Attorney Evan Brown

October 25, 2023 Copyright, DMCA

No knowledge of infringement, no secondary copyright liability for YouTube

This case underscores that platforms like YouTube, when promptly addressing DMCA takedown notices, are not necessarily held liable for user-uploaded content that infringes copyright.

Plaintiff sued defendant YouTube accusing it of secondary copyright infringement liability — that YouTube was contributorily and vicariously liable for infringement concerning three videos that nonparty TV-Novosti (operator of various RT channels, including RT Arabic) posted on YouTube. These videos contained content from documentary videos plaintiff had created and for which it owned the copyright.

Defendant moved to dismiss the complaint. The lower court granted the motion to dismiss. Plaintiff filed a motion for leave to file an amended complaint, which the court denied. That court had determined that the proposed amendments would be futile. Plaintiff sought review with the Second Circuit, arguing it had sufficiently alleged YouTube’s liability under theories of contributory and vicarious liability. On appeal, the court affirmed the denial of the motion to amend.

The court rejected plaintiff’s argument that YouTube was liable for infringement by failing to delete TV-Novosti’s entire YouTube account. Plaintiff’s argument apparently went something like this: “We made YouTube aware of the infringement by sending a DMCA takedown notice. Though YouTube took down the videos (which it did not catch in its copyright-detection technology) once it found out about them, by continuing to provide the platform for this infringer, YouTube took on liability for the infringement.”

The court held that it agreed with the lower court’s denial of the motion for leave to amend. “[B]ecause YouTube promptly and permanently removed the [allegedly infringing videos] from its platform once it received the plaintiff’s DMCA notices, the Amended Complaint does not permit an inference that YouTube acted in concert with TV-Novosti.”

Business Casual Holdings, LLC v. YouTube, LLC, 2023 WL 6842449 (2d Cir., October 17, 2023)

July 25, 2023 Blockchain, Computer Crime

Hackers stole cryptocurrency but the insurance company did not have to pay

hackers cryptocurrency insurance

Insurance and loss

Plaintiffs had a homeowners insurance policy with defendant insurance company. The policy covered personal property owned or used by the plaintiffs with a maximum limit of $359,500 for direct physical loss due to certain perils, including theft. In June 2021, hackers accessed plaintiffs’ computer and stole crypto tokens from their crypto wallets on two blockchain networks, amounting to approximately $750,000. Plaintiffs reported the incident and filed an insurance claim with defendant. Defendant only paid $200 on the claim because of a special limit of liability found in the policy.

Thinking that to be a pretty insufficient payment for such a dramatic loss, plaintiffs sued, alleging breach of contract and unreasonable denial of coverage under a Minnesota statute. Defendant moved for judgment on the pleadings. (“Judgment on the pleadings” in US federal court refers to a ruling made by the court based solely on the parties’ written pleadings and documents, without the need for a trial, when there are no genuine issues of material fact in dispute.) The court granted the motion.

Not direct and physical

Defendant had argued that the theft of digital assets (crypto tokens) did not constitute a “direct physical loss” under the policy, and thus, the claim was not covered. The court analyzed the language of the insurance policy, stating that “direct physical loss” required a distinct, demonstrable, and physical alteration to the covered property. Since crypto tokens are purely digital and lack physicality, according to the court, they do not meet the requirements for “direct physical loss” under Minnesota law.

Plaintiffs claimed that the policy’s language was ambiguous, but the court rejected this argument, applying the ordinary meaning of “direct physical loss” as required by Minnesota law.

The court also addressed plaintiffs’ statutory claim for bad-faith denial of coverage under Minnesota Statute § 604.18. To succeed in this claim, plaintiffs needed to prove that defendant lacked a reasonable basis for denying coverage and acted in reckless disregard of this fact. But since defendant did not breach the policy, the court found that the bad-faith claim failed as well.

Rosenberg v. Homesite Insurance Agency, Inc., 2023 WL 4686412 (D. Minn., July 21, 2023)

From the archives:

Exploiting blockchain software defect supports unjust enrichment claim

July 24, 2023 Trademarks

When X makes it an ex-brand: Can a company retain rights in an old trademark after rebranding?

This past weekend Elon Musk announced plans to rebrand Twitter as X. This strategic shift from one of the most recognized names and logos in the social media realm is stirring discussion throughout the industry. This notable transformation raises a broader question: Can a company still have rights in its trademarks after rebranding? What might come of the famous TWITTER mark and the friendly blue bird logo?

Continued Use is Key

In the United States, trademark rights primarily arise from the actual use of the mark in commerce (and not just from registration of the mark). The Commerce Clause of the United States Constitution grants Congress the power to regulate commerce among the states. Exercising this constitutional authority, Congress enacted the Lanham Act, which serves as the foundation for modern trademark law in the United States. By linking the Lanham Act’s protections to the “use in commerce” of a trademark, the legislation reinforces the principle that active commercial use, rather than mere registration, is a key determinant of rights in that trademark. So, as long as a company has genuinely used its trademark in commerce (assuming no other company has rights that arose prior in time), the company retains rights to that mark.

Though a company may transition to a new brand identity, it can maintain rights to its former trademark by continuing its use in some form or another. This might involve selling a limited line of products under the old brand, using the old brand in specific regions, or licensing the old trademark to other entities. Such actions show the company’s intent to maintain its claim and rights to the mark—such rights being tied strongly to the actual use of the mark in commerce. No doubt continued use of the old marks after a rebrand can be problematic, as it may paint an unclear picture as to how the company is developing its identity. For example, as of the time of this blog post, X has placed the new X logo, but still has the words “Search Twitter” in the search bar. And there is also the open question of whether we will in the future call content posted to the platform “tweets”.

Avoiding Abandonment

If a company does not actively use its trademark and demonstrates no intention to use it in the future, it runs the risk of abandonment. Once a trademark is deemed abandoned, the original owner loses exclusive rights to it. This is obviously problematic for a brand owner, because a third party could then enter the scene, adopt use of the abandoned mark, and thereby pick up on the goodwill the former brand owner developed over the years.

What Will Twitter Do?

It is difficult to imagine that X will allow the TWITTER mark to fall into the history books of abandoned marks. The mark has immense value through its long use and recognition—indeed the platform has been the prime mover in its space since its founding in 2006. Even if the company commits to the X rebranding, we probably have not seen the end of TWITTER and the blue bird as trademarks. There will likely be some use, even if different than what we have seen over the past 17 years, to keep certain trademark rights alive.

From the archives:

Is Twitter a big fat copyright infringing turkey?

July 24, 2023 Artificial Intelligence, Contracts

Generative AI executive who moved to competitor slapped with TRO

generative ai competitor

Generative AI is obviously a quickly growing segment, and competition among businesses in the space is fierce. As companies race to harness the transformative power of this technology, attracting and retaining top talent becomes a central battleground. Recent legal cases, like the newly-filed Kira v. Samman in Virginia, show just how intense the scramble for expertise has become. In the court’s opinion granting a temporary restraining order against a departing executive and the competitor to which he fled, we see some of the dynamics of non-competition clauses, and the lengths companies will go to in order to safeguard their intellectual property and strategic advantages, particularly in dealing with AI technology.

Kira and Samman Part Ways

Plaintiff Kira is a company that creates AI tools for law firms, while defendant DeepJudge AG offers comparable AI solutions to boost law firm efficiency. Kira hired defendant Samman, who gained access to Kira’s confidential data. Samman had signed a Restrictive Covenants Agreement with Kira containing provisions that prohibited him from joining a competitor for 12 months post-termination. Samman resigned from Kira in June 2023, and Kira claimed he joined competitor DeepJudge after sending Kira’s proprietary data to his personal email.

The Dispute

Kira sued Samman and DeepJudge in federal court, alleging Samman breached his contractual obligations, and accusing DeepJudge of tortious interference with a contract. Kira also sought a temporary restraining order (TRO) to prevent Samman from working for DeepJudge and to mandate the return and deletion of Kira’s proprietary information in Samman’s possession.

Injunctive Relief Was Proper

The court observed that to obtain the sought-after injunction, Kira had to prove, among other things, a likelihood of success at trial. It found that Kira demonstrated this likelihood concerning Samman’s breach of the non-competition restrictive covenant. It determined the non-competition covenant Samman breached to be enforceable, given that it met specific requirements including advancing Kira’s economic interests. The court found that the evidence showed Samman, after leaving his role at Kira, joined a direct competitor, DeepJudge, in a role similar in function, thus likely violating the non-competition restrictive covenant.

The court found that Kira faced irreparable harm without the injunction, especially given the potential loss of clients due to Samman’s knowledge of confidential information. The court weighed the balance of equities in favor of Kira, emphasizing the protection of confidential business information and enforcement of valid contracts. It required Kira to post a bond of $15,000, to ensure coverage for potential losses Samman might face due to the injunction.

Kira (US) Inc. v. Samman, 2023 WL 4687189 (E.D. Va. July 21, 2023)

See also:

When can you use a competitor’s trademark in a domain name?

July 20, 2023 Section 230

Court allows Amazon to censor “Wuhan plague” book reviews

amazon book reviews

In 2015, plaintiff began posting book reviews on Amazon, but in 2019 Amazon revoked his review privileges due to guideline violations, including reviews that criticized Donald Trump and two authors. After arbitration in 2020 favored Amazon, plaintiff and Amazon reached a settlement allowing plaintiff to post reviews if he adhered to Amazon’s policies. However, in 2022, after posting reviews derogatory of millennials and referring to COVID-19 as the “Wuhan plague,” Amazon once again revoked plaintiff’s ability to post book reviews and deleted his prior reviews from the platform.

Plaintiff sued Amazon alleging breach of contract and violation of Washington’s Consumer Protection Act (CPA), and seeking a request for a declaratory judgment saying Section 230 of the Communications Decency Act should not protect Amazon. Plaintiff asserted that Amazon wrongfully removed plaintiff’s reviews and did not adequately explain its actions. The CPA violation centered on Amazon’s insufficient explanations and inconsistent policy enforcement. Amazon sought to dismiss the complaint, arguing there was no legal basis for the breach of contract claim, the other claim lacked merit, and that both the Section 230 and the First Amendment protect Amazon from liability. The court granted Amazon’s motion.

Breach of Contract Claim Tossed

The court noted that to win a breach of contract claim in Washington, plaintiff had to prove a contractual duty was imposed and breached, causing plaintiff to suffer damages. Plaintiff claimed that Amazon breached its contract by banning him from posting book reviews and asserted that Amazon’s Conditions and Guidelines were ambiguous. But the court found that Amazon’s Conditions and Guidelines gave Amazon the exclusive right to remove content or revoke user privileges at its discretion, and that plaintiff’s claim sought to hold Amazon responsible for actions the contract permitted. Similarly, the court found plaintiff’s claims for both breach of contract and breach of the implied duty of good faith and fair dealing to be baseless, as they failed to identify any specific contractual duty Amazon allegedly violated.

No Violation of Washington Consumer Protection Act

To be successful under Washington’s Consumer Protection Act, plaintiff would have had to allege five elements, including an unfair or deceptive act and a public interest impact. The court found that plaintiff’s claim against Amazon, based on the company’s decision to remove reviews, failed to establish an “unfair or deceptive act” since Amazon’s Conditions and Guidelines transparently allowed such actions, and plaintiff presented no evidence showing Amazon’s practices would mislead reasonable consumers. Additionally, plaintiff did not adequately demonstrate a public interest impact, as he did not provide evidence of a widespread pattern of behavior by Amazon or the potential harm to other users. Consequently, plaintiff’s claim was insufficient in two essential areas, rendering the CPA claim invalid.

Section 230 Also Saved the Day for Amazon

Amazon claimed immunity under Section 230(c)(1) of the Communications Decency Act (CDA) against plaintiff’s allegations under the CPA and for breach of the implied duty of good faith and fair dealing. Section 230 of the CDA protects providers of interactive computer services from liability resulting from third-party content (e.g., online messaging boards). For Amazon to receive immunity under this section, it had to show three things: it is an interactive computer service, it is treated by plaintiff as a publisher, and the information in dispute (the book reviews) was provided by another content provider. Given that Amazon met these conditions, the court determined that plaintiff’s claims against Amazon under Washington’s CPA and for breach of the implied duty were barred by Section 230 of the CDA.

As for plaintiff’s declaratory judgment claim regarding Section 230, the court found that since the Declaratory Judgment Act only offers a remedy and not a cause of action, and given the absence of a “substantial controversy,” the Court could not grant this declaratory relief. The court noted that its decision was further reinforced by the court’s conclusion that Section 230 did bar two of plaintiff’s claims.

Haywood v. Amazon.com, Inc., 2023 WL 4585362 (W.D. Washington, July 18, 2023)

See also:

Amazon and other booksellers off the hook for sale of Obama drug use book

July 8, 2023 Artificial Intelligence, Copyright

Does a human who edits an AI-created work become a joint author with the AI?

If a human edits a work that an AI initially created, is the human a joint author under copyright law?

U.S. copyright law (at 17 U.S.C. § 101) considers a work to be a “joint work” if it is made by two or more authors intending to mix their contributions into a single product. So, if a human significantly modifies or edits content that an AI originally created, one might think the human has made a big enough contribution to be considered a joint author. But it is not that straightforward. The law looks for a special kind of input: it must be original and creative, not just technical or mechanical. For instance, merely selecting options for the AI or doing basic editing might not cut it. But if the human’s editing changes the work in a creative way, it might just qualify as a joint author.

Where the human steps in.

This blog post is a clear example. ChatGPT created all the other paragraphs of this blog post (i.e. not this one). I typed this paragraph out from scratch. I have gone through and edited the other paragraphs, making what are obviously mechanical changes. For example, I didn’t like how ChatGPT used so many contractions. I mean, I did not like how ChatGPT used so many contractions. I suspect those are not the kind of “original” contributions that the Copyright Act’s authors had in mind to constitute the level of participation to give rise to a joint work. But I also added some sentences here and there, and struck some others. I took the photo that goes with the post, cropped it, and decided how to place it in relation to the text. Those activities are likely “creative” enough to be copyrightable contributions to the unitary whole that is this blog post. And then of course there is this paragraph that you are just about done reading. Has this paragraph not contributed some notable expression to make this whole blog post better than what it would have been without the paragraph?

Let’s say the human editing does indeed make the human a joint author. What rights would the human have? And how would these rights compare to any the AI might have? Copyright rights are generally held by human creators. This means the human would have rights to copy the work, distribute it, display or perform it publicly, and make derivative works.

Robot rights.

As for the AI, here’s where things get interesting. U.S. Copyright law generally does not recognize AI systems as authors, so they would not have any rights in the work. But this is a rapidly evolving field, and there is ongoing debate about how the law should treat creations made by AI.

This leaves us in a peculiar situation. You have a “joint work” that a human and an AI created together, but only the human can be an author. So, as it stands, the AI would not have any rights in the work, and the human would. Here’s an interesting nuance to consider: authors of joint works are pretty much free to do what they wish with the work as they see fit, so long as they fulfill certain obligations to the other authors (e.g., account for any royalties received). Does the human-owner have to fulfill these obligations to the purported AI-author of the joint work? It seems we cannot fairly address that question if we have not yet established that the AI system can be a joint author in the first place.

Where we go from here.

It seems reasonable to conclude that a human editing AI-created content might qualify as a joint author if the changes are significant and creative, not just technical. If that’s the case, the human would have full copyright rights under current law, while the AI would not have any. As these human-machine collaborations continue to become more commonplace, we will see how law and policy evolve to either strengthen the position that only “natural persons” (humans) can own intellectual property rights, or to move in the direction of granting some sort of “personhood” to non-human agents. It is like watching science fiction unfold in reality in real time.

What do you think?

June 28, 2023 Section 230

Snapchat not liable for enabling teacher to groom minor student

A high school science teacher used Snapchat to send sexually explicit content to one of her students, whom she eventually assaulted. Authorities uncovered this abuse after the student overdosed on drugs. The student (as John Doe) sued the teacher, the school district and Snapchat. The lower court threw out the case against Snapchat on the basis of the federal Communications Decency Act at 47 USC § 230. The student sought review with the United States Court of Appeals for the Fifth Circuit. On appeal, the court affirmed.

Relying on Doe v. MySpace, Inc., 528 F.3d 413 (5th Cir. 2008), the court affirmed the lower court’s finding that the student’s claims against Snapchat were based on the teacher’s messages. Accordingly, Snapchat was immune from liability because this provision of federal law – under the doctrine of the MySpace case – provides “immunity … to Web-based service providers for all claims stemming from their publication of information created by third parties.”

Doe v. Snap, Inc., 2023 WL 4174061 (5th Cir. June 26, 2023)

June 19, 2023 Contracts, Social Media

How do you sort out who owns a social media account used to promote a business?

Imagine this scenario – a well-known founder of a company sets up social media accounts that promote the company’s products. The accounts also occasionally display personal content (e.g., public happy birthday messages the founder sends to his spouse). The company fires the founder and then the company claims it owns the accounts. If the founder says he owns the accounts, how should a court resolve that dispute?

The answer to this question is helpful in resolving actual disputes such as this, and perhaps even more helpful in setting up documentation and procedures to prevent such a dispute in the first place.

In the recent case of In re: Vital Pharmaceutical, the court considered whether certain social media accounts that a company’s founder and CEO used were property of the company’s bankruptcy estate under Bankruptcy Code § 541. Though this was a bankruptcy case, the analysis is useful in other contexts to determine who owns a social media account. The court held that various social media accounts (including Twitter, Instagram and TikTok accounts the CEO used) belonged to the company.

In reaching this decision, the court recognized a “dearth” of legal guidance from other courts on how to determine account ownership when there is a dispute. It noted the case of In re CTLI, LLC, 528 B.R. 359 (Bankr. S.D. Tex. 2015) but expressed concern that this eight year old case did not adequately address the current state of social media account usage, particularly in light of the rise of influencer marketing.

The court fashioned a rather detailed test:

Are there any agreements or other documents that show who owns the account? Perhaps an employee handbook? If so, then whoever such documents say owns the account is presumed to be the owner of the account.
But what if there are no documents that show ownership, or such documents do not show definitively who owns the account? In those circumstances, one should consider:
- Does one party have exclusive power to access the account?
- Does that same party have the ability to prevent others from accessing the account?
- Does the account enable that party to identify itself as having that exclusive power?
If a party establishes both that documents show ownership and that a party has control, that ends the inquiry. But if one or both of those things are not definitively shown, one can still consider whether use of the social media account tips the scales one way or the other:
- What name is used for the account?
- Is the account used to promote more than one company’s products?
- To what extent is the account used to promote the user’s persona?
- Would any required changes fundamentally change the nature of the account?

Companies utilizing social media accounts run by influental individuals with well-known personas should take guidance from this decision. Under this court’s test, creating documentation or evidence of the account ownership would provide the clearest path forward. Absent such written indication, the parties should take care to establish clear protocols concerning account control and usage.

In re: Vital Pharmaceutical, 2023 WL 4048979 (Bankr. S.D. Fla., June 16, 2023)

June 13, 2023 Litigation, Section 230

Amazon gets Section 230 win over alleged defamatory product review

Customer ordered a scarf from plaintiffs’ Amazon store. Customer left a review claiming the scarf was not a real Burberry. When neither customer nor Amazon would take down the review, plaintiffs (the Amazon store owners) sued for Amazon for defamation. The lower court dismissed on Section 230 grounds. Plaintiffs sought review with the Eleventh Circuit which affirmed the dismissal in a non-published opinion.

Section 230 (a provision in federal law found at 47 U.S.C. 230 which gives legal immunity to many online services) provides that “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Because the lawsuit sought to treat Amazon (a provider of an interactive computer service) as the publisher of information (the product review) provided by another information content provider (customer), this immunity applied to protect Amazon from liability.

Specifically, the court held:

Amazon is an interactive computer service provider. Amazon’s website allows customers to view, purchase, and post reviews online, and therefore provides computer access by multiple users similar to an online message board or a website exchange system.
Amazon was not responsible for the development of the offending content. According to the complaint, defendant wrote the allegedly defamatory review, and therefore she functioned as the information content provider.
Roommates.com is not applicable, as the complaint here alleges that defendant wrote the review in its entirety.
Plaintiffs seek to hold Amazon liable for failing to take down defendant’s review, which is exactly the kind of claim that is immunized by Section 230 — one that treats Amazon as the publisher of that information

McCall v. Amazon, No. 22-11725 (11th Cir., June 12, 2023)

McCall_v_Amazon

What is a copyright license and why do you need one?

A copyright license is a formal agreement that allows another party to exercise rights in a copyright-protected work legally, which would otherwise infringe on the copyright owner’s exclusive rights. This agreement can be limited or extensive, temporary or perpetual, depending on the terms upon which the parties agree. A license does not transfer the copyright ownership; it simply grants specific permissions to the licensee. Features of a copyright license often include:

The scope of use: This sets forth which rights the licensee may exercise. It could specify whether the licensee can reproduce, distribute, publicly perform, display, or create derivative works from the copyrighted material.
Geographic location: The license might provide where the copyrighted material can be used.
Duration: This sets forth how long the licensee can exercise rights in the copyrighted material.
Exclusivity: It indicates whether the copyright owner can grant similar licenses to others.

Absent certain limited situations such as fair use, need a copyright license to legally exercise rights in someone else’s copyrighted work. Infringing on a copyright – using it without permission – can lead to legal consequences, including liability in court and the obligation to pay the other side’s attorney’s fees. For businesses, obtaining a copyright license can help them use, incorporate, and benefit from a copyrighted work, such as software, a piece of music, or a photograph, while respecting the legal rights of the copyright owner.

The licensing process also facilitates economic growth and cultural exchange by providing a legal framework for creators to monetize their work and for users to access and incorporate it into their own creations. For the creator, licensing can provide a source of income and allows it to control how and where its work is used. For the user, the license offers a way to legally and ethically utilize a work that adds value to its own product, service, or project.

See also:

Intellectual property issues in a speaker’s agreement