A Bittersweet Victory: The Ninth Circuit Reaffirms DMCA Protection

In 2007, Universal Music Group (UMG) brought a lawsuit against Veoh Networks (Veoh), a video hosting website, alleging that Veoh facilitated copyright infringement by providing a website that hosted videos containing music owned by UMG. On December 20, 2011, the Ninth Circuit Court of Appeals upheld a summary judgment in favor of Veoh and held that Veoh was protected by the Digital Millennium Copyright Act’s (DMCA) “safe harbor” provisions. In other words, it found in order to be protected by the safe harbor provisions of the DMCA, sites making files uploaded by users publicly available are required to remove infringing content only when the site becomes aware of the specific infringing content, for example, by means of a DMCA takedown notice.

While Veoh’s website was found to be perfectly legal, its victory is bittersweet; the small startup company filed for bankruptcy early in 2010 from the high cost of defending its case. Its victory, however, was an important victory for the Internet, as a whole, and may also have implications toward the outcome of the case between Viacom and YouTube.

The case also brings to light why the SOPA/PIPA bills before the House and Senate are cause for concern. The DMCA allows companies like Veoh to keep its business running while a case is being litigated. The SOPA/PIPA bills, however, would have immediately shut Veoh’s website down before it even had its day in court, thereby keeping Veoh from running its business which, in this case, was ultimately found to be perfectly legal. There is cause for concern when copyright holders abuse the law to stymie innovative new startups. The SOPA/PIPA bills will be back on Congress’ agenda when it reconvenes in January.


The “Dutiful” China: A Proposal to Impose Duties on Merchandise from China

Congressman Steve King (R-IA) introduced legislation last week, H.R. 3375, that aims to punish China for failing to protect the holders of United States intellectual property rights.  The legislation would accomplish this by directing the President to impose duties on merchandise from China in an amount equivalent to the estimated annual loss of revenue to holders of United States intellectual property rights as a result of violations of such intellectual property rights in China.  Under King’s bill, the revenue raised by the imposition of duties on Chinese merchandise will be proportionally distributed to provide compensation to holders of United States intellectual property rights.

In his press release, Rep. King states that, “The creative genius of Americans, protected by our copyrights, trademarks and patents, is systematically being pirated by the Chinese whose government appears to be complicit” and that his bill “levies a duty on all Chinese imports in an amount necessary to both pay U.S. property rights holders for their stolen intellectual property and to administer the program.”

While Rep. King cites a Congressional Research Report to imply there has been some research performed, the facts and figures of this report are questionable.  Most importantly, while the bill may be well-intentioned, the real question is: who will ultimately bear the burden of these imposed duties?

Congress’ New Target After Patent Law Reform: Legal Sites & Copyrights

With the recent and, perhaps hasty, overhaul of the patent law system in the United States through the America Invents Act signed into law by President Obama on September 16, 2011, it appears that Congress has now shifted its focus from patent legislation to copyright legislation.  The shift to copyrights comes in the form of a bill called the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011 (also referred to as the “PROTECT IP Act,” “United States Senate Bill S.968,” or simply, “PIPA”) that was introduced and passed out of the Senate Judiciary Committee on May 12, 2011 by Senator Patrick Leahy (D-VT).

Several large firms and business groups in the entertainment industry, such as the MPAA and the US Chamber of Commerce, have expressed support for the legislation and claim that PIPA would help shut down “rogue” websites dedicated to infringing activities, such as the online sale of counterfeit products, and save U.S. jobs.

However, arguing that PIPA was an overreach that would imperil free speech and innovation on the Internet, Senator Ron Wyden (D-Ore.) placed the bill on hold and prevented the bill from going to the Senate floor for a vote.  Senator Wyden exercised the rule allowing a single senator to place a hold on a bill, even though a hold may be overridden by a 60-vote majority.  Senator Wyden is also known for blocking a similar bill, called the Combating Online Infringement and Counterfeits Act (COICA), after the Senate Judiciary Committee passed it in late 2010 which would have expanded the power of federal agencies to seize the domain names of allegedly infringing websites.

While the Senate version of PIPA allows the Department of Justice to seek court orders to force search engines and ISPs to stop sending traffic to websites accused of copyright infringement and allows copyright holders to seek court orders to require payment processors and online ad networks to cease any business with allegedly infringing websites, the House version may include new legal liabilities for websites and online services that rely on user-generated content, effectively destroying sites such as Twitter, Facebook, and YouTube.

Opponents to the Bill say it would allow rights holders to obtain temporary court orders against infringing sites without adequate judicial review.  Several concerned groups, such as Web entrepreneurs like the co-founders of Twitter, foursquare, and LinkedIn additionally argue that the bill’s definition of what constitutes a “rogue site” dedicated to copyright infringement is vague.  They argue that the bill could result in inadvertent “collateral damage” to both the Internet and the technology industry because the bill requires that “rogue sites” be removed from search engines, DNS servers, and other third parties.  They have asked the House Judiciary Committee members to hold off on the legislation and consider input from the affected groups.  While members of the House finally agreed to meet with groups representing the technology industry, it has been reported that the Representatives have ignored the technology industry’s concerns regarding the problems the Bill would cause for innovation and job growth and have decided to release the Bill it had been working on with an accelerated push to get the Bill approved.  As the concerned groups have expressed, the stakes are high, and while the technology industry may be leading America out of the recession, “inadvertent damages to the tech sector could not happen at a worse time.”

The House of Representatives is expected to introduce their version of the bill this week.

UPDATE: October 26, 2011

A bipartisan group in the House today introduced the “Stop Online Piracy Act” (H.R. 3261).  The House Judiciary Committee will hold a hearing on the “Stop Online Piracy Act” on November 16, 2011.  The text of the bill can be found here.