No, The FCC Should Not Have the Power to Cancel Contracts

Kristian Stout —  9 August 2016

Copyright law, ever a sore point in some quarters, has found a new field of battle in the FCC’s recent set-top box proposal. At the request of members of Congress, the Copyright Office recently wrote a rather thorough letter outlining its view of the FCC’s proposal on rightsholders.

In sum, the CR’s letter was an even-handed look at the proposal which concluded:

As a threshold matter, it seems critical that any revised proposal respect the authority of creators to manage the exploitation of their copyrighted works through private licensing arrangements, because regulatory actions that undermine such arrangements would be inconsistent with the rights granted under the Copyright Act.

This fairly uncontroversial statement of basic legal principle was met with cries of alarm. And Stanford’s CIS had a post from Affiliated Scholar Annemarie Bridy that managed to trot out breathless comparisons to inapposite legal theories while simultaneously misconstruing the “fair use” doctrine (as well as how Copyright law works in the video market, for that matter).

Look out! Lochner is coming!

In its letter the Copyright Office warned the FCC that its proposed rules have the potential to disrupt the web of contracts that underlie cable programming, and by extension, risk infringing the rights of copyright holders to commercially exploit their property. This analysis actually tracks what Geoff Manne and I wrote in both our initial comment and our reply comment to the set-top box proposal.

Yet Professor Bridy seems to believe that, notwithstanding the guarantees of both the Constitution and Section 106 of the Copyright Act, the FCC should have the power to abrogate licensing contracts between rightsholders and third parties.  She believes that

[t]he Office’s view is essentially that the Copyright Act gives right holders not only the limited range of rights enumerated in Section 106 (i.e., reproduction, preparation of derivative works, distribution, public display, and public performance), but also a much broader and more amorphous right to “manage the commercial exploitation” of copyrighted works in whatever ways they see fit and can accomplish in the marketplace, without any regulatory interference from the government.

What in the world does this even mean? A necessary logical corollary of the Section 106 rights includes the right to exploit works commercially as rightsholders see fit. Otherwise, what could it possibly mean to have the right to control the reproduction or distribution of a work? The truth is that Section 106 sets out a general set of rights that inhere in rightsholders with respect to their protected works, and that commercial exploitation is merely a subset of this total bundle of rights.

The ability to contract with other parties over these rights is also a necessary corollary of the property rights recognized in Section 106. After all, the right to exclude implies by necessity the right to include. Which is exactly what a licensing arrangement is.

But wait, there’s more — she actually managed to pull out the Lochner bogeyman to validate her argument!

The Office’s absolutist logic concerning freedom of contract in the copyright licensing domain is reminiscent of the Supreme Court’s now-infamous reasoning in Lochner v. New York, a 1905 case that invalidated a state law limiting maximum working hours for bakers on the ground that it violated employer-employee freedom of contract. The Court in Lochner deprived the government of the ability to provide basic protections for workers in a labor environment that subjected them to unhealthful and unsafe conditions. As Julie Cohen describes it, “‘Lochner’ has become an epithet used to characterize an outmoded, over-narrow way of thinking about state and federal economic regulation; it goes without saying that hardly anybody takes the doctrine it represents seriously.”

This is quite a leap of logic, as there is precious little in common between the letter from the Copyright Office and the Lochner opinion aside from the fact that both contain the word “contracts” in their pages.  Perhaps the most critical problem with Professor Bridy’s analogy is the fact that Lochner was about a legislature interacting with the common law system of contract, whereas the FCC is a body subordinate to Congress, and IP is both constitutionally and statutorily guaranteed. A sovereign may be entitled to interfere with the operation of common law, but an administrative agency does not have the same sort of legal status as a legislature when redefining general legal rights.

The key argument that Professor Bridy offered in support of her belief that the FCC should be free to abrogate contracts at will is that “[r]egulatory limits on private bargains may come in the form of antitrust laws or telecommunications laws or, as here, telecommunications regulations that further antitrust ends.”  However, this completely misunderstand U.S. constitutional doctrine.

In particular, as Geoff Manne and I discussed in our set-top box comments to the FCC, using one constitutional clause to end-run another constitutional clause is generally a no-no:

Regardless of whether or how well the rules effect the purpose of Sec. 629, copyright violations cannot be justified by recourse to the Communications Act. Provisions of the Communications Act — enacted under Congress’s Commerce Clause power — cannot be used to create an end run around limitations imposed by the Copyright Act under the Constitution’s Copyright Clause. “Congress cannot evade the limits of one clause of the Constitution by resort to another,” and thus neither can an agency acting within the scope of power delegated to it by Congress. Establishing a regulatory scheme under the Communications Act whereby compliance by regulated parties forces them to violate content creators’ copyrights is plainly unconstitutional.

Congress is of course free to establish the implementation of the Copyright Act as it sees fit. However, unless Congress itself acts to change that implementation, the FCC — or any other party — is not at liberty to interfere with rightsholders’ constitutionally guaranteed rights.

You Have to Break the Law Before You Raise a Defense

Another bone of contention upon which Professor Bridy gnaws is a concern that licensing contracts will abrogate an alleged right to “fair use” by making the defense harder to muster:  

One of the more troubling aspects of the Copyright Office’s letter is the length to which it goes to assert that right holders must be free in their licensing agreements with MVPDs to bargain away the public’s fair use rights… Of course, the right of consumers to time-shift video programming for personal use has been enshrined in law since Sony v. Universal in 1984. There’s no uncertainty about that particular fair use question—none at all.

The major problem with this reasoning (notwithstanding the somewhat misleading drafting of Section 107) is that “fair use” is not an affirmative right, it is an affirmative defense. Despite claims that “fair use” is a right, the Supreme Court has noted on at least two separate occasions (1, 2) that Section 107 was “structured… [as]… an affirmative defense requiring a case-by-case analysis.”

Moreover, important as the Sony case is, it does not not establish that “[t]here’s no uncertainty about [time-shifting as a] fair use question—none at all.” What it actually establishes is that, given the facts of that case, time-shifting was a fair use. Not for nothing the Sony Court notes at the outset of its opinion that

An explanation of our rejection of respondents’ unprecedented attempt to impose copyright liability upon the distributors of copying equipment requires a quite detailed recitation of the findings of the District Court.

But more generally, the Sony doctrine stands for the proposition that:

“The limited scope of the copyright holder’s statutory monopoly, like the limited copyright duration required by the Constitution, reflects a balance of competing claims upon the public interest: creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts. The immediate effect of our copyright law is to secure a fair return for an ‘author’s’ creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good. ‘The sole interest of the United States and the primary object in conferring the monopoly,’ this Court has said, ‘lie in the general benefits derived by the public from the labors of authors.’ Fox Film Corp. v. Doyal, 286 U. S. 123, 286 U. S. 127. See Kendall v. Winsor, 21 How. 322, 62 U. S. 327-328; Grant v. Raymond, 6 Pet. 218, 31 U. S. 241-242. When technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of this basic purpose.” Twentieth Century Music Corp. v. Aiken, 422 U. S. 151, 422 U. S. 156 (1975) (footnotes omitted).

In other words, courts must balance competing interests to maximize “the general benefits derived by the public,” subject to technological change and other criteria that might shift that balance in any particular case.  

Thus, even as an affirmative defense, nothing is guaranteed. The court will have to walk through a balancing test, and only after that point, and if the accused party’s behavior has not tipped the scales against herself, will the court find the use a “fair use.”  

As I noted before,

Not surprisingly, other courts are inclined to follow the Supreme Court. Thus the Eleventh Circuit, the Southern District of New York, and the Central District of California (here and here), to name but a few, all explicitly refer to fair use as an affirmative defense. Oh, and the Ninth Circuit did too, at least until Lenz.

The Lenz case was an interesting one because, despite the above noted Supreme Court precedent treating “fair use” as a defense, it is one of the very few cases that has held “fair use” to be an affirmative right (in that case, the court decided that Section 1201 of the DMCA required consideration of “fair use” as a part of filling out a take-down notice). And in doing so, it too tried to rely on Sony to restructure the nature of “fair use.” But as I have previously written, “[i]t bears noting that the Court in Sony Corp. did not discuss whether or not fair use is an affirmative defense, whereas Acuff Rose (decided 10 years after Sony Corp.) and Harper & Row decisions do.”

Further, even the Eleventh Circuit, which the Ninth relied upon in Lenz, later clarified its position that the above-noted Supreme Court precedent definitely binds lower courts, and that “fair use” is in fact an affirmative defense.

Thus, to say that rightsholders’ licensing contracts somehow impinge a “right” of fair use completely puts the cart before the horse. Remember, as an affirmative defense, “fair use” is an excuse for otherwise infringing behavior, and rightsholders are well within their constitutional and statutory rights to avoid potential infringing uses.

Think about it this way. When you commit a crime you can raise a defense: for instance, an insanity defense. But just because you might be excused for committing a crime if a court finds you were not operating with full faculties, this does not entitle every insane person to go out and commit that crime. The insanity defense can be raised only after a crime is committed, and at that point it will be examined by a judge and jury to determine if applying the defense furthers the overall criminal law scheme.

“Fair use” works in exactly the same manner. And even though Sony described how time- and space-shifting were potentially permissible, it did so only by determining on those facts that the balancing test came out to allow it. So, maybe a particular time-shifting use would be “fair use.” But maybe not. More likely, in this case, even the allegedly well-established “fair use” of time-shifting in the context of today’s digital media, on-demand programing, Netflix and the like may not meet that burden.

And what this means is that a rightsholder does not have an ex ante obligation to consider whether a particular contractual clause might in some fashion or other give rise to a “fair use” defense.

The contrary point of view makes no sense. Because “fair use” is a defense, forcing parties to build “fair use” considerations into their contractual negotiations essentially requires them to build in an allowance for infringement — and one that a court might or might not ever find appropriate in light of the requisite balancing of interests. That just can’t be right.

Instead, I think this article is just a piece of the larger IP-skeptic movement. I suspect that when “fair use” was in its initial stages of development, it was intended as a fairly gentle softening on the limits of intellectual property — something like the “public necessity” doctrine in common law with respect to real property and trespass. However, that is just not how “fair use” advocates see it today. As Geoff Manne has noted, the idea of “permissionless innovation” has wrongly come to mean “no contracts required (or permitted)”:  

[Permissionless innovation] is used to justify unlimited expansion of fair use, and is extended by advocates to nearly all of copyright…, which otherwise requires those pernicious licenses (i.e., permission) from others.

But this position is nonsense — intangible property is still property. And at root, property is just a set of legal relations between persons that defines their rights and obligations with respect to some “thing.” It doesn’t matter if you can hold that thing in your hand or not. As property, IP can be subject to transfer and control through voluntarily created contracts.

Even if “fair use” were some sort of as-yet unknown fundamental right, it would still be subject to limitations upon it by other rights and obligations. To claim that “fair use” should somehow trump the right of a property holder to dispose of the property as she wishes is completely at odds with our legal system.

Kristian Stout

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Kristian Stout is the Associate Director for Innovation Policy at the International Center for Law and Economics (ICLE). As a technology professional and entrepreneur for over ten years, Kristian’s scholarship is influenced by a practical understanding of the challenges facing innovators in the modern economy. Kristian has previously been a lecturer in the computer science department of Rutgers University, is frequently invited to speak on law and technology topics, and has been published in law journals and legal treatises. Kristian is an attorney licensed to practice law in New Jersey and Pennsylvania, is a partner at A&S Technologies, a software services firm, and sits on the board of CodedByKids, a nonprofit organization that provides STEM education to underprivileged children.

12 responses to No, The FCC Should Not Have the Power to Cancel Contracts

  1. 

    Mr. Stout, I’ve written elsewhere about the set-top box rulemaking, but responding here to your characterization of fair use, because I believe you’re ignoring some key authority and making an incorrect assumption when you say that fair use is not a right.

    First, fair use is not an excused infringement. Section 107 of the Copyright Act says “the fair use of a copyrighted work . . . is not an infringement of copyright.”

    Second, fair use is required by the First Amendment as part of the “traditional contours” of copyright law, according to Justice Ginsburg’s majority opinion in Golan v. Holder. Thus, unilateral abrogation of fair use, whether through contract law or some other law, is likely unconstitutional. That makes it a right, not a “gentle softening” of copyright.

    Third, you seem to believe that fair use cannot be a right because in litigation, it is structured as an affirmative defense to a claim of copyright infringement. That doesn’t follow. Self-defense is an affirmative defense to battery, for which the defendant bears the burden of proof in a civil suit. But that’s consistent with saying that you and I have a right to self-defense. None of the cases you link to, including the SunTrust case, holds that members of the public do not have a right to make fair use of copyrighted works. They simply indicate that the party accused of infringement bears the burden of proof to establish it.

    In short, fair use is a right. While a person can waive it voluntarily with a contract, neither the operation of law nor the unilateral actions of third parties can abrogate it.

    • 

      Mitch: Thanks for the comment. Even assuming for the sake of argument that fair use is a right, I don’t think your final sentence can be correct. Unfortunately, few, if any, rights are inviolable, especially when they conflict. Thus, copyright is a right, and yet you support the FCC’s abrogation of it by operation of law. Even if some of what results from the NPRM supports fair use, some of it surely won’t. Certainly the FCC does not argue for or support a claim that its rules would do no more than further established fair use rights. While the NPRM does brush aside copyright, it’s done no analysis to support its assertion that copyright isn’t an issue (nor that, to the extent it may be, the rights abrogated are coextensive with fair use). At minimum it is cavalier about abrogating rights.

      Other examples, more generally, abound. Most are controversial, as is this one. Equal protection and free exercise sometimes conflict, and one has to give; ditto equal protection and establishment; right to a fair trial and free speech; etc., etc. Even, as you note, property and free speech.

      More so with fair use, of course, because it is by definition defined with reference to copyright: At the very most it is a qualified right, limited by the courts’ balancing of the famous four factors. Which means, at minimum, that with a few exceptions where we could all probably agree with near-certainty that some use constitutes fair use, it is essentially always fact-specific, and always subject to change. As the Court wrote in Acuff-Rose, “The task is not to be simplified with bright line rules, for the statute, like the doctrine it recognizes, calls for case by case analysis.”

      Regarding the First Amendment point, while the Constitution may require that some speech can’t be abrogated by assertion of copyright, that argument certainly doesn’t apply to all speech or conduct. Not least something like time-shifting which can’t possibly have a basis in the First Amendment, right?

      Regarding the Section 107 point, I think we can all agree that it is inartfully drafted. No doubt your reading isn’t impossible. But so are other readings, including the ones by many courts that say that fair use is an affirmative defense — including the Supreme Court in Acuff-Rose and Harper & Row. At the outside, as Lydia Loren has argued, fair use “injects a much needed concept of harm to the copyright owner to keep the scope of copyright owner rights from interfering with the underlying constitutional objective of copyright law.” I think her word choice is quite intentional — fair use here is a concept that ensures that copyright adheres to its intended “objective” (thus, copyright is itself a qualified right, of course); it is not itself a right, but it is a limitation on (an exception to) copyright. I’d say this is also consistent with Sony (see, e.g., the language that Kristian quotes above).

      I’m sure we disagree on this, but to me everything points to fair use (except perhaps where the First Amendment demands it) as being ancillary to, or a qualified exception to, or subservient to, or derived from copyright. Which, to me, means that copyright “wins,” unless and until a particular use in a particular context is shown to be required to achieve the purpose of copyright. Whether that makes it technically an affirmative defense or not is really somewhat secondary, because on this reading the claim that fair use can justify the FCC’s proposed rules still fails.

    • 

      Mr. Stoltz,

      Thanks for the comment.

      > First, fair use is not an excused infringement. Section 107 of the Copyright Act says “the
      > fair use of a copyrighted work . . . is not an infringement of copyright.”

      So, the reason why I refer to Section 107 as misleadingly drafted is that it does indeed start with this language. However, it then quickly goes on to establish a balancing test. As far as first order rights go, its exceedingly unusual to claim there is a right …. that exists under only certain narrow conditions. This is maybe more like a privilege (in Hohfeld’s terms). It certainly doesn’t seem like a defense, and being a balancing test that can only be applied after there is an action against someone’s property certainly makes it out in practice to be more of a defense.

      >Golan v. Holder

      I will re-read Golan v. Holder, but Harper and Acuff Rose are very explicit on this point. And all the circuits have follows Acuff and Harper as well (with the exception of Lenz in the 9th, which implicitly reversed its own precedent to do so, without even adequately referring to the case).

      >Self-defense is an affirmative defense to battery, for which the defendant bears the burden of proof in a civil suit. But that’s consistent
      > with saying that you and I have a right to self-defense. None of the cases you link to, including the SunTrust case, holds that members of
      > the public do not have a right to make fair use of copyrighted works. They simply indicate that the party accused of infringement bears
      > the burden of proof to establish it.

      I think this is a great example actually. Unpack what self-defense is: violence used against another person in some particular set of circumstances that justify the use of violence. At root, just because you will be entitled to use violence in certain circumstances, it does NOT give you license to use violence in all cases. And when you use that violence, even in self-defense, the police are well within your rights to arrest you, because you have in fact committed a battery (or assault, depending on how its defined). Later on, a court of a jury may find you were justified for having used violence and excused you, however you still do not have a right to use violence in the first instance.

      I might be parsing here, but I think the difference between a right to behavior and an excuse for committing otherwise unacceptable behavior is extremely important throughout the law.

    • 

      Mitch,

      Whether fair use is a right depends, of course, on how one defines “right.” There are definitions broad, narrow, and everything in between. Fair use is a right in the broad sense of “a power, privilege, or immunity secured to a person by law” (Black’s, def. #2), but not in the narrow sense of “a legally enforceable claim that another will do or will not do a given act” (Black’s, def. #4). The “exclusive rights to do and to authorize” in Section 106 give rights to copyright owners in the narrow sense of legally enforceable claims, but fair use in Section 107 gives would-be fair users no comparable claims. This is why many don’t think of fair use as creating affirmative rights—there is no fair use cause of action.

      At best, one can seek a declaratory judgment that a certain use is fair once there is a concrete threat of action by a copyright owner. But that cause of action is just a corollary of the copyright owner’s right to bring a legally enforceable claim against an alleged infringer. Absent the threat from the copyright owner, there is no case or controversy. In my mind, it makes little sense to call something an affirmative right when there’s no affirmative cause of action to enforce it. If there were such a right, then there’d be a correlative duty in others to not interfere in its exercise.

      To your points:

      (1) Yes, Section 107 says that fair use “is not an infringement.” That doesn’t make it an affirmative right. Killing an enemy soldier pursuant to the law of war is not murder, but you don’t have an affirmative right to kill an enemy.

      (2) The Supreme Court did not say that fair use is necessary to balance the rights in Section 106 with the First Amendment, only that it’s sufficient when coupled with the idea/expression dichotomy. Nevertheless, fair use does have a constitutional dimension, and I agree that some fair use is protected by the First Amendment (time-shifting, for example, is not). But that constitutional basis doesn’t do the work you suggest: Private parties can make fair use impossible without there being any First Amendment issue because the First Amendment only applies to government actors.

      Copyright owners can distribute their works in ways that make fair use impossible, such as by using physical or digital locks, and it’s not a First Amendment issue. Not only is there no government action, there is no affirmative right to fair use. If I loan you a book that’s locked in an impenetrable safe, you have no cause of action against me because you can’t make fair use of the book. You simply have no such affirmative right, and I have no duty to grant you access in a way that would make it possible for you to engage in fair use.

      (3) The fact that fair use operates ONLY as an affirmative defense is a corollary to the fact that it’s not an affirmative right. Again, if it were an affirmative right, there’d be a fair use cause of action. You can certainly say that fair use is a right in the broad sense, but it’s not an affirmative right in the narrow sense.

      You say: “While a person can waive it voluntarily with a contract, neither the operation of law nor the unilateral actions of third parties can abrogate it.”

      I disagree. You’re conflating what one can do with a work once they have access to it with whether that access can be denied in the first place. This is the same mistake the EFF is making in its suit challenging the constitutionality of the DMCA.

      You have a right in the broad sense to speak freely, protected by the First Amendment. But that free speech protection isn’t so broad that you can trespass on my lawn to protest my support of the TPP. I can unilaterally allow TPP supporters to use my lawn while keeping you and other TPP opponents out. I can even call in the sheriff to enforce my content-based restriction of your speech, and you will be arrested and taken off of my lawn if you refuse to vacate. Your First Amendment right to protest doesn’t mean you can protest whenever and however you want.

      The same holds true for fair use and copyright. You can make fair use of a book at a library, once you have access to the work, but the First Amendment doesn’t mean you can break into the library in the middle of the night to get your hands on the book. Likewise, copyright owners and pay-TV providers can distribute works in ways that make fair use difficult or impossible. Since you have no affirmative right to make fair use of the work, your ability to engage in fair use is limited to your ability to gain access to the work in the first place.

      And this is where your argument falls apart. Copyright owners, pay-TV providers, set-top box manufacturers, computer manufacturers, and TV manufacturers can all design their products in a way that makes fair use impossible. The First Amendment doesn’t prevent this because there is no affirmative right to engage in fair use. Fair use simply doesn’t guarantee access to copyrighted works.

      • 

        It is correct that fair use does not guarantee access to copyrighted works. But nor does copyright guarantee rightsholders distribution channels tailored to their each and every preference.

        That is where the argument that rightsholders are entitled to an unlimited right to negotiate private contract terms falls apart.

        As an interesting note, while conceptually the “right” to time-shift television programs is not guaranteed, Congress did enshrine in Section 624A a mandate that the FCC adopt rules to ensure that consumers could use third-party navigation devices to record television programs, and pursuant to that, the FCC adopted encoding rules limiting the ability of MVPDs to foreclose recording (and therefore, limiting the ability of content providers to foreclose recording of content distributed via MVPDs).

        (The FCC encoding rules were vacated in 2013, of course — but that was pursuant to a challenge that the FCC had exceeded it’s authority by extending them to DBS providers who were not otherwise party to the Plug and Play proceedings. To the best of my knowledge, the FCC’s authority to impose such rules upon the MVPDs otherwise involved in the proceedings has never been challenged, and appeared to be accepted as valid in the 2013 holding.)

  2. 

    Reblogged this on The Trichordist and commented:
    Some casual reading on set top box proposal. But it’s important to note that the issue here is remarkably similar to the DOJ 100% licensing rule.

    1) non-legislative likely unconstitutional attempt to establish what is essentially a statutory license.
    2) interferes with private contracts.
    3) comes at the behest of Google int the 11th hour of Obama administration.

    • 

      David, I couldn’t agree more. In fact, I didn’t really touch on it in this post, but in our comments we definitely pointed out how the entire scheme essentially amounts to a compulsory licensing scheme. Its hard to see how this does not just come out and smack everyone in the face it seems so obvious.

  3. 

    I happen to consider the FCC proposal highly problematic (and don’t believe it will come to pass), but for reasons having nothing to do with copyright. When it comes to the copyright-based arguments being made, it seems to me they are wholly (and transparently) without merit.

    Unfortunately, your meta-argument above is no exception. In fact, the central thesis of your argument seems to be little more than misdirection. The most obvious and egregious example? Copyright rights are not “constitutionally guaranteed rights.” They are statutory rights. The copyright clause grants a power to Congress, not rights to individuals. And how can we interpret a statement like “Congress may not evade the limits of one clause” as anything other than intentional misrepresentation, when we all know quite well that the copyright clause places no affirmative obligation on Congress to institute any copyright protection, at all? Have you no shame?

    Congress can, of course, override one statute by another. How is that not the case here, with respect to the copyright arguments?

    Every copyright-based argument I have seen made to this point — content protection, device limitations, channel position and third-party advertising — has already been implicated, for a dozen years, by the existence of Cablecard devices. It has not been a subject of copyright controversy in that time, and has been accepted as consistent with the explicit authorization of by Congress under the 1996 Telecommunications Act.

    What’s more, every programming agreement in place today was negotiated in this already-existing environment where such contractual limitations imposed directly on MVPDs do not apply to third-party (cablecard) devices at arms length to the MVPDs.

    What argument could there possibly be that, suddenly now, under a new competitive navigation proposal, the exact same thing would constitute an infringement of rights under copyright (let alone the catastrophic/gargantuan infringement it is made out to be), unauthorized by Congress?

    So far as I can tell, the only difference is the anticipation that the current proposal (given the current state of technology and widespread market adoption of OTT devices) might actually achieve significant consumer adoption. But that can’t possibly be a valid legal distinction, since (for good, or for bad) the entire purpose of the competitive navigation provisions of the 1996 Act were precisely to create a robust, competitive market!

    Want to argue that the implications with respect to these issues represent bad policy? More power to you. But I fail to see where you, or anybody, have presented any arguments that are even colorable as to the suggestion that the FCC proposal violates law with respect to copyright.

    • 

      Mr. Greenfield, I was on the fence about replying to you because the tone of your comment bordered on the offensive, but since you took the time to write, I wanted to at least offer a few thoughts.

      First, the connection between the Constitution and the Copyright Act is one whereby the Constitution recognizes the value of property rights and establishes a particular set of affirmative powers in Congress to enact protective legislation. This in itself is fairly notable as, apart from structural considerations, the Constitution is overwhelmingly a negative rights document. Thus, the clause creates a priority for at least a particular kind of property right — and i’d argue that along with the Fifth amendment, and the manner in which due process is regarded, there is a pretty firm proposition that, to the extent that property is recognized in the law, agencies, state governments, and other bodies subordinate to Congress are not free to cancel those property rights without following certain rather explicit procedures.

      As I noted in the article, Congress is of course free to change those contours, but surely the FCC is not so free.

      Further, the Copyright Act, following from this constitutionally recognized set of property rights, enacts a legal scheme for carrying out the protection of those rights. The sections of the Communications Act upon which the FCC relies for its NPRM does not give the FCC any power to abrogate property rights. In fact, when those rights have been altered in the past — e.g. through compulsory licensing, etc — statutory provisions have been explicit on the point.

      There are any number of ways that the FCC could interpret its mandate from Congress to increase the availability of navigation devices. But doing so by creating what amounts to a de facto compulsory licensing system is not legally justified.

      Also, as fair notice, in the future if you include comments like “have you no shame?” or accuse me of purposeful misdirection I will simply ignore your comments.

      thanks for taking the time to write a thoughtful comment!

      • 

        Mr. Stout, your original remarks appeared to clearly suggest that the copyright clause granted “constitutionally-protected rights” and imposed limits on Congress’s ability to circumscribe those rights. Such would be gross mischaracterizations of the copyright clause. Authors here generally being presumed to be well-versed in law, it seems quite natural to question such remarks.

        If you take such great offense at someone actually questioning such as to potentially refuse to respond (to what I think you otherwise acknowledge is a very substantive comment), that is unfortunate, but I think in that case, responsibility for that choice is on you. (Having spent many years in academia myself, I am certain that, even in academia, you have routinely encountered arguments more abrasive in tone than the questions I posed. In fact, I might suggest you review the repeated tone of your own remarks, in this very post, criticizing Ms. Bridy.)

        In your reply to my comment, you seem to be suggesting that those original remarks actually pertained to an argument that the FCC proposal would represent a fifth amendment taking. Fine, except I don’t actually see where a takings argument is, otherwise, being made in the original post. At a minimum, you’re argument is extremely unclear in this regard.

        I’m afraid, however, that your immediate reply continues with another questionable characterization of the copyright clause. (And this time, unquestionably pertaining to the copyright clause, itself.) You propose that the copyright clause is noteworthy as a grant of affirmative powers in an otherwise “overwhelmingly negative rights document.” Yet you ignore that the immediate context of the clause — Article I Section 8 — is entirely affirmative grants of power to Congress, and the copyright clause is but one of eighteen affirmative grants of power there. And in fact, the limited, enumerated nature of the grant of powers to Congress requires that those grants be affirmative. Given that context, the affirmative nature of the copyright clause hardly seems unique or particularly noteworthy. At a minimum, overlooking this actual context would make it appear that your characterization of the copyright clause is very significantly biased.

        I also note that you have not responded to the substantive issues I raised. If this particular technological proposal for enabling competitive navigation was not authorized by Congress per 47 USC 629, was cablecard, too, never authorized by 629? If this particular proposal represents a taking, was cablecard also a taking? If the present proposal amounts to a compulsory license, does cablecard also amount to a compulsory license?

        The cablecard rule was promulgated by the FCC nearly two decades ago, and the regime has been in actual use for a dozen years. Why have these arguments never before been pressed as they are now, or actually litigated, for that matter? What exactly is the legal distinction between this proposal and cablecard?

        For the record, I have yet to see anything even remotely convincing that this new approach would amount to a compulsory license, but assuming for the sake of argument that it would…what exactly do you believe is a way that “the FCC could interpret its mandate from Congress to increase the availability of navigation devices,” consistent with the Section 629 requirement that such be available from third parties “not affiliated with any multichannel video programming distributor,” without amounting to a compulsory license? After all, if you’re going to argue that the FCC could do such, and at the same time argue that 629 doesn’t authorize them to adopt any approach that amounts (in your view) to a compulsory license, you should certainly be able to outline what at least one such valid approach would look like.

        Perhaps I’m small-minded, but if you define a requirement that signals be made accessible (to subscribers!) via unaffiliated third party navigation devices to be a compulsory license, and yet instituting a compulsory license is not authorized by 629, I’m having a hard time understanding how it’s even conceptually possible to satisfy the mandate of 629.

        And since you now have indicated that you are arguing that the FCC proposal would represent a taking, are there any examples of a prior change in the scope of rightsholder rights – or even institution of a compulsory license — being treated as a taking? When the 1976 Copyright Act instituted a compulsory license for secondary retransmission of TV signals by cable systems, were existing rightsholders compensated for a taking? Or how about when 17 USC 117(a) was adopted, allowing users to make archival copies of software — was that treated as an abrogation of private contracts constituting a fifth amendment taking? It seems to me there are many examples of changes to the scope of rightsholders rights, and (actual) institution of compulsory licenses, that have not been viewed as fifth amendment takings. Are there actually any examples at all where such changes were treated as a taking?

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        Mr. Greenfield,

        First let me apologize if my original post was taken to mean that I believed anyone was acting with malicious intent — I certainly believe that Professor Bridy believes what she wrote in good faith. Any tone I expressed is simple surprise that someone could have a position that contracts could so easily be cancelled by act of an administrative agency and — moreover — i was surprised that anyone would try to compare the Copyright Office’s view that parties exercising their contract rights was somehow a throwback to the bakeries of the 19th century.

        Although the Copyright Act does not explicitly mention an affirmative right to contract, the Copyright Act does actualize property rights for individuals, and individuals have a background common law right to make contracts with their property. If a government agency decides its going to cancel private contracts, this is a pretty big deal.

        On the Cable Card — i’m not sure. I need to go back and think about that. I didn’t intend to bring up takings as a substantive argument in my reply comment — it was just a thought that crossed my mind when i was writing. But that’s an interesting idea.

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        I didn’t read your post as claiming malicious intent on Ms. Bridy’s part. I did read it as repeatedly ridiculing in tone.

        There are many sites where I question authors’ grasp of the law. This site is not one of them. (Here, the question is usually one of ideological bias.) If my tone in questioning how somebody familiar with the law could make the assertions you made came across as overly strident, my apologies for that.

        As to substance, it is not at all surprising to me that a commentator would relate the arguments being made presently to Lochner. In fact, it seems quite natural to me. The argument being made – the argument you seem to be making here – can easily be construed to be suggesting not just a right to contract, but an inviolable right to contract, immune to regulation, and in fact, imposing affirmative obligations upon the government to enforce those private contract terms, within its regulations.

        I don’t think that’s a reasonable position respecting the proper deference due private contracts, and I don’t think it so strange to reference Lochner in discussing such.

        As you note, (absent regulation) programmers are free to demand anything they wish in a carriage agreement. They can, and in the past have, demanded things like a cable box must initially tune a specific channel of theirs, when turned on, or that their on-demand asset titles cannot be displayed on the same screen as any other provider’s titles. (Both of which, I’d argue, contradict Congress’s clear intention that third parties be able to develop novel, user-friendly interfaces.) They could demand that the cable box must beep three times whenever tuned to their channel. They could demand that the cable box must beep three times whenever tuned to a competitor’s channel.

        Is it even remotely reasonable to suggest that, in creating a system to enable third-party navigation devices, the government must accommodate any and every possible demand that a content owner might make?

        I don’t think so, but even if one thought it were philosophically reasonable to expect such, it would literally be impossible to do so, from a technical perspective. Delivering content to third-party navigation devices intrinsically requires a defined interface and execution environment. To make a navigation device beep three times when a particular channel is tuned, there needs to be a defined way to signal that. Obviously, it’s impossible to a define a general interface and execution environment that could accommodate any and every possible contractual demand a content provider might make. Just as obviously, I think, it’s not reasonable that any such system should accommodate any and every such demand.

        As a practical matter, then, enabling third party navigation devices necessarily means limiting the scope of what can be contractually demanded with respect to those devices. If a rightsholder deems such limits unacceptable, they are free to withhold the licensing of their content through MVPDs. But they’re not free to mandate that third party navigation devices implement any and all limits they want – or be banned – so that they are assured of having exactly the kind of MVPD market that they prefer for their content.

        It would seem to me that between Sections 624A and 629, Congress quite explicitly granted the FCC authority to establish standards that will necessarily and unavoidably limit the scope of contractual demands content providers may impose on the delivery of their content to third-party navigation devices. In fact, Congress mandated that the FCC do such.

        It’s one thing to argue that a particular choice in a standard represents bad policy (e.g., a very bad balancing of interests) and should be reconsidered, or even that a particular choice exceeds statutory (or constitutional, for that matter) authority. (As I’ve noted repeatedly, however, every specific issue I’ve seen raised respect the present proposal is one that has existed with respect to the cablecard regime for a dozen years, without any legal challenge, so it’s hard to understand why it is suddenly a catastrophic concern now.) It is something else entirely to argue that contractual rights are sacrosanct and any system must (do the impossible task of) accommodate(ing) all private licensing rights.

        Yet that’s precisely what statements like:

        “As a threshold matter, it seems critical that any revised proposal respect the authority of creators to manage the exploitation of their copyrighted works through private licensing arrangements, because regulatory actions that undermine such arrangements would be inconsistent with the rights granted under the Copyright Act.”

        and:

        “No, The FCC Should Not Have the Power to Cancel Contracts”

        would seem to be suggesting.