Content & Technology Policy Report June 20, 2014

Content & Technology Policy Report June 20


“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 June 20

I. Headlines and Highlights:

In Congress this week, House Republicans held leadership elections, and the House Judiciary’s Subcommittee on IP prepared for part two of a set of hearings on music licensing issues. On the judicial front, the U.S. Circuit Court of Appeals in Chicago ruled this week that Sherlock Holmes, and 46 stories and four novels the character has appeared in, belong in the public domain. In the Administration, the U.S. Patent and Trademark Office (USPTO) and National Telecommunications and Information Administration (NTIA) held the third public multistakeholder forum meeting on improving the Digital Millennium Copyright Act (DMCA) Notice and Takedown system. Also in the Administration, U.S. Trade Representative (USTR) Michael Froman underscored the importance of a “free and open Internet” as the U.S. negotiates trade deals with its partners. In international news, Canada announced that it will introduce a “notice-and-notice” system to target online copyright infringers through the use of ISPs. Also, several German publishers are seeking compensation from search engines for using snippets of publications in search results. On the industry front, the Copyright Alliance announced that the Authors Guild has joined as an executive member. Also in industry news, SoundExchange announced it paid out a record-setting $162 million in Q1 and Apple reached an out of court settlement with complainants in a class action lawsuit filed against it over alleged e-book price fixing. Continue reading for further details on this week’s news.

II.  Congressional Updates:

  • House Republicans chose Rep. Kevin McCarthy (R-CA) and Rep. Steve Scalise (R-LA) to be the party’s next Majority Leader and Whip, respectively. Rep. McCarthy will replace current Majority Leader Eric Cantor (R-VA) who was defeated in his primary earlier this month, and Rep. Scalise will fill the Whip position left open by McCarthy’s promotion. Rep. McCarthy is Co-Chair of the Recording Arts and Sciences Congressional Caucus.
  • The Co-Chairs of the Congressional Internet Caucus are urging House and Senate Leadership to pass bipartisan legislation before the August recess to permanently eliminate new state and local taxes on Internet access. In a letter from Reps. Anna G. Eshoo (D-CA) and Bob Goodlatte (R-VA), as well as Senators Patrick Leahy (D-VT) and John Thune (R-SD), the members cite an impending November 1, 2014, expiration of current law that – since 1998 – has placed a moratorium on the ability of state and local governments to impose new taxes on Internet access. “The moratorium’s expiration poses a threat to many of the current benefits of the Internet for American citizens,” they wrote in the letter. With the expiration approaching, the House Judiciary Committee passed with overwhelming support on Wednesday a permanent extension of the Internet Tax Freedom Act. A copy of the letter sent to House and Senate Leadership can be viewed here.
  • The Congressional Internet Caucus held a briefing this week to present the preliminary findings of a new study on Internet congestion by Dr. David Clark from MIT. A summary of the study is available here. The goal of the research was to determine the origin and extent of congestion in the core of the Internet, specifically on whether the interconnections among ISPs, both customer-provider (transit) and ISP-ISP (peering) links, are subject to widespread congestion. Dr. Clark concluded that his data did not reveal a widespread congestion problem among the U.S. providers; most congestion can be attributed to recognized business issues, such as interconnection disputes involving Netflix; congestion does not always arise over long periods of time, but can come and go essentially overnight as a result of network reconfiguration and decisions by content providers as to how to route content. During the discussion following Dr. Clark’s presentation, there seemed to be an impasse about who was causing the congestion: ISPs or content providers. Mr. Ken Florence, VP of Content Delivery at Netflix, explained how Netflix is using 5 of the 6 top global connectors and is still experiencing this problem; Dr. Clark’s evidence, Florence claimed, revealed that as soon as a deal was made with Comcast, all congestion problems vanished. On the other side of the argument, Mr. Ike Elliot, SVP of Strategy at CableLabs, blamed Netflix for choosing already crowded connection points. When asked about whose responsibility it is to try to fix the problem, Mr. Gene Kimmelman, President and CEO of Public Knowledge, stated the need to look back at the telecommunications market in the early 1900s, during which the government stepped in and eased industry tensions. Kimmelman said this strategy would be the best model to use to address the issue at hand. When asked the same question of responsibility, Mr. Florence said it is that of ISPs, whereas Mr. Elliot said it is the content provider’s responsibility.
    • Speaker: Dr. David Clark, Senior Research Scientist, MIT/Computer Science and Artificial Intelligence Laboratory
    • Moderator: Daniel Weitzner, Director, MIT CSAIL Decentralized Information Group
    • Panelists:
      • Jeff Eisenach, Visiting Scholar, Director of the Center for Internet, Communications and Technology Policy, American Enterprise Institute
      • Ike Elliot, SVP of Strategy, CableLabs
      • Ken Florance, VP, Content Delivery, Netflix
      • Gene Kimmelman, President and CEO, Public Knowledge
      • Matthew Luckie, Postdoctoral Fellow, CAIDA, UCSD
  • The Congressional International Anti-Piracy Caucus will unveil the 2014 Country Watch List, discuss newest developments in its work to combat ad-supported online theft, and reveal the Caucus’s new name at an event on June 24 at 9:30AM in room 562 of the Dirksen Senate Office Building.  Please RSVP to Jeff Lowenstein ( if you or someone else from your organization plans to attend.
  • The House Judiciary’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law has scheduled a hearing for June 24 at 10:30AM on the proposed merger of AT&T and DirecTV. Later that day at 2:30PM, the Senate Judiciary’s Subcommittee on Antitrust, Competition Policy and Consumer Rights will also hold a hearing on the merger.
  • The House Judiciary’s Subcommittee on IP has scheduled a hearing for June 25 at 10:00AM titled “Music Licensing Under Title 17: Part Two.” Witnesses scheduled to testify at the hearing include: Mike Huppe, President and CEO, SoundExchange; Rosanne Cash, Singer Songwriter on behalf of the Americana Music Association; Delida Costin, General Counsel, Pandora; David Frear, Executive VP and CFO, SiriusXM Radio; Cary Sherman, Chairman and CEO, Recording Industry Association of America; Darius Van Arman, Board Member, American Association of Independent Music; Charles Warfield, Joint Board Chair, National Association of Broadcasters; and Paul Williams, President and Chairman of the Board, ASCAP
  • The Senate Committee on Finance has scheduled a hearing for June 25 at 2:00PM titled “Trade Enforcement: Using Trade Rules to Level the Playing Field for U.S. Companies and Workers.”

III. Judicial Updates:

  • The U.S. Circuit Court of Appeals in Chicago ruled this week that Sherlock Holmes, and 46 stories and four novels the character has appeared in, belong in the public domain. The ruling reaffirms the expiration of the copyright originally held by Scottish writer Arthur Conan Doyle’s estate. The decision came as a result of Doyle’s estate having demanded licensing fees from the editor of a book of original Sherlock compilations.

IV. Administration Updates

  • The USPTO and NTIA are holding the third public multistakeholder forum meeting on improving the DMCA Notice and Takedown system today at the USPTO’s headquarters in Alexandria, VA. The morning session consists of working group sessions with a public meeting following after lunch. For more information and to view the program agenda, click here.
  • The USPTO and NTIA have posted the final agenda for the second Green Paper on Copyright Roundtable on the following topics: (1) the legal framework for the creation of remixes; (2) the relevance and scope of the first sale doctrine in the digital environment; and (3) the appropriate calibration of statutory damages in the contexts of (i) individual file sharers and (ii) secondary liability for large-scale infringement. The all-day roundtable will be held on June 25 at Wasserstein Hall, Harvard University Law School, 1585 Massachusetts Ave., Cambridge, MA. A webcast of the event will be made available here.
  • The location of the USPTO and NTIA’s Los Angeles Green Paper on Copyright Roundtable has been finalized. The event will take place on July 29 at Loyola Law School, Walter J. Lack Reading Room, 919 Albany St, Los Angeles, CA. Furthermore, the Berkeley Green Paper on copyright roundtable scheduled for July 30 has been moved to the UC Berkeley School of Law, Boalt Hall, Booth Auditorium, 215 Bancroft Way, Berkeley, CA. More information on registration and/or observation can be found here.
  • USTR Michael Froman spoke at the Center on Foreign Relations on Monday, where he delivered remarks on U.S. trade policy, including the pending negotiations of the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership. Ambassador Froman pushed for the need to have U.S. trade agreements that promote a “free and open Internet.” Notably, he said “By bringing traditional trade principals into the digital era, we can make sure the global trading system reflects new developments in technology, to bolster a free and open Internet, the free flow of data, and the capacity of small and medium-sized businesses to integrate themselves efficiently into the global economy.” The Ambassador’s complete remarks can be viewed here.

V.  International Updates:

  • Canada announced Tuesday that it will introduce a “notice-and-notice” system to target online copyright infringers through the use of ISPs. Infringers will be notified through the system that their activity is in violation of the law. The plan was unveiled by industry minister James Moore and minister of Canadian heritage Shelly Glover. Notably, the system lacks a “takedown” aspect that is a significant part of the U.S. “notice-and-takedown” system.
  • Gale Ann Hurd, executive producer of The Walking Dead, warned this week that growing levels of piracy are hurting the TV and film industry. She told the Guardian: “The truth is you wouldn’t imagine stealing someone’s car [or] a piece of art they have created… We are poised on the precipice in filmed entertainment – TV and movies – because of the prevalence of piracy the content creators will not get a revenue stream to the point that they won’t be able to create. That is the danger of piracy.” Hurd also called upon Google to increase its efforts to address piracy websites.
  • Several large German newspaper and magazine publishers are undertaking legal action against Google, Microsoft, and Yahoo, in an attempt to compel the search engines to pay them 11% of their “gross sales, including foreign sales” coming “directly and indirectly from making excerpts from online newspapers and magazines public.” The news was revealed by Jeff Jarvis in a blog post that can be viewed here. Jarvis calls the publishers’ demands “as absurd as they are cynical and dangerous.”

VI.  Industry Updates:

  • This week, the Copyright Alliance announced that the Authors Guild has joined as an executive member. The Authors Guild is the nation’s leading advocate for writer’s interests related to effective copyright protection, fair contracts, and freedom of expression. Jan Constantine, General Counsel, will represent the Guild before the Copyright Alliance.
  • SoundExchange, the independent performance rights organization that collects and distributes digital performance royalties, today announced its Q1 numbers. In the fiscal first quarter the nonprofit paid $162.4 million to recording artists and labels, its largest Q1 payment to date and a 38% increase over the $117 million paid out last year.
  • On Monday, Apple reached an out of court settlement with complainants in a class action lawsuit filed against it over alleged e-book price fixing.  The company was found guilty of price collusion with several publishers last year. The deal will help the company avoid a trial where it could have faced upwards of $840 million in claims. The terms of the settlement have not yet been disclosed, and it must be court approved before it can be finalized, pending the outcome of Apple’s appeal to last year’s case.
  • The season finale of the hit show Game of Thrones broke the record for piracy this week, with over 1.5 million downloads in the first 12 hours of the episode’s airing. Australia accounted for the biggest piracy market for the season finale episode. The piracy data gathered on the episode was compiled by TorrentFreak. 
  • T-Mobile announced this week that it will allow customers to use music streaming services on their devices without tapping into their monthly data usage. Services given a free pass in the deal include Spotify, Pandora, Rhapsody and others. The move comes as the phone company’s latest strategy to increase its user base.
  • Google’s YouTube unit is reportedly threatening to block content from labels that are resisting the company’s licensing terms for its recently announced music streaming service. The service is expected to offer consumers similar functionality to Spotify, and is reported to launch within the next several months. Read more from the Wall Street Journal here.
  • AEI’s Center for Internet, Communications, and Technology Policy has scheduled a roundtable discussion on how conservatives should approach fundamental reforms in copyright law and policy. The event, titled “Copyrights and innovation: Understanding the debate”, will be held on July 1 from 12:00PM – 1:30PM at AEI. Participants include: Jerry Brito, Mercatus Center; Stan Liebowitz, University of Dallas; Tom Palmer, Atlas Economic Research Foundation; and Mark Schultz, George Mason University School of Law. The event will be moderated by Jeffrey Eisenach of AEI. RSVP to attend this event, or click here on July 1 at 12:00PM for a live stream.

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