The morality of termination rights

Raustiala and Sprigman over at the New York Times Freakonomics blog take on the morality of copyright termination rights, “an obscure provision of U.S. copyright law…[that] allows songwriters and musicians to…take back from the record labels many thousands of songs they licensed 35 years ago”:

In general, if you decide to sell or perpetually license a piece of property, you can’t later take it back, no matter how much you might want to. So If I sell my house and two years later the city decides to build a lovely public park in my neighborhood, the value of my former house may rise substantially. But no one contends that I can take the house back, or that I’m due a bonus payment from the lucky buyer.  A deal is a deal.

So why the exception for copyright owners?

I have to start somewhere, so it might as well be here:  it’s disingenuous to invoke a home-sy (literally) analogy, show that it fails, and use that failure to “prove” your point.  Raustiala and Sprigman note that “in general,” residential homes are sold outright.  So what?  Equally “in general,” commercial property leases for retail outlets (e.g., stores in shopping center developments) explicitly vary rent payments based on sales (i.e., higher store sales this month/year = higher rent).  Both systems are unobjectionable, assuming one simple fact:  the parties know what kind of deal they are making at the time they make it.

Thus, Raustiala and Sprigman’s analysis falls apart right off the bat.  Termination rights are not a recent phenomenon that nobody knew anything about until a year ago.  Unlike, say, Congress’ decision to re-copyright works that had already fallen into the public domain, termination rights have clearly been a part of U.S. copyright law since 1976.  They may have been “an obscure provision” to the general public reading the Freakonomics blog, but they certainly weren’t obscure to artists and labels.  Raustiala and Sprigman’s characterization is like calling the infield fly rule “obscure”–and then implying that a bunch of MLB players should be out because they didn’t know it existed or how it worked.

They go on:

Think for a moment about the economic effect of the termination provision on the behavior of parties to copyright transactions. Because buyers can expect, on average, to make lower profits when the law contains the termination provision, they will offer less in the initial transaction. Thus, sellers will be more willing to accept less, because they know that if a work later proves valuable, they can terminate and demand some additional payment. So the most likely effect of the termination provision is to force deal prices down across the board….Put differently, the termination provision is a regressive tax.  And in that light, the “fairness” justification for the termination provision is less than overwhelming.

Even assuming this is true, the record labels’ supposed “offer [of] less in the initial transaction” has already happened–35 years ago.  Changing the rules at this point to favor the labels over artists would also seem to invoke its own set of fairness issues.  To put it mildly.

Reversing Righthaven

The court system issued another stunning rebuke of Righthaven and its business model, as an Electronic Frontier Foundation press release reports:

In a decision with likely wide-ranging impact, a judge in Las Vegas today dismissed as a sham an infringement case filed by copyright troll Righthaven LLC. The judge ruled that Righthaven did not have the legal authorization to bring a copyright lawsuit against the political forum Democratic Underground, because it had never owned the copyright in the first place. [emphasis added]

This is a big win for bloggers, and the news gets even worse for Righthaven:

As part of his ruling today, the judge ordered Righthaven to show why it should not be sanctioned for misrepresentations to the court.

More coverage at Techdirt.

I guess we’re starting to get that copyright law clarity I was hoping for

Can you hear the people sing?

Brian pointed me to an article at the Chronicle of Higher Education about Lawrence Golan’s Supreme Court fight against copyright expansion:

The dispute that led to Golan v. Holder dates to 1994, when Congress passed a law that moved vast amounts of material from the public domain back behind the firewall of copyright protection. For conductors like Mr. Golan, that step limited access to canonical 20th-century Russian pieces that had been freely played for years.

Re-copyrighting works isn’t a technical or minor matter.  It has a huge effect of performing musicians like Golan:

When a work is in the public domain—that Puccini opera, say—an orchestra can buy the sheet music. Symphonies typically cost about $150. And the orchestra can keep those pages forever, preserving the instructions that librarians laboriously pencil into scores. But works under copyright are typically available only for rent. And the cost is significantly higher: about $600 for one performance. With the flip of a switch, the new law restored copyright to thousands of pieces.

For big-city orchestras like the New York Philharmonic, that change is like a "mosquito bite," Mr. Golan says. But Mr. Golan’s [University of Denver] ensemble gets only about $4,000 to rent and buy music each year. That means it can perform some copyrighted works but must rely on the public domain for about 80 percent of its repertoire. And $4,000 is relatively generous. Other colleges might have only $500 to spend on music. When the Conductors Guild surveyed its 1,600 members, 70 percent of respondents said they were now priced out of performing pieces previously in the public domain.

As Brian asked in his email pointing me to the article,

it sounds like US courts have always been willing to extend copyright protections…will there ever really be a "public domain" in the future for works published/created after World War I?

Unfortunately, the jury’s still very much out.

Lobbynomics v. empirical data

Ars Technica points to a UK report asserting that “lobbynomics” rather than empirical data drives much of the intellectual property policy debate:

There are three main practical obstacles to using evidence on the economic impacts of IP…[3] Much of the data needed to develop empirical evidence on copyright and designs is privately held. It enters the public domain chiefly in the form of “evidence” supporting the arguments of lobbyists (“lobbynomics”) rather than as independently verified research conclusions.

My own experience in dissecting IP developments supports this view.  It is surprisingly difficult to find “hard data” about copyright piracy, leaving any “debate” to a shouting match between proponents of bald assertions.

We need better data, and we all need to be more circumspect (and humble) before drawing sweeping conclusions from the little that is available.

Righthaven class action?

Ars Technica is reporting that one Righthaven defendant is “launching a class-action counterclaim against Righthaven”:

BuzzFeed…quickly moves from a defense of its own conduct to an attack on the conduct of Righthaven, and it asks the judge to put every Colorado defendant into a class which can pursue Righthaven for extortion-style behavior.

I’m not sure that Righthaven’s behavior should be turned into some sort of perverse-reverse legal payday for defendants, but I suppose this was an inevitable development.

Righthaven’s contract unsealed; sanctions a real possibility

Joe Mullin at paidContent has just posted a story about Righthaven’s previously sealed contract with Steves Media, parent company of the Las Vegas Review-Journal:

The contract reveals that the controversial copyright-enforcement company and the LV R-J are splitting their net earnings from suing hundreds of bloggers on a 50-50 basis. It also shows that the LV R-J is still largely in control of Righthaven’s litigation strategy—a fact that could end up being ruinous for Righthaven’s campaign of copyright lawsuits.

A link to the judge’s order and the contract is available here.  I’ll update this post when I’ve had time to read and analyze it thoroughly…

Update: After reading through the contract and order to unseal for myself, I think these are the most relevant sections:

Section 3.3

Stephens Media shall have the right to Notify Righthaven…that Righthaven should not take any Infringement Action with respect to a particular putative infringer.…Stephens Media shall only send any Declination Notice on a reasonable basis with the grounds of reasonability being that a particular putative infringer [1] is a charitable organization, [2] is likely without financial resources, [3] is affiliated with Stephens Media directly or indirectly, [4] is a present or likely future valued business relationship of Stephens Media or otherwise would be a Person that, if the subject of an Infringement Action, would result in an adverse result to Stephens Media.

I guess it’s safe to conclude that Stephens Media did not see fit to step in on behalf of the Center for Intercultural Organization (“a charitable organization”), Brian Hill (an autistic blogger who practically defines someone “likely without financial resources”), various newspaper sources (“affiliated with Stephens Media directly or indirectly”), or any of the hundreds of other bloggers (“likely future valued business relationship of Stephens Media”) Righthaven has sued.

Sections 7 and 8

Section 7.1:

Stephens Media shall effect the assignments to Righthaven of copyrights as required by this Agreement…by executing a particularized assignment with respect to each copyright and each consistent with (and in form and substance the same as) the scope of assignment….

Section 7.2:

Despite any such Copyright Assignment, Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery.

Section 8:

Stephens Media shall have the right at any time to terminate, in good faith, any Copyright Assigmnent (the “Assignment Termination”) and enjoy a right of complete reversion to the ownership of any copyright that is the subject of a Copyright Assignment; provided, however, that if Righthaven shall have commenced an action to prosecute an infringer of the Stephens Media Assigned Copyrights, Stephens Media shall be exclusively responsible for effecting termination of such action including, without limitation, all Losses associated with any dismissal with prejudice.

Taken together, these three excerpts seem to affirm that Righthaven is essentially buying the right to bring lawsuits from Stephens Media, which is arguably impermissible under Silvers v. Sony Pictures Entertainment, Inc., 402 F. 3d 881 (9th Cir. 2005).

Section 11

Stephens Media understands and acknowledges that Stephens Media and Righthaven may be liable for an Infringer’s attorneys’ fees as required by Law in connection with an Infringement Action. Stephens Media further understands that a lawsuit brought solely to harass or to coerce a settlement may result in liability for malicious prosecution or abuse of process. If any Claim made by an Infringer in an Infringement Action results in Losses, other than Losses described in Section 8, Righthaven shall be solely liable for such Losses and shall indemnify Stephens Media from and against any such Losses but only if such Losses do not arise out of a misrepresentation by Stephens Media or other breach by Stephens Media of a provision of this Agreement.

I guess we now have incontrovertible evidence that both the newspaper and Righthaven knew “that a lawsuit brought solely to harass or to coerce a settlement may result in liability for malicious prosecution or abuse of process”!  I wouldn’t be surprised if this section gets referenced in a future sanctions order.

Conclusion:  what does Judge Hunt think?

It’s impossible to know, of course, what’s inside Judge Hunt’s mind.  However, his order to unseal the Righthaven contract strongly suggests that he is growing weary of Righthaven’s legal antics:

There is an old adage in the law that, if the facts are on your side, you pound on the facts. If the law is on your side, you pound on the law. If neither the facts nor the law is on your side, you pound on the table. It appears there is a lot of table pounding going on here.

There has been presented absolutely no basis to strike the Request to Unseal, and that motion will be denied. [emphasis added]

No doubt Righthaven is already sorry they filed this case.  The only remaining question is whether their sorrow will be measured in dollars.  And just how many.