Technology and Digital Media Lawyer & Attorney : Davis Wright Tremaine Law Firm : Ecommerce, Outsourcing, Web 2.0

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"Interesting" case filed in the Northern District of Florida earlier this month.  Professor Moulton of the University of Florida and Faulkner Press, the publisher of his e-textbooks filed a copyright infringement lawsuit against Class Notes ("Einstein's Notes").  Professor Moulton alleges that Einstein's Notes, one of these organizations that essentially sells crib notes for college classes "slavishly" copied the film study questions and exam practice questions prepared by Professor Moulton and marketed by Faulkner Presss.  Setting aside the self-importance one must have to both file a copyright registration on one's lectures and license the rights to the lectures to a publisher, so far we have a garden variety copyright infringement lawsuit -- albeit in an unusual environment.  The complaint takes it one step further, however, and argues that the typed lecture notes included as part of the Einstein's Notes packet are a derivative work of Professor Moulton's lectures.  In other words, Professor Moulton alleges that a student's notes of a professor's lecture constitutes copyright infringement (although Professor Moulton's attorney suggests that this would be protected by fair use).  This is even more interesting in this case because Professor Moulton suggests that fixation of the lecture occurred through his notes in his lecture that he made to his transparency.  Setting aside the attempt of Professor Moulton to get rid of a bottom feeder trying to facilitate cheating students, the concepts underlying the lawsuit would have significant consequences for any note taking -- everything from Cliff's Notes to commentary on public discourse.  The complaint is here. 

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The District Court for Arizona in Atlantic v. Howell rejected the record industry's motion for summary judgment that contended that merely making available music files for downloading through a file sharing service constituted copyright infringement.  This reverses the court's previous ruling from August 2007.   The key issue is whether "making available" or "offering to distribute" copyrighted works, absent evidence of actual distribution, violates a copyright owner's exclusive distribution rights under Section 106 of the Copyright Act.  This is the third case this April to weigh in on this issue.  Howell joins the U.S. District Court in Massachusetts in London-Sire Records v. Doe in requiring more than merely making the infringing works available.  The Southern District of New York held the opposite in Elektra v. Barker.  Undoubtedly this is just the beginning so stay tuned.  For more information (albeit from an interested party), the EFF has a page addressing these issues. 

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A fascinating new lawsuit filed by the major record labels.   The record labels sued Project Playlist on Monday alleging that the website was guilty of massive infringement.  What's fascinating is that Project Playlist purports that it only allows it's users to make playlists of existing, legal music.   In other words, it claims to allow its users to make a playlist consisting of multiple links to music resident on servers elsewhere.  While this behavior has led to liability in Europe, it seems inconsistent with general linking law in the United States.   (although the movie studios have sued so called "leeching" websites like torrentspy.com).  It is unclear whether the record labels are alleging that Project Playlist is solely a leeching website like torrentspy or whether they are alleging more garden variety file sharing liability.  I haven't been able to get a complaint yet, but the reports suggest that the record labels are alleging both the standard Grokster inducement claim as well as Project Playlist's illegal reproduction of the music.  If it turns out that the only allegedly infringing activity of Project Playlist is the inline linking from user's playlists to third party hosted music, this could create new linking law since Project Playlist purports to do more than the typical leeching websites of the world.

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The US on Friday placed nine countries on a "priority watch list" for allegedly failing to protect American producers of movies, computer software and other copyrighted material from widespread piracy.  This will subject them to extra scrutiny and could eventually lead to economic sanctions - if the administration decides to pursue complaints before the World Trade Organization.  The countries were China, Russia, Argentina, Chile, India, Israel, Pakistan, Thailand and Venezuela.  Four countries were removed from the list:  Egypt, Lebanon, Turkey and Ukraine.  Not surprisingly, a large part of the report focuses on China.   Ultimately, the report is a fascinating read on what the priorities are for the US in terms of intellectual protection (mainly pharmaceuticals and entertainment).  It's also an interesting treasure trove of where to get pirated materials when wandering the markets of the Czech Republic or Buenos Aires.  http://www.ustr.gov/Document_Library/Press_Releases/2008/April/USTR_Issues_2008_Special_301_Report.html

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Law.com is reporting today that "Wal-Mart's internal meetings are on display in three decades worth of videos made by a Kansas production company scrambling to stay in business after Wal-Mart stopped using the firm. In response to losing its biggest customer, Flagler Productions has opened its archive, for a fee, to those seeking clips of unguarded moments, including a scene of male managers parading in drag at an executive meeting. Much of the interest in the candid videos is coming from plaintiffs lawyers pursuing cases against Wal-Mart." Read the rest. 

What I found most interesting for the purposes of this blog was that the parties never signed an agreement (in 30 years).   I'm sure no one ever thought there would be an aftermarket for these videos, but in today's day and age, there is a market for just about everything.  This is a good example of why it makes sense to use care with respect to owning you intellectual property -- even for things that aren't customer facing.  My experience is that many companies will use less care when they are hiring outside videographers, photographers, free-lance writers, etc. to produce corporate training films, recordings for archives, etc.

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Rumor has it that orphaned works legislation is now being drafted and will be brought to light for legislative consideration sometime this year.  Such has been reported by the American Society of Media Photographers and was the topic of a legislative update at the recent ALI ABA Legal Issues in Museum Administration conference.  According to such sources, there is a good chance that such legislation will be passed sometime this year.

The legislation would affect copyright-protected works that have been orphaned by their respective owners.  Before you start humming, It's a Hard Knock Life, keep in mind that some of these works might not be true orphans.   They might have parents somewhere.  Without casting judgment on any parenting style, the gist is that some safe harbors should be afforded to users who have made a reasonably diligent, good-faith, but ultimately unsuccessful effort to locate a work's copyright holder.

The orphan-works problem is a symptom of the 1976 Copyright Act, which eliminated all of those pesky copyright compliance rules (you know, like publication without copyright notice would drag the work into public domain) to be able to comply with Berne requirements.  But now that copyright holders need not render any affirmative action to ensure at least some level of copyright protection, it can be difficult to know who claims rights to what, even when a would-be user makes a sincere attempt to track down copyright information.  By way of example, consider the copyright in a 1980's home movie purchased from a local thrift shop.  What about that piece of code in a cool vintage video game?  Who owns the rights?  How would you ever locate the rights holder?

Orphaned works legislation would provide limited safe harbors in situations like these. 

The proposal set forth by the Copyright Office in 2006 has three basic elements:

1. The would-be publisher conducts a good-faith and reasonably diligent search.
2. The publisher provides minimal and reasonable attribution, as possible  (the idea here being that if a publisher uses a work without the copyright holder's permission, it shouldn't be passed off as it's own).
3. In the event a copyright holder resurfaces and claims infringement, the copyright holder's damages would be limited to reasonable compensation for use with limited injunctive relief for derivative works made with the copyrighted work.  A kind of compulsory licensing scheme, if you will....

The devil, of course, will be in the details.  As John Waters has said, "There's no such thing as a bad home movie."  I couldn't agree more!  But can well imagine such a thing as bad orphaned works legislation.  So, if you care about this, I encourage you to keep apprised of the legislation and let your voice be heard.  In the meantime, the Copyright office report can be found here.

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As I recall, when Clint Eastwood's Dirty Harry said "A man's gotta know his limitations" in Magnum Force, he wasn't talking about software licenses. But as a recent Northern District a California case shows, he could have been. Poorly drafted license limitations can be deadly for a licensor.

(Yes, that may be the cheesiest lede ever. But work with me on this.)

Recall the basics. When a software licensee exceeds the scope of his or her license, the licensor generally has a claim of infringement. In many cases, this is quite straightforward. For instance, if the license grant doesn't give the licensee a right to create derivatives of the code, then doing so likely infringes. So far, so simple.

But consider those other provisions of the license agreement that aren't in the license grant. Does violating those provisions give rise to infringement? Common sense (at least my common sense) suggests not. Fortunately, the cases tend to agree, and Netbula, LLC v. Storage Technology Corp., No. 06-07391, 2008 U.S. Dist. LEXIS 4119 (N.D. Cal. Jan. 18, 2008), has a nice discussion of the issues.

Netbula licensed a software development kit (SDK) under what looks like a pretty typical SDK license. However, the drafter forgot to hook the license limitations onto the license grant. Big mistake. Netbula wanted to claim copyright infringement based on the licensee's violating a term of the license. The court didn't buy it.

Why? Basically, the putative "license limitation" was in the wrong place---drafted as a separate promise not a license limitation. (A man--in the gender-neutral sense--has to know his limitations, remember?) The court looked to Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115, 1121-22 (9th Cir. 1999), Sun Microsystems v. Microsoft Corporation, No. C 97-20884, 2000 WL 33223397 (N. D. Cal. May 8, 2000), and S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1088 (9th Cir. 1989) for guidance.

"Before [Plaintiff] can gain the benefits of copyright enforcement," said the court, "it must definitively establish that the rights it claims were violated are copyright, not contractual, rights." So, the court

must therefore determine if Plaintiff has established that the disputed terms of the license are limitations on the scope of the license, and thus an issue of copyright, or independent contractual covenants and thus contractual rights. If they are the former, then Plaintiff must also show that Defendants have acted outside of the scope of their license....

In Sun Microsystems v. Microsoft Corporation, No. C 97-20884, 2000 WL 33223397 (N. D. Cal. May 8, 2000) ("Sun II"), the district court confronted a similar question of scope with regards to a software license agreement. In Sun II, the contract between the parties required that the commercially distributed software Defendant developed with Plaintiff's copyrighted software had to be compatible with certain other software....

The court found that this "compatibility" provision was a separate contractual covenant and not a limitation on the scope of the license itself because, inter alia, the contract says "nothing about the license grants being subject to, conditional on, or limited by compliance with the compatibility obligations."

This is why these days most carefully drafted licenses have a heading that says something like LICENSE GRANTS; LIMITATIONS after which come both the grant and (wait for it) the limitations. Or you might see a subsection under the main heading LICENSES that lists the limitations on the grant. Another approach is to add a new section below the grant that says, in big, bold, glowing neon letters LICENSE LIMITATIONS.

Different strokes for different folks. But cases like Netbula (and the Sun cases mentioned above) make one thing clear: you should not only know your limitations, but make sure the court knows them as well.

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A new Facebook application, ArtShare, allows Facebook users to play curator and select artworks for rotating display on their profile page.  Once displayed, a visitor who clicks an image will be directed to the website of the originating museum.  Participating institutions include Walker Art Center, Metropolitan Museum of Art, and Brooklyn Art Museum. 

Unfortunately, and perhaps predictably, there's only a handful of contemporary images available.  Presumably, this is due to the costs of copyright administration.  As many of you know, copyright doesn't transfer with the sale or gift of an artwork absent an express agreement to the contrary.  So a museum's rights to reproduce even works in its own collection may be limited.  This is especially probable where works were donated by a third-party donor, who never sought copyright from the artist.  Getting all those permissions can be a daunting task for any institution, and especially for a non-profit.  Practice pointer for would-be collectors: negotiate any copyrights or licenses  you may need at the time of purchase, where  your negotiating leverage is at its height, and when so doing, think about possible future needs.  And get an express license (or assignment) in writing. 

Happily for Facebook users, however, some institutions, such as Walker Art Center, have bucked the trend and included some great contemporary images including gorgeous pieces by Ellsworth Kelly and Mario Merz.  Very cool.  To check out ArtShare go here.

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That's what Madeline McIntosh, SVP at Random House Audio Group, told The New York Times when asked about Random House's plans to go DRM-less:

Random House was the first to announce it was backing away from D.R.M., or digital rights management software, the protective wrapping placed around digital files to make them difficult to copy. In a letter sent to its industry partners last month, Random House, the world's largest publisher, announced it would offer all of its audio books as unprotected MP3 files beginning this month, unless retail partners or authors specified otherwise.

Penguin Group, the second-largest publisher in the United States behind Random House, now appears set to follow suit. Dick Heffernan, publisher of Penguin Audio, said the company would make all of its audio book titles available for download in the MP3 format on eMusic, the Web's second-largest digital music service after iTunes.

The entire piece is here.

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An anonymous artist takes Garfield comic strips and removes Garfield. The result is part Dadaism, part Zen, part... something.

But what about the IP issues? Discuss.

HT: VSL.

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Recently, the U.S. District Court for the Northern District of Illinois briefly discussed "licensee estoppel" in a copyright infringement case. Here's how BNA summarized the case (and in the process tried to win the 2008 Longest. Sentence. Ever. Competition):

Doctrine of licensee estoppel does not bar defendant's challenge to plaintiff's ownership of copyright in computer software, even though provision in licensing agreement explicitly forbidding licensee from challenging validity of licensor's copyright is generally enforceable, since licensing agreement between parties to present suit did not contain no-contest clause, and broader application of licensee estoppel doctrine is disfavored in copyright cases.

Whew. Anyway, in case you're a little hazy on all that estoppel stuff, especially regarding patents, trademarks and copyright, here's a quick overview:

Under the common law doctrine of licensee estoppel, a licensee was forbidden to challenge the licensor's ownership of an intellectual property right, or the validity of that intellectual property right, during the license term. Under current U.S. law, licensee estoppel continues to be applied in all circumstances only in the context of trademark and trade secret licenses. The doctrine of licensee estoppel has been made explicitly inapplicable to patent licensees. When a copyright license is litigated, courts have, in some circumstances, applied the doctrine, while courts in other circumstances have not.

That's from Intellectual Property Licensing: Forms and Analysis by Richard Raysman, Edward A. Pisacreta, and Kenneth A. Adler, which you can buy here.

So far, so theoretical. What does one of these "you can't challenge the validity of my IP rights" clauses look like? Here's one I came across recently:

Licensee will not during the term of this Agreement, or at any time thereafter, contest the validity of, jeopardize by affirmative act or knowing inaction, or take any action inconsistent with, Licensor's rights or goodwill in the Software in any country or jurisdiction.

The case, by the way, is FM Industries Inc. v. Citicorp Credit Services Inc., and you can find the court's decision here. The bottom line: FM forgot a clause like the one above and left themselves open to a claim of invalidity. Ouch.

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Ever throw your copyrighted expression into the trash only to find out that a dumpster diver has found and resold it? Me neither. But if you or someone you represent has, you may find William Patry's discussion of United States v. Chalupnik, 2008 WL 268997 (8th Cir. Feb. 1, 2008) illuminating (or infuriating). Patry and commentators on his blog locked the lower court's decision in the pillory and began pelting it with vegetables days ago. While the discussion there goes in a predictable direction, it's worth a skim.

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Waxy.org crunches some piracy numbers:

This year, all but six of the 34 nominated films were available in DVD quality by the last week of January. This is about consistent with past years, but we're seeing a shift towards studios releasing DVDs closer to their theatrical date. This trend, combined with the new availability of high-quality Region 5 rips from overseas, is making the screener leak less meaningful. After all, why bother releasing the screener if the retail DVD or a direct-from-film transfer is already out?

More here.

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"When copies are free," writes Kevin Kelly at Edge.org, "you need to sell things which can not be copied." Like what, you ask? Kelly has a few ideas. Eight in fact. Here they are:

1. Immediacy. "Sooner or later you can find a free copy of whatever you want," says Kelly, "but getting a copy delivered to your inbox the moment it is released — or even better, produced — by its creators is a generative asset." Another example is a hardback versus a paperback book. Hardbacks cost more. If you want to read the latest Sue Grafton novel, you have to pay for hardback. If you can wait, you can get the paperback for less. In each case, you are buying the same story.

2. Personalization. Kelly notes that a "generic version of a concert recording may be free, but if you want a copy that has been tweaked to sound perfect in your particular living room — as if it were preformed in your room — you may be willing to pay a lot."

3. Interpretation. Kelly's most interesting example is genetic data. "Right now getting your copy of your DNA is very expensive," says Kelly, "but soon it won't be. In fact, soon pharmaceutical companies will PAY you to get your genes sequence. So the copy of your sequence will be free, but the interpretation of what it means, what you can do about it, and how to use it — the manual for your genes so to speak — will be expensive."

4. Authenticity. "You might be able to grab a key software application for free, but even if you don't need a manual, you might like to be sure it is bug free, reliable, and warranted. You'll pay for authenticity." This idea is worthy of a book. In fact, it's already been written: Authenticity: What Consumers Really Want. It's a pretty good read and has lots of case studies about authentic companies like REI and Starbucks.

5. Accessibility. "We'll pay Acme Digital Warehouse to serve us any musical tune in the world, when and where we want it, as well as any movie, photo (ours or other photographers). Ditto for books and blogs. Acme backs everything up, pays the creators, and delivers us our desires." I'm in.

6. Embodiment. I'm with Kelly here: "sometimes it is delicious to have the same words printed on bright white cottony paper, bound in leather. Feels so good." Another example: there's lots of poetry on the web that you can read absolutely free. But many people, myself included, still buy nicely bound volumes of, say, Milton. Embodiment matters.

7. Patronage. In other words, tipping. "Radiohead's recent high-profile experiment in letting fans pay them whatever they wished for a free copy is an excellent illustration of the power of patronage. The elusive, intangible connection that flows between appreciative fans and the artist is worth something."

8. Findability. "A zero price," says Kelly, "does not help direct attention to a work, and in fact may sometimes hinder it. But no matter what its price, a work has no value unless it is seen; unfound masterpieces are worthless. When there are millions of books, millions of songs, millions of films, millions of applications, millions of everything requesting our attention — and most of it free — being found is valuable."

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Legal threats are nothing new for The Pirate Bay, of course, as you can see from their helpful legal threats page. What appears to be new is that the Danish government wants an ISP to block access to the notorious site. According to Reuters,

A Danish court has ordered Denmark-based Internet service provider Tele2 to shut down its customers' access to the popular file-sharing site Pirate Bay, Danish IT magazine Computerworld reported on Monday. Computerworld said on its Web site that a court had ordered Denmark's Tele2 -- one of the Nordic country's largest Internet providers -- to close access to the site at the request of the International Federation of the Phonographic Industry (IFPI).

Never heard of TPB? Here's a quick overview from Wikipedia:

The Pirate Bay website allows users to search for and download torrent files (torrents), small files that contain the machine-readable information necessary to download the data files from other users. The torrents are organized in the categories: Audio, Video, Software applications, Games, and, for registered users only, Pornography. Registration requires an email address and is free; registered users may upload their own torrents and add comments to torrent descriptions. Downloading of data files from other users is facilitated by the Bittorrent tracker that also runs on a Pirate Bay server.

Never heard of BitTorrent? The bottom line is that it's a P2P file sharing technology:

BitTorrent is a peer-to-peer file sharing (P2P) communications protocol. BitTorrent is a method of distributing large amounts of data widely without the original distributor incurring the entire costs of hardware, hosting and bandwidth resources. Instead, when data is distributed using the BitTorrent protocol, each recipient supplies pieces of the data to newer recipients, reducing the cost and burden on any given individual source, providing redundancy against system problems, and reducing dependence on the original distributor.

Again, that's from Wikipedia.

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Landes and Posner's slim volume on the political economy of IP law is worth a read, and at under thirty pages, it's not that much of a time commitment. Among the many gems inside it is this graphic on the growth of U.S. IP statutes (in terms of words and pages):

Admittedly, this a crude measure of statutory growth. Still, as of 2000, copyright was leading with patent law second and trademark law third.  (Both patent and TM lagged growth in the U.S. Code generally.)

The AEI has a PDF version of the book here.

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