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CPTWG MEETING #102CPTWG MEETING #102March 8, 2007March 8, 2007

Legislative/Litigation UpdateLegislative/Litigation Update

Jim BurgerJim Burgerjburger@dowlohnes.comjburger@dowlohnes.com

CPTWG MEETING #102CPTWG MEETING #102March 8, 2007March 8, 2007

Legislative/Litigation UpdateLegislative/Litigation Update

Jim BurgerJim Burgerjburger@dowlohnes.comjburger@dowlohnes.com

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OverviewOverviewOverviewOverview Legislative/Regulatory IssuesLegislative/Regulatory Issues

Fair Use Act (H.R. 1201)Fair Use Act (H.R. 1201) Perform Act (S. 256)Perform Act (S. 256) Canadian MP3 Player LevyCanadian MP3 Player Levy WIPO UpdateWIPO Update

LitigationLitigation Atlantic Recording Corp. v. XM Satellite Radio Inc.Atlantic Recording Corp. v. XM Satellite Radio Inc.

Fair Use, and DRMFair Use, and DRM Fair Use IssuesFair Use Issues DRM IssuesDRM Issues

Legislative/Regulatory IssuesLegislative/Regulatory Issues Fair Use Act (H.R. 1201)Fair Use Act (H.R. 1201) Perform Act (S. 256)Perform Act (S. 256) Canadian MP3 Player LevyCanadian MP3 Player Levy WIPO UpdateWIPO Update

LitigationLitigation Atlantic Recording Corp. v. XM Satellite Radio Inc.Atlantic Recording Corp. v. XM Satellite Radio Inc.

Fair Use, and DRMFair Use, and DRM Fair Use IssuesFair Use Issues DRM IssuesDRM Issues

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Legislative/Regulatory Legislative/Regulatory IssuesIssues

Legislative/Regulatory Legislative/Regulatory IssuesIssues

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Fair Use Act (H.R. 1201)Fair Use Act (H.R. 1201)Fair Use Act (H.R. 1201)Fair Use Act (H.R. 1201) Introduced by Reps Boucher and Introduced by Reps Boucher and

DoolittleDoolittle Limit statutory damages for copyright Limit statutory damages for copyright

infringement to cases where “no infringement to cases where “no reasonable person could have believed” reasonable person could have believed” that unauthorized use was lawfulthat unauthorized use was lawful

Prevent liability for creation or Prevent liability for creation or distribution of hardware devices if they distribution of hardware devices if they are “capable of substantial commercially are “capable of substantial commercially significant noninfringing uses”significant noninfringing uses”

Introduced by Reps Boucher and Introduced by Reps Boucher and DoolittleDoolittle Limit statutory damages for copyright Limit statutory damages for copyright

infringement to cases where “no infringement to cases where “no reasonable person could have believed” reasonable person could have believed” that unauthorized use was lawfulthat unauthorized use was lawful

Prevent liability for creation or Prevent liability for creation or distribution of hardware devices if they distribution of hardware devices if they are “capable of substantial commercially are “capable of substantial commercially significant noninfringing uses”significant noninfringing uses”

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Fair Use Act (cont.)Fair Use Act (cont.)Fair Use Act (cont.)Fair Use Act (cont.) Bill would create 6 new DMCA exemptions to allow:Bill would create 6 new DMCA exemptions to allow:

Academic use of compilations Academic use of compilations Users to skip through “commercial or personally Users to skip through “commercial or personally

objectionable content” in a workobjectionable content” in a work Transmission of a work over a home or personal network Transmission of a work over a home or personal network

(exemption does not allow circumvention of technology (exemption does not allow circumvention of technology designed to prevent “mass, indiscriminate redistribution”)designed to prevent “mass, indiscriminate redistribution”)

Access to public domain works that are part of a compilation Access to public domain works that are part of a compilation consisting primarily of public domain worksconsisting primarily of public domain works

Access to a work of “substantial public interest” for the Access to a work of “substantial public interest” for the purpose of “criticism, comment, news reporting, scholarship purpose of “criticism, comment, news reporting, scholarship or research”or research”

Library or archive to “preserve or secure a copy or to Library or archive to “preserve or secure a copy or to replace a copy that is damaged, deteriorating, lost, or stolen”replace a copy that is damaged, deteriorating, lost, or stolen”

Note: On Feb. 21, CRS released report on DMCA Note: On Feb. 21, CRS released report on DMCA ExemptionsExemptions

Bill would create 6 new DMCA exemptions to allow:Bill would create 6 new DMCA exemptions to allow: Academic use of compilations Academic use of compilations Users to skip through “commercial or personally Users to skip through “commercial or personally

objectionable content” in a workobjectionable content” in a work Transmission of a work over a home or personal network Transmission of a work over a home or personal network

(exemption does not allow circumvention of technology (exemption does not allow circumvention of technology designed to prevent “mass, indiscriminate redistribution”)designed to prevent “mass, indiscriminate redistribution”)

Access to public domain works that are part of a compilation Access to public domain works that are part of a compilation consisting primarily of public domain worksconsisting primarily of public domain works

Access to a work of “substantial public interest” for the Access to a work of “substantial public interest” for the purpose of “criticism, comment, news reporting, scholarship purpose of “criticism, comment, news reporting, scholarship or research”or research”

Library or archive to “preserve or secure a copy or to Library or archive to “preserve or secure a copy or to replace a copy that is damaged, deteriorating, lost, or stolen”replace a copy that is damaged, deteriorating, lost, or stolen”

Note: On Feb. 21, CRS released report on DMCA Note: On Feb. 21, CRS released report on DMCA ExemptionsExemptions

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Perform Act Perform Act (S. 256)(S. 256)Perform Act Perform Act (S. 256)(S. 256)

Reintroduced Jan. 11 by Sen. FeinsteinReintroduced Jan. 11 by Sen. Feinstein Nearly identical language as bill introduced Nearly identical language as bill introduced

last termlast term Proposed law would obligate webcasters, Proposed law would obligate webcasters,

digital audio subscription services, and satellite digital audio subscription services, and satellite radio to:radio to:Pay “fair market value” for musicPay “fair market value” for musicUse “readily available and cost-effective Use “readily available and cost-effective

technology” to prevent piracytechnology” to prevent piracy Would prohibit these entities from authorizing, Would prohibit these entities from authorizing,

causing, enabling, or inducing users to make causing, enabling, or inducing users to make copies of satellite radio contentcopies of satellite radio content

Reintroduced Jan. 11 by Sen. FeinsteinReintroduced Jan. 11 by Sen. Feinstein Nearly identical language as bill introduced Nearly identical language as bill introduced

last termlast term Proposed law would obligate webcasters, Proposed law would obligate webcasters,

digital audio subscription services, and satellite digital audio subscription services, and satellite radio to:radio to:Pay “fair market value” for musicPay “fair market value” for musicUse “readily available and cost-effective Use “readily available and cost-effective

technology” to prevent piracytechnology” to prevent piracy Would prohibit these entities from authorizing, Would prohibit these entities from authorizing,

causing, enabling, or inducing users to make causing, enabling, or inducing users to make copies of satellite radio contentcopies of satellite radio content

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Canadian Levy on MP3 PlayersCanadian Levy on MP3 PlayersCanadian Levy on MP3 PlayersCanadian Levy on MP3 Players

Canadian Private Copying Collective urging Copyright Canadian Private Copying Collective urging Copyright Board to imposeBoard to impose levy on iPods/MP3 players levy on iPods/MP3 players Levy would increase compensation to artists for Levy would increase compensation to artists for

private copying of their worksprivate copying of their works Levy would range from $4.25 (< 1GB storage) up to Levy would range from $4.25 (< 1GB storage) up to

$63.75 (> 30GB)$63.75 (> 30GB) Second attempt at levy:Second attempt at levy:

Court rejected first attempt; ruled that levy on Court rejected first attempt; ruled that levy on “digital audio recording devices” does not apply to “digital audio recording devices” does not apply to MP3 playersMP3 players

Revised proposal would trigger levy by classifying Revised proposal would trigger levy by classifying MP3 players as “audio recording media”MP3 players as “audio recording media”

Canadian Private Copying Collective urging Copyright Canadian Private Copying Collective urging Copyright Board to imposeBoard to impose levy on iPods/MP3 players levy on iPods/MP3 players Levy would increase compensation to artists for Levy would increase compensation to artists for

private copying of their worksprivate copying of their works Levy would range from $4.25 (< 1GB storage) up to Levy would range from $4.25 (< 1GB storage) up to

$63.75 (> 30GB)$63.75 (> 30GB) Second attempt at levy:Second attempt at levy:

Court rejected first attempt; ruled that levy on Court rejected first attempt; ruled that levy on “digital audio recording devices” does not apply to “digital audio recording devices” does not apply to MP3 playersMP3 players

Revised proposal would trigger levy by classifying Revised proposal would trigger levy by classifying MP3 players as “audio recording media”MP3 players as “audio recording media”

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WIPO Broadcasting TreatyWIPO Broadcasting TreatyWIPO Broadcasting TreatyWIPO Broadcasting Treaty BackgroundBackground

February 8, 2006 Rights-Based DraftFebruary 8, 2006 Rights-Based Draft General Assembly - October 2006General Assembly - October 2006

If consensus on signal-based approach, DipCon in If consensus on signal-based approach, DipCon in Nov ‘07Nov ‘07

11stst Special Session January 17-19, 2007 Special Session January 17-19, 2007 Chair issued “non-paper” discussion pointsChair issued “non-paper” discussion points

Signal-based approach, scope, objectivesSignal-based approach, scope, objectivesObjects and definitionsObjects and definitionsRights and protectionsRights and protections

Chairman’s Draft for Second Special Session - June 2007Chairman’s Draft for Second Special Session - June 2007

BackgroundBackground February 8, 2006 Rights-Based DraftFebruary 8, 2006 Rights-Based Draft General Assembly - October 2006General Assembly - October 2006

If consensus on signal-based approach, DipCon in If consensus on signal-based approach, DipCon in Nov ‘07Nov ‘07

11stst Special Session January 17-19, 2007 Special Session January 17-19, 2007 Chair issued “non-paper” discussion pointsChair issued “non-paper” discussion points

Signal-based approach, scope, objectivesSignal-based approach, scope, objectivesObjects and definitionsObjects and definitionsRights and protectionsRights and protections

Chairman’s Draft for Second Special Session - June 2007Chairman’s Draft for Second Special Session - June 2007

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WIPO Broadcast Treaty –WIPO Broadcast Treaty –The US SenateThe US Senate

WIPO Broadcast Treaty –WIPO Broadcast Treaty –The US SenateThe US Senate

Senators Patrick Leahy and Arlen Specter letter to Senators Patrick Leahy and Arlen Specter letter to Copyright Office and PTO expresses concern over most Copyright Office and PTO expresses concern over most recent draft of treatyrecent draft of treaty

Senators interpret the treaty as granting a 50 year Senators interpret the treaty as granting a 50 year exclusive rightexclusive right

Senators concerns over broadcast right:Senators concerns over broadcast right: limits fair use of contentlimits fair use of content Adds uncertainty to consumer useAdds uncertainty to consumer use Restricts rights of content ownersRestricts rights of content owners May create unintended intermediary liabilityMay create unintended intermediary liability

Senators claim treaty inconsistent with U.S. law; urge Senators claim treaty inconsistent with U.S. law; urge support for narrower signal theft approach to support for narrower signal theft approach to protecting broadcaster signalsprotecting broadcaster signals

Senators Patrick Leahy and Arlen Specter letter to Senators Patrick Leahy and Arlen Specter letter to Copyright Office and PTO expresses concern over most Copyright Office and PTO expresses concern over most recent draft of treatyrecent draft of treaty

Senators interpret the treaty as granting a 50 year Senators interpret the treaty as granting a 50 year exclusive rightexclusive right

Senators concerns over broadcast right:Senators concerns over broadcast right: limits fair use of contentlimits fair use of content Adds uncertainty to consumer useAdds uncertainty to consumer use Restricts rights of content ownersRestricts rights of content owners May create unintended intermediary liabilityMay create unintended intermediary liability

Senators claim treaty inconsistent with U.S. law; urge Senators claim treaty inconsistent with U.S. law; urge support for narrower signal theft approach to support for narrower signal theft approach to protecting broadcaster signalsprotecting broadcaster signals

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LitigationLitigationLitigationLitigation

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Atlantic Recording Corp. v. XM Satellite Atlantic Recording Corp. v. XM Satellite Radio Inc.Radio Inc. (S.D.N.Y. 2007) (S.D.N.Y. 2007)

Atlantic Recording Corp. v. XM Satellite Atlantic Recording Corp. v. XM Satellite Radio Inc.Radio Inc. (S.D.N.Y. 2007) (S.D.N.Y. 2007)

XM player allows subscribers to build music libraries from XM player allows subscribers to build music libraries from recorded musicrecorded music Music industry claims XM offering unauthorized music download Music industry claims XM offering unauthorized music download

serviceservice XM argued player merely enables users to exercise fair use rights XM argued player merely enables users to exercise fair use rights

to record radio broadcasts; protected by AHRAto record radio broadcasts; protected by AHRA AHRA excludes liability for makers of “digital audio recording AHRA excludes liability for makers of “digital audio recording

devices” and for noncommercial recording by consumerdevices” and for noncommercial recording by consumer Court rules XM and subscribers not protected by AHRA: Court rules XM and subscribers not protected by AHRA:

AHRA does not apply to music “leased” to consumers who pay AHRA does not apply to music “leased” to consumers who pay subscription fees for broadcastsubscription fees for broadcast

XM acting as distributor and broadcaster of music, but only XM acting as distributor and broadcaster of music, but only paying royalties as a broadcasterpaying royalties as a broadcaster

XM player allows subscribers to build music libraries from XM player allows subscribers to build music libraries from recorded musicrecorded music Music industry claims XM offering unauthorized music download Music industry claims XM offering unauthorized music download

serviceservice XM argued player merely enables users to exercise fair use rights XM argued player merely enables users to exercise fair use rights

to record radio broadcasts; protected by AHRAto record radio broadcasts; protected by AHRA AHRA excludes liability for makers of “digital audio recording AHRA excludes liability for makers of “digital audio recording

devices” and for noncommercial recording by consumerdevices” and for noncommercial recording by consumer Court rules XM and subscribers not protected by AHRA: Court rules XM and subscribers not protected by AHRA:

AHRA does not apply to music “leased” to consumers who pay AHRA does not apply to music “leased” to consumers who pay subscription fees for broadcastsubscription fees for broadcast

XM acting as distributor and broadcaster of music, but only XM acting as distributor and broadcaster of music, but only paying royalties as a broadcasterpaying royalties as a broadcaster

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Fair Use & DRM IssuesFair Use & DRM IssuesFair Use & DRM IssuesFair Use & DRM Issues

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Fair Use IssuesFair Use IssuesFair Use IssuesFair Use Issues Israel holding hearings on revising copyright Israel holding hearings on revising copyright

lawlaw Amended fair use statute would adopt non-Amended fair use statute would adopt non-

exhaustive four-factor approach similar to exhaustive four-factor approach similar to US law US law § 117 of U.S. Copyright Act§ 117 of U.S. Copyright ActLists examples of permitted uses (e.g., research, Lists examples of permitted uses (e.g., research,

criticism, news reporting, quotation or criticism, news reporting, quotation or teaching)teaching)

Minister of Justice may recognize specific Minister of Justice may recognize specific conduct as fair useconduct as fair use

Israel holding hearings on revising copyright Israel holding hearings on revising copyright lawlaw Amended fair use statute would adopt non-Amended fair use statute would adopt non-

exhaustive four-factor approach similar to exhaustive four-factor approach similar to US law US law § 117 of U.S. Copyright Act§ 117 of U.S. Copyright ActLists examples of permitted uses (e.g., research, Lists examples of permitted uses (e.g., research,

criticism, news reporting, quotation or criticism, news reporting, quotation or teaching)teaching)

Minister of Justice may recognize specific Minister of Justice may recognize specific conduct as fair useconduct as fair use

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Fair Use Issues (cont.)Fair Use Issues (cont.)Fair Use Issues (cont.)Fair Use Issues (cont.)

German music industry pushing for restrictions German music industry pushing for restrictions on private copying rights in revised German on private copying rights in revised German copyright law:copyright law: Limit private copying to one generation by Limit private copying to one generation by

owner of original workowner of original work Prohibit software allowing users to record Prohibit software allowing users to record

specific tracks played on Internet radiospecific tracks played on Internet radio Provide exclusive broadcast right for musical Provide exclusive broadcast right for musical

works to give artists and producers right to works to give artists and producers right to control how their music is playedcontrol how their music is played

German music industry pushing for restrictions German music industry pushing for restrictions on private copying rights in revised German on private copying rights in revised German copyright law:copyright law: Limit private copying to one generation by Limit private copying to one generation by

owner of original workowner of original work Prohibit software allowing users to record Prohibit software allowing users to record

specific tracks played on Internet radiospecific tracks played on Internet radio Provide exclusive broadcast right for musical Provide exclusive broadcast right for musical

works to give artists and producers right to works to give artists and producers right to control how their music is playedcontrol how their music is played

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DRM IssuesDRM IssuesDRM IssuesDRM Issues

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DRM IssuesDRM IssuesDRM IssuesDRM Issues Some European countries claiming Apple’s Some European countries claiming Apple’s

DRM policies violate contract & copyright lawsDRM policies violate contract & copyright laws Claim Apple’s FairPlay DRM locks consumers into Claim Apple’s FairPlay DRM locks consumers into

owning iPods because not compatible with rival owning iPods because not compatible with rival music/playersmusic/players

Norway began campaign in June 2006 to Norway began campaign in June 2006 to persuade Apple to change DRM policies; persuade Apple to change DRM policies; France, Germany, Netherlands joined; all claim France, Germany, Netherlands joined; all claim Apple’s DRM policies violate their lawsApple’s DRM policies violate their laws Sweden, Denmark, Finland expressed support for Sweden, Denmark, Finland expressed support for

Norway’s campaign, but not officially claiming Norway’s campaign, but not officially claiming Apple violates their lawsApple violates their laws

Norway threatened legal action unless Apple changes Norway threatened legal action unless Apple changes policies to allow compatibility with competing policies to allow compatibility with competing players/music by Sept. 2007players/music by Sept. 2007

Some European countries claiming Apple’s Some European countries claiming Apple’s DRM policies violate contract & copyright lawsDRM policies violate contract & copyright laws Claim Apple’s FairPlay DRM locks consumers into Claim Apple’s FairPlay DRM locks consumers into

owning iPods because not compatible with rival owning iPods because not compatible with rival music/playersmusic/players

Norway began campaign in June 2006 to Norway began campaign in June 2006 to persuade Apple to change DRM policies; persuade Apple to change DRM policies; France, Germany, Netherlands joined; all claim France, Germany, Netherlands joined; all claim Apple’s DRM policies violate their lawsApple’s DRM policies violate their laws Sweden, Denmark, Finland expressed support for Sweden, Denmark, Finland expressed support for

Norway’s campaign, but not officially claiming Norway’s campaign, but not officially claiming Apple violates their lawsApple violates their laws

Norway threatened legal action unless Apple changes Norway threatened legal action unless Apple changes policies to allow compatibility with competing policies to allow compatibility with competing players/music by Sept. 2007players/music by Sept. 2007

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DRM Issues (cont.)DRM Issues (cont.)DRM Issues (cont.)DRM Issues (cont.) Apple Response:Apple Response:

European countries should tell record labels to European countries should tell record labels to abolish DRMabolish DRM

Recording Industry:Recording Industry: DRM needed to combat piracy; Apple and others DRM needed to combat piracy; Apple and others

should share technology to ensure compatibility should share technology to ensure compatibility But record label EMI claims it is considering But record label EMI claims it is considering

offering all of its music without DRMoffering all of its music without DRMAlready experimenting and receiving positive Already experimenting and receiving positive

feedback from consumers; has offered DRM-free feedback from consumers; has offered DRM-free music from artists such as Norah Jones and Lily music from artists such as Norah Jones and Lily AllenAllen

Apple Response:Apple Response: European countries should tell record labels to European countries should tell record labels to

abolish DRMabolish DRM Recording Industry:Recording Industry:

DRM needed to combat piracy; Apple and others DRM needed to combat piracy; Apple and others should share technology to ensure compatibility should share technology to ensure compatibility

But record label EMI claims it is considering But record label EMI claims it is considering offering all of its music without DRMoffering all of its music without DRMAlready experimenting and receiving positive Already experimenting and receiving positive

feedback from consumers; has offered DRM-free feedback from consumers; has offered DRM-free music from artists such as Norah Jones and Lily music from artists such as Norah Jones and Lily AllenAllen