Fifth Circuit Permits Ex Parte Counterfeiter Powerslam

I don’t usually write about trademark law, but there was an interesting opinion out of the Fifth Circuit yesterday that caught my eye. Earlier this year, World Wrestling Entertainment (“WWE”) put on its WrestleMania XXX event at the Superdome in New Orleans, Louisiana. Between ticket and merchandise sales, these events bring big money. Anticipating the inevitable counterfeiting that would take place, WWE turned to the federal district court in New Orleans for preemptive relief. Led by attorney Ray Areaux—Areaux was my professor for trademark and unfair competition law—WWE filed an ex parte motion seeking (1) a temporary restraining order, (2) an order authorizing the seizure of counterfeit goods, and (3) an order to show cause why a preliminary injunction should not issue against the unnamed defendants.

In its memorandum of law in support of the motion, WWE stressed that the order should issue ex parte as “notice to a defendant could result in no relief for the plaintiff because counterfeiters often destroy or hide the counterfeit merchandise.”1 WWE argued that it had complied with all of the requirements of Section 1116(d) of Title 15, which provides that “the court may, upon ex parte application, grant an order . . . providing for the seizure of goods and counterfeit marks . . . .” WWE urged the court to make the injunctive relief applicable nationwide, as it planned to host live events in other cities through March of 2015. The requested relief was limited in both time (to within a fourteen-day period) and scope (to within a five-mile radius of the events).

Despite having been granted such ex parte relief several times in the past, District Judge Ginger Berrigan of the Eastern District of Louisiana denied WWE’s motion.2 Judge Berrigan held that WWE had failed to adequately describe the defendants:

The problem with Plaintiff’s request is apparent once one recalls that the order it requests is not directed against a single named, identified, or even described person—all the defendants are John Does, and Plaintiff provides no particular information about the identity of any of them. At best, Plaintiff defines Defendants almost tautologically: Defendants are anyone who would be a proper defendant within broad geographic and temporal limits. Yet without knowing who (not even necessarily a name, but some information about) “the person against whom seizure would be ordered,” the Court cannot possibly evaluate the above requirements, and certainly not based on “specific facts.” Yet all Plaintiff has provided the Court by way of description is, in essence, “Some unidentified people we think might sell merchandise we think is counterfeit around WWE events across the nation during the next year.”

In Judge Berrigan’s opinion, WWE’s proposed order “puts the cart before the horse” as “[t]he Court may ‘not grant an application’ under Section 1116(d) ‘unless’ requirements dependent on the identity of Defendants are satisfied.” She thought it “impermissible bootstrapping” to permit WWE “to use a seizure order to develop the facts necessary to satisfy the statutory prerequisites to issue a seizure order.” Despite acknowledging that these “fly-by-night operators” cause “real harm” to WWE, Judge Berrigan was concerned that WWE’s proposed order “runs afoul not just of statutory text, but potentially of limits on the very power of the Court such as ripeness, due process, and personal jurisdiction.” As such, she chose not to exercise her discretion to enter the requested order.

Recognizing the importance and novelty of the legal issues presented, however, Judge Berrigan certified her opinion for interlocutory appeal:

As the Court indicated above, it is sympathetic to Plaintiff’s dilemma—how can Plaintiff, and many in Plaintiff’s situation, such as the NFL, NBA, NASCAR, and touring musicians, gather the “specific facts” necessary for relief when the kind of bootlegger it confronts is a moving target? Moreover, a number of district courts have provided relief (albeit without reasons) similar to that which gives the Court pause here. The Court is therefore of the opinion that the issues discussed in this order “involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b).

The Court is hopeful that the Court of Appeals for the Fifth Circuit will accept this certification given the prominent role that New Orleans (and other cities in the Fifth Circuit, though the Court must confess a partiality to New Orleans) plays in hosting events where the kind of bootlegging Plaintiff alleges occurs. Additionally, other courts have noted that cases such as this rarely proceed to final judgment because the alleged bootleggers do not appear . . . . Accordingly, interlocutory certification is perhaps the only method available for Courts of Appeals to provide guidance (which the Court has not been able to find in any circuit) on the kind of relief Plaintiff requests.

The day after Judge Berrigan issued her opinion denying WWE’s motion, WWE filed a motion and memorandum for reconsideration. The day after that, Judge Berrigan denied the new motion,3 again citing the plaintiff’s inability to adequately describe the defendants:

There is no doubt that, as Plaintiff explains, Congress intended to expand the remedies available to trademark holders confronting counterfeiters by providing them a mechanism to obtain ex parte seizure orders. But the ability to obtain a seizure order without notice is not the same as the ability to obtain a seizure order without identifying the “person” against whom it is directed.

On interlocutory appeal to the Fifth Circuit, WWE’s luck changed. In a per curiam opinion released yesterday,4 a panel comprised of Circuit Judges Higginbotham, Jones, and Higginson—Judge Higginson was my evidence professor before being nominated to the Fifth Circuit by President Obama—vacated Judge Berrigan’s opinion denying WWE’s motion for ex parte relief. This marks the first time, to my knowledge, this issue has been reached by a federal appellate court. The Fifth Circuit disagreed with Judge Berrigan’s assessment:

The district court’s granular focus on the “identity” of unnamed Defendants misinterpreted the statutory requirement and its application here. The district court is correct that ex parte seizure orders should not be granted at will, and it commendably gave the requirements careful attention. It is the case that the Act constrains the issuance of such orders with certain procedural protections for the persons against whom they are issued. The district court concluded that it could not, ex ante, identify the persons against whom orders would issue as required by section 1116(d), an appropriate concern but one not present on the specific facts here.

The district court’s concern overlooks a predicate established in this case: WWE does not license third parties to sell merchandise at live events. Rather, it makes its own merchandise sales directly. The resulting confined universe of authorized sellers of WWE merchandise necessarily “identifies” any non-WWE seller as a counterfeiter. WWE cannot know in advance the specific identities of counterfeiters who will present themselves at any given event, but it does know that any non-affiliated seller at or near an event is almost certainly a counterfeiter.

In this case, therefore, the “person[s] against whom seizure would be ordered” are readily identifiable as any non-affiliated person purporting to sell WWE merchandise at or near a live WWE event. Provided that observation of unauthorized sales themselves is sufficient to identify a counterfeiter, as in this case, we see no reason why the district court cannot evaluate the requirements for ex parte seizure and temporary restraining orders to issue. We conclude from the record that WWE has met its burden under section 1116(d), and that the orders sought here should issue.

The Fifth Circuit found that, at least on the facts of this case, it was a simple matter to identify counterfeiters: Anyone not affiliated with WWE selling goods at an event “is almost certainly” an infringer because WWE doesn’t “license third parties to sell merchandise at live events.” In a footnote, the Fifth Circuit brushed aside the impact on legitimate resellers: “WWE can readily identify the unauthorized designs of counterfeit merchandise, and the Act’s wrongful seizure provisions would entitle the harmed reseller to a cause of action for any damages.” The Fifth Circuit remanded the case to the district court, where it “is free to modify the proposed order or to draft its own order as it sees fit, consistent with the ex parte seizure provision of the Act and with this opinion.” Presumably, Judge Berrigan will now grant WWE’s requested relief, and it can powerslam counterfeiters at its live events as they continue through March of next year.

Follow me on Twitter: @devlinhartline

© 2014 Devlin Hartline. Licensed under the Law Theories Public License 1.0.

  1. See, e.g., Senate-House Joint Explanatory Statement on Trademark Counterfeiting Legislation, 130 Cong. Rec. H12076, at 12080 (Oct. 10, 1984) (“The purpose of the ex parte seizure provision is to provide victims of trademark counterfeiting with a means of ensuring that the courts are able to exercise their jurisdiction effectively in counterfeiting cases. Testimony before both the House and Senate Judiciary Committees established that many of those who deal in counterfeits make it a practice to destroy or transfer counterfeit merchandise when a day in court is on the horizon. The ex parte seizure procedure is intended to thwart this bad faith tactic, while ensuring ample procedural protections for persons against whom such orders are issued.”). 
  2. See World Wrestling Entm’t, Inc. v. Doe, Case No. 14-cv-00688, 2014 U.S. Dist. LEXIS 45326 (E.D. La. Apr. 1, 2014). 
  3. See World Wrestling Entm’t, Inc. v. Does, Case No. 14-cv-00688, 2014 U.S. Dist. LEXIS 48754 (E.D. La. Apr. 3, 2014). 
  4. See World Wrestling Entm’t v. Unidentified Parties, Case No. 14-30489, 2014 U.S. App. LEXIS 21001 (5th Cir. Nov. 4, 2014). 

No Lemonade For Aereo’s Lemons

Over at the Volokh Conspiracy blog, Professor David Post laments “our incoherent copyright law.” His case in point: The opinion and order issued last week by District Judge Alison J. Nathan granting a preliminary injunction against Aereo.1 Professor Post claims that “the Copyright Act is an incoherent mess” since, in his opinion, Judge Nathan held that Aereo “may be a ‘cable system’ for purposes of determining whether it is infringing, but it’s not a ‘cable system’ for purposes of determining eligibility for the statutory license.” Professor Post explains:

[T]he Copyright Act not only says that cable system re-transmissions are infringing, but it also, importantly, provides them with a compulsory statutory license, at a fixed rate, to do so, in sec. 111 of the Act. That is, Congress didn’t merely make cable systems liable for infringement – it provided them with a defense to an infringement claim (provided that they paid the statutorily-set royalty to the copyright owners). So Aereo said, in effect: OK, if we’re a cable system, we can (like other cable systems) continue to re-transmit these signals to our customers (just like the cable companies do), so long as we pay the royalty.

Contrary to Professor Post, I don’t think there’s anything “incoherent” about Judge Nathan’s holding that Aereo is not a “cable system,” as that term is defined in Section 111. Curiously, Professor Post declares the result “bizarre and counterintuitive” without supplying any of Judge Nathan’s reasoning. The problem with Professor Post’s approach stems from his premise, namely, that the Copyright Act “says that cable system re-transmissions are infringing.” But that’s not what the Transmit Clause in Section 101 says. It instead broadly defines what it means “[t]o perform . . . a work ‘publicly.’” And while all cable systems may publicly perform under the Transmit Clause, it doesn’t follow that only cable systems publicly perform thereunder. A different type of service—one that isn’t a “cable system,” as Aereo is not—may publicly perform as well.

Professor Post claims that Judge Nathan held that Aereo “may be a ‘cable system’ for purposes of determining whether it is infringing,” but that’s not what she said. Nor is it what the Supreme Court held in Aereo III. The Court instead simply deduced that Aereo performs because it “acts like a CATV system.” The Court’s reasoning can be boiled down to a syllogism: Since cable systems perform, and since Aereo is functionally equivalent to a cable system, it follows that Aereo performs. But saying that Aereo “acts like” a cable system for the purpose of determining whether it performs under the Transmit Clause has nothing to do with whether Aereo is a “cable system,” a term of art, under Section 111. It makes little sense to argue otherwise.

Yet, in the district court, Aereo argued that if it’s a cable system under the Transmit Clause, then it’s a “cable system” under Section 111. Judge Nathan soundly rejected this logic:

Doing its best to turn lemons into lemonade, Aereo now seeks to capitalize on the Supreme Court’s comparison of it to a CATV system to argue that it is in fact a cable system that should be entitled to a compulsory license under § 111. This argument is unavailing for a number of reasons.

To begin with, Aereo’s argument suffers from the fallacy that simply because an entity performs copyrighted works in a way similar to cable systems it must then be deemed a cable system for all other purposes of the Copyright Act. The Supreme Court’s opinion in Aereo III avoided any such holding.

Indeed, the Supreme Court consistently stated throughout its opinion that Aereo’s similarity to CATV systems informed its conclusion that Aereo performs, not that Aereo is a cable system. . . .

But the Supreme Court in Aereo III did not imply, much less hold, that simply because an entity performs publicly in much the same way as a CATV system, it is necessarily a cable system entitled to a § 111 compulsory license. . . . Stated simply, while all cable systems may perform publicly, not all entities that perform publicly are necessarily cable systems, and nothing in the Supreme Court’s opinion indicates otherwise.

The issue before the Supreme Court was whether Aereo publicly performs under the Transmit Clause, not whether it’s a “cable system” under Section 111. That the Court did not consider the Section 111 defense is Aereo’s own fault—it never argued that it’s a “cable system” under Section 111 in the first place. Arguing that it’s a “cable system” would have meant conceding the one thing it didn’t want to admit, namely, that it publicly performs. Aereo’s strategy, until recently, has been to deny that it publicly performs at all.

Unable to find anything in Aereo III indicating that it is in fact a “cable system” under Section 111, Aereo posited that certain statements made by the Justices during oral argument prove that its newly-found Section 111 defense excuses its otherwise-infringing conduct. Of course, as Judge Nathan acknowledged, statements made at oral argument have no “legal effect,” and “only the Justices’ written opinions have the force of law.” More damaging to Aereo’s cause, Judge Nathan noted that “the statements of the Justices at oral argument cut against its position because the statements indicate that the Justices were certainly aware of the possibility of the § 111 defense and did not address it in the opinion.” To this I would add that the Court didn’t address the Section 111 defense because Aereo made the strategic choice not to present it.

Even more desperate than its claim that some offhand and out-of-context remarks made at oral argument prove a defense that it had expressly disavowed, Aereo argued that the Second Circuit’s opinion in ivi is not on point.2 There, the Second Circuit had held that “Congress did not intend for § 111’s compulsory license to extend to Internet retransmissions.” Confronted with this binding precedent contravening its Section 111 argument, Aereo declared that Aereo III overruled ivi by implication. Judge Nathan rejected this claim as well:

But the Supreme Court did not mention ivi or ivi’s holding, and . . . nothing in the Supreme Court’s opinion can be read as abrogating ivi because the Supreme Court limited its holding to a finding that Aereo performs like a cable system for purposes of the transmit clause, not that it is a cable system entitled to a § 111 license. Thus, ivi remains good law and binding precedent here.

Additionally, Aereo argued in the alternative that ivi is distinguishable on the merits. According to Aereo, “the unrestricted nature of ivi’s transmissions was the determinative fact for the Second Circuit, which noted that Section 111’s compulsory license scheme was intended to support local market—rather than national market—systems.” Thus, Aereo hypothesized that the fact that it only transmits content its users can receive in their home markets means that everything the Second Circuit said in ivi about Section 111 does not apply to its service. Since ivi transmitted content to anyone, anywhere—not just content available in its users’ home markets—Aereo argued that ivi is inapposite.

Reading the ivi decision, I don’t see how Aereo could possibly argue that this home market distinction is “the determinative fact” that obviates everything else the Second Circuit said about Section 111 and internet retransmissions. With even the most charitable eye, I can’t conceive of how ivi can be read to turn on this lone distinction. Judge Nathan agreed:

To the contrary, the geographic reach of internet retransmission services was but one of many factors the Second Circuit considered in reaching its holding that § 111 does not cover internet retransmission services. . . . Only at the end of its step two analysis did the Second Circuit note that “[m]ore broadly, the Copyright Office has maintained that § 111’s compulsory license for cable systems is intended for localized retransmission services; under this interpretation, Internet retransmission services are not entitled to a § 111 license.” . . . This reference to the possible geographic reach of ivi’s system provided an additional point of distinction between Internet retransmission and traditional cable systems, but it was not “the determinative fact” for the Second Circuit.

In sum, Judge Nathan rejected all of Aereo’s Section 111 arguments: The Supreme Court never said that Aereo is a “cable system” under Section 111—its focus was on the Transmit Clause because that is what the parties had argued. Nothing the Justices said at oral argument changes this—in fact, the Justices conspicuously failed to mention Section 111 in the opinion despite the issue having been discussed at oral argument. And most devastatingly, Aereo could find no support for its argument that ivi is no longer good law or that ivi does not apply to its own internet retransmissions. I think Judge Nathan got it right on all counts, and I don’t see anything “incoherent” about it.3

Aereo threw out some other arguments that Judge Nathan easily dismissed. For example, Aereo contended that it qualifies for the safe harbor under Section 512(a) of the DMCA. This is the safe harbor that applies to services that act as mere conduits of content. The obvious problem for Aereo is that it does more than act as a mere conduit—it stores the content as well. Furthermore, Aereo’s own actions are sufficiently proximate such that it publicly performs, that is, it causes the transmissions to occur. Judge Nathan observed that Aereo, consistent with Aereo III, could not seek refuge in this safe harbor:

Aereo’s service uses antennas to capture over-the-air broadcasts and then transcodes and buffers the broadcasts before sending them to a “server, where a copy of the program is saved to a large hard drive in a directory reserved for [a given] Aereo user.” . . . In other words, Aereo stores and provides links to copyrighted material. . . .

§ 512(a)(1) states that the safe harbor will only be available if “the transmission of the material was initiated by or at the direction of a person other than the service provider.” This was essentially the defense that Aereo has asserted all along: it only acts at the direction of its users, who do the “performing” when they click play on Aereo’s site. The Supreme Court rejected this defense and expressly held that Aereo performs.

What’s more, Judge Nathan noted that Aereo never asserted that it qualifies for the Section 512(a) safe harbor in the first place since it never claimed to have a repeat infringer policy in place pursuant to Section 512(i): “Failure to have in place such a policy is thus an absolute bar to asserting any defense under § 512.” So not only did Aereo not qualify for the safe harbor because it failed to allege one of its prerequisites, the safe harbor would not have protected Aereo even if all of the prerequisites had been met. And this followed from the fact that Aereo is not a mere conduit of content, as it, quite remarkably, still claimed to be—the Supreme Court’s opinion in Aereo III to the contrary notwithstanding.

Turning to irreparable harm, Judge Nathan saw no reason to revisit her earlier holding in Aereo I that the plaintiffs had established that they would suffer irreparable harm in the absence of a preliminary injunction.4 As to the balance of hardships, however, Judge Nathan found that things were now different. In Aereo I, the plaintiffs had been deemed unlikely to succeed on the merits under the Second Circuit’s reasoning in Cablevision. As such, Judge Nathan had rejected the plaintiffs’ contention that Aereo’s hardships were not cognizable since they were alleged to be founded on infringement. With Aereo’s affirmative defenses under Sections 111 and 512(a) now rejected, Judge Nathan made short work of Aereo’s argument that the plaintiffs are unlikely to succeed on the merits:

In light of the Supreme Court’s holding, Plaintiffs have demonstrated a likelihood of success on the merits, and Aereo has not demonstrated a likelihood of success on the merits of its novel affirmative defenses.

And given the plaintiffs’ likelihood of success on the merits post-Aereo III, Judge Nathan held that the balance of hardships now favors the plaintiffs:

[A]s the Second Circuit has held, “[i]t is axiomatic that an infringer of a copyright cannot complain about the loss of ability to offer its infringing product.” ivi, 691 F.3d at 287. The Supreme Court has concluded that Aereo performs publicly when it retransmits Plaintiffs’ content live over the Internet and thus infringes Plaintiffs’ copyrighted works. In light of this conclusion, Aereo cannot claim harm from its inability to continue infringing Plaintiffs’ copyrights. . . . Aereo cannot claim significant hardship if an injunction issues, while Plaintiffs can still claim harm if an injunction does not issue. Thus, the balance of hardships tips in Plaintiffs favor.

Turning to the scope of the preliminary injunction, Judge Nathan held the plaintiffs “to their earlier decision, strategic or otherwise, to seek a preliminary injunction limited in scope to enjoining retransmission of their copyrighted works while the works are still being broadcast.” Thus, Judge Nathan only enjoined Aereo’s near-simultaneous transmissions, though she did make the injunction applicable nationwide. Whether Aereo’s time-shifted transmissions should also be enjoined will have to wait until the district court considers granting a permanent injunction. In a previous post, I argued that these time-shifted transmissions are infringing as well. And it’s interesting to note that Aereo does not appear to be offering time-shifted transmissions at this time. Perhaps it’s because Aereo realizes that these time-shifted lemons don’t make lemonade either.

Follow me on Twitter: @devlinhartline

© 2014 Devlin Hartline. Licensed under the Law Theories Public License 1.0.

  1. See Am. Broad. Companies, Inc. v. Aereo, Inc., Case No. 12-cv-1540, 2014 WL 5393867 (S.D.N.Y. Oct. 23, 2014). 
  2. See WPIX, Inc. v. ivi, Inc., 691 F.3d 275 (2d Cir. 2012), cert. denied, 133 S.Ct. 1585 (2013). 
  3. I should note that I’m not claiming that ivi was decided correctly. I’m merely saying that Judge Nathan properly concluded that ivi remains good law and that it’s dispositive here. 
  4. See Am. Broad. Companies, Inc. v. Aereo, Inc., 874 F. Supp. 2d 373, 397-400 (S.D.N.Y. 2012). 

MP3tunes and the Ghost of Cablevision

On September 29th, District Judge William H. Pauley, III, issued his memorandum and order in Capitol Records v. MP3tunes,1 as many have reported. However, as I read the decision, I’m surprised at Judge Pauley’s holding that certain parts of Cablevision are still good law after the Supreme Court’s opinion in Aereo. Specifically, Judge Pauley distinguished Aereo and held that its interpretation of the public-private distinction under the Transmit Clause is not controlling precedent. Respectfully, I think that’s bunk.

The defendant, Michael Robertson, argued that he could not be secondarily liable for violating the plaintiffs’ public performance rights since the third-party websites linked-to from his MP3tunes platform were not themselves directly infringing. In analyzing the direct liability of these third-party websites, Judge Pauley turned to the Second Circuit’s analysis of the public performance right in Cablevision. The Cablevision court held that “under the transmit clause, we must examine the potential audience of a given transmission by an alleged infringer to determine whether that transmission is ‘to the public.'”

In the Second Circuit’s opinion, since “the use of a unique copy may limit the potential audience of a transmission,” such use is “therefore relevant to whether that transmission is made ‘to the public.'” The Cablevision court read into the Transmit Clause a distinction between public and private performances based on the use of a single source copy for each transmission: “it seems quite consistent with the Act to treat a transmission made using Copy A as distinct from one made using Copy B.” When there’s a one-to-one relationship between the source copy and the user, the Second Circuit held, the performances are private.2

But the Cablevision court implied that things would be different if one source copy were used to make multiple transmissions to multiple users. In that case, the performances would be public, even though the “potential audience of a given transmission” would still be limited. This rule would apply, for example, if a video-on-demand service such as YouTube were to use only one source copy for multiple performances. Even if each transmission reaches only one person, the fact that each transmission arises from the same source copy means that the performances are nonetheless public. That’s the Second Circuit’s theory of the public-private distinction under the Transmit Clause.

Judge Pauley applied this analysis to the third-party websites in MP3tunes:

Robertson argues that third-party websites did not publicly perform the works-in-suit. Public performance means, inter alia, to (1) perform or display the work in a public place or in a place where a substantial number of persons is gathered or (2) to transmit or display the work in or to the public by means of any device or process. (See Charge at 31.) “[U]nder the transmit clause, [courts] must examine the potential audience of a given transmission by an alleged infringer to determine whether that transmission is ‘to the public.’ ” Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121, 137 (2d Cir.2008). “Both factors—the identity of the transmitter and the source material of the transmission—limit the potential audience of a transmission … and are therefore germane in determining whether that transmission is made ‘to the public.’ ” Cartoon Network, 536 F .3d at 138. In the context of this case, a third-party domain hosts a single master copy that is available for transmission to anyone on the Internet.

Having determined that these third-party websites used a “single master copy” for their multiple transmissions, Judge Pauley found that they were direct infringers—thus making Robertson an indirect infringer. The problem with this is that the Supreme Court in Aereo completely rejected this “single master copy” theory from Cablevision. While one can certainly argue that Aereo is distinguishable to the extent its analysis focused on functional equivalence to a cable system, its interpretation of the public-private distinction under the Transmit Clause, by contrast, applies wherever there is a performance-by-transmission (or a display-by-transmission, as discussed below).

In Aereo, the Supreme Court held that a performance is not private simply because there is a one-to-one relationship between the source copy and the user. In other words, the Court held that the public-private distinction under the Transmit Clause does not turn on the “potential audience of a given transmission,” with an exception for multiple transmissions arising from one source copy, as the Second Circuit had indicated in Cablevision. Under the Supreme Court’s interpretation of the Transmit Clause, even multiple transmissions made from multiple copies, one for each user, can be public performances as well:

The text of the Clause effectuates Congress’ intent. Aereo’s argument to the contrary relies on the premise that “to transmit … a performance” means to make a single transmission. But the Clause suggests that an entity may transmit a performance through multiple, discrete transmissions. That is because one can “transmit” or “communicate” something through a set of actions. . . .

The Transmit Clause must permit this interpretation, for it provides that one may transmit a performance to the public “whether the members of the public capable of receiving the performance … receive it … at the same time or at different times.” § 101. Were the words “to transmit … a performance” limited to a single act of communication, members of the public could not receive the performance communicated “at different times.” Therefore, in light of the purpose and text of the Clause, we conclude that when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes.

We do not see how the fact that Aereo transmits via personal copies of programs could make a difference. The Act applies to transmissions “by means of any device or process.” Ibid. And retransmitting a television program using user-specific copies is a “process” of transmitting a performance. A “cop[y]” of a work is simply a “material objec[t] … in which a work is fixed … and from which the work can be perceived, reproduced, or otherwise communicated.” Ibid. So whether Aereo transmits from the same or separate copies, it performs the same work; it shows the same images and makes audible the same sounds. Therefore, when Aereo streams the same television program to multiple subscribers, it “transmit[s] … a performance” to all of them.

Aereo teaches that the public-private distinction under the Transmit Clause doesn’t turn on the number of source copies used, and that holding is not limited to services that look like cable systems—it applies to Transmit Clause analysis generally. While Judge Pauley may have reached the right result in finding that the third-party websites were direct infringers of the plaintiffs’ public performance rights, his reliance on Cablevision’s ghost led him astray when it came to Robertson’s own direct liability for violating the plaintiffs’ public display rights.

Due to its parallel construction, the Transmit Clause applies with equal force to performances and displays accomplished via transmissions. What’s “to the public” for the public performance right is “to the public” for the public display right:

To perform or display a work “publicly” means . . . to transmit or otherwise communicate a performance or display of the work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

Judge Pauley held that Robertson did not directly infringe the plaintiffs’ public display rights because he used individualized source copies for each transmission:

Robertson contends that MP3tunes did not publicly transmit cover art because MP3tunes created a separate copy of each album cover for each user. Each time any user uploaded a track, MP3tunes’ software automatically searched for and retrieved cover art, regardless of whether other users had that cover art in their lockers. (Tr. 345:2–347:1 (Horowitz).) MP3tunes saved the cover art on its servers. (Tr. 345:12–15 (Horowitz).) Only one user was capable of receiving each copy. (Tr. 346:20–347:1 (Horowitz).) Because there was no master copy of the cover art, MP3tunes cannot be held directly liable for a public display of cover art. see Cartoon Network, 536 F.3d at 139; cf. MP3tunes I, 821 F.Supp.2d at 649–50 (holding that MP3tunes could not be directly liable for violations of Publishers’ public performance rights in musical compositions because MP3tunes did not use a master copy).

Judge Pauley’s “cf.” at the end references his earlier holding in 2011 in the same litigation:

EMI argues that MP3tunes’ storage system violates its right to public performance because, much like Robertson’s earlier effort at online music storage with, MP3tunes employs a “master copy” to rebroadcast songs to users who uploaded different copies of the same song. EMI relies on the Second Circuit’s holding that a cable provider did not violate television studios public performance rights in its digital recording and play back services because the cable provider did not use a master copy to play back shows recorded by their viewers. Cartoon Network, LP v. CSC Holdings, Inc., 536 F.3d 121, 138 (2d Cir.2008). EMI’s argument, however, mischaracterizes MP3tunes’ storage system. The record demonstrates that MP3tunes does not use a “master copy” to store or play back songs stored in its lockers. Instead, MP3tunes uses a standard data compression algorithm that eliminates redundant digital data. Importantly, the system preserves the exact digital copy of each song uploaded to Thus, there is no “master copy” of any of EMI’s songs stored on MP3tunes’ computer servers.

How a “standard data compression algorithm that eliminates redundant digital data” differs from a “master copy,” I truly don’t know. It seems to me that they’re the same thing—if all of the “redundant digital data” is eliminated, what’s left is a “master copy.” Regardless, while Cablevision’s read of the public-private distinction under the Transmit Clause as turning on the number of source copies may have been good law in 2011, that’s no longer true today. Judge Pauley’s holding that Robertson didn’t directly infringe the plaintiffs’ public display rights because “there was no master copy of the cover art” simply can’t be reconciled with the Supreme Court’s holding in Aereo that the number of source copies doesn’t matter under the Transmit Clause.

The plaintiffs in MP3tunes argued that Aereo’s interpretation of the Transmit Clause should be applied to both the public performance and the public display analysis, but Judge Pauley brushed this aside:

Plaintiffs also argue that the Supreme Court’s opinion in Aereo establishes that the third-party websites performed the work publicly. But the Supreme Court expressly excluded “novel issues not before the Court, as to which ‘Congress has not plainly marked [the] course.’ ” Am. Broad. Cos. v. Aereo, Inc., 134 S.Ct. 2498, 2511 (2014). Because the third-party domains here are not “substantially similar” to a community antenna television provider, they are beyond Aereo’s reach. See Aereo, 134 S.Ct. at 2506. ***

Further, as described earlier, Aereo does not buttress Plaintiffs’ argument because its holding was explicitly limited to technologies substantially similar to the one before the Supreme Court. Aereo, 134 S.Ct. at 2506, 2510–11. Therefore, Robertson’s motion for judgment as a matter of law is granted as to MP3tunes’ liability for public display rights in cover art.

Indeed, the final section of the Supreme Court’s opinion in Aereo discussed the intended reach of its holding. It began by noting that its conclusion that Aereo performs doesn’t necessarily mean that other services also perform:

Aereo and many of its supporting amici argue that to apply the Transmit Clause to Aereo’s conduct will impose copyright liability on other technologies, including new technologies, that Congress could not possibly have wanted to reach. We agree that Congress, while intending the Transmit Clause to apply broadly to cable companies and their equivalents, did not intend to discourage or to control the emergence or use of different kinds of technologies. But we do not believe that our limited holding today will have that effect.

For one thing, the history of cable broadcast transmissions that led to the enactment of the Transmit Clause informs our conclusion that Aereo “perform [s],” but it does not determine whether different kinds of providers in different contexts also “perform.” For another, an entity only transmits a performance when it communicates contemporaneously perceptible images and sounds of a work. See Brief for Respondent 31 (“[I]f a distributor … sells [multiple copies of a digital video disc] by mail to consumers, … [its] distribution of the DVDs merely makes it possible for the recipients to perform the work themselves—it is not a ‘device or process’ by which the distributor publicly performs the work” (emphasis in original)).

The Court was able to determine that Aereo performs because of its functional equivalence to a cable system, but as it noted, that wouldn’t necessarily be true for “different kinds of providers in different contexts.” That said, however, the Court reiterated its definition of what it means to “perform” under the Transmit Clause: “an entity only transmits a performance when it communicates contemporaneously perceptible images and sounds of a work.” That definition of performance-by-transmission applies whether the service is functionally equivalent to a cable system or not.

By the same token, the Court then discussed its definition of “the public” under the Transmit Clause:

Further, we have interpreted the term “the public” to apply to a group of individuals acting as ordinary members of the public who pay primarily to watch broadcast television programs, many of which are copyrighted. We have said that it does not extend to those who act as owners or possessors of the relevant product. And we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content. See Brief for United States as Amicus Curiae 31 (distinguishing cloud-based storage services because they “offer consumers more numerous and convenient means of playing back copies that the consumers have already lawfully acquired” (emphasis in original)). In addition, an entity does not transmit to the public if it does not transmit to a substantial number of people outside of a family and its social circle.

Nothing in that passage demonstrates that the Court’s understanding of “the public” is limited to services that are functionally equivalent to a cable system. On the contrary, the Court stated affirmatively that “the public” does not include “those who act as owners or possessors of the relevant product.”

Lastly, in the passage quoted by Judge Pauley, the Court stated that it wasn’t deciding cases not before it:

We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us. We agree with the Solicitor General that “[q]uestions involving cloud computing, [remote storage] DVRs, and other novel issues not before the Court, as to which ‘Congress has not plainly marked [the] course,’ should await a case in which they are squarely presented.” Brief for United States as Amicus Curiae 34 (quoting Sony, supra, at 431, 104 S.Ct. 774 (alteration in original)). And we note that, to the extent commercial actors or other interested entities may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are of course free to seek action from Congress. Cf. Digital Millennium Copyright Act, 17 U.S.C. § 512.

While it’s true that, as Judge Pauley noted, the Court indicated it was not deciding “novel issues” that were not before it, that doesn’t mean that its entire interpretation of the Transmit Clause should be dismissed as inapplicable to MP3tunes. On the contrary, the Court reiterated its definitions of “perform” and “the public” in the very section where it discussed the intended reach of its holding. The Court didn’t create a special interpretation of the public-private distinction under the Transmit Clause for cable systems and Aereo-lookalikes, as Judge Pauley seemed to think. The Supreme Court’s analysis applies no matter which technology is at issue, including Robertson’s MP3tunes.

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© 2014 Devlin Hartline. Licensed under the Law Theories Public License 1.0.

  1. Capitol Records, Inc. v. MP3tunes, LLC, Case No. 07-cv-9931, 2014 WL 4851719 (S.D.N.Y. Sept. 29, 2014). 
  2. It should be noted that the Second Circuit somewhat cabined things: “This holding, we must emphasize, does not generally permit content delivery networks to avoid all copyright liability by making copies of each item of content and associating one unique copy with each subscriber to the network, or by giving their subscribers the capacity to make their own individual copies.” 

Further Thoughts on Infringement as Conversion

After my last post discussing the holding in Flo & Eddie v. Sirius XM that the defendant had converted the plaintiff’s property when it publicly performed its pre-1972 sound recordings without a license, someone asked me how that holding is reconcilable with the Supreme Court’s statement in Dowling v. United States that “interference with copyright does not easily equate with theft, conversion, or fraud.” My answer to that is two-fold: Dowling read into the National Stolen Property Act a physicality requirement that does not necessarily apply to the tort of conversion, and the fact that conversion claims can be preempted by the Copyright Act demonstrates that such claims do “easily equate” with infringement.1

Dowling sold bootleg recordings of Elvis Presley through the mail, and the issue before the Supreme Court was “whether phonorecords that include the performance of copyrighted musical compositions for the use of which no authorization has been sought nor royalties paid are consequently ‘stolen, converted or taken by fraud’” under Section 2314 of Title 18. The physical records themselves had been paid for by the defendant, but the performances recorded thereon had not. The Court said this wasn’t enough to bring it within Section 2314’s reach, since cases prosecuted under that statute “have always involved physical ‘goods, wares, [or] merchandise’ that have themselves been ‘stolen, converted or taken by fraud.’”

I think this makes sense: If I fill up my legally-bought iPhone with illegally-downloaded movies and songs, my iPhone doesn’t become stolen or converted property. The Court read Section 2314 to require that the physical goods transported across state lines be themselves stolen or converted. But I don’t think this holding is irreconcilable with the notion that infringement can be theft or conversion. My iPhone full of illicit downloads represents my theft or conversion of the victims’ intangible property rights, not of any material objects that may have belonged to the victims. And since those intangible rights have no physicality, they can’t be transported across state lines as required by Section 2314.

Generally speaking, Section 301 of the Copyright Act preempts state law claims that seek to vindicate legal or equitable rights that are equivalent to any of the exclusive rights in Section 106 for works that are copyrightable subject matter under Section 102 or Section 103. State law claims that are qualitatively different from a copyright infringement claim because they contain an extra element are not preempted. However, an element that goes to knowledge or intent is not an extra element that prevents preemption. Under this analysis, courts frequently find that state law claims for conversion are preempted under Section 301.

For example, take the case of Frontier Group v. Northwest Drafting & Design, where the plaintiff claimed that its ownership of certain architectural plans had been converted when the defendant used the plans to build a single-family residence. The court held that the plans were copyrightable subject matter under Section 102. Turning to whether the right asserted was equivalent to an exclusive right under Section 106, the court noted that the plaintiff did not seek the return of the physical plans. Instead, it sought monetary damages because the defendant had used the plans to build the residence, that is, the defendant had made a reproduction. Finding that there was no extra element alleged, the court held that the conversion claim was preempted by the Copyright Act.

Thus, the conversion claim was “easily equate[d]” with a claim for copyright infringement, and it was the act of making the copy that implicated the exclusive right to be vindicated. It should be noted, however, that there was no claim that the residence itself—that is, the copy—was converted property. Building the residence converted the plaintiff’s intangible right under Section 106, but the residence itself did not represent property that had been converted. In the same way, my iPhone full of illicit downloads is the product of my conversion of the victims’ exclusive rights, though my iPhone is not property that has been converted. And this same distinction applies to Dowling’s bootleg recordings of Elvis Presley.

The Dowling dissent faulted the majority’s reasoning:

The statutory terms at issue here, i.e., “stolen, converted or taken by fraud,” traditionally have been given broad scope by the courts. For example, in United States v. Turley, 352 U.S. 407, 77 S.Ct. 397, 1 L.Ed.2d 430 (1957), this Court held that the term “stolen” included all felonious takings with intent to deprive the owner of the rights and benefits of ownership, regardless of whether the theft would constitute larceny at common law. Id., at 417, 77 S.Ct., at 402. Similarly, in Morissette v. United States, 342 U.S. 246, 72 S.Ct. 240, 96 L.Ed. 288 (1952), the Court stated that conversion “may be consummated without any intent to keep and without any wrongful taking, where the initial possession by the converter was entirely lawful. Conversion may include misuse or abuse of property. It may reach use in an unauthorized manner or to an unauthorized extent of property placed in one’s custody for limited use.” Id., at 271–272, 72 S.Ct., at 254–255.

Dowling’s unauthorized duplication and commercial exploitation of the copyrighted performances were intended to gain for himself the rights and benefits lawfully reserved to the copyright owner. Under Turley, supra, his acts should be viewed as the theft of these performances. Likewise, Dowling’s acts constitute the unauthorized use of another’s property and are fairly cognizable as conversion under the Court’s definition in Morissette.

I agree with the dissent that Dowling’s acts constituted theft and conversion under those broad definitions; however, that wasn’t the precise question before the Court. The issue was whether the physical records—that is, the copies that resulted from that theft and conversion—were themselves stolen or converted property. As with my illicitly-filled iPhone and the illicitly-built residence in Frontier Group, Dowling’s creation of the copies converted intangible property, but the copies themselves were not tangible property that had been converted. Section 2314 explicitly requires that the physical property being transported across state lines be “the same” property that was stolen or converted. It was not: The property that Dowling stole or converted was intangible, while the property he transported was tangible.

The Dowling majority noted that “interference with copyright does not easily equate with theft, conversion, or fraud,” but, in the same paragraph, it also said it’s “less clear, however, that the taking that occurs when an infringer arrogates the use of another’s protected work comfortably fits the terms associated with physical removal employed by § 2314.” This lack of “physical removal,” as required by the statute, meant that Dowling’s infringing copies were not “the sorts of goods whose interstate shipment § 2314 makes criminal.” But this doesn’t mean that Dowling’s acts of infringement in creating the physical records were not themselves acts of theft or conversion.

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© 2014 Devlin Hartline. Licensed under the Law Theories Public License 1.0.

  1. Of course, even if a conversion claim is preempted by the Copyright Act, it doesn’t necessarily follow that the claim would have succeeded on the merits had it not been preempted. For example, intangible personal property cannot be converted under Oklahoma state common law. See, e.g., Shebester v. Triple Crown Insurers, 826 P.2d 603, 608 (Okla. 1992) (“Conversion is an illegal taking of another’s personalty inconsistent with his ownership rights. The general rule in Oklahoma is that only tangible personal property may be converted.”) (emphasis in original; footnotes omitted). 

Happy Together: Infringement as Conversion

The copyright world is abuzz this week about Monday’s decision in Flo & Eddie v. Sirius XM. Flo & Eddie Inc. is a corporation owned by two of the original members of “The Turtles,” the group that recorded hit songs in the 1960s such as “Happy Together,” and it sued satellite radio giant Sirius XM Radio Inc. for publicly performing fifteen of its pre-1972 sound recordings. The complaint listed three causes of action: misappropriation, unfair competition, and conversion under California state law. Because sound recordings fixed prior to February 15, 1972, are not protected by the federal Copyright Act, the question of whether there exists an exclusive right to publicly perform pre-1972 sound recordings under California state law was central to all of the plaintiff’s claims. Looking at the statutory text, legislative history, and case law, the district court held: “The Court finds that copyright ownership of a sound recording under § 980(a)(2) includes the exclusive right to publicly perform that recording.”

While most of the coverage that I’ve seen so far has focused on the court’s holding that the plaintiff does have the exclusive right to publicly perform its pre-1972 sound recordings in California, there’s another part of the decision that has caught my eye, namely, that Sirius XM is liable for converting the plaintiff’s property. Conversion is an intentional property tort wherein the defendant wrongfully exercises dominion over the plaintiff’s personal property.1 Historically, conversion only applied to tangible personal property, but over the last two centuries, it has increasingly been applied to intangible personal property as well.2

California state law takes a broad view of the tort of conversion, and this, in turn, follows from the state’s broad conception of property. As far back as 1880, the Supreme Court of California noted that “the action no longer exists as it did at common law, but has been developed into a remedy for the conversion of every species of personal property.”3 While early cases required that the intangible property converted be merged in a document,4 such as a stock certificate, that requirement is no longer adhered to in California.5 And this follows from the recognition that “property” does not refer to the thing itself, but rather to the rights appurtenant to the thing. As one California appellate court put it in 1948, “property is all-embracing so as to include every intangible benefit and prerogative susceptible of possession or disposition.”6

Flo & Eddie presents a unique look at the nature of an author’s exclusive rights, unmoored from the baggage of the Copyright Act. The district court found Sirius XM liable on all three claims: misappropriation, unfair competition, and conversion. Each of these claims is unique, yet they’re also interrelated in that they focus on practices that are fundamentally inequitable. When Sirius XM publicly performed the plaintiff’s sound recordings without paying for the privilege, its business practices were unlawful and unfair. The plaintiff invested substantial time and money to create its property, yet Sirius XM misappropriated that property and reaped where it had not sown. And Sirius XM converted the plaintiff’s property, wrongfully exercising dominion over the plaintiff’s intangible rights.

Too often today, these fundamental notions of fairness get lost when discussing copyright infringement, and we hear complaints from the copyleft whenever anyone dares suggest that copyright is property that can be converted or stolen. Such notions are dismissed as the inventions of “maximalists” who are dishonestly attempting to reframe the debate. But the truth is that the “propertization” of copyright is nothing new,7 and there’s been a steady change in how we think about property generally, both tangible and intangible, over the last few centuries. The district court in Flo & Eddie had no trouble determining that the plaintiff’s intangible property rights had been converted, and this wasn’t because some Hollywood boogeyman was whispering in its ear—it’s simply because the modern conception of property is far broader than it used to be centuries ago.

In its motion for summary judgment, the plaintiff argued that Sirius XM had engaged in conversion under California state common law, and it’s interesting to note too how the plaintiff grounded its property rights in the labor-desert theory:

California’s common law also protects pre-1972 recordings under the long recognized theories of misappropriation and conversion. . . . Conversion . . . is a strict liability tort and only requires a plaintiff to show (1) ownership or right to possession of the property; (2) conversion by a wrongful act or disposition of property rights; and (3) damages. . . .

There can be no doubt that Flo & Eddie and its principals (Kaylan and Volman) invested substantial time and money in development of their pre-1972 recordings. They not only supplied the artistic performances that are on the recordings, but they waived substantial royalty claims in order to obtain ownership of those recordings, and paid to buy out the interests of the other members of The Turtles in those recordings.

In addition, Flo & Eddie and its principals (Kaylan and Volman) have devoted their time and energy over the last four decades licensing, promoting, and marketing those recordings. On the other hand, Sirius XM has simply taken those recordings at little or no cost to it and has used them to become the largest radio broadcaster in the United States measured by revenue.

In its opposition brief, Sirius XM argued that it had not dispossessed Flo & Eddie of any of its property nor caused it any damage when it publicly performed the plaintiff’s sound recordings:

Plaintiff likewise makes no serious effort, nor could it, to prove out the elements of a conversion claim, which requires “the wrongful exercise of dominion over the property of another” and proof of “(1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages[.]” . . .

Sirius XM’s public performances of Plaintiff’s sound recordings neither dispossess the Plaintiff of those recordings nor cause any injury or lost sale that could be said to “interfere” with its possessory interest. Plaintiff admits that it cannot identify a single lost sale, lost license, or diminished license fee it has suffered as a result of Sirius XM. . . . Absent any dispossession or any proven damage, Plaintiff’s attempt to extend the conversion cause of action to bar unauthorized performances of its recordings must fail.

In its reply brief, the plaintiff argued that Sirius XM’s public performances had dispossessed it of its property and caused it damage:

Similarly unavailing is Sirius XM’s argument that it is not liable for conversion because its “public performances of Plaintiff’s sound recordings” does not dispossess Flo & Eddie of those recordings. . . . Sirius XM’s ipse dixit ignores the fact that performance of those recordings dispossesses Flo & Eddie of that performance. . . .

Sirius XM’s contention that conversion of sound recordings has been limited by the court to those instances where it interferes with a sale wrongly suggests that only sales of physical product matter. Finally, Sirius XM’s contention that Flo & Eddie have not suffered harm because they are unable to identify lost sales ignores that the harm in this case is measured by much more than lost sales. It also includes the revenue that Sirius XM wrongfully appropriated to itself and the license fees that Sirius XM should have paid had it licensed the recordings instead of simply taking them.

Confronted with these highly disparate views as to whether Sirius XM had converted Flo & Eddie’s property when it violated the plaintiff’s exclusive public performance rights, the district court easily sided with the plaintiff:

“In California, conversion has three elements: ownership or right to possession of property, wrongful disposition of the property right and damages.” . . . Flo & Eddie has an ownership interest in the right to publicly perform its sound recordings under § 980(a)(2). . . . There was wrongful disposition of that property right every time Sirius XM publicly performed the recordings without Flo & Eddie’s permission, in violation of California copyright law. . . .

On the element of damages, Sirius XM contends that there are none because Flo & Eddie cannot identify a single sale or lost or diminished license fee that it has suffered as a result of Sirius XM’s performance of its sound recordings. . . . But Sirius XM’s unauthorized performances alone establish conversion damages in the form of license fees that Sirius XM should have paid Flo & Eddie in order to publicly perform its recordings. . . . Thus, the Court grants Flo & Eddie’s motion for summary judgment on conversion liability.

I don’t claim to know whether the court reached the right conclusion as to the existence of an exclusive right to publicly perform pre-1972 sound recordings under California state law. I’ve never researched that issue, and I have no idea whether it will survive the inevitable appeal. But, assuming that holding is correct, I think the court reached the right result—both descriptively and normatively—that Sirius XM converted Flo & Eddie’s property. And while I’m sure this holding brings much chagrin to those who see little value in the exclusive rights of authors and artists, it makes perfect sense to me.

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© 2014 Devlin Hartline. Licensed under the Law Theories Public License 1.0.

  1. See, e.g.Burlesci v. Petersen, 68 Cal. App. 4th 1062, 1066 (1998) (“Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages. Conversion is a strict liability tort. The foundation of the action rests neither in the knowledge nor the intent of the defendant. Instead, the tort consists in the breach of an absolute duty; the act of conversion itself is tortious. Therefore, questions of the defendant’s good faith, lack of knowledge, and motive are ordinarily immaterial.”). 
  2. See, e.g., Restatement (Second) of Torts § 242 cmt. d (1965) (“The modern action for the tort of conversion always has been colored by its descent from the common law action of trover, which originated as a remedy against the finder of lost goods who refused to return them. Because of this origin, and the persistence until comparatively recent years of the fiction of losing and finding, the action was narrowly limited in its scope, and it would not lie for the appropriation of any property which could not be lost and found. It would not lie for the appropriation of land, because land was incapable of being lost; and it would not lie for the appropriation of any choses in action or other intangible rights, which were incapable of being found. With the disappearance of the forms of action, the modern action of conversion has undergone a slow process of extension, which has carried it beyond these ancient limits of the action of trover.”). 
  3. Payne v. Elliot, 54 Cal. 339, 341 (1880). 
  4. See, e.g., Restatement (Second) of Torts § 242 cmt. e (1965) (“It was first held that the conversion of a document in which intangible rights were merged permitted recovery of damages for the appropriation of the rights so identified with it. . . . Then . . . it came to be recognized by a number of courts that the recovery was for the interference with the intangible rights themselves, and that the conversion of the document was merely the means by which this was accomplished. The final step, which a good many courts have taken, was the recognition that there may be ‘conversion’ of such an intangible right, of a kind customarily identified with and merged in a document, even though the document is not itself converted.”). 
  5. See, e.g., Kremen v. Cohen, 337 F.3d 1024, 1033 (9th Cir. 2003) (“In short, California does not follow the Restatement’s strict requirement that some document must actually represent the owner’s intangible property right. On the contrary, courts routinely apply the tort to intangibles without inquiring whether they are merged in a document . . . .”); Welco Electronics, Inc. v. Mora, 223 Cal. App. 4th 202, 210 (2014) (“In California, the tort of conversion has expanded well beyond its original boundaries.”). 
  6. Downing v. Mun. Court of City & Cnty. of San Francisco, 88 Cal. App. 2d 345, 350 (1948) (internal quotations and citations omitted). 
  7. See, e.g., Justin Hughes, Copyright and Incomplete Historiographies: Of Piracy, Propertization, and Thomas Jefferson, 79 S. Cal. L. Rev. 993, 1008-09 (2006) (“The question of whether copyrights were property had been debated by seventeenth- and eighteenth-century English jurists and writers, albeit in a jumble of other issues. Through those debates the view that copyright was property steadily strengthened. While the issue might not have been totally resolved by the time of the American Revolution, the colonists-cum-revolutionaries may have missed some of the nuances of the English debate—and appear to have landed more squarely on the copyright-is-property side. In that sense, the recent scholarly debate about the ‘propertization’ of copyright recapitulates this seventeenth- and eighteenth-century debate—with modern scholars seemingly cautioning modern judges and policymakers not to do what seventeenth- and eighteenth-century judges and policymakers have already done.”).