Digital Media Lawyer Blog

Digital media law update: Despite the tremors caused by the Lenz case, a recent decision by a Wisconsin District Court shows that it can still be difficult to obtain a judgment holding a defendant liable for sending a false DMCA notice. See Third Education Group, Inc. v. Phelps, E.D.Wisc., No. 07-c-1094, Decision and Order Following Court Trial (November 25, 2009).

The Digital Millennium Copyright Act puts a powerful tool in the hands of a person who claims to be the owner of a copyright. Copyright law provides for six-figure statutory damages against an ISP who permits infringing material to reside on a site under its control after receiving notice of the presence of the material. However, the DMCA provides immunity from these civil damages if an ISP takes down such material in response to a notice from the putative owner of the copyright, and meets certain other tests. This provides a strong incentive for an ISP to reflexively take down infringing material -- such as by disabling an entire website -- upon receiving a DMCA takedown notice.

This puts serious weapon in the hands of the general public that can be used protect legitimate copyright interests -- or can be misused by someone who has no rights in material used by a competing business to get its site shut down.

To prevent abuse of the notice and take down system, Congress put two major protective measures into the DMCA: the counter-notice procedures in § 512(g) and the misrepresentation rule in § 512(f). Section 512(f) provides that a person who "knowingly" misrepresents that material on a site is infringing is liable for any damages, including attorneys fees, incurred by the alleged infringer."

It can be very hard to prove a knowing misrepresentation occurred. Courts interpreting this statute have generally found that to be liable, the person who sent a false DMCA notice must have lacked the honest belief that material was infringing. As stated by the 9th Circuit, "Congress's apparent intent [was] that the statute protect potential violators from subjectively improper actions by copyright owners." Rossi v. MPAA, 391 F.3d 1000, 1005 (9th Cir. 2004).

To determine whether the sender of a false DMCA notice had a good faith belief in the truth of the notice, courts do not limit themselves to the testimony of the sender. Rather, courts consider the information that the sender relied on. However, it doesn't take much evidence for the court to find that the author of a DMCA notice acted in good faith.

For example, the Rossi case concerned the website www.internetmovies.com, which Rossi described as an online magazine that provided visitors with a directory of websites containing information about movies. Rossi's site contained the words "Join to download full length movies online now!" In fact, users could actually download no movies through Rossi's site or through the links to which he referred users -- a fact that MPAA investigators missed because they never attempted to download any movies from Rossi's site.

However, the 9th Circuit stated that the sender of a DMCA takedown notice is not required to perform a "reasonable investigation" and "cannot be held liable simply because an unknowing mistake is made, even if the copyright owner acted unreasonably in making the mistake." Id. at 1005. Accordingly, the 9th Circuit found that the MPAA acted in subjective good faith because the language on Rossi's site "led the MPAA employees to conclude in good faith that motion pictures owned by MPAA members were available for immediate downloading from the website."

Continue reading "Third Education Group v. Phelps: DMCA Notice and Takedown Procedures Lightly Policed by Misrepresentation Rule" »

Digital media law update: The U.S. has been in talks with the E.U., Japan, Canada and a number of other mostly developed nations since 2006 to develop the Anti-Counterfeiting Trade Agreement (ACTA). Several further rounds of ACTA negotiations have been scheduled, including meetings in Mexico this month and in Wellington, New Zealand in April 2010. Assuming an agreement is reached, ACTA, like any other international treaty, will have to be ratified to become U.S. law.

ACTA is supposed to provide international rules for enforcing a broad spectrum of intellectual property rights, including addressing Internet piracy. ACTA is not intended to affect the fundamental rights of the citizens of its signatories. However, virtually any law affecting the Internet has the potential to affect individual rights, such as freedom of expression and freedom of association.

ACTA negotiations have raised considerable concern among Internet access rights groups because the negotiations have been conducted in secret. A long list of industry "insiders" have been permitted to review drafts of ACTA documents -- including attorneys associated with Public Knowledge, a consumer rights advocacy group. However, they have been required to sign non-disclosure agreements that prohibit them from sharing what they have learned with the general public.

Despite the secrecy, a number of ACTA-related documents have been leaked to the public. A summary of the ACTA chapter dealing with the Internet was leaked in September 2009, and a set of comments by the E.U. regarding ACTA language proposed by the U.S. was leaked in October 2009. These documents suggest that ACTA is largely being modeled on the Digital Millennium Copyright Act and may not create the great threat to Internet access rights that some claim.

Among other provisions, current ACTA proposals would:

• Require member states to provide for third-party liability for ISPs: Third party liability appears to refer to liability for contributory infringement and for inducing infringement. These legal principles are already enshrined in current U.S. law, including the DMCA. The E.U. objected to this language -- but on the grounds that it went too far, because some E.U. member states do not permit civil liability for contributory copyright infringement. Rather, the E.U. indicated that it would prefer that the exact circumstances triggering liability be undefined, and that ACTA only provide for exemptions from civil liability.

Continue reading "Too Soon to Worry about the Anti-Counterfeiting Trade Agreement (ACTA)?" »

The copyright infringement claims brought against Canadian Gary Fung and his .torrent sites have at last been resolved. On December 21, 2009, Judge Wilson of the Central District of California found Fung and several of his .torrent sites liable for inducement of copyright infringement. Wilson's decision was based largely the same grounds on which other operators of peer-to-peer filing sharing were found liable in Grokster, Napster and Usenet.

To be liable for inducing copyright infringement, a defendant must have knowledge of another's infringement and undertake purposeful acts aimed at assisting and encouraging this infringement. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 545 U.S. 913, 936-37 (2005). This means that the plaintiff must first show that there has been an act of direct infringement by third parties. A&M Records, Inc. v. Napster, Inc., 219 F.3d 1004, 1013 (9th Cir. 2001). In the case of peer-to-peer filing sharing, infringement can occur both when a copyrighted work is uploaded (this violates the copyright holder's distribution right) and when it is downloaded (this violates the copyright holder's reproduction right). 17 U.S.C. §§ 106 (1), (3).

Here, for evidence that direct copyright infringement had occurred, Judge Wilson relied on a plaintiffs' expert who testified that 95% of the files available through Fung's sites were copyrighted. This evidence was corroborated by testimony from users who admitted downloading copyrighted material from Fung's sites. For evidence that infringement had occurred in the U.S., Judge Wilson relied on IP-address data which showed that infringing downloads took place in the U.S.

Fung argued that his sites' .torrent files were not directly involved in illegal downloads, but merely pointed users to tracker sites that were responsible to initiating the user downloads. (See discussion in our December 7, 2009 post). However, Judge Wilson found that when a user of a BitTorrent sites clicks on a "download torrent" button, this causes the downloading "of the actual content item referenced by the dot-torrent file" to occur, without any further action by the user. Even though in reality, the torrent file is directing the user's computer to a BitTorrent tracker and the content files are actually downloaded from third party users' computers, the user is effectively unaware of this. Judge Wilson stated: "dot-torrent files and content files are, for all practical purposes, synonymous. To conclude otherwise would be to elevate form over substance."

As evidence that Fung and his sites had induced this direct infringement, Judge Wilson cited material on Fung's websites that showed knowledge the sites were being used to download infringing material and that encouraged users to provide access to infringing material:

Continue reading "IsoHunt Mystery Resolved: Judge Wilson finds Gary Fung's BitTorrent Sites Liable for Contributory Copyright Infringement" »

YouTube has been amassing an impressive list of music industry giants who have agreed to license their content for performance on its site. Recent additions to the fold include Warner Music and the UK Performing Rights Society. These are simply two more examples of the recent warming trend in the music and video copyright holding community's attitude toward YouTube

I recently attended a meeting of the California Copyright Conference which featured a panel appearance by Zahava Levine, YouTube's knowledgeable and enthusiastic Chief Counsel. CCC membership includes publishers, songwriters, attorneys, representatives from trade publications, performing rights societies, motion pictures, television, multimedia, Internet, and record companies. Given the amount of infringement of CCC member's copyrights that exists online, I half expected to see bushels of rotten tomatoes and crates of eggs to be hurled in Ms. Levine's direction.

There were universal complaints about diminished royalties from music in general -- much of which was attributed to Internet file-sharing. However, many, if not most, CCC members seemed to view YouTube as a possible savior and were eager to learn how to make money from the site.

As Zahava explained (and is further detailed on YouTube's site), YouTube offers audio and video copyright holders three options for dealing with unauthorized copyrighted material: a copyright holder can either block, monetize or track such unauthorized material. Under the "block" option, a copyright holder can send a DMCA notice to YouTube identifying the infringing material and requesting YouTube to take it down. Under the monetize option, a copyright holder can share in revenue, such as earnings from InVideo ads overlaid on videos and banner ads running next to videos. Under the tracking option, a copyright holder can simply choose to monitor traffic for videos containing its material, using YouTube's analytics tools.

To aid in these three goals, YouTube has created tools to identify infringing audio and video files on its site -- called "Audio ID" and "Video ID." Zahava explained to me that these operate as fingerprinting technologies. (Although "fingerprint" is not YouTube's preferred term for this process.) A copyright holder provides YouTube with a master audio or video file from which YouTube creates a fingerprint. This fingerprint is then compared to the millions of audio and video files in YouTube's system to identify infringing material. Participating copyright holders can than opt to either block, monetize or simply monitor the identified material -- the three options described above. Zahava did not provide the CCC members with specific metrics on the effectiveness of this technology, but indicated that it was one of the most effective in the industry. For more on YouTube's content protection programs, see http://www.youtube.com/t/content_management.

While some copyright holders would like to achieve complete control over their content and wring a dime or dollar from every performance, copy or distribution, this has never been possible. YouTube's approach brings the promise of at least some monetary returns -- even if these currently are far less than the rapidly vanishing dollars from CD and DVD sales. But who can say what the future holds.

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.

Digital media law update: We have now passed the two-year anniversary of the filing of the plaintiffs' motion for summary judgment in the case brought by several content providers against BitTorrent promoter Gary Fung, a 20-ish Canadian resident who operated the torrent site isoHunt. See Columbia Pictures, Inc. v. Gary Fung, Central District of California, No. 2:06-cv-05578. Such a lengthy period to litigate a summary judgment motion is highly unusual, but largely appears to have been caused by the nature of bit torrent technology and the fact that torrent sites are at least one step removed from the file-sharing process.

BitTorrent is a peer-to-peer file sharing technology, or "protocol," that permits individuals to upload and download very large files, such as files for feature films and video games. It breaks up such large files into many smaller bits, so that they can be more quickly transferred between users. The first user creates a "seed" file that consists of the entire movie, song or other file that the user wishes to share. After the availability of this seed becomes known, other users (caller "peers") request and are given different pieces of data from the seed. Once the entire file is distributed among users, then each becomes the source for that portion of the seed file which can then be distributed to all the peers on the network.

The user who first uploads a seed also creates and uploads a .torrent file. This file includes a unique identifying number, or "hash." This file contains metadata about the files to be shared and about the tracker, the computer that coordinates the file distribution. Peers that want to download the file must first obtain a torrent file for it, and connect to the specified tracker, which tells them from which other peers to download the pieces of the file. The tracker maintains lists of the clients currently participating in the torrent (also called the "swarm"). See http://en.wikipedia.org/wiki/BitTorrent_(protocol) for further details.

To locate torrent files, users can use web search engines. There are also torrent sites, like Gary Fung's isoHunt, that provide links to .torrent files (according to briefs filed by Fung, isoHunt "provides a .torrent file to the visitor"). According to Fung's briefs, "The services provide by a torrent site like isoHunt involve functions of data collection, indexing, caching and downloading of a torrent file." At isoHunt, .torrent data files are collected through uploads from visitors and by searching the Internet with automated systems that systematically investigate all accessible hyperlinks, looking for ".torrent files. The .torrent files are cached in a database where there are many thousands of .torrent files. Columbia Pictures v. Fung, Central District of California, Defendants' Supplemental Brief in Opposition to Plaintiffs' Motion for Summary Judgment on Liability (April 25, 2008).

Continue reading "The Gary Fung / isoHunt Mystery: Are Torrent Sites Liable for Copyright Infringement Conducted by Third Parties?" »

There has been a lot of recent press touting manufacturers of Mac clones. Clone manufacturers attempt to unlock the tie between Apple software and hardware by selling non-Apple hardware that include copies of Apple's much-loved software. However, because Apple does not sell copies of its software for use on non-Mac hardware, the only way for this business to work economically is for the cloner to modify the Mac software and then create copies of this modified software for use on non-Mac computers. These are actions that necessarily would seem to violate Apple's copyrights over its software. And so found a court in a recent decision in favor of Apple. See Apple, Inc. v. Psystar Corp., N.D. Cal. 3:08-cv-03251, Order re Cross Motions for Summary Judgment (November 13, 2009).

The defendant in the case, Psystar, made a line of computers called Open Computers. Psystar purchased a copy of Mac OS X and modified it by removing the Mac OS X bootloader and kernel extension files and replacing them with files that would permit Mac OS X to run on non-Apple hardware. The modified copy of Mac OS X was used as new master copy for mass reproduction and installation on Psystar computers.

As Judge William Alsup found, Psystar's actions created a target-rich environment for infringement claims. Among Apple's exclusive rights that he found Psystar had violated were: (1) its reproduction rights (by downloading copies of Apple's software onto its clones, and creating copies in the computers' RAM when the computers were turned on); (2) its distribution right (by selling copies of Apple's software to the public), and (3) its right to create derivative versions (by making the modifications noted above to permit the use of Mac OS X on non-Apple hardware).

Continue reading "Apple v. Psystar: Installation of Modified Apple Software on Cloned Computers Constituted Copyright Infringement" »

Living on the west side of Los Angeles puts me smack in the middle of the entertainment industry. I have often seen promotional copies of DVDs of TV shows and feature films or music CDs being exchanged at parties, and even seen stacks of these being left out by the side of the street for trash pickup. Studios and labels don't want this content distributed to the public because early distribution can foul up marketing campaigns, and because promotional versions of content may be remixed or reedited. But can the studios and labels prevent recipients from giving away or even reselling these lightly-controlled promotional discs? A June 2008 case said "No".

The case is UMG Records, Inc. v. Augusto, C.D. Cal., No. CV-07-03106. UMG is a well-known record label and frequently produces promotional CDs. UMG's promotional CDs are labeled with language stating that "This CD is the property of the record company and is licensed to the intended recipient for personal use only. Acceptance of this CD shall constitute an agreement to comply with the terms of the license. Resale or transfer of possession is not allowed and may be punishable under federal and state laws."

The defendant Augusto was not one of the original recipients of UMGs CDs, but came into possession of many of these promotional CDs through music shops and online auctions. Augusto then resold the promotional CDs via eBay, as rare collectibles that were not available in stores. After discovering the sales, UMG attempted to get eBay to take down Augusto's auction sites. However, after initially taking them down, eBay eventually reinstated Augusto's sites.

UMG then filed suit against Augusto for copyright infringement, arguing that the language on its CDs created a license agreement precluding sale or distribution of the CDs. Augusto defended, relying primarily on the "first sale" doctrine. Under the first sale doctrine, a copyright holder's right to distribute a work is limited to the initial distribution of copies of a work, not to the resale or further transfer of possession of those copies. 17 U.S.C. § 109.
Central District Judge Otero held that principal issue in the case was whether UMG had transferred title when it sent out the promotional CDs. If the answer was yes, then the first sale doctrine applied and Augusto did not infringe UMG's distribution rights when he resold the CDs on eBay.

Continue reading "UMG Recordings v. Augusto: First Sale Doctrine Protects Reseller of Promo CDs" »

When a website designer and host and its customer work together to create a website which -- oops! -- contains unlicensed copyrighted images, who is liable for the infringement? A recent case found that the answer was "Both," holding the web designer liable for direct infringement and its customer liable for vicarious infringement. See Corbis Corp. v. Nick Starr, d/b/a Master Maintenance, N.D. Ohio No. 3:07CV3741 (September 2, 2009).

The case involved janitorial maintenance company, Master Maintenance, which hired West Central Ohio Internet Link, Ltd. to redesign and host its website. Master provided at least some of the pictures that were eventually used on the website, and supervised and approved the site's design and publication. Unfortunately, four of the images that were eventually used on the site were owned by the plaintiff, Corbis, a media company which owns a large image collection and which had never licensed the use of its images on Master's site.

In a classic case of finger-pointing, Master claimed that when it was slow in providing additional images, West Central took the bull by the horns, found images from other sources to put on the site, including the four infringing images. Master claimed that the infringing images were part of the pictures that West Central supplied. Of course, West Central claimed that Master provided all of the images.

Judge James Carr said that it didn't matter.

There are only two elements to a claim of direct infringement. The plaintiff must show: (1) its ownership of a copyright, and (2) infringement (e.g., copying) by the defendant. Here, Corbis created a presumption that it owned the four images in question by providing a certificate showing it owned a collection of works in which they were included. Then Corbis proved that West Central copied the images by posting them to Master's website, which West Central hosted on its server.

End of issue. According to Judge James Carr, West Central was liable for direct infringement, plain and simple, regardless of who had originally supplied the images.

For vicarious copyright infringement, a plaintiff only has to show that the defendant: (1) received a financial benefit from direct infringement, and (2) had the right and ability to stop or limit the infringement but failed to do so. Here, three of the four images depicted janitorial or cleaning services. Since the website was used to attract new customers to its janitorial business, Judge Carr found that Master Maintenance had received a financial benefit from the images. Moreover, since it was responsible for approving changes to the website, he found that Master Maintenance also had the right to stop the infringement, but failed to do so.

So even if Master Maintenance denied that it had supplied the infringing images, Judge Carr concluded that it could still be found vicariously liable for West Central's direct copyright infringement as a matter of law.

Continue reading "Corbis Corp. v. Starr: Finger-pointing Could Not Save Web Designer and Customer from Joint Copyright Infringement Liability" »

Digital media law: Startling high damage awards in a number of recent copyright, trademark and cybersquatting cases are often the result of simple math. Plaintiffs in these cases have the right to demand an award of statutory damages in lieu of proving actual damages. In each case, the amount of damages is tied to the number of copyrighted works or trademarks infringed, or the number of infringing domain names. It is very common for juries or judges to make per violation awards of $50,000 to $1,000,000 and more. Where a defendant has committed infringements of multiple works or marks, using simple math, it is quite easy to get to damage awards in the tens of millions of dollars -- regardless of the actual harm suffered by the plaintiff or the profits earned by the defendant.

Here is the short and skinny law on these types of statutory damages:

• The Copyright Act provides for a minimum statutory award of $750 and a maximum of $30,000 for each copyright infringed. If the plaintiff proves that the infringement was willful, the maximum damage award is raised to $150,000. 17 U.S.C. § 504(c)(1), (2).

• The Lanham Act provides for statutory damages in trademark cases involving "counterfeit marks" of not less than $1,000 or more than $200,000 per counterfeit mark per type of good or services sold, offered for sale or distributed. The maximum is raised to $2,000,000 for willful infringement. 15 U.S.C. § 1117(c).

• The Anti-Cybersquatting Protection Act permits statutory damage awards of not less than $1,000 and not more than $100,000 per domain name. 15 U.S.C. § 1117(d). Courts take factors such as willfulness into account in determining the appropriate amount of statutory damages.

In all three cases, the plaintiff may elect an award of statutory damages, in lieu of actual damages, at any time before entry of final judgment.

Here are some recent examples of how the "math" of statutory damages has played out:

• Microsoft Corp. v. McGee, 490 F.Supp.2d 874 (S.D. Ohio 2007):
Microsoft brought this copyright and trademark infringement suit against the operator of the Computerme.net website, which sold and installed a variety of Microsoft software products. According to Microsoft, in August 2006 the defendant sold a counterfeit copy of Office 2000 Pro to a Microsoft investigator. Microsoft ultimately sued for infringement of five of its trademarks and seven of its copyrights. The defendant defaulted and Microsoft sought an award of statutory damages.

The Court found that the defendant had acted willfully because it had failed to respond to Microsoft's demand letters and had defaulted at trial. However, because Microsoft had only requested the maximum amount of non-willful damages for trademark and copyright infringement, the Court awarded just that: $30,000 each for the 7 copyrights infringed ($210,000) and $100,000 each for the 5 trademarks infringed ($500,000) -- a total of $710,000.

Continue reading "Akanoc, OnlineNIC and Computerme : Suits Involving Multiple Copyright, Trademark or Cybersquatting Claims Provide Opportunities for Startling Statutory Damage Awards" »

Copyright law: A recent case from the Southern District of New York demonstrates the need to register each revision of software provided to third parties in order to maintain copyright protection over it.

The case was SimplexGrinnell LP v. Integrated Systems & Power, Inc., U.S.D.C., Southern District of New York, Case No. 07Civ2700. The plaintiff, Simplex, makes fire alarm and sprinkler equipment. The defendant, ISPI, was an installer of Simplex's equipment in the New York and New Jersey areas and was granted, as part of a bankruptcy court order, a license to use Simplex's programming software to service Simplex alarm systems for ISPI's existing customers. However, ISPI began using Simplex's software to service new customers, as well. Simplex sued for copyright infringement, seeking to block ISPI from using its software to service new customers.

The Court found that it simply could not issue an order this broad. Simplex had created five "revisions" of its software, numbered 8, 9, 10, 11 and 12. It had also issued serial editions of each revision. For example, versions 10.01, 10.50, 10.60, 10.61, 10.60.99 and 10.61.01 were all part of revision 10. However Simplex had only obtained proper copyright registration for four of these multiple versions: versions 8.04, 9.02, 10.01 and 11.01.

The problem for Simplex was that under the Copyright Act, a court only has subject matter jurisdiction over registered copyrights. See 17 U.S.C. § 411(a) ("no action for infringement shall be instituted until registration of the copyright claim has been made in accordance with this title"). As such, the Court held that it was not authorized enforce Simplex's copyrights for any versions of its software, except for the four registered versions.

Copyright law classifies works as "original" and "derivative" works. A "derivative" work is a work that is based on "one or more preexisting works." 17 U.S.C. § 101. To be fully protected, derivative works must be copyrighted separately from the original works on which they are based. In an attempt to circumvent the Court's ruling, Simplex argued that the changes it had made in the software between the serial editions of each revision were trivial, so the different editions within each revision did not qualify as "derivative" works and did not require separate copyright registration. Under Simplex's theory, because each version of the software was not a derivative work, it registration of one of the versions within each "revision" should be sufficient to confer subject matter jurisdiction over the entire revision.

Continue reading "Good Copyright Registration "Hygiene" Necessary to Obtain Copyright Protection over Revised Versions of Software" »

Many blog sites on the Internet are devoted to complaints or criticism of the practices of businesses and their executives. For example, we recently blogged about a site that critiques the practices of beauty company Mary Kay, Inc. -- www.pinklighthouse.com. Another site focuses on critiques of Starbucks' operations --starbucksgossip.typepad.com. The authors of such blogs or websites frequently worry that their posts could subject them to ruinous liability for defamation, trademark infringement (for use of the company name), or copyright infringement (for reprinting company materials).

However, a recent decision by a District Court in the Northern District of California illustrates the protections the law affords attack blogs from such claims. In 2006, Robert Delsman, Jr., a former General Electric employee, submitted a claim for disability benefits to the firm that handled such claims for GE -- Sedgwick Claims Management, Inc. Sedgwick is managed by David North (CEO) and Paul Posey (COO). Delsman grew dissatisfied with Sedgwick's handling of his case and began to express his views about Sedgwick, North and Posey in a blog and a postcard mailing campaign called "Operation Going Postcard."

The blog, which is currently hosted at http://www.gesupplydiscrimination.com/, accused Sedgwick of wrongfully denying benefits to claimants, violating various laws, and accused Sedgwick and its "minions" (which it termed "Sedgthugs") of having committed "Sedgcrimes."
Delsman also took two copyrighted photos of North and Poser and superimposed them on "WANTED" postcards, some of which he "morphed" to look like pictures of Adolph Hitler and Heinrich Himmler. The postcards contained messages next to the photos such as this: "WANTED FOR HUMAN RIGHTS VIOLATIONS. . . Have you been threatened by this man or his minions? The time for change is at hand!" On the reverse side, they read: "Have you been terrorized, threatened or lied to by Sedgwick Claims Management Services? The time to act is now! Report these despicable activities to the US Department of Justice and the Attorney General in your state. Sedgwick CMS can be stopped peacefully and purposefully if enough people act now! Get informed!"

That's strong stuff!

Sedgwick filed suit against Delsman seeking to stop his damaging campaign. It claims included copyright infringement, for his use of the photos, and the usual panoply of defamation-related claims, including libel and interference with prospective business advantage. See Sedgwick Claims Management Services, Inc. v. Delsman, U.S.D.C. Northern District of California, Case No. C 09-1468 SBA, Order Granting Defendant's Motion to Dismiss (July 16, 2009).

There is nothing wrong with the types of claims Sedgwick brought. I have successfully brought them myself on behalf of defamed plaintiffs. However, the circumstances have to be right. The reality is that the First Amendment protects a lot of damaging speech.

Continue reading "Attack Blog's Salvos against Corporation and Blogger's Use of Copyrighted Photos in Parodies of Management Deemed Non-Actionable by California District Court" »

On July 30, 2009, two customers filed a class action suit in a Seattle federal court over Amazon.com's remote deletion of copies of George Orwell's 1984 from their Kindle "Devices." (Fn1) The suit alleges that in its Terms of Use, Amazon.com provided that customers were granted the "right to keep a permanent copy" of content obtained from Amazon, and "to view, use, and display such Digital Content an unlimited number of times . . ." Amazon.com's deletion of their copies of 1984 violated these promises. The plaintiffs have alleged several legal theories against Amazon.com, including breach of the Terms of Use, damaging the plaintiffs' computers in violation of CFAA, trespass to chattels (the plaintiffs' Kindle Devices), conversion (of the deleted material) and other grounds.

While Amazon.com has yet to file a response, provisions in its Terms of Use for the Kindle provide clues as to how it may proceed.

As widely commented on in the press and by other bloggers, Amazon's Kindle electronic book reading device represents a significant departure from the way that book content has previously been distributed. For printed books, once the publisher sells the book, it is practically impossible for the publisher to exert significant control what happens to the individual copies of the book. The publisher has no ability to obtain royalties except from the first purchaser. The publisher has no real ability to prevent users from making copies of books to share with others. Moreover, if the publisher mistakenly sells content for which it has not secured the copyrights, it is virtually impossible for it to retrieve the books and minimize the damages. (Fn2)

Amazon.com's Terms of Use for the Kindle attempt to change all of that. While Amazon.com's Kindle webpages often use the term "buy" or "bought" in connection with books offered on the site, its "clickwrap" Terms of Use paint a different picture.

On one hand, some of the provisions in the Terms of Use, make a Kindle book transaction look like the traditional purchase of a book. According to the Terms of Use, "[u[pon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times . . ."

However, the provisions that immediately follow limit those rights. According to the Terms of Use, a customer has the right to keep and view this Digital Content ". . . solely on the Device or an authorized by Amazon as part of the Service and solely for your personal, non-commercial use." In other words, the user has lost the traditional book buyer's rights transfer the content to others, or to use the content for whatever non-infringing purpose he or she desires. (Fn3) The Terms of Use further restrict traditional book purchaser's powers by providing that "[y]ou may not use the Device, the Service or the Digital Content for any illegal purpose."

Continue reading "The Kindle Content Deletion Flap: Predictions on how Amazon.com Will Respond to the Newly-Filed Class Action" »

The complaint in Vanderhye v. IParadigms, LLC represented an interesting attempt to attack an on-line, computerized plagiarism detection service by accusing the service of copyright infringement. See Vanderhye v. IParadigms, LLC, 562 F.3d 630 (4th Cir. 2009).

IParadigm operates an on-line plagiarism detection service called Turnitin. Schools require students to submit writing assignments to Turnitin, which are compared to other writings in Turnitin's database. The database contains other student papers, as well as commercial and academic journal articles. Turnitin supposedly creates a "fingerprint" of the student's papers by applying various mathematical algorithms. Turnitin then compares this digital fingerprint to the fingerprints of the other works in its database and generates an "Originality Report" which indicates the percentage of the student's work that appears not to be original.

With permission from participating schools, Turnitin will place the submitted writing assignments into its database, so that they become part of the database used to evaluate the originality of subsequent student papers. The plaintiffs included three students who had submitted their papers to Turnitin for testing and whose papers were then archived in the database. The plaintiffs alleged that Turnitin's inclusion of their papers in the database constituted copyright infringement.

The Fourth Circuit's analysis focused on the "fair use" doctrine, which it characterized as "a privilege in others than the owner of the copyright to use the copyrighted material in a reasonable manner without the [copyright holder's] consent." 17 U.S.C. § 107 provides that fair use includes "criticism, comment, news reporting, teaching . . . scholarship or research." The statute provides a four factor test to determine whether the use is fair.

The Court rejected the argument that because IParadigm's use of the student papers was commercial that this required a finding that its use was unfair. Looking at the four factor test in the statute, the Court instead found that Turnitin's use of the student papers was transformative, since the papers were being used for a different purpose in the Turnitin database than that for which they were originally prepared. It further found that Turnitin's use of the papers did not discourage, but rather encouraged creative expression. While Turnitin used the whole of the plaintiff's works, its use was so transformative that this factor was not decisive. Finally, it found no substantial evidence that Turnitin's use of the papers in its database would affect the market for the papers.

It is not surprising that the 4th Circuit took the side of the schoolmasters in this case. Of course, any time a Court rules that it is OK for a third party to copy and then use an entire copyrighted work, it will raise eyebrows in some quarters.

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.

I have recently had a number of discussions with website operators that bring audio, video and other content to their websites via "in-line" linking, about whether this practice violates copyright laws. In-line linking is a form of hyperlinking that permits a host website to incorporate images and other materials from other websites into the host website. The HTML in the "in-line" link directs the user's browser to retrieve a linked-to image from a source website and display it on the user's screen -- all without leaving the host website.

Typically, the linked material appears on the user's screen in a "frame" -- surrounding material from the host website. In many cases, a shot of the opening frame (in the case of video clips) or a diluted version object itself (in the case of photographs) will be used as a "thumbnail," which the user will click to activate the hyperlink. This technology has been used in Google's image search function and in social networking and affinity sites, among others.

"In-line" linking and "framing" have often been criticized by the owners of the source objects. For example, in many cases, the "frames" on the host website will cover over advertising and trademarks of the source website. This reduces the ad revenue stream that the source website may have counted on to pay for the content. It is also often claimed that the creation of thumbnails reduces the demand for cell-phone downloads of images.

So do in-line linking, framing and the use of thumbnails violate copyright laws? In many cases -- as the legacy of series of decisions in the Perfect 10 case -- the answer will be "No."

Perfect 10 is a media company that distributes photographs of female models through its magazine, website and via cell-phone downloads. Because it exists on the internet, it was covered by Google's search text and image engines. Google image searches would recover Perfect 10 photographs, which would be displayed as thumbnails on Google's site. When a user clicked on the thumbnail, "his computer would pull up a page comprised of two distinct frames, one hosted by Google and a second hosted by the underlying website that originally hosted the full-size image." Perfect 10 v. Google, Inc., 416 F.Supp.2d 828 (C.D. Cal. 2006).

The Google frame, at the top of the screen, stated that the thumbnail "may be scaled down" and that the Google frame was not the context in which the picture was originally found. The Google frame also gave the URL of the source of the picture, although often in truncated form. The thumbnail was created by Google from the original photograph and existed on Google's servers. While the essence of the image could be viewed, thumbnails typically eliminated over 97% of the pixels in the original image. Id. at p. 847, n. 13.

Continue reading "The Legacy of Perfect 10: Websites that Use In-line Linking and Thumbnails to Bring Third Party Content to Users Can Avoid Suits for Direct Copyright Infringement" »

Power.com is a social networking aggregator, boasting over 5 million users in India and Brazil, that launched business in the U.S. in November 2008. It permits users to simultaneously log-in to multiple social networking sites, such as Myspace and Facebook and instant messaging sites, such as Twitter.

While some website operators might consider this service as free advertising, other might see it as posing the danger of supplanting the websites it aggregates. In fact, Power.com has already drawn significant lawsuit fire. In December 2008, shortly after the site premiered, Power.com was sued by Facebook. (Facebook, Inc. v. Power Ventures, Inc., et al., U.S.D.C., Northern District of California, Case No. C 08-5780).

Facebook claimed that Power.com was circumventing Facebook's protocols for accessing its information, infringing on Facebook's trademark, and inducing Facebook users to provide them with email addresses of Facebook contacts for the purposes of sending commercial messages that it falsely stated came from "The Facebook Team." Facebook brought claims against Power.com under numerous legal theories, including violation of the CAN-SPAM act (15 USC §7701), copyright and trademark infringement, violation of the Digital Millennium Copyright Act and violation of California's unfair competition law.

In response, Power.com brought a motion to dismiss/motion for more definite statement -challenging the sufficiency of the allegations in the complaint. However, the bar to survive such a motion in Federal court is not very high. Under Federal rules, a plaintiff generally does not have to be specific about the facts that underlie the claims he brings in a lawsuit. Federal courts deem it sufficient that the complaint merely contain sufficient facts to give the defendant "fair notice" of the nature of the claim and its basis. The courts rely on discovery and law and summary judgment to weed out unmeritorious claims. The main exception to this rule is for claims alleging fraud. For these claims, the complaint must state what the fraudulent representations were, who said them and where and when.

These rules largely dictated the outcome here. After Facebook filed its opposition, Power.com actually withdrew its motion as to the CAN-SPAM claims. According to Power.com's reply brief, this did not amount to a concession that the claims had merit, but merely that Facebook had met the pleading standards for these claims.

Continue reading "Facebook Suit Against Social Networking Aggregator Power.com Survives Initial Court Test" »

A number of press reports have given the impression that the Colorado District Court's ruling in Golan v. Holder (fn1) means that that Federal laws reviving expired copyrights violate First Amendment protections on free speech. The actual ruling is far narrower.

In 1993, Congress enacted 17 U.S.C. Section 104A, to permit foreign authors whose copyrights had fallen into the public domain for technical reasons (such as by failing to renew the copyright with the U.S. Copyright Office) to restore their copyrights. Section 104A solely permitted "restoration" of copyright protection for works from "a nation other than the United States." (fn2) Section 104A was added after the United States joined the Berne Convention for the Protection of Literary and Artistic Works -- a treaty first enacted in 1886, but not joined by the U.S. until 1988. Article 18 of the Convention requires member nations to provide copyright protections to works by foreign authors so long as the term of protection in the country of origin has not expired as to the work.

The plaintiffs were U.S. artists who used works by foreign artists that had been in the public domain before 1994, such as Sergei Prokofiev's "Peter and the Wolf." The plaintiffs claimed that after Section 104A was enacted, they were subjected to higher performance fees, sheet music rentals and other royalties. In some cases, these costs were prohibitive. (fn3)

The Golan case was the brainchild of Stanford Law professor, founder and co-director of the Center for Internet and Society and Director of the Fair Use Project, Lawrence Lessig. The original complaint claimed that Section 104A shrunk the public domain and thereby violated the limitations on congressional power inherent in the Copyright Clause, and violated First Amendment rights to free expression. The Colorado District Court originally rejected these claims. However, on appeal, the Tenth Circuit found that a legitimate First Amendment claim existed and remanded the case for First Amendment analysis.

The basis for the Tenth Circuit's ruling was the U.S. Supreme Court ruling in Eldred v. Ashcroft (fn4), in which the Supreme Court stated that a Congressional act modifying copyright law might be subject to First Amendment scrutiny if it "altered the traditional contours of copyright protection." (fn5) While the Tenth Circuit could not find federal authority that explained the phrase "traditional contours", it concluded that the traditional contours of copyright protection included the principle that "works in the public domain remain there." (fn6) It based this on the notion that the general sequence is that copyrighted works has always progressed from "1) creation; 2) to copyright; 3) to the public domain" and that Section 104A changed this sequence. (fn7)

Continue reading "Golan v. Holder: Colorado Federal Court Finds that Federal Law Restoring Expired Copyright Claims of Foreign Authors Violates the First Amendment" »

On April 9, 2009, in a lightly attended session, 16 members of the French Senate rejected La Loi Hadopi (Haute autorité pour la diffusion des œuvres et la protection des droits sur l'internet, or "HADOPI"). This law would have required internet service providers to monitor their subscribers' use of copyrighted works and impose "three strikes and you're out" penalties under which a repeat offender would lose his internet access for up to a year. The law also would have created a commission to monitor compliance with the law and deal with disputes.

Critics of the bill have argued that the proposed sanctions would be ineffective, because a user could regain internet access by simply creating a new account name.

In the post-mortem on the defeat of HADOPI, most commentators have cited as the primary reason for the defeat a provision that would have required a booted user to continue to pay the ISP for service he was now prohibited to use. The French Socialist Party, whose members were responsible for the defeat in the Senate, have now called on supporters of HADOPI to concede defeat. However, most commentators expect a new version of the bill to be introduced shortly.

From the perspective of a copyright holder, the HADOPI concept holds promise for controlling infringement A number of other countries are watching developments on this bill closely, and have considered or are considering similar legislation.

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.