OPEN

So, the minions of the Web rose in fury to stymie passage by the United States congress of SOPA, the Stop Online Piracy Act, thus ensuring freedom of Internet Service Providers from curtailment of their First Amendment rights. Beneath the blare of the victors’ trumpets, however, the pained cries of piracy victims were completely drowned out.  Does no one speak for them?

A recent editorial in the Sunday New York Times, “Beyond SOPA”, reminds us that some legislators speak for those whose right to earn an honest living has been pillaged by unscrupulous criminal syndicates, some of which are supported by foreign governments. “Piracy by Web sites in countries like Russia and China, which offer high-quality bootleg copies of movies and music, is a real problem for the nation’s creative industries,” said the editorial, pointing to “legislation that could curb the operation of rogue Web sites without threatening legitimate expression.”

The bill the editorial referred to also sports a four-letter acronym, but one that we hope will not be as dirty a word as SOPA.  This one is called OPEN: the Online Protection and Enforcement of Digital Trade Act. Here’s how it is designed to work: “Content owners could ask the International Trade Commission to investigate whether a foreign Web site was dedicated to piracy. The Web site would be able to rebut the claim. If the commission ruled for the copyright holder, it could direct payment firms like Visa and PayPal and advertising networks like Google’s to stop doing business with the Web site.”

The Times thinks that OPEN offers solutions that do not have the same pitfalls as those of SOPA, and we share the editorial’s support. We just wonder, though, why all the attention is focused on foreign pirates when a domestic piracy industry continues to thrive. And why just movies and music? What are we authors – chopped liver?

Richard Curtis

For a complete archive of E-Reads postings on piracy, visit Pirate Central.

FileSonic, a filesharing website has voluntarily disabled itself, obviously scared out of the game by the Justice Department’s shutdown of MegaUpload and the arrest of its principals.  “FileSonic has disabled all file sharing functionality on its website, restricting access so that users may only download their own files,” reports Ars Technica.

Ryan Paul, reporting on the self-inflicted takedown, expressed puzzlement that Filesonic “already has strong procedures in place to combat piracy” such as digital fingerprinting to detect attempts to upload unauthorized files, and observes the takedown procedures prescribed by the Digital Millennium Copyright Act.

Paul should not be nonplussed that a so-called law-abiding website is taking itself down.  The DMCA’s procedures, watered down by powerful web carrier lobbies, has become a travesty, making it so hard for piracy victims to get satisfaction that many give up in frustration. (See Takedown Notices: Antipiracy Weapon or Exercise in Futility?)

Another leading file locker provider, RapidShare, does not seem prepared to follow FileSonic over the cliff.  “Legitimate hosting providers have nothing to fear,” they told Ars Technica, “as long as they comply with requests from rights holders and don’t turn a blind eye to piracy conducted with their service.”

Read details in FileSonic has disabled file sharing in wake of Megaupload takedown

Richard Curtis

The news of SOPA’s likely defeat by Internet activists contrasts bizarrely with the arrest of one of the Web’s most flagrant and flamboyant copyright violators.  Even as the massed forces of Google, Facebook, Twitter, Wikipedia and other popular Web interests laid siege to proposed government restrictions of their freedom, the US Justice Department and the FBI terminated the freedom of the notorious Kim Dotcom, founder of Megaupload, an Internet locker service that facilitates anonymous transfer of movie, music, text and other files.

The indictment against Dotcom and six cohorts, issued by a grand jury, states that they criminally conspired to infringe copyrights to the tune of $500 million. They face 20 years in prison. Dotcom’s website has been shuttered. If you click on megaupload.com you’ll get the above banner.

It will be interesting to see whether the Internet community, so passionate in its defense of freedom – including the freedom to link to alleged infringers (see Game Over: Google Insists on Linking to Pirate Sites) – will rally to the defense of the Megaupload gang. Will Dotcom and Co. be considered brethren to the innocent and ignorant folks who unknowingly download copyrighted music and movies? Or will the immense scale of megaupload’s allegedly illegal traffic cause the Googles, Facebooks and Twitters to distance themselves from the defendants?  It will be instructive to see how it all plays out.

It will also be instructive to see whether the Justice Department’s indictment against the Megauploaders will stick. The case of Pirate Bay, formerly the world’s largest BitTorrent file-sharing tracker, might shed some light on these speculations. In 2009 four men involved in Pirate Bay’s website were arrested, tried, sentenced to a year in jail and ordered to pay about $4.5 million in damages. After their release, the website (apparently under new management) was relaunched from a venue in the Ukraine, then moved again to Netherlands where it is now headquartered in Cyberbunker, a military nuclear warfare bunker built by NATO to withstand a nuclear war and now used as a webhosting data center according to TorrentFreak.

But there’s more: in 2009 Sweden’s Pirate Party seized on the high profile Pirate Bay suit to rally supporters to a victory in the European Union’s parliamentary elections, winning a seat.  (See Swedish Pirate Booty: a Seat in Europe’s Parliament).

Ever since Robin Hood and his merry band roamed Sherwood Forest, the noble, romantic bandido has been a staple of our imagination. So, the reward of a short sentence, a modest fine, and a seat in government for Kim Dotcom will come as no surprise.

For a detailed account of the arrest of Mr. Dotcom and his companions, read Founder of Shuttered Web Site Sought Limelight by Kevin J. O’Brien in the New York Times.

Richard Curtis

Piracy is an extremely controversial and complicated subject. For a complete archive of E-Reads postings pro and con, visit Pirate Central.

Saint Petersburg, Home of Ali Baba, Floppy and the Rest of the Koobface Gang

St. Petersburg, Russia, is one of the world’s most exquisite cities, a spectacular treasure trove of palaces, parks, monuments and churches and, above all, the incomparable Hermitage museum.  If you’re visiting and have a bit of time drop by to say hello to the Koobface Gang, the quintet of computer criminals who live like pashas in plain sight, making St. Petersburg their haven under the gracious indifference of the nation that hosts them.

Riva Richmond, writing in the New York Times, reports that “Five men believed to be responsible for spreading a notorious computer worm on Facebook and other social networks — and pocketing several million dollars from online schemes — are hiding in plain sight in St. Petersburg, Russia, according to investigators at Facebook and several independent computer security researchers. The men live comfortable lives in St. Petersburg — and have frolicked on luxury vacations in places like Monte Carlo, Bali and, earlier this month, Turkey, according to photographs posted on social network sites — even though their identities have been known for years to Facebook, computer security investigators and law enforcement officials.” They post pictures of themselves on the Foursquare network and tweet to the world about it, simultaneously thumbing their noses and rubbing their knuckles in our eyes.

For years the conspirators have seduced suckers into clicking on tempting videos, initiating a malware transfer that eventuates in the purchase of phony antivirus software. It is estimated that their poison packages occupy as many as 800,000 computers and their racket pockets at least $2 million a year.

Yet, despite the fact that their names are publicly known, “None of the men have been charged with a crime and no law enforcement agencies have confirmed they are under investigation,” says Richmond, who lists them by their real names and their cutesy nicknames.

How do they get away with it, and can anything be done to put a halt to their predations?  Read Web Gang Operating in the Open

Richard Curtis

For a complete archive of articles about piracy, check out Pirate Central on the E-Reads website.

Hello again, Comic Book Artist.

Remember last summer I warned you? “Before you take the job with that comic book company,” I said, “I want to make it absolutely clear that if you accept it you will NEVER, EVER own the rights to your work. Your employer will be free to create $100 million movies with ten sequels. Your precious creations will be works for hire and your only compensation will be the salary they pay you.”

My case in point was Jack Kirby, one of the co-creators of such immortal comic book characters as The Incredible Hulk, Spider-Man and X-Men. “These characters have generated tens of millions of dollars in revenue over the last five decades from everything from comic books to movies to toys and collectibles,” the New York Times reported. But because Kirby produced them as a writer for hire, he had no copyright claim on them After he died his estate tried to recover the rights under a provision of the US copyright law entitling next of kin to terminate contracts signed by the deceased artist, But the claim was rejected by a court because – again – Kirby had given up his rights as an employee of Marvel on a for-hire basis.

In case that decision didn’t sink in, my Comic Book Writer friend (and your brother the novelist for hire), in December Gary Friedrich, claiming to be creator of another Marvel blockbuster, Ghost Writer, met the same fate beneath the gavel of a federal judge. It seems Friedrich didn’t read, or take seriously enough, the fine print on the Marvel paychecks he endorsed, according to an Associated Press story.

“US District Judge Katherine Forrest tossed out 4-year-old claims brought by Gary Friedrich, who said he created the motorcycle-driving Ghost Rider with the skeletal head that sometimes had fire blazing from it. A Ghost Rider of the 1950s and ’60s was a Western character who rode a horse. The judge said Friedrich gave up all ownership rights when he signed checks containing language relinquishing all rights to the predecessor companies of Marvel Entertainment LLC.” (See ‘Ghost Rider’ comics creator loses rights lawsuit)

So – has the lesson sunk in? As we said when we wrote up the Kirby case, Abandon All Hope, Ye Comic Book Artists.

Richard Curtis

In our recent report on HarperCollins lawsuit against e-book publisher Open Road Media (See Can Open Road Beat the Harper Lawsuit Rap?) we wrote: “Our own guess is that this case will never go the distance and will instead be settled.”

Shows how wrong one can be, and it proves once again that when great principles are involved, litigants will fight harder than they will over mere money.

Today Publishers Weekly reports that Open Road has decided to lawyer up. The e-book publisher recently launched by former Harper CEO Jane Friedman, accused by Harper of infringing on the latter’s rights, has retained the team of attorneys that represented the Authors Guild in its class action case against Google.  Open Road Chief Operating Officer Chris Davis said “It appears to us that HarperCollins is trying to intimidate authors, overturn established law and grab rights that were not in existence when the contracts were signed many years ago. We are confident that we will successfully defend authors’ rights and we look forward to filing our response in court.”

Considering that copyright authority Lloyd J. Jassin calls it “The Court Battle that Could Determine the Fate of the Book Industry,” authors and publishers may get their wish to see contradictions and ambiguities in book contracts, respecting digital rights, resolved once and for all.

But at what fearful price? The cost of litigating the issues to the max, including appeals that could rise as high as the Supreme Court, will be millions. Both parties have deep pockets. The whole world will be watching.

For Jassin’s superb analysis of the issues and potential legal strategies, read Who Controls eBook Rights?

Richard Curtis

Simon van Meygaarden, a friend and correspondent based in the Netherlands, holds some views about illegal downloading that diverge from our own (including the term “illegal downloading”). In particular he believes that financial losses due to such downloads are an infinitesimal fraction of the potential legitimate revenues.  He has actually demonstrated mathematically that for every $1000 of potential to be made by an authorized content provider, only $1.40 ends up in the pocket of an unauthorized user.

Read Simon’s calculations.  Then I’ll have a few of my own.

Richard Curtis

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Illegal Downloads – What are we talking about?

Let’s start with a term that is misused more than “piracy” and “crisis” together, the illustrious and infamous – turning on my hollow voice – “Illegal Downloads”.

A download is the transfer of data from a server or host computer to one’s own computer or device. Let’s define my number of downloads as “N”.

Now, not every download gets transmitted error-free, and if one bit goes wrong the download is unusable, so let’s define the Corruption Factor “CF” as an error-percentage. If 10% of my downloads is corrupt and unusable, CF = .1

My number of error-free download now is N * ( 1 – CF )

Some error-free downloads are password-protected, and they usually contain viruses or point to infected websites, so let’s define the Viral Factor “VF” also as an error-percentage. If 10% of the downloads is password protected, VF = .1

My number of safe downloads now is N * ( 1 – CF ) * ( 1 – VF )

Some of my safe downloads are never played (or watched or read), so here we have the Play Factor “PF”.

My number of played downloads is N * ( 1 – CF ) * ( 1 – VF ) * PF

Now I have played the download and I am finally aware of the product itself. Clearly, some products are copyright free or public domain. So here is the Infringement Factor “IF”, the percentage which is actually illegal, by American law.

My number of illegal downloads is N * ( 1 – CF ) * ( 1 – VF ) * PF * IF

Some of my illegal downloads are crap, and I would never have bought them anyway. The rest are good, I might have actually bought them, and that’s the Buy Factor “BF”.

The number of product I might have actually bought is N * ( 1 – CF ) * ( 1 – VF ) * PF * IF * BF

So let’s put some numbers to this formula, from my own experience.

50% of my downloads are corrupt, so CF = .5
25% is password-protected, VF = .25

The Play Factor is more difficult, as it varies with the type of product. I have downloaded about 2.000 movies, and I have actually tried to watch about half of them, so PF_movie = .5. Being a D.J., I have downloaded perhaps 20,000 albums, but honestly, I have only tried to listen to about 5% of those, so PF_album = .05. I also like books, my entire house is filled with them, I can’t actually store anymore, but, I shamefully admit I have about 250.000 ebooks, and I only tried to read a fraction of them. Let’s say one in a thousand, so PF-ebook = .001.

For the sake of simplicity, let’s say 75% is illegal (IF = .75), and 50% is crap (BF = .5).

Now imagine a publisher, who sells a million ebooks a year, and fears that for every ebook he sells, ten others are downloaded, so N = 10 million. His loss in revenue, in terms of numbers of books, would be:

10,000,000 * ( 1 – .5 ) * ( 1 – .25 ) * .001 * .75 * .5 ==
10,000,000 * .5 * .75 * .001 * .75 * .5 ==
1,406.25 ebooks == about 0.14% of his turnover

Here’s a question: how much money would it cost (advertisement, improving product quality, reducing production costs) to raise one’s turnover with 0.2%?

I admit, my actual numbers are personal, and they are most certainly wrong as a reliable average. But my analysis, I think, is right. Morally, and emotionally, I completely understand and support the fight against piracy, however, rationally, and economically, it is a whole different ball game, and it all boils down to how much money (energy, time and resources) one is currently spending on fighting piracy, and how much it would take to estimate the right numbers and raise one’s turnover accordingly.

Simon van Meygaarden

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Richard here again.

Let’s concede the correctness of every one of Simon’s calculations and grant his conclusion: that illegal downloading is siphoning off a mere $1.40 out of every $1000. My question for him is simple: Suppose you keep $1000 on your night table and a dozen burglars enter your home, but they remove only $1.40 of it, will you feel as benignly about your loss as you do about mine?

Richard Curtis

For a complete archive of articles about piracy, visit Pirate Central.

Copyright authority Lloyd J. Jassin calls it “The Court Battle that Could Determine the Fate of the Book Industry”, and that’s no exaggeration. The principles are of the very highest order, and every author, publisher and agent has a major stake in the outcome.

We are referring to HarperCollins’s infringement lawsuit against Open Road Media about which we reported the other day. Open Road, the independent e-book publisher started by former Harper CEO Jane Friedman, issued an e-book edition of Julie of the Wolves, a children’s book classic that is still in print with HarperCollins.

In his masterful analysis, posted on his “Copylaw” blog, Jassin cites a number of key arguments in Harper’s brief. Principal among them:

1. Does the “exclusive right to publish in book form” – the phrase in Harper’s original contract – cover digital formats undreamed of when that contract was originally framed?

2. Similarly, does contractual language like “computer storage and retrieval,” “future technologies” and “now known or hereinafter” apply to a medium three decades over the horizon?

3.Does Open Road’s e-book violate the noncompetition language of HarperCollins’s contract?

Significantly, Jassin doesn’t see a knockout punch for either contender. The publishing establishment could either score “an unfair competition protection windfall, or meet their digital Waterloo.”

One huge factor he doesn’t mention is the expense of staging this legal battle. If litigated to the max, including appeals that could take the issue to the highest court in the land, the costs could run into the millions of dollars. In an earlier lawsuit brought by Random House against another indie e-book publisher, RosettaBooks, the parties settled after Rosetta won early rounds in the court system and the price tag for both parties started to get prohibitive. If Open Road decides to fight it out, it will look at the arguments presented by Rosetta. But it will also look at the expense.

One other interesting note is that Harper has elected not to sue the author.  As she signed the Harper contract she is the logical party to go after for the infringement.  But suing authors is bad public relations. What about Open Road? They too have a contract with the author, one that relies on the author’s warranties.  Open Road has the option to claim that the author breached those warranties and licensed rights she didn’t clearly own.  But that doesn’t look so hot either. So, looking to the author for satisfaction is simply not an option for either Harper or Open Road.

Our own guess is that this case will never go the distance and will instead be settled.  Though that’s the prudent thing to do, it will just leave the issues hanging for another day.  Too bad. We’d all like to know where we stand. Thousands of contracts containing language as ambiguous as the old Julie contract hang in the balance.

Read Lloyd J. Jassin’s The Court Battle that Could Determine the Fate of the Book Industry:A Review & Analysis

Richard Curtis

Towards the end of the twentieth century just about every book contract contained language granting the publisher computer storage and retrieval rights. Though the first people to employ the term probably did not envision e-books, the advent of digital technology sent publishing lawyers scurrying to their contracts to make sure they contained some variant of that term. For, in their opinion, the ownership of e-book rights stood firmly upon it. And when at the turn of the 21st century authors examined those same contracts, the existence of “Computer Storage and Retrieval” loomed like a snarling guard dog warning them to step no further across the owner’s line.

Though there have been some probes by authors, agents and startup e-book publishers of this and similarly ambiguous phrases in book contracts, none has ever been fully litigated. That may now change if a just-announced lawsuit is carried out to the max.

Over the Christmas holiday Publishers Lunch‘s Michael Cader broke the news that HarperCollins has sued Open Road, the independent e-book publisher founded by Jane Friedman (former CEO of HarperCollins incidentally), for infringing on Harper’s digital rights to a classic work of children’s literature, Julie of the Wolves by Jean Craighead George. The author was not named in the suit, however.

Key to Harper’s position is the phrase in its contract with the author that “makes clear that the scope of HarperCollins’ publishing rights extends to exploitation of the work ‘through computer, computer-stored, mechanical or other electronic means now known or hereafter invented’ — language that serves only to reinforce HarperCollins’ exclusive rights to publish the Work as an e-book.”

There have been some previous territorial quarrels over e-book rights based on vague contractual terminology such as the phrase “in book form” in some Random House contracts issued long before Kindle was a gleam in Jeff Bezos’s eye. If there was no such thing as an e-book when the original volume was acquired, can a publisher claim that e-book was meant by “in book form?”

The following piece was posted on our blog when Random House, feeling threatened by newly created independent e-book publishers, decided to assert its rights in no uncertain terms.  Anyone interested in the Harper-Open Road dispute will benefit from this backgrounder.

Richard Curtis

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Random Serves Notice on Would-Be E-Interlopers
Like a wolf marking its territory against rivals, Random House served unequivocal notice today on what it perceives as potential e-poachers seeking a loophole in Random’s definition of “book”.

The warning was embedded in a letter from Random CEO Markus Dohle mailed or emailed to literary agents describing the company’s plans and initiatives in the digital world. Authors were also put on notice that they are “precluded from granting publishing rights to third parties that would compromise the rights for which Random House has bargained.”

“The vast majority of our backlist contracts,” writes Dohle, “grant us the exclusive right to publish books in electronic formats. At the same time, we are aware there have been some misunderstandings concerning ebook rights in older backlist titles. Our older older agreements often give the exclusive rights to publish ‘in book form’ or ‘in any and all editions’. Many of those contracts also include enhanced language that references other forms of copying or displaying the text that might be developed in the future or other more relevant language that more specifically reflects the already expansive scope of rights. Such grants are usually not limited to any specific format, and indeed the “form” of a book has evolved over the years to include variations of hardcover, paperback and other written word formats, all of which have understood to be included in the grant of book publishing rights. Indeed, ebook retailers market, sell and merchandise ebooks as an alternate book format, alongside the hardcover, trade paperback and mass market versions of a given title. Whether physical or digital, the product is used and experienced in the same manner, serves the same function, and satisfies the same fundamental urge to discovery stories, ideas and information through the process of reading. Accordingly, Random House considers contracts that grant the exclusive right to publish ‘in book form’ or ‘in any and all editions’ to include the exclusive right to publish in electronic book publishing formats. Our agreements also contain broad non-competition provisions, so that the author is precluded from granting publishing rights to third parties that would compromise the rights for which Random House has bargained.”

If Random’s position sounded familiar to some, it’s the same one that the company used in 2001 when it sued Rosetta, an e-book startup that offered digital editions of books by Kurt Vonnegut Jr., William Styron and Robert B. Parker, having secured them directly from the authors. Random had published the books before there was such a thing as the Internet, but nevertheless considered a book to be a book no matter what form it took. Random’s request for an injunction was denied by the court, and Random then filed an appeal. It too was denied.

Random and Rosetta eventually settled, allowing Rosetta to continue publishing the books but leaving unresolved the issue of who controls e-rights to books where the language defining them is ambiguous.

By issuing its letter to agents today, Random House reasserted its position that, ambiguous or not, the publisher considers the language in its contracts to grant it ironclad control over e-rights. Anyone who believes otherwise is advised to take a good sniff before venturing over the perimeter of Random’s territory.

Richard Curtis

Where is Errol Flynn when we need him?

We long for a hero of his stature to deal with the pirates of the Spanish Main.  According to an author so abused by them that she has quit writing altogether, “We [Spain] come after China and Russia in the total number of illegal downloads but, obviously, there are a lot more of them so we win on a per capita measure.”

“Given that I have today discovered that more illegal copies of my book have been downloaded than I have sold,” declared Lucía Etxebarria in The Guardian, “I am announcing officially that I will not publish another book for a long time.”

She accuses her country’s politicians of being afraid to act.  In that regard her nation is far from isolated.  Few politicians in any country know or care about piracy, some benefit from it, and some are fully proactive in state-sponsored copyright theft.

Details in Spanish novelist Lucía Etxebarria quits writing in piracy protest

Richard Curtis

For a complete archive of E-Reads postings about piracy, visit Pirate Central.