Wednesday, June 30, 2010

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?

Wednesday, June 23, 2010

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).

Friday, June 18, 2010


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.

Thursday, June 17, 2010


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!

Wednesday, June 16, 2010


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

Thursday, June 10, 2010

My School Infringed My Homework

On May 13, 2010, the blog located at 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.

Wednesday, June 2, 2010

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.

    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.