Copyright – Page 9 – Attorney Evan Brown

May 27, 2014 Copyright

No infringement means no injunction in software dispute

Former members of a limited liability company, who participated in the development of four pieces of software while a part of the company, sued the LLC and its remaining members for copyright infringement. Defendants moved for summary judgment, arguing that plaintiffs’ infringement claims must fail because defendants had not used the allegedly copyrighted software outside of the licensing agreements the LLC signed while plaintiffs were still with the company. The court granted defendants’ summary judgment motion.

Plaintiffs agreed that the software had not been used outside the license agreements with companies the LLC had entered while plaintiffs were with the company. But plaintiffs still sought injunctive relief with respect to their infringement claims.

To demonstrate copyright infringement, plaintiffs were required to prove “(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 362, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991)). In this case, plaintiffs essentially conceded that the second element of the Feist test was not met.

The court cited Arista Records, LLC v. Doe 3, 604 F.3d 110, 117 (2d. Cir.2010)) to note that in the second Feist element, “the word copying is shorthand for the infringing of any of the copyright owner’s five exclusive rights described in 17 U.S.C. § 106”. Those exclusive rights allow the owner to: (1) reproduce the copyrighted work; (2) prepare derivative works based upon the copyrighted work; (3) distribute copies of the copyrighted work; (4) perform the work publicly; and (5) display the copyrighted work. Because plaintiffs conceded that defendants had not used the software outside of the license agreements with its customers that were made while plaintiffs were still a part of the LLC, defendants had not infringed on plaintiffs purported exclusive rights.

Plaintiffs nevertheless claimed that they were entitled to injunctive relief to prevent defendants’ potential future use of the copyrighted software. Plaintiffs were required to show that: (1) they had suffered an irreparable injury; (2) that remedies at law were inadequate to compensate that injury; (3) that the balance of hardships warranted a remedy in equity in favor of plaintiffs; and (4) that the public interest would not be disserved by a permanent injunction.

Here, plaintiffs conceded that they had not suffered an injury – the copyrights had not been infringed. Instead, plaintiffs were arguing for a prospective injunction to prevent defendants from infringing upon a copyright for which there was no evidence defendants intended to infringe. The court denied the injunction, holding that a prospective injunction could be entered only on the basis of current, ongoing conduct that threatened future harm.

Brightharbour Consulting, LLC v. Docuconsulting, LLC, 2014 WL 1415186 (N.D.Ga. April 14, 2014)

Evan Brown is an attorney in Chicago, advising clients in technology transactions, intellectual property disputes, and other matters involving the internet and new media.

February 14, 2014 Contracts, Copyright

Court sides with software developer in open source dispute

Case provides rare opportunity to get court’s analysis of GPL.

Plaintiff wrote an XML parser and made it available as open source software under the GPLv2. Defendant acquired from another vendor software that included the code, and allegedly distributed that software to parties outside the organization. According to plaintiff, defendant did not comply with the conditions of the GPL, so plaintiff sued for copyright infringement.

Defendants moved to dismiss for failure to state a claim. The court denied the motion.

Plaintiff claimed that defendant directly infringed its copyright by distributing the software without any attribution to plaintiff, without plaintiff’s copyright notice, without reference to plaintiff’s source code, and without any offer to convey the source code.

Defendant argued that it did not violate the terms of the GPL because its “distribution” of the software was merely internal, mainly to its own financial advisors. Accordingly, defendant argued, the requirements under the GPL to, among other things, attribute plaintiff and provide the source code were not triggered.

The court rejected defendant’s argument, looking to the allegations in the complaint that defendant distributed the software to it vendors in India, as well as providing it to “thousands of non-employee financial advisors.”

Despite the popularity of open source software, not a lot of courts have interpreted and applied the provisions of open source licenses. This case — if it does not settle — provides a rare opportunity to see serious legal treatment of the oft-used GPL.

XimpleWare Corp. v. Versata Software, Inc., 2014 WL 490940 (N.D.Cal. February 4, 2014)

Evan Brown is a Chicago technology and intellectual property attorney helping software vendors and customers alike navigate the many issues pertaining to technology development and licensing.

February 13, 2014 Copyright

Unjust enrichment claim over unauthorized use of software was not preempted by the Copyright Act

The Copyright Act is a federal law, and is drafted to “preempt” state laws that purport to give individuals rights that are “equivalent” to rights granted under the Copyright Act. The purpose of this preemption is to displace the effect of any equivalent state law, so that the federal framework gets to deal exclusively with copyright.

So when a plaintiff goes to court suing for copyright infringement and also adds a state law claim against the defendant based on the same underlying facts, defendants routinely move to dismiss that state law claim as preempted by the Copyright Act.

That is what happened in a recent case involving a plaintiff software developer who filed a copyright infringement case against a company for whom he had done some work. He added an “unjust enrichment” claim based on state law, which defendants moved to dismiss. But the court denied the motion, holding that in this situation, the unjust enrichment claim was not dealing with rights that were equivalent under the Copyright Act.

Plaintiff’s unjust enrichment claim was based on the fact that he had not been paid any money for the development work he provided to defendants. In other words, he delivered the copyrighted software, which defendants used without paying him. Sounds a lot like copyright infringement, doesn’t it? Or, more precisely, it sounds like the rights he was claiming were equivalent to those provided under the Copyright Act.

But the court held otherwise, namely, that plaintiff had pled an “extra element” that rendered his unjust enrichment claim to not be equivalent to rights under the Copyright Act.

The court drew an important distinction within the doctrine of unjust enrichment, between “implied-in-law” (quasi-) contracts, and “implied in fact” contracts. An implied-in-fact contract claim passes the threshold of having an “extra element” that defeats a preemption challenge, while an implied-in-law contract does not.

An implied-in-law contract is a “fictional” contract created by a court for equitable, not contractual, purposes. It is not an actual contract, but is a legal substitute formed to impose equity between two parties. An implied-in-fact contract, on the other hand, is indeed a contract that is agreed to by non-verbal conduct, rather than explicit words.

Infringement is the unauthorized use of a work, and a court applying an implied-in-law contract would simply be stepping in to remedy an injustice of that infringement. That is why an unjust enrichment claim based on an implied-in-law contract would be preempted. But the implied-in-fact contract has more to it – actual conduct (a factual reality) that is more than just the conduct of the infringement that took place. That is why an implied-in-fact contract claim of unjust enrichment passes the no-preemption test.

(Compare this to the 2010 case of Christen v. Iparadigms that dealt with Turnitin.com.)

Mahavisno v. Compendia Bioscience, Inc., 2014 WL 340369 (E.D.Mich. January 30, 2014)

February 11, 2014 Copyright, Unfair Competition

Co-founder liable for sending company’s social media followers to new competing company’s Facebook page

The owners of an LLC successfully published a magazine for several years, but the business declined and the company eventually filed bankruptcy. While the bankruptcy proceedings were still underway, one of the owners started up a new magazine publishing the same subject matter. He essentially took over the old company’s website to promote the new magazine. And he posted to the LLC’s Facebook page on three separate occasions, “reminding” those who liked the page to instead like his new company’s Facebook page.

The bankruptcy trustee began an adversary proceeding against the owner asserting, among other things, breach of fiduciary duty, unfair trade practices, and copyright infringement. The bankruptcy court held a trial on these claims and found the owner liable.

On the breach of fiduciary duty claim, the court equated the “reminding” of Facebook users to visit and like the new company’s Facebook page was equivalent to using the company’s confidential information. Similarly, as for the unfair trade practices claim (under the Louisiana Unfair Trade Practices Act), the court found that social media is “an important marketing tool,” and held that “taking away followers of [the old company] and diverting them to [the Facebook page of the new company]” was an unfair trade practice.

On the copyright infringement claim, the court found that the images and articles on the website belonged to the old company under the work made for hire doctrine and that the owner had not obtained consent nor paid compensation for their use in connection with the new enterprise.

In re Thundervision, L.L.C., 2014 WL 468224 (Bkrtcy.E.D.La. February 5, 2014)

Photo credit: Flickr user 1lenore under this Creative Commons license.

February 7, 2014 Copyright, DMCA

Must a service provider remove all content a repeat infringer uploaded to qualify for the DMCA safe harbor?

459px-Enjoy_Don't_Destroy Does an online service provider forfeit the safe harbor protections of the Digital Millennium Copyright Act if, when terminating the account of a repeat infringer, it does not delete all content the repeat infringer uploaded — infringing and noninfringing alike? A recent decision involving the antique internet technology Usenet sheds light on an answer.

Active copyright plaintiff Perfect 10 sued Usenet provider Giganews for direct and secondary liability for hosting allegedly infringing materials on the Giganews servers. Giganews asserted the safe harbor of the DMCA (17 U.S.C. 512) as an affirmative defense. Perfect 10 moved for summary judgment on whether the safe harbor applied – it argued that the safe harbor did not apply, Giganews argued that it did. The court denied Perfect 10’s motion.

Perfect 10 asserted that Giganews had not reasonably implemented a policy to terminate the accounts of repeat infringers as required by 17 U.S.C. 512 (i)(1)(A). One of the arguments Perfect 10 made was that Giganews did not reasonably implement its repeat infringer policy because Giganews terminated the accounts of the infringers but did not also delete all the content the infringers had uploaded.

The court was not persuaded that § 512(i)(1)(A) requires a service provider to disable or delete all content a repeat infringer has ever posted. The plain language of the statute requires “termination … of subscribers and account holders,” not the deletion of content. And because a requirement of taking down all content, not just infringing content, would serve no infringement-preventing purpose, the court held that there was no justification for reading such a requirement into the statute.

Perfect 10, Inc. v. Giganews, Inc., — F.Supp.2d —, 2014 WL 323655 (C.D.Cal. January 29, 2014)

February 3, 2014 Copyright, Trademarks, Unfair Competition

No copyright protection for two word phrase

In a final pretrial order, plaintiff stated that “to this day [defendant] persists in using [plaintiff’s] copyrighted ‘usurpassed performance’ language on its packages.” Defendant filed a motion in limine (a motion to exclude evidence) to preclude plaintiff from introducing evidence or putting on testimony that would infer or suggest the phrase “unsurpassed performance” has been registered as a copyright.

The court granted the motion.

Under the Copyright Act, “[w]ords and short phrases such as names, titles, and slogans” are not subject to copyright. 37 C.F.R. § 202.1(a). The court looked to a number of cases in which short phrases had been denied copyright protection. For example, other courts had held that “Where Words Come Alive,” “Earth Protector,” “Chipper,” and “Retail Plus” were not copyrightable material.

One wonders whether plaintiff was really trying to assert some form of unfair competition or trademark infringement. The notion is worth entertaining for but a brief moment, till one realizes that laudatory phrases such as “unsurpassed performance” find no protection under trademark law either.

Predator International, Inc. v. Gamo Outdoor USA, Inc., 2014 WL 321069 (D.Colo. January 29, 2014)

January 31, 2014 Copyright

No copyright liability against founder of competing company for overseeing development of infringing website

After defendant left plaintiff’s employment to co-found a competing company, plaintiff sued defendant personally for copyright infringement based on the new company’s website’s resemblance to plaintiff’s website. The infringement theory was interesting – plaintiff alleged that defendant did not commit the infringement himself, but that he was secondarily liable for playing a significant role in the direct infringement by the new company’s employees.

Defendant moved to dismiss the copyright infringement claim. The court granted the motion.

There are two types of secondary copyright infringement liability: contributory liability and vicarious liability. A defendant is a contributory infringer if it (1) has knowledge of a third party’s infringing activity, and (2) induces, causes, or materially contributes to the infringing conduct. See Perfect 10, Inc. v. Visa Int’l Service Ass’n, 494 F.3d 788, 795 (9th Cir.2007) (quoting Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir.2004)). In the context of copyright law, vicarious liability extends beyond an employer/employee relationship to cases in which a defendant has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities. A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir.2011) (quoting Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 262 (9th Cir.1996)).

In this case, the court held that plaintiff had not alleged enough detail to state a claim of secondary liability against defendant. Instead, the complaint simply recited the elements of contributory and vicarious liability. Specifically, plaintiffs failed to allege:

That defendant was uniquely in possession of the original material on plaintiff’s website, but rather plaintiffs alleged that the material was publically available on the website for anyone to read and copy.
How defendant, as a non-employee (but founder) of the new company, was personally responsible for the content of the new company’s website. (Interestingly, the court held it was not sufficient to allege that defendant was a founder of the new company. Although plaintiffs alleged some factual details about what was actually copied from plaintiff’s website, they alleged no factual details as to defendant’s personal involvement in the infringement.)
Facts that suggested that defendant induced the new company to infringe plaintiff’s website.
Facts that suggested that defendant had the right to control and supervise the new company’s employees who were involved in the alleged infringement.

Plaintiff’s attempts to impose secondary liability were (if they had worked) a clever method for accomplishing the same objective as piercing the corporate veil. Granular control by the individual founder could be equated with the “alter ego” aspect of the veil-piercing analysis. The absence of such specific control by the individual defendant, however, left the possibility of liability only with the company.

BioD, LLC v. Amnio Technology, LLC, 2014 WL 268644 (D.Ariz. January 24, 2014)

January 30, 2014 Copyright, Evidence, Litigation

Does publication on the web give rise to “access” in copyright infringement analysis?

Plaintiff sued defendant for copyright infringement. Defendant moved for judgment on the pleadings (which is essentially the same thing as a motion to dismiss for failure to state a claim except it is after defendant files an answer). Defendant asserted that plaintiff had not pled copyright infringement because under the Seventh Circuit’s “substantial similarity” test to demonstrate infringement, plaintiff had not pled defendant had “access” to the allegedly infringed work.

The court rejected defendant’s argument and denied the motion for judgment on the pleadings on this issue.

In some copyright infringement cases, a plaintiff may not have direct evidence that the defendant committed infringement. In those situations, a finder of fact may infer that infringement has occurred when it is shown that:

the defendant had access to the copyrighted work; and
the accused work is substantially similar to the copyrighted work.

In this case, defendant argued it never had access to plaintiff’s designs that it was alleged to have infringed. But the court considered the online publication, 11 years ago, of plaintiff’s designs, to find access for purposes of the motion for judgment on the pleadings:

With regard to online publication, in 2003, [plaintiff] first published the [allegedly infringed work] at [its website]. The Internet already was widely used and accessible at that time. Because the non-movant is entitled to reasonable favorable inferences in evaluating a motion for judgment on the pleadings, the online publication is enough to establish access for purposes of denying [defendant’s] motion for judgment on the pleadings.

The court’s decision provides no meaningful analysis as to why publication on the web gives rise to access. It states the finding above in such a conclusory manner as if to indicate it sets forth some per se rule. But one is left to wonder whether other factual nuance would change the answer to the inquiry: What if publication were in 1993 rather than 2003, at a time when many, many fewer people were on the web? What if the publication were behind a paywall for which defendant had no authorization to pass? What if defendant pled it did not utilize the web for this sort of information, or, even more compellingly, not at all?

Skyline Design, Inc. v. McGrory Glass, Inc., 2014 WL 258564 (N.D.Ill. January 23, 2014)

Can a website be liable for linking to infringing content?

Gawker facing Grokster-like challenge in suit by Quentin Tarantino over leaked script.

gawkster The Hollywood Reporter has covered Quentin Tarantino’s copyright infringement lawsuit against Gawker for publishing links to leaked copies of the script of a yet-to-be-made Tarantino film. The complaint alleges that certain anonymous defendants are directly liable for infringement for uploading the script, and that Gawker is secondarily liable for the infringement.

Going after Gawker that way makes sense, because the site cannot be directly liable for infringement if it did not exploit any of Tarantino’s exclusive rights under Section 106 of the Copyright Act, viz.: the right to copy, distribute, publicly perform, publicly display, or make a derivative work.

None of those rights are implicated by simply publishing a link. So if Gawker is shown to be liable for copyright infringement, it will have to be derived from the direct infringement of the parties who uploaded the content, and/or the infringement occasioned by Gawker users who download the script.

These facts call for an analysis under the Supreme Court’s 2005 Grokster decision, which held that:

[O]ne who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.

The Grokster analysis gets some color in the Ninth Circuit (Tarantino’s suit is pending in federal court in California) in the 2013 case of Columbia Pictures v. Fung (the Isohunt case). In that case, the appellate court held that Isohunt was secondarily liable for the infringement occasioned by its users under the Grokster analysis. Like Gawker, Isohunt’s conduct did not implicate any of the plaintiffs’ Section 106 rights. Instead, its liability was premised on the conduct it undertook to direct users to the acquisition of infringing content.

Gawker is of course no stranger to controversy. Just last week we covered a Florida case dealing with Gawker’s First Amendment rights to publish excerpts of the Hulk Hogan sex tape. This bold move of publishing provocatively certainly continues that trend. But this time that move could face some serious Grokster-like consequences.

Copyright and the JFK Assassination

Fifty years ago today, which was of course long before smartphones with cameras, Abraham Zapruder filmed the assassination of President John F. Kennedy using his 8 millimeter color home movie camera. Not only did the Zapruder film become iconic, its subsequent treatment formed the basis for a later copyright case that presented some interesting issues.

A few days after the assassination, in exchange for $150,000, Zapruder assigned the copyright in the film to Life Magazine (actually its parent company Time Inc.). In 1967, Josiah Thompson wrote a book about the assassination that contained charcoal sketches copied from frames of the Zapruder film.

Time sued for copyright infringement. Defendants moved for summary judgment. The court granted the motion.

Among other things, defendants argued that the frames from the Zapruder film were not entitled to copyright protection in the first place because they lacked originality. The court rejected this argument, noting that:

The Zapruder pictures in fact have many elements of creativity. Among other things, Zapruder selected the kind of camera (movies, not snapshots), the kind of film (color), the kind of lens (telephoto), the area in which the pictures were to be taken, the time they were to be taken, and (after testing several sites) the spot on which the camera would be operated.

The case also had a fair use component. As is still the reality 50 years later, the court observed that “the [fair use] doctrine is entirely equitable and is so flexible as virtually to defy definition.” It cited an earlier decision that called the issue “the most troublesome in the whole law of copyright.”

The fair use analysis is particularly interesting in that it took place, obviously, before the 1976 Copyright Act, which codified the now well-known fair use factors. But it looked to the same language that is now in Section 107 of the Act, which then was merely a passed Hose Bill (H.R. 2512) but still under consideration by the Senate. It wasn’t until more than 10 years later that the factors actually became codified.

The court held that the fair use factors went in defendants’ favor. It noted the substantial public interest in having the fullest information available. And it concluded that people bought the book not for the Zapruder pictures, but because of the theory and explanation set forth in it, supported by the Zapruder pictures. Moreover, there was little, if any, injury to the copyright owner. There was no competition between plaintiff and defendants. And here is a theme that persists to this day, even as recently as the Google Book Search decision: “It seems more reasonable to speculate that the Book would, if anything, enhance the value of the copyrighted work; it is difficult to see any decrease in its value.”

Time Inc. v. Bernard Geis Associates, 293 F.Supp. 130 (D.C.N.Y 1968)