Senator Ron Wyden is up to his old tricks–he’s got a secret hold on the CASE Act and is taking his usual ridiculous positions just to see if he can get away with it. His day of reckoning has been coming for a long time and may have just arrived. We don’t come to the Congress looking for a fight, but he does. Maybe now he’ll get one. Like any other bully, there’s only one way to make it stop.
Why would Senator Wyden care about the CASE Act? Because Google does. And why does Google care? Because the CASE Act would provide meaningful relief to artists in all copyright categories caught up in DMCA hell, the ennui of learned helplessness brought on by the call and response of notice and counter notice that gives Google domain over vast numbers of copyrights from people who can’t afford to fight back in federal court. And Google cannot have that.
So what is going on that prompted a kind and reasonable fellow like Copyright Alliance chief Keith Kupferschmid to accuse Senator Wyden of bad faith negotiations in the above tweet? Quick recap: Remember there’s new legislation working its way through Congress that would establish a new “small claims court” in the US called the CASE Act. The immensely popular and bipartisan bill introduced by Rep. Hakim Jeffries, passed the House of Representatives on a 410-6 vote. Yes, that’s right–410-6 in favor of the CASE Act. (If you’re interested, you can download the CLE materials I put together for a recent bar association panel on the CASE Act. This has a detailed explanation of holds, copy of the bills, and some other public materials.)
The legislation is now in the Senate which is the land of legislative secret holds and the kind of faux collegiality based on unanimous consent voting outside of the procedures we normally think of, especially floor votes. At a high level, here’s how it works: The Senate staff essentially emails around legislation and if no Senator objects to it, it is passed by unanimous consent. Called “hotlining” this is pretty common in the Senate. It does not require scheduling floor time and gets things done.
But see what they did there? If just one–one–senator who objects to the hotlined legislation, it all grinds to a halt. This is called placing a “hold” on the Senate version of a bill. Which brings us to Senator Ron Wyden.
Senator Wyden has a history of placing holds on copyright legislation. Most recently, he placed a hold on the Music Modernization Act in order to extract some further punishment for the old guys and dead cats who saw a glimmer of hope in the pre-72 part of the bill (Title II). In what has become standard practice, the banshees from the Electronic Frontier Foundation and Public Knowledge swing into action with their Fear Uncertainty and Doubt campaigns in an effort to weaken copyright in any way they can get away with.
You know, these guys:
EFF and Public Knowledge treated us to this kind of propaganda:
Both EFF and Public Knowledge used the Phone2Action tool which features this permission set for Twitter that sure looks like it’s designed to create a bot net:
So back to Senator Wyden. EFF and Public Knowledge are not the only ones with ties to Google in particular and Big Tech in general. Senator Wyden represents Oregon, but he is actually from Palo Alto in what was once called the Santa Clara Valley, but is now generally called Silicon Valley. And what does Silicon Valley need that Oregon has?
Huge honking amounts of electricity to run the massive data centers that power Big Tech and allows them to store fuflops of data about you and me. Remember–it takes about as much electricity to run YouTube as it does to light the city of Cincinnati. And unlike Teslas, etc., that run on the magical power of cherubic elves jogging on golden flywheels, Google needs the same electricity that comes out of the wall from whatever source it is derived. Here’s some data on the data centers:
Needless to say, when you are groovier than thou Googlers, this little fact is distasteful and really jacks with your self-image. Hence, Google seeks out “green” power as part of the mix–and here’s where Oregon comes in. Courtesy of the taxpayer, i.e., you and me, Oregon happens to have a bunch of hydroelectric power from the Columbia and Snake Rivers Hydroelectric Project that also extends into British Columbia.
Well, it’s not just courtesy of you and me, it’s also courtesy of the sacred lands given up by Native Americans for The Dalles Dam (Google’s main Oregon data center is located in The Dalles). The Dalles Dam has an interesting history with Oregon’s local Confederated Warm Springs Tribes and the Yakama Indians, too. Thanks to the ever efficient Army Corps of Engineers and a bunch of federal taxpayer money, the Dalles Dam hoodwinked the tribes into giving up sacred land, which is now at the bottom of the reservoir, but that’s a story for another day.
According to The Oregonian:
Data centers have become one of Oregon’s biggest industries, with Google, Apple, Facebook and Amazon spending billions of dollars to buy and equip online storage facilities in rural parts of the state. They’re lured primarily by tax savings, which can shave tens of millions of dollars from a server farm’s annual operating cost.
Earlier this week, The Dalles city council and Wasco County commissioners voted to approve a package of “enterprise zone” tax breaks that exempts Google’s buildings and computers from local property taxes. The pact could save Google tens of millions of dollars or more over the 15-year life of the deal.
In exchange, Google will make an up-front payment of $1.2 million to local governments and $800,000 annually after that.
And who was formerly the chair of the Senate Energy & Commerce Committee? You guessed it.
So back to Senator Wyden and his hold on the CASE Act (I won’t blame you if you’d prefer a shower right about now). Remember that the CASE Act is the biggest threat to Google’s DMCA-based business model to come along. So Wyden’s marching orders on the CASE Act is the same as it was on MMA and the same as it’s been for years. Slow it down, weaken it, let the process grind it to bits if possible or extract so many concessions that it’s toothless or as toothless as it can be.
And that is why a good guy like Keith Kupferschmid is calling out Ron Wyden. Because there’s #JustOne senator standing in the way of justice.
With Section 512 of the DMCA, Congress sought to “preserve strong incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements that take place in the digital networked environment.”
Given the symbiotic relationship between copyright owners and service providers, Congress meant to establish an online ecosystem where both would take on the benefits and burdens of policing copyright infringement. This shared-responsibility approach was codified in the Section 512 safe harbors.
But rather than service providers and copyright owners working together to prevent online piracy, Section 512 has turned into a notice-and-takedown regime where copyright owners do most of the work. This is not what Congress intended, and the main culprit is how the courts have misinterpreted Section 512’s red flag knowledge standards.
In a major victory for the rule of law and a total vindication for Rightscorp, Magistrate Judge Andrew Austin ruling in the labels’ contributory copyright infringement case against Grande Communications, a Texas-based ISP, has recommended that Grande be denied the DMCA safe harbor defense in a copyright infringement case for failing to implement a repeat infringer policy. (UMG Recordings, Inc. v. Grande Communications Networks, LLC and Patriot Media Consulting, LLC, case number 1:17-cv-00365-DAE-AWA for those reading along at home.)
Recall that the DMCA safe harbor, as poorly drafted as it is, does include conditions to the ability of an online service provider to assert the safe harbor defense. These include the “knowledge predicate” (essentially denying the safe harbor to those who had knowledge of the infringement waiving like a red flag). Another predicate is the Congress’s attempt to address the safe harbor’s moral hazard that Congress created by requiring the online service provider to take infringement seriously and to adopt–and actually implement–a repeat infringer policy. Absent these predicates, the Congress has created what is essentially a back door royalty-free compulsory, the detestable “DMCA license,” which of course is no license at all.
While no one can predict the future, it is my hunch that these cases will demonstrate again and again that online service providers do not take these predicates seriously. My bet is that they knowingly allow massive infringement to occur on their networks with no real effort to implement a repeat infringer policy. Therefore, they bring trouble on themselves all by themselves.
That is certainly what happened in BMG’s groundbreaking case against Cox Communications, a precedent that figures largely in the Grande case and in the label and publisher tag-along case in Virginia against Cox. Thankfully, BMG led the way and hung in there as the lone copyright owner enforcing their rights until they achieved a successful result and settlement. (BMG Rights Mgmt. (US) LLC v. Cox Commc’ns, Inc., 149 F. Supp. 3d 634, 657 (E.D. Va. 2015), aff’d in part, rev’d in part, 881 F.3d 293 (4th Cir. 2018).)
This is certainly the view of the magistrate in his recommendation to the trial judge on Grande’s contributory infringement. Here’s a few relevant excerpts:
In this case, Grande had nothing even approximating the system Cox used, as for the six years before this lawsuit was filed, it never warned a customer they might be terminated, regardless of how many infringement notices Grande received about that customer….During the six year period, the only policy that addressed repeat infringement was Grande’s general Acceptable Use Policy, which among many other things, stated that repeat copyright infringers could have their service terminated….
More than six months after posting the DMCA policy, and two months after this case was filed, Grande terminated its first customer for infringement in nearly seven years. Through the date of the filing of the instant motion, Grande has terminated a total of 12 users—eleven in 2017, and one in 2018….This amounts to absolutely no implementation of the policy Grande had allegedly adopted. And, as in BMG, the policy that was actually in effect for this time was that Grande was determined never to terminate a subscriber, no matter what information Grande received about that customer allegedly infringing a copyright. It is hard to imagine a case in which it is more clear that the DMCA safe harbor is not available….The fact is, Grande had no policy in effect for the vast majority of the relevant time period, and its last minute conversion is too little too late.
And when a judge says “its last minute conversion is too little too late,” that’s roughly the equivalent of a phrase that echoed through my childhood–“that’s bullshit for starters.” So don’t go there.
There’s a long way to go before this case is concluded, but it’s starting to look like a pattern is emerging here–ISPs, and probably all ISPs, got some bad, bad advice and have simply failed to address one of the few parts of the DMCA safe harbor that actually makes sense.
Of course, it must be said that Rightscorp played a crucial role in making this contributory infringement case. If it were not for Rightscorp, who were also an integral part of the Cox case, it is unlikely that the copyright owners arguments would have been as compelling. Magistrate Judge Austin acknowledged their role:
Grande’s complaints about the Rightscorp notices also miss the mark, for a host of reasons. First, the very same sort of Rightscorp notices at issue here made up a large portion of the notices that BMG relied on in their suit against Cox. Cox made very similar attacks on those notices, and also argued that the evidence failed to “prove actual knowledge of repeat infringement.” [Citation omitted] As the Fourth Circuit explained, that argument was misplaced, because “Cox bears the burden of proof on the DMCA safe harbor defense; thus, Cox had to point to evidence showing that it reasonably implemented a repeat infringer policy.” Id. The court found Cox failed to show that it had ever actually followed through and implemented its policy as written, and without such evidence, there was not a triable issue. Id. The same is the case here. Grande has pointed to no evidence that it ever considered terminating a user during the relevant period, despite the fact that there is ample evidence, including internal emails, indicating that it believed many of its customers were repeat infringers. Without at least some evidence of this sort, it cannot create a fact dispute related to its defense.
Grande has admitted that it would not have terminated any subscribers, no matter what the circumstances were, prior to June 2017, as the policy in place from 2010 to mid- 2017 was that it would not terminate a user for infringement “regardless of the source of any notice,” “regardless of the content of any notice,” and “regardless of the volume of notices . . . for a given customer.” [Citation omitted.] Moreover, the evidence in the record from Grande’s own documents reflects the opposite of what it now argues—Grande took the Rightscorp (and other) notices as evidence of infringement.…The criticism of the Rightscorp system and the notices it generated was never made until Grande was sued, and its lawyers raised these issues. What the lawyers thought of the notices in 2017 is irrelevant to the question of what Grande thought of them between 2010 and 2017. It is Grande’s employees’ knowledge that matters, and the evidence is undisputed that those employees believed the notices reflected that many of Grande’s customers were repeatedly infringing on copyrights.
The magistrate judge clearly took seriously the evidentiary record that Rightscorp helped to develop, and focused on the key evidence that was presented–when Grande received the notices they knew exactly what they meant and they fell into the very moral hazard that, having created the problem, Congress tried to address with the repeat infringer predicate.
It should be apparent that Cox and Grande will become extraordinarily important cases in the DMCA jurisprudence as we fight in Europe to roll back the greatest income transfer of all time–the value gap which is created by legacy statutes that have lost their utility.
Safe harbors were a nice idea to give a little latitude to reasonable people acting reasonably. They were never intended to be an alibi. But–as usual–the Congress having created the problem, it is now up to the copyright owners to fix it.