Journal of International Media & Entertainment Law - Volume 6, Number 2

JOURNAL OF INTERNATIONAL MEDIA & ENTERTAINMENT LAW PUBLISHED BY THE DONALD E. BIEDERMAN ENTERTAINMENT AND MEDIA LAW INSTITUTE OF SOUTHWESTERN LAW SCHOOL IN ASSOCIATION WITH THE AMERICAN BAR ASSOCIATION FORUMS ON COMMUNICATIONS LAW AND THE ENTERTAINMENT AND SPORTS INDUSTRIES Volume 6, Number 2

2016–2017

EDITOR’S NOTE ARTICLES The Lawyer’s Role in Promoting the Use of Fair Use Jon M. Garon Censoring the Silk Screen: China’s Precarious Balance Between State Regulation and a Global Film Market Jeremy Geltzer Intellectual Property From Outside the Box: The Curious Case of Internet From Space Amir H. Khoury The Internet Service Provider Secondary Liability: A Comparative Analysis of Brazilian and United States Legislation and Case Law Raphaela Maciel Ladeia

JOURNAL OF INTERNATIONAL MEDIA & ENTERTAINMENT LAW

Volume 6 Number 2 2016–2017

PUBLISHED BY THE DONALD E. BIEDERMAN ENTERTAINMENT AND MEDIA LAW INSTITUTE OF SOUTHWESTERN LAW SCHOOL IN ASSOCIATION WITH THE AMERICAN BAR ASSOCIATION FORUMS ON COMMUNICATIONS LAW AND THE ENTERTAINMENT AND SPORTS INDUSTRIES

Mission Statement: The Journal of International Media & Entertainment Law is a semiannual publication of the Donald E. Biederman Entertainment and Media Law Institute of Southwestern Law School in association with the American Bar Association Forums on Communications Law and the Entertainment and Sports Industries. The Journal provides a forum for exploring the complex and unsettled legal principles that apply to the production and distribution of media and entertainment in an international, comparative, and local context. The legal issues surrounding the creation and dissemination of news and entertainment products on a worldwide basis necessarily implicate the laws, customs, and practices of multiple jurisdictions. The Journal examines the impact of the Internet and other technologies, the often-conflicting laws affecting media and entertainment issues, and the legal ramifications of widely divergent cultural views of privacy, defamation, intellectual property, and government regulation.

Subscriptions: Print subscriptions are available at an annual rate of $US 50 (domestic) or $US 60 (foreign). Please direct inquiries to the Biederman Institute at Southwestern Law School, 3050 Wilshire Boulevard, Los Angeles, California 90010, (213) 738-6602, or send an email to institute@swlaw.edu. Back issues are available for $US 30.00 per copy plus $US 5.95 for shipping and handling.

Disclaimer: The opinions expressed in the articles published in the Journal of International Media & Entertainment Law are solely those of the authors and do not necessarily reflect those of the Donald E. Biederman Entertainment and Media Law Institute, Southwestern Law School, the American Bar Association, the Forum on Communications Law, or the Forum on the Entertainment and Sports Industries.

Law School: For information about the Biederman Institute or Southwestern Law School, please contact Prof. Robert Lind, Southwestern Law School, 3050 Wilshire Boulevard, Los Angeles, California 90010, (213) 738-6842, or send an email to institute@swlaw.edu.

Membership: For information about membership in the Forum on Communications Law or the Forum on the Entertainment and Sports Industries, please contact the ABA Service Center, 321 North Clark Street, Chicago, Illinois 60654-7598, (800) 285-2211, or send an email to service@americanbar.org.

Permission to Reprint: Requests to reproduce portions of this issue must be submitted by email to institute@swlaw.edu.

Submission Guidelines: Submission guidelines are printed on the inside back cover of each issue. Š 2016 Southwestern Law School

The Journal of International Media & Entertainment Law is published twice a year by Southwestern Law School, in cooperation with the American Bar Association.

ISSN: 1556-875X. Postmaster: Send address changes to the Biederman Institute at Southwestern Law School, 3050 Wilshire Boulevard, Los Angeles, California 90010.

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SUPERVISING EDITOR Michael M. Epstein Southwestern Law School BOARD OF EDITORS Janine Small, Chair ABA Forum on the Entertainment and Sports Industries

Carolyn Forrest, Chair ABA Forum on Communications Law

Peter Bartlett Minter Ellison Lawyers

Kevin Goering Norwick, Schad & Goering

Nathan Siegel Levine, Sullivan, Koch & Schulz

Eric S. Brown Franklin, Weinrib, Rudell & Vassallo, P.C.

David Goldberg University of London

Mark Stephens Howard Kennedy LLP

Chunghwan Choi Lee & Ko

Robert Lutz Southwestern Law School

John Tehranian Southwestern Law School

J. Alexandra Darraby The Art Law Firm

Michael Scott Southwestern Law School

Cydney A. Tune Pillsbury Winthrop Shaw Pittman, LLP

Silvia Faerman Southwestern Law School

Brian A. Rosenblatt Bryce, Downey & Lenkov LLC

Kurt Wimmer Covington & Burling, LLP

Jeff Gewirtz NETS Basketball/Brooklyn Sports & Entertainment

Kyu Ho Youm University of Oregon

SUPERVISING STUDENT EDITOR Emily A. Rehm STUDENT EDITORS Harmony Anderson Lacey Chrabaszcz Chiara Genovese Josh Glocer

S. Elliot Hakakzadeh Shelby Luchesi-Gallaher Jessica Lusk

Inez Morales Jaclyn Ponish Ashley Ramos

Nadia Sokolova Jason Souza Christina Steele

Aldwin Tanala Charlie Wang Alexa Whiteside Nikta Yazdi

PUBLISHED BY THE DONALD E. BIEDERMAN ENTERTAINMENT AND MEDIA LAW INSTITUTE OF SOUTHWESTERN LAW SCHOOL IN ASSOCIATION WITH THE AMERICAN BAR ASSOCIATION FORUMS ON COMMUNICATIONS LAW AND THE ENTERTAINMENT AND SPORTS INDUSTRIES

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Contents vii

Editor’s Note MICHAEL M. EPSTEIN

ARTICLES 101

The Lawyer’s Role in Promoting the Use of Fair Use JON M. GARON

123

Censoring the Silk Screen: China’s Precarious Balance Between State Regulation and a Global Film Market JEREMY GELTZER

169

Intellectual Property From Outside the Box: The Curious Case of Internet From Space AMIR H. KHOURY

187

The Internet Service Provider Secondary Liability: A Comparative Analysis of Brazilian and United States Legislation and Case Law RAPHAELA MACIEL LADEIA

PUBLISHED BY THE DONALD E. BIEDERMAN ENTERTAINMENT AND MEDIA LAW INSTITUTE OF SOUTHWESTERN LAW SCHOOL IN ASSOCIATION WITH THE AMERICAN BAR ASSOCIATION FORUMS ON COMMUNICATIONS LAW AND THE ENTERTAINMENT AND SPORTS INDUSTRIES

Editor’s Note As of this writing, the Journal of International Media & Entertainment Law (“JIMEL”) is putting the finishing touches on its Fall 2016 international media law conference, Freedom of Information Laws on the Global Stage: Past Present and Future, to be held at Southwestern Law School on November 4, 2016. Conceived with the participation of U.K.-based media law scholar (and JIMEL editorial board colleague) David Goldberg, this conference has been almost two years in the making. I am pleased to report that 30 scholars and practitioners from around the world are scheduled to converge on Los Angeles to share perspectives on freedom of information, including participants flying in from as far as way as China, India, Nigeria, Australia and Israel. Lawyers from the United Nations, the Reporters Committee for Freedom of the Press, CNN, Buzzfeed, and the U.S. FOIA Ombudsman’s Office will also be there, among many others. A selection of scholarly papers from the conference will appear in the next volume of JIMEL. Additional papers will be published in Southwestern Law School’s Journal of International Law, which is helping to organize and underwrite the conference.

This issue has a diverse selection of four articles. The first article, The Lawyer’s Role in Promoting the Use of Fair Use, by Jon M. Garon, offers a standardized framework for legal opinion letters that address the question of whether a particular use of copyrighted works is permitted by a third party.

The author, Dean of the Shepard Broad College of Law at Nova Southeastern University, writes with a pragmatic eye to propose a degree of certitude and reliance for third party users who seek publication or Errors and Omissions insurance. This issue’s second article, Censoring the Silk Screen: China’s Precarious Balance Between State Regulation and a Global Film Market, is an exhaustively researched and current summation of film censorship in the People’s Republic of China by Jeremy Geltzer. Mr. Geltzer is a respected lawyer and film scholar whose recent book, Dirty Words and Filthy Pictures: Film and the First Amendment (University of Texas Press 2016) has received wide acclaim. From Israel comes an article entitled Intellectual Property from Outside the Box: The Curious Case of Internet from Space, by Dr. Amir H. Khoury. Dr. Khoury, a Senior Lecturer at the Faculty of Law at Tel Aviv University, examines the intellectual property issues related to space-related vii

internet and proposes a regulatory approach that balances the benefits of this developing distribution system with protections for copyright and trade secret holders. The last of our articles is entitled The Internet Service Provider Secondary Liability: A Comparative Analysis of Brazilian and United States Legislation and Case Law. Written by Raphaela Maciel Ladeia, an emerging legal scholar from Brazil, this article carefully reviews the current rules, regulations, and case law regarding internet defamation and copyright infringement in the U.S. and Brazil, including the Marco Civil da Internet, which was enacted in 2014.

As always, your comments, suggestions, and feedback of any kind are welcome.

Michael M. Epstein Supervising Editor

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SOUTHWESTERN LAW SCHOOL 2016–2017 BOARD OF TRUSTEES KEVIN BURKE STEVEN P. BYRNE MICHAEL E. CAHILL PHYLLIS W. CHENG DENNIS P.R. CODON MICHAEL J. DOWNER THOMAS L. DRISCOLL PETER DUCHESNEAU CHARLES P. FAIRCHILD DARIN J. FEINSTEIN THOMAS H. HOBERMAN CINDY JOHNSON ANTHONY KIDD LAUREN B. LEICHTMAN WAYNE LEVIN

SANFORD P. PARIS DANIEL M. PETROCELLI HON. ROBERT H. PHILIBOSIAN JOHN A. SCHULMAN LARRAINE D. SEGIL JOHN B. SPIRTOS ROBERT G. VAN SCHOONENBERG HON. ARLEIGH M. WOODS GEORGE WOOLVERTON JULIE K. XANDERS FRANK L. ELLSWORTH, Trustee Emeritus SHELDON A. GEBB, Trustee Emeritus HON. RONALD S.W. LEW, Trustee Emeritus HON. J OHN F. PARKER, Trustee Emeritus BRIAN A. SUN, Trustee Emeritus

ADMINISTRATION MICHAEL J. DOWNER, B.A., J.D., Chair of the Board of Trustees SUSAN WESTERBERG PRAGER, B.A., M.A., J.D., Dean and Chief Executive Officer MICHAEL CARTER, B.A., M.B.A., Vice President and Chief Operating Officer CHRISTOPHER DAVID RUIZ CAMERON, B.A., J.D., Vice Dean NYDIA DUENEZ, B.A., J.D., Dean of Students and Diversity Affairs DOREEN E. HEYER, B.S., M.S., Senior Associate Dean for Academic Administration MARCIE CANAL, B.A., Associate Dean for Administrative Services WARREN GRIMES, B.A., J.D., Associate Dean for Research DEBRA L. LEATHERS, B.A., Associate Dean for Institutional Advancement ROBERT MENA, B.A., M.S., Ed. D., Associate Dean for Student Affairs HARRIET M. ROLNICK, B.A., J.D., Associate Dean for SCALE® BYRON STIER, B.A., J.D., LL.M., Associate Dean for Strategic Initiatives JULIE K. WATERSTONE, B.A., J.D., Associate Dean for Experiential Learning LINDA A. WHISMAN, B.A., M.L.S., J.D., Associate Dean for Library Services LISA M. GEAR, B.A., Assistant Dean for Admissions SHAHRZAD POORMOSLEH, B.A., J.D., Assistant Dean for Career Services

FULL-TIME FACULTY RONALD G. ARONOVSKY, A.B., J.D., Professor of Law DEBRA LYN BASSETT, M.S., J.D, John J. Schumacher Chair and Professor of Law PAUL A. BATEMAN, B.A., M.A., Ph.D., Professor of Legal Analysis, Writing and Skills MICHAEL J. BERGER, B.A., M.A., J.D., Associate Professor of Law BETH CALDWELL, B.A., M.S.W., J.D., Professor of Legal Analysis, Writing and Skills ALAN L. CALNAN, B.A., J.D., Professor of Law CHRISTOPHER DAVID RUIZ CAMERON, B.A., J.D., Vice Dean and Justice Marshall F. McComb Professor of Law MARK CAMMACK, B.A., J.D., Professor of Law CATHERINE L. CARPENTER, B.A., J.D., The Honorable Arleigh M. Woods and William T. Woods Professor of Law CRAIG W. CHRISTENSEN, B.S., J.D., Professor of Law Emeritus LAURA DYM COHEN, B.S., J.D., Director of Street Law Clinic and Public Service Programs and Clinical Professor of Law ALEXANDRA D’ITALIA, B.A., J.D., M.P.W., Director of Writing Center and Associate Professor of Law MICHAEL B. DORFF, A.B., J.D., Michael & Jessica Downer Endowed Chair and Professor of Law MICHAEL M. EPSTEIN, B.A., J.D., M.A., Ph.D., Supervising Editor of the Journal of International Media and Entertainment Law and Professor of Law JOSEPH P. ESPOSITO, B.S., J.D., Co-Director of the Trial Advocacy Honors Program and Professor of Law SILVIA F. FAERMAN, Abogada (law degree), Director of Summer Law Program in Buenos Aires and Associate Professor of Law JENNY R. FEE, B.A., J.D., Supervising Attorney, Children’s Rights Clinic and Lecturer in Law KATHRYN FEHRMAN CAMPBELL, B.A., J.D., Associate Professor of Legal Analysis, Writing and Skills JAMES M. FISCHER, J.D., Professor of Law DEBORAH L. FORMAN, A.B., J.D., Visiting Professor of Law MICHAEL H. FROST, B.A., M.A., Ph.D., Professor of Legal Analysis, Writing and Skills NORMAN M. GARLAND, B.S., B.A., J.D., LL.M., Professor of Law BRYANT G. GARTH, B.A., J.D., Ph.D., Dean Emeritus JAY W. GENDRON, B.A., J.D., Visiting Associate Professor of Law ANAHID GHARAKHANIAN, B.A., J.D., Director of the Externship Program and Professor of Legal Analysis, Writing and Skills ANITA L. GLASCO, A.B., J.D., M.C.L., Professor of Law Emeritus

WARREN S. GRIMES, B.A., J.D., Associate Dean for Research and Irving D. and Florence Rosenberg Professor of Law ISABELLE R. GUNNING, B.A., J.D., Professor of Law PRIYA S. GUPTA, B.A., MSc., J.D., Faculty Director of the General LL.M. Program and Professor of Law DANIELLE KIE HART, B.A., J.D., LL.M., Professor of Law JOHN HEILMAN, B.S., J.D., M.P.A., M.R.E.D., Co-Director of Academic Success and BarRelated Programs and Professor of Law ROMAN J. HOYOS, A.B., J.D., M.A., Ph.D., Professor of Law HILA KEREN, LL.B., Ph.D., Professor of Law JOERG W. KNIPPRATH, B.A., J.D., Professor of Law CRISTINA C. KNOLTON, B.A., J.D., Professor of Legal Analysis, Writing and Skills HERBERT T. KRIMMEL, B.S., M.Acc., J.D., Professor of Law JAMES A. KUSHNER, B.B.A., J.D., Professor of Law Emeritus ROBERT C. LIND, B.E.S., J.D., LL.M., Co-Director of the Donald E. Biederman Entertainment and Media Law Institute and Irwin R. Buchalter Professor of Law CHRISTINE METTEER LORILLARD, B.A., M.A., Ph.D., Professor of Legal Analysis, Writing and Skills Emeritus ROBERT E. LUTZ, B.A., J.D., Paul E. Treusch Professor of Law SUSAN J. MARTIN, B.A., J.D., Professor of Law Emeritus ARTHUR F. MCEVOY, A.B., J.D., M.A., Ph.D., Professor of Law JONATHAN M. MILLER, B.A., J.D., Professor of Law VIVIEN T. MONTZ*, B.A., J.D., Professor of Legal Analysis, Writing and Skills UDOKA NWANNA, B.A., J.D., Visiting Professor of Legal Analysis, Writing and Skills NEIL OLLIVIERRA, B.A., J.D., Co-Director of the Donald E. Biederman Entertainment and Media Law Institute and Associate Professor of Law AMY PEIKOFF, B.S., J.D., Ph.D., Visiting Associate Professor of Law and Research Fellow for the Study of Objectivism SUSAN WESTERBERG PRAGER, B.A., M.A., J.D., Dean, Chief Executive Officer and Professor of Law ROBERT A. PUGSLEY, B.A., J.D., LL.M., Professor of Law Emeritus in Residence GOWRI RAMACHANDRAN, B.A., M.A., J.D., LL.M., Professor of Law ANDREA RAMOS, B.A., J.D., Director of the Immigration Law Clinic and Clinical Professor of Law NATALIE RODRIGUEZ, B.A., J.D., Co-Director of Academic Success and Bar-Related Programs and Associate Professor of Law JACQUELYN K. ROGERS, B.S., J.D., Academic Success Fellow and Adjunct Associate Professor of Law HARRIET M. ROLNICK, B.A., J.D., Associate Dean for SCALE® and Associate Professor of Law Michael D. Scott, B.S., J.D., Professor of Law BILL H. SEKI, B.A., J.D., Co-Director of the Trial Advocacy Honors Program and Professor of Law BUTLER D. SHAFFER, B.S., B.A., J.D., Professor of Law Emeritus

*In Memoriam

IRA L. SHAFIROFF, B.A., J.D., Professor of Law KATHERINE C. SHEEHAN, B.A., M.A., J.D., Professor of Law Emeritus REBECCA A. SIMON, B.A., J.D., Associate Professor of Law, Academic Success and BarRelated Programs JUDY BECKNER SLOAN, B.A., J.D., Professor of Law LIONEL SOBEL, B.A., J.D., Professor of Law Emeritus in Residence and Director of Southwestern’s International Entertainment and Media Law Summer Program in London BYRON G. STIER, B.A., J.D., LL.M., Associate Dean for Strategic Initiatives and Professor of Law J. KELLY STRADER, B.A., M.I.A., J.D., Professor of Law LEIGH H. TAYLOR, B.A., J.D., LL.M., Dean Emeritus and Professor of Law N. KEMBA TAYLOR, B.A., J.D., Professor of Legal Analysis, Writing and Skills JOHN TEHRANIAN, A.B., J.D., Paul W. Wildman Chair and Professor of Law TRACY L. TURNER, B.A., J.D., Director of the Legal Analysis, Writing and Skills Program and Professor of Legal Analysis, Writing and Skills RACHEL VANLANDINGHAM, B.A., M.P.M., J.D., LL.M, Associate Professor of Law JULIA VAZQUEZ, B.A., M.A., J.D., Supervising Attorney, Immigration Law Clinic and Lecturer in Law DOV A. WAISMAN, A.B., M.S., J.D., Associate Professor of Law JULIE K. WATERSTONE, B.A., J.D., Associate Dean for Experiential Learning, Director of the Children’s Rights Clinic and Clinical Professor of Law CATHERINE KUNKEL WATSON, B.A., J.D., Professor of Legal Analysis, Writing and Skills Emeritus LINDA A. WHISMAN, B.A., M.L.S., J.D., Associate Dean for Library Services and Professor of Law WILLIAM WOOD, B.A., M.S.E.L., J.D./M.A., Visiting Associate Professor of Law DENNIS T. YOKOYAMA, B.A., M.S., J.D., Professor of Law

ADJUNCT FACULTY RAHUL AGRAWAL GREGORY W. ALARCON MILENE C. APANIAN MICHAEL BECKMAN BARBARA A. BLANCO HON. DEBORAH BRAZIL FRANK CANNIZZARO ROBYN LEE CHEW TIMOTHY Y. CHUNG LEAH COHEN-MAYS SIANNAH COLLADO ALEXANDER COMIS ANGELA DAVIS THOMAS DEBOE HAROUT DIMIJIAN DEBORAH DROOZ ROBERT N. DURAN PEGGY FARRELL JAMES FELDMAN JUSTIN FELTON GARY P. FINE ALICE J. GARFIELD MAX GAVRON CRAIG GELFOUND JAMES B. GLADSTONE PENELOPE GLASS SEVAN GOBEL DAVID GOLDBERG HON. SCOTT M. GORDON GARY GRADINGER JONATHAN HANDEL HON. J. GARY HASTINGS ROBERT F. HELFING KAREN A. HENRY HOWARD JACOBS VERONICA JEFFERS ALLAN J OHNSON DOUGLAS JOHNSON NEVILLE J OHNSON HON. MARK A. JUHAS HILLARY S. KANE ROBERT KAYNE BRIAN R. KELBERG JUDY A. KIM

ANDREW KNAPP MIRIAM ARONI KRINSKY JESSICA LANGER MARY LAWLER LAWRENCE M. LEBOWSKY JEFFREY M. LENKOV WAYNE LEVIN ZACHARY LEVINE GEROLD W. LIBBY AMY J ANE LONGO KYLE MARKS RICHARD D. MARKS CRAIG MATSUDA HON. DARRELL S. MAVIS TIMOTHY B. MCCAFFREY, JR. HON. ANTHONY M OHR YVETTE MOLINARO KAMAL M OO HERMEZ M ORENO RONI MUELLER ROBERT MYMAN JANET NALBANDYAN HON. DAVID NEUMEISTER CAROLINE NEWCOMBE CHRISTOPHER O’CONNELL DAVID OSTROVE HON. YVETTE PALAZUELOS TIGRAN PALYAN SHERIN PARIKH HON. AMY M. PELLMAN JANET PHILIBOSIAN JUAN A. RAMOS GEORGE H. RUIZ ALICE A. SALVO LOVEE SARENAS LARRAINE SEGIL AMANDA M. SEWARD TODD A. SMITH EDWARD C. STARK CATHERIN VALERIO BARRAD NORMAN VAN TREECK SONIA YAGURA JULIE ZATZ

The Lawyer’s Role in Promoting the Use of Fair Use Jon M. Garon* A third party’s ability to exploit a literary work, photograph, film, song, or database will depend on the nature of the copyright owner’s work and the third party’s usage. This article provides an introductory standardization to help lawyers answer questions regarding the contours of copyright, fair use, and select limitations on copyright in order to provide a simple guide to reduce a bit of the uncertainty. The purpose is to provide a framework for how a lawyer can respond to the common question of whether a particular use of copyrighted works is permitted by a third party and to place the framework for the answer in the context of an opinion letter. In this way, the third party user will have an answer that can be relied upon when seeking publication or Errors & Omissions Insurance for distribution and exhibition.

“Reality changes; in order to represent it, modes of representation must change.”

—Bertolt Brecht** I.

INTRODUCTION

Over the past few decades, the global economy has transformed into a multinational, highly networked information economy. Regardless of whether the wealth is transferred through goods, labor, or services, it is the

* Dean and Professor of Law, Nova Southeastern University Shepard Broad College of Law; J.D., Columbia University School of Law 1988. This article was prepared as part of the 2016 American Intellectual Property Law Association Spring Meeting, May 17-19, 2016. Available at SSRN: http://ssrn.com/abstract=2750462. The author wishes to thank Krystal Acosta for her assistance in the preparation of this article. ** Bertolt Brecht, Popularity and Realism (1938), in THEODOR ADORNO, ET AL., AESTHETICS AND P OLITICS 82 (London: New Left Review of Books 1977).

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quality of information which fuels the transaction and adds to its value. 1 All of this information is affected by copyright. While mere factual data is not protected by copyright law in the United States, lawyers and courts must still look to the Copyright Act to determine the point where such collections of information become compilations of protected property. Similarly, depictions, descriptions, and other information transition from the realm of the unprotected data to the dominion of copyright based on the nature, character, and use of the data. At the other end of the creative spectrum, even the most expressive works are sometimes available to another author because of fair use or explicit statutory limitations on the owner’s rights.

Enter the lawyers. Because a third party’s ability to exploit a literary work, photograph, film, song, or database will depend on the nature of the copyright owner’s work and the third party’s usage, the answer invariably is that “it depends.” This may be an ideal response while in law school, but it is hardly the transparent and efficient solution sought by most clients. This article provides some introductory standardization to help lawyers answer questions regarding the contours of copyright, fair use, and select limitations on copyright in order to provide a simple guide to reduce a bit of the uncertainty. Rather than provide a comprehensive restatement of copyright, the purpose is to provide a framework for how a lawyer can respond to the common question of whether a particular use of copyrighted works is permitted by a third party. Moreover, since the lawyer’s private response is often insufficient for the third party user, this article attempts to go one step further and place the framework for the answer in the context of an opinion letter. In this way, the third party user will have an answer that can be relied upon when seeking publication or Errors & Omissions Insurance for distribution and exhibition.

II. INITIAL RIGHTS ACQUISITION Guiding attorneys who represent “authors” requires broad generalizations. The category of authors includes novelists, playwrights, computer programmers, choreographers, sculptors, lawyers, academics, photographers, film directors, and musicians. 2 As used in this article, all

1. MANUEL CASTELLS, THE RISE OF THE NETWORK SOCIETY: THE INFORMATION AGE : ECONOMY, SOCIETY, AND CULTURE VOLUME I, 108 (2010) (“the knowledge component of goods and services becomes decisive in terms of value added”).

2. See Russ Versteeg, Defining “Author” for Purposes of Copyright, 45 AM. U. L. REV. 1323, 1332 (1996) (“the contemporary, majority definition of “author” is clear, because the majority of cases decided under the 1976 Act hold that an author is someone who contributes something that is copyrightable on its own.”); Childress v. Taylor, 945 F.2d 500, 505 (2d Cir. 1991). C.f. Garcia v. Google, Inc., 786 F.3d 733, 741 (9th Cir. 2015) (A claim by an actress in a motion picture scene failed to establish copyright authorship. The Ninth Circuit then adopted “longstanding practices [of

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these creators of copyrighted materials will be included under the term “author” even though the creative process will differ greatly from one category to another, and the scope of the copyright will vary as a result.

As discussed below, the author seeking representation will be both asking for assistance in establishing the copyright ownership of her original work and seeking to show that the source material incorporated into the new work was permitted under the Copyright Act. In other words, every author needs to use the Copyright Act as both sword and shield, asserting rights against some potential third parties while defending claims against other potential parties. 3 This should generate a very balanced view of copyright based on a “divide and choose”4 approach to copyright ownership, but unfortunately that is not typically the case. 5 Since an author will be both asserting and defending the scope of each copyright in some hypothetical future, the author should seek the most equitable rules. However, copyright owners with large portfolios of works are more likely to be asserting copyright, while creators of fan fiction, factual works, and documentary filmmakers will be more likely to be defending the unauthorized use of copyrights owned by others.6 Authors seek interpretations to copyright that further their creative and economic interests.7 Lawyers also tend to align towards these economic approaches based on the needs of their clients.

In developing the preliminary assessment, this balance is reflected as well. The purpose of the approach is to help assure the author she has sufficient rights to commercially exploit the work. An author seeking noncommercial exploitation, such as a fan writing fan fiction8 or an academic using material for the classroom, would need fewer rights. 9 For purposes of this article, the assessment will focus on the needs of a documentary filmmaker. The documentary filmmaker best illustrates the the Copyright Office which] do not allow a copyright claim by an individual actor or actress in his or her performance contained within a motion picture.”).

3. See Steven M. Brams, Fair Division, in BARRY R. WEINGAST & DONALD WITTMAN, HANDBOOK OF P OLITICAL ECONOMY (2005), http://www.nyu.edu/gsas/dept/politics/faculty/ brams/fd_handbook.pdf.

4. See id. In the “divide and choose” methodology, one child slices the pie at the source of the conflict and the other child selects the preferred piece.

5. See Jon M. Garon, Normative Copyright: A Conceptual Framework for Copyright Philosophy and Ethics, 45 CORNELL L. REV. 1278, 1281 (1996).

6. See id. at 1281-82.

7. See Maria A. Pallante, The Next Great Copyright Act, 36 COLUM. J.L. & ARTS 315, 319 (2013) (discussing the “intensity with which interested parties across the copyright spectrum sometimes make their views known—and the public’s confusion, if not aversion, when it comes to copyright issues . . .”).

8. See Warner Bros. Entm’t Inc. v. RDR Books, 575 F. Supp. 2d 513 (S.D.N.Y. 2008) (upholding injunction of commercial publication based on extensive, commercialized fan fiction publication).

9. See, e.g., 17 U.S.C. § 110(1) (2016) (copies for classroom instruction).

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author at the center of the copyright balance. She is creating a highly expressive, time-intensive factual work. The author has very strong incentives to assert strong copyright ownership against unauthorized reproduction or distribution of the work. There is a theatrical distribution market and a market for the works in television and online distribution. At the same time, the documentary is often composed of archival footage, unauthorized clips, and filming at locations where clearance of all preexisting copyright is impractical.

Step one is for the lawyer to be sure that he represents the right party or parties. Working with filmmakers and other collaborative artists, it is very common to learn that during the development of the project there had originally been a different team of writers and creators.10 Prior agreements, whether oral or in writing, could give rise to the claim of joint authorship. 11 “Joint authors co-owning copyright in a work ‘are deemed to be tenants in common,’ with ‘each having an independent right to use or license the copyright, subject only to a duty to account to the other co-owner for any profits earned thereby.’”12 Under the general articulation of the co-authorship rule, “[a] coauthorship claimant bears the burden of establishing that each of the putative co-authors (1) made independently copyrightable contributions to the work; and (2) fully intended to be co-authors.”13 The requirement of an independently copyrightable contribution provides an excellent evidentiary step, but the Seventh Circuit has limited the requirement in certain situations.14 The lawyer should be very direct, preferably with a written questionnaire, asking about earlier collaborators, incomplete earlier projects, or other opportunities for third parties to make ownership claims regarding 10. See, e.g., Thomson v. Larson, 147 F.3d 195, 197-98 (2d Cir. 1998) (Broadway musical Rent “began in 1989 as the joint project of Billy Aronson and composer Jonathan Larson. Aronson and Larson collaborated on the work until their amicable separation in 1991.” Lynn Thomson was later hired as dramaturg and ultimately wrote approximately 25% of the musical’s book, but was denied any co-authorship copyright.).

11. 17 U.S.C. § 201(a) (2016) (“Initial Ownership. — Copyright in a work protected under this title vests initially in the author or authors of the work. The authors of a joint work are coowners of copyright in the work.”).

12. Cmty for Creative Non-Violence v. Reid, 846 F.2d 1485, 1498 (D.C. Cir. 1988), aff’d, 490 U.S. 730 (1989).

13. Thomson v. Larson, 147 F.3d at 200. See Childress v. Taylor, 945 F.2d 500, 509 (2d Cir. 1991).

14. Gaiman v. McFarlane, 360 F.3d 644, 659 (7th Cir. 2004) (not requiring independent creative element and endorsing the approach of David Nimmer that “if authors A and B work in collaboration, but A’s contribution is limited to plot ideas that standing alone would not be copyrightable, and B weaves the ideas into a completed literary expression, it would seem that A and B are joint authors of the resulting work” (quoting 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 6.07 (2003))).

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the material. Even if there is no valid copyright claim, there may be valid contractual rights that require clarification to allow the author to provide a valid chain of title for distribution of the project.

Step two is to determine whether the documentary filmmaker is required to secure underlying rights to the story. 15 “True stories cannot be ‘owned’ by anyone.”16 However, if the documentary has used the facts from a book or other single source of research, the filmmaker may need to acquire the right to adapt that source into a documentary film. 17 Since copyright protects the order, selection, and arrangement of facts and other information that is otherwise outside the scope of copyright, the author of the underlying work may be able to claim copyright in that expression. 18 At the same time, copyright does not extend to either the facts or ideas involved in portraying a true story,19 so the documentary filmmaker does not need to license or “clear” every possible resource.

Similarly, plagiarism is not an actionable tort under federal law and authors of source material do not generally need to be cited in documentary films. 20 Plagiarism is distinct from copyright infringement. 21 Legal liability for violations of plagiarism rules are generally limited to academic and research settings, such as student submissions, researchers, or academic submissions. 22 A documentary film, however, may be created in such 15. See MICHAEL C. DONALDSON & LIST A. CALLIF, COPYRIGHT & CLEARANCE 135 (4th ed.

2014) (“[a]n underlying property is the source material used as the basis for a script that is not wholly original with the author”); JON M. GARON, THE INDEPENDENT FILMMAKER’S LAW & BUSINESS GUIDE 50 (2d ed. 2009) (“The First Amendment grants the filmmaker the right to retell a true story using his own expression. Whether presented in documentary form or dramatized, true stories have a natural resonance for audiences, which in turn provide excellent marketing opportunities.”).

16. GARON, supra note 15, at 50.

17. See, e.g., Bernard Weinraub, Plagiarism Suit Over “Amistad” is Withdrawn, N.Y. TIMES, Feb. 10, 1998, at A10 (Barbara Chase-Riboud, withdrew her lawsuit against the historical drama Amistad produced by Dreamworks SKG. “Ms. Chase-Riboud herself became the target of attacks,

by Dreamworks lawyers who said she had ‘lifted entire passages’ and ‘directly taken’ from a book

by William A. Owens about the Amistad uprising.”).

18. See 17 U.S.C. § 103 (2016) (“(a) The subject matter of copyright as specified by section 102 includes compilations and derivative works, but protection for a work employing preexisting material in which copyright subsists does not extend to any part of the work in which such material has been used unlawfully.”).

19. 17 U.S.C. § 102(b) (2016).

20. See Stuart P. Green, Plagiarism, Norms, and the Limits of Theft Law: Some Observations on the Use of Criminal Sanctions in Enforcing Intellectual Property Rights, 54 HASTINGS L.J. 167, 199 (2002) (“Plagiarism is prohibited by various codes of academic and professional ethics.”); see also A.V. ex rel. Vanderhye v. iParadigms, LLC, 562 F.3d 630, 639 (4th Cir. 2009).

21. Green, supra note 20, at 201 (“the rule against plagiarism departs from the fundamental concept in copyright law that only the “expression” and not the “idea” or “facts” that underlie such expression is protected.”).

22. See Ralph D. Mawdsley, The Tangled Web of Plagiarism Litigation: Sorting Out the Legal Issues, 2009 B.Y.U. EDUC. & L.J. 245, 246 (2009) (“The enforcement of academic penalties against

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settings. In those instances, the author is under additional obligations to identify and properly attribute all source material. 23 Because factual works could be based on a large range of sources, the author will not be able to prove that she did not use a particular source. To overcome this evidentiary difficulty, the author should keep a careful log of the source material actually used. The evidence of the sources utilized will go a long way to diminish claims that a particular source was used without attribution.24 Step three involves a review of the project itself. It is preferable that this work is done at least twice—first at the script stage and again at the final cut stage. 25 The first instance of clearance is to help drive the decisions regarding the project towards content that is free from ownership and title disputes. 26 “[S]cript clearance identifies all the script elements that may give rise to third-party ownership claims. It will identify the potential legal issues, and will instruct the film company to consult with the production attorney to resolve those issues.”27 Even a documentary filmmaker can often choose what locations to select when creating film footage. The choice of camera location will impact whether third party copyrighted works, trademarked products, and other protected elements are included or excluded from the shots. 28 In many instances, these elements are fundamental to the documentary; but in other shots, these complications can be avoided simply by understanding the nature of the location and the purpose of the scene. 29 Each clearance problem adds to the transaction costs and reduces the potential to commercialize the project. 30 Lawyers should help the authors avoid those clearance issues that are not relevant to the essence of the work.

The final clearance review should be a scene-by-scene, or frame-byframe, review of the final cut of the documentary to identify each third party right being used in the final project. Billboards, tee-shirts, background music, product labels, recognizable faces, individuals’ names, background artworks, operating televisions, and computer screens all may involve

plagiarists has resulted in an increasing number of lawsuits with a surprisingly wide range of legal claims.”).

23. See GARON, supra note 15, at 255-57 24. Id. 25. See generally DONALDSON & CALLIF, supra note 15, at 403-65.

26. See GARON, supra note 15, at 224 (discussing script clearance).

27. Id. at 224-25.

28. Id. at 225.

29. Id. at 226.

30. Id.

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intellectual property or other third party rights that must be addressed. 31 Either the author has express permission to use the right, preferably in a written signed agreement, or the author will seek an exemption from the claim that can be made by the third party. 32 Typically, there is some giveand-take with the clearance attorney. Scenes may be shortened, coverage shots may be substituted, or other steps may occur to resolve various clearance issues before the final version of the film is locked as complete. 33 III. JUDGMENT CALLS NEEDED TO MAP THE COPYRIGHT LANDSCAPE To sell the work to a distributor, the author will need to prove she has the necessary rights. If all the rights have been acquired through the use of express, written, and signed agreements, then a summary of the rights acquired and corresponding signed documents will complete the process. 34 If, instead, some or all of the rights are not acquired through written agreements, then she will require evidence that the rights are not needed. 35 For documentary filmmakers, this generally takes the form of an opinion letter.36 In a typical Errors & Omissions application, for example, the insurer will ask, “If the production is a documentary, are you relying on the Fair Use Doctrine? If yes, please attached a copy of an opinion letter from your clearance attorney that states they have reviewed the final production and the use of the clips.”37 Similarly, the Errors & Omissions application will reference the insurance company’s “clearance procedures” to assure that all the material is wholly original.38 This standard cannot actually be met. Every author stands upon the shoulders of the giants who preceded them, relying on some combination of unprotected ideas, facts, and other public domain materials as the basis of their work; most incorporate a significant amount of source

31. See Ted Gerdes, A Legal Checklist of Basic Clearance Procedures, GERDES LAW, http://www.gerdeslaw.com/wp-content/themes/gerdes/inc/checklist.pdf (last visited Sept. 26, 2016) (“You and your attorney should monitor the production or other work to be insured at all stages, from inception through final cut or edit, with a view to eliminating all material that could give rise to a claim.”).

32. Id. (“You have to have written agreements between you and the creators, authors, writers, and owners of all material. This includes getting authorization for quotations from copyrighted works that are used in the work.”).

33. See GARON, supra note 15, at 224-27.

34. Id. 35. Id. at 235-36.

36. See DONALDSON & CALLIF, supra note 15, at 425-36.

37. Id. at 436 (form of Hiscox Insurance Company Inc.).

38. See id. at 437.

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material. 39 As a result, an admonition to an author to use only original material stands as both naïve and impractical. 40 The Errors & Omissions application is buttressed by a distribution agreement that requires a similarly overbroad warranty and guarantee: The Writer hereby represents and warrants that all of the work (and the Property, if any) shall be wholly original with Writer and none of the same has been or shall be copied from or based upon any other work unless assigned in this Agreement. The reproduction, exhibition, or any use thereof of any of the rights herein granted shall not defame any person or entity nor violate any copyright or right of privacy or publicity, or any other right of any person or entity. . . .41

Although such a warranty is common, the author required to sign such an agreement cannot truly fulfill the promise that the work is wholly original.

Instead, the author is guaranteeing that no party has legal rights to challenge the content of the work and claim authorship or ownership. 42 Nonetheless, the “wholly original” phrasing remains a common form for the author’s representation and warranties.

For an attorney providing a copyright opinion letter in this transaction, the opinion must be limited to identifying areas where a third party is most likely to assert rights and then explain why such assertions are without merit.

The Copyright Act provides that copyright protects works of original

39. See Bradley W. Grout, Wobbling on the Shoulders of Giants: The Supreme Court’s Failure in Lotus v. Borland, 4 J. INTELL. PROP. L. 77, 121 (1996) (“This phrase comes from Isaac Newton’s famous statement: ‘If I have seen farther than other men, it is because I have stood on the shoulders of giants.’”). Newton, in fact, was paraphrasing an earlier quotation attributed to John of Salisbury from 1159. See Standing on the Shoulders of Giants, PHRASE FINDER, http://www.phrases.org.uk/meanings/268025.html (last visited Sept. 26, 2016).

40. See JAMES BOYLE, THE PUBLIC DOMAIN : ENCLOSING THE COMMONS OF THE MIND 48 (2008).

[I]nformation products are often made up of fragments of other information products; your information output is someone else’s information input. These inputs may be snippets of code, discoveries, prior research, images, genres of work, cultural references, or databases of single nucleotide polymorphisms—each is raw material for future innovation. Every increase in protection raises the cost of, or reduces access to, the raw material from which you might have built those future products.

Id. at 48. See also Andrew Gilden, Raw Materials and the Creative Process, 104 GEO. L.J. 355, 361-62 (2016).

41. PublicFilmWorks Writers Agreement, PUBLICFILMWORKS, http://www.sec.gov/ Archives/edg–ar/data/1108730/000104746904015641/a2135186zex-10_3.htm (last visited Sept.

26, 2016).

42. In this example, the author is required to make the guarantee regarding ownership of copyright, publicity rights, trademark interests, and privacy rights as well as guarantee that the author has not defamed any person through the creation and distribution of the work. See KELLY CRABB, THE MOVIE BUSINESS: THE DEFINITIVE GUIDE TO THE LEGAL AND FINANCIAL SECRETS OF GETTING YOUR M OVIE M ADE 35 (2005).

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authorship which have been fixed in a tangible medium of expression. 43 The law, however, then immediately excludes categories of information and data that are statutorily excluded from copyright, including facts, ideas, processes, or discoveries.44  Ideas are not protected by copyright, but the expression of those ideas will be, so the telling of a true story is copyrightable, but the copyright will not stop another party telling that same story as long as the second story is not copied from the first; 45  Facts are not protected by copyright, but the creative order, selection, and arrangement of facts may be protected as a compilation;46  A copyrighted work may not be copied or reproduced without permission, but another party who makes a similar work without resorting to copying has a copyright in her work as well; 47  Titles to literary works are not protected by copyright, 48 though they may sometimes be protected by trademark; 49

43. 17 U.S.C. § 102 (2016). See Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345 (1991) (“The sine qua non of copyright is originality.”).

44. 17 U.S.C. § 102(b) (“In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.”); Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 556 (1985) (“No author may copyright his ideas or the facts he narrates.”).

45. Mazer v. Stein, 347 U.S. 201, 217 (1954) (“Unlike a patent, a copyright gives no exclusive right to the art disclosed; protection is given only to the expression of the idea—not the idea itself.”); Autoskill v. National Educational Support Systems, Inc., 994 F.2d 1476, 1487 (10th Cir. 1993) (“Separating idea from expression, then, is one of the basic parts of a substantial similarity analysis.”); Sheldon v. Metro-Goldwyn Pictures Corporation, 81 F.2d 49 (2d Cir. 1936), cert, denied, 298 U.S. 669 (1936); Tetris Holding, LLC v. Xio Interactive, Inc., 863 F. Supp. 2d 394, 400 (D. N.J. 2012).

46. Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 350-51 (1991) (“A factual compilation is eligible for copyright if it features an original selection or arrangement of facts, but the copyright is limited to the particular selection or arrangement. In no event may copyright extend to the facts themselves.”); Baker v. Selden, 101 U.S. 99 (1880).

47. Sheldon v. MGM Pictures Corp., 81 F.2d 49, 54 (2d Cir. 1936) (“[I]f by some magic a man who had never known it were to compose anew Keats’s ‘Ode on a Grecian Urn,’ he would be an ‘author,’ and if he copyrighted it, others might not copy that poem, though they might of course copy Keats’s.”).

48. 37 C.F.R. § 202.1 (“The following are examples of works not subject to copyright and applications for registration of such works cannot be entertained: (a) Words and short phrases such as names, titles, and slogans; familiar symbols or designs; mere variations of typographic ornamentation, lettering or coloring; mere listing of ingredients or contents . . .”).

49. See Heirs of Estate of Jenkins v. Paramount Pictures Corp., 90 F. Supp. 2d 706, 711 (E.D. Va. 2000), aff’d sub nom. Evans v. Paramount Pictures Corp., 7 F. App’x 270 (4th Cir. 2001); Rogers v. Grimaldi, 875 F.2d 994, 998 (2d Cir. 1989) (“[I]t is well established that where the title of a movie or a book has acquired secondary meaning . . . the holder of the rights to that title may prevent the use of the same or confusingly similar titles by other authors”); Warner Bros. Pictures

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Choreography is protected by copyright, but mere dance steps are not; 50  Characters may be protected by copyright, but only if they are fully developed and somewhat independent of the stories in which they are expressed;51  Including a fleeting or indistinct reproduction of another’s work is often de minimis and therefore too insubstantial to give rise to copyright infringement; 52  A work that is no longer protected by copyright because the term has expired is free for any party to use, but the author who creates a derivative work from that source may claim copyright in her contribution; 53 and  Otherwise exclusive rights to copyright are not infringed by fair use, including reproduction “for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research . . .”54 When writing an opinion letter regarding clearance for a documentary, there may be a variety of distinction questions asked by the insurance carrier or the distributor: title clearance; music clearance; clip (re-use) clearance; and personal rights clearance.55 The distributor will typically require that the clearance documentation take into account the different legal standards v. Majestic Pictures Corp., 70 F.2d 310, 311 (2d Cir.1934) (titles “may not be used by a competitor to deceive a public which has long attributed [the title] to complainant’s moving pictures”).

50. Horgan v. Macmillan, Inc., 789 F.2d 157, 161 (2d Cir. 1986) (“The Act does not define choreography, and the legislative reports on the bill indicate only that ‘social dance steps and simple routines’ are not included.” (citing H.R. Rep. No. 1476, 94th Cong., 2d Sess. 53–54, reprinted in 1976 U.S. Code Cong. & Ad.News 5659, 5666-67).

51. Warner Bros. Entm’t v. X One X Prods., 644 F.3d 584, 597 (8th Cir. 2011) (“It is clear that when cartoons or movies are copyrighted, a component of that copyright protection extends to the characters themselves, to the extent that such characters are sufficiently distinctive.”); Gaiman v. McFarlane, 360 F.3d 644, 661 (7th Cir. 2004) (“[A] stock character, once he was drawn and named and given speech . . . became sufficiently distinctive to be copyrightable.”).

52. Newton v. Diamond, 388 F.3d 1189, 1192–93 (9th Cir. 2004) (“For an unauthorized use of a copyrighted work to be actionable, the use must be significant enough to constitute infringement.”); La. Contractors Licensing Serv., Inc. v. Am. Contractors Exam Servs., Inc., 13 F. Supp. 3d 547, 552 (M.D. La. 2014), aff’d, 594 F. App’x 243 (5th Cir. 2015) (“The de minimis doctrine provides that if unauthorized copying is sufficiently trivial, the law will not impose legal consequences.” (internal quotations omitted)).

53. Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 33 (2003) (“The right to copy, and to copy without attribution, once a copyright has expired, like “the right to make [an article whose patent has expired]—including the right to make it in precisely the shape it carried when patented—passes to the public.” (citing Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 230 (1964); Warner Bros. Entm’t, 644 F.3d at 596 (“[F]reedom to make new works based on public domain materials ends where the resulting derivative work comes into conflict with a valid copyright.”).

54. 17 U.S.C. § 107 (2016).

55. See Gerdes, supra note 31.

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regarding copyright and personal clearance rights for each geographic territory acquired. 56 Some of these interests focus on areas outside copyright, but the approach is similar for those legal issues.

Titles provide a good example of how these rights overlap. Even though titles are not protected by copyright, and are only protected by trademark if they have acquired secondary meaning, the distributor may still require an opinion letter. The Motion Picture Association of America maintains the Title Registration Bureau, a title registry that binds MPAA members and other distributors that have joined the agreement. 57 Even if the author has not elected to join the registry, the potential distributor of the film may have done so, and as a result, the MPAA registry must be reviewed prior to the selection and marketing of the title. Similarly, non-film uses may trigger claims of trademark infringement. For example, the film Drop Dead Gorgeous had originally hoped to use the title “Dairy Queens” for its story of a Minnesota beauty queen competition, but the proposed title raised objections from the restaurant chain owning a similar trademark. 58 The lawyer and the clearance service must look to trademark searches, MPAA Title Registration Bureau registry searches, copyright office searches for literary works using the title in a series, and similar sources to create the factual evidence that the distributor is not contractually obligated not to use the title and there is no likelihood of confusion with an owner of a similar trademark.

The opinion letter for copyright will tend to balance the analysis between concerns that a third party cannot assert a lawful copyright and concerns that a third party who owns a lawful copyright cannot assert that right because of fair use or another exemption under the statute.

IV. THE ANATOMY OF THE OPINION LETTER The opinion letter allows both the insurance company and the distributor to rely on the facts specified and the conclusions of law related to scope of the law covered and the facts reviewed. Although there is a paucity of published opinions on copyright issues, there is useful litigation to help understand opinions from patent law cases:

56. See id. (“All necessary rights must be obtained that cover domestic and foreign territories, including any extensions and renewals for all literary material (other than original or unpublished material) contained in the insured production.”).

57. See Tom Isler, The Art of the Movie-Title Steal, PENN LAW: DOCS & THE LAW BLOG (Apr. 16, 2014), https://www.law.upenn.edu/live/news/4690-the-art-of-the-movie-title-steal (discussing the 1916 silent short entitled The Butler retained precedence so that a Weinstein Company film was permitted only to use Lee Daniel’s The Butler as its title).

58. Kate Brown, How to Advertise a Movie Without Getting Sued, DOTTED LINE REP. (Mar. 27, 2014), http://dlreporter.com/2014/03/27/how-to-advertise-a-movie-without-getting-sued.

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One can evaluate whether a written opinion is detailed, includes an analysis for each claim of the patent at issue, and demonstrates diligent search of the prior art and a review of prosecution history as well as possible counter arguments that will likely be faced and the probability of their success in litigation. A written opinion may additionally reflect the completeness of the data provided to counsel which is discoverable from the client and attorney without implicating more difficult problems of waiver of underlying work product.59

Building from this example, a thorough copyright law opinion will similarly provide an analysis of each copyright scope or fair use claim, clearly identify the scope of the research involved in the legal and factual search, and expressly identify the limitations of the opinion. 60 The factual research need not be original. “The lawyers responsible for preparing an opinion letter usually do not have personal knowledge of the factual information necessary to support the information in the letter. Instead, the lawyers rely on information that they obtain from others, especially the client company’s officials and public records.”61 Provided the opinion letter specifies that the opinion relies upon the records of the author, the opinion can verify the form of the copyright releases obtained and the parties who executed such releases without checking the surrounding facts and circumstances of each signature.

Copyright and patent differ in many key respects, so overreliance on the jurisprudence involving patent opinions may overstate the confidence an attorney can have in copyright opinion practice. Nonetheless, patent opinions have some standardized forms that may help the copyright opinion draftsman.

These include “freedom to operate letters” and “noninfringement opinion letters,” among others.62 “A freedom-to-operate opinion letter typically involves a ‘product clearance’ investigation to proactively identify and dispose of issues arising from patents in the area.”63 The non-infringement opinion seeks to distinguish the clients’ product or service from those of competing claimants. 64 Reference to such patent forms may be beneficial to copyright attorneys and add some consistency across

59. K.W. Muth Co. v. Bing-Lear Mfg. Grp., 219 F.R.D. 554, 563 (E.D. Mich. 2003).

60. See A. SIDNEY HOLDERNESS, JR. & BROOKE WUNNICKE, LEGAL OPINION LETTERS FORMBOOK §§ 3.01-3.13 (A. Sidney Holderness, Jr & Brooke Wunnicke eds., 3rd ed. 2010).

61. Id. at § 3.03, at 37.

62. Suneel Arora, Preparing or Evaluating Non-Infringement and Other Patent Opinions, in THE 2006 MIDWEST INTELLECTUAL PROPERTY INSTITUTE 1 (Minn. Continuing Educ. ed., 2006) (other categories include “pre-litigation infringement opinion letters” and “invalidity opinion letters”).

63. Id. at 2.

64. Id.

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areas of expertise within a firm. Both copyright and patent share enough similarities to help develop common limitations.

The standard limitations on the opinions are further bolstered by the customary practice involving opinion letters. 65 “[C]ertain assumptions do not [need to be expressly stated] because they have a general application not limited to particular circumstances, for example assumptions that: copies of documents are identical to the originals; signatures are genuine; and parties other than the client are authorized to enter into the subject transaction.”66 The patent field also provides some guidance on the possible benefits of a well-drafted opinion letter. Under patent law doctrine, a sufficiently complete opinion letter can negate a finding of willfulness on the part of an infringer.67 At the same time, the lawyer’s “concern over exposure to claims and liability [is] resulting in more defensive practice.”68 Balancing the benefits of a thorough opinion which provides robust information upon which a third party can rely and realistic concerns that the opinion letter has the potential to open the opining attorney to claims and liability, some initial suggestions may prove helpful.

The copyright opinion letter will likely consist of the following sections:69  Role of Counsel70  Qualification circumscribing Counsel’s Due Diligence71  Qualification limiting to terms of Acquisition Agreement  Qualification limiting Scope of Copyright Law  Qualification limiting Bankruptcy72

65. See Statement on the Role of Customary Practice in Preparing and Understanding ThirdParty Legal Opinions, 63 BUS. LAW. 1277, 1277–79 (2008).

66. HOLDERNESS, JR. & WUNNICKE, supra note 60, at § 3.03.

67. K.W. Muth Co., 219 F.R.D. at 564 (“Because the issue of willful infringement will only arise if the counsel giving the opinion was wrong, the focus of a jury’s willfulness . . . is not on the legal correctness of the opinion of counsel . . . but rather on whether the opinion was sufficient to instill a belief in the accused . . . .”); Thorn EMI N. Am., Inc. v. Micron Tech., Inc., 837 F. Supp.

616, 621 (D. Del. 1993) (“The facts of consequence to the determination of a claim of willful infringement relate to the infringer’s state of mind. Counsel’s mental impression, conclusions, opinions or legal theories are not probative of that state of mind unless they have been communicated to that client.”).

68. HOLDERNESS, JR. & WUNNICKE, supra note 60, at § 3.03 (“This trend has been reflected, for example, in greater use of express exceptions, assumptions and limitations and reduced reliance on customary practice, and in resistance to a greater number of particular opinions that historically were not of concern.”).

69. See PETER SIVIGLIA, COMMERCIAL AGREEMENTS: A LAWYER’S GUIDE TO DRAFTING AND NEGOTIATING § 13:2 (2015).

70. Id. 71. Id. 72. Id.

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Qualification limiting Non-Copyright Issues (unless separately provided)  Substantive Discussions 73  Use of Ideas and Sufficiency of Research  Unrestricted Use of Content in the Public Domain  Fair Use of Film Clips  Fair Use of Quotations  Transformative Nature of Author’s Work  Fair use of Capturing Copyrighted Media in the Process of Filming Something Else  Fair Use for using Copyrighted Material in its Historical Sequence  Signature Block It is common for law firms to have practice groups dedicated to opinion letters. This may not be the same for copyright opinions but the sparse published material suggests there is less information about these opinions than in other areas, and firm practice groups may not be as familiar with these concerns.

Without addressing the substance of each provision of the opinion letter, a few key provisions may prove illustrative. For example, here is suggested language for the Qualification circumscribing Counsel’s Due Diligence: [W]e have made such examination of the law and have examined such other documents as we have deemed necessary or appropriate to render this opinion, including, without limitation, the Memorandum and Articles of Association, of the Company. In our examination we have assumed the genuineness of all signatures, the authenticity and completeness of all documents submitted to us as originals, the conformity to original documents and completeness of all documents submitted to us as copies, and the authenticity of the originals where copies have been submitted. We have no reason to believe that these assumptions cannot be made.74

The scope of the research is quickly and thoroughly limited by the reasonable assumptions for the documents reviewed. To the extent that due diligence is reliant on searches and outside review, these limitations should also be stated. “[T]he freedom-to-operate opinion letter can never guarantee . . . a clear path to market. . . . It is necessarily limited by the effectiveness of the product clearance search, and the conclusions of the

73. See generally Documentary Filmmakers’ Statement of Best Practices in Fair Use, CTR. MEDIA & SOCIAL IMPACT, http://www.cmsimpact.org/fair-use/best-practices/ documentary/documentary-filmmakers-statement-best-practices-fair-use (last visited Sept. 26, 2016) [hereafter Documentary Best Practices].

74. SIVIGLIA, supra note 69, at § 13.2.

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opinion letter should reflect this lack of complete certainty.”75 The search strategies and parameters should be explained, which has the benefit of limiting the third party to its independent assessment regarding the sufficiency of the search. 76 For documentary filmmakers, most of the substantive sections rely heavily on the Documentary Filmmakers’ Statement of Best Practices in Fair Use.77 “In 2005, a coalition of lawyers, law schools, and film industry advocates came together to help outline many of these principles. The effort served both to clarify the practices commonly used by professional documentary filmmakers and to help advocate that those practices met the legal guidelines for fair use.”78 Attorneys drafting opinion letters are very well served by placing opinions on these matters within the context of the Statement of Best Practices in Fair Use. “[T]he work is premised on the observation that over time, courts have tended to defer broadly to the views of practice communities about what constitutes reasonable and appropriate unlicensed use of copyrighted materials in their own fields of activity.”79 More importantly, “[b]roadcasters and insurers accepted fair use terms within normal business practice.”80 This means that opinions buttressed by the language and limitations of the Statement of Best Practices in Fair Use will have credibility with the relevant third parties and make the opinion more likely to support the requests of the author for insurance and distribution.

Having the support of the Statement of Best Practices in Fair Use will assist the attorney in drafting very fact-specific, judgment-laden opinions. In addition to the comment, criticism, news reporting, teaching, scholarship, and research,81 additional broad categories have been carved out by the courts.82

75. ARORA, supra note 62, at 4.

76. See, e.g., DONALDSON & CALLIF, supra note 15, at 419 (providing sample title opinion letter which lists details of title, copyright, and trademark search upon which the opinion is based).

77. See Documentary Best Practices, supra note 73; Patricia Aufderheide & Peter Jaszi, Recut, Reframe, Recycle: The Shaping of Fair Use Best Practices for Online Video, 6 I/S: J. L. & POL’Y FOR INFO. SOC’Y 13, 40 (2010); Peter Jaszi, Copyright, Motion Pictures and Fair Use, 2007 UTAH L. REV. 715 (2007).

78. GARON, supra note 15, at 243.

79. Aufderheide & Jaszi, supra note 77, at 14.

80. Id. at 16.

81. See 17 U.S.C. § 107 (2016).

82. See GARON, supra note 15, at 240-41 (“[F]air use has also developed to include the rights of researchers—such as documentary filmmakers—to make personal copies of entire works for their research archives, backup copies of materials, and to allow consumers to temporarily copy music, television and film for enjoyment at a later time or place.”); Jaszi, supra note 77, at 719 (“[B]roadly speaking, fair use comes in two varieties–one relating to personal or private end uses of copyrighted material and the other to reuses that are arguably ‘productive’ in nature.”).

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The general preamble to fair use is further clarified by four factors which can be weighed by the court in determining whether a particular use constitutes a fair use: In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include— (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.83

No single factor is determinative. Despite the codification of the provision, fair use is the quintessential common law doctrine, with the rules developing slowly and separately in each medium. 84 Musical compositions are treated somewhat differently than sound recordings; 85 narrative commercial films are treated differently than documentaries; 86 and noncommercial video uploads are a world unto themselves. 87 When writing opinion letters, the reference to existing factual litigation serves as the signposts for accepted fair use practices. But at the same time, some decisions have come under fierce criticism for either their outcome or their analysis, so the practitioner must be wary of assuming every case is

83. 17 U.S.C. § 107 (1992).

84. Pamela Samuelson, Unbundling Fair Uses, 77 FORDHAM L. REV. 2537, 2541 (2009) (“[F]air use law is both more coherent and more predictable than many commentators have perceived once one recognizes that fair use cases tend to fall into common patterns, or what this Article will call policy-relevant clusters.”) Professor Samuelson develops a broader matrix for fair use coherency beyond the role of fair use in commercial and consumer publication: The policies underlying modern fair use law include promoting freedom of speech and of expression, the ongoing progress of authorship, learning, access to information, truth telling or truth seeking, competition, technological innovation, and the privacy and autonomy interests of users. If one analyzes putative fair uses in light of cases previously decided in the same policy cluster, it is generally possible to predict whether a use is likely to be fair or unfair.

Id. at 2537. This broader approach may prove very helpful in particular opinion letters and certainly serves as an excellent guide for identifying the underlying beauty and coherence in copyright fair use.

85. Jaszi, supra note 77, at 738-39.

86. See id. at 728.

87. See id. at 714-16.

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good law. 88 As part of my larger project on independent filmmaking, I have previously addressed the four fair use factors for documentary filmmakers: Broadly speaking, the law favors documentary film’s goals of public comment, so the first prong of the four-factor test will generally weigh in the favor of the filmmaker. This does not mean that the documentary need be ponderous or academic to benefit from the clause. Irreverent or polemic, comical or studious, all works improve public knowledge and thereby benefit the public. However, the first prong also specifies that to be considered fair use, a work’s appropriation of copyrighted material must be transformative in nature. Merely reproducing the content without comment does not transform it. Thus, if the documentary provides insight or criticism through the context in which the material is used, it is much more likely to be fair use.

The second prong of the test reflects the fact that stronger copyright protection is [often] given [more] to fictional or highly creative works than to those that are factual. While ideas, facts, formulas, and processes are not even protected by copyright, the manner in which facts are expressed is given modest copyright protection. Fair use offers very wide latitude to make use of such factual expressions, because the copyright should never create a monopoly over the facts or ideas.

For most documentary filmmakers, the most important aspects of the fair use test are the last two prongs. Under the third prong, the law makes clear that less is more. The smaller the portion of a copyrighted work one uses, the greater the chance it is considered fair use. Short quotes are more likely to be fair use than recitation of extensive passages; 30-second clips are more likely to be fair use than 5-minute sequences.

Similarly, the fourth prong balances the economic interests of the copyright holder with those of the documentary filmmaker or others who seek to use copyrighted works without permission. To the extent that the documentary film serves as a competing product with the copyright holder’s own work, it is less likely to be considered fair use. If the documentary filmmaker’s work does not threaten to replace the copyright owner’s work in the market, the documentary will more likely be considered fair use.89

88. See, e.g., Cariou v. Prince, 714 F.3d 694 (2d Cir. 2013) (inexplicably 25 of artist’s 30 paintings were held transformative as a matter of law and thus constituted fair use of the copyrighted photographs, but what distinguished the fair use works from the potentially infringing works was incomprehensible); Bridgeport Music, Inc. v. Dimension Films, 410 F.3d 792 (6th Cir. 2005) (overstating copyright interest in sound recording samples); Dr. Seuss Enterprises, L.P. v. Penguin Books USA, Inc., 109 F.3d 1394 (9th Cir. 1997) (obvious parody of Dr. Seuss’s lyrical style upheld as copyright infringement even in the absence of any particular literal infringement).

89. GARON, supra note 15, at 240-43.

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The important aspect of this approach is its normative power to shape expectations of all the participants in the creative economy. “[C]ommunities of cultural practice can and do make predictive judgments on a more systematic basis. Thus, over time[,] each community evolves a shared understanding of fair use for its own practices—powerful testimony to the power of interpretation of fair use by a creative community.”90 The usefulness of the normative research provided by the Center for Media & Social Impact and other institutions is particularly helpful in the context of the many factual situations that do not have examples of litigation that is on point. They are even more important when the courts struggle to understand the medium or the works and create false landmarks that often take years for the creative community to erase.

Building on the fair use clause, the Statement of Best Practices for Documentary Filmmakers provides specific guidance in areas likely to require opinion letters: ONE: Employing Copyrighted Material as the Object of Social, Political, or Cultural Critique Description: This class of uses involves situations in which documentarians engage in media critique, whether of text, image, or sound works. In these cases, documentarians hold the specific copyrighted work up for critical analysis.

Principle: Such uses are generally permissible as an exercise of documentarians’ fair use rights. This is analogous to the way that (for example) a newspaper might review a new book and quote from it by way of illustration. Indeed, this activity is at the very core of the fair use doctrine as a safeguard for freedom of expression. So long as the filmmaker analyzes or comments on the work itself, the means may vary. Both direct commentary and parody, for example, function as forms of critique. Where copyrighted material is used for a critical purpose, the fact that the critique itself may do economic damage to the market for the quoted work (as a negative book review could) is irrelevant. In order to qualify as fair use, the use may be as extensive as is necessary to make the point, permitting the viewer to fully grasp the criticism or analysis.

Limitations: There is one general qualification to the principle just stated. The use should not be so extensive or pervasive that it ceases to function as critique and becomes, instead, a way of satisfying the audience’s taste for the thing (or the kind of thing) critiqued. In other words, the critical use should not become a market substitute for the work (or other works like it).

90. Aufderheide & Jaszi, supra note 77, at 20-21.

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TWO: Quoting Copyrighted Works of Popular Culture to Illustrate an Argument or Point Description: Here the concern is with material (again of whatever kind) that is quoted not because it is, in itself, the object of critique but because it aptly illustrates some argument or point that a filmmaker is developing—as clips from fiction films might be used (for example) to demonstrate changing American attitudes toward race.

Principle: Once again, this sort of quotation should generally be considered as fair use. The possibility that the quotes might entertain and engage an audience as well as illustrate a filmmaker’s argument takes nothing away from the fair use claim. Works of popular culture typically have illustrative power, and in analogous situations, writers in print media do not hesitate to use illustrative quotations (both words and images). In documentary filmmaking, such a privileged use will be both subordinate to the larger intellectual or artistic purpose of the documentary and important to its realization. The filmmaker is not presenting the quoted material for its original purpose but harnessing it for a new one. This is an attempt to add significant new value, not a form of “free riding”—the mere exploitation of existing value.

Limitations: Documentarians will be best positioned to assert fair use claims if they assure that: 

the material is properly attributed, either through an accompanying on-screen identification or a mention in the film’s final credits;

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to the extent possible and appropriate, quotations are drawn from a range of different sources;

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each quotation (however many may be employed to create an overall pattern of illustrations) is no longer than is necessary to achieve the intended effect;

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the quoted material is not employed merely in order to avoid the cost or inconvenience of shooting equivalent footage.

THREE: Capturing Copyrighted Media Content in the Process of Filming Something Else Description: Documentarians often record copyrighted sounds and images when they are filming sequences in real-life settings. Common examples are the text of a poster on a wall, music playing on a radio, and television programming heard (perhaps seen) in the background. In the context of the documentary, the incidentally captured material is an integral part of the ordinary reality being documented. Only by altering and thus falsifying the reality they film—such as telling subjects to turn off the radio, take down a poster, or turn off the TV—could documentarians avoid this.

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Principle: Fair use should protect documentary filmmakers from being forced to falsify reality. Where a sound or image has been captured incidentally and without prevision, as part of an unstaged scene, it should be permissible to use it, to a reasonable extent, as part of the final version of the film. Any other rule would be inconsistent with the documentary practice itself and with the values of the disciplines (such as criticism, historical analysis, and journalism) that inform reality-based filmmaking.

Limitations: Consistent with the rationale for treating such captured media uses as fair ones, documentarians should take care that: 

particular media content played or displayed in a scene being filmed was not requested or directed;

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incidentally captured media content included in the final version of the film is integral to the scene/action;

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the content is properly attributed;

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the scene has not been included primarily to exploit the incidentally captured content in its own right, and the captured content does not constitute the scene’s primary focus of interest;

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in the case of music, the content does not function as a substitute for a synch track (as it might, for example, if the sequence containing the captured music were cut on its beat, or if the music were used after the filmmaker has cut away to another sequence).

FOUR: Using Copyrighted Material in a Historical Sequence Description: In many cases the best (or even the only) effective way to tell a particular historical story or make a historical point is to make selective use of words that were spoken during the events in question, music that was associated with the events, or photographs and films that were taken at that time. In many cases, such material is available, on reasonable terms, under license. On occasion, however, the licensing system breaks down.

Principle: Given the social and educational importance of the documentary medium, fair use should apply in some instances of this kind.

To conclude otherwise would be to deny the potential of filmmaking to represent history to new generations of citizens. Properly conditioned, this variety of fair use is critical to fulfilling the mission of copyright. But unless limited, the principle also can defeat the legitimate interests of copyright owners—including documentary filmmakers themselves.

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Limitations: To support a claim that a use of this kind is fair, the documentarian should be able to show that: 

the film project was not specifically designed around the material in question;

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the material serves a critical illustrative function, and no suitable substitute exists (that is, a substitute with the same general characteristics);

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the material cannot be licensed, or the material can be licensed only on terms that are excessive relative to a reasonable budget for the film in question;

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the use is no more extensive than is necessary to make the point for which the material has been selected;

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the film project does not rely predominantly or disproportionately on any single source for illustrative clips;



the copyright owner of the material used is properly identified.

Fair Use in Other Situations Faced by Documentarians The four principles just stated do not exhaust the scope of fair use for documentary filmmakers. Inevitably, actual filmmaking practice will give rise to situations that are hybrids of those described above or that simply have not been anticipated. In considering such situations, however, filmmakers should be guided by the same basic values of fairness, proportionality, and reasonableness that inform this statement. Where they are confident that a contemplated quotation of copyrighted material falls within fair use, they should claim fair use.91

Drafting a useful analysis for each relevant substantive aspect of the opinion letter should combine the considerations listed in these statements with the normative research presented by the Center for Media & Social Impact, and the well regarded opinions published by the federal courts on copyright law. Through the triangulation of these three sources, the lawyer has undoubtedly met the requirements of non-negligent research. By articulating these sources in the opinion, the lawyer has presented both the basis for the opinion and the basis on which the relying party can make its assessment of the veracity of the opinion.

91. Documentary Best Practices, supra note 73.

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V. CONCLUSION “[I]t ‘is not 15 minutes of fame [teenagers] care about, it is about 15 megabytes of fame.’”92 Today’s economy is built around information, data, and media, swirling around us in a manner unfathomable and far beyond a mere celestial jukebox.93 “Horizontal networks of communication built around peoples’ initiatives, interests, and desires are multimodal and incorporate . . . photographs[,] . . . cooperative projects such as Wikipedia[,] . . . music and films[,] . . . and social/political/religious activist networks that combine webbased forums of debate with global feeding of video, audio, and text.”94 The normative expectations built by the Statement of Best Practices for Documentary Filmmakers and similar guidance projects help provide standard expectations for the parties to these complex, ever-changing transactions. The empirical community research adds even more, providing clear guidance that the practices being proposed are, in fact, the practices being adopted by many others.

For authors of copyright law opinions, the need to rely on the case law, empirical data, and guidance projects is greater than most practice areas because there has not yet been significant public disclosure on the terms and standard provisions expected of the opinion letters.

To bring this goal even farther forward, lawyers should work with their clients and begin to share these opinion letters publicly as a resource for their clients and the future authors they inspire. Just as copyright incentivizes publication, so should the need for a strong creative community incentivize lawyers and clients to agree to publish and share the resources helpful in producing creative works.

Each specific instance remains somewhat unique in fair use opinions.

Nonetheless, these guides should help lawyers better understand their due diligence obligations and their ability to fulfill those obligations and provide meaningful opinions. As a result, the ability of the creative economy to create more works and to avoid excessive transaction costs should further the underlying goals of copyright to promote science and the useful arts through creativity and innovation.

92. CASTELLS, supra note 1, at xxviii.

93. See generally PAUL GOLDSTEIN, COPYRIGHT ’S HIGHWAY : FROM GUTENBERG TO THE CELESTIAL JUKEBOX 187-216 (rev. ed., Stanford Univ. Press, 2003).

94. CASTELLS, supra note 1, at xxviii.

Censoring the Silk Screen: China’s Precarious Balance Between State Regulation and a Global Film Market Jeremy Geltzer* Time travel, ghosts, and smart-aleck superheroes may sow the seeds of rebellion—or so the Chinese Communist Party fears. Motion pictures from Ghostbusters to Deadpool to Back to the Future have been banned in the People’s Republic for violating China’s opaque permitting process. Still, the promise of profit keeps Hollywood producers attempting to crack the censor’s code for a taste of box office lucre.

As China increasingly influences Hollywood’s studio system, it is necessary to understand the largest Asian film market. From China’s centralized distribution and exhibition structure to the state-influenced regulation of content, recognizing the unique characteristics and aggravating triggers is essential for content producers world wide.

China has long kept a tight reign on both traditional and new media to suppress potentially subversive messages that could challenge state authority. Since the beginning of the film industry, the Chinese government viewed imported motion pictures critically, concerned about the erosion of their national identity. Only a few years after the first public screenings in the West, filmmakers eagerly crisscrossed the globe, capturing exciting and exotic imagery and building bigger audiences. While European producers joined these film forces in the early days, the global reach of motion pictures has been associated with Americanism and the colonization of local cultures.

Once the Chinese Communist Party (CCP) took control of the mainland in 1949, a curtain fell on Hollywood productions in the region. The People’s Republic of China (PRC) remained in self-imposed exile from the global * Geltzer is the author of DIRTY WORDS AND FILTHY PICTURES: FILM AND THE FIRST AMENDMENT (Univ. of Texas Press 2016). The author would like to express great thanks to Southwestern Law School Professor Michael M. Epstein and to the editorial staff of the Journal of International Media & Entertainment Law, particularly supervising student editor Emily A. Rehm.

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marketplace until the 1970s. Suffering from decades of failed economic policy and severe social engineering, in the 1980s the door was cautiously opened to the import of foreign films, and later, to internationally held joint ventures and co-productions. With China’s move to normalize trade relations, their system developed into a Post-Socialist structure, incorporating aspects of the free market economy into the ideological apparatus of the Communist government. Global capital began to flow into the PRC resulting in a financial windfall for the prevailing powers. Rather than bend towards capitalism, the CCP maintained central authority with protectionist policies that maximized domestic profits and forced foreign players to abide by a complex system of regulations.

As the Bamboo Curtain parted, America’s entertainment-media conglomerates were eager to exploit the region but had to negotiate access across trade barriers. The PRC imposed various measures of market control, manipulation, and censorship to protect their domestic industry. A quota limited the amount of foreign product available in China. A state-sanctioned monopoly on imports eliminated competition and offered artificially low license fees. An ever-evolving bureaucratic structure had ultimate authority over content. It was challenging for foreign entities to maintain consistency with the alphabet soup of regulatory agencies that evolved from MRFT to SARFT to SAPPRFT. Furthermore, as certain films were turned away, the reasons for rejection remained obscure. There was little guidance on prohibited content and state agencies were notoriously vague with feedback, offering only circulars and advisory statements from party assemblies as touchstones. Foreign filmmakers were forced to navigate a process riddled with arbitrary and capricious decision-making—as well as outright corruption—to gain approval.

The story of Hollywood’s quest for access to China’s movie screens is one of false starts. After a decade of confidence-building, the Tiananmen Incident zeroed the clock. After another decade of development, the United States’ accidental bombing of a Chinese embassy in Belgrade again chilled relations. But over time, the China film market expanded and American filmmakers found fissures in the system to gain a toehold in the complex environment.

Together, Hollywood’s creative power and the PRC’s multitude of movie audiences have elevated corporate players on both sides. But regulation and censorship still block the gateway to China for foreign filmmakers. Access to the potentially profitable markets requires knowledge of the PRC’s intentionally complex, often-unpredictable, and ever-shifting structure.

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MOTION P ICTURES IN THE MIDDLE KINGDOM 1900-1979 The story of film regulation in China opens at the very beginning of film making itself. Only months after the public premiere of Thomas Edison’s projecting motion picture device,1 the first movies arrived in China. James Ricalton, an Edison consultant, was sent to the Far East where he exhibited a program of short films at the Tien Hua Tea Garden in Shanghai in August 1896. Ricalton was on location to film scenes of the Boxer Rebellion in 1900.2 Edison’s main competitor, American Mutoscope and Biograph Company, sent their own operative: C. Fred Ackerman. By 1901, Ackerman had recorded proto-newsreel footage of military activity in Formosa. 3 European producers were only slightly behind their American counterparts.

Dispatched by the Lumière brothers, Francis Doublier likely arrived in China around 1899.4 After fleeing defeat in the Philippines Theater of the SpanishAmerican War, Spanish-national Anthony Ramos established the first permanent Chinese motion picture theater before 1906.5 The Ramos Amusement Corporation pioneered film exhibition in China, but was likely shuttered with the onset of the civil unrest in the early 1920s.

Domestic motion picture production in China began in the early 1900s.

Ren Qingtai produced the region’s first film, Dingjun Mountain (1905).6 Ren followed Dingjun with Battle at Changban (1905) and Mount Quinshi (1906), but after a fire destroyed his studio in 1909, production ceased. 7 Together Zhang Shichuan and Zheng Zhengqiu wrote and directed Nanfu Nanqui (A Couple in Difficulty, 1913) and built the Mingxing Film Company in 1922.8 Despite these locally produced projects, motion pictures were 1. Edison’s Vitascope Cheered. “Projecting Kinetoscope” Exhibited for the First Time at Koster & Bial’s, N.Y. TIMES, April 24, 1896, at 5.

2. JAMES RICALTON, CHINA THROUGH THE STEREOSCOPE A JOURNEY THROUGH THE DRAGON EMPIRE AT THE TIME OF THE BOXER UPRISING (1901); George Hunt, How We Know About James Ricalton, LIFE, Vol. 61 No. 16, at 5 (Oct. 14, 1966); YINGJIN ZHANG, CHINESE NATIONAL CINEMA 14 (2004).

3. Roy L. McCardell, Pictures That Show Motion, EVERYBODY ’S MAGAZINE 231 (1901); Thomas F. Millard, Camera on the Firing-Line, EVERYBODY ’S MAGAZINE 463-470 (1904).

4. Films “Dead” in 1900, Pioneer Believed, N.Y. TIMES, Feb. 2, 1940, at 12; Glenn Myrent, When Movies Began and No One Came, N.Y. TIMES, Dec. 29, 1985, at H19, 22.

5. Matthew D. Johnson, Regional Cultural Enterprises and Cultural Markets in Early Republican China, 16 CROSS-CURRENTS: EAST-ASIAN HISTORY & CULTURE R. (Sept. 2015), https://cross-currents.berkeley.edu/sites/default/files/e-journal/articles/johnson.pdf; Xuelei Huang and Zhiwei Xiao, Shadow Magic and the Early History of Film Exhibition in China, in THE CHINESE CINEMA BOOK 51 (Song Hwee Lim & Justin Ward eds., 2011).

6. Liyan Qin, The Intertwinement of Chinese Film and Literature: Choices and Strategies in Adaptation, in A COMPANION TO CHINESE CINEMA 363 (Yingjin Zhang ed., 2012).

7. TAN YE & YUN ZHU, HISTORICAL DICTIONARY OF CHINESE CINEMA 129 (Scarecrow Press, 2012).

8. Liao Fangzhou, Through the Lens, GLOBAL TIMES (June 1, 2016), http://www.globaltimes.cn/content/986399.shtml; 1922: The Mingxing Film Company, CHINESE

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primarily imported, introducing a global perspective and American values to Chinese audiences.

By November 3, 1930, following a period of civil strife, a motion picture censorship law was passed. 9 The primary motive in passing this Censorship Act was to control the import of unregulated foreign films—specifically American motion pictures. From this point forward, the Chinese authorities would recognize the importance of motion pictures as an ideological tool for political propaganda.10 China remained an essentially closed market to American filmmakers for the next fifty years. Increasingly strict regulations on content devastated what remained of China’s domestic film industry. During the Cultural Revolution period, 1966-1972, few films were produced and content was strictly regulated, required to adhere to party policy.11 President Nixon’s visit to China in 1972 began a process that led to improved Sino-US relations. By the mid-1970s, the stage was set for normalization of trade relations. When Vice Premier Deng Xiaoping arrived in the U.S. to meet with President Carter in 1979, the state powers signaled a mutual effort to cooperate on issues related to education, commerce, science, and technology12— distribution of media and motion pictures would take a central role in the USChina conversation.

That same year, 1979, the Ministry of Culture’s Central Film Bureau mandated the incorporation of the China Film Group Corporation (CFGC).

CFGC was established as the state’s monopoly solely authorized with administering affairs relating to imported films and later foreign coproductions.13 After decades of self-imposed exile, the PRC was taking steps to rejoin the global film market. Jack Valenti, president of the Motion Pictures Association of America (MPAA), took immediate notice of the underdeveloped Chinese market. Hollywood representatives met with China

MIRROR, http://www.chinesemirror.com/index/2007/09/1922-the-mingxi.html (last visited Sept.

28, 2016).

9. COPYRIGHT AND RELATED TOPICS: A CHOICE OF ARTICLES 116 n.320 (Univ. Cal. Press 1964).

10. 1930-1931: The Film Censorship Act and an Expert Interview, CHINESE MIRROR, http://www.chinesemirror.com/index/2011/09/1930-1931-the-film-censorship-act-and-an-expertinterview.html (last visited Sept. 28, 2016).

11. Film Industry in China, CHINA. ORG. CN, http://www.china.org.cn/english/features/ film/84966.htm (last visited Sept. 28, 2016). This is the authorized government portal site to China, published under the auspices of the State Council Information Office and the China International Publishing Group.

12. Ministry of Foreign Affairs of the People’s Republic of China, The Establishment of SinoU.S. Diplomatic Relations and Vice Premier Deng Xiaoping’s Visit to the United States, http://www.fmprc.gov.cn/mfa_eng/ziliao_665539/3602_665543/3604_665547/t18007.shtml (last visited Sept. 28, 2016).

13. ZHANG, CHINESE NATIONAL CINEMA, supra note 2, at 190.

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Film as early as 1980. However, negotiations faltered when Valenti, advocating a revenue-sharing distribution system, could not come to terms with the CFGC, which insisted on a flat fee for distribution rights. 14 The flatfee model was a non-starter because such a deal would require producers to sell their content for a fraction of the value, disproportionately limiting possible profits from the PRC. RENAISSANCE IN CHINA’S FILM FACTORIES While negotiations with Hollywood stalled, the 1980s saw resurgence in China’s domestic film industry. Just years earlier, the Cultural Revolution and crackdown on censorship had severely affected the Beijing Film Academy (BFA). Established as the Performance Art Institution of the Film Bureau of the Ministry of Culture in 1950, the country’s single cinema school trained legions of aspiring filmmakers. Despite its popularity, the BFA was closed during the Cultural Revolution and remained shuttered for over a decade, from 1966-1978.15 The BFA resumed accepting applicants in 1978. This matriculating class became known as “the Fifth Generation” and it teemed with talent. By the early 1980s, BFA graduates emerged as exciting new voices on the world stage. Zhang Yimou won the Golden Bear at the Berlin Film Festival for Red Sorghum (1987); Chen Kaige was nominated for the Palme d’Or at the Cannes Film Festival for Hai zi wang (Children of the King, 1987); Wu Ziniu won a Silver at Berlin for Wan Zhong (Evening Bell, 1988); Tian Zhuangzhuang was nominated for a Gold at Berlin for Da Taijian Li Lianying (Li Lianying, the Imperial Eunuch, 1991); Li Shaohong was nominated for a Golden Leopard at the Locarno International Film Festival for Sishi Puhuo (1992); Ning Ying claimed a Gold at the Tokyo Film Festival for Zhao le (For Fun, 1993); and Liu Miaomiao was recognized at the Venice Film Festival for Za Zue Zi (Chatterbox, 1993). Fifth Generation filmmakers heralded a vibrant rebirth for Chinese cinema.

Fifth Generation filmmakers also demonstrated a generational rupture, eschewing the Socialist realism that characterized the cinema of their parents.

Moving away from party propaganda, these new directors focused on personal subjects and individual struggles, even daring to voice criticism of the CCP. Set in 1939, Chen Kaige’s Huang tudi (Yellow Earth, 1984) looked at rural peasants living in extreme poverty, experiencing hardships that were 14. WENDY SU, CHINA’S ENCOUNTER WITH GLOBAL HOLLYWOOD, CULTURAL P OLICY AND THE FILM INDUSTRY 1994-2013, at 16 (2016); The Introduction of the First Blockbusters Accused “Foreign Comprador,” SINA NEWS, http://news.sina.com.cn/c/2008-12-19/091616880300.shtml (last visited Sept. 28, 2016).

15. Patricia C. Bibby, Chinese Sweeping Oedipal to be Released, DEL RIO NEWS HERALD, March 21, 1991.

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at odds with the party’s heroic visions of the working class. Huang Jianxin’s Hei Pao Shijian (The Black Canon Incident, 1985) satirized Chinese bureaucracy: a cryptic message about a missing chess piece sets off conspiratorial intrigue. The most extreme cultural critique came from Tian Zhuangzhuang. In The Blue Kite (1993), Zhuangzhuang’s film followed a family torn apart by the political upheavals of the Hundred Flowers Campaign, the Great Leap Forward, and the Cultural Revolution.

Blue Kite was banned in China and Zhuangzhuang was blacklisted from making films in his own country for nearly a decade. 16 While members of the Fifth Generation reinvigorated Chinese cinema, state regulators responded by asserting strict control over controversial content with censorial tactics.

As artistic pictures produced by Fifth Generation filmmakers were gaining notice at film festivals across the world, they were not igniting box offices at home. Instead, the China film industry was mired in a downward spiral as movie attendance plummeted from 29.3 million in 1979 to 21.2 million in 1986.17 State administrators stepped in to reverse this troubling trend. In 1986, the Ministry of Culture, the Film Bureau, and the Department of Radio and Television were merged to form the Ministry of Radio, Film and Television (MRFT). MRFT was charged with regulating media and censoring content, reporting up to the Propaganda Department of the CCP. The department was reorganized again in 1998 to form SARFT, nominally under the Ministry of Information Industry (MII) but in practice MRFT/SARFT acted with little oversight.18 By 1989, MRFT’s Film and Television Bureau announced a set of regulations entitled “The Circular on Implementing the Censorship and Rating System for Some Movies.” These guidelines suggested a series of prohibitions on subject matter, which included “plots involving rape, robbery, prostitution, drug addiction, and trafficking; movies depicting violence, murder, and fighting; movies exhibiting sexual activities; and movies with ‘ugly/abnormal social phenomena.’”19 16. Marcelle Clements, “The Blue Kite” Sails Beyond the Censors, N.Y. TIMES, April 3, 1994, at H13; Hugh Hart, Springtime Again for Tian, L.A. TIMES (May 28, 2004), http://articles.latimes.com/2004/may/28/entertainment/et-hart28.

17. See RUI ZHANG, THE CINEMA OF FENG XIAOGANG: COMMERCIALIZATION AND CENSORSHIP IN CHINESE CINEMA AFTER 1989, at 22 (Hong Kong Univ. Press 2008); Yingjin Zhang, Directors, Aesthetics, Genres: Chinese Postsocialist Cinema 1979-2010, in A COMPANION TO CHINESE CINEMA 70 (Blackwell Publ. 2012).

18. Zheng Li, Media Control in China, in THE HANDBOOK OF MEDIA AND MASS COMMUNICATION THEORY 693 (Robert S. Fortner, P. Mark Fackler, eds., 2014); XING FAN, COMMUNICATIONS AND INFORMATION IN CHINA: REGULATORY ISSUES, STRATEGIC IMPLICATIONS 115-16 (Univ. Press Am. 2001).

19. Ministry of Broadcasting, Film, and Television, The Circular on Implementing the Censorship and Rating System for Some Movies, in CHINA FILM YEAR-BOOK 1990, at 45 (1990).

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Coinciding with increased regulation on domestic film content, China began to seek investment from international financers. One of the earliest joint ventures partnered China’s struggling state facilities with Hong Kong’s mature motion picture industry.20 Set in the distant past, Shaolin Si (The Shaolin Temple, 1982) was a martial arts action picture shot on location in Henan Province, China, at the historical birthplace of kung fu. The film followed a rebellious novice monk. After a warlord murders his father, the surviving son seeks refuge at a Buddhist monastery. While excelling at wushu, an acrobatic form of kung fu, the boy is not cut out for ascetic life: he falls in love and lusts for revenge. In the climatic scene, the boy defends his sensei, avenges his father, demonstrates his fighting prowess, and declines a woman’s love to become the epitome of a chivalrous warrior hero.

Shaolin Si starred Beijing-born Li Lianjie/Jet Li, already known as a national hero and five-time winner at the Chinese National Martial Arts Competition. 21 Audiences accustomed to stultifying state propaganda and artistic film school fare relished the action-packed fight film. 22 At a time when tickets cost 0.1 RMB, Shaolin Si attracted revenue over 100 million RMB on the China mainland alone, and was so influential that it triggered a genre of imitators as well as transformed the antiquated Shaolin monastery into a tourist attraction. 23 But not all co-productions went as smoothly or as successfully as Shaolin Si. In 1985, the De Laurentiis Entertainment Group committed $25 million to produce Tai-Pan, a historical drama based on James Clavell’s novel, on location in China. Even before shooting began, Raffaella de Laurentiis clashed with Chinese host organizations. She claimed that bribery, kickbacks, and administrative slowdowns hampered the production.

De Laurentiis told The New York Times that she was required to pay $630,000 to Central China Television and the China Foundation to lock location permissions. After English-language newspapers in Hong Kong ran a story in which she made comments critical of her experience in China, De Laurentiis discovered that Chinese production personnel were pulled off the set, bringing the $100,000-a-day shoot to a halt.24 In addition to logistic

20. Christopher Beam, The Rise and Fall of Shaolin’s CEO Monk, BLOOMBERG BUSINESSWEEK (Dec. 28, 2015), http://www.bloomberg.com/news/features/2015-12-28/the-riseand-fall-of-shaolin-s-ceo-monk; LISA ODHAM STOKES, HISTORICAL DICTIONARY OF HONG KONG CINEMA 374 (Scarecrow Press 2007).

21. Jet Li: King of the Kung-Fu Stars, CHINA. ORG. CN, http://www.china.org.cn/english/ features/film/159979.htm (last visited Sept. 28, 2016).

22. Martial Arts Fever Sweeps China Off Its Feet, N.Y. TIMES, Sept. 12, 1982, at 10.

23. SABRINA QIONG YU, JET LI: CHINESE MASCULINITY AND TRANSNATIONAL FILM STARDOM 4 (Edinburgh Univ. Press 2012).

24. John F. Burns, “Tai-Pan” Contrasts Old China and New, N.Y. TIMES, April 27, 1986, at H17.

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hurdles, Chinese regulators imposed creative challenges. One scene scheduled to be shot on the Hong Kong waterfront was vetoed because of the implication that Westerners “had accomplished great things.”25 Actionpacked sequences of Chinese characters looting and burning an opium warehouse were cut for offending cultural sensibilities despite the historical record. Production on the picture’s slightly risqué bedroom scenes had to be relocated to Macao because officials objected to the idea of a Chinese girl romantically entangled with an opium trader. 26 De Laurentiis publically declared that the changes amounted to censorship. Difficulties on production were met with apathy at the box office. Tai-Pan earned just over $4 million. 27 By the late 1980s, the PRC’s changing policy on motion picture content began to take shape as international co-producers moved further into the largely untested environment. The Chinese film industry was restructured with the Circular of 1989, which provided a degree of guidance by proscribing certain topics. Historical dramas were favored because references to the contemporary regime could be avoided or at least concealed.

Chen Kaige’s Yellow Earth demonstrated that some defiance would be tolerated, but Tian Zhuangzhuang’s Blue Kite served as a warning that overly controversial pictures—and their directors—would be silenced. Comparing the celebrated Shaolin Si to the troubled Tai-Pan, films that portrayed China in a negative light—even if historically accurate—would face bureaucratic inertia if not outright suppression. Still, within a single decade, 1978-1988, the Chinese film industry was rejuvenated, claiming attention on the international festival circuit as well as wooing foreign entities into investing in co-productions. In a moment of aggressive optimism, the Vice Minister of Radio, Film, and Television, Tien Congming, even dared to challenge Hollywood’s film industry by questioning which country was more marketaccessible: “From 1985 to 1993, America exported 54 films to China but only imported two from China.”28 The PRC film market was entering an era of dramatic revitalization.

Then in April 1989, the PRC experienced a dramatic upheaval: the Tiananmen Square Incident. Student protests had been brewing since middecade gathering momentum as their rhetoric increasingly challenged the regime. 29 As the throngs of young peaceful protesters grew more vocal the 25. Id. 26. Id. 27. Chinese Red Tape Causes Problems, DAILY NEWS L.A., January 17, 1986; Tai-Pan, BOX OFFICE MOJO, http://www.boxofficemojo.com/movies/?id=taipan.htm (last visited Sept. 29, 2016).

28. Maggie Farley, COMPANY TOWN: Action! Hollywood Sees it in China, L.A. TIMES (November 3, 1995), http://articles.latimes.com/1995-11-03/business/fi-64365_1_china-film.

29. See Calum MacLeod, Chinese Dare Recall Tiananmen Square Massacre, USA TODAY (June 2, 2014, 12:37 AM EDT), http://www.usatoday.com/story/news/world/2014/06/01/ tiananmen-square-25-anniversary/9774513; Luo Siling, Teaching Tiananmen to a New Generation,

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central government, still under the leadership of Deng Xiaoping, responded by declaring martial law.30 Tension escalated until early June when the decision was made to mobilize the People’s Army.31 The result was a stillundisclosed amount of arrests, injuries, and causalities.32 The promise of opening China-US relations evaporated instantly. In the wake of the PRC’s actions against the pro-democratic movement, import of western films was drastically reduced from 1990-1992.33 During this period of self-imposed exclusion, MRFT advocated a homegrown genre: the “main melody” or “central message” film. Teng Jinxian, director of the Film Bureau, had proposed main melody films (zhu xuan lü) in 1987 as a means to counter growing political turmoil and reinforce positive images of the CCP and its leaders. The bureau encouraged Chinese filmmakers to develop content embodying patriotic and socialist ideals while repudiating individualism, hedonism, and capitalistic greed. 34 Exemplars of this genre included historical and hagiographic pictures such as Sun Zhongshan (Sun Yat-Sen, 1987), Kaiguo Daidan (The Founding of a Nation/The Birth of a New China, 1989), Da Jue Zhan (Decisive Battles, 1990), and Mao Zedong and his Son (1991).35 By the early 1990s, these propagandistic pictures accounted for 25% of domestic production. 36 Message films may have served as significant state ideological apparatuses indoctrinating audiences to CCP policy and party line but they did not deliver audiences to theaters. In a 1990 interview with The New York Times, Teng Jinxian confided that the Chinese film industry was facing a financial crisis: “‘Young people [are] largely bored by the new type of politically correct movies that were being ordered up by his ministry . . . I cannot give you a figure,’ he said of the losses being suffered, ‘but it is colossal.’”37 With a release schedule packed with party approved message films that drove audiences away from theaters, the Chinese film industry would fail.

N.Y. TIMES (June 21, 2016), http://www.nytimes.com/2016/06/22/world/asia/china-tiananmenrowena-he.html.

30. See supra note 29.

31. Id. 32. Id. 33. SU, supra note 14, at 1.

34. See RUI ZHANG, supra note 17, at 40; SU, supra note 14, at 20.

35. See Nicholas D. Kristof, China’s Films: More Propaganda, Less Art, N.Y. TIMES, Aug. 1, 1991, at C15; Orville Schell, Once Again, Long Live Chairman Mao, ATLANTIC (Dec. 1992), http://www.theatlantic.com/magazine/archive/1992/12/once-again-long-live-chairmanmao/306586.

36. YING ZHU, CHINESE CINEMA DURING THE ERA OF REFORM: THE INGENUITY OF THE SYSTEM 81 (2003).

37. James Sterngold, Toeing Party Line, Chinese Films Falter, N.Y. TIMES, Aug. 25, 1990, at L11.

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The CCP responded with an infusion of state subsidies. At the Central Committee Assembly of 1990, the party proposed a National Film Development Fund. This fund would channel 5% of national box office revenue towards films with “significant themes.” The amount of mainstream melody films increased from 11 in 1991 to 19 in 1992.38 At the 14th National Congress in October 1992, Jiang Zemin, the General Secretary of the CCP, delivered a report entitled “Accelerating the Reform, the Opening to the Outside World and the Drive for Modernization, so as to Achieve Greater Successes in Building Socialism With Chinese Characteristics.” Jiang addressed China’s need to recalibrate the socialist economy and accelerate modernization. “We should open up more international markets, diversify our trading partners and develop an export-oriented economy,” said Jiang, “to open wider to the outside world and make more and better use of foreign funds, resources, technology and management expertise.”39 Contrasting with Jiang’s directive to reach out and join the world economy was the CCP’s dictate to adhere to its orthodox message. Zhang Yimou’s Ju Dou (1990) was an artistic triumph by any measure, a visually stunning historical drama set in a dye factory in rural southern China. The picture was nominated for an Academy Award for Foreign Language Film. 40 At a moment when Chinese cinema teetered on the brink of recognition in Hollywood, potential triumph was squelched. Party censors disapproved of a scene of the film’s protagonist (Gong Li) bathing, her bare back to the camera.41 MRFT also condemned her character’s adulterous relationship, which was central to the plot. 42 Ju Dou was banned in China; furthermore, the Chinese Government asked to have the film withdrawn from consideration for an Oscar—twice. 43 As controversy swirled around Ju dou, a Swiss movie claimed the award. For China’s film industry, defeat was snatched from the hands of victory. The Ministry of Film’s ban was lifted a year later in 1992.44

38. Yingchi Chu, The Consumption of Cinema in Contemporary China, in MEDIA IN CHINA: CONSUMPTION, CONTENT, AND CRISIS 47 (Stephanie Hemelryk Donald, Michael Keane, & Yin Hong eds., 2003); SU, supra note 14, at 98.

39. Full Text of Jiang Zemin’s Report at 14th Party Congress, BEJING REVIEW, http://www.bjreview.com.cn/document/txt/2011-03/29/content_363504.htm (last updated Mar. 29, 2011).

40. The 63rd Academy Awards 1991, OSCARS, http://www.oscars.org/oscars/ ceremonies/1991 (last visited Sept. 29, 2016).

41. Sheryl WuDunn, China Fights an Academy Award Nomination, N.Y. TIMES, Feb. 25, 1991, at C11.

42. Id. 43. Id. 44. SHEILA CORNELIUS & IAN HAYDEN SMITH, NEW CHINESE CINEMA: CHALLENGING REPRESENTATIONS 43 (Wallflower Press 2002).

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In 1993, Wu Mengchen was elevated to general manager of the China Film Distribution and Export Company (CFEIC), the state’s monopolized film entity. Setting out a policy that reflected Jiang’s directive, Wu aligned with the CFEIC with MRFT and jointly announced “Suggestions on the Deepening of Institutional Reform of the Chinese Film Sector,” commonly referred to as “MRFT Policy Document No. 3.” Document 3 streamlined China’s film industry, eliminating bureaucratic layers to make the system more compatible with a market economy. 45 In addition to mandated internal reforms, Document 3 permitted CFEIC to select and import ten foreign films a year under a revenue-sharing agreement.46 This departure from the flat rate buy-out model made the PRC more attractive to Hollywood’s content owners. Still, the PRC’s vision of motion pictures as an ideological apparatus had not changed so the imported films would be subjected to strict censorship. The rule was buyer beware—the blue pencil of the Chinese censors could strike almost at random. The New York Times observed, “The censors won’t say what the rules are, and once they have banned a film, they won’t even tell directors how to cut it to satisfy their objections.”47 Implementing the import provisions of Document 3 in January 1994, Wu Mengchen announced an initiative to revitalize the domestic film market with foreign blockbusters that had achieved solid box office results overseas. 48 The PRC resumed the process of opening its doors to the international market but independently-produced foreign films were at a disadvantage as compared to MPAA members, major studios capable of producing and marketing tent pole products (i.e., big budget blockbuster motion pictures with analytically predictable box office potential). Under the revenuesharing model, provided for in Document 3, CFEIC offered onerous terms keeping the lion’s share of profit—generally 85%—still, even a 15% take49 helped to sweeten the pot for foreign producers, giving them a taste of the potential Chinese box office. The first major Hollywood film studio to enter the Chinese market on a revenue-sharing basis with a big budget picture was Warner Bros. That historic picture, the first blockbuster to penetrate the Bamboo Curtain, was The Fugitive (1993). Based on a 1960s television series reimagined, The Fugitive was a cat-and-mouse thriller that followed a

45. Id. at 46; SU, supra note 14, at 86.

46. The number of imported motion pictures would be increased to twenty in 2001 after China joined the WTO; in 2012, an additional fourteen IMAX and 3D pictures were permitted.

47. Patrick E. Tyler, Who Makes the Rules in Chinese Movies?, N.Y. TIMES, Oct. 17, 1993, at H19.

48. SU, supra note 14, at 15 (citing Wu Mengchen, Wu Mengchen’s Speech on National Conference of General Managers, in CHINA FILM MARKET 2, at 7 (1994)).

49. Patrick Brzeski, MPAA Confirms New Hollywood-China Film Distribution Agreement, HOLLYWOOD REP. (Nov. 5, 2015), http://www.hollywoodreporter.com/news/mpaa-confirms-newhollywood-china-837645.

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Hitchcockian theme: an innocent man framed by circumstances beyond his control. Suspected of murdering his wife, the film finds Harrison Ford on the run fleeing a granite-faced US Marshall played by Tommy Lee Jones.

The picture was successful in its domestic release, grossing over $176 million in its first two weeks against a $44 million production budget. 50 In China, Warner Bros. took a significantly smaller cut of the box office, but the potentially massive audience promised dividends. In Shanghai alone, official state sources projected audiences over 700,000 people. 51 Even with drastically reduced ticket prices, The Fugitive grossed $3.8 million in China 52 and was regarded by both the U.S. and China as an “event of historic significance.”53 TINSEL TOWN IN RED The Fugitive was Hollywood’s first profitable venture into the Chinese market and brought U.S. studios a step closer to realizing the goal of accessing the PRC’s untapped and potentially rewarding market. The following year, other major studios reached similar agreements with CFEIC that permitted their own pictures admission to PRC theaters. Universal International entered the arena with True Lies (1994), Fox with Speed (1994), Disney with The Lion King (1994), Paramount with Forrest Gump (1994), and Columbia TriStar with Bad Boys (1994). While True Lies was the standout, grossing approximately $15 million in China, each of the pictures exceeded expectations except Forrest Gump, which was deemed an underperformer taking in $2.9 million. 54 The infusion of imported content lifted the PRC’s industry was well, earning China Film 60% of its yearly income and sparking a 70% increase in movie attendance in 1994.55

50. See The Fugitive, BOX OFFICE MOJO, http://www.boxofficemojo.com/movies/ ?page=weekend&id=fugitive.htm (last visited Sept. 29, 2016); The Fugitive (1993), NUMBERS, http://www.the-numbers.com/movie/Fugitive-The (last visited Sept. 29, 2016).

51. Rone Tempest, How Do You Say “Boffo” in Chinese? “The Fugitive:” The First Recent Hollywood Blockbuster to be Shown in China in Years Has Given a Boost to the Country’s Faltering Movie Theaters, L.A. Times (Nov. 29, 1994), http://articles.latimes.com/1994-1129/entertainment/ca-2665_1_american-movie.

52. Zhang Rui, Top Grossing Chinese Films All Through Years, CHINA.ORG.CN (Feb. 19, 2016), http://www.china.org.cn/arts/2016-02/19/content_37827515.htm.

53. Sean O’Connor & Nicholas Armstrong, U.S.-China Economic and Security Review Commission Staff Research Report, Directed by Hollywood, Edited by China: How China’s Censorship and Influence Affects Films Worldwide (Oct. 28, 2015), http://origin.www.uscc.gov/ sites/default/files/Research/Directed%20by%20Hollywood%20Edited%20by%20China.pdf; see also Stanley Rosen, The Wolf at the Door: Hollywood and the Film Market in China from 19942000, in SOUTHERN CALIFORNIA AND THE WORLD 52 (2002).

54. See Rosen, supra note 53, at Table 3.1 (Box Office Receipts for American “Megafilms” in China).

55. Farley, supra note 28.

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As China Film, still the solely authorized entity to import foreign films, filled its coffers with royalties from revenue-sharing imported pictures, the state reinvested profits in infrastructure. In January 1996, Hendian World Studios broke ground in the countryside five hours from Beijing. Hendian Studios would become China’s first major production facility, the vision of Xu Wenrong a farmer-turned electronics manufacturer. Moving into his role as media mogul, Xu partnered with director Xie Jin on a main melody film entitled Yapian Zhanzheng (The Opium War, 1997). Xie had locked backing from the government, but had no location to shoot the picture. Xu offered his support, channeling state funds into what would become the largest film studio in China. Hendian expanded to 2,500 acres, becoming more immense than Universal and Paramount studios combined. 56 Once completed, Hendian teemed with historical sets ranging from Ming dynasty palaces to Beijing back alley hutongs and earned the title Chinawood.57 Over the course of the next fifteen years, state funds would subsidize a domestic studio system of epic proportions. The Chinese government invested over $1.57 billion in Wuxi Studio, located south of Shanghai.

Branding itself as Huallywood, Wuxi’s stages were booked by domestic crews as well as foreign co-productions such as Iron Man 3 (2013).58 The Beijing Cultural and Creative Industry Development Special Fund contributed to build China Film Group’s Huairou Film Base in the capital city.59 Each of these state funded facilities offered their soundstages free of charge to domestic productions.60 The playing field was not level for domestic and foreign producers but with eyes on box office prize, Hollywood’s studios would not be deterred.

Simultaneous with building motion picture production infrastructure, the State Film and Television Bureau issued another new policy. Promulgated 56. Cathy Yan, If You Build It, They Will Come: Chinese Town Gets Hollywood Makeover, WALL ST. J., (May 21, 2011), http://www.wsj.com/articles/SB1000142405274870432280457 6302901606181530; Ian Johnson, Studio City, NEW YORKER (Apr. 22, 2013), http://www.newyorker.com/magazine/2013/04/22/studio-city.

57. Clarissa Sebag Montefiore, Is “Chinawood” the New Hollywood?, BBC: CULTURE (Oct. 10, 2014), http://www.bbc.com/culture/story/20140207-is-chinawood-the-new-hollywood; Hengdian World Studios, Where History Meets Modernity, CHINA. ORG.CN (June 11, 2008), http://www.china.org.cn/travel/where_to_go/2008-06/11/content_15741653.htm.

58. Richard Verrier, Sid Ganis: Wuxi Studio Will Be a Major Production Hub in China, L.A. TIMES (June 13, 2012), http://articles.latimes.com/2012/jun/13/entertainment/la -et-ct-ganis-china20120613; Mandy Zuo, Hello “Huallywood,” S. CHINA MORNING P OST (Feb. 10, 2016), http://www.scmp.com/news/china/society/article/1909294/hello-huallywood-chinese-studiohopes-monkey-king-fantasy-sequel.

59. Huairou: National Film and TV Industrial Model Zone, CHINA.CN. ORG: THIS IS BEJING! (Oct. 31, 2014), http://www.china.org.cn/bjzt/2014-10/31/content_33926886.htm; Clifford Coonan, Huairou Film Base Hopes to Lure Westerners, VARIETY (Mar. 24, 2012), http://variety.com/2012/film/news/studio-complex-puts-china-in-the-picture-1118051848.

60. Johnson, Studio City, supra note 56.

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in June 1996 as “Regulations on Administration of Films,” the guidelines were referred to as “Document 200.”61 Document 200 set out procedural requirements for imports, obligations for co-productions, as well as explicitly prohibited content. Under Article 24, Films are forbidden to have the following contents: (1) Those endangering the unity, sovereignty and territorial integrity of the state; (2) Those harming the security, honor and interests of the state; (3) Those inciting national splitism [sic] and disrupting the unity of nationalities; (4) Those divulging state secrets; (5) Those publicizing obscenity or superstitions or playing up violence; (6) Those libeling or insulting other people; or (7) Other contents prohibited by the state.62

The seventh category would subsume all others providing a legal and regulatory foundation for arbitrary and unpredictable censorship. Violations were prohibitive: unapproved exhibitions were subject to confiscation of all earnings as well as fines calculated at five to ten times the illegal earnings.63 In addition to addressing censorship issues, Document 200 provided a degree of clarity on imported revenue-sharing foreign films. While international films brought audiences back to theaters and delivered windfalls of profit to China Film, MRFT’s protectionist policy required twothirds of the total screen time be reserved for domestic Chinese productions. 64 By protecting domestic producers and fleecing foreign filmmakers the CCP was able to reclaim legitimacy, badly damaged after the Tiananmen Incident, based on the economic achievements of the “socialist market economy.” The PRC’s overall strategy with regard to international marketplace had shifted from resistance to collaboration, directing China into a pole position on the geopolitical stage.65 In 1998, MRFT was restructured to form the State Administration of Radio, Film, and Television (SARFT).66 The new bureaucratic system encouraged international co-productions, but byzantine regulations and protectionist policies still left foreign partners at a disadvantage. Hollywood producers jockeying for a slice of the promising PRC box office found themselves bound by red tape and cumbersome administrative processes.

American filmmakers were unaccustomed to working with state subsidized

61. Decree No. 200 of the State Council of the People’s Republic of China on June 19, 1996, ch. I, art. 24 §§ (1)-(7), Regulations on the Administration of Film (Asian Legal Information Institute trans.), http://www.asianlii.org/cn/legis/cen/laws/roaof382.

62. Id. 63. Id. at art. 60.

64. Id. at art. 45.

65. SU, supra note 14, at 5-6.

66. IRENE WU, FROM IRON FIST TO INVISIBLE HAND : THE UNEVEN PATH OF TELECOMMUNICATIONS REFORM IN CHINA 138 (Stanford Univ. Press 2009).

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conglomerates that could include arrays of unrelated operations—one Shanghai Studio commented that it was not critical to make profits from films because the facility earned a steady income from a factory that it ran on the lot. The Chinese studios were also committed to social security obligations including kindergartens, health clinics, and apartment complexes for their staff.67 Hollywood’s capitalist content producers had to acclimate to the heavily regulated Chinese system.

Foreign filmmakers seeking to operate within the PRC were faced with two modes of entry: importing content and producing pictures on location as part of a joint venture agreement.

Since Western producers had not operated in China since the pioneering days of filmmaking, importing content was the first feasible approach.

Cinematic imports could adhere to two different models: flat rate/buy outs and revenue sharing joint ventures. Under a buy-out agreement, which was the rule prior to Document 200 in 1996, film-owners could only license a picture’s distribution rights at a flat rate. This was generally less advantageous to the foreign entity because for a single negotiated fee, all rights in the territory would be licensed. For instance, one of the first buyouts occurred in the early 1980s when China Film Group acquired theatrical rights for Superman (1978) from Warner Bros. for a vastly below market rate of $50,000.68 With Document 200 came the ability for foreign filmmakers to move into the PRC market under revenue sharing schemes. Even if foreign rights holders could only claim a small slice of the box office and were on the hook for tax and tariffs, the income was better than a flat rate. By the end of the decade, SARFT began considering international participation in the domestic market through joint venture agreements.

Cooperative productions, pairing a foreign entity with a China-national production group, were permitted after the passage of “Measures for the Administration of Chinese-Foreign Cooperative Film Production” in 2004, referred to as Document 19.69 In a joint venture, both Chinese and foreign parties invested in funding and labor, producing together, sharing interest and risk. Two systems of cooperative-production developed: Joint Productions and Assisted Productions. Joint Productions arose when Chinese parties and foreign entities invested in and produced a film together. These jointly owned works would share copyrights as well as potential profits. Unlike the

67. Seth Faison, A Chinese Wall Shows Cracks, N.Y. TIMES, November 21, 1995, at D1.

68. Firedeep & Robert Cain, How China’s Movie Distribution System Works, Part 1, CHINA FILM BIZ (Nov. 7, 2012), https://chinafilmbiz.com/tag/the-fugitive.

69. Order of the State Administration of Radio, Film, and Television, December 1, 2003, Measures for the Administration of Chinese-Foreign Cooperative Film Production (Asian Legal Information Inst. trans.), http://www.asianlii.org/cn/legis/cen/laws/mftaoccfp732 (last visited Sept.

30, 2016).

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creative latitude offered producer in the free market system, foreign filmmakers working on a joint production were still subject to certain requirements, such as the Chinese actors comprising at least one third of main cast members in addition to the rigors of state censorship. Joint productions were regarded as domestic films so these pictures would avoid the import quota.70 In October 2004, Warner Bros. became the first major studio to partner with PRC a production entity, joining with China Film Group and Hengdian Group to form Warner China Film HG Corp. The joint venture, Warner China Film, announced plans to develop, produce, and distribute predominantly Chinese-language feature films with modest budgets ranging from $1.5 million to $6 million.71 While Warner China Film catered to the domestic China audience with a slate of films, other joint ventures focused on a single picture: The Karate Kid (2010), a Sony-China Film Group co-production; Looper (2012), an Endgame-DMG co-production; Cloud Atlas (2012), a Warner Bros.-Dreams of Dragon Picture; Pacific Rim (2013), a Warner-Legendary-DDY coproduction; and Kung Fu Panda 3 (2016), a Dreamworks-Oriental Dreamworks production (Oriental Dreamworks was organized as a joint production house in 2012 intended for multiple projects similar to Warner China Film). 72 A Legendary-China Film co-production distributed by Universal in the U.S., Warcraft (2016), earned a record $45.7 million on its opening day and passed the $100 million mark in the PRC before hitting that number in the U.S.73 Despite its astronomical box office, Warcraft

70. See Procedural Course for Chinese-Foreign Film Co-Production and Assisted CoProduction, CHINA FILM CO-PRODUCTION CORP., http://www.cfcc-film.com.cn/ introeg/busine.html (last visited Sept. 30, 2016); About Co-Productions, CHINA HOLLYWOOD SOC’Y, http://www.chinahollywood.org/about-co-productions (last visited Sept. 30, 2016).

71. See Press Release, Time Warner, China Film Group, Hengdian Group and Warner Bros.

Pictures Partner to Create Warner China Film Hg Corporation (Oct. 14, 2004), http://www.timewarner.com/newsroom/press-releases/2004/10/14/china-film-group-hengdiangroup-and-warner-bros-pictures-partner; Mike Goodridge, Warner Bros. Makes History with First Ever Foreign Production Co. in China, SCREEN DAILY (Oct. 14, 2004), http://www.screen daily.com/warner-bros-makes-history-with-first-ever-foreign-production-co-in-china/ 4020508.article; Patrick Frater, China Film Group at 15: Moving the Biz into the Future, VARIETY (June 24, 2014), http://variety.com/2014/film/spotlight/china-film-group-1201243320.

72. See supra note 71.

73. See John Horn, “Karate Kid” Update Breaks Down Some Chinese Walls, L.A. TIMES (May 30, 2010), http://articles.latimes.com/2010/may/30/entertainment/la-ca-karatekid-20100530; Gregg Goldstein, China Partner Helps “Looper” Win Big, VARIETY (Oct. 6, 2012, 5:00 AM PT), http://variety.com/2012/film/box-office/china-partner-helps-looper-win-big-1118060324; Laurie Burkitt, Warning from China Film Watchdog: Not Enough “Co” in Co-Productions, WALL ST. J. (Aug. 27, 2012, 7:05 PM HKT), http://blogs.wsj.com/chinarealtime/2012/08/27/warning-fromchina-film-watchdog-not-enough-co-in-co-productions; Laurie Burkitt, Kung Fu Panda 3: A Litmus Test for China-Hollywood Joint Ventures, WALL ST. J. (Jan. 26, 2016, 7:50 PM HKT), http://blogs.wsj.com/chinarealtime/2016/01/26/kung-fu-panda-3-a-litmus-test-for-chinahollywood-joint-ventures; Scott Mendelson, Box Office: “Warcraft” Snags Jaw-Dropping $46

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demonstrates one example of a significant challenge facing co-productions in China. In China’s state-run exhibition system, foreign co-productions were entitled to only a percentage of the film’s gross, ranging from 13-17% in the early 2000s up to 25% a decade later when China made concessions to join the World Trade Organization. 74 The price of doing business in China would require far greater margins before a picture could be considered financially successful. Still, the joint production model remains the favored method of co-production because the economic split provides foreign producers with a larger share than movies imported under the quota system and subject to the flat rate buy out.75 Another method of structuring a Chinese-international joint venture is the Assisted Production or Coordinated Production. In an assisted production the foreign party provided all capital and the PRC entity was hired for production services, supplying equipment, location, and labor.76 Here, the foreign party wholly owned the finished film, which although produced domestically was regarded as an imported work. As such, assisted productions were subject to the import quota 77 and were required to flow through the China Film Group prior to exploitation in China. An example of an assisted production was Transformers: Age of Extinction (2014).78 Produced partially in China but wholly-owned by Paramount Pictures, Extinction complied with China Film’s import formalities to open in the PRC with an astronomical box office debut of $92 million.79 If the studio was able to retain 15% of that gross, it would be entitled to $13.8 million before tax Million Opening Day in China, FORBES: MEDIA & ENT. (June 8, 2016, 11:00 AM), http://www.forbes.com/sites/scottmendelson/2016/06/08/warcraft-china-box-office-a-jawdropping-46-million-opening-day.

74. Claire Suddath, Why China Is Hoarding Hollywood’s Box Office Profits, BLOOMBERG (July 30, 2013, 2:01 PM PDT), http://www.bloomberg.com/news/articles/2013-07-30/why-chinais-hoarding-hollywood-s-box-office-profits.

75. Joint U.S.-PRC ventures were not limited to production but also occurred with exhibiting entitles; in 1997, seven years before the passage of Document No. 19, the Hong Kong subsidiary of United Artists Cinema Circuit (itself a division of Regal Entertainment) extended into China by participating in the construction of China’s first multiplex in Wuhan. By 1999, UACC opened a second venue in Shanghai. See Ross Melnick, Hollywood Embassies, Labour and Investment Laws and Global Cinema Exhibition, in HOLLYWOOD AND THE LAW 154 (Paul McDonald et al., eds., 2015).

76. Yu Yan, Moving Pictures, BEIJING REVIEW: ARTS & CULTURE (Sept. 24, 2012), http://www.bjreview.com.cn/culture/txt/2012-09/24/content_485853.htm.

77. See The Stipulation of Administration on Chinese-Foreign Film Co-Production, CHINA FILM CO-PRODUCTION CORP. (July 6, 2004), http://www.cfcc-film.com.cn/policeg/content/ id/1.html.

78. Erich Schwartzel & Laurie Burkitt, Lights! Camera! China! “Transformers” Knows Its Audience, WALL ST. J (June 26, 2014, 11:32 AM HKT), http://blogs.wsj.com/chinarealtime/ 2014/06/27/lights-camera-china-transformers-knows-its-audience.

79. See China All Time Openings, BOX OFFICE MOJO, http://www.boxofficemojo.com/ intl/china/opening (last visited Sept. 30, 2016).

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and tariffs, which demonstrates SARFT’s arduous fees and reductions levied on foreign filmmakers.

A third category of joint production was described in SARFT’s “Administration of Sino-Foreign Cooperation in the Production of Films Provisions,” released in 2004. Called “Production by Appointment,” such ventures occurred when a foreign entity appointed the Chinese party to carry out production in China on its behalf. 80 Essentially the foreign party acted as financier, sponsoring and bankrolling a domestic production.

SIGNS OF TROUBLE Following The Fugitive, the first Hollywood film to break through bureaucratic barriers and realize box office potential in China, American studios prepared to exploit the developing market. Instead, the U.S. industry suffered a major setback. Only three years after The Fugitive’s encouraging run, China slammed the door shut on three American exhibitors.

Touchstone/Disney, Columbia/TriStar, and MGM/UA discovered that inattentiveness to China’s strict but vague proscriptions would threaten each studio’s ability to compete in the developing marketplace. 81 In November 1997, MRFT issued a memorandum stating: “In order to protect Chinese national overall interests, it has been decided that all business cooperation with these three companies to be ceased temporarily without exception.” 82 Three films, Kundun (1997), Seven Years in Tibet (1997), and Red Corner (1997), sparked the first censorship crisis in U.S.-Sino film relations.83 Kundun is an opulent biopic of the early years of Tenzin Gyatso, the Tibetan boy who would become the fourteenth Dalai Lama. 84 The film serves as both an extension as well as a departure from the previous work of director Martin Scorsese.85 The contemplative tone and hallowed halls of Potala Palace in Lhasa is a far cry from the Mean Streets (1973) of Manhattan and the sweaty grit of the boxing rings in Raging Bull (1980). And yet Kundun shares much with Scorsese’s The Last Temptation of Christ (1988); both pictures center on belief and persecution. 86 Jesus and Kundun are men

80. Yan, supra note 76.

81. See Sharon Waxman, China Bans Work with Film Studios, WASHINGTON P OST (Nov. 1, 1997), https://www.washingtonpost.com/archive/lifestyle/1997/11/01/china-bans-work-with-filmstudios/9f3a23e3-4d83-4749-898c-bd1fef276f03.

82. Id. 83. Id. 84. See generally Kundum (1997), IMDB, http://www.imdb.com/title/tt0119485 (last visited Sept. 30, 2016).

85. See Roger Ebert, Kundum, ROGER EBERT : REVIEWS (Jan. 16, 1998), http://www.rogerebert.com/reviews/kundun-1998.

86. See id.

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torn between personal feelings and spiritual obligations set before a backdrop that pits faith against violence. Self-knowledge and self-control raise Jesus and Kundun and condemn other Scorsese characters, from Jack LaMotta to Travis Bickel in Taxi Driver (1976) and Jordan Belfort in The Wolf of Wall Street (2013).

While Kundun was still in production, MRFT expressed its displeasure. 87 Over a year before the film’s release, The New York Times reported the Chinese agency issued what amounted to a threat, insinuating that Disney’s plans were at risk due to the Dalai Lama picture.88 In a moment of creative strength but political recklessness, the mouse house stood by its provocative picture. This stance put the studio’s other efforts, such as plans for a theme park and consumer products at risk. 89 Disney underestimated China’s resolve in its determination to silence the film. After Kundun was released, the PRC’s backlash was swift and severe. Beijing condemned the cinematic glorification of the spiritual icon they called a splittist and a slave master: “We are resolutely opposed to the making of this movie,” said Kong Min, an official at the Film Bureau of the Ministry of Radio Film and Television.

“It is intended to glorify the Dalai Lama, so it is an interference in China’s internal affairs.”90

Not only was Kundun banned, but the government also halted all business dealings with Disney. 91 An official statement combined dogmatic outrage with bruised emotions: “Taking up Tibet and human rights issues, . . .

[Kundun] viciously attack[s] China and hurt[s] Chinese people’s feelings. . . .

We must maintain sharp vigilance.”92 Anxious to resolve the situation, which affected business ventures ancillary to their motion picture division, Disney called on the man who thawed U.S.-Chinese relations a quarter century earlier. Former Secretary of State Henry Kissinger previously helped orchestrate the opening of relations with the PRC under President Nixon. Once again Kissinger demonstrated diplomatic acumen, successfully calming China’s rage over Kundun and

87. See Bernard Weintraub, Disney Will Defy China On Its Dalai Lama Film, N.Y. TIMES, Nov. 27, 1996, at C9.

88. Id. 89. Ray Zhang, Government Bans Movies from Three US Film Makers, CHINA NEWS DIGEST § 1(7) (Nov. 3, 1997), http://www.cnd.org/CND-Global/CND-Global.97.4th/CND-Global.97-1102.html.

90. Seth Faison, Dalai Lama Movie Imperils Disney’s Future in China, N.Y. TIMES, November 26, 1996, at A12.

91. Maggie Farley, Hong Kong Bows to Beijing in Turning Away 3 U.S. Films, L.A. TIMES (Nov. 4, 1997), http://articles.latimes.com/1997/nov/04/business/fi-50007.

92. Id.

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paving the way for Disney’s next production, Mulan,93 to be released the following year.94 China’s ban on Disney was officially resolved two years later in 1999; discussions resumed on the construction of theme parks and Disney’s greater involvement in the PRC film marketplace. 95 Still, the Kundun incident left a chill in Hollywood as political realities tarnished the promise of bountiful box office earnings.

Disney did not stand alone. Seven Years in Tibet (1997), distributed in the U.S. by Columbia/TriStar (Sony), was a variation on a similar theme.

Directed by Jean-Jacques Annaud, Seven Years presented a biopic of Austrian mountaineer Heinrich Harrer, played by Brad Pitt. Even before China made its position known, Seven Years aroused controversy when Stern revealed that Harrer was a member of Hitler’s SS. The German magazine also published a photograph of the outdoorsman being congratulated by the Fuhrer.96 While an association with Hitler may have been bad for business in the Western world, the film’s focus on the Dalai Lama created controversy in China. Since annexation in 1965, the PRC considered the Tibet Autonomous Region a district of China. Because of the film’s geopolitical theme, representing Tibet as an independent nation invaded and occupied by Chinese forces, Seven Years was banned, along with its star and director.

Interestingly, Sony did not face the same harsh penalty as Disney, possibly because the CCP viewed the Japanese parent company as a non-Western entity. 97 The PRC’s relations with Pitt and Annaud remained tense until 2014.98

93. Based upon a Chinese folktale, Mulan centers on a girl who disguises herself as a man to join the army and fend off invading tribes. Her character has been championed by the Chinese as the personification of duty to family and country; however, Disney’s production was not merely a political concession. Mulan had been in production prior to Kissinger’s visit. In the end, Disney’s Mulan underperformed at the China box office, bringing in under US $2 million. See Bernard Weinraub, Disney Hires Kissinger, N.Y. TIMES, Oct. 10, 1997, at E7; Rosen, supra note 53.

94. Weinraub, Disney Hires Kissinger, supra note 93.

95. China Drops Ban on Disney Films, ORLANDO SENTINEL (Feb. 8, 1999), http://articles.orlandosentinel.com/1999-02-08/news/9902070659_1_mulan-disney-films-chinese.

96. Bernard Weintraub, Dalai Lama’s Tudor, Portrayed by Brad Pitt, Wasn’t Just Roving Through the Himalayas, in N.Y. TIMES, June 21, 1997, at 13.

97. Hongmei Yu, From Kundun to Mulan: A Political Economic Case Study of Disney and China, 22 J. ASIAN STUDIES LIBERAL ARTS 12, 16 (2015), http://www.asianetworkexchange.org/ articles/abstract/10.16995/ane.100.

98. Brad Pitt Breaks the Ice with China Visit After Tibet Row, INQUIRER. NET (June 3, 2014, 7:15 PM), http://entertainment.inquirer.net/143831/brad-pitt-breaks-the-ice-with-china-visit-aftertibet-row. Annaud’s relationship with China thawed after Wolf Totem (2015), a French-China joint venture scored $24.8 million in its PRC opening on its way to $110.4 million, the seventeenthhighest grossing film of the year in China.

See Wolf Totem, BOX OFFICE MOJO, http://www.boxofficemojo.com/movies/?page=intl&id=wolftotem.htm (last visited Sept. 30, 2016).

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With Kundun and Seven Years, PRC authorities demonstrated sensitivity to Hollywood’s representations of Tibet. MGM’s Red Corner (1997), on the other hand, presented a far more explicit indictment of the Chinese system.

Red Corner was a mystery-thriller starring Richard Gere, an outspoken Free Tibet supporter.99 While visiting China on a business trip, Gere’s character is wrongfully accused of murder.100 The U.S. government is unable to provide help, afraid of jeopardizing an investment project. Red Corner exposes China’s human rights violations, corrupt judicial system, and dehumanizing totalitarianism. 101 While Scorsese and Annaud aimed for character driven dramas set against spectacular backdrops, Gere’s picture intended to indict China itself. The New York Times pointed out that “the film’s opening date, timed to President Jiang Zemin’s visit, is apparently no accident.”102 Unsurprisingly, Red Corner was banned in China, the picture’s promotional tagline, ironically prophetic: “Leniency for those who confess . . . severity for those who resist.”103 The stakes were highest for Disney, which had other business ventures hinging on their relationship with the PRC; other studios were in a less vulnerable position. Even with the Red Corner fracas, executives at MGM and Columbia TriStar found that their business saw little effect. Box office expectations were higher than actual earnings, especially with revenue sharing capped at 15% and other assorted reductions such as tax, tariff, and manipulation. Jack Valenti was stymied, although “he believed the animosity from China would fade. ‘Right now I think things are in a sour mood, but I’m urging people to be patient, to be calm, to avoid confrontation,’ he said . . . ‘Let’s let time heal this, and it will.’”104 A LICENSE TO PRINT YUAN That healing process was well under way the following year when Titanic (1997) arrived in China. Directed by James Cameron, Titanic redefined box office expectations. On its opening day in April 1998, the disaster epic racked up a record-breaking ¥359,500,000 Yuan—U.S. $44

99. See generally Red Corner, IMBD, http://www.imdb.com/title/tt0119994 (last visited Sept.

30, 2016).

100. Id. 101. Id. 102. Janet Maslin, Lady Killer? Beijing Is Not Charmed, N.Y. TIMES, October 31, 1997, at E20.

103. Red Corner, Taglines, IMDB, http://www.imdb.com/title/tt0119994/taglines (last visited Sept. 27, 2016).

104. Waxman, supra note 81.

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million. 105 The film more than tripled the take of the second most successful imported picture, True Lies (1994), also directed by Cameron. Titanic was not only a masterpiece of Hollywood star power, VFX rendering, and heartrending sentimental cinema, it also came with an important endorsement: President Jiang Zemin publically praised the picture and urged China’s politburo to see the blockbuster, which, in good Socialist tradition, portrayed the rich as villains and the poor as heroes. 106 “This movie shows fully how people deal with the relationship between love, poverty and wealth, in the middle of a difficult situation,” said Jiang. 107 While official endorsement helped elevate Titanic, Jiang’s notice was not always welcome. One of China’s great Fifth Generation filmmakers, Chen Kaige reached the height of artistic refinement with Farewell, My Concubine (1993). Concubine is a historical epic seen through the eyes of Beijing opera performers. On first pass, the film breezed through censorship clearance in only two days. 108 But it was too successful for its own good, winning the Palm d’Or at Cannes; nominated for cinematography and Foreign Language Picture at the Academy Awards; and winning Best Foreign Language Picture at the British Academy of Film and Television Arts (BAFTA), the Golden Globes, and the New York Film Critics Circle. 109 Such accolades brought Concubine to the attention of Jiang. The PRC President arranged for a private screening and watched the picture with the Communist Party Central Committee’s Propaganda Chief. Immediately following the screening, Kaige’s film was denounced for its harsh depiction of the Cultural Revolution, its portrayal of homosexual love, and its climactic suicide, based on the plot of a famous Beijing opera.110 “Before Cannes, none of the leaders knew anything about this film,” the director commented,

105. Titanic, BOX OFFICE MOJO, http://www.boxofficemojo.com/movies/?id=titanic.htm (last visited Sept. 30, 2016).

106. Emily Parker, “Titanic” Takes China by Storm Following Jiang’s Endorsement, WALL ST. J. (Apr. 14, 1998), http://www.wsj.com/articles/SB892495319302117000.

107. “Titanic” Gets Thumbs Up in China, GAINESVILLE SUN, March 13, 1998, at 2A. When Titanic 3D was released in 2012 to commemorate the centennial of the ship’s sinking, the enhanced picture did not sail quite as smoothly through the censorship process. Kate Winslet’s nude torso was digitally cropped out. One official voiced the board’s concern: “Considering the vivid 3D effects, we fear that viewers may reach out their hands for a touch and thus interrupt other people’s viewing.” See Aaron Crouch, Cut, Censored, Changed: 10 Hollywood Films Tweaked for International Release, HOLLYWOOD REP. (Jan. 23, 2013, 7:52 PM PST), http://www.hollywoodreporter.com/gallery/cut-censored-changed-10-hollywood-414099.

The stereoscopic rerelease also captured a massive audience, bringing in $58 million in its debut. Titanic 3D, BOX OFFICE MOJO, http://www.boxofficemojo.com/movies/?id=titanic3d.htm (last visited Sept. 30, 2016).

108. Tyler, supra note 47.

109. See Farewell, My Concubine, Awards, IMDB, http://www.imdb.com/title/tt0106332/ awards (last visited Sept. 27, 2016).

110. Tyler, supra note 47.

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“but then after they saw it, some of them got pretty angry.”111 While statements of government officials may have played a role in the success of Titanic, the effects were decidedly detrimental to the exhibition of Farewell, My Concubine, despite the picture’s international praise.

When Farewell, My Concubine was released in the early 1990s, the PRC’s film industry’s domestic production was soft and audience attendance below expectations. This situation persuaded MRFT to pass a series of resolutions to bolster internal film and encourage imported content. In 1995, China Film President Wu Mengchen observed, “China’s film industry is in a time of transition . . . changing from a welfare-state mode to a moneymaking mode.”112 The remainder of the decade saw the administrative bureau make efforts to find a compromise between socialist ideological policies and capitalistic economic interests. After a series of setbacks, ranging from bureaucratic complications to censorship obstructions, the unprecedented success of Titanic confirmed the potential of the PRC’s film market. China would now consider joining the World Trade Organization (WTO) and take its place in a global exchange.

In 1999, China prepared to mark the fiftieth anniversary of the founding of the PRC. State mandated patriotism was at a peak and the production of main melody films were increased to enhance the optimistic mood. The Socialist state began engaging in a series of talks with the U.S. on the subject of China’s accession to the WTO. The two nations reached a bilateral agreement intended to accelerate the process of China’s entry and promote the development, stabilization and expansion of China-U.S. trade and economic ties.113 But before a stronger alignment could take shape, another event intervened.

On May 8, 1999, all forward momentum was halted when U.S.-led NATO forces accidently bombed China’s embassy in war-torn Yugoslavia.114 Relations were instantly chilled into a glacial cold war. The PRC’s propaganda machines churned into high mode with The New York Times reporting, Ever since NATO bombs hit the Chinese Embassy in Belgrade last Friday, China’s state-run media have dished up a ceaseless stream of banner headlines and jarring photos of bereft parents crying over victims’ bodies, of President Jiang Zemin in tears as he greeted families of the dead.

Newspapers and television programs have called the bombing an

111. Id. 112. Seth Faison, A Chinese Wall Shows Cracks, N.Y. TIMES, Nov. 21, 1995, at D4.

113. Bilateral Agreement on China’s Entry into the WTO Between China and the United States, MINISTRY OF FOREIGN AFFAIRS OF CHINA, http://www.fmprc.gov.cn/mfa_eng/ ziliao_665539/3602_665543/3604_665547/t18051.shtml (last visited Sept. 11, 2016).

114. See Chinese Evacuate a Bombed Embassy in Serbia, N.Y. TIMES, May 9, 1999, at 12.

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intentional “criminal act” . . . [The] dead Chinese have been anointed “martyrs.”115

Imported American films were summarily banished from China in 1999, commencing an embargo that would last from May to October. 116 This fivemonth blackout of Hollywood films occurred simultaneously with the release of China’s intensive program of main melody pictures, an auspicious coincidence for the domestic industry.

Diplomatic ties and trade relations were resumed by the end of year.

Preparing for China’s imminent participation in the WTO, SARFT circulated a flurry of new motion picture regulations. In June 2000, “Some Opinions about Carrying Out Further Reform in the Film Industry,” Document 320, later augmented by SARFT Documents 41 and 1519, transformed China’s film industry from state owned studios to large scale vertically integrated semi-privately held conglomerates,117 analogous to the “classical Hollywood system” that operated in the U.S. prior to the Paramount Consent Decree. 118 The heavily negotiated reform saw results: by December 2001, China was acknowledged as a member of the international trading system. 119 Asia’s greatest market was opening up to global commerce, but China now had the obligation of fair dealing. Part of the PRC’s commitment in joining the WTO was to employ less restrictive measures against foreign imports.120 China responded to the WTO’s requirements by issuing “Regulations on the Administration of Movies,” Document 342, on December 25, 2001.

Document 342 provided yet another restructuring of the film industry that included an examination administration (Article 24), an enumerated list of prohibited subjects (Article 25), an explanation of the administrative process (Article 29), and penalties (Article 58).

115. Elizabeth Rosenthal, China’s Mood; Real Public Rage Stoked by Propaganda Machine, N.Y. TIMES, May 14, 1999, at A13.

116. JENNY GEORGE DACCACHE & BRANDON VALERIO, HOLLYWOOD ’S REPRESENTATIONS OF THE SINO-TIBETAN CONFLICT: P OLITICS, CULTURE, AND GLOBALIZATION 155 (2012); James Bates & Maggie Farley, Hollywood, China in a Chilly Embrace, L.A. TIMES, June 13, 1999, at A1.

117. See SU, supra note 14, at 81-82, 87 citing SARFT and Ministry of Culture, The Detailed Regulations to Implement Structural Reform of the Mechanism of Film Distribution and Exhibition, in China Film Yearbook 2002 15-16 (2002); id. at 87, citing SARFT and Ministry of Culture, Some Opinions About Carrying Out Further Reform of the Film Industry, in China Film Yearbook 2001 1-3 (2001).

118. See, e.g., United States v. Paramount Pictures, 334 U.S. 131 (1948). This is the landmark antitrust case in which the U.S. Supreme Court ordered film studios to divest themselves of theater chains thus breaking up their monopoly on the industry and ending the “Golden Era” of Hollywood.

119. China Joins the WTO - At Last, BBC NEWS (Dec. 11, 2001), http://news.bbc.co.uk/ 2/hi/business/1702241.stm.

120. See World Trade Organization, Accession of the People’s Republic of China, Nov. 10, 2001, WT/L/432, 48 I.L.M. 941 (2009).

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Article 24 addressed SARFT’s revised motion picture administrative system, which required examination of all media intended to be distributed, projected, imported, or exported. The following provision, Article 25 specified ten types of prohibited content: (1) That which defies the basic principles determined by the Constitution; (2) That which endangers the unity of the nation, sovereignty or territorial integrity; (3) That which divulges secrets of the State, endangers national security or damages the honor or benefits of the State; (4) That which incites the national hatred or discrimination, undermines the solidarity of the nations, or infringes upon national customs and habits; (5) That which propagates evil cults or superstition; (6) That which disturbs the public order or destroys the public stability; (7) That which propagates obscenity, gambling, violence or instigates crimes; (8) That which insults or slanders others, or infringes upon the lawful rights and interests of others; (9) That which endangers public ethics or the fine folk cultural traditions; (10) Other contents prohibited by laws, regulations or provisions of the State. This listing provided slightly more clarity than the comparable Article 24 of Document 200 issued in 1996; however, the tenth proscription once again was a catchall and open door for unfettered censorship. 121 Document 342 also clarified the review process as an effort to mitigate what might be considered unfair censorship. Under Article 29, if the examination committee’s finding was contested, the rights holder would be permitted a reexamination, provided the issue was raised within 30 days of receipt of the examination decision. 122 For those not adhering to the administrative procedure, penalties could be severe. In addition to a schedule of fines, the importer, distributor, and/or exhibitor of an unlicensed film could face confiscation of the media, as well as seizure of illegal proceeds. 123 “If the case is serious, he/it shall be ordered to cease his/its business for rectification or his/its license shall be revoked by the original organ issuing the license.”124 Document 342 increased the quota of foreign imports to 20 pictures per year in 2001.125 The playing field was not quite leveled, but for a moment in time, China’s protectionist regulations were loosened. Under previous state directives foreign investors were limited to a minority interest up to 49% in

121. Regulations on the Administration of Movies (promulgated by St. Council, Dec. 25, 2001, effective Feb. 1, 2002), World Intellectual Property Organization, at art. 25 (2001).

122. Id. at art. 29.

123. Id. at art. 58.

124. Id. 125. Gabrielle Jaffe, Will the Great Film Quota Wall of China Come Down?, GUARDIAN (Mar. 24, 2011), https://www.theguardian.com/business/2011/mar/24/china-film-quota.

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joint ventures.126 But in another spate of regulations announced in 2003, and referred to as Documents 18, 19, 20, and 21, SARFT permitted increased ownership of exhibition outlets in selected regions. 127 In Beijing, Shanghai, Guangzhou, Xi’an, Chengdu, Wuhan, and Nanjing, foreign shareholders were allowed to own up to 75% of theaters.128 By 2005, the Hollywood majors, including Disney, Sony, Warner Bros., and the Weinstein Co., were establishing bases of operation in China.129 Opening a Beijing office for The Hollywood Reporter, bureau chief Jonathan Landreth commented, “Why am I here? Because everyone else in Hollywood is.”130 The future looked bright for filmmakers seeking opportunities in the PRC. SARFT’s generous provisions turned out to be short lived. Document 21, which granted increased ownership of exhibition outlets, was nullified and revoked a year later by a circular entitled “Several Opinions on Foreign Investment in the Culture Industry.”131 The revised regulation reinstated the mandate for Chinese mainland investors to hold at least 51% interest “or play a leading role in their joint ventures with foreign investors.”132 Time Warner, which had begun investing in mainland cinemas pulled an about-face.

Warner Bros. International Cinemas (WBIC) announced its withdrawal, transferring equity to its partner the Shanghai Film Group.133 After an optimistic run from 2000-2006, Warner Bros. was out of the theatrical business in China, demonstrating a foreign entity’s vulnerability to abrupt and unforeseen policy changes in the PRC. Warner Bros. wasn’t the only studio facing difficulties with China’s film administration. Along with regulations aimed at diminishing foreign market share came a renewed scrutiny of film content. The Da Vinci Code (2006) opened with promise in China, earning over $13 million in its first three weeks.134 In June of that year, China Film acting under orders from SARFT demanded the removal of Sony’s thriller from all theaters nationwide without prior notice. 135 Officials first claimed the ban was a concession to Chinese

126. SU, supra note 14, at 33.

127. Id. 128. Id.;see also JAMES M. ZIMMERMAN, CHINA LAW DESKBOOK: A LEGAL GUIDE FOR FOREIGN -INVESTED ENTERPRISES 175-76 (American Bar Assoc. 3d ed. 2010).

129. David Barboza, Hollywood Movie Studios See the Chinese Film Market as Their Next Rising Star, N.Y. TIMES, July 4, 2005, at C3.

130. Id. 131. SU, supra note 14, at 37.

132. Zhang Rui, Warner Finishing Cinema Transfers in China, BEIJING REVIEW (Apr. 12, 2007), http://www.bjreview.com/movies/txt/2007-04/12/content_61428.htm.

133. Id. 134. Stanley Rosen, Hollywood and the Great Wall, L.A. TIMES, June 18, 2006, at M1.

135. Id.

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Catholic Groups.136 Weng Li, deputy manager of film exhibition and distribution, offered a more practical reason: “The withdrawal is to make way for homemade movies released in the upcoming month . . . We made a purely commercial decision. No single film could monopolize the market for one or two months, not even in the United States. We’re making room for the next month when 10-plus homemade films will show across the country.” 137 This was the beginning a new strategy: the official implementation of blackout periods to evict foreign films from China screens in order to manipulate the market and increase the revenue of domestically produced films.

As foreign films saw more screen time, they also experienced greater censorship. Universal stood by as SARFT cut twenty minutes from Miami Vice (2006), including a sex scene between Colin Farrell and Chinese star Gong Li. 138 Brokeback Mountain (2005), produced by Focus Features, a subsidiary of Universal, was banned for scenes of homosexual relations between two cowboys played by Heath Ledger and Jake Gyllenhaal. 139 Scenes in Paramount’s Mission: Impossible 3 (2006) were trimmed, including one sequence where Tom Cruise killed a Chinese security guard 140 and another in which unkempt laundry lines were seen along the streets of Shanghai.141 Disney’s Pirates of the Caribbean: At World’s End (2007) found disfavor due to a ruling that Chow Yun-fat’s character, pirate captain Sao Feng, was an insulting, racial caricature that “vilifie[d] and humiliate[d] the Chinese.”142 Sao Feng was ordered cut from the film. 143 Martin Scorsese was back in the hot seat with The Departed (2006), released by Warner Bros.

The Academy Award winning picture—itself based on a Hong Kong thrilled entitled Infernal Affairs (2002)—was barred from playing the PRC.144 After viewing the film and issuing a ban, a China Film rep commented, “[T]hey thought it wasn’t suited for the mainland Chinese market. . . . They didn’t

136. Joseph Kahn, China Bans Code After Warning from Catholics, N.Y. TIMES (June 9, 2006), http://www.nytimes.com/2006/06/09/world/asia/09cnd-china.html.

137. Xinhua News Agency, China to Release M:I3 with Scenes Cut, CHINA. ORG.CN (June 10, 2006), http://www.china.org.cn/english/features/film/170978.htm.

138. Jonathan Landreth, China Cuts 20 Minutes from “Vice,” HOLLYWOOD REP. (Oct. 13, 2006), http://www.hollywoodreporter.com/news/china-cuts-20-minutes-vice-139542.

139. Clifford Coonan, China, Taiwan Tussle Over Ang Lee, VARIETY (Feb. 25, 2013), http://variety.com/2013/film/awards/china-taiwan-tussle-over-ang-lee-818644.

140. Landerath, China Cuts 20 Minutes from “Vice,” supra note 138.

141. Crouch, supra note 107.

142. Chow’s Pirates Scenes Cut in China, ABCNEWS (June 17, 2007), http://www.abc.net.au/news/2007-06-18/chows-pirates-scenes-cut-in-china/71638.

143. Id. 144. Departed Banned from China Theaters, USA TODAY (Jan. 1, 2007), http://usatoday30.usatoday.com/life/movies/news/2007-01-18-departed-china_x.htm.

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give concrete reasons.”145 One cause may have been a plot point in Departed where Boston crime lords attempt to sell high tech weapons to Chinese villains.146 Whether it was unsightly dirty laundry in Shanghai or the suggestion of Chinese international aggression, images that upset SARFT were quickly wiped from the screen with little process, discussion, or opportunity for appeal.

Responding to these events the United States brought a complaint against China before the WTO in April 2007.147 Speaking for Hollywood filmmakers, U.S. representatives complained, first, of barriers and restrictions on import of films and other audiovisual and entertainment products, and second, of the growing problem of piracy stemming from the deficiencies in China’s protection and enforcement of intellectual property rights.148 China’s response was defiant. In a PRC Commerce Ministry statement, spokesman Wang Xinpei commented, China expressed great regret and strong dissatisfaction at the decision of the United States to file WTO cases against China over intellectual property rights and access to the Chinese publication market . . . Such a move would seriously damage the cooperative relations established in the fields, and would have negative impact on bilateral trade . . . China strongly requires the US side to reconsider the decision and make prompt changes. 149

When the US did not back down, China blocked all imports.150 SARFT did not announce a formal ban on U.S. media, but, by December 2007, PRC administrators reported that American films were no longer being approved for release in the coming year.151 The allegations were contentious. Media piracy had been flourishing in China since the early 1990s, riding on the boom of home video technology. 152 China’s official position was perplexing: a spokesman for China’s National Copyright Administration “did not deny that intellectual property rights infringement and piracy occurred in the Chinese market,” but commented

145. Id. 146. Id. 147. Press Release, United States Files WTO Cases Against China Over Deficiencies in China’s Intellectual Property Rights Laws and Market Access Barriers to Copyright -Based Industries (Apr. 9, 2007), https://ustr.gov/about-us/policy-offices/press-office/press-releases/ archives/2007/april/united-states-files-wto-cases-against-china.

148. Id. 149. US Move to File Trade Cases Against China “Not Wise,” CHINA DAILY (Apr. 10, 2007), http://www.chinadaily.com.cn/china/2007-04/10/content_847045.htm.

150. David Barboza, Suspicions in US That China Has Put Ban on Hollywood Films, N.Y. TIMES (Dec. 12, 2007), http://www.nytimes.com/2007/12/12/business/smallbusiness/12film.html.

151. Id. 152. See Pirated Video Discs Thrive in China, DESERET NEWS (Dec. 14, 2000), http://www.deseretnews.com/article/798508/Pirated-video-discs-thrive-in-China.html.

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“that doesn’t mean the United States is founded to file complaints against China in the WTO.”153 With regard to the barriers on free trade, the PRC had increased their quota on imported film after joining the WTO, but that allowance still hovered at only 20 revenue-sharing foreign films a year.154 Earning potential was also stifled by SARFT’s mandate that only allowed foreign studios take 11-15% of box office receipts or about half the norm for other parts of the world. 155 Furthermore, joint ventures were heavily regulated and restricted foreign investors to minority ownership while bearing the full freight on tax and tariffs.

CHINA’S CENSORS TAKE ACTION While the WTO proceedings played out, the PRC’s ban on Hollywood films was loosened but now subject to heavy-handed regulation. The Jackie Chan action-comedy film Rush Hour 3 (2007) was declined permission to screen in China.156 Import officials cited “an ‘overabundance’ of imported films this year.”157 This ruse was not consistent with the PRC’s comprehensive ban on all U.S. films only months earlier. Verging on the bizarre, Garfield: A Tale of Two Kitties (2006) was flagged by the newly installed “Great Firewall of China”; the orange tabby’s prints and advertisements somehow triggered the PRC’s overly sensitive porn filter.158 Equally alarming was SARFT’s crackdown on domestic content that violated state-ordered etiquette. One of China’s promising female directors, Li Yu, had previously run afoul of the Ministry’s protocols.159 Her picture Jīn nián xià tiān (Fish and Elephant, 2001) was the first film made in China on the subject of lesbianism. 160 It was quickly suppressed.161 Low-resolution video copies were snuck out of the PRC to play at international film festivals, where they were praised at Venice and Berlin. 162 Li Yu’s Pingguo (Lost in

153. Barboza, supra note 150.

154. Id. 155. Michael Cieply, In China Movie Pact, More 3-D, Less Reality, N.Y. TIMES, Feb. 20, 2012, at B2.

156. Jonathan Landreth, Rush 3 Hits Wall in China, HOLLYWOOD REP. (Aug. 8, 2007), http://www.hollywoodreporter.com/news/rush-3-hits-wall-china-146365.

157. Id. 158. Emma Graham-Harrison, China’s Internet Porn Filter—No Garfield Please, REUTERS (June 30, 2009), http://www.reuters.com/article/us-china-internet-filter-idUSTRE55T26Y 20090630.

159. PETER C. PUGSLEY, EXPLORING MORALITY AND SEXUALITY IN ASIAN CINEMA: CINEMATIC BOUNDARIES 56 (2015).

160. Id. 161. Id. 162. Jinnian Xiatian, Fish and Elephant, CHINESE CINEMAS (May 23, 2002), http://www.chinesecinemas.org/fishandelephant.html.

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Beijing, 2007), with its depiction of gambling, rape, and the sale of unwanted children, was equally troubling to PRC authorities. 163 It too was banned and copies detained, which prevented Li Yu from participating in Berlinale.164 In addition to motion pictures, China took the opportunity to assert greater control across all media. Broadcast censors were ordered to tighten restrictions on television dramas and unscripted reality TV shows. 165 PRC President Hu Jintao announced an initiative to “purify” the Internet with tougher rules and closer monitoring. 166 Once again, on the threshold of greater convergence with the global marketplace, the China-US relationship was complicated by regulation. Under investigation by the WTO, the PRC doubled down on the censorship of both imported and domestically-produced media.

In October 2008, the WTO ruled against China on the issue of piracy. 167 The International Intellectual Property Alliance prevailed on their claim that abuses in the PRC had cost content owners over $3.7 billion in lost sales in 2007.168 By August 2009 the decision came down on the issue of free trade.169 In the WTO’s ruling, the panel concluded that China violated the commitments it made upon joining the organization in 2001 by forcing imported media products to be routed through state-owned companies. 170 While the panel ordered China to reduce impediments to trade, the ruling did not reject the cap on imported films at twenty revenue-sharing titles per year and furthermore accepted that PRC censors had the right to bar foreign films and publications that government censors found objectionable. 171 China appealed the decisions but the WTO’s appellate body upheld the panel’s findings. Those conclusions called for China to provide equal access to foreign media content producers and distributors. 172 A deadline was set

163. Jonathan Landreth, China Bans Beijing from Berlin, HOLLYWOOD REP., Feb. 2-4, 2007, at 1.

164. Id. 165. See Jonathan Landreth, China Cracks Down on Reality TV, HOLLYWOOD REP. (Jan. 12, 2007), http://www.hollywoodreporter.com/news/china-cracks-down-reality-tv-127913; Jonathan Landreth, China Censors: Gotta Accentuate the Positive, HOLLYWOOD REP. (Jan. 23, 2007), http://www.hollywoodreporter.com/news/china-censors-gotta-accentuate-positive-128494.

166. Jonathan Landreth, China President Wants Gov’t to Purify Internet, HOLLYWOOD REP., Jan. 26-28, 2007, at 40.

167. See US Claims Win in WTO Piracy Case, HOLLYWOOD REP. (Oct. 19, 2008), http://www.hollywoodreporter.com/news/us-claims-win-wto-piracy-120883.

168. Id. 169. See Jonathan Landrath, China to Appeal WTO Ruling, HOLLYWOOD REP. (Aug. 17, 2009), http://www.hollywoodreporter.com/news/china-appeal-wto-ruling-87733.

170. Id. 171. Id. 172. US-China Economics and Securities Review Commission, Directed by Hollywood, Edited

by China: How China’s Censorship and Influence Affect Films Worldwide, ¶ 4 (Oct. 28, 2015),

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for China to comply with the orders: March 2011.173 Recalcitrant, China failed to modify its practices, instead maintaining state-authorized limitations on foreign access to its film market.

The distribution history of James Cameron’s epic sci-fi blockbuster Avatar provides a case study. Avatar takes place in the distant future on a faraway planet where Earth’s industrialists mine the precious mineral unobtanium. Unfortunately, the deposit of ore lies beneath the world tree of an alien species—extracting the valuable material endangers the peace loving Na’vi. Cameron’s previous film Titanic was a sensation in China, with the CCP divining a Marxist message on the contentious relationship between labor and capital.174 But the pro-environmental message of Avatar was impossible to avoid. The avarice of Earth’s corporate colonizers could easily be associated with China’s ecological disregard from the building of Three Gorges Dam, which flooded archaeological sites and villages along the Yangtze River, to rampant deforestation, costal land reclamation, and toxic air pollution. Avatar opened in China on January 4, 2010, less than five months after China challenged the adverse WTO ruling.175 The film proved wildly popular pulling in $76 million in ticket sales. 176 Avatar was China’s biggest box office champ ever.177 Two weeks later the picture was summarily yanked off many of the PRC’s screens.178 The official reason was to make way for a domestically produced 3D biography of Confucius.179 Kong Zi (Confucius, 2010) was a main melody film directed

by Hu Mei and featured Chow Yun-fat as the distinguished philosopher. 180 SARFT was manipulating the market, steering audiences to the domestically produced patriotic picture by eliminating its competition. 181 But film audiences were not interested. The Shanghai Daily ran a headline: “Confucius says: flop.”182 Regardless of reviews, blackout dates became an effective method by which SARFT could control domestic box office and limit the dominance of http://origin.www.uscc.gov/sites/default/files/Research/Directed%20by%20Hollywood%20Edited %20by%20China.pdf.

173. Id. 174. Why China Loves “Titanic” So Much: A Theory, WALL ST. J. (Apr. 25, 2012), http://blogs.wsj.com/chinarealtime/2012/04/25/why-china-loves-titanic-so-much-a-theory.

175. Sharon LaFraniere, China Curtails Run of Avatar as It Fills Theaters, N.Y. TIMES, Jan. 20, 2010, at A4.

176. Id. 177. Id. 178. Id. 179. Id. 180. David Pierson, Confucius a Snooze for Chinese Audiences, L.A. TIMES, Feb. 27, 2010, at B1.

181. Id. at B1, B5.

182. Id. at B1.

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foreign films. In 2012 the PRC closed its screens to foreign films from June to August.183 According to SARFT this summer period was allocated for “domestic film protection” to allow local pictures the opportunity to play without competition from major Hollywood blockbusters. 184 The strategy was successful in shifting the market share of domestically produced films vis-à-vis foreign films. For instance, in the month of June, China-produced pictures earned under $10 million a week while revenue from U.S. films never dipped below $25 million. 185 During the month of July, when Hollywood product was embargoed or limited, China-produced films averaged returns of approximately $46 million a week while US-made pictures suffered with a take of approximately $4 million a week. 186 The tactic was canny. Imposing the blackout SARFT did not break any international trade rules, as one MPAA representative commented, “Are [the Chinese] violating WTO obligations? Probably not.”187 Aside from blackout periods, SARFT maintained tight control over screens in China with an ever-changing roster of restrictions. In 2010, Gordon Chan directed The Mural, a follow up to his action-romance hit Hui Pi (Painted Skin, 2008).188 While Skin was adored in China, nominated for three Golden Rooster Awards and Three Hundred Flower Awards—the equivalent of America’s Academy Awards and Golden Globes, respectively—Mural found a very different reception.189 The Mural underwent extensive revisions to please PRC censors; its plot was altered to comply with a directive that nightclubs were a forbidden subject. 190 In 2011 an even more curious restriction was set forth. Films such as The Terminator (1984), Back to the Future (1985), and Bill and Ted’s Excellent Adventure (1989) were stopped at the border.191 The reason: SARFT barred the topic

183. Robert Cain, A Few Thoughts on China’s Foreign Film Blackouts, CHINAFILMBIZ (Sept.

21, 2012), https://chinafilmbiz.com/tag/china-box-office/page/4.

184. Id. 185. Robert Cain, 6 Key Lessons from SARFT’s Foreign Film Blackout, INAGLOBAL (Oct. 25, 2012), http://www.inaglobal.fr/en/cinema/article/6-key-lessons-sarft-s-foreign-film-blackout.

186. Id. 187. Id. 188. Jonathan Landreth, The Mural Retouched to Pass Muster with Censors, HOLLYWOOD REP. (Nov. 11, 2010), http://www.hollywoodreporter.com/news/mural-retouched-pass-mustercensors-41391.

189. Id. See also Six Nominations to “Mulan” for Hundred Flowers Awards, CHINESE.CN (June 7, 2010), http://kungfu.chinesecio.com/en/article/2010-06/07/content_139825.htm.

190. Landreth, The Mural Retouched to Pass Muster with Censors, supra note 188.

191. Richard Hartley-Parkinson, Great Scott! China Ban Films and TV Shows Featuring Time Travel (Just In Case Anyone Wants to Rewrite History), DAILY MAIL (Apr. 15, 2011), http://www.dailymail.co.uk/news/article-1376771/Great-Scott-China-bans-time-travel-cinemaTV.html.

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of time travel citing disrespect of history. 192 The ban more broadly applied to films that contained elements of superstition, fantasy, and reincarnation— characters that could travel back in time and rewrite history had to be eradicated. 193 But certain historical truths could be altered if it pleased the CCP.194 Mao’s Last Dancer (2009) chronicled the uplifting story of a boy born in a rural village who rises to acclaim at the prestigious State Dance Academy. This Beijing-style Billy Elliot was banned in the PRC.195 “The Chinese government doesn’t want anyone reminded that Chairman Mao was a lunatic,” commented director Bruce Beresford.196 A documentary on the tragic collapse of a school building during the Sichuan earthquake entitled China’s Unnatural Disaster: The Tears of Sichuan Province (2009) caused controversy when programmed by the Beijing Independent Film Festival. 197 The film was silenced and Disaster’s American filmmakers were denied visas to enter China.198 Zhao Liang’s documentary Petition (2009) was also squelched by SARFT; however this director demonstrated shrewd political skills to further his career. Petition delved into the issue of PRC authorities muzzling commoners who followed an age-old tradition of travelling to Beijing to seek redress for wrongdoings by local officials. 199 The central government was not presented in a positive light and the independently produced film could not find clearance to be exhibited in its native country. 200 Zhao transformed his relationship with the CCP with his next documentary entitled Zai yi qi (Together, 2010).201 Commissioned by the Ministry of Health, Together focused on discrimination against Chinese with HIV and AIDS. 202 The film avoided mentioning the government’s extensive denial and cover-up of the diseases and was passed by state censors.203 Zhao commented, “When you’re 192. Id. 193. Id. See also Jonathan Landreth, China Bans Time Travel Films and Shows, Citing Disrespect of History, HOLLYWOOD REP. (Apr. 13, 2011), http://www.hollywoodreporter.com/ news/china-bans-time-travel-films-177801.

194. Hartley-Parkinson, supra note 191.

195. Roger Moore, Mao’s Last Dancer Banned in China, PHILLY.COM (Aug. 20, 2010), http://articles.philly.com/2010-08-20/entertainment/24974840_1_chinese-cinemas-china-culturalrevolution.

196. Id. 197. Sky Canaves, Banned by Beijing: US Filmmakers Who Made Sichuan Earthquake Documentary, WALL ST. J. (Sept. 2, 2009), http://blogs.wsj.com/chinarealtime/2009/09/02/banned by-beijing-us-filmmakers-who-made-sichuan-earthquake-documentary.

198. Id. 199. Edward Wong, Chinese Director’s Path from Rebel to Insider, N.Y. TIMES, Aug. 14, 2011, at 1.

200. Id. 201. Id. 202. Id. 203. Id.

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working in China, there’s a gray area that you have to navigate.”204 While the director reestablished his position in the China film industry, it cost him credibility with colleagues. Ai Weiwei, an internationally recognized artist who was detained during China’s crackdown on liberal intellectuals, repudiated his former friend Zhao. But Zhao’s example raises a significant factor: the pressures of government can force filmmakers to compromise their positions in order to remain productive in the industry. Those pressures can take the form of censorship on one hand as well as of largess on the other.

The rebellious director Zhang Yimou, once banned for Ju Dou, found praise and privilege within the Chinese system. Appreciating the adoration, his later work was transformed to fit the main melody template. Films such as Hero (2002) and The Flowers of War (2011) abide by the ideological constraints he once disdained. Rebellious no longer, Yimou has been embraced by China’s motion picture politburo.

A PRECARIOUS BALANCE The U.S. and China remained at loggerheads regarding the WTO ruling until February 2012, when a temporary settlement was reached. This Memorandum of Understanding Between the People’s Republic of China and the United States of America Regarding Films for Theatrical Release (MOU) did not bring China into compliance with the WTO decision, but it did address several key points.205 The settlement increased the number of revenue-sharing foreign film imports each year to thirty-four, stipulating that fourteen of those films would be released in IMAX or 3D formats. 206 This concession satisfied major studios at the expense of America’s independent filmmakers who did not produce large format pictures. The settlement also raised the allocated percentage of box office receipts for foreign studios to 25%.207 These allowances increased market access and provided a greater share of revenue for foreign film producers and distributors.208 In exchange for these compromises, the U.S. agreed to refrain taking further action with the WTO.209

204. Id. 205. See Memorandum of Understanding Between the People’s Republic of China and the United States of America Regarding Films for Theatrical Release, Ch.-U.S., Feb. 18, 2012, T.I.A.S. No. 12-0425 [hereinafter Memorandum of Understanding].

206. Id. 207. Id. 208. Id. 209. Ethan Smith & Bob Davis, China Agrees to Increased Access for US Films, WALL ST. J. (Feb. 18, 2012), http://www.wsj.com/articles/SB100014240529702048804045772301724 01449982.

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The MOU provided a pathway to the future, committing both sides to further discussion in 2017 on the issues of additional revenue and imported product. However, if subsequent talks stall, section 15 of the MOU allows the U.S. to resume its action against China in the WTO after January 1, 2018.210 A stopgap was put in place, and the countries reached an uneasy equilibrium but the case remained unresolved for the long term.211 China’s market is still largely closed with its quota system in place and a revenue ceiling for foreign investors.212 Still, Vice President Joe Biden, MPAA President Chris Dodd, and Disney CEO Robert Iger praised the 2012 MOU as “a significant opportunity to provide Chinese audiences increased access to our films.”213 The immediate result of the settlement was dynamic growth in the PRC’s media sector. The increased import quota injected a shot of adrenalin into the industry. In 2012, China box office revenue hit $2.7 billion, up 37% from the previous year, to become the second largest global market after North America.214 Those numbers continued upward, hitting $3.57 billion in 2013,215 $4.76 billion in 2014,216 and surging over 48% in 2015 to hit $6.78 billion.217 First two quarters of 2016 showed slightly slower growth at 21% but the PRC box office still managed to cross the $4 billion mark. 218 By 2017, China is expected to surpass North America and become the largest movie market in the world.219 Construction of movie screens kept pace with box office: from 9,286 screens in 2011, the number shot up to over 13,000 screens in 2012—a number that doubled 2010’s venue count.220 Screen 210. Memorandum of Understanding, supra note 205.

211. See id.

212. Smith, supra note 209.

213. Id. 214. Pamela McClintock, China Box Office Revenue Hits $2.7 Billion in 2012, Second Only to North America, HOLLYWOOD REP. (Mar. 21, 2013), http://www.hollywoodreporter.com/news/ china-box-office-revenues-hit-430267.

215. Patrick Frater, China Surges 36% in Total Box Office Revenue, VARIETY (Jan. 4, 2015), http://variety.com/2015/film/asia/china-confirmed-as-global-number-two-after-36-box-officesurge-in-2014-1201392453.

216. Clifford Coonan, China’s Box Office Surges 36% in 2014 to $4.76 Billion, HOLLYWOOD REP. (Jan. 1, 2015), http://www.hollywoodreporter.com/news/chinas-box-office-surges-36760889.

217. Patrick Brzeski, China Box Office Grows Astonishing 48.7 Percent in 2015, Hits $6.78 Billion, HOLLYWOOD REP. (Dec. 31, 2015), http://www.hollywoodreporter.com/news/china-boxoffice-grows-astonishing-851629.

218. Julie Makinen, China Box Office: Growth Slows in First Half of 2016 but Still Up 21%, L.A. TIMES (July 11, 2016), http://www.latimes.com/entertainment/envelope/cotown/la -et-ctchina-box-office-half-20160711-snap-story.html.

219. Patrick Brzeski, China Box Office Grows Astonishing 48.7 Percent in 2015, supra note 217.

220. 2013-2014 China Film Industry Report: Abstract IV, ENTGROUP (Oct. 29, 2014, 11:52 AM), http://english.entgroup.cn/views_detail.aspx?id=2660.

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construction would continue to skyrocket, hitting 18,000 in 2013, 22,000 in 2014221 and nearly 29,000 in 2015. The number of movie screens is on target to hit 50,000 in China before 2020. 222 Ticket sales also increased, growing from 462 million in 2012 to 612 million in 2013, 223 and 830 million in 2014, increases of over 30% year-on-year.224 Responding to the explosive market, in March 2013, the government merged SARFT with the General Administration of Press and Publication to form a new bureau: the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT).225 Led by Cai Fuchao, who previously served as deputy director of Beijing’s propaganda department from 19982008, SAPPRFT like its predecessor was tasked with approving all films shown in China, including co-productions and domestically produced content.226 SAPPRFT’s authority was left intentionally broad. 227 How and when the bureau chose to enforce its influence was undefined; furthermore, SAPPRFT habitually provided vague feedback forcing foreign filmmakers to navigate a byzantine process ripe for corruption in order to gain import approval. 228 Like the Hollywood Production Administration under Will Hays in place from 1930s-1950s in the U.S., SAPPRFT is involved in preproduction, production, distribution and can refuse to pass a film that completed the process.229 Possibly in a move to legitimize his department’s existence, Cai Fuchao’s SAPPRFT introduced a new regime of rigorous censorship.

In addition to enforcing regulations that had been passed prior to the U.S.-PRC settlement, SAPPRFT brought new matters to the process.

Because China lacked a rating system, all films had to be appropriate for general audiences of all ages.230 The practice was not consistently applied. 231 SAPPRFT demonstrated sensitivity toward disparaging presentations of the

221. Id. 222. Xu Fan, Movie Screens in China Hit New Record, CHINA DAILY.COM. CN (Sept. 1, 2015), http://www.chinadaily.com.cn/culture/2015-09/01/content_21770672.htm 223. Patrick Frater, China Adds 5,000 Cinema Screens in 2013, VARIETY (Jan. 17, 2014), http://variety.com/2014/biz/asia/china-adds-5000-cinema-screens-in-2013-1201062132.

224. China Box Office Sales Rise 36 Percent in 2014: State Media, DAILY MAIL (Jan. 1, 2015), http://www.dailymail.co.uk/wires/afp/article-2893274/China-box-office-sales-rise-36-percent2014-state-media.html.

225. Nancy Tartaglione, Global Showbiz Briefs: China’s SARFT; Inocente Screen Australia; BBC Four, DEADLINE HOLLYWOOD (Mar. 11, 2013), http://deadline.com/2013/03/global-showbizbriefs-chinas-sarft-inocente-screen-australia-bbc-four-450409.

226. Sean O’Connor, supra note 53.

227. Id. 228. Id. 229. Id. 230. Id. 231. Id.

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CCP and Chinese people. 232 When Nury Vittachi, a Sri Lankan author of detective-fiction, was contacted about writing a screenplay, he discovered parameters that limited his palette in China: “crime stories are crime free, ghost tales have no ghosts and crooked politicians can’t be crooked.” 233 Vittachi also exposed a variety of non-SAPPRFT approvals that may be triggered: If the hero is a monk or the setting is a temple or a church, the script will also require a permit from the State Administration for Religious Affairs.

If it’s a spy movie, national security agents will have to vet it. For cop shows, you need approval from the police’s so-called art department.234

Censorship enforcement could be unpredictable. Columbia/Sony was required to make cuts to Men in Black 3 (2012), a sci-fi comedy about secret agents charged with apprehending unruly extraterrestrials living on Earth. 235 State regulators saw political resonance in one scene where Will Smith, playing an agent, erases the memories of a group of Chinese bystanders. 236 China’s Southern Daily newspaper commented, “This could have been a hint on the use of Internet censorship to maintain social stability.”237 Sony again ran afoul of state censors in Skyfall (2013), the twenty-third entry of the James Bond franchise. 238 To reach PRC audiences, the studio was required to delete a scene set where a hit man is shown shooting a Chinese security guard.239 Paramount Pictures ran up against SAPPRFT with the 3D retooling of Top Gun (1986).240 This chest-thumping Air Force actioner was rejected due to its display of American military dominance. 241 Academy Award nominated Captain Phillips (2013), which starred Tom Hanks in the biopic

232. Frank Langfitt, How China’s Censors Influence Hollywood, NAT ’L PUB. RADIO (May 18, 2015), http://www.npr.org/sections/parallels/2015/05/18/407619652/how-chinas-censorsinfluence-hollywood.

233. Nury Vittachi, China’s Crime-Free Crime Films, N.Y. TIMES (Jan. 3, 2015), http://www.nytimes.com/2015/01/04/opinion/sunday/chinas-crime-free-crime-films.html.

234. Id. 235. Malcolm Moore, Chinese Villains Censored from Men in Black 3, TELEGRAPH (May 30, 2012), http://www.telegraph.co.uk/news/worldnews/asia/china/9300092/Chinese-villains-censored -from-Men-in-Black-3.html.

236. Id. 237. Id. 238. Pamela McClintock, Box Office Report: Skyfall Scores $5.1 Million Opening Day in China, HOLLYWOOD REP. (Jan. 22, 2013), http://www.hollywoodreporter.com/news/box-officereport-skyfall-scores-414319.

239. Id. 240. Michael Cieply & Brooks Barnes, To Get Movies into China, Hollywood Gives Censors a Preview, N.Y. TIMES (Jan. 14, 2013), http://www.nytimes.com/2013/01/15/business/media/inhollywood-movies-for-china-bureaucrats-want-a-say.html.

241. Id.

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of a mariner taken hostage by Somali pirates, was denied on similar grounds: PRC censors were uncomfortable with scenes of “the big Military machine of the U.S. saving one U.S. citizen.”242 Only two months after Top Gun was denied, Paramount tweaked its tent pole production of World War Z (2013).243 The studio removed an offending scene where the film’s star, Brad Pitt, discussed the geographic origin of an outbreak that triggered the zombie apocalypse and pointed to China.244 The revised submission did not placate authorities; official response was silence. 245 World War Z skipped mainland China.246 SAPPRFT’s embargo on films that “promote cults or superstition” in Document 200, Article 24 §5, was invoked to exorcize several pictures from the Chinese market.247 Director Guillermo del Toro was riding high after his robot-alien monster thriller Pacific Rim (2013) grossed $113 million in China.248 But the director with a yen for the supernatural suffered a misfire with his gothic romance, Crimson Peak (2015).249 Universal Pictures learned that the only exception to SAPPRFT’s no-ghost protocol was spirits based in Chinese mythology. 250 Similarly, Sony’s all-female reboot of Ghostbusters (2016) was denied release in China even after changing its title to Super Power Dare to Defy Team to avoid any reference to prohibited poltergeists. 251 Disney/Marvel was vigilant to de-Tibet-ize its comic book movie adaptation of Doctor Strange (2016), which contained an ancient master of magic from the mountain kingdom, but the overarching theme of mysticism and enchantment might ward off approval from the state censors.252 242. Clare Baldwin & Kristina Cooke, How Sony Sanitized the New Adam Sandler Movie to Please Chinese Censors, REUTERS (July 24, 2015), http://www.reuters.com/investigates/specialreport/china-film.

243. Lucas Shaw, Zombie Film World War Z Changes Scene After Fearing Chinese Censors, BUS. INSIDER (Apr. 1, 2013), http://www.businessinsider.com/world-war-z-changes-scene-fearingchinese-censors-2013-4.

244. Lucas Shaw & Sharon Waxman, China Censors Rejected Brad Pitt’s World War Z, WRAP (June 3, 2013), http://www.thewrap.com/movies/article/brad-pitt-world-war-z-china-rejectingzombie-apocalypse-95051.

245. Id. 246. Id. 247. Patrick Brzeski, China’s No-Ghost Rule Could Haunt Crimson Peak, HOLLYWOOD REP. (Oct. 21, 2015), http://www.hollywoodreporter.com/news/chinas-no-ghost-rule-could-833473.

248. Id. 249. Id. 250. Id. 251. Patrick Brzeski, Ghostbusters Denied Release in China, HOLLYWOOD REP. (July 13, 2016), http://www.hollywoodreporter.com/news/ghostbusters-denied-release-china-910563; Henry Barnes, Ghostbusters in Line for China Ban Due to Supernatural Theme, GUARDIAN (July 14, 2016), https://www.theguardian.com/film/2016/jul/14/ghostbusters-china-ban-supernaturaltheme.

252. See Hannah Shaw-Williams, Doctor Strange’s Erasure of Tibet is a Political Statement, SCREEN RANT (Mar. 30, 2016), http://screenrant.com/doctor-strange-china-tibet-ancient-one.

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Violence, religion, and sexuality are also censured by SAPPRFT. The raunchy antihero superhero action pics Deadpool (2016) and Suicide Squad (2016) were runaway box office successes in the U.S. But in China, both films were denied release due to excessive violence, graphic language, and nudity. 253 Ben-Hur, the epic biblical tale of childhood chums separated by their cultures has a long history of being censored in China. 254 MGM produced the first blockbuster version of Ben-Hur in 1925.255 Cantonese authorities turned the picture away commenting it was “Christian propaganda decoying the people to superstition which must not be tolerated in the present age of revolutionary enlightenment.”256 This historical precedent did not deter Paramount from producing an updated version in 2016. Whether SAPPRFT will break precedent and permit the picture has yet to be determined but Paramount should have been on notice that religious subjects were to be treated sensitively since the studio’s biblical tent pole Noah (2014) was banned two years earlier.257 The issue of depicting same sex couples is still in flux. Fan Popo produced Mama Rainbow (2012), a sympathetic documentary on six Chinese mothers and their gay and lesbian children. 258 Popo claimed SAPPRFT ordered the picture taken down from streaming platforms and brought suit in the Beijing No. 1 Intermediate People’s Court.259 In December 2015, Popo prevailed on a technicality: SAPPRFT hadn’t officially released any takedown notice.260 This was a momentary victory for LGBTQ rights activists: three months later in March 2016, SAPPRFT authorized a take-down notice for a popular online series Addiction (2016), which centered on two gay

253. Benjamin Lee, Deadpool Denied Release in China Due to Extreme Content, GUARDIAN (Jan. 16, 2016), https://www.theguardian.com/film/2016/jan/18/ryan-reynolds-tim-millerdeadpool-denied-china-release-extreme-content; Rebecca Hawkes, Violence, Nudity, Possession: Why Suicide Squad—and Other Films—Aren’t Released in China, TELEGRAPH (Aug. 5, 2016), http://www.telegraph.co.uk/films/2016/08/05/violence-nudity-possession-why-suicide-squad—and-other-films.

254. See “Ben Hur” Film Put Under China Ban, READING TIMES (Reading, Pa.), Jan. 8, 1929, at 4.

255. Mike Fleming, Jr, Sweet Chariot! MGM is Rebooting “Ben Hur,” DEADLINE (Jan. 14, 2013), http://deadline.com/2013/01/new-ben-hur-movie-remake-reboot-mgm-lew-wallace-novel404155.

256. READING TIMES, supra note 254.

257. Julie Makinen and John Horn, China’s Cinematic Censors Say “No” to Noah, L.A. TIMES (May 9, 2014), http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-china-noah20140509-story.html.

258. Lilian Lin, Chinese Gay Activist Claims Victory in Online Film Censorship Lawsuit, WALL ST. J. (Dec. 28, 2015), http://blogs.wsj.com/chinarealtime/2015/12/28/chinese-gay-activistclaims-victory-in-online-film-censorship-lawsuit.

259. Id. 260. Id.

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men. 261 This time the official comment banned all depictions of gay people as part of a cultural crackdown on “vulgar, immoral, and unhealthy content.”262 Knowing the subjects that prompt censors to take notice is one element of getting a film passed by SAPPRFT, another method is anticipating ways to cajole administrators. Several studios have made proactive and strategic changes, altering the version to be screened in China and showcasing Chinese expertise. In Iron Man 3 (2013), Disney/Marvel extended a scene showing Chinese doctors helping the hero in need. 263 The calculation was spot-on; Iron Man 3 smashed box office records, earning a record $21.1 million on its opening day. 264 In Fox’s The Martian (2015), China’s National Space Administration was positioned in a pivotal role, stepping in to save NASA’s reputation and Matt Damon’s life. 265 The film rocketed to a $50 million first weekend. 266 Hollywood studios have adopted the casting of Chinese actors as de rigueur. X-Men Days of Future Past (2014) introduced Fan Bingbing as a teleporting mutant in the first of four films featuring the Chinese star. 267 Independence Day: Resurgence (2016) included Chinese model/star Angelababy in a brief appearance as a fighter pilot as well as a product placement for Chinese company Tencent. 268 Disney/Lucasfilm signed Wen Jiang for Rogue One: A Star Wars Story (2016).269 Paramount recruited

261. Hannah Ellis-Petersen, China Bans Depictions of Gay People on Television, GUARDIAN (Mar. 4, 2016), https://www.theguardian.com/tv-and-radio/2016/mar/04/china-bans-gay-peopletelevision-clampdown-xi-jinping-censorship.

262. Id. 263. See Shaw, supra note 244.

264. Clarence Tsui, Iron Man 3 Smashes China’s Opening-Day Box Office Record, HOLLYWOOD REP. (May 1, 2013), http://www.hollywoodreporter.com/news/iron-man-3-smasheschinas-450413. See also Baldwin & Cooke, supra note 242.

265. Brett Lang, “The Martian” Soars to $50.1 Million Opening in China, VARIETY (Nov. 29, 2015), http://variety.com/2015/film/box-office/the-martian-china-opening-1201649698.

266. Patrick Brzeski, China Box Office: The Martian Rockets to $50 Million, Mockingjay 2 Disappoints, HOLLYWOOD REP. (Nov. 30, 2015), http://www.hollywoodreporter.com/news/chinabox-office-martian-rockets-844746.

267. Alice Yan, China’s X-Men Star Fan Bingbing Joins Forbes’ List of Hollywood’s BiggestEarning Actresses, S. CHINA MORNING P OST (Aug. 21, 2015), http://www.scmp.com/ news/china/money-wealth/article/1851363/chinas-x-men-star-fan-bingbing-joins-forbes-listhollywoods.

268. Jonathan Papish, China Box Office: Summer Heist Pic Tops Fox Sci-Fi Flick, CHINA FILM INSIDER (June 28, 2016), http://chinafilminsider.com/china-box-office-summit-heist-pic-tops-foxsci-fi-flick.

269. Scott Timberg, Hollywood’s New China Syndrome: the Country’s Enormous Audience Means Money for Movie Studios and Some Restrictions, SALON (Sept. 25, 2016), http://www.salon.com/2016/09/25/hollywoods-new-china-syndrome-the-countrys-enormousaudience-means-money-for-movie-studios-and-some-restrictions/.

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Zhang Ziyi for its own sci-fi thriller, God Particle (2017).270 Actress Jing Tian is set to appear in three major upcoming pictures with enormous U.S.PRC crossover potential: The Great Wall (Universal-China Film, 2017), Kong: Skull Island (Warner Bros., 2017), and Pacific Rim: Maelstrom (Universal-Legendary, 2018).271 But strategic pandering doesn’t always work. MGM’s remake of 1980s Cold War drama Red Dawn (2012) tweaked the nationality of America’s invaders first to China, then, wary of offending the lucrative market, used digital effects in post-production to change the villain to North Korea. 272 The film fizzled; it is unclear whether it ever gained access to China.273 Sony eliminated a scene from an Adam Sandler VFX-comedy in which aliens blast a hole in the Great Wall.274 Such imagery ran contrary to the directive barring scenes in which Chinese sites or monuments suffer damage. 275 But even this could not lift Pixels (2015) from a dismal theatrical run.276 Eliminating negative imagery may not erase the taint; however, portraying China heroically plays to CCP conceits and has proven to be an effective tactic.

Despite onerous regulations and arbitrary censorship, China remains an important market to Hollywood. During the past decade as home video sales, once an important revenue engine, steadily declined, studios looked to the untapped audiences of the PRC to fill the home video vacuum. But solidifying relationships with China and navigating the bureaucracy of SAPPRFT has proven to be a challenge.

Regulation of imported films created a bottleneck with only thirty-four foreign films permitted entry to PRC screens as of 2016. Manipulation of the market favors domestic productions with blackout dates and selective ticketing to boost the box office of homegrown pictures. Even a highly successful foreign film is subject to shearing—non-Chinese entities are eligible for only a small slice of revenue, but are liable for taxes and tariffs.

In 2013, a year that saw the release of successful blockbusters including Iron 270. Borys Kit, Zhang Ziyi Joins J.J. Abrams’ Sci-Fi Thriller “God Particle,” HOLLYWOOD REP. (May 26, 2016), http://www.hollywoodreporter.com/heat-vision/zhang-ziyi-joins-jj-abrams897736.

271. Erich Schwartzel, Hollywood Under Pressure to Put More Chinese Actors in the Spotlight, WALL ST. J. (Sept. 19, 2016), http://www.wsj.com/articles/hollywood-under-pressure-to-put-morechinese-actors-in-the-spotlight-1474304341 272. Ben Fritz & John Horn, Reel China: Hollywood Tries to Stay on China’s Good Side, L.A. TIMES (March 6, 2011), http://articles.latimes.com/2011/mar/16/entertainment/la-et-china-reddawn-20110316.

273. Id. 274. Baldwin & Cooke, supra note 242.

275. See id.

276. Patrick Brzeski, China Box Office: Mission Impossible Narrowly Tops Minions, Pixels Fizzles, HOLLYWOOD REP. (Sept. 21, 2015), http://www.hollywoodreporter.com/news/china-boxoffice-mission-impossible-826066.

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Man 3 (Disney), Pacific Rim (Warner Bros.), and Fast and Furious 6 (Universal), American studios walked away empty handed. 277 The China Film Group withheld all royalties because of a dispute over who should bear the cost of a new 2% luxury levy.278 The MPAA argued that the tax violated the terms of the MOU, which stipulated that studios receive 25% of Chinese box-office revenue free and clear of any taxes.279 In the end SAPPRFT accepted payment and the state tax bureau promptly waived the assessment.280 State censorship of content remains an impediment. Imports that make it through the thirty-four-film quota are subject to the rigors of the censor bureau’s often arbitrary and capricious cuts based on vague and unpredictable criteria.281 Domestic films must also navigate a difficult passage. Sex, violence, ghosts, time travel, religious themes, sexuality, and disparaging China’s culture and history—even when accurate—are red flags. 282 But forbidden subject matter may also be less evident.

Shen Yongping’s documentary A Hundred Years of Constitutionalism reviewed China’s constitutional governance from 1911 to the present day. 283 The film was banned before release in 2015 and its director was sentenced to one year in prison for “illegal business activities.”284 CONCLUSION Even with rigid regulation, strict censorship, and an unbalanced playing field that limits competition, the PRC market remains an attractive business opportunity as it grows, expands, and further develops year after year in leaps and bounds. As the PRC is poised to overtake North America as the most lucrative film market, major studios are calibrating blockbusters for success in China. In 2017, Universal will release The Great Wall, a sci-fi epic starring Matt Damon and directed by Zhang Yimou; Disney has Born in China, a sprawling documentary celebrating the nature and wildlife of the diverse landscape; and EuropaCorp prepares a French co-production of

277. Pamela McClintock, MPAA Chief Christopher Dodd Announces End to China Standoff, HOLLYWOOD REP. (Aug. 13, 2013), http://www.hollywoodreporter.com/news/mpaa-chiefchristopher-dodd-announces-605084.

278. Id. 279. Id. 280. Id. 281. See Hawkes, supra note 253.

282. See id.

283. Clifford Coonan, Chinese Filmmaker Jailed After Documentary About Constitution, HOLLYWOOD REP. (Jan. 1, 2015), http://www.hollywoodreporter.com/news/chinese-filmmakerjailed-documentary-constitution-760901.

284. Id.

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Warrior’s Way, a martial arts fantasy-action flick.285 Warner Bros. has resumed its strategy of producing Chinese language movies announcing a 12film slate that includes original titles such as Chinese Wall Street as well as remakes of Miss Congeniality and the Adam Sandler comedy Blended with an Eastern edge. 286 The integration of Hollywood’s film industry with China’s market remains in flux. The bilateral agreement of 2012, which tolled the U.S.’s claim before the WTO is set to expire in February 2017.287 At that point either a new agreement will be reached or the U.S. may resume their action for unfair trade practices. It is likely that Hollywood studios will push for a larger share of theatrical revenue, expanded import quota, and reduced state intervention. It is predictable the SAPPRFT will counter these with their concern for eroding the domestic market and diluting Chinese culture with foreign media. That much has not changed.

What has changed is China’s position with regard to leverage. Since the MOU was signed, Chinese media entities have expanded while American studios have endured limited growth. The tables are turned. Ten years ago, U.S. filmmakers struggled for a toehold in the PRC; now, Chinese players are firmly entrenched in the Hollywood system. Chinese mega-corporation Wanda acquired AMC in 2012 and Carmike Cinema in 2016 to create the world’s largest theatrical chain. 288 In 2016, Wanda purchased Legendary Entertainment; Beijing-based Perfect World Pictures invested $500 million in Universal; and Bona Film Group put $235 million into Fox’s forthcoming tent poles. 289 After kicking the tires at Paramount Pictures, internal discord at the storied film studio prevented Wanda from acquiring a stake in the company. Instead, the China conglomerate announced a significant co-

285. Dave McNary, Matt Damon’s “The Great Wall” Pushed Back to 2017, VARIETY (Feb. 18, 2016), http://variety.com/2016/film/news/the-great-wall-moved-back-matt-damon-12017 09873; Patrick Frater, Disney’s “Born in China” Heads for Release, VARIETY (Aug. 11, 2016), http://variety.com/2016/film/asia/disneys-born-in-china-heads-for-release-1201836067; Patrick Frater, Cannes: Dave Bautista Stars in Martial Arts Epic “Warrior’s Gate,” VARIETY (May 13, 2015), http://variety.com/2015/film/global/dave-bautista-stars-in-warriors-gate-exclusive-12014 93451.

286. Borys Kit, Zhang Ziyi Joins J.J. Abrams’ Sci-Fi Thriller “God Particle,” HOLLYWOOD REP. (May 26, 2016), http://www.hollywoodreporter.com/heat-vision/zhang-ziyi-joins-jj-abrams897736; Patrick Frater and Shirley Lau, Warner’s Flagship Entertainment Unveils 12 China Movies, VARIETY (Mar. 15, 2016), http://variety.com/2016/film/asia/flagship-unveils-13-chinamovie-projects-1201731176.

287. Memorandum of Understanding, supra note 205.

288. Ed Hammond, AMC’s $1.1 Billion Carmike Deal Makes China Movie Powerhouse, BLOOMBERG (Mar. 3, 2016), http://www.bloomberg.com/news/articles/2016-03-04/amcentertainment-said-in-talks-to-acquire-carmike-cinemas.

289. Patrick Brzeski, Ratpac, Warner Bros. to Launch Chinese Film Fund with China Media Capital, HOLLYWOOD REP. (Apr. 27, 2016), http://www.hollywoodreporter.com/news/ratpacwarner-bros-launch-chinese-888078.

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financing deal with Sony Pictures in September 2016.290 With influence in production, distribution, and exhibition sectors, China-based companies have embedded themselves in Hollywood’s film factory.

As Chinese influence increases and the PRC market grows ever more central to revenue streams, it is likely that big budget Hollywood movies will bend toward SAPPRFT’s needs. Censorship will move to the pre-production phase: big budget films that offend Chinese sensibilities can simply no longer be green lit by risk adverse studios tied to Chinese investors. To succeed in Hollywood a film must be suitable in Shanghai and bankable in Beijing. The film industry has achieved a global reach, but the marketplace is far different than what Hollywood’s movie pioneers initially envisioned.

290. Mike Fleming Jr., China’s Wanda Forming Major Alliance with Sony Pictures, DEADLINE HOLLYWOOD (Sept. 21, 2016, 11:05 AM), http://deadline.com/2016/09/dalian -wanda-sonypictures-slate-deal-1201823837.

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Appendix U.S.-PRC Box Office Comparison 2005-2016291

$12,000,000,000 $10,000,000,000 $8,000,000,000 $6,000,000,000 $4,000,000,000

US

$2,000,000,000

China

$0

291. Patrick Brzeski and Pamela McClintock, How Hollywood Can Break Through China’s Box Office, HOLLYWOOD REP. (Mar. 9, 2012), http://www.hollywoodreporter.com/news/chinatrade-deal-hollywood-box-office-revenue-297719; Chinese Box Office Grow 43% to Hit $908m in 2009, CHINA DAILY (Sept. 1, 2010), http://www.chinadaily.com.cn/bizchina/201001/09/content_9293353.htm; Jonathan Landreth, China’s Box Office Jumps 61 Percent to Hit $1.47 Billion in 2010, HOLLYWOOD REP. (Jan. 3, 2011), http://www.hollywoodreporter.com/news/chinas-box-office-hits-147-67601; Clifford Coonan, China’s 2011 Box Office Take Tops $2 Billion, VARIETY (Jan. 10, 2012), http://variety.com/2012/film/box-office/china-s-2011-box-office-take-tops-2-billion-1118048424; Clifford Coonan, China 2013 Box Office Surges 27 Percent to $3.6 Billion, HOLLYWOOD REP. (Jan. 2, 2014), http://www.hollywoodreporter.com/news/china-2013-box-office-surges-668181; Frater, China Surges 36% in Total Box Office, supra note 215; BOX OFFICE MOJO, http://www.BoxOfficeMojo.com (last visited Sept. 16, 2016); THE NUMBERS, http://www.thenumbers.com (last visited Sept. 16, 2016); MTIME, http://www.mtime.com (last visited Sept. 16, 2016); ENT GROUP, http://www.english.entgroup.cn (last visited Sept. 15, 2016).

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Year

United States

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China

2005

$8,900,000,000

$256,000,000

2006

$9,100,000,000

$335,000,000

2007

$9,700,000,000

$336,000,000

2008

$9,700,000,000

$630,000,000

2009

$10,600,000,000

$908,000,000

2010

$10,500,000,000

$1,470,000,000

2011

$10,100,000,000

$2,070,000,000

2012

$11,000,000,000

$2,800,000,000

2013

$10,900,000,000

$3,640,000,000

2014

$10,300,000,000

$3,570,000,000

2015

$11,300,000,000

$6,780,000,000

$6,700,000,000

$3,747,567,000

2016 (as of 6/2016)

Intellectual Property From Outside the Box: The Curious Case of Internet From Space Amir H. Khoury* INTRODUCTION A new form of the Internet-Connected Network (the Internet) is here, and the law needs to take heed. This rival functions by way of beaming free wi-fi to and from space. It aims to reach every person and location on earth. One of the first contenders in this field is the Outernet system. A fully operational Outernet will require the launch of hundreds of satellites into low Earth orbit. Each satellite, which receives data from a network of ground stations, will broadcast the Internet to phones and computers, giving billions of people across the globe free online access. Using something known as datacasting technology, the Outernet (and other systems like it) promises to broadcast the Internet around the world.

This paper looks at this exciting new medium through the intellectual property looking glass. It highlights the many benefits and the challenges that the Outernet will pose to intellectual property.

The paper is comprised of three chapters. The first chapter discusses the Outernet type of technology and its benefits to intellectual property.

The second chapter looks at the challenges, both immediate and future, and possible threats to IP-protected content. The third and last chapter examines regulative tools that could be employed in order to deal with these challenges without detracting from the benefits that need to be preserved in order to expand internet communication.

* Senior Lecturer, Faculty of Law, Tel Aviv University.

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CHAPTER ONE The Makings of the Outernet and its Benefits A new rival to the Internet is at our doorstep—or rather, over our roof tops—and the law needs to take heed. This rival is comprised of a network of miniature satellites that are launched into low Earth orbit and effectively facilitate internet access around the globe. One of these initiatives is referred to as the “Outernet.” There are other systems being developed as well.1 This research focuses on the Outernet as a case study, but its findings are applicable to similar models as well.

The Outernet is operated by Media Development Investment Fund (MDIF), a private corporation. MDIF now beams free wi-fi to and from space. It aims to reach every person and location on earth. In order to achieve this ambitious goal, MDIF plans to further launch hundreds of CubeSats (miniature satellites) into low earth orbit. For this purpose, the Outernet has already been cooperating with the UK Space Agency and Clyde Space (a Scottish satellite equipment manufacturer) on a cost-sharing endeavor for manufacturing and launching CubeSats into space. NASA may be getting involved soon. 2 Each CubeSate satellite, which receives data from a network of ground stations, will broadcast the Internet-based information to phones and computers, giving billions of people across the globe free online access. With this satellite-based communication, using something known as datacasting technology—which involves sending data over wide radio waves—the New York-based company that is developing the Outernet says they’ll be able to broadcast the Internet around the world.

From the outset, I should like to point out that the dramatic impact that I see (as many others do) for the Outnernet is not shared by all. In fact, there are harsh skeptics of the Outernet and systems like it. These skeptics challenge the viability and vitality of the technological foundations of the project and the social benefits that are anticipated. According to one commentary, “much like the solar roadway, this is yet another pie in the sky fundraising effort that will yield zero useful results.”3 The reason for this 1. These companies include: Facebook-backed Internet.org initiative; Google’s balloonbased (Project Loon); and satellite internet companies such as OneWeb and O3b as well as SpaceX. 2. Jonathan Shiever, Outernet Joins the Space Race for Internet Accessibility, TECHCRUNCH (Mar. 13, 2015), http://techcrunch.com/2015/03/13/outernet-joins-the-space-racefor-internet-accessibility.

3. See KeriLynn Engel, How the Outernet Will Free the Internet, WHO IS HOSTING THIS?, http://www.whoishostingthis.com/blog/2014/08/26/outernet (last visited Sept. 26, 2016); Cryptovariable, https://www.reddit.com/r/Futurology/comments/2a8jzn/how_the_outernet_will _free_the_internet_from. The skepticism also relates to the life span and vitality of CubeSats in that their decay rate is high and that they might last only 3-4 year from orbit deployment. This

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harsh criticism is based primarily on technical issues—namely, that this is basically a satellite-based one-way data transmission and not the Internet (in the classic sense of the word). There is also doubt as to the viability of two-way communications with satellites in low earth orbit. 4 Furthermore, the skeptics point to another very serious problem, contending that it would be virtually impossible to tune into satellites that are overhead for two- to six-minute segments, and that it is much easier to jam the frequency of said satellites than regular short-wave land-based antennas.5 But while these questions (an ensuing skepticism) might be relevant on the technical level, and while they might carry some merit, the issue is well beyond the scope of this research. Indeed, although the Outernet, as any innovation that preceded it, is set to encounter some challenges, the skepticism which basically leads to undermining the merits of the Outernet is not justified. I should like to mention three reasons for this: First, the Outernet (and other systems like it) is now a fact. It is operational, though still on a relatively “primitive” and limited level. 6 Second, the benefits of the Outernet cannot be overlooked and as such one should not dismiss them based only on technical reasons of functionality and cost. That is because, all innovations, even the internet itself, began with primitive “baby steps.” Indeed, if one were quick to judge (and condemn) them at their inception, there would not have been any Internet, cellular phone, or even personal computers.

Third, other large companies are looking into methods in which to expand internet connectivity to the public. Suffice it to mention here Facebook’s plans to launch multiple solar powered drones, and Google’s concept of creating a network of helium balloons for broadcasting the internet. In short, the fact that such pioneering companies are involved in the race to expand intent reception provides sufficient evidence of the merit and possibly even the viability of the Outernet. 7 Our collective human experience shows that technology grows and expands exponentially. It has a tendency to improve in rapid steps and to develop; its developers also learn from mistakes. As such I predict that a satellite based feed of intern-computer communication is here to stay.

mean a need for hundreds of CubeSats and a stock-pile of (spares) at least two fold of replacement, and the additional problem of “meshing” of the CubeSats.

4. See supra note 3.

5. Id. 6. Outernet (@outernetforall), FACEBOOK (Aug. 3, 2015), https://www.facebook.com/ OuternetForAll/posts/383980288465952 (“Meet Lighthouse, our first receiver. We installed one in a school in Uganda on a remote island in Lake Victoria.”).

7. ABC RN, Outernet: Free Data Forever?, YOU TUBE (Nov. 20, 2014), https://www.youtube.com/watch?v=BHjmLbk00sI (discussing Outernet and its global access to the best, free content).

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Granted, the systems to-date are not yet of a caliber so as to become the main stream for Internet traffic, but the existing system have crossed the thresh-hold and are likely to develop much more in the intermediate (and possibly in the immediate) future. In this regard, the Outernet bears the hallmarks of a transformative Internet. It is basically a massive decentralized system that is not contingent on a classic network structure, an Internet Service Provider ISP, and a search engine. Outernet is based on a single broadcaster that broadcasts content to an unlimited and undefined group of receivers. Clearly, as far as dissemination of information goes, the Outenrnet seems to be a game-changer. And hence the law needs to take heed. In order to show the dramatic impact that the Outernet will have on Internet usage and society at large, I should like to shed light on three issues: 1.

Censorship and the Ability to Exercise Freedom of Expression

Just as police (and customs) around the world control crossing points and man checkpoints and just as armies patrol and protect borders, so too the internet is a rather convenient tool for censoring content. In this context, censorship is the privilege to determine that certain content should not be seen by the public and the ability (both legally and technically) to prevent the public from seeing it. So censorship is both the determination and the act of preventing coupled into one. In this regard, Mathiesen defines censorship as “restricting or limiting access to an expression, portion of an expression, or category of expression, which has been made public by its author, based on the belief that it will be a bad thing if people access the content of that expression.”8 Consider the empowerment of users in countries that are presently censoring internet content (e.g., China and North Korea). The Outernet looks to be poised to provide access to free and unrestricted cyberspace.

What does this mean for free speech? And for protected (copyrighted) content? In this part, I will shed light on the very real problem of internet content based censorship and explain how the Outernet can function in a manner that curbs excessive use of said mechanism.

When we think censorship, we are inclined to associate it with nondemocratic and more so totalitarian states and with countries with a very centralized form of government—North Korea being a prime example. But even in more open countries, such as China, internet censorship seems to be

8. Kay Mathiesen, Censorship and Access to http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1264451.

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widespread.9 But in fact, this tool of censorship is not limited to this group of countries and has become much more prevalent around the world.

Indeed, the ability to police internet traffic is technologically available by way of Deep Packet Inspection (DPI). DIP now allows internet service providers to “monitor the content of data packets in real-time and make decisions about how to handle them.”10 As such, “censorship” is not a word that is limited to a specific type of country. Rather, it applies to all countries. In fact, even countries that pride themselves on being full democracies have witnessed laws to this effect. Over the past decade, Australia has decided to implement some degree of Internet censorship using technological means. As such, it has become the “first Western democracy to mandate filtering legislatively, and to retrofit it to decentralized network architecture.” 11 But while Australia seems to be “open about its filtering goals, the government’s transparency about what content is to be blocked is poor.”12 And therein lays the problem at the heart of censorship. It is not the idea of censorship that is problematic; rather, it is more to do with the lack of clarity regarding the content that could be blocked through censorship. In this regard, Bambauer has stated that “Australia represents a shift by Western democracies towards legitimating Internet filtering and away from robust consideration of the alternatives available to combat undesirable information.”13 But, for the sake of fairness, Australia is not the only democratic country struggling with this issue. Consider, for example, the situation in South Korea, a democracy that is prepared to “tolerate significant censorship of online political speech.”14 Fish predicts that South Korea’s internet censorship regime “may not be effective or sustainable into the future.”15 Edwards

9. Even as early as 2002, the Chinese government appears to have been heavily engaged in censorship of the internet for its domestic users. See Jonathan Zittrain & Benjanin G. Edelman, Internet Filtering in China IEEE Internet Computing (March/April 2003), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=399920. According to Zittrain and Edelman, tracked over 19 thousand blocked sites in china covering a host of issue including news, politics, health, commerce, and entertainment.

10. Ralf Bendrath and Milton Mueller, The End of the Net as We Know it? Deep Packet Inspection and Internet Governance (Aug. 4, 2010), http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=1653259.

11. Derek Bambauer, Filtering in Oz: Australia’s Foray into Internet Censorship, Brooklyn Law School, Legal Studies Paper No. 125 (Dec. 22, 2008), http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=1319466.

12. Id. 13. Id. 14. Eric S. Fish, Is Internet Censorship Compatible with Democracy?: Legal Restrictions of Online Speech in South Korea (Oct. 15, 2009), http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=1489621. Fish demonstrates how a decades-long policy of free speech in South Korea has left the Internet “particularly vulnerable.”

15. Id.

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detects a “dangerous international trend towards non transparent and nonaccountable censorship online, not only in non-democratic countries like China but increasingly in Europe and elsewhere.” 16 She calls for the creation of a “speech impact assessment process [before] new systems of top-down state-endorsed Internet filtering are implemented.” 17 But, while all of these issues are usually engaging the system from within and its approach to the internet, the Outernet introduces a solution from without. That is to say, the Outnernet changes the paradigm, thus instead of relying on states to formulate policies that are more conducive to free speech (and free communication); the Outernet places the power in the hands of the masses.

It is said, that in democracies there resides a fourth authority (in addition to the executive branch, legislator and the judicial system); it is the “media.” The “media” has allowed for bringing more information before the public, thus creating more robust checks and balances between the three above mentioned authorities and also empowering the public to be more informed. In this regard, Riley observes, “Today, Internet governance is a complex system of checks and balances among users, businesses, and governments.”18 That is exactly what Outernet-type systems can ensure in an age where the virtual world of communication and information has become the primary battleground of real life. In fact, as Fish points out the question of internet censorship “takes on particular importance as the Internet is becoming the dominant model of mass communication in many democracies, and as television and print journalism increasingly fuse with the Internet and lose their independent identities.” 19 Hence the crucial importance of the Outernet model in that it secures methods of communication that are not contingent on the whims or determinations of government, and which allow people to exercise what I would refer to as true internet without borders. This is achieved by way of getting their opinions out there. Granted, this “fenceless” system poses some downsides and dangers. I will discuss these in the next chapter. But with that being said, the truth remains, that where power is exercised without restraint (and full transparency), there is a potential for abuse.

Collective wisdom needs to be kept part of the equation in order to act as the “fifth authority” in the virtual world. As Balkin observes, “The most

16. Lilian Edwards, Pornography, Censorship and the Internet (July 16, 2009), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1435093.

17. Id. 18. M. Christopher Riley, Anarchy, State, or Utopia? Checks and Balances of Power in Internet Governance (Mar. 2, 2013), http://papers.ssrn.com/sol3/papers.cfm?abstract_ id=2262055.

19. Fish, supra note 14, at 46.

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important decisions affecting the future of freedom of speech will not occur in constitutional law; they will be decisions about technological design, legislative and administrative regulations, the formation of new business models, and the collective activities of end-users.”20 And so without opening up the debate over the extent to which information needs to be ingested and digested, the basic premise needs to be that information needs to flow freely and seamlessly, this is basically the life blood of a truly free society. Indeed, if to continue with the metaphor, blood sometime carries a virus, or disease, yet to deprive a patient of his blood just because a virus could spreads through his body, is medically unsound to say the least. And so it is in the case of channels of information. Clearly, then, this imperative freedom of expression is part of a larger debate which Balkin aptly refers to as “knowledge and information policy.”21 But without derogating from the above, it remains true that censorship or rather the abstention from said censorship is only one component which can ensure free speech. Balikn, talks about the need for “an infrastructure of free expression.” 22 I believe that this view regarding the dual conditions for free speech is accentuated in the context of internet based communication. It sits very well with what the Outernet can ensure, and that is to pass information outside the realm of governmental censorship. That infrastructure of free expression, if “properly designed” (as Balkin puts it), should—according to Balkin—give people “opportunities to create and build technologies and institutions that other people can use for communication and association.” 23 In this regard, the Outernet can function around the globe as a very useful facilitator of the core value of free speech.

Balkin alerts to the great shifting landscape of free speech. Thus, while in the twentieth century there has been a rise in the protection of the “formal freedom to speak”24 while mass broadcast technologies have reserved practical freedom to a relative few, in the twenty-first century, new technologies offer ordinary citizens a vast range of new opportunities to speak while said speech is being turned into a “commodity.” 25 In some cases, information is collected by their parties for commercial or security reasons.26 Thus, technologies that create new possibilities for democratic 20. Kack M. Balkin, The Future of Free Expression in a Digital Age, 36 PEPP. L. R. 427, 427 (2009).

21. Id. at 102.

22. Id. at 106.

23. Id. 24. Id. at 114-15.

25. Id. at 115.

26. According to Balkin, technologies that create new possibilities for democratic cultural participation often threaten business models that seek to commodify knowledge and control its access and distribution. Id. Intellectual property and telecommunications law may be the terrain

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cultural participation often threaten business models that seek to commodify knowledge and control its access and distribution. Intellectual property and telecommunications law may be the terrain on which this struggle occurs, but what is at stake is the practical structure of freedom of speech in the new century.

It is also important to note that not exercising censorship may, after all, be a good thing for countries and communities. That is because the ability to vent anger via the social networks may in fact create a lesser tendency for violence on the streets. Casilli and Tubaro show this with respect to some events of social and public unrest in the initial periods of the Arab spring and in the British riots that took place in 2011. 27 They have argued that the decision to “regulate” or restrict social media in situations of civil unrest results in higher levels of violence. In their view, “a complete absence of censorship, not only corresponds to lower levels of violence over time, but allows for significant periods of social peace after each outburst.”28 In order to drive the censorship point home in the context of intellectual property, one should bear in mind that IP is not only the right to say something, or the right to protect that creativity or expression; it is also the right to share that content with the world. This is so inherent to the IP system that we tend to take it for granted and to treat it as a given. Indeed, the bundle of rights that is vested, by the law, in the hands of the copyright owner allows the owner the right of performance, as well as the right to make available the expression in a digital medium. That is to say, just as copyrights are infringed if a non-owner of the content places it online, so too when the content and the ideas therein are excluded from public discourse, the copyright in that content has not been exercised by the right holder and as such has been de-facto infringed. Thus, the Outernet by its very structure is capable of traversing the closed gates and thus can allow the owners of copyrighted content to bring that content (and the ideas therein) to a public that otherwise would not have had access to them.

2.

Proliferation of Access to the Internet

The number of worldwide internet users has risen drastically over the past ten years, when in 2005 the number was just over one billion worldwide. The number has risen to a staggering level: just about 3.2 on which this struggle occurs, but what is at stake is the practical structure of freedom of speech in the new century.

27. Antonio A. Casilli & Paola Tubaro, Why Net Censorship in Times of Political Unrest Results in More Violent Uprisings: A Social Simulation Experiment on the UK Riots (Aug. 14, 2011), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1909467.

28. Id.

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million in 2005.29 However, there is a drastic difference in the proliferation of the internet amongst continents. Indeed, while is June 2015 the North American continent and Europe boasted 87.9% and 73.5% internet penetration amongst the general population, that ration for the same point in time was only 27% in Africa and a little over at 38.8% in Asia.30 Granted, the growth rate of internet penetration in Africa has been rising drastically between 2000 and 2015 at over 6389%. Africa’s share—as well as the share of other continents such as Asia as well as the Middle East and Latin America—remains noticeably lower than that of North America and Europe. Furthermore, it is important to bear in mind that in a large continent such as Asia, there is also the great difference amongst countries.

Consider inter penetration in North Korea as compared with its southern neighbor (South Korea) or Japan. Thus, the impressive rise in internet usage for Asia and Africa over the past fifteen years still does not insure continent wide internet access, but is more likely reflective of internet penetration in countries that already have internet use. 31 Indeed, According to the World Bank, while in South Korea over 84% of the population has internet access, in Afghanistan (also in Asia) only 6.4% have internet connection. 32 This drastic fluctuation amongst countries of the same continent is prevalent around the world. 33 Hence, the access issue for landbased internet will continue to be for the mostly rich or middle class. In that sense, remote places in all continents rich or poor will still be much less likely to receive internet connection in the conventional internet infrastructure.

Thus, as things stand, it is estimated that only 40% of the world’s population currently has access to the internet. Thus, they are prevented from accessing the wealth of knowledge that the internet provides. Thus, nearly 5 billion people today lack basic internet access. Most of these reside in remote or rural areas.

But where the internet has failed, the Outernet hopes to succeed. The Outernet is set to circumvent the infrastructure problems and thus to allow internet access to all. It easy to see how the Outernet constitutes a new internet revolution; namely Internet for all wherever they may be.

Thus, it is not surprising that the Outernet refers to itself as 29. See Number of Internet Users Worldwide from 2005 to 2016 (in millions), STATISTA, http://www.statista.com/statistics/273018/number-of-internet-users-worldwide (last visited Sept.

26, 2016).

30. Internet Users in the World by Regions, INTERNET WORLD STATS, http://www.internetworldstats.com/stats.htm (last visited Sept. 26, 2016).

31. For a comprehensive survey of Internet access per country, see id.

32. Internet Users (Per 100 People), WORLD BANK, http://data.worldbank.org/ indicator/IT.NET.USER.P2 (last visited Sept. 26, 2016).

33. Id.

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humanity’s public Library. The Lighthouse device by Outernet stores the information it receives from Outernet on its internal drive.

Teachers and students can connect to the Lighthouse Wi-Fi signal to browse the content or connect Lighthouse to an existing LAN network.

3.

Information Sharing

The Outernet is based on the technique known as User Datagram Protocol (UDP) multitasking. The UDP is based on the sharing of data between users. In essence UDP is a revamping of P2P methods. Users will be able to flick through certain sites much like flicking through television channels. Outernet will essentially broadcast the Internet, and in many respects will preserve the “End-to-End” design that is internet to the internet’s success. Lamely and Lessing have cautioned against any change in the architectural design of the internet, especially in with the onset of high-speed cable modem service with ISP service by some cable companies.34 The Outernet constitutes a preservation of the internet’s design as an end-to-end system. In fact, it is less subject to censorship, more accessible to user around the world and more vibrant in allowing for unimpeded content sharing. At this point, I need to emphasize the reality that as things stand, the Outernet currently is only a broadcast-receiver system; that is to say its users are not able to put their own content to others, nor are the able to join social networks or even surf the internet for that matter. At this point, the Outernet by its own admission is aiming to become “humanity’s public library.” But even that is a giant leap forward.

Imagine if you will a village in a remote region of a poor country. Imagine if someone wanted to erect a library with a bunch of books and encyclopedias. It would be cynical to claim that by doing so the pole in the village will now become part of the world—yet with that being said, all would agree that by allowing people access to information in those books, they are effectively much more involved, and in fact are parents in the information that is out there that would have stayed beyond their reach had it not been for that library. And so it is with the Outernet. Consider if you will the words of articles 7 of TRIPS, wherein it is stated that: The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and 34. Mark A. Lemley & Lawrence Lessig, The End of End-to-End: Preserving the Architecture of the Internet in the Broadband Era, 48 UCLA L REV. 925 (2001) (discussing the multiple dangers of changing the architectural design of the Internet, including losing ISP competition, risking that monopolies will negatively affect the net’s architecture to protect their territories, threatening innovative technology, and affecting the internet’s entire architecture).

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users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. 35 Consider how the Outernet model embodies these ideas in the context of empowerment. In this the power is not their communication, but rather their ability to share the information with all peoples. That in itself is the first step towards full empowerment of peoples in developing countries or remote areas.

Interestingly, copyright law in the same manner does not extend protection to facts and scientific information and mathematical equations.

These rightfully seem as public domain information. The regulators (both on the international and national level) are keenly aware of the ramification of blocking such knowledge by war of creating ownership over this type of content. In this regard as well the Outernet finds itself in agreement with these principles that underlie copyright protection.

CHAPTER TWO The Challenges that the Outernet Poses to Intellectual Property Protection While all of the benefits of the Outernet are notable, the Outernet will not come without a cost. Indeed, the entire idea of policing the internet is not only about the excessive control of states agencies, it is also about safety and law and order. As such, it is not easy to strike a balance between the openness and complete (oversight) censorship. In many respects, this struggle over control is to be blamed on the masses (or at least in a notable segment of the population) in that their conduct over the internet has necessitated and thus justified censorship and regulative control. Riley portrays the shift from the utopian internet which over time has become a fertile breeding ground for selfish, immoral and illegal behavior: In the beginning, the Internet was managed primarily through a social contract. Good behavior from all parties involved produced a ripe environment for invention and innovation and generated tremendous benefits for the entire world. But over time, the influx of money and power began to reward selfish behavior more and more, breaking open the Internet’s utopia and leading to crime, censorship, and fights over control.

As a result, many are questioning whether national or international governmental bodies should play a more active role in Internet governance. As it is frequently framed, this question of “more or less government� on the Internet is overly simplistic. Today, Internet governance is a complex system of checks and balances among users,

35. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), 1869 U.N.T.S. 299, art. 7.

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businesses, and governments – and too great a disparity of power, for any of these parties, could create imbalance and undermine some policy goals in favor of others, to the detriment of the Internet as a whole. 36

Most notably, the primary challenge of the Outernet (in the context of intellectual property) will be about the protection of content, and sensitive information as well as and privacy. In this chapter I shall look at all of these social costs which Outernet type system might exasperate.

Indeed, in order to better the grasp the magnitude of these challenges, suffice it to consider the following questions: What happens when the internet becomes a free for all, with no ability to trace, or to track? What would be of applying legal protections when a potential infringer is much less visible or identifiable; by way of the lack of and Internet Protocol (IP) number)? How would a Digital Rights Management (DRM) system adapt to this new method of connecting between various computer users? How can the law provide protections to copyrightable content in such an environment? What might be the response of international institutions such as WIPO and WTO to these types of systems ponce they become widespread? What would be the effectiveness of existing treaties and laws in view of such a change (consider here WCT, WPPT and well national laws such as the US Digital Millennium Copyright Act (DMCA)? How should the legal system gear up in order to deal with this new technology?

These questions go to show the wide scope of the battle lines so to speak between the conventional regulative system and challenges that the new system will most likely bring about? The go to show the potential deep impact that that Outernet type systems could have on the internet and on intellectual property rights therein.

To date the two primary treaties dealing with content on the Internet are the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty (WIPO Internet Treaties). Okediji explains that these agreements which have been established just over fifteen years ago are “increasingly less relevant in addressing the challenges of creativity in the digital age.”37 In her view, “The growing social and legal recognition of new forms of creativity enabled through digital technologies offers an important opportunity to challenge anew claims that globally mandated copyright norms can effect incentives to create that are relevant across geographical, cultural and technological boundaries.”38 In my view, while these issues were not written about Outernet type systems, they also apply 36. Riley, supra note 18, at 1.

37. Ruth Okediji, The Regulation of Creativity Under the WIPO Internet Treaties (Minnesota Legal Studies, Paper No. 09-30), http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=1433848.

38. Id. at 2382.

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to them. That is because this new medium of connectivity and of transfer of content is set to empower groups that until now had been outside the Internet arena. Indeed, these newcomers will now come into a deeper interaction with the world both as consumers and producers. And by having them join, the internet will become a truly global medium with even less possibility of effective policing and protection. Specifically, I will now deal with four of the most pressing challenges that internet regulation and especially IP regulation is set to pose: 1.

A New Form of “Peer-to-Peer” Sharing

Peer-to-Peer (P2P) sharing over the internet has existed for some decades. The most notable example of this was Napster. P2P sharing still exists today via different websites such as Emeul and Bit-Torrents. But the major difference between the old generation of P2P and the new possibilities for P2P sharing in Outernet type systems is that in the original system one could identify a website (or a legal entity) that could be held responsible for misconduct (including IP infringement). That same entity was also, to a large extent, a “deep pocket” which could be accessed for damages, if and when awarded.

It is clear that a system that circumvents a central internet hub or service provider is less likely to be trackable. The content that is transferred cannot by definition be intercepted given that it does not go to a specific “clearing house” mechanism. Furthermore, the fact that the Outernet is not dependent on search engines in the way that we use them today will further weaken the ability of the regulator or by proxy to oversee what is being transmitted by users. In his research, Goldman, alludes to the misconception according to which, “due to search engines’ automated operations, people often assume that search engines display search results neutrally and without bias.”39 He explains that just as other media channels “search engines affirmatively control their users’ experiences, which has the consequence of skewing search results.” 40 2.

Transfer of Content

Much like peer to peer sharing, the Outernet could be fertile ground for transferring content. Content and information in this regard are power, and empowering the individual user has its benefits but also its costs. Consider

39. Eric Goldman, Search Engine Bias and the Demise of Search Engine Utopianism, 8 YALE J. L. & TECH. 188, 188 (2006).

40. Id.

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the ongoing legal battles between Viacom and YouTube. 41 In these contexts, although the users are the active parties engaged in the potential infringement of content, there is a central hub which can be held liable. It is no wonder as to why this issue has been a crucial point of contention in the Internet for the past decade.42 Indeed, not all are happy about the “safe harbor” concept that is driven by the notice and take-down mechanism.

In the Outernet (and other systems with a similar structure), there will no longer be a clear hub at which copyright owners can direct their challenges. In fact, it is even much more difficult for the copyright owners to identify the scope of an infringement or to track it let alone its source in real-time.

3.

Trade Secret Proliferation

Trade secrets are in all walks of commercial life. They are there to secure a legitimate edge that one market player might have vis-à-vis his peers. The commercial secret is part of intellectual property regulation and is recognized as such within the TRIPS agreement.43 As such the trade secrets are now widely protected by national laws around the world. The trade secret protection not only recognizes the right of the owner of a trade secret to protected said information, but also, on the practical level, empowers the owner of said trade secret to exercise such protection by extending a direct legal rivalry between the owner of the trade secret and all parties involved. Namely, the holder can act and sue all parties that are involved in the illegal taking, transferring or use of his or her trade secret.

In so doing, the owner of the trade secret can expand his operations and thus reduce the incentive of those involved in the illegal (unlawful) taking of the said secret.44 With that said, the Internet has become fertile ground for illegally sharing such content, given the speed of communication, the ability to connect with distant parties and the ability to transfer date with 41. See Amir Hassanabadi, Viacom v. Youtube—All Eyes Blind: The Limits of the DMCA in a Web 2.0 World, 26 BERKELEY TECH. L.J. 405 (2011).

42. Patrick Gibbs, Video on Remand: A Second Viewing of Viacom’s Feud with Youtube and the Case for Casting Off from the Safe Harbor (Feb. 2, 2011), http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=1760611. Gibbs observes: There is an age-old conflict between traditional copyright industries and new distributive technologies. The conflict stems from abilities to copy and easily distribute protected works.

As the cost of copying decreases and ease of access to copyrighted works increases, copyright industries continually lobby for stronger rights. With the emergence of the Internet and software that allows fast and easy duplication of content, copyright owners and Internet service providers lobbied for new legislation governing the use of such software, resulting in the Digital Millennium Copyright Act of 1998 (DMCA).

Id. 43. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), 1869 U.N.T.S. 299, art. 39.

44. See id.

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much ease. As such, many battles have and still are being fought in this regard. But still in the conventional Internet wherein users can be identified and tracked through their specific Internet Protocol, the illegal transfer of trade secrets is also a challenging arena for potential infringers who might need to go to great lengths to cover their tracks.

But in a world such as that in which the Outernet will function, where Internet content is broadcast to the entire planet, the ability to know who has actually received the broadcast is virtually non-existent. In these cases it becomes exceedingly easy for individuals and corporations to receive information that is “out-there” (for lack of a better term). As such, it would now be much more difficulty to track the destination of the broadcast, and to pin-point the identity of the receiver. In this regard, said receiver could also claim use of publically available information in “good faith.” This would make it even harder for the owners of trade secret to pursue and receive legal recourse against end-users.

4.

Domination Over Information

It is very important once Outernet type systems become common place (as I think they will become) over the next few years, that there be continued oversight of the content that is included in the broadcast. Such content needs to remain clear of any political and commercial interests. It must not be dominated by interest groups; rather, its content should be free and open. It should be truly open to all, in an equal manner. Thus, the Outernet should be deemed a “social project,” and, as such, be subject to some form of regulative checks and balances, in order to ensure these social interests of openness and freedom of access to information.

CHAPTER THREE Looking Ahead: Conceptions for Dealing with Outernet Type Systems The solutions to the challenges that may still come to IP through the Outernet are not in the immediate horizon. In fact, until such time that the Outernet becomes a bi-directional system, the one way broadcast holds a lesser chance for infringement. What is more, given that the outlearnt is more like a “televised” public library, it seems fit that we think about its regulation in these two contexts. That is to say that the Outernet should be regulated in the context of intellectual property by similar rules that regulate television and public libraries.

But, before looking at those rules, I would like to explain why the Outernet is indeed reminiscent of television broadcast and also of public libraries. In fact, there are a few reasons for this:

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a. The Outernet is a single direction rather than one directional broadcast. That is to say there is a single broadcast incident to multiple receivers who cannot access the content that is being broadcast to other receivers. In this regard receivers, much like home television, are passive participants in the broadcast, they cannot affect it and their reception does not detract from the quality of the broadcast itself. b. The Outernet is not a live internet feed. Namely, it is not logged to live site that change randomly; they are rather a snapshot of sites at a given point in time. In this regard, the content is not subject to sudden unforeseen surprises or content, but they can be expected. c. Given its nature, and current capabilities as described above, the Outernet is not about social networking and rather about bringing information to the wider public. In fact, as mentioned above the Outernet’s slogan is “Humanity’s Public Library.” This is dramatic in its intent to empower the masses. It is also a very good branding ticket which might encourage for information providers to seek joining this noble effort. d. In both television and libraries, except in cases of live broadcasts, the content is predetermined and preset. In both of these, the content that is being received by the respective users is a snapshot of what the library holds at a given point in time. By definition, the user cannot see beyond what is broadcast at a time that he “tunes-in” or enters the library to borrow a book.

This role of a library that the Outernet is seeking to play is very important. Indeed, generally speaking, digital libraries are now recognized as key actors in the dissemination of information and knowledge. In this regard, Afori observes that “[i]n this digital era, public and academic libraries serve as key players in the promotion of access to knowledge.” 45 As stated above, to my mind, there is a strong similarity between the Outernet, and public libraries, wherein both facilitate the access of the masses to knowledge that is stored therein. This similarity between libraries and the Outernet also leads to the bigger question of licensing.

That is to say would the Outernet be smothered by inhibiting licensing thus preventing it from broadcasting informative content freely? Would the cost of licensing render the Outernet project a non-viable endeavor? Should this not be preempted in order to evade the risks? I think that the answer to all of the above questions is a resounding “yes.” In the context of the libraries, Afori points out that “[t]he digital era has created a profound shift in libraries’ practice, finding expression in the transition from purchasing shelf-books to purchasing licenses to electronic resources. These licenses

45. Orit Fischman Afori, The Battle Over Public E-Libraries: Taking Stock and Moving Ahead (Feb. 1, 2013), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2500205.

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control the libraries’ ability to pursue their declared goals, and highlight the core problem of private ordering in the information market.” 46 In her view, “One of the most acute manifestations of this problem is the common practice, which has taken on world-wide dimensions, whereby these licenses restrict various uses otherwise permitted by copyright law.” 47 I agree with Afori’s view that restrictive contracts, especially with respect to public e-libraries, should be invalidated by the law because said libraries serve as a “gateway to knowledge and in the promotion of social justice and freedom of speech.”48 Travis goes further still by calling for a copyright reform “to pave the way for digital library projects like Project Gutenberg, the Internet Archive, and Google Print, which promise to make much of the world’s knowledge easily searchable and accessible from anywhere.” 49 He too is apprehensive about a copyright legal system that “frustrates digital library growth and development by granting overlapping, overbroad, and near-perpetual copyrights in books, art, audiovisual works, and digital content.”50 Furthermore, Balkin emphasizes the need for establishing viable mechanisms, which I world refer to here as channels in which to get the content across to the masses. Balkin explains: Freedom of speech depends not only on the mere absence of state censorship, but also on an infrastructure of free expression. Properly designed, it gives people opportunities to create and build technologies and institutions that other people can use for communication and association. Hence policies that promote innovation and protect the freedom to create new technologies and applications are increasingly central to free speech values.51

On the regulative level, the copyright system needs to make room for the Outernet concept and needs to give it a substantial maneuvering space in order to empower it to bring inform to the masses much like regular libraries were (and still are) intended to do. Operatively, I would suggest the following types of reforms: 1. To expand the public domain in what I would refer to as Information Oriented Content.

2. To limit the originality requirement in order to keep some content out of the private domain. In this regard, the legislator (and the

46. Id. 47. Id. 48. Id. 49. Hannibal Travis, Building Universal Digital Libraries: An Agenda for Copyright Reform, PEPP. L. REV. (2006), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=860784.

50. Id. 51. Jack M. Balkni, The Future of Free Expression in a Digital Age (Jan. 29, 2009), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1335055.

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courts) should act to reject and block exasperated claims of rights over certain works, if it is deemed that they lack a certain level of originality.

3. To revitalize the fair use doctrine, by disallowing contractual schemes to circumvent them. This revitalization would nullify the chilling effect on market actors. According to Adler et al, “Failure to employ fair use affirmatively and consistently impairs the accomplishment of the academic and research libraries’ mission.” 52 Specifically, in the case of public libraries Adler also takes note of the “costs associated with seeking permission or making what seem to be tedious case-by-case determinations of fair use.”53 4. Extending the safe harbor protection (that has been granted to companies such as YouTube), to the digital library arena as well.

5. Providing a unified, limited and non-extendable term of protection for copyrighted works in order to allow digital libraries to operate in a friendlier legal environment. It is worth noting here that the trend to date has been quite the opposite, this is most evident in the Supreme Court’s ruling in Eldred v. Ashcroft.54 Travis rightly points out that “[i]ndefinitely renewable copyrights threaten to marginalize Internet publishing and online libraries by entangling them in endless disputes regarding the rights to decades- or centuries-old works.”55 SUMMARY In this paper, I have looked at the exciting new medium of spacerelayed internet connectivity which is exemplified by the Outernet system.

My research has focused primarily on intellectual property issues. I have highlighted the many benefits of this new system (of internet connectivity to the masses), but I have also underscored the challenges that it might pose to intellectual property protected content primarily in the context of copyrights and trade secrets. At the conclusion of this research, I have proposed some concepts for maintaining the balance between the challenges and the benefits that can stem from the Outernet and systems like it.

52. PRUDENCE ADLER ET AL., FAIR USE CHALLENGES IN ACADEMIC AND RESEARCH LIBRARIES 1 (Dec. 20, 2010).

53. Id. 54. 537 U.S. 186 (2003). In this decision by the U.S. Supreme Court, the court upheld the constitutionality of the 1998 Sonny Bono Copyright Term Extension Act (CTEA).

55. Travis, supra note 49.

The Internet Service Provider Secondary Liability: A Comparative Analysis of Brazilian and United States Legislation and Case Law Raphaela Maciel Ladeia* INTRODUCTION According to the International Telecommunication Union (ITU), in 2015 about 3.2 billion people around the world were using the internet every day. 1 This considerable number, which corresponds to 40% of the world’s population, demonstrates that the internet is imperative in this globalized world. It facilitates innumerous activities, but at the same time raises social conflicts that require proper rules. With this background in mind, this paper reviews current Brazilian rules and regulations as well as case law regarding defamatory and copyright infringement on the internet, including most notably the Marco Civil da Internet [Internet Bill of Rights], which was enacted in 2014. This paper also compares the Brazilian and the United States’ experiences, focusing on the potential liability of internet service providers (ISPs).

This article proceeds in four parts. The first part explains the definition and origin of the internet and the Brazilian Internet Bill of Rights’ purpose, process, main features, principles, central disputes, and influences. The second part analyzes potential ISP liability in Brazil for defamatory content.

This section explains the exceptions under the Internet Bill of Rights (IBR) and reviews the Brazilian highest courts’ understandings before and after the adoption of the act. The third part examines ISP liability in Brazil for copyright infringement, one of the explicit exceptions to the application of

* LL.M., Columbia Law School 2016; recipient, Parker School Certificate in International and Comparative Law. 1. ITU Releases 2015 ICT Figures, ITU, https://www.itu.int/net/pressoffice/press_releases/ 2015/17.aspx (last visited May 9, 2016).

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the IBR. This section also reviews the Brazilian Copyright Act and recent proposals to modernize it, including the May 2015 decision of the Superior Court of Justice, which accessed ISP liability for another’s copyright infringement. The fourth part compares Brazilian and U.S. legislation and case law with respect to defamatory content and copyright infringement on the internet. The conclusion reflects about the worthiness of existing legislation.

I.

THE INTERNET ORIGIN AND THE BRAZILIAN INTERNET BILL OF RIGHTS

In simple terms, the internet is an international network of interconnected computers.2 According to Barry M. Leiner et al., J.C.R Licklider of MIT wrote the first records of the internet during the Cold War in 1962.3 The concept was to decentralize the U.S. information sharing, preventing its potential loss in a hypothetical attack.

In 1969, the UCLA Professor Leonard Kleinrock transmitted the first email in history. 4 In the 1970s, the United States started permitting other researchers to develop studies about the internet. 5 This resulted from the decrease of tension between the United States and Russia and the consequent risk reduction of immediate attacks.

In 1992, the scientist Tim Berners Lee created the World Wide Web. 6 By the same period, a global and commercial interest in the internet increased, resulting in the internet boom. 7 As reported by Leonardi, the internet was launched in Brazil in 1989 with the incentive of the Science and Technology Ministry. However, until 1995 it was restricted to the research and educational fields. 8 According to the International Telecommunication Union (ITU), in 2015 about 3.2 billion people around the world were using the internet every day. 9 This considerable number, which corresponds to 40% of the world’s population, demonstrates that the internet is an imperative in the globalized world. It facilitates innumerous activities, but at the same time raises social conflicts that require proper rules.

2. See generally MARCEL LEONARDI, RESPONSABILIDADE CIVIL DOS PROVEDORES DE SERVIÇOS DE INTERNET [THE INTERNET SERVICE PROVIDER LIABILITY] (2005).

3. Barry M. Leiner et al., Brief History of the Internet, INTERNET SOCIETY, http://www.internetsociety.org/internet/what-internet/history-internet/brief-history-internet (last visited Sept. 26, 2016).

4. Id. 5. Id. at 8.

6. Id. at 12.

7. Id. at 14.

8. See generally LEONARDI, supra note 2.

9. ITU Releases 2015 ICT Figures, ITU (May 26, 2015), https://www.itu.int/net/pressoffice/ press_releases/2015/17.aspx.

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As Ascensão has noted, considering the internet is a global grouping of interconnected computers, no government or entity can absolutely take control of it.10 Therefore, as a general rule the internet regulation pertains to each country. Nevertheless, there are some international efforts to suppress globalized harmful behaviors such as the Berne Convention of 1886 and the Agreement of Trade-Related Aspects of Intellectual Property Rights (TRIPS) of 1994.

As stated by Reinaldo Filho, the development of the internet resulted not only in a technological revolution but also in a legal revolution. 11 With that background in mind, during the 2014 NETMundial, the Brazilian President announced the Federal Statute No. 12.965/2014, also known as Marco Civil da Internet [Internet Bill of Rights] (IBR).12 The IBR resulted from a democratic process. First, its bill was submitted to public consultation and later passed through six public hearings.13 Hence, it can be considered a transparent statute.

The initiative of regulating the Internet in Brazil started in 2006, with the cybercrimes’ bill proposed by the Senator Eduardo de Azeredo. 14 The Brazilian society strongly reacted against this penal regulation, since its broad scope would turn thousands of Internet users into criminals. 15 In 2007, Ronaldo Lemos, the director of the Institute for Technology and Society of Rio de Janeiro, wrote an article for Folha de São Paulo, a respected press venue in Brazil, claiming the idea of a civil regulation and calling it “Marco Civil.”16 In 2008, the Ministry of Justice created a multitask team to draft a bill that encompassed this concept. 17 In 2009, the former Brazilian President, Luiz Inácio, defended a civil regulation of the Internet in the 10th International Free Software Forum. 18 In the same year, the Ministry of Justice and the Getúlio Vargas Foundation celebrated an agreement to launch a platform to stimulate the online discussion of the mentioned bill. 19 The first

10. See generally JOSÉ DE OLIVEIRA ASCENSÃO, SOCIEDADE DA INFORMAÇÃO E MUNDO GLOBALIZADO, PROPRIEDADE INTELECTUAL E INTERNET [THE INFORMATION SOCIETY AND THE GLOBALIZED WORLD : INTELLECTUAL PROPERTY AND INTERNET], (Marco Wachowicz et al. eds.

2002).

11. See generally DEMÓCRITO RAMOS REINALDO FILHO, RESPONSABILIDADE POR PUBLICAÇÕES NA INTERNET [LIABILITY FOR PUBLICATIONS ON THE INTERNET], (Forense ed.

2005).

12. CARLOS AFFONSO ET AL., UNDERSTANDING BRAZIL’S INTERNET BILL OF RIGHTS 6 (2015).

13. Id. at 27, 36.

14. Id. at 28.

15. Id. 16. Id. at 29.

17. Id. 18. Id. at 36.

19. Id. at 29.

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phase of public consultation ended with more than 1,800 contributions. 20 This was the first time in Brazil’s history that the House of Representatives took into account popular contributions. In 2010, the second phase of the public consultation ended with more than 1.168 contributions. 21 In 2011, the President Dilma Rouseff sent the bill to the House of Representatives. 22 In March 2012, Alessandro Molon, a Congressmen, was chosen as the leader of the bill and later created a special commission launching the virtual community of the IBR.23 In 2013, Edward Snowden, a contractor for the U.S. National Security Agency (NSA), leaked documents that showed the President Dilma Rouseff and the oil company Petrobras were being target of the U.S. surveillance. 24 In the same month, the IBR was put in a constitutional regime. 25 Thus, it should have been voted in 45 days and the Congress was prevented from voting on any other issues until the completion of the IBR. Nonetheless, the bill was delayed several times. In March 2014, the Internet Bill of Rights was approved in the House of Representatives. 26 In April, it was approved in the Senate, and in the same month, it was sanctioned by the Brazilian President. 27 The explanatory memorandum of the Congress, a report that accompanies the bill to the Brazilian President, marks the challenge of harmonizing the law and digital culture.28 The document also stresses that the absence of legal definition results in contradictory judicial opinions.

20.

21.

22.

23.

24.

25.

26.

27.

28.

Id. at 38.

Id. at 36.

Id. at 37.

Id. at 28.

Id. at 68.

Id. at 37-38.

Id. at 38.

Id. Id. at 31

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Ronaldo Lemos accurately represented the central disputes of the main stakeholders of the IBR:29

According to the Congress, the IBR was inspired by the United States’ Electronic Communications Privacy Act of 1986 (18 U.S.C. §§ 2510-2522); the United States’ Communications Decency Act of 1991 (U.S.C §§ 230, 560, 561); the United Kingdom Data Protection Act of 1998; the Electronic Communications and Wireless Telegraphy Regulations of 2011; the Electronic Communications (Universal Service) (Amendment) Order of 2011; the Privacy and Electronic Communications (EC Directive) Regulations of 2003; the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations of 2004; the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations of 2011; the Argentinian Ley 26.032; the Spanish Ley 11/2007, Ley 25/2007, Ley 56/2007, and Ley 18/2011; by the Portuguese Laws 69/98, and 32/2008; and by the French Loi 2004-669 2004, and 2009-669 2009.

One purpose of the IBR, according to the Brazilian Vice President of ecommerce, was to establish the basic internet rules in the country, mitigating an environment of insecurity that used to scare off potential investors. 30 To Silva, Lopes and Oliveira, the internet is a public space, where the fundamental rights must be observed. 31 29. RONALDO LEMOS, FEET ON THE GROUND : MARCO CIVIL AS AN EXAMPLE OF MULTITAKEHOLDERISM IN PRACTICE IN UNDERSTANDING BRAZIL’S INTERNET BILL OF RIGHTS 30 (Instituto de Tecnologia e Sociedade do Rio de Janeiro ed., 2015).

30. Kalinka Iaquinto, Caia na Rede [Fall in the Network], CONJUNTURA ECONOMICA 38 (May 2014), http://bibliotecadigital.fgv.br/ojs/index.php/rce/article/view/31726 (last visited May 9, 2016).

31. Sherilyn Hayana da Silva, et al., Marco Civil da Internet 4 [Internet Bill of Rights] (2007), http://www.santacruz.br/ojs/index.php/JICEX/article/view/675.

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In accordance with Gômara and Almeida, the IBR confirmed Constitutional rights such as privacy, data protection, and freedom of speech.32 However, the aforementioned legislation also brought a huge controversy: the network neutrality. It is interesting to note that the European Parliament, almost concomitantly, approved a specific law safeguarding the network neutrality and the United States Court of Appeals District of Columbia Circuit held that the network neutrality rule announced by the Federal Communications Commission was invalid. 33 The IBR is divided into five chapters. The first announces the preliminary provisions. The Second moves to user’s rights. The Third reports the connection between Internet applications. The fourth addresses the judicial request of data and the fifth points out the government’s role.

Saldanha presents seven fundamentals to the IBR, allocating the freedom of speech as the most important.34 Gomes and Néri acknowledges the main features of the IBR: privacy, personal data, data storage, surveillance in the web, free internet, end of targeted marketing and freedom of speech.35 Freedom of speech includes the treatment for the ISP. As a rule, if the ISP does not remove the defamatory content after judicial order, it will not be held liable, therefore, ensuring the end of the “private censorship.” Nonetheless, the IBR provides an exception to this general rule.

As reported by Souza, Viola and Lemos, the IBR may inspire other nations.36 The Italian President of the House of Representatives, Ms. Laura Boldrini, decided that Italy’s Parliament would create a commission based on the Brazilian experience. 37 The Research Center of the Brazilian Legislative, led by Carlos Eduardo Elias de Oliveira, launched a manual for the referred legislation, explaining

32. Marcelo Pereira Gômara and Bráulio Dias Lopes de Almeida, Lei 12.965, de 23/04/2014, Marco Civil da Internet, Comentários [Federal Statute No. 12.965, from 04/23/2014 – Internet Bill of Rights. Commentaries], at 226-27, Revista do Tribunal do Trabalho. 2 a Região. Fonte Oficial de Publicação de Julgados. Revista, (Silvia Regina Pond. Galv.o Devonald.

Desembargadora Presidente et al. eds, 2014).

33. See supra note 32.

34. See generally Jânia Maria Lopes Saldanha. Marco Civil da Internet: Um Quadro de Princípios, Responsabilidade e de Protagonismo do Poder Judiciário [Internet Bill of Rights: A Framework of Principles, Responsibility and the Judiciary Protagonism], in O PODER JUDICIÁRIO NA SOCIEDADE EM REDE 160, 164-165 (2015).

35. Entenda o que está em Jogo na Proposta do Marco Civil da Internet [Understand What is at Stake in the Proposed Civil Marco Internet], POLITICA (June 11, 2013 7:30 PM), http://g1.globo.com/politica/noticia/2013/11/entenda-o-que-esta-em-jogo-na-proposta-de-marcocivil-da-internet.html.

36. AFFONSO. supra note 12, at 6-7.

37. Id. at 8.

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their personal interpretation.38 First, it elucidates that the “Internet Constitution” is not the best term to refer to the IBR. 39 This name expresses an autonomy that the mentioned legislation does not have. Therefore, the IBR conflicts with the Brazilian Federal Constitution, Consumer Code, and Civil Code, among others. The Brazilian President recently regulated the IBR by the decree 8.771/2016.40 According to Nazareno, since the internet is no longer an ideal and free environment, where the users navigate without the interference and monitoring of companies and governments, the biggest challenge is to equate all the interests in an internet that is viable, fair and accessible to everybody. 41 II. THE INTERNET SERVICE PROVIDER SECONDARY LIABILITY IN BRAZIL: DEFAMATORY CONTENT According to Binicheski, ISPs are essential actors to access the internet.42 However, these technical intermediates are more attractive to civil liability lawsuits, for being in a more reachable position and because of its financial resources.

Until the IBR, the Brazilian Superior Court of Justice (STJ), the highest court in Brazil to try subjects related to the Federal Statutes, held that the ISP must take down, through mere request, all the defamatory publication within twenty-four hours of the receipt of the notice. 43 Otherwise, the ISP would be held liable. 44 This is the Court’s position in any internet context, including social media and blogs.

For example, the judgment AgRg no REsp 1309891/MG, which Justice Sidnei Beneti held that according to the STJ precedents, the ISP is not liable

38. Carlos Eduardo Elias de Oliveira, Aspectos Principais da Lei No. 12.965, de 2014, o Marco Civil da Internet: Subsídios à Comunidade Jurídica [Main Aspects of the Federal Statute No. 12.965, 2014, the Internet Bill of Rights: Subsidies to the Legal Community] at 5 (2014).

39. Id. 40. Brazilian laws are subject to administrative decrees. Their purpose is to specify the interpretation of the law.

41. Cláudio Nazareno, Texto de Referência Acerca do Marco Civil da Internet [Reference Text on the Internet Bill of Rights], at 12, 14 (2014).

42. See generally Paulo Roberto Binicheski, O Marco Civil da Internet: Primeiras Linhas [The Internet Bill of Rights: First Insights], 2014.

43. S.T.J.J. EDcl no REsp 1323754/RJ (2012/0005748-4), at 10.

44. Until the STJ establishes the precedent regarding ISP, the national courts used to hold in three contradictory ways. The first used to exempt the ISP from any liability for other’s content.

The second used to apply a strict liability regime for the ISP. The final used to relate the liability of the ISP to a possible fault on its part. Some courts would hold the ISP liable for not taking down the content after becoming aware of its existence and other courts would hold the ISP liable for not complying with the court’s order to remove the defamatory content.

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for the content of third parties. 45 However, it is obliged to remove immediately the defamatory content, though mere request. 46 Another example is the judgment REsp 1193764/SP, which Justice Nancy Andrighi explained that the commercial usage of the internet is subject to the Brazilian Consumer Code. 47 Therefore, the fact that the service rendered by the ISP is free of charge does not change the consumer relation, since the concept of consumer established in the Article III of the Brazilian Consumer Code comprehends indirect payments. 48 The Justice also reasoned that a previous monitoring of the content is not an intrinsic part of the service rendered by the ISP.49 However, as soon as someone notifies the ISP of the illegal content, it must immediately act by removing it.50 If it does not act this way, it will be liable for its omission. 51 Justice Nancy Andrighi has the most comprehensive opinions regarding takedown notices. For instance, in the opinion EDcl no REsp 1323754/RJ (2012/0005748-4), the Justice explained that the speed that the information circulates in the virtual media makes it imperative for the measures to restrain the dissemination of defamatory contents, whereby rapidly and decreasing the libel dissemination and consequently its results. 52 Therefore, the ISP must take down the defamatory content within twenty-four hours of the notice.53 If it fails to do so, it will be secondarily liable for its omission. 54 During the twenty-four hours, the ISP does not have to analyze the request. 55 After having proper time to analyze the notice, it should evaluate the veracity of the information. If the information is true, the ISP must definitely take down the content and if not, it should restore it. It is important to note that not being obliged to analyze a notice within twenty-four hours does not mean it can defer the analysis indefinitely. The ISP must be fair and adopt the legal

45. S.T.J.J. AgRg no REsp 1309891/MG, Relator: Ministro Sidnei Beneti and Terceira Turma, 06.29.2012, at 2id.

46. Id. 47. S.T.J.J. REsp 1193764/SP, Relator: Ministra Nancy Andrighi and Terceira Turma, 08.08.2012.

48. Id. 49. Id. 50. Id. 51. Id. 52. S.T.J.J. EDcl no REsp 1323754/RJ (2012/0005748-4), Relator: Ministra Nancy Andrighi and Terceira Turma, 10.17.2013.

53. Id. at 10.

54. Id. 55. Id.

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means against the abuse of the notices.56 There are several decisions with the same understanding. 57 Interestingly, the STJ treated Google’s liability with a different regime when Google acts as a “search provider.” As held by the Court, Google is not liable for the defamatory information that its search engine may indicate.58 The idea of the opinion was to recognize the search provider’s role and ensure the fundamental right to access information.

The Brazilian Supreme Court (STF), the highest Court in Brazil to try subjects that are related to the Federal Constitution, by the same time, created a “general repercussion” in a case relating to a plaintiff who was trying to make Google liable for the Orkut’s defamatory content. 59 The STF suspended all similar lawsuits to decide first which right should weight more in this type of cases: freedom of speech or privacy. 60 In the opinion, the Justice explains that due to the complexity of this case and the apparent antinomy, the Court should make a separate session to discuss these rights. 61 After the IBR, the Brazilian case law must change. In Article 19, the IBR states freedom of speech as the main rule. 62 The concept was to prevent abusive notifications and protect the ISP, while favoring potential innovation. In this scenario, ISPs are accountable only if they do not take down the defamatory content after a specific court’s order. Hence, the “victim” of the defamatory content cannot notify the ISP himself.

The IBR created two exceptions to the general liability rule in articles 19 and 21.63 First, aiming to valorize privacy, the ISP has to comply with the victim notification to take down any content that involves nudity or sex (socalled revenge porn).64 This exception was inserted in one of the last rounds of the IBR’s bill as an answer to the case of two Brazilian teenagers that

56. Id. 57. S.T.J.J. REsp 1396417/MG, Relator: Ministra Nancy Andrighi and Terceira Turma, 11.25.2013.

58. S.T.J.J. REsp 1316921/RJ, Relator: Ministra Nancy Andrighi and Terceira Turma, 10.17.2013.

59. A general repercussion is a procedural instrument in the Brazilian Federal Constitution, which enable the STF select the lawsuits it is going to analyze, considering the criteria of legal, political, social or economic relevance. The concept is to decrease the number of lawsuits in the STF. Once the STF finds a general repercussion, it will analyze the merit of the question and after the inferior Courts will apply it in identical cases.

60. S.T.F.J. ARE 660861 RG, Relator: Ministro Luiz Fux, 11.07.2012.; S.T.F.J. RE 628624, Relator: Ministro Marco Aurélio, 08.16.2011.

61. The holding was not found, despite the fact the STF mentioned in the national media that it would solve the general repercussion in a few weeks after the mentioned case.

62. AFFONSO, supra note 12, at 48.

63. Id. at 52.

64. Id. at 54.

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committed suicide after having their intimate videos shared through WhatsApp.65 Some authors, as Souza, understand that Article 21 can create several discussions in future lawsuits, because of its wording. 66 According to Oliveira, the first exception should be interpreted conjointly with the Consumer Code, that articles 186 and 422, protects the bona fide and neminem laedere principles. 67 In this reading, besides the obligation of take down, the ISP must also provide the victim with the information of the author of the defamatory content (including name, address and the taxpayer registration number). This is necessary for the victim to try the author of the defamatory content for direct liability.

The second exception regards copyright infringement.

Any infringement related to copyrighted materials continues subject to the Brazilian Copyright Act and the Federal Constitution. According to Souza, this exception was clearly created by the influence of the television broadcasters that did not want to change the established practice of sending notifications to take down the infringing copyrighted material. 68 Another reason for this exception is the idea of modernizing the Brazilian Copyright Act. 69 This would be a way to avoid overlaps in the legislation. The referred update in the legislation is still far from being materialized.

After one year being in force, it is very precipitate to appoint the failures of the legislation, since the Judiciary did not have enough opportunities to assess many cases involving it.

Some scholars interpret the Articles 18 and 19 of the IBR in a different way. Souza, for instance, states that not being liable for not removing a content without a court’s order does not mean that the ISP cannot remove the content once notified by the victim and in accordance with its Terms of Services. Nevertheless, this interpretation disregards the purpose of the statute, which that was not to create a “private censorship.”70 In this sense, the IBR recognizes the Judiciary as the competent authority to decide to take down the material, since this would demand a subjective analysis of the ISP and therefore imperil freedom of speech.

Article 19 in the IBR also states that civil special courts may judge issues arising from this section.71 The IBR referred to the special courts, created by

65. Id. 66. Id. at 55. Article 21 states that the ISP must act in a “diligent manner” and “considering its technical limitations,” which results in subjective standards.

67. Oliveira, supra note 38, at 148.

68. AFFONSO supra note 12, at 52.

69. Id. 70. See generally AFFONSO, supra note 12.

71. Id. at 51.

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the Brazilian Federal Statute No. 9.0099/1995, which procedure is guided by the principles of celerity, orality and simplicity. Nonetheless, nothing prohibits the creation of a different court specialized by subject.

The IBR, through Article 19, seems to be incentivizing the judicialization, which is broadly criticized. Souza brings one of the most recurrent arguments in this context, that the speed that things happen on the internet is not compatible with a lawsuit. 72 Nonetheless, the removal of the content can be granted by injunction of the civil special courts.

III. THE INTERNET SERVICE PROVIDER SECONDARY LIABILITY IN BRAZIL: COPYRIGHT INFRINGEMENT The protection of the intellectual property in the digital era is a challenge, mostly because reproducing an intellectual property work in the digital media is easy, fast, efficient, involves low costs, and it is difficult to differentiate the copy from the original.

There is no doubt that the Brazilian Copyright Act is applicable to the internet, once it recognizes the creations expressed in any media, fixed in any support, tangible or not, now known or that will be invented in the future. In addition, the mentioned statute ensures the immediate suspension of the transmission or retransmission of the copyrighted work independently of the media or process used for the practice of illicit.

According to the specialists, the Brazilian Copyright Act, Federal Statute No. 9.6010/1998, is one of the most restrictive in the world. 73 Therefore, many scholars thought the law would not resist the digital era. This is also the opinion of the Consumers International’s IP Watchlist that evaluated the Brazilian law as one of the worst, among the thirty countries they assessed. 74 An example of restriction that the Brazilian Copyright Act announces is the concept of fair use. Brazil follows the European model, which is completely rigid, in contrast to the U.S. model. While in Brazil, the conduct is stated in a list that the scholars understand as exhaustive, the U.S. courts established some criteria that will be checked in the cases. In other words, in the Brazilian model, if the conduct of the agent is not exactly as stated by the list, it cannot be considered fair use.

The copyright cannot be an absolute monopoly. Otherwise, many rights would be impaired, such as the right to access culture, development, freedom 72. Id. at 9.

73. See generally SÉRGIO VIEIRA BRANCO JÚNIOR, DIREITOS AUTORAIS NA INTERNET E O USO DE OBRAS ALHEIAS [COPYRIGHTS IN THE INTERNET AND THE USE OF OTHER’S WORK] (Lumen Juris ed., 2007).

74. Consumers International, IP Watchlist (Apr. 18, 2011), http://www.consumers international.org/news-and-media/news/2011/04/brazil,-egypt-and-uk-among-worst-copyrightregimes-in-the-world.

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of speech, and free flow of ideas. In this context, it is necessary to think about alternatives to balance the mismatch of the technology with such a restrictive law. The first option is a legislative reform in order to include the specificities of the internet and the conducts that are socially acceptable and what the law currently prohibits. The second option is the exercise of hermeneutics to interpret the current legislation taking into account the Federal Constitution that states the intellectual property as a fundamental right along with the users and judicial precedents.

The mentioned legislative reform seems to be the best option, but at the same time, seems unlikely to occur. According to Reia and Mizukami, the process to modernize the Brazilian Copyright Act started in 2007 in the National Forum for Copyrights that permitted public debate and consultation.75 The idea was to use the same collaborative model of the IBR and try to balance the users and author’s interests. However, the reform has suffered a stagnation period that coincided with the time that the President appointed the new Culture Minister, Ms. Ana Hollanda. It is interesting to note that Ms. Hollanda has a close relation to the recording industry and the Central Office of Collection and Distribution (Ecad), which are both against the bill. In 2015, a new Minister was appointed, Mr. Juca Ferreira, who brought with him the hope of the continuation of the legislative process.

Nonetheless, as of now any governmental efforts toward the modernization of the Copyright Act remain to be seen.

The case law, in its turn, is presenting a new hermeneutics in the liability of the ISP in the cases of copyright infringement, in a movement that started in May 2015 in the STJ. It is useful to acknowledge the facts of the case decided by the STJ to understand the opinion of Justice Salomão. 76 Botelho Indústria e Distribuição Cinematográfica Ltda, a company of legal education in Brazil that offers its products through CDs and DVDs, detected the commercialization of counterfeited copies of its products in an Orkut’s link.

Therefore, according to the Plaintiff, the company notified Google Brasil Internet Ltda to take down the related Orkut’s communities. Nevertheless, Google answered the notification stating that it would be impossible to take down because they would need better specification of the communities, including the specific location (URL). In March 2008, the Plaintiff affirmed that it had expressly identified the communities; hence, there was no reason for Google not to take down.

75. See generally JHESSICA REIA & PEDRO NICOLETTI MIZUKAMI, REFORMANDO A LEI DE DIREITOS AUTORAIS: DESAFIOS PARA O NOVO GOVERNO NA ÁREA DA CULTURA [REFORMING THE COPYRIGHT LAW: CULTURE RELATED CHALLENGES FOR THE NEW GOVERNMENT] (2015).

76. Brazilian Superior Court of Justice (STJ). REsp 1512647/MG, Rel. Ministro Luis Felipe Salomão, Segunda Seção, judged in 05/13/2015 and published in 08/05/2015.

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Considering Google’s alleged omission, the Plaintiff filed a lawsuit asking that the Court should enter judgment in his favor; Google should be required to take down the communities; and that Google would pay the Plaintiff’s actual and moral damages. 77 The District Court of Belo Horizonte/MG recognized the actual damages, required Google to provide the IP and the qualification of the users that infringed the copyrights and stated that the URL was unnecessary to take down the content. The District Court did not acknowledge moral damages to the Plaintiffs. The core concept of the District Court was that the ISP, while acting as the administrator of a social media and permitting the creation of profiles and communities that violates the law, is liable for all the actual damages that may arise when the copyright owners, among others communicates the ISP, but it does not act removing the content. The State Appellate Court affirmed the opinion on appeal.

Thereafter, the Defendant filed a special appeal to the STJ because according to the Defendant the obligation to remove content without the URL and to provide the IP and further qualification of the users who infringed the law was impossible. Moreover, the Defendant alleged it could not be condemned to actual damages since it did not directly or indirectly infringed the laws.

In May 2015, the STJ tried the case. Justice Salomão began his opinion by quoting the articles 102 and 104 of the Brazilian Copyright Act. This articles states that the ones who fraudulently reproduce, disclose or otherwise use a work of others’ ownership, or that edit a literary, artistic or scientific work or who sell, expose for sale, hide, acquire, distribute, have in storage or use work or phonogram fraudulently, in order to sell, benefit, advantage, profit directly or indirectly, for themselves or others, are civilly liable. Next, the Justice argues that the common ISP that administrates a social media site cannot be obviously framed in the mentioned articles. Thereafter, he mentions that the U.S. doctrine is currently framing the ISPs into two categories of liability: direct and secondary. The former being applied when the actor personally engages in infringing activity and the latter, by contrast, when the actor is responsible for infringement of third parties, even when they have not themselves engaged in the infringing activity. Therefore, it applies when the ISP induces or encourages others to infringe the law or to profit from such acts, while it declines its right and ability to control them.

Applying this to the case, Justice Salomão states that Orkut’s purpose was not to share intellectual works. After analyzing the evidence, Justice Salmao stated that Orkut’s structure did not permit the share of such files. Therefore, it is not a case of contributory liability. Likewise, there is no evidence that

77. Id.

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the ISP received any financial benefit through the copyright infringement.

Thus, there was no vicarious liability. Finally, he states that there is no obligation to remove content when the ISP does not have the specific location for the infringement (URL).

Justice Salomão considered that since September 2014, Orkut officially does not exist. However, considering it is still possible to search for Orkut’s communities in a catalog available at http://orkut.google.com, the official closure of Orkut did not automatically remove the infringing communities.

The Justice also mentions in his opinion that the absence of a specific legislation in this sector makes the importance of the jurisprudence to evolve gradually. Therefore, he highlights that is the first time the STJ decided the ISP’s hand in copyright infringement.

Justice Salomão mentioned that before the IBR the STJ had a precedent that the ISP had 24 hours to take down the defamatory material after being notified. However, after the legislation, the defamatory content is only removed after a judicial order that must be specific. Next, he mentioned that the IBR contained two exceptions: revenge porn and copyright infringement.

The Justice concludes this reasoning noting that, in the absence of a specific legislation and precedents, the existence of the Brazilian Copyright Act and the foreign wide debate about the subject, the Defendant is not liable because Orkut’s structure and the ISP conduct did not contribute to the infringement.

He mentions the Copyright Act articles clarifying that Google did not do any of the actions. Thus, it cannot be direct liable and to discuss its potential secondary liability, he mentions Sony v. Universal Studios, Napster, Grokster and Pirate Bay cases. The Justice concludes with the understanding that to hold an ISP liable it would be like consider the post officers liable for the content of the private letters that they are only delivering. Finally, the Justice agrees with the dissent and partially changes his opinion to adjust that the ISP must take down the communities and inform the IP and qualification of the users, even without the URL. Although other Justices have praised the STJ opinion, it disregards the Brazilian peculiarities. There is no question about the constitutionality of the use of the comparative law in the judicial opinions in Brazil. More than that, the use of comparative doctrine to develop a contextualized approach of problems that are common in several legal systems is not a novelty. In addition, historically, there is no substantial restriction on the use of foreign law in the Brazilian case law.78 However, according to Cardoso, the excess in the comparative law may deviate the judges from the social, economic and

78. See generally Otávio Luiz Rodrigues Junior, Fonte Estrangeira Pode Fundamentar Decisão Nacional? [Can a Foreign Source Base a National Opinion?] CONSULTOR JURÍDICO (2012), www.conjur.com.br/2012-dez-12/direito-comparado-recurso-estrangeiro-fundamentardecisao-nacional (last visited May 9, 2016).

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cultural conjuncture, which increases the possibility of “bad” opinions. 79 Furthermore, until now every time Brazil, as United States, mentioned a comparative doctrine, it made a obter dictum proposition and never a ratio decidendi, as it was stated in this opinion. 80 The concept is to complement the opinion, enriching it and permitting the development of the legal system.

The critique about the opinion is not only a question of defending the legal cultural in Brazil but also to question the legal qualification of the foreign doctrine.

IV. A COMPARATIVE ANALYSIS OF THE BRAZILIAN AND UNITED STATES CASE LAW AND LEGISLATION In the United States the theories of secondary liability (contributory and vicarious infringement) that were previously refined in the real world, were later applied to the ISP. These theories were developed for years in the United States courts, starting with the landmark case on vicarious liability Shapiro, Bernstein & Co. v. H. L. Green Co.81 In this case, the court stated that there were two lines of precedents: the landlord leasing and the proprietor or manager of a dancing hall leasing his premises to or hiring a dance band.82 Therefore, considering the storeowner retained the right and ability to control the record concession and concessionaire’s employees and financially benefited from the unauthorized sale of counterfeited records that infringed the Plaintiff’s rights, it should be held liable.83 Another landmark case on secondary liability is Gershwin Publishing Corp. v. Columbia Artists Management, Inc.,84 in which the court defined contributory liability.

According to the court, the liability for participation in the infringement occurs when the person (aware of the infringing activity), takes part in the other’s infringing conduct by inducing, causing or materially contributing to it.85 The development of the doctrine with regard to the flea markets, in Hard Rock Cafe Licensing Corp. v. Concession Services, Inc.,86 and Fenovisa, Inc. v. Cherry Auction Inc.,87 and the theory of fair use in Sony Corporation of

79. See generally GUSTAVO VITORINO CARDOSO, O DIREITO COMPARADO DA JURISDIÇÃO CONSTITUCIONAL [THE COMPARATIVE LAW IN THE CONSTITUTIONAL ADJUDICATION] (Revista Direito GV ed., 2010).

80. Id. at 26.

81. 316 F.2d 304 (2d Cir. 1963).

82. Id. at 307.

83. Id. 84. 443 F. 2d 1159 (2d Cir. 1971).

85. Id. 86. 955 F. 2d 1143 (7th Cir. 1992).

87. 76. F. 3d. 259 (9th Cir. 1996).

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America v. Universal City Studios, Inc.,88 were useful to deal with the early challenges from cyberspace, such as those presented in Religious Technology Center v. Netcom On-Line Communication Services, Inc.,89 when the CDA and DMCA did not yet exist.

Before the CDA enactment there was a controversy among the courts when assessing the ISP liability for third part defamatory content. For instance, in Cubby, Inc. v. CompuServe, Inc.90 and Stratton-Oakmont, Inc., v.

Prodigy Services Co.,91 analogous facts lead to different holdings. In the first case, the court held the ISP could only be held liable for defamation if it knew or had reason to know the defamatory nature of the content. 92 Therefore, it was not held liable. 93 In the second case, the ISP was found liable for defamation. 94 In response to Stratton-Oakmont, Congress enacted the Communications Decency Act (CDA) of 1996 to create an immunity for the intermediary that only made available third parties contents. The concept was also to incentivize the ISP to monitor its network’s content. Thus, it established the general rule that the ISP “shall not be treated as the publisher or speaker or any information” provided by” third parties. 95 The statute also defines internet and interactive computer service, information content provider and access software provider, which are very broad definitions that are met in all cases. States are not allowed to enact laws increasing the liability of the ISP and there is no take down obligation. It does not affect criminal nor intellectual property law.

The United States Supreme Court struck down most of the CDA. According to the Court, several penal sections that conflicted with the freedom of speech were unconstitutional. However, Section 230 remained.

In the cases that followed the CDA’s enactment, like Zeran v. America Online Inc.,96 there is complete immunity from liability for defamatory speech posted in the ISP system by third parties. By the same time the direct liability of the actual content creator remains, the ISP does not have the obligation to remove such speech even after being given notice. The interpretation of the CDA was expanded beyond defamatory speech in cases like Stoner v. eBay Inc.,97 when eBay was considered immune for liability 88.

89.

90.

91.

92.

93.

94.

95.

96.

97.

464 U.S. 417, 104 S. Ct. 774 (1984).

907 F. Supp. 1361 (N.D. Cal. 1995).

776 F. Supp. 135 (S.D.N.Y. 1991).

1995 WL 323710 (N.Y. Sup. Ct. May 24, 1995).

Cubby, Inc. v. CompuServe, Inc., 776 F. Supp. at 142.

Id. at 144.

Stratton-Oakmont, 1995 WL 323710, at *7.

47 U.S.C. § 230 (1998).

129 F. 3d 327 (4th Cir. 1997).

No. 305666, 2000 WL 1705637 (Cal. Super. Ct. Nov. 1, 2000).

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arising from listings for counterfeited music. The courts are possibly considering that everything in the internet is speech. That is also the understanding in Dart v. Craiglist Inc.,98 Gibson v. Craiglist Inc.,99 and Miles v. Raycom Media Inc.100 It is interesting to note that with this understanding, the ISP liability seems to be almost absolute. Cases like Charles Novins, ESQ. P.C. v. Cannon101 and Carafano v. Metroplash.com Inc.102 confirm this.

Comparing this to the Brazilian experience, there is a tendency since the late nineties of not holding the ISP liable for defamatory content. This can be confirmed by the U.S. opinion in the case Religious Technology Center and the Brazilian case TJRS, Ap. Civ. N. 70001582444, Judge Antônio Correa Palmeiro da Fontoura in May 2002.

The IBR is in many portions similar to the CDA. As in the United States that left the copyright issues to the DMCA, the Brazilian legislation in its Article 18 states that copyright issues will be treated by the specific regulation. With the upcoming copyright reform, Brazil is about to choose which model to follow in the Copyrights Act. In addition to this, considering the ISP does not author the content, it is not secondary liable. Therefore, Article 19 of the IBR is very similar to the Section 230 of the Communication Decency Act. The Brazilian and the U.S. legislation are also very similar regarding direct infringement of copyrights. Both does not require intent or state of mind, although willfulness is relevant and consists of the unauthorized exercise of one exclusive rights of the copyright holder. Nevertheless, as it was exposed by Justice Salomão in his opinion, the Brazilian legislation engages in an exhaustive list of acts that might configure copyright infringement.

The Digital Millennium Copyright Act (DMCA) of 1998, in its turn, provides the immunity for ISP that meet specific conditions in section 512.

Under the DMCA, to avoid liability, the ISP must implement a policy of terminating the accounts of subscribers who are repeat infringers; upon learning of an infringing transmission, the ISP must act to remove the infringing material; not obtain financial benefit from the infringement; not have actual knowledge of the infringement and design an agent to analyze the notices of the copyright owners.

Among the most interesting features of the DMCA, it provides two definitions for ISP that are so broad that it is almost impossible no to fit into it; it encourages the ISP to monitor the content, despite not obliging it.

98.

99.

100.

101.

102.

665 F. Supp. 2d 961 (N.D. Ill. 2009).

No. 08 Civ. 7735(RMB), 2009 WL 1704355 (S.D.N.Y. June 15, 2009).

No. No. 1:09CV713–LG–RHW, 2010 WL 3419438 (S.D. Miss. Aug. 26, 2010).

557 F. App’x 155 (3d Cir. 2014).

339 F. 3d 1119 (9th Cir. 2003).

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Moreover, it deals with a similar idea to contributory liability in the “information residing on systems or networks at direction of users” section.

Until nowadays, the decisions regarding the DMCA are differently construed and up to this moment, the Supreme Court of the United States did not try anything related to the mentioned legislation. There is a lot of disagreement in the enforcement of red flags (when differentiating it from actual knowledge) in cases like Robert Hendrickson v. Ebay, Inc.103 Moreover, in cases like A&M Records, Inc. v. Napster, Inc.,104 the courts disagree about the meaning of “through.” Some courts opt for the purpose of the statute and some for the literal reading. Therefore, considering the court did not apply the safe harbor, it held Napster vicarious and contributory liable. This was a landmark decision on copyright and peer-to-peer technology and was used as parameter for the following decisions of In re Aimster Copyright Litigation.105 In sum, even after seventeen years of existence, there are lots of disagreements in the application of the DMCA, which in most of cases, tend to benefit the innovation and disregard the copyrights. Holdings like Costar Group, Inc. v. Loopnet, Inc.106 and Viacom International Inc. v. YouTube Inc.107 support this understanding.

In contrast with the United States, Brazil does not have an internet copyright legislation, but only the Federal Constitution and the Brazilian Copyright Act. As previously mentioned, the main similarity in this field with the United States’ model rises from the Brazilian STJ; subsequently, Brazil began considering the United States standard and began applying contributory and vicarious infringement. More than this, the similarity can be seen in the disagreement of the courts in assessing copyright infringement in the internet.

After studying the precedents and the current legislations, it is possible to state that ISP is almost always shielded, which may be creating an imbalance in the rights of the content owners and the victims of defamatory contents against the ISP and the regular internet users.

CONCLUSION The main problem with internet legislation is that it cannot keep up with the rapid pace of changes in technology. By the time a government discusses, drafts, and implements a new law, the market and technology have already raced ahead. Thus, any attempts to modernize the existing rules are difficult

103.

104.

105.

106.

107.

165 F. Supp. 2d 1082 (C.D. Cal. 2001).

No. 00-16401, 00-16403, 2000 WL 1055915 (9th Cir. July 28, 2000).

334 F.3d 643 (7th Cir. 2003).

164 F. Supp. 2d 688 (D. Md. 2001).

253 F.R.D. 256 (S.D.N.Y. 2008).

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and complex. Moreover, the increased use and the involvement of several actors, such as users, ISP and copyright holders, almost turns the internet into a battlefield, where each party wants their interests preserved. The attempt to balance all these interests is not a novelty, but the internet makes it even more difficult.

After analyzing the Brazilian and the United States experiences, it is possible to conclude that in most of cases the ISP benefits from the current legislation and doctrine, which is still controversial. In this scenario, the ultimate questions must be: How to balance the interests in a fairer way? Is it worthy to have a legislation is this field? Are the mentioned legislation and case law failures?

There are no current definitive answers for these questions. However, the tendency is that a more stable scenario will be established over time.

While this does not happen, it is possible to infer that the legislation and the case law—despite presenting many failures—support, even minimally, the creators to keep creating and the ISP to keep existing. Otherwise, the creative process as a whole and the ISP would have succumbed. 108 Finally, in an ideal world, it would be possible to infer that it is worthy to have legislation in this field, since the representatives of the people draft it. This would be more vehemently confirmed in the cases that the legislations result from the citizens’ contributions, like the IBR, since they would be the transparent manifest will of the people. Therefore, this would the purpose of living a democracy. Nevertheless, despite recognizing this possibility, in the real world, politicians are not always moved by the majority’s will, even though it may seem so.

108. This does not mean that they did not have to adapt over time.

JOURNAL

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