Content & Technology Policy Report May 2, 2014

Content & Technology Policy Report May 2


“Weekly copyright related summary of issues, including congressional, judicial, administration, international and industry updates, provided courtesy of  American Continental Group (ACG).”


Content & Technology Policy Report May 2

I. Headlines and Highlights:

The Senate Finance Committee grilled U.S. Trade Representative (USTR) Ambassador Michael Froman on the Administration’s 2014 trade policy agenda this week. On the House side, a resolution that would ban “any new [AM/FM radio] performance fee, tax, royalty, or other charge” reached 219 signatures. Also in the House, the Judiciary Committee’s Subcommittee on IP announced a hearing for next week, on “Compulsory Video Licenses of Title 17.” It also announced a field hearing on First-Sale on June 2, in New York City and one or two music licensing hearings later that month. Meanwhile, the House Subcommittee on Antitrust announced it hold a hearing next week to examine the pending Comcast – Time Warner merger. On the judicial front, Quentin Tarantino is refilling a copyright infringement lawsuit against Gawker after losing his initial case last week. USTR released its annual Special 301 Report on IP Rights this week, notably removing Italy and the Philippines from its watch list and condemning ongoing and widespread IP infringement in China. In international news, police in China raided a popular streaming service that is host to online piracy activities. In industry, Vice President Biden and House Judiciary Committee Chairman Bob Goodlatte (R-VA) spoke at the Creativity Conference on the need to reduce IP infringement incidences domestically and abroad. Continue reading for further details on this week’s news.

II. Congressional Updates:

  • The Senate Finance Committee held a hearing on Thursday to hear from USTR Ambassador Michael Froman on President Obama’s 2014 trade policy agenda. Ambassador Froman gave remarks outlining the current state of U.S. trade initiatives as well as what strategies the USTR will deploy in the coming months, with a view toward finalizing the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP). The Committee questioned him on a variety of subjects, ranging from transparency to currency manipulation to IP protections abroad, but the discussion on IP focused primarily on patents. In particular, Senators Orrin Hatch (R-UT) and Bob Menendez (D-NJ) made several inquiries into USTR’s efforts to safeguard IP in its trade negotiations. Senator Hatch opined in his opening remarks that Trade Promotion Authority (TPA) would be vital for the success of the Administration’s trade policy and took the Administration to task for not prioritizing the passage of TPA. Committee Chairman Ron Wyden (D-OR) spoke on the need for U.S. trade policies that promote a free and open Internet, but he did not enter into specifics.
  • 219 members of the House have now signed onto the Local Radio Freedom Act (H. Con. Res. 16), a resolution introduced by Reps. Michael Conway (R-TX) and Gene Green (DTX) early last year. The resolution would prohibit “any new performance fee, tax, royalty, or other charge” directed at local AM/FM radio stations. A companion resolution was introduced by Senators John Barrasso (R-WY) and Heidi Heitkamp (D-ND), where it has 12 other Senate backers. The resolutions were introduced as a response to advocacy efforts to level an “uneven” royalty playing field between AM/FM stations and other services such as satellite and Internet radio. Gordon Smith, CEO of the National Association of Broadcasters, said in a statement that “this resolution reaffirms Congress’s appreciation for the public service and economic benefits radio broadcasters provide to every community, while recognizing the mutually beneficial relationship between radio and performing artists.” Meanwhile, House Judiciary Subcommittee on IP Ranking Member Jerrold Nadler (D-NY) responded by saying “there is a growing recognition that the lack of a [broadcast radio] performance right is patently unfair, and I am confident that many of us in Congress will continue to fight to correct this injustice.” Ted Kalo, Executive Director of the musicFIRST coalition, also issued a statement, downplaying the resolution and saying his group is “confident many of these ‘cosponsors’ also support” performance royalties for AM/FM radio.
  • Members of the Congressional Creative Rights Caucus attended a Copyright Alliance – co-hosted event this week titled “Focus on Photography.” The event explored the importance of copyright and the art of photography, partially through the lens of leading photographers: Andrew Harnik, political and sports photographer for The Washington Times; and Brian Skerry, world renowned underwater wildlife photographer and frequent contributor to National Geographic Magazine. John Lapham, Senior Vice President and General Counsel of Getty Images, also attended and delivered remarks at the event. The event was well attended by both congressional staff and Members of Congress.
  • The House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law has scheduled a May 8th hearing at 9:30AM on “Competition in the Video and Broadband Markets: the Proposed Merger of Comcast and Time Warner Cable.”
  • The House Judiciary Committee’s Subcommittee on IP has scheduled a May 8th hearing at 2:00PM on “Compulsory Video Licenses of Title 17.” It also announced a field hearing on First-Sale on June 2nd, in New York City and one or two music licensing hearings later that month.

III. Judicial Updates:

  • U.S. District Judge R. Gary Klausner awarded the directors of The Matrix a win this week when he determined that their film did not infringe the copyright of work by writer Thomas Althouse. Althouse had sued directors Lana and Andy Wachowski, Warner Bros., and producer Joel Silver back in 2013, claiming their film stole aspects of a screenplay he wrote and submitted to the studio in 1993, called The Immortals. Judge Klausner found that “the basic premises of the Matrix Trilogy and The Immortals are so different that it would be unreasonable to find their plots substantially similar.”
  • Best-selling author Tess Gerritsen filed a lawsuit on Tuesday against Warner Bros., claiming that the studio’s film Gravity was partially based on one of her books. Warner Bros.’ New Line unit and one of its subsidiaries purchased film rights to Gerritsen’s book Gravity in 1999, though the author claims the studio breached its contract with her when it did not provide a “based upon” credit for her novel. She is demanding 2.5 percent of the film’s net profit.
  • After losing a copyright infringement lawsuit last week against Gawker for linking to his leaked script of The Hateful Eight, director and screenwriter Quentin Tarantino has now added a claim to his lawsuit that the website committed direct copyright infringement of his leaked script. The complaint asserts that “anyone who sought to read or obtain the Screenplay from the Screenplay Download URL necessarily had to first download a PDF copy of the work onto their own computer.”

IV. Administration Updates

  • The USTR released its annual Special 301 Report on IP Rights this week, where it notably removed the Philippines and Italy from its Special 301 Watch List, a list reserved for countries with concerning IP abuses and policies. In recent years, the governments of Italy and the Philippines have enacted a series of legislative and regulatory reforms to enhance the protection and enforcement of IP rights. Furthermore, Philippine authorities have made laudable civil and administrative enforcement gains. While challenges remain in the countries, USTR said their efforts merit this change in status. Other highlights from the report include:
    • Growing concerns with respect to the environment for IPR protection and enforcement in India and other markets.
    • Ongoing, serious concerns about the protection and enforcement of trade secrets with respect to China, and emerging concerns in other markets.
    • Music licensing and cable broadcasting concerns found throughout the Caribbean that adversely affect U.S. copyright holders, including creators of original pay television programming, songwriters, and other independent artists.
    • Announcement that the USTR will conduct Out-of-Cycle reviews to promote engagement and progress on IPR challenges identified in this year’s reviews of India, Kuwait, Paraguay and Spain.
  • On Tuesday, Federal Communications Commission (FCC) Chairman Tom Wheeler published a blog post titled “Finding the Best Path Forward to Protect the Open Internet.” The post was in response to “a misinformed interpretation” of the Open Internet Notice of Proposed Rulemaking currently before the FCC. Chairman Wheeler emphasized that this “is not a final decision by the Commission but rather a formal request for input on a proposal as well as a set of related questions. Second, as the Notice makes clear, all options for protecting and promoting an Open Internet are on the table.” Furthermore, he states that “if a broadband provider (ISP) acts in a manner that keeps users from effectively taking advantage of that pathway then it should be a violation of the Open Internet rules… This NPRM means that consumers, startup innovators, venture capitalists, and others who have been waiting…and waiting…and waiting for the certainty of rules would finally have something on which they can rely. We have been talking about net neutrality for a decade; it is time to put something in place – and to do it with dispatch.” The Chairman’s full post can be found here.
  • The location of the May 5th public Copyright Office roundtable discussions on the Right of Making Available has been moved from the Hearing Room, LM-408 of the Madison Building of the Library of Congress to the Rayburn House Office Building, Room 2226, located at 45 Independence Ave SW, Washington, DC. More information on the roundtable is available here.
  • The Copyright Royalty Judges have announced their final determination of the rates and terms for two statutory licenses permitting certain digital performances of sound recordings and the making of ephemeral recordings for the period from January 1, 2011, through December 31, 2015. The effective date of the determination was April 25, 2014. For more information, click here.

V. International Updates:

  • Last week, police raided a Shenzhen-based technology office, Kuaibo Technology, as part of the China’s latest efforts to crack down on online IP infringement. Kuaibo operates a peer-to-peer video player and download service called QVOD. A large number of copyrighted files are regularly shared illegally over the service.

VI. Industry Updates:

  • Last Friday, the Washington Post’s Editorial Board published an op-ed on the Aereo case that was before the Supreme Court last Tuesday. The article, titled “Aereo’s Supreme Court Case Balances Innovation and Copyright,” has the board writing “Aereo’s critics want to shore up the exclusive right of the people who own copyrights on programming to control — and profit from — the distribution of their work. Aereo benefits from the notion that the networks are allowed to send such programming over the public airwaves on the condition that anyone can view it for free.” Finally, they write “the law should ensure that people who create content can obtain fair rewards from copyright protections. But it must also allow innovators to innovate.” The full op-ed can be viewed here.
  • On Monday, Netflix confirmed that it secured an agreement with Verizon to pay the ISP a fee to ensure its content reaches customers on faster, improved connections. The deal is similar to one the company recently secured with Comcast, and comes in the wake of a decision by the FCC that allows ISPs to charge for an Internet “fast lane.”
  • On Monday, Orly Lobel, Law Professor at the University of San Diego, published an op-ed in the Harvard Business Review, titled “Aereo Isn’t Illegal Just Because It Threatens Broadcasters.” Professor Lobel argues that claims the case could threaten cloud computing are “largely over-stated,” as are the threats from broadcasters that they will stop distributing their content over airwaves if the case is not decided in their favor. She writes, “still, investors and entrepreneurs will certainly gain more confidence if the Court’s ultimate decision creates more certainty, and if Congress’s laws encourage competition and reduce barriers to entry.” The full article can be viewed here.
  • In an effort to appease critics and allay concerns of its pending merger with Time Warner, Comcast has said it would be willing to offload 3.9 million customers to other operators if the deal is completed. Such a move would keep Comcast’s TV market share under 30 percent.
  • R Street Institute released a policy study written by Derek Khanna this week titled “Guarding Against Abuse: Restoring Constitutional Copyright.” In the study, Khanna warns that a lengthened copyright term can result in the creation of fewer original works. His paper concludes that “we can be supporters of a copyright regime that protects and compensates creators, a noble goal, while recognizing that the current system has gone haywire. It’s time to restore our founding principles and recognize that constitutional copyright would unleash new creativity and economic growth. A copyright term closer to that envisioned by our founders, modified according to modern economic conditions, would be good for innovators, good for content creators and good for the public at large.” The full study can be viewed here.
  • On Friday, the MPAA, ABC News and Microsoft hosted a “Creativity Conference” at the Newseum, where policy makers, Administration officials and industry came together to reflect on the importance of maintaining and fostering an environment that spurs creativity. A number of esteemed speakers took the stage at the event, including Vice President Joe Biden, House Judiciary Committee Chairman Bob Goodlatte (R-VA), Rep. Marsha Blackburn (R-TN), and executives from the various corners of the creative industries. Vice President Biden questioned how a nation can consider itself “a law abiding nation… when they are stealing the most valuable intellectual ideas of our country.” He also defended current U.S. trade negotiation efforts and said the Administration is working to ensure strong international IP protections. Chairman Goodlatte advocated for the copyright industry, emphasizing that consumers need to be willing to pay for content if they want to continue seeing quality films and works: “if you don’t reward the creators, you’re not going to get the creativity.” At the same time, he said that industry needs to continue to adapt to consumer habits to ensure delivery channels are sufficiently meeting their needs.

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