More First Sale News

Last week the Ninth Circuit ruled on the second of three first sale cases - MDY v. Blizzard. The opinion can be found here.

The case is about the use of bots (made by MDY) to assist in advancing in the World of Warcraft video game owned by Blizzard. For more facts about the case, see my previous blog entry.

Relying on the earlier decision in Vernor v. Autodesk, the first decision in the trio of first sale cases before the Ninth Circuit this term, the Court finds that the players of Blizzard are licensees and not owners of the World of Warcraft software. Blizzard’s World of Warcraft End User License Agreement specifically prohibits users from creating or using third party software to modify Worlds of Warcraft including bots.

However, the Ninth Circuit differentiates between a contract covenant which is a breach of the license agreement and not copyright enforceable conditions. Because the Ninth Circuit reversed the district court decision and determined that the MDY bot did not alter or copy any of Blizzard’s software, it was not a copyright enforceable condition and thus no copyright infringement occurred.

Next the Ninth Circuit had to decide whether MDY committed copyright infringement under the DMCA when it modified its bot to circumvent Blizzard’s Warden technology to prevent bots from connecting to the World of Warcraft servers.

In its interpretation of the DMCA (17 U.S.C. Section 1201(a)), the Court finds that the statute is meant to protect from circumvention of access controls to copyrighted works including decrypting and descrambling works. This does not necessarily affect the exclusive rights under Section 106 of the Copyright Act. The Court notes that this is a departure and differing view from the Chamberlain decision in the Federal Circuit requiring that the circumvention interfere with one of the exclusive rights under Section 106.

Based on this interpretation, the Court finds that MDY does not violate Section 1201(a)(2) for the literal elements and individual non-literal elements of Worlds of Warcraft because the Warden technology does not control access to the Worlds of Warcraft elements. The Warden technology does not prevent access to Worlds of Warcraft on an individual user’s computer but only to the Worlds of Warcraft servers.

However, the Court finds that MDY violates Section 1201(a) for the dynamic non-literal elements of Worlds of Warcraft. The Ninth Circuit explains the dynamic non-literal elements as analogous to the audiovisual display of a computer game which is independently copyrightable from the software program code. Because Warden does prevent access to the audiovisual display of the Worlds of Warcraft from its servers, MDY’s efforts to restructure its bots to circumvent the Warden technology is an infringement.

The Court reversed summary judgment for Blizzard for tortuous interference with contract because there were triable issues of fact.

Supreme Court Splits on First Sale

Last week the Supreme Court issued a split 4-4 ruling in the Costco v. Omega lawsuit. The opinion can be found here.

The split affirms the decision of the Ninth Circuit that the first sale doctrine does not apply to copyrighted works manufactured and sold abroad. The case has been reported in many news outlets, including the New York Times and Wall Street Journal.

50 Cent Sued for Copyright Infringement

A Federal lawsuit for copyright infringement in the Eastern District of New York was filed last week over the instrumental track for the 50 Cent song “I Get Money” by Tyrone Simmons. Simmons claims that he purchased the exclusive rights for the instrumental track which was used without his permission.

Defendants also include the song producer and records companies associated with the single.

Viacom Appeals

As widely expected, Viacom has appealed the June 2010 district court ruling in Viacom v. YouTube to the Second Circuit. (I previously discussed the district court's decision granting summary judgment to YouTube in a 3 part post: Part I, Part II, Part III.) Viacom has a full text of the appeal as filed on their website.

Interestingly, Viacom has primarily focused on the factual findings of the district court in granting summary judgment for YouTube as an internet service provider under Section 512(c). Section 512(c) provides a defense to copyright infringement for certain activities carried out by internet service providers. (Further explanation available here.)

Viacom has stated three reasons why Section 512(c) should not apply to YouTube:

1. YouTube had knowledge that the content on YouTube was infringing or were aware of facts and circumstances that the content was infringing and did nothing to stop infringement. Viacom claims that YouTube’s general knowledge of infringing activity on its website should be sufficient to prevent YouTube’s service provider defense under Section 512(c).
   
   Viacom alleges that YouTube selectively enforced against copyright infringement when YouTube had programs available to weed out infringing works and ignoring community flagging systems that would have pointed out infringing works. Viacom also claims that YouTube was aware of the predominant amount of infringing works that were available on its site and encouraged these videos because YouTube received more “hits” from these videos.
   
   The court found that YouTube took appropriate action when advised of the alleged infringing web posts by Viacom. The court found specific knowledge was needed in order for the Section 512 defense to not apply.
2. YouTube had the ability and control over the infringing content and received a direct financial benefit. Viacom claims that YouTube gained financial benefits from advertising revenue due to the increased audience at its website. Viacom points to certain facts that YouTube realized that a major part of its success were videos that infringed on copyrights.
   
   Viacom also reiterates that YouTube could have taken action against infringing activities but did not. The district court found that YouTube must have specific knowledge of the infringing content in order to be able to control the infringing activity.
3. YouTube’s activities went beyond the storage function of a service provider under Section 512(c). Viacom claims that YouTube’s actions in posting user content includes more than just storage – including display, reproduction, performance and licensing content to others.
   
   The district court found that YouTube’s activities in placing the user’s content on its website was incidental to the acts of storage and thus was within the parameters of the Section 512(c) defense.

Viacom also seeks that summary judgment be reversed and granted in its favor. A number of amici have filed briefs on Viacom’s behalf including Business Software Alliance, Motion Picture Association of America, Microsoft, and members of the publishing and music industries.

For the first 2 reasons set forth by Viacom, it would seem heavily reliant on Grokster and general principles from the case. Based on the district court decision, Viacom would argue a couple of small changes and Grokster would not have been guilty of infringement. (This may be true.)

It will be interesting to see how the Second Circuit handles the issue of the district court’s finding regarding specific knowledge of infringement is necessary, not general knowledge.

I think the best that Viacom may be able to hope for from the Second Circuit is that there are triable issues of fact and summary judgment for YouTube was unwarranted. (Based on the number of facts presented by Viacom, this seems to be its strategy.)

The third reason set forth by Viacom is by far the more interesting legal argument. While Viacom is surely unhappy with the result of district court under Reasons 1 and 2 above and would like a ruling in its favor based on the facts it presents, it seems that Reason 3 would be the best argument to obtain summary judgment in Viacom’s favor. The more interesting questions facing the Second Circuit are not argued fully until nearly 50 pages into the Opening Brief.

IDPPPA passes Senate Judiciary Committee

The recently proposed legislation protecting fashion design has been approved by the Senate Judiciary Committee.

For a summary of the bill, see the Chronicle's earlier post discussing the IDPPA and whether fashion should be protected by copyrighted.

A new question now remains: Because there is a “lame duck” session currently in Congress, will the bill pass before Congress ends its session?

There seems to be some question as to whether Congress will move forward with any legislation before the new year (other than tax-related legislation).

I do not know how much of a priority the IDPPPA is to members of Congress. Similar legislation, such as the Design Piracy Prohibition Act, has previously been introduced near the end of a Congressional term and the bill never passes before the Congressional term ends. I suspect that this will be the case again given the short time left before the Congressional session ends.

Following the November elections and the anticipated gridlock when the new Congress begins in January 2011, will the IDPPPA be made into law? What do you think?

A Twist of LimeWire - Infringer Pirated

Following the decision that LimeWire’s peer file-sharing network infringed copyrights in a lawsuit filed by the Recording Industry Association of America, Judge Kimba Wood issued a permanent injunction against the company on October 26, 2010. The injunction was granted with LimeWire's consent.

In the 17 page order, the Court did go through the permanent injunction factors from the Salinger case in the Second Circuit. You can see the entire injunction here.

The Court found that LimeWire would be unlikely to be able to pay the statutory damage award. If LimeWire were not permanently enjoined, it would continue to facilitate “generations of infringement.” The RIAA would also be harmed because LimeWire would offer the copyrighted works that plaintiffs sell for free, thereby significantly affecting the market for the copyright owners’ works.

The Court also found the statutory damage award was not an adequate remedy at law especially to prevent future infringements and this factor favored a permanent injunction.

Because the Court found LimeWire’s business model was infringement, the balance of the hardships clearly favored plaintiffs. Finally the Court found that a permanent injunction serves the public interest by upholding copyrights and the harm caused by LimeWire.

In effect, LimeWire’s network has been shut down.

However, according to news reports, there is a software sharing program called LimeWire Pirate available on downloading sites on the Internet.

LimeWire has posted a notice on its website claiming it has recently become aware of third parties using the LimeWire name. The notice also includes a cease and desist to all parties using the LimeWire software, name and trademark.

Supreme Court Hearing on Copyright First Sale - November 8, 2010

I was in attendance at the Supreme Court on Monday, November 8, 2010 for the hearing in the Costco v. Omega matter. You can read the transcript of the hearing here.

It was interesting to hear the judge’s questions on the first sale doctrine and its applicability to copyrighted works made and distributed abroad.

A couple of non-substantive observations. (Disclosure: I have worked on this case on behalf of Omega from 2004 – present)

The outside of the courthouse is well-kept and architecturally stands out (even in Washington DC surrounded by other similar inspiring buildings including the Library of Congress, Capital Building and the Senate and House office buildings.

The building itself is celebrating its 75th Anniversary. The huge halls and columns inside are majestic but in some ways only lead up to disappointment once entering the courtroom itself. The courtroom is small. The seating capacity could not have been over 250 people. The vaulted ceilings may make everything seem small but there were relatively few rows of seats. (Some were bench type seating while chairs in rows and on ends of benches comprised the remainder of the seats.) I have been to circuit courts with more abundant seating.

The justices themselves were well prepared and were engaging with questions. Given the serious nature of Supreme Court proceedings in general, I was surprised that there were a couple of moments of laughter (where Justice Breyer indicated that even he had to draw the line somewhere and Justice Scalia quipped, "Let me write that down.").

Relatively speaking, the hour went by fairly quickly with three speakers, Aaron Panner for Respondent Omega, Roy Englert for Petitioner Costco, and Malcolm Stewart for the United States in support of Respondent.

A decision will be made before the end of June.



Contributory Infringement or Settlement Negotiations?

On Saturday, Cablevision and NewsCorp, owner of the Fox television stations, settled their ongoing dispute over programming fees.

During the two week long battle, in which over 3 million Cablevision customers in the New York/Philiadelphia area were without News Corp's channels, Fox apparently sent a cease and desist letter to Cablevision accusing the company of copyright infringement.

Fox is accusing Cablevision of contributing or vicariously infringing on its copyrights by having the Cablevision service representatives advising its customers how to obtain content from Fox (and its other networks such as National Geographic Channel and Fox Business) via networks such as Ivi.

Ivi offers a subscription based service which delivers television live over the internet. Unlike websites such as Hulu, where someone can access episodes of previously aired shows, the Ivi player shows the original broadcast of whatever the television stations are airing at the time.

No specific companies were named in the letter, which can be seen here. However, Fox is part of a group of broadcasters, who include ABC, NBC, and CBS among others, who last month sued Ivi for copyright infringement. The case is WPIX Inc v. Ivi Inc, 10-7415, Southern District of New York.

Fox will likely need to show that Cablevision knew that it was inducing others to infringe on Fox’s copyrights. It may also need to show that Cablevision knew or instructed its customer services representatives to advise its customers how to obtain the programming.

Could the actions of Cablevision be further complicated if Cablevision was aware or received complaints about the Ivi website as either an Internet provider (unlikely due to the safe harbor provisions as currently interpreted by the Court in Viacom v. YouTube) or as a content provider themselves (Cablevision's subsidiary Rainbow Media Holdings owns such networks as AMC, IFC and the Sundance Channel)?

Was this a mere ploy by Fox to settle on more favorable terms? Could Cablevision bring a declaratory judgment action for a finding that it is not infringing on Fox’s rights? Now that an agreement has been reached by Fox and Cablevision, will Fox follow through or stop pursuing the claim for copyright infringment?

Is Copying or Parody the Sincerest Form of Flattery?

A recent episode of South Park included a parody of the movie Inception. Normally a parody would be considered a fair use in terms of copyright. However, in this instance the creators of South Park claimed to have never seen the film. How was this discovered?

The South Park episode contained several quotes from a video that appeared on the website collegehumor.com. The video (which first appeared in August contained the line, “Sometimes my thoughts of my dead wife manifest themselves as trains.” The line never appeared in the movie Inception. However, the line was used, along with others from the web show, in the South Park episode, entitled 'Insheeption.'

The South Park creators have apologized to the collegehumor.com creators.

In the case of a parody defense to copyright infringement, the copying must be close so that the work can be recognized as a parody of the original work – however, it is a fine line – as a parody must only take what is necessary. This can be a very fact intensive process. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994)


It is often difficult to determine when copying occurs. (In the instances of text, publishers will often print books with typographical errors to determine if someone has merely made a copy of its work.) Sometimes, the slightest changes will conceal whether a copyrighted work was in fact copied. Ideas and facts can often be expressed in many ways. However, because the South Park episode slavishly copied the collegehumor.com work, it was easy to tell where and what was copied.

Privatizing U.S. Copyright Registrations?

Continuing on last week's discussion of the Copyright Principles Project, I am going to discuss one of the reform proposals being suggested by the CPP.

The CCP wants to make the copyright registration process more like the domain name registrar process. CPP: Directions for Reform, p. 26. Since many countries do not require a registration in the first place, I cannot see how this process would work. A decentralized registration process will only make copyrighted registrations more difficult to find. If you have ever tried to locate information regarding domain name registrations and owners, it is not an easy process. (In addition, some domain name registrars encourage and profit from the anonymity of its registration owners.)

There is also a more puzzling aspect – how and who would be in charge of managing copyright deposits. For obvious reasons, the Copyright Office does not post or make available online, a copy of the deposit for copyright applications. I do not believe that copyright registrars would post this information either. Therefore, all the registration would include is a title, author and possibly a description of the type of work.

The U.S. Copyright Office while often referring to itself as a record keeping office, must make some determinations on registration. It is nowhere near the rigorous standards of patent or trademark offices but a minimal review is required. It would be inappropriate for registrars to make determinations on whether the work itself is copyrightable.

There are a couple of organizational steps the Copyright Office could take. One example would be to better categorize the types of works. Broad categories such as sound recordings, performing arts, text and visual arts are somewhat helpful but today we have more definite descriptions that would make it more helpful in searching the copyright office records. Computer software programs, lyrics, musical compositions, websites, sculpture, paintings, architectural designs, etc. are better descriptions for others to search copyright records. (Titles themselves are not an accurate harbinger of what is contained in a deposit for a copyrighted work.)

While the CPP points out that it would also be advisable to have a sort of “small claims” procedure, it would be more than inappropriate to have separate registrars determine such claims. Copyright is a Constitutional principle:

"The Congress shall have power ... To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." U.S. Constitution Article I Section 8.

Turning over decisions to determine rights to private registrars may not only result in conflicting results (such as in the instance of domain name registrations) but confusion. Besides the federal court system, a governmental agency such as the Copyright Office would be the only other appropriate way to decide such cases.

The Copyright Principles Project - Copyright Law Reform

The Copyright Principles Project: Directions for Reform is attempting to influence a movement to reform the current copyright law to be simpler, easier to understand the more malleable due to changing times. The report can be found here and will be published in the Berkeley Technology Law Journal this fall.

While I agree that the U.S. copyright law could use some revisions especially given technological advances, some of the ideas raised in the report are highly problematic.

First, in a practical sense, the U.S. copyright law has been amended well over 50 times in the past 30 years. 1 Patry on Copyright §§ 1:110-114 (2008).

This has not resulted in the law being able to keep up with the advances in technology. But viewed in terms of other areas of the law, copyright law manages to updated with regularity. The law will never be able to catch up with technology. By the time many laws are passed, new issues arise. It is unrealistic to believe that changes in the copyright law will cause it to catch up to the technology.

It is also inconsistent to believe that we can make copyright law simpler and easier to understand and at the same time catch up with technology. Technologies are complicated. The DMCA is an attempt by Congress to create a system of laws to apply copyright law to the digital age.

Striking a balance between creating an incentive for the creation and promotion of the arts and the rights of the public is not easy. Efforts by the Principles Project create imbalance for sake of ease.

For example, avoiding liability for non-commercial uses of a copyrighted work could make the law easier in terms of understanding what the law is; however, it takes the balance and weighs it heavily in favor of public rights and takes the rights of the author away. Courts have struggled with the problem of non-commercial uses especially under the fair use doctrine, but commercial/non-commercial uses are not the only factor. See e.g. Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 539 (1985).

The Principles Project has several other proposals including more “safe harbor” provisions, consistency in damage awards, and other provocative ideas which may the subject of future blog entries.

BATTLES IN SEATTLE - Vernor v. Autodesk, Inc. Decision

A couple of months ago, Copyright Chronicle covered the 3 cases (UMG Recordings v. Augusto, Vernor v. Autodesk, Inc., and MDY Indus. v. Blizzard Entertainment) involving the first sale defense heard in Seattle by the Ninth Circuit in our First Sale Frenzy: Battles in Seattle series of posts.

The first decision has been made in the Ninth Circuit in the Vernor v. Autodesk case.

Procedural History/Summary: Vernor sold copies of Autodesk’s software on eBay. Autodesk filed several DMCA takedown notices with eBay. After several notices, Vernor’s account was suspended. Vernor filed a declaratory judgment action against Autodesk.

Autodesk alleged that it had licensed its software to CTA. Part of the license included that when updates were provided to its customers, they were to destroy the previous versions. However, CTA sold Version 14 to Vernor.

Autodesk was able to trace the software available on eBay to CTA. Autodesk maintained activation codes and serial numbers to verify registrations of its software. Portions of Autodesk’s agreements with its customers include use restrictions associated with the software.

The district court granted Vernor summary judgment finding that Vernor did not infringe on Autodesk’s software because Vernor was protected by the first sale defense under Section 109 and the essential step defense. The primary issue and question in the case was whether the transaction between Autodesk and CTA was a license or a sale. The first sale under Section 109 and the essential step defense do not apply to licenses but only to sales. The district court found that the transaction between Autodesk and CTA was a sale and therefore, Vernor was free to sell Version 14 on eBay. Vernor v. Autodesk, Inc., 2009 U.S. Dist. LEXIS 90906, *42-44 (W.D. Wash. 2009).

The case was appealed to the Ninth Circuit. The Court found the following factors relevant to the inquiry of whether a transaction is a license or a sale: (1) whether the copyright owner specifies that the user has a license; (2) whether the copyright owner significantly restricts the user’s ability to transfer the software; (3) whether the copyright owner places restrictions on use by the user. The Court found that the district court erred in finding that a sale occurs when a transferee is entitled to keep the work. Because Autodesk did not require a return of its work, the district court found there was a sale. Vernor v. Autodesk, Inc., 2010 U.S. App. LEXIS 18957, *25-26 (9th Cir. Wash., Sept. 10, 2010).

The Ninth Circuit reversed and remanded, holding that a software user is a licensee where the copyright owner: (1) specifies that the user is granted a license; (2) significantly restricts that user’s right to transfer the work; and (3) imposes restrictions on use. As these criteria were met in the transaction between Autodesk and CTA, Vernor was in the same position as CTA and had no right to sell Autodesk’s software. (CTA has previously settled with Autodesk.)

There were several amici involved in the case who had indicated that there were significant policy considerations; however, the Court found its ruling based on its precedent and Congress was free to amend or modify the law based on policy considerations. Vernor at *37.

Should Fashion be Protected by Copyright? - Guest Post by Oren Gelber

The American fashion industry often points out that the United States is the only industrialized nation that does not provide protection for fashion designs.

Back in August, New York Senator Charles Schumer sought again to change that fact when he introduced new legislations intended to provide protection to fashion designs. The Innovative Design Protection and Piracy Prevention Act (IDPPPA), was sponsored by Mr. Schumer and ten other senators. See the entire IDPPA here. (via Counterfeit Chic)

The IDPPPA is proposed as an amendment to Chapter 13 of the Copyright Act (which currently applies only to vessel hulls). If passed, the IDPPPA would provide some intellectual property protection to fashion designs.

There have been some who criticize the IDPPPA as unnecessary. However, some of these critiques of the proposed legislation ignore the fact that this legislation is rather limited in what it protects.

In its present form, the proposed legislation only covers the most original fashion designs. This means that while the bill covers all fashion designs, including clothing and products like handbags, belts and sunglasses, in order to qualify for protection, the item must be original, unique, distinguishable, non-trivial and a non-utilitarian variation over prior designs—in essence it must be original and novel. Any original design which predates this legislation and anything that does not meet this high standard of originality remains in the public domain.

Factors that cannot be used to determine the uniqueness of a design are color, patterns and a graphic element (patterns on cloth and graphic elements may be eligible for copyright protection separately even without this amendment).

Clearly, this is a rather high standard for protection. Moreover, the protection itself is limited to a three-year period from the time the item is first seen in public, such as during a runway show. Three years is short when compared with the normal term of a copyright—for individual authors, copyright protection is granted for a term of the life of the author, plus 70 more years; work made for hire copyrights are protected for a term of 120 years from the date of creation.

A designer seeking to enforce a copyright-protected design must also bear a heavy burden. The IDPPPA provides that a designer asserting infringement of his/her design will have to plead an infringement with particularity—that is, the Complaint must allege specific facts establishing that the design was protected (“a unique, distinguishable, non-trivial and non-utilitarian variation over prior designs”) and an infringement occurred. Such a heightened pleading standard is intended to discourage frivolous lawsuits. The designer would further bear the burden of proving that the copy is “substantially identical” to the protected design. The substantially identical standard is more stringent that the “striking similarity” requirement for copyright infringement of literary, visual or musical works under current U.S. law.

As with existing U.S. Copyright Law, the IDPPA also has exceptions and defenses. Independent creation is a defense to a cause of action under the new proposed legislation. If an alleged infringer can establish that the design he is claimed to have copied was actually conceived of and created independently, there will be no liability for infringement, even if the works are identical. There is also a fair use “home sewing” exception, which would allow individuals to sew a single copy of the protected work for their personal use (not to be sold or used in commerce until after the expiration of the protection period).

The IDPPA is thus not as far reaching or all encompassing as its opponents would lead us to believe. In actuality, this proposed legislation is very limited in the scope of its protection (only the most original designs will actually be protectable) and the term of protection is short.

As most commentators familiar with the legislation will point out this new bill represents a compromise between the two sides of the fashion copyright debate. Unlike previous legislation, the American Apparel and Footwear Association and Council of Fashion Designers of America both took part in the crafting of this legislation and are both supporters of this legislation. The collaboration of the American Apparel and Footwear Association and Council of Fashion Designers of America on this legislation is a large step in the right direction.

However, even if the Innovative Design Protection and Piracy Prevention Act does become law, designers will still face an uphill battle in combating knock-offs given the limited protection that IDPPPA grants and the heavy burden of proof for establishing infringement.

Considering the creativity and ingenuity that go into crafting some of these fashion designs (on par with traditional subjects of copyright protection), the argument that fashion designs do not merit this limited protection is unpersuasive.

The Settlement of Summer - Don Henley v. Chuck DeVore

Earlier this month, Don Henley (along with fellow songwriters Mike Campbell and Danny Kortchmar) settled a copyright lawsuit with California State Assemblyman and former Senate hopeful Chuck DeVore.

Copyright Chronicle has been following this case, which involved two music videos made by DeVore’s campaign using the music and lyrics from Don Henley’s songs “The Boys of Summer” and “All She Wants to Do Is Dance.” DeVore changed “The Boys of Summer” to “The Hope of November,” with lyrics mocking Barack Obama and “All She Wants to Do Is Dance” to “All She Wants to Do is Tax,” with lyrics aimed at Senator Barbara Boxer.

In DeVore’s cross-motion for summary judgment, he claimed the fair use defense. According to DeVore, the use of Henley’s songs was intended to parody Henley and the liberal bias in Hollywood. (I’ve previously mentioned how the parody defense would be a tough sell for DeVore considering the subjects of the commentary in his two songs are not the subjects of Henley’s songs.)

In June, U.S. District Judge James Selna rejected DeVore’s parody claims, ruling that DeVore had not established a fair use defense, and granted Henley summary judgment on the copyright infringement claims. A full-text of the decision can be found here.

A large portion of the Court’s decision focused on the parody inquiry and the distinction between parody and satire. While parody of a work is considered fair use, the Court noted that many courts remain split over whether parody of the author of a work is also protected. In the decision, the Court framed its analysis of DeVore’s songs with the assumption that “parody-of-the-author” would constitute fair use. Under this framework, the Court found that “Dance” was purely satire, as the song “makes no implicit or explicit reference to Henley or Kortchmar, much less ridicules them” (p. 17). “November” was found to have parodic element, as the narrator in both songs express disillusionment with politics; however, it was only a minor part and therefore the extent of DeVore’s use was not justified.

The Court also found that DeVore’s use of the songs as campaign advertisements was commercial. In his opposition brief, Henley argued that the videos were intended to increase campaign donations (each of the videos contained links to DeVore’s campaign website and the emails publicizing the videos linked directly the donation page on DeVore’s website). See Harper & Row, Publishers, Inc. v. National Enterprises, 471 U.S. 539; 105 S. Ct. 2218; 85 L. Ed.2d 588; 53 U.S.L.W. 4562.

The court agreed with Henley. Despite noting that courts have normally ruled campaign advertisements as non-commercial speech (See Mastercard Int’l Inc. v. Nader 2000 Primary Comm., No. 00 Civ. 6068 (GBD), 2004 WL 434404 at *12 (S.D.N.Y. Mar. 8, 2004)), the Court based their decision on the Ninth Circuit case Worldwide Church of God v. Phila. Church of God, Inc., 227 F.3d 110, 117 (9th Cir. 2000):

“Like the church in Worldwide Church, which stood to gain parishioners through the unlicensed use of the plaintiff’s copyrighted work, DeVore and Hart stood to gain publicity and campaign donations from their use of Henley’s music. In fact, the videos contained links directing viewers to the DeVore campaign website, encouraging viewers to directly donate. Thus, under the logic of Worldwide Church, the Defendants “profited” from their use in the sense that they benefitted or gained an advantage without having to pay customary licensing fees to the Plaintiffs. 227 F.3d at 1118.” (p. 19)

Despite deciding for Henley on the issue of copyright infringement, the Court declined to rule on whether DeVore’s infringement was willful. The Court also rejected the Henley’s Lanham Act claims and granted summary judgment on the issue in favor of DeVore.

Do you remember when I licensed that copyright to you?

S...The law says that license ends in 35 years if I want it to.

Not a lot of people realize that copyright assignments can be terminated after 35 years. There is a five year window to terminate. It is written into the Copyright Act. 17 U.S.C. § 203(a)(3) for transfers executed by the author on or after January 1, 1978. There is a process by which the author (or his/her heirs) can terminate the license. (Other statutes and time periods apply for works created prior to the enactment of the 1976 Copyright Act which are governed by 17 U.S.C. § 304.)

The first set of terminations may take place for licenses made in 1978 (for works created pursuant to the 1976 Copyright Act) in 2013. Notifications can already be served and must provide at a minimum 2 years before the termination date. 17 U.S.C. § 203(a)(3) and 203(a)(4)(A).

There are not many reported cases involving copyright termination rights. These cases all involve terminations made prior to the 1976 Act and usually involve the heirs of an author. One such case involves Superman. See Siegel v. Warner Brothers Entertainment, Inc., 542 F. Supp 2d 1098 (C.D. Cal. 2008). In that case, the widow and daughter of Jerome Siegel, one of the joint owners of the Superman character, was able to terminate the copyright assignment to Warner Bros. (the successor in interest to DC Comics). Siegel, 542 F. Supp 2d at 1145. The heirs of the other owner (Joseph Shuster) are now attempting to terminate its license and have filed termination notices effective in 2013.

Both Siegel and Shuster’s heirs are using the same lawyer – Marc Toberoff to terminate the rights in the Superman character.
DC Comics sued Toberoff claiming Toberoff is preventing his clients from settling or negotiating with DC. DC also claims that he wants a share in the rights. The case is pending and Toberoff recently filed a motion to strike based on California’s anti-SLAPP laws. (See Toberoff’s motion here, via THR, Esq.)

Despite the new provisions, termination of granted rights is not guaranteed. The few reported cases involving copyright termination are likely to provide guidance for the future of copyright terminations.

Several recent cases deal with the “agreement to the contrary” provision found in §304(c), which states, “termination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant.” 17 U.S.C. §304(c)(5).

Twice, courts have denied heirs’ efforts to terminate rights granted prior to 1978. In both cases, the courts ruled that the termination rights to the original grants were considered forfeited due to post-1978 grants by the heirs. See Penguin Group (USA) v. Steinbeck, 537 F. 3d 193 (2d Cir. 2008) (termination notice to rights granted in 1938 was ruled invalid due to a 1994 agreement between Steinbeck’s wife and the publishing company); Milne v. Stephen Slesinger, Inc., 430 F. 3d 1036 (9th Cir. 2005) (termination notice to 1930 grant ruled invalid due to 1983 agreement).

The Ninth Circuit addressed §304(c)(5)’s language again in 2008 in Classic Media, Inc. v. Mewborn, 532 F.3d 978 (9th Cir. 2008) and in this case ruled that the rights to Lassie could come home to the daughter of author Eric Knight, despite an 1978 assignment. (Interesting note: Marc Tobleroff was counsel for Mewborn, Knight’s daughter)

It will be interesting to see how many copyrights transfers are terminated. I suspect that there will be many more of these suits in the future. The ramifications of these termination provisions will be the subject of (what is likely to be) a series of posts.

What If They Take Away Your Internet?

In the U.S. there is the dramshop rule where if you drink too much alcohol, the provider will cut you off. If a new law is passed in New Zealand, if you commit copyright infringement over the Internet, the court may order your internet service cut off.

It is always interesting to see how other countries handle the problems of copyright infringement. In most instances, governments cannot keep up with the technologies to create laws to prevent certain infringing activities before they develop.

This dilemma has been compounded by the Internet which allows the sharing (and copying) of copyrighted materials almost instantaneously.

For instance, in Canada, a copyright reform bill has been proposed to develop a system of copyright laws to catch up with technology. In New Zealand, a new bill proposes a court injunction to suspend copyright infringers’ internet service provider account for six months. (I am not sure this idea has been fully developed as it would be difficult to prevent someone from opening up a new internet account or obtaining a new computer or going to a library or internet café for access.) Such a remedy would certainly face a high level of scrutiny in other places.

Internet access has been treated as a human right in countries such as France and Finland. It would seem more difficult to enforce a remedy such as the one proposed in New Zealand where broadband and wireless communications would make it difficult to track infringers who were denied internet access.

While the proposed remedy may be an effective tool to prevent copyright infringement over the Internet, whether this spreads to other countries remains to be seen.

Protecting Your Website

In reviewing this recent article about a law firm that is primarily involved in settling copyright infringement lawsuits involving downloads of movies from BitTorrent (including The Hurt Locker which I have previously discussed), it serves as an overlooked reminder for protection of intellectual property rights – copyright your website.

The U.S. Copyright Group claims that they never had a live site (located at dglegal.force.com/sitelogindglegal.com) similar to the one located at www.copyrightsettlements.com. The U.S. Copyright Group’s website does not look this way.

However, this may serve as an important reminder that a website may be copyrighted as to the text and pictures (and the compilation and/or arrangement of these elements) located on the web. Time, effort, energy, creativity, research, development and marketing decisions go into many companies’ outward public appearance – such as brochures, advertisements, press kits, and press releases.

Many of these materials are copyrighted to protect from having anyone else copy these efforts. Websites should be thought of similarly. It is fairly easy to copy someone’s website (and in fact, very often, the underlying code to produce such a website can be easily reproduced). Some also offer a service on how to copy other websites.

There are copyright infringement lawsuits in instances where a copyrighted website is lifted and posted at other locations. See FragranceNet.com, Inc. v. FragranceX.com, Inc., 679 F. Supp. 2d 312 (E.D.N.Y. 2010) (where defendant used over 900 copyrighted images from Plaintiff's website). See also SMC Promotions, Inc., et al. v. SMC Promotions, et al., 355 F. Supp. 2d 1127 (C.D.Cal. 2005) (where defendant used copyrighted photos and product descriptions from plaintiff's online members-only catalog).

For those who hire web designers to create their websites, they should make sure that there are proper contracts in place to ensure that the designer has created an original work and that the resulting website is not infringing on anyone else’s work. Also, a copyright registration for the website is necessary in order for U.S. based authors to sue possible infringers.

For the most part websites contain text and visual works which in combination comprise the copyrighted work. In the course of a copyright application, the applicant must disclaim any part of the works which they cannot claim copyright protection in (such as a previous work or a work not made by the author).

Also if a website contains video and or sound recordings (such as background music), I would recommend that this material be separately copyrighted (apart from the website itself) as these materials could be easily lifted separately and may have their own independent worth. (Also, an applicant should realize that when a deposit for registration for a copyright which includes “screen shots” of the website – it does not include the contents of the videos or the background music – and thus would not be registered.)

(Full disclosure: Collen IP does offer copyright registration services for websites including enhanced services under its Brutus® Protection Program.)

Barbie vs. Bratz - You can't script this reality show

Brief Update regarding last week’s blog entry: One day after the announced settlement regarding “Shaq Vs.” and pointing out that ideas are not copyrightable I pointed to the example of Pros Vs. Joes on Spike as a prior example of a similar idea. On Thursday, I found a lawsuit brought by two men from Long Island against Spike TV for infringing on its script for a similar reality television show (Yes, I know I just wrote script for a similar reality show.) See Complaint here. I will continue to monitor to the case and keep the blog updated.

Part of the premise to last week’s blog is that ideas themselves are not copyrightable but the expression of those ideas. Partially based on this premise, the Ninth Circuit reversed an injunction for copyright infringement in the ongoing Mattel v. MGA Entertainment Inc. case involving Bratz dolls.

To briefly summarize, Carter Bryant, an individual employed by Mattel to design fashion and hairs styles for collectible Barbie dolls, developed the concept of Bratz including the names of some of the characters, sketches, and sculpt. Bryant allegedly violated his employment contract with Mattel by presenting the idea for Bratz dolls to MGA. At trial, the jury found generally that MGA was liable for copyright infringement and enjoined MGA from “producing or marketing virtually every Bratz female fashion doll."

One of the issues that should have been decided was whether Bryant’s employment contract assigned rights to Bryant’s works were created outside the scope of his employment. (If it was within the scope of Bryant’s employment, it would be a work made for hire and Mattel would be the author of the work.) Because this issue was not decided, the Ninth Circuit vacated the copyright injunction.

While the appellate court agreed that Mattel owned the copyright and MGA had access to the sketches and sculpt, whether the Bratz dolls infringe on the sculpt and the sketches was still an open question. One of the reasons the question remained open is due to the fact that only the particular expression of the doll idea was covered by copyright not the idea of the doll itself. “Otherwise the first person to express any idea would have a monopoly over it.” Mattel v. MGA Entm’t Inc., Appl No. 09-55673 at 10540.

The Ninth Circuit finds that the substantial similarity must be based on what is protectable – not idea. The court finds that the expression of an attractive young, female fashion doll with exaggerated proportions can only be expressed so many ways – for the sculpt – but not for the sketches. Thus, the court finds the sketches can have broad protection for the substantial similarity test.

The court remands the case to filter out the ideas within the sketches to determine whether the sketches were infringed by the Bratz dolls. The court also advises the district court that while some of the first Bratz dolls were substantially similar to the sketches a large majority of the subsequent generations of Bratz dolls evolved. Any substantially similarity to the original sketches to the subsequent generations may have only been similarity to the ideas.

The appellate court vacated the injunction and remanded. There are other pending issues on appeal including damages which are yet to be decided.

The Whole Shaquille

This recent article regarding a settlement reached in the television show “Shaq Vs.” reminded me about an overlooked element of copyright law by many – an idea is not copyrightable.

The case was filed in a Los Angeles Superior Court and thus, it is unlikely that there was an allegation of copyright infringement. Yet, this is a difficult concept for many to understand but copyright protects the expression of an idea, not the idea itself. 17 U.S.C. Section 102(b).

In the “Shaq Vs.” case, Plaintiff Todd Gallagher sued Endeavor Talent Agency alleging that Plaintiff’s book “Andy Roddick Beat Me with a Frying Pan” was the basis for the “Shaq Vs.” television show. Apparently Gallagher through his talent agency had attempted to “shop” his show to various networks; however, the show moved forward with Shaq (another client of Endeavor) replacing Gallagher.

“Shaq Vs.” features Shaquille O’Neal challenging famous celebrities and sports stars in the field for which they are famous. Examples include boxing against Oscar De La Hoya and beach volleyball against Kerri Walsh and Misty May-Treanor.

Gallagher’s book is based on stories where the author challenged professional athletes where the athletes would face a handicap such as Andy Roddick playing tennis with a frying pan.

While the case was settled out of court, it may be that there were more specific facts or instances that were highly similar (or there may have been a non-disclosure agreement) or bad blood between Gallagher and Endeavor but it seems that the underlying idea may have been taken but this is not copyright infringement.

An idea or broad concept cannot be copyrighted. One of the simplest reasons that this is true is because if every idea could be taken, there would not be any incentive but every new book, television show, etc. would merely be a re-tread of something already done.

In this instance, Gallagher’s book may have provided an idea but there are differences. Clearly, Gallagher’s competitions involved a handicap to the sports professional. “Shaq Vs.” does not always have gimmick handicaps such as using a frying pan for a tennis racket. Also, while Gallagher’s book appears to be sports oriented, “Shaq Vs.” includes such competitions this season as cooking against Rachel Ray and a spelling bee against the National Spelling Bee Champion.

Also, Gallagher’s book could easily be based on other prior ideas such as “Pros v. Joes” (which began in March 2006) which was prior to the publication of Gallagher’s book in October of 2007.

Viacom v. YouTube, Part III - Limitations of Liability

The final part of the Viacom v. YouTube trilogy focuses on the DMCA limitations of liability in Section 512.

A copyright includes a certain bundle of exclusive rights such as distribution, reproduction, public display, and the right to make derivative works. See 17 U.S.C. § 106. Under the DMCA, Section 512 provides the limitations for liability for online materials specifically for online service providers.

Under the statutory scheme of Section 512, there are several subsections for different liabilities. For example, 512(a) is a safe harbor for “infringement of copyright by reason of the provider’s transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing, or providing connections…” This is followed by specific conditions:

1. the transmission of the material was initiated by or at the direction of a person other than the service provider;
2. the transmission, routing, provision of connections, or storage is carried out through an automatic technical process without selection of the material by the service provider;
3. the service provider does not select the recipients of the material except as an automatic response to the request of another person;
4. no copy of the material made by the service provider in the course of such intermediate or transient storage is maintained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients, and no such copy is maintained on the system or network in a manner ordinarily accessible to such anticipated recipients for a longer period than is reasonably necessary for the transmission, routing, or provision of connections; and
5. the material is transmitted through the system or network without modification its content.

Section 512 (b) is for storage for system caching with specific conditions and 512 (d) is for infringement by reason of reference or linking to an online location with infringing materials or activity.

Viacom v. YouTube, Part II

Last week Part I of the Copyright Chronicle's discussion of the Viacom v. YouTube opinion covered YouTube's protection under the "safe harbor" provision of §512(c) the Copyright Act and the red flag test to determine when facts or circumstances of infringing activity is apparent.

Part II discusses the Court's analogies to Tiffany v.Ebay and Grokster in its opinion.

The district court's opinion makes 2 analogies which are troubling. The first is the correlation to the Tiffany v. Ebay decision in the Second Circuit and the second is the correlation between Grokster (and related cases) and YouTube.

The Ebay Analogy

Starting on page 18 of the Viacom decision, the Court discusses the recent Second Circuit decision in Tiffany v. Ebay. Ebay was found not liable for contributory infringement when a significant number of the TIFFANY goods sold on its website were found to be counterfeit. The Court compares Ebay’s generalized notice that some of the Tiffany products sold on Ebay are counterfeit with YouTube and similarly decides that YouTube is not liable for infringement. However, there are distinguishing facts and circumstances.

First, unlike eBay, YouTube has control over the infringing material. eBay may sell goods through its website; however, eBay itself never had possession, custody or control over the goods themselves. eBay has no way of inspecting or reviewing the goods to determine whether the goods are fake or real. (Although, eBay’s level of promotion and general knowledge regarding counterfeits of Tiffany products on its website may raise a question regarding false advertising versus fair use.)

YouTube does have possession, custody and control over the submissions of users. (YouTube requires that videos posted to its website be uploaded to its servers.) Viacom had evidence that YouTube monitors the content of its website. See Page 39 and footnote 20 of Viacom’s Opposition to YouTube’s Motion for Summary Judgment and YouTube’s Answer to the First Amended Complaint at ¶ 39:

“Defendants admit that the Terms of Use contain certain content-based restrictions on the types of videos users may upload and store on the service, and that YouTube reserves the right to remove from the service material uploaded in violation of YouTube’s Terms of Use.”

The Court quickly brushes aside YouTube’s “monitoring” as defensible as part of providing online service citing 17 U.S.C. § 512(m)(1) and monitoring for cataloging or editor review to provide information location tools under 17 U.S.C. § 512(d). See Pages 14 and 16.

However, YouTube’s affirmative step of reviewing video posts for content should present not only a question of fact (the case was decided on summary judgment), but also a different analysis than eBay. The standard must be raised for an internet service provider who monitors and reviews the content. YouTube chooses the content it wants to make available on its website.

Unlike eBay, YouTube knows what goes up on its website. While there is apparently less monitoring now, it does not change the fact that YouTube specifically monitored the content being posted for more than mere categorization. See Footnote 20 of Viacom’s Opposition to YouTube’s Motion for Summary Judgment.

As alleged in the Complaint, YouTube was actively looking for and removing pornography from its website. If such content based decisions were being made by YouTube, YouTube is more than an online service provider and merely adhering to the safe harbor provisions is a cop out.

A higher standard must be applied when content is being reviewed in the first instance and more than for references to “pirating,” as proposed by the Court’s decision as a red flag for copyright infringement. It could not be Viacom’s burden under these circumstances to know which specific videos were monitored. YouTube is in complete control of the videos and the decisions after reviewing the content of its posts – both general and specific. (If YouTube does not keep records or tracking of the specific videos reviewed for content, how could YouTube prove that their knowledge was only general? Again this is another instance of a factual inquiry which should not have been resolved at summary judgment.)

While the Court takes some solace in the success of the notice and takedown provisions under the DMCA by claiming that the problem is fixed after notification to YouTube, it is of little solace to the copyright content owners whose exclusive rights and work value is already diminished.

Perhaps fittingly and unwittingly, in quoting the eBay decision, there is an indication that there is a solution for Viacom and other content providers: “Some contemporary knowledge of which particular listings are infringing or will infringe in the future is necessary.” See Page 20.

Perhaps, the proposal in the previous posting that Viacom could put everyone on general notice (and perhaps YouTube on specific notice) that none of its content is permitted on the Internet to be streamed and provided an indicator (such as the CBS eye or Comedy Central logo in the corner) may appropriately satisfy the Second Circuit’s requirement for liability.

The Grokster Analogy

The Court’s analogy between Grokster, Fung, Lime Group, and the infamous Napster cases seems to make a better case that Napster and other peer file-sharing website may have been simply before their time and as the law catches up, there may be different results. The Court relies heavily on the statement of Viacom’s General Counsel that the behaviors of Grokster and YouTube are not the same. But I am not sure how this matters or of the complete context of this statement.

In distinguishing YouTube from Grokster, the Court finds that Grokster’s conduct did “not comport with that of a service provider who furnishes a platform on which its users post and access all sorts of materials as they wish, while the provider is unaware of its content, but identifies an agent to receive complaints of infringement, and removes identified material when he learns it infringes.” See Page 23.

Given the broad definition applied to service providers (which would include YouTube), it is difficult to say that Grokster (and for that matter Napster) was not a service provider. Grokster and Napster provided a platform for the exchange of information online. Napster, at its height, was unlikely to be aware of (or even capable of ascertaining) all of the content posted on its website. There is also a clear argument to be made that Grokster had generalized knowledge similar to YouTube. The difference then is really that Grokster and Napster did not have complaint departments and did not or could not remove specifically identified information.

I think that analogizing YouTube to Napster and Grokster and their progeny may have unintended ramifications. It would seem all you need is a DMCA notice and takedown policy and Napster, in its previous form, would still be around today.

Viacom v. YouTube, Part I

Last week, the Southern District of New York ruled in favor of YouTube in the Viacom case. In deciding Cross-Motions for Summary Judgment, the Court held that YouTube is protected under the “safe harbor” provision of section 512(c) of the Copyright Act.

See Opinion here.

While a lot of credit is given to YouTube for having removed the specific videos requested following the DMCA notice, there are some troubling aspects to this decision.

First, the critical question for the Court was whether the service provider has actual knowledge or “in the absence of such knowledge, is not aware of facts or circumstances from which infringing activity is apparent” is meant to be a general awareness of infringements or a specific infringement of individual items. (The quote is not from the opinion but from the actual statute 512(c)(1)(A)(ii).)

The Court then goes on to discuss the “red flag” test in the legislative history of the Senate and House Reports – “whether infringing activity would have been apparent to a reasonable person operating under the same or similar circumstances – an objective standard should be used.” (See Opinion at page 10.)

Later in the legislative history, an example of a red flag would be a directory that typically uses the terms “pirate” “bootleg” or other slang terms in their URL and header information to make their illegal purpose obvious to other Internet users. (See Opinion at page 12.) This avoids “discriminating judgments about potential copyright infringement from online editors and catalogers creating search information. (See Opinion at Page 13.)

The legislative history concludes that awareness “should typically be imputed to a directory provider only with respect to pirate sites or in similarly obvious and conspicuous circumstances, and not simply because the provider viewed an infringing site during the course of assembling the directory.” (See Opinion at Page 15.)

This leads the Court to the decision that there must be more than mere knowledge of infringement in general but specific and identifiable infringement for individual items. The Court relies on the Perfect 10 case regarding DMCA notification where the Court will refuse to shift the burden from copyright owner to provider. This gives the impression that the burden will never shift. This may produce a much more chilling effect than, I think, the Court may have intended. This gives copyright owners no incentive to provide their content online. I do believe that it is possible some people may label materials “pirated” but most people are smart enough to avoid such a keyword that would raise a “red flag.”

However, would the circumstances be different if Viacom and/or others did not allow their content to be reproduced on the Internet. Could the red flag and general and specific awareness be implied from the well-known fact that the content provider does not permit the reproduction of its material for media online?

Could the simple solution be a campaign informing the public and/or a specific letter to YouTube claiming that all episodes of Show X are not available on the Internet or streaming media? Any copies in said form are unauthorized infringing copies for which no user has permission. Would this be the criteria necessary for specific knowledge for any individual posting?

Leading By Example

Yesterday, the U.S. Intellectual Property Enforcement Coordinator (“IPEC”), released the 2010 Joint Strategic Plan on Intellectual Property Enforcement (“Report”). As part of the PRO-IP Act, this report is a required follow up on the enforcement initiatives and economic impact of counterfeiting and piracy for intellectual property.

Perhaps, the oddest highlight was right in the very beginning as part of the objectives for the government to protect American intellectual property rights was to get the federal government to stop using and purchasing infringing materials. (Later, the report specifies the particular problem that government contractors may be using infringing copies of software.)

On one hand, it is commendable that the government is willing to recognize that intellectual property enforcement is a problem even internally, on the other hand, if the government cannot clean up infringement of intellectual property internally, it is somewhat hypocritical to expect the government to enforce intellectual property rights against others.

Perhaps the subtitle explains it best “Leading By Example.” (See page 7 of Report.) The IPEC will also measure public perceptions of intellectual property rights. (See page 47.)

Other highlights of the Report include:

• The continued consideration for confidentiality in international trade negotiations. (Page 8)
  
• A shared governmental database regarding ongoing investigations and cases regarding intellectual property infringement (Page 11).
  
• A heavy focus (and rightfully so) on counterfeit pharmaceuticals including a Counterfeit Pharmaceutical Interagency Committee (Page 13).
  
• Lots of facts about the economic impact of intellectual property and enforcement including:
  
  • An 800% increase in i.p. investigations and prosecutions in the last 10 years (Page 29).
    
  • 50 FBI Special Agents pursuing intellectual property investigations (Page 30).

BATTLES IN SEATTLE (Part 3 of 3)

We're back with the third and final round in our "Battles in Seattle" series.


Round 3 - MDY Indus. v. Blizzard Entertainment

Blizzard Entertainment and Vivendi Games (“Blizzard”) are the creators and operators of the popular Massively Multiplayer Online Role-Playing Game (MMORPG) World of Warcraft. Blizzard owns the copyright for the World of Warcraft software. MDY Industries created a bot (short for robot) known as WowGlider. The WowGlider bot plays World of Warcraft for its user while he or she is not playing, thus enabling WowGlider users to advance, and attain experience and game assets more quickly within World of Warcraft than other players. MDY sought declaratory judgment that its Glider program did not infringe Blizzard’s copyright and Blizzard counter-claimed against MDY for trademark infringement, contributory and vicarious copyright infringement, tortuous interference with contract, violation of the DMCA, unfair competition and unjust enrichment.

In arguing against Blizzard’s counerclaims, MDY urged the District Court to adopt the Western District of Washington’s decision in Vernor v. Autodesk, Inc. and find that WoW players are owners of the software because they are entitled to keep the copy of the software they acquire from Blizzard. The District Court of Arizona did not adopt MDY’s position.

The District Court of Arizona granted summary judgment in favor of Blizzard with respect to MDY's liability for tortious interference, contributory copyright infringement, and vicarious copyright infringement. The court granted summary judgment in favor of MDY on a portion of the DMCA claim and on the unfair competition claim. In making its ruling on Blizzard's copyright infringement claims, the Court inquired whether purchasers of WoW owned their copy of the game. Pursuant to to 17 U.S.C. § 117, owners of computer programs are allowed to create copies or adaptations of the computer program if it is an essential step towards utilization of the program. The Court found that WoW purchasers were not owners of their copy of the game but rather were licensees. Thus, the players are required to adhere to the End User License Agreement and the Terms of Use set by Blizzard in order to play the game. Blizzard expressly prohibits "the use of bots or third-party software to modify the WoW experience" in the Terms of Use and End User License Agreement. Thus, the Court found that players who use Glider violated the Terms of Use and were not licensed to use WoW and therefore the copying of the World of Warcraft software to RAM constituted copyright infringement.

Unlike UMG Recordings Inc. v. Augusto and Vernor v. Autodesk, Inc., the oral arguments in MDY Indus. v. Blizzard Entertainment dealt predominantly with the contractual issues and the validity of shrinkwrap licenses. Counsel for MDY argued, along the lines of Vernor, that Blizzard’s End User License Agreement and Terms of Use were merely labeled as licenses but were not and that merely stating in the contract that a certain action was copyright infringement did not make is so.

You can listen to the oral argument in its entirety here.

BATTLES IN SEATTLE (Part 2 of 3)

Today is the second part of our three part series discussing the oral arguments in a trio of copyright cases presented to the Ninth Circuit on June 7, 2010.

Round 2 - Vernor v. Autodesk, Inc.

Autodesk holds the copyright in AutoCAD, a 3-D modeling software program that sells for approximately $4,000. AutoCAD is sold with a shrinkwrap license which prohibits, among other things, resale of the software. In addition, AutoCAD is sold in sealed boxes for a fixed price with no-recurring fees or expirations for use.

Craig Vernor purchased several copies of AutoCAD from an architecture firm and listed those copies on Ebay and ultimately sold two copies for approximately $400 per copy. Autodesk sent Ebay a takedown notice claiming copyright infringement. Vernor responded with a counter-notice stating that he was reselling legitimate software. As a result of additional complaints from Autodesk, Ebay suspended Vernor’s account for a month.

Vernor then filed a declaratory judgment lawsuit in Federal District Court seeking a holding that he did not infringe upon Autodesk’s copyright. The District Court held in Vernor’s favor, finding that his actions were protected by the first sale doctrine and that his resale of legitimate copies of AutoCAD did not infringe Autodesk’s copyright. Autodesk counter-claimed for copyright infringement and contributory copyright infringement

Autodesk argued that it retained ownership of the copy of the software by virtue of the license agreement, and that the copy was merely licensed and not owned by the original purchaser. Therefore, Autodesk products could not be resold to third parties because only an "owner of a copy" has rights under the first-sale doctrine, as codified 17 U.S.C. § 109(a). Vernor was thus infringing Autodesk's copyright and Autodesk was within their rights to block such sales. Autodesk further claimed that, because the CD was a mechanism for making a copy of the software, Vernor enabled his clients to make unlicensed copies of Autodesk software and Vernor was liable for contributory copyright infringement.

The District Court noted a conflict in the precedent. The Court noted that the transfer of software from Autodesk accompanied by a restrictive license under the MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993), Triad Sys. Corp. v. Southeastern Express Co., 64 F.3d 1330 (9th Cir. 1994), and Wall Data, Inc., v. Los Angeles County Sheriff's Dept., 447 F.3d 769 (9th Cir. 2006) cases would not be a sale and the first-sale doctrine would not apply, and thus Vernor would not be permitted to redistribute the software. However, under United States v. Wise, 550 F.2d 1180 (9th Cir. 1977), Vernor would be protected under the first-sale doctrine because the transfer of copies of Autodesk's software implies a right of perpetual possession of the copy. Given the conflicting precedents, the court felt compelled to rely on the earliest precedent, Wise, and thus found in Vernor's favor.

The oral arguments in Vernor v. Autodesk, Inc. centered on whether or not the sale of a software CD was a sale or a license. Counsel for Vernor likened this situation to that of Bobbs-Merrill Co. v. Straus (the 1908 Supreme Court case where Bobbs-Merrill sued Macy’s for selling copies of a book for 89 cents when the book publisher printed a "license agreement" in the front flap of the book, stating that any book dealer who sold the book for less than one dollar would be liable for infringing the publisher's copyright. The Supreme Court ultimately ruled that merely labeling something a "license” does not make it a license, and that resellers could sell the book at 89 cents.). When a justice challenged this analogy, counsel for Vernor noted that Autodesk had no expectation of getting the CD back once it was sold, thus the realities of the transaction are inconsistent with Autodesk’s assertions that they retain ownership in the copy. Autodesk’s counsel, meanwhile, focused upon the impact on the software licensing system and the industry as a whole. Autodesk also noted that the significant restrictions, enumerated in the shrinkwrap license, attendant to the use of the AutoCAD software indicate that users are truly licensees, rather than “owners”. Autodesk’s attorney argued that it does own the individual copies of its software that users purchase, Autodesk just doesn’t have any interest in getting them back. (This statement in particular might prove troublesome for Autodesk).

Implications: If the District Court’s ruling in Vernor v. Autodesk is upheld it may harmonize the application of the first-sale doctrine by treating used copies of software like used books, music CDs, and movie DVDs. On the other hand, the foundation of the software industry’s business model may be damaged, requiring a restructuring of software sales going forward and potentially raising software prices.

Listen to the oral argument in its entirety here.


Stay tuned...The third and final round of our "Battles in Seattle" series takes place tomorrow!

BATTLES IN SEATTLE (Part 1 of 3)

In the copyright context, the determination of whether an individual or entity is a licensee rather than an owner of the copy can depend on the actions of the parties, despite contractual writings and notices. Whether an individual is an owner or a licensee can have an impact on the application of the copyright first sale doctrine.

On June 7, 2010, the Ninth Circuit panel sitting in Seattle, Washington heard oral arguments in UMG Recordings Inc. v. Augusto (a copyright first sale case about promotional sound recordings purchased at used music stores), Vernor v. Autodesk, Inc. (a copyright first sale case involving the sale of software on Ebay), and MDY Indus. v. Blizzard Entertainment (a copyright case related to software code in the computer game World of Warcraft).

With this trio of cases, the Ninth Circuit is presented with three different fact patterns. When considering these cases, the Court must determine, among other things, under what set of circumstances can a transaction be deemed a license and what constitutes a sale.

Copyright Chronicle will be covering each of these cases in a three part series over the next three days.

The parties are in their corners. Let’s get ready to RUMBLE!

Round 1 - UMG Recordings Inc. v. Augusto

My School Infringed My Homework

On May 13, 2010, the blog located at Redstate.com posted Elena Kagan’s senior thesis To the Final Conflict: Socialism in New York City, 1900-1933 from Princeton University.

Subsequently, the blogger received a notice from Princeton University to remove the copy of the thesis from her website. See notice here. The Princeton University Archives claims that the copies provided are governed by U.S. Copyright Law, are for private individual use only and electronic distribution is prohibited.

This got me thinking…how did Princeton University Archives obtain rights to this thesis? Clearly Princeton University could not claim that they were the author, unless the student, in this case, Elena Kagan, was employed by Princeton University and the thesis was prepared in the context of her employment. (Ed. – for what students pay to attend most universities, no student produced material should ever be considered a work made for hire.) The rights of an educational institution with respect to a student - produced work is quite a quagmire and includes issues of authorship and fair use / educational purposes defenses, among others. It should not be.

The student created the work. The student should be free to do what they wish with the work and not be subjected to what the school would do with the submitted work. At least on this level I will give Princeton some credit….

This is when I found a copy of the senior thesis of Michelle Obama (then Robinson) from Princeton University on the Politico blog and figured out what Princeton University had – a limited license.

Weekly Wednesday Wrapup - Update Edition

This week we follow up on updates from previous columns:

• Limewire asks that the district court reconsider its finding of copyright infringement. Two week ago, summary judgment was entered against Limewire on grounds of copyright infringement.
  
  In its motion to reconsider, Limewire claims there was error where the judge did not consider conflicting evidence and resolving the conflicting evidence in Limewire’s favor (as the non-moving party). Such motions for reconsideration are rarely granted. Denying summary judgment would require issues of material fact.
  
  Based on the decision, I do not see Limewire getting too far with this argument especially on a motion for reconsideration. I will keep looking to see if Limewire follows through and files an appeal to the Ninth Circuit.
  
  
• Two weeks ago, I also included an article regarding the producers of “The Hurt Locker” potentially filing lawsuits against those who downloaded the movie from BitTorrent. The lawsuit has been filed against 5,000 defendants. See Complaint here.
  
  Maybe producers of motion pictures will file more of these lawsuits to fill the gap in the number of copyright lawsuits now that the RIAA is no longer pursuing illegal downloaders of music. See Blog Entry of May 19, 2010.
  
  
• Finally, the Don Henley / Chuck Devore lawsuit regarding the parody defense which changed the lyrics to “The Boys of Summer” and “All She Wants to Do Is Tax” has been briefed for summary judgment. Cross motions for summary judgment were filed.
  
  • Henley opposition brief
    
  • DeVore opposition brief
  
  A hearing was scheduled for yesterday. It would seem to be a tough sell for DeVore to show how his videos “parody” Henley’s songs especially given the commentary directed at politicians Barbara Boxer and Barack Obama not the subjects of Henley’s songs. This parody / social commentary argument was recently rejected in the Salinger case because the parody must be on the work itself not on the artist or another topic. 641 F. Supp. 2d at 256-257.

Weekly Wednesday Wrapup - MORE THAN MEETS THE EYE

According to Wired, Paramount Pictures, the production company behind the Transformers movie franchise, is claiming that a video showing people filming footage for the Transformers 3 movie posted on YouTube constitutes copyright infringement. The video in question is 3 minutes long and shows the movie crew standing around, followed by a few seconds of a hydraulic lift shooting a car 100 feet down an alley. You can see a snippet of the original YouTube video here.

So far, Paramount has issued a DMCA take down notice prompting YouTube to the video. Ben Brown, the poster of the YouTube video, has filed a counter-notice contesting Paramount’s claims.

Is the posting of this YouTube video copyright infringement or is Paramount impermissibly using copyright law to shut down a legitimate video?

It depends.

In order to have a copyright, you must have a work fixed in a tangible medium. Paramount cannot claim a copyright in the footage until it is filmed. Thus, if Ben Brown shot his video at the same time that Paramount was shooting its scene, fixation could have arguably occurred simultaneously, thus both Paramount and Ben Brown own copyrights in their respective footage. However, if Paramount created copyrightable story boards for the action sequences, unauthorized filming and posting of the live action scene could be considered an infringing derivative work of the story boards.

Even assuming Paramount has a valid copyright claim, there is still a defense of de minimis copying. The footage of the crew preparing for filming is probably not part of Paramount’s shoot (unless it is being filmed by Paramount for “making of” features for the DVD release) and the actual action sequence that was filmed was only a few seconds long. In the context of the amount of footage Paramount will film for the movie (hundreds of hours) or even the final product (approximately two hours), Ben Brown’s snippet could be considered de minimis copying.

It could further be argued that Ben Brown’s YouTube video would not replace the market for the original feature length film. However, Ben Brown’s YouTube video could impact the sale of DVDs, which often include DVD extras such as deleted scenes and “making of” features.



Oren Gelber is an associate at Collen IP. She is guest posting while Tom is in Boston for INTA 2010.

Weekly Wednesday Wrapup

This week the big copyright news story was the RIAA victory against Limewire, a file sharing website for copyright infringement. See Decision here. In the course of the decision, the Court specifically notes the success of the RIAA against individuals. See Decision at footnote 22.

Is this the zenith for the recording industry in lawsuits for copyright infringement for file sharing?

Quite possibly as the recording industry has claimed that it will stop pursuing file sharing copyright infringement lawsuits. [Wall Street Journal]

The number of copyright infringement lawsuits nearly doubled from 2004 to 2005 (just under 6,000 lawsuits filed) when the RIAA lawsuits for file sharing were ramping up. However, a steady decline in the number of lawsuits has occurred to the point were the number of copyright infringement lawsuits is slightly more than 2,000.
Source: Administrative Office of the Courts

As one set of copyright owners may be ending its lawsuits on file sharing…BitTorrent may be the next target. As technology advances, the spectrum and size of the files to be shared grows. The producers of the Best Picture – “The Hurt Locker” are threatening suit and to learn the identities of BitTorrent users that illegally copied the movie. [ABC News]

Given that the RIAA has paved the way with its successes in copyright infringement actions and learning the identities of downloaders through ISP subpoenas, the MPAA and its members may have an easier time stopping infringements (and possibly fewer lawsuits filed for movie downloads).

Weekly Wednesday Wrapup - May 12, 2010

• FIRST SALE FRENZY: On June 7, 2010 the Ninth Circuit will hear appeals in UMG Recordings Inc. v. Augusto, a first sale case involving promotional sound recordings sold on Ebay; Vernor v. Autodesk, Inc., a first sale case involving software; and MDY Indus. V. Blizzard Entertainment, a first sale case involving software code in World of Warcraft video game.

Not one oral hearing on first sale doctrine but 3 – in the same day in the Ninth Circuit.


• Google filed for declaratory judgment claiming DMCA protection claiming that Google timely removed and/or disabled links to Plaintiff’s DMCA takedown notice where Plaintiff, a record company alleged and filed a previous suit for contributory and vicarious copyright infringement when RapidShare links appeared in internet searches on Google and Microsoft search engines. Plaintiff previously contested that Google and Microsoft responded to the DMCA takedown letter. The case raises issues about responses to DMCA takedown notices as well as the boundaries of contributory and vicarious copyright infringement.


• In a case initially filed in the Southern District of New York and recently transferred to Central District of California, over 40 photographers, owners of photography copyrights and the organization that operates the San Diego Zoo are seeking more than $11 million in damages from the fast-food chain Taco Bell for copyright infringement.

The Plaintiffs claim that 4 ecology-themed DVDs distributed along with Taco Bell’s “Kid’s Meal” menu items contained over 100 images that were used without authorization or compensation to the copyright owners. The subject images were licensed to SNAP TV Inc. by the wildlife-specialty stock photo agency Minden Pictures. The Complaint alleges that Minden has been unable to get SNAP TV to pay for its license and thus SNAP TV’s use of the images and by extension Taco Bell’s distribution of over 2 million DVDs containing these images constitutes copyright infringement.

Plaintiffs are seeking monetary damages as well as Taco Bell’s profits attributable to the alleged infringement. However, as the Complaint points out, these DVDs are promotional items which were distributed along with Taco Bell’s “Kid’s Meals” menu items. If the DVDs were given away for free, as is done with most Kid’s Meals at fast food chains, then there is not basis for computing profits attributable to their distribution—because there are none. Should they prevail upon their copyright claims, Plaintiffs may be better served by seeking statutory damages.

Catcher in the P.I. (preliminary injunction)

The April 30, 2010 decision by the Second Circuit has been the subject of many reports – predominantly regarding the likelihood of success for the Trustees of the J.D. Salinger literary trust. However, there is a separate and independent significance within the decision – the scope of the eBay decision by the Supreme Court [547 U.S. 388 (2006)] on injunctive relief. The Second Circuit’s decision remanded and vacated the preliminary injunction order (with a ten day stay to allow for Salinger’s estate to seek a temporary restraining order).

Weekly Wednesday Wrapup - May 5, 2010

This week the Second Circuit and rappers bring the headlines in copyright news:

• Remember: Copyright does not cover ideas including pureeing vegetables to “sneak” them into kids' diets. The Second Circuit Court of Appeals, upheld a lower court’s decision that no copyright infringement occurred as Jessica Seinfeld’s cookbook Deceptively Delicious: Simple Secrets to Get Your Kids Eating Good Food was “very different” from Missy Chase Lapine’s cookbook The Sneaky Chef: Simple Strategies for Hiding Healthy Foods in Kids' Favorite Meals. See order here.


• Second Circuit upholds RIAA’s method of obtaining identities of alleged copyright infringers who downloaded music through subpoenas of internet service providers. See order here.


• Second Circuit vacates preliminary injunction and remands to district court to follow the Supreme Court’s decision in Ebay v. MercExchange where court finds likelihood of copyright infringement of The Catcher in the Rye and its main character Holden Caufield by Fredrik Colting and his book 60 Years Later: Coming Through the Rye. See order here.

Now onto the rappers:

• Lil Wayne has been sued for copyright infringement by rapper Dirahn Gilliams who claims Lil Wayne used portions of his song “Grinding Like A Goon” in the multi-platinum hit “Lollipop”.


• Continuing with the hip hop theme, Akon filed a copyright lawsuit in the Southern District of New York against Konvict cosmetics over their Konvict fragrance. According to the rapper, he had been in talks with the company over a fragrance line, however no deal was actually finalized.

And in other news:

• Don Henley has sued the Republican Senate hopeful Chuck DeVore for copyright infringement after Devore retooled Henley’s songs “The Boys of Summer” and “All She Wants to Do is Dance” to “Hope of November” and “All She Wants to Do is Tax” in campaign videos.
  See complaint here.

While fair use is likely to be raised by DeVore, I don’t think that he has the same arguments in the You Tube / Prince lawsuit. Nor do I think that a claim of parody could be successful – it is difficult to comprehend how a political attack ad to drum up political campaign contributions [there goes the whole not for profit angle] can be seen as a parody of the Don Henley songs. DeVore and other Defendants claim that they were making a political point as Henley represents the entertainment industry. [This is not only a weak argument but also leads anyone to believe DeVore could have taken any song by any artist and claim that they represent the entertainment industry.]