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Friday, March 18, 2011

Should It Be A Felony To Stream Infringing Materials?

David Makarewicz
SitesAndBlogs.com

This is Part III of a series of articles analyzing specific aspects of the Obama Administration's White Paper (available for download here), recommending legislative changes to combat online piracy and counterfeiting.  Click if you missed our overview of the White Paper in Part I or our analysis of the Government's proposed new wiretap authority for copyright offenses in Part II.

The Obama Administration wants to clarify
that streaming infringing material is a felony
One aspect of the White Paper that has grabbed headlines is the Obama Administration's recommendation that Congress clarify that felony copyright infringement includes infringement by streaming.  The current legal definition of felony copyright infringement only references "distribution" and "reproduction," which does not clearly include streaming.

There is some room to debate whether felony-level penalties (up to 10 years imprisonment) are too harsh for any intellectual property offense such as this or whether there are legitimate reasons to treat streaming different than other methods of distribution and reproduction.  However, asking Congress to clarify an unclear law is generally a reasonable request.

The problem comes from the fact that, rather than just make that simple, straight-forward recommendation, the Administration has chosen to cloak their request in cryptic language that makes it unclear exactly what it is that they are asking for.  The White Paper reads as follows:

It is imperative that our laws account for changes in technology used by infringers. One recent technological change is the illegal streaming of content. Existing law provides felony penalties for willful copyright infringement, but felony penalties are predicated on the defendant either illegally reproducing or distributing the copyrighted work. Questions have arisen about whether streaming constitutes the distribution of copyrighted works (and thereby is a felony) and/or performance of those works (and thereby is a not a felony). These questions have impaired the criminal enforcement of copyright laws. To ensure that Federal copyright law keeps pace with infringers, and to ensure that DOJ and U.S. law enforcement agencies are able to effectively combat infringement involving new technology, the Administration recommends that Congress clarify that infringement by streaming, or by means of other similar new technology, is a felony in appropriate circumstances.
The most troubling phrase is "infringement by streaming, or by means of other similar new technology, is a felony in appropriate circumstances."  If Congress acts on this, the language of the bill will have to be closely studied to determine exactly what activities fall into the category of "other similar new technology" and exactly what are the "appropriate circumstances."

Intellectual Property Brief called this recommendation "the biggest eyebrow raiser in this document."  They suggest that whether streaming is a method of distribution or merely a performance is a legal question that has not been resolved by the courts and the Administration's attempt to change the law to fit their interpretation is an attempt "to circumvent that question."  Additionally, they are concerned that the ambiguous phrasing will cast too wide a net:
The two sections that stand out as real wild cards here however are “in appropriate circumstances,” and “other similar new technology.” “Appropriate circumstances” raises an entire host of questions regarding what types of streams would carry felony penalties, not to mention questions about who would actually incur liability for a particular stream. Would liability be limited to the host itself, or would embedding the infringing stream also qualify? Likewise, “similar new technology” is completely ambiguous in its scope, and comes across as a catch-all grab to avoid the need for analyzing the infringement impact of future technologies.
Determining exactly what "similar new technology" any new law will reference is essential.  There are enormous differences between punishments for felony copyright infringement and misdemeanor copyright infringement.

Felony copyright infringement (18 U.S.C. §§ 2319(b); 17 U.S.C. § 506(a)), by a first-time offender, "for purposes of commercial advantage or private financial gain," for the willful, unauthorized "reproduction or distribution" of copyrighted works, with a retail value of more than $2,500 is generally punishable by imprisonment of up to 5 years and a $250,000 fine.  It is slightly less if not done for a private financial gain and significantly more if the defendant is a repeat offender (the imprisonment doubles to a maximum of 10 years.)

Penalties for a misdemeanor offense are much less harsh.  A defendant is generally guilty of a misdemeanor violation if he violated intellectual property rights other than those of reproduction or distribution (or if other elements of 17 U.S.C. § 506(a) are not satisfied.)  Misdemeanor copyright only incurs a maximum imprisonment of one year and a $100,000 fine.

A person utilizing a technology that is borderline infringement needs some ability to predict the potential consequences if he miscalculates.  That is why I can live with Congress clarifying whether streaming is properly classified as a felony or a misdemeanor (hopefully after a meaningful substantive debate.)  However, I can not live with the inclusion of a catch-all phrase such as "similar new technology" which would make the law less clear and less predictable.

This was Part III of a multi-part analysis that we will roll out over the course of the next few days that will provide a detailed review of the recommendations in the White Paper, as well as what these recommendations tell us about the Obama Administration's intellectual property philosophy and agenda.  In Part IV,  we will analyze the implications of giving the DHS new authority to share information with "rightholders.".

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