Last week we wrote about the appalling decision handed down by New York’s highest court in Kaur v. New York State Urban Development Corp. which allowed the state to confiscate 17 acres of private property for Columbia University’s planned expansion. By declaring the area blighted, the state was then allowed to seize control by using the power of eminent domain and hand it over to another private entity. That same week, another equally appalling decision was handed down by a Federal District Court Judge, this time concerning intellectual property. In Viacom v. Youtube, Judge Stanton ordered that Youtube (owned by Google) qualified for safe harbor protections under the Digital Millennium Copyright Act (DMCA) even though its founders "not only were generally aware of, but welcomed" pirated content.

This ruling flies directly in the face of the 2005 Grokster decision. The Supreme Court ruled in MGM Studios v. Grokster, that software developers can be held liable when their products foster the infringement of copyrighted movies and music. In a unanimous decision, the high court ruled against companies such as Grokster which base their business on the theft of intellectual property rights.

I am not a lawyer and don’t aspire to be one, but what I do understand is the implications this decision has on creators. (For a good analysis delving in the minutia of the case go here) Judge Stanton not only found that Youtube was not liable for copyright infringement since the site removed offending content once they were informed of its existence. So, this ruling not only sanctions and encourages start ups to acquire capital off the stolen works of others but puts the burden on copyright owners to find and serve takedown notices on their infringed works.

Technological advances have made the dissemination of creative works very easy and readily available and I love this fact. However, the relative ease of delivering and acquiring content has led members of the copyleft to conclude that online creative works should be free.

The incentive to create quality content lies in the ability to sustain a living off that product. (Yes, I know there are differing opinions on what makes a quality product. I mean really, some of the nonsense kids are listening to these days…But I digress.) Now anyone can create and upload a song or album using Garage Band (or make movies, take pictures, whatever your heart desires), but that doesn’t mean everything is necessarily a good product and those few who do produce the truly creative gems will become fewer and fewer as they will be required to devote more time on earning a living doing something else and less time to developing their craft. When creators and innovators face the risk of having their property effectively expropriated why invest the time and resources? And when they do make that investment, they are now forced to devote more time to tracking down their infringed content online.

Jim Delong, put this ten times more eloquently over at Digital Society when he wrote:

So unless this is reversed, Google, like Columbia University, has now been given the power of eminent domain over other people’s property, only without even a pretense that just compensation is required. In the long run it cannot work. Margaret Thatcher said that the defect of socialism is that sooner or later you run out of other people’s money. A similar argument applies here – sooner or later, YouTube will run out of other people’s creativity and property. But of course this is a long run argument, and one would rather see it solved sooner by effective legal decisions than by people in the future trying to figure out why creative stuff is getting rare, with production volume limited to what can be protected by the equivalent of legal infantry wars.

Last week was a pretty unfortunate week in the realm of property rights. Fortunately, this is not the end of the road for either case. It is imperative for the future of sound property rights and the rule of law that these cases be remedied either judicially or legislatively.

Tags: BIGSTORY IntProp LegalDL | Permalink | Comments

Youtube is an unusual medium, because while it is a free source of content, it is a self-contained source for that content. You can't just download and take a Youtube video on the road with you; you need to go to Youtube any time you want to watch it. People who really want to have a certain song they listen to on Youtube over and over will buy that song from a legitimate source. This is why I believe Youtube is more beneficial to the industry than harmful. It's essentially free and easy publicity for indie bands. Obscure songs can travel around the world, netting 100,000 views in a week, and increase their potential customer base beyond what the pre-internet days would have allowed.
tax re4mer / June 29, 2010 29:59 pm

When you use the promotional value argument, you may have a valid point, except your theory is based on forced promotional value. An artist may choose to disseminate their works online for free, but that is an option they have a right to make, not you. If they believe promotional value is more important than compensation then they will support giving it away, if they don't then they will not. Moreover, YouTube's entire business model is based off the ad revenue that is made from this free content. None of these profits are seen by the creators. If Viacom or the recording industry or the comic publishers we wrote about thought this was a good model and a benefit to them, don't you think they would support it?
Kelsey Zahourek / June 29, 2010 29:24 pm

Kelsey, that's a very good point that I had not thought of until you brought it up. Thanks for clarifying and giving me some good perspective on the issue.
tax re4mer / June 30, 2010 30:29 pm

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