In 1971, the State of California indicted several LP bootleggers with 140 counts of music piracy under section 653h. They eventually pled guilty to ten counts. The state law prohibited the duplication of a commercial recording for sale; compositions were protected by federal law. The Supreme Court consolidated their appeals under the name Goldstein v. California. The defendants advanced three arguments: 1) the California statute permitted a state copyright of unlimited duration in derogation of the “limited times” provision of the federal Progress Clause; 2) the state law violated the provisions of the Court’s previous Sears and Compco holdings; and 3) states could only protect unpublished writings, and under the definition of “published” in federal law, the recordings had been divested.

The Court rejected all three. The Constitution’s Progress Clause did not prohibit the states from also exercising their own copyright powers, nor did it limit those powers. Thus the “limited times” provision only applied to the federal government, and if a state wanted to make its protections perpetual, it was free to do so. During this discussion, the Court raised some points that have been ignored in the excitement over the Capitol v. Naxos case. It emphasized that “a copyright granted by a particular State has effect only within its boundaries,” and that this situation

is no different from that which arises in regard to other state monopolies such as a state lottery, or a food concession in a limited enclosure like a state park; in each case citizens may escape the effect of one State’s monopoly by making purchases in another area or another State.

However, it admitted that conflicts “would arise, for example, if each State exercised a sovereign power to levy imposes and tariffs.” The fact that Capitol Records, a corporate resident of New York, was able to use the Capitol v. Naxos decision, ostensibly effective only within that state, to force Naxos, whose American division is a corporate resident of Nashville, to curtail much of its activities across the United States, leads one to wonder if it did result in just this kind of state-vs-state trade barrier-ism.

But most of the opinion dealt with the Sears-Compco issue, which the Court turned into a disquisition on the thorny question of whether sound recordings are “writings,” and what their status was under the 1909 Copyright Act. The Court concluded: 1) “writings” as defined in section 4 of the Copyright Act, did not include everything eligible for copyright under the Progress Clause; 2) there were things that are “writings” under the Constitution, but which Congress chose not to include within federal copyright law; 3) sound recordings were one of these things; 4) “publication” was a term of art applying only to situations arising under the federal Copyright Act; thus, a state may use a different definition. The Court never addressed whether section 653h fell within the “palming off” provisions of Sears and Compco, or what standards a state had to meet to have a valid anti-music-piracy statute.

It was a close decision, 5-4. There were two dissents. One was grounded in Judge Hand’s dissent in Capitol Records v. Mercury Records; the other in a text of the Copyright Act itself. Both said essentially the same thing. The Copyright Act covered, in a blanket manner, everything that was a “writing,” that is, everything Constitutionally capable of copyright. Section 5 of the Act then listed those things that were intended for protection through registration. Sound recordings weren’t there. Thus, sound recordings were covered by copyright law, but “coverage” did not include “protection.” Because they were covered by federal law, although without protection, state law was preempted. That being so, the dissent implied that the majority should have taken the next step of determining if section 653h met the “palming off” criteria in Sears and Compco, but it didn’t.

Both sides noted that their opinions were somewhat transitional, because by that time, the law had changed.

To be continued…

Capitol v. Mercury was the last major phonorecord copyright case for eighteen years. However, two tangentially related cases, both in the Supreme Court in 1964, proved tremendously important. Sears, Roebuck & Co. v. Stiffel Co. and Compco Corp. v. Day-Bright Lighting were virtually identical cases. Stiffel made floor lamps; Day-Bright made overhead florescent factory lights. Both thought they had valid patents. They were wrong. Competitors copied their well-regarded products and undersold them. Lacking valid patents, the makers of the originals successfully sought relief under state laws designed to prevent unfair competition. The Supreme Court overturned each lower court. “When an article is unprotected by a patent or a copyright, state law may not forbid others to copy that article,” wrote Justice Black. “If the design is not entitled to a design patent or other federal statutory protection, then it can be copied at will.” In 1967, Barbara Ringer, Assistant Register of Copyrights, told a congressional committee that:

The Supreme Court decisions in the Sears and Compco cases raise serious doubts as to whether any rights in sound recordings survive their publication (i.e. the first sale or distribution of records) . . .Even though three and a half years have passed since the Sears and Compco decisions, their full impact remains unclear and controversial . . . In my opinion the crucial question in deciding whether published sound recordings are still entitled to common-law protection is whether the pre-emption of State common law rights applies only to works that come within the subject matter of the present Federal copyright statute, or whether it extends to works (like sound recordings) that are not now protected by federal copyright, but that are Constitutionally capable of it . . . it is my view that sound recordings are “writings of an author” and that Congress can grant them any degree of copyright protection it sees fit. However, they are not subject to statutory protection under the present law, and under the Sears, Compco, and subsequent decisions, they cannot be given common-law protection equivalent to copyright.

Admittedly, Ringer’s was a rather pessimistic assessment. In both opinions the Court had made two points clear: 1) while a state could not prohibit copying, their power to regulate false labeling, deceptive advertising, fraud, or other “palming off” violations remained untouched; and, 2) the court would likely hold that the act of copying another’s goods, when done with the deliberate intent of creating deception or confusing customers, fell within the general category of “palming off.”

It was under this rationale that New York state courts continued to successfully prosecute music piracy, most notably in a 1964 case, Capitol Records v. Greatest Records, where Capitol was able to convince the court to force Greatest Records to destroy thousands of copies of a bootleg compilation album culled from The Beatles early singles and their first two LPs. “In the unfair competition cases Sears and Compco, the Supreme Court held that when an article is unprotected by a patent or copyright, state laws may not forbid others to copy that article; but it was pointed out that state law, statutory or decisional, may, in appropriate circumstances, grant relief where deceptive or fraudulent practices [are] shown” explained the New York court.

Largely based on New York’s experience, California added its own anti-piracy provision, section 653h, to its penal code in 1968. It became the basis of the next major legal action.

To be continued…

Its time to backtrack a bit and explain what I mean by an “Erie v. Tompkins” dilemma. I promised when I started this blog that I would not descend into legalese, but now I’m going to have to get a bit close. I promise that this is as bad as it will ever get.

Although you’ve probably never heard of it, 1938’s Erie Railroad  v. Tompkins is probably the single most important Supreme Court decision since Marbury v. Madison, the case that determined that the Supreme Court was the ultimate arbiter of what is or isn’t constitutional. The facts in Erie v. Tompkins were almost absurdly simple. Tompkins was a citizen of Pennsylvania. The Erie Railroad was a corporate citizen of New York. Tompkins was hurt in a railroad accident that occurred in Pennsylvania. State law in Pennsylvania favored railroads. State law in New York favored victims. Cases decided in federal court leaned towards victims as well. Whose law applied?

Most people think that the federal courts exist to decide matters pertaining to federal law, so-called “federal question” issues. Surprisingly, this is usually not so. Under Article II of the Constitution, the federal courts are given jurisdiction over disputes “between Citizens of different States.” So by the time of the Erie case, there was already a well-established way to prevent a plaintiff from gaining an automatic home-field advantage over a defendant.  For example, if a citizen of State A wanted to sue a citizen of State B, Citizen A couldn’t just walk into his home state’s court, file, and demand that Citizen B show up. Instead, A must go and file suit in the federal court in B’s home state. This is called “diversity”, and most cases in the federal courts are these diversity cases. Tompkins did this, suing the Erie in New York federal court.

The court, following then-standard practice, applied federal law and awarded Tompkins $30,000. The Supreme Court reversed this, determining that the federal court should have applied Pennsylvania law, because that is where the accident happened. In other words, the federal court should have “stepped into the shoes” of a Pennsylvania state court. The only time federal law should be applied, according to the Supreme Court, is when the dispute involves a federal question. Thus, to this day, you’ll see the seemingly bizarre spectacle of a North Dakota federal court applying California law.

The federal court in Erie said that Pennsylvania’s laws should apply because the law, in both New York and Pennsylvania, said “the court where the accident happened has jurisdiction.” Predictably, the next controversy arose over how to decide whose laws should apply when the two don’t agree. That is, whose law should be used to decide whose law gets used? Again, the first rule applied was that federal procedures (called “conflict of law” rules) should apply. During the period of time we have been discussing, the 1940s and 1950s, there was huge turmoil between many federal and state courts (especially in New York) about whether federal or state conflict of law rules should be applied in diversity cases.

Recall the Capitol v. Mercury case, the one dealing with the Telefunken imports. Judge Dimock, representing the majority view, held that phonorecords were not within the category of writings that were “copyrighted works”. Therefore, they were controlled by state law; and thus, state law determined if they were “published.” Judge Hand, to the contrary, argued that all things that are writings are “copyrighted works”  under the language of section 4 of the 1909 Copyright Act.  Therefore, the records were not controlled by state law, and federal law alone determined if they were published or not. This argument boiled down to whose law should apply. If federal law applied, “published” could be defined one way. If state law applied, “published” could be defined another way. In reality, this was a struggle over judicial power, a struggle that was also at the heart of the Capitol v. Naxos IV decision.

To be continued…