If You Can’t Beat ‘Em, Join ‘Em: Establishing a BMI/ASCAP Type Nonexclusive Blanket Licensing System to Combat Internet Piracy of Movies and Mixed Martial Arts Intellectual Property and Videos

If You Can’t Beat ‘Em, Join ‘Em: Establishing a BMI/ASCAP Type Nonexclusive Blanket Licensing System to Combat Internet Piracy of Movies and Mixed Martial Arts Intellectual Property and Videos.

Nick Hashimoto
April 12th, 2006
Final Draft
UI Cyberspace Law Seminar 2006

TABLE OF CONTENTS

I. INTRODUCTION…………………………………………………………………………… 3

A. OBJECTIVE………………………………………………………………………………3

B. SUMMARY OF CONTENT, STRUCTURE, AND SCOPE OF PAPER………………. 6

II. THE MMA INDUSTRY……………………………………………………………………….7

III. PROBLEM OF PIRACY IN THE MIXED MARTIAL ARTS

INDUSTRY…………………………………………………..………….. ………………….. 9

A. INTRODUCTION……………………………………………………………………….. 9

B. METHODS IN WHICH MMA VIDEOS ARE BEING PIRATED……………….……10

i. DVD BURNING……………………………………………………………….10

ii. EBAY AND ONLINE STORES…………………..…………………………..11

iii. PEER TO PEER FILE SHARING………………….…………………………12

iv. YOUTUBE…………………………….………………………………………12

v. KEEPVID………………………………………………..…………………….13

vi. MMA MESSAGEBOARDS…………………………………………………..13

IV. THEORIES OF COPYRIGHT LIABILITY…………………………………………………13

A. INTRODUCTION………………………………………………………………..……..13

B. DIRECT INFRINGMENT………………………………………………..…………….14

i. THEORIES OF COPYRIGHT LIABILITY……………………………..……14

ii. APPLICATION TO METHODS OF MMA PIRACY…………………..……14

a. DVD BURNING…………………………………………………..14

b. EBAY AND ONLINE STORES………………………..…………14

c. PEER TO PEER FILE SHARING…………………………………15

d. YOUTUBE…………………………………………………………15

e. KEEPVID…………………………………………………………..15

f. MMA MESSAGEBOARDS……………………………………….15

C. CONTRIBUTORY INFRINGMENT……………………………………………………16

i. THEORIES OF COPYRIGHT LIABILITY……………………………...……16

a. CLASSIC CONTRIBUTORY INFRINGMENT…………………. 16

b. DMCA SAFE HARBOR EXCEPTION FOR INTERNET SERVICE PROVIDERS…………………………………………………….…17

c. SONY CASE………………………………………………….……18

d. NAPSTER CASE…………………………………………………..19

e. GROKSTER CASE………………….……………………………..20

ii. APPLICATION TO METHODS OF MMA PIRACY……………………...…21

a. DVD BURNING……… …………………………….…………...21

b. EBAY AND ONLINE STORES…………………..…………….…21

c. PEER TO PEER FILE SHARING…………………….……….…..21

d. YOUTUBE…………………………………………………………22

e. KEEPVID…………………………………….…………………….23

f. MMA MESSAGEBOARDS……………………………………….23

D. VICARIOUS LIABILITY ………………………………………………………………25

i. THEORIES OF COPYRIGHT LIABILITY…………………..……………….25

ii. APPLICATION TO METHODS OF MMA PIRACY………………..……….26

a. DVD BURNING………………………………………...…………26

b. EBAY AND ONLINE STORES…………………………………..26

c. PEER TO PEER FILE SHARING…………………………………26

d. YOUTUBE………………………………………………….….…..26

e. KEEPVID……………………………………………………….….26

f. MMA MESSAGEBOARDS…………………………………….…26

E. CONCLUSION……………………………………………………………….…….……27

V. OTHER SOLUTIONS TO THE PROBLEM OF COPYRIGHT INFRINGEMENT OF MMA VIDEOS……………………………………………………………………..…………….….28

A. IGNORE THE PROBLEM………………………………………………….……….…..28

i. PROBLEM WITH VIDEO QUALITY OF PIRATED DOWNLOADS.……..28

ii. DOWNLOADING TIMES………………………………………………….…28

iii. PIRACY LEADS TO MORE DVD SALES……………………………….….28

iv. BIG SCREEN TV AND HIGH DEFINITION DVDS……………….…….….29

v. SHOWING OLDER FIGHTS ON TV……………………………..……….…29

B. PAY PER VIDEO SYSTEMS………………………………………………….…….…30

i. ITUNES………………………………………………………………………..30

ii. NAPSTER……………………………………………………………………..30

C. OVERWHELMING THE INTERNET WITH DEFECTIVE VIDEOS………………..30

VI. IMPLEMENTING A NONEXCLUSIVE BLANKET LICENSING SYSTEM TO MIXED MARTIAL ARTS VIDEOS……………………………………………………………….…31

A. DEFINTION…………………………………………………………………………..…31

i. WHAT IS A NONEXCLUSIVE BLANKET LICENSING SYSTEM?............31

ii. ORIGIN: THE PROBLEM IT WAS DESINGED TO SOLVE……………....32

B. APPLYING A NONEXCLUSIVE BLANKET LICENSE TO MMA VIDEOS……………………………………………………………………………….....32

C. THE NONEXCLUSIVE BLANKET LICENSE IS THE SUPERIOR SOLUTION……………………………………………………………………..……….36

D. WHY IT IS BETTER THAN IGNORING THE PROBLEM…………………………...36

a. PROBLEM WITH VIDEO QUALITY OF PIRATED DOWNLOADS……………………………………..……………...36

b. DOWNLOADING TIMES……………………..……………….…36

c. PIRACY LEADS TO MORE DVD SALES………………….....…36

d. BIG SCREEN TV AND HIGH DEFINITION DVDS………..…...36

e. SHOWING OLDER FIGHTS ON TV………………………….….37

ii. WHY IT IS BETTER THAN PAY PER SONG SYSTMES…………………..37

iii. WHY IT IS BETTER THAN OVERWHELMING THE INTERNET WITH DEFECTIVE VIDEOS………………………………………………………....37

iv. SUPPORTS POLICY CONCERNS OF INTELLECTUAL PROPERTY…………………………………………………………………….38

a. CONSISTENT WITH GOALS OF THE COPYRIGHT LAWS…..38

b. JUDICIAL ENFORCEMENT MECHANISMS IN PLACE……....38

c. ANTITRUST ISSUES WITH NONEXCLUSIVE BLANKET LICENSING SYSTEMS…………………………………....39

i. PASSES THE SHERMAN ANTITRUST ACT…..39

ii. MMA VIDEOS AND ANTITRUST…………...…40

VII. CONCLUSION……………………………………………………………………………….41

I. Introduction

A. Objective

Mixed Martial Arts (MMA) is a sport that combines the many different styles of striking (karate, kickboxing, boxing, muay Thai), grappling (judo, wrestling) and submissions (Brazilian jiu-jitsu, judo, sambo) of the martial arts. MMA is one of the most popular sports in Japan, with its New Year’s Eve events audience and enthusiasm rivaling the U.S. “Superbowl” game of American Football. By 2006, MMA has become increasingly popular in the U.S as well as around the world.

With the increasing popularity of this “sport of the future”, the commercial aspects of the sport have become caught up in the copyright piracy issues analogous to those confronting the U.S. film and recording industry. MMA’s revenues come from ticket sales for live events (live gate receipts), television rights, pay per view buys and sales of DVDs.

Each of these revenue streams satisfies the Copyright Act’s definition of protected intellectual property (“fixed in a tangible medium of expression”), and therefore the MMA owners are legally entitled to control the “performance” and reproduction” rights of their property. (among other rights)

At the outset, however, it is analytically useful to distinguish between a couple different methods of copyright infringement. By way of example, (a) the unauthorized, real time re-broadcast of a pay-per-view MMA event, (b) the recording of an MMA broadcast for later broadcast, (c) the creation of an unauthorized DVD from such a broadcast, or (d) the copying of a DVD created by the DVD owner. Moreover, there is a distinction between these activities being undertaken by (a) a large commercial firm for profit, (b) unauthorized file sharing of recorded MMA events between hundreds or thousands of fans, and (c) substantial noninfringing uses or other convenience copying by an individual DVD owner for his or her own use.

The objective of this paper is to find a solution to video piracy in the MMA industry. It is difficult for MMA companies to find either those who are offering the sites, or the users who are going there to illegally download the videos. Efforts to go after direct copyright infringers further suffer from having to run into Fair Use and other 1^stAmendment problems. At the same time, efforts to hold internet service providers and file sharing companies liable for vicarious and contributory infringement have for the most part failed. When these efforts have been legally effective, the MMA industry still deals with the futile problem of new copyright infringing service providers cropping up for every site that has been legally shutdown.

Thus the solution that this paper proposes is a variation on the “nonexclusive blanket license” approach to MMA videos that has worked relatively well for music performance rights in the music industry through the private BMI and ASCAP organizations.

It is true that many of these same challenges are felt throughout the intellectual property industry as a whole, especially in the U.S. film industry. Hollywood is particularly concerned about widespread movie piracy. On April, 3, 2006, Six movie studios announced that they would start selling downloadable movies at prices between $9.99 - $40 online through a joint website called www.movielink.com in an effort combat movie piracy.[1] However, in this paper we will examine the problems of video piracy as they apply specifically to the MMA industry. Video piracy is a bigger problem in the MMA industry than in Hollywood for three reasons. First, in the movie industry, the experience of going to a movie theatre and watching movies at home on a computer or television is still substantially different. In the MMA industry, however, where going to the live event is usually not an option, (especially since roughly 70% of the events take place in Japan) watching a pirated video of a DVD or a pay per view event is exactly the same experiences one would get if the patron paid for the DVD or pay per view event. In MMA, the infringing and noninfringing activities are perfect substitutes, and therefore the MMA industry is more susceptible to video piracy than Hollywood.

Second, there have been orders of magnitude of decreases in the time it takes to

download video material and also a similar decline in the cost of hard disk storage capacity. These two technological innovations have made it possible for a substantial increase in the amount of online video piracy. However, these two technologies have not reached the point to allow for instantaneous or near instantaneous downloading of a 90 minute or two hour movie. A file the size of a 90 minute movie is two big for the most popular peer to peer file sharing servers. Larger Bit Torrent Peer to Peer file sharing servers have to be used, and file downloading times through these servers can take hours, days or even weeks.

What makes MMA videos unique to the current video piracy technology is that each event can be broken down into 9-12 fights, each fight which lasts anywhere from 1 second up to a maximum of 25 minutes each. This allows for instantaneous or near instantaneous (1 minute to 25 minutes) downloading time for individual fights on the most used file sharing servers and has made MMA online video piracy extremely popular.

The first two reasons make MMA online video piracy a clear and present danger which must be dealt with all deliberate speed. The third reasons is that there are other differences between the MMA industry and Hollywood (first run movies, theatres, film distribution schemes, product placement and derivative and licensing revenue streams) that would broaden the scope of this paper excessively. Therefore, applying blanket licensing to Hollywood movies will be the subject of a subsequent paper.

If the nonexclusive blanket licensing model can be successfully adopted to the small MMA industry as will be illustrated in this paper, it is hoped that it can serve as a blueprint that Hollywood can follow in dealing with the looming scepter of widespread video piracy of Hollywood movies.

B. Summary of Content, Structure, and Scope of Paper

In Part II the MMA industry the primary United States and Japanese companies, and their sources of revenue including DVD and pay per view buys, are examined.

Part III details the various ways in which the copyright on MMA videos are infringed through the internet. Among the mediums that are examined are DVD Burning programs, EBay, Online Stores, Peer to Peer File Sharing, broadcasting sites such as www.YouTube.com, broadcasting site downloading sites such as www.KeepVid.com and MMA Messageboards.

Part IV examines the various theories of copyright liability including direct infringement, contributory infringement and vicarious liability. The theories of copyright liability are then applied to the various methods of illegal copyright infringement of MMA videos.

In Part V, additional solutions to the problem of copyright piracy of MMA videos are discussed, including technological barriers to copying, the Itunes and Napster pay per song models and overwhelming the Internet with defective videos.

Part VI is devoted to the proposal that a nonexclusive blanket licensing scheme based and modified from the BMI/ASCAP model should be used to combat MMA video piracy.

II. The MMA industry

Under 17 U.S.C. §101 MMA videos are the intellectual property of each individual MMA organization.[2] MMA videos are a considerable source of revenue for the individual MMA organizations.

In the United States MMA is still considered a fringe sport, although in the last few years, Zuffa, LLC, the owners of the Ultimate Fighting Championship (UFC) have aggressively pushed for more mainstream acceptance. Zuffa has done this by bringing the UFC back to pay per view cable TV, and creating the popular reality TV show, “The Ultimate Fighter” (TUF).

However, until the UFC and other organizations can gain mainstream acceptance in the United States, the main sources of revenue will continue to be live gate receipts, pay per view buys, and sales of DVDs. Although, Governor Arnold Schwarzenegger and the state of California have recently sanctioned MMA events in the state, MMA in the United States is still along way from challenging the big four sports (Football, Baseball, Basketball, Hockey) or even similar substitutes such as Pro Boxing or Pro Wrestling.

The situation is quite different in Japan. In Japan the largest MMA organizations are Dream Stage Entertainment’s (DSE) Pride Fighting Championships (Pride) and Fight Entertainment Group’s (FEG) K-1 organization. While the K-1 organization is primarily a kickboxing organization, they compete head to head with Pride for the fighting sports audience. Furthermore, in the last year, K-1 has successfully created the K-1 Hero’s MMA division to directly challenge Pride for the MMA market.

MMA has become a mainstream sport in Japan with many of the Pride and K-1 events broadcast either live or a couple days after the event on free prime time network television. Both organizations’ biggest events of the year take place in front of a live television audience on New Year’s Eve. On December 31^st, 2005, Pride’s Shockwave event earned a 17% rating of the network audience, and K-1’s Dynamite event earned 14.8%.[3] Thus, on New Year’s Eve, 32% of the Japanese national network audience was watching MMA.

Further evidence of mainstream acceptance of MMA in Japan is the substantial female demographics of the audience. K-1 estimates that 50% of their audience is female, while Pride states that 30% of their audience is female.[4]

“DiPietro ascribes some of K-1's feminine appeal to what he calls "the groupie factor--women who become smitten with a given fighter and simply can't get enough of him. Some K-1 and PRIDE fighters achieve idol status in Japan. "A lot of women were in love with the late Andy Hug," DiPietro says, referring to the Swiss superstar who rose to celebrity heights in Japan before his untimely death from leukemia three years ago. "And now, some of these guys wear Armani and appear in television commercials. You can hear the women shriek when they step into the ring."[5]

As MMA has increasingly become a mainstream sport in Japan, Pride and K-1’s revenue has tended to come more from the sale of television rights and advertising rights and relatively less from live gate receipts, pay per view buys, and DVD sales. Derivative sources of revenue such as DVD sales become less important as a consequence of the events being broadcast on live TV. However, with the large fan base, Pride and K-1 have continued to tap DVD sales by the addition of “dark matches” (matches purposely not shown on free TV or even on the pay per view broadcast) and exclusive backstage footage, fighter interviews, and fighter documentaries for its most ardent fans.

For the smaller Japanese MMA organizations (sometimes referred to as minor league organizations) such as Pancrase, Rings Fighting Network, Deep, Shooto, ZST (Zest), it appears that like their American counterparts that DVD sales remain an important source of revenue.

Furthermore, even the large organizations K-1 and Pride, rely heavily on DVD sales as income streams to fund their American subsidiaries, K-1 USA and Pride USA.

II. Problem of Piracy in the Mixed Martial Arts Industry.

A. Introduction

Illegal copyright infringement of MMA DVDs is a serious problem in the U.S. MMA industry. Infringement takes the forms of DVD burning, sale of bootleg burned DVD’s, illegal downloading and illegal viewing of MMA DVD’s over the internet. The costs of piracy are especially acute for both American and Japanese MMA organizations in the U.S. as DVD sales and pay per view buys are the primary sources of revenue.

Internet video piracy hurts both these revenue streams by providing the contents of DVDs and pay per view events free on the internet. It is incorrect that nobody is hurt from illegal downloading of MMA intellectual property. The MMA companies suffer from a substantial loss in revenue. More importantly, as demand for a product decreases (through illegal free downloading) price increases which makes MMA DVDs and pay per views even more expensive and even less attractive to the honest customers who actually decide buy the product.

B. Methods in which Mixed Martial Arts videos are being pirated.

i. DVD burning

The root of internet MMA video piracy begins with those software programs that allow one to extract the video content of an MMA DVD onto their computer where it can be viewed, spread over the Internet, or burned onto a DVD. These software programs allow copyright infringers to rent (at a video rental store) or buy DVDs (buying a legitimate original, making a copy and then selling the original on EBay) and then copy the content for their own use in violation of 17 U.S.C. §106 (1) right to reproduce.[6]

One way, DVD companies in general try to stop video piracy is through the inclusion of fancy artwork for their DVD cases and through the sale of artistic slip covers over the DVD cases. However, for those infringers who clamor for authenticity, there are websites on the Internet that offer case cover artwork that can be downloaded and printed into authentic case covers. An infringer could also simply copy the case copy artwork on the technologically advanced and affordable color copiers that are available these days.

ii. EBay and Online Stores

Copyright infringers can make copies of movies by renting, buying or illegally downloading a movie and then burning them onto a DVD recordable in violation of 17 U.S.C §106 (3) the right to distribute.[7] These infringers then sell them on online web stores or through EBay in violation of that right.

When these pirated copies are sold on EBay as used DVD’s, purchasers rarely complain because they are getting the DVD’s at a fraction of the normal retail cost.

There are also online stores such as piracy www.nocontestdvd.com, http://www.wrestletapes.net/wrestletapes2.html that appear sell DVD’s recorded either directly from the U.S or Japanese pay per view, or burned from U.S. or Japanese DVD’s and VHS’s. Although it must be emphasized that we cannot be sure if these stores are engaging in copyright piracy, the fact that prices are not listed, that price information is released through email requests, and that events that have not been released on either the Japanese or U.S. DVD are available months before they are released by the official MMA companies seem to indicated that piracy is in fact going on. For example, Inoki Bom Ba Ye 2003 has never been released by any Japanese or U.S. company, yet is for sale at http://www.wrestletapes.net/miscellaneousmmaevents.html#Bom-Ba-Ye%202003 as being taped off the pay-per-view. It is highly doubtful that any of the MMA DVD’s taped off the pay per view that are sold on these sites have been secured through the purchase of derivative reproduction and distribution rights of the pay per view event of the respective MMA companies.

This form of piracy is easily traceable and has been effectively policed, particularly by the UFC, especially on Ebay.

However, the Japanese MMA companies have been less successful in monitoring infringing activity through online web stores and EBay. The online sale of MMA videos at a fraction of the cost is rampant on the internet. DSE USA who markets Pride is an exception to the Japanese MMA companies as they have shown a willingness to litigate against copyright pirates[8]

Among the companies that EBay and online stores continue to sell pirated copies are Japanese MMA organizations such as K-1, the Rings Organizations, Inoki, Shooto, ZST, Deep, Brazil’s IVC and Jungle Fight, Lithuania’s Rings Bushido, the UK's Cage Rage and Ultimate Combat and the US organization, Rumble on the Rock. It should be noted however that despite the aggressive litigation pursued by the UFC and to a lesser extent by Pride USA, that the online store Wrestletapes continues to sell Pride and UFC videos.

iii. Peer to Peer File Sharing Networks

Peer to Peer file sharing networks like www.YouSendIt.com, www.Megauplaud.com, www.Rapidshare.de allow for the transfer of pirated videos clips to one or many infringers during a temporary window of time. Bit Torrent Peer to Peer file sharing networks allow for the transfer of whole movies or DVDs but take considerably more time. YouSendIt and Megauplaud type files are ideal for MMA videos because MMA DVD’s can be broken down by individual fights. Individual fights are downloaded and downloading times range from minutes to 30 minutes. Furthermore MMA videos on YouSendIt and Megauplaud networks are freely accessible by anyone whereas Bit Torrents usually involve some sort of trade or sharing of files between users.

iv. YouTube

Sites like www.YouTube.com and www.Putfile.com allow for the rebroadcast of pirated videos over the Internet. The current popular video file viewing website is www.YouTube.com. YouTube states the purpose of their website is to “Broadcast Yourself”. Anyone is able to share their videos on the world wide web. What differentiates YouTube from file sharing networks is that the viewer can only watch the video on the website. Files are not swapped over the internet, and the videos are not capable of being downloadable to the average internet layman. Instead the video is viewed over the Internet in violation of 17 U.SC. §106 (5) the right to display.[9]

v. KeepVid

The http://keepvid.com website allows users to enter the URL for a YouTube or GoogleVideo Video into a downloadable format. Users can go onto YouTube and watch copyrighted MMA videos and then through KeepVid permanently download the video onto there computer where it can be stored or disseminated onto the internet through any of the previously described mediums.

vi. MMA message boards

Provide a community where fans of MMA can discuss fighting techniques, fighting styles, fighting events and fighters. It is a great benefit to MMA fans because as a fringe sport, most members have very few like minded individuals to discuss MMA with outside the virtual internet world. (In the real world, only through Martial Arts clubs and wrestling teams can one engage in such conversations.)

However, MMA message boards also facilitate copyright infringement by allowing members to alert each other to pirated MMA videos on File Sharing servers or YouTube. And more often then not it is one of the members of the messageboards who post the illegally pirated videos onto the File Sharing servers or YouTube.

IV. Theories of Copyright Liability

A. Introduction

B. Direct Infringement

Direct Infringement applies to those who infringe on the legal rights of the copyright owners.

i. Theories of Direct Infringement

Anyone who reproduces or distributes (among other things) a copyrighted work without the copyright owners permission and who does not have a fair use defense may be liable for direct copyright infringement.

ii. Application to Methods of MMA Piracy

a. DVD Burning

Direct copyright infringers may burn MMA DVDs onto blank DVD R’s in violation of 17 USCS §106 (1) right to reproduction.[10] This type of piracy is almost impossible to detect, as it can all be done in one’s home without any connection to the internet. Once one has downloaded or purchased the DVD burning software (for purportedly substantial noninfringing uses) there is no way to trace these individuals. This type of piracy will always remain a problem as an infringer can simply rent a DVD at a video rental store or buy the original and make a copy. Then the user can legally sell the original as used on EBay while maintaining the burned copy for his own home library or on his computer.

b. EBay and Online Stores

If copyright owners are serious about enforcing their rights, this type of right is the easiest to enforce. The infringing activity is highly traceable to the online store owner or EBay seller through their registration using their real name, and through payment to their bank account, PayPal, or Credit Card transaction record. Although there are ways to circumvent this, by using post office boxes and payment through money orders or cash, such methods usually result in cautious buyers and reduced pirated DVD sales. In Rf Video, Inc. v. Dream Stage Entertainment, DSE and Pride were able to reach a settlement and shutdown an online seller of illegal bootleg DVDs.[11]

Studios and companies are quite eager to go after those sellers who are commercially profiting from copyright infringement and will go to grant lengths to enforce their rights against such purported competitors. In United States v. Larracuente[12], movie studios followed a VHS video rental owner to his video store and his house, in a sting operation against the rental store owners “video counterfeiting laboratory”.

Even if the online stores take their site off the internet, sites such as http://www.archive.org/ through the use of the Waybackmachine allow the MMA companies litigation teams to find evidence of the content of the websites that have been taken off the internet. Although there are conceivably ways to circumvent the recording power of the Waybackmachine, only the most savvy copyright infringers are adept at not living any fingerprints.

c. Peer to Peer File Sharing, YouTube, KeepVid & MMA Messageboards

Going after the individual direct infringers can be rather difficult because of the difficulty in tracing them and also the fact that the amount of infringement and damages will often times be less than the cost of litigation. The main benefit of going after the infringers is to give publicity to the dangers of copyright piracy and to serves as a deterrent effect.

A further problem is getting access to the identities of certain infringing subscribers from ISP and cable service providers under fair use and DMCA safe harbor rules.[13]

Furthermore, the persons who pirate MMA videos off the internet are the hardest, most ardent supporters of the fringe sport. They help promote the sport through their own MMA websites, message boards, and fight compilation videos. They also use there free funds to buy MMA merchandise, go to live MMA events, and take on MMA training for either self defense or potentially as a career in MMA fighting. Until the sport becomes mainstreams though, there is a fine balance between going after the most loyal fans and biting the hand that feeds them.

B. Contributory Infringement

Because of the difficulty of litigating against the wide spread number of individual direct infringers, copyright holders have chosen to go after those who contribute to the infringement.[14]

In policing copyright infringers, copyright owners have found that it is much more effective to go after the contributory infringers than the direct infringers because of the difficulty in identifying and tracing the direct infringers over the internet. Contributory infringers who provide conduits such as file sharing websites, and online stores are much easier to locate and prosecute. Furthermore, there is the possibility of collecting more damages against the contributory infringers since the infringement by the multiple direct infringers of the site may be aggregated.

i. Theories of Contributory Liability

a. Classic Contributory Infringement:

The classic test for contributor infringement comes from Gershwin Publishing Corp. v. Columbia Artists Management, Inc., and states that there is contributory liability where the infringer with the knowledge of the infringing activity, induces, causes, or materially contributes to the infringing activity of the direct infringer.[15]

Knowledge of infringing activity can be actual or constructive. In UMG Recordings, Inc. v. Sinnott, the flea market where counterfeit and pirated recordings were being sold by vendors was held to have constructive knowledge of the copyright infringement taking place.[16]

In Fonovisa, Inc. v. Cherry Auction, Inc, material contribution was found by the flea market because they provided an environment and a market for vendors to sell counterfeit recordings.[17] In one police raid, 38,000 counterfeit sound recordings were confiscated. The court concluded that the infringing activity in such massive quantities could only happen with the support services (utilities, parking, advertising, plumbing and customers) of the flea market.[18] The Cherry Auction court held that providing the site and facilities for known infringing activity was sufficient for contributory liability.[19]

Furthermore, the contributor must have knowledge of direct infringement at the time it materially contributes to the direct infringement for secondary liability to occur.[20]

b. DMCA safe harbor exception for Internet Service Providers

In Hendrickson v. EBay, Inc., the copyright owner of a Charles Manson documentary DVD sued EBay for contributory infringement of the sale of bootleg Manson DVD’s on EBay.

EBay was successfully able to claim a safe harbor exception under the Digital Millennium Copyright Act against such a claim.[21] The DMCA safe harbor exception protects “qualifying” internet service providers from liability for monetary relief for direct, vicarious, or contributory infringement.[22] A service provider is an online service or network access or the operator of facilities of an online service or network access.[23] In order to qualify as an internet service provider, the service provider must perform one of four functions.[24] The provider’s activities at issue must either (a) function as a transitory digital network service, (b) a system cache, (c) information residing on system or network at the direction of the users, or (d) information location tools.[25] EBay qualified for the DMCA safe harbor protection under 512 (c).

In order to receive safe harbor protection the service provider must pass a three prong test. First, the service provider must not have actual knowledge or awareness that an activity is infringing or must expeditiously remove or disable the problematic material.[26] Second, the service provider must not receive a financial benefit directly attributable from the infringing activity if the provider has the ability to control such activity.[27] Third, the service provider must show it responded expeditiously to “notice” of copyright infringement.[28]

The court ruled for EBay because Hendrickson failed the third prong since he did not meet one of the six elements of the DMCA’s safe harbor notice requirement. Hendrickson had failed to provide written notice of the copyright infringement to EBay.

c. Substantial Noninfringing uses Test/Sony Betamax case

In Sony Corp. of America v. Universal City Studios, Inc, the landmark 1984 Betamax case, the Supreme Court held that Sony’s sale of home video recorders was not contributory copyright infringement because the VCRs were capable of substantial noninfringing uses. [29] Sony’s VCRs were capable of illegally reproducing copyrighted television shows. However, the VCRs were also capable of providing noninfringing uses such as time-shifting. Time shifting was the practice of recording licensed television programs of which the broadcasters did not object to in order to view the program at a later time. Furthermore there were a substantial number of copyright owners who did not object to having their programs recorded and therefore those programs were considered substantial noninfringing fair uses as well.

In adopting the substantial noninfringing use test, the Court through analogy borrowed and modified [30] the patent laws policy towards contributory infringement.[31] The patent act expressly states that “a staple article or commodity of commerce suitable for “substantial noninfringing use” is not contributory infringement.[32]

d. Napster Case: Knowledge of infringement activity on Central Server

In A&M Records v. Napster, Inc., the 2001 Napster case, the 9^th Circuit held that despite Napster’s capability for substantial noninfringing uses, Napster was liable for contributory infringement because Napster knew or had reason to know of its users infringement of copyrighted songs.[33] Napster created a file (songs) sharing conduit on the internet from which its individual users could trade and reproduce songs. Napster claimed that the Napster conduit had substantial noninfringing uses such as trading public domain songs or noncopyright protected material. In this case, unlike the Sony case, however, there was substantial evidence that Napster was aware of the illegal copyright infringement of trading of songs and was therefore liable for contributory infringement.

In Religious Tech. Ctr. v. Netcom On-Line Commun. Servs., the Netcom case, it was determined that internet service providers was liable for contributory infringement if it had knowledge of infringing activity and failed to purge the infringing activity.[34] That was enough to distinguish the case from the Sony substantial noninfringing use case.

e. Grokster: Inducement Rule

After Napster was disbanded, companies such as Grokster and StreamCast appeared on the internet and distributed free Software that would allow users to trade files directly with each other. Since there was no central server or conduit on the internet through which Grokster operated, Grokster could not be liable for any infringing activity under the Napster and Netcom line of cases. Grokster gave away the software, and made its money from the sale of advertising space on their software downloading website and whenever any user used the Grokster software.[35]

Consequently, any litigation against Grokster would face the Sony substantial noninfringing use test. Grokster could then claim that their software had substantial noninfringing uses such as trading computer programs, files, and public domain works such as Shakespeare.[36]

The Supreme Court reiterated in 2005 in MGM Studios Inc. v. Grokster, Ltd., the Grokster case, that nothing in Sony precluded the common law fault based liability use of evidence of intent in finding contributory infringement.[37] The Supreme Court then adopted the inducement rule from the common law and Patent Law. The inducement rule made active steps taken to bring about infringement as sufficient for contributory copyright liability and enough to overcome the Sony substantial noninfringing use defense.[38] An affirmative intent to induce could be shown from advertising infringing uses or giving instructions on infringing uses or encouraging infringing uses.[39] Under this rule Grokster was found liable for encouraging and advertising that its software was capable of Napster type copyright infringement.

ii. Application to Methods of MMA Piracy

a. DVD burning software distributors

Sites such as www.DVDshrink.com offer free DVD copying software. First, since there is no central server, there cannot be liability for knowledge of infringing activity under Napster.

The Sony substantial noninfringing use test then applies. DVDshrink’s substantial noninfringing use is to make backup discs of legally purchased DVDs. This appears to be a legitimate use since DVD can easily becomes scratched, broken or unplayable.

Finally the only way to overcome the Sony test is to use the Grokster Rule of Inducement. However, DVDshrink is extra careful not to advertise or encourage the noninfringing uses of copying and then disseminating the copy protected property on the internet. There will most likely not be any contributory liability against DVDshrink.

b. EBay

Based on the EBay case, supra, EBay qualifies for the DMCA Safe Harbor exception. As long as EBay responds expeditiously to notice of copyright infringement by attempting to remove the pirated auction in question, EBay will not be liable for contributory infringement.

Furthermore, even without the DMCA, EBay has substantial noninfringing uses of the sale of used goods which are protected under the first sale doctrine.

c. Peer to Peer File Sharing Sites Version 3.0

In the case of smaller file sharing sites such as www.Megaupload.com and www.yousendit.com and larger bit torrents, there is a central server through which files are traded. However it appears these sites are quick to take down any copyrighted material when alerted of infringing activity and fall under the DMCA safe harbor exception.

Even if we go to the Sony test, file sharing sites can claim the same substantial noninfringing uses of its ancestors, Napster and Grokster.

Furthermore, under the Grokster Rule of Inducement the new file sharing sites can not be liable because they don’t advertise or encourage the infringing activity. But in reality it doesn’t matter that the new file sharing sites do not advertise or encourage the direct infringers because direct individual infringers already know the potential noninfringing uses of file sharing sites, having become hardened veterans of the first two file sharing site campaigns. As a consequence MMA video piracy through file sharing programs, continue unabated.

d. YouTube

Self broadcasting sites such as www.YouTube.com, act as central servers onto which material is broadcast and available for viewing. When infringing material is broadcast on YouTube, and the copyright owner gives notice to YouTube, YouTube promptly removes the infringing material and therefore complies with the DMCA safe harbor exception.

Assume arguendo, that the courts use the Sony test, YouTube becomes more problematic. YouTube has more than substantial noninfringing activity. There are a myriad of legitimate uses such as teenage girls broadcasting home music videos from their bedroom, musicians performing their own music, class clowns documenting infantile escapades or amateur film makers showing their movies. In fact the infringing activity may only be a small portion of the uses. The balance in favor of the good done to society from the dissemination of ideas and incentive to exercise creativity may greatly outweigh the harm to copyright owners in this medium.

As for the Grokster Rule of Inducement, YouTube’s moniker is “Broadcast Yourself”. They do not advertise or encourage copyright infringing material on their site.

e. KeepVid

It does not appear that KeepVid monitors what videos are being transferred into a downloadable form, so it does not appear that KeepVid qualifies for the DMCA safe harbor exception.

Under Sony, KeepVid can claim substantial noninfringing uses, of allowing for the download of public domain material from YouTube and GoogleVideo.

Under the Grokster Rule of Inducement, KeepVid can claim that it does not encourage or advertise copyright infringement.

f. MMA message boards.

MMA message boards such as www.Sherdog.net are expeditious in deleting copyrighted material when given notice from the UFC, Pride USA and other organizations and therefore qualify for the DMCA safe harbor exception.[40] Sherdog.net the largest MMA message board online posts this disclaimer as a sticky on the top of their forums:

“From now on full fights of older copy protected events and clips/highlights of recent events are against the rules to post. A recent event means any event still available through the majority of PPV providers. This apply (sic) to all forums including the Spoiler forum.
Same rules apply:
Double Yellow Infractions
- Posting video clips of events recently shown on pay per view. Posting full fight clips from unauthorized copyrighted events. Includes outwardly soliciting/providing any fights or events via PM.
Extreme cases or annoying users will be handle according to the Ban Infractions rules.
Linking to any other website or web page where full fight clips or events can be downloaded will also lead to the provider of the link(s) being banned. This includes Google Video, YouTube, YouSendIt, Rapidshare etc
Thanks.”[41]

MMA messageboards, are also similar to YouTube in that the noninfringing activity greatly outweighs the infringing use. The noninfringing activity may be even greater than YouTube ranging in the 90% range as there is a great societal interest in having those interested in the same hobbies have the ability to communicate and share their enjoyment of their hobby.

Finally, the Grokster Rule of Inducement does not apply. In fact, the Grokster rule of inducement test is a paper tiger test because almost every company complies with it, and direct infringers no longer need to be told how to use these services for infringing uses.

C. Theories of Vicarious Liability

Vicarious liability comes from the common law agency principle of Respondeat Superior.[42] The landmark case for vicarious liability in copyright infringement is Shapiro, Bernstein & Co. v. H. L. Green Co.[43] In the Shaprio case the owner of a department store was liable for copyright infringement for the sale of counterfeit recordings by a concessionaire in the department store. Even thought the concessionaire was not employed by the department store, the court found vicarious liability under respondeat superior.

The court distinguished two types of copyright infringement vicarious liability cases. The first is the land lord – tenant model. If a landlord lacked knowledge of infringing activities of the tenant and had no control over the premises then the landlord was not liable for vicarious liability.[44] The second is the dance hall line of cases. The operator of an entertainment venue was held liable if the operator could control the premise and the operator obtained a direct financial benefit from the audience who paid to enjoy the infringing performance.[45]

The Gershwin case further elaborated this point. Even if there is non employer-employee relationship the owner may be vicariously liable if he has the right to supervise the infringing activity and also has a direct financial interest in such activities.[46]

Direct financial benefit can be found if the infringing activity enhances the attractiveness of the venue to potential customers or if the infringing activity increase attention to the venue. In the Cherry Auction case, the sale of pirated recordings at the swap meet was considered a substantial ‘draw’ to customers.[47]

ii. Application to Methods of MMA Piracy

a. DVD burning software distributors.

www.DVDshrink.com offer free DVD copying software. Since there is no central server, there cannot be a right to supervise the infringing activity and there is no liability.

b. Sale of Pirated videos through EBay.

While EBay has the right to supervise the infringing activity and conceivably derives a direct financial benefit from the infringing activity, the DMCA safe harbor provision precludes liability.

c. File Sharing Sites Version 3.0

In the case of smaller file sharing sites such as www.Megaupload.com and www.yousendit.com and larger bit torrents there is a right to supervise, and there is a direct financial benefit from the infringing activity. However, once again the DMCA safe harbor provision precludes liability.

d. YouTube

With YouTube, there is a right to supervise the broadcasts, and there is a direct financial benefit from the infringing activity. However, the DMCA safe harbor provision precludes liability.

e. Keep Vid

With KeepVid, there is a right to supervise the broadcasts, and there is a direct financial benefit from the infringing activity. There is a question as to whether KeepVid does policy the downloading of infringing activity. Furthermore, under the DMCA safe harbor provision there is a question as to whether notice is being complied with. There may be vicarious liability with KeepVid.

f. MMA message boards.

With MMA messageboards, there is a right to supervise the broadcasts, and there is a direct financial benefit from the infringing activity. The DMCA safe harbor provision precludes liability.

D. Conclusion.

The problem that copyright holders face becomes painfully apparent. As soon as one conduit, software program or file sharing site of copyright infringement is shutdown through litigation, 10 more litigation resistant mutations sprout onto the commons of the internet. With sites like YouTube and MMA message boards, the question of how to handle them becomes even more difficult as the balance in favor of the dissemination of information and ideas starts to dwarf the rights of the copyright holder.

Even more disconcerting is that computer users have become so knowledgeable on internet piracy that no one needs to encourage, induce or advertise copyright piracy to them for copyright piracy to take place. Through the combination of the MMA message boards, the file sharing sites like Megaupload and DVD extracting software such as DVDshrink, each participant instinctively and silent cooperates with each other to make copyright piracy possible. Like a sophisticated organized criminal syndicate each person only plays one part in contributing to MMA video piracy. Perhaps it is time to look to and use through analogy the criminal conspiracy laws methods in dealing with such wheel and spoke type associations.

Furthermore, the dilemma is that technology can be changed quickly and almost instantaneously while the speed of court litigation lags painfully behind. By the time a decision is reached in the courts, the technology has already mutated, evolved and adapted to immunize itself from the consequences of the decision. Policing copyright infringement becomes an exercise in plugging holes in a bursting dam with ones finger. As soon as one circular hole is plugged with a circular plug, two more square shaped holes are created with no square plug to stop the damage.

V. Other Solutions to the problem of copyright infringement of MMA videos

A. Ignore the Problem. Advances in Technology will make pirating a Moot Point.

i. Problem with Video Quality of Pirated downloads.

Video quality varies, with most downloads (especially of pay per view which may be captured by something as simple as webcams) not being of the quality of DVDs.[48] The argument goes that consumers will still buy the DVDs even if they have the pirated version because picture quality is important.[49]

ii. Downloading Times

Downloading times and file bartering times for large files (movies) through Bit Torrents can become a hassle to infringers. Downloading entire 4 hour MMA pay per view events or a full length Hollywood Movie can vary from hours to weeks depending on the server used and the speeds of the file sharing computers.

iii. Piracy leads to more DVD sales

There is some evidence that copyright infringement of intellectual property leads to legitimate purchases of similar intellectual property. Especially in a niche industry like MMA this may be true. Pirating copies allows for free promotion and advertising of the industry as a whole.[50]

iv. Big Screen TVs and the High Definition DVD (HD DVD) & BluRay formats.

As demand and economies of scale for Big Screen Flat Panel TVs continue to lower the price, the demand for HD DVD and BluRay Discs will likely become more popular. HD DVD and BluRay images are 4 times the resolution of standard television images. On a large screen high definition flat panel television, the square pixels from regular DVD’s makes the image less crisp and the difference between them and HD and BluRay DVD’s is quite noticeable. The argument goes that this change in format will force consumers to abandoned their pirated DVD quality videos and buy HD DVD and BluRay quality DVD discs. By analogy one can see that with the advent of digital CD technology, consumers still had the choice of illegally dubbing tape cassettes on dual deck tape players or recording music off the radio onto tape cassettes, but decided to abandon such methods of copyright piracy because they preferred to pay for the superior digital sound quality of CDs.

v. Pirating may be less of an issue as MMA organizations show older fights on Television.

K-1 USA currently licenses to ESPN the right to show footage from some of their Las Vegas K-1 Grand Prix Tournaments. Pride USA has licensed footage to show older fights to Fox Sports Net and has even shown a recent pay per view fights exclusively on Fox Sports Net, albeit on one week tape delay. Pirates would have the option of video recording or TIVO’ing these fights legally. As more and more MMA videos appear on free television, there is less of a need to protect this property from internet piracy.

It can also be argued that as MMA becomes more popular in the US, there may come a time where national television broadcast revenue greatly exceeds the revenue brought in from DVD sales.

B. Pay per song systems such as Itunes and Napster

In response to the Napster, Aimster, and Grokster cases, the music industry has gone to a pay per song system. Users can legally download individual songs for a fee that would be much cheaper than buying the whole tangible form of the CD.

i. Itunes

Itunes is a pay per song system in which you can download music for 99 cents. They have recently added the ability to download 30 minute TV shows for $1.99.[51] Apple makes even more profits from selling its portable IPOD series of devices which play the Itunes music.

ii. The new Napster

The legal Napster has a system where you pay a blanket license fee of $9.95 a month for the ability to listen to unlimited songs from a library of one and a half million songs.[52] However in order to burn to a CD or permanently download music to your computer (and listen to it without the Napster membership), one has to pay 80 cents per song. In other words this isn’t a true blanket license, but a veiled pay per song system which still encourages copyright infringement and piracy.

C. Overwhelming the Internet with Defective Videos

Interestingly the adult video industry, another fringe industry, has dealt with the problem of adult video internet piracy in a novel way. The adult video industry companies puts thousands of legitimate versions of their pirated videos on file sharing networks so that it overwhelms the pirated versions of the material.[53] By overwhelming the networks the chances of receiving a legitimate version over a pirated version increase greatly, especially since keyword searches and googling lead to these legitimate versions.

The catch is that when downloaders opens up the legitimate versions of the adult videos, the videos redirect the user to the adult video companies homepage where the user is either required to pay to watch the video or can watch the video for free in exchange for marketing information.[54]

VI. Implementing a nonexclusive blanket licensing system to Mixed Martial Arts Videos

A. Definition

i. What is a nonexclusive blanket licensing system?

A nonexclusive blanket licensing system has been used primarily by BMI and ASCAP. In a BMI/ASCAP type nonexclusive blanket licensing system, a private organization such as BMI or ASCAP is set up to license performance rights to their catalogue of songs.[55] The purchaser of the blanket license has the ability to perform any song in the entire catalogue and also has the right to perform the song as many times as it wants.

Any radio station, restaurant, bar, or mall, that wants to play those songs simply pays a nonexclusive blanket licensing fee to BMI or ASCAP. The profits from these fees are then divided up according to a mathematical formula that calculates the frequency of songs that are played. Monitors from BMI/ASCAP make sure that radio stations and entertainment establishments have purchased a BMI/ASCAP license.

However, the blanket license is not an exclusive licensing system. Purchaser may choose to purchase songs on a per play basis or alternatively may contact the individual composers and obtain a license without the involvement of BMI or ASCAP.

ii. Origin: the problem it was designed to solve.

Broadcasst Music, Inc. v. Moor-Law, Inc. found that, (1) The reduction of transaction costs; (2) the inability of clubs to identify which compositions they would use on any particular occasion; (3) the inevitable increase in monitoring costs in the absence of blanket licensing (4) ) the relative inexpensiveness of administering a license based on entertainment costs favored the use of a blanket licensing system.[56]

B. The application of the blanket license system to Intellectual Property in the MMA industry.

Given the problem of stopping MMA video piracy over the internet, the MMA industry should adopt a BMI/ASCAP type blanket licensing system. Although the BMI/ASCAP model applies to radio stations and other public performance venues, the MMA model would be adapted and modified to apply the blanket license to individual downloaders.

It has been argued that a MMA model where the MMA websites pay a license fee is more analogous to a BMI/ASCAP type system than one where individual downloaders pay a license fee. Under this system, MMA websites would pay a license fee to the central organization allowing them to give their users the ability to download any videos within the MMA video catalogue. The main advantage of this model is that it would be very easy to enforce, since a website that didn’t have a license could be easily found and sued.

The problem with this model is that most of the legitimate MMA related websites are not the problem. It is the individual websites such as DVDshrink, Megaupload, YouTube, KeepVid that through the sum of their parts make it possible for illegal downloading to occur. A further problem is that even if one monitored legitimate MMA websites, it would still not prevent sites similar to DVDshrink, Megaupload, YouTube, and KeepVid from continuing to cater to individual copyright infringers.

The blanket licensing model that should be advocated is a centralized website that allows individual users to download videos for a blanket licenses fee. There are many advantages to such a system. By having a centralized website, the MMA companies reap the rewards of their own copyright rights through sheer numbers of downloading users (aggregation of license fee users), advertising revenue, and ancillary sources of revenue (sales of licensed clothing, and training equipment through the onsite web store). As mentioned earlier companies such as Grokster and Streamcast distributed their software free of charge and made all of their income from selling advertising space. As the number of users of each software increased, the advertising opportunities became more and more lucrative.[57] As more users turn towards the centralized MMA blanket license website, the licensing fee can be reduced more, and could conceivably be licensed for free. The website would capture the international market as well, as borders are no barrier to the internet. This could be accomplished by having the central website in different languages, and with the ability of users to download an event with the broadcast in a variety of different languages. An additional advantage is that a centralized website can do market research and record user preferences of each individual licensee based on the Amazon.com model.

Furthermore, a centralized site could be used to launch internet pay per view events which would either be included under the blanket license or would have to be purchased at another small fee. Broadcast of live television on the internet has become increasingly popular. On April 10^th, 2006, ABC announced that they would start streaming video for their most popular television shows on the internet.[58] This comes one month after the success of CBS’s free streaming of its NCAA Final Four tournament through its Full Court Pass program which allowed viewers access to virtually every game in the 65 team tournament. “CBS streamed more than 15 million live broadcasts of NCAA tournament games during this year’s March Madness, numbers that exceeded the networks expectations”[59] One of the smaller MMA organizations, Hawaii’s Rumble on the Rock (ROTR) has already decided to take advantage of this technology by offering the April 22 pay per view by allowing next day internet broadcast of the pay per view and viewing of select older fights through a pay per fight system.[60]

The benefits of pay per view over the internet to MMA companies are that they lower the cost of MMA pay per view broadcasts because the MMA companies do not have to purchase the time slots from the cable companies to broadcast their shows. Furthermore, the WWE (World Wrestling Entertainment), UFC and Pride have purchased most of the prime weekend slots for pay per view events, and therefore it is harder for the other MMA companies to purchase costly pay per view slots through the cable companies. By eliminating the middle man (the cable companies), a centralized MMA blanket licensing organization could also provide low cost real time pay per view events available to a world wide audience. The revenue generated from such a system on an international level would be tremendous, despite the low affordable price that would be charged.

Enforcement against MMA video piracy through contributory and vicarious online service providers who do not comply with the DMCA safe harbor provisions would continue through litigation under this system. The combination of continued enforcement and a centralized blanket licensing server would rewards those who deserve it the most, the copyright rights owners. By setting up such a system, the individuals who would have infringed but for the blanket licensing centralized website will come to the centralized website and drive turn away from those websites that contribute to copyright infringement at the expense of the MMA companies. The free riders of the intellectual property of MMA videos would no longer garner the profits generated from advertising revenue from illegal downloaders.

Like the BMI/ASCAP system, profits from this centralized website would be distributed as a percentage based on the frequency of the companies videos that are downloaded.

Such a system would be especially effective for the smaller MMA companies in the United States such as Rumble in the Rock, KOTC, and Gracie Fighting Championships since the smaller companies lack the legal resources to combat piracy through litigation. Also of great benefit would be the Japanese MMA organizations, Pancrase, Shooto, Rings, Deep and ZST, who do not have a presence in the states. Ideally, all the MMA websites would participate in creating a centralized organization, but theoretically such a system could work without the participation of some of the major players.

C. The nonexclusive blanket license is the superior solution

i. Why this is better than Ignore the Problem. Advances in Technology will eliminate the issue.

a. Problem with Video Quality of Pirated downloads.

Although it is true that video quality of pirated video’s is often times inferior to DVD’s, as capturing technology continues to improve, video quality of pirated downloads will improve as well. Already it is possible to download HDTV quality images of TV shows over the internet and run them through your 50 inch Plasma Flat Panel HDTV.

b. Downloading Times

Decreases in orders of magnitude on downloading times will make the time constraint issue less problematic for pirates. Furthermore for MMA Videos, individual fights which last anywhere from 10 seconds up to 16 minutes can be downloaded quite quickly.

c. Piracy leads to more DVD sales

While it is true that pirating copies allows for free promotion and advertising of that industry[61] the same goal of promoting and advertising the industry can be accomplished by a centralized nonexclusive blanket licensing website that allows for low cost downloads.

d. Big Screen TVs and the High Definition DVD (HD DVD) & BluRay formats.

Although the superiority of BlueRay and High Definition DVD’s will encourage the purchase of such dvds even thought the same video can be pirated with the old dvd technology on the internet, pirating technology will inevitably catch up with HD DVD and BluRay technology, making pirating of HD DVD and BluRay MMA videos possible. Already, this pirating technology is possible on the internet for High Definition television shows.

e. Pirating may be less of an issue as MMA organizations show more fights on television.

This is true. However, most events in the U.S. are shown selectively on television. This does not solve the problem of pirates having access to the entire MMA library of fights. Furthermore, most of the fights shown on television are older fights. Since pay per view buys are still an important source of revenue, live fights of pay per view events will not be shown on television creating an incentive to continue to illegally download these pay per views.

The day of seeing television networks pay millions of dollars per MMA event is still far off in the US. With American football, baseball, basketball and hockey firmly entrenched in the sports industry, MMA has a much steeper mountain to climb than in Japan in order to become one of the most popular sports in the U.S.

ii. Why it is better than pay per song systems such as Itunes and Napster

Pay per song systems continue to encourage music piracy because the costs rise the more songs you purchase. Somebody who would like to download many songs will likely turn to illegally music piracy.

iii. Why it is better than overwhelming the internet with defective videos

The problem with this strategy is that it will most likely lead to the downloaders becoming frustrated by the adult video companies attempt to thwart their piracy. In fringe industries such as MMA and adult videos, the illegal downloaders are usually the industries most loyal fans. By thwarting the illegal downloaders attempts at obtaining videos, the companies may hurt their goodwill and ironic as it sounds, loyalty of its most ardent fans. The companies in such fringe industry must balance the promotion of their industry by these loyal fans against their interest in copyright protection.

iv. Supports current infrastructure and addresses policy concerns of intellectual property

a. Consistent with goals of the copyright laws.

A MMA video blanket licensing scheme would be consistent with the goals of the copyright law in that downloads of videos at a low price would encourage the dissemination of information, knowledge and wisdom. At the same time it would reward the copyright holders by generating revenue through the blanket licensing fee and advertising revenue.

b. Judicial enforcement mechanisms in place.

The courts have fully supported the enforcement of nonexclusive licensing systems. BMI and ASCAP send monitors to check to make sure no one is using the catalogue without paying the licensing fee. When a violator is found, the courts have consistently found for BMI/ASCAP or in the alternative, the violator settles before litigation.

Under BMI/ASCAP Nightclub owners have been found liable for failing to pay licensing fee.[62] Even juke box owners who fail to pay licensing fees has been liable. In Broadcast Music Inc, v. Allen-Genoa Rd. Drive-in, Inc., a BMI field investigator found a juke box that was playing BMI controlled music and did not have a BMI registration sticker.[63]

As mentioned previously, while the BMI and ASCAP licensing systems deal with the public performance rights of musical compositions, by analogy we can extend it to MMA videos. Instead of implicating 106 (6) right of performance, a MMA video blanket licensing scheme could operate 106 (1) right to reproduce, and 106 (3) right to distribute. While going after individual infringers will still be problematic, the combination of litigation as a deterrent, and a low cost blanket license will effectively eliminate the need for MMA video piracy.

c. Antitrust issues with nonexclusive blanket licensing systems

There is some valid concern that a MMA video blanket licensing organization could run into antitrust problems as a monopoly. However, courts have consistently ruled in favor of nonexclusive blanket licensing arrangements.

1. BMI/ASCAP passes the Sherman Act Antitrust tests.

There have been several Sherman antitrust actions against BMI/ASCAP type blanket licensing schemes. Disgruntled licensees have waged antitrust attacks on the performing rights organizations' licensing practices over the last forty years.[64]

Most of these cases have been brought under Sherman 1, monopolization. Under Sherman 1, certain activities by monopolies qualify as either, Per Se illegal and anticompetitive or as either legal or illegal depending on how the activities are judged under the Rule of Reason test. Under the Per Se test naked restraints against competition such as tying arrangements and price fixing are deemed automatic violations of the Sherman Antitrust act. All other activities follow the Rule of Reason test in which the court will allow the activity if the anticompetitive effects are not undue.[65]

Because of concerns of anticompetitive practices, the 1941 consent decree between the government and ASCAP allowed for an alternative to blanket licensing in the form of a per program license.[66]

In 1950, the government reexamined the consent decree and said that the alternative had to offer a real economic choice. The amended consent decrees gave the courts the power to determine a reasonable license fee.[67]

In the CBS line of cases, the Supreme Court determined that the courts should use Rule of Reason analysis to price fixing and tying arrangements rather than the Per Se Rule for ASCAP and BMI type blanket licensing organizations.[68] The Court determined that it was not experienced in the industry and that the BMI/ASCAP licensing fee was, “not literal price fixing”. Similarly, in the Moore-Law case the court also determined that they were not experienced.[69]

The CBS court believed that blanket licensing was necessary to protect the rights of copyright holders and therefore was not a naked restraint on trade with no purpose except stopping competition.[70]

Finally, in Buffalo Broadcasting, it was determined that as long as the alternatives were viable, even if seldom used, they would be considered realistic alternatives to Blanket Licensing.[71]

In summary, in blanket licensing cases the courts balance the antitrust and copyright considerations and find that the organizations need for such a blanket license outweigh the anticompetitive effects.[72]

2. MMA video blanket license and Antitrust.

If the MMA industry were to adopt a blanket licensing agreement they would likely withstand antitrust challenges based on the courts adoption of the Rule of Reason for BMI, ASCAP type blanket licensing arrangements.

Furthermore under the Moore-Law court’s blanket license benefit factors, an MMA blanket license scheme would benefit the industry. An MMA blanket license would (1) reduce transaction cost for users to receive copyright rights to all the different organizations, (2) it would take care of the inability of individuals to identify which event or fight they wanted to download on a particular occasion, (3) reduce the inevitable increase in monitoring costs in going after direct and contributory infringers, (4) and favor the relative inexpensiveness of administering a license based on MMA video costs.[73]

VII. Conclusion

By setting up a centralized nonexclusive blanket licensing system for MMA videos, the copyright holders of MMA videos are rightfully rewarded for their copyright rights through the licensing fee and the advertising revenue. No longer will everyone else, the DVD burning software companies, the MMA message boards, the file sharing companies, free ride and capitalize off the copyright owners reward. At the same time, the fans of MMA will also benefit from the low cost of MMA videos, wide variety of selection, and the dissemination of information and ideas through the easy access to MMA videos.