Jennifer Baltimore, deputy general counsel of Lincoln Center for the Performing Arts
Jennifer Baltimore, deputy general counsel of Lincoln Center for the Performing Arts

If you were the Walt Disney Co., and you saw thousands upon thousands of fan-created videos that featured your intellectual property cropping up on YouTube, would you crack down on those violations or would you “Let It Go?”

This type of conundrum illustrates an issue that copyright holders face in this era of pervasive digital technology. We’ve come a long way since the early days of Napster, but the same questions posed by that technology still plague copyright law today. Namely, will digital technology sap the value of my intellectual property?

“Law is becoming more accepting and open to technology,” says Jennifer Baltimore, deputy general counsel of Lincoln Center for the Performing Arts. “There seems to be more of a permissive trend with respect to technology.” Baltimore has almost 20 years of experience working with entertainment IP law, primarily working with the intersection of music and new media, having spent time at AOL, Universal Music Group and MySpace, and has seen the music industry go through challenging periods from the growth of Napster to the current propagation of online streaming services.

“The proliferation of infringement in new technology arenas, new platforms and technologies is increasing over time,” explains Rhonda R. Trotter, partner and co-head of the trademark, copyright and false advertising group and office managing partner in the Los Angeles office of Kaye Scholer. “Now we’re at a point, 15 years post-Napster, where consumers of IP content are accustomed to being able to obtain access to the content for free in many instances and quite easily. This presents a challenge for owners of IP in terms of what extent and what means they use to try and maintain the value while at the same time balancing that against the interest of making sure they don’t perturb consumers that are the base for their commercial success.”

Resistance is futile

Any breakthrough in communication technology brings with it apprehension from existing stakeholders. Monks were concerned that the printing press would eliminate the need for their manuscript copying skills and, more recently, movie studios were afraid the newfangled invention called television would drive them to bankruptcy. The same skepticism held true for copyright owners when they looked into the future of digital technology.

“Resistance from copyright owners is the reason there was a Napster,” Baltimore explains. “They were used to a world that was tangible, concrete. You needed the master copy of a recording… There was a sense of security derived from controlling the master recording.”

“Eventually, technology was able to produce a good quality copy from something other than the master, and copyright owners did not foresee that day,” she says. “This paved the way for Napster and, instead of creating a licensing structure on the front end, the music industry was forced to play catch up.”

Fast-forward 15 years and the digital music landscape is far different for copyright holders. Now, with so many digital platforms available to users, the ways in which a copyright can be infringed upon are legion.

“Copyright owners must be selective from a resources standpoint, the methods they used to go after infringers and even if they go after them,” says Trotter. “As all of us have become more accustomed to dealing with content online or in mobile media and social media platforms, the real danger is that the content owners will create an adversarial relationship with the consuming public.”

Dealing with intermediaries

But legal methods are not the only strategies for dealing with potential infringers. Sometimes the smart move is to follow the money and deal with intermediaries.

These intermediaries consist of companies that are in some way involved in the process of distributing copyrighted material on the Internet. This can mean approaching search engines such as Google. Since most people come across pirated content via an Internet search, Google is often the conduit that leads people to this type of content.

Entertainment companies are working with Google to convince the search giant to give lower priority to sites that host pirated content. Since Google’s algorithm already allows for prioritization of searches—videos hosted on YouTube often get preferential treatment by virtue of Google’s ownership of that site—entertainment and media companies are encouraging search engine providers to bury the illegal content. This initiative goes even further in Europe, where companies are working to convince Internet hosting providers to block illegal content altogether.

The campaign to combat illegal content is not quite cut-and-dried, however. While media and entertainment companies rightly bristle at the thought of entire works—episodes of television shows or whole feature films—being made available for free on pirate sites, the use of smaller portions of copyrighted content is a different story. If an infringer merely chops up a longer work into bite-sized pieces and posts those online, it’s a more serious matter than if someone chooses to use copyrighted material in a fair use case, like a parody.

The future of copyright law

While patent reform is a hot topic in Washington, D.C., these days, potential reform to copyright law has not received as much attention. Perhaps the biggest piece of legislation in this arena in the past 20 years was the Digital Millennium Copyright Act (DMCA), which was passed in 1998.

“The DMCA has strengths and weaknesses on both sides,” says Trotter. “From the standpoint of content owners, it provides a quick and simple process for getting infringing material taken down from a site, provided one has identified it as existing.” But this puts the onus on the copyright owners to police the content, which is a tremendous burden from a resources standpoint.

With the changes in digital technology and customer expectations that have occurred in the last 15 years, reform seems inevitable, though it’s possible that the law may always lag behind the technology.

“Reform is on its way,” says Baltimore. “The copyright office issued a notice of inquiry to examine music licensing structures that exist today, asking questions about the royalty rate setting process and standards and whether statutory licenses are effective.”

Impactful cases

While the legislature has yet to consider sweeping reform, there are a number of court cases that are addressing trends in the copyright space. Michael Allan, a partner at Steptoe & Johnson LLP, cites two such cases from the past several years that have been impactful. The Motion Picture Association of America (MPAA) won a suit against Hotfile, a file sharing site and one of the most trafficked websites in the world. The site was given tens of thousands of repeat infringer notices, and, though the site’s owner tried to behind the DMCA, the suit was a big win for the MPAA and the film industry.

In the music industry, Capitol Records, Inc. v. MP3tunes, LLC is worth noting, as it marks one of the first times where the CEO of a file sharing site was held liable along with the company, conceivably putting him on the hook for tens of millions of dollars in settlement money. These courtroom wins over massive sources of piracy will serve as notice to potential infringers that copyright holders will not sit back and allow people to steal their intellectual property.

Digital technology may have made it easier for people to infringe on copyrighted material, but it doesn’t mean that entertainment companies like Viacom, AOL and Disney need to be frozen in place in their efforts to combat infringement.