Technology & Marketing Law Blog: Copyright Archives

Technology & Marketing Law Blog

May 23, 2013

Talk on Designing Optimal Safe Harbors and Immunities

By Eric Goldman

Recently, I posted a Forbes article entitled "Designing Optimal Safe Harbors and immunities." Based on the feedback I got to the article, I plan to convert it into a full-blown law review article eventually (i.e., it could take me years). Because I plan to invest more into this project, I workshopped the paper at the University of Washington (thanks Zahr for organizing this!). From the talk: my presentation slides, audio recording (item #36) and video recording (item #37).

Posted by Eric at 09:00 AM | Copyright , Derivative Liability | TrackBack

May 12, 2013

Perfect 10 Gets a Surprising Partial Sumary Judgment in 512 Case--Perfect 10 v. Yandex

By Eric Goldman

Perfect 10, Inc. v. Yandex N.V., 2013 WL 1899851 (N.D.Cal. May 7, 2013)

Few names strike as much fear--and derision--among Internet lawyers as Perfect 10. Perhaps the quintessential Internet Law plaintiff of the 2000s decade, Perfect 10 went on a dubious litigation campaign filled with precedent-setting losses and massive legal bills for all participants. Perfect 10 won a ruling here and there, but for the most part, Perfect 10's courtroom efforts have been a categorical failure. Indeed, few plaintiffs have created more favorable Internet Law precedent than Perfect 10.

Thus, it's a little disorienting/surprising to see Perfect 10 win anything in court, even if it's a small preliminary ruling. Perfect 10's target in this lawsuit is Yandex, the Dutch company operating the leading Russian search engine. In this ruling, the parties are wrangling over Yandex's ability to qualify for the 512 safe harbors.

Consistent with its past (and IMO unnecessarily sloppy) practices, Perfect 10 didn't send a prototypical 512(c)(3) notice. Instead, one takedown notice it sent consisted of:

a cover email attaching the DMCA notice. Next, there was an attached PDF file. The PDF file began with a short DMCA notice letter that described the contents of the DMCA notice itself and requested that the images be taken down. The notice letter was followed by several pages of screen shots from Yandex's own image search web sites. The screen shots showed the allegedly-copyrighted images in Yandex's search results along with corresponding links to the party directly hosting the content. In many instances the links to the third-party sites were truncated, but it was possible to copy the whole link by right-clicking on the image in the file. At the end of each sample notice was a single screen shot from Perfect 10's own website that included the allegedly copyrighted images in a four-by-four grid of images.

Yandex raised several objections to this notice. Yandex says that Perfect 10's notices should be reviewed in combination with the others because the aggregated workload processing the many PDFs it received was unnecessarily high, but the court accepts Perfect 10's request just to look at this one. (That turned out to be an uncharacteristically savvy litigation move from Perfect 10). The court is unmoved by Yandex's beef that it's burdensome to extract the full URLs from the PDF and to match the screen shots to the thumbnails. The court thinks these obligations are within the scope of the service providers' responsibilities, and because Perfect 10 asked the judge to evaluate just one takedown notice in isolation, the court denigrates the amount of work required for Yandex to review each notice in isolation (calling Yandex's gripe "disingenous" at one point). Thus, the court grants Perfect 10's summary judgment request that this PDF takedown notice satisfied 512(c)(3).

(An aside: I find it incredible that Perfect 10's PDF approach was the most efficient way to prepare 512(c)(3) notices. It seems almost like Perfect 10 was trying to satisfy the minimum 512(c)(3) requirements using the most onerous and expensive approach for recipients. They wouldn't be that devious...would they? At minimum, Perfect 10 could have saved itself a lot of future litigation time and expense by sending more traditional notices.)

Yandex also categorically loses any 512(c) safe harbors for the period of time it didn't have a designated agent for service of notice, a step that didn't happen before 2012. Designating an agent is a clear minimum requirement for 512(c) protection, but it highlights the challenges faced by some foreign defendants. It sort of makes sense that a European search engine wouldn't satisfy a US formality, but Yandex was big enough that it should have checked off this box. Whoops.

If history has any predictive power, Perfect 10 will ultimately lose this lawsuit. Still, Perfect 10 got a couple of favorable points out of this ruling. To me, that reinforces the structural design failings of 512's safe harbor.

See more blog posts on Perfect 10.

[Photo credit: Play on ten. Success metaphor // ShutterStock]

Posted by Eric at 09:18 AM | Copyright , Derivative Liability | TrackBack

May 09, 2013

Copyright Trolling Is Really Hard to Do Profitably--Righthaven v. Hoehn

By Eric Goldman

Righthaven LLC v. Hoehn, 2013 WL 1908876 (9th Cir. May 9, 2013)

It's been a rough week for copyright trolls. First, Judge Wright destroyed the Prenda Law enterprise in a sanction-filled opinion. Second, today the Ninth Circuit emphatically rejected Righthaven's attempt to manufacture copyright standing. I don't see how either the Prenda Law outfit or Righthaven survive these blows. Both offer a good cautionary tale for anyone who thinks there's gold in copyright trolling. Not only isn't it a path to riches, but it's likely a road to ruin; I'm still waiting to see how many lawyers lose their license from the ill-fated efforts.

The Ninth Circuit says that Righthaven failed to obtain bona fide copyright transfers to Stephens Media's copyrights, despite several attempts to do so. The funny thing is, it would have been possible to satisfy the standing requirement, but only if Stephens Media had been willing to give up control of its copyrights. Instead, Stephens Media simultaneously wanted the cash from Righthaven's litigation campaign but was never comfortable enough actually giving Righthaven any real rights. Using too many double negatives, the court says:

Moreover, the contract evinced not just an intent that Righthaven receive whatever rights were necessary for it to sue, but also an intent that Stephens Media retained complete control over all exclusive rights. The problem is not that the district court did not read the contract in accordance with the parties’ intent; the problem is that what the parties intended was invalid under the Copyright Act.

The final version of the Stephens Media-Righthaven deal (contained in a “Clarification and Amendment to Strategic Alliance Agreement") said that Stephens Media "convey[ed] all ownership rights in and to any identified Work to Righthaven through a Copyright Assignment so that Righthaven would be the rightful owner of the identified Work.” Yet, even this contract provision failed because Righthaven had to give Stephens Media 30 days notice before exploiting the work, and Stephens Media could buy the rights back by giving 14 days' notice and paying $10. The court says:

Consequently, Righthaven was still unable to exploit any exclusive rights unless Stephens Media permitted it to. Meanwhile, Stephens Media was free to exploit the works to the full extent it wished, and it presumably would with any article that it perceived to have additional value.

Sounds like Righthaven could have benefitted from a real copyright expert to handle these provisions. Where was Dale Cendali when Righthaven needed her most?

Because Righthaven never properly procured a copyright transfer to any of Stephens Media's works, it lacked standing for all of its lawsuits based on Stephens Media's works. In turn, because Righthaven lacked standing, the Ninth Circuit vacates the lower court fair use rulings in the Hoehn and DiBiase cases (and presumably Righthaven's other fair use losses are similarly suspect), an unfortunate but logical collateral consequence.

In theory, Righthaven could try once again to acquire proper copyright transfers from Stephens Media and refile all of its lawsuits, but that won't happen. It's clear Righthaven didn't know how to litigate properly, it's clear that there's not a lot of easy profits in suing mom-and-pop bloggers who may unintentionally violate a newspaper's copyright, and Righthaven has lost all of its assets. So Righthaven is dead, and it won't be resurrected. Good riddance. The remaining mop-up issues from the Righthaven debacle include whether Stephens Media will have to cough up more money for its role in the sordid affair, and how the various state bar discipline enforcers view the conduct of some of Righthaven's attorneys.

In September 2010, I had a telephone "debate" with Steve Gibson of Righthaven. In the call, I kept pounding the point that I didn't believe his scheme could be profitable. Over the last three years, I haven't seen anything that changes my view. Copyright trolling requires a high volume of low-value cases, which requires lawyers to keep costs down--inevitably by cutting legal corners. Thus, there is an intrinsic tension between keeping costs down and generating enough bona fide copyright infringement cases to get paid off. Good data points for future copyright owners who thinks trolling is the path to riches.

Prior blog posts:

* Righthaven Hit With Another Fee/Cost Award, This Time Nearly $120k--Righthaven v. DiBiase
* Colorado Judge Drills Righthaven and Awards Attorneys' Fees--Righthaven v. Wolf
* Resetting the Righthaven Fiasco
* Righthaven Defendant Awarded $3,800 in Attorneys' Fees--Righthaven v. Leon
* Recapping Righthaven Developments from the Past Two Weeks
* Righthaven Benchslapped in Ruling Saying It Lacks Standing--Righthaven v. Democratic Underground
* Another Defense-Favorable Righthaven Ruling--Righthaven v. Choudhry
* Republishing Entire Newspaper Story is Fair Use--Righthaven v. CIO
* Blogger Wins Fair Use Defense...On a Motion to Dismiss!--Righthaven v. Realty One

[Photo Credit: trolling road sign // ShutterStock]

Posted by Eric at 10:30 AM | Copyright | TrackBack

May 02, 2013

More Evidence That Congress Misaligned the DMCA Online Copyright Safe Harbors--UMG v. Grooveshark (Forbes Cross-Post)

By Eric Goldman

UMG Recordings, Inc. v. Escape Media Group, Inc., 2013 WL 1729431 (N.Y. App. Div. April 23, 2013)

Grooveshark runs a user-generated content (UGC) website that allows users to upload sound recordings and other users to stream those recordings. UMG Recordings (a subsidiary of Vivendi, VIV:FP) sued Grooveshark for copyright infringement based on its users' activities. This week, a New York state appellate court partially denied Grooveshark's eligibility for the online safe harbors enacted by Congress in the 1998 Digital Millennium Copyright Act. This ruling creates several problems for UGC websites that let users post sound recordings, and it demonstrates one way Congress mishandled drafting its online safe harbors.

The Ruling

In 1998, Congress provided UGC websites with a safe harbor for user-caused copyright infringement (17 U.S.C. 512(c)). To be eligible for the safe harbor, UGC websites must satisfy some preconditions. If they do, copyright owners unhappy about users committing copyright infringement can send takedown notices to the UGC website. If the UGC website responds quickly to a takedown notice, the DMCA online safe harbor says that the website avoids further copyright liability for the items identified in the takedown notice. In contrast, if the UGC website ignores/rejects the takedown notice, it potentially bears legal responsibility for its users' actions. Obviously, most UGC websites prefer to limit their risk, so they routinely take down items identified in the takedown notices.

I acknowledge that you probably think most court opinions address arcane legal issues, but even I think this ruling dealt with unusually arcane legal issues. The DMCA online safe harbors apply to "copyright" claims, but it turns out the word "copyright" is ambiguous. In the 1976 Copyright Act, Congress attempted to eliminate most state copyright laws. As a result, today most potentially copyrightable works either are protected under federal law, or they are not protectable under federal or state copyright law at all. However, Congress preserved a few categories of works that can be covered by state copyright law--the most commonly-encountered example is certain bootleg recordings of concerts. Congress also said that sound recordings made before 1972 remain protected under state copyright laws. Some of these pre-1972 sound recordings are hugely important and highly recognizable cultural assets; for example, the Grooveshark court cites the UMG-owned recordings of “Peggy Sue” by Buddy Holly, “Johnny B. Goode” by Chuck Berry, “My Girl” by the Temptations and “Baby Love” by the Supremes.

It's this latter group of pre-1972 sound recordings at issue in the Grooveshark case. Grooveshark argued that the DMCA safe harbors applied to both federal and state copyrighted works. UMG argued that the safe harbors only apply to federal copyrighted works, not state copyrighted works. In a short and relatively unenlightening opinion, the New York state appellate court sided with UMG and ruled that the DMCA safe harbor's "notice-and-takedown" scheme doesn't apply to state copyrighted works.

Implications

I see at least three problems with the court's ruling:

Problem #1: In 20111, a New York federal court (in Capitol v. MP3Tunes) reached the directly opposite conclusion and held that state copyrighted works are covered by the DMCA. (The Grooveshark opinion acknowledged this precedent but made no effort to distinguish it). In 2007, the federal Ninth Circuit Court of Appeals held in 2007 that all state IP claims against UGC websites (including, presumably, state copyright laws) categorically are preempted by a different federal website immunity, 47 U.S.C. 230 (see Perfect 10 v. ccBill).

Thus, we have three different and conflicting interpretations of the DMCA's applicability to pre-1972 sound recordings. What a mess! It's never good for anyone when courts have three different answers to the same legal question. It also means litigants may engage in wasteful forum-shopping efforts to find the judicial venue where the rules are most favorable them.

Problem #2: The ruling doesn't hold Grooveshark liable for users' copyright infringement of pre-1972 sound recordings. Instead, Grooveshark simply failed to qualify for the safe harbor for those works, so the judicial inquiry will now turn to the default laws applicable to "secondary" infringement of state copyrighted works. Unfortunately, we have no idea what those rules are. Because most UGC-related copyright infringement cases have been resolved by the DMCA safe harbor, we don't have many rulings interpreting the secondary infringement rules in those rare situations when the safe harbor doesn't apply (see this post for more about that). Furthermore, we have even scarcer caselaw interpreting secondary liability for infringement of state copyrighted works. (It's probable the rules will track the federal copyright laws, but that's not guaranteed). Thus, this case now involves novel and unpredictable legal questions.

Problem #3: Grooveshark has no easy way to distinguish which user-submitted sound recordings are covered by federal copyright versus state copyright. However, its legal liability depends on this difference. Operationally, how should Grooveshark proceed? Without universal protection from the DMCA's safe harbor "notice-and-takedown" scheme, Grooveshark may be required to pre-screen user uploads to assess whether the file is a pre-1972 sound recording or not, and then it may have to handle those files differently.

However, if that's the result, Grooveshark probably doesn't have a viable business. The pre-screening costs would be exorbitant, Grooveshark would make many classification errors, and copyright owners would subsequently argue (probably unsuccessfully, though we are not sure) that Grooveshark should lose the DMCA safe harbor if it fails to catch infringing files during its pre-screen. (See the latest Viacom v. YouTube ruling for examples of copyright owners' arguments about website operator scienter).

More importantly, if Grooveshark must build a uniform site-wide operational process to deal with the small minority of user-uploaded recordings protected by state copyright law, then the DMCA online safe harbors failed at a fundamental level. Even if the safe harbor applies to 99% of the works, the safe harbor doesn't help UGC websites with their business planning because the UGC website must still anticipate and address the 1%--and this becomes impossible if, without further research, the 1% looks identical to the 99%.

In a recent post, I discussed some key design attributes of safe harbors and immunities. One element I identified was "global preemption," meaning that a successful safe harbor has to swipe out all overlapping claims covering the same activity. The Grooveshark ruling suggests Congress failed that design principle by leaving open a state copyright workaround. In my prior post, I identified some other ways that the DMCA online safe harbors violated best-practice design principles. I doubt Congress will be revisiting the DMCA online safe harbors soon (nor would I anticipate any beneficial changes when it does), but its mistakes with the DMCA safe harbors offer useful lessons for Congress' next attempts to draft effective safe harbors.

For more discussion about the DMCA online safe harbors, see the recordings and resources from the recent 15 Year DMCA Retrospective Conference at Santa Clara University.

Posted by Eric at 11:09 AM | Copyright , Derivative Liability | TrackBack

April 23, 2013

You Shouldn't Need a Copyright Lawyer to Pick a Dentist--Lee v. Makhnevich (Forbes Cross-Post)

By Eric Goldman

In October 2010, Robert Lee needed a dentist, pronto. He didn't realize he needed a copyright lawyer to help him pick a dentist.

In search of urgent pain relief, Lee contacted Dr. Stacy Makhnevich (a preferred provider under Lee's insurance plan). Dr. Makhnevich's office required Lee to sign a "Mutual Agreement to Maintain Privacy" before it would treat him. This agreement--based on a form contract sold by a North Carolina company called Medical Justice--prohibits patients from posting online reviews of the dentist; and if the patient does write a review, the agreement says the dentist owns the review's copyright. In exchange, the dentist promises not to ask the patient if it can sell the patient's name to marketers--a worthless promise, as HIPAA already requires the dentist to obtain patients' permission before selling their information to marketers. (Elsewhere, I've explained why I think asking patients to restrict their future reviews is unethical, probably illegal, and a bad business decision).

Lee just wanted dental services, and not surprisingly he wasn't in much of a mood to negotiate the ownership of copyrights in works that Lee hadn't even written yet. So like hundreds of thousands of other Americans, Lee signed a Mutual Agreement to Maintain Privacy so he could get the dental services he urgently needed.

Later, Lee became unsatisfied with his interactions with the dentist and posted critical online reviews to Yelp, DoctorBase and other websites. Apparently unhappy with the reviews, the dentist invoked the Mutual Agreement to Maintain Privacy and claimed copyright ownership over those reviews. The dentist sent Lee draft versions of lawsuits claiming $100,000 in copyright infringement damages. The dentist sent Lee invoices claiming copyright damages of $100 per day for his infringement. The dentist also sent takedown notices to Yelp and other websites, threatening to sue them for copyright infringement if they didn't remove Lee's posting. (To its credit, Yelp stood behind its user and declined to remove the review, accepting the risk of being sued for Lee's purported copyright infringement).

Lee didn't fold under this pressure; instead, he sued the dentist to void the contract. In a recent ruling, the court rejected the dentist's attempt to dismiss Lee's lawsuit. The court didn't conclude that Lee will win (that question hasn't been raised yet), but the opinion isn't good for the dentist. The court frames the lawsuit in skeptical terms:

This lawsuit about a toothache and a dentist's attempt to insulate herself from criticism by patients has turned into a headache. After appealing to his dentist for pain relief, Plaintiff Robert Allen Lee, ironically, is appealing to the court for relief from his dentist.

Elsewhere, in response to the dentist's argument that there's no real dispute between the parties, the court disparages the dentist's argument as "specious" and "ridiculous" in light of the dentist's "constant barrage of threats." Rhetoric like this typically is a leading indicator of future adverse rulings.

This ruling is particularly noteworthy because we almost never see legal battles involving the Mutual Agreement to Maintain Privacy. When confronted with a doctor or dentist's threats involving the agreement, most patients quickly back down and remove their online reviews. In the rare situations where the patient doesn't back down, some doctors and dentists acquiesce rather than test the contract's strength in court. This case got to court only because the dentist sought so aggressively to assert the contract rights and Lee decided to fight rather than fold. Though we'll have to see how this case turns out, the dentist probably made the wrong choice.

Meanwhile, after a public interest organization (Center for Democracy & Technology) filed a complaint about Medical Justice's practices with the Federal Trade Commission, Medical Justice unilaterally declared that it had "retired" the contract and advised its customers to stop using its form. Indeed, Medical Justice has done a complete reversal on its customers. Having persuaded its customers that patient reviews should be suppressed, Medical Justice (under a new brand, eMerit) is now selling doctors and dentists a service to help them increase the number of online reviews from patients. Medical Justice's customers would have been much better served encouraging patient reviews from the beginning; many of those customers are now woefully behind their competition in generating a credible quantity of patient reviews.

Despite Medical Justice's credibility-defying flip, Medical Justice was so effective at persuading doctors/dentists to fear patient reviews that some doctors and dentists are still using the form agreement. Should your doctor or dentist present with such a form, you don't need to call your copyright lawyer. Instead, refuse to sign the form, tell your doctor or dentist that the form agreement is unethical and probably illegal, and send them a copy of the recent ruling. Or, tell the doctor/dentist that you're going to take your business to a healthcare provider with more enlightened views about patient reviews.

If you're a doctor or dentist wondering how to deal with patient reviews, elsewhere I've offered some suggestions.

Case Citation: Lee v. Makhnevich, 2013 WL 1234829 (S.D.N.Y. March 27, 2013). The initial complaint.

Posted by Eric at 01:18 PM | Copyright | TrackBack

April 19, 2013

Viacom Loses Again--Viacom v. YouTube

By Eric Goldman

Viacom International Inc. v. YouTube Inc., 2013 WL 1689071 (S.D.N.Y April 18, 2013)

Persistence is a virtue, but stubbornness is a sin. I'm pretty sure Viacom has sinned a lot in its six years of litigation against YouTube. How many things have to go wrong for Viacom before it wakes up and smells the hummus? It's now lost twice in the district court, it's created a bunch of precedent unfavorable to its interests, it's proven that even it can't figure out which clips it authorized to post on YouTube and which it didn't, it gave up complaining about YouTube's behavior after 2008 (making the case entirely backward-looking), it got caught repeatedly astroturfing, and in general it's looked like a massive jackass. Perhaps its next appeal will finally kill this case as it deserves, though that will single-handedly cause a new downturn in the legal industry as hundreds of lawyers look to find new sugar daddy clients.

Personally, I blame the Second Circuit for unnecessarily extending the case. The Second Circuit's remand clouded the law and ensured the parties would waste millions of dollars more before YouTube reaches its inevitable victory. On remand, the case went back to Judge Stanton, who ruled quickly on YouTube's motion for summary judgment (YouTube's final brief was filed less than 2 months ago). It's hardly surprising that Judge Stanton ruled for YouTube again--after all, he ruled for YouTube previously, and he shouldn't have been reversed by the Second Circuit--but he left no doubt that he feels Viacom's case is bogus.

It doesn't help Viacom that, in its opposition to YouTube's summary judgment motion, it admitted:

It has now become clear that neither side possesses the kind of evidence that would allow a clip-by-clip assessment of actual knowledge.

This was a devastating admission by Viacom, though extraordinarily helpful for framing the case. If the safe harbor is available only if the defendant can prove the negative, i.e., that it didn't have actual knowledge of infringement with respect to each and every user-uploaded file that a copyright owner challenges, then the safe harbor is a nullity. Service providers can't prove the negative, and trying to do so would lead to lots of socially wasteful efforts by the service provider recording its every move--just in case some future copyright owner decides to sue.

Judge Stanton shreds Viacom's argument in an incredibly satisfying way. He correctly disparages this argument as "an anachronistic, pre-Digital Millennium Copyright Act (DMCA) concept" because it basically presumes the service provider knows of user-caused infringement unless it can prove otherwise. The judge further mocks Viacom's "extravagant" request to deny YouTube the DMCA safe harbor because YouTube doesn't have adequate evidence. The judge says the fact neither party can tender clip-by-clip evidence of actual knowledge:

demonstrates the wisdom of the legislative requirement that it be the owner of the copyright, or his agent, who identifies the infringement by giving the service provider notice...Thus, the burden of showing that YouTube knew or was aware of the specific infringements of the works in suit cannot be shifted to YouTube to disprove. Congress has determined that the burden of identifying what must be taken down is to be on the copyright owner, a determination which has proven practicable in practice.

[Note: check out the videos and other resources from the HTLI's 15 Year Retrospective of the DMCA in March, with some great discussion on these points. See especially Judge Whyte's discussion of the pre-DMCA Netcom case.]

The court then turns to Viacom's willful blindness argument. The Second Circuit's implication that willful blindness could be relevant to a 512 safe harbor inquiry was a terrible moment in 512 jurisprudence. As I wrote about that opinion:

By adding another category of knowledge but not defining it, this opinion adds substantially to the transaction costs for a [scienter] category that may not exist in the real world. The judges may be happy with themselves that they've done a more thorough taxonomizing job, but everyone else is miserable trying to figure out what belongs in that taxonomical node.

Judge Stanton does some fancy footwork around the Second Circuit's muddled legal standard. I think the most honest characterization of Judge Stanton's handling is that he effectively merges willful blindness into the other two statutorily specified scienters (actual knowledge via takedown notices or "red flags"). This is entirely logical. The willful blindness standard was a mistake in the first place, so it makes sense (and is jurisprudentially helpful) to gut the standard. Still, Viacom will surely press the Second Circuit to clarify the willful blindness hairball it coughed up last time. Ideally, the Second Circuit will fix its prior mistake and recant the whole willful blindness sideshow.

Regarding YouTube's right and ability to control infringements, Judge Stanton rearticulated the legal standard:

knowledge of the prevalence of infringing activity, and welcoming it, does not itself forfeit the safe harbor. To forfeit that, the provider must influence or participate in the infringement.

I don't really love this standard. What do "influence" or "participation" mean? Those words are not in the 512(c) statute, nor are they normally part of the common law vicarious copyright infringement test (participation is part of contributory infringement, not vicarious). The court gives three examples of what might constitute improper influence or participation, but two examples relate to online marketplaces and not more typical UGC sites. The other example, "prescreening content, rendering extensive advice to users regarding content and editing user content" (from the Wolk case), seemed OK if all three elements are required.

Having left us a little confused about the legal standard, Judge Stanton concludes:

YouTube's decisions to restrict its monitoring efforts to certain groups of infringing clips, like its decisions "to restrict access to its proprietary search mechanisms," do not exclude it from the safe harbor, regardless of their motivation. Plaintiffs' remaining evidence of control goes no than the normal functioning of any service provider, and shows neither participation in, nor coercion of, user infringement activity.

The court does indicate that YouTube may have "steered viewers towards infringing clips" by manually highlighting two clips-in-suit on its home page. However, both clips had authorization. Otherwise:

There is no evidence that YouTube induced its users to submit infringing videos, provided users with detailed instructions about what content to upload or edited their content, prescreened submissions for quality, steered users to infringing videos, or otherwise interacted with infringing users to a point where it might be said to participated in their infringing activity.

What a hash. I'm sure the Second Circuit will make a further hash of this point. If these elements are an "or," meaning plaintiffs merely need to allege a service provider engaged in any one of these activities, we're going to have lots of arguments about the right and ability to control prong in the future.

Finally, the judge rejects the syndication issue. The clips hand-selected and delivered to Verizon weren't at issue in the lawsuit, and YouTube's other automated syndication arrangements were consistent with the safe harbor.

Having disposed of the four issues remanded by the Second Circuit, the judge granted YouTube's summary judgment motion.

Overall, the judge reached a solid and defensible result. However, the common law interpretations of the 512 safe harbors are getting messier and more convoluted due to this lawsuit and the parallel suits like UMG v. Veoh. Basically, rather than handing defendants clean wins, the courts keep adding extra factors and layers of analysis to the statutory elements, which jacks up the adjudication costs and reduces predictablity. To me, this opinion exemplifies the weakness of the 512 safe harbor design (see my recent blog post on optimal safe harbor design for more). Although we could point fingers at the judges (especially the Second Circuit for its stupid willful blindness digression), the real blame goes to Congress for making its safe harbor requirements too detailed and giving judges too much room to color between the lines. Judge Stanton's ruling isn't a model of judicial reasoning, but it's pretty good in light of how the courts have scrambled the safe harbors due to Congress' defective drafting.

Case Library

[Photo credit: Businessman not listening // ShutterStock]

Posted by Eric at 08:38 AM | Copyright , Derivative Liability | TrackBack

April 15, 2013

Designing Optimal Immunities and Safe Harbors (Forbes Cross-Post)

By Eric Goldman

[Note: this is one of those posts that languished in the queue for a few years. Depending on your response, I may decide to turn it into a lengthier academic paper. Please send me your thoughts!]

You already know the legal system is screwed up, but I'd like to be more specific about why. When we say lawyers are "litigious," what we really mean is that too many lawyers spend too much time thinking about how to sue someone else. Similarly, legislators spend their time manufacturing new laws, which usually create more opportunities for people to sue each other (see the Economist’s discussion of this point). Law professors typically do the same; the typical law review article focuses on a social problem and proposes to solve it with a new legal rights. (Just take a look at the torrent of recent academic articles about privacy and you'll see what I mean).

I don't understand why we as a society spend so much time thinking about suing people. I'm much more interested in figuring out how we can stop suing each other. If we could create "lawsuit-free zones," we'd avoid the individual and social costs of adjudicating disputes, including the' settlements payments to get rid of nuisance and otherwise meritless lawsuits. Plus, lawsuit-free zones stimulate business investments by providing more legal certainty to entrepreneurs, which should translate into more jobs. So finding ways to dial down litigation might be the best “jobs stimulus” effort our legislators could undertake.

The way to create lawsuit-free zones is through "immunities" and "safe harbors." Immunities categorically eliminate legal liability in the specified contexts. Safe harbors allow defendants to avoid liability if they take the specified steps. Both help motivate socially beneficial and job-creating activity. Three examples:

* 47 USC 230, an immunity that says websites aren't liable for user-generated content (UGC) except with respect to intellectual property claims and a small number of other specified circumstances. This immunity has become the foundation of the UGC industry, which has created lots of jobs and improved the flow of socially beneficial information. For more on Section 230's merits as economic policy, see my Regulation of Reputational Information paper.

* 17 USC 512, a safe harbor for websites to avoid liability for user-committed copyright infringement. While this safe harbor has some serious flaws (especially when compared to 47 USC 230), it has still provided enough legal certainty to help the UGC industry grow.

* California Business & Professions Code (B&P) 16600, which voids non-compete clauses in California in most circumstances. In her book Regional Advantage: Culture and Competition in Silicon Valley and Route 128, Prof. Annalee Saxenian persuasively demonstrated that this immunity plays an essential role in Silicon Valley's success.

While technically not immunities and safe harbors, two other examples of legal doctrines that help create a lawsuit-free zone:

* the "standing" requirements in Article III of the Constitution, which requires (among other things) that plaintiffs show they have suffered a cognizable harm before they get access to the Federal court system. In particular, Article III standing efficiently kills meritless Internet privacy cases where plaintiffs have suffered no real harm. In turn, the lawsuit-free zone created by Article III standing facilitates experimentation and innovation on privacy-related matters.

* Anti-SLAPP laws applicable to lawsuits brought to suppress socially beneficial speech. Anti-SLAPP laws end those lawsuits quickly and put plaintiffs on the hook for the defendant's attorneys' fees. California has a strong anti-SLAPP law, and it's dramatically reshaped many litigation areas.

Based on these examples, it's possible to reverse-engineer some key attributes of immunities/safe harbors that help create strong lawsuit-free zones:

* Minimal Formalities/Prerequisites. Immunities and safe harbors work best when they don't require technical steps that might be inadvertently overlooked or mishandled. Thus, Section 230 automatically protects every UGC website; and B&P 16600 automatically protects every employee and future employer. In contrast, Section 512 has a long list of technical prerequisites (what we call "formalities") that can disqualify well-meaning but sloppy or uneducated entrepreneurs--or, at minimum, prompt expensive legal fights over whether the formalities have been satisfied.

* Drafting Brevity. The longer the statute, the more things that plaintiffs can fight over. Section 230(c)(1)'s main operative language is only 26 words, which doesn't give plaintiffs a lot of bases to fight. In contrast, Section 512 runs for thousands of words, creating dozens of different vectors to attack a safe harbor defense. As a result, with so many more words to fight over, Section 512 judicial opinions are typically much lengthier--and more expensive to the litigants--than Section 230 opinions.

* Global Preemption. Because too many legal doctrines overlap, an immunity/safe harbor that protects defendants against only one legal doctrine is typically useless; plaintiffs can just focus their energies on other overlapping causes of action that might apply to the same behavior. Thus, an effective immunity/safe harbor eliminates the defendant's liability completely, regardless of what cause of action the plaintiff asserts. For example, Section 230 and Article III standing work so well because they usually categorically preempt all causes of action asserted by the plaintiff, no matter how many or wide-ranging.

* No Weasel-Words. Subjective elements of an immunity or safe harbor, such as the requirement that the defendant act in "good faith" or "innocently," are tautological. They give judges an opportunity to inject their normative views, and they create more opportunities for plaintiffs to fight. As a result, weasel-words can destroy the effectiveness of an immunity or safe harbor. For example, one part of Section 230 (Sec. 230(c)(2)) depends on the defendant's "good faith" conduct; that part has been comparatively useless to defendants as a result.

* Specifically Described Scienter. "Scienter" means the amount of the defendant's bad knowledge or intent. I favor immunities and safe harbors that protect defendants regardless of their scienter. Section 230 does that; websites aren't liable for third party content no matter what the plaintiff alleges about the website's knowledge of the content. Realistically, though, legislators typically will not excuse defendants who have sufficiently bad scienter. If so, the statute should spell out precisely when the defendant has the requisite scienter. For example, Section 512 defines exactly when the defendants have disqualifying scienter about user-caused copyright infringement--defendants must have actual knowledge or awareness of apparent infringement--and it defines the elements of a copyright owner's takedown notice that is sufficient to provide actual knowledge. Unfortunately, Section 512 has been a failure at circumscribing disqualifying scienter. Courts have added other types of disqualifying scienter ("inducement" and "willful blindness" are two examples) that have encouraged plaintiffs to sue over behavior that should be plainly protected by the safe harbor. Thus, Section 512 has become a good cautionary tale of how an immunity or safe harbor's failure to adequately circumscribe disqualifying scienter properly can undermine the immunity/safe harbor's efficacy.

* Quick Resolution. An effective immunity/safe harbor ends unmeritorious lawsuits quickly and cheaply. At minimum, it should keep the case out of discovery, where the costs grow so quickly that the lawsuits punish even successful defendants. Veoh provides a good example of how a safe harbor can become useless if it takes too long. The Ninth Circuit ruled Veoh had properly qualified for a Section 512(c) safe harbor, but the ruling came too late. By the time the Ninth Circuit blessed Veoh's practices, Veoh was already dead due to its unsupportable litigation costs. In contrast, Section 230 cases are usually decided on motion to dismiss grounds and thus are comparatively quick and cheap for defendants, making the immunity a more useful tool for entrepreneurs.

* Sanctions for Bogus Claims. Plaintiffs should internalize the costs of their bad choices. For example, anti-SLAPP lawsuits make plaintiffs pay defendants for bring anti-social lawsuits. This risk that the plaintiff will write a check to the defense--for a lawsuit initiated by the plaintiff--raises the strategic stakes for plaintiffs. It also makes defendants financially whole.

I welcome your further thoughts about the optimal design of successful immunities and safe harbors.

[Photo Credit: 3d rendered illustration defending some pollen // ShutterStock]

Posted by Eric at 11:43 AM | Content Regulation , Copyright , Derivative Liability , General , Internet History | TrackBack

April 13, 2013

Another 512(f) Claim Fails--Tuteur v. Crosley-Corcoran

By Eric Goldman

Tuteur v. Crosley-Corcoran, 2013 WL 1450930 (D. Mass. April 10, 2013). The complaint (page 5 shows the photo in question).

We don't see that many 17 USC 512(f) lawsuits over bogus copyright takedown noties, and we see even fewer successful ones. Here's another failed one.

I hate it when bloggers attack each other rather than finding a way to get along. After all, the rest of the world hates us as bloggers, so why can't we bond together in solidarity? C'est la vie.

This pair of dueling bloggers come from the highly charged community discussing home birthing. The doctor believes home birthing increases neonatal deaths, the doula disagrees. In a literal F-U to the doctor, the doula blogged a photo with (as the court described it) a "graphic gesture with her middle finger that is often associated with an unrealized ambition of French soldiers at the Battle of Agincourt." [FN] The doctor copied the photo and posted on her blog. The doula sent a takedown notice to the doctor's web host. Some more background on this case.

[FN] I'm not an expert in the famous Battle of Agincourt, but I believe there's some controversy whether English longbowmen gave French enemies a one- or two-fingered salute/taunt; the latter being what we now call the V sign. So I'm not sure the court's historical allusion is accurate. Just in case there's any doubt, the doula is definitely not making the V sign.

The doctor brought a 512(f) claim for the takedown notice to her host. The doula tried to dismiss the 512(f) lawsuit on jurisdictional grounds, but the court (apparently sue sponte) says that it needs to address Article III standing to avoid the "thorny" Internet jurisdiction questions. It's the most bizarre Article III analysis I've seen. The court says it seriously doubts the doctor has a viable 512(f) claim. How hard is it to win a 512(f) claim? The court says the doctor has "plausible" fair use and implied license defenses to a copyright infringement claim, suggesting that perhaps the doula didn't adequately consider those doctrines. No matter. The court says:

there is no requirement in the DMCA that a notice-giver inform the service provider of an infringer's possible affirmative defenses, only that she affirm her good faith belief (as appears to be the case here) that the copyrighted material is being used without her (or her agent's) permission

Apparently satisfied the doula did that, the court says the doctor's cause of action isn't viable. The tortious interference similarly fails based on the apparent legitimacy of the doula trying to enforce her copyright.

Having made a ruling on grounds that the parties didn't brief or argue, the court gives the doctor 21 days to object to this ruling. Given the acrimony underlying this lawsuit, the doctor will surely object. The court will then slam the door on her 512(f) lawsuit, with the inevitable appeal to follow.

[Photo Credit: Battle of Agincourt in 1415 and Hand showing the sign of victory// ShutterStock]

Posted by Eric at 07:55 AM | Copyright , Derivative Liability | TrackBack

April 05, 2013

First Sale Doctrine Doesn't Allow Resale of Digital Songs – Capitol Records v. ReDigi

[Post by Venkat Balasubramani, with comments from Eric]

Capitol Records, LLC v. ReDigi Inc., 2013 WL 1286134 (S.D.N.Y. Mar. 30, 2013)

[There has been a recent whirlwind of copyright activity in the courts. We will try to get caught up soon!]

ReDigi looks like a law professor’s exam question that sprang to life. The basic question involves the legality of a marketplace for digital music files. Unfortunately for ReDigi, the court is not very sympathetic to its enterprise, and the court grants Capitol’s request for summary judgment. I expect an appeal will be forthcoming.

Background: ReDigi put some good energy into architecting its service to try to avoid infringement. It only allowed for re-sale of certain files, and more importantly, took steps to insure that only one user could enjoy a particular song at any one time--it made sure that if you sold a track, the computer did not contain extra copies of this track. Although it wasn’t foolproof (the system did not detect whether you retained copies of your track elsewhere), it did prompt you to delete any versions of a song on the particular computer that’s interfacing with ReDigi; and if you declined, it would terminate your account. Sounds pretty carefully structured to me.

Reproduction and Distribution: The court says ReDigi trips over the fact that it must make a copy in order to transfer files between people who trade them. ReDigi tried a bunch of analogies to say that a copy-less transfer occurred, but the court is not sold:

ReDigi asserts that the process involves ‘migrating’ a user’s file, packet by packet – analogous to a train . . . the device was [also] likened to the Star Trek transporter – “Beam me up, Scotty” – and Willy Wonka’s transportation device, Wonkavision.

(James Grimmelmann has an excellent post deconstructing these fictional technology references).

Although the court notes that it’s not aware of any authority dealing with the scenario where digital files are transferred and only one copy exists before and after the transfer, the court says that what occurs through ReDigi’s platform is a “reproduction within the meaning of the Copyright Act.” The court says this reading is supported by the plain text of the Copyright Act (that says reproduction occurs when the work is fixed in a new “material object”) and the legislative history. [The ruling contains a very interesting discussion around the semantics of “reproduction” that is worth reading. As usual, I wasn’t totally sold one way or the other.]

The court also agrees with Capitol that, in addition to the unauthorized reproduction, the sale via ReDigi also implicates the distribution right. Absent an affirmative defense, the court says that there would also be an unauthorized distribution.

No Fair Use or First Sale Defenses: The court applies the fair use factors and says ReDigi comes up short. There’s no transformation of the works (songs). The entirety of the work is copied, and conceivably this will affect the market for new works. Interestingly, the court says that reproduction incident to a sale is what falls outside fair use, but it does not discuss reproduction that may occur in similar contexts such as lending or trading (that may be closer to fair use).

The court also says that ReDigi cannot take advantage of the first sale doctrine. The court starts out by saying that first sale only insulates ReDigi against distribution and does not protect against reproduction. (This is splitting hairs, I think. To the extent there is a first sale defense, any reproduction incidental to it could plausibly be considered fair use.) At any rate, here is the crux of the court’s conclusion on first sale:

the first sale defense is limited to material items, like records that the copyright owner put into the stream of commerce. Here, ReDigi is not distributing such material items; rather it is distributing reproductions of the copyrighted code embedded in new material objects, namely, the ReDigi server in Arizona and its users’ hard drives. The first sale defense does not cover this any more than it covered the sale of cassette recordings of vinyl records in a bygone era.

The court also cites to a 2001 report from the Copyright Office on the DMCA Act that rejected application of first sale to digital works.

Derivative Liability: The final issue was whether this all added up to liability for ReDigi.

First, the court says that ReDigi is directly liable. According to the court, ReDigi’s service was designed to only sell copyrighted work, and therefore, even though ReDigi wasn’t the one doing the copying and distributing, it could be held liable directly for the copying and distribution that takes place via its product.

Second, the court says that ReDigi is liable under vicarious and contributory theories. With respect to contributory liability, the court says that ReDigi was amply aware of the legally grey aspects of its business (its investment offering documents said as much). It also contributes materially by participating at many steps in the process. Finally, the service is not capable of non-infringing uses the court says. The court comes to the same conclusion on the vicarious infringement question, saying that ReDigi had “complete control” over its users activities and it financially benefited from every single sale.

Wow, this is a packed ruling! There is a lot to digest from this one, but a few quick notes.

First, the court footnotes a very interesting point (fn. 3): apparently ReDigi launched new software during the pendency of the litigation that would house material downloaded directly from iTunes and allow later purchasers to access it from the same location. The court declines to consider the legality of this service, but it certainly offers a possible path forward for services such as ReDigi. This also raises the question that if something like this could be accomplished and was plausibly non-infringing, at least from the standpoint of a reproduction right, does it really make sense to ding ReDigi because it accomplished the same thing through other means?

Second, where was the DRM? ReDigi offered iTunes files, but I missed the boat that iTunes decided to offer music that was not tied to a particular device that you had registered. As Eric noted in his post about Kirtsaeng, one of the reasons why the first sale win in that case may be pyrrhic is that digital media will be subject to the whims and fancies of DRM. It's interesting that a big category of digital content is offered without DRM. I wondered about what contractual restrictions were in place (both as between iTunes and the user and the copyright owner and iTunes). It's also strange that music is offered DRM-free (at a higher price), but then you can't legally transfer it anyway.

Third, there’s no discussion of the DMCA at all in this ruling. Maybe I'm missing something foundational, but I would have thought ReDigi would have at least tried to assert a defense based on DMCA safe harbors. The court would have probably rejected the defense (or took the muddled route the 9th Circuit took in the Fung case), but it was still interesting to see the DMCA not figure in the discussion at all.

The court downplayed any discussion of whether there was underlying infringements by ReDigi's users. I also found much of the court’s core conclusions overly formalistic, but then again, the copyright rules are formal in many respects, particularly the rules that govern sounds records and phonorecords. The court seems to do a fairly close reading of the statute and legislative background. It’s tough to fault the court’s order for its core conclusion that a transfer via ReDigi requires a reproduction, although there is room to disagree with it.

Finally, the court’s discussion on direct and indirect infringement was also not totally persuasive. Outside the P2P / inducement context, it’s rare to see a court find that a site or service should be held liable directly for the infringements that take place on its system. This is one example. The 9th Circuit opinion from Fung that we hope to post about soon is another example.

Either way, services have previously tried to crack the "how to transfer copyrighted tracks online" puzzle and have failed. (See, the MP3Tunes case.) As Eric highlights below, it may be safe to assume that there is no first sale right when it comes to digital goods. Surprisingly, even without contractual restrictions in place, you may be fairly limited in what you can do with digital music.
_____

Eric's Comments: I admire the pluck of entrepreneurs who launch businesses that face significant legal risk based on their basic architecture, but ReDigi's legal fate was predictable if unfortunate. The bottom line is that there's no digital first sale right, and I don't think the statutory language provides any colorable basis to argue in favor of it. So I think ReDigi has been legally doomed from the beginning. I wish there were a digital first sale doctrine, and I admire ReDigi's attempts to remanufacture some of the attributes of physical chattel for the digital world, but the judicial system is a poor place to make a last stand on something that contradicts the statutory language so clearly.

Venkat raises a good point about 512(c)--could ReDigi have found greater success positioning itself as an eBay/Amazon-style marketplace for user-to-user transactions of digital files? I can't imagine a 512(c) defense would succeed if the users never had the right to resell song files and ReDigi takes a cut of the transaction, but that defense would have been no less meritorious than the digital first sale argument.

In the end, this case provides a good cautionary tale for us as consumers. PAY LESS FOR DIGITAL SONGS AND MOVIES than you would pay for CDs and DVDs because the digital files are instrinsically worth less over their lifetimes. Protip: before buying a digital song or movie, I check eBay and Half.com to see how much it costs to buy the same CD or DVD used. Even with shipping, it's surprising how often the used good is cheaper than the digital file, and I get a better bargain by also preserving my first sale rights.

I commend reading James Grimmelmann's article--a delicious mix of fandom silliness and deep philosophical musings.

Just a reminder: in 2010, the High Tech Law Institute held a full-day academic symposium on the First Sale Doctrine, and it might be worth checking out some of the materials generated in connection with that event.
_____

Other coverage:

James Grimmelmann's article
Aaron Sanders
Wendy Davis/MediaPost

[image credit: Shutterstork/wongwean - "handdrawn music element"]

Posted by Venkat at 09:45 AM | Copyright , Derivative Liability , Licensing/Contracts

April 03, 2013

Product Review Website Defeats Trademark Claims--Boarding School Review v. Delta Career Education

By Eric Goldman

Boarding School Review, LLC v. Delta Career Education Corp., 1:11-cv-08921-DAB (SDNY March 29, 2013)

This case involves Community College Review, with the tagline "find the right community college for you." It publishes information about various community colleges and provides a navigation wizard. The community college pages include advertising and a lead generation form that allegedly forwards leads to competitive colleges. The trademark owners in this case operate private colleges offering associate degrees. The colleges sued CCR for trademark and copyright infringement.

The colleges objected to statements on CCR website saying “Get info / application from [name of trademarked college]” when those statements allegedly generated leads that were sent to competitors. This claim fails because the colleges merely alleged CCR forwarded the leads to competitors without any further factual support. This failed the Iqbal pleading standard.

The remaining trademark claims failed--on a motion to dismiss--for lack of consumer confusion. The court says the site headline (referencing "Community College Review"), domain names and "header and navigational menu clearly and quickly communicate to site visitors that BSR’s website is an omnibus review site profiling community colleges, not a website affiliated with or sponsored by the schools profiled." The court also notes the sophistication of prospective college students (accord the CollegeSource ruling) and the industry differences between college operator and a review website.

The federal trademark dilution claim fails because of a lack of fame (FWIW, I hadn't heard of the trademark owners or their colleges before) despite the allegations that:

Defendants own at least fourteen educational institutions, provide educational services to at least 16,000 people, have one subsidiary that has operated for more than 100 years, have invested “enormous” sums of money in marketing, provide services that are “highly sought after,” and have experienced “extraordinary and longstanding sales success”

The state trademark dilution claim fails because there wasn't a plausible allegation that the colleges "will lose their ability to serve as a unique identifier of Defendants’ educational institutions." The court doesn't use the term nominative use, but basically the court says that CCR's nominative use can't create blurring, and there wasn't any tarnishment because CCR didn't link the trademarks with shoddy products (I didn't fully understand the court here).

The colleges also alleged copyright infringement, but the allegedly infringing activity all occurred before the copyright registrations, so the court denies statutory damages and attorneys' fees. There might still be actual damages worth pursuing; if not, the lack of juicy damages might de facto end the copyright claim.

The court allows the colleges to amend the complaint with respect to the “Get info / application from" language. Otherwise, the trademark claims were dismissed with prejudice.

This case didn't involve consumer reviews, so 47 USC 230 wasn't implicated. Still, the colleges' tactics were similar to the efforts we've seen from other attempts to work around Section 230, such as the PissedConsumer line of cases. Basically, the colleges tried to use trademark law to shut down the review website from building product pages in an ad-supported website. These efforts to depopulate a product catalog's taxonomy pose a serious threat to the integrity of review websites, and it's great to see the court reject the effort. I also discuss this issue in my Online Word of Mouth and Regulating Reputational Information papers.

This case is the latest trademark case in the increasingly rough-and-tumble world of marketing educational services. Other cases in this line include CollegeSource v. AcademyOne and Private Career Training Institutions Agency v. Vancouver Career College (Burnaby) Inc. (from Canada).

[Photo Credit: Young woman having trouble studying // ShutterStock]

Posted by Eric at 09:02 AM | Copyright , Marketing , Trademark | TrackBack

March 26, 2013

The Supreme Court's Kirtsaeng Ruling Is Good News for Consumers, but the First Sale Doctrine Is Still Doomed--Kirtsaeng v. John Wiley (Forbes Cross-Post)

By Eric Goldman

Kirtsaeng v. John Wiley & Sons, No. 11–697 (U.S. Supreme Court March 19, 2013). Prior blog post of the Second Circuit ruling in the case.

In Kirtsaeng v. John Wiley & Sons ($JW-A), the U.S. Supreme Court ruled that U.S. copyright law doesn't restrict the importation of legitimate copyrighted works manufactured and sold overseas. As a result, publishers cannot use U.S. copyright law to enforce their price discrimination schemes of pricing copyrighted works on a per-nation basis.

This ruling is a legal victory for U.S. consumers, who should see cheaper prices in the short run. This ruling is also a win for museums, libraries and other institutional collectors of copyrighted works, who face less risk now when acquiring copyrighted works (especially those initially sold overseas). Still, amidst the good news, it's impossible to ignore the rapid and probably irreversible demise of copyright's First Sale doctrine, meaning this legal victory is likely short-lived at best.

What Happened

In 1998, the U.S. Supreme Court decided Quality King Distributors, Inc. v. L’anza Research Int’l, Inc., 523 U. S. 135 (1998), holding that a copyrighted item manufactured in the U.S. and initially sold outside the U.S. could be legally imported back into the U.S. pursuant to copyright's First Sale doctrine (17 U.S.C. 109) and without violating the copyright owner's importation right (17 U.S.C. 602). The Quality King court expressly declined to resolve the much more common situation where the copyrighted item was initially manufactured overseas and then imported into the U.S.

That well-known issue has remained legally ambiguous for 15 years. The 2010 Costco v. Omega case squarely raised the issue, but the court deadlocked at 4-4 (Judge Kagan recused) and didn't definitively resolve the issue, necessitating the court to revisit the issue just 3 years later. The legal interplay between the First Sale doctrine and the importation right vexes the courts because Congress' poor statutory drafting supports at least two different but equally plausible interpretations of its language. Courts often produce inconsistent results and split opinions in those situations.

The Kirtsaeng court concluded that Quality King didn't apply only to copyrighted goods manufactured domestically. Instead, copyright's First Sale doctrine--allowing the unrestricted resale of legitimate copyrighted goods after they are first sold into the market--applies regardless of where the goods are initial made or sold. This means copyright owners can't prevent goods sold in cheap markets from competing with the same goods sold in higher-priced markets. With the emergence of efficient online retail markets such as eBay ($EBAY), a textbook publisher who sells a low-priced book in Thailand won't be able to sell the same textbook in the U.S. market for a much higher price. The pricing gap will allow arbitragers to buy the books in Thailand, resell them via eBay or textbook e-tailers, and still make a profit even after shipping and taxes. Thus, a copyright owner's trans-border price competition with itself will jeopardize the now-common international price discrimination schemes.

Why the First Sale Victory Will Be Short-Lived

It's hard to be too sympathetic to publishers deploying international price discrimination. Culturally, U.S. consumers intuitively oppose price discrimination; and U.S. consumers are paying higher prices due to price discrimination against them. Still, to the extent that price discrimination helps put more money overall in publishers' hands, the current price discrimination schemes (in theory) have been encouraging publishers to publish more content, so without international price discrimination, at the margins some of that content will go unpublished. At least, that's the story copyright owners like to tell.

Don't cry for publishers just yet. Copyright's First Sale doctrine has become increasingly less useful to consumers over the past couple of decades due to changes in technology and business practices, and I anticipate this ruling will accelerate the trend. Some of the ways publishers may strike back without seeking any changes to the law:

Localization. Publishers can localize their offerings for local markets such that different countries' versions can't substitute for each other. For example, if John Wiley releases a Thai-language textbook, it won't be very interesting to most U.S. consumers. Publishers have numerous other ways of localizing copyrighted works (beyond translations) to restrict trans-border substitutability.

Versioning. Publishers can quickly issue new editions of their works that moot prior editions. We're already seeing this in the textbook market. Publishers are increasingly releasing new textbook editions on a 3-year (or even 2-year) schedule to eliminate competition with used books.

"Shrinkwrapping." Instead of relying on copyright law, publishers can try to impose and enforce contract restrictions on resale. It's clear that software can be sold subject to a contract that restricts transfer (see Vernor v. eBay), but it's less clear if the resale of other physical items containing copyrighted works--such as books, CDs or DVDs--can be restricted by copyright law. The seminal Supreme Court case Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908) could be read to say that such shrinkwrapped contracts are ineffective, but I consider that issue legally unresolved.

Geographic Coding. Publishers can encode electronic media in geographic-specific technical formats. For example, DVDs currently have "region codes" that do not permit DVDs sold in one region to be played on equipment built for that region.

Tethering/DRM. Increasingly, physical versions of copyrighted works are "tethered," i.e., they require an interaction with a central server to operate. For example, with some videogames and software, consumers need to input an "unlock code" to access the game or software; and the unlock code can be limited to the initial buyer or to a particular machine in a way that restricts transfer. Even textbooks may be subject to tethering if they have an integrated online component, which is increasingly the case.

Even without any of those efforts, the long-term movement from publishing content in physical items to electronic publication has been effectively shrinking the importance of copyright's First Sale doctrine. There is no "digital" First Sale doctrine, meaning that a buyer of an electronic file cannot resell or transfer "possession" of that electronic file under the First Sale doctrine. So as consumers buy fewer physical copies of copyrighted works and more electronic versions, consumers implicitly forego the First Sale rights associated with the physical goods. Plus, as fewer physical goods enter the market, the copyright owner feels less price competition from them.

In addition, copyright owners might assault the First Sale doctrine legislatively. One possibility is that publishers will simply ask Congress to statutorily reverse the Kirtsaeng opinion. More likely, publishers will advance their interests via negotiations over international treaties or Free Trade Agreements (FTAs). Coordinated special interests can game international negotiations more easily than Congress--the publishers have direct financial payoffs from participating in the process, while the interests of consumers, libraries, museums and other "buyers" are more diffuse. Anticipate more publishers showing up at the negotiations, and don't be surprised if publishers overturn the Kirtsaeng decision without ever approaching Congress directly.

So, as a content consumer, enjoy the upcoming price competition while it lasts. The First Sale doctrine is dying rapidly, and we as consumers are becoming poorer as that happens.

Some Related Materials

* In 2010, the High Tech Law Institute at Santa Clara University School of Law held an all-day academic conference on the First Sale doctrine. See the associated symposium issue in the Santa Clara Law Review.

* In 2010-11, the Ninth Circuit issued a troika of First Sale doctrine cases: Vernor v. Autodesk, MDY v. Blizzard, and UMG v. Augusto. In my opinion, the net effect of these cases was irresolute.

[Photo credit: CD/DVD safely backed up by padlock // ShutterStock]

Posted by Eric at 11:18 AM | Copyright , E-Commerce , Licensing/Contracts | TrackBack

March 21, 2013

Griping Blogger Protected by Fair Use But Not Section 230--Ascend Health v. Wells

By Eric Goldman

Ascend Health Corp. v. Wells, 2013 WL 1010589 (E.D.N.C. March 14, 2013)

Brenda Wells gripes about University Behavioral Health of Denton ("UBH") at two blogs, which she promotes via Twitter, Facebook and YouTube. UBH and related parties sued Wells for, among other things, copyright infringement and defamation.

Copyright

Wells allegedly posted the followed copyrighted materials:

images of UBH’s facility; an image apparently of Ascend’s officers, including Kresch; an image of UBH’s logo; and, a still image of a man outdoors with other people in the background from a UBH promotional video

The court grants Wells' motion to dismiss on fair use grounds. The court says she used the images for criticism of UBH, and that makes her use transformative even though she didn't modify the images (cite to Sedgwick v. Delsman). Further, the images had no independent commercial value, so the reuse of the images for criticism didn't harm the market value of the images. It's great to see a blogger win a fair use defense on a motion to dismiss; the caselaw is split on this topic. Compare Righthaven v. Realty One with Katz v. Chevaldina.

Defamation

Among other defenses, Wells claimed that she was protected by 47 USC 230. Wells argued that she:

“simply . . . re-post[ed] content provided by a third party.” Specifically, she points to two statements on her blog which plaintiffs allege are defamatory. As to one statement, plaintiffs allege that Wells removed the name of the commentator, and with the other, plaintiffs allege it was purportedly authored by the mother of a former UBH patient. Therefore, Wells argues, because the statements were authored by others and published on her website, albeit with some edits, she cannot be held liable for those statements. (cites omitted)

While the court says that quoting third parties could potentially qualify for Section 230 (see, e.g., the uncited D'Alanzo case), the plaintiffs' allegations knock her out of the immunity:

Plaintiffs allege that Wells herself created some of the defamatory statements on her blog. Furthermore, as to the defamatory statements based on information provided by others, it is not evident the extent to which Wells may have made more than mere editorial changes to that information, and the court agrees with plaintiffs that discovery should bear this out. Section 230 immunity does not cover content which Wells created herself or other content, although originating with a third party, which Wells significantly altered.

Unfortunately, the court's discussion isn't adequately nuanced. It's true that significantly altered third party content can lose Section 230 immunity, but only if the editing actually changed the meaning of the edited content. My hope is that those facts will become clearer in discovery, and if the facts are favorable, perhaps the judge will reconsider the Section 230 analysis on summary judgment.

Blogs and Fair Reporting Privilege

The court also rejects Wells' fair reporting privilege argument because she's a blogger, not a "newspaper or other periodical":

Wells’s internet blogs are not akin to a newspaper or other periodical, even one published electronically. Postings on the blog are not published at regular intervals. They are not composed of articles, news items, or the like.

Sigh.

[Photo credit: to illustrate poor customer service, with complain message on keyboard // ShutterStock]

Posted by Eric at 08:49 AM | Copyright , Derivative Liability | TrackBack

February 24, 2013

Before Graduated Response, There Was BSA's "Define the Line" Program. What Happened to It? (Guest Blog Post)

By Guest Blogger Sruli Yellin

[Eric's introduction: with the imminent launch of the six strikes/graduated response program from the deceptively named Center for Copyright Information, I thought it might be worthwhile revisiting a prior effort by rightsowners to coopt Internet access providers to do their dirty work. My RA Sruli Yellin discusses:]

On October 28, 2004, the Business Software Alliance (“BSA”) launched its “Define the Line” (“DTL”) program. According to the press release (which you can find here), the program was designed to educate college students about the evils of pirating software. At the time DTL was launched, only 32% of students reported paying for their software according to a BSA/IPSOS study. BSA/IPSOS has not released an updated study.

Prof. Goldman previously covered the DTL campaign here and here.

So what happened to DTL?

The first of two universities to sign up for DTL was Marquette University. It took seven months for Marquette to sign up, and another month and half for the second school, Dickinson College, to join the ranks. As part of the initiative, the schools agreed to spread the word and distribute anti-piracy materials provided by BSA. The DTL program descriptions were incomplete and garbled, but unlike graduated response, there was never any explicit reference to downgrading or cutting off student Internet use for repeat violations.

Why would universities sign up for a BSA program? The bottom line, of course. According to Prof. Goldman, Marquette received $30M in software from a software company called USG for signing up. (The article he cites, like everything else BSA-related, is no longer online). In the BSA’s ideal world, it seems that every university in the nation would have signed up. But at $30M a pop, there was no chance of financially realizing that dream, nor would the benefits to BSA have outweighed the considerable cost.

As one might expect, a PR campaign with the goal of getting college students to spend money on anything aside from alcohol is doomed before it even starts. Schools involve government authorities in intra-campus issues only when absolutely necessary since all such incidents need to be reported in school statistics. If the IP policing is done in-house – through discipline boards and public safety officers – no stats need to be kept. So, when it came to illegal file-sharing, savvy students knew that private colleges would not want to throw their tuition-paying students to the wolves. At most, students might have to plead with campus IT to get their service back or, worse yet, have their parents make an irate phone call.

DTL was a complete failure as an initiative to educate college students. After the second college signed up, I couldn't find any more information about the program, and it appears the program gradually withered away. So what lessons does DTL provide with respect to the upcoming graduated response system?

First, it takes a long time to get institutions to implement a rightsowner-instituted anti-piracy campaign. While it took 7 months to get Marquette to sign up, it has been over 18 months since the major Internet access providers announced they would be implementing the graduated response system.

Second, what’s in it for the major telecom companies? Why would they risk alienating their paying customers, and why are they taking such overgenerous positions like exposing users with open wi-fi signals to sanctions? Like with DTL, I imagine the answer is in the bottom line.

There simply has to be a cash/cash equivalent component to the equation. Content owners are likely shouldering much of the cost of rolling out graduated response. In the UK, for instance, content owners have committed to shouldering 75% of the costs of implementing graduated response. Further, perhaps content owners are actually paying the telecom companies off. Though it’s unlikely that content owners could offer enough money to billion-dollar companies that they would risk alienating their users, with companies like Netflix and RedBox changing the landscape of content consumption, one cannot help but think that content owners have promised to sweeten the pot with deals designed to enable the telecom companies to compete. Whether they can buy their way to success this time remains to be seen.

[Photo Credit: Drawing a line in the sand // ShutterStock]

Posted by Eric at 12:05 PM | Copyright , Derivative Liability , Internet History | TrackBack

February 16, 2013

"Heisman Pose" Photographer Sues for Copyright Infringement - Masck v. Sports Illustrated, et al.

By Jake McGowan [writings][LinkedIn]

Masck v. Sports Illustrated, et al., 2:13-cv-10226-GAD-DRG (E.D. Mich. complaint filed Jan. 18, 2013)

On his journey to winning the Heisman Trophy for the 1991 season, University of Michigan’s Desmond Howard returned a punt 93 yards for a touchdown and famously celebrated by recreating the stance of the trophy itself. See the photo in question, and the plaintiff's attempts to merchandise it, at his "store." (Check out the number of times the site stuffs the phrase "Desmond Howard"--I could see why this might raise some issues of its own).

In a wordy 67-page complaint that goes into overtime, the man behind the lens for the famous “Heisman Pose” photograph is now taking a group of defendants to court for allegedly copying and reproducing the work in various ways.

Brian Masck’s Claims Against the Plethora of Defendants

Brian Masck is suing Sports Illustrated, Nissan, Getty Images, Champions Press, Photo File, Inc., Fathead, Wal-Mart, Amazon.com, and Desmond Howard himself.

According to Masck, the defendants violated his copyright in the following ways:

(1) Sports Illustrated and Nissan teamed to run Nissan advertisements using the photograph in three separate magazine issues;
(2) Desmond Howard published the photo on his website;
(3) Getty Images published the photo on its website and sold unauthorized licenses;
(4) Champions Press published the photo without permission in Desmond Howard’s biography, I Wore 21;
(5) Photo File and Fathead sold unauthorized copies; and
(6) Amazon and Wal-Mart allowed merchants to sell copies of the work online.

Against everyone except Amazon and Wal-mart, Masck also included unfair competition claims under Lanham Act §1125 and Michigan state law.

The Strength of Masck’s Copyright Claims

Masck’s photo clearly satisfies the requirements for copyright protection. Because he took the photo as a freelancer, there does not seem to be any ownership issues.

But the fact that several photographers captured similar shots of Howard striking the Heisman pose raises a few questions about the scope of Masck’s protection. First of all, the other photographers’ shots demonstrate that the trophy itself underlies everything--if Masck were claiming protection for the idea of the Heisman photo, he would be on the wrong side of the idea-expression dichotomy and in a weak position to sue. But the main thrust of the complaint is that Masck’s specific expression is special:

Jeff Shrier also caught the pose with his camera, but from an angle that did not get the full facial expression, cut off one of Howard’s feet, and simply does not have the same energy and style. Similarly, Chris Covatta’s picture from Howard’s opposite side cuts off the outstretched hand, shows almost none of the face, and does not really give that same sense of a famous pose being struck. Brian had by far the best shot – really the only shot[.]

With several other photographers capturing the same moment, there is also the practical issue of proving that these defendants infringed on his work rather than someone else’s. Observing the photographs in the complaint, Masck’s does seem distinguishable from the rest for the reasons mentioned above. But Masck took further steps to prove that certain defendants (including Howard himself) were copying from his expression specifically:

In 2011, Brian Masck had altered the Heisman Pose photograph ever so slightly, so he could track unauthorized use of his photograph. He added two tells to the photograph. First, he removed the branding from the glove on Desmond Howard’s right hand. Second, he extended the lettering on the football. These small alterations do not appear to the untrained eye, but assist Brian Masck in tracking infringing uses of his photograph.

All in all, Masck's photo is likely protected but only as to his exact expression. The question becomes how much money he can demand realistically.

Masck Failed to Register the Photograph Until 2011

Masck's delayed registration of the photograph has cost him the ability to demand statutory damages. Under § 412, statutory damages are only available if the author registers the work with the Copyright Office prior to infringement, or within three months after publication. Masck registered the photograph in August 2011, which makes him almost two decades late.

According to Masck, the sluggish effort to register the work came from bad legal advice:

His counsel at that time advised him that, because Sports Illustrated had published the photograph and correctly credited it to him in the accompanying byline, his photograph would be fully protected by copyright law . . . Consequently, Brian did not register his Desmond Howard Heisman Pose photograph with the Copyright Office at that time.

Normally, the absence of statutory damages would make this a low-dollar-value dispute. However, Masck can still ask for actual damages and the infringer’s profits, and those numbers could be meaningful with a high-value photo like this one. Then again, because actual damages and profits would be time-consuming and difficult to prove, I would not be surprised if the parties settled.

Masck’s Lanham Act Claims

In addition to the copyright claims, Masck also brings unfair competition claims alleging that the defendants caused confusion as to the origin of the Heisman Pose photo. The problem with these claims is that they are effectively trying to emulate copyright protection by stretching the language of the Lanham Act.

In Dastar v. Twentieth Century Fox, the Supreme Court struck down such an attempt:

[The phrase “origin of goods”] refers to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods . . . To hold otherwise would be akin to finding that § 43(a) created a species of perpetual patent and copyright, which Congress may not do.

The Court stressed that the “creative talent” embodied in the work was not left without any protection--if it had qualified, it could still have been protected by copyright. This same reasoning should also apply to Masck’s work, because his claims are based on the defendants copying his photograph, not passing off his physical copies of the photograph as their own.

The Unintentionally Hilarious Tone of the Complaint

I don’t mean to downplay or ridicule Masck’s attempt to fight for the fruits of his labor, but there were several points in the complaint where I just had to laugh. Some passages sounded like they belonged in a memoir:

”In that pre-digital era, he enjoyed the physical act of producing a photograph. He liked to set up the trays and chemicals, watch the image appear, adjust the exposure with his hands, and try different kinds of emulsions and papers to produce different effects.”

“[Brian] saw a story that needed to be told, and he told it in his way, with his camera. He realized then that he was a photojournalist.”

. . . passages had plainly unnecessary background information:

When he headed to college at the University of Michigan in 1980, he started his studies in the art school . . . But after he got involved with the Michigan Daily (the student newspaper on campus) and the Michiganensian (the yearbook), Brian began to lean toward photojournalism.

. . . some passages seem like they’re trying to take subtle jabs at the other photographers on the field:

“‘We said that big plays are going to tell the story of this game’” . . . The two photographers saw the potential for Howard to break free at some point in the game . . . Little did either of them anticipate that the foresight, perceptive planning and skill of one of them would facilitate the creation of a college football icon, let alone a broader cultural touchstone.”

. . . and then there are those sentences which just ask for it:

"Of photography, says Brian today, 'It’s just what I do.'"

I could go on, but for now it suffices to say that we will have to wait and see if this goes to trial for actual damages or settles out of court. But if you happen to be looking for a freelance photographer memoir with a flair for the dramatic, the complaint link is at the top. Enjoy.

[Photo Credit: Debby Wong / Shutterstock.com]

Posted by JakeMcGowan at 08:40 AM | Copyright | TrackBack

February 14, 2013

Israeli Court Says Full-Text RSS Feeds Create an Implied Copyright License (Guest Blog Post)

By Guest Blogger Jonathan J. Klinger

Aggregation of content through RSS feeds has been a big issue every since websites began to use RSS to distribute their content. See, e.g., Prof. Goldman's discussion of the issue in 2005. Still, we haven't had much legal guidance explaining when an aggregator can safely integrate RSS feeds and act as a web-based RSS reader.

Recently, a magistrate court of Petach Tikva in Israel addressed the issue squarely in Apfeldorf v. Yitzhak (C 46636-07-11 Apfeldorf v. Yitzhak, pardon my Hebrew). Tomer Apfledorf is an Israeli Intellectual Property attorney who blogged using Google's Blogger service. Apfeldorf configured the blog's setting to provide an RSS feed in full text (not just excerpts).

Apfeldorf brought copyright infringement claims against Yitzhak and its website for republishing his RSS feed. Yitzhak owns one of Israel's more interesting websites, News First Class (News1),which reports on public corruption, freedom of information and other issues. News1 also is one of the only websites that publish source court documents related to news articles.

News1 also aggregates blogs from Israeli blogosphere, indexes them according to subjects and subject matters, and then links to the blog posts. News1, in the relevant period, indexed Apfeldorf's RSS feed. Because this process was automated, News1 republished Apfeldorf's articles in full because they were gathered from his RSS feed. After Apfeldorf found out, he contacted News1 and asked them to remove the content, compensate him and cease syndication. News1 stopped syndicating his blog and removed its content, but it did not compensate Apfeldorf. Therefore, Apfeldorf sought 200,000 ILS (around $50,000 USD) in statutory damages.

The court made two different and interesting rulings. The first, based on Dr. Yuval Dror's expert testimony, is that RSS facilitates syndication, so by offering the RSS feed and encouraging sharing of blog posts through social media buttons (such as the Facebook share), Apfeldorf waived the right to enforce his intellectual property rights:

The plaintiff testified that he was aware that technically the RSS allows withdrawal of headers and content from the blog, when he did not choose the default of using only headers and allowed headers and full text from the blog. Moreover, the plaintiff installed icons that allowed sharing of content from the blog in social networks and sharing through other sites. By doing so, the plaintiff declared, explicitly, that it means to disseminate the content in the blog, to the possible extent. [...] By installing the RSS protocol there is not waiver of the author on the protections granted by law to his works and you cannot determine that the installation of the RSS by itself means that there is a waiver of protection thereof and a license to copy the works. [...] The plaintiff did not choose a default where the RSS feed shall solely distribute headers, but also the full text, and therefore, the posts were downloaded in full, and this is a statement by the plaintiff about his conduct and wish to distribute his words. Under these circumstances, I rule that examining the plaintiff's conduct under the microscope of current internet practices indicates the conclusion that the plaintiff, by his conduct, waived the protection granted by law"

The court also ruled that even if News1 was infringing, its activity may be fair use; and if the feed is used alongside credit to the original author (and possibly a link), then fair use may be asserted.

This ruling is somewhat logical if you know RSS feeds, and it is consistent with new copyright norms. Raghu Seshadri wrote about the subject (footnotes omitted):

Under copyright law "the creator of the RSS feed retains, automatically, all copyrights in the content in the feed and retains all rights in its republication, use as a derivative work, and so forth." Yet, users are copying these feeds and including them on their own web sites. This has naturally raised an infringement issue with experts arguing for and against finding infringement. In addition, the RSS "community is speaking, to large extent, by creating a norm around syndication and aggregation which is very important." Here the applicable distribution medium architecturally permits other sites to publish RSS feeds. Thus a technology based license would allow such uses unless and until the copyright owner either expressly reserves their rights or revokes such a license.

Raghu Seshadri, Bridging the Digital Divide: How the Implied License Doctrine Could Narrow the Copynorm-Copyright Gap.

Does this ruling mean that the AFP lawsuits against news aggregators may come to an end? Maybe. What is most surely mean is that if you are a website (or the legal counsel of a website) you should begin to think about adding a specific license to the RSS feed (or adding something about it in the website's terms of service), especially if you are offering a full-text feed. In other words, to overcome the "implied license in RSS" presumption, you must take a proactive approach.

[Photo Credit: Person reading RSS news // ShutterStock]

Posted by Eric at 12:47 PM | Copyright , Licensing/Contracts | TrackBack

February 13, 2013

Territorial Implications of Antigua's Internet-Based IP Sanctions Against the US (Guest Blog Post)

By Guest Blogger Marketa Trimble

At the end of January 2013, the WTO authorized Antigua to suspend its intellectual property obligations toward the United States in retaliation for the United States’ breach of WTO rules. There are at least three reasons why the decision and the potential internet-based implementation of the retaliation are notable.

First, the case shows the inherent danger that exists when IP issues are included in general trade negotiations and trade treaties, such as the WTO negotiations and the TRIPS Agreement (the danger exists alongside the possible benefits that such an inclusion provides in the form of improved enforceability of countries’ IP obligations). At a conference on the TRIPS Agreement held in April 2011, I noted that putting IP issues in a “basket” with other trade issues could lead to some IP rights being bargained away for trade advantages, and that IP rights might even become the subject of trade sanctions. At that time, my example of the WTO Antigua – U.S. dispute over online gaming, with the possibility that Antigua could suspend the IP rights of U.S. right holders, was greeted with mild amusement by conference attendees. Indeed, it appeared unlikely that a small island nation would take any retaliatory actions against a trade giant. Regardless of whether Antigua now decides to implement IP-related measures against the United States or not, the mere fact that it can retaliate in the area of IP demonstrates that the inclusion of IP issues in general trade negotiations and trade treaties may have negative consequences.

The second reason the Antigua story is notable is that it exposes the problems that arise when a country attempts to design sanctions on the Internet against another country in such a way that the sanctions will both target intellectual property and remain territorially limited. News reports (e.g., here and here) have mentioned the possibility that Antigua could host websites itself or permit third parties to host websites in its territory that would include copies of the works of U.S. copyright holders, such as music and film studios, and offer those copies for free download to anyone in the world with an internet connection. As one commentator has suggested (here), this form of retaliation would not be territorially limited because downloading from such websites could infringe copyrights in multiple countries, not just in the United States. Therefore, through such websites, Antigua would not be able to implement a sanction that would be perfectly territorially limited (meaning limited to the territory of the United States).

However, it would be possible to view the sanction as limited “personally” – limited to U.S. copyright holders – if the websites offered works of only U.S. copyright owners. Of course, this “personal” limitation might be difficult to implement as well.

It is in fact difficult to identify on a global scale works that are owned solely by “U.S. copyright owners” because the same person or entity that owns a copyright in the United States might not be the same person or entity that owns a copyright to the same work in another country. Countries vary in their rules on copyright ownership and the rules they use to determine what country’s law applies to determine copyright ownership. France and Portugal, for example, apply the law of the place of origin of a work, which will typically be the country of the first publication of the work or the country of the author’s nationality, if the work has not been published.

In the Internet age, the country of first publication might in fact be contested. For example, the interpretation that U.S. courts seem to lean toward is that making content available on the Internet from anywhere in the world is equivalent to simultaneous first publication in the United States. But the country of first publication is only one of the factors that a U.S. court will consider when looking for the country with the most significant relationship to a work – which is the country whose law is applied to copyright ownership, at least in the Second Circuit.

As a result, the “country with the most significant relationship” rule may lead to a different result than the place of origin rule applied in a French or Portuguese court. Other countries, such as Germany and China, determine copyright ownership based on the law of the country in which the copyright was infringed (the law of the protecting country). The variation in national rules on copyright ownership means that a work may have different copyright owners in different countries. Additionally, copyright owners may choose to part with their rights for some countries or regions and retain them for others.

Though the copyright owner(s) in the United States and in other countries may not be the same person(s) or entity(ies), the Internet-implemented sanctions discussed above will affect all of those owners, regardless of their location. Non-U.S. persons and entities recognized by non-U.S. copyright laws as copyright owners will find their rights infringed under the laws of the countries outside the United States, even though Antigua (in this case) may wish to target only U.S. persons or entities, and the copyrights to the particular works at issue are owned by U.S. persons and entities under U.S. copyright law.

The multiple-owner problem is less likely to arise in cases of works created by or for sophisticated copyright owners, such as large music and film studios, who will take precautions to prevent the problem of multiple international copyright ownership by entering into contractual arrangements that settle copyright ownership issues internationally and by having copyright clearances for their uses of other copyright-protected works researched and completed internationally. Indeed, motion pictures by major studios will often include a copyright notice at the end of the credits with information pertaining to copyright ownership globally. In any event, to prevent potential harm to non-U.S. copyright owners outside the United States, an entity designing an internet-based sanction (such as Antigua) should verify that there is one copyright owner or one set of copyright owners for the entire world who are all U.S. persons and entities, and that any other works (such as music) used in their works (such as in films) have been cleared for copyright purposes internationally as well.

An additional difficulty is that even if U.S. music and film studios are the global copyright owners of a work, infringing their rights outside the United States creates effects outside the United States that are not limited to the U.S. copyright owners and to the United States. There might be non-U.S. licensees outside the United States, including exclusive licensees, who will be harmed by the free distribution of the works on the internet. Countries other than the United States might lose tax revenue because copyright owners and licensees will pay no taxes on royalties that were never collected because of the availability of free downloads.

The Antigua story also deserves attention for a third reason: the problem of evasion of geolocation and filtering measures. One report mentioned that users connecting to Antigua-based websites from the United States will be able to bypass any geolocation and filters that might be implemented by their U.S. service providers if those service providers attempt to block access to the websites. Evasion of geolocation and inducement to evade geolocation may have the legal implications that I analyzed in detail in my recent article. The possibility of large-scale evasion of geolocation by internet users in response to any Antiguan internet-implemented retaliation measures is further impetus for serious consideration of the legal implications of evading geolocation.

[Photo credit: Antigua flag // ShutterStock]

Posted by Eric at 10:17 AM | Copyright | TrackBack

February 11, 2013

Conference Announcement: A 15 Year Retrospective of the Digital Millennium Copyright Act, SCU, March 15

By Eric Goldman

On March 15, 2013 at Santa Clara University, the High Tech Law Institute is hosting a conference entitled "A 15 Year Retrospective of the Digital Millennium Copyright Act." Our co-sponsors include the advisory committee to the Congressional Internet Caucus, the Electronic Frontier Foundation and Fenwick & West.

This event follows the basic formula from our popular 2011 conference, a 15 year retrospective of 47 USC 230. Like that conference, our goal is to appraise the DMCA's legacy and effect after 15 years in the field. To do so, we are bringing some key players from the DMCA's birth, such as Bruce Lehman (who wrote the influential Green and White Papers), Judge Whyte (who decided the precedent-setting RTC v. Netcom case) and Jay Monahan (who helped build eBay's VeRO program before the DMCA was on the books). We're also bringing in folks who are dealing with cutting-edge DMCA issues today. My hope is that we'll walk away from the event with a better perspective of how we got here, what worked/what didn't, and what lessons we can learn from the DMCA as we continue to build copyright policy in the digital millennium.

We anticipate spending the morning on 1201 and the afternoon on 512. My colleague Tyler Ochoa will talk about 1202 in the morning. At this point, I think it's unlikely we'll cover music streaming (114), computer repair (117) or vessel hull designs (1301 et seq), even though all of them are interesting. Some of our speakers who discuss the DMCA generally may touch on them. We hope to post a more specific hour-by-hour schedule in the next week or two.

As usual, we keep our registration prices low, and we have numerous discounted or free registration categories. We anticipate offering California CLE once we sort out the hour-by-hour schedule. We anticipate strong demand for the event, so register today to save your seat today.

If you're an academic and interested in coming to the DMCA conference, note that the next day (March 16) we're having an Internet Law academic work-in-progress conference. We're putting new speaking requests on a waitlist, but we have room for additional discussants.

Posted by Eric at 11:39 AM | Copyright , Derivative Liability | TrackBack

January 25, 2013

17 USC 512(f) Is Dead--Lenz v. Universal Music

By Eric Goldman

Lenz v. Universal Music Corp., 2013 WL 271673 (N.D. Cal. Jan. 24, 2013).

This is the long-running case involving a YouTube video of a baby dancing to a Prince song. Universal Music overzealously took the video down for 6 weeks in 2007 via a 512(c)(3) notice. The video now has 1.2M+ views, so it's since become a cultural icon. The video has spawned 6 years of litigation over Universal's wrongful takedown notice--litigation that is going nowhere fast and unfortunately will yield nothing useful when it's done.

Judge Fogel rejected the summary judgment motions of both parties, sending this case to trial on Universal's scienter when sending the takedown notice. Judge Fogel summarizes the permissible arguments each party can make:

Lenz is free to argue that a reasonable actor in Universal’s position would have understood that fair use was “self-evident,” and that this circumstance is evidence of Universal’s alleged willful blindness. Universal likewise is free to argue that whatever the alleged shortcomings of its review process might have been, it did not act with the subjective intent required by §512(f).

Framed that way, Universal almost certainly wins in light of the Ninth Circuit's 2004 Rossi case. Universal made a boneheaded move sending the takedown notice, but even with her many sympathetic facts, Lenz is unlikely to persuade a jury that Universal had the subjective bad faith required by Rossi.

Even if Lenz persuades the jury otherwise, Judge Fogel's latest ruling makes it clear that there's no meaningful financial payday at the end of this road. Lenz will get $1,275, the value of EFF's Marcia Hoffman's pre-lawsuit legal advice, plus possibly other damages of no consequence. Judge Fogel gives the example that "Lenz must have incurred at least minimal expenses for electricity to power her computer, internet and telephone bills, and the like." In other words, those other damages are probably worth another nickel. With such a small dollar value at issue, and the cost of a jury trial so high, this case really ought to settle now. There's nothing left for anything to prove, and the transaction costs of reaching the inevitable denouement aren't worth it to either side.

The 2004 Rossi case, requiring subjective bad faith on the part of the takedown notice sender, eviscerated 512(f) as a cause of action, but this case--with its cramped definition of damages--has killed off 512(f) as a cause of action. Except in those rare cases where 512(f) supports equitable relief (and that does happen occasionally--see, e.g., Design Furnishings v. Zen Path), there are very few circumstances where it makes economic sense to bring a 512(f) lawsuit. What a shame.

512(f) is dead for another reason. The statute contemplates that copyright owners would communicate their preferences to service providers exclusively via 512(c)(3) takedown notices, but many copyright owners have developed other ways to kill user-generated content (UGC) files without sending 512(c)(3) notices. Indeed, as this case notes in FN1, Universal now has a deal with YouTube to kill files directly, no takedown notice required--and therefore, 512(f) doesn't regulate Universal's communications to YouTube. That's increasingly true of other major copyright owners.

The in-the-field move away from 512(c)(3) notices is just one example of how industry conditions have changed over the past 15 years that affect the DMCA without any legislative change. There are many others. We are holding a conference on March 15 at SCU, a "15 Year Retrospective on the DMCA," to discuss this and many other changes. It will be a terrific discussion, so please come!

Prior Blog Coverage

* Disclosure of the Substance of Privileged Communications via Email, Blog, and Chat Results in Waiver -- Lenz v. Universal
* Rare Ruling on Damages for Sending Bogus Copyright Takedown Notice--Lenz v. Universal
* Fair Use - It's the Law (for what it's worth)--Lenz v. Universal

[Photo Credit: Road Closed Sign // ShutterStock]

Posted by Eric at 09:08 AM | Copyright , Derivative Liability | TrackBack

January 16, 2013

Court Definitively Rejects AFP's Argument That Posting a Photo to Twitter Grants AFP a License to Freely Use It -- AFP v. Morel

[Post by Venkat Balasubramani]

AFP v. Morel, 10 Civ. 02730 (S.D.N.Y. Jan. 14, 2013)

The court *finally* issued its ruling on the parties’ cross motions for summary judgment in AFP v. Morel, the Haiti photo case. Previous posts here and here.

The facts are interesting and highly relevant to the fast-paced world we operate in. I recommend reading them, if for no other reason than as a cautionary tale. In a nutshell, Morel took photos of the Haiti earthquake, uploaded them to Twitpic and posted to Twitter. Someone else took Morel's photos and uploaded the same photos to their own account. An AFP staffer found the photos on the second individual's Twitter account, communicated with him, and thought AFP obtained a license. AFP then distributed the photos to Getty and other downstream third parties. Morel was understandably unhappy and started firing off takedown letters and requests. This prompted a preemptive lawsuit by AFP. (Joe Mullin has an excellent recap at Ars and he delves into the messy factual backdrop: "News flash for the media: you can't sell photos grabbed from Twitter.")

Highlights from the court’s ruling:

AFP can’t claim the benefit of any license in the Twitter or Twitpic terms: although this may not be the most consequential aspect of this case, this is one that people will focus on, particularly in light of the Instagram TOS controversy. AFP tried to argue that the Twitter terms of service allowed it to freely use content posted to Twitter (& Twitpic). The court previously said nein, and the court again (different judge) definitively closes the door on this argument. There are lots of quotable bits of the discussion, but this one is pretty cut and dry:

These statements [that you “retain your rights to any Content”] would have no meaning if the Twitter TOS allowed third parties to remove the content from Twitter and license it to others without the consent of the copyright holder.

The court also notes that Twitter's Guidelines:

further underscore that Twitter TOS were not intended to confer a benefit on the world-at-large to remove content from Twitter and commercially distribute it: the Guidelines are replete with suggestions that content should not be disassociated from the Tweets in which they occur.

[emphasis added] AFP raised a related argument that a broad license was necessary; otherwise, Twitter users would be infringing en masse. The court doesn't buy this argument either, and this was a pretty wacky argument from AFP. I’m surprised they pressed on with this. They didn't raise any other defenses to liability, so they (along with the Post) are out of luck.

Other defenses to liability: Getty, one of AFP’s co-defendants, raised two other defenses to liability: (1) it was entitled to a DMCA safe harbor, and (2) it did not act volitionally. I have to admit I was a lot more skeptical of these arguments at the outset, but reading the opinion made me change my mind. At minimum, they are “in the ballpark.”

On the DMCA issue, the court asks this strange question of whether the service provider seeking DMCA protection is “doing something useful for a person or company” or providing “a commodity . . . in the form of human effort.” The court raises the related query of whether "an entity that is directly licensing copyrighted material online is . . . a 'service provider' [under the DMCA]." The court intimates that an entity claiming DMCA protection must do something other than merely making content available to third parties. I’m not sure where the court distilled all of this from, but ultimately the court says that there’s a factual dispute as to whether Getty was “actively involved” in the licensing (i.e., was the process totally automated) and whether Getty received a financial benefit directly attributable to the allegedly infringing activity.

Getty loses summary judgment on its no-volitional conduct defense for a related reason. The court says that under Second Circuit law, the volitional conduct defense only extends to the right of reproduction, and here Getty allegedly engaged in distribution. The court also says that there’s a factual dispute as to the extent of involvement by Getty employees in the licensing process.

Neither of these defenses are totally foreclosed to Getty, although I'm skeptical that they will carry the day.

Secondary liability: The court says that there’s enough evidence in the record to create a dispute as to whether AFP and Getty can be held liable for contributory infringement. AFP and Getty both tried to say that they were passive participants at best, and merely passed on the photos, but the court says the available evidence indicates a factual dispute about the extent of their involvement. The court also says that they can possibly be held liable merely for making available Morel's photos to third parties.

Morel can also assert a claim for vicarious liability against Getty (for some reason he didn't bring this claim until too late against AFP). The court says that there’s a factual dispute as to whether Getty benefits directly from the allegedly infringing materials and also whether it acted quickly enough to remove the photos from its system (its failure to do so may give rise to vicarious liability). Defendants argued that the DMCA codifies vicarious liability standards, and Morel's path to derivative liability should be through the DMCA, but the court rejects this argument in a footnote (citing the Second Circuit's ruling in Viacom).

DMCA CMI Claims: Morel made an argument that AFP’s distribution of the photos with incorrect attribution equaled a claim for removal or alteration of copyright management information or the knowing distribution of material with incorrect information. There were predictable factual disputes around how AFP obtained the photos and whether it knew that the photos were Morel’s when it distributed the photos with incorrect attribution. The DMCA claim requires proof of state of mind, and the court says this can't be resolved at the summary judgment stage. AFP also tried to argue that the credit information was not “copyright management” information because this information is not intended to provide information about ownership, but the court rejects this argument, taking a broad view of what can constitute "copyright management" information (e.g., adding 'AFP' or 'Getty' in the caption may form the basis of a CMI claim). Ultimately, factual issues preclude judgment in favor of Getty and AFP on Morel’s DMCA CMI claims.

Statutory Damages: Finally, the parties dispute the scope of statutory damages. Morel says he is entitled to a separate award per work/per downstream subscriber. If Getty or AFP are held derivatively liable for the acts of downstream subscribers, Morel says each such subscriber should result in a separate damage award. This would get really ugly for Getty and AFP. In contrast, they argued that Morel is only entitled to one work per defendant (and jointly liable defendants are only hit with a single award). The court sides with Getty and AFP, saying that they’re only liable once per work and the award against them is not multiplied based on their subscribers. The parties have the same dispute about the scope of DMCA CMI damages, and the court again sides with AFP and Getty. Just one award for each instances of removal of CMI.

Yowza. This is an action-packed ruling that covers a ton of different issues. Tough to do justice in a single blog post. Good fun for copyright geeks, people who like issue spotting, and law profs who can repurpose this for a law school exam question!

It’s nice to see confirmation that AFP’s license argument is silly. We've always known this, but it’s good to get further judicial affirmation, particularly in light of the Instagram terms of service dust-up. Service providers may include broad license grants in their terms of service, but it takes a lot to say that the service provider can exploit content or IP outside the ecosystem. It takes even more to say that a third party who is a stranger to the relationship can do so. The court's interpretation of Twitter's guidelines and terms is sure to give users some comfort that, when a service such as Twitter says "you own your content," this at least means that third parties cannot come along and exploit it freely.

Getty’s DMCA safe harbor argument is an interesting one. A purely automated system that takes in photos (or content) and licenses it out theoretically should be entitled to DMCA protection (or at least should be considered a service provider). The court cites to other examples of service providers (YouTube; Photobucket) but distinguishes them by saying they are doing something in addition to merely acting as a licensing engine. I wasn't terribly persuaded--YouTube is making available user generated videos to the public; it just happens to make them available for free. The court seemed uncomfortable with the notion that a turnkey online service could take in content and license it out and yet fall under the DMCA's definition of service provider. The court could have just focused on the question of whether the material was stored at the direction of a user; if this answer is yes, moved on to other aspects of the DMCA test (that amply allow Morel to argue that Getty is not entitled to DMCA protection). For some reason, the court went off the rails on to a discussion about the precise type of service that must be provided as a threshold matter. I also suspect the facts in this case will make the DMCA safe harbor argument ultimately difficult. The court's discussion about what is or is not a "service provider" under the DMCA may have been superfluous in light of factual disputes around Getty's involvement.

[It’s also worth noting that this isn't a case against the typical online service provider. Much of Getty and AFP’s operations may be conducted online, but there are still humans ultimately pushing the levers. (At least this is my impression from the facts.) This makes me think we shouldn't read too much into this as a DMCA safe harbor case or a case that deals with derivative liability for purely online service providers (e.g., YouTube).]

The CMI ruling is interesting. This isn't the first case to adopt a broad definition of "copyright management information," but courts seem fairly willing to take this approach. (Tip to photographers and content creators: watermarks are your friends.)

The damages ruling is a breath of fresh air for the defendants. I think the law is somewhat mixed and the court could have gone either way (and have treated individual Getty subscribers as supporting additional awards), but it’s the one saving grace to the ruling from Getty's and AFP’s standpoint. From a doctrinal standpoint, it's fairly interesting as well. The court was swayed by what it described as the "absurd" outcome under Morel's suggested damages framework. I don't know that the court's ruling leaves Morel totally out in the cold. He still could claim actual damages and ask the jury to sock AFP and the other defendants, pointing to the revenues they generated. AFP and Getty aren't the most sympathetic defendants in a copyright case, among other things due to their own zealous and sometimes overly aggressive enforcement efforts. Statute of limitations issues notwithstanding, he could also go after other Getty customers. This would get thorny for Getty.

End result: AFP should have looped in the co-defendants and written a check from day one. After furiously litigating the case for almost two years, it's definitely going to be writing a check to Morel. Maybe the real argument was around the extent of damages available to Morel, and the court's ruling on this issue will clear up some grey areas around what he can obtain. Either way, there are a ton of interesting issues addressed in the order, but the simple takeaway is something we already knew: stuff that's posted online is not necessarily fair game for recycling, especially not photos (and particularly if you're a corporate defendant who argues for aggressive enforcement when your own rights are allegedly infringed). A service provider's broad terms of service with its users is unlikely to be of much help to any recyclers.

Posted by Venkat at 09:37 AM | Copyright , Derivative Liability , Licensing/Contracts

January 11, 2013

Top Ten Internet Law Developments of 2012 (Forbes Cross-Post)

By Eric Goldman

I'm pleased to share my list of top 10 developments of 2012:

#10: The Push Towards Anti-Class Action Arbitration Clauses. In 2011, the U.S. Supreme Court ruled in AT&T Mobility v. Concepcion that businesses may be able to adopt mandatory arbitration clauses that ban customer class-action lawsuits. The ruling was hardly crystal-clear, but in its wake, many websites adopted such clauses. Nevertheless, as the Zappos decision points out, these clauses must be adopted according to the laws governing contract formation and amendment, or they will fail in court.

#9: General Patraeus/Paula Broadwell Imbroglio. On the surface, it's just your typical Washington DC sex scandal. However, it had several interesting cyberlaw angles, including the attempts to hide digital conversations and Ms. Broadwell's alleged cyberharassment of Jill Kelley. My biggest takeaway: If the CIA Director can't keep the FBI from reading his email, what chance do you or I have?

#8: Do-Not-Track Meltdown. Everyone hoped that industry would come up with a do-not-track (DNT) standard rather than kicking the issue to Congress or the FTC. Then, it all went to heck. Microsoft announced it would turn on DNT by default in its browser, which prompted Internet publishers to threaten to ignore Microsoft's DNT signal. Meanwhile, Internet publishers and others adopted a narrow definition of "do-not-track," arguing it meant no-tracking for advertising purposes, but tracking for other purposes was still OK. The effort then devolved into acrimonious recriminations and left open the possibility that government regulators will fill the gap--to everyone's detriment. (For what it's worth, I take a very dim view of technological do-not-track efforts for reasons I explain here).

#7: Social Media Exceptionalism. In 2012, regulators eagerly sought to "fix" social media through regulation, but their efforts will fail because no one can precisely define social media as a subset of Internet activity. For example, California's recent attempt to curb employers' attempts to obtain employees' social media passwords led to the astounding definition that "social media" means all digital data, whether online or off.

#6: Megaupload. The US government proudly touted its takedown of Megaupload as a victory for Internet copyright enforcement. Unfortunately, it appears that takedown involved an enforcement action where it appears the US government repeatedly ignored or broke the law.

#5: Software Patents/Smartphone Wars. The smartphone industry has ushered in a glorious era of innovation, but it's also highlighted how patents can hinder, not spur, innovation. Smartphone players have spent (wasted?) billions of dollars on patents with the hope that they can operate without restriction from other players' patents, and many tens of millions of dollars have been spent (wasted?) on legal fees as the players sue each other for patent infringement and defend against interlopers with weak/bogus patents hoping for a little taste of the action. See my essay on software patents:

#4: Europe Hates Silicon Valley. I'm surprised whenever I read about a new European ruling that's adverse to a Silicon Valley company, because at this point I assume that everything Silicon Valley companies do in Europe is already illegal. Google, Facebook and other Silicon Valley players are under constant legal attack in Europe on countless fronts. Everyone might be happier if the Silicon Valley players just got out of Europe altogether.

#3: Google and Antitrust. The FTC largely dropped its antitrust investigation against Google, and dropped it completely with respect to Google's search engine practices. (Technically the denouement rolled out on January 3, 2013, but I'm still counting it as a 2012 development). This is an important development for several reasons. First, the FTC--which makes its living by bringing enforcement actions--admitted it had no reason to complain about Google's search engine practices. Second, the scuttlebutt all throughout the investigated suggested that the FTC was committed to busting Google, and Google turned that situation around 180 degrees. Third, not intervening into the operation of Google's search algorithm is a logical decision, but one still worth celebrating. This was a great resolution for Google, a complete rejection of the concerns raised by Microsoft and other Google-haters, and due to the FTC's non-involvement, ultimately a big win for Google's users.

#2: ITU/WCIT's Attempted Internet Takeover. I really didn't understand what happened in Dubai at the ITU/WCIT meeting. All I know is that nothing good could have happened there, so preserving the status quo is a win, as ironic as that sounds.

However, there has been some teeth-gnashing that the meeting exposed looming fault lines between pro-censorship and anti-censorship governments. I don't understand that angst for at least two reasons. First, all governments are pro-censorship, and that certainly includes the United States. Indeed, the US has exhibited some awkward duality as it rails against foreign attempts to censor the Internet even as both Congress and the Obama Administration exhibit a never-ending pursuit of controlling the Internet themselves.

Second, the Internet has already fractured into multiple "Internets." The Internet in the United States increasingly bears little resemblance to the Internet in foreign countries, both because local regulators simply block certain websites and because websites localize their services to accommodate local regulation. Plus, it's been proven that countries can simply "unplug" from the Internet. Thus, we don't have a single unified Internet; we have many partially-overlapping Internets. I will say more about this in a future post.

#1: SOPA's Failure. The failure of SOPA/PIPA is not the watershed event for our republican democracy that we wished it would be. Citizen-driven rejection of special-interest Internet legislation will not happen very often. But as a David-and-Goliath story--the uncoordinated and oft-ignored Internet user community rising up against a well-oiled and undefeated copyright lobby--it doesn't get any bigger than SOPA. Also, we learned something really important: American voters will acquiesce to a lot of bad and self-interested decisions by their elected officials, but voters will grab the torches and pitchforks if they think the Internet is threatened.

Honorable Mentions

Some other developments of note:

* despite the Fourth Circuit's rekindling of the Rosetta Stone case before it settled, the decade-long keyword advertising litigation battles against Google are basically over with a big win for Google and other keyword advertising vendors. I also think we'll see trademark owner-vs-advertiser lawsuits tapering off too.

* app cloning is a big business, and we're seeing increasing lawsuits in the area, including the EA v. Zynga and TripleTown cases.

* the application of the Computer Fraud & Abuse Act is being dialed back in the employment context (see the Nosal and WEC cases).

* Oracle v. Google gave us one of the cleanest rulings to date that software APIs are not copyrightable. The case was also interesting for the judge's investigation into the paid advocacy efforts of both Oracle and Google.

* the images of Marilyn Monroe and Albert Einstein are moving closer to the public domain.

* the IB v. Facebook ruling could be a watershed decision in spurring class action lawyers to make a buck in the name of "protecting the kids" in court.

* Web publishers can improve their defamation defenses by hyperlinking to original sources.

Most Interesting Cases

I read a lot of cases in 2012, and some of the most interesting cases I saw this year:

* Erickson v. Blake. Music composers can create copyrightable compositions by equating the digits of the number "pi" (π) to musical notes, but they can't stop others from creating their own musical compositions based on pi's digits.

* Bland v. Roberts. Two government employees "liked" their boss' opponent in an upcoming election; after the boss won reelection, the employees allegedly got fired for their divided loyalties. The court (mistakenly, in my opinion) said that "liking" an item on Facebook isn't constitutionally protected speech.

* Scott v. WorldStarHipHop. A classmate posted a video of Scott fighting with an ex-girlfriend. Scott obtained the copyright to the video from his classmate and, as the new copyright owner, sent copyright takedown notices in an effort to scrub the video from the Internet. This copyright acquisition scheme basically converts copyright law into a "right to forget." In 2013, expect to see even more plaintiffs acquire copyright ownership as a way to suppress/control unflattering content about them.

* In re Heartland Payment Systems. This is a settlement of a data security breach class action lawsuit with 130M class members. The parties spent $1.5M to encourage class members to tender damage claims and another $270k to process the tendered claims. A total of 290 claims were tendered, of which 11 were valid, with a maximum payout per valid claim of $175. So the parties incurred $1.75M in transaction costs to award about $2k in damages. Interesting.

* Augstein v. Leslie. If you post a YouTube video promising $1M for the return of your laptop, you could actually owe $1M if someone returns your laptop.

* Olson v. LaBrie. Facebook should bring families closer together, but in one family, photo tagging plus a snarky comment prompted a lawsuit for a restraining order.

Lists from Previous Years

Previous top 10 lists from 2011, 2010, 2009, 2008, 2007 and 2006. Before that, John Ottaviani and I put together a list of top Internet IP cases for 2005, 2004 and 2003.

[Photo Credit: Top Ten Key // ShutterStock]

Posted by Eric at 07:25 AM | Content Regulation , Copyright , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Marketing , Patents , Privacy/Security , Publicity/Privacy Rights , Search Engines , Trademark , Trespass to Chattels | TrackBack

January 08, 2013

Q4 2012 Quick Links, Part 1 (IP Edition)

By Eric Goldman

Copyright

* Author’s Guild v. HathiTrust, 1:11-cv-06351-HB (SDNY Oct. 10, 2012). James Grimmelmann's take.

* Hillicon Valley: ‘Shell-shocked’ lawmakers shy away from online piracy in new Congress

* Ars Technica: Voters boot three SOPA-sponsoring Hollywood allies from Congress

* Triple Town/Yeti Town cloned game app lawsuit settles. Prior blog post.

* Righthaven, LLC v. DiBiase, 2012 WL 5868154 (D. Nev. November 16, 2012). Shawn Mangano is substituted out as counsel in this case, replaced by Michael Mushkin. Bold move by Mushkin to walk into this shitstorm.

* Ricchio v. Amazon.com Inc., No. 12-332 (E.D. Wis. Oct. 12, 2012): "I find plaintiff has failed to state a claim for copyright infringement. He alleges defendant is again allowing third-parties to sell copies of his book without plaintiff’s authorization, but he does not claim that any of the books being sold on defendant’s website are counterfeit copies. Plaintiff claims only that defendant is allowing third parties to re-sell copies of his book without compensating him. However, under the “first sale” doctrine, plaintiff is not entitled to profit from the resale of his book."

* TorrentFreak: Google Removed 50 Million “Pirate” Search Results This Year

* PeerMusic, III, Ltd. v LiveUniverse, Inc., 2:09-cv-06160-GW -PLA (C.D. Cal Oct. 9, 2012). Awarding $12,500 per song in a default judgment against lyrics website, for a total of $6.6M.

* Time: How Microsoft’s Copyright Claim Went Awry

Trademark

* Split ruling on Google’s motion to dismiss in Home Decor Center v Google. Prior blog post.

* John Crane Production Solutions, Inc. v. R2R and D, LLC, 861 F.Supp.2d 792 (N.D. Tex. March 21, 2012):

JCPS is essentially concerned about initial interest confusion. A claim for trademark infringement can be based not only on whether purchasers are confused as to the source of the product at the time of the sale, but also based on “confusion that creates initial consumer interest, even though no actual sale is finally completed as a result of the confusion.” Elvis Presley Enters., 141 F.3d at 204 (internal quotation marks and citations omitted). Some courts have concluded that the fact that purchasers are sophisticated does not foreclose a finding of initial interest confusion if products and marks are sufficiently similar. Others have held that the character of a given market, including the sophistication of potential purchasers, is enough to overcome a likelihood of initial interest confusion. Compare Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 260 (2d Cir.1987) (holding there was likelihood of initial interest confusion “even though defendant's business is transacted in large quantities only with sophisticated oil traders”) with Checkpoint Sys., 269 F.3d at 285 (holding no likelihood of initial interest confusion, in part because purchasers were sophisticated and exercised high degree of care) and Rust Env't & Infrastructure, 131 F.3d at 1217 (holding no likelihood of initial interest confusion, in part because purchasers were sophisticated and market was small). Because even a sophisticated purchaser can be subject to initial interest confusion, the court will weigh this digit and the potential for initial interest confusion along with the other digits in determining whether a likelihood of confusion exists.

Yet, the plaintiff still lost the case. Why not just give up the "initial interest confusion" charade?

* Paramount Farms Intern. LLC v. Keenan Farms Inc., 2012 WL 5974169 (C.D. Cal. November 28, 2012): "Ms. Hodari testified that the Wonderful Pistachios brand has a Facebook page with almost 300,000 “likes.” While the Facebook recognition of the brand does not conclusively demonstrate actual recognition of the associated trade dress, it lends credence to the other evidence that the trade dress has become famous. Accordingly, the Court finds there remains a triable issue whether the Claimed Trade Dress is famous."

* Google's algorithmic changes are curtailing demand for domain names.

* Robert G. Bone, Taking The Confusion Out Of “Likelihood Of Confusion”: Toward A More Sensible Approach To Trademark Infringement, 106 Nw. U. L. Rev. 1307 (2012).

* Latest round in Nextdoor.com and Raj Abhyanker.

* Stipulated contempt finding in the North Face v. South Butt case.

Patents/Trade Secrets

* Project DisCo: One In Six Active U.S. Patents Pertain To The Smartphone

* NDSL, Inc. v. Patnoude, 2012 WL 6096584 (W.D. Mich. December 7, 2012): "Patnoude's November 12, 2012, generic LinkedIn invitation is not sufficient to establish that Patnoude has solicited NDSL Customers in violation of subparagraph 9.a(2). NDSL has not established that Patnoude has solicited any NDSL Customer."

* Skyhook Wireless, Inc. v. Google Inc., 2012 WL 5309755 (Mass. Superior Ct. Sept. 28, 2012). Granting summary judgment to Google.

Posted by Eric at 12:06 PM | Copyright , Domain Names , Patents , Trade Secrets , Trademark | TrackBack

Let's Stop Using the Term “Soft IP”

By Eric Goldman

You may have heard--or even used--the phrase “soft IP.” I'm not a fan of it, and I think we should retire the term.

The term "soft IP" is inherently ambiguous. Sometimes, people use "soft IP" to refer to “copyrights and trademarks;” other times, the term is intended to cover all IP other than patents--presumably publicity rights, trade secrets, etc. I especially cringe when I hear students tell me they are looking for a "soft IP" job. Typically, that's a reliable tipoff that the students don't know what kind of IP job they want; they just know they don't want to be (or aren't eligible to become) a patent prosecutor. That lack of clarity in the student's mind is rarely an asset to their job search.

I've had difficulty tracing the term's etymology. I searched several online databases looking for early uses and I found published references as far back as 1998, but my vague recollection (corroborated by others) is that the term goes back well before then.

As a term establishing a classification of IP, “soft IP” implies an antonym--presumably, “hard IP.” I don’t hear people use the term "hard IP," but given that soft IP always excludes patents, presumably patents are part of the antonym.

I can think of a few explanations for a hard/soft distinction among intellectual properties. First, patents often cover physical devices, so they often have a physical tangibility, while copyrights, trademarks and other IPs may be more intangible by comparison (even though patents protect "ideas," which is as intangible as they come).

Second, the hard/soft distinction might imply some difference in the degree of the practice's difficulty, i.e., the perception that patent law, and any associated technology, are complicated and “hard,” while other IPs are relatively easy and "soft" by comparison. People rarely articulate this relative value judgment explicitly, but I'm sure some patent practitioners believe that what they do is more challenging than the work of other IP practitioners; and I'm even more confident (because I've seen it repeatedly) that some patent practitioners feel comfortable "dabbling" in other IPs on the grounds that if they can do patents, they are well-qualified to handle other IPs.

It's true that patent prosecution requires passage of a separate bar exam, which in turn requires a technical background, so in that sense becoming a patent practitioner is "harder" than becoming an IP practitioner generally. Still, there is a certain implicit arrogance in this line of thinking.

Although I concede that patent law has plenty of arcane and baffling rules, I think patent practice is demonstrably not “harder” than other IP practices. I invite any patent practitioner--or, for that matter, any lawyer--who thinks that non-patent IP is "easy" to: walk me through 17 USC 114 (the music streaming provisions); calculate a pre-1976 copyright term duration; tell me what the term "use in commerce" means in trademark law; or walk me through the multitudinous ICANN procedures for objecting to or challenging gTLDs. And while historically the biggest bucks were in patent litigation, we're seeing big bucks across the IP spectrum, such as Oracle's $1.3B copyright damages award in the SAP case and Google's $100M+ defense costs in Viacom v. YouTube. (As I explain to my Internet Law class, $100M of legal fees is like the cost of *twenty* typical patent lawsuits!) And patent cases don't have a monopoly on hard technological questions; think about the technological sophistication to resolve Oracle v. Google, the Cablevision case or the Goforit case (just to pick three examples off the top of my head). Not only would it be condescending to say or imply that non-patent IP is "easy" or fluffy, I don't think it's remotely supportable factually.

A third hard/soft distinction is in the phrase “hard sciences,” although we rarely hear the antonym "soft sciences" (presumably social sciences). Because a technical background is required for patent prosecution, perhaps “hard IP” implicitly cross-references “hard sciences.” The thing is, there are several paths to qualify for the patent bar that don't require a “hard” science background, so that linkage would be odd.

In conclusion, I see at least three problems with the term “soft IP”:

1) It has at least two different definitions, making the term ambiguous.
2) It establishes an implicit hierarchy between different IP practices, which is potentially condescending and factually unsupportable.
3) It might imply an linkage with “hard sciences” that isn't necessarily true.

OK, so what should we use instead of the term "soft IP"? I don't have a great answer. The reality is that the IPs being lumped together under the "soft IP" appellation don't have enough commonalities to support the linkages--other than that they aren't patents. So we could use the term "non-patent IP" as the antonym to a patent practice. You probably like the term "non-patent IP" as much as I do (i.e., not much). My only other suggestion is to skip any effort to combine IPs in a single term and instead specify which IPs you are referring to. For example, if you're using "soft IP" to copyrights and trademarks, just say "copyrights and trademarks."

[I'm deliberately sidestepping the broader debate about the legitimacy of the term "IP"/"intellectual property," although I think that topic deserves additional discussion given some people's intrinsic absolutism towards "property" rights.]

Precise nomenclature is especially crucial for students in their job searches. If you aren't interested in a patent career, that's fine; but it's not a strong sales pitch to tell employers what you're *not* interested in, and the requirements and expectations of a trademark practice are quite different than a copyright practice (and different still from other IP niche practices). In reality, the best thing to students can do is to match their search criteria with the way employers structure the jobs. Few employers recruit for a "copyright" lawyer; typically, they are looking for a software licensing attorney or an entertainment attorney or an IP litigator knowledgeable in copyright law. My recommendation to students: figure out what employers are looking for, assess how the requirements of the job match against your skills and interests, and proceed accordingly. If you haven't gotten to the point where you can avoid the term "soft IP," your job search process probably still needs more cultivation, no matter how much effort you've invested in it to date.

[Photo credit: illustration depicting a sign post with directional arrows containing a choices concept // ShutterStock]

Posted by Eric at 08:51 AM | Copyright , Patents , Publicity/Privacy Rights , Trade Secrets , Trademark | TrackBack

January 03, 2013

The Problem of “International Orphan Works” (Guest Blog Post)

By Guest Blogger Marketa Trimble

The U.S. Copyright Office recently extended the deadline by which the public may submit comments on issues related to orphan works until February 4, 2013. The Office is gathering suggestions for shaping future U.S. legislation and taking other actions to address the issues of works whose copyright has not expired, yet the owner of the copyright cannot be identified or located. However, legislating on orphan works at the national level cannot solve an important problem: the problem of establishing the status of an orphan work internationally. The solution to this problem is crucially important for anyone hoping to use orphan works on the internet – particularly entities that are among the most active lobbyists for orphan works legislation.

The key component of orphan works legislation is a definition of what qualifies as an “orphan work.” The definition relies on a standard for the diligent search that a prospective user of a work must conduct in searching for the copyright owner of the work. If, even after performing a diligent search, the prospective user cannot identify or locate the copyright owner, the work will be considered an “orphan work.” The legislation also must address whether, if the work is an orphan work, the user must pay royalties, and if so, when, in what amount, and to whom.

An important accelerator in the search for a solution to the orphan works problem has been the various projects that were developed to digitize library collections and make digital copies available online. Although the orphan works problem did not first arise because of digital technology or the internet, the problem certainly attracted significantly more attention when it was pointed out by entities that wished to make large quantities of materials available to the general public online.

Given the link between the internet and the interest in orphan works, it would appear to be an imperative that a legislative solution to the orphan works problem pay particular attention to the use of orphan works online. However, a legislative solution that is merely national in scope will not solve the orphan works problem for prospective users of the works if that use will be online – it will only set a national standard for diligent search for one country, exposing a prospective user to the risk that his diligent search will not meet the standards of other countries, where the work will also be accessible online. While a user might have searched for the copyright owner in a manner that met the standard prescribed by the legislation of country A and thereby be free of liability for infringement under the law of A, the same search might be insufficient according to legislation in country B, thereby making the user liable for infringement in country B.

The European Union, which leapfrogged the United States in legislating on orphan works when it adopted its directive on certain permitted uses of orphan works in October 2012, had to solve the problem for all 27 EU member states. The directive offers a hybrid solution: it sets common minimum standards for a prospective user’s diligent search and combines the minimum standards with an obligation for mutual recognition of additional national rules for the prospective user’s diligent search. While the directive dictates what constitutes a minimum diligent search for a prospective user of a work (the Annex of the directive and Article 3.4), it also gives EU member states an opportunity to set in their implementing national legislation additional requirements for diligent searches (Article 3.2). Once a prospective user meets the standard of one of the EU member states and determines that the work is an orphan work, other EU member states must respect that status based on the national standard (Article 4). The European Union thus creates the status of an EU-wide orphan work – undeniably an important step for the EU single market.

How will EU-wide orphan works fare beyond EU borders? If a German library identifies a work first published in Germany as an orphan work under future German EU-compliant legislation (see Article 3.3 of the directive for the applicable law) and makes a digital copy of the work available online, the library will not face infringement liability in any EU member state. But suppose the copyright owner suddenly emerges and sues for copyright infringement in a country outside the European Union where the diligent search standard is different – or where no legislation on orphan works exists at all. One possible way for the library to limit its exposure to potential copyright infringement liability outside the European Union will be to allow access to the work online only to those users who connect to the internet from EU member states – a solution that could generate a greater need for effective geolocation tools and raise questions about how the law should treat acts of evasion of geolocation (see my article on the topic here).

Can an orphan work solution serve prospective users of a work who intend to use the work on the internet, although the solution does not provide for an “international orphan work” status? Such a status could only be established by an international treaty, which could adopt the EU hybrid model or set a single diligent search standard. Without an “international orphan work” status the problem could still be solved by the operation of the rules for jurisdiction and choice of law, which would effectively limit the number of countries whose national laws would apply to the acts of the prospective user. Such rules could either be left to develop naturally with no international coordination (as has been the case so far with the exception of the European Union and the European Free Trade Association), or could be shaped by collective action – if countries could eventually agree on a treaty on jurisdiction, choice of law, and the recognition and enforcement of judgments (the restarted activities of the Hague Conference on Private International Law in this area provide a possible forum for such an effort). Four completed and one ongoing academic projects attempt to provide guidelines for courts and legislators on which rules to adopt (for the ongoing project see here).

There might be one other possibility: the EU directive, once implemented in EU member states’ national legislation (which should occur by October 29, 2014), might prove that the standard set by the directive is high enough to identify orphan works reliably at the international level. If the EU standard is sufficiently high, the instances in which works will not be legitimate “international orphan works” – instances in which their copyright owners will in fact exist and emerge to claim infringement – will be very few, if any.

However, even if copyright owners are truly unidentifiable or non-locatable under any standard, the question will remain as to what law should govern the royalties due, if any, for the use of the work if the work is accessible online from multiple countries. But maybe the question of the law applicable to the royalties arrangement will not necessitate an international agreement: it might transpire (as it does with other infringement issues on the internet) that in most cases various natural barriers will provide sufficient limits on the territorial scope of potential liability. The limited financial resources of copyright owners – who are the potential plaintiffs – or a limited willingness of courts to adjudicate infringements under multiple national copyright laws might delineate the territorial scope of potential liability in the majority of cases. Furthermore, if the copyright owner is truly unidentifiable or non-locatable, there might be no one with standing to sue for copyright infringement anyway.

[Photo credit: Puzzle World Globe // ShutterStock]

Posted by Eric at 09:23 AM | Copyright | TrackBack

December 31, 2012

Anti-Scraping Lawsuits Are Going Crazy in the Real Estate Industry (Catch-Up Post)

By Jake McGowan with comments from Eric

[Eric's preliminary note: it's taken me weeks to review this blog post, so I've been keeping poor Jake in a holding pattern. Still, I hope the wait is worth it.]

The real estate listings industry has become increasingly concerned with competitive “scraping” by multiple listing service websites. After all, MLS owners make money by exploiting an information asymmetry--they charge participating brokers and agents for access to the database listings. If a website legally scrapes and distributes the MLS’s data, it destroys the valuable information asymmetry and thus hurts the listing services’ revenues.

For these reasons, some MLS sites have tried to squash this type of competition by taking the scrapers to court for copyright infringement. But the listings in question often consist largely of photographs and generic descriptions. Does copyright even apply in the first place?

First, courts tend to enforce copyright protection for photographs in this context. Earlier this year in Pacific Stock, Inc. v. MacArthur & Company, Inc., Pacific Stock went after the owners of a website that scraped real estate listing photographs and used them on the site without a license. The court entered default judgment against the website and its operators.

While photographs often satisfy the originality requirement, questions linger as to whether courts should protect seemingly generic listing information.

In recent cases like Allure Jewelers v. Mustafa Ulu, we have seen defendants make similar arguments (i.e., that copyright does not protect the information in question). Allure involved a dispute between competitors over whether descriptors for jewelry are protectable. Unfortunately, the court did not go into depth about the originality argument; it dismissed Allure's claim for failure to obtain registration before filing suit.

But a district court in Minnesota recently considered this question more directly in Regional Multiple Listing Service v. American Home Realty Network, 0:12-cv-00965-JRT-FLN (D. Minn. Sept. 27, 2012).

Background

The controversy centered around three types of content allegedly scraped from Regional MLS’s “NorthStarMLS” website: (1) photographs; (2) narrative “public”/“agent” remarks; and (3) “field descriptors.”

The narrative public/agent remarks describe the property, but also contain a bit of puffing and tailoring toward a target audience.

Example:

Agent Remarks: Agents this is a must see for your lakehome buyers. Main flr living, gradual slope to lake, sandy lakeshore, finished lower level, ceramic tile & infloor heat, 2 decks & much more. Agent/Seller, questions call listing office. Provide as much notice for show

Public Remarks: Lakefront living at it’s [sic] finest! Southern views from either of your 2 decks or patio, Full finished basement w ceramic tile & infloor heat, & many more upgrades. Sandy lakeshore, yard w minimal maintenance, perfect for that getaway you’ve been looking for.

The “field descriptors,” on the other hand, are usually bare factual statements that describe the property in generic terms.

Example:

Exterior Features: Balcony, Deck, Dock, Patio

Interior Features: Kitchen Window, Security System, Tiled Floors, Vaulted Ceiling(s), Walk-in Closet, Washer/Dryer Hookup, Main Floor Full Bath, [illegible], 3⁄4 Basement, All Living Facilities on [illegible].

RMLS alleged that AHRN infringed its copyrights for all of this content by scraping the data (either from NorthStar or its licensees) and reproducing it on NeighborCity.com. Although the court did not enter a full discussion of the copyright interest in the textual elements of a MLS database, it still shed some light on whether those elements were sufficiently original to warrant protection in any event.

“Narrative” Descriptions of Houses Likely Qualify for Copyright Protection

The court held that the narrative “agent remarks” and “public remarks” were likely copyrightable:

As with other types of copyrights, creativity must exist to protect a compilation . . . These remarks are uniquely-phrased descriptions of property, highlighting those parts of a property that might be most attractive to agents and the public[.]

The court also held that RMLS was likely to succeed in showing “irreparable harm” because NeighborCity detracts value from NorthStarMLS. In addition, RMLS contracted with the brokers under the expectation that it would not distribute any of the listing content without permission from the brokers. Thus, if RMLS didn’t go after NeighborCity, their reputation and goodwill may have suffered.

As for the scope of the injunction, the court refused to grant protection to the field descriptors:

The descriptors do not seem sufficiently creative to warrant protection, especially one-word descriptors such as “deck” and “patio” . . . There are limited ways of expressing the basic facts included in these field descriptors, suggesting these expressions by RMLS are not copyrightable.

Since then, AHRN filed its answer and asserted counterclaims under federal and Minnesota antitrust law:

The concerted effort to suppress competition from companies like AHRN depends in large part on the ability of RMLS and other MLS's to . . . intimidate potential competitors with threats of copyright enforcement litigation – despite knowing that much of the information over which they claim copyright privilege is not copyrightable, not properly registered in compliance with the Copyright Act, or not owned by them.

Same Writ, Different Plaintiff: Metropolitan Regional Information Systems v. AHRN

Metropolitan Regional Information Systems v. American Home Realty Network, 12-cv-00954-AW (D. Md. Nov. 13, 2012)

AHRN just can’t catch a break. The company is also currently a defendant in another copyright case extremely similar to the one discussed above—this time brought by Metropolitan Regional Information Systems (MRIS).

MRIS moved for a preliminary injunction, which the district court ultimately granted. After AHRN filed a motion to clarify the scope of the injunction, the court cited factual disputes about the underlying textual elements and thus specified that the injunction applied only to the photographs in the database.

The Court had originally enjoined AHRN from:

unauthorized copying, reproduction, public display, or public distribution of copyrighted content from the MRIS Database, and from preparing derivative works based upon the copyrighted content from the MRIS Database.

The court concluded that the language in the order was not sufficiently specific under FRCP 65, especially since the court based its order on the copyrighted photographs.

MRIS disagreed to the request to modify the order, pointing out that the Court had previously found that the database is entitled to copyright protection as a compilation. As part of that holding, the Court found that the database (including the textual elements) had exhibited the requisite originality for copyright protection.

But although the textual elements were part of a compilation that had the requisite level of originality, MRIS had not shown that AHRN copied such textual elements. There was still a factual dispute as to whether AHRN copies the database wholesale as part of its operation. For this reason, the court declined to expand the scope of the injunction beyond MRIS's copyrighted photographs.

The revised order now reads as follows:

AHRN and all persons acting under its direction, control or authority are hereby preliminarily enjoined from unauthorized copying, reproduction, public display, or public distribution of MRIS’s copyrighted photographs and from preparing derivative works based upon MRIS’s copyrighted photographs.

Although the court refused to include the textual elements in the preliminary injunction, it noted that the revised order does not mean that MRIS has no copyright interest in the textual elements.

To the contrary, MRIS has demonstrated a likelihood of success on the merits that the MRIS Database exhibits the requisite originality for copyright protection.

But the court did also mention that copyright interests in factual compilations are "thin."

Like in the RMLS case, AHRN subsequently filed antitrust counterclaims.

__________

Initially, it’s worth noting that photographs receive unique treatment in the infringement analysis. The court has no trouble concluding that a competitor potentially infringes when it copies the photos.

These cases both seem to stand for the idea that the textual elements are sufficiently original to qualify for copyright protection—albeit “thin.” Drawing the line in the sand at the "field descriptors," the RMLS court recognizes the psychological difference between lists and narratives from the perspective of the reader. Although these "narratives" might be broken sentences with generous amounts of typos, they evoke certain emotions that bare facts cannot and require some original thought. They might even be useful to an agent who is pondering their best sales pitch. For these reasons, they clear the originality bar (though not by much). [Eric's note: re copyrighting language that's the most effective sales language, see Webloyalty.com, Inc. v. Consumer Innovations LLC.]

By setting the bar relatively low for originality, this decision may lead to more copyright-based attacks on these MLS competitors as a way of suppressing competition. This prompts a bigger question: how much value does the "narrative" aspect of these sections add to these sites?

If customers don't care about the "narrative" aspect of the sites, then this decision may not pose as much of a threat to these listing scraper sites--it seems that as long as they don't use the photographs or copy any original narratives, they are less vulnerable to a copyright infringement suit. This prompts yet another question for these plaintiffs—given the “thin” nature of protection, is a lawsuit really worth it? We’ll have to wait and see.
_____

Eric's Comments

Scraping always raises interesting policy and theory issues, so from that standpoint I'm disappointed we don't see more scraping lawsuits or rulings. These two NeighborCity rulings are among the cleanest to date addressing the copyright implications of scraping, and they show just how hard it is to run a legally permissible scraping-based business. Here, the real gotchas are photos--always a liability trap--and the kicker is that the MLSs are taking copyright ownership in the photos enough to have standing.

In the Northstar case, the court is fairly clear that the MLS doesn't always take 100% ownership and NeighborCity is free to approach the co-owner for the license. Recognizing the logistical difficulties of doing so, so long as the MLS can engage in legal shenanigans like taking a meaningless ownership stake in photos, the MLS can use that ownership stake as an impressively effective anti-competition tool. I was disappointed in the Northstar case how tone-deaf the judge was to the competitive issues at stake. It seemed like once the MLS established its status as a copyright owner, all competition-related issues got turned off. That's troubling from a policy standpoint.

Stitch together the following four copyright ownership data points and you'll see a disturbing trend:

1) As discussed in this post, MLSs, as database aggregators, taking copyright ownership interests in broker-supplied photos/"product shots" to suppress competition from other aggregators
2) Righthaven taking ownership interests in newspaper articles so it could sue mom-and-pop republishers
3) Scott v. WorldStarHipHop and related cases (such as Katz v. Chevaldina) where the subjects of photos/video who are unhappy with their depiction buy the copyrights to the photo/video and then send copyright takedown notices in a synthetic right-to-forget campaign.
4) Medical Justice encouraging doctors and other healthcare providers to take copyrights in written patient reviews of them to have the power to veto those reviews.

To me, the trend is clear. People are monkeying with copyright ownership to achieve purposes that copyright law was never designed to accomplish. I haven't yet figured out a fix for this, but if we aren't careful, this copyright ownership hack will moot many other important social and policy balances we've tried to strike elsewhere in the law.

Two other interesting things from these rulings:

1) NeighborCity appears to have avoided scraping the MLS sites directly, thereby presumably avoiding the risk of trespass to chattels/CFAA and contract breach claims. Still, as these cases indicate, scraping a third party licensee's site doesn't bypass the copyright problem.
2) The Maryland case upheld the validity of an electronic copyright (204(a)) ownership assignment per E-SIGN, favorably citing Hermosilla case. (The court says that, using an online clickthrough agreement "satisfied the signature requirement of E-SIGN and Section 204(a)"). I think this is the right result, but it shows just how easy to accomplish the copyright ownership hack.

[Photo Credit: Olivier Le Queinec / Shutterstock.com]

Posted by JakeMcGowan at 11:40 AM | Content Regulation , Copyright , Licensing/Contracts , Trespass to Chattels | TrackBack

December 26, 2012

Lawsuit Against Instagram Over Terms of Service Changes Looks Flimsy -- Funes v. Instagram

[Venkat Balasubramani with a comment by Eric]

Funes v. Instagram, 12-6482 (N.D. Cal. complaint filed Dec. 21, 2012)

Eric and I posted about Instagram’s recent TOS rev. Neither of us were particularly enthusiastic about the changes. (See Facebook's Proposed Amended Sponsored Stories Settlement and Instagram's Revised TOS.) Not surprisingly given the privacy bar's affection for suing Internet companies, the changes sparked a lawsuit. But, the lawsuit is not a winner. In fact, it’s borderline frivolous.

The lawsuit asserts claims for breach of contract; violation of California’s publicity rights statute; breach of bailment (creative!); unfair competition. Plaintiff also asks for declaratory relief.

Courts have held that the imposition of a revised terms of service is not sufficient grounds for a lawsuit. (See Fineman v. Sony Network. Fineman is highly relevant, and involved similar arguments against a paid service.) An even bigger problem is that the revised terms are not in effect yet. Not only can the currently proposed terms be changed by Instagram (Instagram indeed made a few revisions in response to user outcry), the users can remedy any problems themselves—they can exercise self-help and leave the network before the new terms apply. In the event plaintiff does not withdraw its lawsuit (and she really should), I’m sure the many arguments will be fleshed out in Instagram’s motion to dismiss. In any event, here’s my initial summary.

Breach of contract: There’s nothing wrong with Instagram changing contractual terms on a prospective basis. To the extent plaintiff claims that the revised terms “interfere[] with and frustrate[] Plaintiff and the Class' use of the Instagram's service,” this is something Instagram is perfectly entitled to do.

Section 3344 claim: This is the personality rights statute that was at issue in Fraley. As I mentioned in my initial blog post about Instagram’s terms, I don’t believe the revisions really effected a material change. This language around sponsored stories was likely protective in nature, and brought about as a result of the Fraley settlement. In any event, Instagram’s blog post following the uproar expressly disclaimed its intent to broadly exploit user content in this manner.

Bailment: I don’t know what to make of the bailment claim. Query as to whether bailment applies to digital materials at all. [Eric's comment: it doesn't]. In any event, Instagram’s initial terms of service I’m sure allows it to retain any photographs uploaded to its service. Query as to whether Instagram can change the terms and have the terms apply to old content and not allow users to delete or disable the old content. It’s unclear as to whether Instagram allows users to delete their accounts or photos. In any event, this question is premature.

Section 17220 claim: Damages are limited under this section to money that has been paid by plaintiffs. In this case: zero dollars. Injunctive relief may be available, but again this is premature.
__

Instagram’s TOS rollout was clunky, mostly because it did not anticipate user reaction around the key question of whether users could control monetization or off-platform use of their photos. FWIW, Instagram’s various public statements still do not adequately address this issue!

As to whether the revisions warranted a lawsuit the answer is obviously no. This is a classic example of lawsuits against social networks gone completely amok. For the most part, when a change is effected prospectively, plaintiffs will be left to argue unconscionability. As numerous cases make clear, this is an extremely difficult argument to make.

As Eric noted elsewhere, Section 3344 has a mandatory fee-shift, and could result in plaintiff having to write a check to Instagram.
___

Eric's Comment I can't say I'm a fan of Instagram's recent behavior, but I'm even less of a fan of publicity-seeking throw-lots-of-garbage-into-a-complaint-and-hope-something-sticks lawsuits like this one. It's a sign of a slow news week (and a season when reporters have difficulty finding credible sources) when a bogus lawsuit like this gets any press coverage at all--other than the loud and mocking guffaw it deserves.

Posted by Venkat at 05:42 AM | Copyright , E-Commerce , Licensing/Contracts , Publicity/Privacy Rights

December 20, 2012

Facebook’s Proposed Amended Sponsored Settlement and Instagram’s TOS Revs

[Post by Venkat Balasubramani]

Fraley v. Facebook, 11-cv-196193 (N.D. Cal.) (Amended Proposed Settlement) (Motion to Approve) (Preliminary Approval) (case docs, compiled by Citizen Media)

I initially passed on blogging the amended proposed settlement agreement in Fraley v. Facebook, the Sponsored Stories class action lawsuit, but the recent changes to Instagram’s terms of service brought the issues to the fore.

The Fraley Claims: As detailed in several posts here, Fraley involved misappropriation claims based on Facebook’s Sponsored Stories initiative. Essentially, end users claimed that Facebook’s use of their posts for advertising purposes constituted an unauthorized exploitation of their publicity and personality rights. (Minors piled on separately.) Facebook couldn't easily extricate itself from the putative class action, and accordingly it settled. Its first attempt to settle the lawsuit did not meet with judicial approval—the court said that while the terms may be fair, it was not presented with sufficient information to evaluate its propriety. Facebook and the plaintiffs went back to the drawing board and made a few key changes to the proposed settlement. Not surprisingly, the second iteration met with approval.

Amended Settlement: One big change in the proposed settlement: Facebook offered up cash ($20 million settlement fund). It also supposedly offered users greater control over use of their likeness. The lawyers also made a helpful concession about the amount of requested fees that would go unchallenged.

it’s tough to assess the revised settlement in terms of the injunctive relief that it provides—it’s supposed to allow greater control over the use of end users’ likeness. However, the settlement is somewhat awkwardly worded in terms of control to end users. Facebook will create a mechanism that allows users to view their interactions that "have been" displayed in Sponsored Stories and will enable users to "control which of these interactions . . . are eligible to appear in additional Sponsored Stories." The peculiar combination of past and future tense in the phrasing should raise eyebrows. I guess a global opt-out was too much to ask for.

The Upshot: Given the majority opinion in Lane (the Beacon case), the original settlement seemed like it had a chance of being approved. As revised, I imagine it will easily receive final approval. Judge Seeborg already gave it his preliminary thumbs up.

Instagram TOS Changes: On a somewhat related note, Instagram recently unveiled changes to its terms of service. While it’s difficult to assess user reaction (Flickr was billed as the obvious beneficiary), celebrities, high profile users, and photographers all expressed their displeasure. It’s worth stopping to think about exactly what has changed. On this point, see this helpful redline from William Carleton. The big change (and one that may not be material) is the change from Instagram being able to “place . . . advertising and promotions on the Instagram Services or on, about, or in conjunction with your Content,” to the following:

You agree that a business or other entity may pay us to display your username, likeness, photos . . . and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you.

I don’t see this as a significant change to what Instagram can do with your photographs. The fact that the language of the revised terms tracks relevant language from the Amended Settlement Agreement in Fraley makes me think this is just a clean up change to bring Instagram’s terms into conformity with what is required of Facebook under the revised settlement.

Unfortunately, both the previous and current version fail to answer the key question about the scope of the license users grant: will usage only occur within the Instagram ecosystem, or can Instagram license out photos to third parties to use in other media (e.g., magazine ads or television)? Could my photo of a Seattle sunset end up in a Coca Cola ad where Instagram is paid money for usage of the photo? "Very IP" makes a persuasive case that new language around transferability or sublicensability means that Instagram can under the revised terms exploit content outside the ecosystem: "The Truth About Instagram." I'm not totally persuaded. In this litigious environment, particularly in light of Facebook's experience with Beacon and Fraley, any off-line rights would be clearly called out in its license agreement. Any other approach would just be inviting a lawsuit. In light of the (still pending) AFP v. Morel dispute (where AFP allegedly took photos from Twitpic and argued that it was entitled to a broad license to distribute content elsewhere), this clarity is important to users. I have no idea why Instagram dropped the ball on addressing this.

A day after the big online meltdown, Instagram’s founder published a post acknowledging user outcry and saying that it is committed to not “selling your photos” . . . whatever this means.

This was a classic example in how not to revise a terms of service. Instagram highlighted the revised terms clearly for users, but failed to anticipate what users would care about. Eric makes a few good points below about the terms that have me scratching my head. Did Instagram really leave in the "we can amend these terms whenever we want" provision in its revised terms? Ouch.

It's easy from our perspective to nitpick about the direction Instagram chose, but overall it feels unimaginative to me. They could have taken a variety of routes, ranging from offering users an opt-out (even a paid alternative) to granular control, to a revenue share (ad/brand marketplace?), but Instagram looks like it is doing what Facebook would do. Not surprising, but sort of a bummer for users. I guess it's a good illustration that the Fraley (and the FTC) settlement notwithstanding, Facebook is ready able and willing to override user preferences. [Query as to whether these changes in any way implicate the FTC consent decree covering Facebook, or the companies' promise to stay separate?]

Other coverage on the Instagram Issue:

EFF (Kurt O.): Instagram's New Terms of Service to Sell Your Photos
Creative Commons: Should Instagram adopt creative commons licensing?
William Carleton: Why not share the revenue?
Verge (Nilay Patel): No, Instagram can't sell your photos
Wendy Davis: User Revolt Spurs Instagram to Backtrack on New Terms of Service
Very IP: The Truth About Instagram
__________

Comments from Eric on Instagram:

1) When Facebook bought Instagram, what did Instagram users think was going to happen? Of course Facebook was going to bring its special style of management to Instagram. The revised user agreement is part of the ongoing Facebook-ization of Instagram.
2) If you run a high-profile website, you need to run any proposed user agreement changes through a user focus group before unleashing the revisions on the public. This way, you can preview the potential pitfalls better than if only lawyers and insiders read the terms. If Instagram did run its proposals through a focus group, then it needs to do a better job of that.
3) Instagram's proposed contract revisions still contain the ability of Instagram to unilaterally amend the terms without notice. After Zappos' meltdown, that's a really bad idea from a legal standpoint.
4) Although I knew what Instagram was trying to say with its provision to let them turn Instagram content into Sponsored Stories ads, the provision was clumsily worded at best and easy to misunderstand. (As Venkat points out, Instagram should have known about the risk people will think they are turning into a stock photo agency after the Twitpic debacle). People overreacted by thinking advertisers could freely recycle their photos; even if Instagram took the copyright license, if anyone appeared in the photos, the advertisers still would need a separate publicity rights consent. Sill, it was absolutely shameful for Instagram to then blame the concerns on users misunderstanding the contract provisions. Users can misunderstand even clear contract language, but this was not clear language. The fault lies with Instagram's drafters, not the users.
5) I was particularly flummoxed by the proposed provision "You acknowledge that we may not always identify paid services, sponsored content, or commercial communications as such." Can you even do this by contract? My best guess is that this provision is legally ineffective.
6) My question to all of the unhappy Instagram users: where are you going to go? All of Instagram's competitors--indeed, all free photo hosting options--are equally likely to turn on their users. Recall my dilemmas with Scribd. Moving from one free photo hosting site to another delays the problems, at best. It doesn't solve the underlying problem.
7) Overall, the biggest "problem" here is that Instagram users unrealistically expected that a free cloud service wouldn't turn on them. Every cloud service provider goes rogue on its users inevitably; and where the business' interests diverge from users, users are going to be thrown under the bus. Instagram users must have thought Instagram was the exception; and perhaps before Facebook bought it, they could have enjoyed a cloud utopia for a while longer before the collapse. But all users should have learned by now: when it comes to cloud services, you get what you get and you don't throw a fit. In light of the burgeoning number of times cloud services have quite publicly gone rogue on users, it's becoming increasingly less reasonable for users to expect anything differently. There's only one way for users to truly control the fate of their online digital assets, and that's to host all of their content on their own website. If you don't want to do that and you're looking for a free and easy option, you get what you get.

Added (comments from Venkat): In response to the feedback, Instagram founder Kevin Systrom announced in a blog post that Instagram is "reverting" the advertising language to what had been in effect from the beginning. (Here's the blog post: "Updated Terms of Service Based on Your Feedback" and here is a link to the revised terms.) The post also explains:

Going forward, rather than obtain permission from you to introduce possible advertising products we have not yet developed, we are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work.

You also had deep concerns about whether under our new terms, Instagram had any plans to sell your content. I want to be really clear: Instagram has no intention of selling your photos, and we never did. We don’t own your photos – you do.

Finally, there was also confusion about how widely shared and distributed your photos are through our service. The distribution of your content and photos is governed by our privacy policy, and always has been. We have made a small change to our terms to make that as clear as possible.

Left in is the language saying that the license to "use" user content is "transferable, sub-licensable," subject to limitations in the privacy policy. This may be protective (or clunky) drafting, but I still can't tell if Instagram intends to exploit user content outside the ecosystem. It's awkward to use privacy preferences as the limitation on how Instagram can use the photos. (For example, language in the policy says: "[o]nce you have shared User Content or made it public, that User Content may be re-shared by others," but it's not entirely clear what this means.) For public photos, it looks like the language still gives Instagram room to freely use (outside the ecosystem) content that has been designated as "public". Again, this may not be the intent, but to me, the language is not 100% clear.

Posted by Venkat at 11:19 AM | Copyright , Internet History , Licensing/Contracts , Publicity/Privacy Rights

December 19, 2012

When Will We Give Up the Charade That Numbers Are Copyrightable?--National Football Scouting v. Rang

By Eric Goldman

National Football Scouting, Inc. v. Rang, 11-cv-5762-RBL (W.D. Wash. Dec. 13, 2012)

Individual numbers aren't copyrightable, no matter how much work or judgment went into producing them. This proposition seems so obvious, I feel silly even mentioning it. A number is like a word in a sentence: it could be strung together with other elements into a copyrightable work, but standing alone, it's too small to constitute "an original work of authorship." And, of course, we're always free to reuse any number we want in our own expression.

Yet, despite this common-sense baseline, we have a burgeoning body of caselaw indicating the opposite, including this ruling--one of the cleanest cases to date articulating the proposition that a single number (e.g., "42") can, by itself, be copyrightable. The court nevertheless finds for the defendant on fair use--leaving this yucky ruling on the copyrightability of individual numbers hanging out there, just waiting for plaintiff misuse.

This case involves the rating of pro football prospects. NFS prepares a 6 page "scouting report" of each prospect, including "Player Grades," "a numerical expression representing National’s opinion of the player’s likelihood of success in the NFL." NFS provides these unpublished reports, under NDA, to 21 pro football teams at $75k/team, creating a $1.6M/year business line.

Rang blogs on the NFL draft at Sports Xchange. He wrote 8 stories about NFL prospects that referenced a total of 18 players' NFS Player Grades. The opinion doesn't explain how Rang got access to the NFS reports. NFS sued Rang and Sports Xchange for copyright infringement and trade secret misappropriation.

Citing CDN v. Kapes (one of my least favorite copyright cases of all time) and CCC v. Maclean Hunter, the court says flatly that "a numeric expression of a professional opinion can be copyrightable [because] National arrives at its grade through a weighing of subjective factors, such as personal character, leadership, and poise."

Having reached that illogical conclusion, the court then contorts the fair use analysis to avoid the logical implications of its illogical conclusion. The court says the nature of the work favors the plaintiff because the grades were unpublished; the court doesn't really consider the fact-ish nature of the works. It also says that the amount taken weighs in favor of Rang--even though he took 100% of each of the 18 grades--because he didn't include the grade range (apparently important). The court summarizes its other thoughts about fair use:

Rang’s news articles transformed National’s copyrighted material into a commentary on prospective draftees. Rang did not use the Player Grades as a focal point of his article or create a whole-sale list of Player Grades; he used them only as a jumping off point to discuss Rang’s own impressions of the player and his draft prospects....The transformative nature of Rang’s articles does not interfere with the potential market for the Scouting Reports. The Scouting Reports are still valuable to the National Football League Clubs that order them, and even if National sought to sell them to the public, Rang’s articles would not act as a market replacement.

Still, the new isn't all good for Rang. The court survives the trade secret misappropriation claim, rejecting Rang's argument that opinions can't be a trade secret.

* Regulation of Reputational Information essay
* Second Circuit Stays Hot News Injunction--Barclays v. theflyonthewall
* Republishing Third Party Ratings in Marketing Material Might Be Copyright/Trademark Infringement--Health Grades v. Robert Wood Johnson Univ. Hospital

For more on this topic, see, e.g., Justin Hughes, Created Facts and the Flawed Ontology of Copyright Law (I don't agree with its normative point) and James Grimmelmann, Three Theories of Copyright in Ratings

[Photo credit: Football player celebrates after scoring a touchdown // ShutterStock]

Posted by Eric at 09:12 AM | Copyright , Trade Secrets | TrackBack

December 12, 2012

Bit-Torrent Copyright Litigation Updates, and a Potentially Significant Decision on Joinder

[Post by Venkat Balasubramani]

We don’t track the numerous mass file sharing cases going on around the country. There are too many of them, and it’s not easy to glean any sort of a clear trend. But here are a few that came across the transom recently.

Well Go USA, Inc. v. Filesharing Swarm, 12 cv 00963 (S.D. Tx. Sept. 25, 2012): the court first deals with whether a subpoena is properly issued under 17 USC section 512(h). Following RIAA v. Verizon, the court says that these subpoenas are only available to obtain information from ISPs that actually store—rather than act as conduits for the access of—the files in question. The court grants limited discovery (subject to a protective order). Finally, the court expresses concerns as to whether the defendants are all properly joined. The court allows the defendants to be part of the lawsuit at this stage but allows defendants to present arguments (after service) as to why joinder is not proper.

AF Holdings v. Doe & Botson, 12-CV-02048-EJD (N.D. Cal. Oct. 3, 2012): this case squarely addresses a person’s liability for infringements effected via an open wi-fi connection (the order mentions that plaintiff is trying to hold Botson liable for “failing to secure his internet connection,” so I read this as a case involving open wi-fi, rather than a case where someone was provided a password and engaged in infringing acts). Either way, the court says that a claim of negligence is preempted by the Copyright Act. For good measure, the court also says in the alternative that the claim is barred by Section 230, and that there’s no special relationship between the plaintiff and defendant so there’s no duty, and no underlying basis for a negligence claim.

Aerosoft GMBH v. Does, 12-21489-CIV-SEITZ/SIMONTON (S.D. Fl. Oct. 23, 2012): this is a case where the court granted limited discovery (as in the Well Go USA case). Defendants then brought motions to quash, arguing that joinder was improper. The court says that there is mixed authority on the issue but ultimately finds that Bit-torrent swarm joinder is not proper. Plaintiffs argued that the various pieces of the file shared by defendants could have been used to aggregate a whole copy, but the court says this argument is “deceptive in its allure.” While the trackers may all fit together to form the whole file, there’s no allegation or evidence that defendants actually participated in the same transaction. The court also says that each user didn’t choose to engage with the other users. The court quashes all subpoenas that seek information regarding doe defendants (except for the first named defendant).

Discount Video Center, Inc., et al. v. Does, 12-10805-NMG; 12-10532-GAO; 12-10758-GAO (D. Mass. Nov. 16, 2012): I'm not sure exactly what happened in this case (three different cases--two brought by Patrick Collins and one by Discount Video Center). The court basically loses patience with counsel for plaintiff and concludes that plaintiffs have no intention of litigating these cases:

Plaintiff Patrick Collins, Inc. has sued at least 11,570 John Doe Defendants in litigation around the country without ever serving a single defendant.

They are just looking to identify and send letters to Doe defendants. In fact, the court is not even sure that plaintiffs have any plan to identify the defendants ("[plaintiffs] have not proposed a discovery plan aimed at identifying the infringers they have sued"). The court has some choice words for plaintiffs' counsel (e.g., the "course of action [plaintiffs intends to pursue] . . . suggests an improper effort to engage in judge shopping and evidences a disregard for the Court's limited public resources"). End result: requests for early discovery denied; plaintiffs ordered to show cause as to why the lawsuits should not be dismissed for failure to effect timely service.

Third Degree Films v. Does 1-47, 12-10761-WGY (D. Mass. Oct. 2, 2012): Judge Young, who had previously rejected an improper joinder argument raised by Doe defendants, revisits the issue. The court finds that joinder is proper under Rule 20(a)(2)(B) because there’s a logical relationship between the claims brought against the various defendants. There is also evidentiary overlap, and an “aggregate of operative facts.” However, the court says it has discretion under Rule 20 to implement “protective measures,” and it exercises that discretion:

This Court is concerned that the joinder mechanism is being manipulated to facilitate a low-cost, low-risk revenue model for the adult film companies . . . . Third Degree and like companies file a single cookie-cutter complaint alleging copyright infringement against tens, hundreds or thousands of individuals based on their IP addresses, paying only a single $350.00 filing fee, and likely employing a contingency fee structure . . . . The company relies on the combined threat of substantial statutory damages and the embarrassment of being publicly named as illegally downloading a pornographic film . . . to assume that at least some of the defendants will settle for perhaps $2,000 or $3,000 – which result comes at minimal cost to the company. . . . [O]ur federal court system provides litigants with some of the finest tools available to assist in resolving disputes; the courts should not, however, permit those tools to be used as a bludgeon.

The court is careful to say that it’s not aware of any bad conduct on the part of Third Degree, but that it is uncomfortable with the overall structure of these lawsuits and settlements. The court severs Does 2-47 from the lawsuit and requires Third Degree to file individual complaints against them.

As mentioned initially, it’s pretty difficult to discern any sort of a trend from this litigation. That said, judges are expressing discomfort with the litigation tactics being used against Bit-torrent defendants. Maybe a few bad apples are ruining it for the rest of the litigants? Who knows. (Someone should map out the jurisdictions where judges have ordered the copyright plaintiffs to proceed individually. This would be useful for both sides, and sounds like a great project for a law student to undertake.)

Judge Young’s opinion is particularly significant because it’s a reversal of his previous position. It’s also a thorough opinion. The fact that it relies on the court’s discretionary power under Rule 20 (rather than the question of whether joinder is appropriate in the first instance) is interesting as well. That discretion is more insulated from appellate review.

Finally, see this article from Timothy B. Lee at Ars: "Porn trolling firm dogged by identity theft allegations." Ouch.

Previous posts:

Court Nukes Another Mass Defendant File-Sharing Lawsuit -- Digiprotect v. Does
Copyright Doe Defendant Can’t Quash Disclosure Subpoena Anonymously—Hard Drive Productions v. Does

[image credit: Shutterstock/Kentoh - "social networking online"]

Posted by Venkat at 04:26 PM | Copyright , Derivative Liability

December 05, 2012

Amazon Not Liable for Affiliates' Allegedly Bad Acts--Routt v. Amazon

By Eric Goldman

Routt v. Amazon.com, Inc., C12-1307JLR (W.D. Wash. Nov. 30, 2012)

Sandy Routt is an artist (check out SandysBeachGifts.com if you care). She claims that Amazon affiliates (called "associates" in Amazon's vernacular) displayed her copyrighted photos (product shots) of her products on their websites and then bait-and-switched potentially interested buyers to alternative offerings. Instead of suing the affiliates, Routt sues Amazon.com for the affiliates' behavior, alleging copyright infringement, trademark infringement and violations of the state consumer protection law (the CPA). Amazon defeated the claims on a 12(b)(6) motion to dismiss, though the court gives Routt a chance to replead.

Vicarious Liability. The court dismissed her various vicarious liability claims because, in all cases, Routt didn't adequately allege that Amazon had sufficient control over its affiliates' activities. The court cites Amazon's self-protective language in its affiliate agreement and Routt's overall too-general pleadings. Routt argued that Amazon's contract requires affiliates to comply with IP law and says it can terminate affiliates who violate that provision. However, the Ninth Circuit rejected the salience of those facts to vicarious liability claims in Perfect 10 v. Amazon. The court also says it's persuaded by the analogous Sellify v. Amazon ruling, also rejecting Amazon's liability for its affiliates' conduct.

Direct Copyright Infringement. The court says Routt only alleged copying by affiliates, not by Amazon.

CPA. Routt claimed that Amazon was part of a far-reaching "scam" whereby its affiliates would engage in bait-and-switch and Amazon would profit. The court says that Routt didn't marshal adequate facts in the complaint to support this theory.

Contributory Infringement. The court says that Routt's pleadings were too conclusory.

Implications. Over the years, we've seen aggressive legal arguments from plaintiffs--usually exhorted with the utmost conviction of their veracity--that advertisers should be accountable for their affiliates' actions. Among the worst offenders are the FTC and state AGs' offices, but plenty of plaintiffs have breathed fire on this theory too. However, when those theories have been tested in court, they have generally failed miserably. I don't know why it's so hard to understand that an advertiser shouldn't be liable for the conduct of its independent contractors, but the overreaching legal arguments just won't quit. How many advertiser wins in court will it take to convince plaintiffs to move on?

* FTC Online Endorsement Guidelines Strike Again - FTC Dings Legacy Learning Over Allegedly Misleading Affiliate Reviews
* Important Ninth Circuit Ruling on Keyword Advertising, Plus Recaps of the Past 4 Months of Keyword Ad Decisions
* Amazon Isn't Liable for Rogue Affiliate's Keyword Ad Buys--Sellify v. Amazon
* Affiliate Liability Talk Notes from SMX West
* Affiliate Liability Extravaganza

and see the many cases cited in these last two posts

[Photo credit: "a circle of fingers point to the center" // Shutterstock]

Posted by Eric at 12:04 PM | Copyright , Derivative Liability , Trademark | TrackBack

December 04, 2012

The Problems With Software Patents (Forbes Cross-Post)

By Eric Goldman

The U.S. patent system largely treats all innovations equally, but innovation often works quite differently in different industries. In particular, the software industry differs from other major innovative industries--such as computer hardware and biotech/pharmaceuticals--in several key ways, and those differences can create (and have created) significant friction for the patent system.

Software patents have also created big--and expensive--problems for companies throughout all sectors of our economy. Pretty much as soon as they get venture financing, start-up companies are getting approached by "patent trolls" with offers they can't refuse: pay me now or pay your lawyer many times that amount to prove you don't have to pay me. And large companies, especially in the smartphone industry, are paying literally billions of dollars to acquire patent portfolios to keep those portfolios from falling into the wrong hands and with the hope that large patent portfolios will fend off competitor threats (i.e., provide the company freedom to operate its business without interference from competitors' patents).

This post is the first of a two-part series recapping a conversation we had earlier this month at Santa Clara University entitled "Solutions to the Software Patent Problem." In this post, I'll explain how innovation in the software industry differs from other industries and some of the resulting problems associated with software patents. In a subsequent post, I'll talk about possible fixes.

What's unique about software? Three main differences:

1) Software Has Short Innovation Cycles

Software iterates quickly. Most software programs, and features of those programs, have an effective commercial life of only a few years. Then, new software developments quickly render prior innovations obsolete . Contrast this with mechanical innovations, some of which may have commercial lives of decades, and pharmaceutical innovations, which may retain commercial value indefinitely.

Some implications of the short innovation cycles in the software industry:

Software Has Significant First Mover Advantages. Software innovators can recoup some of their R&D investments simply through de facto marketplace exclusivity from being the first mover. An example: assume that a particular software innovation has a two-year commercial lifecycle and it takes competitors 6 months to bring a matching product to market. In a situation like this, the first mover gets 1/4 of the maximum useful exclusivity period simply by being first to market. In some cases--many cases?--the exclusivity period provided by the first mover advantage is more than enough to motivate software R&D without any patent protection.

Software's Lifecycles End Before Patents Issue. As a practical matter, the commercial lifespan of a software program or feature (before being mooted by new innovations) is usually shorter than the time it takes the U.S. Patent & Trademark Office to resolve a patent application--a process that often takes 4 years or more. So invariably the patented innovation will be obsolete by the time the Patent Office decides if it's worthy of a patent.

2) Software Will Be Produced Without Any Patent Incentive

We principally justify patent law on utilitarian grounds: that social welfare improves by providing innovators with an economic reward in the form of a limited-term marketplace exclusivity. The utilitarian argument leads to patent's "quid-pro-quo": society gives innovators something really valuable--monopoly-like rights to exclude competition--in exchange for a number of socially valuable deliverables from innovators: investments in R&D, public disclosure of those R&D results, and eventually the unrestricted rights to replicate the innovation.

It's great when the quid-pro-quo model works as designed, but that's not always the case. One way the quid-pro-quo model breaks down is if we give up the quid (the rights to exclude) when we would have gotten the quo (the R&D investments and public disclosure) in any case. In those circumstances, society "overpays" for the innovation.

There are several reasons to believe that society overpays when it provides patent protection for software.

Copyrights and Trade Secrets Provide Adequate Production Incentives. Multiple aspects of software can qualify for copyright protection: the source code, the compiled code, the visual layout, the documentation, possibly even the aggregation of menu commands (the "structure, sequence and organization" of the software). Copyright only protects the expression of ideas, not the ideas themselves, so the ideas may be freely reused by competitors and others. However, the line between ideas and expression in copyright is hardly clear (see, e.g., my posts about EA v. Zynga and the Spry Fox v. Lolapps disputes), giving even more berth to copyrights' scope.

Trade secrets also protects software source code and sometimes other aspects of software, such as proprietary limited-distribution documentation. While trade secrets won't prevent copying of widely available software, even in that case it can still slow down the competition (and thereby extend any first mover advantage) by preventing the competitors from obtaining shortcuts to facilitate knockoffs.

Thus, even if it's not complete protection, the combination of copyright and trade secrets can provide substantial intellectual property protection for software. Historically, this combination has provided adequate incentives for the software industry. During the first several decades of the software industry--a period which saw explosive industry growth--software patents were rarely obtained and even more rarely enforced.

Software Vendors Can Restrict Competition Without Patents. Software can have substantial lock-in effects that can thwart competition without patents. For example, software users may become locked into one vendor's offerings due to proprietary file formats, the difficulty of learning/re-learning menu commands or keystrokes, a developer community that creates valuable apps specific to the software, and user investments in their own proprietary customizations (such as the infamous example of macros in Lotus 1-2-3). We might lament the competitive distortions associated with these lock-in effects, but so long as the software vendor doesn't break the law, they represent a crucial explanation for software innovation without patent incentives.

Software Gets Produced Without Any IP Incentives at All. The free and open source software community provides another example of software's quo without patent's quid. In those communities, people work collaboratively without any individual contributor getting any intellectual property protection for their contributions. In many cases, this is because the contributor has other ways of monetizing their efforts, such as offering maintenance or customization services or building a reputation for programming expertise that leads to job offers. (I explore these alternative monetization methods in my article comparing Wikipedia and the FOSS community). Further, some free and open source software contributions are purely altruistic, made without any financial expectations at all. Collectively, the free and open source software community has proven that lots of software--even large-scale enterprise-class software--will be produced without any patent incentives.

3) Other Problems

Software Gets Patented at Too High a Level of Abstraction. Stripped to its basics, software gathers, manipulates or displays data. There may be novel ways of accomplishing those goals, but the true novelty typically is limited to some arcane implementation in the software code, not the concept of gathering, manipulating or displaying data. Unfortunately, too many software patents claim protection at the highest level of abstraction (i.e., "moving data on a network"), not at a lower level like the more mundane implementation of that concept.

The result is overbroad software patents that overclaim their true novelty. The overclaiming should lead to patent application denials on numerous grounds, including failure to enable, failure to satisfy the written description requirement, and obviousness. But if the PTO doesn't aggressively screen the patents on those grounds, bogus patents get through the system. That's happened way too often.

The USPTO Mishandled Software Patent Applications. Furthermore, for a long time--a decade or more--the PTO did not adequately research the prior art applicable to software patents. Patent examiners typically focus their prior art searches on the database of existing patents. This means that when there's a watershed technological change--like the initial wave of software patent applications--the examiners don't see a lot of applicable prior art in their existing patent database. Therefore, they grant patents that don't deserve protection. Eventually the patent database becomes rich enough with prior art to reach an equilibrium, but the errors in the interim produce a batch of legacy patents that never should have issued.

Software Is Too Hard to Describe Precisely. Related to the abstraction problem, the boundaries of many software "innovations" are too hard to describe precisely. (In contrast, the specific implementation methods would be much easier to describe). Because of the semantic challenges, the resulting patents are so opaque that no one can understand what they mean. This also means that the patent owner can adopt expansive interpretations of the patent boundaries and then use the threat of patent litigation over those ambiguous borders to extract cash from potential defendants--even those who would ultimately be outside the patent's scope if they invested in challenging the patent owner.

Patent Research by Subsequent Innovators Is Too Costly. In theory, product developers can check the patent database to see if they are transgressing someone else's patents. In practice, this doesn't work in the software industry for at least two reasons. First, as mentioned, the imprecision of software patents makes it hard for developers to realize that the patent owner thinks the patent covers the developer's efforts. Second, large software programs may have millions of lines of code, while it's possible to obtain patents for functionality that can be expressed in only a few lines of code. The result is that a single software program could potentially implicate thousands, or even tens of thousands, of patents. The costs to find these patents, research their applicability, and then where appropriate negotiate licenses to even a small fraction of those patents, would vastly exceed the potential economic returns from most software applications. Thus, software developers rationally choose not to research the patent database at all and instead "fly blind."

There are even more problems with software patents, but this brief summary lays the foundation for part two of this series, where I will examine some possible solutions to the problems associated with software patents.

Posted by Eric at 11:50 AM | Copyright , Patents , Trade Secrets | TrackBack

November 15, 2012

District Court Smacks Down Another “Avatar” Copyright Infringement Claim -- Schkeiban v. Cameron

By Jake McGowan

Schkeiban v. Cameron, No. 2:12-cv-00636 (C.D. Cal. 2012)

As of this post, James Cameron’s movie Avatar has grossed roughly $2.78 billion. And as the old saying goes, “where there’s a hit, there’s a writ.” Given the film’s financial success, several eager plaintiffs have come out of the woodwork to sue Cameron for copyright infringement. But these prospective plaintiffs may find that the courts aren’t as eager to let them in front of a jury.

A district court in California recently held that Elijah Schkeiban, one of these plaintiffs, failed to prove that Avatar was “substantially similar” to his Bats and Butterflies children’s book.

Schkeiban’s Bats and Butterflies Not “Substantially Similar” Under the Extrinsic Test

Since this was a motion to dismiss, the court used the “extrinsic” test to compare the similarities of the ideas and expressions in the two works. The extrinsic test is objective, and focuses on “specific expressive elements” like plot, themes, dialogue, mood, setting, pace, characters, and sequence of events.

As for the plots and sequences of the events, the court found that the two works were substantially different:

“In Avatar, Jake, the paraplegic ex-Marine, takes six years to travel to the moon Pandora, and in a genetically engineered avatar body learns the customs of the indigenous tribe. During his journey, he falls in love with a member of the tribe and eventually chooses to support the tribe against his employer, a corporation engaged in strip mining. In contrast, Bats and Butterflies tells the story of Joshua, a 13-year old school boy, who is bullied by school mates. He is instantly and magically transported to a distant planet invaded by bats and butterflies. There, Joshua helps the butterflies defeat the bats and helps a caterpillar princess mature into a queen butterfly.”

Schkeiban tried to argue that the works were substantially similar at a broader level of abstraction (“alien lands . . . deaths of family members . . . battles between groups with competing interests”), but the court reminded that “vague abstracted ideas” do not satisfy the more objective extrinsic test.

With regard to the rest of the specific expressive elements, the court found that any similarities between the two works were vague and random at best:

“The similarities that plaintiff highlights between a bullied teenager and a paraplegic war veteran are mere general themes or plot ideas . . . while Avatar directly conveys themes of racism, genocide, imperialism and environmentalism, Bats and Butterflies conveys these themes symbolically, if at all . . . Bats and Butterflies is a children's story with a simple protagonist who stands for good and consistently fights against evil. In contrast, Avatar is a more complex story about a conflicted protagonist[.]”

Since the only real similarities were general ideas unprotected by copyright law, the court dismissed Schkeiban’s claim.

Similar Case: Muller v. Twentieth Century Fox Film Corp.

Muller v. Twentieth Century Fox Film Corp., No. 08 Civ. 2550 (S.D.N.Y. 2011)

Last year, a district court in New York ruled against the plaintiff in a similar infringement suit, albeit for less of a “hit.”

James Muller alleged that the film Alien vs. Predator was substantially similar to his original screenplay The Lost Continent, which involved “a government-led expedition to the Antarctic to investigate a mysterious structure below the frozen surface, a secret plan by a group called the "Freemasons" to recover a powerful crystal from the ancient city of Atlantis, and attacks by stone gargoyles come-to-life.” Citing differences in the concept, characters, and other expressive elements, the court disagreed with Muller’s claim and granted summary judgment in favor of Twentieth Century Fox.

“[S]ummary judgment is appropriate because the only similarities between the Screenplay and the Film are insubstantial, and pertain to non-copyrightable ideas, unprotected stock themes, or ‘scènes à faire,’ and not to protected expression.”

__________

It’s hard to tell whether these plaintiffs actually believe what they’re cooking up, or whether they are merely opportunistic. Either way, it seems clear that these plaintiffs did not even come close to clearing the “substantially similar” hurdle. In both cases, the similarities were firmly on the “idea” side of the idea/expression dichotomy, and the courts seemed eager to dismiss the claims.

Photo credit: Juan Camilo Bernal / Shutterstock.com

Posted by JakeMcGowan at 12:41 PM | Copyright | TrackBack

November 12, 2012

Intellectual Property on the Internet: A Brief Comparison of the Current Situation in Europe and the United States (Guest Blog Post)

by Guest Blogger Pablo García Mexía, J.D., Ph.D
[Visiting Professor of Internet Law, The College of William & Mary. English translation by Morgan G. Fletcher, B.A. Cornell, William & Mary Law School, Class of 2014. The original Spanish version of this article was published in the weekly column La Ley en la Red, that the author writes for Spain´s newspaper ABC.es. I wish to thank Professor Eric Goldman for his kind invitation to write this guest post in his excellent blog.]

[Eric's note: I thought this was an interesting response to my hot topics presentation from a European perspective, so I'm delighted to share it here.]

The situation in the United States regarding intellectual property on the Internet provides a magnificent perspective to evaluate the schools of thought currently evolving in both Europe and Spain.

Thanks to the generosity of Eric Goldman of Santa Clara University in California, I have had the opportunity to immerse myself in this action. Goldman is one of the foremost authorities on Internet law in the United States, and he typically delivers an annual lecture discussing the primary developments and occurrences in the area that have transpired in the preceding months. Its text is available on the Internet.

For our purposes, the main points of his work can be categorized into two overarching themes.

The first refers to what Goldman describes as "perennial questions," which is in turn divided into three categories: the utilization of keywords in online publications (for example, the Adwords system on Google); the liability of intermediaries, such as Amazon, for the commercialization of products on its platform that infringe on intellectual property rights; and the liability of intermediaries that store content (e.g., YouTube).

In response to the matter of keywords, Goldman suggests a liberal approach that allows the use of keywords in trademarks and registered, commercial trade names, citing as support both recent doctrine and case law proffered in the May 2012 Trademark Trial and Appeal Board decision of STK v. BackRack. The main reasoning lies in the fact that, although the majority of Internet users search for a keyword that contains a registered trademark, or the registered product itself (i.e., "Kleenex," without going any further), a lot of other users would like to be shown similar products on an equal basis. In spite of all of this, Goldman does highlight the reality that there are several unresolved important cases on this subject, four of which pertain to Google and another which is currently being reviewed by the Supreme Court of Wisconsin.

With regards to Amazon, Professor Goldman cited a 2012 ruling from the California Court of Appeals that absolved a company of liability for third party commercialization of counterfeit goods, even though they had received notification of this alleged infraction from the trademark holder. Rightly, Goldman draws the conclusion that simple notification on the part of the intellectual property rights owner is not sufficient to convey liability to sites such as Amazon; however, the ruling also introduces the possibility that companies such as Amazon may reject abusive claims from the holders of such rights.

Finally, with respect to content storage, Goldman highlights an August 2012 ruling from a federal court that excludes the viewing of videos embedded in hyperlinks from consideration as copyright infringement, effectively ruling out all liability for the owners of the site in question.

Eric Goldman refers to the aforementioned second section as "Post-SOPA Battlefields." Three points stand out from this section: the criminal prosecution of the founders of MegaUpload by the U.S. Department of Justice; the seizure of domain names by the U.S. Immigration and Customs Enforcement (as was the case with Spain´s Rojadirecta); and international treaties such as ACTA. The first two fully address a critical issue in Internet law: the downloading of protected content, specifically through hyperlinks that make it possible to access such content without having to download or save them to your own server. The third, regarding ACTA, is a theme that has already been addressed in other installments of La Ley en la Red, to which I now refer.

From the presentation, I have distilled my own thoughts about three conclusions from--and for--Europe.

The first arises from the fact that the "perennial questions" to which Goldman alludes all commonly reference intermediaries in the information society, whether they are access providers or content providers; in other words, whether they are Movistar or Facebook. What confirms this is that, in the U.S., the issue of intermediaries plays a crucial role among legal questions relating to the Internet, particularly in all matters concerning potential liability for allegedly illegal acts committed by their users.

One of the main conclusions that after years studying these themes I have been able to extract is that this same thing happens in Europe, in the sense that intermediary liability is one of the undisputed "star themes" of European Internet law, especially if one takes into account its absolute uniqueness; regardless of the peer principles utilized in such dispute resolution--which have a more or less general anchor--the underlying conflicts here arise and develop only on the Internet.

The second big conclusion can be drawn from the liberal trend, expressed by Goldman, pertaining to the use of keywords for online advertising, the activities of e-commerce platforms such as Amazon, and the legality of streaming videos through embedded links. In the U.S., thanks to the liberal interpretation of applicable regulations, a growing openness with respect to online business activities is being achieved.

It is interesting to observe this increasingly open interpretation, which has also been picked up in Europe with respect to one of the same issues--that of keywords. Judgments of the European Court of Justice released in March 2010, specifically the Louis Vuitton and Viaticum et Luteciel cases, point in the direction of excluding strict liability for Google under circumstances similar to the aforementioned American cases, and instead subjecting that company to general guidelines of electronic commerce liability provided by European legislation.

This begs the question as to why such a propensity for openness in Europe does not extend to the commercial activities of Amazon or other similar websites. One already dated judgment from the District Court of Rotterdam, Netwise v. NTS (Dec., 2002), reaches the opposite result in similar facts regarding eBay, as the Court urged the copyright holder to act against the popular online auction site.

However, those more recent and authoritative cases adjudicated by the European Court of Justice could easily assert their influence over these assumptions because, as also argued by the said Court, it is not Amazon or Google who, as entities, to infringe on intellectual property, but instead those users who utilize protected names or trademarks without authorization.

More questionable is the assumption relating to embedded links. In Europe, the use of these by third linking websites has always been considered, especially by legal doctrine, as a breach of copyright, because, by definition, with this type of link it is not possible to dispel any confusion over the authorship of the content. In this sense, the jurisprudence cited by Goldman is certainly groundbreaking, even, I dare say, if it were to catch on in his own country.

The third and final conclusion pertains to the United States' involvement in multiple, some international, judicial fronts to combat Internet piracy. One battle scene that Goldman opines to be of little use is SOPA, characterizing it as the failed Stop Online Piracy Act that tried to push through some members of the American legislature and that, in his own view, “will happen without any legislation”.

This criteria offered by the professor from Santa Clara seems more concordant with the European point of view. In this vein, it is enough to cite the ruling of the European Court of Justice in Promusicae v. Telefonica (Jan. 2008). Not to mention ACTA, whose ratification on the part of the European Union and its member states is now more than in doubt, for these same reasons.

After all, even though the European Union and its Member States have also become "entangled" on multiple judicial antipiracy fronts, it is certain that for the most part, the views that have been taken have always been more moderate in their defense of intellectual property, especially when it conflicts with fundamental rights such as privacy and freedom of expression.

Posted by Eric at 09:25 AM | Copyright , Derivative Liability , Trademark | TrackBack

November 10, 2012

Email That Says “Done .. thanks!” Doesn't Transfer Copyrights – MVP Entertainment v. Frost

[Post by Venkat Balasubramani]

MVP Entertainment, Inc. v. Frost, B235100 (Ca. Ct. App. Nov. 7, 2012) [pdf]

We enjoy cases where people negotiate or modify contracts via email or other modern methods of communication. The underlying rules haven’t changed, and nor should they, but people don’t expect that casual off-hand electronic communications can form or alter contractual relationships. This can lead to unintended results. The favorite from this genre is the CX Digital case, where an Instant Message conversation modified the terms of an agreement and resulted in a $1.2mm judgment: "Court Rules That Instant Message Conversation Modified the Terms of a Written Contract."

This case involved an alleged agreement to transfer rights in the book titled “The Match: The Day the Game of Golf Changed Forever.” MVP wanted to purchase rights in the book and turn it into a movie. Attorneys for the parties exchanged emails.
The lawyer for MVP sent an email (to the author's lawyer) with proposed terms, and asked whether “this is okay and [he would] send paperwork.” In response, the lawyer for the copyright owner (Alan Wertheimer) said:

done . . . thanks! Werth.

Later, the author and his entity talked to MVP and said that they did not want MVP to make The Match into a movie. MVP sued, asserting a variety of claims, but principally a breach of contract claim. In MVP’s view, Wertheimer’s “done thanks” email created a binding contract.

The court says that a transfer of copyright ownership is not valid unless there is a writing signed by the owner: “It doesn’t have to be the Magna Carta; a one-line pro forma statement will do.” Section 204’s writing requirement is slightly different from the statute of frauds. It serves more than an evidentiary function, and defenses such as equitable estoppel do not apply.

The big problem in this case is that Wertheimer did not have actual authority to transfer the copyrights. He testified that while he often negotiated these types of deals, he never signed the contracts (the author signed the agreements). MVP argued that Wertheimer had “ostensible authority," but the court says this is irrelevant. While California agency law may have certain rules for when contracts should be enforced against principals based on their agents leading others to believe they had authority, the Copyright Act requires a writing signed by the owner or the owner’s duly authorized agent.

MVP also argued that Wertheimer’s signature on the email (i.e., “Werth”) was an electronic signature under the ESIGN Act, but the court footnotes this argument and says it doesn't trump the actual authority issue. Again, the key issue is whether or not Wertheimer had authority--if he did, the email would likely have satisfied the writing requirement (given the court's earlier statement that the writing need not be the Magna Carta). (For context on Section 204 and the ESIGN Act, check out John O.’s blog post on the Hermosilla case: “Can A Copyright Be Assigned By Email?--Hermosilla v. Coca-Cola.”)

I may be saying this out of self-interest, but I like this result. It’s a bummer to have someone argue that one of your casual emails ended up granting someone rights in your client’s property.

In my comments to the Hermosilla post, I mentioned the possibility of a standard disclaimer that may preempt these types of arguments:

Nothing in this email is intended as an offer and the author disclaims any intention to make an offer or create an enforceable agreement through any email messages. Any agreement with the author of this email must be in a signed paper document!

I have not implemented one of these, but I still think it’s a good idea.

(h/t: Courthouse News)

[Image credit: Boris15 / Shutterstock.com]

Posted by Venkat at 11:45 AM | Copyright , E-Commerce , Licensing/Contracts

November 08, 2012

Social Media Producer’s Counterclaims Based on Website Ownership Rejected – Ardis Health v. Nankivell

[Post by Venkat Balasubramani]

Ardis Health v. Nankivell, 11 Civ. 5013 (S.D.N.Y. Oct. 23, 2012)

One of the many social media ownership disputes we blogged about was Ardis Health v. Nankivell, where a company sought, among other things, social media passwords from its ex-employee. Based on the existence of a written agreement, the court awarded injunctive relief and required the ex-employee to turn over the passwords: See “Ex-Employee Converted Social Media/Website Passwords by Keeping Them From Her Employer--Ardis Health v. Nankivell.” (Eric’s advice is still on point. Get the passwords before you sever the relationship.)

[Eric's note: on that point, query if asking her for the passwords would have been illegal under the new statutes regarding social media passwords. I still can't believe the California legislature completely missed the fundamental issue that employers and employees routinely dispute who owns a social media account.]

The ex-employee (Nankivell) brought counterclaims asserting ownership over the “whatsinurs” website. She claimed it was a separate project her and her former employer undertook as a joint venture. She also alleged sexual harassment based on a hostile work environment, but the court declines to exercise supplemental jurisdiction over these claims.

Partnership claim: The parties did not have a written partnership agreement (or separate contract) governing their relationship for the “whatsinurs” site. Jordan Finger, the owner of Ardis Health—her employer—circulated a draft “founder’s agreement,” but it was never signed. She had one of her attorneys review it, and in the meantime, Finger terminated her via email. Nankivell thus had to argue they had created a de facto partnership based on the conduct and understanding of the parties, and the court finds that she will be unable to do so. She failed to make any allegations that the parties agreed to share any losses (as opposed to profits) from the venture, and the two documents relevant to the relationship (the proposed founder’s agreement and the termination email) did not contain any evidence of such an understanding. Accordingly, the court says that she won’t be able to make out a claim for a partnership.

Conversion of the website: Nankivell also brought a claim for conversion based on the website, and the underlying domain name, trademark, trade dress, and copyright. The court says that this claim is preempted:

The gravamen of [her] claim is that she ‘created’ the Whatsinurs website, including its ‘design’ and ‘dinstinctve look,’ and that [defendants] exercised ‘unauthorized dominion’ over the work and presented it to the public as their own.

The subject matter of the dispute (the website) is covered by the Copyright Act, and her claims lack an extra element. Thus the claims are preempted. The court also says that her claims for conversion of the copyright, trademark, trade dress, and domain name fail because she failed to allege that she had demanded her property back.

The court also dismisses her unjust enrichment and quantum meruit claims, finding them preempted.

Ouch. This is a rough break for Ms. Nankivell. On the one hand, she violated the cardinal rule of entering into a business relationship without having documentation in place. On the other hand, it’s tough to fault her too much since she had an employment relationship in place with Ardis Health. To top it off, her boss sent her a proposed co-founder agreement, so he clearly contemplated some sort of equity relationship with her.

The preferred route here for her would have been to claim joint ownership (authorship) over the assets that she created, regardless of any joint venture, and regardless of the fact that the owner of Ardis registered everything in the name of his entities. That could have avoided the preemption hurdle. The court notes this as a possibility, but for whatever reason flags that she didn’t take this route. Either way, the ruling seems fairly draconian from her standpoint, and one that's contrary to the one-time intent of the parties.

Implied joint ownership agreements for websites are pretty much a guaranteed recipe for disaster. We’ve blogged about a ton of these cases—so many that I’ve lost count. Aside from the obvious takeaway of make sure you have a written agreement in place before you invest any significant resources, another one is to keep track of what entity's name the joint venture's assets are registered in. (Here, nothing was registered in the name of the joint venture; an entity was not even formed.) It would have helped to have the domain name, trademarks, copyright registrations in the name of a jointly owned entity.

On a related note: I intended to mention an update to the JustBrand / HotHeadz case—another case involving an employer/employee relationship that spawned a putative joint web venture (outside the employment relationship). (See LLC Members in Online Store Venture Bound by Partnership Fiduciary Duties -- Health and Body Store v. Justbrand Limited.) There the trial court denied injunctive relief to the employer—who claimed joint venture status—on the basis that the parties failed to execute a written agreement governing essential terms. The Third Circuit vacated, finding that the formation of an LLC, listing entities affiliated with the ex-employees and the employer as equity owners was sufficient to find a joint venture. Therefore, fiduciary duties were owed, and one side (the ex-employees) could not “lock out the other” from control of the website. The Third Circuit sent the case back to the trial court, but the trial court isn’t happy turning over control to the employer. The trial court appoints an interim receiver to “manage” any ongoing dissension that arises between the parties. The court says that appointment of a receiver will tax the business and it’s unclear whether any assets will be left over. With this mind, the court admonishes the parties to try to settle, although it notes that settlement is unlikely (given that the parties are dug in).

Related posts:

cases involving social media assets:

"Social Media and Trademark Law" Talk Notes
Court Denies Kravitz’s Motion to Dismiss PhoneDog’s Amended Claims -- PhoneDog v. Kravitz
An Update on PhoneDog v. Kravitz, the Employee Twitter Account Case
Another Set of Parties Duel Over Social Media Contacts -- Eagle v. Sawabeh
Employee's Claims Against Employer for Unauthorized Use of Social Media Accounts Move Forward--Maremont v. SF Design Group
Courts Says Employer's Lawsuit Against Ex-Employee Over Retention and Use of Twitter Account can Proceed--PhoneDog v. Kravitz
Ex-Employee Converted Social Media/Website Passwords by Keeping Them From Her Employer--Ardis Health v. Nankivell
Court Declines to Dismiss or Transfer Lawsuit Over @OMGFacts Twitter Account -- Deck v. Spartz, Inc.
Employee's Twitter and Facebook Impersonation Claims Against Employer Move Forward -- Maremont v. Fredman Design Group
MySpace Profile and Friends List May Be Trade Secrets (?)--Christou v. Beatport
Fight Over Access to Log-in Credentials for Blog Does not Trigger Copyright Preemption – Insynq v. Mann

website/co-blogger ownership cases:

LLC Members in Online Store Venture Bound by Partnership Fiduciary Duties -- Health and Body Store v. Justbrand Limited
Tea Partiers Wage War Against Each Other Over a Google Groups Account--Kremer v. Tea Party Patriots
Cautionary Tale of Website Co-Ownership--Mikhlyn v. Bove.
Web Vendor Dispute Gets Ugly--Ground Zero Museum v. Wilson
Holding on to a Domain Name to Gain Leverage in a Business Dispute Can Constitute Cybersquatting -- DSPT Int'l v. Nahum
Another Cautionary Tale of Joint Website Ownership--TEG v. Phelps [UPDATED]
Web Developer Didn't "Convert" Website--Conwell v. Gray Loon
Ohio Appeals Court: GoDaddy can be Held Liable for Wrongly Transferring Control Over Domain Name and Email Accounts -- Eysoldt v. ProScan

[image credit: Shutterstock/Tribalium ("handshake symbol")]

Posted by Venkat at 10:48 PM | Copyright , Licensing/Contracts

November 03, 2012

Plastic Surgeon Owns Copyright in Before-and-After Photos of Patient--Denenberg v. LED Technologies

By Eric Goldman

Denenberg v. LED Technologies, LLC, 11-cv-03155-RBJ (D. Colo. Sept. 28, 2012)

Dr. Steven Denenberg is a facial plastic surgeon. Like many doctors performing elective procedures, he takes before-and-after photos of his patients and publishes some of them on his website. The opinion doesn't mention whether Dr. Denenberg obtains releases from his patients, but I have to assume he does.

LED asked an ad agency to put together an infomercial for its "anti-aging light." The agent pulled photos off of Dr. Denenberg's website and incorporated them into the infomercial. The opinion doesn't explain how the photos were used; surely LED didn't provide false testimonials.

LED doesn't have much to defend against Dr. Denenberg's copyright infringement claim. LED argued that photos aren't copyrightable, an obviously futile argument:

In the act of taking the pictures, Dr. Denenberg had to make creative decisions, no matter how “crude, humble, or obvious” they may have been. Further, in arranging the photographs on the website, Dr. Denenberg had to make additional creative decisions. The pictures are independent creations with at least a modicum of creativity

LED also argued that maybe Dr. Denenberg's nurse took the photo instead of Dr. Denenberg, also a futile argument. Although Dr. Denenberg said he usually takes the photos because he likes doing so, it wouldn't matter as the nurse's photo would be an employee work-for-hire.

LED's only good news is that the court rules that it didn't infringe willfully for statutory damages purposes, but the court reserves LED's innocent infringement damages adjustment for fact adjudication. I'm not sure how much of a difference that would make to the final damages award; in any case, the real financial payoffs in this case will depend on whether the court awards Dr. Denenberg his attorneys' fees, which could very well exceed the damages award. Given the weaknesses of LED's defenses, this could be a good case for a fee shift.

This case doesn't really teach us much we didn't already know, but I still thought it was worth sharing for two reasons. First, after the whole Medical Justice fiasco, I'm on high alert for situations where doctors might be overclaiming copyrights (probably not the situation in this lawsuit). Second, and perhaps more importantly, this lawsuit plus the Medical Justice situation make it clear that doctors are more frequently running into sophisticated IP issues, especially copyright issues, than they used to. I wonder if there are opportunities for a new niche IP practice focusing on the unique IP needs of doctors.

Posted by Eric at 10:52 AM | Copyright | TrackBack

October 30, 2012

Overreaching Anti-Circumvention Claim Shut Down--DISH Network v. World Cable

By Jake McGowan

Dish Network L.L.C., et al, v. World Cable Inc., 11-CV-5219 (E.D.N.Y. 2012)

In the hopes of ratcheting up damages, plaintiffs often try to assert any possible claim in their arsenal. In the realm of copyright law, this may involve asserting DMCA claims against the dirty, rotten infringers, even though the alleged infringement might not fall within the statutory boundaries.

A district court in New York encountered such a situation in DISH Network v. World Cable Inc., where it ultimately slapped down the satellite TV provider’s DMCA claim for failure to prove that World Cable “circumvented” a technological measure within the meaning of the Act.

Kritiya / Shutterstock.com

Background

DISH Network is a satellite TV company, and World Cable operates an IPTV distribution system in the New York City area, where customers pay a subscription fee and purchase a set-top box to access the programming. The case revolved around a dozen South Asian TV channels licensed to DISH Network by the copyright owners, and allegedly rebroadcast by World Cable without authorization.

DISH Network secures its satellite signal against unauthorized viewing through a “conditional access system.” Basically, the satellites transmit an encrypted signal down to the customer’s satellite dish, and through a wire to the receiver. For paying subscribers, the smart card in the receiver hardware de-scrambles the signal and allows the customer to view the content.

DISH entered into such subscription agreements with defendants Sajid Sohail, Yasmine Malik, and Shahid Rasul. Upon suspicion, DISH conducted an undercover investigation and alleged to have found that the defendants were actually World Cable agents routing the signal for the South Asian channels through its IPTV system.

In October 2011, DISH filed a complaint asserting claims under the Communications Act. They also brought claims under New York state law for unjust enrichment, conversion, unfair competition, and breach of contract. Smelling blood in the water, DISH also decided to go after World Cable under section 1201 of the Digital Millennium Copyright Act.

By subscribing, the individuals agreed (1) to view the programming only at the address associated with the account, and (2) not to rebroadcast or transmit the DISH Network signals. Thus, it seems clear that World Cable’s actions violated the subscription agreement. The question is whether the DMCA claims were too much of a stretch.

DISH Network’s Various Theories for its § 1201 Claim

Originally, DISH argued that the scheme “enable[d] the Defendants’ World Cable subscribers to avoid or bypass the Plaintiffs’ encryption which should have protected those signals.”

But in its motion to dismiss, World Cable pointed out that such action would not violate the DMCA, as it is not “circumvention” within the meaning of the statute. Seemingly caught off-guard by this argument, DISH scrambled to characterize the situation in a new light. In a second motion to amend, DISH argued that World Cable circumvented the encryption mechanism by misrepresenting that they planned to use the accounts solely for residential or commercial viewing.

After chiding DISH for its sloppy motions to amend, the court slapped down both of the proffered arguments and granted World Cable’s motion to dismiss the DMCA claims.

Fraud and Deceit Do Not Constitute “Circumvention” Within the Meaning of § 1201(a)(1)

On several different levels, DISH Network’s claims simply did not fit within the spirit or the statutory boundaries of the DMCA. The court began by explaining that the anti-circumvention provision in § 1201(a)(1) is aimed at an entirely different type of wrongful conduct than was alleged in the first amended complaint:

“[T]he DMCA is aimed at protecting ‘the efforts of copyright owners to protect their works from piracy behind digital walls such as encryption codes or password protections’. . . Here, while the Defendants alleged fraud may have circumvented contractual barriers to receiving the signal, there are no facts in the first amended complaint from which the Court can infer that they circumvented the “digital walls” that protected the copyrighted works.”

The court notes that if it was to accept DISH’s logic, then anyone that plans to engage in unauthorized redistribution of purchased copyrighted material would violate the DMCA. Such an interpretation would radically broaden the scope of the statute.

To further illustrate its point, the court applied these facts to an analogy put forth by Congress:

“The act of circumventing a technological protection measure put in place by a copyright owner to control access to a copyrighted work is the electronic equivalent of breaking into a locked room in order to obtain a copy of a book” . . . In this case, the room was already unlocked, and therefore the Defendants did not have to “break in” to gain access to the copyrighted work. While lying to convince the Plaintiffs to open the door and then stealing, copying, and selling the content of the books inside the room may violate other laws, they do not violate the DMCA.

In response to this line of reasoning, DISH cited a recent California district court case that interpreted “circumventing” more loosely. In the analogy context, the decision equated breaking into the room and lying to gain access to the room. But the Court disagreed with the entire premise of this argument--it explained that the plain language of the statute focuses on method of access rather than authorization. This means that World Cable would have had to utilize some sort of pirate access device or decryption software to “break in,” so to speak.

DISH also tried to justify the claim under the DMCA's anti-trafficking provision (§ 1201(a)(2)), but the court struck that down for the same reason. World Cable was not trafficking any decryption devices either.

Even though the defendants gained access to the signals through fraud and deceit, they used the normal process to decrypt the signal--the receiver hardware and the smart card--in the same way they are designed to function. In the end, this distinction proved fatal to DISH Network's § 1201 claim.

___

As tempting as the "kitchen sink" approach may be, it always helps to analyze the cost/benefit ratio for bringing certain claims. Based on the haphazard motions to amend, I am starting to think that DISH's counsel believed they had a solid § 1201 action--which means they were much too optimistic. In order to pursue this aggressive strategy, they had to stretch the facts to fit the elements of the claims. Had they played it more conservative and stuck to the plausible claims, DISH would not have wasted billable hours on arguments that ultimately frustrated and failed to persuade the court.

Posted by JakeMcGowan at 02:20 PM | Copyright | TrackBack

Consumer Review Website Isn't Liable for Users' Copyright Infringement--Ripoff Report v. ComplaintsBoard

By Eric Goldman

Xcentric Ventures, LLC v. Mediolex Ltd., 2012 WL 5269403 (D. Ariz. October 24, 2012). The initial complaint.

This is a long-running and ill-advised lawsuit by Ripoff Report against ComplaintsBoard for allegedly infringing Ripoff Report's purported copyright in its users' reviews. Ripoff Report argued that ComplaintsBoard "encouraged and permitted" users to repost infringing reviews from Ripoff Report. This allegation doesn't survive a motion to dismiss. Ripoff Report asserted that when it would create fictitious companies and reviews, ComplaintsBoard would create a parallel company listing and encouraged its users to review of the fictitious company. The court says that's not enough to constitute contributory infringement or the requisite supervisory power to constitute vicarious copyright infringement.

Note: the opinion references 512(c) but doesn't apply it; and it's not clear from the opinion if ComplaintsBoard qualifies for the safe harbor. I infer it isn't. I see a 512 agent designation dated May 2012 and stamped "received" September 2012.

The court gives Ripoff Report another chance, but that wouldn't be a wise move. Ripoff Report has plenty to keep its litigation docket busy, and chasing a foreign competitor to enforce its so-called copyright interests in user reviews seems like an unnecessary digression--especially with such weak legal underpinnings.

Posted by Eric at 09:10 AM | Copyright | TrackBack

October 28, 2012

Photographer Who Sued Twitter For Copyright Infringement Voluntarily Dismisses Lawsuit -- Boffoli v. Twitter

[Post by Venkat Balasubramani]

Boffoli v. Twitter, 12-Cv-0154-RSL (W.D. Wash. Oct. 25, 2012) (Notice of Dismissal)

Several months ago, a photographer (Christopher Boffoli) sued Twitter for allegedly not taking down his images that others posted and retweeted. The lawsuit received a fair amount of attention, and raised the perennial issue of the content owner's responsibility to chase down instances of infringing content and send takedown requests, and the intermediary's responsibility to adequately process those requests.

For someone whose content rapidly proliferates through a medium such as Twitter, the task of sending multiple takedown requests for each separate instance of the content can be daunting. Boffoli probably had somewhat of an uphill battle in proving that Twitter did not adequately respond to takedown notices. On the other hand, it seemed like he alleged that some takedown requests he sent fell through the cracks.

Anyway, I saw that Boffoli voluntarily dismissed his lawsuit with prejudice. This probably means that the parties settled; the terms will likely be confidential. What would these terms look like? Maybe an agreement to pay closer attention to any takedown notices that Boffoli sends (or some separate email address where Boffoli can escalate his takedown requests). Maybe a small payment to Boffoli for his troubles?

In an era where photo copyright trolls pop up with increasing frequency, it's nice to see this dispute resolve at the early stages. On the other hand, the settlement ducks resolution of several interesting issues: what are the obligations to respond expeditiously to takedown notices; what happens if a service provider fails to meet those obligations; and can a service provider like Twitter really be liable for users' links to infringing content.

Access a copy of the Notice of Dismissal here.

[On a loosely related note, I should mention that the lawsuit involving claims brought by a photographer who sued Agence France Presse and a bunch of media companies for allegedly misappropriating his Haiti earthquake pictures from Twitpic is still pending. The parties' cross-motions for summary judgment have been pending for several months. Prior posts on that case: "Agence France-Presse Claims Twitter's Terms of Use Authorize Its Use of Photographs Posted to TwitPic;" "Court Rejects Agence France-Presse's Attempt to Claim License to Haiti Earthquake Photos Through Twitter/Twitpic Terms of Service".]

Posted by Venkat at 09:45 AM | Copyright

October 27, 2012

Blogger Can't Defeat Copyright Infringement Claim on Motion to Dismiss--Katz v. Chevaldina

By Eric Goldman

Katz v. Chevaldina, 2012 WL 5245401 (S.D. Fla. October 5, 2012). The original complaint.

This is a high-profile case (and part of an ongoing litigation battle between the parties). Raanan Katz is a Florida real estate developer and part owner of the Miami Heat basketball team. Irina Chevaldina blogged criticial remarks about Katz and included a headshot of Katz. I'm not 100% sure, but I believe Katz didn't initially own the headshot's copyright but instead acquired it later. If so, this case is in the vein of Scott v. WorldStarHipHop. As copyright owner of the headshot, Katz sued Chevaldina for copyright infringement.

This lawsuit is almost certainly unmeritorious. See, e.g., Sedgwick v. Delsman (another lawsuit over a griping blogger including headshots). But it's not easy to dispose of unmeritorious copyright cases early. Fair use defenses don't normally support 12(b)(6) motions to dismiss because they are so fact-intensive.

We've seen a couple exceptions recently. The defendant cited the recent Seventh Circuit ruling in Brownmark v. Comedy Partners, the South Park "What What (in the Butt)" parody case. Not only was the 7th Circuit's ruling garbled, but I doubted it was going to be a watershed precedent (which is why it only made our quick links). The court didn't discuss Righthaven LLC v. Realty One Group, Inc., another recent example of a blogger winning fair use on a motion to dismiss.

Still, given how rare cases like Brownmark and Realty One are, it's not surprising that the court denied Chevaldina's motion to dismiss the copyright claim. A much better test will come on the defendant's summary judgment motion, which the judge should grant--and add a fee-shift to the defendant for bringing such an unmeritorious case. I imagine the plaintiff can afford the fee-shift, but it would be a useful caution to other plaintiffs that enforcing copyrights in headshots, especially against gripers, is a terrible waste of society's resources.

Posted by Eric at 10:08 AM | Copyright | TrackBack

October 24, 2012

Does the Supreme Court Have a Free Policy Choice in Wiley v. Kirtsaeng? (Guest Blog Post)

By Guest Blogger Marketa Trimble

Does the Supreme Court Have a Free Policy Choice in Wiley v. Kirtsaeng?
(A Template for an Interpretation of the Copyright Act that Ignores the Place of Manufacture and Provides a Free Choice between the Principles of International and National Exhaustion)

The Supreme Court will make an important decision in Kirtsaeng v. John Wiley & Sons, which the Court has scheduled for oral arguments on October 29, 2012. Although the focus of the controversy has been on distinguishing between foreign-made and U.S.-made copies (see below), the key policy question in the decision should rather be which principle of copyright exhaustion the United States should adopt for all copies: the principle of international exhaustion or the principle of national exhaustion. Under the principle of international exhaustion the first authorized sale of a copy – anywhere in the world – exhausts a copyright owner’s right to distribute the particular copy, and the new owner of the copy may freely resell the copy in the protecting country (in this case in the United States). The principle of national exhaustion says that only if the first authorized sale occurs in the protecting country (in this case in the United States) will the right to distribute under the copyright law of that country (in this case U.S. copyright law) be exhausted.

The problem is that the Copyright Act has been interpreted to distinguish between copies manufactured in the United States and copies manufactured outside the United States. Courts have interpreted the Act as applying the principle of international exhaustion to copies manufactured in the United States and the principle of national exhaustion to copies manufactured outside the United States. Whether it makes sense to treat copies differently based on their place of manufacture is debatable, but it certainly makes no sense as a matter of policy to afford rights more favorable to a copyright owner (under the rule of national exhaustion) for copies manufactured outside the United States. Other countries do not distinguish by places of manufacture when they apply the exhaustion principle; they adopt the principle of either national or international exhaustion for all copies.

The question is whether the Supreme Court could both 1) abandon the distinction between copies based on their place of manufacture, and 2) make a conscious policy choice between the principles of national and international exhaustion. It might seem that the constraints of the language of the Copyright Act would preclude an interpretation that would lead to taking the two steps simultaneously. However, the template below shows that it might be possible for the Supreme Court to focus on the key policy debate and choose freely between the two principles of exhaustion, thereby selecting a pivotal policy for U.S. copyright law. The template suggests that the relevant individual provisions of the Copyright Act could be interpreted in a manner that would permit a choice of one exhaustion principle or the other without having to distinguish among copies based on their place of manufacture.

On the issue of national versus international exhaustion see also Kirtsaeng v. John Wiley & Sons, Reply Brief for Petitioner, Oct. 1, 2012, pp. 20-23.

Related posts:

* Second Circuit Says No First Sale Doctrine for Works Manufactured Outside the U.S. -- Wiley & Sons v. Kirtsaeng
* Supreme Indecision: Costco v. Omega Gums up the (Watch)Works
* Resale of International Textbooks to US Students Not Protected by First Sale Doctrine--Pearson v. Liu

Also see the HTLI conference page for Exhaustion and First Sale in IP from 2010.

_____

The template below is based solely on statutory language and ignores legislative history, case law, and other points of reference for legislative interpretation. The interpretation of the statutory language in the template is simplified to serve the purpose of an overview rather than an in-depth analysis.

U.S. Copyright Act Provision	Interpretation for International Exhaustion	Interpretation for National Exhaustion
§109(a), first sentence (The First Sale Doctrine) “Notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”	The first sale doctrine applies to sales anywhere in the world. A person or entity becomes an “owner of a particular copy or phonorecord” by acquiring the copy or phonorecord anywhere in the world. The phrase “lawfully made under this title” refers to copies or phonorecords that are lawful – or if made under the same circumstances in theUnited States, would have been held lawful – under the U.S. Copyright Act.	The first sale doctrine applies only to sales within the United States because section 602(a)(1) makes it an infringement to import copies or phonorecords acquired outside the United States. The phrase “lawfully made under this title” means that the provision applies to any copies or phonorecords, whether manufactured in the United States or abroad, which once in the United States are held to have been lawfully made as measured by the U.S. Copyright Act.
§602(a)(1) (Infringing Importation of Copies Acquired Abroad) “Importation into theUnited States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside theUnited Statesis an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under section 501.”	The exclusive right to distribute under section 106(3) is limited by the first sale doctrine in section 109(a), and therefore it is not an infringement to import copies or phonorecords to which the distribution right was exhausted; even if they have been acquired abroad, the distribution right of the copyright owner is exhausted. Section 602 concerns copies and phonorecords that were never sold by the copyright owner anywhere in the world and are now being imported into the United States.	Section 602(a) targets copies or phonorecords “acquired outside the United States,” and the section defines the territorial scope of the distribution right to include the right to distribute outside the United States, which is not limited by the first sale doctrine in section 109(a). Section 602(a) captures copies or phonorecords acquired outside the United States whether or not they were sold outside the United States by the copyright owner.
§602(a)(2) (Infringing Importation and Exportation of Infringing Copies) “Importation into the United States or exportation from the United States, without the authority of the owner of copyright under this title, of copies or phonorecords, the making of which either constituted an infringement of copyright, or which would have constituted an infringement of copyright if this title had been applicable, is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under sections 501 and 506.” (emphasis added)	(1) The reason for using the longer phrase (in italics) as opposed to the shorter phrase “not lawfully made under this title” is that the provision’s emphasis is on lawful manufacture. (2) The interpretation of the first sale doctrine as covering sales in the United States and abroad is consistent with section 602(a)(2) because the doctrine does not cover copies or phonorecords that were not “lawfully made under this title,” meaning not lawful – or if made under the same circumstances in the United States, would not have been held lawful – under the U.S. Copyright Act. The distribution right to such copies and phonorecords is never exhausted in the United States and their importation and exportation is an infringement.	(1) The reason for using the longer phrase (in italics) as opposed to the shorter phrase “not lawfully made under this title” is that the provision’s emphasis is on lawful manufacture. (2) The interpretation of the first sale doctrine as covering sales only in the United States is consistent with section 602(a)(2) because the doctrine does not cover copies or phonorecords, whether manufactured in the United States or abroad, which once in the United States are held to be unlawful under the U.S. Copyright Act. The distribution right to such copies or phonorecords is never exhausted in the United States and their importation and exportation is an infringement.
§501(a), first sentence (Infringement of Copyright) “Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122 or of the author as provided in section 106A(a), or who imports copies or phonorecords into the United States in violation of section 602, is an infringer of the copyright or right of the author, as the case may be.”	It is an infringement to distribute copies or phonorecords that were never sold by the copyright owner in the United States or anywhere in the world (section 106(3) distribution right limited by the first sale doctrine of section 109(a), and section 602(a)). Importation of unlawful copies is also an infringement (section 602(b)).	It is an infringement to distribute copies or phonorecords that were never sold by the copyright owner in the United States(section 106(3) distribution right limited by the first sale doctrine of section 109(a)). It is an infringement to import copies or phonorecords that were acquired outside the United States whether or not they were sold there by the copyright owner (section 602(a)). Importation of unlawful copies is also an infringement (section 602(b)).
§109(c) and (e) (Exceptions to the right to perform publicly and the right to display publicly) “Notwithstanding the provisions of section 106(5), the owner of a particular copy lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to display that copy publicly, either directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located.” “Notwithstanding the provisions of sections 106(4) and 106(5), in the case of an electronic audiovisual game intended for use in coin-operated equipment, the owner of a particular copy of such a game lawfully made under this title, is entitled, without the authority of the copyright owner of the game, to publicly perform or display that game in coin-operated equipment, except that this subsection shall not apply to any work of authorship embodied in the audiovisual game if the copyright owner of the electronic audiovisual game is not also the copyright owner of the work of authorship.”	The exceptions apply to all lawful works – whether made in the United States or elsewhere – because the phrase “lawfully made under this title” refers to copies or phonorecords that are lawful – or if made under the same circumstances in theUnited States, would have been held lawful – under the U.S. Copyright Act.	The exceptions apply to all works that are located within the reach of the U.S. Copyright Act because the phrase “lawfully made under this title” refers to any copies or phonorecords, whether manufactured in the United States or abroad, which once in the United States are held to be lawful as measured by the U.S. Copyright Act.
§110(1) (Educational Exception) “Notwithstanding the provisions of section 106, the following are not infringements of copyright: (1) performance or display of a work by instructors or pupils in the course of face-to-face teaching activities of a nonprofit educational institution, in a classroom or similar place devoted to instruction, unless, in the case of a motion picture or other audiovisual work, the performance, or the display of individual images, is given by means of a copy that was not lawfully made under this title, and that the person responsible for the performance knew or had reason to believe was not lawfully made;”	Same interpretation as for section 109(c) and (e).	Same interpretation as for section 109(c) and (e).
§110(2) (Online Learning Exception) “Notwithstanding the provisions of section 106, the following are not infringements of copyright:… (2) except with respect to a work produced or marketed primarily for performance or display as part of mediated instructional activities transmitted via digital networks, or a performance or display that is given by means of a copy or phonorecord that is not lawfully made and acquired under this title, and the transmitting government body or accredited nonprofit educational institution knew or had reason to believe was not lawfully made and acquired, the performance of a nondramatic literary or musical work or reasonable and limited portions of any other work, or display of a work in an amount comparable to that which is typically displayed in the course of a live classroom session, by or in the course of a transmission, if…”	The phrase “a copy or phonorecord that is not lawfully made and acquired under this title” refers to a copy or phonorecord whose origin is not lawful under the U.S. Copyright Act. Even if the copy or phonorecord was manufactured and/or acquired outside the United States, the copy or phonorecord is not “lawfully made or acquired under this title” if its manufacture and acquiring under the same circumstances in the United States would have been unlawful under the U.S. Copyright Act.	The phrase “a copy or phonorecord that is not lawfully made and acquired under this title” refers to a copy or phonorecord, which once in the United States is held to be unlawfully made and/or acquired under the U.S. Copyright Act. Regardless of where the copy or phonorecord was manufactured and/or acquired, once in the United States, its lawfulness is measured by the U.S. Copyright Act.
§1001(7) and §1006(a)(1)(A) (Digital Audio Recording) “An ‘interested copyright party’ is— (A) the owner of the exclusive right under section 106(1) of this title to reproduce a sound recording of a musical work that has been embodied in a digital musical recording or analog musical recording lawfully made under this title that has been distributed; (B) the legal or beneficial owner of, or the person that controls, the right to reproduce in a digital musical recording or analog musical recording a musical work that has been embodied in a digital musical recording or analog musical recording lawfully made under this title that has been distributed;” “The royalty payments deposited pursuant to section 1005 shall, in accordance with the procedures specified in section 1007, be distributed to any interested copyright party— (1) whose musical work or sound recording has been— (A) embodied in a digital musical recording or an analog musical recording lawfully made under this title that has been distributed, …”	The phrase “lawfully made under this title” refers to copies or phonorecords that are lawful – or if made under the same circumstances in theUnited States, would have been held lawful – under the U.S. Copyright Act.	The phrase “lawfully made under this title” means that the provision applies to any copies or phonorecords, whether manufactured in the United States or abroad, which once in the United States are held to have been lawfully made under the U.S. Copyright Act.

Posted by Eric at 09:50 AM | Copyright , E-Commerce | TrackBack

October 20, 2012

Q3 2012 Quick Links, Part 2 (Copyright)

By Eric Goldman and Jake McGowan

* Horrifying video evidence that the police probably grossly misused their police power to arrest Kim Dotcom. Related: Timothy Lee: Feds: We Can Freeze Megaupload Assets Even if Case Dismissed. My prior blog post.

* Wired: Oops! Copyright Cops Return Seized RojaDirecta Domain Names -- 19 Months Later. EFF coverage. More evidence that ICE simply has no idea what it's doing with its domain name seizure campaign. A disgusting misuse of government power.

* Jennifer Granick: TVShack Extradition Case Tumbling as Seventh Circuit Holds Linking/Streaming is Lawful. Here’s the complaint in U.S. v. O’Dwyer (SDNY). Related: Leaked Documents Detail The MPAA’s Plans for Sock Puppetry To Mislead People About Richard O’Dwyer.

* WPIX, Inc. v. ivi, Inc., August 27, 2012: "Internet retransmission services are not cable systems and do not qualify for § 111 compulsory licenses."

* Capitol Records, Inc. v. Thomas-Rasset, 2012 WL 3930988 (8th Cir. Sept. 11, 2012): "a statutory damages award of $9,250 for each of the twenty-four infringed songs, for a total of $222,000, does not contravene the Due Process Clause."

* Tenenbaum jury award reaffirmed on remand. Prior blog post.

* Real View v. 20-20. Expert cannot come up with good comparable licensing transactions for a defendant downloading its competitor's software via P2P file-sharing to develop a non-infringing alternative. As a result, the judge's prior remittitur order stands, meaning the plaintiffs get a $4,200 award after 4 1/2 years of litigation. Sounds like a pretty poor business decision. Prior Blog Post.

* Oracle and SAP stipulate to $306M of damages.

* Dell Cullum v. Diamond A Hunting, Inc., August 8, 2012:

the district court did not abuse its discretion in treating the photographs as a compilation instead of individual works for purposes of calculating damages. The record fully supports the conclusion that Cullum’s photographs constituted one work “in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole.” Cullum registered the photographs in question under a single copyright registration number, and he marked the disc that he filed with the United States Copyright Office containing these photographs as “Set Number 1.” Furthermore, Cullum himself refers to the photographs in the record on appeal as a “collection.”

* Palmer Kane LLC v. Scholastic Corp., 1:11-cv-07456-KBF (S.D.N.Y. July 16, 2012). Photographers can't establish class action against textbook publisher for allegedly exceeding permission scope.

* Pearson Education Inc. v. Almgren (8th Cir. July 13, 2012). Even when the defendant committed willful copyright infringement, the plaintiff doesn’t automatically get a fee shift if the plaintiff is behaving badly:

In this case, the publishers sought approximately $90,000 in attorney's fees, but the bankruptcy court found that an award of attorney's fees would be inappropriate because (1) the publishers likely could have stopped Almgren's conduct prior to any litigation, at minimal cost, with a simple cease-and-desist letter, (2) the publishers filed suit "in the busiest, largest, and furthest away court they could find" in an effort to scare Almgren, (3) the publishers resisted the bankruptcy court's efforts to encourage settlement before litigating the adversarial action, and (4) the publishers' spare-no-expenses litigation strategy was unreasonable in light of the absence of "any real damages." The publishers argue that the bankruptcy court abused its discretion by discounting their need to act forcefully to deter willful infringement by others and leaving them "at a financial loss from enforcing their rights against a willful infringer who purposely, and fraudulently, prolonged the litigation" by fabricating a story about a roommate using his name.

To be sure, the publishers were free to make an example of Almgren by litigating their claims against him fully, within the bounds of the statutory scheme provided by Congress; they were under no obligation to employ a minimum-impact cease-and-desist strategy. However, the publishers never were guaranteed that the attorney's fees generated by their strategy of choice would be compensated. See Fogerty, 510 U.S. at 534 (rejecting a proposed construction of § 505 that would result in an automatic recovery of attorney's fees by the prevailing party). While a different court might have weighed the factors in this case differently, we cannot say that the bankruptcy court committed a clear error of judgment in finding that an award of attorney's fees would not "advance considerations of compensation and deterrence" in these "particular circumstances." See id. at 534 n.19. Accordingly, we affirm the denial of attorney's fees.

* William T. Gallagher, Trademark and Copyright Enforcement in the Shadow of IP Law, 28 Santa Clara Computer & High Tech. L.J. 453-497 (2012). An interesting ethnographic study of IP lawyers.

* Michael Carrier, Copyright and Innovation: The Untold Story. The title overclaims, but it's an interesting study of what might have happened if the recording industry co-opted Napster rather than killing it. I wanted to hear more about Bertlesmann's decision to break ranks with the other labels and more about unbundling of albums into individual songs.

* Marty on a case that holds that if a client-drafted complaint is protected by copyright law, the attorney filing the complaint had an irrevocable copyright license to the complaint.

* Pirate Bay blocks did little to curb file-sharing.

* Cablevision doesn't want its precedent to help rivals like Aereo. Prior blog post.

* The Innocence of Muslims lawsuit raises the question: Can an actress claim copyright in her performance? My response.

* David Levine recaps a few of the problems with TPP.

* NASA’s Mars Rover Crashed Into a DMCA Takedown.

* Ars Technica: ”Six strikes” Internet Warning System will come to U.S. this year.

* Wired: The Algorithmic Copyright Cops: Streaming Video’s Robotic Overlords. EFF coverage.

* Audio of my Door County talk on SOPA. [Stream] [Download]

* Notes from my very basic talk at the Sunnyvale Public Library, “Online Copyright: What You Need to Know”

Posted by JakeMcGowan at 05:25 PM | Copyright | TrackBack

October 05, 2012

Judge Dismisses Claims Against Pandora for Violating Michigan’s Version of the VPPA – Deacon v. Pandora Media

[Post by Venkat Balasubramani]

Deacon v. Pandora Media, Inc., 2012 WL 4497796 (N.D. Cal.; Sept. 28, 2012)

The plaintiffs sued Pandora for improperly disclosing their “listening history” and related information (bookmarked tracks, stations, recent activity, and bookmarked artists). Plaintiffs alleged that Pandora disclosed this information in violation of Michigan’s version of the federal Video Privacy Protection Act (VPPA) to other Pandora users, non-subscribers, and finally through Facebook integration to their Facebook friends. Judge Armstrong of the Northern District dismisses the lawsuit. Although the dismissal is without prejudice, the judge sends a signal that this lawsuit is probably dead.

Standing: Pandora argued that plaintiffs lacked standing. The court says a violation of a statutory right is sufficient to confer standing, and statutes may confer standing without the showing of actual damages. Here, the language of the statute says that anyone whose information is disclosed in violation of the statute can bring a claim for actual damages or $5000, whichever is greater. So there’s no standing problem.

Statutory violation: The key question was whether Pandora engaged in “selling . . . , renting, or lending . . . sound recordings.”

The court looks to the dictionary definition of the term “renting” and says it means: the payment of consideration in exchange for “use” of something. Here, Pandora selects the song, streams the song, and deletes the song after it’s streamed. Plaintiffs don’t “use” the song in the conventional sense of the term. The court also looks to Pandora’s terms of service which say that users can’t do anything with the song (edit, change, store, or alter it in any way). Additionally, listeners have to listen to it through Pandora.com or a Pandora-supported device.

The court comes to a similar conclusion with respect to the term “lend” (to allow for temporary use of something “on the condition that the thing . . . be returned”). Each song is placed temporarily in the user’s hard drive and there’s nothing returned to Pandora after the song is played. Once the song is over, “the song file is deleted from the subscriber’s computer by Pandora.” The user doesn’t "return" the song.

The plaintiffs’ claims with respect to the disclosure of sales also fails. Pandora doesn’t sell any songs to users—it provides links where people can click through and buy songs. There also were insufficient allegations that Pandora even disclosed any items purchased by plaintiffs, whether through the referral links or otherwise.

Copyright law: Pandora also made the creative argument that copyright owners had the exclusive right to distribute the songs and transfer ownership by sale, transfer, lease (etc.). Here, Pandora obtained a license to stream the songs and the license was limited to a public performance license. Pandora did not have the right to do anything more with the underlying content and thus could not grant any of these rights to users. The court likes this argument.

CPA.The court also dismisses claims under the Michigan Consumer Protection Act, saying that a class-based complaint requires an allegation of actual damages under Michigan case law.

While the VPPA only covers “video cassette tapes or similar audio visual materials,” states have added their own protections to the mix. California, for example, enacted the Reader Privacy Protection Act. (See Eric’s post on that statute and its possible breadth here.) There’s an argument to be made that music should be treated differently from books and videotapes because books and videotapes typically provide more insight into a person’s intellectual direction and shouldn’t be disclosed to third parties without consent. In any event, the Michigan statute covers “sound recordings” so music obviously comes within this definition.

There is of course a big question about whether the Michigan statute (which was enacted more than 20 years ago) was even intended to apply to services such as Pandora. The answer has to be no, but the court gets to this result by analyzing the text of the statute with copyright licensing concepts overlaid on top. In contrast, the Hulu decision from a couple of weeks ago denied Hulu’s motion to dismiss. The differences in text between the VPPA and the Michigan statute probably accounts for this variation. The VPPA defines consumers as anyone who “rents, purchases, or subscribes,” and defines a provider as anyone engaged in the business of “rental, sale, or delivery” of videos or similar audio visual materials.

Pandora also raised a consent argument based on its terms of service. The court doesn't rely on this argument, and it's unclear if the Michigan statute's exception for written consent applies to online terms. This is an ongoing battle in the VPPA realm. See the testimony of Prof. McGeveran with respect to the consent provisions of the VPPA: "Testimony of William McGeveran".

These cases are good illustrations of the fact that these statutes should all be revisited to account for changes in delivery and distribution of information online. Minor changes in the texts of both statutes arguably account for the differing results, but the drafting choices were just happenstance, at least as they related to streaming services. Eric made this point more bluntly in recent posts about the Cloud Computing Act of 2012 and California's effort to protect social media accounts: legislatures bake technological assumptions into their drafting. These assumptions don't age well; yet legislators keep making the same mistakes.

Other coverage:

(Declan/cnet) Pandora Defeats Privacy Suit Over Facebook Integration
(Wendy / MediaPost) Pandora prevails in privacy case

[image credit: Shutterstock]

Posted by Venkat at 11:10 AM | Copyright , E-Commerce , Privacy/Security

October 03, 2012

Recent Ruling in Triple Town/Yeti Town Game App Dispute Provides Cautionary Lessons for Both EA and Zynga (Partial Forbes Cross-Post)

By Eric Goldman

Spry Fox LLC v. Lolapps, Inc., 2:12-cv-00147-RAJ (W.D. Wash. Sept. 18, 2012). The complaint.

Even with all of the media coverage over EA's ($EA) recent copyright infringement lawsuit against Zynga ($ZNGA) (including my blog post on the case), there was no clear consensus about which litigant had the upper hand legally. This was, in part, because the lawsuit raises difficult and murky issues under copyright law's "idea/expression dichotomy," which says that ideas aren't copyrightable but the expression of those ideas can be. A recent ruling in a different cloned game app case shows how courts struggle to apply the idea/expression dichotomy to cloned app games lawsuits. Accordingly, the new ruling implicitly cautions both EA and Zynga to settle their case rather than have a judge rule on its merits.

The new ruling involves two game apps. The first app is "Triple Town," where users match different objects to work their way up an object hierarchy. The rival app is "Yeti Town," which has functionally identical gameplay but using modestly varied user interfaces. Yeti Town is unquestionably a clone app of Triple Town, and due to the similarity of their gameplay, consumers likely view the apps as substitutes for each other (i.e., there is little reason for a user to play both).

Triple Town sued Yeti Town. The district court's ruling on Yeti Town's motion to dismiss is both illuminating and confusing. The district court guts the copyright eligibility of some key elements of Triple Town's gameplay and user interface. The court says:

* it's standard (in copyright parlance, scènes à faire), and therefore not protected by copyright law, to award points and coins to players, display gameplay suggestions in the margins and provide an in-game marketplace.
* in-game dialogue boxes explaining the hierarchical matching process, and expressing the concept of redeeming coins for in-game advantages, are subject only to "thin" copyright protection that probably only restricts verbatim copying.
* some of Triple Town's choices were "functional" and therefore not protectable either. (Note to copyright geeks: it's odd phrasing to discuss "functionality" limits to copyrightability). Functional elements include the size of the object matching grid (6x6), the marketplace's pricing structure, and limits on the number of in-game advantages that players can purchase.
* the gameplay rules, and aspects like exchanging coins for in-game advantages, are subject to "thin" protection at most.

Having knocked out many of the elements that Triple Town alleged Yeti Town copied, the opinion seemingly points to an easy win for Yeti Town. Yet, in an unexpected switcheroo, the court says that Triple Town has adequately pled copyright infringement by Yeti Town. The opinion isn't entirely clear why, but the court apparently thinks Yeti Town's user interface (UI) changes didn't go far enough:

the object hierarchy coupled with the depiction of the field of play comprise a setting and theme that is similar to Triple Town’s. A snowfield is not so different from a meadow, bears and yetis are both wild creatures, and the construction of a “plain” is not plausibly similar to the construction of a “patch”

The assessment of each game's UI gets to the heart of the EA-Zynga dispute. Like Yeti Town, Zynga allegedly copied the basic gameplay from EA and then put its own lightly modified UI elements on top of that gameplay. Indeed, as alleged by EA, Zynga probably did less to modify its UI than Yeti Town did. The Triple Town ruling suggests that Zynga probably can't score a quick win.

At the same time, the case also shows the risks to EA of pressing its case. The court could gut the copyrightability of key elements of EA's games, just like this judge did to Triple Town. EA should be nervous about setting an adverse precedent like that.

Thus, both EA and Zynga potentially have a lot to lose from letting their case proceed. In light of these risks, both parties should be actively pursuing settlement negotiations rather than putting their fates in a judge's hand.

More generally, the battle over cloned apps, especially cloned game apps, shows no sign of letting up. Unfortunately, because such cases consistently implicate hard idea/expression dichotomy issues, we aren't likely to get definitive guidance about the legal boundaries of copying soon, if ever. All of this counsels game developers who are worried about competitive cloning to prioritize non-legal solutions that maintain their competitive posture against cloned apps. For the foreseeable future, it will be more prudent to slug it out in the marketplace than to slug it out in court.

BONUS: One piece I left out of the Forbes post:

while the title “Triple Town” is not itself copyrightable, the fact that 6Waves chose the title “Yeti Town” is potentially relevant to the substantial similarity inquiry....It is at least plausible to infer that 6Waves chose the title “Yeti Town” because it was copying “Triple Town,” and the trier of fact can consider this inference as it considers the similarity between the two games.

Say what???

Also, Marty Schwimmer has issues with this ruling too. In contrast, Prof. Greg Lastowka writes that this ruling:

nudges copyright a little bit further toward protecting game mechanics....I think that, based the court's analysis, if this were EA v. Zynga (instead of Spry Fox v. Lolapps), EA would win.

Posted by Eric at 09:30 AM | Copyright | TrackBack

September 28, 2012

"Notes and Questions" About the UMG v. Shelter Capital Case (Excerpt from my Internet Law Reader)

By Eric Goldman

As I previously mentioned, I have posted my Internet Law reader as a $7.50 download. In connection with adding the UMG v. Shelter Capital case, I completely redid the "Notes and Questions" section following the edited case. I'm teaching the materials now in my Internet Law class, and I thought you might be interested in seeing an excerpt of the reader's discussion about the case and 17 USC 512 generally:
___

NOTES AND QUESTIONS

Viacom v. YouTube. After this ruling, the Second Circuit issued its opinion in Viacom v. YouTube, dealing with similar facts. Viacom Intern., Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012). The opinion is mostly consistent with the Ninth Circuit’s UMG opinion, but it expressly disagreed with the Ninth Circuit regarding the safe harbor’s meaning of “right and ability to control”—saying the concept “involve[s] a service provider exerting substantial influence on the activities of users, without necessarily—or even frequently—acquiring knowledge of specific infringing activity.” This standard is vague and opaque, leaving lots of room for future arguments. The Second Circuit also more expressly acknowledged that a service provider’s willful blindness could defeat the safe harbor; but as with the “right and ability to control” phrase, the opinion didn’t define what behavior constitutes willful blindness.

In light of the Viacom v. YouTube ruling, the Ninth Circuit asked the litigants in UMG v. Shelter Capital to submit briefs on whether it should modify the opinion you just read. As of August 2, 2012, the Ninth Circuit had not amended its opinion, but that remains a possibility as of press time.

The Viacom v. YouTube litigation is especially puzzling because the litigants have so much incentive to work together rather than fight each other. Indeed, Viacom has acknowledged that it has no objections to YouTube’s practices since May 2008, when YouTube deployed more aggressive technology filters. Indeed, Viacom currently heavily uses YouTube to promote its offerings. So what’s the problem that needs to be resolved in court?

Takedown Notices. Why didn’t UMG just send Veoh proper takedown notices instead of suing it in court? If UMG had sent proper takedown notices, what do you think Veoh would have done with them?

Red Flags of Infringement. What, exactly, constitutes a “red flag” of infringement? If a website provides a tool letting users report problems with content, and one user flags another user’s content item as infringing, does the website have a “red flag” of infringement—and if so, of what?

The Challenges of Determining Infringement. Viacom’s marketing team and affiliates uploaded videos to YouTube for their marketing benefit. In some cases, Viacom deliberately altered clips to look like an unauthorized upload to make it look more interesting to viewers. The Viacom legal team would complain about clips posted by Viacom’s marketing team because they wouldn’t realize the uploads were authorized. If Viacom’s legal team doesn’t know that some clips were authorized by its own marketing department, how is YouTube supposed to know?

Also, Viacom routinely acquiesced to leaving up user-posted video clips, but it constantly changed its acquiescence policy—and never disclosed the policy to YouTube. If Viacom is constantly changing its mind about which user postings it objects to, how is YouTube supposed to know?

Also, Viacom TWICE withdrew clips from its complaint which it subsequently determined weren’t infringing. If Viacom’s litigators can’t figure out which clips are infringing well enough to file an accurate complaint—when they have full access to Viacom’s information and its lawyers are under Rule 11’s investigatory duty—how is YouTube supposed to figure it out?

Willful Blindness. The UMG court hints that a service provider’s willful blindness would disqualify it from the statute. What types of actions on a service provider’s part might satisfy the Ninth Circuit that the service provider engaged in willful blindness? Note the statute and caselaw already cover other scienter standards, including “actual knowledge,” “red flags” and “inducement.” What’s left for “willful blindness” to address?

Copyright Owner Over-Claiming. Does it strike you as odd that UMG took the position that Veoh couldn’t advertise the availability of material from 50 Cent, Avril Lavigne and Britney Spears, even though UMG did not completely control those artists’ catalogs?

Wordsmithing. Does it strike you as odd that the court effectively concludes that the phrase “right and ability to control” means something different depending on whether it’s being used in the common law test for vicarious copyright infringement or in the safe harbor statute?

Investor Liability. Why weren’t the investors automatically protected by the corporate veil? If you were a potential investor in a new user-generated content website, would this ruling deter you from making the investment? See Michael A. Carrier, Copyright and Innovation: The Untold Story, 2012 WISC. L. REV. ___ (forthcoming).

Discovery Implications. Imagine that you are a copyright owner’s counsel. In light of this opinion, what kinds of onerous discovery requests might you legitimately make of a service provider defendant? What kinds of onerous discovery requests might you legitimately make of the service provider’s investors?

Denouement. In this opinion, the Ninth Circuit declares that Veoh properly complied with the legal expectations of Congress. This is great news for Veoh, right? Yes, except that Voeh’s litigation costs for this and other cases (such as Io v. Veoh) drained its bank account, forcing Veoh to shut down—meaning its investors lost their investment, its employees lost their jobs, and users who uploaded videos to Veoh had those videos taken offline. So the case produces an anomaly: the courts gave Veoh a clean bill of health, but getting that clean bill of health killed Veoh.

Indeed, Google has disclosed that it spent $100 million on litigation costs in Viacom v. YouTube up to the point it filed its summary judgment motions. Obviously, it has spent more—much more—on legal fees since making those filings. Google can afford to spend over $100M defending YouTube, but smaller market players—like Veoh—can’t.

What implications might these facts (i.e., Veoh is legal but dead) have for the proper design of immunities and safe harbors? Compare the litigation costs associated with the 47 U.S.C. § 230 immunity discussed later in the casebook.

Posted by Eric at 09:57 AM | Copyright , Derivative Liability | TrackBack

September 24, 2012

Latest "Hot Topics in Internet Law" Talk Slides

By Eric Goldman

Earlier this month, I spoke at the "IP and the Internet" conference sponsored by the California State Bar's IP Section on the perennial favorite topic, "Hot Topics in Internet Law." My talk slides. Given the conference's theme, I focused the talk on cyberlaw IP-related topics rather than the broader universe of cyberlaw topics.

Some related posts:

* "Hot Topics in Internet Law" Talk Slides (June 2012, to SFIPLA)
* "Recent and Future Developments in Trademark Law" Talk Slides (July 2011, to SVIPLA)
* "Hot Topics in UGC Liability" Talk Slides (June 2011, SCU event)
* "Trends in Internet Law" Talk Slides (Nov. 2010, to the IP Institute by the CA State Bar's IP Section)

Posted by Eric at 01:11 PM | Copyright , Derivative Liability , Trademark | TrackBack

September 22, 2012

Improperly Designating Fashion Designs as "Unpublished" May Invalidate Copyright Registration--Family Dollar Stores v. United Fabrics

[Post by Jake McGowan]

Family Dollar Stores, Inc., v. United Fabrics International, Inc., No. 11 Civ. 2574 (S.D.N.Y. 2012)

A few weeks ago, we blogged about whether websites are “published” for copyright law purposes in Rogers v. BBB of Metropolitan Houston. While that decision lacked a definitive answer relating to the status of websites, it reinforced the long-standing idea that registering a copyright creates a presumption of validity that must be rebutted by the defendant.

With their backs against the wall, the defendants in these copyright cases often try to challenge the validity of the copyright registration. But it’s not always clear what types of errors will invalidate the certificate and strip the holder’s right to sue.

In Family Dollar Stores v. United Fabrics International, a district court in New York considered whether including previously published works in an “unpublished” collection invalidates the registration.

Background

United Fabrics International (UFI) is a textile company based in Los Angeles. In 2008, it purchased the rights to original artwork from a studio in Italy. UFI used the artwork as source material to create a fabric design called “Mod Squad.” That same year, it began offering the design for sale to customers.

Screen shot 2012-09-21 at 4.33.41 PM.png
Photo of the "Mod Squad" Design from Complaint

Almost a year later, UFI filed an application with the Copyright Office to register the Mod Squad design and 18 other designs as a collection. The Copyright Office granted the application and issued a registration certificate for an unpublished collection, just as UFI had requested. By registering, the company gained the power to sue for infringement of its copyright rights for the design.

UFI flexed this legal muscle in March 2011, when its lawyers contacted Family Dollar Stores and alleged that they had violated UFI’s registered copyright rights in the Mod Squad design. Since a registration certificate acts as prima facie evidence of validity, it was up to Family Dollar Stores to rebut that presumption and knock out the foundation of UFI’s claim.

It turned out that they had an ace in the hole. When the Copyright Office granted UFI’s application, it didn’t know that UFI had already published 13 of the 19 designs in the purportedly “unpublished” collection. Family Dollar Stores jumped all over this inaccuracy, and filed a complaint for a declaration that UFI’s copyright rights are invalid and unenforceable. UFI filed counterclaims alleging infringement of the Mod Squad design copyright.

A Published Design Cannot Be Included in an “Unpublished Collection” Application

The court agreed with Family Dollar Stores, and held that UFI’s copyright registration for the Mod Squad design was invalid.

The chain of logic is fairly simple. Under 17 U.S.C. § 101, “The distribution of copies . . . of a work to the public by sale or other transfer of ownership” constitutes publication. Thus, UFI published the Mod Squad design by selling it and erred when it included the designs in the “unpublished” application. The question became whether this error would prove fatal to UFI’s counterclaims.

In this regard, the court cited two cases left unanswered by UFI--Determined Productions, Inc. v. Koster and L.A. Printex Industries v. Aeropostale--which both held that prior publication invalidates registration as to the previously published designs.

But in arriving at this same conclusion, the court considered whether the improper inclusion of the previously published materials amounted to a “material” error that could invalidate the registration certificate.

Including Previously Published Designs in a Collection of “Unpublished” Designs is a “Material” Error

UFI tried to argue that its inclusion of the Mod Squad design was a “minor technical” error. This distinction is significant because if it had been merely a technical error, Family Dollar Stores would have had to prove that UFI intended to defraud on the Copyright Office. Unfortunately for UFI, the court did not buy this argument.

The decision recognizes that the “material error” vs. “technical error” distinction depends on the particular design at controversy. To better digest this point, it helps to break down the L.A. Printex case mentioned above. That case also involved a registered, unpublished collection of designs. But even though that collection included some previously published designs, the claim revolved around the properly included unpublished designs.

The court contrasts the L.A. Printex situation with the case at hand:

Here, by contrast, UFI alleges that the FD Defendants infringed a previously published work that it included as part of a collection of unpublished works. Furthermore, UFI did not supplement its original registration by deleting the previously published Mod Squad design from the collection registration; instead it deleted the unpublished designs from the collection, thus rendering the original registration wholly nugatory. That cannot be considered a “minor technical error.”

Since UFI’s application contained a material error, the court invalidated its protection of the Mod Squad design, thus barring the textile company’s counterclaims.
_____

Two important takeaways from this case:

This should go without saying, but UFI’s management should have been more hands-on in making sure that its copyright application was completely accurate. As we saw in this case, courts can be sticklers about certain designations, and this ended up as a costly error for a design to which they actually had the rights. Any time you have to stand up in front of a judge and claim legal ignorance, you are already on shaky ground. This is essentially what happened; UFI tried to pass the buck and said that its design team made a good-faith legal mistake. Did they not think to consult legal counsel for these complicated intellectual property issues? Why did they leave the application process to the design team in the first place?

But nobody’s perfect, which leads me to my second point.

UFI could have and should have contacted the Copyright Office about a supplementary registration. By doing so, it could have accounted for its so-called “mistake,” and preserved its right to go after Family Dollar Stores on the Mod Squad design. But it dropped the ball and never even supplied the court with a supplementary registration. This is just plain sloppy and, judging from the tone of the decision, did not garner any favor with the judge.

It's still unclear how this result meshes with the Rogers v. BBB decision. The court in Rogers never definitively answered the question of whether a website is "published" for copyright law purposes--it acknowledged the unsettled nature of the question and merely held that BBB had not overcome the presumption of validity attained by the registration. But if future decisions show that websites are "published," then the copyright holder should make sure their applications follow suit. Otherwise, this decision seems to suggest that they would be putting their rights at risk.

Posted by JakeMcGowan at 09:18 AM | Copyright | TrackBack

September 18, 2012

Court Says No Negligence Claim for Third Party Infringement via Open Wi-Fi Connection – AF Holdings v. Doe

[Post by Venkat Balasubramani]

AF Holdings, LLC v. Doe, C 12 2049 (PJH) (N.D. Cal.; Sept. 4, 2012)

I blogged about a case where a P2P infringement plaintiff argued that a defendant should be held liable for failing to secure their internet connection. (“No Negligence Claim for Infringement via Shared Internet Connection (Preempted by Copyright Act) – Liberty Media v. Tabora.”) A recent case presented the argument of whether you have a duty to secure your Wi-Fi connection (and police infringers) even more squarely. The court held that someone can’t be held liable for contributory infringement based on a negligence theory.

AF Holdings sued Doe and Hatfield. It did not assert any claims of direct infringement against Hatfield. Instead, it argued that Hatfield “had a duty to secure his internet connection,” and his breach of that duty meant that he could be held liable for the infringements of others.

The court rejects this argument, saying that AF is trying to hold Hatfield liable for his nonfeasance and this theory is only available where the parties have a “special relationship.” There’s no special relationship between AF and Hatfield and thus no duty.

The court also says that a negligence claim is preempted. Copyright preemption analysis requires an “extra element” in order for a claim to not be preempted. (The claim must have an extra element that’s not present in a copyright infringement claim.) The court summarily says that there’s no extra element because AF is ultimately seeking to prevent the exercise of one of its rights under the Copyright Act (copying and sharing). Casting this as a negligence claim does not save it from preemption.

The court also discusses Section 230 immunity. Strangely, AF argues that Section 230 shouldn’t apply because the negligence cause of action is not aimed at “offensive material.” The court sidesteps the Section 230 question in light of its other finding that there’s no duty and the claims are preempted.

___

Not particularly exciting, but this case presented the "negligence for failing to secure Wi-Fi" theory more straightforwardly than the prior case I blogged, so I thought the rejection of this argument was worth noting. It would have been nice for the court to have discussed the standards for derivative liability for infringement generally, and how negligence would lower this bar (and potentially open the floodgates), but this only received a passing mention from the court.

Posted by Venkat at 09:42 AM | Content Regulation , Copyright , Derivative Liability

September 12, 2012

Buyers of Michael Jackson's Assets from a Storage Locker Auction Can't Set Up Paywalled Tribute Website--Branca v. Mann

[Post by Jake McGowan]

Branca v. Mann, CV 11-00584 (C.D. Cal. Aug. 10, 2012)

When a celebrity goes bankrupt or forgets to pay a bill for his/her physical-space storage locker, opportunists may swoop in and purchase the goods so they can try and turn a profit reselling them. But sometimes, these buyers get a little overzealous--they convince themselves that their interest in the tangible property gives them an interest in some of the celebrity’s underlying intellectual property rights. This leads to poorly designed pay-for-access websites with risqué names like “parisexposed.com.”

A district court in California heard one of these storage locker disputes in Branca v. Mann, where the defendants set up a pay-for-access website relating to the late Michael Jackson. The court lowered the boom on August 10th, granting summary judgment in favor of the plaintiffs for a long list of claims including copyright infringement, false designation of origin, misappropriation of likeness, cybersquatting, and so on.

Background

The Jacksons have been blessed with many talents, but financial management is not one of them.

Toni Sanchez Poy / Shutterstock.com

In the late nineties, Michael Jackson’s parents and two of his brothers owed money to a company owned by one of the defendants. To collect on the debt, the company found a storage facility with Jackson family memorabilia and sought to authorize a bankruptcy sale including photographs and audio recordings found in the storage facility (the “Subject Property”). Jackson tried to block the sale, but the defendants ended up buying the Estate’s right, title and interest in the Subject Property.

In 2004, some of the defendants in this suit created a pay-for-access website using Jackson’s name, likeness, photographs and other copyrighted material from the bankruptcy sale. Jackson fired back, filing a suit alleging copyright infringement, false designation of origin, cybersquatting, and misappropriation of likeness. The court granted a preliminary injunction, but dismissed the action with prejudice in ’06 after Jackson failed to prosecute. If you recall, Jackson’s legal team was a little busy at the time.

Jackson died in 2009 and the defendants tried to cash in, creating new websites and selling access to more of Jackson’s copyright-protected material. Jackson’s lawyers promptly threw the kitchen sink at them, filing a suit alleging copyright infringement, false designation of origin, cybersquatting, cyber piracy, misappropriation of likeness, and unfair competition. They asked for declaratory relief, along with an accounting of how much defendants profited from the alleged unauthorized use and a permanent injunction.

The district court sided with Jackson’s estate, granting summary judgment on almost every claim. The key question in this case, however, was whether the defendants’ purchase of the “Subject Property” granted them any interest that would justify their pay-for-access website.

Defendants Did Not Acquire IP Rights Through Bankruptcy Sale

The defendants argued that they acquired an interest in Jackson’s IP rights through the original bankruptcy sale. In support, they pointed to a 7th Circuit decision which held that a sale agreement need not include the exact word “copyright” to transfer an interest in the corresponding IP rights. The court distinguished the 7th Circuit case:

Language in the bankruptcy court’s order and from an exchange between the lawyers and the bankruptcy judge also made clear that the sale had transferred intellectual property rights. Here, to the contrary, none of the facts surrounding the sale of Debtors’ personal property from a storage facility indicate a transfer of any intellectual property rights.

Ultimately, the court held that the bankruptcy sale covered only the personal property of the Jackson debtors, and did not transfer any rights, title, or interest to Michael Jackson’s intellectual property.

[Eric's note: on the copyright front, this seems like a trivially easy 17 USC 202 case.]
___

This is a great example of the conceptual difficulties that arise when intangible property is embedded in tangible property, like a cassette tape. After all, the Jacksons’ storage locker contained valuable, unreleased audio recordings alongside the other tangible property. Many non-lawyers might believe that by purchasing the locker, they purchased everything, including the intangible property contained on tangible property. Although the physical tapes are somewhat valuable in a memorabilia sense, the true value lies in the rights to copy and distribute the song itself. But the tapes are merely a medium for the combination of protected musical tones and lyrics--they don't grant those rights. They shouldn't grant those rights, because it would not be fair to allow the songs to leak simply because they were on the wrong cassette at the wrong time.

Now imagine that the storage locker contained only tapes, and the defendants paid thousands of dollars. If they can’t distribute the songs on the tapes, why did they invest in the first place? They could try and recoup by selling the tapes as memorabilia, but really maybe they just made a bad investment due to a legal error.

Posted by JakeMcGowan at 07:02 AM | Copyright | TrackBack

September 10, 2012

Is a Website "Published" for Copyright Law Purposes?--Rogers v. BBB of Houston

[Post by Jake McGowan, with comments from Eric]

Rogers v. Better Business Bureau of Metropolitan Houston, H-10-3741 (Aug. 15, 2012)

Vicente Barcelo Varona / Shutterstock.com

In the realm of copyright law, evolving technological perceptions have led to doctrinal questions that have the potential to determine the outcome of a case. One of these questions is whether posting content to a website amounts to “publishing” the material within the meaning of the Copyright Act.

A district court in Texas considered this question recently in Rogers v. Better Business Bureau of Metropolitan Houston, but hesitated to take a firm stance.

Background

In December 2001, the Better Business Bureau of Metropolitan Houston (“BBB”) contracted with Rogers to create websites for its member businesses. Under the terms, Rogers agreed to create individual websites for the member businesses, and host them on a website he created called “reliabilitymall.com.” The site is currently down for maintenance, but thanks to Internet Archive’s Wayback Machine, you can get a glimpse of what it looked like circa 2004, in all its clip-art glory.

Nearly a decade later, BBB exercised its right to terminate the contract with Rogers and started searching for a new web developer. In response, Rogers applied for a certificate of copyright registration for the Reliability Mall website collection as an unpublished, nondramatic literary work. The Copyright Office granted his application and issued the certificate on January 31, 2010.

Rogers filed this lawsuit in October 2010, alleging that BBB directed its new web developer to pull content from Rogers’ websites (mainly the source code). BBB moved for summary judgment on Rogers’s copyright infringement claims, arguing that Roger’s copyright was invalid since he represented the websites as “unpublished.”

BBB Failed to Overcome the Presumption of Copyright Validity

The Court denied BBB’s partial summary judgment motion, citing a failure to overcome the copyright’s “presumption of validity.” Because Rogers obtained the certificate of registration, the burden shifted to BBB to prove that the registration was invalid. Usually this would mean proving fraud or unoriginality, but neither of those meshed with the facts of the case; BBB instead argued that Rogers’s decision to register the sites as “unpublished” was a “legal error regarding the entire basis for [his] application.”

In support of its “legal error” argument, BBB argued that the sites were published because Rogers uploaded the webpages to the Internet. The district court did not sign off on this argument.

Uploading Webpages to the Internet Does Not Constitute Publication as a Matter of Copyright Law

The court notes that the Copyright Act does not delineate when a work attains “published” status, but defines “publication” as “the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending” (emphasis added).

This is where we start to veer off the rails. A public display of a work does not of itself constitute publication, and neither the Copyright Act nor its regulations explain how the statutory definition applies to Internet works.

Noting a lack of relevant case law in the Fifth Circuit, the court looked to the nonbinding case Getaped.com, Inc. v. Cangemi, 188 F.Supp.2d 398 (S.D.N.Y. 2002), where a district court in New York held that a website was published because a user “acquires the ability to make a copy of that webpage . . . indistinguishable in every part from the original.”

But the court goes on to emphasize the unsettled nature of the question, citing several district court cases from around the country that differed in their outcomes and accompanying rationales. This tangled mess of precedent ended up being the death knell for BBB’s partial summary judgment motion:

Absent binding law or even a clear consensus in case law directly related to the posting of a website online, the court is not inclined to negate the presumption of validity by finding, as a matter of law, that Plaintiff distributed copies of the websites when he uploaded them to the Internet.”

___

Eric's Comments

Sometimes, when you step back from a litigation, you wonder, how in the world did the parties get here? I guess litigators can make any argument, but the arguments in this case seem so completely against their own interests in the broader sense.

The copyright owner registered the web-posted work as unpublished. I don't know how carefully the Copyright Office reviews this aspect of the registration application. In fact, there could be situations when content posted to the website isn't "published," such as if it were posted on a website at a private URL that's never distributed, or if the website is password-protected and only a limited audience had the password. The Copyright Office can't always tell these subtleties, even if they investigated the unpublished claim (and I'm not sure how much they do). It doesn't appear the copyright owner fit into these examples. As a result, it appears the copyright owner made a mistake.

However, in general, copyright owners have been seeking to expand the scope of activities that constitute "publication," and thereby expanded the definition of "distribution," because this increases the scope of infringing activities. Thus, in the file-sharing cases, copyright owners have been taking the position that a web posting constitutes "making available" the work and thus a distribution, irrespective of whether anyone downloaded the files. Indeed, many criminal prosecutions have been based on the same basic argument; thus, for example, warez traders have been prosecuted for distributing copyrighted works even if the government never showed that anyone else downloaded those works.

As part of defeating the infringement claim, the defendant here tried to make a "fraud on the Copyright Office" argument predicated on the copyright owner's mistaken claim that the work was unpublished. Thus, we have the bizarre situation where the copyright owner is arguing for a narrow construction of "publication" and the defendant is arguing for a broad construction, when normally the litigation postures should be flipped.

While this case is hardly definitive, it's still a helpful case for defendants who want to take the position that simply posting a file to a website doesn't constitute "publication" and thus not a distribution. In particular, if I were representing any criminal copyright defendants, this case could be a helpful citation in destroying willfulness, if not the underlying claim elements.

Posted by JakeMcGowan at 12:44 PM | Copyright | TrackBack

September 07, 2012

Fight Over Access to Log-in Credentials for Blog Does not Trigger Copyright Preemption – Insynq v. Mann

[Post by Venkat Balasubramani with comments by Eric]

Insynq, Inc. v. Mann, 3:12-cv-05464 RBL (W.D. Wash.; Aug. 29, 2012)

Insynq is an application service provider that “provides virtual desktops and remotely hosts applications for accountants and small business owners.” Mann worked at Insynq and Insynq’s predecessor; her responsibilities included sales, support, and “writing and content development.” She signed an agreement which contained (a seemingly broad) non-compete clause, which prevented her from the following:

(1) compet[ing] for or solicit[ing] business related to an application service provider; (2) own[ing], operat[ing], or participat[ing] in employment with any entity in the business of marketing and selling application service provider business; (3) compet[ing] or solicit[ing] application service provider business from any customer of Insynq; or (4) [using any confidential information of Insynq].

While Mann was employed at Insynq, she started up a few blogs on the side (“bookkeeping in bunny slippers”; “ca4ca”; and “quickbooks in the cloud”). In February 2012, Insynq terminated Mann, and asked her to turn over the log-in credentials for the three blogs. When Mann did not turn them over, Insynq sought and obtained a preliminary injunction requiring Mann to turn over the log-in credentials. Insynq obtained the injunction in state court where it sued, but Mann removed to federal court on the basis that requiring Mann to turn over the log-in credentials triggered copyright preemption.

Insynq moved to remand, and the court granted the motion. The log-in credentials may allow someone to access the blogs and post to the blogs, but this is distinct from the right to display or reproduce the articles, which were the rights protected under the Copyright Act. In fact, Insynq expressed no copyright interest in the articles at all.
__

This dispute is one of many where employer and employee fight over blogs or social media assets post-termination. As Eric notes below, getting the credentials prior to termination would have been prudent.

As to the underlying merits, it’s not entirely clear that Insynq should be able to preclude Mann from blogging on the side, at least not by virtue of the non-compete it had in place. The non-compete ostensibly covers the same type of services that Insynq provides (roughly speaking, bookkeeping services in the cloud), but it’s hard to see how blogging directly competes with this. Insynq could have claimed access to the underlying content under a work-for-hire provision in its employment agreement (assuming it had such a provision in place), but as the court notes, that’s not what Insynq was looking for. I'm not sure exactly what the basis was for requiring Mann to turn over the log-in credentials and the court does not discuss the basis of the state court injunction. (If the non-compete clause is the basis for the injunction, this may preclude Mann from blogging going forward, but this doesn't necessarily mean that Insynq should have control over the blogs.)

As Eric notes, the copyright preemption claim was a stretch. The log-in credentials provide control over the account, and are typically viewed as an intangible property right (similar to domain names). But the content itself is separate, and in the case of a blog, is subject to copyright principles as far as ownership goes.

As always, a clear written agreement is the surest route to avoiding misunderstandings, although even where there is an agreement in place, an agreement may not easily answer the question since use of the platform or account may end up being a blend of personal and professional.
___

Eric's Comments

I don't really understand the copyright preemption doctrines, but the preemption argument here seemed pretty out-there. I know litigators love to make creative arguments, but this seemed more on the crazy side of the crazy/creative divide. I can't imagine the lawyer actually expected the preemption argument to succeed.

If the blogs really were company assets instead of personal blogs, then the company apparently violated the cardinal rule about employee-operated social media accounts: get the login credentials BEFORE terminating the employee.

Posted by Venkat at 03:37 PM | Copyright , Licensing/Contracts

August 25, 2012

Google Tries Again to Respond to Judge Alsup's Shill Disclosure Order. Now, How About Oracle?

By Eric Goldman

Oracle America, Inc. v. Google Inc., 3:10-cv-03561-WHA (N.D. Cal. Aug. 24, 2012)

In the ongoing saga about Judge Alsup's requests that Oracle and Google disclose possible shills, Google filed a supplemental disclosure that listed 13 individuals/organizations. There's not much in Google's disclosure that I didn't already know, and I wonder if the judge has finally gotten whatever he's looking for. Google has a better basis to argue that it properly responded to the judge's request, but I still have no idea how the judge will respond.

Some mildly interesting points about Google's supplemental disclosure:

* Google disclosed William Patry this time, but baffingly, Google did not identify him as a treatise author. Given that the judge has made his interest in treatise authors quite clear, I don't understand why Google didn't explicitly close this loop.

* Google cited a tweet by its employee, Tim Bray. Google didn't include the tweet's contents in the filing (or that it got retweeted 575 times!), but it's worth including here:

"Speaking only for myself as an individual of course: Fuck Oracle."

It's a little hard to characterize this as a "comment" on the case!

* Google disclosed Bruce Perens as a consulting expert. Normally, consulting experts aren't disclosed to a litigation opponent or the public at large unless they become testifying experts. I haven't checked to see if his involvement in this case was previously disclosed. If not, Oracle may have learned something new.

* Google lists Mike Masnick because a Google-funded organization (CCIA) paid him to write his The Sky is Rising report. I don't understand why this is on Google's list, as Judge Alsup's order clearly said he only was interested in "employees" of Google-funded organizations. Ditto for Google's disclosure of Michael Barclay, an EFF fellow.

Overall, Google's disclosure list disclosed, or name-checked, many well-known figures in the cyberlaw community, including the people I've already mentioned plus Mark Lemley, Paul Levy, Timothy B. Lee, Julie Samuels and others. If we got all of the referenced folks together in one room (and hid the knives), it would be a pretty cool party.

My biggest question: Why didn't Oracle supplement its initial disclosure in light of the judge's clarification? I can't believe Oracle has not provided any money to organizations whose employees commented on the case. So how about it, Oracle? Plead a mea culpa to the judge for blowing off his deadline and provide a more complete disclosure.

Our prior posts on this matter:

* Judge Alsup Tells Google to Try Harder With Its Shill Disclosures
* Oracle and Google Make Unenlightening Disclosures of their "Shills"
* Judge Alsup Tries to Out the Shills in Oracle v. Google
* Java APIs Aren't Copyrightable--Oracle v. Google (Guest Blog Post)

Posted by Eric at 10:12 AM | Copyright , Evidence/Discovery , Patents | TrackBack

August 22, 2012

Why Did Google Flip-Flop On Cracking Down On "Rogue" Websites? Some Troubling Possibilities (Forbes Cross-Post)

By Eric Goldman

Earlier this month, Google announced that it may downgrade search results for a website if Google receives a high volume of "valid" takedown notices against the website. Google's move has confused many Google-watchers, largely because the exact implementation details are important but aren't being disclosed.

However, I'm confused for a more fundamental reason. Google staunchly opposed the Stop Online Piracy Act (SOPA), yet Google's move partially implements SOPA anyway--and makes one of the analytical errors that made SOPA so objectionable. (See my prior blog post on other recent efforts to recreate SOPA). This post tries to figure out why Google flip-flopped on SOPA.

The Analytical Error

Theoretically, both SOPA and Google's algorithmic change are intended to curb "rogue" websites. Unfortunately, any definition of rogue websites creates false positives by including websites that will mature into legitimate players over time. For example, YouTube circa 2005 might have looked like a rogue website at the time, but few folks would characterize it that way now. Or, a site like Pinterest (with its legally questionable "sideloading") might initially look like a rogue website until its lawyers clean things up.

In 1998, Congress enacted a safe harbor scheme to balance the interests of copyright owners and providers of user-generated content (UGC) websites. The basic deal: copyright owners send takedown notices for specific items of user-posted infringing content, legitimate UGC websites honor those takedown notices, and the websites avoid copyright liability for their users' content. This scheme, while imperfect, has worked well enough to help the UGC ecosystem flourish.

SOPA threatened to undermine this balance. Instead of sending takedown notices for individual content items, copyright owners could send cutoff notices to the website's service providers that, if honored, would marginalize the entire website. Thus, SOPA's remedy didn't fit the problem: the problem is individual infringing items, but the remedy equally affects both legitimate and illegitimate content items.

Google's algorithmic change creates the same problem-remedy mismatch as SOPA. Based on complaints about individual content items, Google's algorithm may ultimately downgrade the entire website--even if all of the takedown notices are legitimate. (Thus, I'm not even addressing the many illegitimate takedown notices competitors will send Google to try to game its algorithm). By applying the penalty site-wide as opposed to individual content items, the search results for legitimate content items at that downgraded website also will be marginalized. Thus, Google's algorithm replicates one of the SOPA's most objectionable aspects.

Why Did Google Flip-Flop on SOPA?

After fighting SOPA, why did Google choose to partially implement it voluntarily? Some hypotheses:

1) The move helps searchers find more relevant results. This could be plausible if, for example, rogue websites are highly correlated with other problems for searchers, such as malware, that aren't adequately screened by Google's 200+ other algorithmic signals. Google's blog post didn't tell that story, though. Instead, Google offered only a weak explanation of how searchers might benefit from the move by seeing more "legitimate" content sources, and Google hasn't acknowledged the countervailing risk that legitimate content may be downgraded in searchers' results--an outcome that unquestionably hurts searchers in their quest for the most relevant results. Indeed, Google's algorithmic change, on a net basis, could degrade search results relevancy for searchers. Techdirt explores this issue more.

2) Google felt this move would help reduce its legal risk. However, Google already qualifies for Congress' 1998 safe harbor (17 U.S.C. 512(d)), and the voluntary algorithmic change doesn't directly improve its legal posture.

3) Google hopes the change will improve its relationship with Hollywood, which in turn could have ancillary benefits like unlocking more content deals. Given how many folks in Hollywood believe Google is the devil, I doubt an algorithmic change will change that.

4) Google hopes the move staves off more draconian Congressional regulation.

5) Google is acting at the Obama administration's behest to curry political favor for other Google policy initiatives.

6) Google philosophically believes rogue websites are bad and its algorithm doesn't do enough to screen them out.

I could make arguments supporting each of these hypotheses, but I remain troubled that Google hasn't persuaded us that its change is in searchers' best interests. Usually Google's good intent for its algorithmic changes is apparent, but earlier this year I had similar questions about Google's motives with "Google Search Plus Your World," which promoted Google+ in search results compared to other social media services. Google offered a very weak explanation that the Search Plus Your World change was in searchers' best interests, yet Google also was promoting its proprietary offering more prominently than its competitors' offerings. Regardless of Google's intent, the Search Plus Your World integration created potential anti-competitive effects.

Along those lines, let me offer one last hypothesis for Google's current move: Google flip-flopped on SOPA because the algorithmic change reduces the exposure of new disruptive marketplace entrants that compete against Google's other UGC properties. In effect, by (fatally?) downgrading their rankings, Google can keep websites like YouTube circa 2005 and the next nascent Pinterest from growing into bona fide competitors to Google's franchise. If this hypothesis is true, perhaps Google initially resisted the algorithmic change because it knew that the move didn't benefit searchers, but Google finally acceded to the copyright owners' requests when it dawned on Google that the move would help it suppress potential new competitors.

Conclusion

Don't get me wrong: for years, I have vociferously supported Google's right to use whatever ranking algorithm it thinks best serves searchers (see, e.g., my articles on search engine bias from 2006 and 2011). However, this is the second time this year (after Google+'s integration) I've had to ask if Google is really trying to benefit searchers, or if it's doing something else--such as acting like an incumbent trying to shut the door behind it. Even if Google's motives for the algorithmic change are, in fact, legitimate, the potential anti-competitive implications of this move are hard to overlook.

Posted by Eric at 09:46 AM | Copyright , Derivative Liability , Search Engines | TrackBack

August 21, 2012

Judge Alsup Tells Google to Try Harder With Its Shill Disclosures

By Eric Goldman

Oracle America, Inc. v. Google Inc., 3:10-cv-03561-WHA (N.D. Cal. Aug. 20, 2012)

I can't imagine Google is surprised that Judge Alsup did not like its response to his request that Google and Oracle disclose potential shills in Oracle v. Google. After all, Judge Alsup's order instructed both Oracle and Google to name names, and Google's response didn't name a single name while Oracle named three names (Mueller, an employee blogger, and Goldstein). Judge Alsup's quick response, only one business day after Oracle's and Google's disclosures, has almost a pleading tone to Google:

Please simply do your best but the impossible is not required. Oracle managed to do it.

Judge Alsup's follow-on order attempts to clarify his initial request, but amazingly it still does not tip Judge Alsup's hand about what exactly is bothering him. Judge Alsup reiterates that he meant what he said earlier: he wants to know bloggers who (a) covered the case, and (b) got money from Oracle or Google, not just bloggers who got paid to cover the case (a "quid-pro-quo" situation). As I pointed out before, to do this properly, Google should have to screen its thousands of vendors to see which of them covered the case. To speed this up, Judge Alsup specifies a few categories that don't need disclosure:

* AdSense publishers
* experts already disclosed
* university recipients. Excluding universities is a little odd, as universities are hardly above the fray when it comes to being influenced by corporate money.

In the end, the clarifications don't really doesn't narrow down Google's task very much. In particular, Judge Alsup reiterates that he wants Google to disclose organizations it has supported if "one of its employees was a commenter." Given organizations typically speak through their employees, Google will have to go through all of its supported organizations.

The judge also says:

Just as a treatise on the law may influence the courts, public commentary that purports to be independent may have an influence on the courts and/or their staff if only in subtle ways. If a treatise author or blogger is paid by a litigant, should not that relationship be known?

This is odd because judges and their clerks should be resistant to external influences like blogger coverage of the case. We understand that jury members (with their limited experience in the litigation process) might not be so disciplined, but judges and their clerks are trained professionals. Even so, judges and their clerks could be confused when a litigant cites a source when that source was on the litigant's dole--in those cases, it's possible the source changed his/her words to suit the benefactor, thus undermining the source's credibility in ways that may not be apparent to the reader. Oracle has tried to allege that Google did that by citing Jonathan Band's work, but Band didn't receive money from Google directly, and so we might debate if Band's words were tainted.

It's noteworthy that Judge Alsup keeps harping on treatises. Of course Google has William Patry, a copyright treatise author, on staff~~, but I am not yet aware that either party cited Patry's treatise (Please let me know if I missed something)~~. [I forgot that Oracle did cite Patry, as reported in this article.] Perhaps Judge Alsup wants every litigant in every case to disclose which treatise authors are on a litigant's dole, just in case one of his staff consults that treatise independently. Diminished credibility could be a problem when treatise authors become hired guns--especially if that's not disclosed either in the treatise or in a court filing--because a treatise writer could actually edit the treatise to reflect the interests of his/her clients. (I don't know if this has ever actually happened, so this might be a purely hypothetical discussion).

Perhaps one lesson to take away from all this: if you're a litigant and your filings cite a published work by your expert/consultant, maybe you need to disclose that. But in this case, if Alsup's clerks are traipsing through the treatises independently, surely they will discover Patry's affiliation with Google (I don't have a copy myself, but I assume Patry discloses it on the title page). As a result, there may be less risk of unintended treatise taint from Patry than from other treatise authors who become hired guns.

Perhaps as a sign of the judge's exasperation, the judge only gives Google until this Friday at noon to make its updated disclosure. I imagine a lot of Google's lawyers will burn the midnight oil--and rack up a lot of billable hours--this week. Per the judge's near-begging, Google can always claim that it "did its best" but wasn't able to do the "impossible." However, I wouldn't rely on that. I imagine any defects in its next disclosure will infuriate the judge, so I don't think it actually has the luxury of "only" trying its best in the time allotted. Google (or Oracle for that matter) could also challenge on the judge's order, which becomes increasingly likely as the parties realize the difficulty in complying with it.

Oracle may feel a little vindicated that Judge Alsup is hammering Google while giving Oracle a pat on the head, but this order isn't good news for Oracle either. Although it named three names, Oracle didn't come anywhere close to satisfying the judge's order. I expect Oracle will stand pat on its prior disclosure, but Oracle should be furiously scrambling right now too. I wonder if Google will try to drag Oracle down if Oracle doesn't update its disclosure.

Our prior posts on this matter:

* Oracle and Google Make Unenlightening Disclosures of their "Shills"
* Judge Alsup Tries to Out the Shills in Oracle v. Google
* Java APIs Aren't Copyrightable--Oracle v. Google (Guest Blog Post)

Posted by Eric at 07:28 AM | Copyright , Evidence/Discovery , Patents | TrackBack

August 17, 2012

Oracle and Google Make Unenlightening Disclosures of their "Shills"

By Eric Goldman

In Oracle v. Google, Judge Alsup recently ordered the parties to:

[f]ile a statement . . . identifying all authors, journalists, commentators or bloggers who have reported or commented on any issues in the case and who have received money (other than normal subscription fees) from the party or its counsel during the pendency of [the] action

As we previously wrote, this order is incredibly broad, which meant neither party could reasonably comply with its literal terms. As a result, initially I expected the parties to push back on the judge's request; but when they announced they both intended to comply, clearly there were going to make some limiting assumptions.

The statements are filed, and not surprisingly, they are dull. They don't tell us anything we didn't already know.

Oracle's statement discloses the following:

* Florian Mueller, who had previously disclosed his Oracle relationship.
* "certain Oracle employees" who blog. They specifically reference Hinkmond Wong.
* Stanford Law professor Paul Goldstein, who writes a copyright treatise and is of counsel at MoFo, Oracle's law firm in this case. Oracle says Goldstein hasn't commented on the case, but I haven't had a chance to confirm if Oracle cited his treatise in the case and disclosed his MoFo affiliation when doing so. Scott Graham's Recorder article notes that Google cited to Goldstein in its trial brief but didn't note any similar citations in Oracle's papers.

Google's statement doesn't name any names at all. Instead, Google explains to the judge that the literal terms of his order sweep in various categories of folks, and it asks the judge to speak up if he wants more information about folks in those categories. The categories:

1) Universities and non-profits
2) organizations that Google belongs to or contributes to, including political organizations and trade associations. With respect to these first two categories, Google notes that it publicly discloses its relationships (see also its supported academics). I'm curious if other companies make equally robust disclosures of their affiliations and supported researchers? Nevertheless, these lists may not be comprehensive (they have weasel words in the intro, and the academics list doesn't include competitively allocated research grants).
3) AdSense publishers (one of the disclosure categories I harped on--fortunately I wasn't on the list!)
4) Google employees, vendors and contractors
5) Expert consultants in this case. Confusingly, Google claims they are outside the order's scope because the experts only said what they were paid to say. This response would make more sense if we knew the identity of all such experts, but Google didn't offer a list here and could very well have experts that it didn't disclose to Oracle or the court. So it seems like Google may be cutting corners by not disclosing now any expert consultants who hadn't been previously disclosed, or confirming that no such folks exist.
6) Witnesses identified for trial. Google may also be cutting some corners here, saying that these folks were already identified in the litigation record. That's true, but Google didn't disclose which of those folks it paid, either for their testimony or for commenting on the case separately.

Perhaps fearing that Google wouldn't make adequately fulsome disclosures, and even though the judge didn't ask the parties to rat each other out, Oracle tries to "help" Google by anticipatorily naming some names for Google. Oracle calls out:

* Ed Black of the Computer and Communications Industry Association, which Oracle says is "funded in large part by Google." Oracle cites this Forbes post by Black.
* Jonathan Band, who wrote a book cited by Google, and whom Oracle says is indirectly funded by Google through Google-supported trade associations.

More generally, Oracle complains that "Google maintains a network of direct and indirect “influencers” to advance Google’s intellectual property agenda." I couldn't tell if Oracle was complaining out of concerns about the corrosive effect on society that such networks could have, or if it's simply jealousy that Google's influence network is better than Oracle's. I think this whole inquiry raises some very important social issues about credibility, transparency and the corrosive effects of money in our policy-making process, but I don't think we're likely to make real progress on any of those heady topics in this forum.

The parties' submissions now force Judge Alsup's hand. Did he really want the broad disclosure he ordered? If so, I wouldn't be surprised if a benchslap were in the offing for the obviously laconic disclosures. Or, is he going to accept these unenlightening filings and move on? In the former case, we're likely going to find out what was bothering Judge Alsup enough to start this inquiry. But if he doesn't force the parties to do more work, we may never know what started this.

Posted by Eric at 03:25 PM | Copyright , Evidence/Discovery , Patents | TrackBack

August 15, 2012

Six-Month Retrospective of SOPA's Demise [Forbes Cross-Post, A Month Late!] + SOPA/PROTECT-IP/OPEN Linkwrap #3

By Eric Goldman

[This post is composed of three parts. The first part, all 2,700 words of it, is a cross-post from Forbes last month assessing where we stood 6 months after January 18, 2012. Sorry it's taken me so long to repost it. The second part is my third (and possibly final) linkwrap of SOPA/PIPA/OPEN links. I collected most of these links in January and have been slowly accreting more over the past 7 months. As you can imagine, a linkwrap doesn't improve with age. At this point, they are mostly for historical value, but you might enjoy the stroll down memory lane nonetheless. The third part is a comprehensive index of our SOPA-related posts on the blog.]
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Part 1: Celebrating (?) the Six-Month Anniversary of SOPA's Demise (Forbes Cross-Post)

Six months ago--January 18, 2012--was a major day in the Internet's history. Some of the most heavily trafficked websites went dark or rallied their users against proposed legislation called the Stop Online Piracy Act (SOPA) and its sister bill the Protect IP Act (PIPA). The resulting outcry effectively killed the legislation that day. But with 6 months of perspective, plus plenty of new developments, it's clear there may not be much to celebrate about the developments of January 18.

What Happened on January 18

January 18 witnessed some unprecedented political developments. In response to massive voter feedback to Congress, a remarkable 19 United States Senators (nearly 20% of all senators) either changed their position on PIPA (from supporting to opposing) or newly announced a position on PIPA by coming out opposed to it. I'm not aware of any other single day in American history when so many senators publicly changed their opinion on a pending bill in response to voter advocacy.

Even more remarkably, this meant consumers had squarely defeated a determined copyright owner lobby led by the MPAA, although they were hardly alone. (Trademark owners also supported the proposals, but they were less visible in the process). For decades, individual consumers have had virtually no voice in American copyright policy. Generally the process has been:

1) Copyright owners give lots of money to members of Congress.

2) Copyright owners then redeem this patronage by getting broad Congressional support for their legislative wish-lists.

3) The technology community, and other repeat-player groups that depend on third party copyrighted materials (like libraries), fight vigorously to make minor changes to the copyright owners' wish-list.

4) Congress passes the lightly modified proposal and then, feel self-satisfied, pats itself on the back for having engaged all of the relevant constituencies in a vigorous multi-stakeholder legislative process.

This cycle has played itself out a few dozen times over the decades, and SOPA/PIPA were well on their way to following this pattern--until January 18.

And then, an upset outcome. David defeated Goliath. The amateur boxer knocked out the undefeated heavyweight boxing champion. Copyright owners had never outright lost a legislative battle they choose to fight. Yet, on January 18, they did. And they lost that battle to consumers--the constituency who isn't even at the bargaining table. In the words of Vizzini from the Princess Bride: "Inconceivable!"

How January 18 Was a Turning Point

The defeat of SOPA/PIPA immediately shook the corridors of power and continues to ripple through policy circles. Two examples:

ACTA's Demise. The Anti-Counterfeiting Trade Agreement (ACTA) is a trade agreement putatively designed to encourage trans-border cooperation to fight counterfeiting. Unfortunately, ACTA did more than that, potentially upsetting existing delicate balances between IP owners and consumers. Worse, ACTA was negotiated virtually entirely out of the public eye. While industry insiders (such as the copyright lobby) had prominent seats at the table, consumers got very limited disclosures of the drafts and no meaningful opportunity to comment on the proposals. Thus, for consumers, ACTA had potentially unacceptable substantive terms and was developed via an unquestionably unacceptable process.

President Obama signed the agreement without getting Congressional approval, despite significant protests. Other countries started signing ACTA. ACTA looked like a fait accompli.

salajean / Shutterstock.com

Then, partially inspired by the SOPA/PIPA protests in the United States, European consumers started protesting ACTA. Their voices were heard. The European Parliament overwhelmingly rejected ACTA, which most likely takes all of Europe out of ACTA--which, in turn, largely moots ACTA. There are still wranglings and shenanigans involving ACTA, so it's too early to declare it dead. Still, the most likely outcome is that European consumers' protests scuttled an otherwise unstoppable international trade agreement on IP issues--just like US consumers derailed SOPA/PIPA. Could SOPA have been the first spark to ignite effective consumer input into future IP policy-making worldwide?

No Legislator Wants to Be "SOPAed." Back in the United States, politicians are walking on eggshells. Multiple Washington DC insiders have told me that no legislator wants to be "SOPAed," presumably a verb for having massive consumer protests melting the legislator's phones. To avoid the risk of being SOPAed, I'm hearing that some legislators are changing their proposals--presumably to tone them down--before they even are introduced. So even without lifting another finger, consumers may be beneficially influencing the legislative process.

How January 18 Didn't Make a Difference at All

For all of that good news, I believe the better analysis is that the events of January 18 made no real difference. Some examples supporting my conclusion:

SOPA's Death = Status Quo. I can imagine some backroom Hollywood strategist shaking his head, thinking to himself/herself, "Those [insert pejorative expletive] shut down the Internet and melted the phone lines in Washington DC, and what did they get? NOTHING." For all of the work that went into the anti-SOPA/PIPA campaign, the reality is that its demise just preserved the status quo. As the maxim goes, it's a lot easier to kill legislation than to get it passed. And it's hardly easy to kill proposed copyright legislation; it took a favorable confluence of multiple things going right just to kill SOPA/PIPA. But in the end, all of that enormous effort didn't change anything.

Congress Is Making the Same Systematic Mistakes. Procedurally, the advocates of SOPA/PIPA made several mistakes. First, the substantive proposals massively overreached. Legislators' fear of being SOPAed reduces the chance that error will recur, at least in the short run.

Second, SOPA/PIPA would have created some serious technical problems that the legislators simply did not understand. In response to this glaring lack of knowledge, Rep. Chaffetz suggested that Congress should "bring in the nerds" to advise Congress on the technical implications of its proposals. Despite that suggestion, Congress continues to regulate the Internet without adequate guidance from "the nerds." For example, despite protests from many expert technologists, the House passed a cyber-security bill (CISPA).

Third, SOPA/PIPA were drafted largely in secret by a few legislators and a coterie of industry lobbyists who have bought access to the legislative process; once this cabal was satisfied, the bills were introduced and then fast-tracked for passage. Yet, amazingly, Rep. Lamar Smith--a key figure in the SOPA battles--announced he was introducing a bill (the IP Attache Act) resurrecting a small part of SOPA after preparing the bill behind closed doors, and then intended to fast-track the bill. (The amount of overlap between SOPA and the IP Attache Act is complicated;this BNA report tries to unpack the issue). As Techdirt's Mike Masnick asked rhetorically, "Dear Lamar Smith & House Judiciary: Have You Learned Nothing from SOPA?" So for all of the whispertalk that legislators are running scared of being SOPAed, at least some legislators still think it's OK to procedurally navigate controversial bills in a way that (deliberately?) suppresses the public's ability to participate in the process.

Plaintiffs Are Getting SOPA's Remedies (or Better) in Court. As I indicated, SOPA/PIPA's demise preserved the status quo--but the status quo isn't so great for consumers. Without any new legislation, IP owners are already getting extraordinary remedies in court that compare favorably to the remedies contemplated by SOPA/PIPA. My co-blogger Venkat Balasubramani and I have cataloged some of these cases. Typically these cases involve foreign defendants who don't show up, meaning that the court only hears one side of the story (the plaintiff's) and basically gives the plaintiffs whatever they ask for. In many cases, this includes court orders that purport to bind third party service providers (who also aren't in court to defend their interests), even though Federal Rules of Civil Procedure Rule 65 doesn't allow judges to tell non-litigants what to do.

In my "favorite" example, involving a Chinese website allegedly selling counterfeit cigarettes, the court ordered Western Union (who wasn't in court and wasn't a defendant) to interdict all money buyers were sending to the website and put it into a special account for an unspecified period of time. In other words, buyers--who may not have realized they were buying counterfeit goods--weren't getting their ordered cigarettes but also weren't getting their money back. Compare an alternative approach, where the court could have told Western Union to reject the payments and simply return the money to the buyers. Without buyers or Western Union appearing in court to defend their interests, the court overly catered to the plaintiffs' interests. So much for due process.

Until judges start pushing back on plaintiff demands in these cases where defendants no-show, and until judges become more circumspect about their ability to reach non-litigants under Rule 65, who needs SOPA/PIPA? IP owners can synthetically achieve the same or better results without a new statute.

The Obama Administration is Implementing SOPA Even Though Congress Didn't Approve It. Even though Congress did not approve SOPA/PIPA, the Obama administration repeatedly has been tone-deaf to consumer concerns about SOPA and its underlying policies. Three examples of the Obama administration's efforts to create SOPA-like outcomes through its executive branch powers:

* Megaupload prosecution. On January 19, the day after SOPA/PIPA melted down and the copyright lobby was publicly grumbling that their years of campaign contributions weren't buying the patronage they expected, the Obama administration's Department of Justice loudly announced the criminal prosecution of a foreign cyberlocker--one of the types of websites that SOPA/PIPA nominally targeted. In effect, copyright owners convinced the US government (at taxpayer expense!) to enforce SOPA-like remedies even without SOPA on the books. Worse, as we've seen in the past 6 months, the Megaupload prosecution is deeply troubled, and the DOJ has not looked good at any step in the prosecution. Personally, I believe that the prosecution was lawless from inception, a point I explained more fully on my blog.

* Domain name seizures. For a couple of years, the Department of Homeland Security's Immigration and Customs Enforcement (ICE) division has been seizing (without any judicial oversight) hundreds and hundreds of domain names it thinks are used for infringing conduct. The bad news: ICE's legal authority for such domain name grabs is dubious at best. (PIPA and SOPA would have codified the government authority for these ex parte domain name seizures). Worse news: ICE has been acting on unverified claims from self-interested copyright owners. We learned, for example, that ICE seized Dajaz1's domain name based on an unverified report from the RIAA; and when ICE asked for supporting verification (after it had already seized the domain name), the RIAA didn't produce anything for an entire year--at which point ICE simply gave Dajaz1 its domain name back, without an apology or an explanation. The worst news: ICE's Dajaz1-related court proceedings were conducted in secret, meaning Dajaz1 could not see the court file or respond to it because, as near as we can, the file sat in a clerk's desk drawer rather than in the normal place where files are stored. Secret judicial proceedings where the defendant has no ability to see the charges or respond to them? That sounds more like a Kafka book than the country I know and love.

* "Voluntary" industry initiatives. Obama's "IP Czar," Victoria Espinel, has been actively negotiating "voluntary" industry agreements that replicate some of SOPA's key features.

First, Espinel helped broker a "voluntary" agreement where Internet access providers agreed to implement a "graduated response" program. Effectively, the access providers will build a system to process copyright owners' claims (which usually will be automatically generated) of copyright infringement via peer-to-peer file sharing. Each notice against a user will count as a "strike." When users get too many strikes, the Internet access provider will progressively subject the user to more stringent discipline, including potentially terminating the user's Internet access account completely. Users can protest the strikes, but only via a kangaroo court which is not designed to let users win. Corynne McSherry and I previously explained the anti-consumer aspects of the graduated response deal.

The fact that Internet access providers agreed to this deal is fascinating. They were already legally immunized from copyright infringement liability for users' conduct in 17 U.S.C. Sec. 512(a); they agreed to implement a technical system at a not-inconsiderable expense to them; and the ultimate remedy of firing their customers will cost them money too. One has to wonder just how hard the Obama administration leaned on Internet access providers to do something so clearly contrary to their interests; and one further has to wonder why the Obama administration would favor something designed to stack the deck against consumers. Perhaps not including adequate consumer representation at the table had something to do with that.

Second, Espinel brokered a deal where advertiser and ad agency industry groups "voluntarily" encouraged their members to adopt policies against displaying ads on websites that facilitate infringement--another key component of SOPA. This was a little easier sale than the graduated response deal. One of the recommended policy terms is that advertisers shouldn't pay publishers who run their ads alongside infringing content. Well, naturally, the advertisers weren't opposed to anything that would let them get advertising they don't have to pay for. More troubling is the apparent intent to develop a blacklist of allegedly infringing websites that advertisers should cut off. It remains to be seen if the private blacklist will offer an appropriate level of public accountability, transparency and due process.

In a related development, Espinel is also pressuring Yahoo, Google, AOL, and Microsoft to cut off allegedly infringing websites from their ad networks.

The graduated response system hasn't come online yet, and it remains to be seen just how vigorously advertisers will undertake their implied promise to police publishers who are engaged in infringing activity. So it's not clear if these government-brokered voluntary agreements will amount to much. But the fact that the Obama administration is going around to industry groups asking them to do what SOPA would have required or coerced them to do is a good sign that the Obama administration plans to implement SOPA if Congress won't.

One more data point showing that the Obama administration hasn't internalized the messages of January 18. Its trade reps, especially US Trade Representative Ron Kirk, have mishandled the latest trade agreement negotiations for the Trans-Pacific Partnership (TPP), committing the same sins that poisoned ACTA. Just like ACTA, all of the negotiations have taken place in backrooms, with no consumer representation but plenty of industry lobbyists around the table. Furthermore, the process has been not transparent at all (despite Kirk's twisted insistence otherwise, using a "day is night" definition of transparency). Drafts have not been made available to the public, so outsiders can only speculate what's even being discussed. As the EFF asked, "Is the TPP--Framed as a '21st Century Agreement'--the Best Way to Build a 21st Century Society?" More than anything, January 18 was about consumers rejecting backroom policy-making designed to bypass democratic governance. Yet, that's exactly what the Obama administration keeps doing, over and over again.

Conclusion

Franklin D. Roosevelt once said:

[L]et us never forget that government is ourselves and not an alien power over us. The ultimate rulers of our democracy are not a President and Senators and Congressmen and Government officials but the voters of this country.

For one day, on January 18, we reminded our government of this fact. But the burden is on us--the voters--to make our voices heard again and again. One day isn't enough. If you don't like what you see from the system we have, you do have the power--and, I would argue, the responsibility--to remind your elected officials of your displeasure. In response to my unhappiness with some of my elected representatives' stances on SOPA and copyright issues, I've changed my votes in June--and my vote for President is up-for-grabs in November based in part on the candidates' stances on IP (an especially salient issue given how many times the Obama administration has sold out consumers on IP issues). If you believe the system needs fixing, I hope you'll send that message to the folks who are supposed to be working for you.

If You Want More

In April, I gave a talk that amplifies these themes. Watch the 75 minute video. The associated PowerPoint slides.

UPDATE: In July, I gave another version of the talk at a bar association event in Wisconsin. Stream or download.
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Part 2: Linkwrap

Problems with SOPA/PIPA

* Pinterest is a good example of an important new start-up that would never survive under SOPA/PIPA because a single copyright owner could shut down its service providers. (FWIW, Pintererst is also a good example of how the social networking space remains dynamic and competitive despite Facebook’s headstart).

* Techdirt: Website Censored By Feds Takes Up Lamar Smith's Challenge: Here's Your 'Hypothetical'

* Sen. Wyden: "If members of Congress better understood the central role that the Internet plays in their constituents’ lives – the hub through which Americans work, communicate, share, learn, create and enjoy entertainment – they would understand why their constituents fought so hard to protect it."

* Jack Balkin explains the freedom-of-speech problems with SOPA

* Gartner: Collective Punishment: SOPA and Protect-IP are Threats to NSTIC and Federated Identity

* Techdirt: The Sky is Rising.

What Happened and Lessons Learned

* Eriq Gardner: Why Hollywood Is Losing the Public Relations War on Piracy. He cites three mistakes:

Mistake #1: Much of the legislation was negotiated behind closed doors.
Mistake #2: The legislation has been defended on broad generalities and dubious statistics.
Mistake #3: Hollywood has ceded the high ground on being an innovator and defender of speech.

* The Wrap: Sunk! How Hollywood Lost the PR Battle Over SOPA

* Talking Points Memo: a timeline of how the opposition against SOPA/PIPA succeeded

* Hollywood Reporter: The SOPA War: A Frantic Call, an Aborted Summit, and Dramatic New Details on How Hollywood Lost

* News.com: How Republican opposition derailed SOPA and Protect IP

* EFF recaps some of the consequences of January 18, the Great Internet Blackout, a historical day in many ways.

* Larry Downes: Who Really Stopped SOPA, and Why?:

to imagine that the millions of Internet users who took to the virtual streets over the last few months were simply responding to the clarion call of technology companies misses the real point–dangerously so....The bitroots movement wasn’t led by Google. It wasn’t led by anyone. Even to look for its leaders is to miss the point.... it’s already clear that the losers in the PIPA/SOPA fight have learned nothing from the profound activation of Internet users....The only place to really engage your new adversaries is where the live—online, in chat rooms and user forums and social networks, on Twitter and Facebook and Tumblr and Reddit and whatever comes next. If you want to understand what went so horribly wrong with your business-as-usual efforts, you’ll need to take up residence in the digital realm and learn its new rules of engagement.

* Macworld: Who was really behind the SOPA protests?

* HBR: The Real SOPA Battle: Innovators vs. Goliath

* Yochai Benkler: Seven Lessons from SOPA/PIPA/Megaupload and Four Proposals on Where We Go From Here

* Lesley Harris' lessons from the SOPA experience:

1) the online revolt against SOPA and PIPA was not a command and control operation
2) The dramatic online mobilization carries lasting implications for Internet policy.
3) A more cautious approach requires a more open process.
4) Ignorance about how the Internet works is no longer an option. [Eric's comments: I miss the Office of Technology Assessment]
5) Overreaching Internet related legislation is no longer a successful strategy.
6) The Internet community is borderless, and the whole world will be watching.

* Guardian: The online copyright war: the day the internet hit back at big media

* Chris Dodd of MPAA talks about his lessons learned--none of which involve actually improving the products and services offered to consumers.

* Hollywood Reporter: Sundance 2012: MPAA's Chris Dodd Calls Piracy Defeat a 'Watershed Event'

* NY Times: Hollywood is running scared. Snippets:
- “The grass roots they can generate is, frankly, concerning,” Cary Sherman, chairman and chief executive of the Recording Industry Association of America, said of the Internet community.
- the Web’s anti-SOPA message is “sexier” than the facts offered up by Hollywood.
- “Downloading stuff on the Internet for free is cool,” said a person close to Viacom, who spoke on the condition of anonymity so as not to jeopardize his relationship with the company. “Our message isn’t cool.”

Related: Politico: Hollywood to make over piracy message for D.C.

* Nice post by Sen. McCaskill about rethinking PIPA.

Related: A politician actually read the law professor letter against PIPA (which 100 law professors, including me, signed)--and was actually persuaded!

Other Angles

* Content owners are cutting off their donations to Obama over SOPA/PIPA. One Hollywood insider said "he and his fellow moguls won’t give any more money if they keep getting taken for granted," i.e., if Obama takes the money and doesn't deliver the results Hollywood demands.

Related: MPAA's Dodd threatens Obama's financial support due to SOPA. But where can Hollywood turn? All of the Republican presidential candidates opposed SOPA too. It must be unsettling for Hollywood to feel like it has no friends in Washington DC. Now they know how we've felt for decades!

* What reaches more people: a Wikipedia blackout, or a tweet from Kim Kardashian?

* EFF: Dear Hollywood: An Open Letter to the Hardworking Men and Women in the Entertainment Industries

* NY Times: On TV, Antipiracy Coverage May Include a Disclosure

* Hollywood is apparently telling DC lobby firms to drop Facebook as a client.

* In realpolitik terms, the OPEN Act is also dead.

What’s Next

* David Post on SOPA and the future.

* Eriq Gardner: SOPA Defeat Is Not the End Of Hollywood's Ramped-Up Fight Against Piracy

Related: Crazy Cary Sherman NYT Editorial on SOPA. Techdirt response. Ars Technica response.

Also related: Boing Boing on Hollywood's unwillingness to let SOPA go.

More related: Hollywood Reporter: MPAA Chief Christopher Dodd Says SOPA War Isn't Over

* EFF: No more back room deals -- Users must have a voice in governing the Internet.

My take: it's not enough to bring the tech companies to the negotiating table (although that must happen too). Tech companies might inadvertently advance the interests of the Internet user community, but at best that's a happy coincidence. Policymakers need to hear from Internet users--the ones whose content will be removed; or the legitimate Megaupload users who had their data destroyed as a collateral damage of clumsily seizing the assets of a tech company.

* Ars Technica previews the rightsowners' policy wishlist. The only thing missing is a new pony. "Despite a reputation for working in smoke-filled rooms, rightsholders have generally been quite upfront about their enforcement goals. For a few years it involved suing everyone in sight, then it moved to graduated response, and now it means roping in all key Internet players."

* Mark McKenna: Don’t Stop at SOPA

* News.com: White House calls for new law targeting 'offshore' Web sites

* Techdirt: Congress Keeps Pushing Bad Copyright Bills: Senator Stabenow Wants To Expand Treasury/ICE To Go After 'Pirates'

* Reuters: "the Justice Department asked Congress for $5 million to hire 14 new employees, including nine attorneys, to focus on intellectual property crimes"

* Wired: Uncle Sam: If It Ends in .Com, It’s .Seizable

* Operation in Our Sites strikes again, this type cracking down on sites to stream the Super Bowl.

* ICANN: “Thought Paper on Domain Seizures and Takedowns”

* Press release: "ANA, 4A’s Provide Best Practices to Prevent Marketers’ Ads from Appearing on ‘Rogue’ Sites that Infringe Intellectual Property Rights." More: "Addressing online piracy and counterfeiting has been a strong priority for both the White House Office of the Intellectual Property Enforcement Coordinator (IPEC) and the Congressional International Anti-Piracy Caucus. They have urged ANA, the 4A’s, IAB and other industry groups to play an active role in this fight"

Adweek discusses efforts to build a private blacklist that could also be used by domain name registrars and payment service providers. Is that better, or worse, than a government-operated blacklist???

More on this point: Some ad networks plan to use technology to block ads from showing up on sites dedicated to infringement.

* News.com: White House pressures AOL, Google over pirate sites

* Ars Technica: Did the Secret Service take down JotForm because of a user-generated form? Techdirt’s coverage.

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Part 3: Index of Prior Posts

* Can Korean Copyright Owners Sue Australian Defendants in California? Judges Disagree--DFSB Kollective v. Bourne
* Trademark Trolling by SEO Consultant Provides Cautionary Anti-SOPA Tale (and Other Lessons)--Premier Pool Management v. Lusk
* Hermès Obtains (Ex Parte) $100M Award Against Alleged Counterfeiters--Hermès v. Does
* Comments on the Megaupload Prosecution (a Long-Delayed Linkwrap)
* Egregious/Overreaching Ex Parte Orders for Rightsowners Keep Coming -- Deckers and Richemont
* SOPA/PROTECT-IP/OPEN Linkwrap #2
* More on Ex Parte Cutoffs of Foreign "Rogue" Domain Names
* Does the House Judiciary Committee Debating SOPA Know What's Going On In the Courts?--Philip Morris v. Jiang
* If You Dislike SOPA, You'll Dislike This Case Too--True Religion v. Xiaokang Lei
* The OPEN Act: Significantly Flawed But More Salvageable Than SOPA/PROTECT-IP
* I Don't Heart SOPA or PROTECT-IP: A Linkwrap
* Ad Network Avoids Contributory Copyright Infringement for Serving Ads to a Rogue Website--Elsevier v. Chitika
* Court OKs Private Seizure of Domain Names Which Allegedly Sold Counterfeit Goods--Chanel, Inc. v. Does
* Why I Oppose the Stop Online Piracy Act (SOPA)/E-PARASITES Act

Posted by Eric at 12:53 PM | Copyright , Derivative Liability , Trademark | TrackBack

August 14, 2012

No Liability for Takedown Notice that Results in Termination of Facebook Page -- Lown Cos. v. Piggy Paint

[Post by Venkat Balasubramani, with comments from Eric]

Lown Companies v. Piggy Paint, LLC, 1:11-cv-911 (W.D. Mich.; Aug. 9, 2012)

Lown and Piggy Paint are squabbling over “piggy paint” trademarks. Lown has a registration for “PIGGY POLISH,” and alleges that defendants’ “PIGGY PAINT NATURAL AS MUD” brand infringes on Lown’s mark. The court doesn’t explain the reasons for this, but the marks in question are for nail polish products. Pigs and nail polish don’t have a natural association in my mind from a branding standpoint, but I’m no branding expert. [Eric's observation: I'm not sure Venkat is an expert in nail polish, either.]

In response to the trademark infringement claims asserted by Lown, Piggy Paint asserted counterclaims based on Lown’s complaint to Facebook that apparently resulted in the “removal” of Piggy Paint’s Facebook page. Interestingly, Piggy Paint’s Facebook page had some 19,000 fans. The court describes Lown’s complaint as having requested removal of Piggy Paint’s page on the grounds of “copyright infringement.”

Tortious Interference: The court says that Piggy Paint’s counterclaim allegations do not state a tortious interference claim:

Piggy Paint has not shown any valid business expectancy. Although Piggy Paint alleges that it had 19,000 fans of the page, Piggy Paint has not and cannot show that the removal of the facebook page – which did not offer any means of placing orders or doing business – resulted in the loss of any business.

The court also says that there’s no malice on the part of Lown because it acted with “a desire to protect its own mark.”

Conversion: The court also says that there’s no conversion claim. Piggy Paint’s conversion argument was convoluted, and based on the theory that Lown wrongfully “exercised control over [Piggy Paint’s] mark . . . by removing [Piggy Paint’s] page from Facebook.” The obvious problem with this argument is that Facebook and not Lown was the one who removed the page.
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Not to belittle the products or brands involved, but how in the heck did Piggy Paint amass 19,000 Facebook fans? Anyway, this dispute is a great reminder that brand pages and anything similar on a third party platform are not assets you should ever (ever) bank on. (Twitter caused a media dustup when it suspended then reinstated the account of a British reporter based on a complaint from NBC.) Facebook has its own processes for when and how it responds to complaints, but regardless of whether its reaction was over protective or under protective of rights, it is insulated and can’t be held liable. (See the Complexions case, among others.)

It’s not easy to hold the party who sends the takedown notice liable, either. The court rightly treats the Facebook page as something that doesn’t support a tortious interference claim. The Phonedog case, which is still pending, came to a different conclusion, although the facts were slightly different and the case dealt with Twitter followers. (A part of the ongoing struggle in the courts as to how to treat social media assets. See also Eagle v. Morgan, Maremont v. SF Design Group, and the OMGFacts case.)

Interestingly, the court notes that Lown sent a "copyright" takedown notice. This raises the question of whether Piggy Paint could have asserted a claim under Section 512(f) for sending a wrongful takedown notice. Even assuming that Piggy Paint could have argued that the takedown notice should be covered under Section 512(f), given the high bar for liability under Section 512(f), a mistaken takedown notice would be unlikely to support liability.

In any event, damages would likely be difficult to prove, and plaintiffs don't often win these types of cases. See the Ground Zero museum case, the Pandora jewelry case, among others linked below. Ordonez v. Icon Sky is a rare case where damages were awarded for a takedown request that disrupted someone's web presence. This case and Ordonez may have reached different results because this case was contested and did not involve a default judgment. Another possibility is that the judge gave short shrift to the potential for commerce on a Facebook "fan" page as opposed to a more traditional web presence; or that the Ordonez case involved a model, whose web presence would ostensibly be more important to booking gigs and generating revenue. Either way, this case's result is probably in the mainstream and the Ordonez result seems like an outlier regarding damages for disruption of a web presence.

Other coverage:

Tom O'Toole: Court Says Facebook 'Fans' Don't Translate Into Protected Expectation of Business

Eric's Comments

This is a breezy opinion that isn't likely to persuade other judges. However, the core ruling on the tortious interference claim goes right to the heart of the battle over social media accounts. As Venkat notes, the judge says:

Although Piggy Paint alleges that it had 19,000 "fans" of the page, Piggy Paint has not and cannot show that the removal of the facebook page — which did not offer any means of placing orders or doing business — resulted in the loss of any business

Let's assume this is true and Piggy Paint can't prove any actual lost sales from the page's takedown. Even so, the Facebook page was clearly a major part of Piggy Paint's relationship with its customer base, and the page takedown unquestionably disrupts that relationship and Piggy Paint's ability to keep in touch with its audience. At minimum, the judge was quite tone-deaf to the practical implications of this page's takedown. But if disrupting a communication channel between a business and its fans isn't a legal problem, then a lot of the other social media account battles should fail as well. For example, this thinking moots the Phonedog case because the continued patronage of the account's followers is the only real asset at issue.

Venkat is also right that businesses are constantly at peril that their cyberspace presence on third party websites will simply vanish. For more on this, see my article on 47 USC 230(c)(2) and online account termination. In particular, I'm nervous about all of the businesses heavily investing in their Facebook pages. Don't go crying to the lawyers if those pages go POOF.

Posted by Venkat at 10:51 AM | Copyright , Derivative Liability , E-Commerce , Licensing/Contracts , Trademark

August 11, 2012

Breastfeeding Mom Can Sue Video Producer Despite Signing a Blanket Release--Sahoury v. Meredith

By Eric Goldman

Sahoury v. Meredith Corp., 2:11-cv-05180-KSH-PS (D. N.J. Aug. 2, 2012)

Sahoury consented to being video-recorded while breastfeeding for inclusion in an instructional video. She claims that the video producers orally agreed to two conditions: (1) the instructional video would only be shown on cable TV and the Parents magazine website, and (2) the video would not reveal the full name of Sahoury or her baby. However, she signed a blanket written release that didn't reference either promise. She says the release was presented to her after the taping, as she was in a rush to leave. Sahoury alleges that the producers broke both oral promises by posting the video to YouTube with her full name. She then alleges that rogue actors downloaded the video from YouTube and spliced the video of her breastfeeding into pornographic videos featuring a model who looked like her; and the rogue video referenced her full name and was distributed widely, ruining her vanity search results. To combat this, she hired a reputation management service.

Frustrated by the video producers' lack of pursuit against this rogue distribution, Sahoury sued the video producers. In this ruling, the court largely upholds her lawsuit against a motion to dismiss, mostly based on Sahoury's argument that she relied on the oral promises made by the producers. However, the court dismisses her publicity rights claim because using her name in connection with a freely available instructional video doesn't have enough commerciality.

From a legal drafting standpoint, it's interesting that the signed blanket release wasn't dispositive. The release might still work later in the case, but it didn't knock out the case on a motion to dismiss. She basically gets around the release by arguing procedural defects (presented after the video was shot, as she had to leave quickly to get her kid) and the contrary oral promises. Naturally, video/photo producers should never make oral promises to the depicted people that contradict the written releases. Here, it opens the door for the judge's outrage about Sahoury's treatment.

Putting aside the legal issues for a moment, I'm confused because Sahoury's allegations all rest on a questionable factual premise. It appears she thinks that she could avoid being reidentified if only her first name was used, but obviously this is wrong. As we've seen repeatedly, she could be easily reidentified by third parties in the comments or elsewhere online--especially as facial recognition technology improves. And, the ability of pornographers to extract and remix the video was equally possible if the video was on YouTube, on Parents.com or only shown on cable. In other words, by consenting to the production and distribution of a widely available video showing her breast-feeding, she was vulnerable to the porn splicing no matter what. Finally, as we saw in the Bev Stayart cases, a person's name can be splogged into web pages with adult content even if the person has done nothing supporting that association. So from my perspective, Sahoury never had a chance of achieving her putative objectives.

In light of where she is now, what can she do? (beyond reputation management and suing the initial video producers). She could try to go after the rogue video remixer and the various porn sites distributing the video. She would have to rely on privacy claims, as she doesn't own the video's copyright (more on that in a moment). Further privacy litigation against these third parties isn't likely to be productive. The rogue video remixer and porn sites aren't likely to be easy targets--they could be overseas, they are almost certainly judgment-proof, and there are just too many targets--and the privacy claims will be partially undercut by the wide public release of the initial video.

Similarly, legal efforts against search engines to de-index the porn sites linking to her name aren't any more productive. Bev Stayart has shown this is a losing proposition, and 47 USC 230 would also apply to any privacy-based claims.

In contrast to privacy claims, copyright infringement would provide Sahoury with a real cudgel. This is why we're seeing the troubling hack (most recently blogged in Scott v. WorldStarHipHop) of a photo/video subject acquiring the copyright to the visual depiction of them and then turning into a copyright plaintiff. Something like that would be a logical approach for Sahoury here. She can settle up with the initial video producers, get the copyright to the video or at least the portion with her in it, and then send copyright takedown notices not only to the republishing websites but to the search engines as well. I can't really applaud this approach, as it relies on the unwarranted power of copyrights over other legal claims.

Posted by Eric at 10:47 AM | Copyright , Derivative Liability , Licensing/Contracts , Publicity/Privacy Rights , Search Engines | TrackBack

August 09, 2012

Craigslist’s Latest Moves Show It Cares More About Its Market Position Than Delivering Value to Its Users (Forbes Cross-Post)

By Eric Goldman

Craigslist is resorting to increasingly desperate measures to control its users' classified ad listings. Last month, Craigslist sued 3Taps and Padmapper for scraping and repackaging its classified ads. Since then, it has extracted greater IP rights from its advertisers and reportedly may de-index the listings from Google.

Why is Craigslist making these moves? Because third parties are threatening to interpose themselves between Craigslist and its users--in effect, to disintermediate Craigslist. If a third party can interpose itself between an intermediary and its users, the new intermediary can draw the users away from the incumbent, thereby undermining or even eliminating the incumbent's franchise. Not surprisingly, the incumbent will try anything--even desperate anti-user measures--to negate this threat.

The archetypal example of an online intermediary striking back against distintermediation came, ironically, from Craigslist's arch-enemy eBay ($eBay). About a dozen years ago, a start-up, Bidder's Edge, sought to create a super-set of auction listings from multiple Internet auction sites. At the time, there were serious rivals to eBay, including Yahoo Auctions and Amazon Auctions, but eBay still had the bulk of online auction listings.

From eBay's perspective, having its listings in Bidder's Edge database threatened eBay's franchise. While Bidder's Edge might have brought some new buyers to eBay's auctions, one of eBay's competitive advantages was that it already had the largest pool of prospective buyers. From a prospective buyer's standpoint, it would be more advantageous to browse the super-set of all listings on the Internet than to browse only eBay's listings; more auction vendors means more choices and more competition for the buyer. If Bidder's Edge interposed itself between eBay and its buyers, sellers could go to the other auction sites (Yahoo or Amazon) and get exposed to the same pool of buyers that they could have gotten on eBay. In effect, then, by siphoning off eBay's buyers, Bidder's Edge would allow eBay's competitors to siphon off eBay's sellers too.

We know how the story turned out. eBay technologically blocked Bidder's Edge from scraping its website for auction listings. When Bidder's Edge routed around eBay's blocks, eBay sued Bidder's Edge and won a landmark injunction based on the ancient legal doctrine of trespass to chattels. Bidder's Edge kept going for a while by aggregating the auction listings from other auction sites, but without eBay's listings, Bidder's Edge's offering wasn't very compelling to buyers, and it faded away. Meanwhile, without the exposure to eBay's buyers that Bidder's Edge would have provided, the other auction sites also eventually faded away. eBay effectively rolled up the online auction industry, creating billions of dollars of wealth for its stockholders.

Craigslist is fighting the same fight against online aggregators that eBay fought--and won--a dozen years ago, for exactly the same reasons. If Craigslist succeeds with its lawsuit, we can expect that Craigslist will retain its market leader position for at least a little while longer. But if Craigslist can't control its listings, they can help seed a competitive aggregator's database. This, in turn, would give a big boost to existing and new competitors to Craigslist.

This situation is forcing Craigslist to assert more control over its users' advertisements. But this devolves into a zero-sum game between Craigslist and its advertisers, i.e., Craigslist improves its competitive position only by delivering less value to users. For example, taking exclusive copyright licenses to advertisements would prevent Craigslist advertisers from pursuing other advertising venues that could help them reach more potential buyers. (If Craigslist is asking for less copyrights than that, its move is legally ineffectual). Similarly, de-indexing from Google would severely cut off advertisers' exposure to potential buyers. Less potential buyers = less money for advertisers = less reason to use Craigslist.

This could start a downward spiral for Craigslist. Either Craigslist lets third party competitors aggregate its users' advertising into their databases, or Craigslist reduces the value of its services to advertisers and drives them to competitors. Thus, even though it might look like Craigslist is making bizarre moves, I think its moves are quite rational. They're exactly the kind of moves you'd expect from a panicked company realizing its uncomfortably precarious marketplace position.

Posted by Eric at 09:30 AM | Copyright , Marketing , Trespass to Chattels | TrackBack

August 07, 2012

EA Faces Uphill Battle in Its Copyright Infringement Lawsuit Against Zynga (Partial Forbes Cross-Post)

By Eric Goldman

[Eric's note: I am still experimenting with how to write for different audiences. Below is the first draft of a post I wrote for my Forbes Tertium Quid blog. You'll see it's written for a lay audience, but structurally, it's still a geek post. So I've decided to move it over here. I wrote and posted a pithier version for Forbes. If you take a look at both, please email me and let me know which one you liked better (and why).]

Electronic Arts Inc. v. Zynga Inc., 3:12-cv-04099 (N.D. Cal. complaint filed Aug. 3, 2012).

Last Friday, Electronic Arts ($EA) sued Zynga ($ZNGA) for copyright infringement. EA alleges that Zynga's "The Ville" game takes too much of EA's "Sims Social" game.

The lawsuit is interesting for a number of reasons. First, it's always interesting to see two major Silicon Valley companies clash in court. (I know Zynga is located in SoMa--"South of Market Street" in San Francisco--but close enough). It's even more interesting to see big game manufacturers square off, something that happens relatively rarely. Second, the case raises interesting--and difficult-to-resolve--substantive questions about copyright law. Third, game developers copy each other's ideas all the time, meaning that if the case reaches a final adjudication rather than settling, it might set a vitally important precedent for the entire industry.

The Case Merits.

Games are protected by copyright law, but figuring out the precise parameters of EA's copyright protection is a tricky endeavor. Let's take a careful look at the different overlapping copyright interests in a game like Social Sims:

Code. The software code for a game is protectable, but EA doesn't allege Zynga copied its code.

Plot and Characters. A game's "plot" typically is protectable, such as a mandatory sequences of events the player must go through to reach the game's end. EA doesn't allege Zynga copied the plot for Social Sims. Indeed, one of the hallmarks of Social Sims is that it doesn't really have a plot. A game's characters may be protectable independent of the plot if they are drawn richly enough (think "Leisure Suit Larry"). As with the lack of a storyline, Social Sims doesn't really have characters with personalities.

Concept and Expression of the Concept. A game's concept, such as the ruleset for game play, usually is not protectable under copyright law. Thus, competitors may freely make a game with a Monopoly-style gameplay. Similarly, everyone is free to design a game where a player operates an avatar navigating through a virtual environment. At some indeterminate point, a game manufacturer's execution of the game's concept is imbued with enough creative choices that the exact implementation may be protectable.

EA alleges that Zynga took not only the game concept, but many of the unique and creative choices that EA made in implementing the concept. To prevail on this aspect, EA will have to show that its choices were sufficiently creative and unique to warrant copyright protection. EA will also have to show that there were a multitude of ways that a rival could have executed the concept and that its execution isn't a standard method in the industry.

So, for example, regarding para. 94 of the complaint, EA might get a little credit from its choice to communicate that an avatar needs to go potty by showing the avatar standing pigeon-toed (I don't believe that's a standard depiction in the game industry, but let me know if you see it differently). However, EA probably gets little credit from also showing the avatar with a thought bubble thinking of something potty-related (toilet paper in EA's game; a toilet in Zynga's game). Ultimately, many of EA's allegations go to this point: Zynga mirrored the big-picture concept and lots of specific details of that concept in Social Sims and chose a similar or identical method of expressing the specific details. But Zynga is free to copy the concept and free to execute the concept using similar details, so the key question is whether Zynga's execution of the freely copiable concept took too much.

User Interface. A game's user interface can be copyrightable, such as the unique visual depictions rendered by the software code. EA also alleges that Zynga copied aspects of its user interface, such as the exact color scheme and many other visual depictions (e.g., the avatar's thought balloons are quite similar in some cases). In most cases, and consistent with its standard practices, Zynga made small but discernable changes from EA's exact depictions. Like the copying of EA's concept, it's not easy to assess if Zynga changed enough of EA's unique expression.

Overall Assessment. As you can see, parsing the copyright issues is complicated (and I didn't even use any of the copyright law jargon, like the idea/expression dichotomy, "merger doctrine" or "scènes à faire"). What is clear is that EA has to go much further than just showing that Zynga copied its gameplay. Indeed, Zynga's slightly different execution of the specific details in EA's game might be just different enough to avoid the copying charge.

In a legal complaint, the plaintiff tells its very best story unrebutted by the opponent's side of the story. Even without seeing Zynga's response, I was surprised how unmoved I was by EA's allegations. That doesn't bode well for the merits of EA's claim.

What About the Employee Raid? EA makes numerous allegations about Zynga's acquisition of confidential information from ex-EA employees who joined Zynga. Yet, EA didn't complete this thought by making the logical claim of trade secret misappropriation. This leads me to believe that this lawsuit is, at least in part, a proxy battle over Zynga's raids of EA employees. Of course, Zynga's raids were a lot easier when it could offer EA employees a taste of high-flying stock. I'm guessing Zynga's recent stock performance makes future raids less likely.

EA's Risks of Aggressive Copyright Enforcement.

As the prior section indicates, EA may be pushing the envelope on copyright protection through this lawsuit. From my perspective, I can't imagine why EA would want to do that. Every game manufacturer copies other manufacturer's games at some level. There are only so many unique types of game concepts to go around, and most major games manufacturers want to offer a complete line of games covering all of the different game segments. This means that when a game manufacturer comes up with a completely new game concept, inevitably the other manufacturers will implement this game concept themselves.

So if EA succeeds in expanding protection for game concept and user interface details, it might win this battle but lose the war. Ultimately the next time it seeks to do its own version of someone else's concept, any precedent EA makes here will be cited against it.

This makes EA's enforcement effort a high risk endeavor. While this is a case that Zynga can't afford to lose, it's also a case that I think EA can't afford to win. As a result, the most likely outcome is that the parties will settle, probably with little consequences for either party. A logical settlement would involve Zynga making some changes to its game to placate EA, but not changing all of the issues raised in EA's complaint.

Implications for the App Industry Generally.

As with games, concept copying is rampant in the app industry generally. Recall, for example, how Apple declared that it didn't want any more fart applications after the success of iFart. If this case were to set a precedent on the boundaries of legitimate copying of app concepts and the specific details implementing the concept, it could have major implications for the entire app developer community.

I don't expect we'll achieve that result for two reasons. First, because neither EA nor Zynga want a final ruling on the merits, I don't think we'll get a decisive final opinion.

Second, parsing between concepts and expression of those concepts will always require comparison of the original app and the variant. In the context of comparing the plotlines and characters of two plays, over 80 years ago famed Judge Learned Hand said (citations omitted):

Upon any work, and especially upon a play, a great number of patterns of increasing generality will fit equally well, as more and more of the incident is left out. The last may perhaps be no more than the most general statement of what the play is about, and at times might consist only of its title; but there is a point in this series of abstractions where they are no longer protected, since otherwise the playwright could prevent the use of his “ideas,” to which, apart from their expression, his property is never extended. Nobody has ever been able to fix that boundary, and nobody ever can.

We've developed a lot of copyright law since Judge Hand wrote these words, but we've not made any meaningful progress towards fixing that boundary, and I doubt this case will do so either.

Posted by Eric at 04:49 PM | Copyright | TrackBack

August 06, 2012

Now Available: My Internet Law Syllabus and Reader for Fall 2012

By Eric Goldman

I posted my syllabus and my course reader (a $7.50 download at Gumroad) for Fall 2012. If you teach Internet Law (or hope to), email me if you'd like a free copy of the reader plus my course notes and PPT slides. I've priced this reader below the Advertising & Marketing Law casebook Rebecca and I just released because it's less than 50% as long and has less explanatory material. Still, I think it's an excellent value for the students.

Although I think it's been an interesting year for Internet Law, I ultimately didn't make too many changes to the syllabus and reader from last year. The only changes:

- I added UMG v. Shelter Capital and deleted Io v. Veoh and the district court opinion in Viacom v. YouTube. This was a tough call. I thought the UMG case was a better teaching case than the Second Circuit's Viacom v. YouTube ruling, even though the YouTube ruling came out second and had some important deviations from the UMG ruling. Plus, my students are located in the Ninth Circuit, so UMG is the governing law for them, and the UMG ruling distills a lot of Ninth Circuit law that had been murky since the 2007 Perfect 10 troika of rulings. On the minus side, the Ninth Circuit has asked the litigants to brief it on possible amendments to the ruling in light of the YouTube ruling, so the version I've included in the reader could be superseded (I'd be surprised if the Ninth Circuit didn't make some changes, even if minor).
- I added my Forbes essay, Celebrating (?) the Six-Month Anniversary of SOPA’s Demise. I haven't had a chance to repost that essay to this blog yet because I'm combining it with a beefy linkwrap. You'll get it here soon.
- I added WEC Carolina Energy Solutions v. Miller to the trespass to chattels section. I thought this case was easier to teach than the Nosal en banc ruling (i.e., no messiness associated with a criminal prosecution; and less time on tendentious parsing of the word "so"), and Nosal and its progeny appear to be reshaping the CFAA rapidly in ways that should apply outside the employment context.
- I beefed up my "notes and questions" sections after a number of cases (I'll post an example soon), plus lots of bug fixes.

I didn't include the Fourth Circuit's Rosetta Stone v. Google opinion for a number of reasons, mostly because I don't think it's an easy teaching case and because I think lawsuits over keyword ad sales are increasingly anachronistic. Plus, the Ninth Circuit's Network Automation case (binding law for my students) is already having a major impact on trademark law jurisprudence and is a solid enough foundation for teaching keyword advertising issues.

I also have not added any new materials on privacy, even though it's been a crazy time for Internet privacy. I still haven't found any cases I like better than the Pharmatrak case, and I'm not sure I've found any supplementary cases that are worth the time. I'd be grateful for your thoughts on this.

To streamline the reader and eliminate some maintenance hassle, I deleted the statutory texts from the reader and just linked to the key ones. I would welcome your thoughts about the best ways to impress upon students the importance of statutory analysis to Internet Law practice. For now, I'm assuming that burden as the course instructor.

My analogous blog posts from years past: 2011; 2010; 2009; 2008; 2007; 2006; 2005.

Posted by Eric at 11:12 AM | Copyright , General , Trespass to Chattels | TrackBack

The Newest Olympic Sport: Evasion of Geolocation (Guest Blog Post)

By Guest Blogger Marketa Trimble

The Olympic Games can be credited for spreading awareness about and generating excitement for sports that might otherwise be unknown in various parts of the world. The global promotion of sports is one of the undeniable benefits of the Games, which are watched by millions on television and the internet all over the world. Normally it is the sports that are included in the Olympics that receive the amazing publicity and therefore the attention of viewers. However, this year the Olympic contribution might rise beyond the sports seen in London stadiums.

As an article in the Reuters U.S. edition suggested a few days ago (Olympics Fans Find Ways to Circumvent NBC’s Online Control, July 31, 2012), this year the Olympics coverage by the omnipresent NBC will contribute to the popularization in the U.S. of a sport that has not been included in the program of the Games, has not even been considered as an Olympic sport and, frankly, would probably not be accepted as a “sport” by most: evasion of geolocation.

Evasion of geolocation is primarily an expatriate sport – a sport for those who long for their home television programming and other content on the internet that can be accessed only from inside their home country. By misleading the geolocation tools that website operators have installed, expatriates travel virtually to an internet IP address in their home country to access their home television programs. Not that others don’t engage in the evasion of geolocation as well – political activists, dissidents, and others evade geolocation also; however, just as running and swimming are sports for some but life necessities for others, so too may evasion of geolocation be considered as “sport” only in certain contexts.

With its broadcasting approach to the Olympic Games, as described in the Reuters article, NBC has created unwilling virtual expatriates out of at least some U.S. Olympic fans who now have to travel virtually to appear as if they are located outside the U.S. Whether they want to watch “exotic” sports or sporting events in “real” real time, they have to find stations other than NBC to show it to them, particularly if they don’t subscribe to a cable or satellite television service. Alternative stations will be foreign stations, such as (perhaps) the BBC, and likely ones that also prevent access by internet users located outside the country or countries for which the stations hold licenses. And so U.S. sports fans are learning about ways to access foreign websites by evading geolocation and pretending to be in foreign countries.

Are the acts of users who evade geolocation and the acts of providers who supply evasion tools legal? It depends; I wrote over 90 pages explaining the intricacies of those questions in my article The Future of Cybertravel: Legal Implications of the Evasion of Geolocation, 22 Fordham Intell. Prop. Media & Ent. L.J. 567 (2012) [prior blog coverage of the article]. As it could be for any questions about legality, these questions might be inconsequential if no one actually cares: unless there is a party who suffers damage, legality or illegality of acts might only be a matter for academic debate. So who cares? The BBC is gaining viewers, and with more viewers it might be able to charge more for advertising. (For a separate problem with pay-per-foreign-view, see my article.) NBC is losing viewers, which might not matter until the practice becomes widespread enough that advertisers begin to demand lower prices for advertising time on NBC. [Eric's note: if anything, NBC has fared better financially with this year's Olympics than it projected.] NBC’s inability to safeguard territorially limited access to third-party programs through sufficiently effective geolocation could lead to NBC’s losing licenses to programs in the future.

Those damaged by the new Olympic sport of geolocation evasion will be copyright holders who have licensed their content in a territorially limited manner. These might be music labels that have licensed music to advertising agencies for use only in the U.K. but now face the fact that U.S. users are enjoying the music in the U.S. without the labels’ consent. And, of course, no copyright holder will be unhappier about the new sport than the International Olympic Committee.

The practice of the evasion of geolocation, though it may not immediately damage IOC revenues, might in the long run necessitate a rethinking of IOC licensing strategies. Unless the legal status or technical aspects of evasion of geolocation change dramatically (meaning that it becomes illegal or technically too difficult), territorially limited licensing will be rendered ineffective, and the IOC – and, in fact, other copyright holders throughout the world – will have to create new licensing models or embark on new business models altogether.

Posted by Eric at 09:23 AM | Content Regulation , Copyright | TrackBack

August 02, 2012

Video Embedding Site Isn't a Contributory Copyright Infringer, But Sideloading Could Be Direct Infringement--Flava Works v. myVidster

By Eric Goldman

Flava Works, Inc. v. Gunter, No. 11-3190 (7th Cir. Aug. 2, 2012). Prior blog post on district court ruling.

myVidster is a "social bookmarking" website that allows users to link to videos hosted elsewhere on the Internet and thereby embed the videos in myVidster's user interface. Today, myVidster scored a big win at the Seventh Circuit, which held that it had not committed contributory infringement by allowing users to embed infringing videos via myVidster. It's hard to state just how amazing this ruling was for myVidster, because myVidster's principal, Gunter, often refused to honor takedown notices (on the dicey premise that anything posted somewhere elsewhere on the Internet was freely linkable) and thus presumptively failed to qualify for the 17 USC 512(d) safe harbor. Normally, when a website fails to honor takedown notices, judges come down hard on the website—just like the district court did in this case.

While the opinion offers good news for myVidster and possibly other linking websites, it does raise a concern about sideloading, i.e., grabbing a remote file that a user links to and making an archive copy of that file for further delivery. The opinion, without much elaboration and without using the term, breezily characterizes sideloading as direct infringement by the website for grabbing and republishing the remote file. This is almost certainly bad news for Pinterest, which (I believe) routinely engages in sideloading without a lot of explanation to its users, presumably premised on the idea that storing the remotely linked files is authorized by the user and thus qualifies for the 512(c) safe harbor. It remains to be seen what will happen if Pinterest's sideloading is directly challenged and Pinterest is around to defend its interests, but this ruling provides a warning that judges may not see it the way Pinterest does.

Judge Posner drafted this opinion, which means that (as usual for him) it reads like a barely edited first-draft. As usual for Seventh Circuit opinions, it makes a number of questionable and undefended offline analogies, makes assumptions about factual questions that could/should be remanded to the district court, barely engages with or cites to other legal precedent, raises and addresses issues that the litigants never raised, and is filled with gratuitous digressions (e.g., an uncomfortable discussion that gay ethnic pornography might be illegal, a contention neither party advanced; and an odd discussion about the reputational capital benefits of sharing content). If I were Flava Works, I would be hopping mad about the manifest procedural defects in the opinion (and motivated to seek en banc review). As a result of the opinion’s characteristic affectations, parsing this opinion is needlessly difficult, so I can only do so much to deconstruct the legal principles in it.

The main ruling is that the folks uploading infringing videos are direct infringers, but myVidster isn't contributorily liable for letting users link to those infringing videos. Posner unhelpfully rejects the standard Gershwin definition of contributory infringement; instead, he idiosyncratically defines it as “personal conduct that encourages or assists the infringement.” (In my opinion, the last thing we need is further proliferation of definitional standards for secondary infringement!). myVidster wasn't responsible for any infringing activity mostly because it didn't copy or distribute the infringing videos or help users copy or distribute the infringing videos.

Posner sidesteps the concerns from amici Google and Facebook about possible “tertiary” liability, saying myVidster didn’t commit contributory liability and that ends the inquiry. And because the opinion doesn’t find any secondary infringement, it says the 512(d) safe harbor for linking to infringing content is not needed. That turns out to be good news for myVidster because it had a low chance of succeeding with a 512 defense. myVidster avoided an inducement claim because it didn’t “invite” its users to link to infringing files.

Posner does separately address the 106 public performance right, but I found the opinion about that especially inscrutable. I'm hoping someone else can help me understand what Posner was trying to say and, in particular, why he discussed Fonovisa (an offline swap meet case) when discussing the performance right. Although the opinion cited the Ninth Circuit’s Perfect 10 v. Amazon ruling, I also don’t understand why Posner did not discuss the Ninth Circuit’s thoughtful and highly relevant discussion about public display and the difference between embedding content via links and hosting it. The only thing that is clear to me is that Posner thought that linking to infringing content is just like citing to someone else's content, and thus myVidster was too remote from any infringing activity to be responsible for it.

[Rebecca provided this helpful distillation of Posner's public performance discussion: "the site hosting the unlawfully copied videos is publicly performing them, but the watcher is not, and therefore assisting the watcher (without hosting the video) does not assist copyright infringement." If that's where he was going, it would have been interesting to see Posner analogize to and distinguish the Cablevision case.]

The district court's ruling against myVidster reflected, in part, Posner's own opinion in Aimster, which basically threw a P2P file-sharing service under the bus. I personally think Aimster was one of numerous P2P exceptionalist cases and therefore only has precedential value in the P2P file-sharing context. Here, Posner distinguishes his own Aimster opinion in a way that strongly supports that interpretation, even though he doesn't explicitly acknowledge that implication.

In particular, he invokes the troublesome methodology of determining a service's liability based on the percentage of infringing activity taking place on it, saying most (all?) files on Aimster were infringing but that wasn’t the case for myVidster. Comparing infringement rates is a realpolitik approach, but one fraught with peril because (a) those ratios can and do change over time, and (b) they are notoriously difficult to measure properly. Worse, here it appears Posner (or possibly his clerks) did his own ad hoc empirical assessment of myVidster’s infringement rates--on July 4, no less. Your honor, like the American public you serve, you deserve to enjoy the holiday! If the outcome will turn on the current percentage of infringing activity—which it shouldn’t—that question should be remanded to the district court for further fact-finding, not by having a septuagenarian surfing for gay erotica (on court computers?) on a national holiday.

Posner also doesn’t renounce his ill-considered discussion Aimster about the service’s name, where he castigated it for using the –ster suffix just like Napster. Of course, myVidster also uses the –ster suffix, but to no legal consequence this time. Another reason to relegate Aimster to the P2P exceptionalist branch.

While the secondary infringement ruling is favorable to myVidster, the opinion indicates that myVidster could be enjoined from allowing users to archive the linked videos as part of a paid membership service. myVidster had already discontinued that premium service, so the opinion doesn’t spend much time discussing it. Nevertheless, the opinion flatly says that the archiving videos from other sites qualifies as direct infringement, not secondary infringement, even if it’s presumptively initiated by the users themselves as one of the benefits of a premium membership. I think it’s erroneous to treat sideloading as direct infringement when it’s done at a user’s direction, but chalk that up as another thing this opinion got wrong.

This opinion is not an instant classic. This opinion touches on so many important questions in secondary copyright jurisprudence—e.g., the 512(d) safe harbor, liability for tertiary infringement, the legitimacy of UGC linking sites that often link to infringing files stored somewhere else, sideloading and more. Unfortunately, because the opinion’s drafting is a train wreck, I’m skeptical it will be all that important or influential. As a result, it’s a big win for myVidster and less helpful for everyone else.

Nomenclature watch: I believe this is the first appellate opinion to use the term “pay wall” (or “paywall”). The only other opinion I found using either term in Westlaw or Lexis was the district court opinion in this case.

UPDATE: Mike Masnick sees more good news in the opinion than I do.

Posted by Eric at 11:52 AM | Copyright , Derivative Liability | TrackBack

August 01, 2012

P2P Infringement Lawyer Faces Possible Sanctions For Disregarding Court Order Regarding Subpoenas – In re: Bittorrent Adult Film Copyright Infringement Cases

[Post by Venkat Balasubramani]

In re: Bittorrent Adult Film Copyright Infringement Cases, 12-1147(JS)(GRG) and 12-1154(ADS)(GRB) (E.D.N.Y.; July 31, 2012)

P2P lawyers have come under a lot of fire lately for their tactics. As detailed here by Ars, the Fifth Circuit recently upheld a sanctions order in the amount of $10,000 against Evan Stone for issuing unauthorized subpoenas. (Added: the total amount was actually $32,000 when you also include the fees Stone was ordered to pay EFF.) Bizarrely, Stone offered the following comment to Ars:

I'm just going to move on from this whole sanction thing. I think it's bullshit and I think it shouldn't have happened.

(???) Separately, I blogged about another case in New York where the Court slammed copyright plaintiffs for their tactics in pressuring Doe defendants to settle, and severed the cases against the Doe defendants because joinder was improper—plaintiffs had to go after the Doe defendants one at a time or make a better showing as to how the defendants' actions were sufficiently related to support joinder. (“New York Judge *Slams* Bittorrent Copyright Plaintiffs – K-Beech; Malibu Media; and Patrick Collins v. Does.”)

In that case the court in no uncertain terms indicated that it was unhappy with plaintiffs’ conduct:

[t]his course of conduct indicates that the plaintiffs have used the offices of the Court as an inexpensive means to gain the Doe defendants’ personal information and coerce payment from them.

The order (issued on May 1) granted early discovery but imposed certain restrictions. Plaintiffs were granted early discovery as to one Doe defendant in each case, but the court was clear that the ISP should produce the information concerning the Does' identity to the court, not to counsel for plaintiffs. This would allow the court to adequately protect the Does’ rights and, if necessary, appoint pro bono counsel to protect their interests.

According to the court, a week after this order was issued, counsel for Malibu Media and Patrick Collins (Jason Kotzker) served two subpoenas seeking the names and addresses of two Doe defendants on Cablevision. Both subpoenas required production of the sought after information to plaintiffs' counsel, rather than to the court, in contravention of the court's May 1st order. Kotzker later moved for an extension of time to serve the complaint and summons, indicating that although he had issued subpoenas, Cablevision hadn't provided the subpoenaed information.

A few weeks later, the court issued an order raising the question of why plaintiffs’ counsel issued a subpoena seeking production of the Does’ identity to counsel rather than to the court. The order does not appear to be a result of a motion filed by any party. (I could be wrong about this, there are a slew of cases involved and they aren't consolidated on Pacer.) The court says that it will give Kotzker a chance to explain. It’s possible that the subpoenas (the face of which indicated that information should be produced to Kotzker) were accompanied by cover letters explaining the mechanics of the court’s May 1st order. (This seems unlikely, given that Kotzker filed a pleading requesting an extension and mentioned that he had not received the information requested from Cablevision.) The court says it’s difficult to ascertain whether the failure to “observe the precautions established in the Order . . . was deliberate, or simply the result of gross inattention.” The court orders Kotzker to file a declaration or affidavit explaining what happened, whether he reviewed the subpoenas and signed them, and to identify everyone involved who prepared the subpoenas. Kotzker is also directed to provide the court with all correspondence with Cablevision.

Ouch. This could result in counsel falling on his sword and getting a stern lecture from the court. It could also result in more severe sanctions. The subpoena process places a fair amount of power in the hands of lawyers. As this case among others (including the Fifth Circuit sanctions order and Theofel v. Farey-Jones) indicate, this power should be used wisely and judiciously. Judges are not happy when it's misused.

(h/t Ray Beckerman)

Posted by Venkat at 09:01 AM | Copyright , Evidence/Discovery

July 21, 2012

Offering P2P File-Sharing Software for Downloading May Be Copyright Inducement--David v. CBS Interactive

By Eric Goldman

David v. CBS Interactive Inc., CV 11-9437 DSF (C.D. Cal. July 13, 2012). The complaint.

When the Grokster Supreme Court opinion came out in 2005, there was a lot of confusion about the relationship between copyright "inducement" and contributory/vicarious infringement. Did the Supreme Court announce a new basis of derivative liability, or was inducement just a subset of contributory infringement? We haven't gotten a crystal-clear answer over the years, but this case provides a resounding one: the court says the defendants in this case may be liable for inducing infringement even though they aren't liable for contributory or vicarious infringement. Because this case demonstrates that inducement can completely bypass the existing derivative liability scheme, it's troubling.

The entire lawsuit is crazy. CBS now owns Download.com, a CNET property. Download.com distributed P2P file-sharing software along with a lot of other software. Users who downloaded P2P file-sharing software then used it in unknown ways, but presumably some of them used it to infringe. This sets up a "tertiary liability" claim against Download.com, where the software users are (in theory) the infringers, the P2P software manufacturers are the secondary infringers, and Download.com is a tertiary infringer by supporting the secondary infringer who supports the direct infringer. In case you were wondering, as far as I can tell, Section 512 doesn't apply because Download.com wasn't hosting the software at a user's direction (their editors chose which software to host) and Download.com wasn't linking to third party websites to complete the downloads (the software was delivered off Download.com's servers).

The court understood the problems with tertiary liability. Relying heavily on Perfect 10 v. Amazon, the court grants the motion to dismiss the contributory and vicarious copyright infringement claims.

On contributory infringement, the court says that Download.com lacked specific knowledge of users' infringing acts. Download.com's general knowledge that users could infringe with P2P file-sharing software wasn't enough; and the fact that Download.com gave examples of software use to download copyright-protected files didn't change this element (more on this in a bit). The court further rejects that Download.com made a material contribution to the infringements because Download.com didn't offer any infringing files from its website, "Defendants could not take simple steps to stop the infringement" because stopping further software downloads wouldn't cut off infringement by the software already downloaded, and "courts have yet to find contributory liability based on a tertiary actor’s conduct."

On vicarious infringement, the court says:

Defendants control whether infringing third parties can access the P2P software through their site, but do not have the right to stop users from using the software to download copyrighted material illegally. Similar to the search engine in Perfect-10 Amazon, Defendants exercise control over their index and search results, curating the programs available through their services. This does not equate to control over direct infringement.

This result is consistent with courts' rejection of other tertiary liability claims. See, e.g., Elsevier v. Chitika and UMG v. Veoh (the ruling involving Veoh's investors).

OK, so far so good--no tertiary contributory or vicarious infringement. But then the court held that the plaintiffs nevertheless properly alleged an inducement claim based on the following allegations:

Plaintiffs allege that Defendants distributed several P2P programs, and reviewed the programs in relation to other P2P programs known for copyright infringement, such as Napster and Limewire....Plaintiffs also allege that Defendants posted videos to their websites demonstrating how to use specific P2P programs by searching for songs by copyrighted artists, and posted articles and how-to guides that included references to Napster, Limewire, and downloading copyrighted material.

Notice the inference here: Napster and LimeWire were "known for copyright infringement," so merely comparing a software program to those "bad" actors is verboten? Seriously? The defendants point out the possible free speech implications, but the court doesn't care:

Defendants here are alleged to have distributed specific P2P software, while simultaneously providing explicit commentary on that software’s effectiveness in infringing copyright. Such behavior moves beyond opinion into the realm of conduct and does not directly implicate any First Amendment issues.

The court then sends a strong--and harsh--message to Download.com that it may want to settle:

This is not a particularly close or challenging case for inducement based on the facts alleged. Here, Defendants are alleged to have taken the unusual and ill-advised steps of distributing software programs that are capable of widespread copyright infringement while simultaneously demonstrating how to infringe copyrights using that software and evaluating the various programs as to their effectiveness in copying copyrighted material....It would not be difficult to avoid liability by either (1) only providing editorial content without distributing the software or (2) distributing the software without demonstrating or advocating its use for violating copyrights. The Court is confident that most reasonable parties could find their way to accomplish their general goals without running afoul of inducement liability.

As far as I can recall, this is the first time an inducement claim has survived when the contributory and vicarious infringement claims were expressly rejected. Am I'm forgetting any case? I believe Arista v. LimeWire and Columbia v. Fung, two flagship inducement defense losses, never completely rejected the contributory or vicarious infringement claims even though their outcomes also turned on inducement.

This case illustrates an ongoing lesson that a defendant's advertising/marketing can affect the copyright analysis. Inducement allegations often focus on marketing copy, so it's essential that any player dealing with sensitive copyright issues run all marketing copy by competent counsel. This case further extends inducement to "editorial" content. As the court says, the principle is easy enough to comply with; indeed, I thought by now everyone knows that you should never provide examples demonstrating how to download files under copyright protection--just use public domain examples instead. If Download.com didn't run a tight enough ship, this judge appears to be eager to throw Download.com under the bus.

I would be more troubled by this ruling if I thought it had any applicability outside the P2P file-sharing context, but I doubt it. Instead, I see this case as yet another P2P exceptionalism case, where copyright law goes into a weird distortion field any time it gets near P2P file-sharing. Basically, P2P file-sharing software has developed such a toxic brand that judges treat anyone who touches it as evil. That's wrong as a matter of the facts--P2P file-sharing software can be used for both social beneficial and infringing activities--and should be wrong as a matter of law.

Still, any time inducement succeeds on a standalone basis, it just encourages more tertiary liability-style lawsuits both in and outside the P2P file-sharing software context. Just what we need.

Posted by Eric at 11:20 AM | Copyright , Derivative Liability , Marketing | TrackBack

July 10, 2012

No Negligence Claim for Infringement via Shared Internet Connection (Preempted by Copyright Act) – Liberty Media v. Tabora

[Post by Venkat Balasubramani]

Liberty Media Holdings, LLC v. Tabora & Whetstone, 12 Civ. 2234 (LAK) (S.D.N.Y.; July 9, 2012)

A question that was floating around in the blogosphere was whether you can be sued for maintaining an open wi-fi connection where a third party engages in file-sharing using your connection. A district court judge in New York answered that question in the negative. (This case involved a shared internet connection, rather than open wi-fi, but this shouldn't change the result.)

Liberty Media sued Whetstone and Tabora, who were roommates. Liberty alleged that Whetstone “regularly pirat[ed] copyrighted content.” Liberty alleged that Tabora “knowingly participated and . . . declined to put a stop to Whetstone’s [alleged infringement,] despite having had the ability to have done so.” Although Liberty asserted claims for direct and contributory infringement against both defendants, it also asserted a claim for negligence aginst Tabora.

The court says that the negligence claim against Tabora is preempted by the Copyright Act:

[t]he right that Liberty seeks to vindicate by its state law negligence claim – the imposition on one who knowingly contributes to a direct infringement by another – already is protected by the Copyright Act under the doctrine of contributory infringement.

I initially read the order as dismissing the claims for direct infringement based on the fact that the pleadings didn't adequately state a claim for direct infringement against Tabora, but Marc Randazza (GC for Liberty Media) pointed out via email that the court dismissed the claims for direct infringement (with leave to amend) due to a discrepancy in the title of the work at issue. Although the court doesn’t squarely address Liberty’s claim for direct infringement against Tabora, it dismisses the complaint against Tabora in its entirety. This can be read to mean that the mere provision of an internet connection isn’t sufficient to satisfy the test for contributory infringement. This makes sense, as standing alone, it would be a pretty expansive theory of infringement to argue that merely making available an internet connection is sufficient to trigger liability for the acts of those using the connection.

See also: this post from EFF (Corynne McSherry) as to why this theory is unlikely to gain much traction and shouldn't even be viewed as debatable. The post also mentions a Section 230 barrier which the court did not need to reach in this case. (EFF also filed an amicus brief in this case, which you can access here.)

[Note: I corrected the last paragraph and added a parenthetical to the first paragraph.]

Posted by Venkat at 02:59 PM | Copyright , Derivative Liability

July 05, 2012

H1 2012 Quick Links, Part 2 (Copyright)

By Eric Goldman

* The scandal continues: Techdirt reports the Dajaz1 seizure was held up for months because the government was waiting for the RIAA to provide supporting evidence that never materialized. Wait, ICE seized an asset (that is used for free expression) based on unverified assertions…and then held onto it for A YEAR? Techdirt then reports: RIAA Tries To Downplay Its Role In The Feds' Unjustifiable Censorship Of Dajaz1. I cannot believe that no one has lost their job over this scandal yet. Shame on the Obama administration.

* Techdirt: Feds Tie Themselves In Legal Knots Arguing For Domain Forfeiture In Rojadirecta Case.

* The Supreme Court granted certiorari in Kirtsaeng v. John Wiley & Sons, Inc. Prior blog post.

Related: an appropriate denouement to Costco v. Omega: the court awards Costco nearly $400,000 in legal fees under the Copyright Act’s fee shifting provision. Prior blog post.

* Authors Guild v. Google, Inc., 2012 WL 1951790 (S.D.N.Y. May 31, 2012). Class certified in Google Book Search case. James Grimmelmann’s coverage.

* Brownmark Films v. Comedy Partners (7th Cir. June 7, 2012). Fair use parody supported early dismissal of copyright infringement claim. A case that never should have been brought.

* The Ninth Circuit asked for additional briefs in the UMG v. Shelter Capital case in light of Viacom v. YouTube. The parties’ briefs.

* The jury foreman’s remarks about Oracle v. Google (hint: it wasn’t a close call). Prior blog post.

* Is the long-running Perfect 10 v. Google case finally over? Prior blog post.

* Coverage of Cambridge University Press v. Becker (the Georgia State coursepack case) from James Grimmelmann and Inside Higher Ed.

* Graham v. Sotheby’s: California's resale royalties law violates the dormant commerce clause. This case has been appealed to the Ninth Circuit.

* Some pro se appeals: Ouellette to the Ninth Circuit (prior blog post) and Obodai to the Second Circuit (prior blog post). I suspect we’ll see not-for-publication memorandum opinions dismissing the appeals in both cases.

* Graduated Response coming into effect in July (but did it actually start July 1?). Prior blog post.

Relatedly, the Center for Copyright Information has launched its website. It probably would be more accurate to call it “The Center for Biased Copyright Maximalist Information.” Gigi Sohn explains why she joined the board. The EFF says we should "press reset" on the whole project. News.com coverage.

* Rebecca on the Big Brother/Glass Houses “reality” TV copyright lawsuit, CBS Broadcasting, Inc. v. American Broadcasting Companies, Inc., 2:12-cv-04073-GAF-JEM (C.D. Cal. June 21, 2012).

* Righthaven v. Democratic Underground:

1. That Counterclaimants Democratic Underground and David Allen have committed no volitional act giving rise to a claim for direct copyright infringement. Counterclaimants neither posted the excerpt nor encouraged the posting. Nor did they have any knowledge of the posting until after this suit was filed. See Religious Tech. Ctr. v. Netcom On-line Commnc’n Servs., 907F. Supp. 1361 (N.D. Cal. 1995) (direct copyright infringement requires “some element of volition or causation which is lacking where a defendant’s system is merely used to create a copy by a third party”); see also CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004) and Cartoon Network LP v. CSC Holdings, Inc, 536 F.3d 121 (2d Cir. 2008).

2. That the act of posting this five-sentence excerpt of a fifty sentence news article on a political discussion forum is a fair use pursuant to 17 U.S.C. § 107, and that the fair use doctrine provides a complete defense to the claim of copyright infringement from which this suit arose. Judgment on the Counterclaim is accordingly entered in favor of Democratic Underground and against Counter Defendant Stephens Media, LLC.

For this case, Managing IP recognized Fenwick & West and Electronic Frontier Foundation for the US Copyright Case of the Year. The judge also awarded another $131k fee shift against Righthaven

* More Righthaven:

- a judge transferred all of Righthaven's copyright interests to a receiver for auction
- two more Righthaven appeals dismissed.
- Righthaven v. Allec. Righthaven's copyright assignment agreement with Stevo Designs also failed to give Righthaven standing to sue.
- Steve Gibson of Righthaven threw outside counsel Mangano under the bus and claimed he can't act as Righthaven's lawyer in court (even though Gibson has made appearances as a lawyer for Righthaven before). Let the mocking of Gibson continue. It would be shocking if all of the Righthaven-associated attorneys emerge with their licenses unscathed.

* Stevo Design v SBR Marketing. Costa Rica website didn't infringe copyrights in US when plaintiff doesn't identify a single US user. Compare the DFSB litigation.

* Bell v Steele. (No 3) [2012] FCA 246 (16 March 2012). A successful threats action over a copyright demand letter in Australia.

* Maximized Living, Inc. v. Google, Inc., 2012 WL 1439034 (N.D. Cal. March 30, 2012). Defeating a 17 USC 512(h) subpoena doesn’t warrant a 17 USC 505 fee shift. The judge adopted the magistrate report, 2012 WL 1438988 (N.D. Cal. April 25, 2012). Prior blog post.

* MP3Tunes files for bankruptcy. CNET News.com. Techdirt. NY Times. Prior blog post.

* James Grimmelmann recaps Teller's copyright lawsuit over a magic illusion.

* LA Times on “mockbusters”—quickly and cheaply produced knockoff movies that “draft” off Hollywood blockbusters.

* NYT on rampant copying of gameplay among apps.

* If you buy a DVD that includes a code to download the movie, can the download code be sold separately? eBay says no. I don’t see how the First Sale doctrine helps buyers here. But then again, I don’t think copyright law lets people resell “used” CDs/DVDs if they’ve ripped the files to their computers.

* Raw Films, Ltd. v. John Does 1-15, 2012 WL 1019067 (E.D. Pa. March 26, 2012). Participating in a BitTorrent swarm means the lawsuit "arise out of the same series of transactions or occurrences and because common questions of law or fact seem to be raised with respect to all Doe defendants by virtue of the use of BitTorrent to transmit the same copy of the plaintiff's Work."

* Ars Technica: A debrief of Paramount executive Alfred Perry's law school speaking tour about online copyright.

* Overlaps between MPAA and the US government.

* NYT: Documentary Filmmaker Wins Against I.R.S., Which Saw Her as a Hobbyist. See Storey v. C.I.R., T.C. Memo. 2012-115 (U.S. Tax Ct. April 19, 2012).

* After creating a key online copyright precedent in their litigation against each other, CoStar and LoopNet are merging.

Posted by Eric at 10:22 AM | Copyright , Derivative Liability | TrackBack

June 29, 2012

Photographer's Suit Against Client for Republishing Photos on Facebook Proceeds – Davis v. Tampa Bay Arena

[Post by Venkat Balasubramani with comments by Eric]

Davis v. Tampa Bay Arena, Ltd., 2012 WL 2116136 (M.D. Fla.; June 11, 2012)

This seems like a run-of-the-mill dispute between a photographer and client, but I think it contains some helpful lessons. I have a feeling we will see more of these in the future. Chalk it up to more aggressive copyright enforcement, or an impulse to put out an increasing amount of content, or a combination of the two.

Davis worked from 1998 through 2011 (under various contract arrangements) for Tampa Bay Arena as the in-house photographer photographing events. (For what it's worth, here's what looks like Davis' site.) Davis (smartly) retained ownership of the photographs and licensed them to the arena for limited uses. The agreement in place between the parties allowed for use by the arena in the following ways:

newsletter, advertising, display prints, broadcast, and the venue website.

The arena terminated its relationship with Davis in 2011 but continued to use his photographs. In early 2011, the arena created a Facebook page and posted Davis’ pictures on the page. Apparently Facebook had a feature that allowed users to download photographs at the click of a button, and this feature was available on the arena’s Facebook page. Davis asked the arena to remove the photographs from its Facebook page. The arena demurred, and Davis sued, asserting claims for infringement, conversion, and breach of contract.

Breach of contract: The court declines to dismiss the infringement claim, finding that there is a factual dispute as to whether the arena’s use falls within the permitted uses of the agreement. The court does dismiss the infringement claims based on unregistered photographs (with leave to amend). However, the court declines to dismiss Davis’ claims for statutory damages finding there are factual disputes with respect to the timing of the infringements and the registrations.

Conversion and Breach of Contract: The court also declines to dismiss Davis’ conversion and breach of contract claims. The court does not mention preemption when discussing the conversion claims, but finds that the arena’s retention of the slides is sufficient to support a claim. (Some of the photographs were taken with a digital camera and others were taken in slide format.) The court mentions preemption when dealing with the breach of contract claim, but summarily says that the “extra element” required to support a breach of contract claim (when also bringing a claim for infringement) is satisfied when there is a contract in place. Nevertheless, the court says that Davis alleges breaches that are independent of infringement: (1) adding corporate sponsorships to photographs; (2) refusing to return the photographs; (3) conveying rights to Facebook; (4) failing to give appropriate credit; and (5) using photos for sponsorship purposes.

Unfortunately for the arena, the license provisions cover the "venue website" but do not expressly reference Facebook. This isn’t surprising, given that at the time the parties negotiated the 2008 agreement, Facebook was hardly as ubiquitous as it is now. The idea of creating a Facebook page was probably not even a glimmer in the arena's eye.

The key question will be whether the arena can argue that use of the photos on the Facebook site should fall under “advertising”. This will probably be a tough argument, particularly given that anything posted to Facebook grants Facebook broad license to re-use it (e.g., in sponsored stories) and, equally as important, allows end users (fans) to freely download it. (Recall the dispute--still ongoing--between Agence France Presse and a photographer who made photos of the Haiti earthquake. AFP took the position that photos posted to Twitpic were subject to a broad license. The parties filed cross-motions for summary judgment which are currently pending before the court.) Unless the arena has some blockbuster emails from Davis evincing an understanding that the arena’s use in “advertising” was intended to be broadly construed, this may be a tough one for the arena to win.

A few copyright issues that the case brought to mind:

- when is a breach of a license agreement actionable as infringement versus as a breach of contract (as the court noted in MDY v. Blizzard, when a breach of a condition implicates one of the copyright owner’s exclusive rights, which was probably satisfied here)

- can Davis make out a conversion claim based on retention of the photos? (retention of the slides may suffice for the non-digital photos)

- how about the arena’s argument that Davis can’t exploit the photos without its consent or without the consent of the artists or performers (how will this affect Davis' chances for damages in the event he is limited to actual damages?)

These questions aside, I think this is a good cautionary tale when dealing with freelance photographers. One obvious point from this case is clients/licensees should spell out in advance what their acceptable uses would be, and in the era of social media, it’s worth being expansive, or as general as possible. Something like “the arena can use the photos on its websites or in third party websites or platforms for purposes of advertising or promotion” would have gone a long way here.

The trajectory of the relationship between Davis and the arena is interesting. As recounted in this news story posted to Davis' blog, Davis had a long-standing relationship with the arena. The arena posts the photos to Facebook. Davis complains, then sends a C&D, ultimately leading to termination of the relationship. Davis seemed like he had a sweet gig as an in-house photographer at the arena. Was Davis over-reacting when he asked the arena to remove his photos from its Facebook page? Will his proceeds from the lawsuit make up for the money he loses from the arena's business?
____

Eric's Comments

I've complained before about dealing with freelance photographers. During my stint at Epinions, we got sued only two times--both by freelancer photographers for photos we had obtained from third parties, and in both cases the financial demands were completely untethered from reality. As a result, when I see someone who describes themselves as a "freelance photographer," I just assume their alter ego is "pugnacious plaintiff." If you're negotiating a contract with a freelance photographer, get everything you possibly could ever want into the contract before writing a check. Once the cash moves, any activities not clearly permitted by the contract will cost a boatload more or invite a lawsuit, even if financially irrational. CAVEAT EMPTOR!!!

Personally, I won't deal with freelancer photographers who have unreasonable negotiating positions on copyright. That's a good signal that they are likely to be tendentiously unreasonable in the future too. In fact, in my capacity as HTLI director, I just kiboshed a deal with a photography vendor whose contract was muddled on copyright terms and who didn't back down when we made a reasonable counterproposal. Major red flags. The best news: we found a replacement vendor who was half the price and whose form contract was more reasonable about copyright from the start.

Speaking of financial irrationality, I want to amplify on Venkat's discussion about the relationship. The opinion says that Davis was getting $350 per event, plus $130/hr for events over 4 hours (implying an hourly rate of no less than $87.50/hr for events shorter than 4 hours), and he retained the copyright to the photos and could presumably commercialize those in a variety of ways. Getting paid a decent hourly rate to produce copyrighted material that can be further commercialized without restriction sounds like a pretty sweet gig to me (and that doesn't count the other perks, like the free entrance to cool events and the opportunity to rub shoulders with the rich and famous). Meanwhile, it's no surprise that the arena dumped him overboard when he threatened litigation, so Davis chose to grab for the litigation cash and free up his time for other gigs rather than keep the existing economic arrangement with the arena.

Was that a good economic choice? It's hard to tell, but the opinion does give another clue. David sued on 255 photos, 215 which weren't registered at the time he sued, meaning that at most 40 of the photos could possibly support statutory damages and attorneys' fees. It's not clear from the case if all 40 actually were registered on a timely basis, so we'll have to see if Davis is eligible for any enhanced statutory remedies at all.

I'm going to go on a limb and suggest that the maximum possible damages for the 215 photos will be de minimis. Although Davis might have a standard licensing fee for his photos, which would support a plausible claim for actual damages for these photos, the dollar value can't be very high for the use on a Facebook page. And even if all 40 of the other photos qualify for statutory damages, my guess is that the damages will be more on the $750 side than the $30,000 side (and certainly not the $150,000 side).

So how much could this case be worth in Davis' best-case (but still realistic) scenario? $50k? $100k? Is that maximum potential upside worth chucking a long-term relationship (13 years) with the arena? Only Davis can answer that question, and obviously he has (at least implicitly). I hope he made a wise choice.

Posted by Venkat at 09:19 PM | Copyright , E-Commerce , Licensing/Contracts

Can Korean Copyright Owners Sue Australian Defendants in California? Judges Disagree--DFSB Kollective v. Bourne

By Eric Goldman

DFSB Kollective Co. Ltd. v. Bourne, 2012 WL 2376209 (N.D. Cal. June 22, 2012).

DFSB Kollective is a Korea-based copyright owner and a leading producer of Korean music. It went on a litigation tear on March 7, 2011, filing seven similar copyright enforcement actions in the Northern District of California (against Bourne, Doe (revealed to be Yang), Jenpoo, Kuoch, Ma, Tran and Yew). Rather than assigning the seven cases to the same judge or otherwise relating/consolidating them, the cases were divvied up among district judges.

The Jenpoo, Kuoch and Ma cases appear to have settled. Bourne, Tran, Yang (nee Doe) and Yew all no-showed, leading to entries of default against all of them except Yang (which is still pending).

In September 2011, DFSB got a default judgment against Yew for $325k and an injunction from Judge Alsup. I (and most others) missed the Yew case when it came out, but the issues it raises are subsumed by the Tran opinion.

This post focuses on the Tran and Bourne cases. The cases are virtually identical. Both defendants are located in Australia and allegedly ran linking sites focused on the Korean music community (and may have uploaded infringing files themselves). Both cases raise a fairly fundamental question: why is a Korean copyright owner with no operations in California suing Australian defendants in a California court?

In December, Judge Koh issued a default judgment in the Tran case, awarding DFSB $645k in statutory damages plus an injunction. In contrast, earlier this month, Magistrate Judge Corley denied DFSB a default judgment in the Bourne case. Given how similar the cases are, the dichotomous results is noteworthy. Indeed, Magistrate Judge Corley’s opinion expresses disagrees with Judge Koh’s, creating an apparent intra-district split and setting up a potentially interesting showdown between Judges Koh and Corley.

The judges split on the personal jurisdiction question. Judge Koh found that Tran was subject to personal jurisdiction in California because he had accounts at Facebook, Twitter and YouTube and used a privacy service in California to shield his identity. Magistrate Judge Corley, sua sponte, saw it differently:

this Court disagrees that using the Internet accounts of companies based in California is sufficient to support a finding that a defendant expressly aimed his conduct at California. To adopt Plaintiffs' reasoning would render the “expressly aimed” prong of the Calder test essentially meaningless as it has become ubiquitous for businesses—large and small—to maintain Facebook or Twitter accounts for marketing purposes and would subject millions of persons around the globe to personal jurisdiction in California.

Corley also points out that the ads on Bourne’s website don’t appear to target or relate to California, and the website’s goal of providing a directory of Korean-language music had nothing to do with California either.

I think Judge Koh’s conclusion on the social media account question was anomalous. Most of the courts who’ve looked at the issue (none cited by either Koh or Corley) have agreed with Corley. [FN1] Having social media accounts with California-based companies doesn’t automatically confer personal jurisdiction in California for every cause of action. See generally the Mavrix case (cited by Corley). In fact, many social media users don’t know—or care—where their service providers are incorporated or headquartered or where they have data centers.

FN1: See, e.g., NuboNau, Inc. v. NB Labs, Ltd, 2012 WL 843503 (S.D. Cal. March 9, 2012) ("the Court doesn't find that merely engaging Twitter and Facebook to promote one's business constitutes purposeful direction at California, simply because Twitter and Facebook happen to be based there and require users to litigate all lawsuits arising out of their accounts in California."); Sweetgreen, Inc. v. Sweet Leaf, Inc., 2012 WL 975415 (D.D.C. March 23, 2012) ("defendants' passive websites alone do not provide a basis for jurisdiction. Their Facebook pages and Twitter accounts, while interactive, are more like a broad national advertising campaign than a website engaging in e-commerce.") Cf. Lyons v. Rienzi & Sons, Inc., 2012 WL 1203688 (E.D.N.Y. April 11, 2012): "the movant's mere possession of an account on Facebook is not, in the context of this case, a sufficient predicate for hauling it into a court in New York."

The judges also reached different conclusions regarding DFSB’s connections to California. Judge Koh effectively ignored the issue. (In my prior blog post, I wrote “Completely missing from this discussion is how the plaintiffs suffered any harm in California or, for that matter, had any ties themselves to California.”). Magistrate Judge Corley, however, asked the obvious question (again, sua sponte):

Plaintiffs do not explain how California residents were harmed or why that is the proper inquiry. In a copyright case, it is usually the plaintiff—who owns the copyright and thus has standing to bring the lawsuit—who is claiming harm.....Plaintiffs do not allege how they as corporations based in Korea suffered any harm in California.

DFSB may have been engaging in a little copyright litigation “tourism” (analogous to “libel tourism”), picking a US court even though neither litigant had any real ties to the United States. Post-SOPA, we’re on heightened alert for rightsowners’ enforcement actions against “rogue” websites. The DFSB litigation shows that US copyright law already appeals to foreign copyright owners. If SOPA had passed, undoubtedly we would have seen an increase in enforcement actions between two foreign litigants without real ties to the United States. Cf. the increasing number of disputes involving a foreign rightsowner v. a foreign defendant at the ITC, a venue intended to protect US manufacturers.

Among other problems, foreign defendants usually no-show in US litigation, raising real due process concerns. Extra kudos to Magistrate Judge Corley for not rubber-stamping the plaintiffs’ requests in a default action. Most judges are not as careful when the defendant no-shows; even Judges Alsup and Koh—both well-regarded and savvy judges—apparently adopted the plaintiffs’ default judgment arguments largely verbatim without challenging the core deficiency in the plaintiffs’ cases. In contrast, Magistrate Judge Corley raised those issues on her own initiative, without any defense attorney (or the defendant him/herself) encouraging her to do so. This is the way the system is supposed to work if due process means anything.

Corley’s decision isn’t final yet for two reasons. First, because she raised the issues sua sponte, she gave the plaintiffs a chance to rebut her ruling by July 3. Second, Corley’s ruling will go to Judge Hamilton for approval. Corley’s opinion is spot-on, so Judge Hamilton ought to approve the ruling; but I wonder if Judge Hamilton will be spooked by the intra-district split. If so, I could see Judge Hamilton deferring to Judge Koh and eliminating the intra-district split.

Because of these review opportunities, this case seems like an excellent candidate for amicus briefs to explain the social interests at play in no-show default IP cases. Venkat and I have blogged this topic many times before in cases where judges rubber-stamped SOPA-like injunctions because no one was around to object to them. See, e.g., Hermes v. Doe. This case presents a great chance to educate the judiciary about the importance of gatekeeping plaintiffs’ otherwise-unrebutted requests. The turnaround time is short for amicus intervention (and there’s no guarantees the judge will accept them). I can’t lead that charge but I would be happy to work with others.

Posted by Eric at 10:25 AM | Copyright , Evidence/Discovery | TrackBack

June 19, 2012

First Post-Viacom 512(c) Opinion Doesn't Look Much Different--Obodai v. Demand Media

By Eric Goldman

Obodai v. Demand Media, Inc., 2012 WL 2189740 (SDNY June 13, 2012)

This is the first substantive ruling I've seen interpreting the Second Circuit's Viacom v. YouTube ruling. (The Viacom ruling was also discussed in the Ouellette case, but that was tangential to its main discussion). The good news is that the opinion looks pretty much like it would have looked before Viacom v. YouTube. The bad news is that the case was a layup victory against an outgunned pro se plaintiff (who is also unsuccessfully sued YouTube), so we don't really learn much we didn't know. The ugly news is that even at a comparatively svelte 17 pages, the opinion remains an unfortunately long read compared to brief and to-the-point Section 230 opinions.

Obodai claims that a Cracked.com user, "socialway," published 32 items to his Cracked.com profile that infringed Obodai's copyrights. Apparently Obodai never sent 512(c)(3) takedown notices. Nevertheless, after Obodai filed his complaint but before he served it, Cracked.com apparently found out about the complaint, treated it as a 512(c)(3) takedown notice, and removed the 32 files. Thus, Obodai came into the court with the virtually untenable legal position that he didn't send proper takedown notices but the service provider removed the files anyway. In the modern era, plaintiffs like this never win their lawsuits.

Still, Obodai tried many of the standard arguments to disqualify Cracked.com from the online safe harbor. These arguments go nowhere, and Cracked.com easily gets summary judgments. Some of the facts Obodai asserted that had no impact with the judge:

* Cracked.com ran keyword-triggered ads next to socialway's posts
* Cracked.com used "Tynt" to measure search engine traffic to its pages
* Cracked.com has received many other takedown notices
* Cracked.com permitted "unprotected syndication or distribution and display acts." The court interprets this to mean that "Cracked permitted users to post and share content" analogous to the activities in Viacom and Wolk.

All of these assertions result in a resounding "thud."

Obodai also tried to argue that Cracked.com engaged in willful blindness. Expect to see this argument addressed in every 512(c) case for at least the next 5 years. Obodai alleged:

* "defendant designated a copyright agent as a means of ensuring its willful blindness to infringement." The court replies that the statute contemplates designated agents, so this can't evidence willful blindness.
* a Cracked.com staff member infringed a third party copyright. The court replies that even if true, infringement of a third party's copyright has no bearing on the plaintiff's copyright claim.

Putting the details aside, this case doesn't really teach us much. For the past 14 years, the rule has been that responsible plaintiffs send proper 512(c)(3) takedown notices, and responsible service providers respond expeditiously. Obodai's failure to hold up his end of the bargain doomed his case.

Posted by Eric at 09:07 AM | Copyright , Derivative Liability | TrackBack

June 04, 2012

"Hot Topics in Internet Law" Talk Slides

By Eric Goldman

This weekend I presented on "Hot Topics in Internet Law" at the San Francisco IP Law Association's Spring Seminar in Healdsburg. My talk slides. A few photos from the trip. As I've mentioned before, I find "hot topics" talks unusually challenging to prepare--they take much more time than normal talks, they are hard to organize, and they have a high risk of preemption by prior speakers. In addition to quick coverage of a number of topics, I focused on 5 broader topics (I only addressed 3 in the time I had):

* intermediary deputization
* consumer reviews
* social media account disputes
* trolling
* new gTLDs

Posted by Eric at 02:24 PM | Copyright , Derivative Liability , Domain Names , Publicity/Privacy Rights , Trade Secrets , Trademark | TrackBack

June 02, 2012

Java APIs Aren't Copyrightable--Oracle v. Google (Guest Blog Post)

By Tyler Ochoa (see some of Tyler's other posts) with comments from Eric

Oracle America, Inc. v. Google, Inc., 3:10-cv-03561-WHA (N.D. Cal. May 31, 2012).

On Thursday, Judge William Alsup concluded the district court phase of the Oracle v. Google Java-Android trial by holding that the structure, sequence, and organization of the 37 APIs copied by Google is not protected by copyright.

Judge Alsup is to be commended, both for taking the time to understand Java at a highly technical level, and for explaining it with extraordinary clarity. This is by far the most careful and well-written opinion on software and copyrights I've ever read. The opinion is so well-written, and so carefully reasoned, and demonstrates such a strong understanding of the technology involved, that I will be astonished if it is not upheld on appeal.

Judge Alsup's opinion relies on several well-established propositions of copyright law in holding that the structure, sequence, and organization of the APIs copied by Google is not copyrightable. First, under 17 U.S.C. § 102(b), copyright protection does not extend to “any idea, procedure, process, system, method of operation, concept, principle, or discovery.” That means that anyone is free to write a computer program that implements the same functionality as Oracle’s APIs. This is what Google did; they wrote their own source code to implement the same functions contained in Oracle’s APIs. The judge is correct that this is perfectly lawful.

Second, if there is only one way to implement a particular idea, procedure, process, system, or method of operation, then the merger doctrine says that the expression necessary to implement that idea is also not copyrightable. Judge Alsup relied on this proposition to hold that the declarations (programming syntax) for a particular method MUST be identical in order to function in the same way. The only thing that can differ is the name; everything else is specified by the requirements of the Java programming language, which all parties agreed is not copyrightable.

Third, names and short phrases are not copyrightable, even if they are original. Thus, the fact that Google used the same names for each of the methods or functions that it implemented is not itself a violation of copyright.

Fourth, and finally, what Google copied was the organization of those method names into classes and packages. The court found that this organization was original and creative. In other words, it is true that Sun/Oracle could have organized the methods into different classes and packages. Such organization schemes (taxonomies) are ordinarily copyrightable. BUT, the court found that the organization scheme ALSO functioned as a method of operation. Specifically, the Java language requires that a command MUST be in the form "java.package.Class.method()". This means that in order for a program written in Java to invoke a particular function, Google had to copy the structure, sequence, and organization of some of these packages in order for a program containing such a command to work properly.

This ruling is similar to the ruling by the First Circuit in the mid-1990s that the menu command structure of Lotus 1-2-3 was original and creative, but that it was not copyrightable because it was also a method of operation. The Supreme Court granted certiorari to review the case, but one judge was recused, and the ruling was affirmed by an equally divided Court on a 4-4 vote. Although that was something of a controversial ruling at the time, it has widely come to be accepted law, and I would be surprised if the Court of Appeals or the Supreme Court would take issue with it now.

Part of the reason is that broad copyright protection is no longer necessary. Judge Alsup says: "As software patents gain increasingly broad protection, whatever reasons there once were for broad copyright protection of computer programs disappear. Much of what has been considered the copyrightable 'structure, sequence and organization' of a computer program will become a mere incident to the patentable idea of the program or of one of its potentially patentable subroutines." If Oracle wanted to protect its APIs, and they were shown to be novel and non-obvious, it could have obtained patent protection. Indeed, Oracle DID obtain patent protection for some aspects of Java, but the jury specifically found that none of those patents were infringed by Google. Allowing copyright protection would allow Oracle to block any competing implementation of its APIs without having to demonstrate that it had done anything novel or non-obvious.

Obviously, this is a HUGE win for Google. Oracle gets nothing but nominal damages for the incidental copying of nine lines of code (out of thousands of lines in a particular class), and for copying eight computer files that were never used in Android. In order for Oracle to get anything more, it will have to convince the appellate court that Judge Alsup is wrong AND it would have to persuade a jury on retrial that the use was not a fair use (when this jury was reportedly deadlocked 9-3 in favor of fair use). Oracle can continue pouring money down this sinkhole if it wants to, but it would be well advised to concede defeat now.
___

Eric's comments

Competition in the enterprise software industry is as bare-knuckled as any I've seen. Thus, it's not surprising that Oracle, forged from decades of pitched battles, litigates to WIN. We saw some of this zeal in its TomorrowNow/SAP lawsuit, where Oracle didn't just seek a court victory, it sought complete annihilation. Oracle came close to realizing all of its dreams with one of the largest copyright damages awards of all time (even though the court subsequently scaled back the damages award).

Oracle's lawsuit against Google reflects the same fight-to-the-death spirit, exported to a new competitive setting (smartphones instead of enterprise software). I wonder if transplanting this to-the-death attitude to the new context didn't ultimately work to Oracle's disadvantage. Oracle's hubris seems to have hurt it with both the jury and the judge.

If Oracle is GOBOGH (GO Big Or Go Home), Judge Alsup has made it clear that it's time for Oracle to go home. Consider this snippet from the ruling:

Oracle has made much of nine lines of code that crept into both Android and Java. This circumstance is so innocuous and overblown by Oracle that the actual facts, as found herein by the judge, will be set forth below for the benefit of the court of appeals.

Two interesting things about this. First, it's never good when the judge calls a crucial part of your case both innocuous and overblown. Second, I can't recall the last time a judge said in an opinion "I'm only writing this part of the opinion because of the inevitable appeal." You can almost hear the resignation in the judge's voice that Oracle will bring a fruitless appeal despite his best efforts to stave off the wasted motion. I have to imagine that every appellate judge reading this paragraph will detect Judge Alsup's exasperation. That does not bode well for Oracle's chances on appeal.

___

Other reactions to the ruling:

* SCU's incoming new law professor Brian Love was quoted in the San Jose Mercury News as saying: "This is now effectively a total loss for Oracle, across the board...It's absolutely the best possible case for Google."

* EFF: No Copyrights on APIs: Judge Defends Interoperability and Innovation

Posted by Eric at 10:36 AM | Copyright | TrackBack

May 15, 2012

Granick on CISPA's Deficiencies (With Some of My Own Comments)

By guest-blogger Jennifer Granick (with comments from Eric)

[Eric's introduction: Some guest visitors to the blog need no introduction, and that surely describes Jennifer Granick (her Wikipedia page). She's cast huge shadows over cyberlaw in her various stints, including being a leading criminal defense attorney for technology crimes, an EFF attorney and director of Stanford's Cyberlaw Clinic. I'm so glad Jennifer was willing to share her unique perspective on CISPA. I have some remarks after hers. Jennifer has also posted a supplemental line-by-line commentary of CISPA.]

The Cyber Intelligence Sharing and Protection Act ("CISPA") is the latest example of a depressingly common situation in Washington DC -- well-meaning legislators unfamiliar with technology try to rush through a statute about a high-profile Internet issue (here, cybersecurity). Proponents of the bill say they want to faciliate information sharing between the federal government and the private sector. What they don't seem to understand is that existing laws already permit most kinds of cybersecurity information sharing. In their eagerness, the supporters of CISPA would undermine our existing system of accountability for sharing of private data and, by doing so, cause a number of unintended consequences that would harm both state and federal efforts to protect consumer privacy.

CISPA's Unintended Consequences: I firmly believe sharing cybersecurity information is a public good, which is why I have made a career of representing security professionals and hacker hobbyists who want to investigate and report on vulnerabilities. But CISPA (1) fails to comprehend the ways in which existing laws allow sharing, but with accountability; (2) runs roughshod over federal and state laws protecting privacy; (3) could inadvertently immunize retaliatory hack-back security techniques; and (4) creates an "inner circle" of private entities willing to share and share alike with the government, but leaves disfavored service providers in the cybersecurity dark.

(1) Current Law Does Not Interfere With Sharing for Security Purposes: The vast majority of what security professionals consider cybersecurity information is not personally identifing or protected from sharing by any law. Attack signatures, vulnerabilities, exploits and other classic computer security data are freely shareable. For the subset of data that may identify a particular individual, existing laws allow sharing. The most relevant laws, the Wiretap Act and the Electronic Communications Privacy Act, allow a provider to collect and share data for protection of the providers' rights or property. It is true that such sharing is subject to minor but long-standing privacy-enhancing conditions* which CISPA would simply dispose of.

[*FN: My line by line analysis of CISPA (link) highlights where in the text safeguards and dangers would be codified. I strongly oppose this legislation, but can envision a much better, streamlined, privacy respecting, bill that accomplishes the purported cybersecurity purpose.]

As for information protected by HIPAA, VPPA or FERPA, one would not ordinarily think such data is subject to CISPA disclosure and use, except that CISPA specifically calls out sensitive health, educational, firearms, library and bookstore records as the kind of information that private entities can be expected to disclose. Otherwise private information, including video rental records, book rentals, newspaper subscriptions, online reading or data protected by state consumer protection laws (like utility usage records) may freely be shared under CISPA, despite existing privacy rules and sharing safeguards.

(2) State Governments Should Oppose CISPA: States, especially California and New York, protect consumers and consumer privacy with statutes regulating the collection, use and disclosure of sensitive information. Such California laws include electronic surveillance statutes, Shine the Light notifications, Smart Meter utility data protection, the Financial Information Privacy Act, the Reader Privacy Act, Security of Personal Information Law and more. While a comprehensive review of state consumer protection rules that could be preempted by CISPA is beyond the scope of this blog post, it isn't hard to see how California, New York and other states might have serious, perhaps fatal, reservations about CISPA as it currently stands.

(3) CISPA Could Categorically Immunize Even Reckless, Privacy Invasive or Damaging Cybersecurity "Active Defense" Techniques. The definition of cybersecurity system is broad enough to include common "active defense" techniques like remote exploit of an attacking system in order to collect data about the attack, or denial of service attacks to take the offending system offline. For more discussion of those kinds of defenses, see this article in The Atlantic. The statute then categorically immunizes good faith use of such cybersecurity systems. So entities that recklessly use active defense or "hack back" technologies to exploit, disable or destroy attacking machines, even when those machines are innocent zombies controlled and misused by the actual attacker, have no incentive to behave responsibly.

(4) The Cybersecurity One Percent: CISPA sets up a heirarchy of network and service providers. At the bottom are those owned and operated by individuals, who get nothing out of the statute. Next are those entites the government doesn't feel like sharing with, for whatever reason--including the retaliatory motivation that the company hasn't been forthcoming with its own cybersecurity (and customer) data. At the top are the golden firms that get preferrential treatment in the form of state-of-the-art security information. The big businesses that support CISPA probably think they are going to be in the room and get the shiny apple. But CISPA instantiates inequities that the computer security community has been managing for over twenty years, problems which inevitably arise from secretive and selective distribution of important security information. See e.g. Schneier, "Full Disclosure of Security Vulnerabilities a 'Damned Good Idea" (Jan 2007); Microsoft Security Response Center: Announcing Coordinated Vulnerability Disclosure (July 22, 2010); National Infrastructure Advisory Counsel, Vulnerability Disclosure Framework (January 13, 2004); Andy Greenberg, Meet The Hackers Who Sell Spies The Tools To Crack Your PC (And Get Paid Six-Figure Fees), Forbes, March 21, 2012. CISPA proponents neither understand nor address the complexities of acheiving the worthy goal of cybersecurity information sharing.
________

Comments from Eric

Many commentators have drawn parallels between CISPA and SOPA, even though they putatively address very different issues (cybersecurity and IP infringement, respectively). I'd like to unpack some of the parallels. The most obvious parallel between the two laws: who thinks up crazy shit like this? As a prize for their creative thinking, the architects of CISPA and SOPA should get a one-way ticket away from Washington DC. Two other parallels between CISPA and SOPA:

1) No use case. I never understood SOPA's use case. Only one target was named: The Pirate Bay. However, the way it was drafted, SOPA wouldn't have applied to The Pirate Bay. So if SOPA was intended to shut down The Pirate Bay but the statutory drafting didn't reach that far, then the statute lacked any clear justification--and especially no payoff that would justify its multitudinous adverse collateral consequences.

Similarly, I'm not clear what problem CISPA is designed to solve. Indeed, some have said CISPA is a solution in search of a problem. If we can't define the problem clearly and succinctly, it's a good sign that either there's no justification for the law, or (more likely) someone is gaming the legislative system for their own benefit.

CISPA and SOPA have another parallel on this front: we don't understand the use case because the proponents never thought they had to justify the statute. In SOPA's case, the copyright owners expected members of Congress to pass the law without serious questions, which almost happened. When the copyright owners have so many financially supported friends in the corridors of power, they don't need to provide specific rationales for their requests; it's simply enough that the copyright owners wanted it, and their patrons are expected to deliver the quid-pro-quo on demand.

CISPA may not been such a blatant case of rent-seeking, but it too was designed to proceed without opposition because it was part of an anti-cyberwar effort. For reasons that remain entirely unclear to me, many DC insiders apparently have convinced themselves that we are waging a surreptitious cyberwar that the bad guys are winning. Perhaps there really is a cyberwar raging behind the scenes, but evidence of a cyberwar sure hasn't leaked outside the DC insider community. This makes me wonder if maybe there's a little too much paranoia running around in DC. Or, maybe there's rent-seeking behind the efforts to hype the cyberwar threat?

Worse, to the extent CISPA is an anti-cyberwar effort, it is poorly designed for that effort. At minimum, its definitions are way too broad to address just cyberwar concerns. One of my biggest objections to CISPA is that it defines cybersecurity issues to include ordinary Internet activities such as competitive scraping and sharing of copyrighted materials. The broad sweep of the bill only reinforces the lack of a clear use case about the problem it's trying to solve.

2) Hack of the Internet's infrastructure. SOPA attacked the Internet's basic infrastructure. Putting aside the poorly conceived domain name cutoff provisions that would have undermined the DNS's stability, SOPA was designed to deputize intermediaries to resolve problems they had little financial incentive to handle carefully. The result would be a massive circumscribing of socially legitimate behavior by intermediaries asked to intervene in problems they didn't care about.

In a different way, CISPA also hacks up the Internet's infrastructure. Over the decades, we have developed a delicate system of checks and balances on the government's ability to monitor its citizens' behavior. CISPA would completely gut that system, giving the government virtually any online information it wanted whenever it wanted it without meaningful restrictions on the government's ability to misuse the information. Thus, CISPA engages in the worst kind of Internet exceptionalism by turning the Internet into an all-you-can-eat smorgasbord buffet of information for ever-curious government officials, while presumably a more robust checks-and-balance system would still be in place offline. Making the Internet worse is not what we as Internet users want!

The resulting public outcry against SOPA and CISPA demonstrates that. The public at large does not want technologically clueless members of Congress messing up the Internet's infrastructure for uncertain/unclear payoffs. We give a lot of deference to Congress to screw things up, but when it comes to wrecking the Internet, THAT'S worth fighting against.

Posted by Eric at 02:07 PM | Copyright , Derivative Liability , Privacy/Security | TrackBack

May 14, 2012

The Dangerous Meme That Won't Go Away: Using Copyright Assignments to Suppress Unwanted Content--Scott v. WorldStarHipHop

By Eric Goldman

Scott v. WorldStarHipHop, Inc., 2012 WL 1592229 (S.D.N.Y. May 3, 2012)

Copyright law wasn't designed as a privacy enhancing doctrine, but sometimes plaintiffs try to repurpose copyright law anyway. This case is an interesting illustration of how copyright law might be used to reverse-engineer a right to forget, using legal tactics not dissimilar to those advocated (and later renounced) by Medical Justice. As such, this case provides an early warning sign of an emerging attack on publicly available truthful information using copyright law chicanery.

In November 2010, Scott's girlfriend and ex-girlfriend got into fisticuffs in a classroom. Scott joined in the melee and hit his ex-girlfriend multiple times. A classmate, Seymour, videotaped the altercation. Seymour then sent the video to the WorldStar website, which posted the video as "Disgraceful: College Fight In NYC Breaks Out Between A Guy, His Girl & Another Girl In Class! (Man Strong Arm's The Student. Hitting Her With Body Shots)." Unfortunately, the opinion is cryptic about whether Seymour posted the video directly or submitted the video to WorldStar for their posting--it would make a difference to the copyright analysis. The video appears to be offline now.

Then, things get really interesting. In December 2010, Seymour assigned the video's copyright to Scott. The opinion doesn't say why. It could be that Scott paid Seymour for this assignment as a cheap way to get legal control over the video; or it could be that Scott coerced Seymour into transferring the copyright to settle a lawsuit threat. Once armed with the copyright, Scott sent 512(c)(3) takedown notices to the websites hosting or linking to the video. See, e.g., this one to Twitter. Scott sent a defective takedown notice to WorldStar, which didn't respond in 12 days, at which point Scott sued. WorldStar brought a 12(b)(6) motion to dismiss. The court rejects the dismissal motion for the copyright claim and grants it for the publicity rights claim.

Copyright. WorldStar argued that Seymour granted it a license to the video before Seymour's copyright transfer to Scott, and thus Scott's acquisition of the video was subject to the then-existing license. The court rejects this argument because WorldStar didn't adequately show it had the required written license (required by 17 USC 205(e) necessary to withstand a subsequent acquisition).

This reinforces the importance of the facts around how WorldStar obtained the video. The opinion doesn't indicate if Seymour clicked through a mandatory non-leaky clickthrough agreement. If WorldStar used a mandatory non-leaky clickthrough agreement, then I'd argue (per UETA/E-Sign) that in fact there was a written license agreement in effect before the Seymour-Scott transaction. However, for WorldStar's argument to work, the license would need to be irrevocable. Otherwise, even if the license survived the acquisition, Scott can simply revoke the license post-acquisition. So while I think most UGC websites will have a "written" license sufficient to withstand the 205(e) attack, I think most UGC websites also don't have strong enough EULA provisions about retaining UGC once posted to avoid this attack. Note that users' rights to remove the videos they uploaded might be located in either the EULA or privacy policy, so both documents would need to be reviewed to reach a conclusion.

WorldStar also argued that Scott sent a defective 512(c)(3) takedown notice, and thus it never got the requisite knowledge of infringement. However, WorldStar didn't argue that it requested Scott resubmit a compliant notice as possibly required by 512(c) (given the nature of the alleged notice defects), and thus WorldStar can't get a 12(b)(6) dismissal on this point.

Publicity Rights. Scott's New York state publicity rights claim fails because Scott didn't allege WorldStar used the video for advertising purposes, and WorldStar's other activities were protected under the state law's newsworthiness exception. While dismissal is the right outcome, relying on the newsworthiness exception is a little disquieting. The newsworthiness exception applies often in content lawsuits (see, e.g., Parisi v. Sinclair and the trademark case BidZirk v. Smith) but not always. See Fraley v. Facebook as an example of how the newsworthiness exception has its limits. A much better grounds for dismissal would be the lack of commerciality in the video; Seymour had no obvious commercial interest in the video, and WorldStar had no more commercial interest in the video's "editorial content" than an ad-supported newspaper has a commercial interest in its editorial content.

Implications. This lawsuit provides a protocol for folks trying to suppress truthful negative information--acquire the copyrights to the content containing the unwanted information, and then use the newly created threat of copyright infringement to force that information off the Internet. While this is a disconcerting protocol, it probably won't work in all circumstances. For example, the protocol probably works better for visual/aural content than purely textual content because (a) people need to see/hear some things with their own eyes/ears, and (b) it's much easier for others to extract and repeat textual information without running afoul of copyrights. Nevertheless, the post-publication acquisition protocol works even better than Medical Justice's now-retired pre-publication acquisition approach because it doesn't rely on legally dubious pre-assignments of not-yet-extant works, plus it can be activated only in response to specific problematic content. Thus, we need to vigilantly monitor the ecosystem for potential abuses of this protocol.

UGC sites (and especially review sites) could undercut the protocol by restricting users' ability to take down content in response to legal duress. Ripoff Report famously provides its authors with no power to delete their reviews, an aggressive and sometimes questionable move that does avoid the problems identified here. If a blanket restriction on users' editing/deleting of their own content is too strong, UGC sites could limit this attack by restricting editing/deleting if the author assigns/transfers the copyright in the work, i.e., a kind of springing conditional irrevocability to the user's license to the UGC site if the user transfers the copyright. I doubt many UGC sites will undertake such an effort now, but if we see widespread misuse of the protocol, UGC sites should undertake more drastic measures to preserve their sites' integrity.

For more on the social values that this protocol threatens, see my essay on the Regulation of Reputational Information.

UPDATE: The Katz v. Google lawsuit appears to be in the same genre.

Posted by Eric at 09:15 AM | Content Regulation , Copyright , Derivative Liability , Licensing/Contracts , Publicity/Privacy Rights | TrackBack

May 12, 2012

New York Judge Slams Bittorrent Copyright Plaintiffs – K-Beech; Malibu Media; and Patrick Collins v. Does

[Post by Venkat Balasubramani]

K-Beech, Inc. v. Does 1-37, CV 11-3995 (E.D.N.Y.)
Malibu Media, LLC v. Does 1-26, CV 11-1147 (E.D.N.Y.)
Malibu Media, LLC v. Does 1-11, CV 11-1150 (E.D.N.Y.)
Patrick Collins, Inc. v. Does 1-9, CV 11-1154 (E.D.N.Y.)

Order & Report & Recommendation (May 1, 2012)

A trio of bit torrent plaintiffs were smacked around (somewhat brutally) by a federal judge in New York last week. The order addressed requests for early discovery filed by plaintiffs in three separate copyright lawsuits involving approximately 50 Doe defendants. It also addressed the requests of Doe defendants to quash subpoenas which were issued in a fourth action after the plaintiff obtained leave to issue early discovery.

The order is scathing and takes more than a few shots at K-Beech’s “rambling motion papers [that] often lapse into the farcicial.”

End result: the court dismisses one case in its entirety, and cuts the remaining three cases down to one Doe defendant, finding that joinder is improper.

Here is a summary of the key points in the court’s order:

1. An IP address does not conclusively identify an infringer: the court says that unlike in a university setting or in earlier times, these days, given the proliferation of wi-fi, the fact that someone’s IP address was connected to allegedly infringing activity does not mean that the person whose IP address was used is the infringer. (“[A] single IP address usually supports multiple computer devices – which unlike traditional phones can be operated simultaneously by different individuals.”) Accord Johnson v. Microsoft Corp., 2009 WL 1794400 (W.D. Wash. June 23, 2009); in contrast, the FTC considers IP addresses to be personally identifiable information. (For what it's worth, more than a few courts have accepted the view--at least at the early stages of litigation--that an IP address identifies the putative infringer.)

2. Improper litigation tactics: at least one of the plaintiffs (K-Beech) engaged in improper litigation tactics. One of the Doe defendants contacted K-Beech to try to resolve the dispute. Apparently, K-Beech employed the usual threat that a defendant’s name could be tied to a porn lawsuit and persuaded the plaintiff to provide (under the auspices of settlement) “unfettered access to [Doe’s] computer . . . employment records [etc.]” K-Beech then failed to respond to the Doe defendant's communications regarding settlement. In response to Doe’s allegations, K-Beech’s counsel failed to present proof that it or its investigators didn't engage in this conduct. The court notes that Doe’s experience mirrors the experience of at least one other Doe defendant in a file-sharing case in New York. The court is not happy:

[t]his course of conduct indicates that the plaintiffs have used the offices of the Court as an inexpensive means to gain the Doe defendants’ personal information and coerce payment from them.

3. No copyright registration: the same plaintiff who engaged in the tactics referred to above did not have an actual copyright registration—it sought to rely on an application for registration (which is not sufficient in the Second Circuit). Although K-Beech was smacked down for this reason in another case in New York, it tried to remedy this by adding “conclusory trademark claims.” [??] When K-Beech's briefing veered into discussing reputational harm from unauthorized downloads, the court in a footnote points out that the owner of K-Beech doesn’t necessary have the most stellar reputation:

it is worth noting that the owner of K-Beech Inc. (and apparent inspiration for the K-Beech mark) is Kevin Beechum . . . . It appears that this is the same Kevin Beechum who testified in federal prosecutions about his experience vandalizing adult retail video stores to help extort protection payments from their owners.

D’oh!

4. Joinder is inappropriate: the court says that plaintiffs should not be able to sue multiple defendants in the same suit. Plaintiffs tried to rely on the “swarm” theory--which has been accepted by some courts and rejected by others--under which file-sharing defendants who were a part of the same interactions can be sued together in the same lawsuit. Here, the court notes that plaintiffs’ own allegations undermine their swarm theory. For example, the downloads were often weeks or months apart:

even assuming that the John Does are the actual infringers, the assertion that defendants were acting in concert rests upon a thin reed.

The court declines to exercise its discretion to join the Doe defendants together.

5. Plaintiffs trying to avoid separate filing fees: the court notes that plaintiffs have avoided more than $25,000 in filing fees by filing mass-defendant lawsuits, as opposed to suing the Doe defendants individually. When you take other cases in the same district into account, this amount is closer to $100,000. (The court notes that this approaches millions when the suits nationwide are considered.)

6. Don’t try to take the moral high-ground, porn plaintiffs:

In its papers, counsel for K-Beech equate its difficulties with alleged piracy of its adult films with those faced by the producers of the Harry Potter books, Beatles songs and Microsoft software, and compare its efforts to collect from alleged infringers of its rights to the efforts of the FBI to combat child pornography. In an ironic turn, the purveyors of such works as “Gang Bang Virgins,” explain how its efforts in this matter will help empower parents to prevent minors from watching “movies that are not age appropriate.” . . . It is difficult to accord plaintiff, which features “Teen” pornography on its website, the moral high-ground in this regard.

Ouch. As mentioned above, the court dismisses K-Beech’s lawsuit sua sponte in its entirety. The dismissal is without prejudice, but K-Beech should think twice about filing another file-sharing lawsuit in New York. The other defendants can pursue cases against defendants on an individual basis (they must file separately), and the Does (other than unlucky Doe No. 1) are dismissed from the three lawsuits. The court appears open to appointing counsel from its pro bono panel for Doe No. 1 (and I’m guessing future Doe plaintiffs).

There are a slew of these lawsuits pending around the country so it’s tough to say anything definitive, but courts certainly seem to be reaching the boiling point with bittorrent plaintiffs (the abusive litigation tactics don’t help). Check out the TorrentLawyer blog for a few recent examples:

- Malibu Media, LLC cases go down in FLAMES in Virginia

- THIRD DEGREE FILMS, INC. attorney perhaps facing a THIRD DEGREE FELONY

Also, as a follow up to the case in New York, Twitter user "fightcopyrighttrolls" reports on what seems to be an inexplicable strategic decision by lawyers for one of the plaintiffs in this case.

[A note to lawyers: judges compare notes, directly or indirectly.]

Other coverage:

Ars Technica: Furious judge decries "blizzard" of copyright troll lawsuits

Torrent-Freak: Judge: An IP-Address Doesn’t Identify a Person (or BitTorrent Pirate)

Previous posts:

Court Nukes Another Mass Defendant File-Sharing Lawsuit -- Digiprotect v. Does
Copyright Doe Defendant Can’t Quash Disclosure Subpoena Anonymously—Hard Drive Productions v. Does

Posted by Venkat at 09:48 AM | Copyright , Privacy/Security

May 10, 2012

An Unmasking Effort Gets Gutted Some More – Art of Living Foundation v. Does

[Post by Venkat Balasubramani]

Art of Living Foundation v. Does, 10-cv-05022-LHK (N.D. Cal.; May 1, 2012)

I posted earlier about the Art of Living Foundation’s (AOLF) efforts to unmask online critics (posting psueudonymously as ‘Skywalker’ and ‘Klim’). In early rulings, the court rebuffed AOLF’s efforts. AOLF originally brought defamation and trade secrets claims. The court held that any allegedly defamatory statements were protected opinion, and that AOLF failed to identify trade secrets with particularity. The court also stayed discovery of defendants’ identities, finding that the balance of equities favored the preservation of anonymity. (Here's my prior blog post on the case: "Spiritual Group's Attempt to Unmask Online Critics Goes South.")

AOLF filed an amended complaint, dropping the defamation claims but adding claims for copyright infringement. The amendment also specified the allegedly misappropriated trade secrets. With respect to the copyright claim, AOLF alleged that republication of certain “lesson plans” by the Doe defendants constituted copyright infringement and misappropriation of trade secrets.

In a further development in this lawsuit, the court granted the Does’ request to dismiss the copyright claims. The trade secrets claims largely survive, although the court notes that they aren’t the strongest.

Copyright claims: AOLF did not present any evidence that one of the two defendants was involved in any way in republishing the lesson plans, or related notes, so this defendant (Klim) is awarded summary judgment. Skywalker, the second Doe defendant, admitted to posting the text of the lesson plans on his blog. Although he wasn’t entitled to summary judgment on the same basis as Klim, he challenged AOLF’s ownership of the copyrights at issue.

The court finds that the registration certificate presented by AOLF was not prima facie evidence of ownership (because the registration was obtained more than five years after publication). The court goes on to find that the AOLF entity that brought the copyright claim was not the owner of the copyrighted material. There’s an Indian AOLF entity, and one of the declarations let slip that the lesson plans at issue were created “for the benefit of the Art of Living Foundation in India with the understanding that the Art of Living Foundation in India would own [all of the rights to the lesson plan].”

AOLF (US) also tried to argue that the Indian entity assigned the US entity the copyright, but AOLF (US) failed to produce any written record or an assignment, or even that such a writing existed. Even a confirming email would have been plenty, but for whatever reason AOLF (US) was unable to muster evidence on this point.

Trade secrets claims: Defendants continue to batter away at AOLF’s trade secrets, but the court finds that AOLF made the minimal necessary showing that its teaching methods: (1) have independent economic value and are not generally available; and (2) are the subject of reasonable confidentiality restrictions. In particular, AOLF came forward with evidence that although the teaching methods were drawn on “conventional concepts and terminology of Hindu mysticism,” AOLF “incorporate[d] many additional and novel elements.” With respect to confidentiality, AOLF alleged that it required its teachers to sign confidentiality agreements. Although the court expresses some skepticism about the overall merits of AOLF’s trade secrets claims, those claims are sufficient to move forward at this time. However, the court does include language in its order inviting defendants to move for summary judgment on the issue of whether AOLF’s information is truly a trade secret, or indistinguishable from general knowledge of the public or those skilled in the relevant field. The court also raps AOLF on the knuckles for trying to take a third bite at the designation of trade secrets apple. AOLF already submitted an amended designation of trade secrets and sought to amend this designation again. The court says that although it will allow the amendment, this is the last time (“the court puts [AOLF] on notice that this is its final opportunity to amend its trade secret designation with particularity”).

Finally, the court grants the motion to strike as to Klim, finding that AOLF put forth no evidence that Klim was involved in any way in the alleged dissemination of AOLF trade secrets.

SLAPP fees: Finally, the court grants defendants' request for fees as to the defamation/trade libel claim. Although AOLF amended its complaint and dropped the defamation and trade libel claims, there was no evidence that AOLF achieved its goals with respect to these claims through other means. AOLF’s amendment of its complaint to exclude the defamation and trade libel claims was “tantamount to a voluntary dismissal.” (Defendants brought a motion to dismiss and a motion to strike and the court earlier granted the motion to dismiss but declined to reach the merits of the motion to strike.) End result: defendants can seek fees for dismissal of the defamation and trade libel claims.
_____

This is another example of how things can go wrong when someone tries to squelch speech online. Granted, in countless other cases, these types of claims would have resulted in default judgments without anyone batting an eye, but the Does were represented by counsel (and both Public Citizen and EFF appeared as amici). As a result, the balance of power changed significantly. (It also helps to have a thoughtful judge—in this case Judge Koh—who takes a close look at the issues and seems mindful of the speech implications of the judge's rulings.)

It’s interesting that AOLF’s efforts to unmask the Does were premised in part on AOLF’s copyright claims. These turned out to be insufficient at the end of the day. Courts routinely grant requests to unmask Doe defendants when copyright claims are involved, but this ruling is a reminder that judges should take a close look at those requests, even when the other side may not be represented by counsel. For another example, see Maximized Living v. Google.

Finally, the court’s order makes a reference to how many times the webpages containing the alleged trade secrets were viewed: 147 and 351 in July and August 2010, respectively (before the pages were removed in response to a takedown request sent to WordPress). Given the cloud around AOLF’s copyrights and the multiple entities involved (the takedown request was sent from Vyakti Vikas Kendra India), one wonders about the propriety of the takedown requests. But setting this aside, these statistics raise the question of whether AOLF’s significant expenditure of fees to squelch criticism of it was even remotely worth it. (I would be shocked if their answer today was “yes”.) Compare Pitale v. Holstine.

Given the court’s ruling on the fees issue, and its hints around the strength of AOLF’s trade secrets claims, this case should quickly head towards a settlement. The big question is whether everyone will just go their separate ways, or if AOLF will be writing a check to the Does (or their counsel).

Posted by Venkat at 01:37 PM | Content Regulation , Copyright , Privacy/Security , Trade Secrets

April 30, 2012

Comments on the Megaupload Prosecution (a Long-Delayed Linkwrap)

By Eric Goldman

[I've been working on this linkwrap for 3 months. Linkwraps rarely improve with age. At this point, it's not even clear the US government has a case due to its repeated gaffes. Nevertheless, I've decided to post this linkwrap now because--regardless of its disposition--the Megaupload prosecution is an incredibly important Cyberlaw development that almost certainly will make my top 10 year-end list.]

While there could be a small amount of provable criminal copyright infringement—under our modern overexpansive criminalization of ordinary daily activities—for infringing files the Megaupload principals uploaded themselves, the government ordinarily wouldn't have cranked up its massive machinery for those violations. After all, millions of Americans routinely commit violations like that, and mass panic would be at hand if the government exercises its prosecutorial discretion so loosely.

Instead, the government's prosecution of Megaupload demonstrates the implications of the government acting as a proxy for private commercial interests. The government is using its enforcement powers to accomplish what most copyright owners haven't been willing to do in civil court (i.e., sue Megaupload for infringement); and the government is doing so by using its incredibly powerful discovery and enforcement tools that vastly exceed the tools available in civil enforcement; and the government's bringing the prosecution in part because of the revolving door between government and the content industry (where some of the decision-makers green-lighting the enforcement action probably worked shoulder-to-shoulder with the copyright owners making the request) plus the Obama administration’s desire to curry continued favor and campaign contributions from well-heeled sources.

The resulting prosecution is a depressing display of abuse of government authority. It’s hard to comprehensively catalog all of the lawless aspects of the US government’s prosecution of Megaupload, so I’ll just focus on two:

1) Trying to hold Megaupload criminally liable for its users' actions. Criminal copyright infringement requires willful infringement, a very rigorous scienter level. I discuss the implications of this high scienter requirement in more detail in my decade-old article on warez trading. Megaupload’s business choices may not have been ideal, but Megaupload has a number of strong potential defenses for its users' activities, including 512(c), lack of volitional conduct and more. Whether it actually qualified for these is irrelevant; Megaupload’s subjective belief in these defenses should destroy the willfulness requirement. Thus, the government is simply making up the law to try to hold Megaupload accountable for its users' uploading/downloading.

2) Taking Megaupload offline. Megaupload's website is analogous to a printing press that constantly published new content. Under our Constitution, the government can’t simply shut down a printing press, but that's basically what our government did when it turned Megaupload off and seized all of the assets. Not surprisingly, shutting down a printing press suppresses countless legitimate content publications by legitimate users of Megaupload. Surprisingly (shockingly, even), the government apparently doesn't care about this “collateral,” entirely foreseeable and deeply unconstitutional effect. The government's further insistence that all user data, even legitimate data, should be destroyed is even more shocking. Destroying the evidence not only screws over the legitimate users, but it may make it impossible for Megaupload to mount a proper defense. It's depressing our government isn't above such cheap tricks in its zeal to win.

The government has also been shockingly cavalier about the collateral consequences of its prosecution on the marketplace. Legitimate web hosts, and their investors, are quaking in their boots that they will be next. It doesn’t help that the content industry is circulating a “kill chart” of its next desired targets.

In the end, the Megaupload prosecution demonstrates that SOPA advocates are inevitably going to win. The content owners’ ire toward “foreign rogue websites,” combined with the administration’s willingness to break the law, if necessary, to keep content owners happy, leads to lawless outcomes like the Megaupload prosecution and ICE’s domain name seizures. I'll say more about this in my long-delayed SOPA linkwrap.

Some links about Megaupload or the situation more generally worth checking out:

Source Materials

* Superseding indictment

* News.com: Some of the assets seized

Analysis of the Enforcement

* EFF: Megaupload Goes to Court: A Primer

* Ars Technica: How can the US seize a Hong Kong site like Megaupload

* Techdirt: Megaupload Details Raise Significant Concerns About What DOJ Considers Evidence Of Criminal Behavior

* News.com: How did the FBI get access to internal Megaupload conversations?

* Ars Technica: Megaupload: Erasing our servers as the US wants would deny us a fair trial

Collateral Effects

* Phil Corwin on collateral effects

* News.com: FileSonic changed its sharing practices in light of the prosecution

* TorrentFreak: RapidShare Publishes Anti-Piracy Manifesto for Cyberlockers

* RWW: Feds to Megaupload Users: Tough Luck

Revolving Doors/Patronage

* News.com: Nobody wanted MegaUpload busted more than MPAA

* News.com: U.S. Attorney chasing MegaUpload is former piracy fighter

General

* CMLP site on Megaupload

* Irina D. Manta, The Puzzle of Criminal Sanctions for Intellectual Property Infringement, 24 Harv. J.L. & Tech. 469 (2011)

Posted by Eric at 09:30 AM | Copyright , Derivative Liability | TrackBack

April 29, 2012

512(f) Plaintiff Can't Get Discovery to Back Up His Allegations of Bogus Takedowns--Ouellette v. Viacom

By Eric Goldman

Ouellette v. Viacom Intern., Inc., 2012 WL 1435703 (D. Mont. April 25, 2012)

Ouellette sued Viacom for sending allegedly bogus takedown notices for videos he posted to YouTube. His case has gone nowhere. In 2011, his ADA claims were tossed. Then, earlier this year, the magistrate judge rejected his 17 USC 512(f) claim. In this ruling, the judge adopts the magistrate's report and closes the case.

The disposition of Ouellette's 512(f) claim is hardly surprising. Putting aside his status as a pro se, even well-lawyered 512(f) plaintiffs rarely make any progress in court after the Ninth Circuit Rossi case required subjective bad faith as an element of a 512(f) claim. With this insurmountable mountain in his way, Ouellette never really had a chance.

Like so many plaintiffs, Ouellette argued that he can't fully allege Viacom's bad scienter until he gets discovery to see what they did and said. Not surprisingly, the court doesn't want to hear it:

Contrary to Ouellette’s assertion that interrogatories are the correct means for him to discover Viacom’s intent in issuing its takedown notice to Youtube.com, § 512(f) requires Ouellette to allege facts, at the pleading stage, that demonstrate that Viacom acted without a good-faith belief.

Stated differently, unless the 512(f) plaintiff has smoking-gun evidence of the copyright owner's bad intent before filing the complaint, the plaintiff has virtually no chance of getting a 512(f) claim into discovery.

The court rejects Ouellette's other contentions, including:
* Viacom's takedowns of other users' content is relevant to his situation. The court only considers Viacom's scienter with respect to the takedowns of Ouellette's content.
* Viacom's failure to sue Ouellette after the takedowns tacitly admitted that Ouellette had engaged in fair use. Obviously, Viacom could have many legitimate reasons why it didn't sue Ouellette for his uploads.

Ouellette was a lousy test case for 512(f), but his case reminds us that 512(f) plays effectively no role in 17 USC 512's overall design of checks-and-balances.

Posted by Eric at 11:48 AM | Copyright , Derivative Liability | TrackBack

April 24, 2012

Internet Intermediary Law Slides from Stanford Guest Lecture

By Eric Goldman

I recently guest-lectured at an Internet Law course at Stanford, run by Jennifer Granick and Richard Salgado. My slides.

Jennifer asked me to cover 47 USC 230 and 17 USC 512 in a single session. I know other Internet Law professors combine the topics, but I normally don't in my Internet Law course. When I cover online copyright liability, I discuss Section 512 as a defense to secondary copyright infringement. Later, I talk about publication torts, including defamation, and then talk about Section 230 as an Internet exceptionalist approach to publication torts based on third party content. I do have a wrapup slide at the end of my Section 230 (included in the slides linked up) that contrasts Sections 512 and 230, but I have never taught them together. I thought it worked out nicely, and it gave me a chance to show different ways plaintiffs are attacking UGC websites. Check it out.

Posted by Eric at 03:27 PM | Content Regulation , Copyright , Derivative Liability , Trademark | TrackBack

April 17, 2012

MapleStory Enforcement Action Leads to Ridiculously Large Anti-Circumvention Damages--Nexon v. Kumar

By Eric Goldman

Nexon America Inc. v. Kumar, 2012 WL 1116328 (C.D. Cal. April 3, 2012)

It can be disconcerting when UGC websites turn into IP enforcement plaintiffs. Perhaps the biggest offender has been Craigslist, which has brought numerous ill-advised lawsuits (see, e.g., this post) that have developed novel Internet law precedent that seems destined to come back and bite Craigslist in the ass. But I can think of many other ill-advised enforcement actions by websites that are normally defendants, including eBay, Facebook and Zynga. Just remember, guys: live by the sword, die by the sword.

Today's opinion is a default judgment brought by MapleStoy, a MMORPG, against UMaple, a service that runs an unauthorized MapleStory server, i.e., UMaple users can play MapleStory (using the MapleStory client software) without ever touching MapleStory's servers. UMaple then solicits "donations" that lead to enhanced privileges in the UMaple environment.

As usual in a default judgment, the court doesn't question the absentee defendants' liability. Thus, the action moves to damages.

MapleStory sought profit disgorgement under copyright law. All that MapleStory can make stick is UMaples' AdSense revenue, a paltry $400. MapleStory can't get at any of the alleged donations because it can't connect the dots that the revenue was solely attributed to UMaple and not other properties or activities:

Given the myriad electronic commerce transactions allowing for-even encouraging-payment processing through trusted third-party processors like PayPal, AlertPay, and Plimus, the Court could just as easily infer that the bulk of payments Kumar received through these services were earned through legal means of electronic commerce.

It's rare to see a judge so skeptical in a default judgment. This suggests that MapleStory's advocacy failed to engender a high degree of sympathy. Instead, it looks like MapleStory's advocacy (handled by a team from Mitchell, Silberberg & Knupp) alienated the judge. Later in the opinion, the judge calls out MapleStory's lawyers for their arguments about the appropriate anti-circumvention damages calculations in various precedent cases. The judge says ominously that the advocacy led "the Court to question very seriously whether Plaintiff intended to actively mislead the Court or whether these oversights were merely the result of poor legal research." If it weren't obvious, neither conclusion would be a credit to MapleStory's lawyers. The worst part is that no stretching was required in a layup case like this. It's a default judgment, and judges will usually bless all reasonable requests.

After a paltry copyright infringement damages award, the opinion turns to anti-circumvention damages. Dun dun DUN. 17 USC 1203 sets a statutory damages minimum of $200 per act of circumvention. UMaples' client, the "UMaple Launcher," allegedly bypassed the access controls in MapleStory's client software. UMaple had 17,938 users. At $200/user (assuming 1 act of circumvention per user), the tally reaches a total of $3.5M+ in statutory damages, but the judge doesn't think this is right:

even the minimum statutory amount awardable under the DMCA in this case [is] a significant windfall to Plaintiff far in excess of any amount necessary to deter future infringing conduct. Further, the minimum award here likely bears little plausible relationship to Plaintiff's actual damages.

Nevertheless, the judge had no choice based on the formula it felt was binding, so this produces a massive anti-circumvention award. If it were collectible, it would be quite noteworthy as one of the biggest anti-circumvention awards of all time. But, it's not collectible.

As a final dis of the plaintiffs, the judge rejects the attorneys' fee award automatically produced by a formula in the local rules (about $71k). Instead, the judge only promises to award actual fees incurred.

It's hard for the plaintiff to feel good about this win. You don't expect to see such palpable skepticism from a judge when the defendant doesn't even show to protect its own interests. But this case does provide an excellent example of the ridiculousness of anti-circumvention statutory damages. $3.5M+ can't be the right damages award in this case, and it's so guffaw-inducing that it further erodes the legitimacy of our copyright rules.

Posted by Eric at 09:00 AM | Copyright , Virtual Worlds | TrackBack

April 05, 2012

Second Circuit Ruling in Viacom v. YouTube Is a Bummer for Google and the UGC Community

By Eric Goldman

Viacom International, Inc., v. YouTube, Inc., 10-3270-cv, 2012 WL 1130851 (2d Cir. April 5, 2012). The companion case is the Football Association Premier League Ltd. v. YouTube, 10-3342-cv

Overview

After five years in the courts, the Viacom v. YouTube litigation has finally produced an appellate opinion. In my opinion, the result is a loss for Google/YouTube and the UGC community generally. While the court largely agrees with many of YouTube's contentions (and the ruling of the lower court), it nevertheless revives the litigation, ensuring that Google will spend millions of dollars more over the coming months/years.

Furthermore, the opinion identifies at least four "holes" in 512(c) coverage that future plaintiffs will surely attempt to exploit. (Smoking-gun internal emails; willful blindness; right and ability to control; and content syndication). This ensures that other UGC websites will spend a lot of money upfront to try to shut down those holes and spend even more money in litigation to demonstrate that it avoided those holes. So, on balance, I'm characterizing this opinion as a loss for the UGC community because this ruling increases the industry's costs even if the substantive contours of 512 don't change.

Given that the Second Circuit expressly disagrees with the Ninth Circuit's UMG v. Shelter Capital ruling on the right and ability to control issue, I expect future 512 cases will be brought in the Second Circuit, not the Ninth Circuit. I'm not sure if this conflict is strong enough to get the case to the Supreme Court if Google chose to try.

Most importantly, this opinion exposes a structural deficiency of the 512(c) safe harbor. The statute's simply too long and detailed, and if a defendant fails to satisfy each and every element, the safe harbor is lost completely. This is reminiscent of military strategy and information security: the defense has to work equally well across its entire border, while the adversary can concentrate its attack and only has to succeed on one point of attack to win. The same is true with a 512(c) defense. So, it doesn't matter that YouTube won most of the points of contention; if any single point of contention fails, YouTube's 512(c) defense fails. As I've insisted before, this provides a good lesson for drafters of safe harbors and immunities--to work effectively, the safe harbors/immunities must be pithy and categorical, or else they create too many potential points of failure.

Even though Viacom won this ruling, I still don't understand how Viacom is making progress towards any strategic objective that matters to it. Viacom long ago conceded that it didn't object to YouTube's practices after 2008 (after it got access to Content ID). Indeed, Viacom gets upset with YouTube when it removes Viacom's posts made for marketing purposes. And Viacom just expanded its licensing arrangements with YouTube. At this point, Viacom is very clear that it doesn't want YouTube to go away, nor does it want any structural changes to YouTube's current practices. So what the hell is this fight about? Viacom might still look at this lawsuit for its cash value, but it's hard to be sympathetic towards that or see that as a big strategic objective. Viacom might be looking at this case to establish favorable precedent, but it picked a well-funded and determined defendant to make the point, and the Second Circuit ruling--though opening the door for copyright plaintiffs seeking to disqualify 512(c) defenses--doesn't contain a big broad pronouncement that would constitute a strategic win for Viacom. The whole lawsuit is a big waste for all concerned, and the fact the parties can't settle this case after 5 years of costly trench warfare continues to baffle me.

[UPDATE: This post is unintentionally a little contrarian; many folks see this ruling as a win for Google and the Internet. One possible explanation for this difference is our starting baseline.

If your starting point is Viacom''s summary judgment brief and some of the extreme and ridiculous arguments it makes, this opinion is a stunning and quite satisfying rebuke of that brief and those arguments. The opinion bristles with hostility towards most of Viacom's central arguments.

However, my baseline is the Shelter Capital case, which addressed many of the same topics and already established, as Ninth Circuit law, most of the conclusions that people are viewing as wins in this opinion. Compared to the Shelter Capital baseline, this opinion creates additional holes in 512's coverage. That's why I view this opinion as a bummer. In the end, this opinion narrows the grounds of 512 fights, and that's a good thing; but because it opens up new grounds for plaintiffs to exploit, this opinion pushes back--by many years--the day when the safe harbor preempts copyright owners from bringing meritless yet ruinous anti-UGC lawsuits. To me, that's a clear loss for the Internet, no matter how many points of contention YouTube actually won today.]

Analysis of the Court's Discussion

512(c)'s Applicability to Direct and Secondary Infringement

One of the most important rulings of the court comes in an off-hand remark with minimal citation support on page 33: "The District Court correctly determined that a finding of safe harbor application necessarily protects a defendant from all affirmative claims for monetary relief." This is one of the most significant questions in 512(c) jurisprudence: does 512(c) cover only direct infringement, or both direct and secondary infringement? Most courts have assumed the latter without ever saying so, but here the court (echoing, but curiously not citing, the Shelter Capital case) explicitly says 512(c) applies to all flavors of infringement. This makes the safe harbor potentially dispositive to the case--if YouTube gets it, Viacom loses any claim to money damages and, at best, can only get a meaningless limited injunction.

Knowledge of Infringing Activity

The opinion defines three types of service provider knowledge about infringement that might disqualify the service provider from 512(c):

1) actual knowledge of specific acts of infringement. The court calls this a subjective knowledge standard.
2) "red flags" knowledge of specific acts of infringement. The court calls this an objective knowledge standard. I've long argued that the "red flags" standard has evaporated in practice because, objectively, it's impossible for anyone other than the content owner to look at a specific item of content and determine if it's legitimately posted or not. In fact, even content owners can't figure this out for themselves; Viacom itself repeatedly mistakenly identified which items of its own content were properly or illicitly posted to YouTube. If the content owner can't make that determination, I'll argue that objectively no one else could do so either.
3) willful blindness towards specific acts of infringement. Because of the nature of willful blindness, by definition it occurs in situations where the service provider otherwise doesn't have subjective or objective knowledge of the infringing activity. Unfortunately, the court doesn't say what service provider activities would demonstrate willful blindness, and many of us are scratching our heads wondering how willful blindness can occur when the service provider lacks actual or red flags knowledge. Combined with the Tiffany v. eBay contributory trademark ruling, it shows the Second Circuit is obsessed with willful blindness (though it didn’t define willful blindness there either—gee, thanks). The Ninth Circuit had a brief and oblique reference to willful blindness in the Shelter Capital opinion, but my guess is that plaintiffs will like the Second Circuit's express discussion about willful blindness even better than they liked the Ninth Circuit's casual reference.

The court identifies three pieces of evidence that YouTube may have had disqualifying knowledge:

* emails from Patrick Walker asking the team to look for and remove Football League clips
* an email from Jawed Karim indicating that there were Viacom clips on the site that may have been "blatantly illegal"
* an email exchange between Chad Hurley and Steve Chen debating whether to remove clips now or later.

The court expressly says that this evidence may not be enough for Viacom to show disqualifying knowledge (see FN9), but it is enough to get to a jury.

More generally, these emails remind us that YouTube was an unsophisticated start-up in its early days. They didn't have legal counsel reviewing these emails or answering its questions about clip removals. Most UGC start-ups now know that these conversations shouldn't be taking place over email, there should be a tightly enforced email retention policy, and active legal counsel is essential from day 1. But the modern protocol also mean that launching defensible new UGC start-ups is much more expensive.

This is especially true for UGC start-ups trying to avoid the willful blindness doctrine; I criticized the Tiffany v. eBay opinion for endorsing eBay's very expensive anti-infringement infrastructure and implicitly requiring start-ups to maintain a similarly expensive infrastructure. This opinion may have the same adverse economic consequences for other UGC start-ups trying to minimize allegations of willful blindness in the copyright context.

Because the ruling creates more ways for plaintiffs to get to a jury in 512 cases, this ruling also means 512 litigation--even if the defendant succeeds--is going to be more expensive. The needle-in-haystack hunt for smoking gun emails means both parties will spend a lot on discovery (a point I complained about in the Shelter Capital case too). Furthermore, with respect to willful blindness, unless courts aggressively police plaintiffs' allegations, it seems like plaintiffs can use a willful blindness allegation to defeat a 12(b)(6) dismissal motion; and if they can find any colorable evidence, plaintiffs can use that to defeat summary judgment and force jury trials in many future 512(c) cases.

[UPDATE: the willful blindness discussion in this case, and our confusion about what might possibly constitute it, reminds me a little of Justice Scalia's "tertium quid" reference in Walmart v. Samara. By adding another category of knowledge but not defining it, this opinion adds substantially to the transaction costs for a category that may not exist in the real world. The judges may be happy with themselves that they've done a more thorough taxonomizing job, but everyone else is miserable trying to figure out what belongs in that taxonomical node.]

Right and Ability to Control

The court blazes its own trail on what constitutes a service provider's disqualifying "right and ability to control" infringing activity. It disagrees with YouTube, the lower court and the Ninth Circuit's Shelter Capital case, all of which held that a service provider's right and ability to control only applied when the service provider had specific knowledge of the infringing activity. But the Second Circuit also disagrees with Viacom's proposition that "right and ability to control" imports its meaning from the common law vicarious infringement test. The court rightly recognizes that would render the statute internally contradictory.

So the court agrees with no one. Given that it rejected everyone else's definitions, we might expect the court to carefully lay out what it thinks the phrase means. Sadly, no. The opinion doesn't provide an express definition of what qualifies as the "right and ability to control," instead sending that issue back to the district court to figure out both the standard and whether YouTube met it. The clearest clue the court provides about the standard is it "involve[s] a service provider exerting substantial influence on the activities of users, without necessarily—or even frequently—acquiring knowledge of specific infringing activity." I have no idea what that means, other than that it's open season for plaintiff fiestas.

[UPDATE: Sherwin Siy and I had an exchange on Twitter about this:

@SherwinPK: I don't think that "exerting substantial influence on activities of users" is "open season." A bit vague, yeah, but bounded
@ericgoldman OK, what you think "exerting substantial influence on activities of users" means? That's the goal of every UGC site!
@SherwinPK Not at all. Cybernet, for instance, had the OSP literally giving pointers on layout and content. That's substantial influence.
@SherwinPK Youtube doesn't exercise an editorial function wrt to user videos. That's why there's so much dreck.
My private reply: "That's not how the plaintiffs will put it! They will argue top X lists and exhortations to post constitute "substantial influence""]

Stored at a User's Direction

The court rejects several of Viacom's arguments that YouTube's automated handling of user-supplied videos wasn't stored at the user's direction, including YouTube's transcoding and playback functions and its display of thumbnails in a "related videos" module. However, the court leaves open the possibility that YouTube's "syndication" of user videos didn't qualify for 512(c). Specifically, YouTube licensed 2,000 user videos to Verizon Wireless. It’s unclear if any Viacom videos were included. That fact question goes to trial. If no Viacom videos were included, Viacom won't get any benefit from this exception. However, the ruling leaves open future fights over what constitutes "syndication" as a way of bypassing 512(c). More plaintiff fiestas.

Case Library

Posted by Eric at 01:33 PM | Copyright , Derivative Liability | TrackBack

March 20, 2012

Another 512(f) Claim Fails--Ouellette v. Viacom

By Eric Goldman

Ouellette v. Viacom Intern., Inc., 2012 WL 850921 (D. Mont. March 13, 2012). Prior blog post on the case.

Ouellette brought a 17 USC 512(f) claim against Viacom for sending bogus takedown notices. As we know, it's almost impossible to win 512(f) cases, and as a pro se, Ouellette had no chance.

In setting the standard, the court says the copyright owner must consider the fair use doctrine (citation to the Lenz case):

the fair use doctrine is necessarily part of a copyright owner’s initial review of potentially infringing material, and must be considered in assessing whether a copyright infringement exists

Nevertheless, this gesture towards fair use doesn't really help this or any other 512(f) plaintiff. Per the Rossi case, the 512(f) standard remains that the copyright owner's bad faith is measured subjectively. Ouellette argued that he successfully counter-noticed Viacom's takedowns, that Viacom kept DMCAing his videos, and that Viacom uses scanning software without human oversight. Even if all of that is true, the court says, "Ouellette has not presented any factual information plausibly suggesting Viacom actually knew Ouellette made fair use of its copyrighted material, and that it acted with the requisite subjective bad faith in issuing its takedown notices."

Part of that was due to Ouellette's pleading failure for not explaining why his publications qualified for fair use. (I assume future 512(f) plaintiffs will rectify that). Even so, it's clear the Rossi requirement of subjective bad faith dooms almost all 512(f) complaints unless the plaintiff, when filing the complaint, (a) has smoking-gun evidence of subjective bad faith, (b) can make an overwhelmingly compelling case that the publication was obviously protected by fair use, or (c) the takedown notice had material factual errors (like it took down something the copyright owner didn't even own). Given the virtual impossibility of winning 512(f) claims, this case just gives us more reasons to favor 512(f) reform.

We blog virtually every 512(f) case we see.

Posted by Eric at 11:00 AM | Copyright , Derivative Liability | TrackBack

March 19, 2012

Irrational Copyright Lawsuit Over "Pi Symphony" Gets Sliced--Erickson v. Blake

By Eric Goldman

Erickson v. Blake, 2012 WL 847327 (D. Oregon March 14, 2012). The complaint. A prior ruling in the case transferring it from Nebraska to Oregon for jurisdictional reasons. Techdirt's coverage (1, 2).

This case could be an instant copyright law classic. It provides a textbook illustration of a critical copyright doctrine (the idea-expression dichotomy), it involves musical principles that everyone--especially students--can relate to, its facts could be easily adapted to a law school exam, and the subject matter provides endless punning opportunities.

Lars Erickson composed the "Pi Symphony" by assigning each numeral 0-9 to a musical note and then playing the notes corresponding to pi's digits. Read some background on his approach, or watch the video. (In the video, he plays a little "e" as well).

Michael Blake did the same basic thing: he assigned numbers to notes and then played pi using those notes. See his video, “What Pi Sounds Like.” Not surprisingly, because both Erickson and Blake draw from the same source, their outputs have some commonalities.

From a legal standpoint, basic copyright law says no one can copyright either the idea of assigning musical notes to numbers or the idea of playing the notes assigned to a number, whether it's pi, e, pi in base 8 (which might have made some sense to match the scale), the square root of 2 or the speed of light. The court says:

Pi is a non-copyrightable fact, and the transcription of pi to music is a non-copyrightable idea. The resulting pattern of notes is an expression that merges with the non-copyrightable idea of putting pi to music: assigning digits to musical notes and playing those notes in the sequence of pi is an idea that can only be expressed in a finite number of ways. This does not mean that Mr. Erickson's copyright is invalid, only that Mr. Erickson may not use his copyright to stop others from employing this particular pattern of musical notes.

But because there are many options for musically implementing the number pi, it's possible to have a copyrightable expression of that pattern:

What may be protected by copyright is the combination of that pattern with other musical elements: the choice of scale, rhythm, harmony, and embellishments or variation, for example.

Thus, Erickson can have a copyrightable expression of pi set to music, but his copyright is so thin that Blake's expression doesn't infringe it:

.Pi Symphony and “What Pi Sounds Like” employ different rhythms, different phrasing, different harmonies, and different tempos....Thus, after the similarities based on unprotected elements of Pi Symphony are set aside, very few—if any—similarities remain. Mr. Erickson's copyright is therefore “thin” and protects his work only from virtually identical copying....Mr. Erickson's copyright, which is presumed valid, protects his expression of the musical pattern formed by the digits of pi. But what is original about that expression—the cadence, flourishes, harmonies, structure, and so on—is not virtually identical, or even particularly similar, to “What Pi Sounds Like.”

The court closes the circle by rebuking the plaintiff:

Mr. Erickson's grievance may be based not so much on any “copying” by Mr. Blake, but rather on the perception that Mr. Erickson's years of hard work in promoting Pi Symphony were undermined by the sudden popularity of Mr. Blake's work and the media attention it received....Given statutory law, the Constitution, and Supreme Court precedent, Mr. Erickson cannot use his copyright to stop Mr. Blake from employing the same idea—the transcription of the digits of pi to musical notes.

That's a thick list of authority telling Erickson to get over it. Plaintiffs, if you're basically bringing a "sweet of the brow" claim, don't go pi-ing to the courts. (Sorry, I needed at least one groaner).

The New Scientist story on this ruling.

Note: the judge issued this opinion on March 14. Cute! I love judges with a sense of humor. Happy belated Pi Day!

Posted by Eric at 08:40 AM | Copyright | TrackBack

March 10, 2012

Justin.tv Mostly Eliminates Zuffa's Trademark and Communications Act Claims Over User-to-User Live Video Streaming

By Eric Goldman

Zuffa LLC v. Justin.tv, Inc., 2012 WL 764424 (D. Nev. March 8, 2012). The complaint.

[Note: I've worked with Justin.tv on related issues, but I'm speaking for myself in this post]

Justin.tv allows user-to-user live video streaming. Zuffa runs the Ultimate Fighting Championship, which broadcasts pay-per-view fights. This lawsuit relates to the UFC 121 Lesnar v. Velasquez pay-per-view fight from October 2010, which Justin.tv users rebroadcast. Zuffa sued Justin.tv for a variety of claims. In this ruling, Justin.tv successfully dismisses most of the trademark claims and all of the Communications Act claims.

Trademark. Justin.tv argued that Zuffa's trademark claims were Dastar-ed. The court partially disagrees because Zuffa wasn't claiming reverse passing off. Nevertheless, Dastar wipes out Zuffa's claims about any trademarks actually embedded in the video stream, such as Zuffa's trademarked Octagon fighting ring, because trademarks would allow Zuffa to control the copyrighted material even after the copyright term expired. Instead, "the Court limits Zuffa’s trademark claims only to the display of Zuffa’s trademarkswhich are not an inherent part of the video broadcast." Whatever that means...! In a footnote, the court also "expresses extreme doubt" about Zuffa's trademark inducement claim.

Communications Act. Zuffa's claims relate to the "stealing cable" provisions. Justin.tv claimed that 47 USC 230 applies, a pretty logical argument given that Zuffa is bringing a non-IP claim against Justin.tv for third party content. However, the court sidesteps the Section 230 issue, saying it's never been applied to the Communications Act (true) and that the court couldn't find any analogous "stealing cable" claim against websites, and it didn't want to touch this "novel" issue.

Instead, the court dismisses the "stealing cable" claim on its elements. The court says:

In essence, Zuffa alleges that Justin.tv’s users copied Zuffa’s UFC event and then rebroadcast the UFC event over the internet. This is not the type of conduct properly addressed by the Communications Act, but by copyright law (and, potentially, trademark law) because Justin.tv had no relationship with the original cable or satellite signal: by the allegations, Justin.tv did not receive or intercept any actual cable or satellite signal or broadcast. The Court finds no evidence in the statutory language, other cases, or legislative history that the Communications Act addresses this type of conduct or was meant to bolster or act as a separate type of copyright claim.

In a footnote, the court notes the troubling implications of Zuffa's argument:

if the Court were to allow claims such as these, it would have to allow similar Communications Act claims against scores of “cloud computing” service providers such as Microsoft, Apple, Google, Amazon.com, Dropbox, Box.net, and others because Jusint.tv’s [sic] particular streaming service would be irrelevant. As an example, say a person took a snippet (or longer) of video of a UFC match being broadcast on their television with their iPhone, Windows Phone, etc. The iPhone then automatically uploads that video to one of dozens of cloud storage systems such as Apple’s iCloud. The Court refuses to find that Apple (or Microsoft, etc.) would be liable under the Communications Act for merely receiving and storing this data under the Communications Act. Yet, Zuffa arguesfor exactly this result when it argues that Justin.tv’s mere receipt of this video stream makes Justin.tv liable. In passing the Communications Act, Congress did not intend such a result, and this Court will not broaden the effect of the statute in this manner.

Amen!

At its core, the lawsuit is about copyright infringement, and Justin.tv didn't attempt to dismiss that claim. So the case hasn't gotten to the real meaty claim yet. It's my (presumably biased) position that Justin.tv should clearly qualify for the 512(c) safe harbor.

Posted by Eric at 10:52 AM | Copyright , Derivative Liability , Trademark | TrackBack

March 07, 2012

By Eric Goldman

Copyrights

* The inside story of Veoh's destruction:

The company that we had built, that was once valued at over $130 Million was gone. Along with it went the livelihoods of over 120 people and their families, $70 million of money entrusted to us by investors, and a big part of me. I had sacrificed so much to live the life of an entrepreneur. My marriage couldn't stand the strain of this lifestyle and ended in 2009, and while all of this was going on, my father was dying. Instead of spending time with him at his bedside, I was sitting in depositions with lawyers, and stressing over the lawsuit.

Prior blog posts on Veoh, including the post on UMG v. Shelter Capital, where I wrote: "This case's real result is that Veoh is legal, but Veoh is dead—killed by rightsowner lawfare that bled it dry."

* Oracle rejected the $272M remittitur in Oracle v. SAP. GOBOGH! Prior blog post.

* The district court refused a preliminary injunction in Capitol v. ReDigi involving the resale of "used" digital tracks.

* Obodai v. YouTube LLC, 2011 WL 6880734 (S.D.N.Y. Dec. 29, 2011). Pro se copyright lawsuit against YouTube tossed because the copyrights weren't properly registered before suit. Obodai has appealed to the Second Circuit.

* Personal Keepsake Inc. v. Personalizationmall.com. an interesting ruling on 17 USC 1202 (copyright management information). Rebecca's blog post.

* Hollywood Reporter: More details on Warner's takedown systems and the 1M takedown notices it sent to Hotfile.

* Hollywood Reporter: Universal Music May Have Inadvertently Exposed a Flaw in the YouTube Takedown Process.

* Maximized Living v Google, the funky 17 USC 512(h) case, has been appealed. Prior blog post.

* Arena v Doe complaint: Harassed women claim Google isn't honoring DMCA takedown notices.

* Lawyers sue Lexis/Westlaw for copyright infringement for republishing their legal filings and briefs. See this WSJ May 2006 blog post on the topic.

* Scientific publications are gearing up for a copyright litigation frenzy against patent applicants who cite the articles in their patent applications and may be keeping copies of the articles in their files. The Patent Office's position that such copies are fair use.

* Slate on the (copyrightable?) judgments made when making a map.

* Sean Flaim, Copyright Conspiracy: How the New Copyright Alert System May Violate The Sherman Act. Prior blog post.

* Mick Haig case results in more sanctions and attorneys' fees.

* Stephen Fairey pleads guilty to criminal contempt for covering up that he relied on the AP photo when creating the Obama Hope poster.

* Fraserside IP L.L.C. v. Hammy Media, Ltd., 2012 WL 124378 (N.D. Iowa Jan. 17, 2012). No jurisdiction in Iowa over xHamster, a Cyprus-based porn website: "xHamster has no offices in Iowa, no employees in Iowa, no telephone number in Iowa, and no agent for service of process in Iowa. xHamster does not advertise in Iowa. No xHamster officer or director has ever visited Iowa. xHamster does not maintain any of its servers within Iowa. All of xHamster's servers are located outside of the United States."

* Perfect 10, Inc. v. Google, Inc., 2012 WL 685778 (Mem) (U.S. March 5, 2012). Supreme Court declined Perfect 10's cert petition seeking an injunction against Google. Prior blog post.

* C-360/10, Belgische Vereniging van Auteurs, Componisten en Uitgevers (SABAM) v Netlog NV:

The owner of an online social network cannot be obliged to install a general filtering system, covering all its users, in order to prevent the unlawful use of musical and audio-visual work...Such an injunction would result in a serious infringement of Netlog's freedom to conduct its business since it would require Netlog to install a complicated, costly, permanent computer system at its own expense.

Righthaven

* Righthaven.com sold at auction for $3,300.

* Characteristically hypocritical whining from Righthaven about unfair litigation tactics.

* Nevada State Bar has opened an inquiry into three Righthaven attorneys.

* Righthaven v. Kelleher (D. Nev. Jan. 13, 2012): "Buried in a footnote of Plaintiff’s response to the Court’s order to show cause is Plaintiff’s admission that sixteen (16) months after filing the Complaint (#1) in this action and after conducting little to no discovery, it has still not located the written assignment covering the work at issue in the Complaint."

* Righthaven v. Eiser (D.S.C. Jan. 13, 2012). Another court, this time in South Carolina and involving a MediaNews asset, rules that Righthaven lacked standing due to a failed copyright ownership assignment and awards attorneys' fees. In Righthaven, LLC v. Eiser, 2012 WL 527569 (D.S.C. Feb. 16, 2012), the judge approved the magistrate report.

* Righthaven v. Computer Services One (D. Nev. March 1, 2012). Yet another judge in Nevada says Righthaven lacks standing.

* Righthaven's purported copyrights are going to auction. I'm trying to decide which one to bid on!

Posted by Eric at 11:24 AM | Copyright | TrackBack

January 27, 2012

Top Internet Law Developments of 2011

By Eric Goldman

As usual, I'm running late with my year-end recap. This post begins with my countdown of the top 5 Internet Law developments of 2011, then it lists other interesting developments and cases. It concludes with some of the most linked posts and then my editor's choice of some posts in 2011 that might have been a little overlooked. As usual, thanks for reading the blog in 2011!

Countdown: My Top 5 List of Developments in 2011

#5: Righthaven Implodes. Since the beginning, I've been skeptical of Righthaven's business model. Seriously, who else thinks it's a good idea to sue small-time mom-and-pop bloggers and non-profits on a one-by-one basis? However, even I had no idea that Righthaven would accelerate their own demise by routinely making basic litigation errors. A sketchy business model + a litigation shop that isn't very good at litigation = one dead start-up. It's always fun (in a bloodsporty way) to watch hubristic bullies get their just desserts, but watching the Randazza firm school the Righthaven litigators in Litigation 101 has been amazing. THAT'S how you litigate.

Righthaven lost often in 2011 (see my August reset). They lost fair use rulings (e.g., CIO, Choudry). They lost on standing grounds (e.g., Democratic Underground, Wolf). They were hit with sanctions. They were hit with hundreds of thousands of dollars of attorney fee shifts (e.g., Leon, Wolf, DiBiase). They even lost their domain name in an auction--a delicious irony given that Righthaven's complaints improperly demanded its defendants' domain names on the theory that it might need the domain name to satisfy a judgment against the defendant, when in fact it was Righthaven's domain name that was used to help satisfy a judgment against it!

Righthaven ended 2011 on death's door, but the trend of newspapers trolling for copyright litigation isn't going away. I'll be watching NewsRight closely in 2012.

#4: Medical Justice Gives Up. Speaking of hubristic bullies... You recall Medical Justice, the organization that helped doctors and other medical service providers take copyright assignments from patients in their as-yet-unwritten reviews so that the doctors could expeditiously remove unwanted reviews by sending 512(c)(3) takedown notices to review sites. It's an interesting legal hack, but it has some bad side-effects, including the fact that patients hated it, the copyright assignments almost certainly were void (for public policy reasons and others), doctors were hurting themselves by discouraging patient reviews (patients prefer to choose doctors when there's a critical mass of patient reviews), and (as our research uncovered) most consumer review sites ignored the doctors' 512(c)(3) takedown notices. Obviously, with those defects, Medical Justice wasn't exactly adding a ton of value to its clients. Medical Justice finally gave up, but too late to prevent a lawsuit against one of its clients and a complaint to the FTC. Chances are Medical Justice will be living with a long-term hangover from this entrepreneurial foray.

Seeing Medical Justice stop peddling anti-patient review tools was slightly satisfying, but that result was always a fait accompli. The reason Medical Justice's change of heart matters is that shady or clueless vendors keep developing new ways to suppress unwanted consumer reviews, and I hope Medical Justice's experiences will discourage other vendors from trying the copyright hack. I talk about these dynamics more in my paper on regulating reputational information.

#3: gTLD Expansion. It remains unclear exactly what ICANN's rollout of unlimited top level domains will do. Due to the expansion of new namespaces, brand owners face a long list of complicated--and potentially expensive--choices to make. Unfortunately, these choices don't really benefit society; instead, the gTLDs tax businesses while the benefits accrue to a small number of service providers (and, of course, ICANN itself). I think many businesses will reserve their name in multiple new gTLDs to prevent squatting--with the net effect that businesses will spend more money just to preserve the status quo. Meanwhile, most consumers are likely to be bewildered by the unlimited number of TLDs, which is just going to increase their tendency to rely on search engines and link directories rather than domain names to navigate to their desired destinations.

#2: Internet Consumer Privacy Lawsuits Tank. 2011 initially looked like the year of the Privacy Plaintiff. A torrent of privacy lawsuits had been filed, plaintiffs had wrested a few important and lucrative settlements, and Internet companies continue to make questionable privacy decisions that create a steady supply of potential new lawsuits.

But the path to riches didn't materialize. Instead, 2011 emerged as the year when privacy class action lawsuits mostly failed miserably. Courts principally rejected the lawsuits on standing grounds for lack of cognizable harm, but plaintiffs failed on other related grounds, such as a lack of damages negating the prima facie case. There were some exceptions where plaintiffs made a little progress (see, e.g., Claridge v. RockYou, Anderson v. Hannaford, Fraley v. Facebook). I'm sure the privacy plaintiffs' bar will be studying those rare successes to formulate a better battle plan--and to better prepare their cases and find strong named plaintiffs, a recurring omission that hasn't gotten a lot better over the year. However, for now, it's clear that the privacy plaintiffs' bar can't just show up in court and hold out their hands for a payday.

#1: Regulators Broke the Internet. We've always known that regulators could combat bad online activity by working "up the chain," i.e., by making upstream service providers liable for the bad acts or obligated to cut off the activity. However, for the most part, we've shared a tacit understanding that systematically going up the chain was a "nuclear" option--it would fix the specific problem but only at significant collateral cost that, on balance, makes the option unattractive.

I think we'll look back at 2011 as the year that tacit understanding broke down. In 2011, regulators around the world showed a seemingly insatiable demand for working up the chain. Although we in the USA like to think we're different from other repressive regimes, the evidence suggests otherwise. Some examples of "up the chain" activity in 2011:

* Arab Spring. Repressive regimes got local Internet access providers to turn off Internet access in the country.
* Operation in Our Sites. The Immigrations and Customs Enforcement (ICE) agency keeps seizing domain names of suspected foreign rogue websites on an ex parte basis, making errors and breaking the law in the process. Mike Masnick blew open the story on Dajaz1.com, which ICE seized on an ex parte basis, conducted secret proceedings for a year, and then gave back the domain name with no explanation.
* Graduated Response. Copyright owners got Internet access providers to voluntarily (?) agree to restrict, and eventually terminate, their users' accounts.
* Secondary liability against intermediaries. Rightowners keep expanding their intermediary targets, including lawsuits against ad networks and SEOs/web designers. To be fair, some of these lawsuits aren't going very far, and expansive secondary liability theories aren't new in 2011.
* Ex Parte Seizures. Rightsowners are asking for the moon against third party service providers in ex parte proceedings, and courts are giving it to them because the third parties aren't there to represent their own interests. We recap this epidemic in this post.
* SOPA and PIPA. These proposed bills were the finest examples of rightsowners pursuing the nuclear option regardless of the collateral damage. The bills' basic architecture was to attack a wide range of intermediaries for third party actions--domain name registrars, search engines, payment service providers, ad networks. By seeking to deputize the intermediaries, the bills sought to instantiate "up the chain" duties across virtually the entire Internet. Putting aside their other policy deficiencies, I think we should resist all laws predicated on that fundamental assumption of intermediary deputization. See my post on the OPEN bill for why I reject the compromise "follow the money" solution. Sadly, I stand virtually alone in my stance.

Other Interesting Developments.

Some other interesting developments this year:

* Patent Reform. The America Invents Act is the most dramatic patent reform bill in years, and it has many provisions that may affect Internet companies, including the joinder standards, the prior user defense, and the novelty/priority standards. The law doesn't fix the overall problems with bad Internet patents or unmeritorious assertions of those patents, but it nevertheless could make some dramatic changes in what Internet companies do.

* Google and Antitrust. Google has become the incumbent in search, and all of its rivals--especially the companies Google is disintermediating--are desperately seeking to knock it off its perch. I believe Google and antitrust was the #1 topic prompting reporter phone calls to me in 2011. We are waiting to see what comes from the FTC investigation into Google's practices, and the list of Google-haters keeps growing daily. At the same time, the anti-Google forces made surprisingly little actual progress in 2011, including suffering a conspicuous (and not even close) loss in the myTriggers case. See my paper on why I am so over the Google antitrust battles.

* DC's Obsession with Busting Silicon Valley Companies. Sometimes, it feels like DC insiders wake up in the morning and wonder, "What Silicon Valley company do I feel like busting today?" Drive down the 101 from San Francisco to San Jose and play the "Spot the FTC/DOJ Bust" bingo game. Some of DC's targets in 2011: Google Buzz, Twitter (finalized in 2011), Facebook, Google pharma ads, Apple and others for no-poaching restrictions, and others. Good times!

* Judges Order Litigants to Hand Over Passwords to Social Networking Sites. This year, several judges ordered litigants to turn over their Facebook passwords to their litigation opponents for discovery purposes. See, e.g., Zimmerman v. Weis (which I added to my Internet Law reader this year). In 10 years, we'll look back at this mini-trend and shake our heads at the judicial cluelessness. Social networking sites contain a mix of public and private information, and letting a litigation opponent root around the account is just as objectionable as making a litigant hand over the keys to his/her house so the opponent can rummage around.

Other Key Court Rulings in 2011

Some other interesting court decisions this year:

* Author's Guild v. Google. The court rejected the Google Book Search settlement agreement for good reasons, but it sent the parties back to square 1. Why the parties haven't been able to broker a legislative compromise is beyond me.

* Barclays v. theflyonthewall. The Second Circuit took a big bite out of the hot news doctrine. Unfortunately, the Second Circuit didn't kill the hot news doctrine outright, but the opinion leaves open very little room for hot news plaintiffs.

* Network Automation v. Advanced System Concepts. The most important keyword advertising ruling to come out in several years. While the ruling itself was a mixed bag for the litigants, the opinion tore down a number of crusty plaintiff-favorable legal doctrines that had cluttered up trademark jurisprudence for years--including virtually mooting the initial interest confusion doctrine and killing the "Internet trinity" bypass to the standard multi-factor likelihood of consumer confusion test. I've noticed that the opinion has already noticeably tilted courts towards more defense-favorable rulings.

* Betty Boop case (Fleischer Studio v. AVELA). For a few months, it looked like the Ninth Circuit had eliminated trademark merchandising rights in characters that were out-of-copyright. Then it changed its mind; but still it liberated Betty Boop to the world.

* PhoneDog v Kravitz. An interesting battle over ownership of a Twitter account.

* Levitt v Yelp/Ascentive v. PissedConsumer. 47 USC 230 still works really, really well as an immunity. In Levitt, Yelp got a 230 dismissal that Yelp had tried to get advertisers to pay to manage consumer reviews. In Ascentive, the court rebuffed a plaintiff's effort to use a trademark infringement claim against a consumer review website to work around 230.

* Habush v Cannon. Buying a person's name as the trigger for keyword advertising doesn't violate their publicity rights.

* UMG v. Shelter Capital. While everyone waits for the Second Circuit's decision in Viacom v. YouTube, the Ninth Circuit stole some of that thunder with a powerful endorsement of the 17 USC 512 safe harbor. Too bad Veoh didn't live long enough to enjoy the win.

* In re Rolando S. Rolando was convicted of felony identity theft for taking a classmate's Facebook page for a joyride. My vote for the most interesting Internet Law case of 2011, and an instant cyberlaw classic. I've already added it to my Internet Law reader, and the students seemed to enjoy discussing the case.

Some of the Most Linked Blog Posts in 2011 (Per Topsy)

* New Advertising & Marketing Law Casebook Available for Review
* Court Orders Plaintiff to Turn Over Facebook and MySpace Passwords in Discovery Dispute -- Zimmerman v. Weis Markets, Inc.
* "App Store" Isn't Generic, But Apple Can't Enforce Its Purported Trademark in the Term--Apple v. Amazon (Apple legal issues are always good link bait)
* Twitpic Modifies Terms and Claims Exclusive Rights to Distribute Photos Uploaded to Twitpic
* Republishing Entire Newspaper Story is Fair Use--Righthaven v. CIO
* Court Rules That Instant Message Conversation Modified the Terms of a Written Contract -- CX Digital v. Smoking Everywhere (the most popular post of the year by far--a modern Contract Law classic)
* Second Life Ordered to Stop Honoring a Copyright Owner's Takedown Notices--Amaretto Ranch Breedables v. Ozimals

Favorite "Overlooked" Posts

A few posts that maybe got overlooked a little:

* Cyberbullying and Restorative Justice [a Long-Delayed Post on DC v. RR]
* Racy Teen Photos Posted to Facebook Are Constitutionally Protected Speech--TV v. Smith-Green
* Marijuana Activist Can't Change His Name to "NJWeedman.com" -- In re Forchion
* Free-to-Consumers Ad-Supported Website Isn't Illegally Priced--Cammarata v. Bright Imperial
* What Would a Government-Operated Search Engine Look Like in the US?

Lists of Yore

Previous top 10 lists from 2010, 2009, 2008, 2007 and 2006. Before that, John Ottaviani and I put together a list of top Internet IP cases for 2005, 2004 and 2003.

Posted by Eric at 09:45 AM | Copyright , Derivative Liability , Domain Names , Evidence/Discovery , Internet History , Patents , Privacy/Security , Search Engines , Trademark | TrackBack

January 23, 2012

Comments on the Golan v. Holder Supreme Court Ruling (Guest Blog Post)

By Tyler Ochoa

In a decision that favored the 1% (copyright owners) over the 99% (consumers and the public domain), the U.S. Supreme Court recently held that neither the Patent and Copyright Clause of the U.S. Constitution nor the First Amendment prohibits the removal of works from the public domain. Golan v. Holder, No. 10-545. Prior blog coverage of the case: certiorari granted and the 10th Circuit opinion.

The majority opinion was written by Justice Ginsburg for herself and five other justices. Justice Breyer, joined by Justice Alito, dissented. (Justice Kagan recused herself, as she had participated in the case as Solicitor General before being named to the Court.) The line-up of justices was therefore essentially the same as the 7-2 opinion in Eldred v. Ashcroft, 537 U.S. 186 (2003), which upheld the Constitutionality of copyright term extension, with Justice Alito replacing Justice Stevens in dissent, and Chief Justice Roberts and Justice Sotomayor replacing Chief Justice Rehnquist and Justice O’Connor, respectively, in the majority.

The case concerned Section 514 of the Uruguay Round Agreements Act of 1994 (URAA), which is codified in 17 U.S.C. § 104A. That section “restored” copyright protection to works of foreign origin that were still under copyright protection in their source countries, but were in the public domain in the U.S. for one of three reasons: (1) lack of national eligibility, for countries with whom we did not have copyright relations prior to joining the Berne Convention; (2) lack of subject-matter eligibility, for sound recordings fixed before February 15, 1972 (the date sound recordings first became eligible for federal protection); and (3) failure to comply with the formalities previously required under U.S. (such as proper copyright notice and registration of the renewal term). Effective January 1, 1996, all such works were taken out of the public domain and placed under copyright protection in the U.S., for the same duration that is granted to domestic works. (For the background of the case, see Tyler T. Ochoa, Is the Public Domain Irrevocable? An Introduction to Golan v. Holder, 64 Vanderbilt L. Rev. En Banc 123 (2011)).

The Petitioners (orchestra conductors and film distributors who had performed and sold foreign works in the public domain before restoration) made three principal arguments, all of which the majority rejected. First, Petitioners argued that the phrase “for limited Times” in the Patent and Clause prohibits Congress from removing works from the public domain once those “limited Times” have expired. Justice Ginsburg, however, relying on her majority opinion in Eldred, held that “limited” does not mean “fixed” or “unalterable,” and noted that terms granted to foreign works are the same as those granted to domestic works, which the court had previously held in Eldred to be “limited.” Slip. op. at 13-14. She also relied on the fact that many of the works whose copyright was “restored” had never enjoyed copyright protection in the U.S. at all, saying “surely a ‘limited time’ of exclusivity must begin before it may end.” Slip. op. at 15. (Here, Justice Ginsburg is not quite correct: all works enjoyed common-law copyright protection before they were published, even those foreign works originating in countries with whom the U.S. had no copyright treaty relations. It was only upon first publication that foreign works entered the public domain in the U.S. if they failed to comply with formalities or were not from an eligible country. But it is true that many of the works involved had not previously received federal statutory copyright protection.) Nonetheless, the majority’s rationale does not apply to those foreign works that did receive 28 years of copyright protection and were not renewed. Not only did the Berne Convention NOT require that such works be removed from the public domain, Article 18(2) of Berne commands that such works “shall NOT be protected anew” (emphasis added). See Daniel Gervais, Golan v. Holder: A Look at the Constraints Imposed by the Berne Convention, 64 Vanderbilt L. Rev. En Banc 147, 149-54 (2011).

Justice Ginsburg relied primarily on the fact that “the Copyright Act of 1790 granted protection to many works previously in the public domain. . . . The First Congress, it thus appears, did not view the public domain as inviolate.” Slip. op. at 16. However, as Tomas Gomez-Arostegui and I pointed out in our amicus brief, the historical evidence on this point is highly equivocal and far from compelling. We cannot say with certainty whether the members of the First Congress thought they were removing works from the public domain or not; but there is a strong argument that they did NOT think so. It is true that in 1834 the Supreme Court held that there was no post-publication common-law copyright, meaning that, to the extent that the First Congress had protected previously published works, that law was later held to have had the effect of removing works from the public domain; but it is far from clear that the members of the First Congress would have foreseen or agreed with that conclusion.

Justice Ginsburg also relied on a handful of private patent and copyright laws that removed specific works from the public domain, and on two acts that gave owners of foreign works who were unable to comply with U.S. formalities during World Wars I and II the opportunity to comply with those formalities after the war, thereby removing works from the public domain. In so doing, however, Justice Ginsburg indulged in the blithe assumption that anything Congress has done a handful of times must be Constitutional. Marshaled against her conclusion is that is the fact that Congress has steadfastly avoided protecting works already in the public domain each time it has passed a general revision of the Copyright Act, and even expressed the opinion in the legislative history of the 1976 Act that doing so would be unconstitutional. (See Breyer’s dissenting opinion, slip. op. at 19.)

The Petitioner’s second major argument was that granting copyrights to existing works does not “promote the Progress of Science,” as the Copyright Clause requires. In the 18th Century, “Science” meant knowledge broadly, and this portion of the Clause is traditionally read to incorporate a “utilitarian” view of copyright; namely, that the purpose of copyright is promote the creation and distribution of new works of authorship. (This is the principal basis of Justice Breyer’s dissenting opinion.) The majority, however, held that the Clause is also intended to promote the dissemination of existing works of authorship. While there is plenty of evidence to support this assertion (see, e.g., Malla Pollack, What Is Congress Supposed to Promote? Defining ‘Progress’ in Article I, Section 8, Clause 8 of the U.S. Constitution, or Introducing the Progress Clause, 80 Neb. L. Rev. 754 (2002)), it is the majority’s application of this principle that is problematic. Basic economic theory holds that an existing work will be more widely disseminated when it is in the public domain than it will be under copyright protection. Copyright exists to solve the “public goods” problem of financing the work’s creation and initial publication (who would invest in the creation and distribution when the work could be copied more cheaply without paying the author?); but after a “limited Time,” dissemination is better served by placing the work in the public domain. The majority, however, refuses to question Congress’ assertion to the contrary, applying only rational basis review, instead of any kind of heightened scrutiny. (Slip. op. at 21-22).

Petitioner’s third argument was the First Amendment requires heightened scrutiny, because leaving works in the public domain was one of the “traditional contours of copyright protection” that the majority alluded to in Eldred that would justify First Amendment scrutiny. The majority rejects this argument, and squarely holds that the “traditional contours of copyright protection” are limited to the idea-expression dichotomy and the fair use doctrine. (Slip. op. at 23-26 & n.29.) So long as those two (vague and inconsistently applied) limits on copyright are preserved, apparently Congress had the power to impose any other type of speech restriction in the name of copyright protection.

The majority’s decision would seem to foreclose almost any future Constitutional challenge to Congress’ patent and copyright power. The majority rejected (or reinterpreted) the dictum in Graham v. John Deere Co., 363 U.S. 1, 6 (1966), in which the Supreme Court stated that “Congress may not authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available,” saying that this is NOT a Constitutional limit on Congress’ power. (Slip. op. at 19) The majority also states that that the public has no vested rights in the public domain at all. Instead, it characterizes the public domain as the absence of ownership, rather than affirmative ownership by the public. (This characterization is at odds with 19th Century opinions on the subject. In my article Origins and Meanings of the Public Domain, 28 U. Dayton L. Rev. 215, 232-36, 256-66 (2003), I collect the evidence that the public domain was consistently said to have two characteristics in the 19th Century: it was property that was owned by the public, and it was irrevocable.) The absence of any ownership interest in the public domain would seem to foreclose any challenge based on the Fifth Amendment’s Due Process Clause as well.

The Golan opinion is a severe blow for those who believe that the public domain is a vital resource for public education and creativity. I anticipate that owners of copyright in domestic works will now lobby Congress for the same advantage that foreign copyright owners received in 1996: restoration of copyright for those works that are in the public domain for failure to comply with formalities such as copyright notice and renewal. This move, if successful, would have an enormous impact on the public domain. It has been estimated that only about 85 percent of works published in 1923-1963 were renewed; the remaining 85 percent are in the public domain. Congress could apparently restore the copyrights in this 85 percent at any time, leaving the U.S. public domain with only those works that were created before 1922.

Would Congress go back and attempt to restore copyrights in even older works, those that did enjoy the maximum period of copyright protection? I agree that it is far-fetched to suppose that Congress will take advantage of its newly-ratified power to do so, although a broad reading of the opinion would certainly support its power to remove any works from the public domain, including Shakespeare and Beethoven. (Indeed, under the majority’s rationale, none of their works ever enjoyed copyright protection in the United States.) However, at least one passage in the opinion suggests that even this Supreme Court might balk at such a move:

Carried to its logical conclusion, petitioners persist, the Government’s position would allow Congress to institute a second “limited” term after the first expires, a third after that, and so on. Thus, as long as Congress legislated in installments, perpetual copyright terms would be achievable. As in Eldred, the hypothetical legislative misbehavior petitioners posit is far afield from the case before us. In aligning the United States with other nations bound by the Berne Convention, and thereby according equitable treatment to once disfavored foreign authors, Congress can hardly be charged with a design to move stealthily toward a regime of perpetual copyrights.

(Slip. op. at 15) This paragraph suggests that, should Congress attempt to “restore” copyright protection to a work after its maximum statutory period of duration had expired (rather than a work which failed to achieve the maximum period for failure to comply with formalities), the Court might be willing to hold that such “misbehavior” does violate the “limited Times” provision.

Posted by Eric at 02:53 PM | Copyright | TrackBack

January 22, 2012

Photobucket Qualifies for the 512(c) Safe Harbor (Again)--Wolk v. Kodak

By Eric Goldman

Wolk v. Kodak Imaging Network, Inc., 2012 WL 11270 (S.D.N.Y. Jan. 3, 2012). Prior blog post on this case.

As I've indicated before, blogging 17 USC 512 cases has gotten tedious because they are just TOO LONG. I can crank through most 47 USC 230 cases in an hour or two because they are usually quite short and efficient. In contrast, because 17 USC 512 gives copyright plaintiffs so many words to contest, 512 opinions tend to be lengthy and quite time-consuming to blog--with this 69 page opinion as a prime example. This has some implications for drafters of laws like SOPA/PIPA, which have similarly long and detailed provisions that just beg plaintiffs to contest every word and will force courts to write quite lengthy opinions that bloggers like me will struggle to crank through. I cheer for immunities and safe harbors, but I have three cheers for SHORT immunities and safe harbors.

This case is even more unfortunate because the pro se plaintiff had an obviously unmeritorious case, yet the two defendants used three law firms to beat this case. And it's not exactly like Kodak is wallowing in cash any more.

Wolk is an artist. Users uploaded images of Wolk's work to Photobucket (a UGC photo-sharing site). Photobucket, in turn, had a revenue-sharing agreement with Kodak Imaging that allowed users to print the images via Kodak (i.e., Kodak did "photofinishing").

Photofinishing Liability

The court says that Kodak Imaging wasn't directly liable for printing the images (Wolk didn't allege secondary infringement). The court observes that "reproduction, display or transmission of the Plaintiff's images by or through the KODAK Gallery website is an automated process with no human intervention by any employee of the Kodak Defendants." Thus, because its entire system was automated, Kodak didn't act volitionally and thus avoids the strict liability standards of direct copyright infringement.

This ruling is unexpected because it's been conventional wisdom for many years that photofinishers were in fact directly liable for their print jobs. Perhaps that's because humans were always involved in the photofinishing process during that time, as opposed to now where the process from photo upload to mailing of items can be completely automated. Whatever the case, this ruling has to be encouraging for other automated photofinishers (whether they print photos or other items), such as CafePress or Zazzle. Then again, perhaps the copyright plaintiffs will pursue them under secondary infringement doctrines, which Wolk didn't do.

Although I like the result, I remain confused about the scope of the "volitional doctrine." As was the case in Cablevision, Kodak's system was completely automated only because Kodak's engineers designed it that way. We would benefit greatly from a richer theoretical grounding for the volitional doctrine and how it interplays with strict liability. Without that grounding, the results seem a little random.

512(c) Safe Harbor

Photobucket qualified for the 512(c) safe harbor. This isn't surprising; the court indicated as much when it denied Wolk's request for a preliminary injunction. Still, the court works through a 512(c) in fine detail:

* Photobucket is a "service provider"
* Photobucket properly adopted and implemented a repeat infringer termination policy.
* Photobucket accommodates standard technical measures. Wolk argued that Photobucket gives users tools that can remove or hide watermarks. The court doesn't opine whether watermarks are a standard technical measure, but instead the court says Photobucket doesn't encourage users to use the tools, so users--not Photobucket--would be the ones interfering with standard technical measures if watermarks qualified as such.
* Photobucket didn't have actual or constructive knowledge of the infringement. Before the lawsuit, Wolk sent 15 infringement notices covering 9 works. When Wolk sent 512(c)(3) notices, Photobucket expeditiously responded. However, 11 of the notices weren't 512(c)(3)-compliant (because they didn't specify URLs) and thus are irrelevant. (Compare the troubling dicta in the uncited UMG v. Shelter Capital). Wolk argued--as so many copyright owners do--that one notice about a work should cover all existing and future uploads without providing URLs of the other items. The court rejects that argument.
* Photobucket doesn't have the right/ability to control infringement because it does not prescreen content, render extensive advice to users regarding content and edit user content. Photobucket also lacked direct financial benefit from the infringement: "The Defendants' profits are derived from the service they provide, not a particular infringement."
* Photobucket properly identified its agent for notice and designated it with the copyright office.

All of this 512(c) analysis was fairly by-the-book. The most interesting part is where the court discussed how "Photobucket Has No Duty To Police Its Website For Infringements." The court says:

Photobucket is a website that consists of over 9 billion images and videos. Under the plaintiff's theory, Photobucket would be required to police its website for infringing copies of her work wherever they may appear once she has provided a DMCA-compliant notice....[due to 512(m),] the DMCA does not require the policing the Plaintiff suggests.

Secondary Infringement

The court says, without any real discussion, that 512(c) moots Photobucket's secondary liability. Accord UMG v. Shelter Capital. The court continues with other reasons those claims fail. In particular, Photobucket lacked the requisite scienter about the infringing items it transmitted to Kodak at users' requests, nor did Photobucket act "in concert" with Kodak. The court rejects the applicability of Grokster, Napster and Aimster because those cases involved peer-to-peer file sharing (more evidence of the exceptionalism towards P2P) and her incomplete takedown notices didn't confer scienter.

Conclusion

The court granted summary judgment against Wolk, ending her case. The precedential value of this case's discussion about 512(c) probably will be overwritten by the Second Circuit's Viacom v. YouTube ruling, and a win against a pro se litigant isn't much in the grand scheme of things. Nevertheless, the ruling reinforces that courts continue to take the 512 safe harbor seriously. In particular, they continue to rebuff copyright owners who don't send 512(c)(3) takedown notices but still want judicial relief.

Meanwhile, the "volitional conduct" defense appears to be live and well, especially in the Second Circuit, although I'm not sure anyone understands the doctrine's parameters.

Posted by Eric at 02:00 PM | Copyright , Derivative Liability | TrackBack

January 17, 2012

Egregious/Overreaching Ex Parte Orders for Rightsowners Keep Coming -- Deckers and Richemont

[Post by Venkat Balasubramani, with comments from Eric]

Deckers v. Liyanghua, 11-cv-07970 (N.D. Ill.; Dec. 15, 2011) (report and recommendation)

Deckers proceeds against a slew of domain names in Illinois. The case was originally sealed, but in granting a preliminary injunction, the court unseals it. The court's November 15, 2011 (now-unsealed) order provides for the following relief:

- an injunction against defendants
- An order requiring the registries and/or registrars to “prevent the . . . domain names from connecting to corresponding” websites and prevent the registration or transfer of new domain names
- an order directed at search engines, web hosts, registrars and registries to cease facilitating access to any websites through which defendants conduct business
- expedited discovery (Deckers emails a subpoena to banks and service providers who now have to turn over documents)
- authorizing notice via email . . . but “[a] ruling on permissible service of process methods is held in abeyance until Deckers has obtained discovery responses from third parties” [this is significant -- there has not yet been service of process]
- an asset transfer restriction

The preliminary injunction similarly includes a broad injunction against defendants. It also orders the registries to change the registrar of record for the domain names to a registrar of Decker’s choosing. There’s a broad injunction against those "in privity" with defendants, including search engines, web hosts, registrars and registries. The court orders broad discovery, and an asset freeze.

The one interesting thing is that the court makes Deckers post a $150,000 bond. Deckers contested this but the court didn't budge on this issue.

Richemont Int’l v. Montesol OU, 11-cv-09322 (S.D.N.Y.; Jan. 3, 2012)

In this case, the court enters a TRO on Dec. 21, 2011. The TRO broadly enjoins defendants from infringing on the marks and contains an asset freeze. It also purports to enjoin websites, online search engines, online shopping price comparison services and other businesses and publications from advertising, promoting, or marketing the websites or products in question. A similar prohibition is directed to website hosts, ISPs “or any other business supporting, hosting, or providing e-commerce services to defendants’ websites.” The order also directs registries or registrars to “delete all existing DNS entries” for the domain names and to enter the registrar’s default DNS address for the domain names, and orders a slew of service providers to "temporarily disable service to" the domain names.

On January 3, 2011, the court enters a preliminary injunction. The order notes that defendants were served with the papers on December 23 and, as of January 3, 2012, they did not submit any papers in objection. The injunction is similar in scope to the TRO. It contains a broad account freeze directed at third parties. It enjoins service providers from providing support to the websites. It tells the registries/registrars to delete all existing DNS entries and enter the registrar's default DNS address.
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Venkat's Comments

This activity in the courts is crucially relevant to the SOPA/PIPA discussions taking place right now. Congress should take a look at what is going on in courts--if for no other reason than to figure out what relief judges think is authorized under current law (or what relief plaintiffs seem to obtain) and what potential abuses (if any) may occur, and also to explain how exactly SOPA/PIPA changes existing law. Obviously, just because a court authorizes a certain type of relief does not mean that there is always a proper basis for it. There are a lot of cites to "the court's inherent equitable power" in these orders. That's judicial code for: "there is no express basis for it, but I think certain relief is appropriate and I'm going to grant it."

It may not be easy to engender much sympathy for these defendants, but that's not the point. The system has certain procedural safeguards in place, and those should not go out the window just because you're dealing with a foreign online infringer. The relief that is being granted in these cases is extraordinary and is frequently being done with no notice or minimal notice. There is no way much of this will fly against a domestic litigant. In some cases, the initial papers are filed under seal, so defendants cannot determine what the allegations are against them until the preliminary relief--in the form of a shutdown--is awarded. Plaintiffs seem to be required to do nothing more than to present a declaration from their investigative team alleging that (1) defendants infringe, (2) defendants are located abroad, and (3) perhaps the defendants will evade or frustrate the court's relief.

Based on this, the court typically shuts off the defendant's website and also orders relief directed at third parties who may or may not be subject to the court's jurisdiction. These third parties are not before the court and have no chance to contest the scope of the relief being sought. I'm curious as to how they react when they are presented with the order. Do registrars routinely transfer domain names to a friendly registrar of the plaintiff's choosing? Is DNS deletion or revision routinely implemented in response to these orders?

It's interesting to compare the approach Deckers took in this case to the approach it took against alleged infringers who was selling counterfeit UGG boots out of a house (located in Illinois). See Deckers v. Migliore, 11-cv-06836 (N.D. Ill.; Nov. 15, 2011). Deckers didn't obtain any ex parte relief; they moved for a default after effecting service. Is this because a court was less likely to order the total shutdown of the point of sale of the infringing goods (in this case, a house), or because Deckers views infringement occurring on the internet as somehow different?

All of these ex parte shutdown cases (and there are probably many more out there) warrant a *close* look. It's disappointing to see so many of these orders sail through without any significant objection from the judges who sign them. Of course, they offer a preview of how rightsowners will proceed under SOPA. Many have highlighted the potential for abuse under SOPA. There's little doubt that rightsowners will push the envelope. They are already doing so under current law.
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Eric's Comments

Ex parte orders regarding foreign alleged infringers are out-of-control. Without sufficient regulation and without any adversarial pushback, rightsowners have learned that they can ask for ridiculous relief on an ex parte basis and get a judge to sign off on most or all of it. It's clear that rightsowners are asking for way more than the law allows, but judges seem to acquiesce. The results are two-fold:

1) the rightsowners are taking control over third party domain names on an ex parte basis and with questionable notice given to the domain name registrants
2) worse (IMO), judges are issuing orders that purport to bind third party non-litigants, such as domain name registrars, search engines and shopbots. The Federal Rules of Civil Procedure purport to limit such orders against non-litigants, but litigants and judges apparently interpret phrases like "acting in concert" incredibly broadly. The result is that these third party service providers--who aren't in court protecting their interests when the orders are being signed--are presented with a court order that imposes costs on them no matter what they do. They can take the action required in the court order...at some cost. Or they can contest the order...at some cost. Or they can ignore the order and risk being found in contempt. Naturally, these third parties will take whatever path is cheapest--which is usually to honor the order regardless of its legal legitimacy. (This is especially true in the case of domain name registrars, who typically make only a buck or two of profit a year off any particular domain name). So when the judge doesn't tightly control the ex parte requests being imposed on third parties, the judges are usually ensuring that the third party won't contest even an illegitimate order.

Rightsowners don't look so good in this process, but who can blame them for overreaching? If judges are freely handing out lollipops, why not ask for a lollipop! Plus, lawyers view themselves as zealous advocates, so anything that they can get a judge to sign must, by definition, be OK.

This means the real breakdown is occurring with judges. They are supposed to be the safeguards to prevent abuses, but judges are so dependent on adversarial proceedings that they are surprisingly flexible when only one side bends their ears. It looks we need some urgent judicial education about the issues raised by rogue website enforcements.

As Venkat points out, some members of Congress and their rightsowner patrons are also looking pretty silly right now. They keep insisting, with the straightest face imaginable, that rightsowners lack the current ability to bring effective enforcement actions against foreign rogue websites, and this is just FLAT-OUT WRONG. So either these folks are ignorant about what's happening in the courts or lying about it (or possibly both). Now, the entire legislative process is routinely detached from actual facts, so this is nothing unusual, but it's hardly a credit to those who are looking increasingly foolish as rightsowners in court keep getting what lobbying rightsowners and members of Congress keep insisting isn't possible to get. Get your story straight, please.

For the critics of SOPA and PIPA who have decided this legislation is the place to draw the line in the sand: I'm with you, brothers and sisters, but defeating the legislation doesn't end the problem. Until we fix what's taking place in the courts with rightsowners running hog-wild in ex parte proceedings, any legislative successes will be hollow. After we wipe out SOPA and PIPA completely, we need to proactively seek out at least two additional policy solutions:

1) We need to develop educational programs for judges about dealing with ex parte orders, especially when it comes to third party non-litigants.
2) We may need to fix or clarify the portions of the Federal Rules of Civil Procedures so that ordinary service providers aren't bound by ex parte orders against them. The rules should be clear enough that service providers don't have to spend their money to correct judicial errors. Maybe an automatic fee-shift if a plaintiff gets a judge to sign off on an overbroad order that a third party non-litigant successfully contests?

If you have any other suggestions about proactive steps we should take to fix the abuses we're seeing in court, please send them along.

Prior blog coverage of these topics:

* More on Ex Parte Cutoffs of Foreign "Rogue" Domain Names
* Does the House Judiciary Committee Debating SOPA Know What's Going On In the Courts?--Philip Morris v. Jiang
* If You Dislike SOPA, You'll Dislike This Case Too--True Religion v. Xiaokang Lei
* Ad Network Avoids Contributory Copyright Infringement for Serving Ads to a Rogue Website--Elsevier v. Chitika
* Court OKs Private Seizure of Domain Names Which Allegedly Sold Counterfeit Goods--Chanel, Inc. v. Does

UPDATE FROM ERIC: A reader reminded us of the UDRP Sec. 3, which says: "We [registrars] will cancel, transfer or otherwise make changes to domain name registrations under the following circumstances...b. our receipt of an order from a court or arbitral tribunal, in each case of competent jurisdiction, requiring such action." So when a judge issues an ex parte order against a registrar, the registrar's hands may be tied. All the more reason for the judge to get it right and not rely on ex post pushback from the non-litigant third party. This also creates the possibility of abuse of ex parte orders, just like I discussed in this blog post. If we were to redraft the UDRP, we probably would not make it mandatory for registrars to honor ex parte orders.

Posted by Venkat at 11:49 AM | Copyright , Domain Names , Trademark | TrackBack

January 16, 2012

Copyright Doe Defendant Can’t Quash Disclosure Subpoena Anonymously—Hard Drive Productions v. Does (Guest Blog Post)

By Guest Blogger Elliott Alderman with brief comments from Eric

[Eric’s introductory note: Elliott Alderman is an IP attorney in Washington DC. I asked if he could guest-blog this opinion after calling it to my attention.]

Hard Drive Productions, Inc. v. Does 1-1,495, Civil Action No. 11-1741 (D.C. D.C. Dec. 21, 2011)

Overview: A DC Magistrate Judge recently ruled that a defendant cannot file anonymous motions to quash disclosure subpoenas in copyright file-sharing case. This ruling invites discovery abuses--and kicks due process.

The fragile balance between copyright owners enforcing their rights and the privacy interests of IP address owners was upended recently in Hard Drive Productions, Inc. v. Does 1-1,495, Civil Action No. 11-1741 (2011). There, the magistrate held that individuals who subscribe to the Internet through ISPs have no expectation of privacy in their subscriber information, since they have already disclosed this information to their service providers. So when copyright owners file disclosure subpoenas seeking subscriber information, local district court rules require that responding IP address owners must publicly identify themselves as part of filing a motion to quash.

There are two separate levels of privacy involved here: (1) public knowledge (including opposing counsel) of the IP address owner’s identity, and (2) the court’s knowledge of the parties involved in an action before it. A simple solution to the considerable detriment posed to subpoenaed parties is to allow motions to be filed under seal. At this stage, it is only discovery, not adjudication on the merits of the underlying claims, and there is no public benefit to disclosure before consideration of the motions.

Some background: As content owners move from suing download sites for inducement liability to a model of filing reverse class actions against unnamed individual users of P2P networks, discovery of infringers becomes crucial. However, content monitoring software, at best, may associate a digitally marked file with an IP address, but does not identify the owner of the account. And, significantly, the owner of the account is not, by definition, an infringer. So with IP addresses in hand, copyright owners must file disclosure subpoenas with ISPs to get the subscriber information associated with the identified IP addresses.

Typically, consistent with due process (and common sense), IP address owners responding to a disclosure subpoena have the right to preserve their anonymity while a judge reviews the propriety of the class action and the corresponding subpoena. Without the protection of anonymity, a motion to quash a disclosure subpoena is rendered moot, since disclosure of personal information on a public docket reveals the name and address information sought by the subpoena. See Achte/Neunte Boll Kino Beteiligungs GMBH & Co. v. Does 1-4,577, 736 F. Supp. 2d 212, 215 (D.D.C. 2010). Ironically, Achte/Neunte is one of the cases cited by the magistrate in support of public disclosure.

For a number of reasons, Hard Drive makes no sense. A subpoenaed owner essentially no longer has a right to contest disclosure, since challenging the merits of the discovery process reveals the very thing sought in discovery – his identity. And even if the judge later holds that the owner was misjoined, that an IP address is not an infringer, or any of the other bases that courts throughout the country are using to dismiss file-sharing defendants and kill these suits, plaintiffs have the personal information that they need to harass presumptively innocent parties. Worse still, plaintiffs will be encouraged to withdraw subpoenas before judges evaluate their merits, since the subpoenaed information will already be in hand.

As noted above, the Hard Drive magistrate also based his holding on Local Rule 5.1, which requires that all parties who file pleadings and papers with the district court must provide their name and full residence address, even if they are seeking to proceed anonymously. Judge Bates, who had assigned the case to the magistrate, originally ordered that motions to quash would remain under seal even if the moving party lost. How about a Solomonic compromise? Allow motions to be filed under seal, then only if the motion is denied would subscriber information be released, since the ISP is going to disclose the information anyway. Certainly there are policy reasons supporting the requirement that parties identify themselves to the court -- not the least of which is that it has no way of communicating with unrepresented Does – but permitting sealed motions balances the interests of copyright owners seeking to vindicate their rights against the privacy rights of IP address owners.

Moreover, the central premise of the decision, that there is no expectation of privacy in business transactions where information is disclosed to a third party, defies logic. One also shares information with telephone and insurance companies, and medical doctors – third parties all – but an expectation of privacy remains. Moreover, courts have implicitly recognized a privacy interest in ISP subscriber information, holding that copyright owners may not use the DMCA’s takedown notice-subpoena provisions to discover subscriber identities. See Recording Industry Association of America v. Verizon Internet Services, Inc., 351 F.3d 1299 (D.C. Cir 2003); In re Charter Communications, Inc., 393 F.3d 771 (8th Cir. 2005). And although it may be argued that when copyright infringement is at issue there is no free speech right to anonymity, see e.g. Sony Music Entertainment, Inc. v. Does, 326 F. Supp. 2d 556 (S.D.N.Y. 2004), the extortionate nature of the file-sharing cases is such that fairness would dictate that IP address owners should be able to anonymously defend against inclusion in classes of unrelated others.

Further, even assuming that an individual has no reasonable expectation of privacy in his subscriber information, he certainly does in his choice of movies. Part of the copyright troll business model, particularly for pornographic films, is the threat of publicly associating an individual with his private tastes. I have represented a number of owners who have had their routers hacked or had tenants or other unauthorized parties who used their Wi-Fi connections. With or without legal liability, too many of these parties have settled because privacy is a more expensive currency than cash.

In fact, in other contexts where there is the potential for stigma or embarrassment, courts typically evaluate the merits of the underlying case before requiring disclosure of confidential information, like a person’s identity. See, e.g. Doe v. Smith, 429 F3d 706 (7th Cir. 2005). The potential for harm to defendants in file-sharing cases is worse, however, because in addition to whatever shame or stigma attaches to being labeled an infringer or, worse, a porn hound (I think that’s the legal term), there are immediate legal consequences to stripping anonymity. Not permitting sealed motions is like having discovery first, then later evaluating its legitimacy.

Finally, the importance of the anonymous motion is intertwined with the architectural problems with the reverse class action model generally. This is not a white hat/black hat debate between content creators and piracy. Rather, the file-sharing cases are about the economics of joining unrelated parties in a class as a cost-effective way to pursue often non-meritorious actions, where secondary parties who are not infringers become the collateral damage. A number of court have dismissed these actions on a variety of grounds, including that:

* IP address owners are not intrinsically infringers. See VPR Internationale v. Does 1-1017, 2:2011cv02068 (C.D. Ill. 2011) (an IP address is not a person)
* different owners have different defenses; and
* unrelated owners do not act in concert by using a P2P program. K-Beech, Inc. v. John Does 1-85, Civil Action No. 3:11cv469 (E.D. Va. 2011); Raw Films, Ltd. V. John Does 1-32, Civil Action No. 3:11cv532 (E.D. Va. 2011); Hard Drive Productions, Inc. v. Does, No. C-11-01566 (N.D. Cal. 2011).

Moreover, the reliability of monitoring programs is suspect, Challenges and directions for monitoring P2P File Sharing Networks, University of Washington Technical Report, UW-CSE-08-06-01, and because a number of ISPs use dynamic IP addresses (where an IP address is rotated between several users) and “infringements” are generally date- and time-stamped, the odds of mistakenly associating a particular IP address with the “infringement” is greatly increased.

All this for want of a sealing motion!
___________

Eric’s Comments

This is a bad ruling. The court has guaranteed that the copyright plaintiff can unmask defendants simply by asking for a subpoena—either the subpoena is granted or the defendant reveals him/herself to fight the subpoena. That’s not the way the system is supposed to work. By creating a no-recourse situation for anonymous/pseudonymous defendants, the court has stripped them of essential due process rights. And, as we know, plaintiffs able to unmask defendants often can take advantage of substantial extra-judicial remedies, such as the public embarrassment factor in porn copyright cases. Thus, this ruling unfairly screws over anonymous defendants in these cases. It needs to be fixed.

For more on the topic, see Lior Strahilevitz’s paper Pseudonymous Litigation.

Posted by Eric at 10:00 AM | Copyright , Evidence/Discovery , Privacy/Security | TrackBack

January 09, 2012

Updates on Transborder Copyright Enforcement Over "Grandma Got Run Over by a Reindeer"--Shropshire v. Canning

By Eric Goldman

Shropshire v. Canning, 2012 WL 13658 (N.D.Cal. Jan. 4, 2012). Prior blog post.

This dispute involves complicated facts, so here's my understanding of what's happening:

The lawsuit involves the musical composition "Grandma Got Run Over by a Reindeer." I won't give the song a dignity of a link. The song is co-owned by a group that includes Shropshire and his ex-wife Patsy. A Canadian group, the Irish Rovers, covered the song. I can't tell if that cover was properly licensed. Canning, a Canadian, uploaded the Irish Rover's cover to YouTube and synchronized it with Christmas-themed pictures, such as reindeers. I infer that Canning uploaded the cover without express consent from the Irish Rovers. Shropshire eventually sent a takedown notice to YouTube, and Canning submitted a counter-notice. Shropshire then sued Canning for copyright infringement and a 512(f) claim for an impermissible putback notice. Canning subsequently got authorization from co-owner/ex-wife Patsy for his video.

In the first ruling last January, the court rejected (with leave to amend) Shropshire's synchronization claim, saying that Canning's synchronization took place in Canada, not the US, and therefore wasn't covered by US copyright law. The court also rejected (with leave to amend) the 512(f) claim for lack of a claimed misrepresentation. Finally, the court required Shropshire to bring in Patsy as a party, which Shropshire did.

In August, the court partially granted and denied a motion to dismiss the second amended complaint. The court held that "extraterritoriality [is] an element of a claim for copyright infringement rather than an issue of subject matter jurisdiction," and then that "the alleged act of direct copyright infringement – uploading a video from Canada to YouTube’s servers in California for display within the United States – constitutes an act of infringement that is not “wholly extraterritorial” to the United States." Copyright's strict liability made it irrelevant if Canning tried to upload to youtube.ca and had no idea that this would result in files being stored on US servers. [In my opinion, this is a harsh result as none of us have any idea about the geographic situs of servers in the cloud, nor do we care]. The court also partially upheld Shropshire's 512(f) claims from a 12(b)(6) dismissal motion.

That brings us to the most recent ruling, which is largely procedural. Shropshire had named ex-wife Patsy as a party, but they worked things out and settled, which led to Patsy being dismissed. Canning reiterated that Patsy was still an indispensable party to the litigation, but the court held that Shropshire satisfied the prior order by bringing Patsy in and then working out a deal with her. To me, the more interesting development is that the case started with no lawyers on either side, but now both sides have lawyered up in a big way--Shropshire's team lists 4 lawyers from DLA Piper (possibly the world's largest law firm), while Canning has 3 lawyers from Mark Lanier's law firm (not Lanier himself). Seriously, guys? We're talking about a comparatively obscure YouTube video, not Obamacare!

Putting aside the many quirks of this case (including the fact that Canning posted a cover recording and the implicit proxy war between ex-spouses), I think the case is interesting because it demonstrates that US copyright owners can bring--and are bringing--copyright enforcement actions in US courts against foreign alleged infringers. This is the kind of fact that seems highly relevant to SOPA/PROTECT-IP...not that the advocates would actually acknowledge what's taking place in court if it would undercut the case for the legislation--even if the court system today will provide them with their desired solutions without any damaging legislative fixes.

Posted by Eric at 12:04 PM | Copyright | TrackBack

January 06, 2012

Did a Court Eliminate 512(h) Subpoenas?--Maximized Living v. Google

By Eric Goldman with additional comments from David Gingras

Maximized Living, Inc. v. Google, Inc., 2011 WL 6749017 (N.D. Cal. Dec. 22, 2011). The initial 512(h) subpoena. The Justia page.

17 USC 512(h) is a relic of a different era. The basic architecture of 17 USC 512 seeks to put copyright liability on users instead of their service providers. However, for that scheme to work, anonymous/pseudonymous infringers must be identifiable so the copyright owners can sue them instead of the intermediaries. 512(h) seeks to expedite the identification of alleged infringers by allowing copyright owners to get an unmasking subpoena super-easily. All copyright owners need to do is file a subpoena request with a court clerk, and in response the court clerk *must* issue the subpoena--the copyright owners don't need to file a lawsuit, and no judge reviews or approves the subpoena's issuance.

Indeed, neither the clerk nor a judge have any statutorily provided discretion to refuse the subpoena. As a result, 512(h) is now badly out-of-step with the law governing anonymous/pseudonymous online defendants that has developed over the past decade in response to unmasking abuses. In other areas than copyright, plaintiffs usually must make some showing that their substantive claims are meritorious before a judge will issue an unmasking subpoena. (The level of the plaintiff's showing depends on a variety of factors). In contrast, a 512(h) subpoena issues irrespective of the substantive merits of the plaintiff's claims--thus opening up a backdoor channel to unmasking abuses. For example, last year I got anecdotal reports that doctors used 512(h) to unmask patients that anonymously/pseudonymously reviewed doctors in contravention of the Medical Justice-supplied contract. If we were redrafting 17 USC 512 today, we would pay a lot more attention to 512(h) and its privacy implications than we did in 1998. [On that front, I have a latent empirical research project to investigate what happened after 512(h) subpoenas issued, but this case may have mooted it.]

With that background, let me turn to this case. Maximized Living sells copyrighted material to chiropractors. Anonymous blogger Doe allegedly infringed Maximized Living's copyrights via a Blogspot blog post. Maximized Living submitted an apparently overbroad 512(h) subpoena request to Google to identify Doe, and Doe successfully quashed the subpoena for its irregularities. Nevertheless, Doe apparently removed the infringing material from the blog. After that removal, Maximized Living sent Google a putatively corrected 512(h) subpoena request to unmask Doe. In this ruling, the court quashes Maximized Living's 512(h) subpoena for a second time.

The court does something goofy to reach this result. The court holds "that the subpoena power of s 512(h) is limited to currently infringing activity and does not reach former infringing activity that has ceased and thus can no longer be removed or disabled." Thus, because Doe had removed the infringing material after the first 512(h) subpoena was quashed, there was no infringing activity taking place when the second 512(h) subpoena request was made.

The problem with this result is that copyright owners must submit a 512(c)(3) takedown notice to service providers before seeking a 512(h) subpoena. Most service providers will take down the allegedly infringing material in response to the 512(c)(3) notice, so unless the copyright owner moves really fast to make its 512(h) request, the infringing material invariably will be down before the 512(h) subpoena request gets filed with the court--leaving those copyright owner in the same place as this one (i.e., submitting a 512(h) request when there's no current infringement). Below, David Gingras explains why the court may have misread the statute.

As a practical matter, this case's result may not be earth-shattering even if it survives appeal. I believe most service providers honor 512(h) subpoenas without much scrutiny and perhaps without notifying the targeted individual. This case will only help if the targeted individual challenges the subpoena, which will only happen if the service provider notifies the individual before releasing the unmasking information and the individual gets to court quickly enough. Because the service providers are a critical player in this process, how they handle 512(h) subpoenas warrants careful attention. I'd be game to work with you to try to get service providers to tell us more about their 512(h) handling procedure and if they give notice to the users--and wait for any quashing effort to materialize--before forking over unmasking info. [FWIW, Google appears to have done both, so they get a gold star for the day.]

Copyright owners also can avoid this result by filing the 512(h) subpoena request basically at the same time as they send the 512(c)(3) notice. That way, when the 512(h) subpoena is filed, there is still infringing activity occurring, even if it's quickly eliminated by the service provider responding to the 512(c)(3) notice. My guess is that many copyright owners will be reluctant to do this because it will increase the cost and time required to target infringing material when quick-filing of a 512(h) request will help in only a small number of situations. Thus, changing the takedown protocol to add a 512(h) filing probably isn't cost-effective.

Finally, even if 512(h) isn't available, the copyright owner can still seek unmasking through a John Doe lawsuit. This isn't as low-cost as 512(h) and will trigger judicial screening of the subpoena request before issuance, so 512(h) is better for copyright owners if they qualify. Nevertheless, copyright owners can still achieve unmasking, and perhaps this case simply indicates that 512(h) is a much more highly specialized solution than we thought.

Finally, a personnel note: one of the plaintiff's lawyers is Kenton Hutcherson. You may recall that last year I blasted an article by Kenton for advocating that plaintiffs scrub search results by taking advantage of Google's apparently lax policy towards court orders. Here, it looks like the judge didn't respond well to at least two of the plaintiff counsels' choices:

1) the overreach in the initial 512(h) subpoena request
2) the submission of a second 512(h) without the court's permission, as specified when the court quashed the first subpoena

One possibility is that the court reached its odd substantive conclusion in response to the plaintiff lawyers' errors.

________________

Comments by David Gingras

[Eric's introduction: Many of you already know David Gingras due to his positions as General Counsel for Ripoff Report and litigation counsel for thedirty.com. While drafting this post, I sent this opinion to David for his thoughts, and his statutory analysis in response was so useful that I asked his permission to share it]

I think it’s extremely clear the court make the wrong decision here. I think the court should have found that the subpoena was entirely appropriate under § 512(h) even if the allegedly infringing material had been removed and the infringing activity stopped.

The court’s premise seemed to be that you could only use a pre-suit subpoena under § 512(h) to identify current infringers, not a former infringer who had stopped infringing. By itself, this seems like a very dubious distinction. What’s the difference?

As far as I can see, the conclusion was based on the fact that you obviously can only use what is commonly referred to as a “DMCA notice” (i.e., a takedown demand under § 512(c)(3)(A)) to address active infringements. In turn, that sounded correct because § 512(c)(3)(A) requires the party submitting the notice to identify, inter alia: “the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled." By using the present and future tenses here, it’s beyond obvious that this section doesn’t apply to past acts of infringement. In other words, you can only use a § 512(c)(3)(A) notice to address current/ongoing infringements (DUH – if the material was already removed, you wouldn’t need to a send a takedown notice anyway, right?)

Up to this point, the court interprets the DMCA in a common sense way, but then it erred when it assumed (incorrectly), that because § 512(h) subpoenas are necessarily premised on a § 512(c)(3)(A) takedown notice, that requires the court to find that where the infringement has stopped, the right to pursue a § 512(h) subpoena also stops. That’s just totally inconsistent with the plain language of § 512(h)(5) which talks about the duties of a party on the receiving end of a DMCA notice (like Google) once they receive the follow-up subpoena:

(5) Actions of service provider receiving subpoena.--Upon receipt of the issued subpoena, either accompanying or subsequent to the receipt of a notification described in subsection (c)(3)(A), the service provider shall expeditiously disclose to the copyright owner or person authorized by the copyright owner the information required by the subpoena, notwithstanding any other provision of law and regardless of whether the service provider responds to the notification. [italics added]

The way I read that section, it seems pretty simple – you can get and serve a § 512(h) subpoena either contemporaneously with the § 512(c)(3)(A) takedown notice, or the subpoena may be issued subsequent to that notice; i.e., at a later time when the infringement has already stopped. Either way is perfectly fine, which makes sense.

In this instance, the way the court interpreted § 512(h) makes the words “or subsequent to” totally superfluous, so we know the court’s conclusion is incorrect. Furthermore, the last few words of § 512(h)(5) seem to suggest that § 512(h) subpoenas may or may not come after a service provider has already “responded” to the takedown demand; i.e., after the material has already been removed – that’s another strong indicator that the right to pursue a § 512(h) subpoena may start with a § 512(c)(3)(A) takedown notice, but it does not stop simply because the infringing material was removed.

Posted by Eric at 09:18 AM | Copyright , Derivative Liability , Privacy/Security | TrackBack

January 05, 2012

SOPA/PROTECT-IP/OPEN Linkwrap #2

By Eric Goldman

It's been a busy time for news related to SOPA (the Stop Online Piracy Act, not the Stop Online Privacy Act, although that could be an unintended result!), PROTECT-IP/PIPA, and the OPEN Act. In a bit, I'll recap some links. First, though, some general thoughts about the last month.

As I predicted, SOPA has been incredibly divisive. It has largely boiled down to Hollywood in support vs. the rest of the world against, with an emerging "with me or against me" attitude. What a shame. We get much better results when the tech and entertainment community collaborate rather than play zero-sum games.

Naturally, I think Hollywood has made several strategic miscalculations here. First, the outrageousness of its proposals has mobilized the tech community. It's been fascinating watching companies and politicians scramble to disavow themselves from SOPA when targeted by the anti-SOPA advocates. That NEVER happens when it comes to a Congressional proposal to regulate technology. Perhaps this mobilization will be a flash in the pan, or perhaps Hollywood has poked a sleeping tiger once too often.

Second, Hollywood's credibility with its financially-sponsored politicians may be wearing thin. Politicians will happily take its money, but they don't enjoy looking like fools--and many SOPA supporters have, in fact, looked pretty silly while being left twisting in the wind by their Hollywood patrons. Money will buy a lot of politician patience, but the goodwill reservoir is not bottomless.

Third, even if Hollywood can succeed in passing something like SOPA or even PIPA, I believe it would be counterproductive to its long-term interests. As I've mentioned before, we all benefit from having larger common markets (see, e.g., NAFTA or the EEC), and the Internet has emerged as the largest common market of all. A Balkanized Internet will devolve into disparate smaller markets that represent less value for everyone.

A final counterproductive point, although Hollywood may not care. SOPA/PIPA absolutely will drive US dollars--and jobs--overseas. For example, I ditched GoDaddy as my domain name registrar and took my business to a foreign registrar who won't be subject to SOPA/PIPA. If other folks make the same calculations I did, collectively it will be a boon for foreign service providers and a net loss for US service providers. At best, SOPA/PIPA preserve some jobs at the expense of others; my guess is that our economy will suffer a net reduction in jobs. Just what we need during this protracted economic downturn.

The amazing thing is: despite the complete lack of credible empirical evidence supporting SOPA/PIPA, and despite a groundswell of grassroots opposition to it, and despite companies and politicians dropping their support of SOPA/PIPA when the spotlight is cast on them, Hollywood might still be able to succeed in this rent-seeking endeavor. It's evidence of just how well Hollywood has embedded itself into Congress' psyche (and wallets).

Some news items since my last linkwrap:

* OPEN has been introduced in the Senate as S.2029.

* CDT's list of opponents. As you know, I am on it.

* Mike Masnick broke a huge story about Dajaz1.com, showing how our government repeatedly broke the law in falsely pursuing a so-called rogue website. The conduct of the government is chilling--things like this aren't supposed to happen in our democracy!--and if heads don't roll for the coverup, it will be another nail in the coffin of our republic.

* The government also lost the Rojadirecta case. Also, an in-depth look at the Operation in Our Sites bust of Ninja Video, where the government continues to make questionable interpretations of criminal copyright law.

* Constitional Law scholar extraordinare Laurence Tribe and advocate Marvin Ammori both explained how SOPA violates the First Amendment. Marvin followed up with a First Amendment assessment of the manager’s amendment. Corynne McSherry’s thoughts.

* Why aren't members of Congress listening to the opposition? Maybe it has something to do with the revolving door between government and industry. See this article: SOPA revolvers: Sixteen former Judiciary staffers lobby on online copyright issues.

* Wikimedia’s General Counsel Geoff Brigham explains “How SOPA will hurt the free web and Wikipedia”

* One of the many unanswered questions: who is a rogue website and how many are there? CNET News.com suggests that SOPA is all about taking out just one website--The Pirate Bay. Seriously, we're going to break the Internet because of The Pirate Bay? Talk about collateral consequences for something that could be handled with incredibly narrow legislative fixes—or better yet, with precise transborder enforcement cooperation.

* EFF on the good and bad in the OPEN Act.

* Mike Masnick completely destroys Lamar Smith’s so-called statement of facts in support of SOPA. Reading articles like this remind us that support for SOPA/PROTECT-IP is hardly about "the facts."

* More "fact" debunking, this time by Julian Sanchez.

* Speaking of "the facts" or the lack thereof, it appears that the House Judiciary Committee is massively overclaiming who supports SOPA. Misleading the American public apparently is just business as usual in DC.

* Meanwhile, companies are realizing that being listed as a SOPA supporter isn't necessarily good for business. SOPA opponents targeted GoDaddy, who instantly declared their lack of support for SOPA but remains completely untrustworthy and hypocritical.

* Meanwhile, SOPA is turning into an election-year issue, and politicians are beginning to learn the power of Reddit.

* If you want to speak up, check out SOPA Track and find out where your legislators stand. My Congresswoman, Anna Eshoo, has been firm in her opposition to SOPA, but the California senators are both PIPA co-sponsors because they too deeply in bed with Hollywood to listen to other constituents. So fair warning to Sen. Boxer and Feinstein--I plan to vote for your opponents, whoever they are, in the next election cycle.

* Great article about how SOPA will become a Trojan horse for all types of online content censorship, not just the suppression of rogue websites.

* Opposition to SOPA is bipartisan: “I suggest the left and right unite and pledge to defeat in primaries every person named as a sponsor on H.R. 3261, the Stop Online Piracy Act.”

Just a reminder because everyone knows SOPA is so ridiculously extreme: PROTECT-IP is NOT an acceptable "compromise" to SOPA. PROTECT-IP is also extreme. As I indicated previously, if we're going to have any legislative discussions about rogue websites, we should start with the OPEN Act and iterate from there. In light of the action in the courts (see the links below), any legislative solution should be coupled with increased immunities for Internet intermediaries so that they don't just coddle the rightsowners irrespective of the legislation.

FWIW, I have called Rep. Eshoo to thank her for her opposition to SOPA, and I've contacted Sens. Feinstein and Boxer to let them know that I disagree with their positions on PROTECT-IP. Have you contacted your legislators to tell them how you feel? If you don't speak up, they won't know where you stand.

Prior blog coverage of SOPA/PROTECT-IP/OPEN:

* More on Ex Parte Cutoffs of Foreign "Rogue" Domain Names
* Does the House Judiciary Committee Debating SOPA Know What's Going On In the Courts?--Philip Morris v. Jiang
* If You Dislike SOPA, You'll Dislike This Case Too--True Religion v. Xiaokang Lei
* The OPEN Act: Significantly Flawed But More Salvageable Than SOPA/PROTECT-IP
* I Don't Heart SOPA or PROTECT-IP: A Linkwrap
* Ad Network Avoids Contributory Copyright Infringement for Serving Ads to a Rogue Website--Elsevier v. Chitika
* Court OKs Private Seizure of Domain Names Which Allegedly Sold Counterfeit Goods--Chanel, Inc. v. Does
* Why I Oppose the Stop Online Piracy Act (SOPA)/E-PARASITES Act

Posted by Eric at 09:15 AM | Copyright , Derivative Liability , E-Commerce , Trademark | TrackBack

January 03, 2012

Nov.-Dec. 2011 Quick Links, Part 2 (Extended IP Edition)

By Eric Goldman

Copyright

* Costco v. Omega (E.D. Cal. Nov. 9, 2011). On remand after the disappointing non-result from the Supreme Court in this case, the district court gives Costco a decisive win, holding that Omega engaged in copyright misuse:

Omega concedes that a purpose of the copyrighted Omega Globe Design was to control the importation and sale of its watches containing the design, as the watches could not be copyrighted. Accordingly, Omega misused its copyright of the Omega Globe Design by leveraging its limited monopoly in being able to control the importation of that design to control the importation of its Seamaster watches.

The net effect is that Costco violated copyright law's importation clause but Omega's copyright misuse makes the importation not actionable. This is one of the most significant copyright misuse decisions we've seen. Assuming it goes to the Ninth Circuit again, it will be interesting to see what they do with it. If this latest ruling stands, Omega's legal hack will be decisively shut down; and other manufacturers trying to use copyright to control their channels for non-copyrightable articles will want to reevaluate their approach.

* The Righthaven debacle continues to wind towards its messy but inevitable conclusion. Some of the items from the last couple months that caught my attention:

- Every time Righthaven's lawyers whine about opponents' unfair litigation tactics, I'm dumbstruck by the duplicity.

- Stephens Media dropped its efforts to contest that Democratic Underground made a fair use by republishing a newspaper article excerpt.

- Righthaven v. Wolf: "The Court admonishes Mr. Mangano regarding his lack of civility. The motion for reasonable attorney's fees in the amount of $32,147.50 and costs of $1,000.85 is GRANTED."

- Righthaven LLC v. Newsblaze LLC, 2011 WL 5373785 (D. Nev. Nov. 4, 2011). Yet another dismissal for lack of standing.

- the auction for Righthaven.com is going on right now. Current high bid is $1,900.

* C-70/10, Scarlet Extended SA v. Societe Belge des auteurs, compositeurs et editeurs (SABAM) (ECJ Nov. 24, 2011). Some interesting quotes from an ECJ opinion:
- "EU law precludes the imposition of an injunction by a national court which requires an internet service provider to install a filtering system with a view to preventing the illegal downloading of files"
- "The filtering system would also be liable to infringe the fundamental rights of its (Scarlet's) customers, namely their right to protection of their personal data and their right to receive or impart information"
- “E.U. law precludes an injunction made against an Internet service provider requiring it to install a system for filtering all electronic communications passing via its services, which applies indiscriminately to all its customers, as a preventive measure, exclusively at its expense, and for an unlimited period”

* Brownmark Films LLC v. Comedy Partners, 2011 WL 6002961 (E.D. Wis. Nov. 30, 2011): In awarding a fee shift to defendants, "the Court finds that Brownmark's legal positions were also objectively unreasonable, and thus their position was frivolous. To this Court, there is little that could justify the plaintiff's stated view that the South Park version was not parody....given the transformative nature of the use and the lampooning Brownmark's original received, there is ample reason to believe that South Park's use would have greater spurred the market for the original. In the internet era, with information freely and quickly accessible, viewers interested in South Park's version could turn to the internet to find a copy of the original. And any confusion over which version was the original could be supplied to online viewers through a statement at the video's web page. For all of these reasons, the Court finds that Brownmark was objectively unreasonable in its position that South Park's use was not fair." Wendy Davis' writeup.

* Carolyn Wright, a/k/a PhotoAttorney, who helps photographers enforce their copyrights, got side-swiped in a misguided enforcement action and had her photo site mistakenly taken offline by a DMCA takedown notice (not surprisingly, GoDaddy was in the middle of this).

* UC Berkeley revamps its policies about student note-taking and recordings of classes. It seems a little odd to encourage faculty members to be sending 512(c)(3) takedown notices freely. James Grimmelmann has more criticisms.

* Gibson v. Amazon (C.D. Cal. Sept. 8, 2011). The court rejected a copyright infringement case against Amazon, Urban Dictionary and others. Gibson is appealing to the Ninth Circuit.

* RIAA is in pre-litigation enforcement mode against ReDigi for reselling digital files.

* The Zynga-Vostu litigation settled.

* Ars Technica: Warner Bros: we issued takedowns for files we never saw, didn't own copyright to

* Megaupload brought a 512(f) suit against UMG for wrongfully taking down a promotional video. The complaint. The contract. James Grimmelmann's comments.

* The economics of the record label-online music site deals look very, very bad for the music sites.

* Techdirt: Congressional Research Service Shows Hollywood Is Thriving

* David v. CBS complaint. Tertiary infringement re-redux: Download.com sued again for secondary copyright infringement for distributing LimeWire and BitTorrent clients.

* A Singapore newspaper sued Yahoo News for copyright infringement.

* An analysis of the Trans Pacific Partnership (TPP).

Trademark

* 1-800 Contacts, Inc. v. Lens.com, Inc., 2011 WL 5403368 (D. Utah Nov. 4, 2011). The court denies 1-800 Contacts' motion for post-judgment relief based on newly discovered evidence. This case could be a textbook case of trademark bullying--remember, 1-800 Contacts has spent well over $650k on this case and Lens.com made $20 (not a typo) of profit directly from its keyword ads based on 1-800 Contacts' trademarks. Prior blog post.

* Speaking of trademark bullying, does an "Eat More Kale" t-shirt infringe any IP rights that Chik-fil-A has in "Eat Mor Chikin"? See the 2011 C&D letter, the 2006 C&D letter and the 2006 C&D response. I assume most kale eaters don't overlap with Chik-fil-A consumers. But, Paul Levy explains why there should be a pox on both parties' houses.

* Lovely Skin, Inc. v. Ishtar Skin Care Products, LLC., 2011 WL 6055489 (D. Neb. Dec. 6, 2011). In a trademark lawsuit, the defendant asked for:

REQUEST NO. 32: All documents referring or relating to purchasing of keywords, “Ad Words,” “sponsored links,” or other advertisements for search engines and any efforts to achieve search prominence on search engines, including but not limited to Your purchase, or consideration to purchase, the name “Lively Skin” or the URL www.livelyskin.com.

REQUEST NO. 37: Documents referring or relating to communications with Google to purchase “lively skin” and “livelyskin.com” as keywords or “Adwords.”

The court says (cites omitted):

In support of its motion to compel, Ishtar states that Lovely Skin's production of documents in response to these requests are “deficient for two reasons.” First, the Google information lacks the dates that the keywords were used, which are necessary to establish “(1) whether Lovely Skin's marks had achieved secondary meaning when Ishtar entered the market; and (2) the extent of Lovely Skin's inequitable use of the term “livelyskin” in its keyword advertising campaigns.” Second, Ishtar claims that as a result of its recent Internet searches, Ishtar has learned that “Lovely Skin possesses additional information regarding keyword purchases made by Lovely Skin through other search engines.” The Court finds that the information sought by Ishtar is relevant to its affirmative defenses of the claims made against it by Lovely Skin.

* Partners for Health and Home, L.P. v. Seung Wee Yang, 2011 WL 5387075 (C.D. Cal. Oct. 28, 2011):

Defendants have infringed Plaintiff's Perma–Life trademark by each of the following acts, taken either individually or as a whole:

a. Registering the domain www.perma-life.co.kr and using it to promote their competing Pearl Life cookware;

b. Applying the metatags “perma life” and “permalife” to the website at www.perma-life.co.kr through which they sold their competing Pearl Life cookware;

c. Applying the term “permalife” as visible video tags (indexes) on videos promoting Pearl Life cookware which they posted on the Internet at video sharing websites YouTube (www.youtube.com) and Tag Story (www.tagstory.com), and on the “blog” site Daum (www .daum.net).

d. Purchasing the term “permalife” as an Internet search engine advertising keyword to direct Internet users to their website at www.pearllife.com at which they advertised their Pearl Life cookware.

* Foreword Magazine Inc. v. Overdrive Inc., No. 10-1144 (W.D. Mich. Oct. 31, 2011). Offering to sell a domain name after getting a C&D can't be introduced as evidence of bad faith in the resulting ACPA suit.

* Weather Underground v. Navigation Catalyst (E.D. Mich. Nov. 9, 2011). Typosquatters' liability for ACPA violations must be evaluated on a domain name-by-domain name basis, not based on the defendant's entire portfolio; and ACPA bad faith cannot be established on a "willful blindness" standard.

* iYogi Holding Pvt. Ltd. v. Secure Remote Support, Inc., 2011 WL 6291793 (N.D.Cal. Oct. 25, 2011). A default judgment against a competitor who created fake reviews bashing the plaintiff.

* Fordham sent a trademark demand letter to Texas Wesleyan for using the acronym "CLIP" to describe its IP center, which garnered derision from many other IP professors. The demand letter (currently set to private; I'm trying to fix that).

* Multi-Time Machine v. Amazon complaint. A watch manufacturer sues Amazon for trademark infringement based on Amazon's internal search engine's results.

* Night Owl Games v. Zynga complaint. Another game developer seeks a declaratory judgment against Zynga over the -ville trademark, this time "Dungeonville."

* Harvard spikes a Yale t-shirt making fun of it.

* Rebecca provides three updates on Southern Snow Manufacturing Co. v. Sno Wizard Holdings, Inc. (see my prior blog post on the case): insurer had duty to defend, a baffling battle over false trademark marking, and a further rejection that metatags matter.

Patents/Trade Secrets

* The Trade Secret Litigator: The America Invents Act: What Will the Impact of the New Patent Law's "Prior Commercial Use" Defense Have on Trade Secret Protection?

* Coca-Cola turns the vault for its secret formula into a tourist attraction.

* The producers of the Bachelor/Bachelorette sued Reality Steve for inducing show participants to leak spoilers. Reality Steve’s response.

* Are strict limits on e-discovery coming for patent cases?

* All Things D reports on Abhyanker v. Benchmark Capital, an idea theft lawsuit against a VC fund involving the entrepreneur who also is behind Trademarkia.

Posted by Eric at 01:05 PM | Copyright , Domain Names , Evidence/Discovery , Patents , Trade Secrets , Trademark | TrackBack

January 02, 2012

UGC Website Hit With Spoliation Sanctions--Io v. GLBT

By Eric Goldman

[This is one of those blog posts that got stuck in queue. It's still pretty interesting, so I'm sharing at this relatively late date. Happy new year!]

Io Group Inc. v. GLBT Ltd., 2011 WL 4974337 (N.D. Cal. Oct. 19, 2011)

This case involves Io, the pornography company that lost Io v. Veoh, the main 17 USC 512 case I teach in my Internet law course. The defendants in this case are British. They run a series of UGC porn websites where users can get some porn for free and then must pay for additional access either with cash or by uploading their own content. The plaintiffs seek to hold the defendants liable for copyright and trademark infringement because users are allegedly committing copyright infringement by uploading the plaintiffs' porn. The defendants are defending on 17 USC 512 and other grounds.

Being in Britain, the defendants are governed by the Data Protection Act. They interpreted that act to require them to flush lots of data very quickly. Perhaps they have been overly zealous about implementing the DPA such that their interpretation isn't so credible. For example, they automatically deleted all incoming and outgoing email after 3-4 days, and they didn't change this for more than a year into the lawsuit. They also completely deleted all files that were subject to a takedown notice, so it wasn't possible for plaintiffs to see which files had been removed. Their answers to the judge's pointed questions apparently weren't very satisfying, and eventually the defendants went AWOL. So it's a little hard to tease out any legitimate DPA-based objections the defendants might have had from their other questionable choices.

FWIW, I'm not a DPA expert, but the DPA requires that the service provider keep data only so long as reasonably necessary. I would think legal obligations/discovery rules satisfy that standard.

The court's opinion gives some insights into the evidence that would be useful for the 512 safe harbor. The defendants completely wiped away any UGC files they disabled. The court says:

With respect to the deleted audiovisual files, Plaintiffs are prejudiced by not being able to examine the files and related metadata for any "red flags" indicating that infringement was likely. Such red flags could render Defendants ineligible for safe harbor protections of the Copyright Act.

This is consistent with language in the Ninth Circuit's subsequent ruling in UMG v. Shelter Capital. The court continues:

The loss of takedown notices and corresponding removal notification emails also prejudices Plaintiffs. First, the trier of fact may consider the extent of copyright infringement on Defendants' websites when analyzing a claim of inducement to infringe....Although the number of takedown notices does not alone determine the amount of actual infringement on the site, a large number of notices could indicate that a large portion of the material on the site is infringing. In addition, in order to be eligible for safe harbor protection, Defendants must show that they have policy in place providing for the termination of repeat infringers. 17 U.S.C. § 512(i)(1)(A). Defendants claim that they have such a policy in place, but without the ability to examine the takedown notices and corresponding emails, Plaintiffs have no way of challenging the implementation and enforcement of the policy because they cannot examine whether Defendants actually terminated individual users who repeatedly posted infringing material.

I'm not clear about the relevance of the percentage of infringing activity, but for more on the evidentiary issues associated with inducement, see the Grokster ruling. Finally, the court says:

the destruction of Defendants' internal emails renders it impossible for Plaintiffs to explore Defendants' motivation and state of mind in operating their websites; this is key to Plaintiffs' claim of secondary infringement based on inducement

For the evidence spoliation, the court hits the defendants with adverse inference sanctions:

Plaintiffs are entitled to adverse inference instructions in the form of rebuttable presumptions. Given the specific evidence destroyed by Defendants, the court orders the following rebuttable factual presumptions: 1) third parties posted material on Defendants' websites that infringed Plaintiffs' copyrights; 2) Plaintiffs submitted takedown notices to Defendants regarding the infringing material; and 3) Defendants did not take steps to remove Plaintiffs' infringing material from their websites.

Unless the defendants magically find some exculpatory evidence, it sounds like those inferences will nail them on the substantive rulings. The court also awarded $15,000 in attorneys' fees.

This case raises a number of interesting issues.

First, exactly what evidence is plaintiffs entitled to when trying to overcome a service provider's 512 defense? As far as I can tell, there are few limits because just about anything might support an inducement finding. The otherwise defense-favorable ruling in UMG v. Shelter Capital provides some other ideas about information that plaintiffs can seek. Summing all this up, as a practical matter, 512's safe harbor is nifty, but it's an increasingly expensive proposition for both parties. Contrast this with 47 USC 230, where many immunized lawsuits are tossed on a motion to dismiss without any discovery at all. Not only does that allow judges to issue clean and quick rulings, but it saves both plaintiffs and defendants a lot of coin. Note to statutory drafters: it's so important to consider the evidentiary implications of your legislative drafting. The way the statute implicitly allocates discovery costs has a huge substantive effect--especially if the goal is to create a safe harbor or immunity. On this point, even if 512 usually gets to the right result, the safe harbor is miscalibrated from an evidentiary standpoint.

Second, service providers hoping for a 512 safe harbor are often uncertain about what data they should or must retain. After Grokster, UGC sites became nervous about potential inducement liability. As a result, I believe it's become common to recommend that UGC sites flush as much material as quickly as possible (and before litigation becomes "reasonably anticipatable") to reduce the risk that the material will be cited as evidence of inducement or otherwise disqualify the 512 safe harbor. However, UGC sites don't want to look like they are trying to evade the truth or, worse, disrespecting the court (as the defendants in this case might be perceived as doing) or engaged in evidence spoliation, so how should UGC sites strike an appropriate balance? I'd welcome your thoughts about that.

Third, irrespective of how we feel about these particular defendants, their underlying point about the intersection between 17 USC 512 and user privacy is worth considering. 17 USC 512(m) is entitled "Protection of Privacy," so the drafters of 512 recognized the push-pull issue here. Assume for a moment that the defendants in this case honestly wanted to provide their users with private browsing/uploading/downloading, something that might be desirable in the context of these defendants' service. It seems logical that the service provider seeking a privacy-enhanced UGC service would flush its logs, email and disabled files promptly and make those representations to its users. Here, it appears the court would undo those promises, forcing the service provider to retain data it didn't want to keep for the benefit of copyright plaintiffs. I understand that may be our current state of play, but I see the potential for mischief too.

Posted by Eric at 08:20 AM | Copyright , Derivative Liability , Evidence/Discovery , Privacy/Security | TrackBack

December 28, 2011

Why Are Korean Copyright Owners Suing an Australian Infringer in San Jose, California?

By Eric Goldman

DFSB Kollective Co., Ltd. v. Tran, 2011 WL 6730678 (N.D. Cal. Dec. 21, 2011)

In light of SOPA, I am paying closer attention to transborder copyright and trademark enforcement actions. After all, SOPA is designed to redress foreign rogue websites, so the results being obtained in court today are highly relevant to the policy debates. As we've previously shown, a lot of SOPA remedies are already being awarded by judges--for better or worse (mostly the latter)--and some of those rulings are raising some of the same due process concerns we have about SOPA.

Today's ruling baffles me, and I'm hoping you'll help me understand the case and the issues. The plaintiffs own copyrights in Korean pop music and are based in Seoul. The defendant is Kenny Tran, who runs ihoneyjoo.com and ihoneydew.com (both offline--more on that later) and is peripatetic on social media. Tran allegedly posted infringing music files and album covers to cyberlockers and other sites and then linked to the uploads from his social media accounts. The plaintiffs claim Tran is "one of the biggest illegal uploaders (and free download link providers) of Korean music in the world" and his site generated more traffic than the top 3 legitimate Korean music sites combined. (If true, this crucial information about consumer behavior made me think of this meme). Tran allegedly profited from his actions by showing ads and soliciting PayPal donations.

The plaintiffs claim they repeatedly sent takedown notices to Tran's service providers, but Tran allegedly evaded enforcement by opening new accounts or switching vendors. So they sued Tran in San Jose, California, where they happened to draw Judge Koh, the only federal district court judge of Korean descent. They claim to have served him in Australia, but Tran hasn't responded to the lawsuit at all.

As usual in default judgments, the judge basically rubber-stamps the plaintiffs' arguments. She finds personal jurisdiction over Tran, a result that's become almost pro forma in copyright infringement cases (see the multiple Righthaven jurisdictional wins). As for Tran's ties to California, Judge Koh says:

it appears as though Defendant has specifically used several California companies to further his scheme of perpetrating illegal downloads. Tran uses California companies Facebook, Twitter, and YouTube to promote the websites he operates, and to allow users access to the pirated copies of the copyrighted music and artwork. Additionally, it appears as though Defendant uses a privacy service located in California to shield his identity....In light of the nature of the websites run by Defendant, it appears that Defendant's activities are expressly aimed at California.

Similarly, with respect to how Tran caused harm in California, the opinion says:

Tran relied on several California companies to further his scheme of providing copyrighted music to a world-wide audience of users. Additionally, given the evidence provided by Plaintiffs of the reach of Defendant's activities, Tran likely knew that harm—in the form of distribution and download of copyright protected material—would be suffered in the forum state.

Completely missing from this discussion is how the plaintiffs suffered any harm in California or, for that matter, had any ties themselves to California. The opinion offers nothing on that point, leaving open the possibility that the plaintiffs are engaged in strategic forum-shopping. The opinion also does some serious arm-waving about the other factors in the personal jurisdiction tests that evaluate the forum's appropriateness--because the plaintiffs apparently didn't provide anything to show their interest in California, the opinion just says a lot of factors are "neutral" when in fact she's working with no information at all. This is typical of default judgments; we usually wouldn't see such corner-cutting in an adversarial proceeding. Similarly, the conclusion that using Twitter or Facebook makes defendants subject to California jurisdiction would not survive properly adversarial proceedings.

The opinion finds direct copyright infringement of 11 albums/129 songs. It also finds contributory copyright infringement, although it never says who the direct infringer is given that Tran allegedly uploaded the files himself (the failure to identify a direct infringer in a contributory copyright infringement analysis is a common error on my Internet Law exam, a mistake that my students usually regret when they get their grade). The opinion punts on the inducement question, saying "there is some doubt as to whether [inducement] is a separate cause of action or more properly considered a species of contributory infringement."

Based on the copyright infringement, Judge Koh approves $5k statutory damages per infringement, for a total of $645k. She also grants the following injunction:

Defendant Kenny Tran, and his officers, agents, servants, employees, and attorneys, are permanently enjoined from copying, displaying, or distributing Plaintiffs' works without permission, and from providing internet links or instructions enabling others to access infringing copies of Plaintiffs' works.

In light of recent injunctions involving foreign rogue websites, this injunction is quite restrained.

This ruling leaves open the big unanswered question: why the plaintiffs didn't sue Tran in Australia? If they really wanted to shut him down, they are more likely to get the desired enforceability from an Australian court.

One possibility is that the plaintiffs knew Tran would default in a US action but feared he would fight in Australia, so suing in San Jose was a quick way to get a default judgment. But is the default judgment actually worth more than the paper it's printed on? I assume they will have some difficulty enforcing their damages award and even more difficulty enforcing the injunction given Tran is in Australia. If Tran breaches the injunction and is held in contempt by a US court, then what? Getting a quick but unenforceable win seems like an odd move.

Another possibility is that the plaintiffs will use the ruling to cut off Tran from US service providers, like kicking Tran off Facebook, Twitter, etc. Interestingly, the injunction doesn't specifically reference any remedies against these third-party service providers, unlike some of the other troubling rogue website enforcements we've blogged about recently. Furthermore, many of those service providers already are willing to kick Tran off as a repeat infringer, but they won't set up the screens required to proactively prevent Tran from setting up new accounts, so I don't see how this injunction helps.

Nevertheless, Tran's two domain names are already down. Did the domain hosts cut off the domain names only because of this ruling? Or would they have done the same with an Australian ruling of infringement? Or, especially in the case of GoDaddy, merely at the copyright owner's request without any judicial adjudication at all?

A third possibility is that the plaintiffs had copyright registrations in the United States but didn't have the requisite copyright standing in Australia. I haven't researched this, but it seems doubtful.

As you can see, I have a lot of questions about this case and not a lot of answers. I'd welcome your thoughts about what's going on here and what it might mean. (As usual, let me know if it's OK to post your email to the blog).

One thing I do know: our judicial system depends on adversarial proceedings, and it frequently breaks down quickly when judges are asked to make rulings based on hearing only one side of the story. In this case, Judge Koh--a shining light in our federal judiciary who normally issues rock-solid opinions--totally sidestepped a deeper inquiry into the plaintiffs' interests in California. I can't imagine she missed this glaring hole in the plaintiffs' case (the opinion unmistakably arm-waves on the factors that would prompt that inquiry), so perhaps she just wanted to quickly move this uncontentious case off her docket. However we get there, it's clear that judges won't aggressively protect defendants in default judgments on their own accord without any help from defendants. Any legislative solution that relies on ex parte or non-adversarial proceedings before a judge superficially appears to bake in due process but instead will suffer the same defect, even when we have great federal judges who try to do the right thing. This has a lot of implications for SOPA, but it's also relevant to OPEN.

For more on the case, see Mike Masnick's post.

UPDATE: Leanne O'Donnell, an Australian IP lawyer, emailed me some comments:

1) Australian federal court will not enforce the California judgment (see Sec. 5(1) of the Foreign Judgments Act; the United States doesn't get reciprocity).

[Further update: Leanne subsequently qualified that the copyright owners could seek common law enforcement of the California judgment even if they can't take advantage of the Foreign Judgments Act, but it's more expensive and complicated. See, e.g., Stern v National Australia Bank at 133. It's also subject to public policy limits.]

2) She speculated on the reasons why the copyright owners didn't sue in Australia, including the lack of statutory damages in Australian copyright law and potential issues with the injunction. She pointed to Cooper v Universal Music [2006] FCAFC 187 as a case that discusses relevant topics. The Roadshow v. iiNet case, currently on appeal, is also possibly relevant.

3) I asked her about any potential issues with extraterritorial downloads, as we saw in the Shropshire case. She replied: "If the claim for infringement against Tran was for both primary infringement and authorisation he could be found to have infringed copyright in Australia if the plaintiffs could establish that Australians (primary infringers) downloaded songs from his site." If Tran was really running the largest Korean music site on the Web, proving Australian downloads seems plausible.

Posted by Eric at 12:34 PM | Copyright | TrackBack

December 27, 2011

UMG v. Shelter Capital: A Cautionary Tale of Rightsowner Overzealousness

By Eric Goldman

UMG Recordings, Inc. v. Shelter Capital Partners LLC, 2011 WL 6357788 (9th Cir. Dec. 20, 2011). My prior blog posts on district court rulings on Veoh’s 512(c) safe harbor and attorneys’ fees/Rule 68.

Make no mistake, web hosts and their investors got a major 512(c) victory in this ruling. The Ninth Circuit, building on its favorable but convoluted ruling in Perfect 10 v. ccBill, wrote a decisive and clear (well, as clear as the 9th Circuit gets...) opinion interpreting the crucial 512(c) safe harbor. This opinion is so comparatively lucid that I plan to substitute it into my Internet Law reader next Fall as a replacement for the Io v. Veoh and Viacom v. YouTube district court rulings.

But also make no mistake: this case reminds us why we need to strike a fair balance between rightsowners and technology providers, or else our system will break down. This case's real result is that Veoh is legal, but Veoh is dead—killed by rightsowner lawfare that bled it dry. Meanwhile, rightsowners wrongly assessed the legality of Veoh, but the worst consequence they suffered was overpaying their lawyers. Indeed, UMG isn’t liable under 17 USC 512(f) for sending bogus takedown notices because they never sent any notices at all., nor is UMG liable for Veoh's attorneys’ fees. UMG’s decision-makers walk away from this car crash, muttering under their breath that the Ninth Circuit misunderstood their brilliant legal arguments, but they still get to go to their cushy jobs tomorrow. The same can’t be said for Veoh, even though it "won." Veoh’s employees? On the street. Veoh’s investors? SOL. Veoh’s community? Kicked to the curb.

This case outcome—Veoh is legal, but Veoh is dead—highlights one of the many reasons why so many people are so opposed to SOPA/PROTECT-IP. Those proposals don’t make rightsowners fully internalize the cost of their actions, such as the economic losses suffered by erroneously accused targets. Of course rightsowners will overclaim when there's no real downside to doing so; that’s just human nature. (And please, I don’t want to hear any BS that rightsowners will never get it wrong. See, e.g., Viacom v. YouTube). Without proper calibration, rightsowner overclaiming threatens to wreck the entire Internet ecosystem.

A partial fix to SOPA/PROTECT-IP would make rightsowners bear the cost of their overclaiming. Make them put up a $1 billion bond for the privilege of sending cutoff notices; and pay liberally out of that bond if the rightsowners get the law or facts wrong. Write checks to the investors and employees whose economic expectations are disrupted when rightsowners get it wrong. Write checks to the payment service providers and ad networks who turn down money from legally legit businesses based solely on rightsowner accusations. Heck, write checks to the users of those legit services who are treated as inconsequential pawns in this chess match. Sure, a $1B bond obligation with liberal payouts would turn cutoff notices into a sport of kings that only the richest rightsowners could afford, but perhaps that’s the way it should be. A rightsowner's decision to send a cutoff notice should be a Big Deal, the equivalent of going to Defcon 5, and not like sending holiday cards to distant relatives you last saw at Ethan's bar mitzvah.

Unless (until?) Congress wrecks the Internet with SOPA/PROTECT-IP, 17 USC 512(c) still matters a lot to the Internet ecosystem, and this ruling has a lot of good news for web hosts. It’s a long opinion, as 512 opinions usually are. Some highlights:

* Since its passage, 512(c) has had a crucial ambiguity: did it provide a safe harbor for all three flavors of infringement (direct, contributory, vicarious) or just direct infringement? The legislative history was clear that the safe harbor applied to all three flavors, but the literal text of the statute seemed, by its very terms, to exclude contributory and vicarious infringement. Remarkably, most 512(c) cases sidestepped this fundamental interpretive issue. In contrast, this case confronts it head-on and, perhaps for the first time in an appellate ruling, indicates that 512(c) applies to all three flavors of infringement. For example, the court says:

Given Congress’ explicit intention to protect qualifying service providers who would otherwise be subject to vicarious liability, it would be puzzling for Congress to make § 512(c) entirely coextensive with the vicarious liability requirements, which would effectively exclude all vicarious liability claims from the § 512(c) safe harbor….Although in some cases service providers subject to vicarious liability will be excluded from the § 512(c) safe harbor, in others they will not.

To achieve this outcome, the Ninth Circuit says that “right and ability to control”—language that appears in both the standard test for vicarious copyright infringement and as an exclusion to 512(c)’s availability—means different things in those contexts. I presume the same applies to “direct financial interest,” though that didn’t come up here. Notice this is a result only lawyers could love: the exact same words have different meanings depending on whether they are in the plaintiff’s prima facie case or in the defendant’s affirmative defense.

The good news is that the opinion reads “right and ability to control” as dependent on knowing of specific problems that need to be remediated, like the Viacom v. YouTube opinion did:

a service provider must be aware of specific infringing material to have the ability to control that infringing activity within the meaning of § 512(c)(1)(B). Only then would its failure to exercise its ability to control deny it a safe harbor….A service provider’s general right and ability to remove materials from its services is, alone, insufficient. Of course, a service provider cannot willfully bury its head in the sand to avoid obtaining such specific knowledge.

Unfortunately, the last sentence reminds me a little of the gratuitous dicta in Tiffany v. eBay about "willful blindness," which trademark plaintiffs have already started to mine. Trying to scrounge for any angle, I'm sure copyright plaintiffs will start digging around for evidence that service providers buried their head in the sand, making the most tendentious interpretations of fact that aren't damning in the least.

* UMG argued that 512(c) only provided a safe harbor for personal cloud storage. Under this reading, the moment a file stored in the cloud was available to third parties, 512(c) dropped away. The court brushed away UMG’s argument, and I can’t believe UMG thought it was worth pressing. The argument made no sense historically (no one was offering personal cloud storage lockers when the DMCA was passed), it contravened numerous provisions in the statute that clearly suggested otherwise, it would have conflicted with a long list of precedent cases that applied 512(c) to public hosting, and it’s almost impossible to construct a fact pattern where a user uploading to a personal cloud locker commits copyright infringement (or that a copyright owner would learn about this storage sufficient to send a 512(c)(3) notice specifying the file’s location).

As a corollary, 512(c) applies even if the service provider slices-and-dices the user-submitted file, such as transcoding the file and extracting metadata. This is consistent with earlier 512(c) cases, but now it’s Ninth Circuit law.

* The court rejects UMG’s many arguments that Veoh had impermissible scienter. UMG’s hubris was insane. For example, UMG argued that Veoh hosted music videos, and that because it didn’t have licenses to the music, its general knowledge categorically disqualifies Veoh from 512(c). The court shreds UMG’s argument, noting that Veoh did have direct arrangements with music video producers, and UMG’s argument (if you host music, you must know you’re infringing) would negate the entire 512(c) safe harbor. Instead, the court emphasizes the importance of the notice-and-takedown scheme in 512(c) because “Copyright holders know precisely what materials they own, and are thus better able to efficiently identify infringing copies than service providers like Veoh, who cannot readily ascertain what material is copyrighted and what is not.” Thus, the court “hold[s] that merely hosting a category of copyrightable content, such as music videos, with the general knowledge that one’s services could be used to share infringing material, is insufficient to meet the actual knowledge requirement.” Nor can such knowledge count as a “red flag.”

The court isn’t any more impressed with UMG’s argument that Veoh bought Google Adwords keyed to the names of UMG artists like 50 Cent, Avril Lavigne and Britney Spears. The court responds:

50 Cent, Avril Lavigne and Britney Spears are also affiliated with Sony-BMG, which gave Veoh permission to stream its videos by these artists. Furthermore, even if Veoh had not had such permission, we recognize that companies sometimes purchase search terms they believe will lead potential customers to their websites even if the terms do not describe goods or services the company actually provides. For example, a sunglass company might buy the search terms “sunscreen” or “vacation” because it believed that people interested in such searches would often also be interested in sunglasses. Accordingly, Veoh’s search term purchases do little to demonstrate that it knew it hosted infringing material.

I wouldn't rely on the Ninth Circuit for SEM advice, but did the court really say that a site can buy the keyword “Britney Spears” to reach teeny-boppers, even if the site doesn’t offer any Britney Spears music? Hmm...

The court also rejects UMG’s argument that takedown notices from the RIAA should have prompted Veoh to go find additional videos from the same artists mentioned in the takedown notices. As ccBill said, service providers don’t have that affirmative investigatory duty; it remains solely on copyright owners’ shoulders.

Finally, the court rejects UMG’s efforts to dig up old newspaper quotes from Veoh executives acknowledging that their site contained infringing material. The court appropriately notes that 512(c) assumes UGC sites will contain some infringing items. That’s why copyright owners should send takedown notices, and why they shouldn't bitch if they don’t.

One sour note: The court says that a user-submitted complaint that he’d seen infringing content on the site, and fingering a specific other user, could constitute a "red flag of infringement" even if the user complaint didn’t constitute a 512(c)(3) notice. UMG didn't make any progress here based on the specific facts, but unfortunately the Ninth Circuit opened up the door for copyright owners looking for notifications from non-copyright owners that the copyright owners can turn into red flags. Of course they are going to find such notices; what UGC site hasn’t gotten dragged into intra-user disputes? Unfortunately, 512(c) discovery is already ridiculously expensive, and hunts for needles in the haystack like this only add to everyone’s costs—with almost no payoff because sites should be free to ignore user gripes (non-512(c)(3) notices) in their considered judgments. Until the Ninth Circuit fixes this in a future opinion, this sloppy discussion means UGC sites must address non-512(c)(3) gripes about potential copyright infringement at peril of being accused of having red flags of infringement. This isn’t what Congress intended, so it’s a bummer the otherwise-solid opinion went off the rails here.

* The ruling absolved Veoh’s investors of liability. In a footnote, the court recognizes the importance of keeping investors free of liability, especially when the site actually qualifies for the 512(c) safe harbor:

Congress was no doubt well aware that service providers can make the desired investment only if they receive funding from investors like the Investor Defendants. Although we do not decide the matter today, were we to hold that Veoh was protected, but its investors were not, investors might hesitate to provide the necessary funding to companies like Veoh, and Congress’ purpose in passing the DMCA would be undermined.

The court says that UMG isn’t arguing that funding a venture is enough to create liability; the investors must be involved with the business operations. The court tries not to overrule one of the Napster district court rulings regarding investor liability by saying that, in the Napster case, only one investor (Bertlesmann) was involved with Napster. So long as there are more than 1 investor—and frankly, when won’t that be the case?—each individual investor can’t have sufficient control to trigger liability. In response, UMG tried to argue that Veoh had three outside board members from investors and they collectively controlled the board, but the court said UMG didn’t adequately allege that they were in cahoots with each other.

It would have been so much better if the court had just rejected investor liability outright rather than nose-counting board seats and agreements among board members. Expect copyright owners to impose discovery heck on investors, looking for any evidence that smacks of coordinated efforts among them, and expect rightsowners to make mountains out of molehills like stockholders’ agreements. Nevertheless, the Ninth Circuit opinion has enough language to raise the bar on investor lawsuits that district courts should toss these efforts on summary judgment (the needle-in-haystack discovery hunts are going to make motions to dismiss hard). Let’s hope the district courts set the bar high enough that copyright owners eventually get discouraged in pursuing investors.

* The ruling basically eliminates FRCP 68 for copyright cases (and presumably any other statutes that have express fee-shifting provisions). Rule 68 says that if a defendants offers a jdugment, is refused, but then achieves final results better than the settlement offer, the plaintiff must pay all attorneys’ fees after the offer. The idea is to motivate plaintiffs to accept fair settlement proposals—they have to be so confident they’ll do better the settlement offer because they have to pay off the defendant if they are wrong. Rule 68 provides a useful tool from a game theory standpoint, but the court eviscerates it for copyright cases. The court says that Rule 68 offers can pay off only if the judge chooses to award attorneys’ fees under 17 USC 505. No 505 fee shift, no Rule 68 fee shift. But, why is Rule 68 needed if the judge has to make a 505 fee award anyway? This makes no sense. Rebecca discusses this issue in more detail.

I know a lot of folks are interested in how this case affects Viacom v. YouTube. The news is all good for Google. First, until the Second Circuit issues its opinion, this opinion is the new high water mark for 512(c) cases; and it is the governing law of the Ninth Circuit. Second, I imagine the Second Circuit panel will take a look at this opinion, and they may choose to defer to it. The opinion isn’t airtight analytically, but it’s persuasive enough. Third, in the unlikely situation that Google loses in the Second Circuit, this opinion sets up the possibility of a bona fide circuit split that might open the door for a Supreme Court appeal.

Other coverage of the case:

* Techdirt
* Rebecca (focusing on Rule 68)
* EFF
* Michael Barclay

Posted by Eric at 08:19 AM | Copyright , Derivative Liability | TrackBack

December 26, 2011

Infringing Download Without Further Infringement Only Supports Lost License Fee--Real View v. 20-20

By Eric Goldman

Real View LLC v. 20-20 Technologies, Inc., 1:07-cv-12157-PBS(D. Mass. Sept. 21, 2011). The jury verdict form. A June 2011 ruling with more background.

Copyright damages may not seem like the sexiest topic, but the reality is that damages issues are producing some of the most interesting recent copyright jurisprudence. The record-breaking Oracle v. SAP damages award stands out, but other interesting case include Oracle v. Google, Bryant v. Media Right, UMG v. Veoh (more to say about that case soon) and of course the P2P file-sharing cases (including the Tenenbaum case).

This case involves an apparently growing phenomenon where competitor A illegitimately downloads competitor B's copyright material and then uses the material for non-infringing purposes. In this case, Real View downloaded 20-20's software (something having to do with kitchen design) without permission via eDonkey and then used it to refine its competing software so that it was more like 20-20's. Real View then aggressively competed with 20-20, including using an alternative business model that substantially undercut the incumbent's business model. After 20-20 sued, a jury concluded that Real View's software didn't infringe 20-20's software. All that left to adjudicate, then, was the initial unauthorized download, which Real View admitted was infringing (Real View brought a declaratory judgment).

20-20 argued that Real View should pay $38M, which is the amount 20-20 spent to buy a competitor company. Failing that, 20-20 argued that Real View should pay $2M due to "price erosion." Real View said it should pay 20-20's standard license fee of $4,200--although apparently 20-20 wouldn't have licensed the software at all to Real View, making the license fee calculation somewhat hypothetical. Real View also admitted to about making three-quarter million dollars in profits from its own licenses.

The jury came back with an award of $1.37M. In this ruling, the judge issued a remittitur down to $4,200, holding that Real View only was liable for the license fee for the unauthorized download--everything else wasn't proved or was irrelevant. For example, the court rejects all of 20-20's arguments about Real View's "saved development" costs as speculative. Perhaps more importantly, 20-20's claims of price erosion were irrelevant; any price erosion occurred due to Real View's non-infringing competitive software, not the infringing software download itself, and 20-20 didn't prove the causal link between the two well enough. Similarly, the court says 20-20 can't get any of Real View's profits from the non-infringing competitive software simply because it was facilitated by the illegal download.

Not surprisingly, 20-20 rejected the remitittur and instead opted for a new trial. After all, what do they have to lose? They will likely get at least $4,200 again (and if they didn't, it's not a big loss), so they might as well shoot for the upside. But if the damages award goes sour a second time, it would be another example where overaggressive copyright enforcement snatches defeat from the jaws of victory.

This case is interesting because it highlight how copyright owners can easily overclaim damages. Even if one step in the defendants' process involving infringing activity, that doesn't mean that the copyright owner gets to disgorge the defendant of all of its profits. For example, if a defendant impermissibly scrapes a plaintiff's website--making unauthorized copies into RAM while doing so--but the defendant's resulting publication doesn't infringe the plaintiff's copyright, arguably this case would take the defendant's profits off the table, leaving only the potentially meager and overly speculative damages from the illegal download.

Posted by Eric at 08:16 AM | Copyright | TrackBack

December 23, 2011

Academic Literature Recap, Q4 2011

By Eric Goldman

I'm mired in grading heck, slogging my way through 146 exams. As a result, blogging has taken a back seat. I have several key items to blog, including the UMG v. Shelter Capital and Ascentive v. Opinion Corp. rulings. I'll get to these and other topics soon.

In the interim, just in time for the holidays, let me call your attention to some recent academic articles that caught my eye this quarter. They may be worth checking out during your holidays. Happy reading!
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Bevin Ashenmiller and Catherine Shelley Norman, Measuring the Impact of Anti-SLAPP Legislation on Monitoring and Enforcement, The B.E. Journal of Economic Analysis & Policy: Vol. 11: Iss. 1 (Topics), Article 67 (2011). The abstract:

We examine changes in environmental monitoring and enforcement activity in the presence of state legislation prohibiting Strategic Lawsuits Against Public Participation (anti-SLAPP laws). Using data on the Clean Air Act from the Environmental Protection Agency’s ECHO database, we find evidence that state inspections increase by almost 50% after a state passes anti-SLAPP legislation. In addition, we find strong evidence that the ratio of findings of noncompliance to inspections more than doubles in the presence of anti-SLAPP legislation.

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danah boyd, Eszter Hargittai, Jason Schultz & John Palfrey, Why parents help their children lie to Facebook about age: Unintended consequences of the ‘Children’s Online Privacy Protection Act’, First Monday, Volume 16, Number 11 - 7 November 2011. The abstract:

Facebook, like many communication services and social media sites, uses its Terms of Service (ToS) to forbid children under the age of 13 from creating an account. Such prohibitions are not uncommon in response to the Children’s Online Privacy Protection Act (COPPA), which seeks to empower parents by requiring commercial Web site operators to obtain parental consent before collecting data from children under 13. Given economic costs, social concerns, and technical issues, most general–purpose sites opt to restrict underage access through their ToS. Yet in spite of such restrictions, research suggests that millions of underage users circumvent this rule and sign up for accounts on Facebook. Given strong evidence of parental concern about children’s online activity, this raises questions of whether or not parents understand ToS restrictions for children, how they view children’s practices of circumventing age restrictions, and how they feel about children’s access being regulated. In this paper, we provide survey data that show that many parents know that their underage children are on Facebook in violation of the site’s restrictions and that they are often complicit in helping their children join the site. Our data suggest that, by creating a context in which companies choose to restrict access to children, COPPA inadvertently undermines parents’ ability to make choices and protect their children’s data. Our data have significant implications for policy–makers, particularly in light of ongoing discussions surrounding COPPA and other age–based privacy laws.

This article stirred up a fair amount of discussion. See, e.g., the CNET coverage.

Some notes about this article:

* no one looks good here: not the kids, parents, Facebook or Congress.
- Parents teach children how to lie to get what they want online
- Gilmore’s law that the Internet interprets censorship as damage and routes around it. COPPA has been a success at getting websites to shun kids 12 and under, but it’s been a complete failure at protecting kids online.
- all of the lying kids are presumptively engaged in criminal activity

* when kids are asked to represent themselves as older than they actually are, do they inadvertently put themselves in more adult situations than they can handle? See my post on mistake of age defenses.

* the policy implications of this report cut in both directions. Pro-regulation: the only way to keep kids off Facebook is to do mandatory age authentication that parents can’t game; or do comprehensive privacy regulation. Anti-regulation: COPPA was a bust, so we should repeal it or structurally modify it.
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Felix T. Wu, Collateral Censorship and the Limits of Intermediary Immunity, 87 Notre Dame L. Rev. 101 (2011). We don't have too many law professor papers really grokking 47 USC 230, which makes this paper instantly noteworthy. Felix presented this paper at our 47 USC 230 fiesta earlier this year. His conclusion:

Intermediary immunity can and should play an important role in protecting speech on the Internet. Immunity prevents the application of laws targeted at original speakers to intermediaries that lack the incentives of original speakers to speak. Immunity can thus be used to avoid the collateral censorship of lawful, socially desirable speech that poses a real or perceived risk of liability to intermediaries. At the same time, immunity can and should be limited. When intermediaries are actually original speakers, and have the incentives of original speakers, immunity is no longer appropriate. Similarly, immunity as to causes of action that are specifically targeted at intermediaries inappropriately prejudges the reasonableness of such liability.

Even ardent supporters of intermediary immunity would be well-served to recognize its limits. When immunity becomes unbounded, it begins to seem increasingly unfair, stimulating calls to cut back on the immunity, or even eliminate it entirely. The framework developed here demonstrates how, without any need to amend current law, we can limit the immunity, while still serving its core purposes.

James Grimmelmann's comments about the paper.
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Sandra L. Rierson, The Myth and Reality of Dilution, 2012 Duke Law & Tech. Rev. ___ (forthcoming 2012). From the introduction:

This Article advances three claims. First, statutory dilution erroneously assumes that the source-identifying function of a trademark is a rivalrous good and one that is dissipated by use. This assumption lacks empirical support, and is assuredly not categorically true despite the contrary principle that underlies the federal dilution statute. If marks are nonrivalrous, as they often are, no cause of action for dilution should exist.

Second, even were particular marks indeed rivalrous, the social and transaction costs imposed by the federal dilution statute would still outweigh the supposed harm to trademark holders. Dilution claims inflict profound anticompetitive burdens, preclude beneficial comparative advertising, and entrench dominant (often oligopolist) firms at the expense of market entrants. Dilution has serious non-economic costs as well and prohibits protected First Amendment speech without justification. For these reasons and others, the federal dilution statute imposes substantially more harm than it (allegedly) prevents.

Finally, the true foundation for the federal dilution statute lies not in alleged economic harms, but rather results from an entirely misplaced fiction of corporate personality. We do not require trademark holders to prove actual economic injury in the context of a dilution claim because, in truth, there is none. Instead, we have granted the holders of famous trademarks the equivalent of a “moral” right to these marks: an extension of the rights granted to a creator of an expressive work in the copyright context. Trademark owners feel vested in their brands, many of which are deliberately anthropomorphized, and the dilution statute reifies and protects these rights as a matter of federal law.

Stacey Dogan's cogent critique of the article. You may recall that in 2007, SCU convened a major academic conference on trademark dilution.
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Lydia Pallas Loren, Deterring Abuse of the Copyright Takedown Regime by Taking Misrepresentation Claims Seriously, 46 Wake Forest L. Rev. ___ (forthcoming 2011). A nice in-depth look into one of my favorite topics, 17 USC 512(f), by one of my favorite authors. The conclusion:

The takedown provisions of the Copyright Act are a powerful tool that copyright owners may use to obtain prompt removal of infringing material from the Internet without judicial assessment of the assertion of infringement. Congress provided a mechanism to deter abuse of this extrajudicial enforcement mechanism in the form of a new cause of action for material misrepresentation. Courts should interpret the requirements for prevailing on a claim of misrepresentation with an eye toward fulfilling Congressional intent. This means using a standard that would hold copyright owners liable not only when they had actual knowledge that the material targeted for takedown was not infringing, but also when the copyright owner should have known if it acted with reasonable care or diligence that the material was lawful. It also means interpreting the injury requirement broadly and awarding attorney’s fees to prevailing plaintiffs. Taking the claims of misrepresentation seriously will shape the behavior of copyright owners who seek removal of material through takedown notices.

Posted by Eric at 07:55 AM | Content Regulation , Copyright , Derivative Liability , Privacy/Security , Trademark | TrackBack

December 20, 2011

Twelve Comments Filed in Response to Copyright Office Proposal to Amend 512 Designation Requirements

By Eric Goldman

With all of the focus on SOPA/PIPA/OPEN, it's easy to lose sight that a Copyright Office proposal seriously jeopardizes the 17 USC 512 online safe harbors for many service providers. Specifically, the Copyright Office proposes to expire existing agent designations and then require periodic maintenance of designations or they too will be expired. In both situations, a service provider without a designated agent instantly loses all 512(c)/512(d) eligibility--even if the failure was an administrative accident or mistake, and even if the service provider properly filed a valid designation initially. Worse yet, the Copyright Office hasn't shown how the existing database causes problems for copyright owners, so the Copyright Office is proposing to jeopardize these essential safe harbors for no apparent gain to anyone else.

In response to the Copyright Office's proposal, twelve comments were submitted, including the comment that I submitted with the EFF and Jason Schultz. Regarding the proposal to expire existing designations and require periodic maintenance of future designations, the comments broke out as follows:

AGAINST: EFF/Schultz/Goldman, Public Knowledge, Microsoft, CCIA, Matthew Neco
FOR: RIAA, Verizon/Internet Commerce Coalition (I treat these as identical because Verizon is a member of ICC, and their points were similar)
AMBIGUOUS: MPAA (seemingly leaning against the proposal but equivocal)

The CCIA’s opposition on this issue was well-stated: "it would be unsound and inconsistent with Section 512 to attempt to revoke the safe harbor and impose liability on services who do not resubmit contact information to the Office which the Office already has…Proposed § 201.38 is itself a formality which -- at least as described in the NOPR -- may also impose harsh penalties for failing to prepare redundant paperwork at the proper time."

Some of the “AGAINST” comments wondered if the Copyright Office has the power to terminate a validly filed designation, because doing so creates a forfeiture and apparently exceeds the authority that Congress provided to the Copyright Office. I do hope the Copyright Office will consider the administrative law issues carefully before doing something that leads to an expensive lawsuit over its authority.

Some other interesting points raised in the filings:

* the RIAA made several aggressive proposals, including (1) a requirement that "the service provider...disclose any shareholders or related groups of shareholders (such as a family) with a majority ownership of the service provider; and any persons or entities with a controlling interest in or decision making power over the service provider," and (2) "the Copyright Office require proof of the business address of the service provider, perhaps by requiring the entity to scan a piece of business correspondence and attach it to the designation as a PDF." I don’t see it as the Copyright Office’s responsibility to validate service providers’ self-reported information, and I thought the requirement to disclose related entities was overreaching and creates traps for the unwary.

* Microsoft proposed "that the Office consider issuing OSPs a unique identification number corresponding to their submission of a designation of agent, and requiring the OSP to post this number where it also posts information about its DMCA agent and its process for submitting notices of claimed infringement. This requirement would enable users of the OSP directory to easily link a particular website with the DMCA agent designation (and related records) maintained by the Copyright Office." While this proposal would solve one set of problems, I don’t think the Copyright Office has the authority to require the publication of this unique ID as a condition of the online safe harbor.

* Google believes only written takedown notices should satisfy the 512 requirements:

We urge the Office, however, to also note that takedown notices sent to designated agents must be in the form of a written communication. We are concerned that the clarifications and the availability of a phone number do not lead to a requirement that service providers designate a specific person to be contacted for voice communication or that leaving of takedown notices be authorized via phone calls or voice mail. Accepting takedown requests via phone or voicemail would present a multitude of problems: for example, lack of documentation to send on to the alleged infringer, lack of signature, problems with verifying identity, detecting abuse, lack of accurate metrics, scalability, and potential differences of opinion about what was identified.

While I completely agree about the problems of non-written takedown notifications, I’m pretty sure 512 doesn’t give the Copyright Office the power to effectuate this request.

* The Verizon/ICC filings encouraged the Copyright Office to warn rightsowners not to misuse takedown notices. For example, the ICC filing says "we urge the Copyright Office to post a prominent notice at the entry point to the database warning entities submitting DMCA notices that knowing material misrepresentations in 512(c) notices may trigger monetary liability."

* The ICC filing also gave a specific example of the privacy issues raised by the designated agent database:

One woman who works as a designated agent for one of our member companies has received harassing “stalking-type” messages from people who are not copyright owners, but found her name through an agent designation. For precisely this sort of reason, it is important to allow email addresses of designated agents to reflect their function, rather than their name, and to allow designated agents to list P.O. Boxes as their address, wherever their address is a home address.

I frequently use the designated agent database to find contact information for a company when other resources fail me.

* The MiMTiD filing was a piece of work. It appears to misunderstand the existing 512 safe harbors, and most of it is just a rant against Google.

If you want to comment on the Copyright Office proposals, do so quickly. Reply comments are due December 27.

Posted by Eric at 08:00 AM | Copyright , Derivative Liability | TrackBack

December 14, 2011

If You Dislike SOPA, You'll Dislike This Case Too--True Religion v. Xiaokang Lei

[Post by Venkat Balasubramani, with comments from Eric]

True Religion v. Xiaokang Lei (S.D.N.Y.) (TRO; Nov. 18, 2011) (Prelim. Injunction; Dec. 2, 2011). The initial complaint.

We recently blogged about a case where Chanel obtained surprisingly broad remedies against domain names associated with foreign "rogue" websites which allegedly sold counterfeit Chanel items. Much of the relief Chanel sought and obtained in that case overlapped with relief that the proposed SOPA law would provide to rightsowners.

True Religion, a company which manufactures jeans, brought a similar enforcement action against foreign "rogue" websites in the Southern District of New York. It first obtained a temporary restraining order, which the court converted into a preliminary injunction. The relief obtained by True Religion is similarly broad as, and presents the same due process concerns raised by, the Chanel case.

True Religion filed a lawsuit in the Southern District of New York. As in the Chanel case, it went after numerous domain names in a single lawsuit, and it presented declarations from its investigators that they bought counterfeit goods from those domain names. True Religion also presented evidence that defendants undertook efforts to conceal their true identities (primarily by supplying 'purposely-deceptive contact information' to registrars), and that if defendants were provided notice, they would "likely destroy, move, hide or otherwise make [the domain names, products in question, accounts, and records] inaccessible to the Court." True Religion filed its lawsuit on November 15, and the court issued an ex parte TRO three days later. The TRO broadly enjoined the conducts of defendants and third parties, authorized service via email, and set a hearing for November 30, 2011. Defendants were required to show cause on or before the hearing date as to why the court should not issue a preliminary injunction. True Religion filed two sealed declarations and an unsealed declaration. No defendant appeared or filed any pleadings. On December 2, 2011, the court issued the preliminary injunction.

The TRO: The TRO finds that True Religion established a likelihood of succeeding on the merits of its claims that defendants sold products which infringed on True Religion's trademarks and copyrights and that defendants' conduct will cause irreparable injury to True Religion. The TRO also finds that defendants undertook efforts to conceal their identity and that if "True Religion were to proceed on notice to defendants," defendants would shift their operations. Pending the court's ruling on True Religion's request for an injunction, the court issues the TRO, which contains the following provisions:

- defendants and any third parties acting in concert with them, including ISPs, registrars or third party selling platforms are restrained from selling allegedly infringing items;
- True Religion is entitled to broad financial discovery and discovery from various service providers (MasterCard, Visa, PayPal, back-end service providers, web designers, third-party selling platforms, registrars, registries, ad-word providers, etc.);
- third party payment processors and financial institutions are ordered to freeze any of defendants' funds;
- domain name registries (VeriSign, Neustar, Public Interest Registry) and registrars are orderd to "temporarily disable" the domain names referenced in the TRO, "through a registry hold or otherwise";
- third party service providers are ordered to cease providing service to defendants.

The Preliminary Injunction:

The order largely tracks the TRO, but adds a approximately 24 new domain names. As with the TRO, the preliminary injunction broadly enjoins defendants from exploiting True Religion's copyrights and trademarks. In addition, it contains the following provisions:

- third party service providers who are provided notice are enjoined from providing services to defendants in conjunction with any of the acts which defendants are enjoined from doing;
- a broad asset freeze, directed at banks, payment processors, PayPal and other payment services providers;
- continuing right to conduct discovery for True Religion;
- domain name registries and registrars are directed to continue disabling and lock the domain names, including the new domain names;
- third party service providers, including ISPs, back-end service providers, affiliate program providers, web designers, sponsored search engine or ad-word providers are ordered to "disable service" to the defendant websites; and
- an authorization to serve process via "registered electronic mail" pursuant to rule 4.

This is a slightly different flavor from the Chanel orders, but it raises similar due process concerns. The initial order (the TRO) is issued on an ex parte basis without notice, and it contains extraordinary relief--it's essentially a kill switch for the websites in question. There are a variety of reasons why this has the potential to run roughshod over the rights of defendants or third parties; among other things, there could be some mistake as to the underlying domain name or website. There's no assurance that the site as a whole (as opposed to one or two products) is infringing. Also, after bona fide adversarial proceedings, True Religion's copyrights or trademarks may not turn out to be as enforceable as they seem at first blush. But on the strength of True Religion's unchallenged assertions, the court orders various third parties, including registrars, registries, payment processors, ad-word providers and others, to cut off the defendants. (The court did require True Religion to post a bond of $10,000--a laughably nominal amount.)

Regardless of whether the court has the authority to issue an injunction binding third parties who are not before the court, and who may not even be subject to the court's jurisdiction, many service providers will just follow the court order anyway. They may have no interest in expending resources to fight for a third party's due process rights. Indeed, in its declaration filed after the TRO was issued, True Religion indicated that the registries (VeriSign, Affilias, Public Interest Registry, Nominet UK) disabled many of the domain names in question upon receiving notice of the court order. PayPal also froze the funds in 84 different PayPal accounts.

It's unclear how much business defendants conducted in the United States. If their business activities in the US were nominal, this looks like an extraterritorial enforcement by a US rightsowner in a US court. It's tough to tell, given that the process hasn't been adversarial or even designed to facilitate bona fide participation by the defendants.

I know there are some tweaks in pending SOPA/PIPA legislation that surely would be even more helpful to plaintiffs, but courts today seem willing to grant broad remedies to rightsholders without any legislative change at all. It seems that today, rightsowners are able to go to court and, quickly and at low cost, take down domain names and get an order directing third parties, including service providers, ad networks, and payment processors, not to provide services to various websites. That's a pretty good deal if you are a rightsholder. They may even prefer that to the ITC proceedings proposed in OPEN.

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Eric's Comments

This case raises so many unanswered questions for me:

1) Just how many rightsowner vs foreign rogue website lawsuits are already in the court system? Are the Chanel and True Religion cases unique, or are dozens or hundreds of similar cases percolating through the system?

2) Did so much of this case really need to be done under the cloak of secrecy, and even if the answer is yes, why is so much of the case history still sealed?

3) Just how far can rightsowners go in suing dozens or hundreds of unrelated defendants in a single lawsuit? We've seen some pushback against copyright trolls. Are trademark owners similarly overreaching?

4) Just how far can rightsowners go in forcing third party service providers, like domain name registrars, ad networks, payment service providers and others, to honor rulings where the service providers aren't litigants? We dealt with this issue a bit in the 47 USC 230 context in the Blockowicz case. In that case, the Seventh Circuit set some important limits on the reach of Rule 65. Without an adversarial process, were the Chanel and True Religion courts perhaps a little lax in their reading of Rule 65?

5) If rightsowners can already get in court so much of the remedies that SOPA would provide, then why are they pushing so hard for SOPA?

6) Then again, if rightsowners can already get SOPA-like remedies in court, why are we fighting so hard against SOPA? This reminds me a little of the public outcry against UCITA a decade ago--much of the angst was about the parts where UCITA merely restated then-current contract law. Similarly, perhaps SOPA is more of a mirror on present reality than a bona fide change in the law. At minimum, it suggests SOPA may be distracting us from other real problems. If we object to the remedies in SOPA, not only do we need to kill SOPA, but we need to proactively seek new statutes that prevent the outcomes Chanel and True Religion are getting in court.

I plan to continue my personal efforts against SOPA, but it's clear that killing SOPA isn't enough to end the fight. Perhaps OPEN would help by giving rightsowners an easier path to attacking illegitimate foreign websites and thereby alleviate the pressure that rightsowners are putting on doctrines not specifically designed to deal with that problem. That would be a good reason to support OPEN, but it's now 100% clear to me that OPEN also needs more immunities, safe harbors and other limitations on rightsowner powers. If rightsowners get a shiny new enforcement toy via OPEN, they should have to give up some of their overreaching elsewhere.

Posted by Venkat at 11:54 AM | Copyright , Domain Names , Trademark

December 10, 2011

The OPEN Act: Significantly Flawed But More Salvageable Than SOPA/PROTECT-IP

By Eric Goldman

Sen. Wyden and Rep. Issa have released a draft of OPEN: Online Protection & ENforcement of Digital Trade Act, intended as an alternative to SOPA/PROTECT-IP. See my prior posts opposing SOPA and linkwrapping the discussion. Unlike SOPA's disgustingly blatant rent-seeking, which was such an over-the-top abuse of the legislative process that it did not (and could not) support a principled or even intelligent conversations about it, OPEN provides a useful starting point for a sensible conversation that could actually lead to acceptable compromises. For that reason alone, I think Congress should immediately stop all work on SOPA/PROTECT-IP and redirect that energy towards vetting this proposal. Having said that, for reasons I'll explain in a moment, I continue to believe the assumptions underlying SOPA/PROTECT-IP and OPEN are misguided, meaning that forging a compromise from OPEN’s more sensible proposal may be tricky.

Before I get further into substance, two process notes:

First, SOPA was the product of rent-seekers who were talking only amongst themselves and legislators tethered to their campaign contributions. The drafting process was disturbingly closed-door and exclusionary, exactly the kind we wish didn't take place in our representative democracy. In contrast, the OPEN sponsors want to have a dialogue about their ideas. In support of that, they have posted the draft to a website that allows comments and discussion. This is the way our democracy SHOULD work. Why is such an open process the exception instead of the rule?

Second, OPEN is a comparatively svelte 18 pages focused mostly on one core concept, compared to SOPA's 78 page monstrosity that advanced about a dozen different substantive proposals. I can't tell you the number of times I've seen very smart people stymied to keep all of SOPA's moving parts separate, and the failure to do so meant that they were conflating different parts of the statute in ways that prevented productive discussion. (Just two examples: the Colbert Report, where Zittrain mostly focused on SOPA's felony streaming provision while his counterpart was mostly talking about the cutoff provisions; and Business Insider's infographic where the felony streaming sanction was presented as a remedy to the cutoff provisions). By reducing the number of topics at issue, OPEN substantially reduces the chance that policy discussants will simply talk past each other.

An Overview

The law contemplates that rightsowners can file a petition against rogue websites at the ITC, an independent federal agency best known for its adjudication of certain patent disputes. In response to the rightsowners’ petition, the ITC will conduct an administrative adjudication. If the ITC determines that the website is a rogue website, then (1) the website is required to cease its conduct (not sure how enforceable that is), (2) the site also will be subject to any other unspecified consequences following from its determination as a rogue actor, and (3) most importantly, the rightsowner can take the ITC determination to payment service providers (PSPs) and ad networks and have them cut off the flow of money to the rogue website. The PSPs and ad networks would be protected by several immunities for trying to comply with the orders or their other efforts to protect the public.

This makes OPEN similar to SOPA in that it seeks to cut off funds flowing to rogue actors. However, among other key differences, PSPs and ad networks have no legal obligations until the ITC makes a ruling. In contrast, SOPA imposed cutoff obligations on PSPs and ad networks based merely on rightsowners’ unsubstantiated assertions.

What's Good

Substantively, some of the things I liked about OPEN:

* it situates the discussion about "rogue websites" in foreign trade policy. This fixes SOPA's overinclusive application to both domestic and foreign actors. However, if we really think rogue websites are a transborder enforcement problem, there are many other trade policy solutions that might be better options to consider—the most obvious being transborder enforcement coordination like the FTC does with its foreign counterparts.

* OPEN doesn’t touch the domain name system or search engines. SOPA had the potential to destroy the DNS and to jeopardize search engine functioning. OPEN sidesteps both pitfalls.

* OPEN builds in some due process before any formal legal obligations attach. As we've recently seen, due process is actually quite important, and we suffer from its absence. I say “some” due process because I’m not sure how much due process will attach in practice. For example, I have some concerns about the notice provision--not every targeted website will receive notice of the ITC investigation. However, I did like that any website the ITC labels as rogue can correct any identified problems, reapproach the ITC and ask it to remove the “rogue” determination.

* the definition of rogue website is tightened up substantially. It requires three elements:
a) a "non-domestic domain name," which requires that the registry, registrar and registrant all have to be located outside the US (I'm not sure what "located" means in this context). Venkat asked me what happens to a .com registered with a foreign registrar; I believe OPEN does not apply to this domain name.
b) conducting business in the US; and
c) "has only limited purpose or use other than engaging in infringing activity and whose owner or operator primarily uses the site to willfully engage in infringing activity."

The last element, in particular, is quite restrictive by requiring willful infringement. The meaning of the word "willful" is notoriously murky (see, e.g., the multitudinous Supreme Court cases over the word), so the statute would be improved by using a more detailed synonym. No matter what, though, willful is a high scienter level that should easily exclude most legitimate players. The statute further expressly excludes any sites that:

- follow good notice-and-takedown procedures
- qualify for 17 USC 512 (the DMCA online safe harbors) [this means that the statute sits next to 512 instead of rendering 512 moot like SOPA threatened to do], or
- distribute "copies that were made without infringing a copyright or trademark." I’m not 100% sure what this means. It apparently excludes websites reselling goods covered by the First Sale doctrine. I presume that the exclusion includes sites that sell legitimate knock-off goods, such as replicas of goods that aren’t protected by copyrights or trademarks.

* if a PSP or ad network fails to comply with an ITC order, the only consequence is that the DOJ can seek injunctive relief. Rightsowners do not have a private cause of action in those cases. As discussed below, this doesn't eliminate all PSP/ad network exposure to rightsowners, but rightsowners can't introduce evidence of ITC orders in any civil suits they bring against PSPs or ad networks.

* on the trademark side, it expressly limits its applicability to counterfeiting (although there is a erroneous cross-reference in the draft). Presumably, dilution or garden-variety trademark infringement disputes don't qualify under the statute.

What's Not Good

Substantively, some of the things I don't like about OPEN:

* OPEN still contemplates reestablishing a Fortress USA. Fortress USA marginally makes sense regarding the shipment of physical goods across geographic borders. It makes zero sense for digital bits zinging around the borderless network.

* in particular, because OPEN would burden only US-governed PSPs and ad networks, it may drive websites—including legitimate websites who want to reduce their risk of being mistargeted—to shift their business to foreign-based PSPs and ad networks. If lots of businesses make a switch based on these concerns, OPEN could counterproductively result in net financial losses for the US economy.

* similarly, foreign websites can opt-out entirely of the ITC process by consenting to US judicial jurisdiction. I like the idea of an opt-out, but imagine if other countries offered the same quid-pro-quo of allowing US websites to opt-out of some nasty foreign process so long as the websites consent to jurisdiction in their countries. I think we’d be outraged and insulted; which is how I would expect foreign countries to view this quid-pro-quo. Cf. Venkat's recent post on Facebook v. Faceporn. Then again, other countries might think it’s a pretty good idea, leading to a proliferation of transborder quid-pro-quo jurisdictional offers.

* designating the ITC to conduct the investigations is a little odd. First, the ITC is an administrative agency, not a federal court. I don't fully understand all of the implications of administrative vs. judicial review, but I believe there are substantial procedural differences that could lead to important substantive differences. Second, the ITC has been gamed in the patent world (see, e.g., my colleague Colleen Chien's research on the ITC explaining how the ITC hears many US company vs. US company disputes), so I fear similar gaming will emerge. For example, a rightsowner chasing a rogue website could simultaneously pursue a domestic court action, a foreign court action and an ITC proceeding. How would these types of parallel proceedings play out in practice? We’re still trying to resolve the parallel proceeding problems in patents.

* like SOPA, the bill covers copyright infringement, trademark infringement *and* 1201 circumvention. I don't understand why the circumvention issue is getting equal billing or how often transborder circumventions are a real problem. Seeing how 1201 circumvention lawsuits have devolved into anti-competitive enforcements, picking up the circumvention piece could increase the risk of competitive misuse of the statute.

* like SOPA, the definitions are vague. Consider, for example, the definition of Internet advertising service:

The term Internet advertising service means a service that serves an online advertisement in viewable form for any period of time on an Internet site.

Hmm...what does that mean? Notice that the definition doesn't directly distinguish between third-party ad networks and sites that sell their own ads. I think in practice sites that sell their own ads drop out of the statute, so one possible implication is that more sites will ramp up their own ad sales. (This is doubtful, but just throwing the possibility out there). I think the focus on "viewable" is interesting; are audio-only ads excluded? And what does it mean to "serve" content? This contemplates a specific technological interaction that I don't fully understand today and will almost certainly evolve over time.

Why I’m Not Enthusiastic About OPEN

Even though OPEN is worth discussing intelligently, unlike SOPA, I believe it's based on two underlying assumptions that aren’t fixable.

First, like SOPA, OPEN assumes there is a problem with foreign rogue websites that needs to be solved. I'm not saying there isn't, but the policy discussions have been startlingly devoid of reliable and credible facts demonstrating the nature and scope of the problem.

Instead, the evidence in support of a rogue website "problem" typically consists of two main threads: (a) people are dying from counterfeit drugs, and (b) bad guys are "stealing" our stuff. With respect to the former, I've never seen anything more than ad hoc assertion; but if there’s a real problem, counterfeit drugs can be fixed with a highly targeted solution. With respect to the latter, it's hard to give those arguments much credit. After all, all of rightsowners’ arguments are inherently self-interested: it's in their financial interest to say that they would like to make more money than they are making. It's also in their interest to bemoan broad sectoral changes in the economy as evidence that someone is capturing money they think they are entitled to (and to use rent-seeking to thwart those broad sectoral changes). More importantly, there is lots of evidence that a lot of rightsowners are making a lot of money today, both via the Internet and more generally. So it's hard to break out the quantity of actual economic losses that rightsowners are truly suffering when those claims are intermingled with rightsowners’ general rent-seeking efforts.

Therefore, until the rightsowners offer us more than the trumped-up BS already-discredited statistics, I'm still not clear on the problem, how bad it is, how any legislative solution would remediate that problem, and if the collateral consequences of the effort to remediate the problem are greater or less than the problem itself. OPEN does nothing to fill the void of supporting foundational evidence of the problem, so it's hard for me to be enthusiastic about its solution.

Second, and more importantly, attacking the money supply to supposed bad actors remains too blunt an instrument. I may be truly on my own on this point, as many people I respect--including, notably, Rep. Lofgren--are prepared to embrace the policy solution of cutting off money flows. However, by embracing an attack on the movement of money, OPEN replicates one of SOPA's sins. If a player is engaged in legitimate and illegitimate activity and its money supply is cut off, both activities go down the tubes. In contrast, one of the positive aspects of 17 USC 512(c) and (d) is that they require the copyright owner to identify infringing items and target only those items. Giving rightsowners a remedy that would affect an entire site for only some items on the site goes too far.

The OPEN bill tries hard to minimize overbreadth by narrowly defining the targeted websites. Perhaps this definition is narrow enough that there won't be much collateral damage. However, in practice, regulating money flows nevertheless could have pernicious effects in the field. A PSP or ad network drawn into an ITC proceeding frequently will “voluntarily” choose to toss the targeted website before the ITC proceeding reaches its conclusion—even if the ITC proceeding would have rejected the challenge. Furthermore, rightsowners still will send cutoff notices to PSPs/ad networks without filing any ITC petition, and the PSPs/ad networks will often honor them as a way of preempting an ITC proceeding.

What this teaches me (in combination with the Elsevier v. Chitika case) is that PSPs and ad networks need robust statutory immunities which are not based on a notice-and-takedown scheme. On the trademark side, the need for an immunity became clear after the sloppy language in Gucci v. Frontline. On the copyright side, 512 doesn’t cover PSPs and ad networks, probably because in a million years the safe harbor drafters never thought PSPs and ad networks would be liable for third party infringing activity in the first place. Now that we've seen copyright law and trademark law creep much further than we could have imagined in 1998, we should plug this liability hole completely. If OPEN proceeds, it should have a broad-based immunity for PSPs and ad networks with the idea that rightsowners are getting a specific remedy against them in the new law.

While OPEN can’t really be fixed to resolve my two structural concerns, my hope is that the discussion about OPEN will force rightsowners to provide *credible* evidence of harms that they or consumers are suffering (no more self-serving hype, please), and that such evidence will force us to think carefully about how "rifle shot" solutions (as opposed to shotgun solutions) can ameliorate those harms. If we have a discourse that even slightly resembles this ideal, then OPEN will be successful no matter what final outcome we reach.

Posted by Eric at 09:55 AM | Copyright , Derivative Liability , Search Engines , Trademark | TrackBack

December 07, 2011

I Don't Heart SOPA or PROTECT-IP: A Linkwrap

By Eric Goldman

Venkat and I have been covering SOPA and related topics. In case you missed our posts:

* Why I Oppose the Stop Online Piracy Act (SOPA)/E-PARASITES Act

* Court OKs Private Seizure of Domain Names Which Allegedly Sold Counterfeit Goods--Chanel, Inc. v. Does

* Ad Network Avoids Contributory Copyright Infringement for Serving Ads to a Rogue Website--Elsevier v. Chitika

Next week, SOPA is supposed to go to committee markup. In anticipation of that, some of the SOPA-related links from the past few weeks that have caught my attention:

* Bose v. Ejaz (D. Mass Nov. 7, 2011). Paypal cut off funds transfers to an International eBay merchant at the request of Bose, a rightsholder. The court rejects the merchant's tortious interference claim.

* Techdirt: The Definitive Post On Why SOPA And Protect IP Are Bad, Bad Ideas

* Politico: Shootout at the digital corral. The entertainment industry spent $91M this year on lobbying. Tech industry spent $15M. Guess who wins that battle?

* Op-eds against SOPA from NYT, LA Times and the Economist.

* EFF: What's On the Blacklist? Three Sites That SOPA Could Put at Risk

* Public Knowledge explains why PROTECT-IP isn’t an acceptable compromise to SOPA. Both "solutions" are off-the-charts extreme.

* Wired: Analysis: Internet Blacklist Bill Is Roadmap to ‘the End’ of the Internet.

* WaPo: SOPA opposition goes viral. Partially related: interesting stats about SOPA's lack of popularity.

* DHS/ICE seize another 150 domain names. Who needs SOPA? Reuters’ coverage.

* Hollywood Esq.: How Controversial Antipiracy Laws Could Be Enacted Even Without Congress.

* Nazerali v. Mitchell, 2011 BCSC 1581 (B.C. Sup. Ct. Oct. 19, 2011): A Canadian court ordered Google and other support providers to cut off the domain name of an allegedly defamatory website.

* EFF: Free Speech is Only as Strong as the Weakest Link. Check out their new resource, www.globalchokepoints.org.

* The RIAA wrote a letter to the editor headlined “RIAA largely succeeds in goal of bringing piracy under control.” Yet, they insist that SOPA is needed?

* Amusingly misguided: The $500,000,000 Cost of Google’s Five Million DMCA Notices. Partially related: Techdirt: As We Complain About SOPA & PIPA, Don't Forget The DMCA Already Has Significant Problems

Posted by Eric at 08:48 AM | Copyright , Derivative Liability , Trademark | TrackBack

December 05, 2011

Ad Network Avoids Contributory Copyright Infringement for Serving Ads to a Rogue Website--Elsevier v. Chitika

By Eric Goldman with comments from Venkat

Elsevier, Ltd. v. Chitika, Inc., 2011 WL 6008975 (D. Mass. Dec. 2, 2011). Chitika's brief supporting its motion for judgment on the pleadings. Elsevier's opposition. Chitika's proposed reply brief.

As Venkat recently indicated, while Congress generates massive amounts of hot air discussing SOPA, there's a common law battle quietly brewing with rightsowners seeking to obtain in court the same basic remedies that SOPA would provide statutorily. This judge nixes this rightsowner's request, but this is hardly a win for SOPA opponents or ad networks.

Elsevier publishes textbooks. This lawsuit involves pharmatext.org, a (now-defunct) site that provided links to allegedly infringing copies of Elsevier's books. We'd now characterize pharmatext.org as a possibly rogue website. I previously blogged about this case in January, when the judge issued a dense and troubling ruling that ordered ad networks Chitika and Clicksor to freeze the site's money and stop serving ads to the site. It also ordered the domain name privacy proxy to freeze the domain name and identify the owner. Basically, Elsevier got much of the relief that SOPA now seeks to enact as law.

But hold on a second. The court's January order was based on ex parte proceedings. Chitika subsequently showed up to contest the case, and surprise! The court reaches a different result after adversarial proceedings. Let's hear it for due process!!! YEAH!

[Note: you may recall Chitika separately had an unfortunate legal scrape with the FTC.]

Chitika first argued that Elsevier never proved any direct copyright infringement in the United States because Pharmatext.org's operator, Saggi, was based in India, and the site had no US presence. Elsevier argued that it had test downloads done by US investigators, so there was infringing activity in the US. The court nearly blows a gasket before punting this sticky jurisdictional issue:

While it appears that Chitika may eventually be entitled to judgment on this ground (that is, plaintiffs’ failure to allege any act of direct infringement occurring entirely within the United States), factual issues involving the structure of the Internet and the locus of the infringing activity remain (Where did the copying take place? Where are the third-party websites and servers, from which unauthorized copies of plaintiffs’ books were downloaded?). These issues preclude the granting of the motion on this ground.

For more on the jurisdictional question, see, e.g., the Shropshire case. This locus-of-infringement question is quite interesting, especially as applied to "foreign" rogue websites, but SOPA largely sidesteps all of the doctrinal complexity (and creates its own mess).

Without resolving whose the underlying direct infringer, the court instead considers Chitika's contributory copyright liability. The court concludes that Chitika doesn't have the requisite knowledge of infringement:

Plaintiffs do not allege facts showing that Chitika was familiar with the content of the Pharmatext website, or knew (or had reason to know) that such content was infringing. Thus, plaintiffs fail to support with plausible facts their conclusory allegations that Chitika “must have had knowledge” of the alleged infringement of plaintiffs’ books...and that Chitika “plac[ed] ads on the Pharmatext site because [it] believe[d] that Pharmatext users – in other words, people seeking to obtain pirated copies of copyrighted books – are a target audience for particular advertisers.”

Notice this leaves open what would have happened if Elsevier had sent a takedown/cutoff notice to Chitika. Presumably, such a notice would have conferred the requisite knowledge to Chitika.

Heavily relying on Perfect 10 v. Visa (even though it wasn't binding precedent in Massachusetts), the court also rejects Chitika's material contribution to the infringement. The court says:

while Chitika’s advertising payments might make it easier for Saggi’s infringement to be profitable, Chitika did not create, operate, advertise, or promote the infringing websites, and its advertisements were not the “site” of the infringement.

However, the court hedges at the end, saying it wasn't deciding the issue definitively because Chitika's lack of knowledge resolves this case.

In a footnote, the court explains why Judge Kozinski's dissent in Perfect 10 v. Visa is unhelpful to the plaintiffs:

in contrast to Visa, Chitika did not provide an “essential” service to Saggi that enabled infringement on a “massive scale.” Plaintiffs make no factual allegations that Chitika knew about any infringing activity, nor is there any evidence that Chitika was “intimately and causally involved in a vast number of infringing transactions.”

This is a little garbled (because it references the defendant's knowledge in the consideration of material contribution), but it seems like the court suggests that ad networks may be in a different position than payment service providers because ad networks don't have the same multi-iteration "transactions" with the rogue website.

Notice that this court totally sidestepped (or missed?) the tertiary liability aspect of this case--that Chitika was a support provider to a site that only provided links to allegedly infringing files. To me, it would be entirely appropriate for the court to say that any tertiary player categorically lacks the ability to materially contribute to infringing activity. Otherwise, once we start doing a dragnet for service providers to service providers to infringers, the universe of potential defendants grows to a ridiculous size.

In the end, the court grants Chitika's Rule 12(c) motion for judgment on the pleadings. Broadly construed, this ruling is a win for ad networks, indicating that they are not automatically liable for contributory copyright infringement simply because allegedly rogue websites participate in their networks. But I'd hardly call this a resounding win. Elsevier didn't send Chitika a cutoff notice, giving the court an easy escape valve on scienter, and the court waffled on the material contribution prong. I would expect this opinion to look very different if Elsevier sent a cutoff notice and Chitika didn't promptly drop Pharmatext. In so, rightsowners like Elsevier probably can get 90%+ of the benefit of SOPA Section 103 simply by sending cutoff notices to ad networks.

Notice also that in the face of a cutoff notice, Chitika would not stand up to defend the alleged rogue website publisher in its network. Chitika alleged that Saggi accrued about $500 in royalty payments over 29 months of service. Assuming Chitika does 50/50 splits with its publishers, Chitika will not expend an ounce of effort to preserve its $17/month revenue stream from Saggi. Thus, Elsevier's cutoff notice would be dispositive--even if Chitika could win a ruling like this (which would be more uncertain after Chitika gets a cutoff notice), it's not worth the fight. So after Elsevier's cutoff notice to Chitika, Chitika instantly tosses Pharmatext overboard like a piece of garbage, due process be damned. SOPA isn't required to get that result.
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Comments from Venkat:

As Eric points out, Elsevier is trying to hold Chitika liable under a theory of tertiary liability. It's far from clear that Pharmatext is liable to Elsevier for merely linking to infringing downloads. Columbia Records v. Fung is currently pending in the Ninth Circuit, and it should shed some light on how extreme the facts need to be in order to hold a website liable for merely linking to allegedly infringing downloads. (Here's Eric's post on the district court opinion in that case: "Torrent Sites Induce Infringement and Lose DMCA Safe Harbor--Columbia v. Fung." I expect the Ninth Circuit's ruling on the appeal fairly soon.)

The question of infringement that occurs purely off-shore is interesting. As Eric mentions, the court questions whether a site that is totally off-shore can be held liable if there's no predicate act that occurs in the United States. I wonder if this is a legitimate argument for rightsowners as to something in the rules that should be 'fixed'? If Elsevier has no recourse in US courts against Pharmatext, should this automatically undermine any possibility of going after service providers of rogue sites?

Finally, as to the issue of whether Chitika has the requisite knowledge of the underlying infringements for Elsevier to be able to hold it liable, query as to whether any search terms that were used to target could be used to show the requisite knowledge on Chitika's part. The use of search terms as a proxy for intent has come up in the copyright context (e.g., it was used against Limewire as indicative of its intent to lure Napster users) but it would seem less probative in this context.

Posted by Eric at 09:20 AM | Copyright , Derivative Liability | TrackBack

December 01, 2011

Spiritual Group's Attempt to Unmask Online Critics Goes South--Art of Living Foundation v. Does

[Post by Venkat Balasubramani]

Art of Living Foundation v. Does, 10-cv-05022-LHK (N.D. Ca.; Nov. 9, 2011)

Art of Living Foundation is an organization based in India that is dedicated to teaching the spiritual lessons of “His Holiness Ravi Shankar.” Defendants are disgruntled former “student-teachers and students” of plaintiff who want to bring to light their view that AOLF is a “manipulative and abusive cult.” Defendants posted blogs under the pseudonyms “Skywalker” and “Klim.”

AOLF sued, alleging various claims including defamation, misappropriation of trade secrets, copyright infringement and trade libel. AOLF also alleged that defendants published AOLF’s copyrighted “Breathe Sound Water Manual.” AOLF sought leave to conduct expedited discovery. This request was approved and AOLF issued subpoenas to Google and Automattic. Before Google and Auttomatic complied with the subpoenas, defendants appeared through counsel and moved to dismiss AOLF’s defamation claim, strike its trade secrets claim, and also moved to quash the discovery. Skywalker acknowledged that he published the manual, but said that he posted this solely as part of his larger campaign to bring awareness to his views about AOLF.

While the motion to quash was pending, the court granted defendants’ request to dismiss the defamation claim, and struck the trade secrets claim. AOLF filed an amended complaint limiting its claims to copyright infringement and misappropriation of trade secrets. Magistrate Judge Beller granted the motion to quash as to Klim but denied it as to Skywalker, relying largely on the fact that a prima facie claim of copyright infringement is sufficient to overcome the right to anonymity. Judge Koh, reviewing Magistrate Judge Beller’s order, finds that AOLF failed to overcome Skywalker’s right to remain anonymous and quashes the subpoena as to Skywalker.

In a characteristically excellent order, Judge Koh canvasses the various standards courts apply in resolving anonymity issues. Some courts have required plaintiffs to make a prima facie showing before ordering disclosure, while others have demanded admissible evidence establishing each element of a claim. The Ninth Circuit recently held that in resolving the disclosure issue, courts should keep in mind the nature of the speech (e.g., purely commercial versus purely political) as well as the potential chilling effect of ordering disclosure (In re Anynomous Online Speakers). Finally, and most troubling for the defendants, a widely cited 2004 decision from the Southern District of New York found that a prima facie allegation of copyright infringement entitles the plaintiff to identify doe defendants (Sony Music v. Does).

Defendant raised a fair use argument, but the court does not rely on the possibility of non-infringement in resolving the disclosure issue. The court notes that “evidence of copyright infringement does not automatically remove the speech at issue from the scope of the First Amendment.”

The court employs a balancing test where it weighs the harm to plaintiff and defendants. Disclosure of Skywalker’s identity would have a chilling effect on other bloggers, and this weighed heavily in favor of defendants. With respect to harm to the plaintiff from quashing the subpoena, the court finds that AOLF would not suffer a comparable harm. AOLF could proceed in the litigation without knowing Skywalker's identity—Skywalker had responded to written discovery, and if necessary, AOLF’s counsel could even conduct a deposition via telephone (or alternatively, Skywalker’s identity could be revealed on an attorneys’ eyes only basis). Ultimately, AOLF was unable to make a compelling argument that it needed to discover Skywalker’s identity at this point in the litigation. It raised a weak argument that it needed to find out the revenues generated from Skywalker’s blog but the court notes that this information could be gleaned through other sources, such as Google and Automattic.
__

This is a nuanced result. The court recognizes that the copyright claim is not particularly strong and there is a good chance, this is the end of the road for Art of Living Foundation. The earlier dismissal of its defamation claim (and accompanying liability for attorney's fees) is a serious blow, but the court's rejection of its request to unmask Skywalker deprives AOLF of what it was looking to get out of this lawsuit--early identification of a pseudonymous blogger. On the merits of his copyright claim, Skywalker may win on his claim for fair use or successfully argue that the damages are minimal at best. (See generally, the Righthaven debacle.)

The overall takeaway is that if you as a blogger face a claim for garden-variety copyright infringement, this type of a ruling shouldn't give you much hope. Courts will readily cite to Sony Music v. Does and order compliance with a subpoena seeking your identification. If, on the other hand, a plaintiff is using a weak copyright claim to get at you for bad-mouthing the plaintiff, a court may see it for what it is, and deny the requested discovery. Of course, this depends on your luck of the draw and requires you to be in front of a thoughtful judge and have good representation. (The ACLU, EFF, and Public Citizen weighed in as amici, which didn't hurt.) It also requires that service providers don't jump the gun when responding to subpoenas seeking identification. I'm sure on a daily basis, numerous posters and bloggers are unmasked because the circumstances are different from those in this case. Additionally, "garden-variety" copyright infringement unmaskings never get to court at all; service providers routinely make disclosures under section 512(h) without the alleged infringer even knowing it.

Added: Art of Living approached me and asked if I would add a link to an explanatory letter from them explaining their motivations in bringing the lawsuit. I've uploaded it to Scribd here.

Other coverage:
Public Citizen: Federal Judge Protects Anonymity of Blogger Despite the Allegedly Infringing Posting of a Copyrighted Teaching Manual
Techdirt: Courts Can't Ignore Free Speech Concerns Just Because Someone Claims Copyright Infringement
Wendy Davis: Court Rejects Bid To Unmask "Art of Living" Critic
RCFP: Federal judge preserves blogger's anonymity

Posted by Venkat at 04:45 PM | Copyright , Privacy/Security

November 28, 2011

Dangerous Copyright Office Proposal to Undercut the DMCA Online Safe Harbors

By Eric Goldman

In light of SOPA and its capacity to destroy the current online safe harbor scheme, it seems almost quaint to keep worrying about 17 USC 512. However, unless SOPA/PROTECT-IP passes, 512 remains an essential part of the UGC economy, and it's worth fighting to preserve the safe harbor's integrity and all of the social benefits that have flowed from it.

Recently, the Copyright Office floated a proposal that would result in websites completely losing the 512 safe harbors due to administrative technicalities. Specifically, the Copyright Office proposes to force all websites that currently have properly designated an agent for notice to re-register or they will automatically forfeit the safe harbor; then, the Copyright Office proposes to require all websites to take affirmative action to confirm their designation every two years or they will automatically forfeit the safe harbor.

Unquestionably, the proposal's net effect will be that well-meaning legitimate websites will lose their safe harbor protection due to unintentional or garden-variety clerical/administrative errors. Further, there is almost no countervailing benefit to copyright owners or the Copyright Office from the additional administrative requirements.[**] Indeed, the Copyright Office proposal inevitably will increase the litigation costs for both copyright owners and UGC websites as it gives them yet another thing to litigate over--as if 512 opinions weren't long enough already.

[**: Perhaps I've overstated things. In fact, the proposal may offer indirect benefits to both copyright owners and the Copyright Office. First, copyright owners might be happy that more UGC websites become easy targets for their lawsuits. Second, I wonder if the Copyright Office plans to use filing fees to extract more profits from UGC websites, something they didn't expressly say but I have my suspicions].

Working with Corynne McSherry of the EFF and Jason Schultz from UC Berkeley, today we filed comments to the Copyright Office proposal encouraging them to scrap this part of the proposal. Our comments are just 3 pages long, so take a look. The initial comment due date is today; reply comments are due Dec. 27.

Posted by Eric at 09:20 AM | Copyright , Derivative Liability | TrackBack

November 21, 2011

Can A Copyright Be Assigned By Email?--Hermosilla v. Coca-Cola

By John Ottaviani with comments from Venkat and Eric

Vergara Hermosilla v. The Coca Cola Company, No. 11-11317 (11th Cir. Nov. 3, 2011).

Can a copyright be assigned by an exchange of emails? Section 204(a) of the Copyright Act provides that a transfer of copyright ownership is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or by such owner’s duly authorized agent. The 11th Circuit has recently affirmed a lower court’s decision that an exchange of emails was sufficient to constitute a contract to assign a copyright. The court’s decision, however, does not seem to adequately address whether the email exchange satisfies the “writing” requirement in Section 204.

Background

The dispute arises out of Coca Cola’s worldwide marketing campaign for the 2010 FIFA World Cup soccer tournament. As part of its advertising campaign, Coca Cola enlisted recording artist K’Naan to create a new version of his song “Wavin’ Flag,” and called the new version the “Celebration Mix.” Coca Cola had certain lyrics in the “Celebration Mix” adapted and sung in different languages by local artists and K’Naan. In 2009, Coca Cola contacted Jose Puig, a representative of Universal Music Latin America, to produce a Spanish version of the Celebration Mix. The Spanish lyrics were to be sung by David Bisbal, a Spanish language singer. Puig was referred to the plaintiff, Rafael Vergara Hermosilla, in November 2009. Vergara adapted the Celebration Mix into Spanish, and subsequently delivered the Spanish lyrics to Puig in December 2009. A dispute later arose over Vergara’s compensation for the adaptation.

Puig and Vergara negotiated a settlement. After a phone conversation about the terms of the deal, Vergara wrote this email:

[B]ecause I am a man of my word and honor, that is not moved by economic motives, my only request is the my credits are respected as producer and adapter of the Spanish version (that every time the name of any composer of this version appears, my name appears as adapter), and obviously, the credits for the production that are detailed in the invoice sent for this production, which I have detailed below.

For the adaption, you may consider it a work for hire with no economic compensation to that respect. I believe what’s legal is a dollar.

I hope this leaves clear what my work was and what my good intentions were from the beginning.

The next day, Puig responded by email to Vergara to the effect that “You can count on the credits on the track. I am resending you the contract.”

Puig subsequently sent draft contracts confirming the assignment, but inadvertently omitted the provisions that would give Vergara the credits. So Vergara rejected what he characterized as his “proposal” and filed a lawsuit in the Southern District of Florida to enjoin Coca Cola from using the Spanish version of the Celebration Mix without giving him proper credit.

After initially enjoining Coca Cola in May 2010 from disseminating the Spanish version of the Celebration Mix without giving credit to Vergara as the adapter, in February 2011 the District Court granted a summary judgment in favor of Coca Cola. The district court found that the e-mail exchange constituted an assignment by Vergara of his copyright in the adapted lyrics. The court characterized the exchange of emails as an offer and acceptance, “and at that moment the deal was made irrevocable.” The court determined that Puig’s sending of formal contracts that did not reflect all of the terms of the earlier emails was not a “counteroffer which is labeled as an acceptance, but adds new terms” (which typically is not binding under Restatement (Second) of Contracts §59), but was an offer to modify an existing contract. Although Vergara rejected this offer, the court found that this did not impact the initial agreement to assign the copyright.

In a brief aside, the district court also recognized that Section 204 of the Copyright Act requires a signed writing for a conveyance. However, the district court simply noted without discussion that “Courts have found emails to constitute signed writings.” (citing Lemel v. Mattel, Inc., 394 F.3rd 1355 (Fed. Cir. 2005) and the federal E-Sign Act).

11th Circuit Decision

The 11th Circuit opinion is relatively short and to the point. After reciting the facts, the 11th Circuit found that, under Florida law, “the record established without dispute that Vergara assigned his copyright interests to Universal.” The court used a traditional contract analysis to characterize Vergara’s e-mail as an offer and Puig’s e-mail as an unconditional acceptance, which together were effective to create a contract.

Discussion

Unfortunately, while the 11th Circuit found that the e-mail exchange constituted a binding contract under Florida law, the court did not address whether the e-mail exchange constituted a “writing” for purposes of Section 204 of the Copyright Act. Prior to the adoption of the E-Sign law, courts differed as to whether an e-mail exchange would satisfy the writing requirements of Section 204. Section 7001(a)(2) of the federal E-Sign Act, which was enacted in 2000, provides in relevant part that “a contract relating to [a transaction in or affecting interstate or foreign commerce] may not be denied legal effect, validly or enforceable solely because an electronic signature or an electronic record was used in its formation.”

Few courts have addressed what consitutes a "writing" for purposes of E-Sign. Earlier this year, the Arkansas Supreme Court found that a waiver of coverage in an online insurance application constitutes a "writing" for purposes of the Arkansas insurance law requirng such waivers to be in writing. In 2010, the federal district court in Colorado found that an e-mail summary of a settlement meeting could consitute a "writing" for purposes of the Colorado Statute of Frauds, but that the summary could not be enforced as a contract because it was written by an administrative assistant and was not "subscribed by the party to be charged."

But does E-Sign apply to transactions involving transfers of copyrights? Professor Nimmer notes that “[n]othing about the ESIGN Act overtly mentions copyrights in particular or other federal enactments in general.” He further notes that E-Sign does purport to apply “to any transaction in or affecting interstate or foreign commerce,” with some exceptions. It remains to be seem, then whether courts will treat e-mail as having sufficient formalities to satisfy the writing requirement in Section 204 of the Copyright Act.

The 11th Circuit decision also ignored the fact that Vergara’s email characterized the adaptation as a “work made for hire.” Would the decision have come out any differently if analyzed under the “work made for hire” provisions? Probably not. Under Section 101 of the Copyright Act, certain works qualify as a work made for hire if “the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.” The court did not discuss the question whether the adaptation qualified as one of these specially ordered works (at best it might be viewed as a part of an audio visual work, or as a translation, but probably not). Even if the adaptation did qualify as a work that could potentially be a “work made for hire,” does the exchange of emails constitute “a written instrument signed by them?” I find it harder to classify the exchange of e-mails as an “instrument’ within the meaning of the work made for hire definition. This may be why the 11th Circuit decided the issue on contract grounds, but it would have been nice to have some analysis of this issue.
_________

Comment from Venkat:

This is a great post by John that delves into the interplay between the federal ESIGN Act and the Copyright Act. I wonder whether an email disclaimer would have affected the analysis. There’s been a lot written on the efficacy and the desirability of email disclaimers in other contexts, but I wonder if an email disclaimer that said

Nothing in this email is intended as an offer and the author disclaims any intention to make an offer or create an enforceable agreement through any email messages. Any agreement with the author of this email must be in a signed paper document!

would have protected Hermosilla? I’m guessing the court would have said that Hermosilla’s unequivocal intent to reach an agreement trumped anything in an email disclaimer. It may not have been useful here, but it would be useful in other contexts, such as where people exchange email messages in an attempt to settle a dispute and one party tries to use an email along the way to say that the parties reached a settlement and tries to enforce a settlement on this basis. I’m not a fan of email disclaimers, but this type of a disclaimer may be worth exploring.
_________

Eric's comments.

To me, the legal doctrine in this case seems pretty straightforward. If the parties formed a contract or did a proper contract amendment, the fact that the contract was made via email should satisfy the Section 204 "writing" requirement per E-SIGN/UETA. After all, Section 204 is a statute of fraud, and E-SIGN/UETA were designed to say that emails satisfy the statute of frauds. See, e.g., the many real estate cases reaching this result and John E. Theuman, Satisfaction of Statute of Frauds by E-Mail, 110 A.L.R.5th 27 (2003). I don't see any reason why copyright law would be handled differently under E-SIGN or UETA. My analysis is the same for the "work for hire" statute of fraud.

For me, the harder part is whether the email exchange properly formed a contract/contract amendment and, if it did, if Coca-Cola (or its assignor) violated one of the contractual conditions such that their failure to perform negated the contract. If this situation didn't have a whiff of the content creator changing his mind with venal intent, I think other courts might have been more sympathetic on that point.

Posted by John Ottaviani at 08:50 AM | Copyright , E-Commerce , Licensing/Contracts | TrackBack

November 15, 2011

Why I Oppose the Stop Online Piracy Act (SOPA)/E-PARASITES Act

By Eric Goldman

[Note: I've been working on this post for about 2 weeks, so my apologies if my comments are duplicative of the intervening discussion about the bill]

The DMCA online safe harbors have worked pretty well over the past 13 years. I don't know that anyone loves the compromise, but everyone seems to have done OK. We've seen an explosion of UGC websites fueled by the safe harbor, and content owners as an industry have done pretty well for themselves financially and have developed a working relationship with most major UGC sites.

The Stop Online Piracy Act, with its ridiculously named subpart the "E-PARASITE Act," doesn't expressly modify 17 USC 512. Nevertheless, it is a full-fledged assault on the safe harbor's scheme. It employs the same basic notice-and-takedown structure of 512, but it applies the cutoff obligations to payment processors and ad networks (thus effectively reversing Perfect 10 v. ccBill and Perfect 10 v. Visa), expands--for the first time--the takedown obligations to trademarks (thus embracing and expanding Gucci v. Frontline), expands the takedown obligations to cover anti-circumvention in addition to the 17 USC 106 rights, expands the reasons why a rightsowner can complain, and does not give the governed intermediaries any business incentive to stand up for user content. On the latter point, because SOPA is designed to cut off the cash, each and every UGC item potentially jeopardizes its entire economic enterprise of a website hosting it. In other words, if the website goes offline because of cash flow problems caused by the cutoff attributable to a single UGC content item, all of the UGC on that website goes dark because of a single content item. Talk about collateral damage.

Thus, among other adverse consequences, if SOPA passed, it effectively repeals 17 USC 512 by shifting most of the action to the notice-and-takedown process in SOPA. In doing so, SOPA radically changes the balance between content owners and UGC websites. Despite the FUD from the content industry and other bill supporters about the supposedly serious problems caused by "rogue" websites and the supposedly fine-grained targeting of this bill, make no mistake--this law mortally threatens the entire UGC community.

There are a lot of other serious problems with the law and I'll discuss a few in a moment, but let me step back for a moment. Some legislative proposals, even if everyone knows they won't pass, are nevertheless useful for sparking healthy conversation among disparate communities. SOPA is not such a law. It doesn't seek to engender productive conversations. Instead, it goes out of its way to pit Silicon Valley v. Hollywood. This fosters unhealthy and antagonistic conversations, and the ongoing battle between the two diverts valuable resources that could be used to enrich both communities. See, e.g., the $100M+ that Google has spent fighting Viacom in the YouTube lawsuit--a huge amount of money that could have been instead invested in new services that benefit consumers, help rightsowners make more money and generally improve society.

Further, this law represents the worst kind of rent-seeking we see from incumbent industries. One approach to drafting legislation is to put so many objectionable concepts into a single bill that the opponents feel like they won if they clean up 50% of the problems, but that still leaves the other 50% of nasties to get through the system. I find it dispiriting that we must spend a lot of resources just to preserve the status quo from this type of industry overreaching. I support democracy for the reasons articulated by Winston Churchill, but I wished I lived in a democracy where attempts at legislative manipulation like SOPA were obviously DOA and led to its proponents suffering appropriately adverse consequences for their overreach.

In addition to the trumping of the 512 notice-and-takedown provisions, other major structural deficiencies of the law include:

* attempting to reinstantiate geographic borders on the Internet. Perhaps rebordering the Internet is inevitable, but it's bad policy for the United States to be cutting off transborder data flows, even for the putatively noble purpose of suppressing copyright infringement. Basically, the law provides a roadmap to foreign governments on how to reinstantiate geographic borders over their Internet connections, and they won't limit their censorship to copyright infringement. Instead, they'll go for the whole enchilada to restrict every type of foreign content the governments object to. (It seems virtually inevitable that we'll do the same in the US too, but that's a separate post). It will be hard for us to criticize those foreign governments' efforts because we taught them how to do it. The retort that we only deemed border reinstantiation worthy for copyright infringement and no other content type will ring hollow. When the Internet balkanizes into the US Internet, which looks nothing like the Egypt Internet, we'll have no one to blame but ourselves. I encourage the act's proponents to think very carefully whether such a Balkanized Internet will make them less money in the long run.

* The imposition of cutoff obligations on a wide variety of intermediaries, including Internet access providers and search engines in addition to the payment processors and ad networks I discussed above.

* Terms that don't lend themselves to precise statutory definitions, including "Internet advertising service," "Internet search engine," and "Internet site." All of these definitions are broad, ambiguous and based on assumptions about current technology. They don't make sense today and will look even sillier 10 years from now.

* the complete absence of empirical evidence supporting the need for any changes, or that the proposed changes fix any important problem. The collateral consequences would be unacceptable even if this evidence existed; without it, it's hard to interpret this law as a good faith effort to improve society.

While most of the discussion has been justifiably focused on the cutoff provisions, I also want to call your attention to Section 205 of SOPA. The way I read it, it proposes to build a huge bureaucracy of foreign diplomats whose sole job is to advance the interests of US IP owners in foreign countries. We already have problems with USTRs being IP maximalists, but this section would dramatically expand the number of IP maximalists in the US diplomatic corps. I'm not sure I have a good handle on all of the implications, but it seems like (1) we'll have more opportunities for the revolving door from IP owners to government and back, (2) this will further inculcate the agenda of legacy/incumbent IP industries into our government policy, and (3) we will have more boots on the ground to push the US IP maximalist agenda on other countries as part of our doctrinal imperialism.

There has been a lot of commentary about the bills. Some links worth exploring:

EFF Coverage

SOPA: Hollywood Finally Gets A Chance to Break the Internet (an excellent single-stop resource to begin your research)

Proposed Copyright Bill Threatens Whistleblowing and Human Rights

Techdirt

[I know you're already reading Techdirt, but no one is doing a better job of chronicling the day-to-day SOPA developments than Mike Masnick.]

E-PARASITE Bill: 'The End Of The Internet As We Know It'

MPAA Helped Police Seize 'Pirated' DVDs That Were Actually Fully Authorized [a must-read article of how content owners who should know better nevertheless mistakenly accuse legitimate businesses of infringing activity and, using the power of law enforcement, shut down legitimate businesses and cost Americans jobs]

Go Daddy Supports E-PARASITE Legislation Even Though Its Own Site Is Dedicated To Theft Of Property Under Terms Of The Bill

Viacom Exec: 'Everyone Knows A Rogue Site When They See One'… Except He Doesn't

Others

Larry Downes, News.com, SOPA: Hollywood's latest effort to turn back time

Future of Music Coalition, Coming Clean on SOPA

Rebecca MacKinnon, New York Times, Stop the Great Firewall of America

Public Knowledge, SOPA and Section 1201: A Frightening Combination

James Templ

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