Supreme Court Denies Petition in Case Involving State Takings of Copyrighted Property

On March 21, the Supreme Court denied a petition for certiorari in the case of Jim Olive Photography v. University of Houston System. The case involved important and interesting legal issues regarding judicial enforcement of the Fifth and Fourteenth Amendments' prohibitions against state government takings of copyrighted property without just compensation. Unfortunately, the court's denial of the petition means that those issues will have to wait for another time.  

In Allen v. Cooper (2020), the Supreme Court concluded that the Eleventh Amendment generally bars federal courts from hearing infringement claims against state governments. But the Eleventh Amendment does not bar federal courts from hearing claims against states for takings of private property without just compensation or for deprivations of due process. As explained in my December 2021 Perspectives from FSF Scholars, "States Should Not Take Intellectual Property Without Justice Compensation: The Constitution's Fifth and Fourteenth Amendments Protect Copyrights." 

In Jim Olive Photography, the petitioning copyright owner's taking claims were denied by the Texas Supreme Court. He sought an order by the U.S. Supreme Court to vacate that decision and have the lower court reconsider his taking claims in light of the high court's decision in Cedar Point Nursery v. Hassid (2021). In Hassid, the court determined that regulations requiring government access to private property constitute per se physical takings similar to an easement in property because they appropriate the "right to exclude." And the copyright owner in Jim Olive Photography made a well-founded argument a state's appropriation of a copyright owner's exclusive rights, either by making unauthorized reproductions of the work or by publicly displaying it, is analogous to a state's appropriation of a portion of a property owner's land or crops. 

 

The Supreme Court's denial of the petition in Jim Olive Photography is unfortunate for copyright owners whose works have been infringed by state government agencies. But I stand by the legal principles and reasoning about takings of copyrighted property that are set forth in my December 2021 Perspectives:

Copyrights are a type of property that are expressly recognized in the Constitution. This understanding of copyrights as property provides a principled basis for Takings Clause claims when states intentionally or recklessly appropriate exclusive rights in copyrighted property. Such claims also appear consonant with Supreme Court decisions that prohibit states from appropriating personal property and an owner's "right to exclude." The Court should extend its Takings Clause jurisprudence to include takings of copyrighted property. 

Broadcasters' FCC Filing Undermines Radio Copyright Exemption

The National Association of Broadcasters (NAB), in a recent FCC filing, undermined its principal claimed justification for the special copyright exemption enjoyed by radio stations – that music artists benefit from the promotional value derived from radio broadcasts of their copyrighted works. NAB's filing argued that the Commission should remove media ownership rules due to shrinking radio broadcast revenues and audiences, a point that incidentally – and necessarily – shows that any value recording artists derive from broadcasts of their copyrighted works is also shrinking. NAB's implicit admission that the value of such publicity is in decline bolsters the case for Congress to pass the American Music Fairness Act, which would eliminate radio's special copyright exemption.

Since 1971, copyright law has exempted terrestrial AM/FM radio broadcasters that broadcast copyrighted music from paying royalties to the owners of copyrighted music. As Free State Foundation Director of Policy Studies Seth Cooper explained in an August 2021 Perspectives from FSF Scholars, this exemption has persisted despite its conflict with the Founders' embrace of property rights. Specifically, the natural right to enjoy the fruits of one's own labor that informed the Copyright Clause of the Constitution. One supposed justification offered by NAB and others for the persistence of the radio copyright exemption is that music artists benefit from the free publicity deriving from the broadcast of their copyrighted works.

But distribution services that compete with terrestrial AM/FM broadcast – namely satellite radio and online streaming services – are not exempted from owing copyright royalties. And as Seth Cooper explained in his August 2021 Perspectives, music industry revenues increasingly come from copyright royalties. Royalties paid by streaming services alone comprised 83% of the music industry's total revenue in 2020.

The increasing reliance on streaming revenues has been accompanied by a steep drop in revenues from CDs and music downloads, the type of sales benefitted by any publicity from radio broadcast of copyrighted works. Accordingly, whatever value recording artists derive from the promotional value from radio stations playing their copyrighted works, it must be relatively low compared to years past, and is in further decline.

Informed by these market changes, Congress is considering the American Music Fairness Act, which would eliminate the radio copyright exemption. As Seth Cooper explained in a February 2022 Perspectives from FSF Scholars, that bill would bring music distribution services into competitive parity and better align copyright law with constitutional principles. NAB opposes passage of that the American Music Freedom Act, insisting that the radio copyright exemption must continue in part because music artists are fairly compensated by free publicity.

But as the musicFIRST Coalition explained in an ex parte filed with the FCC, NAB undermined its claims when it recently argued in a FCC proceeding on media ownership restrictions that the Commission should lift those restrictions in light of declining revenues and shrinking audience size of radio stations. That admission – similar to admissions that NAB has made for years – undermines NAB's opposition to the payment of royalties for radio stations' broadcasts of copyrighted music. It's time for Congress to eliminate the radio copyright exemption by passing legislation like the American Music Freedom Act.

Utah Becomes Fourth State to Pass a Privacy Law

On March 25, 2022, Beehive State Governor Spencer J. Cox signed the Utah Consumer Privacy Act (the Act), making Utah the fourth state to enact its own unique take on comprehensive data privacy legislation.

In a March 8, 2022, post to the Free State Foundation's blog, I reported that the Act had passed both state legislative chambers unanimously and was "nearly certain" to become law. I also provided a general overview of the consumer rights and corporate responsibilities set forth therein.

Yesterday, Utah officially joined California (the California Consumer Privacy Act and the California Privacy Rights Act), Virginia (the Virginia Consumer Data Protection Act), and Colorado (the Colorado Privacy Act) on the steadily expanding list of states occupying the vacuum created by the absence of a preempting federal privacy law.

Consequently, the logistic headaches for both consumers and businesses I described in "Inconsistent State Data Privacy Laws Increase Confusion and Costs," a March 2021 Perspectives from FSF Scholars, have become more intense.

On the bright side, the Act, which is based on the Virginia statute and appears to strike a workable balance between protecting the rights of individuals and allowing businesses to continue to innovate, potentially could serve as a promising model for the federal law we all eagerly await.

For one thing, it comes down on what I view as the right side regarding the contentious issue of a private right of action, leaving enforcement exclusively to the Office of the Attorney General.

Data Shows 5G Network Connections Surged Again in 2021

A March 23 press release by 5G Americas titled "5G Forecast: 1.3 Billion by Year-End 2022" found that North America (U.S. and Canada) had a total of 72 million connections by the end of last year. That amounts to an addition of 54 million 5G connections in 2021, and a year-over-year gain of 292%. The finding is based on data collected by Omdia. Additionally, 5G Americas expects total connection in North America to climb to 516 million by the end of 2026. Furthermore, North America "had 514 million LTE connections by the end of 2021, which represents near full market maturity." For more findings and forecasts, see 5G America's press release. (No U.S.-specific numbers were provided.) 

Free State Foundation Legal Fellow Andrew Magloughlin and I addressed the significance of 5G's rapid deployment to the communications marketplace and its potential to further benefit consumers in the years ahead in our Perspectives from FSF Scholars, "The Broadband Internet Services Market in January 2022."

Vast Majority of U.S. Consumers Now Buying 5G-Capable Smartphones

According to a March 16 press release by Counterpoint, sales of 5G-capable smartphones reached 51% of global smartphone sales in January 2022, overtaking sales of 4G-capable smartphones. But 5G smartphone sales penetration reached 73% in North America in January of this year.  

While 5G smartphone sales are now predominant, 4G connections till outnumber 5G connections. But as Free State Foundation Legal Fellow Andrew Magloughlin and I point out in our Perspectives from FSF Scholars published earlier this year titled "The Broadband Internet Services Market in January 2022," growth for 4G LTE has already peaked. As we observe in our Perspectives, 5G Americas projects that 5G will constitute the majority of mobile connections in 2024. And if future 5G connections figures match trends in 5G smartphone sales, it is a safe bet that North America – and the U.S., in particular – will be a majority 5G-connected nation sooner than the global average. 

 

In our Perspectives, Mr. Maglouglin and I point out that "[o]ne of the most significant developments in the broadband Internet services market in 2020 and 2021 was the rapid rollout of 5G wireless networks and accelerated adoption of 5G services by U.S. consumers." Continuing rapid deployment of 5G networks -- evidenced by January 2022 sales penetration figures for North America provided by Counterpoint -- is important to the welfare of U.S. consumers because "5G networks are more capacious than 4G LTE networks and they are expected to eventually deliver average speeds about ten times faster than LTE networks, with peak speeds as much as 100 times faster."

GAO Protest Resolved: FCC Sets Due Date for Broadband Map Data

Recent developments hopefully will bring closer to completion the updated FCC broadband service availability maps upon which numerous subsidy programs depend. Significantly, a challenge filed by a losing bidder for a foundational multimillion dollar contract has been resolved. Meanwhile, the Commission has specified what data broadband providers must submit and set a September 1, 2022, filing deadline.

The Broadband Deployment Accuracy and Technological Availability (DATA) Act states that a number of broadband funding programs must rely upon new, more accurate, but not-yet-completed FCC broadband service availability maps when determining which locations in fact are unserved – and therefore eligible for subsidies.

That list includes NTIA's $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program, the FCC's $9 billion 5G for Rural America Fund, and the $11.2 billion second phase of its Rural Digital Opportunity Fund (RDOF).

Moreover, and as I argued in "Overlapping Broadband Appropriations Demand Agency Coordination: New FCC Maps Can Track Grants, Avert Waste," a recent Perspectives from FSF Scholars, those maps can and should be leveraged to safeguard against duplicative grants, overbuilds of privately financed networks, and waste and fraud.

Notably, these same concerns inspired a March 15, 2022, letter from Senator Roger Wicker (R – MS), ranking member of the Senate Commerce Committee, to the Pandemic Response Accountability Committee (PRAC). In his letter, Senator Wicker urged the PRAC to perform the oversight necessary "to ensure the federal funds allocated for broadband deployment are spent as Congress intended."

However, and as I pointed out in "Waiting for Updated FCC Broadband Maps," a February 2022 post to the Free State Foundation's blog, those maps are not yet ready for primetime. And their completion date remains TBD.

Fortunately, one significant hurdle standing in the way – a challenge to the FCC's decision to award a $44.9 million contract to CostQuest Associates (CostQuest) – has been cleared.

On November 9, 2021, the FCC selected CostQuest over a number of competing applicants to create the "Broadband Serviceable Location Fabric" – that is, the master list of every conceivable location to which high-speed Internet service might be provided. Shortly thereafter, one of the losing bidders, LightBox Parent, LP (LightBox), filed a protest with the U.S. Government Accountability Office (GAO).

In a February 24, 2022, decision, the GAO denied in part and dismissed in part that protest, finding that the FCC "conducted a tradeoff and concluded that CostQuest's proposal represented the best value to the government."

A March 2, 2022, CostQuest press release announced that it "has officially been contracted to deliver the broadband location data to support the Commission's Broadband Data Collection (BDC) program."

In addition, the FCC recently released three Public Notices and one Order offering clarity and guidance to fixed and mobile broadband providers:

• On February 22, 2022, it announced a September 1, 2022, deadline for the submission of broadband availability data.
• On March 4, 2022, it released a Public Notice defining "specifications related to the biannual submission of subscription, availability, and supporting data."
• On March 9, 2022, it adopted an Order detailing "the mobile challenge, verification, and crowdsourcing processes" required by the Broadband DATA Act and a Public Notice announcing the publication of "two data specifications … provid[ing] additional detail about the technical elements of the data to be collected as part of" those processes.

James Madison: The Father of the Constitution Favored Copyrights

Today is the birthday of James Madison, widely regarded as "The Father of the Constitution." The track record of Madison (March 16, 1751 – June 28, 1836) includes prompting the Philadelphia Convention of 1787, drafting the Constitution, explaining and supporting it in the Federalist Papers, leading the ratification effort in Virginia's state ratifying convention, implementing the Constitution in the First Congress, and managing the proposed Bill of Rights. Not to mention he served as the fourth U.S. President. 

Given Madison's vast contributions to early American political philosophy and constitutionalism, it is easy to overlook his important role in helping to secure copyright protections for American authors and other creative artists. Free State Foundation President and I described James Madison's role in putting copyright protections in the U.S. Constitution in our book, The Constitutional Foundations of Intellectual Property: A Natural Rights Perspective (Carolina Academic Press, 2015). We provided an abbreviated account of Madison's pro-copyright collaboration with Noah Webster in our November 2015 Perspectives from FSF Scholars, "The Copyright Alliance that Shaped Our Constitution." And we touched on Madison's understanding of property rights, including copyrights, in our September 2015 Perspectives, "Why Intellectual Property Rights Matter: The Founders Believed Ownership of One's Labor is a Natural Right." 

FCC to Auction Spectrum Licenses for the 2.5 GHz Band in July 2022

In a March 1 speech delivered to the Mobile World Congress 2022, FCC Chairwoman Jessica Rosenworcel announced that the FCC will commence its public auction of flexible use licenses for 2.5 GHz spectrum in July of this year. The announcement of the auction date is welcome news. As Free State Foundation scholars have explained on many, many,many occasions, putting more mid-band spectrum into use for commercial services is critical to timely realizing the full benefits of 5G networks. 

Congress Disavows USDA's Misguided Favoritism of Municipal Broadband

Congress disapproved of the Department of Agriculture's (USDA) favoritism for municipal broadband in a nonbinding directive attached to the Consolidated Appropriations Act of 2022 passed last week. That nonbinding directive, which appears within a Joint Explanatory Statement, "encourages the Secretary to eliminate or revise the awarding of extra points…" to municipal broadband networks applying for ReConnect program deployment subsidies.

If followed, this nonbinding directive would improve the likelihood that ReConnect funds flow to states based on true need for broadband service rather than states' conformity to unrelated policy objectives. ReConnect is a multi-billion broadband deployment grant and loan program managed by USDA that generally targets unserved rural areas. Congress tasked ReConnect with distributing $3.15 billion in broadband subsidies over the next few years between the Infrastructure Investment and Jobs Act (IIJA) and appropriations made in 2021.

In response to this cash influx, USDA published "Evaluation Criteria" guidance last year explaining how it will review applications for ReConnect deployment subsidies. This guidance amounts to a points-based system that awards applicants with greater chances of success for meeting standards contained within.

As Free State Foundation Senior Fellow Andrew Long explained in a Perspectives from FSF Scholars, the portion of the Evaluation Criteria awarding 15 extra points for applications submitted by municipal broadband providers exceeds USDA's authority. This criterion intrudes into the FCC's jurisdiction to set communications policy "in the face of conflicting congressional intent" and should be repealed. And USDA didn't adhere to Administrative Procedure Act notice and comment requirements while adopting the municipal favoritism criterion, which foreclosed potential for public comment on whether USDA has authority to adopt such a criterion in the first place.

Further, the municipal favoritism criterion biases ReConnect funds to flow to states that lack prohibitions on municipal broadband, irrespective of actual need for broadband infrastructure, because only municipal applicants within those states will be eligible for these 15 extra points. This is an ill-advised policy choice. As Andrew Long explained in another Perspectives from FSF Scholars, municipal networks are often economic failures that cannot achieve financial viability, explaining why many states prohibit them. So biasing ReConnect funds in favor of municipal networks will reduce ReConnect's effectiveness for narrowing the digital divide.

Now, in the Consolidated Appropriations Act of 2022, Congress appears to agree. This law added nearly $550 million additional funds to ReConnect and other smaller broadband programs at USDA, and it included a nonbinding directive that disavows the Evaluation Criteria's municipal favoritism:

"In addition, the agreement encourages the Secretary to eliminate or revise the awarding of extra points under the ReConnect program to applicants from States without restrictions on broadband delivery by utilities service providers in order to ensure this criterion is not a determining factor for funding awards."

This disavowal should be unsurprising because Congress rejected similar municipal favoritism in the IIJA. Of course, nonbinding directives are, indeed, nonbinding, and amount to legislative history, which is disfavored and cannot substitute for the plain text of the law. But Congress's disavowal of municipal broadband favoritism is at least notable because no law authorizes the Department of Agriculture authority to set Communications Policy in the first place.

Also, a separate nonbinding directive in the Consolidated Appropriations Act of 2022's Joint Explanatory Statement encourages the Secretary of Agriculture to follow notice and comment rulemaking for "all program administration and activities" regarding ReConnect.

It will be interesting to see if the Secretary of Agriculture heeds Congress's wise advice to stop favoring often failed municipal networks for subsidized support.

Supreme Court Clarifies Meaning of Safe Harbor Provision for Copyright Registration

On February 24, the U.S. Supreme Court issued its decision in Unicolors, Inc. v. H&M Hennes & Mauritz, L.P. (2022). At issue in the case is the meaning of Copyright Act Section 411(b), which is a procedural provision for copyright registration that functions as a safe harbor in the event that the copyright registration application includes inaccurate information. Section 411(b)(1)(A) provides that a copyright registration application is valid regardless of whether it contains any inaccurate information, unless "the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate."  

The Ninth Circuit narrowly interpreted Section 411(b) to mean that the safe harbor only saves a copyright registration from invalidation for failure to understand the law, but not for failure to understand the facts. But the Supreme Court reversed the Ninth Circuit and determined that Section 411(b)'s safe harbor encompasses both mistakes of law and mistakes of fact. 

As the Supreme Court stated, "[l]ack of knowledge of either fact or law can excuse an inaccuracy in a copyright registration." However, the court did note its recognition in civil cases that willful blindness may support a finding of actual knowledge. 

 

Copyright registration is important because it is a prerequisite to filing civil copyright infringement claims. Registration also entitles a copyright owner to statutory damages and attorney's fees. Free State Foundation President Randolph May and I discuss aspects of civil copyright enforcement in chapter 8 of our book Modernizing Copyright Law for the Digital Age: Constitutional Foundations for Reform (Carolina Academic Press, 2020). 

Reps. Doyle and Latta Lay Out Plan to Reform Spectrum Management

Earlier today, on its "Congress Blog," The Hill published an op-ed penned jointly by Representatives Michael F. Doyle (D – PA) and Robert E. Latta (R – OH). Determined to avoid a repeat of the recent kerfuffle between the FCC and the FAA over 5G mobile operations in the C-Band, the two lawmakers set forth a four-element plan to overhaul interagency spectrum coordination processes.

As you undoubtedly recall, earlier this year the launch by Verizon and AT&T of 5G using C-Band spectrum licenses for which they contributed billions to the U.S. Treasury was impacted when, at the eleventh-hour, the FAA raised aviation-related concerns.

This occurred even though, prior to auctioning that spectrum, the FCC undertook a lengthy, deliberate, and engineering-informed process that considered, and addressed, potential interference.

Over the last few years, other disagreements regarding FCC efforts to repurpose high-value, underutilized spectrum similarly have played out in unprecedentedly high-profile fashion. They include the L-Band (vis-à-vis the Department of Defense), the 5.9 GHz band (the Department of Transportation), and the 24 GHz band (NASA and NOAA).

In "Aviation conflict highlights the need for spectrum management reform," Representative Doyle, Chairman of the House Energy and Commerce Committee's Subcommittee on Communications and Technology, and Representative Latta, its Ranking Member, expressed their well-founded concern that "declining faith in how these decisions are made is beginning to show signs of jeopardizing the consumer and economic benefits we've enjoyed for generations."

In response, the two laid out four principles that will guide their bipartisan efforts to "pursu[e] public oversight and restor[e] trust in the spectrum management process."

Those principles are as follows:

1. Reassert that it is NTIA that has the responsibility "to balance the needs and concerns of federal spectrum users, and to communicate those interests to its governmental counterparts and the public."
2. Promote "clear rules and expectations for federal and other spectrum users."
3. Ensure "that the government process for managing these critical spectrum resources [relies] on science and engineering …, not the institutional interests of a single federal agency."
4. Prioritize "the finality of [spectrum management] decisions."

Randolph J. May, the Free State Foundation's President, and Seth L. Cooper, its Director of Policy Studies and a Senior Fellow, made a number of similar points in "Congress Should Require Better Agency Coordination on Spectrum Policy," a February 15, 2022, Perspectives from FSF Scholars.

Specifically, Mr. May and Mr. Cooper (1) urged NTIA and the FCC to update their spectrum coordination Memorandum of Understanding to "expressly acknowledge NTIA's role in representing all executive branch agencies," (2) argued that "Congress should pass legislation to improve coordination among federal agencies," (3) noted with concern how the status quo "risks causing unnecessary delay and regulatory uncertainty," and (4) concluded that an improved process "could provide greater assurance to the public."

Justice Thomas Again Suggests SCOTUS Should Interpret Section 230's Plain Text

On Monday, the Supreme Court denied certiorari in Jane Doe v. Facebook, and Justice Thomas wrote another statement suggesting the possibility that the Supreme Court ought to review Section 230 of the Communications Act in an appropriate future case. Justice Thomas's statement in Doe makes the same point he did in his earlier statement in Malwarebytes, Inc. v. Enigma Software Group – that courts interpreting Section 230 have often made policy and purposivist arguments to deny common law distributor liability, arguably contradicting the statute's plain text. 

In Doe, the Texas Supreme Court dismissed common law claims against Facebook brought by a then 15-year-old girl lured into sex trafficking by an adult male sexual predator on Facebook. In dismissing these claims, the Texas Supreme Court treated Facebook's actions as the "publication of information created by third parties" for which Section 230(c)(1) provides immunity.

But Doe's dismissed common law claims were "negligence, negligent undertaking, gross negligence, and products liability based on Facebook's alleged failure to warn of, or take adequate measures to prevent, sex trafficking on its internet platforms." As Justice Thomas noted in Malwarebytes, these types of claims, and particularly the products liability claim, may have involved actions or omissions by Facebook entirely outside the scope of "publication of information created by third parties," to which Section 230's immunity applies.

However, Justice Thomas respected denial of certiorari in Doe for procedural reasons, because the Texas Supreme Court permitted Doe's statutory claim to proceed, making the case unripe. He believes the Supreme Court should interpret Section 230 in the appropriate future case.

Justice Thomas continues to be a prolific commentator on communications law, also penning certiorari statements and opinions on applying common carriage and public accommodations law to Internet platforms, Brand X v. NCTA, the FCC's independence, and FCC preemption in recent years.

Free State Foundation President Randolph May has written at length on Justice Thomas's views on Section 230 and platform common carriage in his Thinking Clearly About Speaking Freely series. The Free State Foundation also cosponsored Catholic University's inaugural Seigenthaler Debate on platform common carriage. Director of Policy Studies Seth Cooper wrote an October 2021 Perspectives from FSF Scholars about a circuit split over whether there is an exception to Section 230 immunity for claims pertaining to state intellectual property law – a split that could provide future occasion for the Supreme Court to interpret Section 230.

Utah "Nearly Certain" to Become Fourth State to Pass a Privacy Law

Any day now, Utah almost certainly will become the fourth state to enact comprehensive data privacy legislation. As I have written previously, in a series of posts to the Free State Foundation's blog and Perspectives from FSF Scholars, Congress bears the increasingly urgent responsibility to pass a federal privacy statute, one that preempts state laws, rejects a private right of action, and establishes a single set of clear rules that businesses can abide and consumers can understand.

Even President Biden, in his State of the Union Address, acknowledged the need for Congress to break the privacy logjam.

The California Consumer Privacy Act and the California Privacy Rights Act. The Virginia Consumer Data Protection Act. The Colorado Privacy Act. Four laws in three states, each imposing a unique set of rights and responsibilities on the border-defying Internet.

In "Inconsistent State Data Privacy Laws Increase Confusion and Costs," a March 2021 Perspectives from FSF Scholars, I explained the headaches that result. Companies must either (1) take high-risk pains to associate accurately each customer interaction with the appropriate state, or (2) craft one-size-fits-all compliance programs that reflect the "greatest hits" imposed by the growing list of states taking steps to fill the federal void. Consumers, meanwhile, are left to try to make sense of these overlapping and contradictory state-specific regimes on their own.

The Utah Consumer Privacy Act is poised to further complicate this already untenable situation. Based upon, but by no means identical to, the Virginia Consumer Data Protection Act, it was passed unanimously by both the Utah Senate and House of Representatives. Last Friday, it landed on the desk of Governor Spencer Cox, who is "nearly certain" to sign it into law. Assuming he does, it will become effective at the end of next year.

Similar to the other state privacy laws already enacted, the Utah Consumer Privacy Act (Act) would establish rights for consumers (to know what personal data is collected, to access or delete that information, to opt out of the collection, use, and sale of personal data for certain purposes, and so on) and responsibilities for covered entities (such as obligations to provide adequate notice to consumers, to safeguard collected personal data, and to respond within a defined window to consumer requests).

However, and as is already the case regarding the laws passed in California, Virginia, and Colorado, the specifics of the Act in many instances are one of a kind.

For example, and subject to exceptions, the Act would apply to a "controller" (defined as "a person … who determines the purposes for which and the means by which personal data is processed") or "processor" (defined as "a person who processes personal data on behalf of a controller") who:

• Does business in Utah or targets state residents with a product or service;
• Generates at least $25 million in annual revenues; and
• Either (a) accesses the personal data of at least 100,000 consumers in a year or (b) derives more than half of its gross revenues from the sale of personal data and accesses the personal data of more than 25,000 consumers.

In the March 2021 Perspectives referenced above, I pointed out that applicability is one of the many ways in which the various state laws deviate from one another – and thereby complicate matters for all involved: "As an initial matter, these bills establish different minimum thresholds – including annual gross revenue amounts and number of individuals, or individuals, households, and devices, subject to data collection – for a business to be deemed covered."

Other ways in which the Act would differ from other state laws:

• The Act would create the consumer right to delete personal information – but only that data in fact provided by the consumer, not data the covered entity has obtained from other sources.
• It would define "sensitive data," a subset of personal data, to include information such as racial and ethnic origin, religious beliefs, sexual orientation, medical history, and genetic, biometric data, and geolocation data. Covered entities would be required to provide notice and an opportunity to opt-out of the collection and/or use of "sensitive data" – rather than requiring that consumers first opt-in.
• It would define "sale" in a manner that, unlike, say, the California Privacy Rights Act, does not include "other monetary consideration."

To be clear, I am not saying these variations are good or bad – just complicating.

Finally, I want to point out approvingly that the Act states unambiguously that "[a] violation of this chapter does not provide a basis for, nor is a violation of this chapter subject to, a private right of action under this chapter or any other law."

Instead, the Act would task the Department of Commerce's Division of Consumer Protection with investigating consumer complaints. The Office of the Attorney General, in turn, would have exclusive enforcement responsibility. Covered entities would be provided with a 30-day right to cure, after which penalties up to $7,500 per violation could be imposed.

Ex-Commissioners Unite, Urge Second Circuit to Affirm Lower Court Decision Enjoining Enforcement of NY Broadband Price Control Law

Four recent members of the Federal Communications Commission, representing both sides of the political aisle, have filed with the Second Circuit Court of Appeals an Amicus Curiae brief in response to the state Attorney General's appeal of the lower court decision in New York State Telecommunications Association v. James.

In their submission, the ex-Commissioners urge the Second Circuit to affirm the U.S. District Court for the Eastern District of New York's conclusion that a New York state law prescribing the prices that broadband providers may charge low-income households constitutes an impermissible attempt to regulate interstate communications rates.

The Affordable Broadband Act (ABA) is a New York state statute that was passed in early 2021. It requires providers of high-speed Internet access operating in New York to make available to eligible low-income households service at specific speeds and, critically, prices: 25 megabits per second (Mbps) downstream for $15 per month and 200 Mbps downstream for $20 per month. It also mandates that broadband providers "make all commercially reasonable efforts to promote and advertise the availability of" these plans.

As Free State Foundation Director of Policy Studies and Senior Fellow Seth L. Cooper noted in "Court Halts New York Price Controls on Broadband Internet Services: California's Net Neutrality Law Should Suffer Similar Fate," a June 2021 Perspectives from FSF Scholars, the U.S. District Court for the Eastern District of New York earlier that month appropriately enjoined the state of New York from enforcing the ABA.

Specifically, the court held (1) that the ABA regulates rates; (2) that "rate regulation is a form of common carrier treatment"; and (3) that because the FCC has classified broadband as an "information service" rather than a "telecommunications service" (that is, a common carrier offering), the ABA "conflicts with the implied preemptive effort of both the FCC's 2018 [Restoring Internet Freedom Order] and the Communications Act."

For a detailed discussion of the conflict preemption issues raised by the ABA, please see Mr. Cooper's January 2022 Perspectives, "State-Level Price Controls on Broadband Conflict With Federal Policy: Court Should Affirm the Preemptive Force of the FCC's 2018 Order."

In their friend-of-the-court brief, Former FCC Chairman and Commissioner Ajit Pai, former Acting Chairwoman and Commissioner Mignon Clyburn, and Former Commissioners Jonathan Adelstein and Michael O'Rielly express their agreement with the district court's conclusion. In doing so, they focus on the big picture:

While much ink has been spilled debating whether broadband is an information service that is regulated under Title I of the Communications Act … or a telecommunications service that is regulated under Title II …, that question does not determine the proper resolution of this case. Whatever the answer, broadband remains an interstate communications service, and broadband rates may not be regulated by state governments.

A copy of their brief is available here.

Foreign Stream Ripping Operation Loses Big in U.S. District Court

On February 11, the U.S. District Court for the Eastern District of Virginia entered an order in UMG Recordings, Inc. v. Kurbanov, awarding copyright holders nearly $83 million in statutory damages against two of the world's most high-trafficked websites offering stream-ripping services. Plaintiff copyright owners also received an award of costs and statutory attorney fees, as well as a preliminary injunction against the stream-ripping operation. The respondent in the case owns stream-ripping websites that unlawfully convert copyrighted sound recordings into stored electronic files and makes copies downloadable by users across the world, including about 1.5 million users in Virginia. The websites generate ad revenues targeted to its large user base. 

The District Court's order from February 11 followed an October 2021 default judgment order, as well as a March 2021 order on remand from the Fourth Circuit in which the District Court concluded that its exercise of jurisdiction over the foreign website owner satisfied constitutional due process concerns. My blog post from June 2020 analyzed the Fourth Circuit's opinion that recognized the District Court's specific personal jurisdiction in the case. 

It may be very difficult for the copyright owners in in UMG Recordings, Inc. v. Kurbanov to collect on their judgment against the owner of the stream-ripping websites. But as explained in my June 2020 blog, the Fourth Circuit's decision may serve as a precedent that will bolster the prospects for copyright owners in pursuing civil justice against online piracy in future cases. 

Free State Foundation President Randolph May and I wrote about the importance of efforts to combat online copyright infringement, including by stream-ripping websites, in our June 2021 Perspectives from FSF Scholars, "Fighting Online Piracy Will Boost American Economy and Jobs."

2021 List of Notorious Piracy, Counterfeiting Markets Released

On February 17, 2022, the Office of the United States Trade Representative (USTR) released the eleventh edition of the Notorious Markets List (NML), its annual overview of the most glaring hotbeds, virtual and physical, for counterfeit goods and pirated content.

Officially titled the "2021 Review of Notorious Markets for Counterfeiting and Piracy," this most-recent NML provides a summary of markets "that reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial piracy or counterfeiting."

The NML, which incorporates responses from the public to a Request for Comments published in the Federal Register in August of last year, is designed "to increase public awareness and help market operators and governments prioritize intellectual property enforcement efforts that protect American businesses and their workers."

(Incidentally, the NML is separate from, but related to, USTR's "Special 301 Report," a congressionally mandated yearly summary "of the global state of intellectual property (IP) rights protection and enforcement.")

The theft of copyrighted material is a serious criminal problem with massive financial implications for creative industries. Citing a U.S. Chamber of Commerce report, the NML notes that piracy "in 2019 cost the U.S. economy an estimated $29.2 billion in lost revenue." Accordingly, one of the goals of the NML is to "motivate appropriate action by the private sector and governments to reduce piracy and counterfeiting."

The 2021 edition of the NML highlights 42 online destinations and 35 geographic locations where the manufacture of counterfeit goods and the theft of copyrighted material run most rampant. The latter includes applications like Popcorn Time ("Known as the 'Netflix of piracy'") and websites such as ThePirateBay ("the most frequently visited bittorrent index site in the world").

In addition, the NML reports on enforcement-related developments, concluding that there have been "notable efforts" and "impressive results" in the ongoing fight to rein in online piracy enabled by Internet protocol television (IPTV) apps and physical illicit streaming devices (ISDs).

However, the NML also acknowledges commenters' serious concerns regarding the existence and continued evolution of what it describes as a "complex ecosystem" facilitating efforts to steal, and profit from, copyrighted content. One that includes "domain name registries and registrars, reverse proxy and other anonymization services, hosting providers, caching services, advertisers and advertisement placement networks, payment processors, social media platforms, and search engines."

A related development of heightened concern involves what the NML describes as "piracy-as-a-service" – that is, comprehensive wholesale offerings that make it even easier for a would-be pirate by providing all of the required tools: "website templates that facilitate the creation of streaming websites, databases of infringing content, dashboards that allow a pirate IPTV operator to oversee the infrastructure of their service, IPTV panels used for generating and distributing playlists of pirate IPTV channels, and hosting providers that specialize in servicing infringers."