The Second Circuit Court of Appeals returned a favorable ruling for major record companies in a copyright infringement case on December 12, 2018.  The ruling came down in Capitol Records, LLC v. ReDigi Inc., a lawsuit involving an online platform (“ReDigi”) designed to enable the lawful resale of purchased digital music files.  The Second Circuit concluded that ReDigi infringed the record companies’ exclusive rights under Section 106 of the Copyright Act.

ReDigi is an online platform created to enable the lawful resale of lawfully purchased digital music under the first sale doctrine.  ReDigi hosts a space online that allows users, who lawfully purchased files from iTunes, to resale those same files online.  In order to resale the files, the user who owns the digital music must first download and install ReDigi’s Music Manager software program (“Music Manager”).  After installation, Music Manager analyzes the digital file intended for resale, verifies that the file was originally lawfully purchased from iTunes, and scans it for indications of tampering.  If the file was lawfully purchased, Music Manger considers it an eligible file that may be resold.  Once the file has been verified, the user transfers the eligible file to ReDigi’s server.  While the file is being transferred, ReDigi breaks the music into small blocks of data, creates a temporary copy of each block, and then sends a command to delete the block of data of the digital file from permanent storage on the initial user’s device.

ReDigi tries to guard against a user’s retention of duplicate digital music files after they are sold through ReDigi by continuing to search the user’s connected device for duplicate.  Major record companies pointed out that ReDigi’s protections do not prevent the retention of duplicates after resale through ReDigi.  According to the record companies, prior to resale, a user could retain duplicates of the digital music file on devices not linked to the computer that hosts Music Manager, and access those duplicates post-resale.  ReDigi’s efforts were not sufficient to prevent the user from retaining sold files.

The US District for the Southern District of New York concluded that ReDigi’s online platform infringed the record companies’ copyrights by unauthorized reproduction and distribution of copyrighted works.  In June 2016, the district court entered a stipulated judgment awarding damages to the record companies for $3.5 million and permanently enjoining ReDigi from operating their online platform.  ReDigi appealed the judgment, but the Second Circuit affirmed the district court’s decision.

In its decision, the Second Circuit found that ReDigi’s temporary copy of the digital file created a new phonorecord which was an unauthorized reproduction.  The Court also found that the making of the reproduction was not a fair use under Section 107 of the Copyright Act where the creators made no change to the copyrighted sound recordings, the system made identical copies of the whole of the recordings, and the reproductions were made for the purpose of resale in competition with the record companies.  The Court made no decision whether ReDigi also infringed the record companies’ exclusive rights under Section 106(3) to distribute their works.

Earlier this year, I authored a blog post about the so-called “Monkey Selfies” after the Ninth Circuit ruled that animals cannot sue for copyright infringement because, as nonhumans, they lack the required standing under the Copyright Act.  Recently, following a single judge’s request for a vote, the Ninth Circuit did not vote in favor of an en banc hearing (a full panel rehearing of the case).

Therefore, the Ninth Circuit’s earlier ruling against the People for the Ethical Treatment of Animals, Inc., on behalf of a monkey named Naruto, stands.  At least for now.

We do it all the time, but is it legal? Maybe. Maybe not.

Embedding content from one source, e.g., a website, into another source, e.g., another website, is not uncommon. News sites embed photographs from Instagram, twitter messages, and videos into their content. Businesses embed videos and photographs of their products into their websites. Embedding also occurs when we post a link from a website into our social media accounts. For instance, after copying and pasting a website link into a social media post, an embedded version of the website automatically generates. This auto embedding typically consists of the formation of a small box or window which may include a reference to the website, an article name or title, and/or an image or video from the website. But is such use of embedded content copyright infringement?

Under the Copyright Act, the owner of a copyright has the exclusive right to “perform…. [or] display the copyrighted work publicly.” 17 U.S.C. §§ 106(4)-(6). Under the act, to” perform or display a work publicly” includes “to transmit or otherwise communicate a performance or display of the work… to the public, by means of any device or process.” 17 U.S.C. § 101. The Act further defines “display” as “to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process.” Id.

In Perfect 10 v. Google the Ninth Circuit established the “server test.” In this 2007 decision, it was held that Google’s presentation of images in its search results via in-line linking did not infringe another’s copyrights because Google did not make a copy or store a copy of the image on its servers. That is, the court found that Google wasn’t displaying a “copy.” For many, this settled the issue: as long as the content was hosted on third-party servers, an in-line or embedded link showing the same content elsewhere would not infringe. But in the last several months, something unexpected happened.

Two district courts recently rejected the holding in Perfect 10 to the extent it required actual possession (e.g., a copy on the accused infringer’s server) as a prerequisite for infringement because neither could find any such requirement in the express language of the Copyright act.

First, the Northern District of Texas held that when one website displays content from another’s website through embedding, it can publicly display copyrighted works of another “by ‘showing a copy’ of the works via a ‘process’” in violation of the Copyright Act. In effect, the court held, this was a live stream of another’s copyrighted content and no different than if a movie goer live streamed a movie via the internet to the public – actions that clearly constitute infringement even if the infringer does not possess a copy. Next, the Southern District of New York similarly held that embedding content into a website such that it displays content from another source could violate a copyright holder’s display rights, even if the website’s server did not store a copy of the work.

Thus, the law on embedded content may not yet be as settled as some believed. Of course, there are always defenses to copyright infringement to consider, like fair use. In the meantime, however, it may be wise to think twice before posting embedded content.

Yesterday the United States Supreme Court announced that it was granting the petition for writ of certiorari in the copyright infringement case previously discussed on this blog here and here.  The case is Fourth Estate Public Benefit Corp. v. Wall-Street.com LLC and involves the question of when a copyright holder can properly file a copyright infringement lawsuit.

34126235 - copyrightCurrently there is a circuit-split as to whether the term “registration” as used in the Copyright Act includes the mere filing of a registration application or whether it requires that the Copyright Office have actually approved or denied the registration application.  The plaintiff in the case, Fourth Estate Public Benefit Corp., filed suit before the Copyright Office had approved or denied its application, and the Eleventh Circuit affirmed the lower court’s dismissal of its complaint on that basis.  The United States Solicitor General, who the Supreme Court invited to weigh in earlier this year, urged the Court to take the case and uphold the Eleventh Circuit’s position.

The Supreme Court is now poised to resolve the dispute and to give copyright holders clarity as to whether they may file suit merely after filing an application for a copyright registration.

Though apparently not when it comes to suing for copyright infringement.  Earlier this week, the Ninth Circuit issued a ruling in a case involving photographs taken by a monkey on a camera left unattended by a nature photographer in Indonesia—aptly deemed the “Monkey Selfies.”  The copyright infringement case was filed by People for the Ethical Treatment of Animals, Inc. (PETA) as “Next Friends” of the monkey named Naruto against the photographer and entity that published the Monkey Selfies in a book that identified themselves as the copyright owners (although also noting that Naruto took the photographs).  After a lengthy dispute, the Ninth Circuit affirmed the district court’s ruling and held that animals like Naruto cannot sue for copyright infringement because, as nonhumans, they lack the required standing under the Copyright Act, which does not expressly authorize animals to sue.