Making the first purchase doctrine work for porn

December 13, 2010

By J. DeVoy

Wouldn’t it be a pleasant surprise if you got $100 in the mail any time someone bought that bookshelf you made in 1995 and sold at a furniture show?  If the porn business plays its cards right, content producers may be able to reap the financial rewards of a similar situation.  But, it likely will come at the cost of an intra-industry lovers’ spat as content producers who focus on traditional media have goals that conflict with streaming-only content and leaner production companies.  Nevertheless, there is an opportunity for everyone to profit if they adapt their models to incorporate new processes.

The first purchase doctrine, previously discussed on this blog here and found in 17 U.S.C. § 109, cuts off a copyright owner’s financial interest in a particular copy once it’s been purchased, allowing it to be resold by subsequent owners.  The relevant statutory language is thus:

[T]he owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

See also Bobbs-Merrill Company v. Straus, 210 U.S. 339 (1908).  This has been the foundation for the secondary market of VHS tapes, video games, DVD’s, cassettes and CD’s for as long as anyone living can recall.  Historically, this has been good for consumers and allowed them to absorb more material than they necessarily would be able or financially inclined to sample.

But then came computers and, more recently, video games that required software installations to be run.  The clear copyright status of a NES cartridge or CD was obfuscated by copies that had to be made when software was loaded from a hard drive into RAM and accessed by the user.   The nature of this changed use led many producers to switch from making purchasers copyright owners and instead giving them only a license in the software, limiting their ability to dispose of it and effectively killing the lawful secondary market.

In the past, whether a user is a licensee or owner of copyrighted material hinged on a two-step inquiry: 1) whether the agreement was labeled a license, and 2) whether the copyright owner retained title to the copy, required its return or destruction, forbade its duplication, or required the transferee to maintain possession of the copy for the agreement’s duration. United States v. Wise, 550 F.2d 1180, 1190-92 (9th Cir. 1977).  The Ninth Circuit refined this position in its recent Vernor v. Autodesk, Inc. decision, finding that a software user is a licensee rather than the owner of a copy where the copyright owner 1) specifies that the user is granted a license, 2) significantly restricts the user’s ability to transfer the software, and 3) imposes notable use restrictions. No. 09-35969, 2010 U.S. App. LEXIS 18957 at *1 (9th Cir. 2010).

This won’t work for studios releasing material on DVD and read-only blu-ray format.  The doctrine is also of minor consequence for video-on-demand and streaming video websites.  But, with some tweaks to meet the standard set forth in Vernor, the adult film business can reap profits off its content’s sales into eternity.

Step one: Start structuring content releases as licenses, rather than sales.  Don’t give the content away, sell the right to use it.  Because there may be back-end income from future sales, the initial sale price could be lowered.  Even if the back-end sales are illusory, it will be easier for the public to swallow this pill if the potential of lower costs is held out to them.  After all, 1) it is a recession, still, and 2) the perceived high price of porn releases is a motivator for pirates’ actions.

Step two: Use technology to restrict the user’s ability to transfer the software.  This has two components within one requirement, the first being to turn porn into “software,” and the second being to restrict transferability through the way the content is accessed, and not merely through harsh words in the licensing agreement.

Turning porn into software can be easily done with computers and gaming systems.  Unless DVD and Blu-ray players are equipped with even nominal processors and hard drive space, more vital technology will be needed to implement this plan.  Some computers now have Blu-ray drives, while almost all have DVD drives; similarly, almost all gaming systems can play DVD’s while Sony’s PlayStation 3 can run Blu-ray films.  The easiest way to reach “software” status is on a computer, where some kind of program must be installed and run in order to access the content on the DVD, even if it is being written to a hard drive cache and processed by the included software for only a second.  For downloaded content, bundling a program by which the video data must be accessed is an easier task.  For gaming systems, this is similarly feasible.  Video game producers have taken the lead in changing their products from items where copyright rights are cut off at the first sale to licensed goods.  Prior discussion of this development is available here.  A similar process of requiring the content to be accessed as part of a program – rather than being reproduced from a storage device like a DVD or Blu-ray disc – will be needed to be software.  As porn has moved into the point-of-view and “experience” film realms,  an extension into gaming systems seems like a natural progression.

Restricting the user’s ability to transfer the software is also what will make this proposition profitable.  The general proposition of licensing is thus: Only a set number of people (in this case, one) can use the license at a time.  The cost of the initial license is built into the initial purchase, and the software – because under this idea, the content is more than a mere DVD or Blu-ray – is automatically registered online as a prerequisite for consumer access.  Once that registration is complete, any future registration on a different machine, by a different owner, or so forth, will require a separate license fee of $2 – $8 for the content to be displayed.  These numbers were not reached as the result of any particular study; they just reflected a reasonable percentage of a DVD’s resale value.  In today’s blasé environment regarding piracy, any money is better than no money.  The licensing agreement is then drafted to reflect this crucial limitation – only the initial purchaser has a license to watch the video on the machine he or she first registers it with, and any subsequent machine, user or owner must receive an individual license.

The third requirement, that the license impose notable use restrictions, is related to the discussion immediately preceding this paragraph.  What constitutes “notable” use restrictions requires further legal research and an opinion tailored to a specific inquiry.  In general, though, restricting the scope of the license to a specific use and machine is a significant limitation on how the consumer can use the product.  Requiring others to pay for future use can also be construed as a limitation.  Any range of circumstances in which the content may be used can be curtailed by the license’s language.  In short, the sky practically is the limit for “notable restrictions,” but a full legal opinion would be needed to determine how restrictive a particular studio’s restrictions would have to be to fulfill this “notable” requirement.

There are technical and administrative issues with this approach, and they are better addressed by database administrators, e-commerce experts, programmers and people better versed in this area than someone so utterly talentless that he had to go to law school.  If, however, enough people do this and the price points for subsequent licenses are carefully chosen, it can be done profitably.  While hackers will no doubt find a way around this with time, such an advance by studios can get ahead of the piracy wave and recover lost sales, and profit from secondary market sales that previously could not be converted into revenues.  At first, it will be only the most dedicated pirates who will find a way around this technology, while everyone else waits for it to be dumbed down to the point-and-click level of torrent ease that they enjoy today.  As a result, more people – even casual viewers – will be paying for porn, possibly for the first times in their lives.

To the extent this may be unpopular with consumers, I doubt people who validly purchase porn now will see any difference.  Legitimate buyers will do what they’ve always done: Buy a copy for personal use and not be burdened by buying supplemental licenses.  The price of future licenses will be priced into the secondary market and may reduce the upfront cost of content, allowing people to focus on the immediate cost of their purchase, driving increased secondary sales – and the inevitable purchase of studio licenses (otherwise, they’ve bought a brick).

This is a bold idea, and not one that can be adopted overnight.  I hope it is a controversial one.  Where some see studios holding viewers hostage for fees, I see a realistic approach to combating piracy, even if it cannot be entirely effective.  The question is, as always, making it work.


Limewire Shutdown Over Copyright Issues

October 27, 2010

by Jason Fischer

Limewire joins the list of infamous internet services deemed to be overwhelmingly used for copyright infringement (source).  Napster, Mp3.com, and Grokster rumored to be throwing a welcome bash for the new fish.


Adult film industry decries piracy in new video

May 3, 2010

By J. DeVoy


This surprisingly sober (and thoroughly whiny co-worker-safe) video from the Free Speech Coalition addresses the problems piracy causes in the adult entertainment industry.  For several years, “Tube” sites such as YouPorn, which feature content uploaded by amateurs and pirated from professionals, have taken a significant bite out of the industry’s earnings.

The video’s most salient point is made about one minute in by director Will Ryder: Torrents can lead to criminal liability because of what users don’t know they’re downloading.  In the halcyon days of Alberto Gonzales’s tenure as Attorney General, child pornography prosecution by the DOJ and US Attorney’s Offices across the country was in high gear, and that illicit content was showing up in all kinds of unexpected places — namely as parts of torrent files.  When someone downloads a torrent, he or she gets the end file from dozens, even hundreds of other people allowing the downloader to copy portions of it off of their hard drives.  Other files can get scooped up in this process, including child pornography.  This happened with non-trivial frequency, and US Attorney’s Offices brought charges against the people who had these files, which were identified through whatever mechanism the DOJ and FBI used to identify and track them. (Even if I could disclose this information, I wasn’t privy to how it was done.)

There are statutory carve-outs in the United States Code  that protects people unknowingly in possession of child pornography.  Under 18 USC § 2252(A), a person must “knowingly” fulfill the conditions of the statute to be guilty, so someone who has no idea he or she has the content may escape liability.  Under subsection (d), a defendant can raise an affirmative defense if he or she:

(1) possessed less than three images of child pornography; and
(2) promptly and in good faith, and without retaining or allowing any person, other than a law enforcement agency, to access any image or copy thereof—
         (A) took reasonable steps to destroy each such image; or
          (B) reported the matter to a law enforcement agency and afforded
                 that agency access to each such image.

Any guesses as to how many people out there would know about this provision?  Would even think to Google for it?  I’m thinking zero.  And woe unto the person who discovers more than three images.  As with most things, an ensuing cover-up of deletions would be worse than the crime.  The easiest, most effective solution simply is to not pirate anything through torrents.  Not porn, not software, not music — nothing.

Another highlight from the video: Lisa Ann dramatically taking off her glasses in the first segment.  It’s an old and clichéd move, but it always works; I bought glasses for the sole purpose of doing it.

Finally, the industry describes what it will do to fight piracy:

Many adult-film producers within the last month have begun employing fingerprinting technology to track online copyright infringement, Cachapero says. (Source.)

Overall, a good idea — one that Trent Reznor developed the early 1990s to identify which of his friends would leak his highly controversial, ultra-limited-release Broken video.  Universal Records has already indicated its intentions to watermark its musical releases as well.  While there may be technological impediments making this move more difficult for the adult film industry, it may be a good way to see where links are originating, especially if content is being released on multiple formats or through more than one distribution channel.


Documents Unsealed in Vicaom v. Youtube — Youtube Shady; Viacom Scorned & Seeks Vast Shift in 512(c) Immunity

March 18, 2010

Today, a New York District Court unsealed documents in Viacom v. Youtube and my-oh-my there are some doozies inside.  Both Viacom and Youtube come out looking like shady characters; Viacom looks like a scorned lover smashing up Youtube’s car up after their failed Youtube buyout and Youtube looks like an prick purposely trying to induce copyright infringement in brazen Napster/Grokster fashion.

Although these are juicy gossip nuggets, the real meat here lies in how Viacom is defining service provider immunity under 512(c).  Viacom’s argument is that Youtube is not eligible for immunity under 512(c) because they are not engaged in “storage,” but rather acting as a media company outside of what Congress intended to immunize.  If successful, this would be a radical shift in how 512(c) immunity is currently defined and would subject almost any website that hosts any user content, like tube sites, internet forums, and publishing platforms to huge copyright suits.

The “ZOMG UR KILLING TEH INTERNETZ” argument gets thrown around pretty quickly these days, but the importance of 512(c) immunity cannot be overstated.  Let’s hope the District Court doesn’t use Youtube’s pretty iffy emails to torpedo 512(c) immunity for everyone.

For more, check out Eric Goldman’s excellent analysis of the dirt in summary judgments motions.


“Twenty-Something Arrested at Twilight Movie” or “State Law Copyright Enforcement?”

December 15, 2009

by Jason Fischer

Earlier this month, 22-year-old Samantha Tumpach was arrested exiting a showing of the new douchey-little-vampire-kid movie, The Twilight Saga: New Moon.  No, she wasn’t detained for a psych eval, as anyone over the age of 16 should be for watching that movie.  (The only problem with implementing that policy is that state mental health facilities would be choked with nearly every female American between the ages of 17 and 45 — my sisters, my wife, and all of their friends included.)  It seems that she was arrested because theater employees saw her operating a video recording device (source).  Did the FBI come swooping in to put an end to this flagrant violation of Federal Copyright Law?

No.  It was those champions of copyright policy, the Rosemont Police.  As it turns out, Illinois has a relatively new anti-bootlegging statute, which criminalizes knowingly operating an audiovisual recording device in a movie theater without permission.  See 720 Ill. Comp. Stat. 5/21-10.

Now, don’t get me started about what a moron this woman is.  Clearly, she’s not the brightest crayon in the box, but I’m not sure she should be looking at three years in the state pen for being a moron.  Her conduct can arguably be defended as fair use, avoiding any civil liability for copyright infringement.  Even if it’s not newsworthy to the most of us, the reason that Ms. Tumpach gives for making the recording, i.e., preserving her sister’s birthday activities for posterity, likely does satisfy the first prong of a fair use analysis in her favor.  With a recording that comes in at a whopping four minutes, the amount-and-substantiality factor should go her way as well.  And it isn’t likely that Ms. Tumpach’s video will replace the needs of these screaming Twilight moms to see Jacob’s rippling six pack.

TRUTH

With respect to federal criminal liability, Ms. Tumpach’s activities don’t seem to satisfy those requirements either.  She didn’t make her video for personal commercial gain, and she hasn’t distributed anything.  So I’m scratchin’ my head, trying to figure out why this chick had to cool it in the clink for a few days and is now awaiting a full-blown criminal trial.  Has being a rude, inconsiderate, i’d-answer-my-cell-phone-if-it-rings-during-this-movie titwank finally become illegal?  She does admit to talking throughout the film, which in my book should be punishable — but more in the corporal variety, e.g., the slap-a-bitch treatment.

Now write the date and time down somewhere, because this may be the only time you’ll ever hear me make the following statement:  I don’t think that the state of Illinois has the power to enforce its bootlegging statute.  Normally, I’d say the federal government should get the hell out of the way, and let the states do their thing, but not this time.  You see, the United States Constitution provides the authority to the Congress to create legislation to protect the exclusive rights of copyright owners.  Any right that the states have to recognize or enforce copyrights has been expressly preempted by the federal government.

Making these criminal charges stick, solely based on the statutory language, may be a slam dunk for some prosecutor, but I’m not sure it would be constitutional.  What say you Blevins?  Would you throw the book at this chick?

UPDATE:  Cook County prosecutors have dropped the charges against Ms. Tumpach (source).  Summit Entertainment, the film’s producer, and Muvico, the theater involved, have both made press releases, declaring that, while they are happy that Ms. Tumpach got off with only an attorney bill and a couple of nights in a holding cell, they are committed to a zero-tolerance policy, recommended by the MPAA, for handling camcorder use.


New Copyright Czar, Background in Trade and Education

September 27, 2009

by Jason Fischer

Victoria the Not-so-Terrible

Victoria the Not-so-Terrible

On Friday, President Obama appointed the first “Intellectual Property Enforcement Coordinator,” a new position created last year by the Prioritizing Resources and Organization for Intellectual Property Act (a.k.a. the PRO-IP Act). While many criticized that legislation as further enlisting U.S. law enforcement to do the dirty work of the RIAA and MPAA, some of those same voices are praising the president’s choice of Victoria A. Espinel as a fair compromise.

“We believe she will be fair in her approach to intellectual property enforcement issues,” said Gigi Sohn, president of Public Knowledge, a left-leaning digital-rights advocacy group. (source)

This commentator hopes that Ms. Espinel’s understanding of the complex landscape of international trade, combined with a history in academics — where the value of citation and accretion is recognized over draconian exclusion — will help move copyright policy towards something a bit more sensible than life-plus-70.


This story has also been published on The Tactical IP Blog.


Piracy = Terrorism (???)

March 31, 2008

One of my favorite Family Guy episodes is It Takes a Village Idiot, and I Married One.

Though clearly more intelligent than her opponent, Lois’ campaign falters as Mayor West proves more politically savvy than she is—while Lois bores voters with detailed plans to improve the city, Mayor West uses glittering generalities and statements completely unrelated to his questions. Realizing (through Brian) that it would be hopeless otherwise, Lois then resorts to similar generalities, dropping controversial terms such as “Jesus” and “terrorists” in meaningless ways. She also answers questions about her policy plans only by saying “9/11.” She eventually gains the support of the populace and wins the election. (source)

You would think that somebody would tell the White House that this tactic has jumped the shark.

Apparently, Michael Mukasey didn’t get the memo… or more likely in this administration, nobody wrote the memo.

Arts Technica reports:

Five sentences into a speech on Friday at the Tech Museum of Innovation in San Jose, Attorney General Michael Mukasey was already waxing eloquent about how technology could help an “international terrorist looking to advance a murderous plot.” (source)

I have argued that Piracy might actually contribute to cultural enrichment. See Can you Digg It???. Nevertheless, I am willing to have my position challenged. I’m friendly to those who claim that piracy is wrong, evil, stealing, nasty, brutish, etc… And no two ways about it, piracy is illegal. I am 100% willing to lose the argument that piracy is a social good.

Nevertheless, all I can say to those who want to use the terrorism boogieman in this debate is summed up right here.


Promote the Progress…. Do I.P. Laws Hurt Poor Countries?

August 1, 2007

Here is an interesting take on Intellectual Property.

August 01, 2007 (LBO) – Developing countries Sri Lanka must be provided policy space in areas like intellectual property and get a comparative advantage in world markets, academics say.

“There is a great divide between the rich world and the poor world. We can see astonishing wealth being enjoyed by some countries [while] billions of people experience enormous poverty,” Tony Anghie, professor of law in the University of Utah says.

The rich world was able come to its current position by amassing wealth, making use of relaxed intellectual property laws and the protection that was given to industries while they were in the developing stage, he told an international trade law conference organized by the Sri Lanka Law College.

Source

Not exactly on point, but here is an earlier post in support of piracy for cultural reasons.


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