1. Digital Copyright Intro to IP – Prof. Merges 3.9.09

2. Agenda Review coevolution of Digital technology and copyright law – Legislation vs. litigation Grokster case study Kelly and Amazon: fair use and digital distribution

4. Coevolution of digital tech and copyright law Digital Audio Tape legislation, 1995 A model accommodation of IP and new technology?

5. “Media Taxes” Surcharge on technology and media Distribute pool of proceeds to artists/creators in some way

6. Terry Fisher – “Promises to Keep”

7. Music compulsory license Lessig proposes an internet-wide compulsory license for downloading of music Separate compensation from control

8. Larry Lessig and Terry Fisher Compulsory license, paid for via a tax on all content Is there a better way? I think so …

9. This form of property is a wrong turn, I would argue Merges, “Contracting into Liability Rules: Intellectual Property Rights and Collective Rights Organizations,” 84 CLR 1293 (1996)

10. Compulsory license vs. private negotiations Difficulty of bargaining “in the shadow of” imminent legislative intervention Webcasting: Case Study

11. Sec. 106. Exclusive Rights in Copyrighted Works (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

12. (a) The exclusive rights of the owner of copyright in a sound recording are limited to the rights specified by clauses (1), (2), (3) and (6) of section 106, and do not include any right of performance under section 106(4).

13. Section 114: 3 main categories “Exempt” transmissions: digital broadcasts by established broadcasters Non-exempt transmissions: compulsory license for non-interactive subscription services Interactive services (not really broadcasting): requires license from sound recording copyright owner

14. Sec. 114 (d) Limitations on Exclusive Right. — Notwithstanding the provisions of section 106(6) — (1) Exempt transmissions and retransmissions. — The performance of a sound recording publicly by means of a digital audio transmission, other than as a part of an interactive service, is not an infringement of section 106(6) if the performance is part of —

15. Sec. 114 (cont’d) (A) a nonsubscription broadcast transmission; (B) a retransmission of a nonsubscription broadcast transmission: Provided, That, [the retransmission is basically by analog broadcast repeater, and not over the internet]

16. [114(d)](2) Statutory Licensing of Certain Transmissions. — The performance of a sound recording publicly by means of a subscription digital audio transmission not exempt under paragraph (1), an eligible nonsubscription transmission, or a transmission not exempt under paragraph (1) that is made by a preexisting satellite digital audio radio service shall be subject to statutory licensing, in accordance with subsection (f) if — (A)(i) the transmission is not part of an interactive service;

17. (3) Licenses for transmissions by interactive services. — … (C) Notwithstanding the grant of an exclusive or nonexclusive license of the right of public performance under section 106(6), an interactive service may not publicly perform a sound recording unless a license has been granted for the public performance of any copyrighted musical work contained in the sound recording: Provided, That such license to publicly perform the copyrighted musical work may be granted either by a performing rights society representing the copyright owner or by the copyright owner.

19. Agreement reached on Internet music royalty rates By RACHEL METZ AP Technology Writer Feb 17, 2:12 PM EST NEW YORK (AP) -- A group that collects royalties for music artists and recording companies has agreed to reduce rates for thousands of commercial radio stations that also play songs over the Internet. Internet radio station operators had complained that rates originally set by the federal Copyright Royalty Board in 2007 could essentially force them to shut down. The new deal lowers those rates by about 16 percent in 2009 and 2010. The stations will now pay $1.50 for every song heard by a thousand listeners in 2009, rising to $2.50 per 1,000 listeners in 2015. The agreement between the National Association of Broadcasters and the royalty-collection group SoundExchange covers the Internet streaming operations at several thousand NAB- member stations, including those owned by Clear Channel Communications Inc. and CBS Corp. Stations that are not members of the broadcasters' group have the option of joining the agreement, according to the NAB. http://hosted.ap.org/dynamic/stories/T/TEC_INTERNET_RADIO_ROYALTIES?SITE=CADIU&SECT ION=HOME&TEMPLATE=DEFAULT

20. http://www.hypebot.com/hypebot/20 09/02/internet-radio-soundexchange- talks-fail.html The Digital Media Association confirmed that negotiations with SoundExchange over net radio royalties did not yield an agreement before the February 15 deadline. The DiMA, on behalf of its members which include RealNetworks, Pandora and MTV has been negotiating with SoundExchange since March of 2007 when the Copyright Royalty Board increased some webcasters royalties by 300%.

23. Grokster Specific facts Holding

24. Facts What did the evidence show about the intent of Grokster’s founders and principals? Note how other distribution schemes may differ...

25. Holding p. 602 “one who infringes a device with the object of promoting its use to infringe”

27. U.S. universities are getting a glimpse at a plan that would build a small music- royalty fee into the tuition payments they receive from students. If successful, the model — proposed by digital music strategist Jim Griffin on behalf of Warner Music Group — could be expanded to make ISPs the collector of such micropayments … http://blog.wired.com/business/2008/12/warner-music-gr.html

30. Liability and product design: Menell Legal Realism in Action: Indirect Copyright Liability's Continuing Tort Framework and Sony's De Facto Demise (with D. Nimmer), 55 UCLA L. Rev. 143 (2007) Unwinding Sony, 95 Cal L Rev 941 (2007)

31. Perfect 10 v. Amazon Facts Holdings

32. PP 30-31 Although an image may have been created originally to serve an entertainment, aesthetic, or informative function, a search engine transforms the image into a pointer directing a user to a source of information. Just as a “parody has an obvious claim to transformative value” because “it can provide social benefit, by shedding light on an earlier work, and, in the process, creating a new one,”Campbell, 510 U.S. at 579, 114 S.Ct. 1164, a search engine provides social benefit by incorporating an original work into a new work, namely, an electronic reference tool.