The Copyright Office sought further comment Tuesday on its study of Digital Millennium Copyright Act Section 512 notice-and-takedown process and the section’s safe harbors. The review in part examines the effectiveness of the current notice-and-takedown process, the counter-notification process and the legal standards that apply under the section (see 1512300039). The CO received more than 91,000 responses to its initial request for comment, though the vast majority were generated as part of a Fight for the Future campaign (see 1604010057 and 1604040051). Stakeholders said following two May roundtables on the study that they expected the CO to favor nonlegislative fixes to Section 512 -- particularly voluntary measures -- in a final report (see 1605040064 and 1605130047). The initial round of comments and the May roundtables have shown “a number of themes merit additional consideration,” the CO said in a notice in the Federal Register. “Many of these relate to questions of balance,” it said, including “how to weigh the diverse interests and needs of affected stakeholders.” The office also said it's interested in feedback on “how to continue to propel” the DMCA's twin public interest goals of “fostering a robust and innovative online environment while protecting the rights of content creators.” The CO sought comment on how Section 512 should be updated to account for diversity in the internet ecosystem and how policymakers should factor diverging views of the efficacy of 512's safe harbors. The office also sought comment on how to update the safe harbors system to address issues with its current efficacy and how to clarify Section 512 to address changes in copyright case law. Comments are due Feb. 6. Studies "providing quantitative or qualitative data relevant to" Section 512 are due by March 8.

An FTC study of business practices of patent assertion entities “does not, for the most part, support the patent troll caricature and, for better or worse depending on one's point of view, diminishes the utility of PAEs as a poster child for reform,” said Technology Policy Institute Senior Fellow Thomas Lenard in a blog post Monday. The commission in early October proposed changes aimed at mitigating what it called “nuisance infringement litigation” brought by a subset of PAEs. The study identified two distinct categories of PAEs -- “litigation” PAEs that relied largely on the use of revenue sharing arrangements to acquire patents and “portfolio” PAEs that bought patents outright. The more problematic PAE subset -- “litigation PAEs” -- were more common among the 22 entities included in the review and were responsible for the vast majority of nuisance litigation (see 1610060045). The study “found no evidence of large-scale demand letter campaigns for low-revenue licenses, one of the elements of the patent troll narrative,” Lenard said. “The FTC also found no evidence that PAE patents are low quality as evidenced by their receiving more citations than the average patent.” The report "acknowledges that its results are not generalizable since the lack of data on the universe of PAEs makes it impossible to draw a statistical sample," Lenard said. "To the extent the data are descriptive of PAEs generally, they do not lead to unambiguous policy recommendations, although the report makes several.” The FTC’s recommendations “do not follow from the rest of report,” Lenard said. “More importantly, we do not know if the proposed reforms would be beneficial because they have not been subject to any sort of benefit-cost analysis. This is especially important because the reforms would appear to apply to all patent litigation (not just PAEs) and perhaps even other types of litigation.”

The Library of Congress switched to a new version of its website aimed at improving users’ access to the library’s digital collections. The website redesign is aimed at giving users “an ever-changing window” into digitized versions of the library’s collections that have been updated and expanded over the past three years, said LOC Communications Director Gayle Osterberg in a Tuesday blog post. The site links to digitized content that the LOC believes is either in the public domain, has been cleared by its owner for public use or is a government-produced work, Osterberg said.

The Electronic Frontier Foundation raised concerns Tuesday about the Copyright Office’s final rule establishing a new online system for designating and searching for agents to receive copyright infringement claim notifications under the Digital Millennium Copyright Act. The CO said Monday it had completed development of the online designation system and planned to deploy it in December (see 1610310050). The final rule for the designation system could expose website owners “to massive risk of copyright liability simply for neglecting to submit an online form on time,” EFF Activist Elliot Harmon said in a blog post: “The rule could eliminate the safe harbor status that thousands of websites receive” under DMCA Section 512. To receive Section 512’s safe harbor protections, websites must designate agents to receive infringement claim notices. The final rule for the online designation system requires all website owners to re-register their agents by the end of 2017 and to renew their registration every three years, the CO said in a notice in Tuesday’s Federal Register. “When website owners inevitably forget to renew, copyright holders will be able to take advantage of that mistake to hold them liable for their users’ infringing activities,” Harmon said. “It will be trivial for abusive copyright holders to use the Copyright Office’s own system to compile lists of sites at risk.” The rule change will disproportionately affect small companies and nonprofits, “the same groups that are most poorly poised to fight copyright infringement suits,” Harmon said. He said the section "already imposes a long list of conditions on service providers, and we’ve seen many well-meaning service providers lose their status over technicalities. Requiring providers to commit to updating their registrations indefinitely is a step too far.”

The National Music Publishers Association and Nashville Songwriters Association International jointly proposed Tuesday that interactive streaming and limited downloads of a song should be assessed mechanical royalties for 2018-22 that are the greater of a $0.0015 per-play rate or a flat $1.06 per-end user royalty per month. Days earlier, the two groups reached a settlement with Sony Music Entertainment in which the label agreed to a proposal for the Copyright Royalty Board to maintain existing mechanical rates for CDs, digital downloads and ringtones. Sony agreed to withdraw as a party to portions of the CRB’s 2018-22 mechanical rate-setting as it related to on-demand and streaming services (see 1610310060). The NMPA/NSAI rate proposals for streaming mechanical royalties “properly align royalties with economic value and consumption and balance the interests of licensors and licensees in achievement of the policy objectives” in Copyright Act Section 801(b), the groups said in a filing. “As demonstrated by the Copyright Owners’ economic witnesses, the proposed rates are not merely reasonable, but are well below the expected rates that would be obtained in an unconstrained market, by reference to the most comparable benchmarks available.” The existing licensing model “is structured as a percentage of revenue, and we must change this to a structure where songwriters are paid in accordance with the inherent value -- and popularity -- of their work instead of the success of a given service’s business model,” said NMPA CEO David Israelite in a statement. “We are laser-focused on achieving royalty rates that are set on a per-play and per-user basis.”

The Supreme Court asked the Office of the U.S. Solicitor General Monday to opine on Lenz v. Universal -- popularly known as the “dancing baby” case -- as the court considers whether to grant twin petitions for review of the 9th U.S. Circuit Court of Appeals’ 2015 ruling in the case. The Electronic Frontier Foundation and Universal Music Group petitioned the Supreme Court for a writ of certiorari to review the 9th Circuit’s ruling. EFF was representing Stephanie Lenz in her nine-year-long lawsuit against UMG over the record label’s takedown notice asking YouTube to remove a 29-second video that Lenz posted that showed her toddler son dancing to Prince’s “Let’s Go Crazy” (see report in the July 25, 2007, issue). The 9th Circuit ruled in 2015 that the Digital Millennium Copyright Act “requires copyright holders to consider fair use before sending a takedown notification” (see 1509140070). The Supreme Court sought further input on EFF’s petition, in which the group asked the Supreme Court to review how copyright owners decide to issue takedown notices. The high court sought an opinion on “whether the Ninth Circuit erred in concluding that the affirmation of good faith belief that a given use of material use is not authorized ‘by the copyright owner, its agent, or the law’” under DMCA Section 512 “may be purely subjective and, therefore, that an unreasonable belief -- such as a belief formed without consideration of the statutory fair use factors -- will not subject the sender of a takedown notice to liability” under Section 512. The top judicial body rejected UMG’s petition to review the 9th Circuit’s ruling on the issue of Lenz’s standing to sue without proving a concrete or particular injury stemming from the takedown notice.

Streaming video company Wreal pursued its preliminary injunction motion "with the urgency of someone out on a meandering evening stroll rather than someone in a race against time," the 11th U.S. Circuit Court of Appeals said in an opinion (in Pacer) Friday upholding a U.S. District Court's denial of a preliminary injunction against Amazon. Wreal, which operates the FyreTV streaming pornography service, is suing Amazon over its Amazon Fire TV trademark. The 11th Circuit opinion said Wreal, after filing its complaint in 2014, did no discovery and five months later moved for a preliminary injunction, which U.S. District Court in Miami denied. Wreal's unexplained delay fatally undercut any showing of irreparable injury if it didn't receive a preliminary injunction, wrote Judge Robin Rosenbaum for herself and Judges Adalberto Jordan and Eugene Siler. Counsel for Wreal didn't comment Monday. U.S. District Judge Joan Lenard of Miami in February ordered a stay in Wreal's lawsuit against Amazon pending the 11th Circuit decision.

The Copyright Office said it finished developing an online system for designating and searching for agents to received copyright infringement claim notifications under the Digital Millennium Copyright Act. This “modernizes the designation process and ensures a more usable and accurate public directory,” the CO said in a Monday news release. “The system has also been designed to encourage service providers to keep their information up to date.” The office sought comment in May on a rulemaking that would reduce the agent designation fees from $105 per designation to $6 ahead of the designation system's deployment (see 1605250055). Stakeholders raised concerns about the NPRM's requirement that they renew designations every three years (see 1606240028 and 1606270079). The CO said it will publish a final rule in Tuesday's Federal Register for the designation system, which is to officially deploy Dec. 1. Stakeholders “can begin to acquaint themselves with the new system” via video tutorials, the office said. Online service providers that have previously designated agents with the CO will have until the end of 2017 to submit a new designation electronically via the online system, the office said.

The 2nd Circuit Court of Appeals ruled against cyberlocker pioneer MP3tunes Tuesday on appeals from Sony, Universal Music Group and former MP3tunes owner Michael Robertson of a 2014 U.S. District Court jury verdict in New York saying Robertson and his firm were liable for secondary, contributory and vicarious infringement. The jury originally awarded Sony and UMG, owners of elements of original plaintiff EMI, $48 million in damages. Judge William Pauley slashed the damages award to $12 million in 2015 because he said Robertson was mostly immune from infringement liability because of the safe harbors included in Digital Millennium Copyright Act Section 512. The 2nd Circuit vacated the portion of Pauley's verdict that said Robertson had partial immunity under Section 512. Pauley “applied too narrow a definition of 'repeat infringer'” under the statute, Judge Raymond Lohier wrote, joined by José Cabranes and Chester Straub. The 2nd Circuit reversed the district court's ruling dismissing claims that MP3tunes and Robertson were liable for permitting pre-2007 infringement of EMI's catalog and Beatles songs “because there was sufficient evidence to allow a reasonable jury to conclude that MP3tunes had red-flag knowledge of, or was willfully blind to, infringing activity” related to the songs. The 2nd Circuit remanded the case to Pauley's court for a new decision on damages. Robertson’s own appeal of the case was struck down, with the 2nd Circuit saying the “evidence showed that Robertson acted in a manner intended to promote infringement.” Sony and UMG didn’t comment. Robertson’s lawyer declined comment.

The Copyright Office confirmed Tuesday that ousted Register of Copyrights Maria Pallante resigned from the Library of Congress entirely. Librarian of Congress Carla Hayden removed Pallante as head of the CO Friday, reassigning her as LOC adviser for digital strategy. Stakeholders quickly questioned the circumstances of Pallante’s ouster and how the move would affect the CO’s policy advisory role (see 1610210061 and 1610240052). Pallante said she will leave the LOC effective Saturday, noting in a copy of her resignation letter we obtained that “I do not accept the reassignment to work on Library matters that was announced on Friday.” Pallante appeared to confirm in the letter earlier reports that her access to the CO’s IT system had been cut Friday after learning of her ouster. “I would be grateful for your accommodation as I say goodbye to colleagues and collect personal items this week, and would appreciate the reinstatement of access to my computer and email so that I may appropriately archive records and remove photos of my family,” she said in the letter. Hayden didn’t detail her reasoning for Pallante’s “reassignment” in a memo obtained by us, but noted that she and Law Librarian of Congress David Mao would closely supervise Pallante’s activities. “If you need research assistance, contact [Mao] or me before tasking anyone,” Hayden said in the memo. “I do not anticipate that this assignment will require any communications with Members of Congress or congressional staff.” The CO didn't comment. Sen. Orrin Hatch, R-Utah, a backer of greater CO autonomy, noted his concerns Tuesday about Pallante’s removal. The move “underscores the longstanding challenges associated with housing the Copyright Office in the Library of Congress,” Hatch said in a statement. “Ultimately the Register’s primary duty is to our nation’s copyright system, including providing expert opinion to Congress. In the coming months, I look forward to exploring this relationship and considering possible legislative actions to ensure the viability of our copyright system.” Lobbyists across the copyright spectrum pointed Monday to Pallante’s backing of CO independence as a major factor in her removal as register. Pallante’s “service as Register has laid the groundwork for important modernization efforts in the Copyright Office, which I intend to pursue working in close collaboration with Congress and stakeholders,” Hayden said in a CO statement. Future of Music National Organizing Director Kevin Erickson echoed other content-side copyright stakeholders in a blog post Tuesday in raising concerns about Pallante’s ouster, but cautioned against speculating whether the move reflects Hayden’s copyright policy stance.