Broadcast Law Blog : Broadcast Lawyer & Attorney : Davis Wright Tremaine Law Firm : Broadcast Law Blog : Seattle, Los Angeles, Washington D.C., New York, San Francisco, Shanghai

The process proposed by the Copyright Office, and the issues that it feels that it needs to address before implementing the system, are many.  They include the following:

• Should the system be organized based on the name of the Service, or based on the URLs of the websites registered?
  • If registered by website, are "apps" developed for mobile devices all associated with a readily identifiable URL that a copyright holder will know if it wants to file a take-down notice, or should apps be registered differently?
  • If registered by Service, should subsidiaries and alternate trade names be registered on one filing, or should each have to register independently?
• Should a service be able to register an agent who is not an employee (e.g. a law firm or other service)?  The Copyright Office expresses reluctance, as such agents may not be diligent in processing take-down notices.
• Must an individual name be provided, or is an office or title at a Service sufficient?
• Should email addresses of the services (as well as those of the agents) be provided?  Should email addresses be made public in the Copyright Office's database?
• How should the Copyright Office deal with situations where there are duplicate entries, such as when a seller of a URL does not notify the Copyright Office of its discontinuance of use, and the Buyer registers an agent for the same URL?
• How can the Copyright Office guard against fraudulent registrations?
• What information should be provided in the registration?  (Currently legal name, address, alternate names, phone number and email address of the agent are required)
• Should the Copyright Office maintain periodic snapshots of its database ( what they call "versioning") so that parties can determine whether a proper agent was designated at various times in the past?
• The Copyright Office suggests that Services may need to periodically validate the information that they have on file.  They ask how often such validation should be required?

An automated system, where information is easily retrievable, and which automatically reminds services to update their information, seems like a real benefit both to copyright holders (who will be able to more easily access the proper person for take-down notices) and service providers (who will be reminded to keep their information current).  Obviously, there are many questions to be answered before the new system can be implemented.  However, with so many businesses now allowing some form of user-generated content, this is an important process with broad impact.  So review the Copyright Office's NPRM, and file comments on issues that are raised by the NPRM.  The new system will eventually require new registrations from all services, but expect that it will be some time before the Office resolves the issues raised in this proceeding, and develops the software system necessary to implement that proposals that it has made in the NPRM.  But the process is underway. 

Also, remember that there is also a safe harbor from most other legal liability for user generated content (including defamation) under provisions of the Communications Decency Act.  We have written about that issue before (see, for instance, this article).  Thus, if you follow the rules, service can allow users to post information to their sites without fear of legal liability. 

Comments in this proceeding are due by November 19.  Very specific filing requirements are contained in the notice.  Companies interested in protecting their content, as well as those concerned with the impact on their businesses from a change in current policies, should file comments by that date.  While changes in some of the current policies require changes in the law that only Congress can make, this proceeding can impact the Administration's legislative agenda.  So express your opinions. 

After an exhaustive analysis of the process that Launchcast goes through to create a stream for a listener, the Court focused on several facts.  First, the Court found that much of the music in any stream delivered by Launchcast was not music selected by the user in their list of preferred artists and songs, but was instead picked by Launchcast from its vast library of songs using a number of factors. The Court also made clear that listeners had no ability to game the system to make it play more favorites of the listener.  While a listener could skip some songs, and pause a song in the middle of its play, it could not go backwards to replay songs or otherwise make particular songs play more frequently. In short, the Court found that the system was set up so that it would not substitute for the purchase of music as listeners could not get songs or even particular artists when they wanted. The Court used the term “predictability” – and found that the user had no predictability in determining whether or when any specific song would play during any listening session, and thus the service was not a substitute for a purchase of a song.

This was important in the Court’s analysis. First, the Court determined that the phrase in the statute defining an interactive stream to be “a transmission specially created for the recipient” was not a model of clarity, and was capable of many interpretations. While the record companies argued that any stream that was created specifically for a user based on the user’s preferences was, by definition, “specially created for the recipient”, the Court found that such a simplistic view could not be sustained.  Instead, the language of the statute has to be interpreted in light of the intent of Congress in the adoption of the statute. The Court went through a thorough analysis of the history of the sound recording royalty and how the DMCA provision at issue here came to be in the 1998 Act. The Court noted that the sound recording performance right was first adopted in the US in 1995 and was intended to be a narrow right, initially being applied only to subscription services. After its adoption, upon fears of piracy on the Internet, the right was expanded three years later to include noninteractive streams. In enacting the broader performance royalty, the DMCA broadened the definition of an interactive stream to include the phrase at issue here, focusing primarily on the issue of digital piracy and the fear that a predictable stream of music would allow digital copying. The Court cites specific language of the House of Representatives report on the DMCA where the House stated that you have an interactive stream “if a transmission recipient is permitted to select particular sound recordings in a prerecorded or predetermined program.”

After looking at the history and the way the service functioned, the Court focused on the language of the statute that said that there had to be a “transmission of a program” that was specially created for the user before the program was deemed to be interactive. The definition of a "transmission of a program" looked at the transmission of a program as a whole – to find that there was an interactive transmission of a program one has to look at the entire transmission to see if the entire transmission was created specially for the user. The Court determined that, given the way the Launchcast system was set up, the user was really able to specifically influence only a small number of songs that were played in his or her stream. The vast majority of the songs were selected by Launchcast and would be of the same genre as the listener's preferences, but what the songs would be was not at all predictable. Finding that the user thus had no predictability in the entirety of the program that was transmitted, the Court found that the streams would not significantly substitute for the purchase of specific music, and thus should not be considered interactive in the meaning that Congress intended.

The decision is very interesting in the depth of its specific analysis of the methodology for the formation of a playlist by Launchcast, and in its examples of music references sprinkled throughout (references to U2's Joshua Tree CD, to Gordon Lightfoot and the Beatles, and to “‘special requests’ [on AM radio which] represented love-struck adolescents’ attempts to communicate their feelings to that ‘special friend.’” The judges also candidly acknowledge that they are “appointed for life” and thus have varying degrees of familiarity with the technology which they are discussing.

What is the impact of the case? It undoubtedly helps solidify the position long taken by webcasters that some degree of user influence is permissible by a service that relies on the statutory license for noninteractive webcasting.  However, the decision was very fact dependent, with few clear boundaries as to what percentage of a stream can be user influenced and what degree that influence can be exercised to remain within the statutory license. Moreover, this is the decision of a single Court of Appeals – albeit an important one sitting in New York, covering the Northeast, and very active on copyright issues. But other cases in other circuits would not be bound by this decision, though they will no doubt find it to be instructive.  But, with other facts, any court might not reach the same decision. Thus, the question of which streams are interactive requiring that a service get a negotiated license from each copyright holder to perform the sound recordings, and which are noninteractive and can be streamed simply by paying SoundExchange the statutory royalty (and I say “simply” with a grain of salt given the multiplicity of options for paying the statutory royalty), will no doubt not be put to rest by this one decision. 

The Petitions to Participate can be filed either by individual parties interested in participating in the case, or jointly by parties with common interests.  Section 351.1 of the CRB rules require specific contact information for the participant, and a statement of the interest of the party filing the request in the proceeding.  A filing fee of $150 per petition is also required.  In the next month, there may be the formation of various interest groups ready to participate in this next proceeding.  These proceedings are long and expensive, so the formation of groups to jointly participate are often the only way for Internet music services can afford to participate in these proceedings. 

At the same time, the CRB noticed the start of a proceeding for the royalty for "new subscription services."  These services include subscription digital music services not provided over the Internet, and not in existence in 1998 when the Digital Millennium Copyright Act was adopted.  Services that were in existence (like the satellite radio services that were authorized by the FCC when the DMCA was adopted and certain cable music services) are referred to as the "pre-existing subscription services" and are not governed by the "willing buyer, willing seller" standard that govern webcasting royalties.  These services, unlike Internet radio, cannot measure exact listenership.  Services that came later, such as music services provided by XM and Sirius to the satellite television systems, are the "new subscription services."  In 2007, they negotiated a 15% royalty to cover the period through 2010. If they cannot reach an agreement on a new rate, they, too, would have to participate in a new proceeding to determine the royalties that they will pay for 2011-2015. The filing date for these services to partipate in the proceeding to set rates is also February 4.

So the fun starts again - get ready to litigate.

The protections offered for those hosting sites come from two separate statutes.  The protections against copyright infringement claims are in the Digital Millennium Copyright Act, and require that the site owner take several steps to secure the safe harbor from liability.  Registration of an individual who can be contacted by a copyright owner if infringing material is posted is required.  The Copyright Office's instructions for such registration can be found here.  The site owner must take down infringing material if properly notified, and should not encourage or promote such infringement.

The protection against most other liability stems from Section 230 of the Communications Decency Act, and has, for the most part, been interpreted very broadly to protect the company running the website from anything posted on the site by third parties.  The holding of the Roommates.com case, while signaling a slight retreat, basically brings the requirements for the safe harbor closer to those for copyright protection in that the site owner cannot be a part of the activity that causes to liability - here by providing the option to choose certain classifications that could be construed as a violation of the law.  While the details and subtleties of the decision are discussed in greater detail in our firm's memo, the basic point seems to be that where the site owner provides part of the content that gives rise to the liability, it cannot claim the safe harbor.  If the same information had been posted by third-party site users without the prompts from the site itself, there likely would be full protection for the site owner.  Thus, to the extent that you are encouraging website users to post their own content on a site that you own, make sure that your site does not prompt the user into providing any specifics that could be found to have been specifically prompted by site material or information that you provide. 

Note that there are no doubt going to be other arguments about how overt a "prompt" must be for the site owner to fall outside the safe harbor.  Also note that this is the decision of just one US Court of Appeals and courts in other jurisdictions could decide a case like this differently (in fact there was a dissent here that worried about how lines would be drawn).  So there is no doubt that we have not heard the last of this issue.

The protections against Copyright infringement liability contained in the Digital Millennium Copyright Act actually impose very specific obligations on the site operator before it qualifies for the safe harbor immunity.   The site owner must register with the Copyright Office, provide the name of a specific person on staff to receive complaints of copyright violations (and keep that name up to date), adopt terms of use for its site that deals with how the site will deal with repeat infringers, have no actual knowledge of infringement and promptly remove offending material if properly notified by a copyright holder that it has been posted on the site ("the notice and take-down" provision).  As with the Communications Decency Act, the website operator should also do nothing to encourage the posting of infringing material.

Details of these requirements can be found in the Law Letter, and should be reviewed by website operators contemplating the posting of user generated content.  These statutes make possible sites that allow users to post material, but require the site owners to observe the formalities that are set out in the statutes, and to avoid encouraging the posting of infringing material.  So build your site and feature third party content, but do so carefully.