Six Pro-Viacom Amicus Briefs Filed in the 2nd Appeal in Viacom v. YouTube - Yup. Hollywood Still Wants to Control the Internet

Saturday, August 03 2013 @ 05:39 PM EDT

Contributed by: PJ

There aren't as many amicus briefs in this second Viacom appeal as there were in the first, less than half, but there are six die-hards supporting Viacom's second appeal who have just filed their amicus briefs in Viacom v. YouTube-Google. They don't understand the Internet. They hate the DMCA's Safe Harbor provision, and they have learned absolutely nothing from history or from the rulings in this case so far. For example, here's the Copyright Alliance cynically predicting the end of the world if the appeals court doesn't overturn the district court judge's ruling for YouTube:

If the court upholds this decision, the burden of ensuring a safe and legal Internet ecosystem will shift almost exclusively onto the shoulders of authors, practically absolving other stakeholders from being in any way responsible for the activities that occur on their websites.
That is, I'm sorry to say, not true. There is no shifting *on* to the shoulders of authors, because the Safe Harbor provision in the DMCA *already* puts responsibility on authors to identify their own works if they think they are being infringed. That's what cease and desist letters are for. And after you send one, the entity you sent it to has responsibilities indeed, a responsibility to act. The only shifting in this picture is folks like the Copyright Alliance trying to shift that burden of identifying infringement onto Google instead. Because Google has lots of money, right? They're smart, right? Why can't they have to come up with something that won't cost authors anything or make them lift a finger to protect their own works?

This group has learned nothing at all about the Internet. All they want is that they want it to stop being the way it is. The Internet is allegedly killing them. The DMCA is giving YouTube a free ride, to hear them tell it, and the lower court judge, they argue, misinterpreted it. Back in the '80s, it was Sony allegedly destroying copyright with their wicked anti-copyright VCRs that let home users video films and tv shows. Now it's the Internet and Google and YouTube allegedly stealing money out of the mouths of starving artists. The arguments are the same.

But do they suffer from amnesia? One amicus brief states clearly that the majority of money Hollywood makes from movies is from sales of things like DVDs after the theater release. The very thing they told the court back in the days of the Sony Betamax case would destroy them turned out to be what kept them in business. They lacked vision back then, and they still do. But can't they compare and notice how wrong they were back then and extrapolate?

It's actually worse. It's greed. They want to make the Internet the new goldmine, as you can see in this telling quote from the amicus brief [PDF] by the American Federation of Musicians et al:

The motion picture and television industry's financial models and well-being, and that of the employees represented by the Guilds and Unions, heavily rely on "downstream" revenue, or revenue from the exploitation of its products subsequent to the theatrical release or first television run.5This was never truer than it is today — 75% of a typical motion picture's revenues derive from exploitation after the initial theatrical release, as do more than 50% of a television program's revenues after the initial television run. Internet exhibition and distribution, in particular, is one area of potential downstream revenue that is continuing to develop, evolve and expand as technology advances.
They want their business model to stay the same and just squeeze the Internet into it until it screams and dies, morphed into a money machine for them, while you and I can do without the real Internet, because it's too free-wheeling for their business model. What do they care about technical progress? This is about money, honey. If every other use of the Internet dies because of their bull-in-a-china-shop ways, what do they care? They never grokked the Internet anyhow.

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The six amicus briefs:
One of the filings, the Football Association Premier League one, is actually a request for leave to file the amicus brief, and that's why it looks different from the others, with the form attached at the top. Here's what they tell the court about their interest here:
The Football Association Premier League Limited, Bourne Co., Murbo Music Publishing, Inc., CAL IV Entertainment, LLC, X-Ray Dog Music, Inc., and Fédération Française de Tennis respectfully request the Court grant them leave to file a brief of amici curiae supporting appellants and reversal. A copy of the proposed brief is attached as Exhibit 1 to the accompanying declaration of Charles S. Sims (“Sims Decl.”). Appellants have consented to this filing and appellees have declined to take a position on the motion. Sims Decl. ¶¶ 2-3.

The movants are copyright owners – sports leagues and independent music creators – who are plaintiffs in a related case, Football Ass’n Premier League et al. v. YouTube, Inc. et al., No. 07-cv-03582 (LLS) (the “Premier League” case). They were parties to an appeal argued jointly with Viacom’s first appeal, which in April 2012 resulted in vacating and reversing the district court’s original grant of summary judgment to YouTube and Google, and remanding for additional fact-finding. See Viacom Int’l., Inc. v. YouTube, Inc., 676 F. 3d 19, 41-42 (2d Cir. 2012). The movants were not parties to the summary judgment proceedings from which this second appeal arises. Because the Premier League case is still before the same district court on many of the same legal issues, the movants have a profound interest in the outcome of this appeal.

Despite differences in the record, the district court’s interpretation of the DMCA safe harbor disqualifiers, including the “control” and “willful blindness” inquiries, will materially affect amici’s case as well as amici’s ongoing businesses. Indeed, some of the same copyrighted works (and clips) that were identified as infringing at the outset of amici’s case against YouTube are still being infringed by YouTube today, with impunity, as a result of the lower court’s extremely narrow reading of those DMCA disqualifiers, contrary to this Circuit’s rulings in the first appeal. Although YouTube’s history (including its knowledge and intent) set forth in Viacom’s brief is much the same for amici and their works; amici submit this brief to highlight for the Court the full breadth of YouTube’s conduct that may be pertinent in assessing the application of the § 512(c) safe harbor so the Court’s decision may take all such conduct into account. In opining on the scope of these inquiries, we also urge this Circuit to be cognizant of additional aspects of YouTube’s control and willful blindness, elucidated in the proposed brief, that have been shown by amici below but are not the focus of the Viacom case, so that future consideration of those matters is not incidentally foreclosed here.

For the foregoing reasons, movants respectfully request that this Court grant their motion for leave to file the proposed brief of amici curiae, attached as Exhibit 1 to the accompanying Declaration of Charles S. Sims.

This isn't just about YouTube, though. It's about the Internet itself. You can see that by the arguments raised. For example, here's a snip from Section II of the amicus brief by the American Federation of Musicians and the other unions and guilds, to show you what I mean:

On-line theft threatens grave harm to the output of the United States' creative industries, and to the artists and craftspeople who make up the Guilds' and Unions' memberships. The Unions' and Guilds' members' earnings, benefits and jobs are reliant on the preservation and proper enforcement of this country's intellectual property laws. That is why the Guilds and Unions have each made the fight against on-line theft a top priority.3

A. On-line Theft Threatens the Unions' and Guilds' Members' Jobs

On-line theft is not a "victimless" crime — theft costs jobs. The creative process that produces the audiovisual works and sound recordings the Unions' and Guilds' members create is significantly and negatively impacted by on-line theft of those works. One of the tangible consequences of on-line theft is a reduction in employment opportunities for Union and Guild members. The financiers and producers of creative content make decisions regarding what projects to "greenlight" based on settled understandings about various markets and the revenues that can be generated from them. In making these decisions, potential financiers and producers calculate a project's value based on projections of the estimated revenues that will be derived from a series of discrete exploitation windows. For example, the typical life cycle of a motion picture would include windows for the initial theatrical release, followed by a release to the home video market and pay-per-view, then pay television (including video-on-demand), and finally broadcast and basic cable television; the foregoing all occur in both domestic and foreign markets.4Many films are also made available for licensed, legal paid download and streaming on the Internet and mobile devices, concurrent to or overlapping with other distribution windows.

These distribution windows recur, so projects generate revenues for many years, sometimes even for the duration of copyright.

The motion picture and television industry's financial models and well-being, and that of the employees represented by the Guilds and Unions, heavily rely on "downstream" revenue, or revenue from the exploitation of its products subsequent to the theatrical release or first television run.5 This was never truer than it is today — 75% of a typical motion picture's revenues derive from exploitation after the initial theatrical release, as do more than 50% of a television program's revenues after the initial television run. Internet exhibition and distribution, in particular, is one area of potential downstream revenue that is continuing to develop, evolve and expand as technology advances. Given the significant importance of downstream revenues to the financial success of films and television programs, if these markets experience a decrease in revenues, financiers and producers will invest in fewer new works, resulting in fewer jobs in the audiovisual arts. As the prospects for downstream revenues have diminished, motion picture investors have become more likely to fund only "blockbuster" movies with a high likelihood of success in their initial theatrical release. Financing has become more constrained for more diverse films that typically draw a greater percentage of their revenues from post-theatrical distribution, thus impacting the number of jobs available to the Unions' and Guilds' members.6

Any unauthorized use of a copyrighted work upsets the economic foundation of the entertainment industry's commercial structure. This is true when pirated DVDs are sold at swap meets. It is also true when new technologies emerge offering millions of Internet users around the world illicit alternatives that contravene the legal rights of copyright owners. And it is particularly destabilizing when a new technology bears a patina of legitimacy, while underneath that shiny surface it threatens to supplant existing, lawfully licensed windows of exploitation. YouTube's longstanding policy of displaying and distributing works in contravention of copyright constitutes precisely such a destabilizing and illegitimate use of new technology.

3 See, e.g., Interview of IATSE President Matthew Loeb, DGA QUARTERLY (Winter 2012), available at: http :// DGAQ/All-Articles/1201-Winter-2012/10-Questions-Matt-Loeb.aspx (explaining the effects of internet theft on union members and efforts of guilds and unions to combat internet theft); Joint statement of AFM, AFTRA, DGA, IATSE, IBT, and SAG commending passage of S. 978, Commercial Felony Streaming Act, June 16, 2011, available at: http://www.afm.orginews/joint-statement-commending -passage-of-s-978; Directors Guild of America, Guilds, Unions Meet with White House Intellectual Property Official, November 8, 2011, available at: DGA-meets-with-Espinel.aspx (stating AFM, AFTRA, SAG, IATSE, DGA, and others met with U.S. Intellectual Property Enforcement Coordinator Victoria Espinel to discuss, among other topics, the fight against internet theft); Jonathan Handel, Unions Speak Out Against Piracy, THE HOLLYWOOD REPORTER, April 4, 2011, (reporting on a press conference where Congressional leaders were joined by representatives of the DGA, AFTRA, IATSE and SAG to discuss internet theft); Joint letter of AFM, AFTRA, DGA, IATSE and SAG to United States Intellectual Property Enforcement Coordinator regarding the development of a federal effort against intellectual property infringement, March 24, 2010, available at: %20and%20Unions%20 Submission%20on%20IPEC%20- %20FINAL%20-%203-24-10-ability to support their families and their contributions to American culture are at stake.

4 A typical television series will run first on a television or cable network and might re-run multiple times within that same season. A recent practice is for episodes of the series to be available for viewing on the Internet and mobile devices — either via ad-supported streaming, a subscription-based service, or through paid downloads — as early as the next day following its first run. Frequently, successful television series are released to DVD after one season ends and before the next one begins. A successful series will eventually be syndicated to other broadcast or basic cable channels.

5 Downstream revenue sources include home video (e.g., DVD) sales, repeat airings on broadcast and basic cable television and premium pay television, new media (e.g., paid Internet downloads) and others, both domestic and foreign. 6 See, e.g., Michael Hiltzik, Casual Purchase of a Counterfeit DVD Shines Light on Piracy, L.A. TIMES, Jan. 4, 2010, available at: h ttp://www.latime s. com/busine s s/la-fi-hiltzik4-20101an04„0,3438848. column (noting that the cost of piracy of motion pictures is greatest for independent film producers, who rely more heavily on foreign distribution than the large U.S. studios, and who have been getting only "a fraction of what they used to" from foreign distributors because piracy has dramatically diminished their own revenue expectations).

This trend has the potential not only to erode jobs and earnings in our industry, but also to deprive consumers of high-quality content that reflects a diversity of viewpoints. One need only look to the music industry to understand how a successful content-based business model can be substantially eroded by a failure to effectively regulate or combat on-line theft. See, e.g., Bono, Op-Ed., Ten for the Next Ten, N.Y. TIMES, Jan. 3, 2010, at WK10.

Here's the Copyright Alliance, predicting doom and gloom if the appeals court doesn't overturn the lower court:
In short, the Copyright Alliance speaks with the voice of all creators – including those who have softer voices than the titans of media – and wishes to provide the Court with their perspective because, as the Court is aware, this case is not just about Viacom and YouTube. This case’s reach is much broader, touching Copyright Alliance members ranging from independent filmmakers who borrow against their retirement income to capture unique voices, to tens of thousands of entrepreneurial professional photographers and videographers, to myriad “below the line” craftspeople who are behind every television show and motion picture we enjoy daily.

This case has legal ramifications symptomatic of a much greater problem than the specific dispute at hand. If the court upholds this decision, the burden of ensuring a safe and legal Internet ecosystem will shift almost exclusively onto the shoulders of authors, practically absolving other stakeholders from being in any way responsible for the activities that occur on their websites. Such a decision would be contrary to the text, legislative history, and spirit of the Digital Millennium Copyright Act (“DMCA”). The legal standards under the DMCA, as interpreted by the courts, should not disincentivize honest Internet businesses from discouraging copyright infringement or, conversely, incentivize ill-intending website operators to launch platforms that welcome copyright infringement.

To bless the lower court’s erroneous application of the DMCA safe harbor would lead to ruinous results for authors, including the inevitable cannibalization of legitimate outlets for new works. Not only would such a result do violence to the DMCA, but it would fly in the face of the Copyright Clause of the United States Constitution, the core purpose of which is to “promote the Progress of Science and useful Arts.”

The Copyright Alliance and its members embrace all of the new technologies that enable their works to be seen and heard by the public in novel ways, including those birthed on the Internet that “disrupt” traditional business models. The Copyright Alliance submits this brief to help the Court appreciate how Judge Stanton’s decision is inconsistent with the DMCA and to help the Court understand the negative impacts of affirmance to all of those who rely on the DMCA to build vibrant and thriving legal outlets for creative endeavors.

Do They Suffer From Amnesia? Let's Go Back to 1984:

The same folks and their brethren told us the world would come to an end for them if Sony was allowed to sell VCRs to home users. Remember Sony Corp. v. Universal City Studios - 464 U.S. 417 (1984)? Hollywood argued back then that people should sit in a movie house or nothing. Or watch something on TV one time when it was broadcast. Or the world would come to the end. The US Supreme Court, however, ruled that time shifting was fair use and VCR vendors were not liable for what home users did with their VCRs.

Now the world will come to an end, they argue, if they can't continue to make most of their money from what Sony made possible -- the home video market, pay-per-view, pay television, broadcast and basic cable, both in the US and around the world -- plus arguing that the Internet should be added to DVDs as an additional, modern way to make money from after-theater releases. But to make that happen to their liking, they have to shift responsibility for infringement onto vendors, which is the opposite of what happened in Sony and the opposite of what the DMCA's Safe Harbor provision says.

Did you like the part about how they used to be able to make money from a product for the life of copyright? Do you know how long that actually is??? Longer than your lifetime. Longer than their lifetimes. So this isn't about their personal income. It's about corporate moneymaking.

They didn't *forget* about Sony. It's actually worse. They don't *like* the decision in Sony, and they continue to try to chip away at it. This time, it's about Safe Harbor, trying to change that so they don't have to send cease and desist letters. Here's why they don't like Sony, from the introduction to the ruling:

Petitioner Sony Corp. manufactures home videotape recorders (VTR's), and markets them through retail establishments, some of which are also petitioners.

Respondents own the copyrights on some of the television programs that are broadcast on the public airwaves. Respondents brought an action against petitioners in Federal District Court, alleging that VTR consumers had been recording some of respondents' copyrighted works that had been exhibited on commercially sponsored television, and thereby infringed respondents' copyrights, and further that petitioners were liable for such copyright infringement because of their marketing of the VTR's. Respondents sought money damages, an equitable accounting of profits, and an injunction against the manufacture and marketing of the VTR's.

The District Court denied respondents all relief, holding that noncommercial home use recording of material broadcast over the public airwaves was a fair use of copyrighted works, and did not constitute copyright infringement, and that petitioners could not be held liable as contributory infringers even if the home use of a VTR was considered an infringing use. The Court of Appeals reversed, holding petitioners liable for contributory infringement and ordering the District Court to fashion appropriate relief.

Held: The sale of the VTR's to the general public does not constitute contributory infringement of respondents' copyrights.

Notice anything helpful to YouTube and you and me? Why, yes. So do I. And so do they. They want the court to flip the switch and make Sony history, by stretching the later Grokster ruling to cover what the US Discrict Court judge so far has ruled it doesn't. That's why Viacom is asking for a new judge.

Here's how EFF describes the effect of the Sony ruling. The case is often called the Betamax case:

The Supreme Court's ruling in Sony v. Universal Studios (aka the Betamax case) is a landmark copyright precedent that has sheltered a wide array of technology innovators from lawsuits at the hands of the entertainment industries. In 1984, the Court held that a company -- in this instance, a VCR manufacturer -- was not liable for creating a technology that some customers may use for copyright infringing purposes, so long as the technology is capable of substantial non-infringing uses. In other words, where a technology has many uses, the public cannot be denied the lawful uses just because some (or many or most) may use the product to infringe copyrights.

The Betamax case and its descendants go to a crucial question: will innovators be forced by copyright law to ask permission from entertainment moguls before building new technologies? If Sony had asked permission from Hollywood, the Betamax might never have made it to market (or might have had very different features). It's thanks to the Betamax ruling that the makers of VCRs and every other technology capable of infringing and non-infringing uses (e.g., personal computers, CD burners, the TiVo DVR, Apple's iPod, and Web browsers) can continue to sell their wares without fear of lawsuits from copyright owners.

The entertainment industry's lawsuit against peer-to-peer software companies in MGM v. Grokster was a frontal assault on the Betamax ruling. By suing the makers of Morpheus, Grokster, and KaZaA software products, the entertainment industry aimed to set a precedent to use against other technology companies (P2P and otherwise).

In its June 27, 2005 ruling, the Supreme Court refused to overturn the Betamax precedent, but it also refused to clarify it. Instead, the Court punted on the hard questions by crafting a new doctrine of copyright infringement liability called "inducement."...

In its current lawsuits, the entertainment industry continues to try to chip away at Betamax. It is remarkable to compare the arguments the entertainment industry has made against P2P to the ones it made against the VTR (what they called VCRs back then) in 1982. A comparison makes it clear that the entertainment industry has been trying to roll back the protections established more than twenty years earlier in the Betamax case.

It's remarkable indeed to see the things that Hollywood said back in the '80s. On that same EFF page, you'll find amicus briefs filed back then in support of Universal Music and against Sony, along with a short snip from each to show you that they fought Sony in the '80's, lost, and they are still fighting even now that they make most of their money from the Sony decision going against them. That old gang of Viacom can't learn from history, nor even figure out where their best interest lies, I conclude:
Uncanny, isn't it, this trip back memory lane? See what I mean about amnesia? Did any of the feared results come true? Actually, the opposite. Most of their money now comes from what they resisted with all their might. They learned nothing from losing the argument in 1984 or even from watching reality play out, rebutting all their arguments and their fears.

The part that is so hard for my brain to understand is why they don't see that their money today is coming mostly from what they thought would be a disaster for them financially. Instead, it proved to be a perpetual goldmine. Why can't they extrapolate from that experience and realize that the Internet is no different, that they don't have to control it as heavily as they think they do to make buckets of money? YouTube is a potential goldmine for them, just as it is, without changing a thing about the DMCA, if they only had a little modernity or at least a bit of vision. Instead, they fear it, because it's not the way they are used to making money.

You can't undo tech progress. Not without deciding as a nation to ban technological progress. And as a matter of fact, that is exactly what they are asking the court to order.

Update: Viacom folded, it seems, and the parties announced on March 18, 2014 that they had settled the matter, with neither party paying the other anything. Since Viacom was originally asking for a billion in damages, the settlement clearly was Viacom waving a white flag. Or, more positively, it's Viacom deciding to wake up and smell the coffee. As the CNN article points out:

Since the lawsuit was filed, YouTube has become the world's largest video-sharing web site and also a partner to major media companies, including Viacom.

The futures of companies like Viacom are increasingly intertwined with technology giants like Google, which the two parties acknowledged.

"This settlement reflects the growing collaborative dialogue between our two companies on important opportunities, and we look forward to working more closely together," the statement said.

Viacom and Google have separately both shown interest in delivering a bundle of cable channels via the Internet, a concept known as "over the top TV." The two also have shared interests in various advertising and technology innovations.

Money is what litigation is about, and so money wins. Unfortunately, Viacom's executives were about a zillion years old, not exactly the Internet set, and it took them a long time to see the opportunity. But better late than never.