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Book Notes: Copyright's Highway by Paul Goldstein
Oct 7, 2006, 3:01p

Copyright's Highway: From Gutenberg to the Celestial Jukebox by Paul Goldstein

I read this book as a senior in college and originally wrote these notes on Dec 12, 2001. Technology was wreaking havoc on the music industry, and Dave and I were voraciously consuming as much knowledge as we could about how the industry ticked. Artists were getting screwed by the labels and stealing music gave us Robin Hood's pride. The future of music was the future of copyright, so it seemed. If one wanted to influence the future of music, it made sense to study the history of copyright. So I read this book.

Dave gave a nice name to our little venture: "Sharecropper Records".

If you're interested in intellectual property and copyright law in the United States, I highly recommend reading these notes or the book itself.

(page numbers are in parentheses)

Chapter 1: The Metaphysics of Copyright
(3) Acuff-Rose Music -> largest country music publisher

(5) Parody as a defense for copying because it can deflate cultural icons

(6) 2 questions for copyright infringement:
- 1. Has the defendant copied?
- 2. If so, has he copied too much?

(6) Even insurance companies, in their "errors and omissions" policies, have a say in what does and does not get published, because they provide insurance in case of infringement

(6) Reasons for copyright:
- 1. Maintain privacy (private letters)
- 2. Preserve integrity (truncated to accommodate commercials)
- 3. Make money (allow copying at a price because initial investment in creation is high)

(7) Copyright has had little effect on value of originals

(9) Patent law gives an inventor the right to stop others from manufacturing, selling, or using an invention without the patent holder's permission

(10) Copyright - Law of authorship
Patent - Law of invention
Trademark - Law of consumer marketing
Of course, there is much overlap

(11) No one buying a T-shirt with "Coca-cola" on it will think they are buying a soft drink, but the value, or "good will", that has accumulated around the Coca-Cola Company's mark over the years will result in the prohibition of the sale of the T-shirt without consent

(12) Right of publicity ensures that a person, such as an athlete, owns the right to anything associated with themselves, including photos and famous quotes

(12) Plagiarism is an ethical, not legal, offense

(13) The purchaser of a newspaper has the right to spread the news gratuitously, for any legitimate purpose not unreasonably interfering with complainant's right to make merchandise of it; but to transmit that news for commercial use, in competition with complainant, is a very different matter: it is unlawful and considered misappropriation

(14) However, Brandeis dissented, arguing that just because something costs money and labor to produce does not mean it is legally considered property; he believed that democratically elected Congress is responsible for intellectual property law that encroaches on the public domain; and that "the general rule of law is, that the noblest of human productions...become, after voluntary communication to others, free as the air to common use"

(14) Line between private property and public domain is a legal artifact, not natural, and varies significantly between cultures and nations

(15) 2 sides to copyright argument:
- 1. Copyright optimist, who views cup of entitlement as half full, to be filled further
- 2. Copyright pessimist, who views cup of entitlement as half empty "Natural rights" vs. "Individual freedoms"

(16) Pessimist asks only one question: How much money would it take to get someone to make their creative work? This is how much they should receive, and no more, as to not restrict other people's freedom of expression

(16) Copyright encompasses one of the few areas of human effort where one person can use something without diminishing the ability of anyone else to do the same - this fuels the debate

(19) A letter, conversation, shopping list has full copyright protection from the moment it is written down, with no need for registration, deposit, notices, or examination in the Copyright Office (since 1909)

(19) Copyright only protects a work's expression, not its underlying ideas

(20) Classic novels are in the public domain, which is why they are so cheap

(20) Concept of compulsory license states that anyone can, by paying a fixed fee, use an author's work without contacting them; song "covers" require only 6.25 cents per copy

(20) Doctrine of fair use allows copying of copyrighted material for salutary purpose, such as news reporting, teaching, and criticism.

(22) Copyright infringement is a felony punishable with up to 5 years in prison (since 1992)

(27) Copyright is the child of technology; there was no need for copyright before we had the technology to make a copy easily, as with the printing press

(33) Congress is usually 20 years behind adapting copyright to new technology

(33) Observing what he called the "iron law of consensus", a former staff member of a Senate copyright subcommittee has cautioned not to look to Congress for help if any proposed imposition of copyright liability disrupts entrenched consumer habits [such as mp3s]

(33) With the exception of Holmes Jr. decades ago, the Supreme Court's attitude has been to treat copyright's cup as half-empty, not half-full

Chapter 2: The History of an Idea
(41) With early printing in England, a cartel called the Stationers' Company controlled all printing and distribution; they bought complete rights to copy a work from the author, leaving the author with just the cash obtained and the original manuscript as his property, and nothing else (began pre-printing press)

(42) This Company monopoly was also controlled by the Crown, so it provided a means for censorship as well

(43) World's first copyright act, the Statute of Anne, in 1709 after lobbying by the Stationers' who argued that writers would only write if they had an enforceable property right; this unleashed a free market of literature and ideas

(64) Justice Holmes, in the Ben-Hur infringement trial, expanded the scope of copyright such that, given the costs of pursuing many individual infringers, a copyright owner's only effective relief would be against the single person that made infringement possible

(64) Musical notations protected by copyright since 1831

(67) First music, copyright-related compulsory license (1909) right was given if a copyright owner authorized a piano or record company mechanically to copy his music composition, any other company was free to make its own recording of the composition by simply paying the copyright owner 2 cents for each record produced

(68) In 1851, French composers, authors, and publishers formed SACEM, an institution that would police and collect royalties for public performance

(68) In 1913, the American equivalent, American Society of Composers, Authors, and Publishers (ASCAP) was born as a performing rights society

(70) In 1917, Supreme Court ruled that ambiance music in a restaurant requires permission from a copyright holder, even though it isn't directly paid for by the customer; therefore, indirect profit garnered from a product like music requires a license

(71) Initial ASCAP license was blanket license that allowed licensee to perform any work in the ASCAP collection as often as they wanted for a flat fee

(71) Artists transfer to ASCAP the rights to nondramatic ("small") performances of their work

(71) ASCAP needed a monopoly on music so that any licensee could get the blanket licensen and not fear being sued because the music they play is not part of ASCAP repertory

(72) ASCAP had no competition, so artist's had little choice but to join, even if they disagreed with the relative popularity of songs and the resultant distribution of licensing revenue

(72) National Association of Broadcasters (NAB) agrees to radio license with ASCAP in 1930s

(73) Justice Department filed antitrust suit against ASCAP for monopolistic practices

(74) In 1939 as their licenses are soon to expire, broadcasters form Broadcast Music, Inc. (BMI) to compete with ASCAP; they did not lure many artists away from ASCAP, though signed new ones with advances; when the licenses expired in 1941, listeners heard public domain classics, and ASCAP members lost revenue from both the radio stations and reduced sales, proving that radio did indeed boost sales

(74) They renegotiated, dropped license charges to one-third, and by 1943 ASCAP had record revenue

(75) Both BMI and ASCAP were sued for antitrust violations in late 1940, resulting in allowing non-exclusive agreements and a prospective (compulsory-like) license at a fair cost

(75) ASCAP now has $300 million revenue with 50,000 artists, and prominent feature is central role that artists play in daily work and independent lawsuits

(76) "public sympathy is stirred by the image of an artist struggling alone in his garret"

Chapter 3: Fifty Dollars to Collect Ten
This chapter discusses a lawsuit between a medical journals publisher, Williams & Wilkins, and the National Library of Medicine. In this case, W&W sued NLM because of the library's practice of photocopying entire journals and sending these copies out as inter-library loans.

(80) For a publisher to confront libraries meant that they were entering into battle with their best customers, which is obviously not a good idea

(81) Should Congress and the courts impose and enforce copyright when revenues for each photocopy were so low and the invasion of privacy so high?

(83) 1957-1961, NLM lent 352,262 works of which 301,528 were photocopies (86%)

(83) Photocopies of close to 1 million pages a year by 1970

(83) Library believed that making photocopies for scholarly use represented fair use, as well as for parodies, news reporting, criticism, or private study

(85) Gentleman's Agreement (1935) between libraries and publishers stated that so long as no profit was made, libraries could make a "single photographic reproduction" of copyrighted material for a scholar who stated in writing that he wanted it "in lieu of loan of such publication or in place of manual transcription and solely for the purpose of research"

(89) In Fortnightly v. United Artists Television, Supreme Court found that a cable television system did not infringe copyright when, without the copyright owner's permission, it retransmitted motion picture broadcasts from local television stations

(90) Messing with the government, or any large company, is extremely dangerous because they may hold more power over you than you may first recognize; in this trial, 75% of articles published by W&W was research funded by government grants, so the government believed that they should have non-exclusive, royalty-free use of these works; furthermore, as the trial progressed, libraries around the country stopped renewing their subscriptions and boycotted publications by W&W

(92) Passano, head of W&W, developed "noisy" paper that was difficult to photocopy (1970)

(92) Fair use had never been applied to excuse the copying of entire piece of work

(94) Preparation cost for a journal runs 50-60% of total cost of publishing, depending on copies sold

(97) W&W did not pay its authors any royalties, sometimes charged them a per-page fee if their articles were too long

(98) 4 factors weighed in determining copyright fair use:
- 1. How many words of the total text had been copied? (Whole articles)
- 2. What is the nature of the copyrighted work? (Scientific journal)
- 3. What is the purpose of use? (Aid to medical research)
- 4. What effect has photocopying had on the market for the copyrighted work? (no definite lost subscriptions)

(99) W&W authors did not object to the copying, and researchers wanted quick and easy access to journal articles

(101) How can you ever tell if anything would or would not have resulted in lost revenue? Even if you ask your potential customers, because they might just speculate...

(105) First court agreed with the plaintiff: "The photocopies are exact duplicates of the original articles; are intended to be substitutes for, and serve the same purpose as, the original articles; and serve to diminish plaintiff's potential market for the original articles since the photocopies are made at the request of, and for the benefit of, the very person's who constitute plaintiff's may be difficult (if not impossible) to determine the number of subscription sales lost to photocopying, but the fact remains that each photocopy user is a potential subscriber, or at least is a potential source of royalty income for licensed copying"

(109) This ruling was overturned in a higher court of the Court of Claims: first, the plaintiff did not show that it is being harmed by the specific practices of the NLM; second, medicine and medical research could be harmed by holding these practices as infringement; and third, legislative guidance is needed, which is not the domain of this court

(111) 1 billion photocopies made in 1967

(117) In Wihtol v. Crow, a choral instructor's copying 48x of a copyrighted song was found not to be fair use

(122) A complimentary good is a product whose price affects the quantity that can be sold of another product, and possibly its price (e.g. razor and razor blades, video game system and software, pen and ink cartridges, etc.)

(123) It was argued that copies and actual papers were complimentary, when in actuality actual papers and photocopying machines are complimentary goods

(126) Supreme Court was divided, and previous judgment favoring libraries stood

Chapter 4: Private Copies
(130) Isolated private copying cannot harm creators, because motion pictures, sound recordings, and books continue to be produced despite private copying

(130) But as technology makes it easier to copy, the risk has grown that "private" copies will displace the retail sales and rentals of authorized copies

(130) Videocassette recorders penetration: 1983 9%, 1991 71%; 1990, average household had more than 2 audiotape recorders

(131) Since 1790, it has always been public, not private, performance that infringe copyright

(131) Private copying cannot be practically regulated

(131) It is bad policy to pass unenforceable laws because impairs fidelity to enforceable ones

(134) Any time Congress waits to challenge copyright infringement of new technology, the copyright owners suffer and electronics companies benefit, as market penetration increases and consumers come to expect the right to use that technology for copying

(143) Section 108 of the 1976 Copyright Act prohibits photocopies in "aggregate quantities", which is defined to be more than 5 copies a year of an article

(143) Videocassette recorders introduced in US in 1975

(144) Nov 1976 Universal and Disney sue Sony for Betamax technology, claiming contributory infringement of copyright

(145) Under patent law, sales of a device are free from contributory infringement if it also has a "substantial non-infringing use"

(145) Betamax owners record for 2 reasons:
- 1. To accumulate libraries
- 2. To time-shift, to tape a show for viewing later
- Question is whether these both fall under fair use doctrine...

(146) First court ruled in Sony's favor, saying that
- 1. Copyright Act does not extend to private, noncommercial copies
- 2. Fair use exempts home copying
- 3. No acceptable theory of contributory infringement could expose VCR producers and sellers to liability
- 4. Injunctive relief against VCR producers would harm them and the public far more than denying it would harm the film companies

(147) Ninth Circuit Appeal reversed decision, citing
- 1. There is no Congressional intent to create blanket home use exception
- 2. Home copying does not constitute fair use
- 3. Regardless, the VCR producers are responsible for infringement
- 4. Instead of an injunction, court could award damages or continuing royalty

(148) Since virtually all TV material is copyrighted and VCRs are sold for the primary purpose of reproducing TV material, there is no substantial non-infringing use

(150) Main issues for private copying exemption:
- 1. Invasion of privacy whenever law seeks to control conduct within home
- 2. Principle of fair warning that should cause hesitation in branding millions of people as law breakers
- 3. Economic interest in not imposing penalty on entrepreneur who has successfully developed and marketed a new product, esp. since copyright holders have not suffered harm

(153) In Supreme Court appeal, burden of proof of harm and damages falls on plaintiff (Universal and Disney)

(154) What's more important in determining substantial non-infringing use is not whether most TV material is copyrighted but how much actual VCR use is infringing

(156) If people are willing to pay for blank tapes and VCRs for the ability to time-shift, doesn't that also mean that they are willing to pay some kind of royalty to copyright holders

(156) Supreme Court decision (in Sony's favor):
- 1. No exemption for private copying
- 2. Contributory infringement only if product has NO non-infringing use
- 3. Time-shifting is non-infringing use, because some copyright holders were OK with it and because it was in some part fair use
- 4. Universal and Disney could show no proof that they had been harmed

(158) Digital audiotape recorder failed in States because RIAA threatened immediate lawsuit even prior to domestic release, scaring importers while legal liability could be determined

(159) When turning to a technological solution to prevent copying in both Betamax and DAT, Judge Ferguson observed that "as sure as you or I are sitting in the courtroom today, some bright young entrepreneur, unconnected with Sony [producer], is going to come up with a device to unjam the jam. And then we have a device to jam the unjamming of the jam and we all end up like jelly."

(160) A system called Copycode was proposed by CBS Records that would embed a signal in pre-recorded tapes so that a recording device, on detection of the signal, would not copy it [this is the SDMI of today]

(160) Serial Copy Management System when incorporated into a DAT would allow machine to copy only original recording; this was a compromise between manufacturers and record companies, but failed because did not include composers and publishers

(162) Audio Home Recording Act of 1992 required not only incorporation of SCMS controls in digital audio equipment but also statutory levy to be paid by producers of blank DAT (3%) and equipment (2%); these royalties are deposited in Copyright Office and divided into two funds distributed annually:
- 1. 2/3 to Sound Recordings Fund, 4% given to background musicians and vocalists, 57.6% to record companies, and 38.4% to artists
- 2. 1/3 to Musical Works Fund, 50% to publishers and 50% to publishers

(163) Under this act, consumer also free to copy pre-recorded cassette (digital or analog) for private noncommercial use

(163) "Public lending right" in Europe (Denmark) to compensate writers with potential income they lose from lending libraries

Chapter 5: The Two Cultures of Copyright
(166) The French have a doctrine of moral right (droit moral) that entitles authors to maintain absolute control over their work, regardless of publisher

(167) "Choice of law" rules allow a court to decide which nation's or state's laws apply in a lawsuit if multiple countries or states are involved

(167) Under "work for hire" doctrine in the US, a company that invests in the creation is the copyright holder; this is in stark opposition to European continental civil tradition, which contends that only people, not companies, can be authors with natural right control

(168) European culture places authors at center ("half-full" optimists) with natural right that maintain copyright 70 years after author's death, vs. American culture that uses utilitarian logic of fair use to balance producers and consumers, that often marginalizes the author ("half-empty" pessimists, only 28 years from creation)

(170) Fair use excuses unauthorized use if it is too costly to negotiate a license; after all, at least the consumer gets something he wouldn't have gotten otherwise, even if the producer gets nothing

(171) In US, copyright is not a natural right but an economic tool to encourage production

(172) In actuality, US lawmakers have treated copyright as half-full, expanding it as new technology develops and new areas of potential economic opportunity emerge

(173) "Welfare economics" judge a legal rule against consumer welfare

(174) Do we really need copyright to encourage required labor and investment?

(175) "The evil [monopoly] of copyright law need not last a day longer than is necessary for purpose of securing the good [production]"

(176) Since copyright is concerned with goods whose consumption does not diminish their availability to anyone else, a dilemma emerges: people who want to pay the price will, but others who do not want to or cannot can still receive the product at no cost or harm to anyone

(177) Therefore, copyright decreases the welfare of one class (who doesn't pay) without increasing welfare of others (who do pay) [IS THIS REALLY TRUE?]

(177) ROOT of the problem is this: information and entertainment are costly to produce but cheap to distribute

(177) One solution is to have the government subsidize the work and offer it free to its tax-paying citizens, which mean higher taxes but does not guarantee that the governmentknows what its citizens' want; a market obviously shows that, which is why it is so good

(182) "Customary copyrights", or "trade courtesy", was an agreement between pirating publishers in the US whereby they would prevent ruinous price wars by deferring to each other's first printing of popular books

(184) Historically, you had to register every work you wanted to copyright, because this would show that you actually cared about the copyright of your production; but now, you just have to slap a © on any work

(186) Berne Convention was multinational agreement where signers agreed to treat other countries' copyrighted works on same level as local works; however, there was no guarantee for reciprocity, so if one country protected sound recordings and another didn't, that country's sound recordings would not get protection in the other country

(192) Neighboring rights were rights that neighbored copyright, like royalties on blank tapes, for example, that would get distributed unequally to local authors rather than between local and international ones

Chapter 6: The Celestial Jukebox
(197) Digital form is attractive because it maintains fidelity, compression, and malleability

(200) Copyright aims to subject literary and artistic works to the discipline on the market

(201) Challenge with Internet is to promptly extend liability to more private uses

(202) 2 main issues concerning copyright and new technology:
- 1. As new technological subject matter is attempting to be protected by copyright, we must be careful not to extend copyright to it simply because it seems to be the most expansive intellectual property law, because specific new legislation may be more appropriate
- 2. As new technological uses of copyrighted works emerge, lawmakers should be quick to extend copyright to encompass them, even if the use seems private

(202) Copyright rights delayed are usually right denied

(203) Copyright does not protect how something is done; that's what patents are for

(206) With computer revolution, copyright was extended far beyond its bounds; for example, copyrighting a program is almost like protecting the how of a process, and not authorship itself - the line is blurred, but software patents are common now

(206) Trade secret laws also protect software code

(208) Trade secret law allows competitors to reverse engineer products

(210) Examples where copyright was not upheld include Apple v. Microsoft for copying the graphical user interface and Sega v. Accolade for reverse engineering and thereby copying the initial code that allows a game to be played on a Sega system

(211) The only copyrightable aspect of a database is the manner in which the data have been selected and arranged; copyright will not protect the data itself

(212) This is difficult because most of the work in building the database is in data collection, not in arrangement; copyright has protection begin at the very point that investment ends

(212) In Feist Publications v. Rural Telephone Service, defendant (Feist) copied white pages and resold it; initially, courts ruled in plaintiff's favor (1987)

(213) However, Supreme Court ruled that copyright does not protect the sweat of the brow invested in searching, collecting, and producing data, but rather creativity is the key to copyright (which is possible in selection and arrangement of data)

(214) European Union proposed new laws in 1992 to protect databases (Database Directive), in two tiers:
- 1. First tier is copyright; if selection and arrangement show creativity in authorship, those aspects of the database are copyrighted
- 2. Second tier covers the actual data, giving owner's 15-year right against competitor's "unfair extraction" of data by rearrangement in different forms; if database owner has monopoly (e.g. phone company), compulsory license at reasonable fee required

(215) This law yet to pass in the US

(216) No one doesn't believe that database data doesn't require some intellectual property protection; the question is, what kind?

(216) Custom crafted (sui generis) law recommended to meet the needs of these products (precedent for such new laws exist, from industrial design protection to Chip Protection Act (1984))

(217) Politics of entrenchment: once a new technology is widespread, and individuals get used to using it for free, it's virtually impossible for Congress to prohibit its use; that's why Congress must act fast if they want to have any control

(218) There is no better way for the public to indicate what they want than through the price they are willing to pay in the market

(219) Copyright Clearance Center tried to collect photocopying royalties from corporations, but failed miserably because system was voluntary (earned $732 on expenses of $2430 over 6 months, 1978)

(221) Revised to Annual Authorization Service, which would audit actual corporations, create statistical formula for photocopy usage, and then charge the company; hugely successful, with revenue of $17 million in 1993; I think most large companies have it today

(221) This is different from library rulings earlier because these fees are paid for actual copying that is done FOR PROFIT by large corporations

(225) November 1993, CompuServe sued by music publishers (140 of them), claiming it was a contributory copyright infringer because its bulletin board allowed subscribers to transmit digitally translated musical compositions (MIDI?) to other subscribers without permission

(225) Defense was two-fold: CompuServe could not be expected to control its content much like the telephone companies or postal services are not expected to, and the compositions were downloaded for private use

(230) General Agreement on Tariffs and Trade (GATT 1947) significant in controlling international trade of copyrighted products

(232) Free markets for goods and free markets for idea are closely, if not perfectly, entwined


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