Copyright Issues on the Legislative Agenda for 2012-2013

Back from its extended August recess, Congress has some unfinished business to settle before the end of the calendar year, such as funding the Federal Government for FY 2013 and addressing expiring Bush tax cuts.

Though they are unlikely to take center stage during the truncated session before elections or the post-election lame duck session, lawmakers will have to contend with several key copyright issues during the 113th Congress. Thus, no matter who wins on November 6, IP leaders in the House and Senate are likely to use the remainder of this calendar year to set the stage for next year’s copyright agenda.

The priority copyright issues for the remainder of 2012 and 2013 are: (1) Anti Piracy Initiatives; (2) Internet Issues; (3) International Agreements; (4) Music Licensing; (5) Book Licensing; and (6) TV Broadcast Issues.  Each is discussed more fully below.

 

1. Anti Piracy Initiatives

Most of the anti-piracy activity will be advanced by working with the Federal Government to encourage private agreements and best practices. There will likely be significant focus by Congress and the Administration on expanding market access (particularly in markets like India, China, etc.) to US content companies. On the Hill, the work on foreign markets will be done in the Foreign Affairs and Trade Committees as well as the Judiciary Committees. Groups opposed to the expansion of copyright protection and enforcement have become much more aggressive. Consequently, the content community will have to defend its interests and existing rights more aggressively than in the past.

• MegaUpload, TVShack and Pirate Bay:

The outcome of the MegaUpload and TVShack cases will have significant implications for international copyright law, especially concerning the infringement of US copyrighted content abroad. The US hopes to extradite the implicated individuals so they can be tried in US court. Meanwhile, Pirate Bay co-founder, Gottfrid Svartholm Warg, was recently arrested in Cambodia, with possible extradition to Sweden so he can serve a one-year sentence for violating copyright laws.

• First Sale Doctrine: 

The Supreme Court will hear a case next term, Kirtsaeng v. John Wiley & Sons, involving the scope of the First Sale Doctrine. The doctrine currently limits the reach of rights holders to the first sale, thereby allowing consumers to resell goods that they lawfully purchased. The 2nd Circuit Court of Appeals ruled in the case that the doctrine did not apply when the defendant had family and friends purchase foreign-made textbooks abroad and send them to him in the US, where he then resold them on eBay for a profit. The Copyright Office has indicated a desire to revisit the First Sale Doctrine.

This case will also raise significant questions regarding US statute which guards against parallel imports or gray market goods.

• Cloud Computing:

This area will be of increased concern to content providers as users and lawmakers struggle to address issues that arise when copyrighted content is used by a single user across multiple platforms.

 

2. Internet Issues

• Reclassification of the Internet:

The House Committee on Energy and Commerce’s Subcommittee on Communications and Technology recently held an oversight hearing of the Federal Communications Commission (FCC). At that hearing, Rep. John Shimkus (R-Il) pressed FCC Chairman Julius Genachowski on whether he plans to close the Commission’s docket to re-classify the Internet as a “telecommunications service” under Title II of the Communications Act. The FCC currently considers the Internet to be an “information service,” a category of service less heavily regulated than a telecommunication service. The potential reclassification of the Internet will be a hot issue because of the significance of the potential change in regulatory supervision. Chairman Genachowski said the FCC will continue to accept public comments.

• Control of the Internet: 

The House unanimously passed H. Con. Res. 127, urging the Obama Administration to fight efforts to confer more control of the Internet to the United Nations. The Administration has already spoken out against proposals that would provide the UN with more control over cybersecurity, data privacy, and technology standards. The House and Obama Administration are both proponents of the current, “multi-stakeholder” approach. Certain actors continue to press for UN control of the internet. Numerous other actors (including lawmakers) are coming together to “defend” the freedom of the internet — an issue that has also surfaced in both parties’ 2012 campaign platforms.

• Department of Justice — Immigration and Customs Enforcement Domain Seizure:

Reps. Zoe Lofgren (D-CA), Jared Polis (D-CO) and Jason Chaffetz (R-UT) sent a letter to Attorney General Holder and Secretary Napolitano criticizing the seizure of multiple domain names that were used to facilitate piracy and counterfeiting carried out under the Administration’s Operation in Our Sites. The letter raised several specific questions regarding the cases brought by DOJ and ICE.

 

3. International Agreements

• Trans Pacific Partnership (TPP):

On November 12, 2011, the leaders of the nine Trans-Pacific Partnership countries – Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the US – announced completion of a broad outline of a TPP agreement. The proposal aims to enhance trade and investment among the TPP partner countries, promote innovation, economic growth and development, and the creation and retention of jobs. The Office of the US Trade Representative (USTR) has proposed a new copyright provision that is intended to alleviate certain intellectual property concerns in the TPP. In so acting, USTR stated that “for the first time in any US trade agreement, the US is proposing a new provision, consistent with the internationally recognized 3-step test, that will obligate Parties to seek to achieve an appropriate balance in their copyright systems in providing copyright exceptions and limitations for purposes such as criticism, comment, news reporting, teaching, scholarship, and research.”

• ACTA:

While this treaty was voted down in the European Parliament, many of the issues that it sought to deal with are still very much alive. For example, two proposals on copyright law have emerged in Europe in the wake of the Parliament’s rejection of ACTA. One report was commissioned by the UK government; the other came from a French citizens’ advocacy group, La Quadrature du Net (LQDN). The UK proposal envisions an “intricately linked system of digital rights exchanges and databases to streamline copyright licensing.” The French proposal suggests broad, “non-market sharing of protected works between individuals.” The Swedish Pirate Party also has developed a proposal.

 

4. Music Licensing

• Internet Radio Fairness Act:

Rep. Jason Chaffetz (R-UT) is currently working on the Internet Radio Fairness Act of 2012, which would allow online radio services such as Pandora to pay artists and copyright owners lower rates under the 801(b) standard of the Copyright Act – used by certain cable and satellite services since 1995 and “grandfathered” under the 1998 law – instead of the current “willing buyer, willing seller” standard that requires the Copyright Royalty Board to consider what the parties would pay in the marketplace for music for Internet radio.

• Interim FIRST Act:

A draft bill from Rep. Jerrold Nadler (D-NY), called the Interim FIRST Act, would put cable and satellite radio services on the same royalty-setting standard as Internet radio. This would lead to higher royalty fees for cable and satellite radio stations. The discussion draft also would make traditional radio stations that do not pay any performance right royalty for terrestrial radio broadcasts, pay a higher fee for their live-streaming broadcasts online.

• Universal-EMI Deal:

Sens. Herb Kohl (D-WI) and Mike Lee (R-UT) wrote a letter to Federal Trade Commission (FTC) Chairman Jon Liebowitz expressing their concern that the Universal Music Group’s purchase of EMI presents “significant competition” issues. They are calling on the FTC to scrutinize the deal to ensure it is not anticompetitive. Kohl is the Chairman and Lee is the ranking member of the Senate Judiciary’s Subcommittee on Antitrust, Competition Policy and Consumer Rights.

 

5. Book Licensing

• eBooks:

Prior to the introduction of iBooks for the iPad, most eBooks were sold by Amazon under a “wholesale model” that allowed the online retailer to set its own prices. Many publishers saw Amazon’s model as harming electronic and “brick and mortar” book vendors. Several publishers tried to implement a new “agency model” under which the publishers determined the price for consumers. The Department of Justice then accused six major book publishers, in US v. Apple et al, of collaborating to increase eBook prices in order to compete with Amazon. There is concern amongst publishers and authors that reverting back to Amazon’s wholesale model would allow Amazon to sell eBooks at below cost, placing pressure on competition and harming authors. The models publishers use for eBooks, along with the royalty payments to content providers, will be impacted by the eventual final outcome of the U.S. v. Apple et al case.

• Open Access Project:

Open access (OA) literature is digital, online, and free of charge. While any kind of digital content can be OA, this type of literature is growing in popularity amongst scholars, researchers, and librarians. Copyright stakeholders are monitoring the development of open access literature projects to make sure they do not infringe on copyrighted works.

• Orphan Works:

“Orphan Works” are copyrighted works—books, music, records, films, etc—whose owner cannot be located. Creators interested in using an orphan work are sometimes deterred for fear of having to pay damages if the owner ever surfaces.  Congress has considered legislation in the past that would allow users of copyrighted content to move forward in cases where they wish to license a use but cannot locate the copyright owner after a diligent search. Despite past political difficulties with finding consensus on orphan works legislation, some stakeholders, including the Copyright Office, are continuing to promote the consideration of orphan works legislation.

 

6. TV Broadcast – Satellite and Cable

• SHVERA:

Satellite and cable companies hoping to overhaul video regulations have their sights set on a “must-pass” bill on satellite carriage of broadcast programming. The measure is on the ‘to-do’ list for the next Congress as the reauthorization of the Satellite Home Viewer Extension Revision Act (SHVERA).  Issues of concern to broadcasters include retransmission consent, the modification of television markets, the “carry one, carry all” provision that requires a satellite company to offer all local stations available in a market if the company wants to offer any local stations, and a proposal to require satellite companies to retransmit local stations nation-wide if they are providing local service in any market.

• The Cable Act:

Recent hearings on the Cable Act have increased the chance that the 20 year old Act will be renewed with changes that will affect content providers. On the one hand, powerful pay TV companies have asked Congress to rewrite the laws so that they can carry a broadcaster’s signal without a negotiated agreement or require mandatory arbitration upon their request. Broadcasters posit that the current market-driven rules are fair, and eliminating broadcasters’ ability to negotiate the value of the broadcast signal will mean less choice for consumers and fewer resources for local stations to dedicate to local news, public affairs programming and coverage of emergency events.