INFRINGEMENT RULING ON STREAMING MOVIE CLIPS SENDS VIDEO DEALERS TO CONGRESS
After setback in federal court, video and record retailers are pressing Congress to tinker with U.S. copyright law to clarify that online stores can use unauthorized or “home brew” trailers to promote sale and rental of copyrighted movies. In letters dated April 8, VSDA and NARM asked members of House Judiciary Committee to enlarge section of proposed Music Online Competition Act (MOCA) to cover in-store and online display of movie clips compiled by sources other than content owners. MOCA in present form would permit stores and online retailers to play music previews only.
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Letters came in response to request for comment from 6 committee members on application of copyright law to digital environment. In its letter, NARM wrote: “We recommend that this provision be extended to include all copyrighted works, and that it include a specific safe harbor for use of sound samples and samples of audiovisual works.” Group also said “it is of critical importance that retailers be permitted to outsource the provision of these samples.” VSDA made same points. Although VSDA VP Sean Bersell has denied it in news accounts, it appears retail groups are running to Congress for relief from recent major legal setback at hands of Disney’s Buena Vista Home Entertainment (BVHE) in movie trailer war.
Legal question at heart of long-running conflict is whether retailer’s Web site can promote movies with click-here-to-see trailer button. By clicking button, customers are transported to 3rd party site that streams home-brew trailer for selected movie. Dealers want streaming privilege because it helps move goods. Movie studios, which have their own Web sites that compete with dealers, have other ideas.
Federal court came down on side of studios. In recent 51- page decision, Judge Jerome Simandle, U.S. Dist. Court, Newark, ruled that 3rd party company that made and streamed unauthorized movie trailers (dubbed by court “clip previews") for retailers’ Web site customers probably violated copyright law. Judge issued preliminary injunction against movie trailer streamer, Haddonfield, N.J.-based Video Pipeline (VP), pending trial. Case has been closely watched by online retailers and entertainment companies.
At issue in Video Pipeline case were 62 clip previews, including those for movies such as Fantasia, Beauty and the Beast and Pretty Woman. Each clip was about 2 min. long and consisted of opening display of Disney or Miramax trademark, title of motion picture distributed by BVHE, then 2 or more scenes from picture followed by another shot of title. VP’s clip previews have no voice-over, no editing, no extra music. VP made clip previews from copies of videos of BVHE’s copyrighted motion pictures owned by its retailer clients, according to court documents. It’s estimated that Internet users streamed VP’s clip previews more than 30,000 times between Nov. 3, 2000, and April 3, 2001.
Previously, VP had received ready-made trailers of Disney movies that it was authorized to exhibit in retailer’s brick-and- mortar outlets to promote home video sales and rentals. VP began streaming trailers on retailers’ Web sites, and when studios demanded VP stop practice, it sued them. In Oct. 24, 2000, filing for declaratory judgement, VP asked court to declare company’s online use of studio-supplied trailers wasn’t copyright infringement. Meanwhile, VP returned studio-made trailers to BVHE and began compiling own clips from titles that retailers stocked, prompting studios to countersue for copyright infringement.
In decision, Judge Simandle concluded copyright was violated because VP’s streaming clip previews were derivative works, public performances and public displays -- rights granted exclusively to copyright holders, in this case BVHE and Miramax. Court rejected VP’s contention that it was protected by First Sale Doctrine -- legal rule that allows retailer to resell and promote its lawfully purchased copyrighted products without copyright holder’s consent. Judge said VP didn’t purchase any copyrighted goods and therefore couldn’t stand in shoes of retailers. Court also said in passing that retailers themselves probably couldn’t use First Sale Doctrine to insulate them from legal attack for displaying images of copyrighted materials at distance over Internet instead of in-store.
Last and not least, court rejected VP’s argument that its clip previews were lawful “fair use” of copyrighted movies. Judge Simandle held, among other things, that VP’s home-made previews were cut-and-paste jobs with no creative ingenuity, that VP’s purpose in making previews was to promote video sales and rentals for profit, that previews, though slight, were reflection of general themes and tones of movies depicted and that video sales of particular copyrighted motion picture on one retailer’s Web site, with help of VP’s promos, “would most certainly detract from possible video sales on BVHE’s own Internet site.” In short, none of traditional fair-use factors cut VP’s way. VP hasn’t decided whether it will appeal injunction.