Hear It Now -- Audio of the March 7 Argument at the Second Circuit

We now have a complete audio recording of the March 7 oral argument hearing before the Second Circuit Court of Appeals in the objections to the copyright class action settlement. Those of you who are interested must bear with me as I explain the technicalities of downloading and playing the files, and highlight what our side believes are the key passages.

The appellants (objectors) were represented by Charles Chalmers. The appellees were represented by Charles Sims (defendants) and Michael Boni (plaintiffs). I should note that subsequent to this hearing, Boni -- head of a team that the objectors believe have inadequately represented the class -- announced his departure from the firm of Kohn, Swift & Graf.

To hear the hearing, you must download nine sequential files:
http://muchnick.net/argue1.wav
http://muchnick.net/argue2.wav
http://muchnick.net/argue3.wav
http://muchnick.net/argue4.wav
http://muchnick.net/argue5.wav
http://muchnick.net/argue6.wav
http://muchnick.net/argue7.wav
http://muchnick.net/argue8.wav
http://muchnick.net/argue9.wav

If you have the proper "codec" installed, you can open these files in QuickTime or Windows Media Player. However, we recommend that you listen to them in a special audio program called The Record Player, which can be downloaded for free at http://www.ftrgold.com. Not only is the sound quality better, but more importantly The Record Player has a digital clock corresponding to the real time on March 7, and this will help you follow the highlights explained below.

Our judges were Ralph K. Winter, John M. Walker Jr., and Chester J. Straub (presiding). As noted earlier on our blog, all are very experienced and accomplished. Winter was one of the judges on the appellate panel that reversed the original district court ruling in favor of the publishers in Tasini v. New York Times. In addition, the leading U.S. Supreme Court case on adequacy of representation and the need for subclasses, is a case called AmChem. In Amchem the Supreme Court relied upon a Second Circuit opinion in In re JOINT EASTERN & SOUTHERN DIST. ASBESTOS LITIG. Judge Winter was one of the judges rendering that opinion. (He participated in our hearing by phone, and never asked a question.)

Judge Straub's questions were mostly confined to the question of jurisdiction. (The objectors, the defendants, and the plaintiffs all agree that the federal courts do have jurisdiction over this settlement.)

Judge Walker asked questions and made statements related to the adequate representation for C works, which of course is one of our principal issues. He was clearly knowledgeable about the briefs on this issue, and interested in it.

There was no discussion of many of our arguments in brief, the most significant of which is what we call the "License by Default." Anyone expecting high drama from this audio needs to know that things rarely work that way; the oral argument focuses on what the three-judge panel chooses to focus on, and not necessarily because they think other points covered in the brief were unimportant or even settled.

From our standpoint, the most impressive takeaway from the hearing is that Judge Walker clearly knows -- and even states -- some of our best arguments with respect to the C's. At one point he challenged Boni on this.

Here are some highlights:


11:38:50
Judge Walker asks Chalmers if there should have been a subclass for C's. Walker mentions the objectors' three main points here: (1) The C reduction shows they were not properly represented; (2) Their compensation formula, compared to B's, was not fair; and (3) The named plaintiffs could not adequately represent the C's, even though they had some unregistered works, because the amount they stood to gain, do in fact gain under the settlement, for the A's and B's is so much greater than anything they lose by treating C's badly.

11:47
Boni states that all authors have registered and unregistered works. He’s making an argument that the settlement treats “works” rather than authors because all authors have both registered and unregistered.

11:47:30
Judge Walker asks, since C's can register their works at any time and sue for infringement, why should they be compensated differently than B's. (This is another of our arguments on the fairness to C's.) Boni goes into a long justification.

11:51
Boni says that in designing the compensation there were no battles among A's and B's and C's – it was done by representatives trying to serve the interests of all parties. He wraps up by directing a remark to Judge Walker that there was no need for subclasses. Judge Walker asks: Wouldn’t there have been a battle if C's had their own attorneys? Boni then repeats the argument that the unregistered authors were not a separate group – all authors held both registered and unregistered. Judge Walker asks where in the record there is evidence of that. Boni describes how complaints show the class representatives had both registered and unregistered works.

12:01
Sims, in addressing the C Reduction, says they have updated information. He doesn’t say what that information is. Judge Walker indicates they may be interested and if they are they will contact the parties. (To date there has been no contact.)

12:04
Chalmers comes up for rebuttal. He notes that Boni said all class members had registered and unregistered works. Chalmers says this is an untrue statement. He notes that Judge Walker asked for evidence in the record and Boni said it was there. Chalmers says the record shows just the opposite. He cites the court to a series of declaration by class members that were put in the record by the plaintiffs and say that at least half of them had only C works. [Later review of the record showed that 10 out of 11 had only C works -- which is what the court will find when it looks.] Chalmers then cites a statement by plaintiffs that “most class members never registered anything.” Judge Walker asks Chalmers to repeat that cite. Then Chalmers cites for the court a statement by defendants that “the vast majority of freelance authors never registered their works at all.”

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Harper's Archive Online: A Little Historical Nugget

The new issue of ASJA's Contracts Watch (http://www.asja.org/cw/cwfiles/cw070410.php) has useful commentary on last week's MediaBistro item about Harper's magazine's putting its entire 157-year-old archive of articles online (http://www.mediabistro.com/fishbowlny/magazines/eat_it_new_yorker_harpers_puts_157year_archive_online_56168.asp).

But I don't want to rehash all that right now. I just want to point out another piece of Harper's history in the fight to get freelancers a fair share of the new market in delivering old stories on which they hold the copyright. It's a story I shared previously in a declaration to the U.S. District Court before it approved the copyright class action settlement -- an approval that a group of objectors, including myself, is challenging in the Second Circuit Court of Appeals. I also told it on this blog on June 20, 2005, under the headline "The Crimes of Thomson/Gale/Information Access Company (Part 2)." Below is the relevant excerpt.

On August 17, 1995, on the advice of the publisher of The Washington Monthly, I faxed Sally Roberts Han of IAC’s copyright and licensing department. According to the magazine, Han had informed it, “very specifically, that at this time IAC does not have the ability to track the sale of individual articles.” I told Han, however, that the NWU had acquired copies of an IAC royalty statement contradicting this assertion.

The royalty statement was for Harper’s magazine and it was dated 8/29/1994. IAC royalties to the magazine for the period January – June 1994 totaled $3,864 and were broken down into three categories: $154.16 for “online,” $3,205.60 for “microform,” and $504.77 for “electronic means.” The “electronic means” category was further broken down into 103 “hits” of individual Harper’s articles, at $4.90 per “hit,” via IAC’s library-based InfoTrac retrieval system.

Again via fax, I shared this document with Morris Goldstein, who had succeeded Robert Howells as IAC’s chief executive. Nothing came of the exchange.

As popular newsstand magazines go, Harper’s is an intellectual one with a modest audience. Yet for a single semiannual period in 1994, when the Internet was in its infancy as a platform for widespread access by home computer users, there was incontrovertible evidence of $504.77 in transaction-based royalties from IAC to Harper’s. IAC lied about and obfuscated these facts.

Can you imagine what the universe of revenues has been since 1994 on just these kinds of transactions, for just IAC and Gale Group and Thomson, for all of the many thousands of publications whose full texts they jointly redistribute, with or without the rights to do so, and including many, many magazines and newspapers that are far better known, more widely read, and more frequently accessed than Harper’s?

Then can you imagine multiplying that figure by all of the defendants in the consolidated class action settlement? Then can you imagine adding in not just restitution for these past infringements but also the waiving of all future electronic rights for articles first published in all of these publications, in perpetuity?

Then can you begin to understand why the $10-to-$18-million preliminary settlement is maybe just a little bit ... off the mark? And why -- no matter how the National Writers Union, the Authors Guild, and the American Society of Journalists and Authors, and their assorted minions attempt to justify it -- a meaningful future rights regime for independent creators depends on objecting to this settlement before it's too late?