Innovation Policy Post

Today a federal judge in New York granted YouTube’s motion for summary judgment in the closely-watched Viacom v. YouTube copyright case.

Viacom sued YouTube for copyright infringement over the appearance of video clips on YouTube over which Viacom claimed the copyright. (It was later revealed that many of those clips were secretly uploaded by dozens of Viacom marketers.) YouTube argued that it was protected by the Digital Millennium Copyright Act’s safe harbors. Generally, those safe harbors, enacted in 1998, limit remedies against online services so long as they respond to “takedown requests” – that is, expeditiously disable access to allegedly infringing content when a copyright holder complains that particular content available on the service infringes its rights.

YouTube complied with thousands of Viacom takedown requests, but Viacom nevertheless argued the safe harbor shouldn’t apply to YouTube, since it had “generalized” knowledge of online infringement. The court rejected Viacom’s argument, pointing out that YouTube removes numerous clips at Viacom’s request, including 100,000 within one business day, consistent with the DMCA.

This decision shows that the DMCA safe harbors are working, and that Congress struck the proper balance, by providing robust protection for creators who think their copyrights are infringed, while still allowing platforms for expression to flourish online.

As today’s decision notes, it is nearly impossible for platforms that host user-created content to differentiate between authorized and unauthorized content, and infringing content and non-infringing content. People are sometimes surprised to learn that due to our lack of copyright ‘formalities’, there’s nowhere to look to determine with any certainty who has rights to what. Only rightsholders know that, and thus only rightsholders know what to take down. The DMCA’s Solomon-like compromise, therefore, was to assign to rightsholders the burden of coming forward with a specific complaint about infringement, and to assign to ISPs and online services the burden of responding to that complaint. Today’s decision reflects exactly that result.

A new report from the Pew Center on States suggests that the biggest obstacle to bringing broadband Internet to Americans may just be Americans themselves. While the majority of Americans currently have access to broadband at home, suppliers are struggling to successfully bring higher speeds to rural areas and regions with lower incomes. The report suggests that about 35% of citizens cannot afford broadband, do not know how to use it, or find it irrelevant to their lives. The report surmises that it’s this lack of accessibility that has allowed the U.S. to slip in the global broadband per capita rankings from number one in the year 2000 to 15^th just last year.

Affordability is chief among the concerns for the spread of broadband Internet. When the U.S. was #1 in 2000, most Americans could get acceptable Internet access using regulated dial-up or DSL phone lines. Since that time, deregulation of Internet access providers has driven up industry profits, a major benefit that companies are hesitant to risk losing by expanding to rural communities. The result? A growing disparity in high-speed Internet access, with wealthy urban and suburban neighborhoods on one end and inner city and rural areas on the other. Consumers and companies alike have now turned to the government to stimulate both supply and demand for broadband.

As Pew Center on the States Deputy Director Lori Grange said today in unveiling the report, “Broadband access is about much more than getting on YouTube.” High-speed Internet access fosters economic growth, the creation of jobs, and global competitiveness for the United States. In many ways, the broadband revolution is akin to the electric revolution. Its growth is subject to local and cultural constraints and attitudes, which is why states and state governments are instrumental to the progression of high-speed Internet access.

CCIA has advocated for public policies to support the broadband revolution since its inception, encouraging greater access to open networks, improved productivity, and economic growth. Grange pointed to the inspiring efforts of North Carolina, which has developed an array of private-public partnerships through an innovative state grant program. In 2007 and 2008 alone, the state’s e-NC Authority gave out over $2 million in grants, resulting in educational advancement by connecting 15 school systems to broadband, progression in medical technology by improving Internet and network speeds in 10 regional hospitals, and the expansion of high-speed access to 10 of the most underserved counties in the state. These results are a testament to the efforts of local officials and what that can mean for online access and economic growth. And now, while the government continues to distribute $7.2 billion worth of stimulus funds in support of universal broadband, the ball is in the states’ court.

The U.S. House of Representatives’ Committee on Homeland Security (“HSC”) held a Wednesday morning hearing on “Cybersecurity: DHS’s Role, Federal Efforts and National Policy.” Archived video of the hearing is available here (Windows Media). A single panel appeared before HSC:

(1) Greg Schaffer, Assistant Secretary, Cybersecurity and

Communications, Department of Homeland Security (“DHS”)

(2) Richard Skinner, Inspector General, DHS

(3) Gregory Wilshusen, Director, Information Technology,

Government Accountability Office (“GAO”)

(4) Stewart Baker, Partner, Steptoe & Johnson, LLP

One of CCIA’s smaller members, TurboHercules SAS, has received a lot of attention recently surrounding its antitrust dispute with IBM, especially because IBM has chosen to rattle its many patent sabers at this much smaller competitor by providing a list of 173 potentially infringed patents. What makes this story a little different from a classic patent shakedown is that TurboHercules is an open source company, and IBM is a champion of open source software. In early April of this year it was reported that IBM accused TurboHercules of “potentially” violating two of the patents in IBM’s “legally binding” Open Source Patent Pledge from 2005. In its pledge, IBM promised the world that it would not assert 500 selected patents (out of IBM’s portfolio of over 40,000) against open source projects. IBM then issued a series of conflicting statements regarding the two pledged patents (see here and here), including one that suggested that the pledge was limited to “qualified” companies that did not compete with IBM. Needless to say, this left many in the Open Source community scratching their heads. The story also highlighted many of the problems endemic to the current patent system.

A new copyright enforcement venture started making headlines earlier this year: the U.S. Copyright Group (USCG). Although the USCG name just recently started getting attention, it appears connected to the Leesburg, VA law firm Dunlap, Grubb & Weaver (DGW), which was established in 1999. The logos for USCG and DGW are the same and Thomas Dunlap, a named partner of DGW, filed several mass-defendant (PDF) complaints (PDF) on behalf of movie company plaintiffs as part of USCG. Further, the DGW name is prominently located on the top of settlement pages created for the litigations and can be found several times in the settlement (PDF) agreements (PDF) offered to alleged infringers in order to avoid litigation. Some blogs and The National Law Journal say that USCG is DGW, while DGW’s blog suggests it was simply “engaged” by USCG.

USCG and DGW utilize an enforcement process employing the widely criticized shotgun methods of DigiProtect and ACS:Law: issuing thousands of pre-settlement letters to alleged copyright infringers. The letters purport to offer recipients the opportunity to avoid copyright infringement litigation for a fixed lump sum. For example, the Far Cry pre-settlement letter (found here in three parts) provides for a settlement payment of $1,500 before June 11, 2010, with the amount rising to $2,500 after that date. While the settlement pages for Far Cry and The Steam Experiment reflect a $1,500 settlement payment, the other three settlement pages created as of now all require a $2,500 payment. Recipients with the $1,500 option thus have a relatively short shot clock to decide whether to pay, or undertake the quite possibly more expensive alternative of retaining an attorney and defending the charges. This has prompted criticisms that even innocent recipients may pay to avoid the cost of litigation, as well as criticism that the joinder of so many arguably unrelated parties constitutes an abuse of process.

How do USCG and DGW identify potential defendants? USCG and certain “partners” monitor file-transfer services and log the IP address, date, time and other pertinent information whenever someone shares a file containing a client’s copyrighted material. DGW then files a single lawsuit in the D.C. District Court on behalf of a movie studio plaintiff naming John Does 1-XXXX for alleged infringing downloads of a given film. Attached to the complaint is a list of the allegedly infringing IP addresses. DGW says it has already filed “about 10 or 11” such complaints “on behalf of” USCG. Seven of those complaints have been filed this year, totaling 14,583 unnamed defendants.

1. A complaint against 749 unnamed defendants for the alleged illegal downloading of the film The Gray Man. Worldwide Film Entertainment, LLC v. Does 1-749, No. 1:10-cv-00038-HHK-DAR (D.D.C., filed Jan. 8, 2010).
   
   
2. A complaint (PDF) for the alleged illegal downloading of the film Uncross the Stars, originally against 83 unnamed defendants but subsequently amended to increase the unnamed defendants to 195. G2 Productions LLC v. Does 1-195, No. 1:10-cv-00041-CKK (D.D.C., filed Jan. 8, 2010).
   
   
3. A complaint (PDF) for the alleged illegal downloading of the film Far Cry, originally against 2,094 unnamed defendants but subsequently amended to increase the unnamed defendants to 4,577. Achte/Neunte Boll Kino Beteiligungs GMBH & CO KG v. Does 1-4,577, No. 1:10-cv-00453-RMC (D.D.C., filed Mar. 18, 2010).
   
   
4. A complaint (PDF) for the alleged illegal downloading of the film Call of the Wild 3-D, originally against 358 unnamed defendants but subsequently amended to increase the unnamed defendants to 1,062. Call of the Wild Movie, LLC v. Does 1-1,062, No. 1:10-cv-00455-RMU (D.D.C., filed Mar. 19, 2010)
   
   
5. A complaint against 2,000 unnamed defendants for the alleged illegal downloading of the film The Steam Experiment (also called The Chaos Experiment). West Bay One, Inc. v. Does 1- 2,000, No. 1:10-cv-00481-RMC (D.D.C., filed Mar. 23, 2010)
   
   
6. A complaint against 1,000 unnamed defendants for the alleged illegal downloading of Smile Pretty (aka Nasty). Maverick Entertainment Group, Inc. v. Does 1-1,000, No. 1:10-cv-00569-RJL (D.D.C., filed April 8, 2010)
   
   
7. A complaint against 5,000 unnamed defendants for the alleged illegal downloading of Oscar Best Picture winner The Hurt Locker. Voltage Pictures, LLC v. Does 1-5,000, No. 1:10-cv-00873-RMU (D.D.C., filed May 24, 2010).

Once the complaint is filed, DGW then asks the court to issue subpoenas requiring Internet access providers (IAPs) to turn over the names and addresses associated with the accounts having the allegedly infringing IP address. These subscribers are then contacted and given the choice of settling up front, or being added to the suit.

IAPs have responded to these subpoenas differently. Verizon notifies customers of subpoenas but has not yet sought to quash them. Comcast and Cablevision are both reportedly working with DWG to reach an agreement on how to handle this large number of subpoenas. However, Time Warner Cable (TWC) has moved to quash USCG’s subpoenas in the Far Cry, Call of the Wild 3-D, and The Steam Experiment cases. TWC’s motion argues that USCG should have filed individual cases against the John Does, as there appears to be no relation amongst them. Further, TWC cites the growing scope of the subpoenas and the hardship TWC will face in having to respond to all 809 information requests. USCG and DWG responded with what appears to be a veiled threat of going after TWC for contributory infringement. Three civil liberties groups, the Electronic Frontier Foundation (EFF), American Civil Liberties Union (ACLU), and Public Citizen, have chimed in with joint amicus briefs in support of TWC’s motion to quash in all three cases (all three PDFs). The amicus briefs argue that USCG and DWG’s tactics deprive letter recipients of a fair chance to defend themselves. Earlier this week, the Honorable Judge Rosemary Collyer ordered the plaintiff movie companies in the Far Cry and The Steam Experiment cases to show cause why she should not dismiss the case as to defendant Does 2-XXXX for “misjoinder under Federal Rule of Civil Procedure 20.”

Given the ease with which IP addresses can be misinterpreted or falsified (two years ago researchers successfully framed (PDF) a university’s network printer for copyright infringement), one question presented is whether a mere IP address is sufficient to allege infringement? Another question is whether hundreds of ostensibly unrelated defendants can be haled into court in a single litigation based merely on the commonality of the allegedly infringing work. D.C. federal courts will likely be required to answer both questions.

CCIA has just released a detailed summary of the policy discussions that took place at the 37^th Annual Washington Caucus on May 13, 2010.

The event featured influential Members of Congress and key Obama Administration officials who spoke to CCIA members about various policies impacting the tech industry and the future of innovation.

Speakers included:

• Obama Administration: Ambassador Miriam Sapiro, Deputy USTR, Robert Hormats, Under Secretary of State for Economic, Energy and Agricultural Affairs, and Greg Schaffer, DHS Assistant Secretary for Cybersecurity and Communications (CS&C)
• Members of Congress: Senator Byron Dorgan, Senator Amy Klobuchar, Senator Mark Begich, Rep. Rick Boucher, Rep. Anna Eshoo, and Rep. Mike Honda
• FTC: Commissioner J. Thomas Rosch, and Jessica Rich, Deputy Director of the Consumer Protection Bureau
• FCC: Blair Levin, former Director of the Broadband Task Force

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Thanks to all who attended and participated in this important tech policy dialogue.