Video Advertising Contract Descends Into Possible “Cyberattack”–Radian Weapons v. GY6Vids

This is a lawsuit between Radian Weapons and GY6Vids, a company that Radian hired to promote Radian’s products on YouTube. (GY’s YouTube channel currently has almost seven hundred thousand subscribers. Press coverage of the lawsuit from The Bulletin here.) The parties signed an agreement saying that Radian would pay GY 0.03 cents per view for the first six months the video was posted on YouTube.

GY created a promotional video for Radian and attached it to a video GY posted to YouTube. The video generated approximately five hundred thousand views in the first month of release. GY sent an invoice to Radian for approximately $15K. Radian paid this invoice. GY sent an invoice in the second month for $42K. Radian demurred. Radian then sent GY a letter saying the contract was void. GY’s counsel then sent a letter to Radian seeking damages for failure to pay.

In the aftermath of the exchange of letters, GY’s videos started receiving a suspiciously large number of “dislikes” on YouTube. In February 2018, GY’s videos received nearly 19,000 dislikes.

Radian sued GY. In response, GY asserted several counterclaims, including for what GY characterized as an “orchestrated cyberattack” by Radian. The court dismisses some of the counterclaims on a motion to dismiss.

Breach of Confidentiality: The contract contained a strict confidentiality provision, and GY alleged that Radian breached this provision. Radian challenged GY’s measure of damages ($5M) but the court says the specific figure is determined as a matter of fact.

Interference with Economic Relations: GY alleged interference with economic relations based on Radian’s alleged cyberattack. The court declines to dismiss the claim, concluding that GY alleged a sufficient relationship with its advertisers and viewers that Radian could have improperly intended to disrupt with its campaign (assuming there was such a campaign). The court notes that the allegations are threadbare and approach the line of being conclusory. But ultimately plausible (barely).

CFAA: The court dismisses the CFAA claim. That claim requires pleading that Radian accessed a protected computer “without authorization”. CFAA claims in this context are often based on access to a party’s website or servers without authorization, or in a way that exceeds the authorization in the terms of use. There’s a broader debate over whether a violation of website terms standing alone can state a CFAA claim, and most courts have said no. Here, GY alleged that Radian left repeated negative comments in violation of YouTube’s terms of service. This is the type of a terms of service violation that courts have said should not support a CFAA claim. The court cites to the 3taps case, where the court said that access to a website following express revocation can constitute a violation of the CFAA. This case is distinguishable for a few reasons.

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We have seen a few disputes over alleged cyberattacks perpetrated or orchestrated by a party. Here, the allegations vaguely pointed to involvement by Radian, but GY did not have specific inculpatory evidence in its possession. The court allows the interference claims to proceed but cautioned that they’re on shaky ground.

The CFAA result makes sense in this case, particularly because the website in question was operated by YouTube. Even if the comments had been left on GY’s own website, the court would have likely declined to recognize a claim unless GY had affirmatively revoked consent. (See also Matot v. CH, a district court ruling rejecting CFAA claims premised on parody accounts.)

The contract was attached to the complaint. The parties asked to file it under seal but the court declined, saying the parties “fail[ed] to present compelling reasons overcoming the strong presumption in favor of public access to the documents”. Kudos! The agreement is linked here and is a simple two page document. Radian probably regrets that it had no restrictions on the amount of views it would pay for. It also doesn’t say much about labeling the content as being sponsored. Perhaps that’s obvious from the context of the promotional video. (As a side note: it’s always an interesting question whether a party can simply file a copy of an agreement or reference material terms of an agreement in a dispute over the agreement.)

The contract was silent as to whether GY had an obligation to disclose the payment from Radian. It’s tough to tell without the benefit of context, but this looks like the type of placement that would trigger the FTC’s endorsement rules.

Case citation: Axts Inc. v. G76vids LLC, 2018 U.S. Dist. LEXIS 183492 (D. Or. Oct. 24, 2018).

Related posts:

Creating Parody Social Media Accounts Doesn’t Violate Computer Fraud & Abuse Act – Matot v. CH

Twitter Isn’t Liable for Impersonation Account–Dehen v. Doe

Holding on to a Domain Name to Gain Leverage in a Business Dispute Can Constitute Cybersquatting — DSPT Int’l v. Nahum

Section 230 Protects Twitter’s Decision to Suspend User’s Account–Mezey v. Twitter

This decision is from July but just showed up in Westlaw. Mezey sued Twitter for suspending his account. The opinion doesn’t provide any background about the account or why Twitter suspended it. The court easily dismissed the lawsuit  on Section 230 grounds. Here’s the court’s entire substantive analysis (paragraph breaks added):

First, Twitter—as a platform that transmits, receives, displays, organizes, and hosts content—is an interactive computer service. 47 U.S.C. § 230(f)(2) (defining interactive computer service as “any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet”); see Am. Freedom Defense Initiative v. Lynch, 217 F.Supp. 3d 100, 104 (D. D.C. 2016) (Twitter is interactive computer service under the CDA); see also Klayman v. Zuckerberg, 753 F.3d 1354, 1357–58 (D.C. Cir. 2014) (Facebook is interactive computer service under the CDA).
Second, Plaintiff is the information content provider as he created the relevant content associated with his Twitter account. See Sikhs for Justice “SFJ,” Inc. v. Facebook, Inc., 697 F. App’x 526, 526–27 (9th Cir. 2017) (creator of Facebook page is “information content provider” under the CDA).
Finally, Plaintiff seeks to hold Twitter “liable for its exercise of a publisher’s traditional editorial functions—such as deciding whether to publish, withdraw, postpone or alter content.” See Fair Hous. Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157, 1170–71 (9th Cir. 2008) (“[A]ny activity that can be boiled down to deciding whether to exclude material that third parties seek to post online is perforce immune under section 230.”).
This case extends a line of Section 230 jurisprudence ranging from Riggs v. MySpace to Sikhs for Justice v. Facebook to Taylor v. Twitter. In this line of cases, the court treatsthe plaintiff’s content as the “third party” content for Section 230 purposes; thus, Section 230 protects the defendant’s decision to remove the plaintiff’s “third party” content. I’m fine with this outcome, but this interpretation of Section 230(c)(1) largely duplicates Section 230(c)(2), so it seems to pose a statutory construction conundrum. I’ve argued elsewhere that courts should use Section 230(c)(2) to handle this situation.
This case also extends the jurisprudence where courts reject “must-carry” obligations, many being brought by plaintiffs with “conservative” views (Mezey’s political leanings weren’t clear to me on a cursory review). Some of the must-carry cases have failed on Constitutional grounds; here, the court elegantly disposes of it on Section 230 statutory grounds. However the courts get there, I’m glad to see the must-carry lawsuits fail.

Ninth Circuit Interprets Autodialer Broadly For TCPA Purposes

Marks signed up for a gym membership with Crunch Fitness. He received three text messages. He sued on behalf of a putative class. The key question is whether the messages were sent using an “automatic telephone dialing system” (ATDS) under the TCPA. The district court granted summary judgment on the ground that the system in question lacked a random or sequential number generator and lacked the potential capacity for such a feature. Marks appealed.

The Ninth Circuit reversed. Given that the DC Circuit recently invalidated the FCC’s interpretation of the term ATDS, the court looks at the statute with fresh eyes. The FCC’s most recent interpretation (which was recently invalidated) said that if equipment has the future capacity to function as an autodialer, taking into account upgrades and enhancements, then it’s an ATDS.

The court says that equipment can be an autodialer if it has the capacity to dial numbers automatically and the capacity to (1) to store numbers, or (2) produce numbers to be called (randomly or otherwise). In other words, the system at issue in this particular case very likely falls under the definition of an autodialer:

The device at issue in this appeal is called the Textmunication system, which is a web-based marketing platform designed to send promotional text messages to a list of stored telephone numbers. Phone numbers are captured and stored in one of three ways: An operator of the Textmunication system may manually enter a phone number into the system; a current or potential customer may respond to a marketing campaign with a text (which automatically provides the customer’s phone number); or a customer may provide a phone number by filling out a consent form on a Textmunication client’s website. A client of Textmunication can then design a marketing campaign that, for example, offers customers free passes and personal training sessions, provides appointment reminders and class updates, or sends birthday greetings, and the Textmunication system will automatically send the desired messages to the stored phone numbers at a time scheduled by the client. [emphasis added]

This sounds like a pretty broad definition that would encompass a lot of systems that companies use for text message campaigns!

The court footnotes that its position is at odds with the Third Circuit. The Third Circuit concluded in a recycled number case against Yahoo that an autodialer had to have the present capacity to generate a list of numbers and then dial such numbers. Granted, a smartphone could be configured to do this, but even this required some configuring and fell into the category of something that didn’t have the present capacity to do so. (Here’s my blog post on an earlier ruling in the Third Circuit case: “Third Circuit Revives TCPA Case Against Yahoo“.)

Crunch has sought rehearing en banc.

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It will be interesting to see whether the Ninth Circuit takes the case en banc or if Crunch files a petition for cert.

The TCPA has kept lawyers busy! The statute itself is unclear as to what equipment must be used in order for a message to fall within the statute’s coverage. As the FCC and courts have noted, given the advances in technology, even a smartphone can function as an ATDS. The technological advances between the TCPA’s enactment and today have rendered the statutory definition somewhat less than useful.

Companies who may be the target of TCPA lawsuits hoped that invalidation of a somewhat broad FCC Order construing the definition of an ATDS would grant them relief. As this case reflects, it can be hit-or-miss in the courts.

Case citation: Marks v. Crunch San Diego, LLC, 2018 U.S. App. LEXIS 26883 * | __ F.3d __ | 2018 WL 4495553 (9th Cir. Sept. 20, 2018)

Related posts:

“Manufactured” TCPA Suit Fails For Lack of Standing

Does Two-Factor Authentication Violate the TCPA?–Duguid v. Facebook

TCPA Claim Against Non-Sender Fails

Third Circuit Revives TCPA Case Against Yahoo

Court Rejects TCPA Claim on the Basis of Implied Consent

Recent FCC Order Helps Shopkick Defeat TCPA Claims

TCPA Claim Against Taco Bell Fails For Lack of Agency

TCPA Claim Over Yahoo!’s IM to SMS Messaging Survives Summary Judgment

Confirmatory Opt-out Text Message Not Actionable Under the TCPA — Ryabyshchuck v. Citibank

Franchisor Isn’t Liable Under the TCPA for Franchisees’ Text Message Campaign – Thomas v. Taco Bell

Confirmatory Opt-Out Text Message Doesn’t Violate TCPA – Ibey v. Taco Bell

Group Text Services Grapple with TCPA Class Actions

Court Rejects Constitutional Challenge to TCPA Based on Vagueness in “Prior Express Consent” Exception — Kramer v. Autobytel, Inc.

Ghostwritten Attorney Newsletter is an “Ad” for TCPA Junk Fax Law Purposes–Holtzman v. Turza

Another Court Finds that TCPA Applies to Text Messages — Lozano v. Twentieth Century Fox Film Corp.

Court Finds that SMS Spam Messages are Subject to the TCPA and Rejects First Amendment Defense — Abbas v. Selling Source, LLC

Ninth Circuit Revives TCPA Claim–Satterfield v. Simon & Schuster

Cellphone Spam Violates TCPA–Joffe v. Acacia Mortgage

Will the Spokeo v. Robins Supreme Court Ruling Favor Plaintiffs Or Defendants? Uh…

Sixth Circuit Says Informational Fax Isn’t an “Ad”–Sandusky v. Medco

Swedish Court Misunderstands Memes (Guest Blog Post)

by guest blogger Stacey Lantagne

Memes are everywhere. Part of the essential communicative fabric of social media, it’s hard to imagine Twitter or Instagram or even texting without them. They get used to react to matters of national debate, sports scores, gossip (celebrity or more personal), and requests to stop at the store for milk before you come home. But their ubiquity means they aren’t just used in personal conversations – schools use them to teach, politicians use them to campaign, and advertisers use them to sell us products.

Memes have muscled their way onto the scene, and recently they’ve been one of the things at the center of much debate concerning the EU’s new copyright law, which could have the potential to stop many of them in their tracks, including my personal favorite, Distracted Boyfriend.

But a recent decision by Sweden’s Advertising Ombudsman (RO), a “self-regulatory advertising watchdog,” attacked the Distracted Boyfriend meme not for its copyrighted status but for something else entirely: sexism. The meme at the time was not being used as a meme, but rather as an advertisement. Seeking applicants for open positions, Bahnhof, a Swedish ISP, used the Distracted Boyfriend meme, casting the girlfriend as “your current workplace” and the woman who catches the boyfriend’s attention as a new job at Bahnhof.

When Bahnhof posted its version of the meme to its Facebook page, it received many comments criticizing its sexism, and the advertisement was referred to RO, which has guidelines against portraying women as “mere sex objects.” RO agreed with the ad’s critics in a unanimous decision, noting that the meme portrayed women as “interchangeable” “sex objects” to men and had “no link” to Bahnhof’s services. The judgment also added that it was offensive that the ad labeled the man as the object at which it was aimed (“you”/“du”), while the women were labeled as the objects to be achieved. The judgment concluded that the ad may discourage women from applying for the indicated jobs.

I feel this decision erred in its refusal to acknowledge that the photograph is no longer a photograph, but a meme, which is something I assert we should be understanding as a completely different creature. RO insisted that it “passes judgments on adverts, not memes.” But the fact that the photograph is a meme should affect how it’s being interpreted. Of course the photograph didn’t have a link to Bahnhof’s business, as RO found, because the photograph wouldn’t. But, as Bahnhof pointed out in its own statement on the issue, the meme did: “We are an internet company and are conversant in this, as are those who would look for a job with us, so we turned to that target group. If we should be punished for anything, it’s for using an old and tired meme.”

Taking this as a photograph instead of recognizing it as a meme is where the trouble in meme legality starts. I argue that there is a type of meme, of which the Distracted Boyfriend is one, whose meaning has mutated through collaborative creativity such that it cannot be treated as a mere photograph anymore. To do so ignores the layers of communicative gloss that its memeification has given it. That’s why this decision can read as so tone-deaf: It’s pretending this is just a photograph, when actually it’s a meme. It’s speaking a completely different language than those who have grown used to this photograph standing in for a much more complex global conversation. Recent discussions calling for closer examination of the messages communicated by memes seems to acknowledge this: It’s not the photographs themselves that are troubling to organizations studying teenage attitudes toward food, but the meaning imbued in the photographs by their memeification.

Memes are hard to describe, and they can be harder still to translate if you are not well-versed in the language of the internet. KnowYourMeme attempts to chronicle the fast-moving, free-wheeling meme vocabulary, providing memes with history and context. As the Distracted Boyfriend entry explains, one of the earliest versions of the meme was a commentary on the youth being lured by socialism away from capitalism – hardly a sexist message.

The photograph might be sexist, but the meme transforms the underlying sexist message into application in a million different situations, from capitalism to the solar eclipse to the Legend of Zelda to meme culture itself. It isn’t that women are interchangeable sex objects; it’s that we’ve all been in a situation where we’ve lost interest in what we have in favor of something new entirely. The original photograph offensively limits that situation to an exchange of interchangeable women; the meme expands the photograph far beyond its limits, implicitly mocking the photograph’s unimaginative limitations in its setup. Why make this photo about men and women, when it could be about anything?

Even the fact that the man is the POV placed at the center of the meme can be understood as part of its commentary: Men are given the starring roles; it’s left to women to rewrite that narrative. Which they do, in meme form, admirably. After all, the meme got its start by recasting the man as “the youth,” immediately demanding that the photograph be read in a much wider, more gender-inclusive way. And, as it’s evolved, versions have developed challenging the gender composition of the original photograph.

I’ve written about the challenges memes present to copyright law. As a quickly evolving method of communication collaboratively created by strangers all over the world, I argue that limiting them to what they were before memeification mutated them does the richness of human communication a disservice. This is why the EU’s copyright laws, in pretending that memes are still just photographs, is so troubling. The distracted boyfriend photograph is of merely passing interest. The meme rose to the top of global conversation last year. It isn’t actually the photograph that went viral, and in circumstances like these, we should meet memes on their own unique terms.

An Analysis of Title II of Public Law 115-264: The Classics Protection and Access Act (Guest Blog Post)

by guest blogger Tyler Ochoa

On October 11, 2018, President Trump signed into law H.R. 1551, the Orrin G. Hatch-Bob Goodlatte Music Modernization Act, which became Public Law 115-364, 132 Stat. 3676.  The Act contains three titles pertaining to copyright law.  Title I is the Musical Works Modernization Act, or MMA Act, which revises the Section 115 compulsory license for musical works and establishes a new “mechanical licensing collective” to administer it.  Title II is the Classics Protection and Access Act (formerly known as the “Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society Act, or CLASSICS Act), which brings pre-1972 sound recordings mostly (but not completely) into the federal copyright system.  Title III is the Allocation for Music Producers Act, or AMP Act, which amends the compulsory license for digital public performance rights for sound recordings to allocate a small portion of the proceeds to producers, mixers, and sound engineers.

This blog post summarizes the provisions of Title II, the Classics Protection and Access Act (or CPA Act).

Background

To fully understand the changes made by the CPA Act, some familiarity with existing U.S. copyright law is needed.  (Readers who are already intimately familiar with existing U.S. copyright law may skip to the next section.)

Federal copyright law distinguishes between a musical work (the notes and lyrics) and a sound recording of a musical work. A sound recording could be a recording of anything, such as a recorded performance of a literary work (an audio book) or a recording of ambient sounds (such as bird calls); but the most valuable sound recordings are recorded performances of musical works.  Each sound recording of a musical work is a derivative work of the underlying musical work.  The copyright in a musical work is owned initially by the composer and the lyricist, and is typically assigned to a music publisher.  In theory, the copyright in a sound recording is owned by the performers and the sound engineers; in practice, the copyright in a sound recording is owned by a record label under a work-made-for-hire agreement.

While musical works have been protected by federal copyright law since 1831, sound recordings were only added to the federal copyright act on February 15, 1972.  Sound recordings fixed on or after February 15, 1972 are protected by federal copyright law.  Until the CPA Act, however, sound recordings fixed before February 15, 1972, however, were protected only by state law.  In those states that have addressed the issue, copyright owners generally had a right to prevent the reproduction and distribution of such pre-1972 sound recordings.

The exclusive rights in a sound recording are limited in ways that do not apply to other copyrighted works.  Copyrighted works usually enjoy five exclusive rights: to reproduce the copyrighted work, to prepare derivative works based upon the copyrighted work, to distribute copies or phonorecords of the copyrighted work to the public, to publicly perform the copyrighted work, and to publicly display the copyrighted work.  [17 U.S.C. §106]  Sound recordings, however, have never had a general public performance right.  As I explained in a previous blog post, in the 1940s sound recording copyright owners tried to establish public performance rights under state law, but largely failed.  In 1972, when sound recordings were first added to the Copyright Act, broadcasters had enough lobbying power to stop any public performance right.  As a result, in order to get federal copyright protection, sound recording copyright owners had to accept only the rights of reproduction, adaptation, and public distribution, without any public performance right.  (The lack of a general public performance right for sound recordings is the primary reason the U.S. has not joined the Rome Convention, the major international treaty concerning sound recordings. The new legislation won’t change this.)

In 1995, Congress added a limited public performance right by means of digital audio transmission only.  [17 U.S.C. §106(6)]  Congress also divided public performances of sound recordings into three categories.  FCC-licensed broadcast transmissions are exempt from having to pay royalties to sound recording copyright owners.  [17 U.S.C. §114(d)(1)]  Non-interactive subscription transmissions get a compulsory license to publicly perform copyrighted sound recordings [17 U.S.C. §114(d)(2)], meaning they do not have to get permission, but they do have to pay royalties.  (In the absence of a negotiated agreement, the royalties are set by the Copyright Royalty Board, a three-judge administrative tribunal, subject to judicial review.)  Interactive transmissions, where a user can request a performance of a particular recording, require negotiated licenses from sound recording copyright owners.  [17 U.S.C. §114(d)(3)]  After some litigation and a Congressional clarification in 1998, “eligible non-subscription transmissions” (i.e., webcasts) were assimilated to the second category.  Courts have also held that services which recommend similar recordings based on an algorithm, such as Pandora, fall within the second category rather than the third category.

Thus, when a song is played on a traditional AM/FM radio broadcast station or on TV (whether analog or digital), the musical work copyright owner gets royalties (collected though blanket licenses administered by performance rights organizations, such as ASCAP and BMI), but the sound recording copyright owner does not get any royalties.  When the same song is played on satellite radio or over the Internet, however, both the musical work copyright owner and the sound recording copyright owner get paid royalties.  (The royalties for the musical works are collected by the PROs, and the section 114 compulsory license for digital performances of sound recordings are collected and distributed by SoundExchange, a performance rights organization formed by the Recording Industry Association of America.)

Until now, however, only copyright owners of sound recordings fixed on or after February 15, 1972, were eligible to collect royalties for digital audio performances of those sound recordings pursuant to the statutory license.  Owners of pre-1972 sound recordings were not eligible for royalties from the statutory license.  As I explained in a previous blog post, owners of pre-1972 sound recordings initially succeeded in establishing a public performance right for pre-1972 sound recordings under state law.  Subsequently, however, the highest courts in several states, including New York and Florida, have rejected a public performance right for pre-1972 sound recordings under state law.  An appeal is currently pending in the California Supreme Court regarding public performance rights for pre-1972 sound recordings under state law.  In the meantime, some digital audio services entered into settlement agreements with the major record labels to pay royalties on public performances of pre-1972 sound recordings. The total amount of royalties is contingent on the outcome of litigation pending in several states.

The Classics Protection and Access Act

Rather than simply providing that pre-1972 sound recordings will hereafter be governed by federal copyright law, the CPA Act adds a new chapter (Chapter 14) to Title 17, consisting of a single section, 17 U.S.C. §1401, titled “Unauthorized Use of Pre-1972 Sound Recordings.”  Section 1401 contains 12 lettered subsections, (a) through (l).  Section 1401 essentially federalizes protection for pre-1972 sound recordings, but it leaves certain details (including initial ownership) to state law.

The key provision is section 1401(a)(1), which reads as follows:

UNAUTHORIZED ACTS.—Anyone who, on or before the last day of the applicable transition period under paragraph (2), and without the consent of the rights owner, engages in covered activity with respect to a sound recording fixed before February 15, 1972, shall be subject to the remedies provided in sections 502 through 505 and 1203 to the same extent as an infringer of copyright or a person that engages in unauthorized activity under chapter 12.

This section has four elements: term of protection, lack of consent, “covered activity,” and remedies.  Considering them in order of importance:

Covered activity:  “Covered activity” is defined in subsection 1401(l)(1) as “any activity that the copyright owner of a sound recording would have the exclusive right to do or authorize under section 106 or 602, or that would violate section 1201 or 1202, if the sound recording were fixed on or after February 15, 1972.”  Thus, the copyright owner of a pre-1972 sound recording effectively now has the exclusive rights of reproduction, adaptation, and distribution, and public performance by means of digital audio transmission. [17 U.S.C. §106(1),(2),(3) and (6)]  Sound recordings lack a general public performance right or a public display right.  [17 U.S.C. §106(4)(5)]

The owner also has an exclusive right of importation and exportation right under section 602, but this is relatively unimportant, due to the Supreme Court’s previous rulings in Quality King v. L’Anza Int’l and Kirtsaeng v. John Wiley & Sons, Inc., holding that the first-sale doctrine [17 U.S.C. §109] is a defense to importation, even if the copies were made outside the United States.  Thus, the importation and exportation rights only apply to copies that were not “lawfully made.”

Finally, the copyright owner gets the benefit of section 1201, prohibiting circumvention of technological protection measures, and section 1202, prohibiting removal or alteration of copyright management information.  (Not surprisingly, the copyright owner of a sound recording does not get the benefit of the moral rights of attribution and integrity in section 106A, which continue to apply only to certain “works of visual art,” narrowly defined.)

Term of protection:  Before the CPA Act, the term of protection for pre-1972 sound recordings was governed by state law, and state law was not preempted by federal law until February 15, 2067 (95 years after the date that sound recordings were first added to the federal Copyright Act).  Former 17 U.S.C. §301(c).  While states could have chosen to provide more limited terms of protection, few states ever considered the issue.  In California, sound recordings are protected by statute [Cal. Civ. Code §980(a)(2)] until February 15, 2047 (the original date of federal preemption prior to enactment of the Sonny Bono Copyright Term Extension Act of 1998).  In New York, however, the New York Court of Appeals had previously held that common-law protection for pre-1972 sound recordings was perpetual, unless and until divested by federal law, even if the sound recording had entered the public domain in its country of origin. Capitol Records, Inc. v. Naxos of America, Inc., 4 N.Y.3d 540 (2005).

In providing federal protection for pre-1972 sound recordings, Congress could have applied the existing (somewhat complicated) rules of duration for copyrighted works to pre-1972 sound recordings.  As originally proposed, however, the CLASSICS Act would have given all sound recordings, no matter how old, federal protection until February 15, 2067.  Even Edison cylinders recorded in the 19th Century would have been protected until 2067, almost 200 years later.  This is the major reason that I joined a group of 42 law professors in opposing enactment of the CLASSICS Act in its original form.

The CPA Act, as enacted, provides to sound recordings a term of 95 years of protection from the date of first publication (the maximum term allowed to pre-1978 works under existing law), plus a “transition period” of between 3 and 15 years.  [17 U.S.C. §1401(a)(2)(A)]  As with other copyrighted works, all terms are extended to December 31 of the year in which they otherwise would expire; except that no protection is provided to pre-1972 sound recordings after February 15, 2067.  The “transition period” is 3 years after the date of enactment for sound recordings published before 1923; 5 years for sound recordings first published in 1923-1946; and 15 years for sound recordings first published in 1947-1956.  All other sound recordings get a transition period that expires on February 15, 2067.  [17 U.S.C. 1401(a)(2)(B)]

Thus, all sound recordings first published before 1923 will enter the public domain on January 1, 2022.  Sound recordings first published between 1923 and 1946 will get 100 years of protection.  Sound recordings first published between 1947 and 1956 will get 110 years of protection.  Sound recordings first published between 1957 and 1972 will get protection until February 15, 2067, resulting in a variable terms of protection of between 110 years and 95 years.  Finally, previously unpublished sound recordings will be protected until February 15, 2067 (even if they are published by the rights owner in the meantime).  Due to the preemption provisions (described below), these terms preempt any state laws to the contrary, even where state law would provide shorter protection.

What does it mean for a sound recording to be “published”?  Before 1978, courts had held that a musical work was “published” only when sheet music was distributed to the public.  Distribution of a sound recording of a musical work was not considered a “publication” of the musical work within the meaning of copyright law.  (The distinction dates back to a 1908 Supreme Court decision, White-Smith Music Publishing Co. v. Apollo Co.,which held that piano rolls for player pianos were not “copies” of a musical work within the meaning of copyright law.  Essentially, a “copy” had to be visible to the eye.)  Indeed, when the Ninth Circuit later held that distribution of a phonorecord was a “publication” of the musical work, Congress overturned the decision by enacting 17 U.S.C. §303(b): “The distribution before January 1, 1978, of a phonorecord shall not for any purpose constitute a publication of any musical work, dramatic work, or literary work embodied therein.”  Of course, this statute (and the rationale underlying it) did not apply to the sound recordings themselves, which (unlike musical works) could only be distributed in the form of phonorecords.  Nonetheless, the New York Court of Appeals relied on this statute in holding (in the Capitol Records v. Naxos case) that pre-1972 sound recordings had never been “published” at all, even when phonorecords of the recordings had been distributed to the public.  If this restricted definition of “publication” were used, then Congress’s transition periods would have been rendered meaningless, as all pre-1972 sound recordings would have been “unpublished” and therefore protected until February 15, 2067.

Fortunately, Congress anticipated this ambiguity and resolved it.  Section 1401(f)(6) provides that “Any term used in this section that is defined in section 101 shall have the meaning given that term in section 101.” Section 101 defines “publication” as “the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending” (emphasis added).  Thus, for purposes of term of protection, a sound recording was first “published” when phonorecords were first sold to the public— an eminently sensible result.

I have a harder time making sense of the “transition periods” themselves.  Sound recordings were already protected against reproduction, adaptation, and distribution under state law; so for these rights, the only “transition” is from state-law protection to federal protection.  Why should sound recordings get longer terms of protection than those enjoyed by any other copyrighted works of similar vintage?  One could argue that ownership of some of these recordings had changed hands with the expectation that they would receive protection until February 15, 2067, regardless of their age; so that restricting them to a 95-year term would deprive the new owners of part of the benefit of their bargain.  But if that was the rationale, one would expect the “transition periods” would be longer for older works, rather than shorter, in proportion to the alleged deprivation. For public performance rights, owners are getting a new right that they never had before (unless you count the Erie-based predictions of two federal district courts, one of which has already been overruled (in New York), with the California appeal still pending).  For most of the recordings, the royalties from the new public performance right might be expected to roughly compensate for the new term limits.  A “transition period” for older sound recordings might be justified on the ground that the owners of those recordings never previously had any opportunity to get public performance royalties at all.  (That is strictly a “natural right” rationale, rather than a utilitarian one, as giving owners of existing works any additional term cannot incentivize them to create new works.)  But again, if that was the rationale, one would expect the “transition periods” would be longer for older works, rather than shorter.  Under a fixed 95-year term, newer works will already get more time to earn royalties from public performances than will older ones.  Moreover, because of the settlement agreements made with the major record labels, the vast majority of rights owners have already received some compensation for public performances of their recordings.  The “transition periods” seem designed simply to give the owners of popular sound recordings from the “golden age” a few extra years of royalties at the expense of the public domain.  (Nonetheless, one must acknowledge that the “transition periods” are a vast improvement over the original version of the CLASSICS Act.)

Lack of consent:  Section 1401(d)(1) defines consent as one would expect:  a digital audio transmission of a pre-1972 sound recording shall “be considered to be authorized and made with the consent of the rights owner if the transmission is made pursuant to a license agreement voluntarily negotiated at any time between the rights owner and the entity performing the sound recording.”  In addition, section 1401(b) provides in the alternative for a statutory license: a digital audio transmission of a pre-1972 sound recording shall “be considered to be authorized and made with the consent of the rights owner if” the transmission would be exempt under section 114(d)(1), or would be subject to the statutory license in section 114(d)(2), provided the applicable royalties are paid.  Likewise, an ephemeral reproduction is considered authorized if it meets the conditions of the statutory license in section 112(e) and the applicable royalty is paid.

Remedies:  Section 1401(a)(1), quoted above, subjects unauthorized “covered activity” to the usual civil remedies in section 502 (temporary and permanent injunctions), section 503 (impoundment and disposition), section 504 (actual damages and defendant’s profits, or statutory damages), and section 505 (costs and attorney’s fees), and (for violations of anti-circumvention or CMI), in section 1203.  Significantly, section 506 is omitted from the list, so there are no criminal penalties for the unauthorized use of a pre-1972 sound recording. (Moreover, under the preemption provisions, described below, it appears that state-law anti-bootlegging laws are preempted as well.)

Those familiar with copyright law know that a plaintiff cannot recover statutory damages or attorney’s fees unless it has registered the copyright before the infringement commenced (or, for infringement of a published work, within 90 days of first publication).  [17 U.S.C. §412  Because pre-1972 sound recordings are not being given a full federal copyright, they cannot be registered in the usual manner.  Thus, the new statute provides that section 412 does not apply.  [§1401(f)(5)(C)]  Instead, the Act provides for a “filing requirement” to permit a rights owner to recover statutory damages and attorney’s fees.  Under section 1401(f)(5)(A)(i), “an award of statutory damages or of attorneys’ fees … may be made with respect to an unauthorized use of a [pre-1972] sound recording … only if (I) the rights owner has filed with the Copyright Office a schedule that specifies the title, artist, and rights owner of the sound recording,” as provided in regulations that the Register of Copyrights is required to adopt within 180 days; and (II) the use occurs more than 90 days after that information “is indexed into the public records of the Copyright Office.”

The statute also provides an alternative limitation on statutory damages and attorney’s fees that depends both on action by the transmitting entity and inaction by the rights owner.  Under section 1401(f)(5)(B)(i), “any entity that, as of the date of enactment of this section, performs a [pre-1972] sound recording … by means of a digital audio transmission” may file its contact information with the Copyright Office, pursuant to regulations that must be adopted within 30 days of enactment.  “The Register of Copyrights may accept [such] filings … only until the 180th day after the date of enactment.”  §1401(f)(5)(B)(ii).  If the defendant does so, no award of statutory damages or attorney’s fees may be made against it, “if the use occurs before the end of the 90-day period beginning on the date on which the entity receives a notice” from the rights owner that “identifies the sound recording in a schedule conforming to the requirements prescribed by the regulations issued under subparagraph (A).”  (This overlooks the fact that “the regulations issued under subparagraph (A)” won’t exist until 180 days after enactment.  Apparently the rights owner will have to guess in advance what the regulations will require.)  If the notice is undeliverable, the 90-day period begins on the date of the attempted delivery.

What is the relationship between the two limitations on statutory damages and attorney’s fees?  Because contact information can only be filed until 180 days after enactment, and only for entities that are already performing a sound recording, it appears that subsection 1401(f)(5)(B) was intended to be a transitional measure. (This is confirmed by the legislative history: Senate Report 115-339 says (at p. 19): “This contact information database will operate up to 180 days after enactment after which the database of works by copyright owners will control whether statutory damages and attorneys’ fees are available.”)  But subsection 1401(f)(5)(A) begins with the proviso “Except in the case of a transmitting entity that has filed contact information for that transmitting entity under subparagraph (B), …”.   Thus, if a transmitting entity files contact information within 180 days, subsection (f)(5)(B) applies (notwithstanding the apparent intent that it operate only as a transitional measure), and rights owners can recover statutory damages or attorney’s fees against that transmitting entity only by sending them a notice identifying its sound recordings.  For transmitting entities that do not file contact information, subsection (f)(5)(A) applies, and rights owners can recover statutory damages or attorney’s fees only if they file a schedule with the Copyright Office identifying its sound recordings.  In either case, statutory damages and attorney’s fees can only be recovered for acts that occur more than 90 days after the notice is sent or the filing is made.  To preserve the right to recover statutory damages and attorney’s fees, therefore, rights owners will have to send a notice to all transmitting entities that file contact information and they will have to file a schedule with the Copyright Office.  (Why Congress chose this baroque procedure, instead of simply granting a regular copyright to pre-1972 sound recordings and allowing or requiring them to be registered in the usual manner, is unexplained.)

Remedies are subject to the usual three-year statute of limitations in section 507  [§1401(f)(2)] and to the usual equitable defenses [§1401(f)(4)].  Section 230 of the Communications Decency Act (47 U.S.C. §230) does not apply as a defense, as the Act specifies that section 1401 is a “law pertaining to intellectual property,” to which section 230 does not apply. [§1401(g)] [Eric’s comment: compare how Congress handled the Defend Trade Secrets Act differently.]

Limitations and Exceptions:  The Act provides that the exclusive rights protected by section 1401 are subject to the exceptions and limitations contained in section 107  (fair use), section 108 (uses by libraries and archives), section 109 (first-sale doctrine), section 110 (specified public performances), and section 112(f) (ephemeral recordings).  [§1401(f)(1)(A)]  Section 108(h), which allows libraries and archives to reproduce, distribute, perform or display a published work “in facsimile or digital form” during the last 20 years of its term, for purposes of preservation, scholarship, or research, unless “the work is subject to normal commercial exploitation” or “a copy or phonorecord can be obtained at a reasonable price,” applies to pre-1972 sound recordings for the entire remaining term of protection.  [§1401(f)(1)(B)]

Congress also resolved a split in the lower courts by expressly making uses of pre-1972 sound recordings subject to the four “safe harbors” for Internet service providers in section 512.  [§1401(f)(3)]

Noncommercial Use of Orphan Works:  Under subsection 1401(c), a person may make a noncommercial use of a pre-1972 sound recording that “is not being commercially exploited by or under the authority of the rights owner,” if three additional conditions are met:  (A) the person “makes a good faith, reasonable search for, but does not find, the sound recording” either in the records of the Copyright Office (as provided below), or “on services offering a comprehensive set of sound recordings for sale or streaming”; (B) the person files a notice identifying the sound recordings and the nature of the use in the Copyright Office; and (C) within 90 days after the notice “is indexed into the public records of the Copyright Office,” the rights owner does not file a notice opting out of the noncommercial use.  [§1401(c)(1)]

The statute does not define “noncommercial use,” but it does exclude two possible definitions.  First, “merely recovering costs of production and distribution of a sound recording resulting from a use otherwise permitted under this subsection does not itself necessarily constitute a commercial use of the sound recording.” [§1401(c)(2)(A)]  Second, “the fact that a person engaging in the use of a sound recording also engages in commercial activities does not itself necessarily render the use commercial.” [§1401(c)(2)(B)]  (The word “necessarily” in those two sentences could be grammatically redundant, but it might also be used to negate the meaning of those sentences, because it implies that “merely recovering costs” or “engag[ing] in [other] commercial activities” might “constitute a commercial use” in some circumstances.)   The statute also provides that filing a notice of noncommercial use “does not itself affect any limitation” in sections 107, 108, 109, 110, or 112(f).  [§1401(c)(2)(C)]

Subsection 1401(c)(3) requires the Register of Copyrights to adopt regulations within 180 days of enactment to provide “the form, content, and procedures” for filing notices of noncommercial use; and to “provide specific, reasonable steps that, if taken by a filer, are sufficient to constitute a good faith, reasonable search … to determine whether a recording is being commercially exploited.”  Subsection 1401(c)(4) provides compliance with the latter “shall be sufficient, but not necessary,” to satisfy the requirement of a good faith, reasonable search; and it provides a safe harbor for a person who makes a noncommercial use of a pre-1972 sound recording, and who “made a good faith, reasonable search … without finding commercial exploitation of the sound recording by or under the authority of the rights holder.”

Subsection 1401(c)(5) requires the Register of Copyrights to adopt regulations within 180 days of enactment, to provide “the form, content, and procedures” for the rights owner of a sound recording to “file notice opting out of the covered activity described in the notice.” Such notices must be filed within 90 days of the date a notice of noncommercial use “is indexed into the public records of the Copyright Office.” Filing an opt-out notice does not itself enlarge or diminish any limitation contained in sections 107, 108, 109, 110, or 112(f).  [§1401(c)(5)(B)]

Subsection 1401(c)(6)(A) provides a civil penalty of between $250 and $1,000 per notice for “[a]ny person who willfully engages in a pattern or practice of filing a notice of noncommercial use of a sound recording … fraudulently describing the use proposed, or knowing that the use proposed is not permitted under this subsection.”  Subsection 1401(c)(6)(B) provides a civil penalty of between $250 and $1,000 per notice for “[a]ny person who files an opt-out notice … knowing that the person is not the rights owner or authorized to act on behalf of the rights owner.”  A person who makes a pattern or practice of filing fraudulent opt-out notices shall be fined at least $10,000 for each such notice.  “Knowing” is defined to mean actual knowledge, “deliberate ignorance” (i.e., willful blindness), or “grossly negligent disregard of the truth or falsity of the information.” [§1401(c)(6)(C)]

Ownership:  The initial rights owner is determined by state law, as it existed before the date of enactment.  [§1401(l)(2)(A)]  Transfers occurring after the date of enactment are governed by sections 201(d) and (e) and section 204 of the Copyright Act.  [§1401(h)(1)(A) and (l)(2)(B)]   (Section 204 requires that any transfers of an exclusive right must be made in a writing signed by the transferor.)  Rights owners are exempted from the requirement that they register the work before filing an action for a violation of section 1401.  [§1401(h)(1)(B)]

Collection and Distribution of Royalties:  Subsection 1401(b)(2) provides for the collection of royalties under the statutory license in accordance with section 112(e) and section 114(f).

Currently, royalties from the statutory license for digital audio transmissions are distributed according to section 114(g), which allocates 50 percent to the sound recording copyright owner, 45 percent to featured artists, 2.5 percent to non-featured musicians, and 2.5 percent to non-featured vocalists.  [17 U.S.C. §114(g)]  (Under Title III of the new legislation, the AMP Act, a portion of the amount due to the sound recording copyright owner or to the featured artists are to be paid to producers, mixers, and sound engineers.)

Under the CPA Act, for voluntary agreements entered into on or after the date of enactment, subsection 1401(d)(2) provides that the licensee shall pay “50 percent of the performance royalties for that transmission due under the license” to “the collective designated to distribute receipts from” the §114(f) statutory license (currently SoundExchange); and those payments “shall be fully credited as payments due under the license.”  [§1401(d)(2)(A)]  These royalties are to be distributed to featured artists and non-featured musicians and vocalists in the same proportions as under §114(g).  [§1401(d)(3)]  This accomplishes the same split of royalties that governs digital audio transmissions for post-1972 sound recordings, but it avoids calling the rights owner of a pre-1972 sound recording a “copyright owner.”

For certain agreements entered into before the date of enactment (voluntary agreements made in 2018, or settlement agreements made with “a preexisting satellite digital audio radio service,” i.e., Sirius XM Radio, Inc., in 2015 or later), the rights owner must pay to the collective “50 percent of the difference between … the right’s owner’s total gross performance royalty fee receipts or settlement monies received” and “the right’s owners total payments for outside legal expenses … directly attributable to the license or settlement agreement.”  [§1401(d)(2)(B)]  As with the above royalties, these funds are to be distributed to featured artists and non-featured musicians and vocalists in the same proportions as under §114(g). [§1401(d)(3)]

For any other voluntary agreements entered into before the date of enactment, the licensee is not required to make any payments other than those provided in the license.  [17 U.S.C. §1401(d)(4)]

Preemption:  There are two preemption provisions in the legislation.  Section 1401(e) preempts certain causes of action that arose before the date of enactment; while an amended version of section 301(c) preempts certain causes of action that arise on or after the date of enactment.

Subsection 1401(e)(1) says:  “This section preempts any claim of common law copyright or equivalent right under the laws of any State arising from a digital audio transmission or reproduction that is made before the date of enactment of this section of a sound recording fixed before February 15, 1972, if” two conditions are met: (A) the transmission would have been exempt under section 114(d)(1), or would have satisfied the requirements for the statutory license in section 114(d)(2), if the sound recording had been fixed after February 15, 1972; and (B) either (i) the transmitting entity pays any statutory royalty due within 270 days of enactment (about nine months), OR (ii) the transmitting entity pays the royalty due under a voluntary agreement (including a settlement agreement) with the rights holder.

Subsection 1401(e)(2) provides that a “claim of common law copyright or equivalent right” includes “a claim that characterizes conduct … as an unlawful distribution, act of record piracy, or similar violation.”  So, the label doesn’t matter, as long as the claim arises from a digital audio transmission or reproduction.

Subsection 1401(e)(3) says that “Nothing in this section may be construed to recognize or negate the existence of public performance rights in sound recordings under the laws of any State.”  In other words, whether a public performance right exists under State law (as a default matter) is still up to the individual states.  I don’t think “the laws of any State” is limited to state statutes; but it is curious that the general preemption provision (below) uses the slightly different phrase “under the common law or statutes of any State.”

To summarize, subsection 1401(e) only preempts claims that arise before the date of enactment, only for digital audio transmissions or reproductions, and only if royalties are or were paid (or the transmission would have been exempt).  (As a result, the CPA Act does not moot the appeal currently pending in the California Supreme Court, although the parties may decide to settle in light of the Act.)  One ambiguity is whether this section covers all reproductions or only those that are incidental to a digital audio transmission.  Given that the statutory license only covers incidental reproductions, that is the better interpretation.

The Act also amends the general preemption provision, 17 U.S.C. §301.  Former section 301(c) provided an exception, specific to sound recordings, to the general preemption provision of section 301(a), that read:  “With respect to sound recordings fixed before February 15, 1972, any rights or remedies under the common law or statutes of any State shall not be annulled or limited by this title until February 15, 2067. The preemptive provisions of subsection (a) shall apply to any such rights and remedies pertaining to any cause of action arising from undertakings commenced on and after February 15, 2067. Notwithstanding the provisions of section 303, no sound recording fixed before February 15, 1972, shall be subject to copyright under this title before, on, or after February 15, 2067.”  That provision left all pre-1972 sound recordings to state law and allowed all of them to be protected until 95 years after February 15, 1972.

The first sentence of amended section 301(c) is essentially the same as the third sentence of former section 301(c): “Notwithstanding the provisions of section 303, and in accordance with chapter 14, no sound recording fixed before February 15, 1972, shall be subject to copyright under this title.”  In other words, the Act provides neighboring rights under section 1401, not full federal copyright.  (But section 1401 includes exclusive rights of reproduction, adaptation, and distribution, in addition to digital audio transmission, so the neighboring right is essentially the same as a full federal copyright.)

The second sentence of amended section 301(c) preempts broadly: “With respect to sound recordings fixed before February 15, 1972, the preemptive provisions of subsection (a) shall apply to activities that are commenced on and after the date of enactment of the Classics Protection and Access Act.”  So, henceforth, all future activities with respect to pre-1972 sound recordings are preempted, except that the next two sentences contain a reservation:

Nothing in this subsection may be construed to affirm or negate the preemption of rights and remedies pertaining to any cause of action arising from the nonsubscription broadcast transmission of sound recordings under the common law or statutes of any State for activities that do not qualify as covered activities under chapter 14 undertaken during the [term of protection].  Any potential preemption of rights and remedies related to such activities undertaken during that period shall apply in all respects as it did the day before the date of enactment of the Classics Protection and Access Act.

As explained above, “covered activities” include reproduction, adaptation, distribution, and digital audio transmission.  The only “activities” I can think of that “do not qualify as covered activities” are public performances by means other than digital audio transmission, such as analog transmissions and audiovisual transmissions.  If any state-law causes of action for those transmissions exist, the reservation potentially preserves them, but only if they also “aris[e] from the nonsubscription broadcast transmission of sound recordings” during the term of protection.  “Broadcast transmission” is likely limited to over-the-air broadcasting, and “nonsubscription” does not include pay services (such as cable TV).  So, only causes of action arising from “free” (or advertiser-supported) over-the-air transmissions are reserved.

To summarize: the CPA Act preempts state-law causes of action arising before the date of enactment from digital audio transmission or reproduction of pre-1972 sound recordings, but only if they otherwise would be exempt or covered by the statutory royalty.  The CPA Act preempts all state-law causes of action arising on or after the date of enactment for any use of pre-1972 sound recordings, including digital audio transmissions, except that it stays neutral with regard to state-law actions (if any) for public performances, based on non-subscription broadcast transmissions of sound recordings that are not digital audio transmissions.

Conclusion

On balance, the CPA Act is a distinct improvement over the previous state of affairs.  Giving pre-1972 sound recordings federal protection against unauthorized reproduction and distribution, instead of leaving them to the vagaries of uncertain state common law (which was never intended to apply post-publication), is beneficial.  Giving pre-1972 sound recordings federal protection against digital audio transmission gives them a new public performance right that they never had; but it eliminates the discrepancy between pre-1972 sound recordings and post-1972 sound recordings, and it largely obviates the necessity of state-by-state litigation to determine the existence of a public performance right under state law.  The Act places term limits on pre-1972 sound recordings (despite the “transition periods” that make those terms longer than those for post-1972 sound recordings).  It ensures that pre-1972 sound recordings are subject to the most important exceptions and limitations of federal copyright law, including fair use, the first-sale doctrine, and the safe harbor for Internet service providers.  Finally, it introduces a new provision on non-commercial use of orphan pre-1972 sound recordings that might serve as a model for expansion to other types of orphan works.

On the downside, the preemption provisions leave untouched the possibility of a state-law public performance right for nonsubscription broadcast transmissions that are not digital audio transmissions, so the possibility of state-by-state litigation is not entirely eliminated; and the Act continues the unfortunate practice of Congress largely blessing negotiated agreements between interest groups, leaving us with an unnecessarily complicated regulatory scheme codified into law.  (Title I, the Music Modernization Act, is an even more extreme example.)  While full federalization of pre-1972 sound recordings would have been simpler, and likely would have been preferable, the Classics Protection and Access Act is an achievement that should be celebrated.

Call for Papers/Participation: 9th Annual Internet Law Works-in-Progress, SCU, March 2, 2019

We invite your participation in the Ninth Annual Internet Law Works-in-Progress conference at Santa Clara University School of Law, March 2, 2019. The conference series is co-sponsored by the High Tech Law Institute at Santa Clara University School of Law and the Innovation Center for Law and Technology at the New York Law School.

The conference enables Internet law scholars from around the world to receive feedback about their in-process research from their academic peers. We broadly construe the scope of topics that fit under the Internet Law umbrella. More background about the series.

Participation Options

You can participate in the conference in one of three ways:

papers-in-progress. Type 1 papers are drafts that are far enough along to benefit from peer feedback but still early enough to accommodate substantial feedback. They have the following attributes: (1) the paper draft is submitted no later than February 11, 2019, noon Pacific time (no extensions!), and (2) as of March 2, 2019, the draft has not been circulated/accepted for publication or posted to SSRN or a similar site. Type 2 papers are due at the same time, but they will have been circulated/accepted for publication or posted to SSRN or a similar site prior to March 2, 2019, which means they may not incorporate substantial peer feedback as easily. We may allocate additional presentation time to Type 1 papers; and we may allocate less time to Type 2 papers and/or require that they be presented by a third-party commenter instead of the author.

projects-in-progress. These are presentations on any academic project that doesn’t meet the paper-in-progress parameters, ranging from nearly finished papers to half-baked ideas.

discussant. Space permitting, we welcome other scholars to join the conversation as active audience participants.

Each participant may make only one presentation at the conference. If you seek an exception to this rule, contact me ASAP.

How to Participate

If you would like to participate, email Eric Goldman (egoldman@gmail.com) the following information by the priority deadline of December 3, 2018, noon Pacific time:

* your name, email address and institutional affiliation
* your preferred participation option, including (if applicable) your anticipated paper type
* the title of your paper/project (if applicable)
* if you would be willing to serve as a commentator-presenter for someone else’s paper (if we create such roles)

We expect to reply to participation requests by December 7, 2018. We will accommodate participation requests after the priority deadline on a space-available basis. However, we’ve typically instituted a waitlist immediately after the priority deadline, so don’t delay!

There is no conference participation fee, but all participants are responsible for their own travel and lodging expenses. We will provide further travel information soon. There are no publication obligations associated with presenting at the conference.

Game Night
Game night is an integral part of the conference, and regular attendees plan their travel schedules so that they can fully enjoy the festivities. This year, game night will start with a fun team-based game (details to come). After that, we’ll have a variety of game offerings, including guided Dungeons & Dragons quests (back by popular demand!), the new CIA card game from Techdirt, Cards Against Humanity, and more!

More Information

The conference website is just a placeholder for now, but more information will be added soon. Contact Eric Goldman at egoldman@gmail.com with any questions or comments.

We look forward to seeing you in Santa Clara! Thanks, Eric.

Section 230 Applies to Defend Trade Secret Act Claims–Craft Beer Stellar v. Glassdoor

Glassdoor is a consumer review site for employees reviewing employers. The plaintiff in this case is a franchisor. Purported employees of a franchisee posted six negative reviews about the franchisee on Glassdoor. The reviews mentioned the francishor’s CEO,  Suzanne Schalow, by name. Schalow sent removal demands. Glassdoor removed one of the reviews, but someone (the author?) revised and resubmitted the review. Glassdoor refused to remove the edited review because it met Glassdoor’s standards. The franchisor sued Glassdoor for numerous claims. Glassdoor defended on Section 230 grounds.

This is an easy Section 230 case, especially in light of the First Circuit’s Jane Doe 1 v. Backpage ruling. The plaintiff complained about third party reviews, so Section 230 presumptively applied. The plaintiff argued that Glassdoor created/developed the reviews because it removed a review and then allowed it to return. The court disagreed: “Glassdoor’s decisions to remove the ‘review,’ and to permit an updated version to be re-posted, constituted the exercise of a traditional editorial function. Without more, Glassdoor cannot be deemed responsible for creating or developing the content.”

The case broke some interesting new ground with respect to the plaintiff’s Defend Trade Secrets Act (DTSA) claim. As far as I know, this is the first time a court has discussed the intersection between Section 230 and the DTSA. The DTSA expressly made its claims subject to Section 230 despite Section 230(e)(2)’s exclusion for “intellectual property” claims:

The initial question here is whether the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836, et seq., is such an “intellectual property law.” Although perhaps counterintuitive—trade secrets are generally characterized as intellectual property (including even, at times, by Congress)—the DTSA itself plainly provides that it “shall not be construed to be a law pertaining to intellectual property for purposes of any other Act of Congress.” When the language of a statute is plain, the Court’s “sole function” is to enforce the law “according to its terms.” Because Congress has clearly dictated that the DTSA should not be construed to be a law “pertaining to intellectual property” for the purposes of any other Act of Congress, the DTSA is clearly not such a law for the purposes of § 230(e)(2). The DTSA claim is thus subject to the immunity provisions of § 230, and accordingly that claim will be dismissed.

I published a law review article EXACTLY addressing this point: “The Defend Trade Secrets Act Isn’t an ‘Intellectual Property’ Law.” The article explains why Congress made such a “counterintuitive” declaration. Yay for practical articles coming from academia’s ivory tower! Boo that I didn’t get cited!

Case citation: Craft Beer Stellar, LLC v. Glassdoor, Inc.,  1:18-cv-10510-FDS (D. Mass. Oct. 17, 2018)

FOSTA Doesn’t Help Pro Se Litigant’s Defamation Claim Against Facebook

This is a typical pro se defamation lawsuit against Facebook. The plaintiff claims that other Facebook users defamed him in a Facebook group. The court treats this as an easy Section 230 case. The court applies the standard three-part test for a Section 230(c)(1) defense:

1) Facebook is an ICS provider (cites to Sikhs for Justice and Fraley). Mark Zuckerberg get lumped into this bucket too.

2) Third party content. “Igbonwa alleges that the offensive posts were by other Facebook users and does not allege that Facebook had any role in creating the content of the posts.”

3) Publisher/Speaker Claims:

all of Igbonwa’s claims turn on the theory that Defendants wrongfully permitted third parties to post defamatory and threatening statements about him and refused to remove the content or provide Igbonwa with the information he needed to pursue claims against the individuals directly. The harm he alleges though (injury to his reputation and being subject to harassment and death threats) is the result of the content of the posts, not the mere fact that Defendants permitted third parties to post statements about Igbonwa. Because Igbonwa can only establish causation of harm on his claims based on the content of the messages that were posted, the Court concludes that all of his claims treat Defendants as publishers

This appears to be the same line of argumentation that has been explored in the social media/”material support for terrorist” claims.

The court grants dismissal without leave to amend, except for a narrow claim to try to identify the original posters.

The case’s only mildly interesting twist came when the plaintiff noted that FOSTA’s preamble of FOSTA said that it amended Section 230 for sex trafficking and “other purposes,” and he claims this “other purposes” language opened up the door to his lawsuit. It’s the kind of argument we only see from pro ses, and it goes nowhere:

The Court rejects Igbonwa’s reliance on vague language in the preamble of the Allow States and Victims to Fight Online Sex Trafficking Act of 2017 in support of the argument that CDA immunity does not apply to his claims. Although there is vague language in the preamble that refers to “the enforcement against providers and users of interactive computer services of … criminal and civil law relating to sexual exploitation of children or sex trafficking, and for other purposes,” Igbonwa points to nothing in the legislative history that suggests this language was intended to eliminate the immunity that is afforded providers of interactive computer services under the CDA outside of the context of sexual exploitation of children and sex trafficking. Therefore, the Court declines to adopt the broad reading of this law that Igbonwa advocates.

A predictable result, but still, good to know.

Case citation: Igbonwa v. Facebook, Inc., 2018 WL 4907632 (N.D. Cal. Oct. 9, 2018)

More SESTA/FOSTA-Related Posts:

Constitutional Challenge to FOSTA Dismissed for Lack of Standing (Guest Blog Post)
An Update on the Constitutional Court Challenge to FOSTA–Woodhull Freedom v. US (Guest Blog Post)
Indianapolis Police Have Been “Blinded Lately Because They Shut Backpage Down”
Constitutional Challenge Against FOSTA Filed–Woodhull v. US (Guest Blog Post)
Catching Up on FOSTA Since Its Enactment (A Linkwrap)
More Aftermath from the ‘Worst of Both Worlds FOSTA’
‘Worst of Both Worlds’ FOSTA Signed Into Law, Completing Section 230’s Evisceration
Backpage Loses Another Section 230 Motion (Again Without SESTA/FOSTA)–Florida Abolitionists v. Backpage
District Court Ruling Highlights Congress’ Hastiness To Pass ‘Worst of Both Worlds FOSTA’– Doe 1 v. Backpage
More on the Unconstitutional Retroactivity of ‘Worst of Both Worlds FOSTA’ (Guest Blog Post)
Senate Passes ‘Worst of Both Worlds FOSTA’ (Linkwrap)
Why FOSTA’s Restriction on Prostitution Promotion Violates the First Amendment (Guest Blog Post)
SESTA’s Sponsors Still Don’t Understand Section 230 (As They Are About to Eviscerate It)
Can the ‘Worst of Both Worlds FOSTA’ Be Salvaged? Perhaps…and You Can Help (URGENT CALL TO ACTION)
Congress Probably Will Ruin Section 230 This Week (SESTA/FOSTA Updates)
What’s New With SESTA/FOSTA (January 17, 2018 edition)
New House Bill (Substitute FOSTA) Has More Promising Approach to Regulating Online Sex Trafficking
* My testimony at the House Energy & Commerce Committee: Balancing Section 230 and Anti-Sex Trafficking Initiatives
How SESTA Undermines Section 230’s Good Samaritan Provisions
Manager’s Amendment for SESTA Slightly Improves a Still-Terrible Bill
Another Human Trafficking Expert Raises Concerns About SESTA (Guest Blog Post)
Another SESTA Linkwrap (Week of October 30)
Recent SESTA Developments (A Linkwrap)
Section 230’s Applicability to ‘Inconsistent’ State Laws (Guest Blog Post)
An Overview of Congress’ Pending Legislation on Sex Trafficking (Guest Blog Post)
The DOJ’s Busts of MyRedbook & Rentboy Show How Backpage Might Be Prosecuted (Guest Blog Post)
Problems With SESTA’s Retroactivity Provision (Guest Blog Post)
My Senate Testimony on SESTA + SESTA Hearing Linkwrap
Debunking Some Myths About Section 230 and Sex Trafficking (Guest Blog Post)
Congress Is About To Ruin Its Online Free Speech Masterpiece (Cross-Post)
Backpage Executives Must Face Money Laundering Charges Despite Section 230–People v. Ferrer
How Section 230 Helps Sex Trafficking Victims (and SESTA Would Hurt Them) (guest blog post)
Sen. Portman Says SESTA Doesn’t Affect the Good Samaritan Defense. He’s Wrong
Senate’s “Stop Enabling Sex Traffickers Act of 2017”–and Section 230’s Imminent Evisceration
The “Allow States and Victims to Fight Online Sex Trafficking Act of 2017” Bill Would Be Bad News for Section 230
WARNING: Draft “No Immunity for Sex Traffickers Online Act” Bill Poses Major Threat to Section 230
The Implications of Excluding State Crimes from 47 U.S.C. § 230’s Immunity

Constitutional Challenge to FOSTA Dismissed for Lack of Standing (Guest Blog Post)

by guest blogger Alex F. Levy

On September 24, 2018, the U.S. District Court of the District of Columbia dismissed a case challenging the constitutionality of the Allow States and Victims to Fight Online Sex Trafficking Act (FOSTA). FOSTA, which President Trump signed into law on April 11, 2018, aimed to reduce sex trafficking by increasing liability for internet intermediaries that facilitated commercial sexual encounters (both consensual and non-consensual). Despite its laudable purpose, however, it was opposed by anti-trafficking activists, sex workers, civil liberties advocates, and technology scholars, among many others. On June 28, 2018, five plaintiffs sued to enjoin the law, arguing (among other things) that it violated the First Amendment. (I filed a declaration in support.) Subsequent filings (and a hearing) touched on the question of whether FOSTA actually affected speech at all — and, if it did, whether it exclusively affected speech proposing a crime, which is not protected under the First Amendment.

The court did not, in the end, directly address the constitutional issue, but instead dismissed the case on grounds that the plaintiffs lacked standing to bring it in the first place. According to the court, none of the plaintiffs faced a credible fear of prosecution; therefore, none could point to a cognizable harm. This is unconvincing for reasons I have detailed elsewhere.

But most importantly, the decision is evidence of how little the courts — along with the legislature and the DOJ — understand about the reality of anti-trafficking efforts based in harm reduction. The premise of the opinion, as it concerns three of the plaintiffs, is that making sex workers’ lives safer and their jobs easier does not violate FOSTA (and that therefore these advocate-plaintiffs are not at risk of being prosecuted). At an oral argument on July 19, the government drew an analogy to harm-reduction measures for drug use:

MR. COHEN: …We’ve talked about analogies. It would be somewhat similar to prosecuting a health-services group for handing out needles to heroin users and arguing that that was somehow promoting heroin use or facilitating the use of heroin. I mean, no one would do that in their right mind. It’s just — it’s not a realistic possibility here of prosecution.

THE COURT: Yeah. So in the absence of that being a realistic possibility, how do they get standing?

MR. COHEN: We don’t believe there is standing in this case, Your Honor, and that’s why we moved as well to dismiss.

(emphasis added)

But then, in an editorial published several weeks later, on August 30, Deputy Attorney General Rod Rosenstein wrote that “[b]ecause federal law clearly prohibits injection sites, cities and counties should expect the Department of Justice to meet the opening of any injection site with swift and aggressive action,” suggesting that the prosecutions that “no one would do…in their right mind” loom on the horizon.

Just like safe-injection sites and harm-reduction measures for drug users, the kind of advocacy that some of the Woodhull plaintiffs engage in easily could be prosecuted under laws designed to suppress the underlying activity — in this case, sex work. The reality is that making sex work safer and reducing trafficking often is a matter of “promoting the prostitution of another.” Advocates have suspected as much for awhile, and Rosenstein confirmed that it’s true: FOSTA — and similar laws — do put many advocates at risk of prosecution. The court should have recognized this and allowed the lawsuit to proceed.

Plaintiffs will likely appeal, but if they lose, it is only a matter of time before the government decides to weaponize FOSTA against one of their peer organizations. Such a defendant will by definition have standing, and the constitutional question will be decided at that point. But in the meantime, worthy harm-reduction measures and advocacy efforts will become riskier. Once again, it’s vulnerable populations — including trafficking victims — who will pay the price.

Eric’s comments: This is an unfortunate ruling. However, like the Backpage v. Lynch ruling, the court’s interpretation of the statute may help future defendants even if this lawsuit ultimately fails. Specifically, the court says “FOSTA targets specific acts of illegal prostitution – not the abstract topic of prostitution or sex work.” 2421A(a) requires that the defendant intentionally facilitate or promote the “prostitution of another person,” and the court says that language “is plainly calculated to ensnare only specific unlawful acts with respect to a particular individual.” The court adds: “Section 2421A will require the Government to show not simply that the defendant was aware of a potential result of the criminal offense, but instead that the defendant intended to ‘explicitly further[ ]’ a specified unlawful act.”

This implies that general awareness of prostitution won’t be a proper basis of a 2421A prosecution; and this seemingly puts the burden on prosecutors to show defendant scienter about specific individuals, a non-trivial prosecutorial challenge for most services that aren’t seeking the promotion of commercial sex on their services. Thus, as a specific example, the court seems to suggest that dating sites typically will avoid liability under 2421A because they never will have sufficient scienter to intend that their “conduct produce the specific result.”

While I think the court’s statements are pretty straightforward based on the statutory language, I think these are helpful scienter clarifications. They should deter prosecutions against many services that get unwanted commercial sex promotions–and to the extent these scienter requirements translate to FOSTA-enabled civil claims, they should similarly make such cases extremely difficult to pursue.

Case citationWoodhull Freedom Foundation v. United States, 2018 WL 4568412 (D.D.C. Sept. 24, 2018)

For the case filings and more, see the EFF case library.

More SESTA/FOSTA-Related Posts:

An Update on the Constitutional Court Challenge to FOSTA–Woodhull Freedom v. US (Guest Blog Post)
Indianapolis Police Have Been “Blinded Lately Because They Shut Backpage Down”
Constitutional Challenge Against FOSTA Filed–Woodhull v. US (Guest Blog Post)
Catching Up on FOSTA Since Its Enactment (A Linkwrap)
More Aftermath from the ‘Worst of Both Worlds FOSTA’
‘Worst of Both Worlds’ FOSTA Signed Into Law, Completing Section 230’s Evisceration
Backpage Loses Another Section 230 Motion (Again Without SESTA/FOSTA)–Florida Abolitionists v. Backpage
District Court Ruling Highlights Congress’ Hastiness To Pass ‘Worst of Both Worlds FOSTA’– Doe 1 v. Backpage
More on the Unconstitutional Retroactivity of ‘Worst of Both Worlds FOSTA’ (Guest Blog Post)
Senate Passes ‘Worst of Both Worlds FOSTA’ (Linkwrap)
Why FOSTA’s Restriction on Prostitution Promotion Violates the First Amendment (Guest Blog Post)
SESTA’s Sponsors Still Don’t Understand Section 230 (As They Are About to Eviscerate It)
Can the ‘Worst of Both Worlds FOSTA’ Be Salvaged? Perhaps…and You Can Help (URGENT CALL TO ACTION)
Congress Probably Will Ruin Section 230 This Week (SESTA/FOSTA Updates)
What’s New With SESTA/FOSTA (January 17, 2018 edition)
New House Bill (Substitute FOSTA) Has More Promising Approach to Regulating Online Sex Trafficking
* My testimony at the House Energy & Commerce Committee: Balancing Section 230 and Anti-Sex Trafficking Initiatives
How SESTA Undermines Section 230’s Good Samaritan Provisions
Manager’s Amendment for SESTA Slightly Improves a Still-Terrible Bill
Another Human Trafficking Expert Raises Concerns About SESTA (Guest Blog Post)
Another SESTA Linkwrap (Week of October 30)
Recent SESTA Developments (A Linkwrap)
Section 230’s Applicability to ‘Inconsistent’ State Laws (Guest Blog Post)
An Overview of Congress’ Pending Legislation on Sex Trafficking (Guest Blog Post)
The DOJ’s Busts of MyRedbook & Rentboy Show How Backpage Might Be Prosecuted (Guest Blog Post)
Problems With SESTA’s Retroactivity Provision (Guest Blog Post)
My Senate Testimony on SESTA + SESTA Hearing Linkwrap
Debunking Some Myths About Section 230 and Sex Trafficking (Guest Blog Post)
Congress Is About To Ruin Its Online Free Speech Masterpiece (Cross-Post)
Backpage Executives Must Face Money Laundering Charges Despite Section 230–People v. Ferrer
How Section 230 Helps Sex Trafficking Victims (and SESTA Would Hurt Them) (guest blog post)
Sen. Portman Says SESTA Doesn’t Affect the Good Samaritan Defense. He’s Wrong
Senate’s “Stop Enabling Sex Traffickers Act of 2017”–and Section 230’s Imminent Evisceration
The “Allow States and Victims to Fight Online Sex Trafficking Act of 2017” Bill Would Be Bad News for Section 230
WARNING: Draft “No Immunity for Sex Traffickers Online Act” Bill Poses Major Threat to Section 230
The Implications of Excluding State Crimes from 47 U.S.C. § 230’s Immunity

Google Successfully Amends Its AdWords TOS to Add Arbitration Clause–Trudeau v. Google

Some AdWords advertisers are suing Google for allegedly misimplementing negative keywords. Google seeks to move the dispute to arbitration. In 2013, Google’s AdWords TOS said:

11 Term. Google may add to, delete from or modify these Terms at any time without liability. The modified Terms will be posted at www.google.com/ads/terms. Customer should look at these Terms regularly. The changes to the Terms will not apply retroactively and will become effective 7 days after posting. However, changes specific to new functionality or changes made for legal reasons will be effective immediately upon notice

An old-school amendment notice fraught with legal peril. In 2017, Google purported to amend the TOS to (among other things) add this provision:

12 Changes to Terms. Google may make non-material changes to these Terms at any time without notice, but Google will provide advance notice of any material changes to these Terms. The Terms will be posted at google.com/ads/terms. Other than changes made under Section 13(G), the changes to the Terms will not apply retroactively and will become effective 7 days after posting. However, changes made for legal reasons will be effective immediately upon notice.

Section 13(G) now says:

G. Future changes to Dispute Resolution Agreement. If Google makes any changes to this Dispute Resolution Agreement (other than a change to Google’s Notice Address), Customer or Advertiser may reject any such change by notifying Google via webform as set forth in Section 13(F) within 30 days of the change. It is not necessary to submit a rejection of the future change to this Dispute Resolution Agreement if Customer or Advertiser had properly opted out of arbitration in compliance with the requirements of Section 13(F). By rejecting a future change, Customer or Advertiser is agreeing that it will arbitrate any dispute in accordance with the language of this Dispute Resolution Agreement, as modified by any changes that Customer or Advertiser did not reject.

Section 13 adds a new arbitration clause, including a 30 day opt-out:

F. 30-day opt out period. Customer (both for itself and for any Advertiser that Customer represents) and Advertiser have the right to opt out of this Dispute Resolution Agreement. A Customer or Advertiser who does not wish to be bound by this Dispute Resolution Agreement (including its waiver of class and representative claims) must notify Google as set forth below within 30 days of the first acceptance date of any version of these Terms containing an arbitration provision (unless a longer period is required by applicable law). Customer’s or Advertiser’s notice to Google under this subsection must be submitted via webform available at adwords.google.com/nav/arbitration. An opt-out notice does not revoke or otherwise affect any previous arbitration agreement between Customer and Google or between Advertiser and Google

The court explained how Google purported to impose the new terms on advertisers:

Google gave notice of the 2017 TOS to the AdWords advertisers through multiple means, including through a direct email to the advertisers, a public blog post, and an alert on the advertisers’ AdWords account. Each notice directed the advertisers to a webpage where they could review and accept the modified terms, which were displayed in a single embedded window. Above the TOS window was the following admonition: “Please review these Terms carefully. They include the use of binding arbitration to resolve disputes rather than jury trials or class actions. Please follow the instructions in the terms below if you wish to opt out of this provision.” Advertisers were then prompted to accept or decline the terms.

Google notified Trudeau of the 2017 TOS by both email and an alert in his AdWords account. Trudeau accepted the 2017 TOS on September 15, 2017 and did not attempt to opt out of the arbitration provision.

There’s a lot not to like about how Google handled things. The original 2013 TOS expressly blocked retroactive changes, yet that’s exactly what Google purported to do with the 2017 arbitration provision. Perhaps more surprisingly, Google gets away with it!

Much of the opinion evaluates some technical legal arguments. The court focuses on some key facts: Trudeau agreed to the amendment and didn’t pursue the opt-out, and the 2017 revisions acted as a novation (thus completely overwriting the 2013 TOS and its contrary provision). Also, the court says Trudeau didn’t vigorously pursue unconscionability arguments. The court rejects Trudeau’s argument that the amendment process was illusory:

[Google] provided ample notice to the advertisers, required them to accept or decline, and gave them a valid opportunity to opt out. Simply put, there was no unilateral amendment of the contract that might render the provision illusory

So what did Google do right here?

  • I think Google’s amendment approach works much better for B2B contracts than B2C contracts. I wonder if the judge would have been as forgiving of Google’s approach if consumers were suing?
  • Providing an opt-out to the arbitration clause is crucial. While I don’t think courts require giving opt-outs for arbitration, it’s a valuable mechanism to enhance the odds of good formation with little risk that many folks will actually pursue the opt-out.
  • Google gave widespread notice of the terms to advertisers, not just posting the new terms on the site.
  • Most critically, Google required advertisers to agree to the new terms, rather than relying on some procedural trick to imply consent. I’m sure some advertisers never clicked to agree to the new terms, but many advertisers are going to keep coming back to AdWords because it’s profitable for them. So Google had the leverage to force advertisers through the new terms–leverage that most sites won’t have. Still, even for sites with less leverage over their customers, this ruling demonstrates that getting a new click on the new terms is legally defensible. Be careful cutting corners on the procedural front!

Case citation: Trudeau v. Google LLC, 2018 WL 4846796 (N.D. Cal. Oct. 3, 2018)