The Senate Judiciary Committee is set to consider legislation that would make unauthorized public performance of a copyrighted work a felony.

Currently, only unauthorized reproduction and distribution can incur felony charges under criminal copyright infringement provisions — violation of other exclusive rights, like public performance, is considered a misdemeanor.

Bill S. 978 (referred by some as the “Commercial Felony Streaming Act” or “Commercial Felony and Streaming Act”), introduced May 12, 2011, provides for a maximum 5 year prison sentence if “the offense consists of 10 or more public performances by electronic means, during any 180-day period, of 1 or more copyrighted works; and the total retail value of the performances, or the total economic value of such public performances to the infringer or to the copyright owner, would exceed $2,500; or the total fair market value of licenses to offer performances of those works would exceed $5,000.”

The MPAA explains the reasoning behind the proposed legislation:

While existing law provides felony penalties for willful copyright infringement, such penalties only apply to defendants who illegally reproduce or distribute the copyrighted work. Due to technological advances since enactment of these penalties, copyrighted content can now be illegally streamed, not just downloaded, online. However, it is unclear whether Internet streaming constitutes distribution of copyrighted works, and therefore eligible to be prosecuted as a felony. Internet streaming of copyrighted works clearly implicates the public performance right, and thus can be subject to criminal liability currently if done willfully and “for purposes of commercial advantage or private financial gain.” Due to the lack clarity surrounding the felony offense, however, prosecutors are reluctant to pursue cases against even the most egregious, illegal Internet streaming services. Indeed, prosecutors tend to focus their limited resources and manpower on prosecuting felony offenses that might result in significant jail time because such prosecutions have the greatest deterrent effect.

Newly appointed Register of Copyrights Maria Pallante testified to the Judiciary Committee in support of the legislative goals of the Act earlier this month. Echoing the MPAA’s explanation for the need of the bill, she added:

One might ask why it is not sufficient to prosecute streaming as a misdemeanor. The fact is, as a practical matter, prosecutors have little incentive to file charges for a mere misdemeanor. This means that, compared to similar infringing conduct involving the large-scale making or distributing of copies (e.g. DVDs of a movie), streaming is not only a lesser crime on the books, it is a crime that may never be punished at all. As a matter of policy, the public performance right should enjoy the same measure of protection from criminals as the reproduction and distribution rights; prosecutors should have the option of seeking felony penalties for such activity, when appropriate.

Though the proposed legislation makes only a nominal change in the law and is broadly supported, it has attracted some concern that it could cover a wide range of common activities online — some have even suggested that if the bill passes, the government will start throwing people in jail for embedding infringing YouTube videos.

What counts as a “public performance” online?

The US Copyright Act gives creators of “literary, musical, dramatic, and choreographic works” the exclusive right “to perform the copyrighted work publicly.” It also states that “to ‘perform’ a work means to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible.” Finally, the Act states that “to perform or display a work ‘publicly’ means—(1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or (2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or 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.”

Though the application of the public performance right continues to evolve in the online arena, the law generally distinguishes between downloading and streaming, with downloading constituting a reproduction and streaming constituting a performance.

The Second Circuit has taken a broad view of who can be directly liable for infringement of the public performance right online. The court has adopted the conclusion of the Southern District in New York that “Congress intended the definitions of ‘public’ and ‘performance’ to encompass each step in the process by which a protected work wends its way to its audience.” In other words, the fact that one service provider has permission to publicly perform a certain work doesn’t by itself give users or services permission to “re-publicly perform” that work — the same is true in the offline world, which is why public establishments like bars and restaurants need a license to play music for their customers even when that music comes from a radio playing music from stations that themselves are licensed to publicly perform works. Other circuits seem to embrace this interpretation as well.

Perhaps the broadest interpretation of what is a public performance was made by a district court in Texas in Live Nation Motor Sports v. Davis. There, the court found a defendant liable for copyright infringement for merely linking to (rather than embedding) the plaintiff’s webcast without permission. Though this case rightfully raised concerns, its interpretation doesn’t seem to have been adopted by any other court.

Some have argued that the Ninth Circuit uses a different test for determining liability for direct infringement of the public performance right, based on that court’s decision in Perfect 10 v. Amazon. The court there used what it called the “server test” — direct infringement of a public display right only occurs when the content is copied on the service provider’s own server — not, for example, when it is displayed through inline linking or framing (though such a server provider may still be indirectly liable).

But I think the Ninth’s holding in Perfect 10 is only limited to the public display right and doesn’t extend to the public performance right. The Copyright Act defines the display right as showing a “copy” of a work, and the court based its conclusion largely on this inclusion of the word “copy” in the definition. It said, “Instead of communicating a copy of the image, Google provides HTML instructions that direct a user’s browser to a website publisher’s computer that stores the full-size photographic image. Providing these HTML instructions is not equivalent to showing a copy.”

Unlike the definition of “display”, the definition of “performance” in the Copyright Act doesn’t require a “copy”. Thus, the question of where the actual content is hosted is irrelevant to whether a public performance has occurred. As far as I can tell, no court has applied the “server test” in the public performance context, so I think it’s reasonable to say there’s an open question about whether the Ninth Circuit takes a different approach than the Second in determining who is liable for violating the performance right online.

Will S.978 Put You in Jail for Embedding Infringing Videos?

Despite the breadth of the public performance right, civil lawsuits against individuals alleged to have infringed it online are rare — Live Nation Motor Sports is the exception rather than the rule. The worry that S.978 will lead to prisons overflowing with people for sharing online videos that happen to be infringing is overblown.

The standard for establishing criminal copyright liability is much higher than civil liability. Prosecutions for criminal copyright infringement under existing law are rare. According to the Administrative Office of the US Courts, less than 50 people are charged with a criminal copyright offense every year. There’s no reason to think that this number will change drastically because of S.978.

Other factors support the idea that most internet users have no reason to worry about this bill. The Department of Justice’s Prosecuting IP Crimes Manual lists several considerations for US Attorneys to keep in mind when deciding whether to bring charges. Among the considerations specific to IP crimes:

Federal criminal prosecution is most appropriate in the most egregious cases.

Limited federal resources should not be diverted to prosecute an inconsequential case or a case in which the violation is only technical.

Federal prosecution is most appropriate when the questions of intellectual property law are most settled. Victims have a broad range of civil remedies that include restitution, damages, punitive or quasi-punitive damages, injunctions, court costs, and attorneys’ fees.

The sources or manufacturers of infringing goods and services are generally more worthy of prosecution than distributors.

There are many other considerations that limit the application of criminal copyright infringement laws to only the most egregious pirates. No one need worry about facing jail time for sharing videos online should S.978 pass.