Thursday, February 26, 2009

Record companies threatening investors in emerging technologies.... is the last thing our economy needs

Commentary:

This trend the content companies are showing towards attempting to threaten the investors in technologies they feel are infringing their copyrights is alarming, especially in view of the woeful state of our economy.

The last thing this country needs is to discourage potential investment in emerging technology.

Professional investors typically:

-invest only a portion of their assets, never putting their base or personal assets at risk; and

-carefully weigh the risks and rewards before investing.

If a professional investor determines that one type of investment will put his personal assets at risk, thus potentially putting him out of business entirely, because one of the company's exposures happens to be in copyright infringement due to the unsettled state of copyright law in the 21st century... he or she will decide -- guess what -- to take a pass.

Which is exactly what the cold and calculating content cartel is hoping will happen.

They can't compete in the marketplace, and they don't know how to innovate or create anything themselves, so they are trying to use litigation as a means of choking off innovation.

This should be disturbing to each and every American.

The recent complaint filed by EMI, which is not even an American company, is an outrage.

I recommend that my readers write to the White House, and to Congress, calling for legislation to prevent this abuse.

Here is my first draft of a proposed statute:

No person or entity can be subject to secondary liability for copyright infringement by a corporation or other business organization based in whole or in part upon (a) work he or she did in his or her capacity as a member of the board of directors or committee thereof, or (b) his or her having invested in any such corporation, including any oversight, monitoring, or due diligence activities in connection therewith.

It shall be a violation of this section to name any such person as a defendant in a claim.

Any person named as a defendant in a claim in violation of this provision, shall be entitled to his, her, or its attorneys fees, trebled.

This statute shall be applicable to pending actions, except that claimants shall be afforded thirty (30) days from its effective date, as a matter of right, to withdraw or abandon any claims which are or may be in violation of the statute.




Commentary & discussion:

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Keywords: lawyer digital copyright law online internet law legal download upload peer to peer p2p file sharing filesharing music movies indie independent label freeculture creative commons pop/rock artists riaa independent mp3 cd favorite songs intellectual property portable music player

6 comments:

derivative said...

On the one hand, this is clearly egregious behavior by the RIAA cartel, and should be slapped down hard by a judge.

On the other hand, I can envision alternate startup company scenarios where the corporate veil should be pierced. I don't subscribe to the RIAA's theory that every download is a lost sale, but if a startup had high-quality downloads of MP3s that they erroneously claim are "legal" then there will certainly be SOME lost sales associated with that, and if the startup has been deliberately constructed to have few assets, perhaps the copyright holders ought to be able to nail the principals to the wall.

So, the thing to avoid is the usual sort of "tort reform" which disallows plaintiffs from collecting extra for truly egregious behavior on the part of the defendant.

I would think that any new policy should be something like:

- you can't separately sue corporate principals for a tort until you have proven your case against the corporate entity, and proven that the tort was intentional and was a direct cause (e.g. not contributory infringement) of any damages.

It also seems (to this layman) that a right-thinking judge could probably implement most of this policy on his own in his own courtroom and a published decision on this issue could influence other courts.

But plaintiffs often want to sue principals. Isn't there a lot of preexisting case law on this sort of thing?

In any case, I occasionally write to my congressman asking him to "do something" about some situation or another, but this has me at a loss. What would the general outlines of legislation that would fix this problem look like?

Thanks,
derivative

Anonymous said...

For more on this subject, I find Lessig's books a good read. Plus, they're free.

http://www.lessig.org/

-Anonymous #1

Matt Fitzpatrick said...

I'd be outraged, too, if EMI had stated a claim against the investors somewhere in this forty-seven page complaint. :)

Readers of this blog by now know what a boilerplate copyright complaint looks like. Conclusory recitations of the copyright statute ring a bell? I'd be shocked if some of this complaint weren't cut-and-pasted from the RIAA's file sharing lawsuit boilerplate. Forty-seven pages, not one single word alleging a specific act Franks, Podowski, Lodha, or Sit undertook to infringe copyright. Do any of their names even appear in the complaint outside the caption on page 1?

Anyway, snowball's chance of surviving a 12(b)(6) dismissal motion -- nothing resembling a claim against the four individuals here. I'm already looking ahead to whether or not the individual defendants will be awarded their costs, or if EMI will file a 41(a)(1) cut-and-run dismissal before that can happen.

Ray Beckerman said...

Derivative, you're not showing your usual precision thinking.

1. We are dealing with emerging technologies in areas where the law is uncertain.

2. "Investors" are not "principals".

If you think it is in the public interest to discourage investment in emerging technologies...think again.

Ray Beckerman said...

There should be an amendment to the Copyright Act:

No person or entity can be subject to secondary liability for copyright infringement by a corporation or other business organization based in whole or in part upon (a) work he or she did in his or her capacity as a member of the board of directors or committee thereof, or (b) his or her having invested in any such corporation, including any oversight, monitoring, or due diligence activities in connection therewith.

It shall be a violation of this section to name any such person as a defendant in a claim.

Any person named as a defendant in a claim in violation of this provision, shall be entitled to his, her, or its attorneys fees, trebled.

derivative said...

Ray:

That's a very good draft. I think the "secondary liability" clause takes care of my real concern. Sorry I didn't express myself clearly.

Thanks,
derivative