Balance Copyright Interests With Fair Use, CEA, HRRC Urge White House

But the government must be careful to balance copyright protection with fair-use and “gray area” considerations, and not endorse technologies that can be used by repressive regimes, CEA and public interest groups said. Espinel’s White House office was created by the PRO-IP Act, which mandates that the government devise a strategy to protect IP. Public comments to shape that strategy were due Wednesday night.

Copyright exceptions “that promote public interests, including but not limited to a robust fair use doctrine, remain fundamental to copyright law in the digital age,” CEA and the Home Recording Rights Coalition told the U.S. Intellectual Property Enforcement Coordinator in comments Thursday on the plan to develop a federal enforcement strategy for fighting IP infringement. CEA and the HRRC think that “one immediate affirmative step that should be undertaken by the United States is the inclusion of recognition of fair use and other public interest exceptions in bilateral and multiparty agreements that address IP rights,” they said. “Where the United States seeks to broaden liability for infringing conduct, it should also seek in each instance to delineate with specificity the metes and bounds of the causes of action, and to clearly define the defenses. Where harsher remedies are sought, or prescribed liability through statutory damages, the United States should ensure that the consequences of infringement remain proportional to the actual injury incurred."

Virtually every consumer recording technology introduced the past 30 years “has been met with the threat or the filing of a lawsuit based on secondary liability for alleged consumer infringement,” CEA and the HRRC said. If Sony had lost the Betamax case, “consumers would have been denied access to a technology that greatly enhanced their personal enjoyment of video entertainment they lawfully purchased,” and today’s DVDs, DVRs, Blu-ray players and set-top boxes “might never have come to pass,” they said. The U.S. “should recognize, and should help other nations also recognize, the potential for overly broad or loosely defined standards of secondary liability to kill the goose that lays the golden eggs of innovation,” they said.

Espinel’s office should keep in mind “unintended consequences of particular enforcement methods and strategies,” said Public Knowledge, the Electronic Frontier Foundation, the U.S. Public Interest Research Group, the American Association of Law Libraries and others. They noted Sony’s DRM on CDs that opened computers to security vulnerabilities. Officials should consider “novel and creative solutions” to protect copyright, such as “facilitating legal access to content through mechanical licensing at reasonable rates” rather than “blunter” enforcement.

Officials should run a cost-benefit analysis to ensure that some industries, such as consumer electronics, aren’t harmed by the policy agenda of content owners and to measure the effects of enforcement against individual users, as opposed to the “commercial scale” infringement that’s the target of PRO-IP, the filing said. “Seizure of a multi-user, multi-use home computer would harm everyone in the household.” Espinel’s office should clearly define the harms from various IP rights, the groups said: Infringement of luxury trademarks doesn’t harm consumers, because they often know they're buying fakes. Luxury brands such as Louis Vuitton have been some of the most active litigants against infringing goods sold on eBay and advertised through Google AdWords.

The PRO-IP Act’s language “suggests a necessarily conservative approach” to possible legal changes in Espinel’s review, the groups said. They said officials should focus on better interagency information sharing, reduced waste in enforcement and a “robust and open system” for international cooperation. If authorities pay the cost of enforcement, private parties will be emboldened to request enforcement even when it’s more costly than the infringement, the groups said. Law enforcement should pursue “centralized, large-scale direct infringers” with clear criminal intent. “Current jurisprudential debates about the scope of the DMCA safe harbors, the limits of the first sale doctrine, or legality of parallel importation are not the proper subject” for federal enforcement.

Public interest groups asked Espinel to forgo the U.S. practice of using trade agreements to limit countries’ policy flexibility under the Trade Related Aspects of Intellectual Property Rights agreement and others. The U.S. also has a moral obligation not to encourage use of technology to limit free speech, they said. “The same technologies that can allow for real-time inspection of content for infringement also allow for comprehensive surveillance on individual communications.” Any new policies must be careful not to discourage the kind of technologies supported by State Department grants and approved by Secretary of State Hillary Clinton in her recent address about Internet freedom, the groups said.

Infringement immediately hits downstream revenue because of the “role that residuals and royalties play in the lives of creators and craftspeople,” said the filing by the RIAA, MPAA, National Music Publishers Association, American Federation of TV and Radio Artists, Directors Guild of America, Screen Actors Guild and International Alliance of Theatrical and Stage Employees. It becomes harder for young people to enter the creative industries, and harms “lower and mid range” films, programs and songs by less well-known artists, the most diverse part of the industries.

Criminal distribution “thrives on the willful ignorance and tacit support of other businesses that are unwilling to take commercially reasonable steps to address it,” the filing said. The government must “encourage” and “eliminate impediments to” cooperation with hosting providers, search engines, ad networks, payment processors, domain name registrars and proxy services, and social networking sites. The user-generated content principles among creators and UGC services, university mitigation of campus piracy and ISP notice-forwarding and graduated-response efforts have shown “some progress,” the filing said: But most intermediaries “at best react passively and selectively to the problem.” Agencies should encourage them to work on a “voluntary basis” with content owners and assure them their cooperation won’t be “second guessed,” the industries said.

IP enforcement principles should be reflected in regulatory venues besides the FCC’s net neutrality proceeding and National Broadband Plan, and “maximum flexibility” should remain for private parties to develop mitigation technologies, the filing said. The groups asked for examination of federal and state laws that may be hindering intermediaries from more cooperation -- a seeming invitation to revisit 1998’s Digital Millennium Copyright Act, which created safe harbors and the notice-and-takedown regime.

Takedown in a “high-volume environment” doesn’t work unless content owners provide a database of their works and service providers prohibit the new upload of previously flagged works, the filing said: Providers need legal guarantees that proactive filtering won’t endanger their safe-harbor status. A delay of even an hour in responding to a takedown for a real-time unauthorized stream renders the process “wholly ineffective.” Content owners need the right to use “automated crawlers” and other legal means of searching for infringement without being impeded by service providers, and hosting providers such as locker services and bloggers should be forced to terminate accounts of repeat infringers, the filing said. Technologies that should be considered include fingerprinting, “quarantine of repeat offending sites,” bandwidth shaping, and “scanning infrastructure” so content owners get real-time streams of new postings, it said.

Agencies should follow the lead of the Justice Department in setting up internal IP task forces, and Treasury should work with financial institutions to block online payment systems from criminal infringement use, the groups said. Enforcement priorities should include a “preventive and responsive strategy” to stop prerelease “blockbuster” films from leaking, identifying websites most responsible for aiding infringement and naming them in the U.S. Trade Representative’s Special 301 review, targeting U.S. facilities of overseas infringing sites, and requiring disclosure of pirated goods on customs forms. But states need to play a bigger role as well, the filing said -- labeling laws should be amended to define illicit file-sharing and streaming as felonies so state authorities can pursue those activities, and law enforcement can already pursue P2P software makers under consumer-protection laws. The groups said the U.S., through ICANN’s Governmental Advisory Committee, must push to keep publicly available accurate Whois data.

The MPAA said it separately submitted statistics about the film industry’s economic impact. A spokesman told us they came from 2008, making them newer than other figures mentioned by the copyright industries. The movie industry was made up of more than 95,000 businesses that paid $40 billion directly to 144,000 businesses in the U.S. and employed 2.4 million people who earned more than $140 billion. The industry paid $15.7 billion in income and sales taxes.

A big help to IP enforcement would be an “ambitious and comprehensive” Anti-Counterfeiting Trade Agreement concluded this year, said the U.S. Chamber of Commerce’s Global Intellectual Property Center. The “transparency” of ACTA that has raised the hackles of public interest groups “risks shifting the focus away from the substance of the agreement and its value to our economy,” the filing said, encouraging the administration to make talks more open and brief Congress. Officials should also work with lawmakers on customs enforcement, an “action plan” for Special 301 violators, and embedding IP specialists at embassies. The federal government should consider establishing multijurisdictional task forces to complement state and local forces, the Chamber said.