Content & Technology Policy Report May

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CONTENT & TECHNOLOGY POLICY REPORT MAY 6, 2016

I. Congressional Updates:

 The Senate Judiciary Subcommittee on Privacy, Technology and the Law has scheduled a hearing on May 11 at 2:30PM on Headlines and Highlights: “Examining the Proposed FCC Privacy Rules.” The hearing will feature witness testimony from Federal Communications  The Supreme Court agrees Commission (FCC) Chairman Thomas Wheeler, FCC to hear case with Commissioner Ajit Pai, Federal Trade Commission (FTC) implications for copyright- Chairwoman Edith Ramirez, and FTC Commissioner Maureen eligibility Ohlhausen.  The Copyright Office holds  The House Ways and Means Tax Policy Subcommittee has public roundtables on its scheduled a hearing on Member proposals for improvements section 512 study to the U.S. tax system. The hearing will take place on May 12 at 10:00AM. Oral testimony will be limited to Members of  TTIP leak reveals EU Congress who have either introduced or cosponsored tax concerns over protracted legislation. Notably, Subcommittee Chairman Charles U.S. copyright review Boustany (R-LA) and his colleague Richard Neal (D-MA) released a bipartisan discussion draft in 2015 for an  Chinese Sci-Hub domain is “innovation box”; the draft legislation would create a shut down preferential tax rate for income derived from certain IP. In the Blogs:  The Senate Finance Committee has scheduled an oversight hearing of the Customs and Border Protection Agency (CBP) Copyright Q&A on May 11 at 10:00AM. CBP Commissioner Gil Kerlikowske Copyright Alliance is scheduled to testify as the sole witness at the hearing. May 4

II. Judicial Updates: How Plagiarism Detection Works  On Monday, the Supreme Court agreed to hear Star Athletica, Plagiarism Today L.L.C., v. Varsity Brands Inc. a case involving two cheerleader May 3 uniform producers that may have a lasting impact on U.S. copyright, specifically on how to “separate creative, Is Code Free Speech? copyrightable designs from utilitarian objects that aren’t Illusion of More subject to copyright.” The lawsuit, originally filed by Varsity April 29 by David Newhoff Brands in 2010, alleged that Star Athletica’s uniform violated 1

Varsity’s copyrighted designs. However, Star rebutted that Varsity holds copyrights on “utilitarian elements of the uniforms” and consequently should be disallowed. Numerous companies have filed amicus briefs, including 3D printing companies Formlabs, Matter and Form, and Shapeways, asking the Supreme Court to rule on this issue and provide clarity on “conceptual separability” regarding what is copyrightable. Read more here.

III. Administration Updates:

 On Monday, the Washington Post published an op-ed by President Obama titled “The TPP would let America, not China, lead the way on global trade.” In the piece, the President argues for the passage of the Trans-Pacific Partnership (TPP): “Let’s seize this opportunity, pass the Trans-Pacific Partnership and make sure America isn’t holding the bag, but holding the pen.” He also made specific reference to IP, saying, “This past week, China and 15 other nations met in Australia with a goal of getting their deal, the Regional Comprehensive Economic Partnership, done before the end of this year. That trade deal won’t prevent unfair competition among government-subsidized, state-owned enterprises. It won’t protect a free and open Internet. Nor will it respect intellectual property rights in a way that ensures America’s creators, artists, filmmakers and entrepreneurs get their due.”

 On Monday and Tuesday in New York, the U.S. Copyright Office held public roundtables on its section 512 study. The roundtables offered an opportunity for interested parties to comment further on the pertinent issues, including topics such as the scope and legal requirements of the DMCA safe harbors; the notice-and takedown and counter-notification processes, including relevant technological developments; voluntary measures to address online infringement; and the overall effectiveness of section 512.

 The Copyright Office announced the one-year anniversary of its “Fair Use Index” last week: One year ago, the U.S. Register of Copyrights, in coordination with the U.S. Intellectual Property Enforcement Coordinator, announced the launch of the U.S. Copyright Office’s Fair Use Index (“Index”). The Index makes the principles and application of fair use more accessible and understandable to the public by providing a basic explanation of fair use as well as presenting a regularly updated searchable database of summaries of major fair use decisions. So far, over 180 U.S. fair use decisions have been summarized, spanning every appellate jurisdiction and many categories of use, from music to digitization to parody. The Fair Use Index is available here.

 The Copyright Royalty Judges are soliciting comments on a motion by Phase I claimants for a partial (60 percent) distribution of 2014 satellite royalty funds under section 801(b)(3)(C) of the Copyright Act. Specifically, the judges seek to ascertain whether any claimant entitled to receive royalties has a reasonable objection that would preclude the requested distribution. Phase I claimants are the Program Suppliers and the Broadcaster, Devotional, Joint Sports, and Music Claimants. Respondents must advise the judges of the existence and extent of their objections no later than May 31, 2016. For details, click here.

 The Copyright Royalty Judges have published in the Federal Register the royalty rates and terms for the digital performance of sound recordings over the Internet by nonexempt, non- interactive transmission services and the making of ephemeral recordings to facilitate those performances for the period from January 1, 2016, through December 31, 2020. The rates took effect on January 1, 2016. For details, click here.

 The U.S. Copyright Office has released the agendas for the public roundtable sessions announced in its March 28, 2016 Federal Register notice in connection with its study on section 1201 of title 17. The agendas provide the locations and times of the sessions and list the participants assigned to each panel. The agendas are available on the Office website here and here. The Office also is announcing a change in the schedule for the San Francisco roundtable sessions. Those sessions will be held entirely on May 25, 2016. The Washington, D.C. sessions will take place on May 19 and 20, 2016, as originally scheduled. For further information on the section 1201 study, please see here.

IV. International Updates:

 Greenpeace leaked a number of documents related to the Transatlantic Trade and Investment Partnership (TTIP) this week, including one from EU negotiators on the “tactical state of play.” Within the document, EU officials describe U.S. copyright reform efforts as “glacial” and a “negative element” for the TTIP talks. The document goes on to note several priority areas for the EU, including: broadcasting rights, public performances, and resale rights.

 Last Friday, the Australian Government’s Productivity Commission released a draft report titled “Intellectual Property Arrangements.” The report assesses the IP challenges facing Australia and recommends solutions. The 601-page report is highly critical of the Australian copyright system, arguing that technology such as geoblocking is “pervasive, and frequently results in… a lower level of digital service.” The report also goes on to criticize Australia’s online copyright protections, which encourage Internet Service Providers to cooperate with rightsholders, as only having a “modest impact in reducing infringement.” Instead, the report advises the Australian government to improve content pricing and availability to reduce infringement. The Productivity Commission uses a table to compare copyright exceptions in the U.S. to those in Australia—which, the report claims, are too narrow and prescriptive. Stakeholders are encouraged to submit comments on the report by June 3; the final version is expected in August 2016. Read the report here.

 VKontakte, Russia’s leading social networking site, launched a new music app for the iPhone on Tuesday, allowing users to stream music from Sony Music, Warner Music Group, and Russian music publishers Soyuz and Nikitin. VKontakte’s agreement with these companies signals a marked change for a site long labeled as the “biggest online pirate.” Moreover, this agreement comes on heels of a 2014 copyright infringement lawsuit filed by Sony Music, Universal Music Group, and Warner Music Group against VKontakte for refusing to remove user-uploaded music from its site. Reports estimate VKontakte will pay music rightsholders about $10 million a year. Read more here.

 Elsevier (now renamed RELX), a world leader in publishing medical and scientific literature, has successfully shutdown a Chinese domain for Sci-Hub, a website that illegally hosts millions of stolen RELX works for free. The publishing company has been locked in a legal battle with the website since last year. Sci-Hub was created by a Ukrainian-born student who believes the works published by RELX should be made available for free.

 Japan’s Ambassador to the U.S., Kenichiro Sasae, argued for the passage of TPP this week, saying the failure to do so could damage U.S. leadership in the Asia-Pacific region. He said: “TPP, together with diplomatic and security engagement, is critical to America's

presence in the region for years to come…It is crucial to U.S. economic leadership going forward.”

V. Industry Updates:

 On Monday, Andrew Langer, President of the Institute for Liberty and Host of the LangerCast on the RELM network, penned an op-ed in The Hill titled, “Is DOJ inadvertently creating ‘copyright trolls?’” Langer criticizes the lobbying efforts of the collectives for the major music publishers – the American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music Inc. (BMI), who are currently urging the Department of Justice to ease the protections in consent decrees. Langer argues that the consent decrees are important because they protect the marketplace from price manipulation, adding that any relaxation of them “would raise costs on any business that licenses music.” Langer goes on to discuss a new request recently made by the major publishers to allow fractional licensing, a practice where a business would need to license the rights from each owner of a song before being permitted to play it. Langer asserts that this model would lead to price manipulation and encourage “trolls” to “intentionally hold up the licensing process and leverage…higher licensing fees.” Read more here.