09 December 2005

Obvious Results

Yesterday, in a fascinating decision filled with interesting little tidbits, the Ninth Circuit decided that one heir to the Milne estate—which controls the rights to Winnie-the-Pooh, for anyone visiting from another galaxy—could not undo a 1983 contract that required Disney to pay higher royalties. Would it surprise you to know that Disney bankrolled the lawsuit by the "dissatisfied" heir?

Actually, the case is both more complicated and less complicated than that. On the one hand, the facts are (to use the technical term) a mess—and that's just the facts that the court chose to set out. On the other hand, the result should have been pretty self-evident… except for some pesky secondary authority that ultimately did not sway the court:

Clare's sole support for her position is found in a treatise authored by the late-Professor Melville Nimmer. In his treatise, Professor Nimmer expressed his assumption that this subsection—which on its face applies only to the statutory termination of a prior copyright grant—is intended to benefit authors and should therefore be extended to prohibit a simultaneous contractual termination and re-grant of copyright rights. See 3 M. Nimmer, Nimmer on Copyright § 11.07 (6th ed. 1978). Clare's counsel, however, conceded at oral argument that no source of primary authority has endorsed this assumption. We too decline to do so.

Milne v. Stephen Slesinger, Inc., (right-click only), slip op. at 16025–26 (Dec. 8, 2005) (italics in original).1

Then the Seventh Circuit jumped into the act—this time on the para-Grokster front, reaching an even more obvious conclusion than did the Ninth Circuit in Milne.

Section 107 provides that when considering a defense of fair use the court must take into account "(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the 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." Gonzalez was not engaged in a nonprofit use; she downloaded (and kept) whole copyrighted songs (for which, as with poetry, copying of more than a couplet or two is deemed excessive); and she did this despite the fact that these works often are sold per song as well as per album. This leads her to concentrate on the fourth consideration: the effect of the use upon the potential market for or value of the copyrighted work.

As she tells the tale, downloading on a try-before-you-buy basis is good advertising for copyright proprietors, expanding the value of their inventory. The Supreme Court thought otherwise in Grokster, with considerable empirical support. As file sharing has increased over the last four years, the sales of recorded music have dropped by approximately 30%. Perhaps other economic factors contributed, but the events likely are related. Music downloaded for free from the Internet is a close substitute for purchased music; many people are bound to keep the downloaded files without buying originals. That is exactly what Gonzalez did for at least 30 songs. It is no surprise, therefore, that the only appellate decision on point has held that downloading copyrighted songs cannot be defended as fair use, whether or not the recipient plans to buy songs she likes well enough to spring for. See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1014-19 (9th Cir. 2001). See also UMG Recordings, Inc. v. MP3.com, Inc., 92 F. Supp. 2d 349 (S.D.N.Y. 2000) (holding that downloads are not fair use even if the downloader already owns one purchased copy).

BMG Music, Inc. v. Gonzalez, No. 05-1314, slip op. at 3–4 (7th Cir. Dec. 9, 2005) (emphasis in original). Unfortunately, Judge Easterbrook missed an even better refutation of the "good publicity" argument: As a matter of law, it's wrong—without worrying about empirical support.

More to the point, even if the dissent is correct that some authors, in the long run, are helped, not hurt, by Database reproductions, the fact remains that the Authors who brought the case now before us have asserted their rights under § 201(c). We may not invoke our conception of their interests to diminish those rights.

New York Times, Inc. v. Tasini, 533 U.S. 483, 498 n.6. In other words, no expotition into the dubious realm of entertainment industry accounting and sales figures need take place; we've got binding legal authority that we can't second-guess whether it's really in a copyright holder's financial interest to pursue a copyright remedy once the holder determines to do so.2

  1. Ironically, Professor Nimmer's son argued the case for the plaintiff.
  2. Some might object that Tasini concerned § 201, while fair use is governed by § 107. True enough; however, the argument being answered is exactly the same argument as made by Gonzalez in this case, under the same statutory scheme (albeit not the same section). I also think this result compelled by the wording of the IP Clause—but I'll be making that argument at length in an article I hope to finish shortly.