Digital Millennium Copyright Act
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US Copyright Office Expands Rights to Repair Software-Enabled Devices

The US Copyright Office issued new regulations expanding and strengthening consumers’ rights to repair software-enabled digital devices (such as video game consoles and medical devices) via exemptions to the Digital Millennium Copyright Act.

Under 17 U.S.C. § 1201, it is generally unlawful to “circumvent a technological measure that effectively controls access to” copyrighted works. In response to proposals from several organizations, including the Electronic Frontier Foundation and the iFixit and Repair Association, the Registrar of Copyright (as it has done every three years since 2000) made rulemaking recommendations to the Librarian of Congress; recommendations that have now been adopted as final rules. The new rules create exemptions to make it easier to repair software-enabled devices. In the prior rulemaking sessions, the Register of Copyrights recommended—and the Librarian of Congress adopted—17 groups of exceptions. This session, the Register recommended 14 additional classes of exemptions, all of which have been adopted.

Among the 14 classes of exemptions that were recommended and adopted are the following:

  • Computer programs that operate the following types of devices, to allow diagnosis, maintenance and repair:
    • Motorized land vehicles or marine vessels
    • Devices primarily designed for use by consumers
    • Medical devices and systems.

This proposed class initially included “modification” in addition to diagnosis, maintenance and repair, but the exemption for modifications was ultimately eliminated. The Register reasoned that including all “modification[s]” would encompass both infringing and noninfringing activities and would implicate the right to prepare derivative works, as well as other issues.

This proposed class, “Computer Programs – Repair,” was initially divided into four general categories: “(1) all software-enabled devices; (2) vehicles and marine vessels; (3) video game consoles; and (4) medical devices and systems.” Not all of the categories made it through, as the Register removed all software-enabled devices from the recommendations. The recommendations stated that this category would have made the class too broad and would have raised the complex question of which types of devices would qualify for permitted repair.

After consideration of all the issues, the Register determined the following three classes had sufficient commonalities to recommend them: Computer programs in devices primarily designed for use by consumers (such as the repairing of optical drives in video games), computer programs in marine vessels and computer programs and data in medical devices and systems. The adopted exemptions expanding the current exemptions for vehicle and device repair and added an exemption for medical devices and systems repair.

The Rules also expand exemptions for consumer-related devices only. In recommending exemptions for device repair, the Register found significant commonalities among uses and users in terms of the diversity of software-enabled devices designed for use by consumers. The Register determined that the narrowed uses of “diagnosis, maintenance, and repair” were supported by the fair use factors, and that the exemption was “not accomplished for the purpose of gaining access to other copyrighted works.” The recommendations also contained a special subset for video games, which narrows the exemption solely to the repair of optical drives. [...]

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Not Your Grandfather’s Internet Royalties? DMCA Favorable Rates Might Apply to Internet Offerings

Reversing the Copyright Royalty Board’s determination that a favorable grandfathered royalty rate did not apply to internet streaming audio transmissions, the US Court of Appeals for the District of Columbia Circuit concluded that internet transmissions are not categorically excluded from the definition of “service” in the Digital Millennium Copyright Act of 1998 (DMCA). Music Choice v. Copyright Royalty Bd., Case No. 19-1011 (DC Cir. Aug. 18, 2020) (Rao, J.).

In the late 1990s, Music Choice, a company best known for its cable television genre-specific music channels, also offered some digital audio transmissions over the internet. These audio transmissions—and their alleged continuation through today—are the subject of this case.

Seeking to establish a new regime governing royalties for digital music services, Congress required in the DMCA that service providers pay copyright holders a market-based rate for playing digital music, but set a generally lower “reasonable rate” for certain preexisting subscription services. A preexisting subscription service—i.e., a service offering digital audio subscriptions for a fee before July 31, 1998—was entitled to the lower rate for its subscription transmissions “made in the same transmission medium used by such service on July 31, 1998.” The question here was whether those transmissions could be made over the internet.

In 2016, the Royalty Board held proceedings to set the preexisting royalty rates for 2018 to 2022, during which it referred the legal question of whether Music Choice’s internet transmissions qualified for the grandfathered rates to the Copyright Register. The Register concluded that, based on the DMCA’s legislative history, the grandfathered rates were intended to apply only to cable and satellite offerings. Accordingly, when the Royalty Board set rates for Music Choice’s offerings, it excluded its internet transmissions from the more favorable grandfathered rate.

Music Choice appealed, and the DC Circuit reversed the Royalty Board. The Court found nothing in the DMCA that required that the definition of “service” categorically exclude internet transmissions. As long as the entity existed as of July 31, 1998 (as Music Choice undisputedly did), internet transmissions could be eligible for the grandfathered rate so long as such transmissions were in the medium in existence on that date. The Court found that nothing in the clear and broad statutory definition of “transmission medium” excluded internet transmissions. The Court also concluded that the structure of the DMCA supported such a conclusion, because in other places it distinguished between particular types of transmissions, whereas in the grandfathered copyright rate at issue, the statute used language capturing all types of transmissions available before the key date.

Having concluded that the Royalty Board wrongly excluded internet transmissions per se, the DC Circuit remanded to the Board to consider “the extent to which Music Choice’s current internet offerings can be fairly characterized as included in the service offering Music Choice provided on July 31, 1998.”

Practice Note: It remains to be seen how narrowly the Royalty Board will define the service offered by Music Choice as of July 31, 1998. Regardless of what the Board finds, this case [...]

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Fifth Circuit Drills Down to Details in Drilling Database Disagreement

In a wide ranging opinion, the US Court of Appeals for the Fifth Circuit held that copying unimportant database schema from a proprietary database did not constitute infringement. The Court also held that where the technological measure that the defendant allegedly circumvented did not effectively control access to the work, there was no Digital Millennium Copyright Act (DMCA) violation. Moreover, the Court found error in not treating the defendant as the sole prevailing party on the copyright and DMCA claims for purposes of attorneys’ fees, notwithstanding plaintiff’s success on other claims. Digital Drilling Data Systems, LLC v. Petrolink Services, Inc., Case No. 19-20116 (5th Cir. July 2, 2020) (Duncan, J.).

Digital Drilling Data Systems (Digidrill) provides software used in oil drilling operations. Digidrill’s software collects data from underground sensors in order to help above-ground operators steer the drill. Digidrill’s systems compile the data into a database that is accessible through a variety of programs, including Digidrill’s DataLogger software. DataLogger includes a security feature that allows access only if a certain USB key is inserted in the computer running the software.

One of Digidrill’s competitors was Petrolink Services. Concerned about losing a large customer to Digidrill, Petrolink obtained a laptop running DataLogger along with the USB key. It soon realized that the database storing the data used by DataLogger was accessible without the USB key. Because Digidrill had not changed certain default settings, all that was required to gain access was a commonly known default administrator username and password. Petrolink then designed a program to copy data from the Digidrill database, including relevant portions of the database schema.

Digidrill sued Petrolink for copyright infringement, DMCA violation and unjust enrichment. The district court entered summary judgment against Digidrill on its copyright infringement and DMCA claims. The district court allowed the unjust enrichment claim to go to trial, where the jury awarded damages to Digidrill. Petrolink then sought fees and costs as a prevailing party under the Copyright Act and DMCA, which the district court denied because both parties had prevailed on some claims. Both parties appealed.

The Fifth Circuit affirmed the summary judgment against Digidrill on its copyright and DMCA claims. As for the copyright claim, the Court cited its own precedent and noted that “[T]o prove copyright infringement, a plaintiff must establish (1) ownership of a valid copyright; (2) factual copying; and (3) substantial similarity.” The only element at issue here was the third prong, substantial similarity.

Digidrill contended that even though Petrolink copied only 5% of DataLogger’s copyrighted schema, a reasonable trier of fact might nevertheless have found substantial similarity due to the “qualitative importance” of that small copied portion. The Fifth Circuit rejected Digidrill’s qualitative importance argument, concluding that there was no record evidence establishing the importance of the copied schema to the DataLogger program as a whole. Thus, “[W]hile the question of substantial similarity typically should be left to the factfinder, summary judgment may be appropriate if the court can conclude . . . that no reasonable juror [...]

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