Last week we discussed pending legislation working its way through the U.S. Congress that would strengthen several statutes to better protect protect IP owners from trade secret misappropriation and provide them with more sweeping and powerful remedies in the event their trade secrets are stolen. This week we discuss several pieces of legislation being proposed in Congress that would afford greater legal protections to copyright owners.
Several bills under consideration would lead to important changes in copyright law that will affect copyright owners throughout California, particularly in the technology and entertainment industries. For instance, the House’s Free Market Royalty Act (“FMRA”) would amend the U.S. Copyright Act to include a public performance right for any audio transmission of a sound recording. FMRA would also provide performing artists a right to collect royalties when their songs are broadcast over the radio or through comparable online services like Pandora or Sirius XM radio. The FMRA would also eliminate compulsory license rates for digital audio transmissions. In its place copyright owners would be able to directly negotiate the terms of licenses – including the rates – to broadcast their recordings, or opt to have the terms and rates negotiated by SoftExchange, Inc., a non-profit performing rights organization that negotiates and collects royalties on behalf of sound recording copyright owners.
The Department of Commerce is also exploring ways to update the Copyright Act and, in particular, to address the complexities associated with protecting copyrights on the Internet. The Department recently received public comments on a working paper about copyright policy from major industry groups and other stakeholders on four major issues: (1) statutory damages imposed on people caught illegally sharing content over the Internet; (2) the sufficiency of the notice and take-down system set forth under the DMCA; (3) whether the first-sale doctrine should be extended to digital products, like e-books and MP3 music files; and (4) the uncertain legal status for musical remixes or “mashups.” The public comment process is designed to help the Department develop policy recommendations on these and other issues, and possibly support the enactment of new copyright legislation to address these on-going concerns.
Other bills focus on changing the compulsory license fees required by the Copyright Act related to content distribution in the television and broadcasting industries. The Next Generation Television Marketplace Act was introduced in the House to repeal compulsory copyright license fees for certain transmissions of television programming by satellite carriers and eliminate certain categories of remedies for infringement. Moreover, in an effort to give consumers more control over their satellite or cable services, the Senate introduced the Television Consumer Freedom Act to provide incentives to major television distributors (i.e., Walt Disney Co., News Corp., and CBS) to allow consumers to purchase channels on an individual rather than bundled basis. Under the bill distributors that only offer channels in bundles would not be permitted to pay the compulsory copyright license fee to distribute content. Instead, such distributors would have to negotiate with individual copyright holders to distribute their content.
Another piece of legislation that has generated significant buzz relates to amending the Digital Millennium Copyright Act (“DMCA”). In 1998, Congress enacted the DMCA to address dramatic changes in copyright law created by the widespread distribution of copyrighted materials in digital format. Section 1201 of the DMCA prohibited consumers from “unlocking” technical controls on software or hardware devices to protect the underlying work from copyright infringement. The prohibition, however, is not absolute. The DMCA allows the Library of Congress (“LOC”) to exempt particular copyrighted works from the anti-circumvention provisions of the DMCA for three-year periods. In 2006 and 2010, the LOC exempted wireless mobile devices from the anti-circumvention prohibition so consumers could re-program their mobile devices to change wireless service providers. As a result, from 2006 to January of 2013, consumers could unlock their mobile devices without liability for copyright infringement. In January of 2013, the exemption expired and the act of unlocking your cell phone became illegal once again under Section 1201 of the DMCA.
Amid public outcry and political pressure, three bills were introduced in Congress in 2013 that focused on legalizing cell phone unlocking through different means. Of these, the House’s Unlocking Technology Act (“UTA”) would amend Section 1201 of the DMCA to make it legal for consumers to unlock technical access controls on their personally owned software or hardware devices as long as they do not commit copyright infringement once they have access to the underlying work. While “bootlegging” music and movies remains illegal under the UTA, the bill would allow consumers to unlock cell phones, computers and other personal devices for purposes of repair, maintenance and modification. UTA would further protect researchers, engineers, and companies that create, transmit, and otherwise make available the tools that facilitate the unlocking process.
All of the trade secret and copyright bills pending in Congress could lead to significant changes in federal laws related to the protection, enforcement and exploitation of these types of intellectual property. Individuals and companies with significant trade secret and copyright assets should monitor these bills to ensure they are fully aware of any developments that may affect their rights and obligations under new federal laws that may affect these types of intellectual property. The raft of current bills, however, could mark only the beginning of efforts to modify and expand federal trade secret and copyright laws.
Finkel Law Group, with offices in San Francisco and Walnut Creek, has extensive experience helping its clients navigate federal and state laws affecting their intellectual property rights, including trade secrets and copyrights. When you need intelligent, insightful, conscientious and cost-effective legal counsel to assist you in understanding new laws that may affect your company’s intellectual property rights, please contact us at (415) 252-9600, or info@finkellawgroup.com to speak with one of our attorneys about your matter.