21 March 2017

The Unanticipated Return of Footnote 4

American law has an extensive history of burying significant disclaimers and complications that don't quite need to be decided immediately in footnotes. Perhaps the most notorious in all of American law is footnote 4 of Carolene Products, which is arguably at the core of every aspect of modern economic legislation... and, sadly, of far too much legislative discrimination and other misconduct.

The Ninth Circuit today did its best to provide a worthy successor. It may have succeeded — but will most likely have done so if it forces Congress to act.

4. The Copyright Office is housed within the Library of Congress, and it is not clear whether the Library of Congress is part of the executive or legislative branch. Compare U.S. v. Brooks, 945 F. Supp. 830, 834 (E.D. Pa. 1996) (“[T]he Copyright Office is part of the legislative branch.”), with Intercollegiate Broad. Sys., Inc. v. Copyright Royalty Bd., 684 F.3d 1332, 1341–42 (D.C. Cir. 2012) (discussing why the Library of Congress “is undoubtedly a ‘component of the Executive Branch’”). If the Library of Congress is part of the legislative branch, then the Librarian’s “power to appoint all of the officers who execute the copyright laws” may run afoul of the Appointments Clause of the Constitution. See John Duffy et al., Copyright’s Constitutional Chameleon, Concurring Opinions (May 17, 2013), https://concurringopinions.com/archives/2013/05/copyrights-constitutional-chameleon.html#more-74811.

Fox TV Stations, Inc. v. Aereokiller, LLC, No. [20]15–56420 (9th Cir. 21 Mar 2017), slip op. at 21 n.4 (PDF). This footnote calls into question the validity of virtually everything that has been done under the (purported) authority of the Register of Copyright since, oh, ever, thanks to the magic of the Appointment Clause. This clause was in the news today due to other legal mischief (PDF)… and legislative misconduct.

Frankly, I'm not all that sure that it would be such a bad thing to call the Register's purported "rulemakings" and other discretionary acts into question. The Copyright Office is a captured agency; it's just that the captors are the transferee/distributor parts of the entertainment industry, whose interests are not aligned with the actual creators of original works. And even more than most captured agencies, the Copyright Office has no incentive whatsoever to change: There's not nearly as much money available working for the creators (trust me on this!). Only a fundamental structural change can create an incentive to escape, and merely declaring an escape doesn't work in the medium (or even short) term: It requires a fundamental change in incentives at all levels of the organization.

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And so, turning to the substance…

The Ninth Circuit ruled — rather unsurprisingly — that Aereo-like distribution-channel-repurposers do not qualify as "cable providers" under § 111 of the Copyright Act. This matters because it is not an infringement to redistribute over-the-air broadcasts on a cable TV network — if one qualifies, and the definitions matter. This fight was actually over the definitions, and the Ninth Circuit ended up deferring to the definition offered by the Register of Copyright (which, unlike so much coming from the Copyright Office, has been pretty consistent over the years, even in the face of changing technology and economic incentives).

The "Aereokiller" system took those over-the-air broadcasts and redistributed them not with a local cable-TV signal (presumably for the benefit of customers in rural and sightline-restricted areas who could not get a clear broadcast signal… based on 1974ish concepts of what is necessary for a clear broadcast signal, but that's for another time), but with an internet subscription. This is a three-element change in distribution channel, which is at least one too many for either the court or the Copyright Office:

  • It is not local. Both the court and the Copyright Office emphasized that § 111 is "about" ensuring access to local broadcast programs of local interest, whether that's regional sports broadcasts, public affairs, or whatever (but without mentioning the nature of the content in their respective directives).
  • It is not for the same form/format as the original broadcast. Although both the court and the Copyright Office are less than obvious about this, there remains a distinction between "passive viewing at home" and "recordable, mobile, editable" in tension with Sony and the Home Audio Recording Act of 1992. One must read between the lines — such as the paragraph in the court's slip opinion spread across pages 12 and 13, rejecting full "technology agnosticism" as entirely consistent with the statute — to see this… which, I suppose, leads directly into the third change, which is truly silent.
  • It provides a complete revenue free ride for the repurposing service, which provides exactly no financial benefit (or other benefit from the exclusive rights provided by copyright) to the copyright holder — or, as relevant here, the holder's licensee broadcasters/distributors (regardless of whether it's a true "broadcast" origin).

The Copyright Office — being an agency captured by the licensee broadcasters/distributors and their non-TV counterparts — is admittedly stuck in the middle. Regardless of the agency capture, the Copyright Office is charged with administering a constitutionally-approved monopoly in the face of centuries of suspicion of monopolies. That's the real subtext here: That these repurposing "services" are simultaneously attacking the holder's/licensee's rights established in that monopoly (a loser, given the constitutional imperatives) and the perceived excessive fees charged by "big media" for participating in that marketplace with even the purest of intentions… and there's very little pure in these intentions, only a desire to avoid paying the (established, often unfair) going rate.

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What I find more interesting about this footnote 4 is that it may provide a lever to chip away at some of the Copyright Office's improper, self-interested nonsense, such as its position in Morris. The tl;dr version of this is that the Copyright Office's captured-agency self interest led it to assert that each and every freelancer's work must be covered by a separate certificate of registration, meaning that a typical periodical with material written by freelancers will have not one certificate (and registration fee!), but perhaps dozens. The full version is… longer.