Busines-law-1.pdf

Youtube, Google and flaws in United States law as the tools of infringement of intellectual property protection in the United States music industry (seminar paper)

Supervisor’s full name and title: Mitja Kovač PhD

Name and surname of the student: Novak Novaković Year: 2016/2017

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Table of contents 1. Introduction..........................................................................................................3 2. The description of the case...................................................................................4 3. The background of Youtube, fair use legal doctrine and application of both in Lenz’s case................................................................................................................5 4. Consequences of Lenz vs. Universal case............................................................9 5. Conclusion..........................................................................................................10 6. List of literature..................................................................................................12

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Introduction Intellectual property is defined as a creation of mind and usually refers to inventions, artistic and literary works. Many things we use, see or hear in our daily lives, such as symbols, songs, images, logos and brands are part of someones intellectual property. Intellectual property is protected by the law, or more specifically, by the set of laws concerning patents, copyright and trademarks.

There are two categories of rights concerning the copyright: ⚫

Economic rights - the rights which allow the owner to gain financial compensation or reward from the use of his work by others.

⚫

Moral rights - the rights which protect the non-economic interests of the author.

Despite the existence of the functional and advanced legal systems in the modern world, there are points when that same law becomes undefined or simply lacks thorough application. The existence of the website called “Youtube” as the biggest and most popular source of audio-visual content, followed by the plethora of software such as “Youtube to mp3 converter”1, “Free youtube downloader”2 and similar programs, websites or browser add-ones, represents such a case. These programs, easily accessible to the global audience via internet, have made a revolution in the way people access music. After copying and pasting a “Youtube” video link of preferred song into the program’s interface, you need a couple of seconds to download the video or convert song to mp3 format and later put it in your computer, cellphone or similar device.

From one perspective, everything seems logical and all parties are satisfied. Music creators and performers are able to get free media space, “YouTube” as a company receives revenue from its advertisers, while the audience has an unlimited access to music and videos completely free of charge.

1 2

http://www.youtube-mp3.org/sr http://download.cnet.com/Free-YouTube-Downloader/3000-2071_4-75219434.html

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The problems arise when “YouTube” account holders upload a video containing music of certain performer without performer’s consent and that same musical content becomes accessible free of charge to the world audience eager to watch it or download it. In this way, both “YouTube” and related software become the genuine mechanisms for stealing intellectual property and infringement of copy right law due to the fact that they do not provide music creators or performers with substantial financial compensation. The peculiarity of this problem is that although “YouTube” possesses tools for the removal of the content with stolen intellectual property and does not officially support websites and software for video downloading and converting, it is still hard for the authors and performers to enjoy their rights. Finding the way to make financial gain once intellectual property is stolen and regaining control over it, still remain an issue for the copyright owners in the music industry. This happens because of the flaws in the United States legal system which, in my opinion, does not offer full protection of rights of the music creators or performers. In this seminar paper, I will try to defend belief that “YouTube” and “Google” implicitly support infringement of intellectual property protection of the music industry in the United States, while the flaws of the copyright and other laws of this country provide these companies and their users with an opportunity to gain profit from stolen intellectual property. I am going to analyze this issue by primarily using the 2007 case from music industry called “Lenz vs. Universal” 3 or “the dancing baby case”4, and also the case regarding more recent practice on “Youtube”.

3 4

http://www.dmlp.org/threats/universal-music-v-lenz https://www.eff.org/cases/lenz-v-universal

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The description of the case In 2007, Stephanie Lenz created a 29-second video of her toddler son dancing with the song “Let’s go crazy” 5 in the background. She posted this video on “Youtube” because she wanted to share a funny video of her son with friends and family. She did not posses any consent or permission from the owner of the song. The song “Let’s go crazy” has been preformed by Prince, the United States musician, while the owner of the song is “Universal Music”, which considered the act of Stephanie Lenz an infringement of copyright it possesses over the song. “Universal Music” submitted a takedown notice, an online form available on “Youtube” filled by individuals whose copyright-protected work is posted on the “Youtube” without prior authorization. The publishing house did this by relying on The Digital Millennium Copyright Act (DMCA) “17 U.S. Code 512 (C) - Limitations on liability relating to material online”, which states that upon notification of claimed infringement as described in paragraph (3), service provider responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity” 6 . After receiving the notice, “Youtube” has removed the video and informed Stephanie Lenz about it. Lenz sends a counter-notification to “Youtube” by relying on the same law. According to DMCA, Lenz’s counter-notification is regarded as “a statement under penalty of perjury that the subscriber has a good faith belief that the material was removed or disabled as a result of mistake or misidentification of the material to be removed or disabled”7. Lenz sued “Universal Music” in the federal district court of California by relying on the code of DMCA regarding misrepresentation of copyright infringement. This code states that “Any person who knowingly materially misrepresents under this section— (1) that material or activity is infringing, or 5 6 7

https://www.youtube.com/watch?v=N1KfJHFWlhQ http://www.law.cornell.edu/uscode/text/17/512 http://www.law.cornell.edu/uscode/text/17/512

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(2) that material or activity was removed or disabled by mistake or misidentification, shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer, by any copyright owner or copyright owner’s authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it”8. She manages to prove that “Universal Music” has deliberately misrepresented her act as copyright infringement and that her video is made only for personal or non-commercial purposes. Lenz manages to do so by relying on the Fair use - “a legal doctrine that says you can reuse copyright-protected material under certain circumstances without getting permission from the copyright owner. ”9. Lenz’s success in the lawsuit against “Universal Music” can be considered partial. Judge Jeremy Fogel establishes that Lenz’s video is not an infringement of copyright law and additionally asserts that the owners of the copyright should consider the fair use before deciding to submit the DMCA takedown notice. Nevertheless, the judge did not resolve which party should cover the attorney’s fees and other expenses. Both sides appealed, but the monetary aspects of the case remain unresolved till this day.

The questions aroused by this case regard not only legal aspects of copyright law in the United States, but also the practice of online service providers based in this country. The online service providers support the infringement of intellectual property rights in collaboration with their users. The paragraphs that follow offer deeper analysis of background of every factor regarding this case. Some of those are: The questionable doctrine of United States legal system, the ambiguous policies and practice enforced by “Youtube” and its owners and finally, the negative consequences of the case to the current attempts of music industry to protect its intellectual property . Before initiating the analysis, it is important to mention that this case was covered by the majority of mass media in the United Sates and became well-known. 8 9

http://www.law.cornell.edu/uscode/text/17/512 https://www.youtube.com/yt/copyright/fair-use.html#yt-copyright-resources

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The background of Youtube, fair use legal doctrine and application of both in Lenz’s case “Youtube” is a company founded in February 2005 by Steve Chen, Chad Hurley and Jawed Karim - the former employees of “PayPal”. On, 9. October 2006 it becomes ownership of “Google Inc.”. Single and most important product of “Youtbe” as a company is the “Youtube” website which represents a platform for uploading, editing and broadcasting videos of different kinds free of charge. It is conceived as the meeting place of three different parties: advertisers, viewers and creators. “Youtube” generates its revenues from advertisers by offering them various advertising options. Some of the most familiar ones are the ads that appear beside videos, in search results and before videos. Many companies are eager to invest a lot on advertising on “Youtube” because apart from reaching wide audience via computers and smartphones, “Youtube” also offers them information about age, location and preferences of its viewers. “Youtube” is able to gather these information by having the consent from its viewers for the use of the so called “cookies” - files used for gathering online information of an individual. The tool called “Youtube’s Free Analytics”10 helps advertisers understand who is watching their ads and how an individual interacts with those ads. Advertisers pay “Youtube’s” services only when a viewer actually clicks on the ad or watches the complete advertisement (in case it is the one showing up before video). It is at “Youtube’s” discretion to decide which ad is going to be seen by a specific viewer on a specific video. Apart from using the viewers’ information mentioned above, “Youtube” is also inclined to broadcasting advertisements before or next to the videos which have been already seen by lots of viewers. “Youtube” creator can be anybody as long as it possesses a “YouTube” account or “Youtube” channel. Upon creation of the account or channel, the prospective creator signs an online legally-binding agreement with “Youtube” entitled “Terms of 10

https://www.youtube.com/yt/advertise/why-it-works.html

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service”11. In the part regarding copyright, this agreement says the following: “you further agree that Content you submit to the Service will not contain third party copyrighted material, or material that is subject to other third party proprietary rights, unless you have permission from the rightful owner of the material or you are otherwise legally entitled to post the material and to grant YouTube all of the license rights granted herein”12. The agreement also states that “Youtube” is not liable if unauthorized use of copyrighted material appears in the content posted on its website. Nevertheless, “Youtube” obligates itself to remove the content once it is established that it violates someone’s copyrights. The “Youtube Community Guidelines” also contain the following provision: “Respect copyright. Only upload videos that you made or that you are authorized to use. This means don't upload videos you didn't make, or use content in your videos that someone else owns the copyright to, such as music tracks, snippets of copyrighted programs, or videos made by other users, without necessary authorizations”13. In addition, creators can choose to monetize their videos by signing the “Ad sense”14 legally-binding contract with “Youtube”. This means that creators allow “Youtube” to put the ads of its advertisers next to or before their videos. This contract obliges “Youtube” to provide the video creator with a commission or a smaller portion of money each time viewer watches the video of a specific creator. In order for a video to be eligible for this kind of practice, it must meet the following requirements: “You have created everything in your video yourself, and you did not sell exclusive commercial usage rights to someone else. If your video contains content created by someone else, you must have their written permission to use and make money from it”.15

In addition to that, the pre-contractual instructions also state the following:

11 12 13 14 15

https://www.youtube.com/t/terms https://www.youtube.com/t/terms https://www.youtube.com/t/community_guidelines https://www.youtube.com/account_monetization https://www.youtube.com/account_monetization

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“Examples of videos that could be eligible include: ⚫

You filmed your cat and there is no background music.

⚫

Your video contains royalty-free music, and you can prove commercial rights using direct links to the song and applicable license.

⚫

Your friend's band wrote and recorded a song for your video and states in writing that you can use and make money from it”.16 On the other hand,“Youtube” has a couple of exceptions regarding the

unauthorized use of copyrighted material which are not mentioned in the “Terms of Service”. These exceptions are supported by the United States law and they may, at some point, strongly contradict “Terms of Service” and become a key tool of intellectual property right infringement. These exceptions refer to Fair use - “a legal doctrine that says you can reuse copyright-protected material under certain circumstances without getting permission from the copyright owner”. 17 Those circumstances refer to videos containing criticism, the videos borrowed from “Youtube” for more accurate and complete news reporting and finally, the so called “remix” videos which was the category of Lenz’s video. Remix is defined as the video that combines short excerpts from different sources and conveys new meaning for the source material.

In the United States law, fair use of certain copyrighted material is determined by a judge who analyzes how the following four factors apply to a specific issue:

In the United States, fair use is determined by a judge, who analyzes how each of the four factors of fair use applies to a specific case. “1. The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes. Courts typically focus on whether the use is “transformative.” That is, whether it adds new expression or meaning to the original, or whether it merely copies from the

16 17

https://www.youtube.com/account_monetization https://www.youtube.com/yt/copyright/fair-use.html#yt-copyright-resources

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original. Commercial uses are less likely to be considered fair, though it’s possible to monetize a video and still take advantage of the fair use defense. 2. The nature of the copyrighted work Using material from primarily factual works is more likely to be fair than using purely fictional works. 3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole Borrowing small bits of material from an original work is more likely to be considered fair use than borrowing large portions. However, even a small taking may weigh against fair use in some situations if it constitutes the “heart” of the work. 4. The effect of the use upon the potential market for, or value of, the copyrighted work Uses that harm the copyright owner’s ability to profit from his or her original work are less likely to be fair uses. Courts have sometimes made an exception under this factor in cases involving parodies.”18 The interpretation of fair use law and “Youtube’s” “Terms of Service” in Lenz’s case can be therefore understood in the following way: Lenz has primarily violated “Youtube’s” “Terms of Service” legally-binding agreement by uploading the video containing portion of someone else’s copyrighted work . Nevertheless, she was not prosecuted for that because it is later established that her video represents an exception because it adds the new meaning to the original copyrighted work and is not likely to be used for commercial purposes, even though she was not actually forbidden to use it for these purposes. Additionally, her 29-second video represents a case when small bits of copyrighted work are used, meaning that it is a part of fair use. This factor is, in addition to other factors highly questionable, bearing in mind that Prince’s song “Let’s go crazy” is three minutes and twenty seven seconds long, meaning that she used approximately one fifth of the 18

https://www.youtube.com/yt/copyright/fair-use.html#yt-copyright-four-factors

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original copyrighted work. Finally, the dance of Lenz’s son can be interpreted as a form of parody of the song, therefore enabling her to monetize the video by relying on the judge’s interpretation of first and fourth factor of fair use. Due to the fact that Lenz’s lawsuit against “Universal Music” received huge media attention in the United States, her video had over one million views. Since she won in the lawsuit and her video got re-uploaded by “Yotube”, Lenz was able to legally monetize her video by signing the “AdSense” contract with “Youtube” which would be eager to post the advertisements before and around and even

during the

playback of her video due to video’s popularity. In my opinion, both Stephanie Lenz as “Youtube” video creator and “Youtube” as service provider have been lawfully provided with an opportunity to violate both economic and moral aspects of copyright law. An additional reason why “Youtube” serves as a genuine tool of copyright infringement is its practice regarding the video licensing and downloading. According to the “Terms of Service” once creator uploads the video on “Youtube” he or she still has the ownership rights over the content, but nevertheless the creator grants “Yotube” “a worldwide, non-exclusive, royalty-free, sublicenseable and transferable license to use, reproduce, distribute, prepare derivative works of, display, and perform the Content in connection with the Service and YouTube's (and its successors' and affiliates') business, including without limitation for promoting and redistributing part or all of the Service (and derivative works thereof) in any media formats and through any media channels”. In practice, this means that even videos with highly questionable content in the sense of copyright such as Lenz’s video, can be legally reproduced, distributed and broadcasted by “Youtube”.19 Moreover, the “Terms of Service” fails to comply with practice of its creator even in the area of video downloading and converting. The “Terms of Service” contains the following rule about it: “Content is provided to you AS IS. You may access Content for your information and personal use solely as intended through the provided functionality of the Service and as permitted under these Terms of Service. You shall not download any Content unless you see a “download” or similar link 19

https://www.youtube.com/t/terms?gl=US

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displayed by YouTube on the Service for that Content. You shall not copy, reproduce, distribute, transmit, broadcast, display, sell, license, or otherwise exploit any Content for any other purposes without the prior written consent of YouTube or the respective licensors of the Content. YouTube and its licensors reserve all rights not expressly granted in and to the Service and the Content”.20 “Youtube” does not officially support the policies and practice of websites and software for video downloading and converting, because, according to the United States piracy law, “Youtube” viewers who do not posses ownership or do not own the copyright over certain video, are not allowed to download that video. “Youtube” has even sued the website for video conversion “youtube-mp3.org”21 on the grounds that “according to Google’s own DoubleClick statistics, YouTube-MP3.org had been pulling in 1.3 million visitors each day – and YouTube felt most were making illegal MP3 rips of copyrighted music videos”.22 In order to impede the function of this website, “Youtube’s” owner, “Google Inc.” has even censored this website on the US servers on its highly popular search engine. What is peculiar about this is that “Youtube” and “Google Inc.” are actually supporting the same practice as this website, but on more implicit way. “Google Inc.” has recently created an add-on for its widely used web browser “Google Chrome”, called “Video downloader ultimate”23, therefore providing the users of its browser to download and convert videos in the same manner they would do with every other similar program. What is peculiar is that most of the users of “Video downloader ultimate” are not fully aware that they are violating the law by downloading their favorite music from “Youtube”, while those who do that consciously do not suffer any consequences simply because it is hard to prove their act.

20 21 22 23

https://www.youtube.com/t/terms?gl=US http://www.youtube-mp3.org/ http://www.real.com/resources/youtube-to-mp3-converter/ https://chrome.google.com/webstore/detail/video-downloader-professi/elicpjhcidhpjomhibiffojpinpmmpil

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Consequences of Lenz vs. Universal case During the lawsuit process and even today, the United States public has been on the side of Stephanie Lenz. Her lawsuit with “Universal Music” became a genuine case study on how an average video creator on “Youtube” can actually fight for the freedom of speech online. Lenz’s video is not likely to be downloaded or converted to mp3 format due to the the song itself, simply because the quality of sound is bad and she has not used the song in its entire length. As a “Youtube” viewer and somebody who has seen this video many times while preparing for this seminar paper I can freely say that there are no obvious signs that this video is monetized in any sense. There are no ads or commercials in the search results, beside or before the video, at least when you watch this video from European continent. This, of course, does not mean that the video was not downloaded and converted, but it is nearly impossible to prove it. Moreover this does not excuse Lenz’s unauthorized use of copyrighted material and “Youtube” for its ambiguity when speaking about “Terms of Service” and the actual practice.

The true significance of this case lies in the consequences which negatively impact current attempts of music industry to protect its intellectual property. The case “Lenz vs. Universal”24 has revealed significant flaws of the law regarding fair use. The most significant flaws are the ones regarding the first and fourth factor of fair use, or more specifically, the ones aimed to determine whether a video made with the use of unauthorized copyrighted work represents an actual copyright infringement and whether this video should be and can be monetized. The problem with these two factors lies in the fact that they are subject to different interpretations by different people. The essence of the problem lies in the undefined border between personal and commercial unauthorized use of copyrighted work. Moreover, what is primary conceived as personal use can be easily turned into commercial use excused by the fair use. Consider the following case. On 1. November 2012, the “Youtube” video creator

24

https://www.eff.org/cases/lenz-v-universal

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with an account name “RAYCEL527” 25 uploaded the home video of the baby wearing nothing but diapers, watching the music video on television and dancing. The music video shown on the television is “Single ladies (Put a ring on it)” performed by Beyonce. Beyonce’s video is almost fully visible on the footage, both song and video are used in their full length while the sound quality is good enough that a “Youtube” viewer and user of “Video downloader ultimate” would definitely consider converting this video into mp3 format. Moreover, it is obvious that the video is monetized by the video creator and “Youtube” because the ads are shown and played before the video, on the bottom of the video and next to the video. In addition, the video creator has written the following in the short description under the video: “I'm not the owner of this video, i just want to share it with you”26. This means that the “alleged” video creator has not only stolen the already stolen intellectual property, but is actually, in collaboration with “Youtube”, severely violating economic rights concerning the copyright owned by “Sony BMG Music Entertainment” - the owner of “Single ladies (Put a ring on it)” song. The publishing house did not sue the video creator probably because, based on practice, the video creator can easily claim that under the fourth factor of fair use, the video is for personal use only, and because it represents a parody on the original copyrighted work, it is legally allowed to be monetized. An additional problem is that no one can claim whether and how many times has the video been downloaded or converted to mp3 format. There is only one thing for sure, this case is not alone.

This case additionally questions for how long can the United States music industry economically survive with such an amount of obstacles regarding the protection of its intellectual property.

25 26

https://www.youtube.com/watch?v=DnjHMtUjIvQ https://www.youtube.com/watch?v=DnjHMtUjIvQ

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Conclusion The question I kept asking myself throughout the paper looks like this: “is there a sole culprit in this issue?” Are the culprits “Youtube” and “Google Inc.” which abide fair use law but fail to do the same with piracy law as their viewers? Should the video creators as the people who are supposed to be well informed and comply with “Terms of service” and other “Youtube” instructions regarding the copyright be the only culpable ones? Is it the ambiguity of fair use law and the interpretation of its four factors the ultimate culprit?

The possible answer is that each party lacks definition or information about what is good and wrong. Viewers choose not to be uninformed or not to care about the legality of their video downloading and converting practice. “Google Inc” and “Youtube” choose to infringe copyright silently and behave in an ambiguous manner in order to maximize their revenues with the cooperation of creators, who can easily claim that their unauthorized use of copyrighted materials is protected by the fair use law. This is not a chain reaction which can be easily regulated by the law, simply because “Youtube” is a place where people’s personal and professional lives meet and interact with one another. This, of course, does not mean that the intellectual property of music industry should become a public good used free of charge because this kind of practice would ruin the creativity and impede the development of contemporary culture.

Since the evolving technology is ought to serve the people and their needs, the issue of intellectual property infringement in music industry may soon become a part of the past thanks to the innovations of “Youtube”. The system called “Contend ID”27 enables the copyright owners to gain full control over their work on “Youtube” once they submit it to “Youtube” database. When their work enters the database it becomes a reference point. When a video creator wants to make a video, the contents he or she uses are compared against all the reference points in the database. If a system detects an audio or video match, no matter how small or large it is, it automatically informs the copyright owner about it and it is later at copyright owner’s 27

https://support.google.com/youtube/answer/2797370?hl=en

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discretion whether this new video is going to be removed from “Youtube”, remain on “Youtube” and whether the “Youtube” can make financial gain out of it. The “Content ID” system which is slowly becoming a part of “Youtube” routine is a solution “Youtube” owned to the music industry. It is certainly going to lead to an increased level of overall protection of intellectual property not just in the United States music industry, but also in the global music industry.

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YouTube, (2014). "Let's Go Crazy" #1. [online] Available at: https://www.youtube.com/watch?v=N1KfJHFWlhQ [Accessed 5 Dec. 2014]. YouTube, (2014). Single Ladies ( Put A Ring On It ) by Beyonce [Baby Dance]. [online] Available at: https://www.youtube.com/watch?v=DnjHMtUjIvQ [Accessed 7 Dec. 2014]. Youtube.com, (2014). Fair use - YouTube. [online] Available at: https://www.youtube.com/yt/copyright/fair-use.html#yt-copyright-resources [Accessed 6 Dec. 2014]. Youtube.com, (2014). Fair use - YouTube. [online] Available at: https://www.youtube.com/yt/copyright/fair-use.html#yt-copyright-four-factors [Accessed 4 Dec. 2014]. Youtube.com, (2014). Terms of Service - YouTube. [online] Available at: https://www.youtube.com/t/terms [Accessed 5 Dec. 2014]. Youtube.com, (2014). Terms of Service - YouTube. [online] Available at: https://www.youtube.com/t/terms?gl=US [Accessed 6 Dec. 2014]. Youtube.com, (2014). Why it Works - YouTube. [online] Available at: https://www.youtube.com/yt/advertise/why-it-works.html [Accessed 3 Dec. 2014]. Youtube.com, (2014). YouTube. [online] Available at: https://www.youtube.com/t/community_guidelines [Accessed 4 Dec. 2014]. Youtube.com, (2014). YouTube. [online] Available at: https://www.youtube.com/account_monetization [Accessed 3 Dec. 2014]. Youtube-mp3.org, (2014). YouTube to mp3 Converter. [online] Available at: http://www.youtube-mp3.org/ [Accessed 4 Dec. 2014]. Youtube-mp3.org, (2014). Претварач из YouTube Ńƒ mp3. [online] Available at: http://www.youtube-mp3.org/sr [Accessed 7 Dec. 2014].

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