks played on Internet radio u Provide exclusive broadcast right for musical works to give artists and producers right to control how their music is played n German music industry pushing for restrictions on private copying rights in revised German copyright law: u Limit private copying to one generation by owner of original work u Prohibit software allowing users to record specific tracks played on Internet radio u Provide exclusive broadcast right for musical works to give artists and producers right to control how their music is played

16. 15 DRM Issues

17. 16 DRM Issues n Some European countries claiming Apple’s DRM policies violate contract & copyright laws u Claim Apple’s FairPlay DRM locks consumers into owning iPods because not compatible with rival music/players n Norway began campaign in June 2006 to persuade Apple to change DRM policies; France, Germany, Netherlands joined; all claim Apple’s DRM policies violate their laws u Sweden, Denmark, Finland expressed support for Norway’s campaign, but not officially claiming Apple violates their laws u Norway threatened legal action unless Apple changes policies to allow compatibility with competing players/music by Sept. 2007 n Some European countries claiming Apple’s DRM policies violate contract & copyright laws u Claim Apple’s FairPlay DRM locks consumers into owning iPods because not compatible with rival music/players n Norway began campaign in June 2006 to persuade Apple to change DRM policies; France, Germany, Netherlands joined; all claim Apple’s DRM policies violate their laws u Sweden, Denmark, Finland expressed support for Norway’s campaign, but not officially claiming Apple violates their laws u Norway threatened legal action unless Apple changes policies to allow compatibility with competing players/music by Sept. 2007

18. 17 DRM Issues (cont.) n Apple Response: u European countries should tell record labels to abolish DRM n Recording Industry: u DRM needed to combat piracy; Apple and others should share technology to ensure compatibility u But record label EMI claims it is considering offering all of its music without DRM F Already experimenting and receiving positive feedback from consumers; has offered DRM-free music from artists such as Norah Jones and Lily Allen n Apple Response: u European countries should tell record labels to abolish DRM n Recording Industry: u DRM needed to combat piracy; Apple and others should share technology to ensure compatibility u But record label EMI claims it is considering offering all of its music without DRM F Already experimenting and receiving positive feedback from consumers; has offered DRM-free music from artists such as Norah Jones and Lily Allen