Article Published

My most recent article on the PRO-IP Act has been published in the April issue of Intellectual Property Today. It is available online at http://www.iptoday.com/articles/2008-4-panzer.asp

The PRO-IP Act: Pulling Section 104

As I mentioned yesterday, the Congressional subcommittee reviewing the PRO-IP Act has pulled section 104 from the bill in an effort to make the bill more palatable to legislators at large. In a legal and logical sense, it seems that if we give the subcommittee members - and Rep. Berman in particular - the benefit of the doubt regarding their good intentions, this amendment would have come about for one important reason. Creating a statutory damages statute that allows for damages for each component part of a compilation simply injects too much uncertainty into the legal landscape when using pre-existing copyrighted materials.

The idea of fair use is essential to the continuing creation of new copyrightable subject matter in all media. Whether it is to spur the later creator to wholly new insights or as the basis for development of derivative works, fair use allows a person to use portions of someone else's copyrighted material for things such as criticism, education and parody.

In determining whether incorporation of copyrighted material in a work is "fair use," the courts undertake to analyze the following four factors:

1.the purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes;

2.the nature of the copyrighted work;

3.amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

4. the effect of the use upon the potential market for or value of the copyrighted work.

Because this 4-factor analysis is interpretive, the later author or creator must make his own judgment at the outset of creation as to whether his use will be fair. If the original copyright holder disagrees and a court finds infringement, the later creator will be liable for damages. Changing the statutory damages provision as originally proposed by the PRO-IP Act, simply makes the risk too great for those intending to use materials under the fair use doctrine, and therefore stifles artistic innovation.

While the legislators on the subcommittee assure us that reform of statutory damages is still on the table, it seems that for now logic has prevailed.

Pro-IP Update: Statutory Damages Provision Removed

The House Judiciary Committee's Subcommittee on Courts, The Internet, and Intellectual Property has sent its version of the PRO-IP Act to the full committee, but in the process has removed the proposed amendment to the statutory damages provision of 17 USC 504, which I discussed in my previous post. Clearly the subcommittee members have heard the calls of the many detractors who believe that this provision was poorly thought out.

Rep. John Conyers (D-MI) added a written statement to the record assuring all that the notion of statutory damages for component parts of a compilation remained "subject matter for another day." That should keep the RIAA and MPAA campaign contributions coming in.

PRO-IP Act Serves Only RIAA and Similar Lobbyists...And Not Very Well

What is a single sentence worth? In copyright law, it would appear the answer is: $150,000 per song.

Much commentary has been offered over the last two months since a bill known as the PRO-IP Act was introduced in the House of Represenatives on December 5, 2007. The bill (H.R. 4279), properly known as the "Prioritizing Resources and Organization for Intellectual Property Act of 2007" covers much ground and states its purpose as "to enhance remedies for violations of intellectual property laws." However, the bulk of the focus in the blogosphere and elsewhere online has centered around a single sentence in Section 104 of the bill - a sentence so obviously bought outright by the influence of the RIAA, the MPAA and their ilk.

Section 104 of the PRO-IP Act proposes to replace the second sentence of 17 USC 504(c)(1). Section 504 of the Copyright Act provides for copyright damages - those damages referred to as "statutory damages." In the simplest terms, Section 104 proposes to amend 504(c)(1) so that damages for infringement by illegal copying of an album will be calculated based upon individual songs - not complete albums - thereby multiplying potential damage awards in file sharing cases by 10 or 12 times the current amount in most cases.

As 504(c)(1) stands, "all the parts of a compilation or derivative work constitute one work." This means that if a person illegally downloads a 12-song album, their potential total statutory liability lies between $750 and $150,000. If the PRO-IP Act becomes law, a copyright owner will be "entitled to recover statutory damages for each copyrighted work sued upon that is found to be infringed." This means that illegally downloading the same 12-song album will expose the guilty party to a damage award of up to $1.8 million.

That Congress would so readily hand to the recording industry and other copyright owners a larger sledgehammer with which to bludgeon their fleeing customers is a fine example of influence without intellect. As a copyright attorney I am a strong supporter of the rights of copyright owners. Plainly put, intellectual property is valuable and theft of that property is no different than theft of material goods. However, the proposed damages provision in the PRO-IP bill does nothing to discourage theft by consumers or to encourage the RIAA and its member organizations to update their own failing and outmoded models.

A college student sued by the RIAA is as unlikely to pay a judgment of $1.8 million as he is to pay a judgment of $150,000. Moreover, there is no evidence that the campaign of file sharing lawsuits has done anything to stem the tide of infringement. Simply raising the potential damages by tenfold is a blind shot that clearly has less to do with solving the problem than it does with pleasing these Congressional policymakers' financial backers.

The answer to reducing infringement by mass file sharing lies in education of consumers - primarily at a young age - and the changing of the outmoded business models of the major record labels and other content owners. The PRO-IP bill neither achieves nor encourages either of these. It is simply a legislative bandage bought by the content owners and sold by Congress, when what is truly necessary is reconstructive surgery of the related business and consumer practices. In the meantime, however, the PRO-IP Act's amendment to the damages provision of the Copyright Act should provide the RIAA and others with more cash from larger damage awards and "settlements" for the same infringements that will not stop.