By Randolph J. May and Seth L. Cooper
According
to the U.S. Copyright Office’s August 3, 2016, letter to members of Congress,
the Federal Communications Commission’s mislabeled “Unlock the Box” proposed
regulation of video devices and apps conflicts with copyright law protections. It’s
now clear the FCC’s proposal might more aptly be named the “Enable Copyright Violations”
proposal.
Concerns
that the FCC’s proposal would undermine the exclusive rights of video
programmers to license and control the use of their copyrighted content have
been widely known. Now, the Copyright Office has declared that the FCC’s
proposed rules “appear to inappropriately restrict copyright owners’ exclusive
right to authorize parties of their
choosing to publicly perform, display, reproduce and distribute their works
according to agreed conditions, and to seek remuneration for additional uses of
their works.” The Copyright Office, with acknowledged copyright law expertise
and charged by law with advising Congress concerning interpretation of the
nation’s copyright laws, urged that “any revised approach to be taken by the
FCC should be crafted to preserve copyright owners’ exclusive right under
copyright law to authorize… the ways in which their works are made available in
the marketplace.”
Predictably,
some supporters of the FCC’s proposal have tried to put their own negative
slant on the Copyright Office’s letter. For instance, the Copyright Office’s
analysis was attacked with word-twisting and non-starter fair use arguments by Public
Knowledge. In our view, the Copyright Office explained, in a careful and
compelling fashion, why the FCC’s proposal would undermine the exclusive rights
of copyright holders and why the proposal is contrary to federal copyright law.
The
Copyright Office’s concerns about the FCC’s proposed improper curtailment of video
programmers’ copyrights come from a straightforward reading of the law. The
crucial provision concerning the rights of copyright holders to authorize
reproduction, transmission, and public performance of their intellectual
property is contained in Section 106 of the Copyright Act. As the Copyright
Office put it: “The rights protected by the Copyright Act are ‘exclusive’ to
the copyright owner, meaning that the copyright owner generally has full
control as to whether or how to exploit his or her work, including by entering
into licensing agreements.”
Public
Knowledge’s press release incorrectly insinuates that the Copyright Office misrepresented
the FCC proposal’s mandates. The Copyright Office, Public Knowledge claims,
believes the FCC would mandate that copyright owners give away outright their
video programming “for free exploitation by third-party devices.” Obviously, such
overheated rhetoric is meant to put the Copyright Office letter in the worst
possible frame. But a fair reading of the letter shows the Copyright Office understands
the distinction between the Commission’s stated intent behind “Unlock the Box”
and the actual practical effect of its proposal. Acknowledging that “[t]he FCC
has stated that the Proposed Rule is not intended to negate these private
contractual arrangements,” the Copyright Office stated the obvious truth: “[I]t
is not clear how the FCC would prevent such an outcome under the Proposed Rule,
for it appears to obligate MVPDs to deliver licensed works to third parties
that could then unfairly exploit the works in ways that would be contrary to
the essential conditions upon which the works were originally licensed.”
While
the FCC proposal may not affirmatively mandate
repackaging of copyrighted video content by third parties who sign no licensing
agreements and pay no royalties to the copyright holders, it does mandate that copyrighted video content
be made available to third-party device makers – who are unbound by licensing
terms. In such circumstances, as the Copyright Office sets forth in
considerable detail, neither contract law nor Commission regulations will provide
copyright owners a means for enforcing licensing terms of use. This means third-party
device makers, among other things, could overlay ads, rearrange channel
lineups, ignore “windowing” or “tiering” agreements, or insert new video
content without consent and without compensation being paid to the copyright
holders. This would be an unavoidable by-product of mandating access to
copyrighted content by third-party devices while leaving copyright holders
without legal recourse.
Public
Knowledge’s press release also engages in plenty of misdirected rhetoric on
fair use. It misleadingly claims that the Copyright Office wants video service
providers and video programmers to disregard fair use rights. There is no
reason to think this is so, and the criticism is hard to understand. The
Copyright Office’s letter states that video service providers and video
programmers avoid uncertainties regarding fair use by contracting around it
through licensing agreements. This is hardly remarkable. Parties to commercial
agreements contract away their rights all the time.
It
goes without saying that licensing agreements between video service providers
and video programmers don’t contract away fair use rights of video subscribers.
To briefly illustrate from another context: Suppose a major publisher enters
into an agreement with a bookseller for an exclusive promotion and sales effort
for a blockbuster novel. The publisher and bookseller could contract around
fair use, whereby the bookseller gives up any fair use claims it may have
regarding what it might say about the novel in promotional materials or how it
might display the novel. But the parties’ agreement would in no way waive the
fair use rights of the novel’s subsequent readers and reviewers – and this is
the point that Public Knowledge misunderstands or ignores.
In
any case, the Copyright Office’s analysis is focused on licensing restrictions
directly affecting the fair use rights of third-party devices – not the fair
use rights of video subscribers. Discussing the Commission’s proposal, the
Copyright Office acknowledged different fair use factors may be present with
respect to video subscribers. Its letter even compared video subscribers to
non-infringing private home users of VCR devices in Sony v. Universal City Studios (1984). So it’s silly to claim, as
Public Knowledge’s press release does, that “[w]hat the Copyright Office
advocates is encouraging distributors to negotiate away their consumers’ rights
without those consumers’ consent.”
The
copyright problems plaguing the FCC’s proposal were explained in an FSF
blog post back in February. Public
comments and reply
comments filed by us in the FCC’s proceeding again explained that the
proposal would undermine the exclusive rights of copyright holders in video programming.
While we believe the FCC’s more aptly named “Enable Copyright Violations” proposal
is misguided in a handful of respects, the proposal’s clash with federal
copyright law is one of its most obvious flaws.
The
Copyright Office, charged by law with advising Congress on copyright issues and
interpretations of the nation’s copyright laws, has now articulated the
copyright problems in a manner that the Commission should not ignore:
In its most
basic form, the rule contemplated by the FCC would seem to take a valuable
good—bundled video programming created through private effort and agreement
under protections of the Copyright Act—and deliver it to third parties who are
not in privity with the copyright owners, but who may nevertheless exploit the
content for profit. Under the Proposed Rule, this would be accomplished without
compensation to the creators or licensees of the copyrighted programming, and
without requiring the third party to adhere to agreed-upon license terms. … As
a result, it appears inevitable that many negotiated conditions upon which
copyright owners license their works to MVPDs would not be honored under the
Proposed Rule.
The
FCC’s disregard of the exclusive rights of copyright owners is serious enough
that the Commission should abandon its proposal. If it wishes to move forward
with any new regulation at all – although in light of marketplace and
technological developments, we submit none is needed – the Commission should explore
ways of promoting competition in the video device market that do not enable
violations of copyright law or undermine copyright licensing agreements.
Barring
this, the Commission should be forthright enough to stop calling its proposal “Unlock
the Box” and instead call it the “Enable Copyright Violations” proposal.
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