Tiptoeing through the copyright, content land mines

The question I am most frequently asked by business owners and independent inventors is, “How do I protect my idea?” Whether it is a tangible invention, software application, Web-based marketplace or other advanced technology, the primary concern (besides monetizing it) is ensuring exclusivity over the concept.
While undoubtedly crucial to lock down the rights to the innovation as tightly as the law allows, it is equally important for businesses and their management teams to ensure they will not run afoul of others’ intellectual-property rights. In this digital age, that often means copyrighted content.
Recent months have seen a number of court decisions relating to the lawfulness of certain ways of delivering copyright-protected media. From reselling foreign-sourced textbooks, to broadcasting TV over the Internet and operating a “used” digital record store, courts have weighed in on the applicability of U.S. copyright laws to new types of media distribution and technology.
This litigation activity should serve as an important reminder that, when using others’ content in any capacity, vigilance and, oftentimes, ingenuity are required to comply with the law. The last thing any business wants is to make a substantial investment of time and money only to be shut down on day one.
Take, for example, Aereo. The firm’s website enables subscribers to watch broadcast-television programs over the Internet. Although “public” retransmission of the television programming is prohibited under copyright law, Aereo gets around this by assigning each subscriber one of its thousands of individual antennas receiving over-the-air broadcast TV signals at its Brooklyn, N.Y. facility. Unsurprisingly, the television networks do not like the idea of their free over-the-air broadcasts being made available on the Internet without remuneration to the networks. The courts have so far sided with Aereo, determining that this is not public transmission and, therefore, permissible because no two users could receive the same broadcast signal – even if their individual antennas allow them to watch the same program at the same time.
Because of the Rube Goldberg-esque design of its mini-antenna system, I have little doubt that Aereo (owned in part by billionaire Barry Diller’s IAC media and Internet conglomerate) was well-advised on copyright law during its design and implementation. While such advice cannot eliminate risk, it can minimize it, and in Aereo’s case, its strategy paid off. Aereo initially streamed only New York-based broadcasts but began broadcasting Boston-based networks in May. It also announced extensive additional expansion to 21 other cities, including Providence, by the end of the year.
ReDigi, however, has not had similar luck in court. ReDigi bills itself as a “digital used music” marketplace. It recently lost its court battle to allow its users to resell their legally acquired music files.
Generally, under the “first-sale doctrine” of copyright law, once you purchase a copyrighted item – e.g., a CD, DVD, book – you own that copy and can resell it. You cannot make multiple copies to sell, but you can sell the one you own.
ReDigi argued that its technology ensured that its users’ music files were deleted from their computers and upon selling their “used” file, they can no longer access it. The court ruled that, semantics aside, the process of uploading files to the server and downloading files from the server to another user necessarily involves “reproduction” prohibited by the Copyright Act.
It noted that the “laws of physics” confirm that a “material object” (i.e., the digital music file) cannot truly be “transferred over the Internet.” In the wake of its court loss, ReDigi has already retooled in such a way that, it claims, complies with copyright law and will not change the user experience. Personally, I think the new technology conforms to copyright law, but it has not yet been tested in court. Perhaps your site is a content aggregator or you host user-generated media or your new device/hardware incorporates outside software or you want to sell books, music and/or other media over the Internet. Each instance presents its own unique copyright questions. And given this continued technological advancement, U.S. copyright law remains, in many respects, unsettled and a fertile area for litigation.
As available content (and the billions in revenue derived from it) grows exponentially, consumers want more and better choices, want it cheaply and the technology exists to deliver it. Content providers understandably want their share from license fees and have seen their revenue decreased by notable disruptions of their business models such as Napster and Netflix, among others.
No matter the size of your company or the business idea at issue, if you are not vetting these potential game-changing intellectual-property questions at an early stage, you may find yourself facing off with deep-pocketed content owners who aggressively defend any marginal impingement on their rights. Not only is this costly from a legal perspective, but the loss of reputation, goodwill and credibility may be unrecoverable altogether. In short, do not underestimate the value of proactive business planning when it comes to sophisticated intellectual-property issues. •

Byron L. McMasters is an attorney with Duffy & Sweeney Ltd., a Providence-based business-law and litigation firm.

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