Foul Use? of the United States

the copyright laws and jurisprudence that these “copyright warnings” and Foul Use? of the United States. Seeking to ad- “anti-piracy warnings” on copyrighted dress some of the novel issues created works—such as television broadcasts FTC Declines by perfect digital reproduction and the and DVDs—materially overstate the instantaneous and wide-spread distri- rights of the copyright holders and to Take Action bution enabled by the Internet, Con- significantly understate or fail to men- gress passed the Digital Millennium tion uses permitted by the Copyright Copyright Act (“DMCA”) in 1998. The Act or the U.S. Constitution. The CCIA Against Allegedly DMCA, which amended the Copyright claimed that the copyright warnings Act of 1976, contained two controver- of these old media companies are Overbroad and sial provisions that have helped define overbroad and misleading, thus con- fair use in the digital age and pitted the stituting unfair and deceptive trade Misleading purveyors of “old media”3 against the practices under the FTC Act. Although disrupting technologies of “new me- the action purported to seek relief only Copyright Warnings dia”4 companies. The first provision— for such allegedly deceptive copyright codified at 17 U.S.C. § 1201—criminal- warnings, it appears to be but one part of a larger strategy by the new media By Scott L. Walker and izes the production and dissemination of devices used to circumvent techno- industry to resuscitate the fair use doc- Matthew Savare logical measures intended to control trine, which has arguably been eroded access to copyrighted works. The and marginalized since the passage of eing avid fans of sports and en- second provision—codified at 17 U.S.C. the DMCA.7 tertainment and practicing at- § 512—creates a safe harbor for online For example, as any football fan Btorneys in those fields, we can and Internet service providers against can probably recite from memory, the not help but take notice of the copy- liability for copyright infringement if National Football League broadcasts right warnings used by the various they take appropriate measures to com- the following statement during each sports leagues, individual teams, stu- ply with proper notice and takedown game: “This telecast is copyrighted by dios, and publishers with respect to letters demanding the prompt blocking the NFL for the private use of our audi- their intellectual properties. Whereas or removal of allegedly infringing ma- ence. Any other use of this telecast or our involvement in this narrow area terial posted on the Internet. any pictures, descriptions, or accounts has usually involved impressing (or Since the passage of the DMCA— of the game without the NFL’s consent annoying) our friends and families which arguably has enhanced the is prohibited.”8 Similarly, Major League with an occasional primer on copy- rights of copyright owners—debate Baseball employs the following mes- right law, the Computer & Com- has ensued regarding the continued sage for its television audience: “This munications Industry Association viability of the fair use doctrine. In copyrighted telecast is presented by au- (“CCIA”)1 took action regarding those addition, content owners represent- thority of the Office of the Commissioner warnings by filing a complaint with ing the old media have filed countless of Baseball. It may not be reproduced or the Federal Trade Commission (“FTC”), lawsuits against new media companies retransmitted in any form, and the ac- alleging that the warnings constitute that have enabled the pervasive—and counts and descriptions of this game may unfair and deceptive trade practices oftentimes illegal—reproduction and not be disseminated, without express 9 under section 5(a) of the Federal Trade distribution of such content. This trend written consent.” Commission Act (“FTC Act”). is best exemplified by the recording In its complaint, the CCIA con- As detailed more fully below, in an industry’s high-profile and prolonged tended that such overbroad warnings unusually swift response, the FTC staff litigation against various file-sharing are not restricted to sports properties, decided on December 6, 2007, not to sites such as Napster and Grokster. The providing the following example from recommend that the Commission take CCIA complaint with the FTC is one of the Morgan Creek/Universal DVD, any formal action against the compa- the more recent examples of this ongo- The Good Shepherd: “All material is pro- nies named in the CCIA complaint at ing struggle. tected by copyright laws of the United this time.2 Despite the speedy resolu- States and all countries throughout the tion of this particular matter, the battle The CCIA Complaint world. All rights reserved. Any unau- between content creators and distribu- On August 1, 2007, the CCIA thorized exhibition, distribution, or tors to define the bounds of copyright filed a Request for Investigation and copying of this film or any part thereof protection and fair use in the age of Complaint for Injunctive and Other (including soundtrack) is an infringe- digital reproduction, distribution, and Relief (the “complaint”) with the FTC, ment of the relevant copyright and will consumption is sure to continue for the claiming that certain entertainment subject the infringer to severe civil and foreseeable future. and sports corporations,5 through criminal penalties.”10 their misleading and manifestly The CCIA objected to these warn- Drawing the Battle Lines false copyright warnings,6 system- ings, and others like them, on three The proliferation of digital tech- atically misrepresent the rights of primary grounds. First, according to nologies and the rise of the Internet consumers under U.S. copyright law. the CCIA, the warnings purportedly economy have placed great strains on Specifically, the complaint alleged overstate the rights of the copyright

Published in Entertainment and Sports Lawyer, Volume 25, Number 4, Winter 2008. © 2008 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

912865_reprint.indd 28 4/16/08 1:37:06 PM holder by completely ignoring the in the old media such as the motion pic- ing authorization from the rights holders. public’s statutory fair use rights. Sec- ture industry—benefit from the “fair use This doctrine’s purpose is to balance the ond, the CCIA argued that claiming economy.” The authors of the study con- rights of copyright owners with the free that the “descriptions” and “accounts” tended that the overbroad copyright reg- speech rights of the public. Section 107 of games can not be disseminated is ulations of the past 10 years have eroded of the Copyright Act codifies the fair use “manifestly false,” because the Copy- the proper balance between copyright doctrine: “the fair use of a copyrighted right Act does not protect facts or protection and fair use. According to the work . . . for purposes such as criticism, ideas. Finally, the CCIA claimed that authors, these developments threaten to comment, news reporting, teaching . . ., threats of severe civil and criminal stifle innovation, economic growth, and scholarship, or research, is not an in- penalties for unauthorized uses are global competitiveness. Thus, whereas fringement of copyright.” Section 107 misleading in that federal law encour- the complaint with the FTC alleged that also articulates the four-part fair use ages many uses that do not require consumers are harmed by misleading test originally conceived by Justice the copyright owner’s permission. copyright warnings, the study—citing Story in Folsom v. Marsh,22 stating: In sum, the CCIA alleged that these various empirical analyses—claimed In determining whether the use made “ warnings, through their explicit that the U.S. economy has become in- of a work in any particular case is a fair statement of prohibition, invocation of creasingly dependent on information use the factors to be considered shall harsh civil and criminal penalties, and technology industries. In the eyes of the include— ’ deliberate omission of consumers CCIA, these unbalanced copyright laws 1. the purpose and character of the ”11 rights, serve to mislead the public. use, including whether such use On October 23, 2007, another is of a commercial nature or is for new media trade association, the nonprofit educational purposes; Home Recording Rights Coalition in the eyes of the ccia, 2. the nature of the copyrighted “ ” 12 ( HRRC ), filed a letter with the FTC work; ’ to supplement the CCIA s complaint, these unbalanced 3. the amount and substantiality of alleging that the dissemination of the portion used in relation to the the disputed copyright warnings is copyright laws copyrighted work as a whole; and analogous to other conduct that the 4. the effect of the use upon the po- 13 FTC has previously declared illegal. endanger economic tential market for or value of the Specifically, the HRRC argued that copyrighted work.23 in both In re: CTC Collections, Inc., et growth and al.14 and In re: State Credit Association, The protections afforded by the fair Inc., et al.,15 the FTC enjoined debt col- millions of jobs. use doctrine have been instrumental lection firms from sending debtors in fostering technological innovation, misleading letters regarding the debt- particularly the creation and expansion ors’ recourse for unpaid debts. The of the Internet. Without fair use, it is pos- HRRC letter emphasized that in those endanger economic growth and millions sible that consumers would not enjoy actions, the FTC found the practice of jobs. It appears, therefore, that the such technologies as the digital video illegal under the FTC Act because the CCIA sought to expand the fair use doc- recorder,24 the iPod,25 or search engines letters were incomplete and inaccu- trine on two fronts: first, by attacking— such as Google.26 rate and were intended to intimidate albeit unsuccessfully—the copyright In both the complaint and the study, the debtors rather than inform them warnings of the content providers in the CCIA noted that in addition to this of their legal rights.16 Similarly, the the name of consumers’ rights,21 and statutory fair use provision, the Copy- HRRC letter cited In re: Sears, Roebuck second, by criticizing the prevailing right Act includes other important— and Co.17 for the proposition that affir- copyright laws for the greater good of yet often overlooked—limitations on matively misstating the legal rights of the economy. Both are complementary copyright.27 For example, section 102(a) consumers causes substantial injury strategies in the organization’s professed affords copyright protection only to and is a deceptive practice.18 Accord- goal to strengthen the fair use doctrine. “original works of authorship,” i.e., ing to the HRRC, the FTC recently protection does not extend to mere found that misstating legal rights by Limits of Copyright Protection facts;28 section 102(b) expressly notes omission violates the FTC Act in cases In crafting this nation’s copyright that ideas are not copyrightable; sec- where others rely on such misstate- laws, Congress has enacted several tion 108 allows libraries and archives ments to their detriment.19 statutory provisions and incorporated to make or distribute one copy of a As an apparent adjunct to its peti- certain doctrinal concepts that limit the work without securing the copyright tion to the FTC to take action regarding scope of copyright protection and safe- owner’s permission; and section 110(1) copyright warnings, on September 12, guard the free speech principles guar- permits displays or performances of 2007 the CCIA released a study titled anteed by the First Amendment. One of a work in a classroom setting without Fair Use in the U.S. Economy: Economic the most significant restrictions on the the rights holder’s authorization. Contribution of Industries Relying on Fair scope of copyright protection is the fair Use.20 In the study, the CCIA argued use doctrine, which permits certain uses FTC Elects to Take No Action that many industries—including those of copyrighted material without secur- Given these express statutory limita-

912865_reprint.indd 29 4/16/08 1:37:08 PM tions on copyright protections, the copy- consumers’ confusion of their rights an HRRC representative believes that right warnings complained of in the and the copyright warnings, claiming another complaint with more evi- complaint appear to be overbroad on instead that any confusion “may well dence might gain more traction with their face. For example, the NFL’s warn- be a function of the inherent complexi- the FTC—although the HRRC empha- ing purports to prohibit all but the pri- ties of copyright law, in particular the sized that it currently has no plans to vate use of the telecast or any “pictures, fair use doctrine . . .”35 Although the take such action.38 descriptions, or accounts of the game ambiguities of the fair use doctrine and But even if the CCIA, HRRC, or without the NFL’s consent.” Such a the inconsistent and often contradictory another entity files a new complaint warning makes no allowance for—and judicial opinions regarding the issue do and supplements the record, there appears on its face to be contradicted contribute to consumer confusion, it is are still several hurdles to overcome by—the fair use doctrine and the prin- reasonable to assume that overbroad or to achieve their apparent objective of ciple that facts are not copyrightable.29 misleading copyright warnings only ex- restoring balance between the rights of Notwithstanding the apparent over- acerbate the problem. Indeed, the FTC copyright owners and the consuming breadth of the copyright warnings, the staff seemingly conceded this when it public. For instance, it is unclear if— FTC staff declined to take action at this wrote: “Widespread use of inaccurate and if so, to what extent—content pro- time. The FTC cited two main reasons copyright warnings could contribute to viders are required to affirmatively set for this decision. First, the FTC staff forth the fair use rights of consumers. claimed that it did not have a “sufficient As noted by Patrick Ross, executive basis to conclude that consumers would director of the Copyright Alliance,39 view those brief warnings as complete widespread use “[i]f CCIA were to succeed in requir- statements of their rights with respect to ing copyright owners to affirmatively the works.”30 Instead, the FTC staff con- of inaccurate delineate a fair use legal strategy with cluded that “consumers would likely in- every warning––in essence act as the terpret the statements as representations copyright warnings user’s defense attorney––wouldn’t that the material at issue is copyrighted many owners simply forgo the caution and that there can be significant penal- could contribute and instead move straight into legal ties for infringing that copyright.”31 Sec- action?”40 Thus, if the CCIA, HRRC or ond, the FTC staff stated that it did not to consumers’ any other group were able to secure have a “sufficient basis to conclude that an FTC order deeming these warnings consumers would be likely to refrain misunderstanding misleading and deceptive, it is proba- from engaging in lawful activities as ble that the parties named in the com- a consequence of reading those warn- of the statutory plaint would simply stop issuing the ings.”32 Rather, the FTC staff claimed warnings in favor of pursuing more that even without the warnings, the protections frequent and systematic copyright in- fair use doctrine is sufficiently unclear fringement suits. and undefined, so the “safest course is available to Moreover, although many of the always to get permission from the copy- principles embodied in the FTC ac- right owner before using copyrighted them under the tions cited in the HRRC letter appear material.”33 relevant, those cases are of somewhat Each justification articulated by the copyright act. limited persuasive value given the FTC staff is open to scrutiny. For ex- different factual context in which ample, section 401 of the Copyright Act they arose.41 Specifically, the HRRC delineates the proper form of copyright letter emphasized two 1975 actions notices, although it expressly notes that consumers’ misunderstanding of the in which the FTC enjoined mislead- “these specifications shall not be con- statutory protections available to them ing debt collection practices.42 In the sidered exhaustive.” Thus, copyright under the Copyright Act.”36 course of resolving those matters, the owners are not precluded from crafting Similarly, although the FTC staff FTC did—as the HRRC pointed out— their own form of copyright notices, is correct in noting that it was not find that the offending debt collection including detailed statements such as provided sufficient information to letters were “incomplete, inaccurate the ones at issue here. Notwithstanding conclude that consumers detrimentally and vague and [we]re stated to intimi- this freedom to craft notices, copyright rely on these warnings,37 such informa- date the debtor rather than to inform warnings can still be overbroad or tion could be obtained through an FTC him of the creditor’s legal rights.”43 misleading under the FTC Act. In its investigation or through a discovery Thus, these enforcement actions stand letter, the FTC staff acknowledged that process. Dismissing the action without for the rather unremarkable principle the disputed warnings “may overstate providing the complainant the oppor- that the FTC has, in the past, ordered particular aspects of limitations on tunity to gather such evidence appears companies to refrain from engaging in consumers’ rights . . .”34 Despite this premature, although the FTC letter misleading conduct. acknowledgment and without any does not foreclose the possibility of in- But unlike the challenged copy- analysis, the FTC staff summarily dis- vestigating the matter at a future date right warnings—which are broadcast missed any causal relationship between on a more complete record. Indeed, to anyone watching—the challenged

912865_reprint.indd 30 4/16/08 1:37:10 PM debt collection practices involved mis- piece of this much broader discussion, Inc., and Penguin Group (USA), Inc. leading statements made in personal- and although the dispute is resolved for 6. The CCIA differentiated between ized letters sent directly to individual the time being, the debate regarding the “copyright warnings,” which are the target consumers. Moreover, both the debt proper balance between copyright pro- of the complaint and “copyright notices,” collectors and Sears—which the FTC tection for content creators and fair use which are governed by 37 C.F.R. § 202.2 also enjoined from misleading con- for the consuming public will certainly and not implicated by the complaint. See sumers who had filed for personal continue. v complaint at 3. bankruptcy—used these devices with 7. Indeed, the HRRC acknowledged the intention of prompting consumers that it viewed the CCIA complaint— to make payments that, in some cases, Scott L. Walker practices antitrust, intellectual which, as detailed in this article, the HRRC they were not obligated to make.44 property, and complex commercial litigation with publicly supported—as an opportunity This is in stark contrast to the disputed Lowenstein Sandler PC. His e-mail is swalker@ to bring to the public’s attention the ero- copyright warnings, which are not lowenstein.com. sion of consumers’ fair use rights via designed to secure payments from—or Matthew Savare practices intellectual prop- devices like these allegedly overbroad prompt any affirmative action by— erty, media, and entertainment law with Lo- copyright warnings. Telephone Interview 45 particular individuals. wenstein Sandler PC. His e-mail is msavare@ with Mitchell L. Stoltz, Associate Counsel As a practical matter, it seems very lowenstein.com. for HRRC (Jan. 4, 2008). The HRRC also unlikely that the FTC will ever take emphasized that the CCIA complaint pre- the extraordinary step of ordering the 1. According to the complaint (see sented an opportunity to argue that copy- copyright owners to submit to a third- http://www.ftc.gov/os/070801CCIA.pdf), right infringement penalties are grossly party entity for guidance on crafting the CCIA is an “international, nonprofit disproportionate in relation to the actual proper warnings—which the CCIA association of computer, information, and harm caused by alleged infringers. Id. had asked the FTC to do.46 Indeed, the communications technology firms. CCIA 8. Complaint at 4. FTC did not mandate such action in its is dedicated to preserving full, fair and 9. Complaint at 5. consent orders either in the aforemen- open competition throughout [its] indus- 10. Complaint at 6. tioned debt collection matters or in try.” Complaint at 2. The CCIA’s members 11. Complaint at 7. Sears. The FTC did, however, require include Google, Microsoft and Yahoo. See 12. Like the CCIA, the HRRC is com- the debt collectors to cease making http://www.ccianet.org/members.html; prised of consumer electronics manufac- certain types of misleading statements see also Jacqueline Palank, Content Mak- turing companies that produce technolo- in their collection letters. If the FTC ers Are Accused of Exaggerating Copyright, gies used to copy, store, share, and dis- ever elects to investigate this matter N.Y. Ti m e s , (Aug. 2, 2007), available at seminate digital content. and evidence is presented of consum- http://www.nytimes com/2007/08/02/ 13. Letter from Robert S. Schwartz, ers forgoing their fair use rights as a business/media/02copyright.html?_ HRRC General Counsel, to The Honorable result of the challenged warnings, the r=1&oref=slogin. Deborah Platt Majoras, Chairman, FTC FTC may deem such narrow relief ap- 2. Letter from Mary K. Engle, Associate (Oct. 23, 2007) (the “HRRC letter”). propriate. In fact, even in refusing to Director for Advertising Practices, FTC to 14. 86 F.T.C. 109 (1975). investigate, the FTC staff urged “copy- Edward J. Black and Matthew Schruers, 15. 86 F.T.C. 502 (1975). right owners to be accurate in their CCIA (Dec. 6, 2007) (the “FTC letter”). 16. Letter at 2. characterizations of their rights and 3. For the purposes of this article, we 17. Docket No. C-3786 (1998). any limitations on consumers’ rights use the term “old media” as a reference to 18. Letter at 2. to use copyrighted works,” and for companies and technologies that focus on 19. Id., citing In re: Rambus, Inc., Docket “all parties concerned with this issue the means of communication that existed No. 9302 (2006) and In re: Union Oil Com- to educate consumers about their legal since before the advent of the Internet, pany of California, Docket No. 9305 (2006). rights and responsibilities . . .”47 such as newspapers, books, broadcast and 20. Thomas Rogers & Andrew Szamoss- As new media companies such cable television, film, and music. zegi, Fair Use in the U.S. Economy: Economic as Google begin to create their own 4. For the purposes of this article, we Contribution of Industries Relying on Fair content and as old media companies use the term “new media” as a reference Use (CCIA: Sept. 2007) (hereinafter the acquire or merge with new media to companies and technologies that are “study”). companies (such as News Corpora- focused on digital communication and ex- 21. Recently, others have criticized tion’s acquisition of MySpace), the lines pression, such as the Internet, computers, copyright owners for their notices to con- between content creator, aggregator, and video games. sumers, albeit on different grounds. See Pa- and distributor will become increas- 5. The complaint named the following mela Samuelson and Jason Schultz, Should ingly blurred. This confluence of media entities: National Football League, NFL Copyright Owners Have to Give Notice About consolidation and diversification, the Properties, Inc., NFL Enterprises LLC, Ma- Their Use of Technical Protection Measures? old combining with the new, and the jor League Baseball, Major League Baseball (Nov. 19, 2007), available at http://ssrn. introduction of innovative technologies Properties, Inc., Major League Baseball com/abstract=1058561 (recommending will further complicate the economic, Advanced Media, LP, NBC Universal, Inc., that the FTC investigate the deployment legal, and public policy48 landscape Universal Studios, Inc., Morgan Creek of digital rights management (“DRM”) of copyright. The dispute concerning Productions, Inc., DreamWorks Animation technologies in digital content and require copyright warnings is just one small SKG, Inc., DreamWorks LLC, Harcourt, notice be given to consumers regarding

912865_reprint.indd 31 4/16/08 1:37:13 PM any technical restrictions imposed by the 35. Id. such an analysis would be appropriate DRM software). 36. Id. given the circumstances. See, e.g., In re: 22. 9 F. Cas. 342 (Cir. Ct. Mass. 1841). 37. Telephone Interview with Mitchell L. Rambus, Inc., Docket No. 9302 (2006), at 30, 23. 24.17 U.S.C. § 107. Stoltz, Associate Counsel for HRRC (Janu- n. 141 (“Whatever the potential breadth 24. Sony Corp. v. Universal City Studios, ary 4, 2008). It is also noteworthy that— of Section 5 of the FTC Act in these cir- Inc., 464 U.S. 417 (1984). even though the challenged warnings have cumstances, our analysis in this opinion 25. Recording Industry Association of been widely used for years—both the CCIA rests on the traditional criteria for evaluat- America v. Diamond Multimedia System, complaint and the HRRC letter merely ing allegations of monopolization under Inc., 180 F.3d 1072 (9th Cir. 1999). alleged consumer harm in a conclusory Section 2 of the Sherman Act.”), avail- 26. Kelly v. Arriba Soft, 336 F.3d 811 (9th manner. Indeed, neither entity provided able at http://www.ftc.gov/os/adjpro/ Cir. 2003). evidence—even anecdotal—of consumers d9302/060802commissionopinion.pdf. 27. Study at 16; Complaint at p. 5, 7, relying upon the warnings, that the warn- Although one commissioner did state in and 9. ings themselves have dissuaded consumers a concurring opinion that the conduct of 28. Feist Publications, Inc. v. Rural Tele- from exercising their fair use rights, or any Rambus constituted an “‘unfair method phone Service Co., 499 U.S. 340, 347-48 (1991) actual harm to the public. Although the of competition’ in violation of Section 5 of (“[Facts] may not be copyrighted and are CCIA complaint did cite to a study by the the FTC Act,” the opinion focused largely part of the public domain available to ev- Center for Social Media as evidence “that on Rambus’ anticompetitive conduct. See ery person.”) (internal citation omitted). consumers are confused about their rights Opinion of Commissioner Jon Leibowitz, 29. This restriction of the dissemination to use legally acquired media and forgo the In re: Rambus, Inc., Docket No. 9302 (2006), of facts means that copyright owners may use of legitimate products and services out at 1-2 (characterizing the complained-of not stop the consuming public from report- of confusion or fear,” the CCIA did not cite conduct as an “unfair method of competi- ing facts shown in a televised game. Never- to any evidence to support its conclusion tion” and urging the complete body of the theless, a copyright owner may permissibly that the disputed warnings “contribute to FTC to “fully exercise” its powers under the restrict access to a live sporting event if an that confusion.” Complaint at 2, ¶ 4 & n.1. broad mandate of section 5 of the FTC Act), individual fails to comply with the owner’s 38. Telephone Interview with Mitchell and 10 (stating that section 5 of the FTC Act rules. For example, the National Colle- L. Stoltz, Associate Counsel for HRRC “is a flexible and powerful Congressional giate Athletic Association recently issued (Jan. 4, 2008). mandate to protect competition from un- new rules restricting the number of times 39. The Copyright Alliance is a non- reasonable restraints, whether long-since credentialed reporters can post live blogs profit organization “dedicated to the recognized or newly discovered, that vio- during the course of particular sporting value of copyright as an agent for creativ- late the antitrust laws, constitute incipient events. If a reporter exceeds the limit for a ity, jobs and growth.” Its members include violations of those laws, or contravene given sport, he or she will be ejected from MLB, the NFL, and other entities named those laws’ fundamental policies”), available the event. Heather Havenstein, N.C.A.A. in the CCIA complaint. See http://www. at http://www.ftc.gov/os/adjpro/d9302/ to Bloggers: Too Many Posts and You’re Out! copyrightalliance.org/aboutus (last vis- 060802rambusconcurringopinionofcommis- N.Y. Ti m e s , Dec. 20, 2007. ited Dec. 28, 2007). sionerleibowitz.pdf. 30. FTC Letter at 4. 40. Copyright Alliance Press Release: 42. HRRC letter at 1-3. 31. Id. Statement From Executive Director Patrick 43. In re: CTC Collections at 115 ¶¶ 9, 11. 32. Id. It is not surprising that the Ross Re: Today’s CCIA Filing with the FTC, 44. For example, in the FTC complaint FTC staff cited this deficiency, because— Aug. 1, 2007, available at http://www. issued in connection with the Sears mat- with respect to media disclosures to the copyrightalliance.org/newsroom/0912 ter, the FTC indicated that certain Sears public—the FTC has declined to intervene fairusestudy. Regarding this statement, consumers paid debts that had been when the complainant fails to demon- HRRC Associate Counsel, Mitch Stoltz, discharged in bankruptcy. In re: Sears, strate the likelihood of consumer injury. noted that the entities named in the CCIA Roebuck & Co., Docket No. C-3786 (1998), See, e.g., Letter from Mary K. Engle, As- complaint do not truly face a binary at ¶ 11, available at http://www.ftc.gov/ sociate Director for Advertising Practices, choice between the challenged warnings os/1998/02/9723187.cmp.htm FTC, to Gary Ruskin, Executive Director, and increased litigation activity. Stoltz 45. HRRC representative, Mitch Stoltz, Commercial Alert, (February 10, 2005), suggested that those companies could, downplayed this distinction, arguing available at http://www.commerciala- instead, amend their warnings to cure that the copyright warnings likely cause lert.org/FTCletter2.10.05.pdf (denying the alleged overbreadth. He cited as an consumers to forgo engaging in fair use Commercial Alert’s request that the FTC example the copyright notice used in the activities out of fear of being assessed require the clear and conspicuous disclo- treatise Nimmer on Copyright, which the stutory damages, which could be as high sure of product placements in entertain- CCIA cited in the complaint. Telephone as $150,000 per infringed work, if such ment programming, because, inter alia, Interview with Mitchell L. Stoltz, Associ- infringement is deemed to be “willful” un- Commercial Alert failed to show the like- ate Counsel for HRRC (Jan. 4, 2008). der section 504(c)(2) of the Copyright Act. lihood of consumer injury). 41. The Rambus and Union Oil decisions Telephone Interview with Mitchell L. Stoltz, 33. FTC letter at 4. quoting U.S. Copy- cited by the HRRC are also distinguish- Associate Counsel for HRRC (Jan.4, 2008). right Office, Fact Sheet FL-102, Fair Use, able. In those actions, the FTC assessed Stoltz also stressed that even if the debt available at http://www.copyright.gov/ the disputed conduct under the Sherman collection context is in some ways factually fls/fl102.html. Act—which is not an analysis that the distinct, the “social cost is analogous.” Id. 34. Id. at 5. CCIA requested, nor does it seem that On this point, Stoltz referred to the CCIA

912865_reprint.indd 32 4/16/08 1:37:15 PM fair use study discussed above and alluded to the substantial economic cost that results when individuals refrain from engaging in fair use activity for fear of being assessed substantial statutory damages. Id. 46. Complaint at 12. 47. FTC letter at 5. 48. Indeed, as a testament to the im- portance of the fair use issue, Congress, in several of its latest sessions, included bills aimed at strengthening the rights of consumers of digital media. See, e.g., Digi- tal Media Consumers’ Rights Act, H.R. 107, 108th Congress (2003); Digital Media Consumers’ Rights Act of 2005, H.R. 1201, 109th Congress (2005); and Freedom and Innovation Revitalizing U.S. Entrepre- neurship (FAIR USE) Act of 2007, H.R. 1201, 110th Congress (2007).

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