Digital Media Lawyer Blog

The American Recovery and Reinvestment Act of 2009, otherwise known as the "stimulus bill" that was passed by Congress on February 13 and signed by the President on February 17 contains over $40 billion in funds specifically earmarked for information and technology-related spending. This includes:

• $11 billion for Smart Grid Investment Program: includes funds for research and development, pilot projects, and federal matching funds "to modernize the electricity grid making it more efficient, secure, and reliable and build new power lines to transmit clean, renewable energy from sources throughout the nation."

• $300 million for Smart Appliances: includes funds to "provide consumers with rebates for buying energy efficient Energy Star products to replace old appliances, which will lower energy bills."

• $7.2 billion for Wireless and Broadband Grants: includes funds for broadband and wireless services in underserved areas to strengthen the economy and provide business and job opportunities in every section of America with benefits to e-commerce, education, and healthcare.

• $650 million for DTV Conversion Coupons

• $750 million for Transit System upgrades: includes funds to "to modernize existing transit systems, including renovations to stations, security systems, computers, equipment, structures, signals, and communications."

• $500 million to replace Social Security Administration's National Computer System.

• $50 million to make improvements to the IT system at the Farm Service Agency.

• $290 million to upgrade and modernize IT systems at the State Department.

• $650 million in Education Technology: to create "21st century classrooms, including computer and science labs and teacher technology training."

• $250 million for Statewide Data Systems: "competitive grants to states to design and develop data systems that analyze individual student data to find ways to improve student achievement, providing teachers and administrators with effective tools."

• $19 billion for Health Information Technology: "to jumpstart efforts to computerize health records to cut costs and reduce medical errors."

Billions more in information technology funds should be available as part of funding in other areas -- even if not specifically earmarked for the information technology industries.

David D. Johnson is a business lawyer whose practice focuses on litigation and other issues relating to digital media and consumer electronics companies. David can be contacted at (310) 785-5371 or DJohnson@jmbm.com.

A recent decision by Judge Fogel in Northern District of California provides a helpful gloss on the Ninth's Circuit's reinterpretation of the Communications Decency Act (CDA) (fn1) in its 2008 Fair Housing Council decision. (fn2) In December 2008, on a motion to dismiss brought in Goddard v. Google (fn3), Judge Fogel considered whether the CDA protected Google's "AdWords" program which allows advertisers to draft short advertisements and select corresponding keywords. The Plaintiff sued Google, claiming that she clicked on an AdWord advertisement that was linked to an allegedly fraudulent mobile service subscription provider website and which caused unauthorized charges to appear on her cellular telephone bill.

According to Judge Fogel, "the only relevant inquiry" for the applicability of the CDA "is whether the interactive service provider "creates" or "develops" the content. (fn4) Looking at older precedents, the Court found that if a website merely provides "neutral tools" to create web content, these are "squarely within the protections" of the CDA -- even if third parties use these tools to create illegal conduct. The fact that a website operator collects fees from users who engage in such illegal content is also irrelevant.

Continue reading "District Court Holds that a Website's Assistance of Users in Creating On-line Content Can Be Sufficient to Eliminate Immunity Under the Communications Decency Act" »

The genius of many interactive websites is that they enlist the public in creating massive databases that are searchable by relevant keywords. This enables "buyers" to quickly find "sellers" who are offering the exact "product" type the buyer is seeking -- whether it be a used automobile, a dating or marriage companion, or housing. To assist users, most sites ask users to create "profiles" from a pre-set menu of options that are most relevant to the particular search to which the website is oriented.

Occasionally, users are able to take advantage of such services to perform illegal and harmful acts. However, courts have generally held that the Communications Decency Act (47 USC §230) provides immunity to the internet service provider, because merely providing menus to assist users in creating a profile has not been found to transform the service provider into the author or creator of the posting -- the "information content provider."

This all seems to have changed with the Ninth Circuit's en banc ruling in Fair Housing Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157 (9th Cir. 2008). The Ninth Circuit characterized Roommates.com as a website that was designed to match people renting out spare rooms with people looking for a place to live. The Ninth Circuit described the Roommates.com service as a standard searchable database website, in which users created profiles that were largely generated via a pre-determined menu of questions. (fn1) These profiles included the user's preferences as to "sex, sexual orientation and whether he would bring children to the household." (fn2) The profiles were created using drop-down menus that asked such things as whether the user was male or female, gay or straight, and whether the housing seeker would live with children or not. (fn3) According to the Court, while asking such questions could well offend the Fair Housing Act and state housing discrimination laws, this information was required by Roommates.com in order for users to access its system.

The Ninth Circuit held that "by requiring subscribers to provide the information as a condition of accessing its service, and by providing a limited set of pre-populated responses, Roommate becomes much more than a passive transmitter of information provided by others, it becomes the developer, at least in part of that information." Hence CDA immunity would not be available. (fn4) The Court also found that the CDA immunity was not available for Roommate's search system, because it filtered listings and directed emails to subscribers "according to discriminatory criteria." (fn5)

Continue reading "Fair Housing Council Decision Leaves Unanswered Questions as to Assistance a Website Operator Can Give Users in Creation of Content without Forgoing CDA Immunity" »

In a January 28, 2009 ruling, an Arizona Federal District Court judge ruled that features included in a "bot" that enabled users to avoid detection and hence obtain access to the elements of game software stored on the game owner's server violate the anti-circumvention rules of the Digital Millennium Copyright Act. (fn1)

The successful counterclaimants in this ruling, Blizzard Entertainment, Inc. and Vivendi Games, Inc., own and operate the widely-distributed World of Warcraft ("WoW") online computer game. In WoW, players control characters within a virtual universe, which interact with characters controlled by other players and computer-generated characters. As players progress, they acquire in-game assets, experience and power.

WoW game software resides in two types of locations: WoW "game client" software is purchased by and downloaded onto the hard drives of individual gamers. WoW "game server" software is located on a Blizzard-owned server and downloaded by users as the game is played.

Glider, which is owned by MDY Industries, is a program known as a "bot", short for "robot", which "plays" WoW while the owner is away from his computer. Blizzard alleged that Glider enables a user to advance more quickly within WoW. Blizzard claimed that Glider enables users to acquire an "inordinate number of game assets -- sometimes referred to as 'mining' or 'farming' the game -- with some users even selling those assets for real money in online auction sites." Blizzard claimed that Glider was diminishing the value of WoW and causing Blizzard to lose customers and money. (fn2)

To detect and prevent the use of bots such as Glider, WoW uses software, referred to by Blizzard as "Warden", which contains two elements: (i) "scan.dll", which scans the user's computer for unauthorized programs such as Glider, before the user logs onto WoW servers; and (ii) the "resident" component of Warder, which periodically sends requests to the user's game client software asking for reports on the content of certain defined portions of WoW memory. If the game client software reports information showing a "clean" segment of memory, Warden let the user continue playing the game. (fn3)

Continue reading "Arizona District Court Finds that Detection Evasion Features of a "Bot" which Permitted Users to Access Software on Interactive Game Distributor's Server Violate the DMCA" »

In a report released on January 14, 2009, the Internet Safety Technical Task Force concluded that the technologies currently being used by digital media companies to address youth safety are "helpful in mitigating some risks to minors online, but none is fail-safe." The study, which was conducted at the Berkman Center for Internet and Society at Harvard University for the 52 State Attorneys General, reviewed technologies such as age verification and identity authentication, filtering and auditing, text analysis and biometrics. (fn1) However, it found that these technologies do not even address the most common online threats faced by minors -- harassment and bullying. Moreover, while the these technologies can be of use against other threats, such as preventing minor access to adult content, each can be circumvented.

The Task Force report identified three major categories of threats faced by minors online: (1) sexual solicitation, (2) online harassment and cyber-bullying, and (3) exposure to problematic content. Of these, the Task Force found that bullying and harassment, most often by peers, are the most frequent threats that minors face online. Bullying and harassment include acts designed to embarrass, humiliate or threaten a minor.

While sexual solicitation is a risk, the study found that "the image presented by the media of an older male deceiving and preying on a young child does not paint an accurate picture of the nature of the majority of sexual solicitations." Rather, most solicitation is between minors, and even in most off-line encounters arranged through the Internet, the minor knows that he is being solicited by an adult. While there is a risk of exposure to unwanted harmful material, "those most likely to be exposed are those seeking it out, such as older male minors."

Continue reading "Harvard Study Finds Significant Limits in the Ability of Current Technology Used by Social Networking Sites to Reduce Online Risks to Minors" »

The Children's Online Privacy Protection Act (COPPA), which prohibits website operators from collecting personal information from a child under age 13 without parental consent, has been around for a little over a decade. (fn1) However, because it believes sufficient time has passed for website operators to become aware of and compliant with the rules, the Federal Trade Commission has started imposing higher penalties on violators. In its most recent COPPA enforcement action, against Sony BMG Music Entertainment, Sony agreed to a $1 million fine as part of its settlement with the FTC. .

A brief excursion around the Web suggests that most popular sites appear to attempting to comply with COPPA. Common techniques, for interactive sites that don't want to deal with the hassle of obtaining parental consent, are to post a policy stating that submissions from persons under age 13 will not be accepted, and/or to require users to provide their birth date before being allowed to begin a registration process that allows access to a site.

However, these exclusionary techniques can be easily circumvented. It is no difficult feat for an enterprising 11 or 12 year-old to falsify her birth date in order to gain access to a social networking site. Once on the site, it would not be surprising if that 11 or 12-year old then posted information that provided her true age -- such an account of her birthday party, or pictures from her school yearbook, showing her to be in the 5th grade and listing her actual age. Part of the very purpose of social networking sites is facilitate the exchange of such personal information. This creates a potential COPPA compliance problem for the website operator.

Continue reading ""Actual Knowledge" Language in COPPA Places Interactive Web Sites at Risk of Non-compliance" »

The California Energy Commission has recently issued a Request For Proposals to locate a private contractor to conduct a market survey to determine the extent of manufacturer non-compliance with California energy efficiency regulations. According to the RFP, "The market surveys will enable the California Energy Commission to target its enforcement efforts. The survey results will identify: (a) those regulated appliance types for which the most non-compliance occurs; and (b) those market participants who are most non-compliant."

The RFP states that the contractor is expected to survey compliance for a list of appliances at several online and retail outlets. Consumer electronics devices to be covered by the survey include: compact audio products, DVD players and recorders and televisions.

For each product, the contractor is to report such items as (i) its energy efficiency or energy consumption; (ii) its compliance with marking requirements; (iii) whether the model complies with California energy efficiency regulations; and (iv) whether the model appears in the Energy Commission's "Active Appliance Database." There is no requirement in the RFP that tests on products be performed. The budget for the survey -- $140,000 to be spent over two fiscal years -- would provide little room for significant testing. Rather, the survey firm is apparently to rely on things such as the product documentation provided by the manufacturer itself to determine compliance.

Continue reading "Manufacturer Compliance with Energy Efficiency Regulations for Consumer Electronics to Be Surveyed by California Energy Commission" »

A recent ruling shows how easy it can be for a company that markets its services via a website to find itself a defendant in a United States federal court. In a trademark infringement case brought over competing claims to the "LifeAlert" trademark, a federal judge ruled on December 29, 2008, that the Canadian defendant could be sued in a California federal court. (fn1) This was despite the fact that the defendant, which marketed living will products and services over the Internet, had no physical presence in California and had never completed any transactions with a California resident via its website. (fn2)

The standard rules for determining whether a court has jurisdiction over a website operator

In general, a court can only exercise jurisdiction over a defendant, if the defendant has the requisite "minimum" level of "contacts" with the particular state in which the court sits. (fn3) Foreign or out-of-state website operators may never have any physical contacts with the state in question. So in cases involving website operators, judges instead use a "sliding scale" analysis, and look at the nature and extent of the commercial activity that the defendant conducts over the Internet with the state where the court sits. (fn4)

At one end of this sliding scale are passive websites, that only make information available to those who are interested in it. Such websites cannot be sued in every state that information from the site is accessed -- but may have to be sued in their home state or country. At the other end of the scale are interactive websites through which the defendant knowingly conducts regular business with the state in question. These clearly can justify a court in that state's exercise of jurisdiction. (fn5) In the LifeAlert case, because the defendant had not engaged in commercial transactions with anyone in California, under these rules, the court found that an exercise of jurisdiction over the defendant would have been inappropriate.

The broader jurisdictional rules applied to foreign defendants

Instead, the court in the LifeAlert case found that jurisdiction was appropriate by resorting to two lesser-known rules. First, the judge applied a rule that effectively only applies to foreign defendants -- Federal Rule of Procedure 4(k)(2). Under this rule, a federal court can assert jurisdiction over a defendant if: (i) the case involves a cause of action based on federal law; (ii) no other state court of general jurisdiction in the U.S. has jurisdiction over the defendant, and (iii) the judge finds that the defendant has sufficient nationwide contacts with the U.S.

Continue reading "Recent Federal Court Ruling Would Make It Easy to Sue Foreign Website Operators in U.S. Courts" »

In another case involving Veoh.com, a federal judge has again rebuffed an attempt by a copyright-holder to claim that the safe harbors of the Digital Millennium Copyright Act (DMCA, 17 U.S.C. § 512) do not protect the video file-sharing site. UMG Recordings, Inc. v. Veoh Networks, Inc., 2008 WL 5423841 (C.D. Cal. 2008).

The Veoh website includes videos supplied by Veoh's content partners and permits visitors to access large library of commercial television shows and movies. Veoh also permits users to upload their own video content. While Veoh has policies against uploading copyrighted material, copyright holders have alleged that users can, at least temporarily, circumvent Veoh's measures -- with the result that copyrighted music and videos are distributed to other users.

In response to suits from such copyright holders, Veoh has claimed qualified immunity under the DMCA. The DMCA, provides several safe harbors for digital media service providers, including limited immunity for infringing information "residing on systems or networks at direction of users." (fn1)

In UMG Recordings v. Veoh, copyright holder UMG Recordings, Inc. claimed that Veoh cannot take advantage of this safe harbor because Veoh performs several functions on user-uploaded videos that are not "storage" and are not "undertaken at the direction of a user." (fn2) These included: (1) creating "Flash-formatted" copies of the uploaded videos; (2) creating "chunked" versions of the uploaded videos; (3) allowing users to access videos via streaming; and (4) allowing users to download whole video files.

In his December 28, 2008 ruling, the judge started with the key assumption that all the activities cited by UMG amounted to "software functions directed toward facilitating access to materials stored at the direction of users." (fn3) Then, focusing on the precise wording of the DMCA, the judge noted that the provision of the DMCA in question -- 17 USC §512(c) -- doesn't state that safe harbor protection is only available for "storing" information. Rather Section 512(c) states that limited immunity is available for infringement "by reason of" or "as a result of" such storage. The judge stated that "when copyrighted material is displayed or distributed on Veoh, it is 'as a result of' or 'attributable to' the fact that users uploaded the content to Veoh's servers." (fn4)

Continue reading "Court Finds that File-Sharing Site Can Be Entitled to DMCA Safe Harbor Protection even though It Converts and Allows Access to User-uploaded Content" »