Sad Kermit and the Future of Copyright

Darrell Day has experienced first-hand the weird things that can happen when a little homemade video is put on the Internet and thus let out into the world. Day, a 24-year old photographer and filmmaker living in Ohio, was perusing MySpace with fellow filmmaker Max Groah a few months ago when the pair came across a profile page for “Sad Kermit,” a much more grown-up and despondent version of the popular Jim Henson character, Kermit the Frog.

“We were like, This is really cool, we should make a music video out of it,” Day says. So they made a video of “Sad Kermit” singing the despairing Nine Inch Nails song “Hurt” while engaging in a series of destructive behaviors: drinking, snorting coke, masturbating to a picture of Miss Piggy, etc.

“We put it up on YouTube, and it just kind of simmered for a while,” says Day. “It was getting a hundred or so hits a day.” But then a link to the video was posted on Fark.com, an immensely popular news and pop-culture aggregating site.

“That night, we had about 12,000 hits, and by the next day, we were at 100,000 hits,” Day says. “And then it was linked to by Ain’t It Cool News and CollegeHumor.com, and it was the featured video on MySpace for a day, and then just all sorts of places.”

Not long after, a segment of the video was featured on VH1’s “Best Week Ever” television program. It was written about by Entertainment Weekly. And, in an ultimate turn of post-postmodern something, a Rolling Stone magazine review of Nine Inch Nails’ new album opened by comparing NIN’s lead singer to his froggy counterpart.

“We hit over a million views now,” Darrell says. “The weird thing is, this was just this little side project for us. It was just, ‘Let’s do this and throw it up on YouTube, just for fun.’”

In a study conducted by the Center for Social Media in March, the distinction between “commercial” videos and those made “just for fun,” for school, or for artistic purposes was made time and again by creators of “user-generated content,” a broad term for fare posted by ordinary citizens or non-professionals and found on sites such as YouTube, Myspace, and countless blogs.

“Without really understanding the requirements of law or having had access to public discussion of emerging custom, they were making up rules themselves about what kind of existing intellectual property it was appropriate to use in their own creation,” writes Pat Aufderheide, director of the center, in The Good, The Bad, and The Confusing: User-Generated Video Creators on Copyright. “They … expressed a variety of binary, good-bad categories within which to order their choices to use copyrighted material.”

Most creators believed the use of copyrighted material in commercial works was undoubtedly “bad,” but use of the same material in works made for school, art, or fun was not so bad. Copyright law, they believed, should distinguish between the two.

“I definitely think copyright law should differentiate between people using copyrighted images or music to make videos that are just for fun or education, and using them in videos for commercial profit,” says Danny Pellegrino, a 21-year-old student majoring in electronic media production who also shoots and edits weekly political “vlog” (video blog) posts, which he uploads to YouTube.

But after championing this distinction, Danny casually points out an issue that makes a clear distinction of this type a little bit more difficult.

“I guess with the age of technology that we are in, no one ever knows if a video they make will just reach their friends. Many videos that are made for just friends end up reaching a wide audience on the Internet.”

When the Sad Kermit video first gained attention, Day and Groah were afraid to claim credit for it because they weren’t sure if they had violated copyright law. “But we’re taking credit for it now,” Day says, “and we want to make more [Sad Kermit] films.”

“I’m pretty sure we fall under fair use,” he adds. “I’m just still not 100 percent sure.”

The Fair Use Doctrine
The fair use doctrine, codified in section 107 of the Copyright Act, provides a litany of instances in which use of copyrighted material by non-owners is protected: parody, satire, criticism, etc. There are four elements to consider when determining whether a specific use is fair: the nature of the use, the purpose of the use (including whether or not it was used for profit), the amount of the copyrighted material used, and the effect of the use on the potential market value of the copyrighted work.

Underlying these is the important question of whether or not the work is “transformative.” Does it use the copyrighted work for the same purpose for which it was originally created, or does it add something new? A finding that a work is transformative outweighs any negative finding in regard to whether the work is used for commercial purpose. This means there are instances when a work can be used for profit and still be considered fair use.

“A lot of creativity and a lot of experimentation … is happening by allowing regular citizens access to content, tools to make and manage it, and forms for them to distribute what they’ve done,” says Steve Tapia, a senior attorney in the legal, IP, and copyright department of Microsoft. “The hardest problem is, How do we establish a set of rules that says some of that stuff is really okay, and we want to promote it, and some of it is not?”

Tapia says the goal right now is to get the conversation back to a middle ground. “It’s [about] getting the content owners to understand there are legitimate fair uses of their content, and getting the content creators to understand, look, there’s a set of rules, and you can’t just take and use everything,” he explains. “Right now, this conversation isn’t happening. The [rights-holders] just view the users as pirates, and the users just view the [rights-holders] as big corporate America trying to rip them off.”

Who’s Liable?
Section 106(3) of the Copyright Act of 1976 provides copyright owners with the exclusive right to determine how their material will be used and distributed to the public. A producer who uses copyrighted material without proper permissions is liable for “direct infringement” on the rights of the rights holder. A producer who makes and posts infringing material on the Internet can be sued directly by the material’s owner.

For practical purposes, however, copyright holders would rather take action against the platforms hosting the infringing material than against each and every individual infringer. To this end, copyright holders have, in the past, sought to make Internet platforms responsible as “substitute” defendants, even if they didn’t “affirmatively” engage in infringing activity.

In 1997, Playboy Enterprises brought a suit against an online bulletin board on which pictures from Playboy magazine were available for sharing amongst members. Playboy claimed the service profited from a system in which consumers downloaded Playboy photos for free from the bulletin service instead of purchasing Playboy magazine.

The service argued that Playboy photos were posted by bulletin board subscribers, not by employees of the service, and therefore it could not be held directly liable for infringing activity. The court ruled in favor of Playboy, finding that the service had engaged in two of the activities reserved to copyright owners — distribution and display — and therefore was, in fact, directly liable.

The court’s opinion came under attack, however, for neglecting to consider another type of liability: contributory infringement. Contributory infringement is very similar to the criminal concept of aiding and abetting, says Tapia. Under current copyright law, hosting platforms can be found liable for “contributory infringement” if they know about and allow (or encourage) infringing activity by third parties.

In Arista Records Inc v. Flea World Inc, for instance, a flee market was found to have committed contributory liability by allowing vendors to sell counterfeit CDs. The relevance to video-sharing sites such as YouTube.com, Myspace, Blip.tv, and Google video is obvious. Most recently, media conglomerate Viacom brought suit against online video platform YouTube and its parent company, Google, accusing YouTube of “massive intentional copyright infringement” and seeking more than $1 billion in damages.

Protecting the Platforms
When the 1976 Copyright Act was being written, telecom companies were concerned they could be found liable for customers transmitting infringing activities over their wires. A “common carrier” provision was inserted in the act, which excepted companies from liability if they had no knowledge of infringing activity taking place through their services.

The Digital Millennium Copyright Act of 1998 updated this common carrier exception for the digital age in section 512A. Essentially, sites such as YouTube can exist because of this provision, often referred to as the “safe harbor” law or, simply, “512.” While fair use protects the right of a creator to make certain content, Section 512 basically protects the right of a video-sharing platform to host it.

“Sites like YouTube couldn’t have gone up without safe harbor laws,” says Fred Von Lohmann, a senior intellectual property attorney with the Electronic Frontier Foundation.

Under section 512 online service providers can qualify for safe harbor treatment from infringement liability. But first a platform must not have “actual or constructive knowledge” of infringing activity taking place on its servers. It must also respond in a timely manner to requests to take down infringing material and have policies in place to terminate “repeat infringers.” Finally, it must respect technological protections used by copyright owners to safeguard their material and not receive direct financial benefit from infringing activity.

Viacom’s case against YouTube rests on the restriction against financial benefit. In Viacom’s estimation, people are drawn to YouTube because it is a place to find certain types of infringing, copyrighted material, such as TV and movie clips. In an op-ed in the Washington Post, a Viacom lawyer wrote that “YouTube would not exist without us.” YouTube does not qualify for protection under Section 512, Viacom argues, because it is receiving a direct financial benefit from the infringing material on its site.

Microsoft’s Tapia explains: “The argument … is that because sites like YouTube create a market of massive copyright infringement, and have economic value because of that infringement, they’re directly liable instead of contributorily liable.” And the distinction has important consequences. Tapia says Viacom has “an interesting theory” in its argument that “nobody would go to YouTube if people didn’t know that this was the place where you could get infringing copyrighted material.”

But is it a valid theory? “Who knows?” says Tapia. “I’ve had lots of discussions with lots of different lawyers, and people are coming down about fifty-fifty, on both sides.”

The Electronic Frontier Foundation’s Von Lohmann, however, disagrees. “I don’t know any lawyer who, in good faith, not being paid by Viacom, could make those arguments.” Google, the owner of Youtube, he adds “is losing the PR war bad.” For one thing, “it is not making a very good case for why what it is doing is a good thing, as opposed to explaining why it qualifies for an exception to the copyright act. Too often, you’re left with the impression that Google is exploiting a loophole, as opposed to creating a fantastic new platform for creativity and innovation.”

The Customer’s Right: User-Generated Content
Viacom’s complaint alleges that YouTube hosted nearly 160,000 video clips with copyrighted material owned by Viacom, and that these clips have been viewed more than 1.5 billion times. The suit represents the most significant legal challenge to date over intellectual property rights in the era of user-generated content. But simply to say that user-generated content and sites like YouTube as a whole are “massive” copyright infringers denies many realities about the new copyright battles. Even the term “user-generated content” itself is all too broad and deceptively simple.

There is a major difference between user-generated videos showcasing a budding filmmaker or musician or comedian’s work and clips of The Daily Show or Grey’s Anatomy uploaded directly to the Internet. While the former may or may not contain some copyrighted material, they are vastly different than the latter types of clips. It’s the difference between posting videos for educational or artistic reasons and “acting as a DVR-for-the-world,” says Tapia — and acting as a digital video recorder for the world hurts copyright owners.

Video platforms and rights holders have been dealing with copyright infringements by issuing cease-and-desist letters, takedown requests and, to a lesser degree, requesting automated takedowns, but none of these are ideal. Say, immediately after The Apprentice airs on network TV, NBC notices some clips from episode are contained in a video posted on YouTube. NBC might send the person who posted that clip or the platform hosting it a cease-and-desist letter, ordering the clip be taken down. Not wanting to get into legal trouble, the poster or platform complies.

Problem solved, right?

Well, not exactly. If you were posting the unedited clip of last night’s episode of The Apprentice, then by the time the cease-and-desist letter has gone out and you’ve taken down the clip, NBC has already been damaged. Viewers who might have purchased the episode from iTunes or watched it on NBC’s own website (thereby exposing themselves to advertising) have instead watched your clip on YouTube.

Then again, say you’re a freshman sociology student, and you have used a couple of clips from The Apprentice as part of a larger video (for argument’s sake, let’s grant that it’s an intellectually serious project) about men and women in the workplace. This would probably qualify as fair use. Are the lawyers at NBC going to differentiate?

Maybe. But “in cease-and-desist letters, claimants often over-state their position,” says Von Lohmann. Your average video-poster — our hypothetical freshman, for instance — after receiving one of these letters will probably take down the video without looking into whether the copyright was infringed. Many people whose content is perfectly legal are going to receive these letters, says Von Lohmann. “When you fish with a drift net, you’re going to catch some dolphins.”

Many media companies are pushing for automated takedowns, which would accelerate the removal of offending material. Automated takedowns work something like this: A copyright holder signs a contract with a platform that whenever it finds infringing material on the site, it can simply send the site the URLs of the offending clips and the site will take them down without question.

“As I understand it, Google has procedures in place to streamline the takedown process for rights holders, permitting them to sign a single statement under the DMCA, and follow with a large number of URLs,” Tapia explains. “Rights holders are using companies like BayTSP to automatically generate large numbers of takedowns.”

This solution might solve the “DVR-to-the-world” problem, but it overlooks the rights of video creators and protected fair-use speech. Right now, the technology to support automatic takedowns is not widely in use. But “the automatic takedowns are coming into play,” Tapia says.

Von Lohmann would like to see three things in terms of this sort of enforcement: a “dolphin hotline” for those whose content is unfairly taken down, a guarantee of manual human review of clips (by the rights holders) before they’re taken down, and a commitment from rights holders that they’re not going to go after transformative creations.

Viacom, for one, has said that they don’t call for the takedown of parodical or interesting content. “Savvy companies are recognizing that there are legitimate creative, first amendment, and public policy issues here, and they’re saying, It’s not always going to be infringement to take something that is my copyright and mash it up or rearrange it,” says Tapia. “And Viacom is sort of coming from that standpoint, being very smart and savvy and respectful of those kinds of interests. But some other companies, particularly the record companies, aren’t doing this all,” says Tapia. “They say, You’re going to filter, you’re going to pay us, or you’re going to take down the content, because we’re going to make money off this.”

Filtering, which uses devices such as metadata and watermarks, is an aggressive approach to copyright management that for now is only on the horizon. Watermarks range from visible logos imprinted on a video or image to subtle, unique imperfections introduced into digital content as a tag. The tags allow software to detect the presence of copyrighted material automatically.

Such a technical solution is “very tempting” says Mike Hudack, founder and CEO of the video-blogging and podcasting platform Blip.tv. “But it’s very difficult to do that in practice.” Companies are apt to go their own way, says John Phillips, a software engineer with Creative Commons, and develop “their own standards for how to do metadata, which is a problem because if you’re using different software, there’s no interoperability.”

The idea behind metadata, Phillips explains, is that a rights holder cam embed a copyright license into a file, “and then hopefully there’s some magic so when you upload the file to some platform like YouTube, [software] would automatically look at the file and say, Hey, you’re using this copyrighted material or this license.”

“In some cases, companies would use this as some sort of digital rights management strategy, with the idea that the system that could restrict based on the metadata inside of a file,” Phillips says. “But Creative Commons doesn’t support it, and I don’t support it.”

The problem with all of these technological solutions to digital rights management, Tapia says, is that “they’re really binary. They only have the ability to say this file contains copyrighted content and it will be blocked, or it doesn’t and it will go through.”

But the appearance of technological solutions such as filters, metadata, automatic takedowns, and watermarking may be inevitable at this point. “Filters are coming,” says Von Lohmann. “The question is what are they going to be used for?”

At a March conference sponsored by the Progress and Freedom Foundation, Bill Rosenblatt, founder of the digital-rights management consultancy GiantSteps Media Technology Strategies, noted that “filtering can be used to identify works and then decide what to do with them. . . . [One] option might be offering a free sample, offering a low resolution version and if you want the high (resolution) you have to pay, asking the user’s email address, or whatever.”

Copyright Literacy and Innovation
“I think it’s our challenge to find ways to let (creators) do what they want to do, as opposed to tell them what they can’t do,” says Von Lohmann. “God forbid it be up to the lawyers to be the arbitrators of our nation’s culture.”

Creative Commons and YouTube have recently launched the audio swap program, designed to empower legal usage of music in user-generated video content. The Audio Swap program allows the platform to test content to see if it contains copyrighted music, and then suggest alternatives.

“The idea is if there’s a content that gets flagged as illegal it could get replaced with some legal content,” says Phillips. “It’s not necessarily ideal, but it’s an interesting step in the right direction.”

Although no reliable business model yet exists for the licensing of copyrighted material by small, individual creators, some rights holders have begun setting up systems to make it easier for these small producers to use material legally by making deals with the platforms hosting this content. Several major entertainment companies, including CBS, Warner Music, Universal Music Group, and Sony BMG, have cut licensing deals with YouTube.

Last fall, CBS began providing short-form video content for a CBS “brand channel” on YouTube that includes news and sports clips along with short segments of top CBS programs, such as Survivor. YouTube and CBS then share revenue from advertising appearing on this channel.

Sony BMG Music Entertainment struck a deal to make certain Sony BMG video content available on YouTube. The deal also allows creators to use certain copyrighted songs from a music catalog. The company will share advertising revenue with YouTube for all uploaded content that incorporates music or video from Sony BMG’s library.

“The YouTube environment represents a fascinating new way to deepen the relationship between our artists and their fans,” stated Thomas Hesse, president of Sony BMG’s global digital business division, in a press release. Tapia thinks it’s smart that media companies are looking for ways to work with, instead of against, emerging trends in user-generated content.

“Shutting down Napster didn’t stop copyright infringement of music, people have just found more ingenious way to do it,” says Tapia. “People that are very much used to not having to pay for content are going to find a way to beat it. If you shut down YouTube, they’ll find other ways to trade content, on sites that don’t even have the regulations in place that YouTube does.”

Looking Forward
Recently, more than 30 lawyers, scholars, business people, and scholars joined a panel on user-generated content and copyright sponsored by the Center for Social Media and the Washington College of Law at American University. There are three ways to deal with filtering and fair use, said AU’s Peter Jasci: get all interested parties together to negotiate fair use principles, push for legislative solutions, or come up with a “best practices” guide representing a consensus position among media practitioners.

A legislative approach, says Rosenblatt during an interview, could involve making standards for fingerprinting technology a part of copyright registration. “A government agency such as the Copyright Office could select and adopt the standard technology … so that there are open interoperable standards and private sector companies could compete for network providers’ business on a level playing field, just like Internet domain registration. Cost reduction for content providers would come from economies of scale.”

But most attendees rejected legislative solutions, especially ones that would further automate take-down processes. “When it’s ‘My bot will speak to your bot,’ what happens to the end user?” one person asked.

Many participants focused on the issues of media literacy and copyright education, and the role that universities, elementary- and high-school teachers, and content platforms themselves can play in educating publics about their rights and limitations as creators. “Participatory video is a vigorous new phenomenon that is promising both for free speech and for new business opportunities,” wrote Aufderheide in a summary of the conference. “However, it is in its embryonic stages and needs to develop. Finding successful ways to manage unauthorized use is critical to keeping existing spaces for new opportunities for public expression and for business growth.”

Of course, some believe that these questions (and possible solutions) will change drastically if Viacom ends up winning its suit against Google and YouTube.

“I really think … this is probably going to be the most interesting legal battleground for media and entertainment companies for the foreseeable future,” says Tapia. “If we don’t get this right, we’re really going to suffer for a long, long time. There’s going to be a lot of speech that will be repressed, they’ll be a lot of money made by content companies and maybe at the cost of free speech.”

But Michael Madison, a law professor at the University of Pittsburgh School of Law, disagrees. “I’m a section 512 liberal and a 512 optimist,” he said. “I think that 512 should be given a broad reading, and that it covers YouTube and comparable sites. However, if the Viacom case against YouTube goes to a ruling on the law, and if Viacom wins and YouTube loses, the sky does not fall.”

Regardless, Von Lohmann is quick to point out, the issue has implications far beyond the current batch of user-generated content platforms and Web 2.0 technologies. “It’s not whether YouTube survives, or MySpace survives,” he says, “but whether the next generation of YouTubes and MySpaces survives, and what they will look like.”

Elizabeth Nolan Brown is a graduate student and writer in Washington, D.C.

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