Holding The Line On Statutory Damage Tradeoffs

Here Chris Castle warns of a suspected upcoming 'omnibus' bill of amendments to the Copyright act as the 2018 campaign season gets underway, and the importance of preventing Big Tech from thoroughly de-fanging copyright infringement litigation.

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Guest post by Chris Castle of Music Technology PolicyIt is very likely that we will hear about a move to make significant amendments to the Copyright Act at some point before the beginning of campaign season in 2018. There are a high number of copyright-related bills that have been introduced in the House of Representatives in the current session, so brace yourself for an “omnibus” copyright bill that would try to cobble them all together Frankenstein-style.A Frankenstein omnibus bill would be a very bad idea in my view and will inevitably lead to horse trading of fake issues against a false deadline. Omnibus bills are a bad idea for songwriters and artists, particularly independent songwriters and artists, because omnibus bills tend to bring together Corporate America in attack formation.

When you consider that Google and Facebook are part of Corporate America (not to mention Apple), the odds of the independent songwriter and artist, but really any songwriter and artist, just holding onto the few crumbs they currently have crash and burn. The odds of actually righting wrongs or–God forbid–getting rid of the legacy consent decrees that protect Big Business vanish into the limit.Of course, what certain elements of Big Tech would really like to do is push all licensing of music into one organization that they could then control through consent decrees or other government regulation and supervision by exercise of the massive lobbying and litigation muscle of the MIC Coalition and DIMA. While I realize that may actually sound anti-competitive, it is typical of monopolists to use the antitrust law to destroy competition (as Professor Taplin has taught us). That’s certainly what has happened with the PRO consent decrees–reduced competition and lower royalties. Not to mention such a licensing organization would collapse under its own complexity. This is probably why the Copyright Office envisioned a “Music Rights Organization” that would combine the PROs and mechanical rights licensing but provided the relief valve of an new opt-out right so that songwriters could escape the madness. (“Under the Office’s proposal, except to the extent they chose to opt out of the blanket statutory system, publishers and songwriters would license their public performance and mechanical rights through MROs.” Copyright Office Music Licensing Study at p. 9)If you want some ideas about the kinds of property rights that Big Tech wants the government to take away from songwriters and artists, just read Spotify’s most recent filing in the songwriter litigation in Nashville where their lawyer tries to define away mechanical royalties (unsurprisingly, the lawyer is a long-time protege of Lessig). Why? Because they are being brought to a trial by their peers on statutory damages for copyright infringement and the potential for having to pay the songwriters’ lawyers due to a statutory right to recover attorneys fees. (Statutory damages for copyright infringement has long been an attack point of Big Tech and we get a preview of where they want it to go in Pamela Samuelson’s “Copyright Principles Project”–essentially abolished.)One way or another, the Big Tech cartel (which includes all the companies in the MIC Coalition and MIC Coalition member the Digital Media Association which itself has members like Spotify and, curiously, Apple) is very likely going to go after statutory damages and try to create yet another “safe harbor” for themselves with no burdens–a “friction free” way to infringe pretty much at will because the actual damages for streaming royalties will be pennies.If the cartel succeeds in eliminating statutory damages and attorneys fees awards, this will truly make copyright infringement litigation toothless and entirely eliminate the one tool that independent songwriters and artists have to protect their rights. It will neuter massive copyright infringement as alleged in all of the Spotify class actions, not to mention cases like Limewire.Oh, you say–did you just switch from song copyrights to sound recording copyrights by referencing Limewire? Yes, I did–because that’s exactly what I predict the DIMA and MIC Coalition have in mind. Why do I say this? Because that’s what these companies are backing in the radioactive Transparency in Music Licensing and Ownership bill (HR 3350). And if you blow up all the current separate bills into one omnibus copyright “reform” bill, the pieces may reconstitute in forms you didn’t expect.But realize that in almost all the many copyright bills currently before the House of Representatives, the other side is trying to bootstrap unjust harm into a negotiation chip to shakedown creators. And it’s not just pending legislation–the shakedown is especially observable with the millions of notices of intention to rely on statutory mechanical licenses for songs filed with the Copyright Office. That’s a nice song you got there, it would be a shame if something happened to it.Big Tech’s basic negotiation method is to rely on a loophole, bootstrap the loophole to build up the pressure on people who can’t fight back, then run the shakedown to get concessions that should never be made. This is what Google has done with the DMCA and is the same shakedown tactic on mass NOIs taken by Google, Amazon, Pandora, Spotify, and others–but curiously not Apple. Somehow Apple has made it work with the most successful digital music platform in history.Let’s go down the issue list:

Bootstrapped Issue	Fix	Bill
Pandora and Sirius stopped paying artists for digital royalties on pre-72 recordings—because of loophole based on federal copyright protection for sound recordings	Start paying artist royalties on classic recordings made before 1972	CLASSICS Act
Terrestrial radio created a loophole so they don’t have to pay performance royalties to artists on sound recordings; stop artists from opting out	Start paying artist royalties for broadcast radio (with protection for noncommercial and small broadcasters)	Fair Pay Fair Play Act, PROMOTE Act
Big tech suddenly started using a loophole to file millions of “address unknown” NOIs with Copyright Office after indie songwriters filed class actions	Require Big Tech to use existing databases to look up copyright owners or don’t use the songs or recordings.	None
No “central database” that has all songs (but no requirement to actually look up anything), requires double registration	If songwriters and artists don’t register, then no statutory damages	Transparency in Music Licensing and Ownership Act

Blown up into parts:–Avoid raising mechanical royalty rate or paying artist royalties on terrestrial at all–How to use the lack of the mythical “central database” as a bright and shiny object to avoid paying royalties and shirk liability for not doing copyright research, an absurd position for companies that owe much of their wealth to their unprecedented ability to profile people around the world and “organize the world’s information”–Avoid paying statutory damages–How to avoid paying royalties that should have paid anyway (pre-72, terrestrial, mass NOI) through distorted interpretations of the law or even safer harbors–Avoid an obligation to actually look up anything (new databases)–Use any work they want if all they have to pay is actual damages and no attorneys fees–Keep songwriters and artists from opting out–Create biggest black box possibleIt should be apparent which way Big Tech is trying to push the creative community. It is important for creators to understand that any legislative concession that the MIC Coalition or DIMA win against songwriters or artists they will then turn around and try to extract in the next shakedown–authors, photographers, film makers, all the copyright categories.It is in everyone’s interest to support a healthy creative community that will continue to engage fans and do enough commerce to create value for the tech monopolies. But–it is crucial to understand that it doesn’t work the other way around.The purpose of the creative community is not to create value for tech monopolies. It is to support compelling artists and help them engage with fans, and sometimes it is art for art’s sake alone. If those artists throw off some commercial gain that the tech monopolies can turn to profit themselves, fine. But creating profit for these monopolists is not the goal of artists.Instead of creating fake problems to try to extract concessions that further undermine creators like offering ice in winter, the tech monopolies like Google, Spotify, Amazon and Pandora should identify real problems and work with us toward real solutions–and not a loophole-driven shakedown.