Welcome

Claims Tribunal, Music Rates Headline 2021 Copyright Issues (1)

Jan. 11, 2021, 10:55 AM; Updated: Jan. 11, 2021, 9:03 PM

A new small claims tribunal and a music licensing collective are among the significant developments set to play out in copyright law in 2021.

The U.S. Copyright Office will run the small claims tribunal under language added to the recently enacted omnibus spending package.

The tribunal will be a new, affordable way to enforce copyrights that aren’t valuable enough to take to federal court in long and costly litigation, rightsholders say. Infringers currently can act with near impunity, they say.

Others worry it could be a haven for abuse, and perhaps unconstitutional with nearly unappealable awards granted outside of a court. Copyright attorneys remain uncertain how the new forum will take shape.

“It’s the first time the Copyright Office has functioned in this capacity. So it’s not easy to just overnight set up a mechanism for handling litigation-style disputes,” copyright attorney Jason P. Bloom of Haynes and Boone LLP said.

The law requires the tribunal to be operational one year after passage, with allowance for a 180-day extension.

The proceedings are designed to be streamlined, remote, cheap, and navigable without a lawyer, with copyright specialists presiding. Advocates hope accused infringers—who can opt out of tribunal proceedings—will be drawn by lower legal costs and award limits.

Critics say sophisticated infringers will opt out, leaving small actors to face potentially still-too-large, impossible-to-appeal penalties. Copyright law professor Rebecca Tushnet of Harvard University called the tribunal “poorly conceived and likely to be abused” by “copyright trolls” seeking out-sized paydays against unsophisticated entities over minor infringement.

Designing notices to the accused that don’t look like a scam or junk mail will be important—and difficult, said Tushnet, a member of the legal committee of the Organization for Transformative Works. The group advocates for the protection of fair use of existing material by incorporating them into new creative works.

Streaming Royalties

A new licensing collective will collect data and billions of dollars from streaming services such as Spotify, and distribute royalties to copyright owners. The Mechanical Licensing Collective is likely to be hugely beneficial to songwriters, music publishers, and digital streaming services, music copyright attorney Benjamin Semel of Pryor Cashman LLP said.

Semel also noted another critical MMA rollout: a market-based “willing buyer, willing seller” standard for setting the rate for streaming royalties rather than the old four-factor test. The once-every-five-years Copyright Royalty Board proceeding to set rates digital services will pay begins in 2021.

“What’s the practical effect? That’s what makes the year so important,” Semel said. “It should improve the rates for copyright owners. But nobody can say.”

Endangered Embeds

Attorneys also are closely watching two New York cases that appear poised to challenge a broadly accepted Ninth Circuit precedent that effectively bars liability for embedding copyright-protected social media posts.

The U.S. District Court for the Southern District of New York ruled Instagram’s terms of service didn’t by itself grant Newsweek a sublicense to embed a photographer’s post in an article. Weeks later a judge that had found the opposite in a case involving Mashable reversed herself to agree, allowing that lawsuit to proceed as well.

Instagram, meanwhile, issued a statement that agreed with the court that its terms of service didn’t mean third parties had permission to embed copyright-protected posts.

“That Instagram felt compelled to make a statement certainly speaks to the importance of the issue,” intellectual property attorney Suzanne M. Hengl of Baker Botts LLP said. “There isn’t a lot of case law. I think a lot of media companies that thought this was standard practice were taken by surprise.”

Few courts have defied the Ninth Circuit’s “server rule,” which suggests embedders don’t control any copies of the work on their servers so they don’t infringe. But that case involved thumbnails from Google’s images search, not social media posts.

If the Second Circuit eventually agrees with the Southern District’s implication that enabling display on a site with an embed could infringe, it could create a circuit split.

Google vs. Oracle

The U.S. Supreme Court is expected to rule by July on whether Oracle’s multibillion-dollar win over Google after the search giant was found to infringe Oracle’s Java copyright should stand. The decision may shake up both software copyrightability and deference to juries’ fair use rulings.

“That’s going to be the biggest case in terms of dollar value, and a case that will ripple across an industry,” Bloom said. Oracle says it’s entitled to at least $8.8 billion in damages.

Google challenged two rulings: that interface code it used was creative enough for copyright protection, and that a jury’s fair use verdict for Google was legally wrong.

Digital Copyright

Sen. Thom Tillis (R-N.C.) has proposed revamping the Digital Millennium Copyright Act. It’s unclear how far the measure will advance in the Democratic-controlled Senate in the 117th Congress.

Tillis’ draft bill would move the U.S. Copyright Office from the Library of Congress to the Department of Commerce and make the Copyright Register a president-appointed, Senate-confirmed position.

The draft measure would overhaul the notice-takedown procedure for allegedly infringing online content. Rightholders claim the current process allows for what copyright attorneys and advocates call a “whack-a-mole” situation with infringement popping back up every time it’s knocked down. It also would put more pressure on platforms to be more proactive in policing infringement including setting up automated filters.

(Updated with additional reporting. An earlier version corrected the name of the licensing collective.)

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editors responsible for this story: Renee Schoof at rschoof@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com

To read more articles log in.

Learn more about a Bloomberg Law subscription.