Your SlideShare is downloading. ×
Hydroshare’s
Legal
Defenses
Against
Copyright
Infringement
Claims:
Promotional
    Music
Storage
and
Redistribution
Under
...
digital
technology,
which
generally
enable
anyone
to
easily
copy,
distribute,
and
make
digital
works
from
available
media
...
Furthermore, an implied license can be found where the copyright holder engages inconduct “from which [the] other [party] ...
b. The
Copyright
Act
and
the
Economics
of
the
Traditional
Recording
            Industry

Section
102
(a)(2)
of
the
Copyri...
artists give up a number of their formerly exclusive copyrights to the label, includingautonomy regarding distribution and...
Although
promotional
music
has
always
been
freely
given,
labels
and
artists
remain
explicit
regarding
their
intent
the
rec...
1990s,
promotional
mixtapes
provided
the
opportunity
for
labels
and
artists
to
once
again
promote
their
music
on
an
influe...
2003, this relative ease lead an estimated 70 million people to participate in online filesharing.44 Thus, in response to ...
copyrighted
material.51
The
artists
themselves,
as
fans
of
the
Mixtape
DJ’s
ability
to
release
high
quality
and
influentia...
further complicated by bad blood with then industry leader Ja Rule, who was politicallyfreezing him out of radio and magaz...
f. Digital
Age
Case
Law
Involving
the
Online
Redistribution
of
Freely
                Released
Copyrighted
Material
Assumi...
the
code,
following
the
instructions
provided.
i.e.
whether
to
include
it
in
Google’s
Web
index
cache
or
not.

Website
own...
groups,
as
hosting
sites
themselves
provide
no
index,
discovery,
or
organizational
tools.

Since
hosting
service
users
do
...
acted so that Defendant had a right to believe it was so intended; 3. Defendant wasignorant of the true facts; and 4. Defe...
contains no specific exceptions for copying, or “harvesting,” publicly available webcontent its permissibility would likel...
not absolutely necessary for a finding of fair use, . . . the goal of copyright, to promotescience and the arts, is genera...
alternative
to
buying
and
maintaining
their
own
storage
related
hardware,
to
strike
down
the
Plaintiffs claims of induceme...
importance in analyzing the first fair use factor. 93 Once again drawing from Field v.Google, while Google is a for-profit...
militating against a finding of fair use.”97Similarly, the Ninth Circuit has held that “the extent of permissible copying ...
fair use factor. The Supreme Court has explained that the fourth fair use factor onlyconsiders the impact on markets “that...
Redistributing Promotional Music Releases Weighs In                                                      Favor of Fair Use...
market for copyrighted promotional releases and Hydroshare’s premeditated developmentof a “mixtape market”. A fifth factor...
In
the
2009
case
between
UMG
Recording,
the
largest
recording
company
in
the
world,
and
Veoh
Networks,
Inc.,
a
video
hosti...
responsible
for
unlawful
or
harmful
content
created
by
their
users
and
other
third
parties.
In
response,
Title
II
of
the
D...
(3)
the
service
provider
must
not
determine
the
recipients
of
the
material;
(4)
any
intermediate
copies
must
not
ordinaril...
Issues of Legal Liability in the Operation of the Hydroshare Distribution Software and Hydroshare.tv
Issues of Legal Liability in the Operation of the Hydroshare Distribution Software and Hydroshare.tv
Issues of Legal Liability in the Operation of the Hydroshare Distribution Software and Hydroshare.tv
Issues of Legal Liability in the Operation of the Hydroshare Distribution Software and Hydroshare.tv
Upcoming SlideShare
Loading in...5
×

Issues of Legal Liability in the Operation of the Hydroshare Distribution Software and Hydroshare.tv

1,529

Published on

Hydroshare (http://www.hydroshare.tv) enables recording artists and authorized rights owners to upload their promotional music files as multimedia projects, which are then stored and indexed for mass free-distribution. Hydroshare also indexes and redistributes projects that have been freely released on the web and promoted as viral, creating a curated repository of promotional music (formally called “mixtapes”) and video.
There are two issues of legal liability involved in the operation of Hydroshare:
I. Liability to performance right holders (labels/artists) stemming from the redistribution of promotional music on the Internet.
II. Liability to the rights owners of underlying music reused by the artist in the promotional project.

Published in: Education, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,529
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
4
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Issues of Legal Liability in the Operation of the Hydroshare Distribution Software and Hydroshare.tv"

  1. 1. Hydroshare’s
Legal
Defenses
Against
Copyright
Infringement
Claims:
Promotional
 Music
Storage
and
Redistribution
Under
the
Implied
License
Doctrine,
Fair
Use,
and
 the
Digital
Millennium
Copyright
Act
Safe
Harbor
Provisions


 “You
cant
steal
something
that
was
designed
to
be
free.”
­
TRON:
Legacy
(2010)


Introduction
Hydroshare
(http://www.hydroshare.tv)
enables
recording
artists
and
authorized
rights
owners
to
upload
their
promotional
music
files
as
multimedia
projects,
which
are
then
stored
and
indexed
for
mass
free‐distribution.
Hydroshare
also
indexes
and
redistributes
projects
that
have
been
freely
released
on
the
web
and
promoted
as
viral,
creating
a
curated
repository
of
promotional
music
(formally
called
“mixtapes”)
and
video.
There
are
two
issues
of
legal
liability
involved
in
the
operation
of
Hydroshare:

 I.
Liability
to
performance
right
holders
(labels/artists)
stemming
from
the
 redistribution
of
promotional
music
on
the
Internet.

 II.
Liability
to
the
rights
owners
of
underlying
music
reused
by
the
artist
in
 the
promotional
project.


 I. Promotional
music
released
into
the
stream
of
commerce
for
free
by
 the
appropriate
copyright
holders
are
distributed
under
a
revocable
 non­exclusive
implied
license
to
duplicate
and
redistribute
the
 work,
and
thus
Hydroshare’s
redistribution
is
a
Fair
Use.
 
 a. Copyright
Law
in
the
Modern
Digital
Music
Landscape
Digital
technology
and
the
Internet
revolution
have
shifted
certain
social
and
business
norms,
creating
dissonance
with
existing
copyright
law
in
the
process.1
Specifically,
the
Copyright
Act
states
that
copyright
is
automatically
granted
to
content
owners
and
subsequently
protected
unless
it
is
explicitly
waived.2
Therefore
a
person
who
violates
any
of
a
copyright
owner’s
exclusive
rights
is
strictly
liable
as
an
infringer.3
However,
this
law
sits
in
direct
opposition
from
modern
trends
in
























































1
See
generally
Christopher
Jensen,
Note,
The
More
Things
Change,
the
More
They
Stay
the
Same:
Copyright
Digital
Technology,
and
Social
Norms,
56
Stan.
L.
Rev.
531
(2003).
2
17
U.S.C.
§
102(a)
(2000).
3
17
U.S.C.
§
501(a)
(2000).
Marvin
Barksdale
for
Hydroshare,
Inc.

 1

  2. 2. digital
technology,
which
generally
enable
anyone
to
easily
copy,
distribute,
and
make
digital
works
from
available
media
without
regard
to
applicable
copyright
law.4
From
these
technologies,
new
sharing
and
distribution
norms
have
emerged
and
found
expression
through
peer‐to‐peer
networks,
open‐source
software,
promotional
mixtapes,
and
other
regimes
where
unlicensed
copying
and
distribution
are
deemed
acceptable.
5
In
this
new
environment,
while
a
number
of
content
producers
with
large
sunk
costs
may
desire
to
restrict
all
unauthorized
uses
of
content,
other
content
producers
adhering
to
new
norms,
commonly
waive
some
copyright
restrictions
and
prohibit
others,
e.g.
“for
promotional
use
only6”
or
claims
for
“failure
to
properly
attribute
authorship.7”
The
later
group
of
copyright
owners,
preferring
to
allow
certain
uses
but
not
others,
may
use
“rights
management”
or
chose
to
license
specific
uses
of
their
works.
These
Digital
Rights
Management
systems
(or
DRMs)
allow
a
copyright
holder
to
“implement
technical
constraints
on
access
to
and
use
of
digital
information,”8
and
copyright
law
provides
supplemental
protection
by
prohibiting
their
circumvention.9

A
copyright
owner
looking
to
protect
unauthorized
distribution
of
his
work
can
also
choose
from
the
many
ready‐made
rights
management
systems,
including
password
protection,
content
scrambling,
and
streaming.
10
However,
when
one
of
these
ready‐made
systems
does
not
reflect
the
rights
holder’s
preferences,
the
copyright
owner
may
choose
to
forego
such
protection,
thereby
enabling
free
sharing.11

The
result
is
the
automatic
reservation
of
all
rights12
‐
a
default
imposed
by
the
law
that
fails
to
reflect
the
copyright
owner’s
preferences13.















As
discussed
earlier,
many
rights
holders
choose
to
license
their
work
for
specific
uses,
outside
of
DRM.
Although
these
licenses
may
be
exclusive,
most
licenses
granted
to
consumers
are
nonexclusive:
“When
the
totality
of
the
parties’
conduct
indicates
an
intent to grant such permission, the result is a nonexclusive license.”14These nonexclusive licenses may be expressly written, orally stated, or implied fromconduct,15 and the scope of the implied license depends on the licensor’s intent16.























































4
See
Jensen,
supra
note
2,
at
556.
5
See
David
W.
Opderbeck,
Peer
to
Peer
Networks,
Technological
Evolution,
and
Intellectual
Property
Reverse
Private
Attorney
General
Litigation,
20
Berkeley
Tech
L.J.
1685,
1696099
(2005).

6
See
Umg
Recordings,
Inc,
V.
Augusto,
2011
U.S.
App.
Lexis
52
(9th
Cir.
Cal.
Jan.
4,
2011)
7
Chris
Anderson,
The
Long
Tail:
Why
The
Future
Of
Business
Is
Selling
Less
Of
More
74
(Hyperion
2006)
(Quoting
Columbia
University
Law
Professor
Tim
Wu).
8
Dan
L.
Burk
&
Julie
E.
Cohen,
Fair
Use
Infrastructure
For
Rights
Management
Systems,
15
Harv.
J.L.
&
Tech.
41,
50
(2001).

9
See
Digital
Millennium
Copyright
Act
§103(A),
17
U.S.C.
§
1201
(2000)
10
See
Seshadri
At
4
11
Id.
12
See
17
U.S.C
§
501
(A);
But
See
17
U.S.C.
§
107
(2000)
(Stating
That
Some
Uses,
Such
As
For
News
Reporting,
May
Be
Fair
Use).
13
See
Raghu
Seshadri,
Bridging
The
Digital
Divide:
How
The
Implied
License
Doctrine
Could
Narrow
The
Copynorm­Copyright
Gap,
Ucla
J.L.

4
(2007)
14
3
Melville
B.
Nimmer
&
David
Nimmer,
Nimmer
On
Copyright
§
10.03[A][7]
At
10
49
To
50
(2007).
15
Id.
Marvin
Barksdale
for
Hydroshare,
Inc.

 2

  3. 3. Furthermore, an implied license can be found where the copyright holder engages inconduct “from which [the] other [party] may properly infer that the owner consents to hisuse.”17 Thus, for courts to rule in favor of the existence of an implied license between anartist or representative releasing a promotional album and a free-content distributionwebsite like Hydroshare, there must be evidence of the copyright holder’s intent to notonly release the music for no cost to the public but to also permit the re-distribution of thework. In instances of valid implied consent, for Courts to find otherwise would subjectthis free promotional music to unreasonable restrictions defeating the purpose for whichit was intended.18 Thus, in order to reach this conclusion, we must analyze therelationship of the U.S. Copyright Act and the evolution of modern marketing andpromotional business strategy to the Recording Industry.This
analysis
of
the
evolving
business
strategy
of
releasing
free
promotional
music
by
the
Recording
Industry
will
also
prove
vital
in
determining
whether
Hydroshare’s
redistribution
of
content
qualifies
as
a
“fair
use”.

In
a
2003
statement
commissioned
and
sponsored
by
the
National
Digital
Infrastructure
and
Preservation
Program,
the
US
Library
of
Congress
stated
that
the
permissibility
of
copying
or
”harvesting”
publicly
available
content
depends
on
consideration
of
traditional
fair
use
factors.19

Under
the
Copyright
Act,
“fair
use”
of
a
copyrighted
work
“is
not
an
infringement
of
copyright.”20
The
fair
use
doctrine
“creates
a
limited
privilege
in
those
other
than
the
owner
of
a
copyright
to
use
the
copyrighted
material
in
a
reasonable
manner
without
the
owner’s
consent,”
and
“permits
courts
to
avoid
rigid
application
of
the
copyright
statue
when,
on
occasion,
it
would
stifle
the
very
creativity
which
that
law
is
designed
to
foster.”

The
Library
of
Congress
recommended
circumstantial
case‐by‐case
review
on
the
following
factors:

the
nature
of
the
material
copied,
the
scope
of
the
copying,
who
would
have
access,
and
how
the
archival
use
could
affect
the
copyright
owner’s
market.21


This
paper
argues
that
because
recording
industry
copyright
owners
now
utilize
authorized
digital
promotional
releases
for
a
variety
of
legitimate
business
purposes,
they
are
inherently
reliant
on
the
spread
and
redistribution
of
this
content,
and
therefore
to
stifle
its
subsequent
distribution
would
defeat
the
purpose
for
which
it
was
intended.









































































































































































16
See
Effects
Assocs.
v.
Cohen,
908
F.2d
555,
558
(9th
Cir.
1990);
Lulirama
Ltd.,
Inc.
v.
Axcess
Broad.
Servs.,
Inc.,
128
F.3d
872,
882
(5th
Cir.
1997).

17

See,
e.g.,
De
Forest
Radio
Tel.
&
Tel.
Co.
v.
United
States,
273
U.S.
236,
241
(1927)
(setting
forth
requirements
for
an
implied
license
defense
to
a
charge
of
parent
infringement.

18
See
Storm
Impact,
Inc.
v.
Software
of
the
Month
Club,
13
F.
Supp.
2d
784,
790

(N.D.
Ill.
1998)

19
June
Besek,
Copyright
Issues
Relevant
to
the
Creation
of
a
Digital
Archive:
A
Preliminary
Assessment,
Council
on
Library
and
Information
Resources
Washington,
D.C.
and
Library
of
Congress,
17
(2003).

20
17
U.S.C.
§
107.
21
See
Besek
at
17
Marvin
Barksdale
for
Hydroshare,
Inc.

 3

  4. 4. b. The
Copyright
Act
and
the
Economics
of
the
Traditional
Recording
 Industry

Section
102
(a)(2)
of
the
Copyright
Act
of
1976
provides
legal
protection
for
“musical
works,
including
any
accompanying
words.”
For
a
work
to
be
protected,
it
must
be
original,
and
must
be
“fixed
in
any
tangible
medium
of
expression”22.
Through
the
Act,
copyright
owners
are
given
a
set
of
exclusive
rights
to
incentivize
them
to
continue
creating
works,
and
which
benefit
society
as
a
whole.23

This
bundle
of
rights
includes
the
right
to:
1)
reproduce
the
work,
2)
prepare
derivative
works,
3)
distribute
copies
or
phonorecords
of
the
work,
4)
perform
the
work,
and
5)
display
the
work.
24
Historically
music
industry
revenues
have
come
primarily
from
selling
physical
(and
later
digital)
music
products.

Thus,
it
follows
that
copyrights
have
been
vital
to
labels
and
artists,
as
the
rights
afforded
to
these
rights
holders
directly
determine
profit
and
royalty
distribution.25
Each
of
the
bundle
of
rights
granted
to
musical
works
through
the
Copyright
Act
create
an
exclusionary
and
exploitable
right
to
a
limited
extent26.
A
digital
sale
of
a
digitally
formatted
musical
work,
just
like
a
traditional
sale
of
a
compact
disc,
creates
numerous
royalties
for
the
copyright
owners
of
the
underlying
works.

Generally,
two
royalties
are
generated
through
the
sale
of
a
musical
work
in
a
sound
recording
–
a
musical
composition
or
mechanical
royalty
and
the
performing
artist
royalty.27
Considering the money potentiality generated through the use of one musicalcomposition in the sale of an album, the economics of copyright protection becomeclear.28 For example, assume one songwriter produces three songs that are used in acommercial album. Further assuming two million copies of the sound recording aredistributed in the United States, the mechanical royalty due to the copyright owner in themusical composition would be $480,000.29In addition to the composer, the performing artist (generally signed to record label) isalso paid a royalty from digital and physical music sales. As compensation for recordingmusic exclusively with one label and signing over the copyright in the sound recording,the performing artist is paid a royalty based on the number of sound recordings sold.30But in exchange for distribution, marketing, and other company services, performing























































22
17
U.S.C.
§
102(a)(2)(2006).
23
See
Washingtonian
Publ’g
Co.
V.
Pearson
306
U.S.
30,
36
(1939)
24
See
id.
§106.
25
See
Brian
Mencher,
Digital
Transmissions:
To
Boldly
Go
Where
No
First
Sale
Doctrine
Has
Gone
Before,
10
UCLA
ENT.
L.
Rev.
47,
53
(2002)
26
Id
at
8
(citing
17
U.S.C.
§
102(a)(2))
27
See
generally
Donald
S.
Passman,
All
You
Need
To
Know
About
The
Music
Business
211(2000)

(The
royalty
became
known
as
a
“mechanical”
for
the
action
that
was
taken
when
the
musical
sounds
were
mechanically
molded
into
the
vinyl
album.).

28
Mencher
at
9.
29
Using
the
current
the
royalty
rate
determined
by
the
U.S.
Congress,
songwriters
are
paid
8
cents
per
musical
composition
user,
per
sound
recording
distributed.
(37
C.F.R.
§
255.3
(2002))
30
See
Passman,

supra
note
45
at
90.

Marvin
Barksdale
for
Hydroshare,
Inc.

 4

  5. 5. artists give up a number of their formerly exclusive copyrights to the label, includingautonomy regarding distribution and creative decisions. While the royalty rate fluctuateswith the medium used (i.e. cassette, compact disc, new media), an average performanceroyalty is about 15% of listed retail price.31 In dollars and cents, this averages out to a$1.10 royalty for each sound recording sold.32 Thus, for the album that sells 2 millioncopies, the performing artist receives roughly $2.2 million.During the music industry’s “Golden Age” (from 1992 – 1999) consumption of albums inthe US rose to nearly 3.5 albums per person per year, with total recorded music revenuetopping off in ‘99 at nearly $15 Billion.33 Music’s permeation into the psyche ofAmericans, as well as into their collective wallets, can be directly correlated with itspermeation into multiple facets of popular culture. Through the expansion of radio, film,cable television, and print media, music was able to affect nearly every aspect of worldculture.The Golden Age of the music business also led to the proliferation of new recordingindustry commerce and marketing strategies. Instead of relying on radio to introduce thepublic to new music, music marketers also began utilizing television executives, writers,club disk jockeys, and other influencers to promote music to the public. Thus began themusic industry swell of promotional music.
 c. The
History
and
Economic
Rationale
Behind
Promotional
Music
 
Although
the
common
business
practices
of
marketing
and
promoting
products
have
expanded
over
time,
the
core
concepts
behind
promotion
have
remained
relatively
the
same.
Promotional
releases
in
the
recording
industry
(promos
for
short),
traditionally
were
copies
of
singles,
albums,
or
EPs
issued
by
a
label
to
journalists,
radio
stations,
retail
stores,
and
other
parties
who
might
provide
some
form
of
product
promotion
or
otherwise
generate
industry
“buzz.”34
Standard
industry
practice
is
that
no
royalties
are
paid
to
the
composers
and
performers
of
the
recorded
materials
given
away
as
promotional
items35.

But
whether
the
act
is
sending
out
key
chains,
Frisbees,
or
new
music,
record
companies
pass
on
the
costs
of
producing
and
distributing
promotional
items
to
the
artists
that
they
promote,
often
against
the
artists’
advances.36

























































31
Id.
at
90.
32
Id.
33

Paul
Cashmere,
"Music
Sales
Down
To
One
Album
Per
Person
Per
Year”
Undercover
News:
Your
Daily
Music
Fix.
28
Feb
2011
Web.
23
April
2011.
34
Lawrence
J.
Glusman,
Comment,
It’s
My
Copy,
Right?:
Music
Industry
Power
to
Control
Growing
Resale
Markets
in
Used
Digital
Audio
Recordings,
1995
WIS.
L.
REV.
709,
736
n.120.

35
Donald
E.
Biederman,
Martin
E.
Silfen,
Law
and
business
of
the
Entertainment
Industries,
Nov
30
2006,
Greenwood
Publishing,
721
36
Corrina
Cree
Clover,
Accounting
Accountability:
Should
Record
Labels
Have
a
Fiduciary
Duty
to
Report
Accurate
Royalties
to
Recording
Artists?,
23
LOY.
L.A.
ENT.
L.
REV.
395
(2003).

(An
“advance”
is
defined
in
the
boilerplate
language
of
most
music
industry
contracts
as
a
“prepayment
of
future
royalties.”)
Marvin
Barksdale
for
Hydroshare,
Inc.

 5

  6. 6. Although
promotional
music
has
always
been
freely
given,
labels
and
artists
remain
explicit
regarding
their
intent
the
recordings
not
be
resold.
This
concept
was
recently
litigated
in
the
UMG
Records
v.
Augusto
case
in
the
Ninth
Circuit,
where
Universal
Music
Group
brought
an
infringement
claim
against
a
defendant
who
was
selling
legally
obtained
promotional
CDs.37
In order to overcome the burden of proofnecessary for the suit, although UMG admitted sending the unsolicited CDs to thedefendant by mail, they relied on inclusion of a CD affixed sticker that read “PromotionalUse Only-Not For Sale” in some cases and in others a lengthier statement that reads: “This CD is the property of the record company and is licensed to the intended recipient for personal use only. Acceptance of this CD shall constitute an agreement to comply with the terms of the license. Resale or transfer of possession is not allowed and may be punishable under federal and state laws.”38Although the restrictions of this “license” were ultimately struck down in this case, itaccurately represents the marketing and promotional strategy of record labels in thebygone age of physical CD and record promotion: release physical promotional copiesonly to intended taste makers who affect the buying market.In
any
given
era
of
the
recording
industry,
promotional
music
strategy
has
always
directly
mirrored
music
consumption.
In
the
Golden
Age
of
recorded
music,
promos
were
given
freely
to
influencers
in
TV,
movies,
and
media.
However,
in
the
‘70s
and
early
‘80s,
promo
distribution
was
limited
to
radio
and
club
disk
jockeys.

As
consumer
demand
for
cassette‐tapes
and
other
personal
media
recording
devices
rose
in
the
late
1970s,
it
didn’t
take
very
long
for
party
DJs
to
begin
integrating
these
pre‐releases
into
their
already
popular
“Party
Tapes”.
Party
Tapes
were
DJ
curated
compilations
of
live
performances
that
were
given
away
by
DJs
to
promote
their
mixing
abilities
and
their
events.
39

But
as
these
Party
Tapes
naturally
expanded
to
include
label
and
artist
provided
promotional
songs,
DJs
soon
realized
there
was
a
viable
black‐market
for
what
would
be
soon
be
known
as
the
“Mixtape.”


In
the
1990s,
as
popular
music
began
leaving
the
clubs
and
spilling
into
the
streets
and
personal
media
devices,
the
“Mixtape
DJ”
became
a
trusted
source
of
new
music.40

Because
fans
of
the
newly
popular
rap
and
hip‐hop
genres
were
accustomed
to
sharing
Party
Tapes
from
their
favorite
DJs,
and
because
the
quality
of
the
tapes
rose
via
the
expansion
of
Compact
Disks
and
the
presence
of
label/artist
supplied
music,
the
demand
for
mixtapes
in
these
genres
grew
dramatically.

Although
the
barriers
to
music
access
and
distribution
were
beginning
to
dissolve,
(mainly
through
the
proliferation
personal
media
duplication
devices)
in
the
mid
























































37
Universal
Music
Group
v.
Augusto,
558
F.
Supp.
2d
1055
(9th
Cir.
2008)
38
Id.
at
1060
39

MTV.com
(2007).
Mixtape
History.
Retrieved
April
22,
2011,
from:
http://www.mtv.com/bands/m/mixtape/news_feature_021003/index8.jhtml
 
40
Id
at
2.


Marvin
Barksdale
for
Hydroshare,
Inc.

 6

  7. 7. 1990s,
promotional
mixtapes
provided
the
opportunity
for
labels
and
artists
to
once
again
promote
their
music
on
an
influential
music
consumption
platform.
Even
further,
rights
holders
were
still
able
to
control
the
distribution
of
their
most
valuable
copyrighted
music
on
radio,
television,
in
movies
and
through
commercial
CD
sales.

Label
executive
Sean
Combs,
who
was
honored
in
2005
with
the
executive/lifetime
achievement
honor
from
the
world
famous
Justo’s
Mixtape
Awards41,
was
at
the
forefront
of
the
label‐originated
mixtape
movement
in
the
mid‐nineties.

Nearly
a
decade
ahead
of
his
time,
Combs
was
able
to
build
the
successful
Bad
Boy
Records
brand
through
supplying
influencers
as
well
as
his
niche
fan
base
with
a
steady
supply
of
pre‐release
singles
and
exclusive
promotional
songs.
Combs
was
the
first
mainstream
recording
industry
executive
to
utilize
both
white
label
promo
releases
and
his
label’s
DJ
curated
mixtape
series
to
drive
album
sales
and
tour
revenue
throughout
the
mid
nineties.

By
1999
the
symbiotic
relationship
between
Mixtape
DJ
and
record
label
had
nearly
completely
dissolved.

Observing
that
the
most
popular
tapes
were
the
releases
with
the
most
exclusives,
mixtape
DJs
began
competing
for
who
could
acquire
the
most
unreleased
songs.

DJs
began
paying
studio
workers
and
other
artist
affiliates
to
steal
music
from
recording
sessions,
putting
them
at
odds
with
the
same
labels
that
long
supplied
them
with
legal
promotional
music.


 d. The
Recording
Industry
Versus
The
Mixtape
During the first years of the 21st century, as street mixtapes rose in popularity, recordingsales were in steady decline42. Popular mixtapes now contained the industry’s biggestsingles before they were available for purchase and in some instances before they evenreached the radio. But, although mixtapes were acting as a replacement for commercialalbums in a few genres, the overall decline in sales could be attributed to a perfect stormof other factors. These include increasing Internet bandwidth, the widespread digitizationof physical media files, and the capabilities of home PCs increasing to better handleplaying and storing digitized audio and video files. This new environment lead to arevolutionary development, that would eventually turn the mixtape industry on its head,called Peer-to-Peer file sharing.Peer-to-peer computing platforms are distributed network applications that partition tasksbetween peers, who make a portion of their resources, such as processing power, diskstorage or network bandwidth, directly available to other network participants43. This inturn made it relatively easy to transfer one or more files from one computer to anotheracross the Internet through various file transfers and individual file-sharing networks. By























































41
Chris
Harris,
“Mixtape
Awards
To
Honor
P.
Diddy
As
Top
Executive”
MTV
News,
8
Mar
2005
42
Alejandro
Zentner,
"File
Sharing
and
International
Sales
of
Copyrighted
Music:
An
Empirical
Analysis
with
a
Panel
of
Countries",
The
B.E.
Journal
of
Economic
Analysis
&
Policy,
Vol.
5,
Issue
1
(2005)
43
Rüdiger Schollmeier, A Definition of Peer-to-Peer Networking for the Classification of Peer-to-PeerArchitectures and Applications, Proceedings of the First International Conference on Peer-to-PeerComputing, IEEE (2002).
Marvin
Barksdale
for
Hydroshare,
Inc.

 7

  8. 8. 2003, this relative ease lead an estimated 70 million people to participate in online filesharing.44 Thus, in response to the proliferation of their copyrighted material on peer-to-peer networks like Napster, in 2003 the RIAA began an aggressive campaign to enforceits copyrights in recorded music against alleged infringers around the world. 45In an extension of the recording industry’s aggressive civil litigation strategy, the labelssoon began to use US criminal law to seek the arrest and prosecution of purveyors ofmixtapes, identified as another source of the illegal proliferation of copyrightedmaterials.46 Although the music was now being spread online, mixtape DJs had gainedthe reputation as thieves and bootleggers, creating many of the most shared digital musicarchives47 and profiting from the creativity of artists through the black market. OnJanuary 16, 2007, Atlanta-area police, working with the RIAA, raided the offices ofTyree Simmons, professionally known as DJ Drama, and confiscated 81,000 mixtapeCDs, along with computers and recording equipment. Drama, along with protégé DJ DonCannon, was also arrested and charged with a felony count of violation of Georgia’sRacketeering Influenced Corrupt Organization law.48 The state of Georgia requires thatthe name of the copyright owner of any recorded music for sale be displayed on thepackaging. According to the complaint, failure by Simmons and Cannon to do so on theirmixtape CDs represented a large-scale, organized and ongoing attempt to engage inillegal reproduction and distribution of the copyrighted works of others. A convictionwould earn Drama and Cannon one to five years in prison and a fine of anywherebetween $10,000 and $100,000.49DJ Drama was regarded as one of the industry’s most influential mixtape DJs, and newsof his arrest led to the removal of mixtape products from store shelves and online sitesacross the country. Along with earlier raids of small music retailers, the Drama/Cannonraid increased fear and uncertainty in the mixtape as a promotional tool and led to achilling of mixtape production and sales in its current compilative format.50 But,
although
the
law
made
it
clear
that
DJs
would
no
longer
be
able
to
press
and
profit
from
these
compilation
mixtapes,
as
Drama
and
Cannon
argued,
the
prominence
and
success
of
the
top
mixtape
DJs
didn’t
come
from
their
ability
to
steal
the
newest
























































44 Ray Delgado, Law Professors Examine Ethical Controversies Of Peer-To-Peer File Sharing. StanfordReport, March 17, 2004.45
Paul
R.
La
Monica,
“Music
Industry
Sues
Swappers:
RIAA
Says
261
Cases
Pursued
For
Illegal
Distribution
Of
Copyrighted
Music”,
CNN
Money,
September
8,
2003
46
Horace
Anderson,
“‘Criminal
Minded?’
Mixtape
DJs,
the
Piracy
Paradox,
and
Lessons
for
the
Recording
Industry”,
76
Tennessee
Law
Review
2
(2008)
47
Id
at
2.
48
See
Hillary
Crosley,
DJ
Drama
Arrested
in
Mixtape
Raid,
BILLBOARD,
January
17,
2007,

available
at
http://www.billboard.com/bbcom/news/article_display.jsp?vnu_content_id=1003533767;

Kelefa
Sanneh,
With
the
Arrest
of
DJ
Drama,
the
Law
Takes
Aim
at
Mixtapes,
NEW
YORK

TIMES,
January
18,
2007,
at
E1.

49
See Nick Marino and S.A. Reid, Two Hip-Hop DJs’ Arrests Spotlight Atlanta as Hotbed For MusicPiracy, Atlanta Journal And Constitution, January 19, 2007, At A1; S.A. Reid, Djs To Appear Today InCourt, Atlanta Journal And Constitution, January 24, 2007 at D6.50
See Hillary Crosley, Mixed Messages: DJ Drama’s Bust Leaves Future of Mixtapes Uncertain,Billboard, January 27, 2007, at 8.Marvin
Barksdale
for
Hydroshare,
Inc.

 8

  9. 9. copyrighted
material.51
The
artists
themselves,
as
fans
of
the
Mixtape
DJ’s
ability
to
release
high
quality
and
influential
compilative
projects,
were
now
engaging
Drama
and
Canon
to
release
DJ
branded
mixtapes
consisting
entirely
of
artist
supplied
music.
52
Next
all
it
took
was
the
meteoric
success
of
one
of
the
newfound
“mixtape
artists”
to
revitalize
and
redefine
the
promotional
music
market
once
again. e. 50
Cent,
Freemium,
and
the
Rise
of
the
Modern
Street
Album
The most important outcome of the Internet Revolution was the lowering of the costbarriers that historically prevented many creatives from producing and distributing theirown work. The onset of new, cheaper technologies and web infrastructure, created aninflux of new players in visual arts, software, as well as music. Therefore not only werethese industries making less money due to the online proliferation of their once wellprotected copyrights, but consumers’ value perception was also declining due to marketovercrowding. In response, media executives enacted a new business model called“freemium” in order to accommodate customers who were now quickly becomingaccustomed to the free flow of content and information.53 Freemium, a portmanteaucombining the two aspects of the business model: "free" and "premium", works byoffering a basic product or service free of charge (such as software, web services or amusic offering) while charging a premium for advanced features, functionality, or relatedproducts and services.54 Although gaining notoriety through the “open source” and“shareware” software business models in the early part of the 21st century, music industryexecutives like Sean Combs first incorporated this model by releasing label-brandedmixtapes in the mid 90s. Ultimately, this authorized mixtape model would evolve againwith rise of a hip-hop superstar named 50 Cent, whose ascension was propped by a seriesof successful freemium “street albums.”In the tear 2000 Curtis Jackson p/k/a 50 Cent was poised to be another yet forgottencasualty of the modern music industry. Despite being signed to Columbia Records andhaving some niche success with the single “How to Rob” which appeared on the In TooDeep movie soundtrack, the label refused to agree to release his album. After the severedrop in sales that same year, although labels and distributers continued to sign acts toexclusive recording agreements, many of these acts remained “on the bench,” estoppedfrom selling their music without mutual consent from the label as rights holder. Thiscreated a growing number of “middle class musicians,” with a released single but anuncertain fan base. Without market confidence, record label executives were unwilling tospend the resources necessary to release a commercial LP. 50 Cent’s situation was























































51
Id.
52
Id.
53
JLM
de
la
Iglesia,
JEL
Gayo,
"Doing
business
by
selling
free
services".
Web
2.0:
The
Business
Model,
2008.
Springer
54
Heires,
Katherine,"A
Business
Model
VCs
Love"
Business
2.0
11
October
2001.
http://money.cnn.com/magazines/business2/business2_archive/2006/10/01/8387115/index.htm.
Marvin
Barksdale
for
Hydroshare,
Inc.

 9

  10. 10. further complicated by bad blood with then industry leader Ja Rule, who was politicallyfreezing him out of radio and magazines. Despite soon being released from his label, 50continued to record with his team of artists and producers. Believing in the strength of hismusic and burgeoning fan base, in Spring of 2002 he released his first mixtape, 50 CentIs the Future, with his group G-Unit.50 Cent’s first official promotional project, 50 Cent is the Future, in many circles isconsidered the best mixtape of all time. 55 Revisiting material from larger acts like Jay-Zand Raphael Saadiq, 50 showcased his ability to rework his own favorite songs into nichecover-versions that resonated with his core audience. 50 Cent is the Future stood upagainst the most popular hiphop releases of 2002 despite being distributed for free andexecutive produced by the artist, his manager, and two mixtape DJs instead of a label.Through this project, 50 Cent was able to create a buzz that recaptured the attention ofradio stations and media outlets around the country, eventually signing a new million-dollar deal with Aftermath/Shady Records.50 Cent’s next two “street albums”, building on the success of the first, set the stage forone of the most successful commercial debut albums of all time. In 2003 he released NoMercy, No Fear followed by God’s Plan, containing original performances and song-writing over a mix of classic and popular instrumentals. But in addition to cover songs,50 and his team decided to add a few original, potential singles to the tracklists includingthe song “Wanksta.” Both the mixtapes and the single soared in popularity, helping hissoon to be released album (which contained “Wanksta” as bonus track) debut at numberone on the US Billboard Charts and sell over six million copies.5650 Cent and his label Shady/Aftermath utilized the freemium model in releasing freepromotional “street albums” that were integral to his meteoric success. These mixtapesenabled 50 to capture the attention of his market, sign a lucrative recording deal, tour theworld, and eventually release a hugely successful album that was his spring-board tobecoming one of the most successful moguls in the music industry. In essence, 50 Centcreated the promotional blueprint still followed by artists in this decade: use quality freemusic releases to galvanize a fan base, tour, sign partnership deals, and (if signed)encourage a label to invest in the marketing and sales budget required to release asuccessful commercial album. Currently, copyright law fails to fairly protect thefreemium business strategy employed by many music copyright owners in the industry bydefaultly restricting the redistribution of these authorized promotional projects.57 Byexamining the modern business practices of music copyright owners in light of “open-source” and “freeware” software case law, the default position of reserving all rights infreely released promotional works appears ineffective and drastically contrary to theirintent.























































55
“Hustler
Musik
:
XXL
Presents
The
Top
20
Street
Albums
Of
All
Time”
XXL
Magazine
(September
2006).
56
Gold
&
Platinum:
Searchable
Database.
Recording
Industry
Association
of
America.
Retrieved
on
2011‐3‐27.
57
See
Jensen,
supra
note
2,
at
556.
Marvin
Barksdale
for
Hydroshare,
Inc.

 10

  11. 11. f. Digital
Age
Case
Law
Involving
the
Online
Redistribution
of
Freely
 Released
Copyrighted
Material
Assuming that by allowing users access to copyrighted material released for free onlineHydroshare is engaged in direct copyright infringement, there are three available defensesto these claims: an implied non-exclusive license for redistribution, equitable estoppel,and fair use. i. Implied
License
in
Digital
Copyright
LawAlthough an implied license is a valid defense to claims of copyright infringement, acopyright owner is not required to expressly grant this permission.58 An implied licensecan be found where the copyright holder engages in conduct “from which [the] other[party] may properly infer that the owner consents to his use.”59 Consent to use thecopyright work need not be manifested verbally and may be inferred based on silencewhere the copyright holder knows of the use and encourages it.60 This inferredpermission or lack of objection is equivalent to a nonexclusive license.61 However, thisimplied nonexclusive license is revocable where no consideration has been given for thelicense.62In the 2006 case of Field v. Google, the plaintiff, an author named Blake Field, asserted aclaim for infringement against the popular Google search engine for “caching” his freelydistributed poems in their search engine, arguing these actions constituted
unauthorized
copying
and
distribution
of
his
work.63
The
Google
cache,
a
repository
of
web
pages,
images,
and
other
content,
is
assembled
by
GoogleBot,
which
locates,
analyzes,
and
catalogs
web
content
in
its
searchable
index.64
Consequently,
when
visitors
type
in
a
search
term,
Google
accesses
its
index
using
optimized
algorithms
and
returns
a
result
set
in
a
matter
of
milliseconds,
allowing
its
users
to
quickly
and
effectively
find
and
preview
the
content
they
are
searching
for.
Thus
Google
saves
and
utilizes
copyrighted
material
to
help
rights
holders
connect
with
their
potential
customers
and
vice‐versa.


The
Internet
industry
has
developed
a
set
of
widely
recognized
and
well‐published
industry
standard
protocols
by
which
copyright
owners
can
communicate
with
search
engines
such
as
Google.

The
principal
method
for
Web
site
owners
is
through
specific
instructions
in
“meta‐tags”
within
the
computer
code
(called
HTML)
hat
comprises
a
given
page.65
When
Googlebot
visits
a
page,
it
reads
through
























































58
See
Effects
Assocs.,
Inc.
V.
Cohen,
908
F.
2d
555,
558‐59
(9th
Cir.
1990).
59
See,
e.g.,
De
Forest
Radio
Tel.
&
Tel.
Co.
v.
United
States,
273
U.S.
236,
241
(1927).
60
See
Keane
Dealer
Servs.,
Inc.
v.
Harts,
968
F.
Supp.
944,
947
(S.D.N.Y.
1997)
61
See
I.A.E.,
Inc.
v.
Shaver,
74
F.3d
768,
775
(7th
Cir.
1996)

62
See
Avtec
Sys.,
Inc.
v.
Peiffer,
21
F.3d
568.
574
n.
12
(4th
Cir.
1994)
63
Field
v.
Google
Inc.,
412
F.
Supp.
2d
1106,

1107
(9th
Cir
2006)
64
Id
at
1108.
65
Id
at
1113. 
Marvin
Barksdale
for
Hydroshare,
Inc.

 11

  12. 12. the
code,
following
the
instructions
provided.
i.e.
whether
to
include
it
in
Google’s
Web
index
cache
or
not.

Website
owners
also
can
communicate
with
search
engine
robots
by
placing
a
“robots.txt”
file
on
their
website,
which
can
also
contain
text
informing
he
robot
not
to
cache
the
site.
Both
the
“no‐archive”
meta‐tag
and
the
robot.txt
file
have
been
widely
recognized
industry
standard
for
years.66




In
Field
v.
Google,
the
Plaintiff
conceded
that
despite
not
giving
Google
explicit
permission
to
save
his
copyrighted
work,
he
was
long
aware
of
Google’s
value
added
services
to
both
web
site
owners
and
its
users,
in
providing
“cached”
links
for
web
pages.67
Furthermore,
it
was
with
this
knowledge
that
he
created
a
robot.txt
file,
intentionally
aiming
to
get
his
copyrighted
works
included
in
Google’s
index
and
to
have
Google
provide
“cached”
links
to
the
Web
pages
containing
the
works68.
Thus
with
knowledge
of
how
Google
would
use
the
copyrighted
works
he
placed
on
the
Internet,
and
with
knowledge
that
he
could
prevent
such
use,
Filed
instead
made
a
conscious
decision
to
permit
it.

Accordingly,
the
Court
ruled
that
the
Plaintiffs
conduct
was
reasonably
interpreted
as
the
grant
of
a
license
for
Google
for
that
use,
allowing
Goggle’s
implied
license
defense.


In
the
modern
recording
industry,
releasing
“freemium”
albums
has
become
a
prevalent
promotional
strategy.

Due
to
the
large
number
of
acts
that
have
had
great
success
through
releasing
free
content
online,
both
artists
and
labels
are
now
forced
to
embrace
social,
blog,
and
traditional
outlets
as
viable
marketing
tools.

Just
as
Google
provides
a
service
that
essentially
acts
as
a
filter
for
the
wealth
of
information
available
on
the
Internet,
music
blogs,
influencers,
and
other
websites
act
as
a
filter
for
the
wealth
of
music
being
released.

Thus,
just
as
Field
understood
the
benefit
of
being
included
in
Google’s
index
and
communicated
his
desire
for
his
copyrighted
material
to
be
“cached”
by
GoogleBot,
accordingly
artists
and
their
teams
actively
communicate
with
new
and
social
media
outlets,
transferring
copyrighted
works
to
the
curators
of
these
outlets
to
be
redistributed
to
their
users.



 The
Internet
industry
utilizes
a
set
of
widely
recognized
websites
by
which
copyright
owners
can
make
large
media
files
accessible
to
others,
called
file‐hosting
services.
These
websites
provide
space
on
a
server
they
own
or
lease
that
is
optimized
for
serving
large
files
to
multiple
users.
One‐click
hosts
provide
artists
aiming
to
send
files
over
the
Internet
a
low
cost,
high
quality
alternative
to
email
and
other
services
that
are
unable
to
meet
their
needs.

Popularized
by
authors
of
Shareware,
Freeware,
and
other
Free
Software,
file
hosting
services
were
created
to
address
the
inherent
bandwidth
costs
incurred
from
offering
free
downloads.

Thus
an
artist
looking
to
send
music
to
a
website
for
dissemination
would
utilize
a
hosting
site,
uploading
the
files
to
the
host
server
and
then
emailing
the
link
to
the
intended
recipient.

Similarly,
many
artists
utilize
these
links
through
their
own
websites
and
mass
emails
to
disseminate
music
to
their
fan
clubs
and
other
support
























































66
Id.

67
Id
at
1114.

68
Id.
Marvin
Barksdale
for
Hydroshare,
Inc.

 12

  13. 13. groups,
as
hosting
sites
themselves
provide
no
index,
discovery,
or
organizational
tools.

Since
hosting
service
users
do
not
have
access
to
the
site
HTML
code
itself,
Internet
industry
hosting
sites
customarily
offer
options
to
either
mark
a
file
as
private
or
to
individually
password
protect
it.
Thus
if
an
artists
is
attempting
to
prevent
mass
distribution,
he
can
share
a
file
internally
so
only
individuals
who
log
into
an
account
can
access
his
music,
or
password
protect
a
file
so
only
those
intended
recipients
who
possess
the
code
have
access.

But,
utilizing
these
protections
to
prevent
distribution
are
contrary
to
the
“freemium”
strategy
of
releasing
promotional
projects,
and
therefore
rarely
utilized
by
recording
artists.

In
order
to
recoup
value
from
the
money
spent
to
produce
the
music
distributed
through
these
releases,
artists
look
to
fully
utilize
the
culture
of
web
2.0,
frequently
encouraging
websites
and
fans
alike
to
redistribute
these
viral
gifts.


Similar
to
the
Plaintiff
in
Field
v.
Google,
modern
recording
artists,
despite
not
giving
every
blog
and
website
explicit
permission
to
redistribute
their
promotional
projects,
are
aware
of
and
benefit
from
the
services
of
websites
like
Hydroshare.
These
online
destinations
are
vital
in
acting
as
filter
for
the
wealth
of
mixtapes
and
promotional
projects
that
are
available
on
the
Internet.

It
is
with
this
knowledge
that
copyright
owners
utilize
one
click
hosting
sites
to
send
their
free
content
to
intended
recipients,
saving
the
bandwidth
costs
associated
with
providing
free
downloads
to
the
public
at
large.
By
choosing
not
to
employ
any
of
the
customary
privacy
protections,
artists
make
the
conscious
decision
that
this
promotional
material
be
freely
shared
and
redistributed
on
traditional,
blog,
and
social
media.
Thus
with
knowledge
that
Hydroshare
and
other
music
sites
redistribute
free
copyrighted
works,
and
that
they
can
easily
prevent
such
uses,
artists
that
promote
and
release
free
promotional
projects
make
a
conscious
decision
to
permit
this
redistribution.
Hydroshare
provides
its
artist
users
with
free
a
storage
solution
for
“mixtape”
artwork,
music,
and
video
and
through
an
implied
revocable
nonexclusivelicense to host and redistribute other free projects, creates a repository
for
legal
promotional
albums
aiding
potential
customers
connect
with
music
rights
holders
and
vice‐versa.


 ii. Estoppel
in
Digital
Copyright
Law
A plaintiff is estopped from asserting a claim for copyright infringement “if he has aidedthe defendant in infringing or otherwise induced it to infringe or has committed coveracts such as holding out… by silence or inaction.69 To prevail on an estoppel case adefendant must prove the following four elements: 1. Plaintiff knew of Defendantsallegedly infringing conduct; 2. Plaintiff intended that Defended rely upon his conduct or























































69
See
Quinn
v.
City
of
Detroit,
23
F.
Supp.
2d
741,
749
(E.D.
Mich.
1998),
2d
at
753
(internal
quotation
marks
omitted,
citing
4
Nimmer
§
13.07
(1990))
Marvin
Barksdale
for
Hydroshare,
Inc.

 13

  14. 14. acted so that Defendant had a right to believe it was so intended; 3. Defendant wasignorant of the true facts; and 4. Defendant detrimentally relied on Plaintiff’s conduct.70In
the
previously
discussed
case
of
Field
v.
Google,
the
Court
found
that
all
Estoppel
elements
were
established
as
a
matter
of
law.

First,
Field knew of Google’s allegedlyinfringing conduct well before any supposed infringement of his works took place.71Field conceded that he knew that Google would automatically allow access to his worksthrough “Cached” links when he posted them on the Internet unless he instructedotherwise.72 Second, Field remained silent regarding his desire not to have “Cached”links provided to his Web site, and he intended for Google to rely on this silence for hisown benefit.73 Third,
Google
was
not
aware
that
Field
did
not
wish
to
have
Google
provide
“Cached”
links
to
his
works.74

Fourth
and
finally,
Google’s
reliance
on
Field’s
silence
was
to
its
detriment,
because
if
Field
communicated
his
preferences
to
Google,
the
parties
would
have
avoided
the
lawsuit
entirely.75

Reviewing the modern practices of the digital music industry in light of the Field v.Google holding, artists who promote and release promotional albums for free on theInternet are estopped from asserting claims of copyright infringement against websitesthat redistribute the copyrighted material. First and foremost, these fluid promotionalprojects are released with the hope and intention that they will become viral sensations,exposing the artist to new fans and propelling their career to new heights. In order toachieve this goal, it has become fundamental that artists encourage new media outlets toengage in what was historically considered ‘infringing’ activity i.e. posting links to andredistributing the copyrighted materials. As hosting sites are by nature erratic, althoughthey have become the industry standard for transferring music files, artists who arelooking for mass free distribution often rely on music websites and fans to disseminateand re-host their projects. Thus, because free file-hosting sites set limits on totaldownload numbers, cap the time that links remain active, and terminate links based onunreliable infringement indicators, Hydroshare and other music sites are able to addressmany of the storage concerns of the modern artist. In sum, artists who release their digitalmusic for free, knowingly and intentionally depend on legal free content destinations toreliably store and disseminate their large music files, and therefore are estopped frommaking claims against them for copyright infringement. iii. Fair
Use
in
Digital
Copyright
LawIn a 2003 paper sponsored by the US Library of Congress titled Copyright IssuesRelevant to the Creation of a Digital Archive, Besek concludes that although the law























































70

See Carson v. Dynegy, Inc., 344 F.3d 446, 453 (5th Cir. 2003) (citing 4 Nimmer § 13.07 (2002))71
Field
at
1119.
72
Id.
73
Id.
74
Id.
75
Id.
Marvin
Barksdale
for
Hydroshare,
Inc.

 14

  15. 15. contains no specific exceptions for copying, or “harvesting,” publicly available webcontent its permissibility would likely depend on whether it qualified as fair use.“Fair use” of a copyrighted work “is not an infringement of copyright” under theCopyright Act.76 The fair use doctrine “creates a limited privilege in those other than theowner of a copyright to use the copyrighted material in a reasonable manner without theowner’s consent,” 77 and “permits courts to avoid rigid application of the copyrightstatute when, on occasion, it would stifle the very creativity which that law is designed tofoster.”78In analyzing whether a particular use qualifies as a “fair use,” the Copyright Act directs aCourt to analyze at least four factors: 1. The purpose and character of the use, includingwhether such use is of a commercial nature or is for nonprofit educational purposes; 2.The nature of the copyrighted work; 3. The amount and substantiality of the portion usedin relation to the copyrighted work as a whole; and 4.The effect of the use upon thepotential market for or value of the copyrighted work.79 The Court must “balance thesefactors in light of the objectives of copyright law, rather than view them as definitive ordeterminative tests.”80 While no one factor is dispositive, courts traditionally have giventhe most weight to the first and fourth factors. 81Once again drawing upon the holdings of the Court in Field v. Google, based on abalancing of the relevant fair use factors, Hydroshare, by copying and distributing thecopyrighted works of artists, who have made them publicly available on the web, isengaged in a “fair use of those copyrighted works. 1. Factor
One:
Purpose
and
Character
of
the
Use a. Hydroshare
Serves
the
Purpose
of
the
Releasing
 Artist/Copyright
Owner,
Safely
and
Reliably
 Releasing
the
Original
Works
to
the
PublicAccording to the United States Supreme Court, the fair use analysis largely turns on onequestion: whether the new [use] merely “supersedes the objects” of the original creation .. . or instead adds something new, with a further purpose or different character, alteringthe first with new expression, meaning, or message; it asks, in other words, whether andto what extent the new work is “transformative” . . . Although such transformative use is























































76
17 U.S.C. § 107.
77
Fisher v. Dees, 794 F.2d 432, 435 (9th Cir. 1986).
78
Dr. Seuss Enters., L.P. v. Penguin Books USA Inc., 109 F.3d 1394, 1399 (9th Cir. 1997).
79
17 U.S.C. § 107.
80
See
Kelly
v.
Arriba
Soft
Corp.,
336
F.3d
811,
818
(9th
Cir.
2003.
81
Compare
Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994) (focusing primarily on firstfactor and whether use is transformative) and Leibovitz v. Paramount Pictures Corp., 137 F.3d 109, 114-15(2d Cir. 1998) (affirming summary judgment of fair use for parody based primarily on the first fair usefactor) with Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 566 (1985) (“[The fourth]factor is undoubtedly the single most important element of fair use.”).Marvin
Barksdale
for
Hydroshare,
Inc.

 15

  16. 16. not absolutely necessary for a finding of fair use, . . . the goal of copyright, to promotescience and the arts, is generally furthered by the creation of transformative works. 82In the seminal case of Kelly v. Arriba Soft Corp.83, the Ninth Circuit determined that asearch engine’s use of copyrighted photographs was a transformative fair use based onthe fact that the search engine used the photographs in question to “improv[e] access toinformation on the internet” while the original function of the work in question wasartistic.84 Assuming that modern recording artists intend to release their copyrightedworks to serve an artistic function as well, Hydroshare’s cataloging and redistribution ofthe freely distributed copyrighted works at issue here, also does not supersede theoriginals.As previously discussed, the industry standard for both mass and private distribution ofmusic files is through free-one click hosting sites; the largest being Germany’sRapidShare and Megaupload based in Hong Kong.85 But although these companies viewthemselves as “dual-use tool[s] providing connectivity between users and storagecapacity,86” both the MPAA and RIAA have categorized them as rouge websites. In May2010 the United States Congressional
International
Anti‐Piracy
Caucus
and
heads
of
the
Recording
Industry
Association
of
America
and
Motion
Picture
Association
of
America
listed
these
one‐click
hosts
in
a
Piracy
Watch
List
containing
the
a
list
of
Top
Priority
Countries
and
websites
that
they
believe
“undermine
the
ability
of
legitimate
services
to
compete
and
thrive
in
the
global
marketplace…”87
Rapidshare
was
also
listed
in
an
official
RIAA
response
a
request
from
the
Office
of
the
US
Trade
Representative
in
November
2010
as
inducing
its
users
to
infringe
on
the
copyrights
on
others88,
a
stance
that
was
reinforced
by
the
January
2011
study
by
MarkMonitor,
asserting
that
file‐hosting
services
have
overtaken
BitTorrent
and
traditional
file‐sharing
as
the
top
sites
for
downloading
pirated
content89.

By categorizing file hosting services as rouge havens of piracy, both the RIAA andMPAA are ignoring the holdings in the United
States
District
Court
case
of
Perfect
10
v.
Rapidshare90
as
well
as
the
rights
and
needs
of
modern
worldwide
copyright
holders.

In
Perfect
10,
the
Court
utilized
Rapidshare’s
testimony
that
it
provides
users
with
unindexed
data
storage,
which
presents
businesses
with
an
economical
























































82
See
Campbell,
510
U.S.
at
579
83
See
Kelly.

84
Id
at
819.
85
Demetris
Antoniades,
Evangelos
P.
Markatos,
Constantine
Dovrolis,
One­Click
Hosting
Services:
A
File­Sharing
Hideout,
Internet
Measurement
Conference
2009,
2,
November
5,
2009.
86
“MegaUpload
Fights
Back
Against
MPAA
and
RIAA
Propaganda”
TorrentFreak
13
January
2011,
http://torrentfreak.com/megaupload‐fights‐back‐against‐mpaa‐and‐riaa‐propaganda‐110113.
87

Jared
Moya
“Congress’
Anti‐Piracy
Caucus
Unveils
List
of
World’s
Most
‘Notorious’
Sites”
Zero
Paid
News
19
May
2010,
http://www.zeropaid.com/news/89178/congress‐anti‐piracy‐caucus‐unveils‐list‐of‐worlds‐most‐notorious‐sites
(Citing
“2010
Watch
List”
Congressional
International
Anti‐Piracy
Caucus,
May
19,
2010)
88
Id.
89
Id.
90
Perfect
10
v.
Rapidshare
(SDCA
09
CV
2596)
May
18,
2010.
Marvin
Barksdale
for
Hydroshare,
Inc.

 16

  17. 17. alternative
to
buying
and
maintaining
their
own
storage
related
hardware,
to
strike
down
the
Plaintiffs claims of inducement of copyright infringement. This testimony,including
evidence
that
the
German
edition
of
PC
World
magazine
has
twice
used
Rapidshare
to
legally
host
free
anti‐virus
software
for
its
readers,
speaks
directly
to
the
importance
and
transformative
nature
of
Hydroshare’s
use
of
copyrighted
materials.

Although
artist
and
fan
reliance
on
free
storage
sites
to
cheaply
disseminate
music
to
wide
audiences
has
propelled
one‐click
hosting
sites
to
the
forefront
of
its
war
on
piracy,
US
Courts
have
recognized
the
legality,
importance,
and
utility
of
these
services.91
In
the
modern
recording
industry
artists
rely
on
the
viral
distribution
and
redistribution
of
their
copyrighted
material
to
further
their
careers,
yet
are
forced
to
rely
on
what
the
RIAA
has
deemed
“havens
for
piracy”
for
economical
storage
and
distribution
services.

While
one‐click
hosting
serves
allow
thousands
of
artists
and
users
to
upload
files
in
return
for
a
link
they
can
either
forward
to
others
or
publish
on
their
website,
their
unreliable,
unindexed,
and
illegitimate
nature,
present
Hydroshare
an
opportunity
to
significantly
improve access to information on the internet. In acting as a storagedepot and index for copyrighted material legally released on the web with the intentionthat it spread virally, there are several reasons Hydroshare’s redistribution qualifies as atransformative use. First, by storing and redistributing promotional projects publiclyreleased through one-click hosting sites, Hydroshare provides copyright owners withdependable distribution that better addresses their needs through multimedia streamingand analytic capabilities and the needs of their fans by enabling access when the originalupload becomes inaccessible. Second, by indexing virally released promotional projectscurrently residing on hosting sites, Hydroshare provides artists and fans a legalalternative to illegal destinations for copyrighted music. Third, Hydroshare utilizesseveral design features to make it clear that it doesn’t intend for its redistributed viralprojects to serve as substitute for commercial releases, including a native opportunity forusers to purchase commercial singles and albums from a given artist. Furthermore,analogous to Google v. Field, the fact that thousands of copyright owners chose to permitwebsites to redistribute their viral releases through externally hosted links and hardwareis further evidence that they do not consider Hydroshare’s redistribution as a substitutefor their own links.92Because Hydroshare serves different and socially important purposes in offering accessto copyrighted works and encouraging instead of superseding the objectives of theoriginal creators, Hydroshare’s redistribution of promotional releases of recording artistsfalls into the category of transformative. b. Hydroshare’s
Status
as
a
Commercial
Enterprise
 Does
Not
Negate
Fair
UseWhen a use is found to be transformative, the “commercial” nature of the use is of less























































91
Atari
Europe
S.A.S.U.

v.
Rapidshare,
OLG
Düsseldorf,
Ref
I‐20
U
59/10
(2010);
Capelight
Pictures
v.
Rapidshare
Ref.
I‐20
U
166/09;
I‐20
U
8/10
(2010);
Viacom
International,
Inc.
v.
YouTube,
Inc.,
No.
07
Civ.
2103
(2010);

92
Field
at
1120

Marvin
Barksdale
for
Hydroshare,
Inc.

 17

  18. 18. importance in analyzing the first fair use factor. 93 Once again drawing from Field v.Google, while Google is a for-profit corporation, the Court ruled that the fact that Googleis a commercial operation is of only minor relevance to the fair use analysis, noting thatthe transformative purpose of Google’s to be considerably more important. Hydroshare,like Google, aims to aid users in indexing the large amount of content currently beingdistributed using the web and use of copyrighted material is serves both the copyrightowner and online community at large. 2. Factor
Two:
The
Nature
of
the
Copyrighted
WorksThe second fair use factor looks to the nature of the plaintiff’s work. When dealing withtransformative uses, this factor has been described as “not . . . terribly significant in theoverall fair use balancing” 94 and “not much help”95 by several courts. In Kelly, the Courtruled that this factor weighed slightly in favor of the plaintiff where the copyrightedphotographs at issue were “creative.” However many Courts, including Kelly and Field,have also noted that copyrighted material intended for public dissemination weighs in thefavor of a fair use.96Even assuming the copyrighted works at issue are as creative as the works at issue inKelly, analogous to Kelly, these recording artists publish their works on the Internet, heredistributing them to the world for free through one-click hosting links premiering on theirWeb sites. Moreover, artists send out marketing “blasts” to ensure that music sitesredistribute their new releases, similar to Field, where the Court held that the Plaintiff’spublic intentions for the work balance the creative nature of the work in finding in favorof fair use. 3. Factor Three: The Amount and Substantiality of the UseThe third fair use factor looks at the amount of the work used. The Supreme Court hasmade clear that even copying of entire works should not weigh against a fair use findingwhere the new use serves a different function from the original, and the original work canbe viewed by anyone free of charge: “[W]hen one considers the nature of a televised copyrighted audiovisual work . . .and that timeshifting merely enables a viewer to see such a work which he had been invited to witness in its entirety free of charge, the fact that the entire work is reproduced. . . does not have its ordinary effect of























































93
See Campbell, 510 U.S. at 579 and Kelly, 336 F.3 at 818 ((“[Transformative] works thus lie at the heartof the fair use doctrine’s guarantee of breathing space within the confines of copyright, . . . and the moretransformative the new work, the less will be the significance of other factors, like commercialism, thatmay weigh against a finding of fair use.”).94
See Mattel Inc. v. Walking Mountains Prods., 353 F.3d 792, 803 (9th Cir.12003))95
See Campbell, 510 U.S. at 586)
96
See Kelly, 336 F.3d at 820; See also Diamond v. Am-Law Publ’g Corp., 745 F.2d 142 (2d Cir. 1984)(finding fair use for a letter to the editor that was published in a modified form); Salinger v. RandomHouse, Inc., 811 F.2d1790, 95 (2d Cir. 1987) (describing Diamond as “applying fair use to a letter to theeditor of a newspaper, which, though not previously printed, was obviously intended for dissemination”);Field, (finding fair use in caching creative works disseminated for free on the internetMarvin
Barksdale
for
Hydroshare,
Inc.

 18

  19. 19. militating against a finding of fair use.”97Similarly, the Ninth Circuit has held that “the extent of permissible copying varies withthe purpose and character of the use” and that “[i]f the secondary user only copies asmuch as is necessary for his or her intended use, then this factor will not weigh againsthim or her.”98 The Ninth Circuit in Kelly thus concluded that the search engine’s use ofentire photographs was of no significance: “This factor neither weighs for nor against either party because, although Arriba did copy each of Kelly’s images as a whole, it was reasonable to do so in light of Arriba’s use of the images. It was necessary for Arriba to copy the entire image to allow users to recognize the image and decide whether to pursue more information about the image or the originating web site. If Arriba only copied part of the image, it would be more difficult to identify it, thereby reducing the usefulness of the visual search engine.”99Similar to the broadcasters in Sony, the photographer in Kelly, and the writer in Field thepromotional music at issue for Hydroshare is released online and available to anyone,free of charge. Also like the fair uses in Sony, Kelly, and Field the use of entire workserves multiple transformative and socially valuable purposes, which could not beeffectively accomplished by using only portions of the work. Without allowing access tothe whole of the project, Hydroshare cannot assist Web users and content owners byoffering access to music releases that are otherwise unavailable. Because Hydroshareuses no more of the works than is necessary in redistribution, the third fair use factor isneutral, despite the fact that Hydroshare allows access to the entirety of the recordingartists’ works. 100 4. Factor Four: The Effect of the Use upon the Potential Market for or Value of the Copyrighted WorkThe fourth fair use factor considers the effect of the defendant’s use upon the potentialmarket for the plaintiff’s work: “[A] use that has no demonstrable effect upon thepotential market for, or the value of, the copyrighted work need not be prohibited in orderto protect the author’s incentive to create.”101The redistributed works on the Hydroshare cloud servers, much like the copyrightedbooks in the Google “cache” in the Field case, were initially made freely available to thepublic for free and thus similarly there is no potential market for the work. AlthoughField contended that Google’s caching harmed the market for his works by depriving himof potential revenue, the Court held this reasoning to be outside of the scope of the fourth























































97
See Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 449-50 (1984) (emphasis added) (affirmingas a fair use the “timeshifting” of entire television shows).
98
See
Kelly,
336
F.3d
at
820‐21.
99
See
Id.;
see
also
Mattel,
353
F.3d
at
803
n.8
(holding
that
“entire
verbatim
reproductions
are
justifiable
where
the
purpose
of
the
work
differs
from
the
original”).
100
See
Sony
464
U.S.
at
448;
See
Kelly,
336
F.2d
at
4821.
See
Field.
101
Sony,
464
U.S.
at
450.
Marvin
Barksdale
for
Hydroshare,
Inc.

 19

  20. 20. fair use factor. The Supreme Court has explained that the fourth fair use factor onlyconsiders the impact on markets “that creators of the original works would in generaldevelop or license others to develop.”102 Thus where there is no likely market for thechallenged use of the plaintiff’s works, the fourth use factor favors the defendant. 103As previously discussed, in the current music industry hundreds of artists every year lookto release free promotional music projects under what those in digital marketing havedeemed the freemium model. Although these releases help artists set the stage forupcoming commercial releases, book touring engagements, and sign new deals, for themost part these artists release these projects for free, looking not to violate any exclusiverecording agreements but also to subsidize the work through viral success. But, despitefreemium’s great potential in our new digital society, the new mixtape model hasn’t beena widespread success for all artists. Even in the case of widely successful projects,monetization of free music has proven to be a difficult proposition. It is Hydroshare’sposition that the difficulties in creating a viable “market” for promotional music projectsis due to the limitations of current “mixtape” distribution destinations. One click-hostingsites, although fast and free, are havens for piracy, employ erratic file terminationpolicies, dictate advertising, and lack index and search capabilities and mixtapesites/blogs can’t handle the storage requirements for reliable distribution, don’t trackconsumption analytics, and curate music content without legal integrity (i.e. hosting bothunlicensed DJ mixtapes and legal artist authorized free releases). Hydroshare, through itsuse of copyrighted free material, addresses these unresolved needs of the modernrecording artist. By indexing and redistributing authorized promotional projects Hydroshare isincreasing the value of the copyrighted work and bolstering the potential market for thenew industry definition of “mixtape.” First and foremost, indexing these projects withsimilar authorized high quality releases gives new credibility and clarity to a segment ofcontent that suffers from an unfair illegal stigma. Second, through redistributing theseprojects and allowing users to stream the associated video, cover image, and music filesat the point of download, Hydroshare enables fans to consume “mixtapes” as the artistintended: raising consumer perception and project value. Third, by providing projectcontent owners with robust analytics on consumer behavior, Hydroshare allows artists tobetter quantity their viral success, giving them concrete tools for touring and othernegotiations. Fourth, by enabling sponsors to target advertising by user characteristicsand by individual releases, Hydroshare makes it easier for artists to subsidize their freereleases through sharing in the advertising revenue generated by their content.Because, there is no evidence that Hydsoshare’s use had any impacton the potentialmarket for the work, and as Hydroshare’s redistribution has a positive impact on the non-existent market for authorized promotional music releases the fourth factor weighsstrongly in favor of a fair use determination.104 5. Additional Factor: Hydroshare’s Good Faith in























































102
See
Campbell,
510
US
at
592.
103
See
Mattel,
353
F.3d
at
806. 
104
See
Kelly,
336
F.3d
at
821‐22.
Marvin
Barksdale
for
Hydroshare,
Inc.

 20

  21. 21. Redistributing Promotional Music Releases Weighs In Favor of Fair UseThe Copyright Act authorizes courts to consider other factors than the four non-exclusivefactors discussed above.105 In particular, the Ninth Circuit has stated that courts mayevaluate whether an alleged copyright infringer has acted in good faith as part of a fairuse inquiry.106 The fact that Hydroshare acts in good faith in only redistributing projectsthat were authorized and intended to be released virally lends additional support for afinding of fair use.Hydroshare’s fundamental mission is to help artists maximize the value in releasing freealbums, so it only redistributes projects that were clearly released in that manner.Hydroshare honors industry-standard protocols that artists use in communicating theirrelease wishes to the world at large, including direct communication, social media, andpress releases. Hydroshare also provides instructions on deploying industry standardinstructions (including the Creative Commons License107) as well as an automaticmechanism for removing redistributed projects from their cloud servers. Moreover,Hydroshare has established an automated mechanism that searches for retail songs andalbums from the project’s author, presenting an opportunity to make a commercialpurchase while downloading or streaming the promotional work. Comparing the activities of the Plaintiff in Field to that of the common recordingartist releasing and promoting the availability of free music for sharing and redistributionprovides further weight in favor of a finding of fair use. In Field, the Court balancedGoogle’s “caching” activities with Field’s affirmative steps to include his work inGoogle’s search results and ignore the protocols that would have instructed Google notdo so. Deliberate conduct by the Plaintiff is often weighed against Defendant’s good faithuse of the work in findings of fair use.108 In summary, the first fair use factor weighs in Hydroshare’s favor because indexingand redistributing promotional copies of work intended to be mass distributed is atransformative use, encouraging the purpose of the work instead of superseding it. Thesecond factor is neutral, use because although creative in nature, recording artists makethese works available in their entirety for free to the widest possible audience. The thirdfair use factor is also neutral, as Hydroshare uses no more of the copyrighted works thanwas necessary to serve its transformative purposes. The fourth fair use factor cutsstrongly in favor of fair use in the absence of any evidence of an impact on the current























































105
See
17
U.S.C.
§
107
106
See
Fisher,
794
F.2d
at
436‐37
(“Because
‘fair
use
presupposes
“good
faith”
and
“fair
dealing,”’
courts
may
weigh
the
‘propriety
of
the
defendant’s
conduct’
in
the
equitable
balance
of
a
fair
use
determination.)
107
Creative
Commons
copyright
licenses
and
tools
forge
a
balance
inside
the
traditional
“all
rights
reserved”
setting
that
copyright
law
creates.
These
tools
give
creators
a
simple,
standardized
way
to
retain
copyright
while
allowing
others
to
copy,
distribute,
and
make
some
uses
of
their
work,
but
non‐commercially.
http://creativecommons.org/licenses/
108
See
Campbell,
510
U.S.
at
585
n.18;
Bill
Graham
Archives
LLC
v.
Dorling
Kindersley
Ltd.,
75
U.S.P.Q.2d
1192,
1199‐1200
(S.D.N.Y.
May
11,
2005)
(granting
summary
judgment
of
fair
use
based
in
part
on
defendant’s
good
faith).
Marvin
Barksdale
for
Hydroshare,
Inc.

 21

  22. 22. market for copyrighted promotional releases and Hydroshare’s premeditated developmentof a “mixtape market”. A fifth factor, comparison of the equities, likewise favors fairuse in the case of an artist who has deliberately ignored the mechanisms that wouldprevent websites like Hydroshare from redistributing their works. A balance of all thesefactors demonstrates that if Hydroshare indexes and redistributes the copyrightedauthorized promotional digital releases of recording artists, Hydroshare’s conduct is a fairuse of those works.II. Section
512
of
the
DMCA,
17
U.S.C.
§
512,
the
"safe­harbor"
provisions,
 shield
online
service
providers,
such
as
hosting
service
providers
and
 website
operators,
from
copyright
infringement
claims
made
against
 them
based
on
the
conduct
of
their
customers
or
users.

 
 a. Definition
of
Copyright
Infringement
Two
main
pieces
of
U.S.
legislation
outline
the
permissible
use
of
an
auditory
work:

the
Copyright
Act
of
1976
(Copyright
Act)109
and
the
Digital
Millennium
Copyright
Act
of
1998
(DMCA).110
The
Copyright
Act
protects
the
rights
of
original
copyright
holders
in
“musical
works”
and
“sound
recordings,”
in
addition
to
“literary
works”
and
“motion
pictures.”
Sections
106
through
122
of
the
Copyright
Act
grants
copyright
holders
many
rights,
including
the
“exclusive
right”
to
reproduce
their
work
“in
copies
or
phonorecords,”
to
“prepare
derivative
works,”
to
sell,
rent,
lease,
or
lend
copies
or
phonorecords
of
their
work,
and
to
perform
or
display
their
work
in
public.111

The
Copyright
Act
renders
violations
of
Sections
106
through
122
illegal
and
copyright
infringers
will
be
subject
to
applicable
civil
and
criminal
penalties.

Under
the
Copyright
Act,
however,
there
are
limited
circumstances
where
an
individual
is
immune
from
liability.112
One
of
the
most
pervasive
copyright
infringement
problems
in
the
United
States
is
the
development
of
sophisticated
technology
that
allows
individuals
to
copy
or
reproduce
auditory
works.

The
most
well
known
reproductive
method
is
the
MPEG
Audio
Layer
3
(mp3),
a
form
of
“audio
compression
technology”
that
“compresses
CD‐quality
sound
.
.
.
while
retaining
most
of
the
original
fidelity.”
In
the
Copyright
Act,
Congress
anticipated
this
use
of
innovative
reproduction
technology
when
it
defined
“copies”
to
include
“material
objects,
other
than
phonorecords,
in
which
a
work
is
fixed
by
any
method
now
known
or
later
developed”
and
methods
of
“perceiv[ing],
reproduc[ing],
or
otherwise
communicat[ing],
achieved
either
directly
or
with
the
aid
of
a
machine
or
device.”113 

























































109 
See generally 17 U.S.C. § 101 (2006).110 
See generally H.R. 2281, 105th Cong. (1998)111 
17 U.S.C. § 102(a).112 See generally Id. §§ 107-112, 117, 119, 121-12248 Id. § 107.113 17. U.S.C. § 101Marvin
Barksdale
for
Hydroshare,
Inc.

 22

  23. 23. In
the
2009
case
between
UMG
Recording,
the
largest
recording
company
in
the
world,
and
Veoh
Networks,
Inc.,
a
video
hosting
platform
backed
Michael
Eisner
and
raising
money
from
Time
Warner
and
Goldman
Sachs,
UMG
sued
the
defendant
for
direct,
contributory,
and
vicarious
copyright
infringement,
and
for
inducement
of
copyright
infringement.

Like
several
defendant
companies
that
have
developed
software
as
a
means
for
democratizing
the
distribution
of
user‐generated
content
in
recent
years,
Veoh
agreed
with
the
plaintiff’s
assertions
that
users
of
Veohs
service
have
been
able
to
download
videos
containing
songs
for
which
UMG
owns
the
copyright,
and
that
Veoh
did
not
obtain
UMGs
authorization
to
make
those
works
available.114 
But,
in
a
move
that
normally
frames
the
substance
of
current
hosting
site
infringement
litigation,
Veoh
asserted
an
affirmative
defense
under
the
Digital
Millennium
Copyright
Acts
(“DMCA”)
“safe
harbor”
provisions.
 b. DMCA
Safe
Harbor
Provisions
for
File
Hosting
Sites
The
creation
of
the
DMCA
was
in
response
to
the
growing
popularity
of
the
internet,

coupled
with
reservations
of
copyright
holders
who
were
reluctant
to
make
their
work
available
on
the
internet
and
ISPs
who
were
fearful
of
liability
that
could
result
from
the
misuse
of
the
services
they
provide.
In
passing
the
DMCA,
Congress
sought
to
achieve
a
compromise
between
the
concerns
shared
by
copyright
holders
and
ISPs.

It
amended
the
Copyright
Act
to
(1)
include
greater
civil
and
criminal
penalties
for
copyright
infringement;
(2)
addresses
technical
measures
that
prevent
unauthorized
access
to
and/or
copying
of
a
copyrighted
work;
and
(3)
protect
Internet
innovation.


In
regards
to
protecting
innovation,
Congress
found
that
millions
of
American
Internet
users
depend
on
one
or
more
technological
intermediaries
to
transmit
or
host
information
in
both
their
business
and
personal
lives.
These
intermediaries
include
ISPs,
mobile
telecommunications
providers,
website
hosting
companies,
online
service
providers
(such
as
blog
platforms,
email
service
providers,
social
networking
websites,
and
video,
photo,
and
music
hosting
sites),
Internet
search
engines,
and
e‐commerce
platforms.
They
provide
valuable
forums
for
commerce,
personal
expression,
community
building,
political
activity,
and
the
diffusion
of
knowledge.

The
openness
of
the
Internet
also
means
that
some
individuals
will
use
these
online
service
providers
(i.e.
hosting
sites)
to
transmit
or
post
content
that
is
unlawful
or
otherwise
offensive.
Clearly,
anyone
who
creates
illegal
content
should
be
subject
to
penalties
provided
by
criminal
or
civil
law.
However,
there
is
a
temptation
in
many
countries
to
try
to
control
objectionable
content
by
punishing
not
only
the
creators
of
content
but
also
the
intermediaries
who
transmit
or
host
it.
This
is
known
as
“intermediary
liability.”
It
arises
where
governments
(or
private
individuals
through
lawsuits)
can
hold
technological
intermediaries
such
as
ISPs
and
websites
























































114 UMG Recordings Inc. v. Veoh Networks, Inc. ,665 F. Supp. 2d 1099, 1111 (C. D. Cal. 2009)
Marvin
Barksdale
for
Hydroshare,
Inc.

 23

  24. 24. responsible
for
unlawful
or
harmful
content
created
by
their
users
and
other
third
parties.
In
response,
Title
II
of
the
DMCA
adds
a
new
section
512
to
the
Copyright
Act
to
create
four
new
limitations
on
liability
for
copyright
infringement
by
online
service
providers.
The
limitations
are
based
on
the
following
four
categories
of
conduct
by
a
service
provider:
(1)
transitory
communications;
(2)
system
caching;
(3)
storage
of
information
on
systems
or
networks
at
direction
of
users;
and
(4)
information
location
tools.
 i. Eligibility
for
DMCA
Service
Provider
Liability
Limitations

To
be
eligible
for
any
of
the
limitations,
a
service
provider
must
meet
two
overall
conditions:

(1)
it
must
adopt
and
reasonably
implement
a
policy
of
terminating
in
appropriate
circumstances
the
accounts
of
subscribers
who
are
repeat
infringers;
and
(2)
it
must
accommodate
and
not
interfere
with
“standard
technical
measures.”

(Section
512(i)).

“Standard
technical
measures”
are
defined
as
measures
that
copyright
owners
use
to
identify
or
protect
copyrighted
works,
that
have
been
developed
pursuant
to
a
broad
consensus
of
copyright
owners
and
service
providers
in
an
open,
fair
and
voluntary
multi‐industry
process,
are
available
to
anyone
on
reasonable
nondiscriminatory
terms,
and
do
not
impose
substantial
costs
or
burdens
on
service
providers.
In
response,
the
Hydroshare
staff
implements
a
strict
submission
and
termination
policy,
only
accepting
content
from
the
accounts
of
verified
rights
owners
and
content
creators,
as
well
as
terminating
the
media
flagged
as
infringing
on
the
rights
of
others.

As
each
limitation
relates
to
a
separate
and
distinct
function,
and
a
determination
of
whether
a
service
provider
qualifies
for
one
of
the
limitations
does
not
bear
upon
a
determination
of
whether
the
provider
qualifies
for
any
of
the
other
three115,
Hydroshare’s
online
activities
fall
into
three
possible
categories:

(1)
transitory
communications;
(2)
system
caching;
and
(3)
storage
of
information
on
systems
or
networks
at
direction
of
users.

 i. Safe
Harbor
Limitation
for
Transitory
Communications
In
general
terms,
section
512(a)
limits
the
liability
of
service
providers
in
circumstances
where
the
provider
merely
acts
as
a
data
conduit,
transmitting
digital
information
from
one
point
on
a
network
to
another
at
someone
else’s
request.

This
limitation
covers
acts
of
transmission,
routing,
or
providing
connections
for
the
information,
as
well
as
the
intermediate
and
transient
copies
that
are
made
automatically
in
the
operation
of
a
network.
In
order
to
qualify
for
this
limitation,
the
service
provider’s
activities
must
meet
the
following
conditions:
(1)
the
transmission
must
be
initiated
by
a
person
other
than
the
provider;
(2)
the
transmission,
routing,
provision
of
connections,
or
copying
must
be
carried
out
by
an
automatic
technical
process
without
selection
of
material
by
the
service
provider;
























































115
Section
512(n).
Marvin
Barksdale
for
Hydroshare,
Inc.

 24

  25. 25. (3)
the
service
provider
must
not
determine
the
recipients
of
the
material;
(4)
any
intermediate
copies
must
not
ordinarily
be
accessible
to
anyone
other
than
anticipated
recipient
and
must
not
be
retained
for
longer
than
reasonably
necessary;
and
(6)the
material
must
be
transmitted
with
no
modification
to
its
content.
As
Hydroshare.tv
acts
as
data
conduit
for
an
uploader/artist
who
has
full
control
over
the
material
uploaded,
it
will
easily
fit
under
these
provisions
as
the
redistribution
mechanism
is
conducted
by
an
automatic
technical
process
on
the
Hydroshare
backend.

 
 ii. Safe
Harbor
Limitation
for
System
Caching

Section
512(b)
limits
the
liability
of
service
providers
for
the
practice
of
retaining
copies,
for
a
limited
time,
of
material
that
has
been
made
available
online
by
a
person
other
than
the
provider,
and
then
transmitted
to
a
subscriber
at
his
or
her
direction.
The
service
provider
retains
the
material
so
that
subsequent
requests
for
the
same
material
can
be
fulfilled
by
transmitting
the
retained
copy,
rather
than
retrieving
the
material
from
the
original
source
on
the
network.

This
limitation
applies
to
acts
of
intermediate
and
temporary
storage,
when
carried
out
through
an
automatic
technical
process
for
the
purpose
of
making
the
material
available
to
subscribers
who
subsequently
request
it.

It
is
subject
to
the
following
conditions:
(1)
the
content
of
the
retained
material
must
not
be
modified;
(2)
the
provider
must
comply
with
rules
about
“refreshing”
material;
(3)
the
provider
must
not
interfere
with
technology
that
returns
“hit”
information
to
the
person
who
posted
the
material
(4)
the
provider
must
limit
users’
access
to
the
material
in
accordance
with
conditions
on
access
(e.g.,
password
protection)
imposed
by
the
person
who
posted
the
material;
and
(5)
any
material
that
was
posted
without
the
copyright
owner’s
authorization
must
be
removed
or
blocked 

×