Friday, February 25, 2011 Special Release: International Music Copyright Piracy Sparks a Need for Global Innovative Solutions

International Music Copyright Piracy Sparks a Need for Global Innovative Solutions: A Brief Look at the United States, China, and Spain (Part 1 & 2 of a 4 part series)

by: Jarrett K. Rumoro

PART I: Introduction and Background

With a fresh new year underway, it is time for musicians and the music industry to reevaluate the viability of relying on producing an album to make money. Current studies have shown that eight out of ten music albums never break even and fail to make back the high costs of producing and marketing.[i] The sales of albums and sound recording music are presently experiencing large financial deficits because of widespread international illegal copyright piracy of content.[ii] People all around the globe are stealing copyrighted music, thus disgorging the profits and economies usually associated with the music industry.[iii]

The Recording Industry Association of America (RIAA) is a trade organization that protects music intellectual property rights of major music companies and artists. The organization estimates that music piracy causes $12.5 billion of economic losses each year globally.[iv] It also estimates that 71,060 American jobs are lost annually due to the effects of Internet music piracy.[v] The RIAA organization approximates that the annual loss from worker’s earnings from jobs that have been lost due to increased Internet piracy is close to $2.7 billion.[vi]

This article will focus on the problem of international music piracy and its effects on the music industry. In Part II of this article discussion will focus on identifying and analyzing the intricacies of global legal protections offered to musicians of copyrighted works. In particular, the discussion will highlight how the United States, China, and Spain have reacted to the widespread problem of international music copyright piracy through laws and enforcement. And although protections have been created and enforced, international music piracy is still an elusive problem to completely obviate. Therefore, Part III of this article will propose two viable solutions for artists and music recording label companies such that they can supplement their pocketbooks with legal win-win partnerships and avoid the growing economical deficits due to music piracy.

PART II: International Trade Agreements and the American, Chinese, and Spanish Applications Thereof

A. What is the Berne Convention and TRIPS?

In the late nineteenth century, in the face of a growing global community, many countries met in Berne, Switzerland, to focus on establishing uniform minimum standards of protection on the literary and artistic works of creators.[vii] The Berne Convention imposed instantaneous obligations on the signatories to promise to adopt (constitutionally) the necessary measures to ensure the application of the minimum standards and give effect to the agreed upon provisions.[viii] The United States, China, and Spain are all current signatories to the Berne Convention.[ix]
Later, in 1994, the World Trade Organization (WTO) administered an international trade agreement called the “Agreement on Trade Related Aspects of Intellectual Property Rights” (TRIPS) which to date is recognized as the most comprehensive multilateral agreement on intellectual property.[x] It incorporates most of the Berne Convention requirements, but also supplies additional obligations.[xi] TRIPS gives its members much deference in deciding the appropriate method of implementing the provisions within the guidelines of their own legal systems and practices.[xii] Both the United States and Spain joined onto the TRIPS agreement in January, 1995, while China remained unincorporated until December, 2001.[xiii]

B. The American Way: Legislative Enactment and Case Law

The United States has legislatively addressed the concerns of illegal piracy of copyrighted music. In 1976, Congress adopted the United States Code Service Title 17 with regards to copyright infringement and has set forth the scope of protection and remedies for illegal reproduction of musical works and sound recordings.[xiv] Additionally, in 1998, the United States enacted the Digital Millennium Copyright Act (DMCA) which increased the penalties for copyright infringement via the Internet.[xv] The DMCA, together with the provisions of Title 17, offer the music industry protections in America on their intellectual property rights.

The United States judicial system has also interpreted the laws inside the courtrooms to provide protections to intellectual property copyright holders. In 2003, in In re Aimster Litig., a preliminary injunction was issued which forced an Internet service provider (Aimster) to shut down because it facilitated music copyright infringement of sound recordings.[xvi] Later in 2010, in Arista Records LLC v. Lime Group LLC, a company which created software that allowed users to illegally download music files was found accountable on a theory of contributory liability.[xvii]
With statutes and case law to protect them, copyright holders in America are shielded from infringement of illegal music piracy. Nevertheless, copyright holders in America are still struggling with outright infringement.[xviii] Current international copyright piracy detrimentally affects the American economy,[xix] and more innovative immediate solutions are needed to help boost the economy, specifically that of the music industry.

C. The Chinese Way: Legislative Enactment and Case Law

When China promulgated its Constitution in 1982, it established a solid foundation for copyright protections.[xx] Articles 19–24 promised the Chinese citizens the freedom to engage in creative endeavors and required the national government to assist the people in the process.[xxi] In 2001, the Chinese revised their Copyright Act to be more consistent with the TRIPS Agreement, and as such helps China into the more digital and technologically advanced age.[xxii] The 2001 Copyright Act contains a non-exhaustive list that outlines the protections afforded to music artists from infringement of songs via: reproduction, distribution, communication via information networks, and adaption.[xxiii]

The Chinese courts have also carved protections for copyright holders against Internet intermediaries, such as a service provider, who participate in copyright infringement via the Internet, or who instigate or assist others in copyright infringement via the Internet.[xxiv] Furthermore, contributory liability may be imposed on Internet intermediaries if they fail to take down such materials, or to identify suspected infringers, once they have been duly notified

by copyright holders.[xxv]

With case law and statutes in place, China would seem to be ready to tackle the problems of illegal piracy but it is notorious for lacking adequate enforcement.[xxvi] The largest source of online music piracy in the Chinese domain is undoubtedly “Baidu” who has a history of getting away with Internet piracy of music content.[xxvii] Not too long ago, Baidu won a favorable verdict when it was sued in China by music industry top labels (Universal, Warner, and Sony BMG).[xxviii] The Chinese court in that case found Baidu not liable because Baidu was merely providing links to third party websites where only then would infringing material be found, as opposed to having the infringing material directly on their own website.[xxix]

However, in February 2010, Baidu was convicted for copyright infringement of fifty songs which it provided full lyrics to without songwriter approval.[xxx] This victory over Baidu was the first in Chinese history where music writers and record companies won a copyright infringement case against Baidu.[xxxi] It appears that this could start a trend that leads to more infringement liability, which certainly would help Chinese copyright holders protect their content. And since China is among the nations on the USTR priority watch list for inadequate copyright protections,[xxxii] it certainly needs to find innovative solutions to curtail the effects widespread infringement.

D. The Spanish Way: Legislative Enactment and Case Law

The current Spanish Constitution was not ratified until 1978, which is partly due to the long dictatorship which controlled Spanish politics until the death of Francisco Franco.[xxxiii] Article 20 of the Spanish Constitution gives its citizens the right to create and produce literary, artistic, scientific, and technical works.[xxxiv] In 1996, the Spanish legislature solidified its Copyright Act and in Article 17 authors are given exclusive rights over the exploitation of their works, whether by reproduction, distribution, communication to the public, or transformation.[xxxv]

One aspect of the revised Spanish Copyright Act which has received lots of attention in Spanish courtrooms is Article 20. In Article 20 the legislature broadly defined “communication to the public,” and as such it has left the door open for judicial interpretation, and the Spanish court decisions reflect wide applications.[xxxvi] For instance, in a series of cases public communication was found, and royalties were thus appropriate, for music that was played in karaoke-bars,[xxxvii] public transports,[xxxviii] and weddings which were held in professional establishments.[xxxix] However, inconsistencies in the courts have emerged which have sent mixed messages to the Spanish public. For example, in 2009, a Spanish court held that a hospital room was considered a private or domestic sphere and thus outside the scope of “communication to the public” subject matter.[xl]

The vast Spanish sentiment, among the public, is that Internet piracy via peer-to-peer file sharing is not illegal.[xli] As a result, last year Spain catalogued an astounding three billion illegal downloads as opposed to twenty one million legal downloads.[xlii] The Spanish misperception of legality was only strengthened in 2006, when the Attorney General of Spain advised that peer to peer downloading should be considered criminal only if it were done for profit.[xliii]

Nevertheless, recently the Spanish government recently created a panel of experts to hear complaints against suspect sites where piracy of copyrighted materials is prominent.[xliv] The panel is then allowed to call on a judge who will have less than a week before he must make a ruling on whether to shut down the site.[xlv] In due time, this measure will help curb Spanish Internet piracy, but currently Spain remains on the USTR watch list for inadequate copyright protection,[xlvi] and therefore also needs innovative solutions to restrain the effects of widespread copyright piracy.

........Next Week Parts 3 and 4.......

[i] About Music Copyright Notices, MUSICUNITED.ORG, (last visited Sept. 01, 2010). (suggesting that if music is routinely stolen via online piracy, musicians will be seriously discouraged from making the songs that fans love. Furthermore, the United States economy (US GDP) in 2007 made $889.1 billion from core copyright industries, thus it is a very sensitive topic to discuss copyright infringement as it relates to the health and stability of the U.S. economy. That figure represents approximately 6.4% of the United States economy.).

[ii] For Students Doing Reports, RIAA.COM, (last visited Sept. 03, 2010).

[iii] Id. (discussing how music piracy is broken down into two major categories. Online piracy is the first form of piracy which entails illegal upload and download of music online. Primarily, online businesses make profits based on theft of copyrighted materials and encourage breaking the law. On the streets piracy is the second form of piracy and includes people who criminally manufacture counterfeit CD’s for sales on the street corners, in flea markets, or in retail stores.).

[iv] Id.

[v] Id.

[vi] Id.

[vii] Berne Convention for the Protection of Literary and Artistic Works, Sept. 9, 1886, 102 Stat. 2853‑2861 [hereinafter Berne Convention], available at .

[viii] Id. at Article 36.

[ix] Contracting Parties, WIPO, (last visited Sept. 03, 2010).

[x] Overview: The TRIPS Agreement, World Trade Organization, (last visited on Oct. 11, 2010). (discussing the main objectives as asserted in the Preamble: (1) to give artists motivations to create works that benefit society as a whole; (2) to reduce the barriers to international trade; and (3) to promote adequate and effective protections of intellectual property rights.).

[xi] Id.

[xii] Id.

[xiii] Id.

[xiv] 17 U.S.C. §§ 1101, 504 (2010). See also 17 U.S.C. § 114(b) (describing that music creators shall have the exclusive rights to ownership in the sound recordings of their works, and the exclusive right to make and prepare derivative works such as rearrangements, remixes, or otherwise altered sequences of their songs.).

[xv] Digital Millennium Copyright Act, 112 Stat. 2860 (codified as amended at 17 U.S.C. §§ 1201–1205 (1998). (demonstrating how sections 1201–1205 address specifically the damages which can be sought for such infringement that arises when online service providers knowingly allow infringing materials to be housed on their websites. However, the online service providers can find “safe harbor” if they do not know of the infringing materials contained on their sites or if they, upon receiving notice of specific infringing materials, act “expeditiously to remove, or disable access to, the material.”).

[xvi] In re Aimster Copyright Litig., 334 F.3d 643 (7th Cir. Ill. 2003). (demonstrating how a service provider [Aimster] was shot down for inviting infringement because its software enabled users to share music files by providing tutorials on how to share files. Aimster argued that it did not have actual knowledge of any infringing uses, and that it should have therefore been protected by the safe harbor provision. But the appellate court rejected the argument ruling that the provider could have limited the amount of infringement by simply monitoring the use of its systems; instead, Aimster did nothing to discourage repeat infringers, and thus was therefore not protected by the safe harbor provisions of Chapter 5 of Title 17.).
[xvii] Arista Records LLC v. Lime Group LLC, 2010 U.S. Dist. LEXIS 46638, **4–98 (S.D.N.Y. May 11, 2010). (illustrating how thirteen record labels [including Atlantic, Virgin, and Warner] sued Lime Group for developing the software known as “LimeWire” which used peer-to-peer file sharing networks to infringe on music copyrights. Although LimeWire was not directly engaged in infringement, they were held liable to the plaintiffs on a theory of secondary liability for copyright infringement. The court noted that since so many infringers are on the defendant’s network, the only practical alternative for imposing liability is to go after the distributor of the copying device. In the case at bar, LimeWire was found liable for over 50 million users since the year 2000.).

[xviii] Stephen E. Siwek, The True Cost of Copyright Industry Piracy to the US Economy, Executive Summary, Institute for Policy Innovation, 1–22, (Oct. 03, 2007), (providing a detailed analysis of statistics which show that Federal, state, and local governments lose at least $2.6 billion annually in lost tax revenue from copyright piracy and arguing that the problem of copyright piracy should be given a prominent place on the [U.S.] policy agenda.).

[xix] Id. at 8. (concluding that the total losses to American producers and retailers of copyrighted products from copyright piracy in 2005 were $25.623 billion, and that this number is actually conservative because it only includes publicly available information given to the USTR and does not include losses in numerous markets in France, Germany, or the United Kingdom.).

[xx] Xue Hong Guo Shoukang, China § 1, in International Copyright and Practice (Paul Edward Geller ed., Lexis Nexis 2009). (discussing how the People’s Republic of China was founded in 1949, and their modern copyright system began to form at that juncture. But as China underwent a cultural revolution from 1966 to 1976, much of the regulations came to a halt during that period. Beginning around 1978, the Chinese government adopted a new policy with regards to international relations and formed diplomatic relations with the United States.).
[xxi] Id. at § 1[2].

[xxii] Id. at § 1[3][a].

[xxiii] Xue Hong Guo Shoukang, China § 8[1][b], in International Copyright and Practice (Paul Edward Geller ed., Lexis Nexis 2009). (explaining how the list represents some recognized ways that authors are protected, but the list does not cover all forms of infringement as may emerge from new exploitation of copyrighted materials).
[xxiv] See e.g., EMI Records Limited v. Beijing Alibaba Information Technology Ltd., Beijing High People's Court, Dec. 20, 2007, reported by Beijing Daily, Dec. 24, 2007, affirming Beijing Second Intermediate People's Court, April 24, 2007.
[xxv] Id. But see Universal Music, Sony BMG Music Entertainment Hong Kong, Warner Music Hong Kong and etc. v. Beijing Baidu Network Information Science and Technology Ltd., Beijing First Intermediate People's Court, Jan. 25, 2010. (illustrating that the Chinese service engine Baidu, which provided services that located illegal music downloads, was not liable because it provided a search engine service rather than actually permitting access to legally copyright protected music).
[xxvi] Music Industry Reacts to USTR Report on Nations With Inadequate IP Protections, The Baidu and China Story, RIAA.COM, (last visited Sept. 03, 2010). (discussing how Neil Turkewitz, the Executive Vice President of the Recording Industry Association of America, noted that the Chinese government has poor enforcement and allows for open theft which has hindered the Chinese public from receiving legal copyrighted material.).
[xxvii] See supra note 25 and accompanying text.

[xxviii] Universal Music, Sony BMG Music Entertainment Hong Kong, Warner Music Hong Kong and etc. v. Beijing Baidu Network Information Science and Technology Ltd., Beijing First Intermediate People's Court, Jan. 25, 2010.

[xxix] Id.

[xxx] Baidu Fined for Copyright Infringement, CHINA.ORG.CN, July 30, 2010, (recognizing that China’s largest Internet piracy provider was only very recently dealt a blow by the Music Copyright Society of China. This plaintiff was the first in country history to get a favorable verdict against Baidu in a Chinese court, which awarded a sixty thousand Yuan recovery for online copyright infringement.).

[xxxi] Id.

[xxxii] Ron Kirk, 2010 Special 301 Report, Office of the United States Trade Representative (2010), 19–23,

[xxxiii] Alberto Bercovitz and German Bercovitz Milagros del Corral, Spain § 1[1][b], in International Copyright and Practice (Paul Edward Geller ed., Lexis Nexis 2009).

[xxxiv] C.E., B.O.E. n. 20, Dec. 29, 1978.

[xxxv] Alberto Bercovitz and German Bercovitz Milagros del Corral, Spain § 8[1][a–b].], in International Copyright and Practice (Paul Edward Geller ed., Lexis Nexis 2009).

[xxxvi] Id. at § 8[1][b][iv].

[xxxvii] Audiencia Provincial (Court of Appeal) Barcelona, Aug. 7, 1998, Aranzadi Civil 1998, no. 1613.
[xxxviii] Audiencia Provincial Teruel (Section 1), March 6, 2008, Westlaw JUR 2008, no. 165101.

[xxxix] Audiencia Provincial (Court of Appeal) Barcelona (Section 15), May 5, 2008, Aranzadi Civil 2008, no. 1114.

[xl] Commercial Court Seville (Section 2), Oct. 16, 2009, Aranzadi Civil 2010, no. 14.

[xli] See generally, Raphael Minder, Pressure Grows on Spain to Curb Digital Piracy, NYTIMES.COM, 1–2, (May 16, 2010), (recognizing that internet piracy is so widespread in Spain that in March, 2010, Sony Pictures Entertainment was considering halting sale of its DVDs to Spain altogether.).

[xlii] Id. at 1.

[xliii] Id.

[xliv] Ciaran Giles, Spain, France Tackle Internet Piracy, MSNBC.MSN.COM, 1, (Jan. 08, 2010), (discussing the Spanish record label association known as “Promusicae” estimated that the music industry lost approximately 1.6 billion dollars in revenue in 2007 and 2008. Also, the industry work force has declined by almost 70 percent in recent year. Hence, the Spanish economy has also felt a sting from the widespread internet piracy and overall national sentiment that it is not a crime to infringe on music copyright. The article also notes the French national policy of cutting off internet access to those who download illegally. According to the French legal system, the internet monitoring authority will first send an email warning the person who downloaded the illegal file that he has downloaded an illegal file and may be cut off access to the internet. Next, a registered letter will be sent to the person with internet access that is question, informing them that their ISP line is being used for illegal downloads. At this point, the person has the right to respond to such a notice, and then it will be up to a judge to ultimately determine if the internet access should be terminated. The termination could last up to one year, and the fines included in the infringement are up to $435,000 or possible jail time. The law has widespread support from the French entertainment industry as well as political support from President Nicolas Sarkozy, even though the law was initially struck down as being unconstitutional. The British national government also stated that it intended to follow the French law, and cut off internet access to those who download illegally.).

[xlv] Id.

[xlvi] See supra note 32 and accompanying text at 37.

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