1H 2017 Quick Links, Part 4 (Copyright, Patent, More)


* Design Basics, LLC v. Lexington Homes, Inc., 858 F.3d 1093 (7th Cir. 2017). Three noteworthy passages from this case:

– “the existence of the plaintiff’s copyrighted materials on the Internet, even on a public and “user‐friendly” site, cannot by itself justify an inference that the defendant accessed those materials. It follows that a plaintiff who cannot show striking similarity and whose evidence of access reduces to the mere existence of a website cannot survive summary judgment on a copyright infringement claim”

– “The market for affordable home designs is crowded because opportunities for originality are tightly constrained by functional requirements, consumer demands, and the vast body of similar designs already available. In this field, the substantial similarity requirement is particularly hard to satisfy…the designer’s or architect’s copyright as thin, so that only very close copying of protected elements is actionable”

– “Design Basics’ business model of trawling the Internet for intellectual property treasures is not unique. In recent years, opportunistic holders of copyrights, patents, and other intellectual property have developed unsavory reputations for “trolling,” bringing strategic infringement claims of dubious merit in the hope of arranging prompt settlements with defendants who would prefer to pay modest or nuisance settlements rather than be tied up in expensive litigation. Like the proverbial troll under the bridge, these firms try to extract rents from market participants who must choose between the cost of settlement and the costs and risks of litigation. This business strategy is far removed from the goals of the Constitution’s intellectual property clause to “promote the Progress of Science and useful Arts.””

* The Copyright Alert System is dead. Good riddance. TorrentFreak. Variety. IP Watch. Prior blog post.

* The Age: ‘Three strikes’ scheme for Aussie pirates scrapped: report

* TorrentFreak: “A new academic study shows that graduated response policies against file-sharers fail to boost box office revenues. The empirical research, which looked at the effects in various countries including the United States, suggests that these anti-piracy measures are not as effective as the movie studios had hoped.”

* Technical Amendment to DMCA Designated Agent Rule:

The Copyright Office has issued a final rule amending 37 C.F.R. § 201.38, governing the designation of agents to receive notifications of claimed infringement under the Digital Millennium Copyright Act (“DMCA”). On December 1, 2016, the Office launched a new fully-electronic online system through which service providers can more efficiently submit and update, and the public can more easily search for and find, designated agent information submitted to the Copyright Office pursuant to section 512(c)(2) of the Copyright Act. The Office also promulgated regulations to govern use of the new system and update what is required of service providers to remain compliant with section 512(c)(2).

This final rule makes non-substantive technical changes to the process by which individuals create system user accounts. As a result of user feedback, the Office has decided that it will no longer be mandatory to provide the position or title, organization, or physical mail address for the individual named as the primary point of contact for communications with the Office. Additionally, the Office has decided to make providing information for a secondary point of contact optional—though it is still recommended so as to best ensure receipt of important communications from the Office. These changes to the user account creation process will make it simpler and easier to complete.

Prior blog post.

* Engine: The Limits of Filtering: A Look at the Functionality and Shortcomings of Content Detection Tools

* The Guardian: Revealed: How copyright law is being misused to remove material from the internet

* Nakada + Associates, Inc. v. City of El Monte, 2017 WL 2469977 (C.D. Cal. June 2, 2017): “The record is clear that Defendant neither stored nor posted the videos on its website. Instead, third party websites self-evidently did so: the first video is stored on YouTube and the other two on www.elocallink.tv website. Defendant merely linked to those videos on its website, and the links, when clicked, direct users to YouTube and www.elocallink.tv websites. Defendant does not copy, display, or encourage the users to share the videos on its website; although the third party websites appear to do so. More critically, and relatedly, Plaintiffs cannot establish on the facts adduced here that, by merely linking to those videos, without anything more, Defendant displayed the videos publicly.”

* Mike Masnick at The Verge: Congress is trying to give even more power to Hollywood

* TorrentFreak: Google Anti-Piracy Agreement Will Target Domain Hopping, Share Search Data

* The Second Life horses and bunnies are back at it, and it looks like the horses have won. Prior blog post.

* Techdirt: Copyright Madness: Blurred Lines Mess Means Artists Now Afraid To Name Their Inspirations


* Ian Appel et al, Patent Trolls and Small Business Employment:

We analyze how frivolous patent-infringement claims made by “patent trolls” affect small firms’ ability to create jobs, raise capital, and survive. Our identification strategy exploits the staggered passage of anti-patent-troll laws at the state level. We find that the passage of this legislation leads to a 1.8% increase in employment at small firms in high-tech industries, which are a frequent target of patent trolls. By contrast, the laws have no significant impact on employment at larger or non high-tech firms. Anti-troll legislation is also associated with fewer business bankruptcies. Financing appears to be a key channel driving our findings: in states with an already established VC presence, the passage of anti-troll laws leads to a 19% increase in the number of firms receiving VC funding. Consistent with this financing channel, we find that the effect of patent laws on employment is driven by states with above-median VC presence. Our findings suggest that measures aimed at curbing the recent explosion in patent litigation may play an important role in reducing both real and financing frictions faced by small businesses.

Hot News

* Scrappost, LLC v. Peony Online, Inc., 2017 WL 697028 (E.D. Mich. Feb. 22, 2017):

Peony asserts a claim for “Misappropriation of Hot News.” At the outset, the Court notes that it has located no authority to support a “hot news” misappropriation claim in Michigan….

At the heart of Peony’s claim is the allegation that Scrappost copied price information from Peony’s publications and misappropriated this information for its own commercial gain. First, Peony disregards the fact that it is Scrappost’s subscribers, not Scrappost itself, that list price information on the Scrappost website. And to the extent that Peony suggests that Scrappost must have copied price information from Peony reports because the information on Scrappost’s website was listed without the consent of Peony’s subscribers, this argument is not supported by any admissible evidence. 2 In sum, Peony has not offered evidence to support the allegation that Scrappost was “free-riding” on the efforts of Peony.

Second, as Scrappost persuasively points out, the data allegedly misappropriated by Scrappost was already published by the time Scrappost obtained it. As such, the information that Scrappost obtained was stale—not timesensitive. Third, Peony has not established how it was damaged as a result of Scrappost’s alleged “free-riding.


* Nevada Enacts New Non-Compete Law

* NY Times: Quit Your Job for a Better One? Not if You Live in Idaho