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February 27, 2008, Alert No. 1,724.
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9th Circuit Holds that Licensed Karaoke Producer Has No Claims for Competitive Injuries Stemming From Infringement by Unlicensed Karaoke Producers

2/27. The U.S. Court of Appeals (9thCir) issued its opinion [28 pages in PDF] in Sybersound Records v. UAV, a dispute between karaoke record producers. The Court of Appeals affirmed the judgment of the District Court, which dismissed Sybersound's complaint.

This case is not a dispute between copyright holders and karaoke related entities. Other opinions address the rights of copyright holders in this context. See for example, January 2, 2008, opinion [PDF] of the 9th Circuit in Leadsinger v. BMG Music Publishing, and story titled "9th Circuit Rules in Karaoke Copyright Case" in TLJ Daily E-Mail Alert No. 1,694, January 3, 2008. See also, June 26, 2007, opinion [12 pages in PDF] of the U.S. Court of Appeals (6thCir) in Zomba v. Panorama Records, which is also reported at 491 F.3d 574, and ABKCO Music, Inc. v. Stellar Records, Inc., 96 F.3d 60 (2d Cir. 1996).

Sybersound Records is a karaoke record producer that asserts that it complies with copyright law, and obtains all required licenses from copyright holders. It further alleges that some of its competitors do not, but nevertheless falsely advertise that their products are fully licensed. Thus, in the case of most music, Sybersound does not allege that its copyrights have been infringed. It therefore has no standing to bring an action for copyright infringement with respect to this music.

That is, a karaoke record producer with a legitimate business model is trying to shut down what it alleges are illegitimate karaoke record producers. (The District Court disposed of this case on a motion for failure to state a claim, so the District Court made no findings of fact.)

However, Sybersound also entered into an agreement with one music publisher (TVT) that provides that Sybersound is the "exclusive assignee and licensee of TVTs copyrighted interests for purposes of karaoke use, and also the exclusive assignee of the right to sue to enforce the assigned copyright interest." Sybersound asserts that its copyright interests under this agreement have been infringed.

Sybersound filed a complaint against various other karaoke producers alleging copyright infringement, violation of the Lanham Act, intentional interference with prospective economic relations, unfair competition under the California Business and Professions Code (CBPC), common law unfair competition, and unfair trade practices under the CBPC.

The District Court dismissed the complaint. Sybersound brought the present appeal.

The Court of Appeals affirmed. This is a long and detailed opinion that addresses numerous claims. The following is a summary of some of the highlights of the opinion.

The Court of Appeals wrote that "we determine whether a party lacking standing to bring a copyright infringement suit under the Copyright Act, but who complains of competitive injury stemming from acts of alleged infringement, may bring a Lanham Act claim, Racketeer Influenced and Corrupt Organizations Act (RICO) claim, or related state law unfair competition claims, whose successful prosecution would require the litigation of the underlying infringement claim. We hold that it cannot."

The Court of Appeals determined that the Lanham Act claim, under 15 U.S.C. 1125(a)(1), is similar to the Lanham Act claim in Dastar v. Twentieth Century Fox Film Corporation, 539 U.S. 23, which the Supreme Court rejected. See also, story titled "Supreme Court Reverses in Dastar v. Fox" in TLJ Daily E-Mail Alert No. 672, June 3, 2003.

The Court of Appeals wrote that "Construing the Lanham Act to cover misrepresentations about copyright licensing status as Sybersound urges would allow competitors engaged in the distribution of copyrightable materials to litigate the underlying copyright infringement when they have no standing to do so because they are nonexclusive licensees or third party strangers under copyright law, and we decline to do so."

It also wrote that "third party strangers and nonexclusive licensees cannot bring suit to enforce a copyright, even if an infringer is operating without a license to the detriment of a nonexclusive licensee who has paid full value for his license".

The Court of Appeals also held that the state law claims that necessarily depend on a showing of copyright infringement are preempted by 17 U.S.C. 301(a). This section provides, in part, that "all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright ... are governed exclusively by this title" and that "no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State".

With respect to the infringement claim, the Court of Appeals wrote that "We also consider whether the transfer of an interest in a divisible copyright interest from a copyright co-owner to Sybersound, unaccompanied by a like transfer from the other copyright co-owners, can be an assignment or exclusive license that gives the transferee a co-ownership interest in the copyright. We hold that it cannot."

Hence, the Court of Appeals affirmed the judgment of the District Court.

Other than the ruling regarding transfers of divisible interests from copyright co-owners, this opinion does not address the rights of copyright holders to enforce their copyright against infringing karaoke record makers.

This case is Sybersound Records, Inc. v. UAV Corporation, et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 06-55221, an appeal from the U.S. District Court for the Central District of California, D.C. No. CV-05-05861-JFW, Judge John Walter presiding. Judge Milan Smith wrote the opinion of the Court of Appeals, in which Judges Diarmuid O'Scannlain and Michael Mosman (DOre), sitting by designation, joined.

eBay Settles with MercExchange

2/28. eBay announced in a release that "it has agreed to a settlement with MercExchange, L.L.C. to dismiss all claims and appeals stemming from the patent lawsuit filed by MercExchange in September of 2001".

eBay added that it "will purchase all three patents involved in the lawsuit, as well as some additional related technology and inventions and a license to another search-related patent portfolio that was not asserted in the lawsuit". eBay did not disclose the purchase price or other financial terms.

This litigation culminated in the landmark Supreme Court opinion [12 pages in PDF] in eBay v. MercExchange, which held that the traditional four factor framework that guides a court's decision whether to grant an injunction applies in patent cases.

See also, story titled "Supreme Court Rules on Availability of Injunctive Relief in Patent Cases" in TLJ Daily E-Mail Alert No. 1,371, May 16, 2006. This opinion is also reported at 547 U.S. 206.

Bush Nominates Members of New Privacy and Civil Liberties Oversight Board

2/27. President Bush nominated Daniel Sutherland, Ronald Rotunda, and Francis Taylor to be members of the recently reconstituted Privacy and Civil Liberties Oversight Board (PCLOB). See, White House release and release.

Daniel Sutherland

Bush also nominated Sutherland (at left) to be Chairman. These terms are staggered. Bush nominated Sutherland for a term of six years expiring January 29, 2014. Bush nominated Rotunda for a term of four years expiring January 29, 2012. Bush nominated Taylor for a term of two years expiring January 29, 2010.

Sutherland currently works at the Department of Homeland Security (DHS) as Officer for Civil Rights & Civil Liberties. Rotunda is a long time law professor specializing in Constitutional law.

Francis TaylorTaylor (at right), who was also a member of the previous PCLOB, is Chief Security Officer for the General Electric Company.

The original PCLOB was created by Section 1061(b) of the Intelligence Reform and Terrorism Prevention Act of 2004. This statute made the PCLOB a part of the Executive Office of the President (EOP). Notably, HR 1 makes the PCLOB "an agency" within the meaning of 5 U.S.C. 551.

Section 801 of HR 1 [LOC | WW], which President Bush signed into law on August 3, 2007, and is now Public Law No. 110-53, revised the PCLOB.

HR 1 provides that the PCLOB "shall be composed of a full-time chairman and 4 additional members, who shall be appointed by the President, by and with the advice and consent of the Senate."

It further provides that current members "may continue to serve on the Board until 180 days after the date of enactment of this Act." That is, they ceased to serve at the end of January.

HR 1 provides that the purposes of the new PCLOB are to "analyze and review actions the executive branch takes to protect the Nation from terrorism, ensuring that the need for such actions is balanced with the need to protect privacy and civil liberties" and to "ensure that liberty concerns are appropriately considered in the development and implementation of laws, regulations, and policies related to efforts to protect the Nation against terrorism".

HR 1 provides that the board shall "have access from any department, agency, or element of the executive branch, or any Federal officer or employee of any such department, agency, or element, to all relevant records, reports, audits, reviews, documents, papers, recommendations, or other relevant material, including classified information consistent with applicable law".

HR 1 does not give the board subpoena power. However, it authorizes the board to request the Attorney General to issue subpoenas.

HR 1 makes the Chairman a full time position.

The members of the original PCLOB were Carol Dinkins, Alan Charles Raul, Ted Olson, Francis Taylor and Lanny Davis. Although, Davis resigned last year.

The original PCLOB issued its second annual report [36 pages in PDF] on January 30, 2008. It addresses at length amending the Foreign Intelligence Surveillance Act (FISA), including the Protect American Act (PAA).

It also addresses the material witnesses statute, watch list redress, the Federal Bureau of Investigation's (FBI) use of National Security Letters (NSLs), the Department of Defense's (DOD) Threat and Local Observation Notices Program, the DHS's National Applications Office, and the DHS's Automated Targeting System (ATS).

See also, first annual report [49 pages in PDF], and story titled "President's Civil Liberties Oversight Board Releases Annual Report" in TLJ Daily E-Mail Alert No. 1,572, May 1, 2007.

The outgoing members wrote in their final report that "The present Board questions whether this statute will lead to the intended enhanced status and authority for the Board and its mission, and notes that the initial result was to stall a number of ongoing initiatives and to remove the present Membership and its staff from office. This necessarily requires a new lengthy confirmation process for successors and duplicative efforts by the new membership to educate itself and integrate its operations into those of the Executive Branch."

Thus, there is now no membership or staff of the PCLOB, President Bush has only now announced several appointments, and the Senate confirmation process could delay their taking office this year, if at all. The PCLOB may not become a functioning body again until well into 2009.

Paper Advocates Performance Right for Recording Artists

2/27. The Progress & Freedom Foundation (PFF) released a paper [15 pages in PDF] titled "A Performance Right for Recording Artists: Sound Policy at Home and Abroad" that argues that "Denying a public-performance right in sound recordings is bad copyright policy and bad technology policy, and it undermines both the international and economic interests of the United States."

In the U.S. terrestrial radio broadcasters are currently exempt from paying royalties to recording artists (the rights of songwriters are different) for broadcasting their copyrighted works, and hence, vehemently oppose proposals to extend the performance right.

There are bills pending in the Congress that would end broadcasters' performance rights exemption. See, HR 4789 [LOC | WW]  and S 2500, [LOC | WW] both of which were introduced on December 18, 2007, and are titled "Performance Rights Act".

The exclusive rights of copyright holders are set out in 17 U.S.C. 106. Section 106(6) extends the performance right for sound recordings only to digital audio transmissions, thus exempting broadcasts by terrestrial radio broadcasters. Section 106(6) currently provides that "the owner of copyright under this title has the exclusive rights to do and to authorize ... in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission".

HR 4789 and S 2500 would amend this by deleting the word "digital". Thus, the rights of recording artists in all audio transmissions would be protected by copyright. Currently, the exclusive rights of recording artists extend to audio transmissions by internet streaming, satellite radio, and via social networking sites.

However, both HR 4789 and S 2500 would provide special treatment for small, noncommercial, educational, and religious radio stations.

The author of the paper is the PFF's Thomas Sydnor.

DC Circuit Vacates FCC Order Regarding Birds and Towers

2/19. The U.S. Court of Appeals (DCCir) issued its divided per curiam opinion [17 pages in PDF] in American Bird Conservancy v. FCC, a petition for review of a Federal Communications Commission (FCC) order denying in part and dismissing in part the petition of the American Bird Conservancy and Forest Conservation Council regarding birds and communications towers in the gulf coast region.

On April 11, 2006, the FCC released its Memorandum Opinion and Order [11 pages in PDF] in its proceeding titled "In the Matter of Petition by Forest Conservation Council, American Bird Conservancy and Friends of the Earth for National Environmental Policy Act Compliance". This item, numbered FCC 06-44, addressed whether the construction of communication towers in the Gulf Coast region violates various environmental statutes.

The opinion of the Court of Appeals (joined by Judges Rogers and Garland) vacates the order of the FCC.

Judge Kavanaugh wrote in his dissent that "Here, they challenge an FCC order that addressed the requirements of federal environmental laws for communications towers in the Gulf Coast region of the United States. I would dismiss their lawsuit as unripe because the FCC, in a separate rulemaking proceeding, is re-examining these environmental issues and considering the effects of communications towers on birds nationwide, including in the Gulf Coast region. The Commission has gathered considerable factual information and input from interested parties -- including from the petitioners in this case -- and the FCCs counsel represented to the Court that the Commission expects to act soon.

This case is American Bird Conservancy, et al. v. FCC, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 06-1165.

Washington Tech Calendar
New items are highlighted in red.
Friday, February 29

The House will not meet. It will next meet on Monday, March 3, 2008.

The Senate will meet at 10:00AM. It will resume consideration of the motion to proceed to HR 3221 [LOC | WW], which relates to real estate foreclosures.

10:00 AM. The Senate Homeland Security and Governmental Affairs Committee will hold a hearing titled "Government-wide Intelligence Community Management Reforms". The witnesses will be David Walker (Government Accountability Office), Marvin Ott (National Defense University), Frederick Kaiser (Congressional Research Service), Steven Aftergood (Federation of American Scientists), Ronald Marks (Oxford Analytica). See, notice. Location: Room 342, Dirksen Building.

10:00 AM. Deadline for foreign governments to submit comments to the Office of the U.S. Trade Representative (OUSTR) to assist it in making Special 301 identifications of countries that deny adequate and effective protection of intellectual property rights or deny fair and equitable market access to U.S. persons who rely on intellectual property protection. See, story titled "OUSTR Seeks Special 301 Comments on Countries that Deny Adequate IPR Protection" in TLJ Daily E-Mail Alert No. 1,703, January 22, 2008, and notice in the Federal Register, January 16, 2008, Vol. 73, No. 11, at Pages 2958-2959.

12:00 NOON - 2:00 PM. The iGrowthGlobal (IGG) will host a panel discussion titled "Network Management: The Latest Battle Over Net Neutrality". The speakers will be Scott Wallsten (IGG), David Burstein (DSLPrime), Jay Monahan (Vuze, Inc.), George Ou (ZDNet), Haruka Saito (Counselor for Telecom Policy, Embassy of Japan), and Christopher Yoo (University of Pennsylvania). Lunch will be served. Register by contacting Ashley Creel at 202-828-4405 or creela at igrowthglobal dot org. Location: Room 2322, Rayburn Building (House Commerce Committee's 3rd floor hearing room).

Deadline to submit to the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) expressions of interest to participate in the spectrum sharing innovation test-bed. See, notice in the Federal Register, February 5, 2008, Vol. 73, No. 24, at Pages 6710-6711.

Deadline to submit comments or objections to the Copyright Royalty Judges' proposed rules that set the rates and terms for the making of an ephemeral recording of a sound recording by a business establishment service for the period 2009-2013. See, notice in the Federal Register, January 30, 2008, Vol. 73, No. 20, at Pages 5466-5470.

Deadline to submit petitions to participate (and filing fees) in the Copyright Royalty Judges' proceeding to determine the Phase II distribution of 1998 and 1999 royalties collected under the cable statutory license. See, notice in the Federal Register, January 30, 2008, Vol. 73, No. 20, at Page 5596-5597.

Deadline to submit comments to the Copyright Royalty Judges in response to its request for comments regarding controversies at Phase I and Phase II for distribution of the 1999 through 2005 royalty funds collected under the satellite carrier statutory license. The deadline to submit comments is February 29, 2008. See, notice in the Federal Register, January 30, 2008, Vol. 73, No. 20, at Page 5597.

Deadline to submit comments to the Copyright Royalty Judges regarding a motion for partial distribution funds under the partial Phase I settlement in connection with the 2004 and 2005 cable royalty funds. Comments are due by February 29, 2008. See, notice in the Federal Register, January 30, 2008, Vol. 73, No. 20, at Pages 5597-5598.

Saturday, March 1

Deadline to submit Form 477, titled "Local Telephone Competition and Broadband Reporting", to the Federal Communications Commission (FCC). See, Form 477 [MS Excel] and FCC document [17 pages in PDF] titled "Instructions for Local Telephone Competition and Broadband Reporting Form (FCC Form 477)".

Monday, March 3

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Third Further Notice of Proposed Rulemaking regarding cable carriage of digital television broadcast signals. The FCC adopted this item on September 11, 2007, and released the text [68 pages in PDF] on November 30, 2007. This item is FCC 07-120 in CS Docket No. 98-120. See, notice in the Federal Register, February 1, 2008, Vol. 73, No. 22, at Pages 6099-6101, and story titled "FCC Adopts R&O and Further NPRM Regarding Cable Carriage of Digital Broadcast TV Signals" in TLJ Daily E-Mail Alert No. 1,640, September 17, 2007.

Tuesday, March 4

10:00 AM - 4:00 PM. The U.S. Patent and Trademark Office's (USPTO) National Medal of Technology and Innovation Nomination Evaluation Committee will hold a closed meeting to discuss persons and companies that have been nominated for awards. See, notice in the Federal Register, February 12, 2008, Vol. 73, No. 29, at Pages 8033-8034. Location: USPTO, 600 Dulany Street, Alexandria, VA.

1:00 - 4:00 PM. The Architectural and Transportation Barriers Compliance Board's (ATBCB) Telecommunications and Electronic and Information Technology Advisory Committee (TEITAC) will meet by conference call. See, notice in the Federal Register, January 24, 2008, Vol. 73, No. 16, at Page 4132.

2:00 - 4:00 PM. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will hold one of a series of meetings to discuss the U.S. positions for the March and April 2008 meeting of the ITU-T Study Group 3 and related issues of the international telecommunication regulations. See, notice in the Federal Register, February 4, 2008, Vol. 73, No. 23, at Page 6547. Location?

Day one of a three day conference hosted by the National Institute of Standards and Technology (NIST) and others titled "7th Symposium on Identity and Trust on the Internet" or "IDtrust 2008". See, notice. The basic price to attend is $110. Location: NIST, 100 Bureau Drive, Gaithersburg, MD.

Day one of a two day conference hosted by the George Washington University's (GWU) Graduate School of Public Management's (GSPM) Institute for Politics, Democracy & the Internet titled "Politics Online Conference 2008". See, conference web site. Location: Renaissance Hotel, 999 9th St., NW.

Wednesday, March 5

9:30 AM. The House Commerce Committee's (HCC) Subcommittee on Telecommunications and the Internet will hold a hearing titled "Competition in the Sports Programming Marketplace". The hearing will be webcast by the HCC. Location: Room 2123, Rayburn Building.

LOCATION CHANGE. 10:00 AM. The Senate Judiciary Committee (SJC) will hold a hearing titled "Oversight of the Federal Bureau of Investigation". The witness will be FBI Director Robert Mueller. See, notice. Location: Room 106, Dirksen Building.

10:00 AM. The House Judiciary Committee (HJC) will hold a hearing titled "Oversight Hearing on the Department of Homeland Security". See, notice. Location: Room 2141, Rayburn Building.

12:00 NOON. The Cato Institute will host a panel discussion titled "Freeing SpeechNow: Free Speech and Association vs. Campaign Finance Regulation". The speakers will be Steve Simpson (Institute for Justice), David Keating (SpeechNow.org), and Michael Malbin (Campaign Finance Institute). See, notice and registration page. Lunch will be served after the program. Location: Cato, 1000 Massachusetts Ave., NW.

Day two of a three day conference hosted by the National Institute of Standards and Technology (NIST) and others titled "7th Symposium on Identity and Trust on the Internet" or "IDtrust 2008". See, notice. The basic price to attend is $110. Location: NIST, 100 Bureau Drive, Gaithersburg, MD.

Day two of a two day conference hosted by the George Washington University's (GWU) Graduate School of Public Management's (GSPM) Institute for Politics, Democracy & the Internet titled "Politics Online Conference 2008". See, conference web site. Location: Renaissance Hotel, 999 9th St., NW.

Thursday, March 6

Day one of a three day conference hosted by the National Institute of Standards and Technology (NIST) and others titled "7th Symposium on Identity and Trust on the Internet" or "IDtrust 2008". See, notice. The basic price to attend is $110. Location: NIST, 100 Bureau Drive, Gaithersburg, MD.

2:00 - 6:00 PM. The Federal Communications Bar Association's (FCBA) Privacy and Data Security Committee will host an event titled "3rd Annual ABA/FCBA Privacy & Data Security for Communications and Media Companies". For more information contact Jenell Trigg at 202-416-1090 or strigg at lsl-law dot com. See, registration form [PDF]. Location: Hogan & Hartson, 555 13th St., NW.

Friday, March 7

Deadline for states to submit applications to the Department of Homeland Security (DHS) for grants related to the implementation of the identification systems mandates of the REAL ID Act. See, DHS release and story titled "DHS Announces Minimal REAL ID Act Grants" in TLJ Daily E-Mail Alert No. 1,708, January 31, 2007.

Deadline to submit comments to the President's National Security Telecommunications Advisory Committee (NSTAC) regarding matters discussed at its February 28, 2008, meeting by teleconference (the NSTAC's Global Positioning Systems report, the results of the NSTAC's investigation of the global network infrastructure environment, and the NSTAC's Network Security Scoping Group). See, notice in the Federal Register, February 4, 2008, Vol. 73, No. 23, at Pages 6521-6522.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) regarding pole attachments and 47 U.S.C. 224. The FCC adopted this NPRM on October 31, 2007, and released the text [40 pages in PDF] on November 20, 2007. This NPRM is FCC 07-187 in WC Docket No. 07-245. See, notice in the Federal Register, February 6, 2008, Vol. 73, No. 25, at Pages 6879-6888, and story titled "FCC Sets Comments Deadlines for Pole Attachments NPRM" in TLJ Daily E-Mail Alert No. 1,714, February 8, 2008.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) in its proceeding titled "In the Matter of Petition to Establish Procedural Requirements to Govern Proceedings for Forbearance Under Section 10 of the Communications Act of 1934, as Amended". The FCC adopted this NPRM on November 27, 2007, and released the text [25 pages in PDF] on November 30, 2007. This item is FCC 07-202 in WC Docket No. 07-267. See, notice in the Federal Register, February 6, 2008, Vol. 73, No. 25, at Pages 6888-6895, and story titled "FCC Sets Comments Deadlines for Forbearance NPRM" in TLJ Daily E-Mail Alert No. 1,714, February 8, 2008.

People and Appointments

Sam Feder2/27. Sam Feder (at left) "is leaving the Commission", stated Federal Communications Commission (FCC) Chairman Kevin Martin in a statement [PDF] released on February 27, 2008. Feder was, until January, General Counsel of the FCC. His replacement is Matthew Berry. Previously, Feder was Martin's legal advisor for spectrum and international issues. Before that, he was Martin's legal advisor for wireline matters. And before that, he was a legal advisor to former FCC Commissioner Harold Furchgott-Roth. Before joining the FCC, Feder worked for the Washington DC law firms of Harris Wiltshire & Grannis and Kellogg Huber.

Meredith Baker2/28. Meredith Baker (at right), acting head of the National Telecommunications and Information Administration (NTIA), will leave the NTIA. Rep. John Dingell (D-MI), Chairman of the House Commerce Committee, stated in a release that "I'm pleased Ms. Baker is committed to remaining at NTIA until a replacement is confirmed and urge the President to nominate a well-qualified replacement who is knowledgeable" about the DTV transition.

2/26. President Bush announced his intent to nominate Paul Schneider to be Deputy Secretary of Homeland Security. He is currently acting Deputy Secretary and Under Secretary for Management at the Department of Homeland Security (DHS). See, White House release.

More News

2/22. The Government Accountability Office (GAO) released a report [34 pages in PDF] titled "Information Security: Protecting Personally Identifiable Information". It reviews laws related to protecting personally identifiable information (PII) held by government agencies, the history of data breaches at government agencies, and efforts by agencies to protect PII.

2/20. The European Commission (EC) released a request for public comments [PDF] regarding private copying levy systems. These are government taxes on blank media, sometimes instituted as a weak substitute for a property rights in music. The EC asks, for example, "How should private copying levy schemes evolve to take into account convergence in consumer electronics?" and "If rightholders decide that their works can be disseminated for free, how should this be taken into account when collecting private copying levies?" Comments are due by April 18, 2008. See also, EC release.

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