California Legislators Hold Hearing on the Ongoing Threat of Piracy

by Jessica Garcia 06/29/2011 09:24 (UTC-08:00) Pacific Time (US & Canada)

A cross-section of leaders from creative industries impacted by piracy and counterfeiting were called upon last week to provide testimony at an informational hearing, “The Ongoing Threat of Piracy to our Economy,” convened by California State Senator Curren Price, Chairman of the Joint Committee on the Arts, and Committee member Senator Ron Calderon.

Held last week on the Paramount Studios lot, the hearing opened with a screening of New York City’s latest public service announcement (PSA) aimed at educating the public on the consequences of piracy. The PSA gives a face to the below-the-line movie industry workers impacted by content theft.

Kevin Suh, Senior Vice President of Content Protection, Internet, testified on behalf of the MPAA. Informing on the threat of rogue websites, he stated:

The sites, whose operators are located throughout the world, take many forms, but have in common the simple fact that all materially contribute to, facilitate and/or induce the distribution of copyrighted works, such as movies and television programming.

These “rogue” websites are increasingly sophisticated and take on many attributes of legitimate content delivery sites, creating additional enforcement challenges and feeding consumer confusion.

Rogue sites legislation, at the federal level, is needed to address the threat to our industry. 

Other panelists included representatives from the Anti-Counterfeiting Coalition; Teamsters Local 399; the Business Software Alliance; the Recording Industry Association of America; Levi Strauss & Co.; and the Los Angeles County Sheriff’s Department.

The overall message of the hearing was that piracy and counterfeiting is a serious threat to all creative industries, consumers, and the economy.

A webcast of the hearing is available here.

California’s Film and Television Tax Credit Program Fuels Economy

by Elizabeth Kaltman 06/28/2011 16:19 (UTC-08:00) Pacific Time (US & Canada)

Today the Los Angeles Economic Development Corporation released a study about the positive economic impact of California’s Film and Television Tax Credit Program. The LAEDC study illustrates why 40 states around the country compete for film and television productions: because they are a proven job creator and economic stimulus. The study shows that the projects that qualified for the tax incentive in the program’s first two years generated $3.8 billion dollars in economic activity statewide, created more than 20,000 jobs and over $200 million dollars in tax revenues. 

Assemblymember Felipe Fuentes (D-Sylmar), author of legislation (AB 1069) to extend the tax credit for an additional five years, held a press conference today on the set of ABC’s Body of Proof to publicize the data in an effort to ensure support for his bill.  Fuentes was joined by Los Angeles City Councilmember Paul Krekorian, Body of Proof Executive Producer Matthew Gross, and a cross-section of entertainment leaders, including IATSE Local 44 Business Agent Ed Brown and Production Manager and DGA member Cleve Landsberg.

Senator Chris Dodd, Chairman and CEO of the MPAA said of the LAEDC study today: “The motion picture and television industry is overwhelmingly comprised of middle-class workers, and since it was enacted in 2009, California’s production tax incentive has been an important driver in a challenging economy. We applaud Assembly Member Felipe Fuentes’ leadership in the effort to extend this worthwhile program which helps keep high paying jobs in California and increases tax revenues across the state.”

Fuentes’ bill is currently awaiting a hearing in the California Senate’s Committee on Governance and Finance and we are hopeful that this study helps to dispel any doubts about the effectiveness of the tax credit program and easily passes through the Senate.


Studios file reply brief in Zediva case

by Ben Sheffner 06/27/2011 11:26 (UTC-08:00) Pacific Time (US & Canada)

Today the MPAA's member studios filed their reply brief in support of their Motion for a Preliminary Injunction in their copyright suit against the unlicensed video-on-demand service Zediva. The studios' brief rebuts Zediva's arguments, explaining to the court why such cases as Columbia Pictures Indus. v. Redd Horne, 749 F.2d 154 (3d Cir. 1984) and On Command Video Corp. v. Columbia Pictures Indus., 777 F. Supp. 787 (N.D. Cal. 1991) demonstrate that Zediva is violating the studios' exclusive right to publicly perform their works under Section 106(4) of the Copyright Act. And our reply brief explains why the Second Circuit's Cablevision decision does not aid Zediva. As the introduction to our brief states:

 Zediva is clearly violating the Studios’ public performance right under settled law. The statute’s plain language, as consistently construed for decades, makes it clear that the thousands of separate transmissions of the Studios’ films that Zediva sends to users “in separate places” and “at different times” constitute performances “to the public.” 17 U.S.C. § 101; Columbia Pictures Indus., Inc. v. Redd Horne, Inc., 749 F.2d 154, 159 (1984); On Command Video Corp. v. Columbia Pictures Indus., 777 F. Supp. 787, 790 (N.D. Cal. 1991). The only difference between the transmissions in Redd Horne and On Command, and those here, is that Zediva uses the Internet instead of its own cable wires to transmit the Studios’ films. But the Internet does not make Zediva any less liable than the services in those cases. Zediva itself admits that the Internet simply functions as “a very long cable” for its transmissions. Opp. at 8:14. And the cases are clear that streams over the Internet are public performances, even where (as is common) each stream is sent separately to an individual user. See United States v. Am. Soc’y of Composers, Authors, Publishers, 627 F.3d 64, 74 (2d Cir. 2010) (“ASCAP”). The rule Zediva advocates would eviscerate protection for a wide range of works streamed over the Internet.

Zediva’s near-total reliance on Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (“Cablevision”), in arguing that its performances are private, is misplaced. Cablevision repeatedly said that its holding applied only to a service that transmitted from one “unique copy” made at the direction of a unique user to that same user. Id. at 135, 138, 139. Zediva concedes that the facts of its service are different than those that were critical to the Cablevision court’s holding. Opp. at 9. The case does not assist Zediva.

The equities cry out for an injunction. Video-on-demand (“VOD”) over the Internet is an important and fast-growing market. Legitimate participants recognize they have to respect the rights that Congress created and obtain licenses to exploit companies that have tried to jump-start a business by violating copyright owners’ the Studios’ public performance right. Zediva is just the latest in a line of rights. Notwithstanding the oft-repeated cries of “we’re small,” and “an injunction will destroy our business,” courts have not hesitated to issue injunctions to protect the rights of content owners and licensees who play by the rules that Congress established. The Court should grant the Studios’ Motion.

Our motion is scheduled to be heard before Judge John Walter of the Central District of California on July 25. Here is the MPAA's set of FAQs on the case.



PROTECT IP and the Venture Capitalists

by Michael O'Leary 06/24/2011 14:44 (UTC-08:00) Pacific Time (US & Canada)

Yesterday, as you may have seen, a group of venture capitalists sent Congress a letter about the PROTECT IP Act.  Part of the letter repeated arguments we’ve heard before suggesting that the bill would somehow undermine the architecture of the Internet – many of which have been debunked here and here.  It’s clear that this bill would have no negative impact on the Internet.

But the writers of this letter raised another point that we wanted to address.  They wrote:

The bill is ripe for abuse, as it allows rights-holders to require third-parties to block access to and take away revenues sources for online services, with limited oversight and due process.

Revenues sources?  Here’s the thing: the bill doesn’t address any revenues that would be relevant for the ventures these investors support. 

Let’s take a step back.  The PROTECT IP Act is meant to put a stop to rampant theft of American-made movies, TV shows, and other content by foreign illegal websites, in two basic ways.  First, the bill would make it so that U.S. consumers can’t access those illegal sites in the first place, which in some cases not only stops theft, but protects those consumers who might otherwise fall victim to identity theft or fraud online.  Second, PROTECT IP would shut down the financing that lets those illegal sites stay in business, by getting the U.S. companies that provide rogue sites with advertising services and plumbing like payment processing to stop doing business with them. 

Obviously the rogue sites themselves profit from U.S. consumers – either by charging a fee for stolen content or for hosting advertising for other companies – but the only “revenues sources” the bill covers come from transactions with criminal sites.  Put another way, the bill would only kick in if a U.S. company is providing financial services to an illegal site, and a court asks it to stop.  So our question is this: when the writers of this letter say PROTECT IP would “require third parties to … take away revenues sources for online services,” are they saying businesses like Facebook and Twitter depend on these illegal sites for revenues? 

That doesn’t make sense. 

This bill simply won’t apply to the writers of this letter, or to the ventures they’re backing.  It applies only to sites whose sole purpose is criminal activity, and if American companies are making money by facilitating that criminal activity, it asks them to stop. 

In the end, theft is theft, and it hurts all of us.  What if a criminal had stolen and duplicated the code that runs Facebook?  So you can imagine the harm that comes when the work of a small filmmaker, who poured her life savings and that of her family, is stolen just after release and sold around the world, with all the returns lining criminals’ pockets instead of going back to the filmmaker to repay her investors and fund future projects.  We can’t stand by as criminals profit from the hard work of the millions of American men and women of the creative and entertainment industry. 

The fundamental issue here is this: the writers of this letter, like so many others, think we have to choose between technological innovation and creative expression.  That’s a false choice.  Technology and creativity are inextricably intertwined, and work in concert, not opposition.   But it shouldn’t be too much to ask the innovators to play by the rules.  That’s all the PROTECT IP Act does – it’s a smart, narrowly-crafted bill whose purpose is stopping theft, not slowing innovation.

The letter cited a number of exciting, successful businesses representing partnerships between creators and technology companies to make content available legally.  We couldn’t agree more – Netflix, Rhapsody and Pandora are exciting partnerships and have proven that these legitimate models can work.  Everybody can get behind that kind of innovation.

Internet Engineer George Ou Debunks Claims PROTECT IP Will Break the Internet

by Paul Brigner 06/24/2011 11:40 (UTC-08:00) Pacific Time (US & Canada)

Internet engineer George Ou has written a forceful response to claims that the PROTECT IP Act will “break the Internet” by allegedly undermining the Internet’s architecture. 
Those arguments suggest that PROTECT IP would interfere with a protocol that allows users to connect to websites more securely and that technology used to prevent access to rogue websites would be ineffective. 
Ou makes two particularly compelling points.  First, in response to concerns about the security protocol Secure DNS (DNSSEC), Ou points out that the purpose of that system is to facilitate users’ secure access to legal, legitimate websites to support online commerce and protect personal data. 
“[S]ecure access to an illegal site is moot because the purpose of the Protect IP court ordered filters is to prevent any access to that illegal site,” Ou writes.  “These opponents of DNS filtering never make the claim that DNS filtering will compromise DNSSEC in the general case for websites that aren’t blacklisted with a court order.  DNS filtering is not a threat to legal websites implementing DNSSEC.” 
In other words – you shouldn’t need to be able to connect securely to illegal rogue sites, because those sites shouldn’t exist in the first place.
Ou’s second point responds to criticisms of technology in which domain name systems prevent access to certain sites, noting that Paul Vixie, one of a group of engineers who signed a white paper opposing PROTECT IP, had himself developed a system to protect users from accessing risky websites:

The thesis of the letter opposing the Protect IP Act is that protecting Intellectual Property is important but DNS filters are ineffective and dangerous.  Yet Paul Vixie is the inventor of DNS filters, so it is self-evident that he does not think his invention is ineffective.  Vixie simply believes that protecting Intellectual Property is not important enough to deserve the protection of his technology.

This is an important paper that should help shed some light on the debate around PROTECT IP. 
The bottom line, of course, is that while some people use technology to commit crime or fraud, technology can also be one of our strongest weapons to fight theft of our creative works – and one of our strongest partners in making those works more widely available to the people who want them.  Now that’s real innovation.

Video Streaming Bill Targets Criminals, Not Lip-Syncers

by Howard Gantman 06/23/2011 15:29 (UTC-08:00) Pacific Time (US & Canada)

We’ve seen a lot of suggestions lately that new legislation aimed at criminals who steal and disseminate American-made movies, television shows, live sporting events, and other creative works would lock up YouTube lip-syncing babies, including this editorial from DailyKos.

But it’s simply not true.  The Commercial Felony Streaming Act (S. 978) is intended for criminals engaged in massive theft that seek to profit off the hard work of others.

That’s another important point – this kind of streaming is actually already illegal, but it’s classified as a misdemeanor, not a felony.  The Commercial Felony Streaming Act toughens the penalty for this behavior to close a loophole in current law that imposes weaker penalties for streaming illegal content than for downloading illegal content via peer-to-peer transfers.  Streaming and downloading are different technologies, but criminals are using them for the same purpose—stealing movies and TV shows made by the millions of men and women whose work in the entertainment industry helps support them and their families.  Super 8 is actually a great demonstration of the power of the creative community to create jobs and generate millions of dollars in economic activity – the film was shot largely in Weirton, West Virginia, employing hundreds of local residents as extras and relying on local businesses to support the shoot, as Kate wrote earlier this month. 

This is a straightforward bill with a straightforward mission that we should all be able to agree on – ensuring that when we enjoy the movies or TV, it’s the people who make them that benefit, not the people who steal them.


Plaudits to PayPal for Cracking Down on Counterfeit DVD and Blu-Ray Disc Merchants

by Howard Gantman 06/22/2011 14:17 (UTC-08:00) Pacific Time (US & Canada)

Following a joint operation between PayPal’s Brand Risk Management department and Motion Picture Association (MPA) Asia Pacific investigators, PayPal today closed 33 accounts of merchants specializing in the sale of illegal counterfeit DVDs and Blu-ray Discs.  The investigation discovered that the majority of these merchants are based in mainland China, and that they market and ship their products directly to retail and wholesale customers worldwide.

This joint operation demonstrates the importance and effectiveness of rightsholders and payment processors joining forces to fight online theft.  Payment processors like PayPal recognize that their business models rely on gaining consumers’ trust, and that their brands are tarnished when counterfeit goods are available for sale through their payment system. 

We can only eradicate the scourge of online theft if all stakeholders in the online ecosystem work together.  We thank PayPal for partnering with us on this effort. 

IP Enforcement Coordinator Victoria Espinel Calls for International Cooperation on Content Protection

by Alex Swartsel 06/20/2011 15:01 (UTC-08:00) Pacific Time (US & Canada)

Check out Intellectual Property Enforcement Coordinator Victoria Espinel’s post on the White House blog this morning about her recent trip to Europe, which included stops in Brussels and London.  “Counterfeiting and piracy is a global crime, and it requires a global solution,” she wrote. 

Espinel also mentioned her office’s work here in the U.S. to find collaborative solutions to content protection:  “Over the last several months, my office has been working closely with Internet Service Providers, advertisers, credit card companies, payment processors, search engines, domain name registrars and registries taking voluntary action against online piracy,” she said. “These private-sector companies, as well as foreign governments, recognize that we all have a stake in maintaining a safe and secure global marketplace. I welcome their cooperation and will continue to engage with them as we fight worldwide counterfeiting together.”

We welcome Ms. Espinel back to the U.S. and look forward to continuing to support her work to protect America’s creative community and prevent content theft.

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