From Google v. Oracle to the Takings Clause


“With a whirlwind of activity to kick off the new year, 2021 proved a hotbed of movement on the copyright front [and] 2022 promises to provide even more exciting copyright brainteasers to be unraveled.”

https://depositphotos.com/211210396/stock-photo-close-wooden-judge-gavel-copyright.htmlOne of the greatest attributes of copyright law is the never-ending abundance of exciting new developments, including those in Congress, the courts, and at the Copyright Office. On the surface, copyright seems straightforward in that it advances the public good by securing property rights to authors. But underneath this simple veneer lies centuries of debate about how best to balance the rights of authors with the public interest, where each distinct issue presents a veritable rabbit hole of metaphysical distinctions. For the copyright connoisseur, keeping up with the latest events can be an exhausting endeavor, though the thrill of solving new puzzles makes it intellectually rewarding. Thankfully, one need not be a member of the copyright cognoscenti to appreciate the major developments in copyright law this past year. From the Supreme Court’s decision in Google v. Oracle to the implementation of a small copyright claims tribunal to attempts to rein in state infringements, 2021 has certainly provided many wonderful events worth highlighting.

For copyright fans, 2020 ended with a resounding bang. Librarian of Congress Carla Hayden announced that Shira Perlmutter would serve as the 14th Register of Copyrights. Senator Thom Tillis released a discussion draft of legislation that would significantly reform the Digital Millennium Copyright Act (DMCA). And President Donald Trump signed into law the Protecting Lawful Streaming Act, which harmonizes the penalties for unauthorized streaming to match those for illicit reproductions and distributions, and the Copyright Alternative in Small-Claims Enforcement Act (CASE Act), which creates a tribunal within the Copyright Office to hear small-value claims. With that whirlwind of activity to kick off the new year, 2021 proved a hotbed of movement on the copyright front. Below are a few of the year’s most important developments, and a few honorable mentions, showing how, even 23 decades after the first U.S. Copyright Act was enacted, fundamental copyright mysteries remain yet to be solved.

Supreme Court Decides Google v. Oracle Case Narrowly

It was billed as the “copyright case of the decade” by many observers, including the petitioner, and not just because it had been litigated for a decade. The obvious choice for the most important copyright development in 2021 goes to the Google v. Oracle decision, which the Supreme Court handed down in April. The interest in the case is hard to exaggerate. Close to sixty amicus briefs were filed at the merits stage, and countless articles have been written about it in the legal and mainstream press. The spat centered on Google’s verbatim copying of thousands of lines of computer code from Oracle’s popular Java platform for use in its competing Android platform. The Federal Circuit had held that the computer code was copyrightable and that fair use did not excuse Google’s appropriation. The Supreme Court reversed on fair use, though the ho-hum decision was not the dazzling blockbuster that some had hoped.

The Supreme Court punted on the main perplexity at issue—whether the code was an uncopyrightable idea or protectable expression—and instead issued a narrow ruling on fair use while assuming copyrightability “for argument’s sake.” The Court characterized the code as “part of a user interface,” giving it “thin” protection and distinguishing it from “the mine run of computer programs” that would receive greater solicitude. The protection was so thin, and the fair use analysis so “creative,” that critics called it “a copyrightability decision masquerading as fair use” and warned that it will “embolden copyists, harm creators and disintegrate value.” Thankfully, the decision was limited to “user interface” code, whatever that may mean, and the Court explicitly stated that it did not “overturn or modify” its “earlier cases involving fair use.” Indeed, as others have rightly surmised, the “one saving grace of Google v. Oracle might be its limited applicability.”

Second Circuit Rejects Broad View of Google v. Oracle

As the Supreme Court’s first fair use pronouncement in 27 years, the question naturally arose as to whether Google v. Oracle should be applied broadly. Despite its clear limitation to a “user interface” and explicit preservation of the Court’s fair use precedents, many wondered whether it fundamentally changed how fair use works in other contexts. It did not take long for the Second Circuit to consider this riddle in Andy Warhol Foundation v. Goldsmith. The suit involved a photograph of musician Prince that was taken by photographer Lynn Goldsmith and turned into an unauthorized series of prints by visual artist Andy Warhol in his signature style. In March, the Second Circuit held that Warhol’s use was not fair because it lacked a “fundamentally different and new artistic purpose and character,” thus cabining the transformative fair use jurisprudence and reinvigorating the derivative work right in the circuit.

After Google v. Oracle was handed down two weeks later, the Andy Warhol Foundation petitioned for a rehearing, claiming that the Supreme Court’s decision “comprehensively refutes the panel’s reasoning” on transformativeness and market harm. A group of sixty intellectual property scholars even piled on, lambasting the panel’s “extremely narrow and . . . erroneous view” of “transformative purpose” and failure to see the “public benefits” of declining to get permission. In August, the panel issued an amended opinion to “emphatically reject” the notion that its reasoning was inconsistent with Google v. Oracle. The panel noted how the Supreme Court “took pains to emphasize that the unusual context, which involved copyrights in computer code, may well make its conclusions less applicable” in other contexts, such as this, where the material “serves an artistic rather than a utilitarian function.” The Second Circuit’s decision suggests, at least for now, that this fair use enigma is not as complicated as some might prefer. However, stay tuned, as the Andy Warhol Foundation petitioned the Supreme Court on December 9, asking it to review the Second Circuit’s decision and arguing that it “creates a circuit split and casts a cloud of legal uncertainty over an entire genre of visual art.”

Copyright Office Implements the CASE Act

Next on the list comes the challenge of making copyrights meaningful and enforceable for the average copyright owner—that is, practically everyone. Enter the CASE Act, which establishes a Copyright Claims Board (CCB) within the Copyright Office to handle certain low-value claims. Given that litigation in the federal courts is very lengthy and expensive, many authors, artists, and small businesses cannot afford to enforce their rights when they are infringed. Nor can most users of copyrighted content seek a declaration in the federal courts that their use is noninfringing. The CCB will provide an alternative route for such claimants with streamlined procedures that are user-friendly, cost-effective, and voluntary for both sides. The Office has been working diligently to get the CCB up and running, and it anticipates that operations will begin “well before” the May 2022 deadline. To that end, on December 8, the Office issued a notice of proposed rulemaking establishing the regulations by which the CCB will operate, and comments are due in February 2022.

The CASE Act has been years in the making. The Copyright Office released a comprehensive study on small claims in 2013, concluding that Congress should take action because the current system presents “formidable challenges” to enforcement, and Congress has investigated the idea since at least 2006. But like every change in copyright law, the CASE Act has its share of supporters and detractors. Advocates applaud the “long-overdue access to justice” it provides and commend it as “an improvement over the status quo” where “infringements regularly go unchallenged and unmitigated.” Others suggest that “the CASE Act is catnip for copyright trolls” who will “pursue meritless claims . . . to extort settlements.” The ability of respondents to opt out also raises concerns as to its effectiveness as well as questions about its constitutionality, though such worries have likely been overplayed. While it is hard to predict how things will play out, it seems clear that many people will be watching as the CCB commences a few months from now.

State Sovereign Immunity and the Takings Clause

The final big development of the year poses one of copyright law’s more difficult stumpers: Can states infringe copyrights with impunity? That question was partially answered last year as the Supreme Court held in Allen v. Cooper that Congress lacked authority when it attempted to abrogate state sovereign immunity for infringement in 1990. But the Court left open the possibility Congress could try again with sufficient evidence of widespread, intentional infringement by the states. The Copyright Office thereafter instituted a public study, and in August it released a report concluding that “the evidence indicates that state infringement represents a legitimate concern for copyright owners” that is “worthy of congressional action.” However, the Office also noted that ambiguous legal standards prevented it from concluding “with certainty that even the current more robust record would be found sufficient to meet the constitutional test for abrogation.” Given this equivocation, it remains unclear whether Congress will take action without first gathering more proof.

Nevertheless, the Supreme Court’s decision has not stopped copyright owners from asserting claims against infringing states. Indeed, the district court in Allen v. Cooper granted a motion to reconsider in August that allows the plaintiff, Rick Allen, to pursue a claim under the Takings Clause. A pair of cases in Texas have likewise brought constitutional claims. In Jim Olive Photography v. University of Houston, the Texas Supreme Court in June confusingly rejected a photographer’s per se taking claim because there was no “physical occupation” of the intangible copyright, though that decision has been appealed to the Supreme Court. And in Canada Hockey v. Texas A&M, the Fifth Circuit held in September that “copyrights are not a form of property protected by the Takings Clause,” though there is now a petition pending for a rehearing en banc. The problem of whether a copyright is a protected property interest under the Takings Clause seems far from figured out.

Honorable Mentions and Looking Ahead to 2022

There have been many other important developments in 2021 worth mentioning—more than can be expounded here. In November, the Supreme Court heard oral argument in Unicolors v. H&M, a case that explores whether a mistake in a copyright registration application requires a district court to solicit the opinion of the Register of Copyrights as to whether registration would have been refused had the error been known. Much of the briefing focused on the correct knowledge standard to be employed, leading to confusion about the scope of the question presented and the suggestion that certiorari may have been improvidently granted. October heralded the completion of the 8th triennial rulemaking proceeding, which creates temporary exemptions to the prohibition against circumventing technological measures that protect access to copyrighted works. After a lengthy process that began in 2020, the Librarian of Congress issued a final rule that incorporates the recommendation of the Register of Copyrights and permits circumvention for noninfringing uses as to several classes of works. And in June, the American Music Fairness Act was introduced in the House of Representatives. The bill would bring U.S. copyright law into alignment with most other countries by providing a terrestrial public performance right for sound recordings.

Looking to the future, 2022 promises to provide even more exciting copyright brainteasers to be unraveled. In response to a letter sent by Senators Thom Tillis and Patrick Leahy to the Register of Copyrights last June, the Copyright Office will be publishing a notice of inquiry seeking comments on standard technical measures (STMs), which are technologies such as fingerprinting and filtering that protect copyrighted works in the digital realm. Though provided for in Section 512 of the DMCA, there has been no consensus on STMs over the past two decades, and that disagreement will likely continue with the comments that are submitted. Turning to the courts, several interesting disputes will likely come to a head in the new year. In SAS Institute v. World Programming, the Federal Circuit will tackle the presumption of validity for registered works and the copyrightability of computer code. District courts will consider the controversial theory of “controlled digital lending” in Hachette v. Internet Archive and one state’s attempt to create compulsory licenses for ebooks in Association of American Publishers v. Frosh. Needless to say, these and many other issues will provide plenty of fodder for copyright enthusiasts to enjoy in 2022 and beyond.

Image Source: Deposit Photos
Author: AndreyPopov
Image ID: 211210396



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