Two items in this week’s copyright news show how the remedies in copyright law are wildly out of whack: Anthropic’s unprecedented settlement payment, and Rick Beato’s impossible uphill fight against Universal Music Group.
We’ve commented at length on the Anthropic settlement in a statement and blog post, but it bears re-re-repeating that the most important factor in this saga is the statutory damages regime in U.S. copyright law, which has been widely criticized by scholars and practitioners for years.
Rightsholders who qualify can seek statutory damage awards of up to $150,000 per work infringed, regardless of the actual harm they suffered as a result of the alleged infringement. Not surprisingly, they seek the maximum almost every time, putting extreme pressure on defendants to settle, regardless of the merits. In this case, since the court ruled that AI training on lawfully acquired copies was fair use, the actual harm to rightsholders from Anthropic’s use of unauthorized copies was, at most, the expected profits from a lost sale of a single copy of each book. And yet, because of statutory damages, Anthropic faced liability stretching into the trillions of dollars, stakes so high that one very knowledgeable observer characterized the case as “potentially business-ending.” In light of those stakes, Anthropic settled for $1.5 billion, which plaintiffs say is the highest settlement award in the history of copyright law. As exorbitant as it is, that’s an award that Anthropic can afford; not many AI startups or researchers could say the same. Until Congress fixes copyright’s damages regime, it will continue to discourage lawful uses and encourage abusive, trolling behavior by rightsholders and their attorneys.
On the other side of the coin, a few weeks ago I wrote about Beato’s struggles with UMG, who have issued so many aggressive copyright claims against his YouTube channel that he’s hired a lawyer on retainer to respond to every claim. (You shouldn’t need a lawyer to practice fair use online, and we’ve got a handy infographic below to help creators better understand their rights.) Beato and his music creator friends are up in arms, and rightly so: if creators like Rick have a legal right of fair use, why is it that UMG can fire off unlimited numbers of half-baked claims wasting their time and threatening their livelihoods, with no consequence?
The fact is, copyright law has generous remedies to protect copyright holders, but virtually nothing to protect fair users. As scholar Jason Mazzone has shown, the law provides no punishment, and plenty of encouragement, to rightsholders and others who engage in “copyfraud” at the expense of the public domain and fair use. The DMCA includes a rare provision, Section 512(f), that purports to punish bogus takedown notices, but the “misrepresentation” in the notice must be done “knowingly.” Courts have said this means fair users can’t sue copyright holders for sending bogus takedowns that infringe their fair use rights unless they can prove that the copyright holder subjectively knew their own claim was bogus when they sent it. If a rightsholder says, “I considered fair use, and decided this isn’t fair use,” they win. This is like the rightsholder version of “no copyright infringement intended!”—except it works. As Eric Goldman explained in a recent blog post, “it is almost impossible for any 512(f) plaintiff to overcome [this barrier].” So copyfraud is only punishable when you can prove the perpetrator subjectively believed they were violating your rights. Meanwhile, copyright infringement is a “strict liability” offense, meaning you can infringe copyright even if you have nothing but good intentions and no idea you’re doing anything wrong.
A level playing field would mean rolling back the exorbitant remedies available to copyright holders and giving fair users a chance to get reasonable remedies when rightsholders overreach. It could start with striking “knowingly” from Section 512(f).