# Amicus Curiae Brief — Cable News Network, Inc. v. CSC Holdings, Inc. (No. 08-448)

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386020_0735%3A09

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2009

## Text

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OFFICE OF THE CLERK

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Supreme Court of the Anited States

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CABLE NEWS NETWORK, INC., et ai.,

Petitioners.
v.

CSC HOLDINGS, INC,, et al.

Sd

On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Second Circuit

+

BRIEF OF THE NATIONAL MUSIC PUBLISHERS’
ASSOCIATION, INC. AS AMICUS CURIAE
IN SUPPORT OF PETITIONERS

+

BrETH S. BRINKMANN
Counsel of Record

JAY A. ROSENTHAL SETH M. GALANTER

Senior Vice President MORRISON & FOERSTER LLP
& General Counsel 2000 Pennsylvania Ave., N.W.

NATIONAL Music Suite 5500
PUBLISHERS’ ASSOCIATION Washington, D.C. 20006 |

101 Constitution Ave., N.W. (202) 887-1544
Suite 705 East
Washington, D.C. 20001
(202) 742-4375

PAUL GOLDSTEIN

MORRISON & FOERSTER LLP
425 Market Street

San Francisco, CA 94104
(415) 268-7000

JACQUELINE C. CHARLESWORTH
MORRISON & FOERSTER LLP
1290 Avenue of the Americas
New York, NY 10104

(212) 468-8000

November 5, 2008

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964
OR CALL COLLECT (402) 342-2531

TABLE OF CONTENTS

Page
TABLE OF AUTHORITIES .................. epee nanenerenl ill
INTEREST OF AMICUS CURIAE...................0005. 1
SUMMARY OF ABRGFOMEINT ......cccsccsrescovessnessssecee 2
PNET Bix pukka isaatuad hd vasdissensiactacrnmaienaaate 9

I. THE RULING BELOw TuHat A “BUFFER Copy”
Is IMMUNE FROM CopyRIGHT LIABILITY IN
THE CABLE TELEVISION INDUSTRY HAS
CREATED A STATE OF UNCERTAINTY IN THE
SS SG widens dctaviidawkndecamnneks 10

A. Interactive Streaming Of Music Relies
On “Buffer Copies” And Thus Could
Be Adversely Impacted By The Second
Circuit’s Decision Involving Cable
WUBI aneesccssvicictncsss EU MEN Pe ereyy nn 11

B. The Decision Below Has Disrupted
Rulemaking By The Copyright Office
Regarding Copyright Licenses’ For
Interactive Music Streaming That Was
Coming To A Conclusion After Eight
Years Of Study And Deliberation.......... 16

C. The Second Circuit’s Decision May
Affect Copynght Infringement Litigation
Pending In The Second Circuit, And
Will Lead To Forum Shopping.............. 22

ll

TABLE OF CONTENTS — Continued
Page
Il. THE CourRT OF APPEALS REACHED A WRONG
CONCLUSION AND Dip So IN A MANNER THAT
Casts A SHADOW OF UNCERTAINTY OVER
NECESSARY PRIVATE NEGOTIATIONS IN THE
Music INDUSTRY 23

CONCLUSION | 26

iN]

TABLE OF AUTHORITIES

Page
CASES:
Football Ass’n Premier League Limited ov.
YouTube, Inc., No. 07-03582 (S.D.N.Y. filed
SOE Sc TIT Rica nacineca sani eennateertae edie nae eee 22
MAI Systems Corp. v. Peak Computer, Inc., 991
Brae PAR. COREE Sal Re Pisce ni cnsuiosisainannchssnacacunatacanetins 24
Marobie-FL, Inc. v. National Ass’n of Fire
Equipment Distributors, 983 F. Supp. 1167
CRW Rant ROET Dinh siuicueniuhsvatcaaus dateckuetaunes hadi 24
Stenograph L.L.C. v. Bossard Associates, Inc.,
SOG FG OO CRG... CR Bi eitvscscrechansccnceinexsetiots 24
STATUTES & REGULATORY MATERIALS:
Copyright Act, 17 U.S.C.
BPS sesh vixeanavishaciaie oes nae passim
Oe Ri kccctahsvsndeccecaxeacn cic a ee a ee passim
Be PE 5.0y enna tenss sstivecaccecasecanei ean aL eat eee 14
FRAC PMD ied ciciacevsiss cen see tee Sauer 14
Oe ee Dinca rence ts he cap cc cenk he es haben ae eet 20
CCW FRO pes snnccensasvoknad dp ndensiedeasieaabubececaae 21
© TF A sh kaise so ns ce ee 21
Bre Sc © RAIS sacccrctccacanctn ch ht eee 7, 23

Digital Performance Right in Sound Recordings
Act, Pub. L. No. 104-39, 109 Stat. 336 (1995)........ 14

1V

TABLE OF AUTHORITIES — Continued
Page

Adjustment or Determination of Compulsory
License Rates for Making and Distributing
Phonorecords, 71 Fed. Reg. 1454 (Jan. 6,
MAE Andiind creche tans aucunabiagucumuniesseuvisausks toebeesareneurenecases on 20

Compulsory License for Making and Distributing
Phonorecords, Including Digital Phonorecord
Deliveries, 73 Fed. Reg. 40,802 (July 16,

MINNIE incu knee su thats chsaeeccadnaeuithchekwesbnck ban santas ieee 6, 12, 17, 18

Compulsory License for Making and Distributing
Phonorecords, Including Digital Phonorecord
Deliveries, 73 Fed. Reg. 47,113 (Aug. 13,

2008) .....cceeecceccee: So AD a NA ee 6, 18-19

Mechanical and Digital Phonorecord Delivery
Rate Adjustment Preceeding, 73 Fed. Reg.
Fe re a eg ED eran Gas nceistce voscticaninienss chien ccuiasitte 20

MISCELLANEOUS:

Comments of the CTIA-The Wireless
Association and The National Association of
Broadcasters, Docket No. 2006-3 (Copyright
ce eS 5 i) ene ee 21

Brad Cook, TMO_ Reports—Analyst Sees
Subscription-Based Music Services Eclipsing
Pay-Per-Download, Mac Observer (May 17,
MUP hiisinitnnss citi Cancinvin<chcecinssakensd tngdsananintndrsaseminesinideaviis 13

Jefferson Graham, Music service Rhapsody’s
not afraid to take on iPod, USA Today (Aug.
ig RET ei teas ce iis whch cuanenn toebn ea cawlaseaat cane waree aero ianiis 13

TABLE OF AUTHORITIES — Continued

PEee, BeOe. INO. 204-774 (LOGS) ......0.000..cc..cesecscesevanes

CeCe HOHE HHH EME HEHEHE HEHEHE SEES

S. Rep. No. 104-128 (1995)
United States Copyright Office, Library of
Congress, DMCA Section 104 Report: A
Report of the Register of Copyrights Pursuant
to $ 104 of the Digital Millennium Copyright

PE SI Ts oad eccrine is tek eues

12, 38,

Page

soees 16

24-25

BRIEF OF THE NATIONAL MUSIC PUBLISHERS’
ASSOCIATION, INC. AS AMICUS CURIAE
IN SUPPORT OF PETITIONERS

The National Music Publishers’ Association, Inc.
(NMPA) respectfully submits this brief as amicus
curiae in support of petitioners.’

INTEREST OF AMICUS CURIAE

Amicus NMPA is a trade association representing
the interests of music publishers in the United
States. The approximately 800 music publisher
members of NMPA, along with their subsidiaries and
affiliates, own or administer the majority of United
States copyrighted musical works. For nine decades,
NMPA has served as the leading voice of the
American music publishing industry in Congress and
in the courts.

The licensing affiliate of NMPA—The Harry Fox
Agency, Inc.—acts as licensing agent for nearly
35,000 music publishers, which in turn represent the

‘ Pursuant to Rule 37.2(a), letters from the parties
consenting to the filing of this brief have been filed with the
Clerk of the Court, and counsel for amicus curiae timely notified
each party’s counsel of amicus curiae’s intention to file this brief.
No counsel for a party authored this brief in whole or in part
and no party or counsel for a party made a monetary
contribution intended to fund the preparation or submission of
the brief. No person other than amicus curiae, its members, or
its counsel made a monetary contribution to the preparation or
submission of this brief.

2

interests of more than 160,000 songwriters, in
connection with the licensing of copyrighted musical
works to make and distribute phonorecords in both
physical and digital formats.

The court of appeals’ ruling in this case, if not
reviewed immediately, may profoundly disrupt the
music industry. In particular, the decision below
creates uncertainty in the place of widely shared
expectations among copyright owners and
distributors of musical works regarding the Copyright
Act’s application to interactive music services that
are delivered through computers and other digital
devices. Many view such digital services as the future
of the music industry.

Accordingly, amicus and its members have a
strong interest in this Court’s review and reversal of
the decision below to ensure that the still-nascent
digital music industry is not irreversibly damaged
in lhght of the court of appeals’ destabilizing
interpretation of the Copyright Act.

SUMMARY OF ARGUMENT

The effects of the erroneous interpretation by the
court of appeals of the Copyright Act in this case are
being felt, and will continue to be felt, far beyond the
cable television industry that is litigating this case.
In particular, the decision creates uncertainty in the
field of interactive streaming of music to consumers
over the Internet, which is a growing part of a billion
dollar digital music industry. Review by this Court

3

and reversal of that erroneous interpretation is
critical to ensure confidence and continued growth
in the digital music industry.

i.

A. From the perspective of a music listener,
interactive streaming of music can be analogized to
a traditional jukebox. Music listeners use their
computers to access online music services and select
particular songs (or artists or genres of music) that
they would like to hear, and their selections are
immediately transmitted over the Internet and
played for them on their computers through the use
of streaming technology.

In order to allow the user to listen to the song,
the entire musical work is transmitted by the
interactive music service to the user’s computer,
where it is reproduced as a “buffer copy” composed of
packets of data deposited in temporary computer data
storage, such as RAM. The computer uses the buffer
copy to play the song for the listener. Unlike
downloading, streaming technology allows the song
to begin playing even before all data comprising
the song have been received by the user’s computer.

The launch and development of interactive
streaming services has been facilitated by industry
understandings concerning the licensing of such buffer
copies under the Copyright Act. At the same time,
however, the lack of formal regulations by the
Copyright Office to confirm the availability of licenses

4

for interactive streaming activities under Section 115
of the Copyright Act, the compulsory license provision
for musical works, has been a significant impediment
to the growth of interactive streaming services.

Under the Copyright Act, “phonorecords” are
reproductions in the form of sound recordings (the Act
uses the analogous term “copy” to refer to other types
of reproductions). The Copyright Act defines
“phonorecords” as “material objects in which sounds
** * are fixed by any method now known or later
developed, and from which the sounds can be
perceived, reproduced, or otherwise communicated,
either directly or with the aid of a machine or device.”
17 U.S.C. § 101. In similar fashion, the Copyright Act
defines “copies” as “material objects, other than
phonorecords, in which a work is fixed by any method
now known or later developed, and from which the
work can be perceived, reproduced, or otherwise
communicated, either directly or with the aid of a
machine or device.” Jbid. The Copyright Act further
provides that a work is “fixed” in a tangible medium
of expression when “its embodiment in a copy or
phonorecord * * * is sufficiently permanent or stable
to permit it to be perceived, reproduced, or otherwise
communicated for a period of more than transitory
duration.” Jbid.

The court of appeals below adopted a novel and
flawed interpretation of the definition of “fixed” to
hold that respondents’ creation of buffer copies of
petitioners’ copyrighted television works did not

5

constitute the reproduction of copyrighted works “in
copies.” Pet. App. 10a-11la. The court appears to have
ruled that data held in a computer buffer for 1.2
seconds are too “transitory” in “duration” to create
“copies,” Pet. App. 17a-18a, and that apparent ruling
has been and will inevitably continue to be invoked to
cast doubt on the status of buffer copies used to
deliver “phonorecords” as well. That interpretation
of the Copyright Act has the potential effect of
excluding interactive music streaming from the scope
of Section 115 of the Act, which provides a compulsory
license for making and distributing phonorecords
of nondramatic musical works. If a streamed buffer
copy is not considered “fixed,” mechanical licensing
revenues, l.e., revenues derived from licenses to make
and distribute phonorecords in physical and digital
formats, are directly threatened, and such revenues
are an essential source of income for music creators.

B. Immediate review of the decision below is
necessary to eliminate uncertainty that it has caused
in pending proceedings concerning the application of
the Section 115 compulsory license of the Copyright
Act to digital uses in the music industry.

1. The Copyright Office has stated that it views
the decision in this cable television case to be
relevant to a currently pending and long awaited
rulemaking in the music industry. The question of
how interactive music streaming should be treated
under the compulsory license provision of Section 115
of the Copyright Act has been studied by the
Copyright Office for eight years. Finally, in July 2008,

6

the Copyright Office issued a notice of proposed
rulemaking in which it concluded, after an analysis of
the statutory language, case law, and its own prior
interpretations, that “buffer copies meet the statutory
definition of phonorecords” and therefore fit within
the scope of the Section 115 license. Compulsory
License for Making and Distributing Phonorecords,
Including Digital Phonorecord Deliveries, 73 Fed.
Reg. 40,802, 40,809 (July 16, 2008).

The court of appeals’ decision in this case was
issued less than a month after the Copyright Office’s
proposed rulemaking. The decision caused the
Copyright Office to extend the time for filing
comments on its proposed rulemaking because that
Office concluded that the ruling below “may be
pertinent to the issues raised in this rulemaking.”
Compulsory License for Making and Distributing
Phonorecords, Including Digital Phonorecord
Deliveries, 73 Fed. Reg. 47,113, 47,114 (Aug. 13,
2008). The Copyright Office subsequently held a
public hearing oa the proposed regulations, where the
Register of Copyrights noted that the court of appeals’
decision in this case is in tension with the Copyright
Office’s rationale for the proposed rule. Moreover,
major Internet companies outside of the music
industry, and others, invoked the decision below in
their comments on the proposed music industry
rulemaking to urge the Copyright Office to reverse its
long-considered proposed regulations.

7

2. The ruling below also could have an adverse
impact on a= groundbreaking music industry
settlement, achieved after years of costly litigation
and negotiation. The Copyright Royalty Board (CRB),
which is tasked under Section 115 with setting the
“reasonable rates and terms” for the Section 115
compulsory license, is currently poised to adopt the
settlement, which addresses the appropriate royalty
rates and terms for interactive music streaming.

Nonetheless, even with the consent of all the
relevant parties and the concurrence of the CRB, the
court of appeals’ decision could interfere with the
conclusive nature of the settlement. Wireless carriers
and others have challenged the settlement based on
the decision below, and even if such royalty rates are
finally adopted by the CRB, legal uncertainty could
embolden some to disregard them as ineffective.

C. Significant current and future copyright
litigation may be directly affected by the Second
Circuit’s erroneous decision in this case, particularly
because the decision now governs in a jurisdiction
that includes a major commercial center for
copyrighted works. For example, a significant class
action suit is pending in district court in the Second
Circuit and alleges that YouTube LLC and its parent
company Google Inc. have engaged in copyright
infringement through their operation of a service
that streams unlicensed videos that incorporate
copyrighted songs. Moreover, because ef the liberal

venue provisions applicable to copyright actions, 28
U.S.C. § 1400(a), potenvial defendants would be able

8

to engage in forum shopping, and select district
courts in the Second Circuit as the venue in which to
bring actions for declaratory judgment that their
buffer copies do not constitute fixed works that
trigger copyright liability. The Second Circuit’s
decision could thus unfairly immunize interactive
streamers from having to pay copyright holders the
royalties that are required under the correctly
interpreted Copyright Act.

Il.

The decision below is based on an incorrect
reading of the statute. Under the correct statutory
definition of “fixed,” it is the work—not “bits” of data
that may comprise the work—that is the key to
determining whether the work is fixed. A work that
remains perceptible is considered to be fixed even if
some of its bits have already passed through a buffer.
Indeed, the overwhelming weight of authority agrees
with the Copyright Office’s interpretation of “fixed,”
most recently reflected in its notice of proposed
rulemaking, which adheres to the functional
definition of Section 101 of the Copyright Act in
considering the ability to perceive, reproduce, or
communicate a copyrighted work.

Just as importantly, the Second Circuit has
created an uncertainty that will undermine existing

music licensing practices and_ hinder private
resolution of disputes as digital music distribution
technologies continue to evolve. The court of appeals

9

adopted a novel reading of the statute and failed to
limit its open-ended interpretation. This Court's
immediate review is necessary to establish an
acceptable degree of predictability for the digital
music industry.

ARGUMENT

The court of appeals’ erroneous interpretation of
the Copyright Act in this case is creating uncertainty
in the nascent field of interactive streaming of music
to consumers over the Internet. Amicus curiae NMPA
urges the Court to grant review of the three questions
presented in the petition for a writ of certiorart,
because each presents an issue that will have a
significant and potentially irreparable impact on the
future of the music industry. This amicus brief
focuses, however, on an aspect of the second question
presented which has particular importance for digital
music streaming and the future of the digital music
industry, t.e., the repercussions of leaving unreviewed
the Second Circuit’s legal determination that the
“buffer copies” created by respondents are not works
that are “fixed,” and are therefore immune from
hability under the Copyright Act.

10

I. THE RULING BELOW THAT A “BUFFER Copy” Is
IMMUNE FROM COPYRIGHT LIABILITY IN THE
CABLE TELEVISION INDUSTRY HAS CREATED A
STATE OF UNCERTAINTY IN THE MUSIC
INDUSTRY

Digital music businesses must have access to a
reliable, industry-wide copyright licensing framework
that will allow them to grow their businesses. It is
equally vital for music publishers and the songwriters
they represent to have a means to be paid for the use
by digital services of publishers’ and songwriters’
copyrighted musical works. The uncertainty produced
by the decision below on whether “buffer copies”
are immune from copyright lability threatens to
undermine any licensing framework for interactive
streaming, and that could have an irreversible
negative impact on the legitimate music marketplace.

Immediate review of the decision below is
necessary to eliminate the uncertainty it has caused
in pending proceedings to determine the application
of Section 115 of the Copyright Act, which is the
compulsory licensing mechanism for those making
and distributing copyrighted nondramatic musical
works in both physical and digital form. 17 U.S.C.
§ 115. Major providers of Internet services, and
others, are attempting to rely on the decision below to
urge the Copyright Office to reverse a long-considered
proposed regulation and to undermine the settled
industry understandings of the role of Section 115
compulsory licensing in the digital music industry.

ll

A. Interactive Streaming Of Music Relies
On “Buffer Copies” And Thus Could
Be Adversely Impacted By The Second
Circuit’s Decision Involving Cable
Television

Interactive streaming is an increasingly important
means for connecting consumers to music through
the Internet. The opportunity to distribute music to
individual listeners has expanded enormously with
the technological innovations of the past decade,
particularly with the increase of access to high-speed
Internet in the home. The music industry has
responded by offering a variety of methods by which
individuals can obtain and listen to music through
their computers and other digital devices.

Currently, the dominant model of digital delivery
of music is to download a permanent digital file, for
use on a computer or portable device (such as the
iPod). In 2006, about 81 percent of the approximately
$1.1 billion in online music services came from
download services.

But there are other competing industry models
for offering music to individual listeners, one of which
is interactive streaming, which is usually offered on a
subscriber basis. Interactive streaming of musical
works based upon subscriber request is a substitute
for, and displaces, the purchase of music, whether in
physical formats such as compact discs, or as digital
downloads. An interactive music streaming service
earns income by charging a monthly fee for access to

12

its collection of music and/or by selling advertising
space to third parties, which is displayed while a song
is being heard.

From the perspective of a music listener,
interactive streaming of music can be analogized to a
traditional jukebox. Listeners use their computer to
access online music services and select particular
songs (or artists or genres of music) that they would
like to hear, and their selections are immediately
transmitted over the Internet and played for them
through the use of streaming technology.

In order to allow the user to listen to the song,
the entire musical work is transmitted by the
interactive music service to the user’s computer,
where it is reproduced in a “buffer copy” composed
of packets of data deposited in temporary computer
data storage, such as RAM. The computer uses the
buffer copy to play the song for the listener. Unlike
downloading, streaming technology allows the song to
begin playing before all data comprising the song
have been received by the user’s computer. See
Compulsory License for Making and Distributing
Phonorecords, Including Digital Phonorecord
Deliveries, 73 Fed. Reg. 40,802, 40,808 (July 16,
2008); United States Copyright Office, Library of
Congress, DMCA Section 104 Report: A Report of the
Register of Copyrights Pursuant to § 104 of the Digital
Millennium Copyright Act 108 (Aug. 2001).

13

Leading American companies that operate
interactive music streaming’ services’ include
RealNetworks, Inc., MediaNet Digital and Napster,
Inc. (recently acquired by Best Buy). Interactive
music streaming and other types of digital music
services are expected to grow dramatically in the
coming years.”

The launch and development of interactive
streaming services has been facilitated by industry
understandings that the buffer copies made by such
services in the streaming process are “digital
phonorecord deliveries” subject to compulsory
licensing under Section 115 of the Copyright Act. The
lack of confirmation of such industry practice through
formal rulemaking by the Copyright Office, however,
has been an impediment to the rapid growth of such
services, owing to lingering doubts concerning the
applicability of the Section 115 license.

Under the Copyright Act, “phonorecords” are
reproductions in the form of sound recordings (the Act
uses the analogous term “copy” to refer to other types

* See, e.g., Jefferson Graham, Music service Rhapsody’s not
afraid to take on iPod, USA Today (Aug. 5, 2008), available
at http://www.usatoday.com/tech/products/2008-08-05-rhapsody-
music-online_N.htm (analyst “forecasts $600 million in U.S.
subscription sales by 2012,” of which interactive streaming is a
subset “up from $235 million in 2007”); Brad Cook, TMO
Reports—Analyst Sees Subscription-Based Music Services
Eclipsing Pay-Per-Download, Mac Observer (May 17, 2005),
avatlabie at http://www.macobserver.com/article/2005/05/17. i2.
shtml.

14

of reproductions). Section 115 provides that once
phonorecords of a nondramatic musical work have
been distributed to the public under the authority
of the copyright owner, any other person may obtain
a compulsory license to make and _ distribute
phonorecords of the work at a statutorily prescribed
royalty rate so long as that person’s primary purpose
is to distribute them to the public for private use. 17
U.S.C. § 115(a). As amended by Congress in the
Digital Performance Right in Sound Recordings Act
of 1995, Pub. L. No. 104-39, § 4, 109 Stat. 336,
344-345, the Section 115 compulsory license includes
the right to make and distribute not just physical
phonorecord products such as compact discs, but also
phonorecords “by means of a digital transmission
which constitutes a digital phonorecord delivery.” 17
U.S.C. § 115(c3)(A).

“Phonorecords” are defined as “material objects
in which sounds” are “fixed” by any method “now
known or later developed,” and “from which the
sounds can be perceived, reproduced, or otherwise
communicated, either directly or with the aid of a
machine or device.” 17 U.S.C. § 101. In similar
fashion, the Copyright Act defines “copies” as
“material objects, other than phonorecords, in which
a work is fixed by any method now known or later
developed, and from which the work can be perceived,
reproduced, or otherwise communicated, either
directly or with the aid of a machine or device.” Jbid.
The Copyright Act further provides that a work is
“fixed” in a tangible medium of expression when “its

15
embodiment in a copy or phonorecord *** is
sufficiently permanent or stable to permit it to be
perceived, reproduced, or otherwise communicated for
a period of more than transitory duration.” Jbid.

The Second Circuit in the decision below applied
a novel and flawed interpretation of the definition
of “fixed” to hold that respondents’ creation of
buffer copies of petitioners’ copyrighted television
programming did not’ constitute reproduction
of copyrighted works “in copies” and was thus
immune from liability under the Copyright Act. Pet.
App. 10a-lla. The court appears to have ruled that
data held in a computer buffer for 1.2 seconds are too
“transitory” in “duration” to create such “copies.” Pet.
App. 17a-18a. That apparent ruling has been and will
inevitably continue to be invoked to cast doubt on the
status of buffer copies used to deliver music
“phonorecords” for purposes of excluding them from
the Section 115 compulsory license altogether.

The century-old compulsory copyright license
embodied in Section 115 that requires payment for
use of copyrighted nondramatic musical works
represents a careful and unique balancing of interests
among musical work owners, music distributors and
music consumers that Congress has entrusted the
Copyright Office to administer. Because of the
displacement of traditional music sales by interactive
music streaming services, a reading of the Copyright
Act that would have the potential effect of excluding
interactive music streaming from the scope of Section
115 because a streamed buffer copy used to play a

16

musical work is somehow not considered “fixed” poses
a substantial threat to mechanical licensing
revenues, l.e., revenues derived from licenses to make
and distribute phonorecords in physical and digital
formats, which are an essential source of income for
music creators.”

B. The Decision Below Has Disrupted
Rulemaking By The Copyright Office
Regarding Copyright Licenses’ For
Interactive Music Streaming That Was
Coming To A Conclusion After Eight
Years Of Study And Deliberation

The question of how interactive music streaming
should be treated for purpose of the compulsory
license embodied in Section 115 of the Copyright Act
has been studied by the Copyright Office for eight
years. The absence of an express rule confirming that
licenses are available under Section 115 for the use of
musical works by digital services offering interactive
streams and the attendant uncertainty about that
licensing availability has been detrimental to the

* The preservation of mechanical licensing revenues was a
primary concern of Congress in amending Section 115 to extend
to digital transmissions of musical works. See, e.g., S. Rep. No.
104-128, at 17 (1995) (in amending Section 115 to include DPDs,
Congress wished to avoid “even a perception of uncertainty,” and
thus sought to “clarify[ ] and confirm|[ ]” the mechanical rights of
music copyright owners in the digital environment); H.R. Rep.
No. 104-274, at 28 (1995) (purpose of DPD amendments was to
“confirm” mechanical rights in context of digital transmissions).

17

music industry. An industry consensus has emerged,
however, and it is supported by the Copyright Office,
which has a long-standing interpretation of “fixed” on
which it has relied to propose critical regulations for
the music industry. The Second Circuit’s opinion, if
unreviewed, could unsettle all of that.

1. The Copyright Office first began considering
the issue of what types of digital! transmissions
of prerecorded music are “digital phonorecord
deliveries” subject to a compulsory license under
Section 115 of the Copyright Act in 2000. See 73 Fed.
Reg. at 40,803 (discussing history of proceedings).
The Copyright Office issued two notices of inquiry in
2001 to collect evidence regarding technology and
industry practices. See id. at 40,805. Following a
series of significant industry developments, the
Copyright Office conducted a public roundtable in
June 2007 to refresh the record in anticipation
of issuing a rule concerning the scope of the Section
115 compulsory license in relation to digital music
services. Ibid. More than 20 organizations and
companies representing copyright owners, songwriters,
record companies, online music services and others
participated in the 2007 roundtable. Ibid.

Finally, in July 2008, the Copyright Office issued
a Notice of Proposed Rulemaking. The Copyright
Office explained that “the continued legal uncertainty
associated with operating music services in the
current marketplace * ** highlight{s] the need to
resolve the outstanding questions concerning which

18

reproductions of phonorecords made during the
course of a stream fall within the scope of the
statutory license and which, if any, do not.” /d. at
40,806. The Copyright Office noted that such
uncertainty “contributed to the current crisis in the
music industry, due to the difficulty of obtaining
licenses for all the rights required in order to offer
various online music services in an environment in
which it is not always apparent which rights must be
cleared and how one can obtain them.” Jbid. The
Office concluded, after an analysis of the statutory
language, case law, and its own prior interpretations,
that “buffer copies meet the statutory definition of
phonorecords” and thus fit within the scope of the
Section 115 license. Id. at 40,809.

The intervening court of appeals’ decision in this
case has substantially undermined that progress on
the Copyright Office’s resolution of those issues. The
Copyright Office had relied on decisions from other
circuits that treat temporary computer reproductions
as sufficiently fixed to constitute copies under the
Copyright Act. Id. at 40,808 (citing DMCA Section
104 Report, supra, at 107-129 (collecting judicial
authorities)). But after issuance of the decision in
this case, the Copyright Office extended the time
for filing comments because it concluded that the
ruling of the court below “may be pertinent to the
issues raised in this rulemaking.” Compulsory License
for Making and Distributing Phonorecords, Including
Digital Phonorecord Deliveries, 73 Fed. Reg. 47,113,
47,114 (Aug. 128, 2008).

19

The Copyright Office then held a public hearing
on its proposed regulations, where the Register of
Copyrights noted that the Second Circuit decision
was in tension with the Copyright Office’s proposed
approach. Transcript of Copyright Hearing at 5 (Sept.
19, 2008), available at http://www.copyright.gov/docs/
section 115/2008/rm_2000-7_hearing_transcript_9.19.08.
pdf; see also id. at 2 (decision “put into question some
of the premises on which our proposed rule was
based”). Accordingly, despite its determination that
regulatory clarification about the applicability of the
compulsory license to digital music streaming would
benefit the industry, the Copyright Office has yet to
issue a final rule.

In addition, opponents of the Copyright
Office’s proposed regulation—including Verizon
Communications, CTIA-The Wireless Association, the
National Association of Broadcasters, the Ad Hoc
Coalition of Streamed Content Providers (which is, in
reality, Google, Inc., and its subsidiary YouTube
LLC)—relied heavily on the decision below in written
comments to oppose the _ proposed _ regulation’s
treatment of interactive music. streaming for
compulsory licensing.* By contrast, like the Copyright
Office, all of the key stakeholders within the music
industry—music publishers and songwriters, record

* These comments are available on the Copyright Office’s
website at http://www.copyright.gov/ducs/section115/comments-3
and http://www.copyright.gov/docs/section115/comments-3/reply.

20

labels and digital music companies—support the
treatment of interactive streams as “digital
phonorecord deliveries” within the Section 115
license.

2. The ruling below also may have an adverse
impact on a-_- groundbreaking music industry
settlement, achieved after years of costly litigation
and negotiation.

The Copyright Royalty Board (CRB), which
consists of Copyright Royalty Judges appointed by
the Librarian of Congress, is charged under Section
115 with setting the “reasonable rates and terms” for
the Section 115 compulsory license, including for
digital uses. 17 U.S.C. § 115(c)3)(D). The CRB
commenced a proceeding in January 2006 to
determine such rates and terms. See Adjustment or
Determination of Compulsory License Rates for
Making and Distributing Phonorecords, 71 Fed. Reg.
1454 (Jan. 6, 2006). Amicus NMPA is a participant in
those proceedings. After all of the participants had
submitted written statements and oral testimony, and
following a lengthy and intensive’ process’ of
negotiation, NMPA and the other parties informed
the CRB that they had reached a groundbreaking
settlement regarding the appropriate royalty rates
and terms for interactive music streaming. See
Mechanical and Digital Phonorecord Delivery Rate
Adjustment Proceeding, 73 Fed. Reg. 57,033 (Oct. 1,
2008) (proposed to be codified at 37 C.F.R. pt. 385).

21

This settlement represents the culmination of
a long series of industry negotiations and
understandings to clarify and resolve concerns
surrounding the treatment of interactive streaming
under the Section 115 compulsory license, as well as
the intermediate copies required to facilitate these
types of digital transmissions. Notably, the royalty
rates and terms to which the parties agreed and
which are embodied in the settlement are consistent
with and would be supported by the Copyright
Office’s proposed regulations.

The Copyright Act authorizes the CRB to adopt
such negotiated rates and terms on an industry-wide
basis so long as the CRB concludes, based on the
record before it and after a period of notice and
comment, that the agreement provides . reasonable
basis for setting statutory terms and rates. 17 U.S.C.
§ 801(b) 7 AIG) & (i). After the conclusion of the
notice and comment period, the CRB is expected to
issue a final regulation containing the royalty rates
and terms for interactive music streaming.

Nonetheless, even with the consent of all the
relevant parties and the concurrence of the CRB, the
Second Circuit’s decision could interfere with the
conclusive nature of the settlement. Wireless carriers
and broadcasters who were not parties to the CRB
proceeding have challenged the settlement based on
the decision below. See Comments of the CTIA-The
Wireless Association and The National Association of
Broadcasters, at 14-15, Docket No. 2006-3 (Copyright
Royaity Bd. Oct. 31, 2008). Further, even if such rates

22

are finally adopted by the CRB, the legal uncertainty
could embolden some to disregard them as ineffective.

By contrast, reversal of the Second Circuit’s
erroneous interpretation of the Copyright Act would
remove any residual doubts about the broad
availability of compulsory licenses for interactive
streaming of musical works under Section 115.

C. The Second Circuit’s Decision May
Affect Cepyright Infringement Litigation
Pending In The Second Circuit, And
Will Lead To Forum Shopping

Current and future copyright litigation may also
be directly affected by the Second Circuit’s decision,
particularly because the decision now governs in a
jurisdiction that includes a major commercial center
for copyrighted works.

Amicus NMPA is a plaintiff representing its
music publisher members in a pending class action
suit alleging that YouTube LLC and its parent Google
Inc. have engaged in massive copyright infringement
through their operation of a service that streams
unlicensed videos that incorporate copyrighted songs.
See Football Ass’n Premier League Limited ov.
YouTube, Inc., No. 07-03582 (S.D.N.Y. filed May 4,
2007), available at http://‘www.youtubeclassaction.com/
courtdox/2VU07-11-O7YTAmdCplt.pdf. This enormous
class action, in which copyright holders from the
music, sports, news, and entertainment industries
have come _ together to prohibit unauthorized

23

reproduction and performance of their copyrighted
works through YouTube, could potentially be affected
by the Second Circuit’s erroneous holding in ways
that would never be undone.

Further, because of the liberal venue provisions
applicable to copyright infringement actions, 28
U.S.C. § 1400(a), potential defendants will be able to
forum shop and select district courts in the Second
Circuit to bring actions for declaratory judgment that
their RAM buffer copies do not constitute fixed works
that trigger copyright liability, in the hope that they
will benefit from the uncertain boundaries of the new
requirements for a work to be considered fixed. Aside
from the enormous toll it would take on music
publishers and songwriters to litigate such actions,
the Second Circuit’s decision could unfairly immunize
interactive streamers from having to pay copyright
holders the royalties that are required under a correct
interpretation of Section 115 compulsory license.

If. THe Court OF APPEALS REACHED A WRONG
CONCLUSION AND Dip So IN A MANNER THAT
Casts A SHADOW OF UNCERTAINTY OVER
NECESSARY PRIVATE NEGOTIATIONS IN THE
Music INDUSTRY

The decision below is based on an incorrect
reading of the statute. And that erroneous
interpretation creates uncertainty that will
undermine existing licensing practices and hinder

24

private resolution of current and anticipated disputes
as digital distribution technologies continue to evolve.
This Court’s immediate review is necessary to
establish an acceptable degree of predictability for
the legitimate digital music industry, which is
already severely tested by the challenges of online
piracy.

RAM buffer copies created by interactive
streaming services in order to play back musical
works for users are “phonorecords” as defined by
Section 101 of the Copyright Act because the buffer
copies are material objects in which sounds are
“fixed” and “from which the sounds can be perceived,
reproduced, or otherwise communicated, either with
the aid of a machine or device.” 17 U.S.C. § 101.

Such buffer copies manifestly meet the definition
of “fixed” in Section 101, because the musical work
exists in a sufficiently stable form to be perceived,
reproduced, and communicated in its entirety. This
interpretation is consistent with the overwhelming
weight of authority, which agrees with the Copyright
Office’s interpretation of “fixed,” and which adheres
to the functional definition of Section 101 in
considering the ability to perceive, reproduce or
communicate a copyrighted work. See, e.g., MAI Sys.
Corp. v. Peak Computer, Inc., 991 F.2d 511, 519 (9th
Cir. 1993); Stenograph L.L.C. v. Bossard Assocs., Inc.,
144 F.3d 96, 100 (D.C. Cir. 1998); Marobie-FL, Inc. v.
National Ass’n of Fire Equip. Distribs., 983 F. Supp.
1167, 1177-1178 (N.D. Ill. 1997); DMCA Section 104

29

Report, supra, at 118-122 (collecting additional
judicial authorities).

The court of appeals below rejected that
consistent interpretation of other courts and the
longstanding interpretation of the Copyright Office,
on which the Copyright Office has relied most
recently to propose critical regulations for the music
industry on compulsory licensing in the digital music
streaming context. Further, in adopting its novel
reading of the Copyright Act, the court of appeals
failed to establish any principles to limit its
unsettling and open-ended ruling.

In determining that data held in a computer
buffer for 1.2 seconds cannot give rise to an
actionable “copy,” the court of appeals misconstrued
the statutory definition of “fixed” on which it relied.
Section 101 provides that “[a] work is ‘fixed’ in a
tangible medium of expression when its embodiment
in a copy or phonorecord *** is sufficiently
permanent or stable to permit it to be perceived,
reproduced or otherwise communicated for a period of
more than transitory duration.” 17 U.S.C. § 101.
Under the statutory definition of “fixed,” it is the
work—not any “bits” of data that may comprise the
work—that is the key to determining whether the
work is fixed. A work that remains perceptible is
considered to be “fixed” even if some of its “bits” have
already passed through a buffer.

The Second Circuit’s contrary interpretation has
left the music industry in an untenable position. A
lack of certainty concerning the ready availability of

26

licenses for the reproductions required for the process
of interactive streaming will inhibit the growth of
legitimate digital music services and threaten the
livelihood of music creators. The court of appeals’
suggestion that its ruling is somehow fact specific,
Pet. App. 17a, provides no useful guidance and only
highhghts the uncertainty engendered by the decision
that will surely impede the private resolution of
licensing issues in the digital music industry.

CONCLUSION

For the reasons set forth above and in the
petition for a writ of certiorari, the petition should be
granted.

Respectfully submitted,

BETH S. BRINKMANN
Counsel of Record

JAY A. ROSENTHAL SETH M. GALANTER

Senior Vice President MORRISON & FOERSTER LLP
& General Counsel 2000 Pennsylvania Ave., N.W.

NATIONAL MUSIC Suite 5500

PUBLISHERS’ ASSOCIATION Washington, D.C. 20006
101 Constitution Ave., N.W. (202) 887-1544
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. PAUL GOLDSTEIN
Washington, D.C. 20001 ‘ ae
(202) 742-4375 MORRISON & FOERSTER LLP

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(415) 268-7000

JACQUELINE C. CHARLESWORTH
MORRISON & FOERSTER LLP
1290 Avenue of the Americas
New York, NY 10104

(212) 468-8000

November 5, 2008

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386020_0735%3A09. Public record. Not legal advice.