The Ninth Circuit’s First Time Interpretation on Family Movie Act Exemption

October 22, 2017 Irene Rajagopal

About the author: Irene Rajagopal is an international business and copyright lawyer with legal experience in U.S. and China. Irene is the founder of PAPER Law Office and licensed to practice law in Washington State. Irene helps clients to complete the copyright registration at U.S. Copyright Office and review the licensing agreements. Her office is located in Bellevue, Washington State. She can be reached at irene@irenerajlaw.com. Please feel free to click here to visit the website of PAPER Law Office PLLC (http://www.paperlawoffice.com).

Chinese Version 中文

by Irene Rajagopal, PAPER Law Office PLLC

The Ninth Circuit Court of Appeals made its first interpretation on the legal authorization of filtering process under the Family Movie Act of 2005 (“FMA”), as an affirmative defense to copyright infringement claims in Disney Enterprises, Inc. v. VidAngel, Inc., 869 F.3d 848 (9th Cir. 2017), where the Ninth Circuit Court decided in favor of the Studios to grant an injunctive relief.

FMA's Statutory Language

FMA provides an exception of copyright infringement on the filtering process or the technologies of such filtering process of household movie viewing.

The statute provides, in relevant part:

Notwithstanding the provisions of section 106, then following are not infringements of copyright:

[...] the making imperceptible, by or at the direction of a member of a private household, of limited portions of audio or video content of a motion picture, during a performance in or transmitted to that household for private home viewing, from an authorized copy of the motion picture, or the creation or provision of a computer program or other technology that enables such making imperceptible and that is designed and marketed to be used, at the direction of a member of a private household, for such making imperceptible, if no fixed copy of the altered version of the motion picture is created by such computer program or other technology.

17 U.S.C. § 110(11).

Background

In Disney Enterprises, Inc. v. VidAngel, Inc, the defendant-appellant VidAngel spent “millions of dollars” buying the DVDs or blue-ray discs of the new released movies, most of these movies are not available at online streaming platforms yet. VidAngel labels each physical copy of the discs with a unique barcode, rip the content into “intermediate copies” by removing the technological protection measures, and add tags to the digital content for filtering purpose. VidAngel’s customers buy a certain copy of DVD or blue-ray disc online and select at least one objectionable content. Then customers can view the movies through digital platforms when VidAngel filters the objectionable content and streams the movies to customers.

There is a tricky part. Customers, after viewing the movies, can sell back the DVD or blue-ray discs to VidAngel for the original purchase price less $1 for standard definition per night or $2 for HD per night. The most customers have never required for the delivery of the discs, but rather just they viewed the movies and sold back the legal ownership of the DVD to VidAngel. VidAngel kept the possession of such discs from beginning to end. The plaintiffs-appellees called this “buy-sellback” as “a sham”.[1]

FMA Defense

When the studios (Disney, Twentieth Century Fox Film, Warner Brother Entertainment) brought the copyright infringement claim and the claim of circumvention of access control measures, one of VidAngel’s defenses is that its operation is in compliance with the exception under the FMA.

To defend claims of reproduction right claim and public performance claim, VidAngel argues its filtering process complies with FMA exemption.

The creation of the “intermediate copies” is exempted for reproduction right claim, because FMA permits a filtered stream “from an authorized copy”, and VidAngel’s filtering processes begins from an authorized copy.
FMA is a complete defense to the public performance claim, because the transmission is not public as VidAngel filters the content tailored for each customer and stream the content to such customer. At the moment of the streaming, such customer was the legal owner of the underlined DVD or blue-ray discs.

The Ninth Circuit Court rejects VidAngel’s arguments:

First, as suggested by the statutory heading “Limitations on exclusive rights: Exemption of certain performances and displays”, FMA provides an exemption to “compliant filtered performances, rather than the processes that make such performances possible”.[2] In addition, there is text limitation on the exemption, reading as “no fixed copy of the altered version of the motion picture is created by such computer program or other technology”. [3] The exemption shall not expand to the reproduction right, therefore making an unauthorized copy shall not be legalized by virtue of FMA. In this case, VidAngel created digital, altered copies before the filtering and streaming.

Second, the key phrases in the statute is filtering “from an authorized copy”. The Ninth Circuit Court held that the most natural reading of the statutory language is that, “the filtered performance or transmission itself must be ‘from’ an authorized copy of the motion picture.” [4] It shall not be read as a process that begins with an authorized copy.

Finally, the Ninth Circuit Court held that VidAngel’s interpretation will create a giant loophole in the copyright law:

“…[V]irtually all piracy of movies originates in some way from a legitimate copy. If the mere purchase of an authorized copy alone precluded infringement liability under the FMA, the statute would severely erode the commercial value of the public performance right in the digital context, permitting, for example, unlicensed streams which filter out only a movie's credits. See 4 Patry on Copyright § 14:2 (2017).” [5]

Disruptive Technologies on Existing Business Models?

The economics behind this case is the major studios' business model to release movie through "windows" in sequence of movie theaters, sale or rental of physical DVD or blue-ray discs, sale of digital downloads, on-demand for short-term online viewing, subscription of online viewing.

VidAngel provides online filtering services that causes disruption of the orderly "windowing" business model, where the licensees paid huge amount to obtain the license in certain window. The Ninth Circuit therefore held there is "irreparable harm".

On the other hand, there may still be a question, whether a narrow and technical interpretation of the FMA will in fact make the online filtering services impossible, even if an online service provider does not create a "sell-buyback" options.

[1] See Plaintiffs-Appellees’s answer, page 8.

[2] See Disney Enterprises, Inc. v. VidAngel, Inc., 869 F.3d 848, 858 (9th Cir. 2017).

[3] See Disney Enterprises, Inc. v. VidAngel, Inc., 869 F.3d 848, 857 (9th Cir. 2017).

[4] See Disney Enterprises, Inc. v. VidAngel, Inc., 869 F.3d 848, 858 (9th Cir. 2017)

[5] See Disney Enterprises, Inc. v. VidAngel, Inc., 869 F.3d 848, 859 (9th Cir. 2017)

Disclaimer and Copyright Notice: This blog post does not constitute any kind of legal advice. The author and PAPER Law Office PLLC will not guarantee the accuracy of the content. Please consult with your lawyer for any legal questions. The copyright of this blog post is exclusively owned by PAPER Law Office PLLC. Please do not reproduce or publish whole or part of this post without advance written consent from the right holder.

Just Say Hello

July 25, 2017 Irene Rajagopal

(Banff, by Irene Rajagopal, July 2017)

About the author: Irene Rajagopal is an international copyright lawyer with legal experience in U.S. and China. Irene is the founder of PAPER Law Office and licensed to practice law in Washington State. Irene helps clients to complete the copyright registration at U.S. Copyright Office and review the licensing agreements. Her office is located in Bellevue, Washington State. She can be reached at irene@irenerajlaw.com. Please feel free to click here to visit the website of PAPER Law Office PLLC (http://www.paperlawoffice.com).

Chinese Version 中文

by Irene Rajagopal, copyright attorney at PAPER Law Office PLLC

Hi Readers,

My family and I went a road trip to Banff National Park last week. The colors and lines of rockies were amazing. I did a few sketches and share with you here.

What are you doing in summer? Keep cool.

Best,

Irene

"Scènes à Faire" in Shakespearian Screenplays

July 5, 2017 Irene Rajagopal

(Summer in Seattle is gorgeous! I spent time on plein air paintings and enjoyed the beauty of nature. Above is one of my recent pastel paintings.)

Chinese Version 中文

by Irene Rajagopal, copyright attorney at PAPER Law Office PLLC

“To make a great film you need three things – the script, the script and the script.”

-- Alfred Hitchcock[1]

Screenplays are the souls of movies, formed by plots, themes, dialogues, mood, settings, pace, characters, events. Copyright infringement claims may happen when two screenplays look so similar.

If two screenplays share a common theme, say, a drama about William Shakespeare, will a court support a copyright infringement claim? The Ninth Circuit Court decision in Heusey v. Emmerich may give you some clues -- the details that flow naturally from an idea will not be protected.

In Heusey v. Emmerich, the plaintiff Kenneth Heusey, an independent screen writer, wrote a screenplay titled “Not Without Justice”, based on historical events of William Shakespeare in the Queen Elizabethan era. After reading the plaintiff’s screenplay, a production company Centropolis offered to buy the rights from the plaintiff, but two parties could not reach a price. The production company Centropolis then bought another screenplay titled “Soul of the Age” and developed a 2011 film “Anonymous”. The plaintiff Kenneth Heusey brought a lawsuit.

Both screenplays, “Not Without Justice” and “Soul of the Age” (the screenplay of “Anonymous”), share a common concept: Shakespeare was a masquerader of the masterpieces -- he did not pen those famous lines, but just accidently took the credit during a political fight between Essex and King James of Scotland for the succession of heirless Queen Elizabeth’s throne.

When deciding the similarity of two works, it is not enough to ask a lay person to look and feel the overall feeling of the works. Instead, the Ninth Circuit adopts two-part test -- an extrinsic test and an intrinsic test. A court will conduct an extrinsic test as a matter of law and a lay person will decide the similarity of expression in an intrinsic test. For purpose of an extrinsic test, a court must filter out any “unprotectable elements”, [2] and compare the "protectable elements" in the plaintiff's work and the defendant's work. This means when two pieces of works look similar overall, if the similarity is based on the unprotectable elements, for example, historical facts, the court shall filter out these elements and exam what remains.

In Heusey v. Emmerich, the district court relied on the “scènes à faire doctrine”. The scènes à faire doctrine “applies to any detail or expression that flows naturally from an idea, regardless of its significance to the work itself”. [3] These details and expression are not protected under copyright law, so another author could use the same or similar details and expressions. For example, if the theme of a screenplay is about the startup companies in Silicon Valley, characters like engineers are “scènes à faire”.

The mood and settings of two screenplays, despite the similarity, are “scènes à faire”. The district court held that the moods (wars, political struggles, conspiracies, betrayals, revenge, and love affairs) are “common among Shakespearian works…as well as works in general set in the Elizabethan era”. Accordingly, “the moods flowing from these stories are examples of both unprotectable scènes à faire and merger”.[4]

The district court further found the settings such as the Queen’s palace, the Tower of London, Essex House, and the Globe Theatre, “naturally flow from premises involving Queen Elizabeth and Shakespeare”, so they “cannot support a finding of substantial similarity”.[5]

The district court also compared the plots, themes, dialogues, characters, sequence of events. Since both screenplays are historical based, the district court filtered out the historical facts and scènes à faire, and demand a heightened standard for the similarity in historical characters. It led to a conclusion that “two works are not substantially similar as a matter of law”. [6]

The Ninth Circuit affirmed the district court’s decision to dismiss the copyright infringement claim with the same reasoning.

As we can see, copyright protection on screenplays has its boundaries -- the historical events, facts, and those details naturally flow out of the idea are not protectable. Maybe that's why the public can enjoy so many movies and dramas about Shakespeare.

[1] See “30 Quotes about Screenwriting from A-List Directors & Actors”, available at https://screenplayscripts.com/quotes-about-screenwriting/

[2] See Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435, 1443 (9th Cir. 1994), quoted by Heusey v. Emmerich, CV 14-06810-AB (EX), 2015 WL 12765115, at *3 (C.D. Cal. Apr. 9, 2015), aff'd sub nom. KENNETH HEUSEY, Plaintiff-Appellant, v. ROLAND EMMERICH; et al., Defendants-Appellees., 15-55975, 2017 WL 2839176 (9th Cir. July 3, 2017)

[3] See Murray Hill Publ'ns, Inc. v. Twentieth Century Fox Film Corp., 361 F.3d 312, 319 (6th Cir. 2004), quoted by Heusey v. Emmerich, CV 14-06810-AB (EX), 2015 WL 12765115, at *4 (C.D. Cal. Apr. 9, 2015), aff'd sub nom. KENNETH HEUSEY, Plaintiff-Appellant, v. ROLAND EMMERICH; et al., Defendants-Appellees., 15-55975, 2017 WL 2839176 (9th Cir. July 3, 2017)

[4] See Id. at *8.

[5] See Id. at *8.

[6] See Id. at *10.

A Summary Judgment: Infringement of Fabric Design

May 19, 2017 Irene Rajagopal

by Irene Rajagopal, attorney at PAPER Law Office PLLC

The Ninth Circuit Court of Appeal recently confirmed that a summary judgment on the infringement of fabric design, which means the in some rare situations, the district court may have discretion on the inference of copying without a jury trial.

In Unicolors, Inc. v. Urban Outfitters, Inc., 853 F.3d 980, 992 (9th Cir. 2017), the Ninth Circuit affirmed the Central District Court’s decision on the copyright infringement. Unicolors, a Los Angeles based fabric designer, brought a copyright claim again Urban Outfitters, Inc. and Century 21 Department Stores, LLC (“Urban Outfitters”).

Unicolors created the fabric design at issue (“Subject Design”) from an original art design created by an art studio in New York, from whom Unicolors obtained the license to use the original design and create derivative works. Unicolors completed the copyright registration of such derivative works -- the Subject Design.

Urban Outfitters maintains a collection of thousands of fabric swatches in its studio. Its designers use those swatches to design apparels, including the dress alleged to copy Unicolor's Subject Design.

The district court found that the Subject Design and Urban Outfitters’ design are overwhelmingly identical. “Looking at two designs as a whole, the arrangement, shapes and details of all the floral or feather motifs are almost exactly the same. The colors are different, and only the Subject Design has white parts outlined in a different color, but otherwise the arrangement, shape, and details of all the floral or feather motifs appear to be almost exactly the same.”

The Ninth Circuit agreed with the district court that the designs are “overwhelmingly identical that precludes the possibility of independent creation”. Although usually the Ninth Circuit adopts two-part analysis to establish the inference of copying -- the extrinsic test and the intrinsic test, the Ninth Circuit confirmed that a summary judgment is appropriate in some rare situations when competing works are overwhelmingly identical.

By distinguishing L.A. Printex Indus., Inc. v. Aeropostale, Inc., 676 F.3d 841, 852 (9th Cir. 2012), another fashion design's copyright case where the Ninth Circuit Court favored the jury trial, the Ninth Circuit clarified that it is still possible to allow a summary judgment:

Where the extrinsic similarity is so strong that the works are near duplicates save for superficial differences, the court may properly conclude that no reasonable jury could find that the works are not substantially similar in their overall concept and feel. In such a case, the court need not delve into a complex subjective analysis of the works to assess substantial similarity and does not risk supplanting the jury's subjective interpretation with its own. See Unicolors, Inc. v. Urban Outfitters, Inc., 853 F.3d 980, 987 (9th Cir. 2017)

When deciding the issue of Urban Outfitters’ willfulness, the Ninth Circuit rejected Urban Outfitters’ argument that it was impossible for Urban to define and locate the copyright status of the fabric swatch. The Circuit Court held that Urban’s refusing “as a matter of policy to even investigate or attempt to determine” the copyright constituted the reckless or willful blindness to fabric designer’s copyright. The Circuit Court made it clear that,

[A] finding of willful infringement does not require a showing of actual knowledge; a showing of recklessness or willful blindness is sufficient. See e.g., Wash. Shoe Co., 704 F.3d at 674. See Unicolors, Inc. v. Urban Outfitters, Inc., 853 F.3d 980, 992 (9th Cir. 2017)

From this case we can see that, while the courts tend to avoid making any subject determination on the similarity of the works, when such similarity becomes "overwhelmingly identical", the courts will go ahead and give a summary judgment on the copyright infringement without wasting the judicial resources to entertain a jury trial.

About the author: Irene Rajagopal is an international copyright and business attorney. Her office is located in Bellevue, Washington State. She can be reached at irene@irenerajlaw.com. Please feel free to click here to visit the website of PAPER Law Office PLLC (http://www.paperlawoffice.com).

Disclaimer and Copyright Notice: This blog post does not constitute any kind of legal advice. The author and PAPER Law Office PLLC will not guarantee the accuracy of the content. Please consult with your lawyer for any legal questions. The copyright of this blog post is exclusively owned by PAPER Law Office PLLC. Please do not reproduce or publish whole or part of this post without advance written consent from the right holder.

Common Law Agency Principles Apply to DMCA Safe Harbor Analysis

May 2, 2017 Irene Rajagopal

By Irene Rajagopal, attorney at PAPER Law Office

In Mavrix Photographs, LLC v. LiveJournal, Inc.,14-56596, 2017 WL, the Ninth Circuit Court of Appeal held that common law agency principles shall apply to the analysis of whether the social media platform shall be liable for the acts of its volunteer moderators, for the purpose of DMCA safe harbor for information residing on systems or networks at the direction of users.

LiveJournal is a social media platform allowing users to create and run thematic “communities”. One of the most popular LiveJounal communities was Oh No They Didn’t (“ONTD”), where users submit posts containing photographs, videos, links and gossip about celebrities’ lives. ONTD attracted 52 million page views per months in 2010. To exercise more control over ONTD for purpose of generating more advertisement revenues, LiveJounal hired a then active moderator to serve as the full time “primary leader” of ONTD.

Mavrix, a celebrity photography company, sued LiveJounal for the alleged copyright infringement on the basis of twenty Mavrix photographs posted on ONTD.

DMCA safe harbor under Section 512 (c) was used by LiveJournal as its affirmative defense (“A service provider shall not be liable ... for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider…”)

The Ninth Circuit Court of Appeal held that to eligible at the threshold for the Section 512(c) safe harbor, “LiveJournal must show that the photographs were posted at the direction of the user”. Mavrix Photographs, LLC v. LiveJournal, Inc., 14-56596, 2017 WL 1289967, at *1 (9th Cir. Apr. 7, 2017) The critical inquiry is about who posted the photos online, rather than who submitted the photos to the online service providers. In this case, the volunteer moderator screened and reviewed the photographs, but the moderator cannot recall if he has posted the alleged photographs.

First, the Ninth Circuit Court of Appeal guided to determine if the moderator is an agent of LiveJounal so that the moderator's acts could be attributed to the owner of the social media platform. When applying the common law agency principles, the Ninth Circuit Court of Appeal emphasized that “whether an agency relationship exists also depends on the level of control a principal exerts over the agent”. The Ninth Circuit Court of Appeal concluded that there are genuine issues of material fact as to whether the moderators are LiveJounal agents.

The Ninth Circuit Court of Appeal further provided the guidance to determine whether the post were at the direction of the user, if there is a finding that the moderators are the agents of LiveJounal.

Posts are at the direction of the user if the service provider played no role in posting them on its site or if the service provider carried out activities that were “narrowly directed” towards enhancing the accessibility of the posts. See UMG Recordings, Inc. v. Veoh Networks, Inc., 620 F.Supp.2d 1081, 1092 (C.D. Cal. 2008);

See Mavrix Photographs, LLC v. LiveJournal, Inc., 14-56596, 2017 WL 1289967, at *7 (9th Cir. Apr. 7, 2017)

The Ninth Circuit Court of Appeal noted that § 512(m) of the DMCA provides that no liability will arise from “a service provider monitoring its service or affirmatively seeking facts indicating infringing activity.” See Mavrix Photographs, LLC v. LiveJournal, Inc., 14-56596, 2017 WL 1289967, at *7 (9th Cir. Apr. 7, 2017).

Reversing and remanding the case back to the district court, the Ninth Circuit Court of Appeal further provided guidances to determine two remaining elements of Section 512(c) safe harbors: (1) the online service provider shall lack both actual and red flag knowledge of the infringement; (2) the online service provider shall not financially benefit from infringement that it had the right and ability to control.

In short, when an online service provider monitors, screens and posts the submission from the users, rather than staying in a passive role, the analysis of DMCA Safe Harbor can be facts specific.

This decision represents the Ninth Circuit Court of Appeal's position on the interpretation of the DMCA as

a balance between the interests of “copyright holders in benefitting from their labor; ... entrepreneurs in having the latitude to invent new technologies without fear of being held liable if their innovations are used by others in unintended infringing ways; and those of the public in having access [to] both....” Columbia Pictures Indus., Inc. v. Fung, 710 F.3d 1020, 1037 (9th Cir. 2013).

Mavrix Photographs, LLC v. LiveJournal, Inc., 853 F.3d 1020 (9th Cir. 2017)

In such a balance, entrepreneurs will not be given a free pass of copyright infringement. Instead the safe harbors are subject to terms and conditions.