Rep. Smith Introduces Orphan Works Act of 2006

May 22, 2006. Rep. Lamar Smith (R-TX) introduced HR 5439 [PDF], the "Orphan Works Act of 2006". This bill is based upon the Copyright Office's report [133 pages in PDF] titled "Report on Orphan Works".

The bill was referred to the House Judiciary Committee (HJC). It is on agenda for the HJC's Subcommittee on Courts, the Internet and Intellectual Property (CIIP) mark up session scheduled for 4:00 PM on Wednesday, May 24. Rep. Smith is the Chairman of the CIIP Subcommittee.

Rep. Lamar SmithRep. Smith (at right) stated in a release that "The orphan works issue arises when someone who wants to use a copyrighted work cannot find the owner, no matter how diligently they search ... The owner may have moved several times, died, or in the case of businesses, changed their name or gone bankrupt. For example, a local civic association may want to include old photographs from the local library archive in their monthly newsletter, but there are no identifying marks on the photo".

He added that "Under current law, the civic association must locate the owner to ask permission and in many cases may not be able to find the owner. Under the Orphan Works Act, they could follow guidelines posted by the Copyright Office as a show of due diligence to reduce the threat of litigation for simply doing the right thing."

The bill is supported by representatives of libraries, museums, and universities. It is also supported by the trade groups that represent the major copyright industries, including the music, movie, book, and software industries. All would be net beneficiaries of the bill. While the bill would weaken the protection afforded to creators, it would primarily harm individuals and very small businesses. Representatives of those who create works in photography, illustration, and the visual arts have adamantly opposed the Copyright Office's proposal.

See also, story titled "House CIIP Subcommittee Holds Hearing on Orphan Works" in TLJ Daily E-Mail Alert No. 1,326, March 9, 2006, and story titled "Copyright Office Recommends Orphan Works Legislation" in TLJ Daily E-Mail Alert No. 1,302, February 2, 2006.

This bill would amend the Copyright Act by adding a new Section 514 titled "Limitation on remedies in cases involving orphan works".

The bill would limit the remedies available to copyright owners in actions for infringement brought under Sections 502-505, but not for actions brought under Sections 512, 1201, or 1202(b), where the infringer, before infringing, "performed and documented a reasonably diligent search in good faith to locate the owner of the infringed copyright".

Circumstances Under Which the Limitation on Remedies Would Apply. Subsection (a) of this new Section 514, provides as follows:

This is similar to the language the was proposed in the Copyright Office's report. However, the CO report did not contain the documentation requirement. Nor did the CO report identify what is meant by the term "reasonably diligent search".

This bill provides more language regarding diligent searches, without providing much more certainty or predictability to copyright holders. It provides, in part, as follows:

The Copyright Act now contains no requirement that a creator register a work for the copyright to exist. The Berne Convention, to which the U.S. is a party, prohibits the imposition of such formalities. This bill does not expressly require registration, or other formalities. However, the above language, especially the reference to registration, is in the nature of a reinstitution of formalities.

Limitations on Remedies. The bill would substantially limit the copyright holder's ability to recover financially, or obtain injunctive relief, for infringement.

The bill provides that "an award for monetary relief (including actual damages, statutory damages, costs, and attorney’s fees) may not be made, other than an order requiring the infringer to pay reasonable compensation for the use of the infringed work." (Parentheses in original.)

The bill does not define the term "reasonable compensation".

Moreover, the bill provides for the recovery of no monetary relief where the infringement was "without any purpose of direct or indirect commercial advantage and primarily for a charitable, religious, scholarly, or educational purpose".

The bill also provides that the "owner of the infringed copyright has the burden of establishing the amount on which a reasonable willing buyer and a reasonable willing seller in the positions of the owner and the infringer would have agreed with respect to the infringing use of the work immediately before the infringement began." Satisfying this burden would likely require copyright owners to retain expert witnesses to perform analyses, write reports, and testify in depositions and trial. The cost of this would not be recoverable, but in many cases would likely exceed "reasonable compensation".

The bill also limits the owner's right to exclude. It provides that "the court may impose injunctive relief to prevent or restrain the infringing use, except that, if the infringer has met the requirements of subsection (a), the relief shall, to the extent practicable, account for any harm that the relief would cause the infringer due to its reliance on having performed a reasonably diligent search under subsection (a)." Subsection (a) of Section 514 is the language stating when an infringer qualifies for the limitations on remedies.

The bill also imposes an almost complete ban on injunctive relief where the infringer "recasts, transforms, adapts, or integrates the infringed work with the infringer's original expression in a new work of authorship". The bill provides that in these situations, "the court may not, in granting injunctive relief, restrain the infringer's continued preparation or use of that new work, if the infringer ... pays reasonable compensation ..."

The bill would limit remedies in actions for infringement. In contrast, the bill would not limit the procedures and remedies available to copyright owners under Section 512 with respect to the notice and takedown of online infringing publication. Nor would it limit liability under Section 1201 for violation of the prohibition against circumvention of technological measures that effectively control access to a protected work. Nor would it limit liability under Section 1202(b) for removal or alteration of copyright management information. Section 1203(c)(3) provides that "a complaining party may elect to recover an award of statutory damages of reach violation of section 1202 in the sum of not less that $2,500 or more than $25,000."

Also, there are asymmetries in the limitations on remedies. The bill would preclude the recovery of attorneys fees by the plaintiff in an action for infringement where the court accords Section 514 status to the defendant. However, nothing in the bill limits the attorneys fees recoverable by the defendant in such an action who successfully asserts counterclaims. Also, while the bill limits the plaintiff in such an action to "reasonable compensation", there is no parallel limitation of the recovery of damages by the defendant for counterclaims.

Also, the bill, if interpreted literally, appears not to apply in declaratory judgment actions brought by infringers seeking Section 514 status. That is, the bill provides that in "an action brought under this title for infringement of copyright in a work, the remedies for infringement shall be limited". If a copyright holder sends a demand to an infringer, and the infringer believes that it is entitled to Section 514 status, if the infringer files a complaint for a declaration that it is entitled to Section 514 status, this is not "an action ... for infringement".

Retroactive Application. The bill provides that "The amendments made by this section shall apply only to infringing uses that commence on or after June 1, 2008." This clause refers only to "uses". The bill would extend to any works, not just those created after June 1, 2008.

This is significant because the Congress, in enacting the Copyright Act of 1978, provided that copyright exists in the creation of any work that is copyrightable subject matter, regardless of whether or not the owner has performed any legal formalities, such as registration, or publication of notices, or taken any steps to protect or defend the copyright. Since 1978 many creators have relied upon the Copyright Act of 1978, and employed business practices based upon the protections of the 1978 Act.

Now, Rep. Smith proposes legislation that would have the effect of depriving certain creators of the ability to enforce their copyrights because they did not take steps that the Copyright Act of 1978 did not require them to take.

State Sovereign Immunity. The bill does not mention state sovereign immunity, the 11th Amendment of the Constitution, of the Supreme Court's opinion in Florida Prepaid, and its progeny. Nevertheless, one subsection appears to address this subject. The bill provides as follows:

The bill goes on to assert that this does not constitute a waiver, or a statutory authorization for the award of damages.

The Supreme Court has held that the Congress cannot abrogate state sovereign immunity in claims for damages under intellectual property laws. However, the Congress can enact intellectual property laws that define the intellectual property rights regime.

There have been failed attempts, for example, to enact a blanket provision that would provide that states can enforce their intellectual property rights only if they have waived their sovereign immunity to claims for damages for their violation of the intellectual property rights of others.

State universities that infringe the intellectual property rights of others have endeavored to block all such legislation. If this bill were enacted, this provision would be a very targeted and limited application of this approach. It would be the first such provision enacted into law.

Perhaps it should be noted that California is an abuser of state sovereign immunity, and that Sen. Dianne Feinstein (D-CA) sits on the Senate Judiciary Committee, while the House Judiciary Committee, and its CIIP Subcommittee, are packed with Californians.

Title of the Bill is Not Descriptive. To the extent that this bill would create no class of works know as "orphan works", the use of the word "works" in the title of the bill, and in the title of the new Section 514, is not descriptive. Neither the Copyright Act, nor implementing regulations, create or define any class of "orphan works". The bill would do nothing to change this.

This bill is more in the nature of a use based limitation on remedies. The phrase "use of orphans" would be less misleading.

However, the term "orphans" is also not descriptive. Again, neither the Copyright Act, regulations, nor this bill define the term "orphans". Under this bill, a single copyrighted work could be accorded orphan status in one legal proceeding, but not accorded orphan status in another. Moreover, while the use of the word "orphan" in this bill is a metaphor that suggests the death of parents, or metaphorically, of authors, the bill would result in Section 514 status being extending by courts to works that were infringed immediately upon creation, where the author is alive, in business, and licensing the work. In particular, there is no minimum age for a work to be accorded Section 514 status.