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On July 13 the Second Circuit Court of Appeals vacated the Federal Communications Commission's orders that found fleeting expletives on awards shows indecent and vacated the FCC's indecency policy as unconstitutionally vague. The same case — Fox Television Stations Inc. v. FCC — reached the U.S. Supreme Court last year and was decided on a procedural issue and remanded back to the appeals court for consideration of the constitutional free speech issue. In 1973 Pacifica Radio broadcast a George Carlin monologue rich in swear words, and the Supreme Court subsequently upheld the FCC's right to impose a fine but described its decision as narrow given that Carlin's intentionally shocking use of repeated expletives had triggered the enforcement action. Last week's decision reviewed and struck down the less-restrained indecency policy launched by the FCC as part of the aftermath to the Super Bowl XXXVIII halftime incident in 2004 involving Janet Jackson and Justin Timberlake — Congress allowed higher fines and the FCC imposed these more readily. Those Super Bowl fines are still under review in the Third Circuit Court of Appeals. FCC Commissioner Michael J. Copps expressed shock at the ruling and said, "I hope that this decision is appealed — and ultimately reversed. In the meantime, as even this court recognizes, the FCC has the power to create a constitutional and enforceable indecency policy.... In light of the uncertainty created by [the] decision, I call on this commission to move forward immediately to clarify and strengthen its indecency framework to ensure that American parents can protect their children from the indecent and violent images that bombard us more and more each day."
The extensive budget bill H.R. 4899 — the Supplemental Appropriations Act, 2010 — passed the House of Representatives on July 1 including a one-sentence anti-pornography prohibition. The legislation read, "None of the funds made available in this act may be used to maintain or establish a computer network unless such network blocks the viewing, downloading, and exchanging of pornography." Several observers complained this language was overly vague and could require any military contractor to implement Internet filtering without guidance as to what websites must be blacklisted.
Senator the Hon. Stephen Conroy, Australia's minister for broadband, communications and the digital economy, described national efforts to compile a blacklist of websites on July 9. "The public needs to have confidence that the URLs on the list, and the process by which they get there, is independent, rigorous, free from interference or influence, and enables content and site owners access to appropriate review mechanisms," he said. The mandatory filter will not be imposed until completion of the review, conveniently after elections where accusations of Internet censorship might sway votes. Meanwhile, the Australian Communications and Media Authority has compiled a list of child-abuse Web addresses that will be voluntarily blocked by ISPs Optus, Primus, and Telstra — which account for approximately 70 percent of Australia's Internet users.
On July 9 Massachusetts' U.S. District Court Judge Nancy Gertner struck down a jury award of $675,000 in copyright infringement damages, finding them unconstitutionally excessive, and reduced the award to $67,500. Defendant Joel Tenenbaum could have settled the file-sharing case against him for $4,000 but wanted to pursue the merits of his case as a consumer file-sharer who did not profit from his infringement. Gertner said, "For many years, businesses complained that punitive damages imposed by juries were out of control, were unpredictable, and imposed crippling financial costs on companies.... In a number of cases, the federal courts have sided with these businesses, ruling that excessive punitive damages awards violated the companies' right to due process of law.... These decisions have underscored the fact that the constitution protects not only criminal defendants from the imposition of 'cruel and unusual punishments,' but also civil defendants facing arbitrarily high punitive awards." Consumer advocates Electronic Frontier Foundation and Public Knowledge praised the decision. Plaintiff RIAA protested that the jury's determination should have been respected.
The International Intellectual Property Alliance made an important submission on July 9 to the ongoing U.S. International Trade Commission investigation into quantifying the impact of U.S. intellectual property infringement in China. The USITC effort will provide a significant review of methodologies used by Economists Inc. Principal Stephen E. Siwek on behalf of several IP organizations including the IIPA — studies that have been seriously questioned by consumer advocates and the U.S. Government Accountability Office.
The European Commission's new Vice President of Competition Joaquín Almunia had strong words for royalty collecting societies in a speech delivered on July 7. "The market for online content in Europe is a shameful anachronism, and the distribution of content online across the entire European Union is expensive and difficult...." said Almunia. "We must find a way to develop pan-European licensing while preserving and promoting the diversity of our culture. In this exercise, we must not confuse threats to the creators of content and threats to the current intermediaries. Collecting societies serve a vital role but the way they manage licensing agreements needs to change. The fragmented national monopoly model and the de facto allocation of customers can no longer stand in their current form."
On July 8 music-related merchandise company loudbytes announced a reporting arrangement with Nielsen SoundScan that first began tracking download sales in April. Redemption codes for downloads can be sold with practically any physical merchandise — although reasonable minimum prices are required such as 50 cents for a single music track — and these are tallied in weekly reports to SoundScan after the codes are redeemed online. Along with SoundScan's pioneering relationship with Music Tee, these arrangements represent a convergence of the physical and digital worlds that may be telling for the future of music commerce.
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