Category: Uncategorized

June 26, 2008 Copyright, Uncategorized

Court tosses abuse of process claim brought by former file sharing defendant

Chan v. Priority Records, LLC, No. 07-15449, 2008 WL 2447147 (E.D. Mich. June 18, 2008)

Priority Records sued Candy Chan for copyright infringement, claiming she used iMesh to download and trade music files. The record company withdrew the suit when Ms. Chan told them it was her daughter that traded the files. The daughter became a defendant too, but that case was thrown out on a procedural issue.

Ms. Chan tried to recover her attorney’s fees in the copyright lawsuit against her, but the court denied the request. So she filed her own lawsuit against Priority Records, its law firm, and Settlement Support Center, alleging abuse of process and violation of the Racketeer Influenced and Corrupt Organizations Act (RICO).

The defendants moved to dismiss. The court granted the motion.

It held that Ms. Chan’s claims could have — and, pursuant to Fed. R. Civ. P. 13(a) should have — been brought as compulsory counterclaims. Ms. Chan had raised these issues (but did not file the counterclaim) in the underlying copyright suit. Most of the allegations in this suit alleged illegal conduct occurring prior to the filing of the underlying copyright suit. And many of the allegations involved only Ms. Chan’s daughter, not Ms. Chan herself.

June 9, 2008 Copyright, Uncategorized

Ben Stein’s “Expelled” film permitted to use clip from Lennon’s “Imagine”

Judge Stein of the U.S. District Court for the Southern District of New York ruled last week that use of portions of the song “Imagine” in the film “EXPELLED: No Intelligence Allowed” were protected as fair use. Plaintiffs Yoko Ono and record label EMI sued Defendants (the producers of the film) for copyright infringement seeking an injunction to stop the use. After hearing oral arguments and viewing the movie, the Court found that the Plaintiffs failed to meet the burden of showing irreparable harm since “on the basis of the current record, defendants are likely to prevail on their affirmative defense of fair use.”

“Expelled”, a full-length movie on intelligent design narrated by Ben Stein uses a 15-second clip of the song with the words “nothing to kill or die for, and no religion too” transposed on the screen over black and white archive sequences (including a military march and a close up of Stalin). Immediately preceding the excerpt several speakers express the hope that science will diminish religion. In a voiceover, Stein notes the speaker “would like you to think he’s being original but he’s merely lifting a page out of John Lennon’s songbook.”

According the one producer, “the film undertakes to inspire viewers to participate in the scientific, political, cultural, and religious debates surrounding [intelligent design].” Defendants obtained permission to include every song in the movie except Imagine. Defendants timed the films release to coincide with state “Academic Freedom” bills (which permit teachers to criticize the theory of evolution.)

The Court first determined that Plaintiffs established a prima facie case of copyright infringement by showing (1) ownership of a valid copyright and (2) unauthorized copying. Accordingly, absent the injunction there is a presumption of irreparable harm. Turning next to Defendants defense of fair use, the Court held that (quoting Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 and U.S. Const. art. I, § 8, cl. 8), that “some opportunity for fair use of copyrighted materials [is] necessary to fulfill copyright’s very purpose, ‘[t]o promote the Progress of Science and useful Arts. . . ‘.”

Taking the fair use factors into consideration, the Court held that: (1) the use of Imagine is not merely exploitative, and since the movie stimulates debate, the commercial purpose of “Expelled” weighs weakly against fair use (Defendants’ use is transformative and for purposes of criticism and commentary, i.e., “what the filmmakers see as the naïveté of John Lennon’s views [in that] ‘Imagine’ is a secular anthem caught in a loop of history recycling the same arguments from years past through to the present,” thus “it is not necessary that defendants [transform] the music or lyrics of the song”, nor that Defendant’s could have made the film without the clip, moreover, the failure to seek permission did not weigh against fair use (2) the film comments on the song, and does not exploit its creative virtues, (3) “both quantitatively and qualitatively, the portion of ‘Imagine’ that defendants copy is reasonable in light of their purpose for doing so [, and thus] weighs in favor of fair use”, and (4) there is absolutely no evidence that the film’s use will usurp the market for “Imagine.”

Balancing the potential hardships to the parties if an injunction were issued, the evidence favored Defendants, especially since Plaintiffs were not likely to lose any licensing revenue. Unless Yoko and EMI expel this decision on appeal, they will not Win Ben Stein’s Money.

Case is: Lennon v. Premise Media, No. 08-3813

May 16, 2008 Copyright, Uncategorized

Court reconsiders “making available” in file-sharing case

A U.S. District Court judge in Minnesota presiding over the case of Capitol Records Inc. v. Jammie Thomas has issued an Order breathing new life into the Defendant’s case.

Thomas was found liable for copyright infringement for activities over the KaZaA network, and had moved for either a new trial or lowering of damages on the ground that the amount of the jury award ($220,000 for 24 songs at $9,250 each) was excessive and a violation of due process. The Court’s Order however, stated that it was “contemplating granting a new trial for a different reason”, because Jury Instruction No. 15 which stated that that “[t]he act of making copyrighted sound recordings available for electronic distribution on a peer‐to‐peer network, without license from the copyright owners, violates the copyright owners’ exclusive right of distribution, regardless of whether actual distribution has been shown” was contrary to prevailing case law. Specifically, the Court noted that binding Eighth Circuit precedent from National Car Rental System, Inc. v. Computer Associates Int’l, Inc., required that “[i]nfringement of [the distribution right] requires an actual dissemination of either copies or phonorecords…”

The order notes that this precedent appears to require “actual dissemination” but that neither party brought this to the Court’s attention. The Order goes on to state that “at least one authority relied upon by Plaintiffs…Atlantic Recording Corp. v. Howell [blogged here], has since been vacated, and, on reconsideration, that court has now held that making sound recordings available for distribution is not actionable under the Copyright Act and that ‘actual distribution’ is required.” The Court invited amicus briefs on the issue, and will hear arguments in the case on July 1, 2008.

Case is: Civil File No. 06‐1497 (MJD/RLE)

May 9, 2008 Trademarks, Uncategorized

A look at some keyword cases and a PPC class action suit

Court orders use of “negative keywords”

Orion Bancorp, Inc. v. Orion Residential Finance, LLC, No. 07-1753, 2008 WL 816794 (M.D. Fla., March 25, 2008)

Plaintiff Orion Bancorp, Inc. is a bank operating under the ORION name and registered trademark since 2002. Defendant Orion Residential Finance, LLC provides financial and real estate related services, and used the term “Orion” in interstate advertising and in the domain name “orionresidentialfinance.com” without Orion Bancorp’s authorization or consent.

The court entered an agreed permanent injunction, ordering Orion Residential Finance to refrain from any and all use of the term “Orion”. The defendant was prohibited from purchasing the word “Orion” as a keyword to trigger sponsored advertising. Moreover, it was required to activate “Orion” as a “negative keyword” (specifically preventing Orion Residential Finance’s ads from appearing when one searches using the terms “Orion”).

N.D. Cal.: Competitor’s trademark as keyword causes initial interest confusion

Storus Corp. v. Aroa Marketing Inc., 2008 WL 449835 (N.D. Cal. Feb. 15, 2008).

Plaintiff Storus Corporation (“Storus”) sued Defendants Aroa Marketing, Inc. (“Aroa”) and Skymall, Inc. (“Skymall”) for trademark infringement based on the defendants’ use of Storus’ mark “Smart Money Clip” to trigger sponsored listings. Storus sells its patented Smart Money Clip, and Aroa sold competing products under its Steinhausen mark which were marketed as the “Smart Money Clip”. Aroa tried unsuccessfully to argue that Storus’ mark was a descriptive term not entitled to protection (but offered no evidence of lack of secondary meaning, i.e., it did not prove consumers do not think of Storus when they see the Smart Money Clip mark).

The Court found that Aroa’s use of Storus’ mark in the sponsored ad caused initial interest confusion. In 11 months, the ad was displayed 36,164 times in response to a search for “smart money clip,” resulting in 1,374 clicks on Aroa’s ad. The court found that the marks were identical, were used on the same type of product, and were marketed via the Internet. (Even though Aroa’s mark appeared in the ad, Storus’ mark appeared first, was larger, and was underlined).

11th Circuit: Competitor’s Trademark as Keyword Likely to Cause Confusion

North American Medical Corp. v. Axiom Worldwide, Inc., 2008 WL 918411 (11th Cir. April 7, 2008)

Eric Goldman has a thorough report on his Technology & Marketing Law Blog of a case where the defendant’s use of the plaintiff’s ACCU-SPINA and IDD THERAPY trademarks in metatags constituted use in commerce, and thus trademark infringement where a Google search listed the defendant as the second most relevant organic search result (below the plaintiff). In a footnote, the court did hint that if the defendant’s website included an explicit comparative advertisement, things might have come out differently.

Possible Class Action Suit against Google and PPC Groups

Finally, Sarah Bird reports on SEOmoz.org that a class action trademark and ACPA lawsuit against Google and other domain parking agencies will move ahead. (Goolge’s adsense program contributes to the pay-per-click links on “parked”, i.e., recently acquired, or tasted domain names). The Plaintiff’s are seeking to hold them liable for these PPC links which may offer competing goods. Though for Google’s part, it notes on its FAQ that it is not responsible for the domain names on which its adsense ads appear, it seems disingenuous to suggest that their algorithms are not behind the PPC links that appear. Google’s method for trademark owners to object to sponsored links places the burden for policing this practice on mark owners.

April 30, 2008 Copyright, Uncategorized

Distribution under the Copyright Act requires more than merely making copies available

Atlantic Records v. Howell, No. 06-2076 (D. Az. April 29, 2008)

Several record companies, including Atlantic Records, sued Pamela and Jeffrey Howell after the record companies learned, through their private investigator, that the Howells used KaZaA to share files. After discovery in the matter closed, the record companies moved for summary judgment, asserting that the Howells infringed the copyright in the sound recordings merely by making them available for the public to copy. The court found in favor of the Howells and denied the motion.

The Copyright Act provides that an owner of a copyright enjoys certain exclusive rights in connection with the work including, among other things, the exclusive right to distribute copies of the work. The record companies case was a bit problematic on this point, as the only evidence of record was that the allegedly infringed files were in KaZaA’s shared folder. There was no indication that actual copies of the files had been transferred.

In support of the argument that making the sound recordings available was an unauthorized distribution, the record companies relied heavily on Hotaling v. Church of Jesus Christ of Latter-Day Saints, 188 F.3d 199 (4th Cir. 1997). In Hotaling, the court held that a library which created a number of unauthorized copies of a work and made those copies available in its various branches could be liable for infringement, despite the absence of evidence that any member of the public had viewed the unauthorized copies.

The Hotaling decision was based largely on policy grounds. The library kept no records of who had viewed the unauthorized copies, thus the plaintiff could not provide direct evidence that the works were distributed to the public. The court opined it would be against sound policy for defendants to avoid liability through the omission of record keeping.

The court in this case rejected and criticized the Hotaling decision, holding that evidence of making a copy available “only shows that [a] defendant attempted to distribute the copy, and there is no basis for attempt liability in the statute, no matter how desirable such liability may be as a matter of policy.”

The recording companies argued that although the term “distribution” is not explicitly defined in the Copyright Act, it is synonymous with the term “publication,” which the statute defines to include “[t]he offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display.” 17 U.S.C. § 101. In other words, if the Howells offered to distribute the copyrighted works to the public for purposes of further distribution, they distributed the works within the meaning of the Copyright Act.

But the court looked to the plain meaning of statutory provision granting an exclusive right to distribute, which requires an identifiable copy of the work to change hands in one of a number of prescribed ways (e.g., sale or lease) for there to be a distribution. The court found it untenable that the definition of a different word in a different section of the statute was meant to expand the meaning of “distribution” and liability to include offers to distribute.

April 26, 2008 DMCA, Evidence, Uncategorized

Emails held sufficient to amend employment contracts in NY

[Brian Beckham is a contributor to Internet Cases and can be contacted at brian.beckham [at] gmail dot com.]

The New York Court of Appeals, 1st Division recently upheld a lower court ruling that a series of “signed” emails is a sufficient writing to modify a contract.

Plaintiff Stevens sold his business (L-S) to Defendant Publicis under two contracts: a stock-purchase agreement including an initial up-front payment, and an employment contract whereby Plaintiff would continue as Chairman and CEO of the new company (PDNY) for three years with additional contingent fees based on earnings. Shortly after the acquisition, problems arose, including loss of a major client and failure to meet revenue and profit targets. Approximately halfway into the three-year term, Plaintiff was removed as CEO and presented 3 options for continued employment. The then-acting CEO of PDNY (Bloom) exchanged a series of emails with Plaintiff. The culmination of this exchange was an email from Bloom on behalf of PDNY describing his understanding of the parties’ terms regarding Plaintiff’s new role at PDNY that Plaintiff’s time would be allocated 70% towards new business development, 20% in maintaining former L-S clients, and 10% devoted to management/operations of PDNY.

Plaintiff responded the next day by email stating: “…I want to thank you again for helping me…That being said, I accept your proposal with total enthusiasm and excitement…” Bloom for PDNY replied the same day: “I am thrilled with your decision…all of us will continue to work in the spirit of partnership to achieve our mutual goal.”

The bottom of each email had the typed name of the sender.

The lower court held, and the Court of Appeals sustained that the parties had agreed in writing (by their emails) to modify Plaintiff’s duties under his employment contract, specifically because both sides expressed their unqualified acceptance of the modification to the contract. (Bloom’s email set forth the terms of the proposed contractual modification, Plaintiff accepted those terms by his email, and Bloom’s reply memorialized that acceptance). Plaintiff also confirmed his acceptance of the modified contract terms in another email to PDNY’s COO.

The Court of Appeals held that Plaintiff’s (and Bloom’s) emails “constitute ‘signed writings’ within the meaning of the statute of frauds, since plaintiff’s name at the end of his e-mail signified his intent to authenticate the contents.” Moreover, the signed writings (the emails) satisfied a requirement of the original employment contract that any modifications must be signed by all parties, i.e., the several emails served as counter-signatures. The same result may not have been reached in a different state, but at least in NY, “signed” emails can be valid for contract purposes.

Case is: Stevens v. Publicis, S.A., 602716/03.

April 13, 2008 Uncategorized

On Shyftr and copyright infringement

Over the past few days a discussion has erupted about the recently-noticed RSS feed aggregator slash social networking site called Shyftr. The gist of the discussion — which can properly be characterized as a controversy — is about how Shyftr republished entire posts from others’ RSS feeds without obtaining prior consent. Rather than try to link to all the great posts out there addressing the issue, just go to this del.icio.us page to see my collection of links on the subject.

A lot of the discussion addresses the concern of Web publishers (mainly bloggers) about where feedback should reside. Services like Shyftr and Friendfeed provide the mechanism for users to comment (and thereby engage in a conversation) within those services, without any way for the original publisher to be directly notified of that disscussion. Brian Solis, whose post about Shyftr was the first to make me aware of this issue, addresses the conundrum by observing that “the conversation has left the building.”

The other particularly unsavory bit of this Shyftr kerfuffle is the intimation that publishing entire feeds in the manner Shyftr was doing it is content theft. Tony Hung may have expressed that concern best. As an intellectual property lawyer, I read intimations of content theft as intimations of copyright infringement.

For as long as RSS has been around, or at least for as long as I’ve cared about RSS, lawyers have been speculating about where the edge of the envelope is when it comes to the manner of republication of feed content. Denise Howell in particular has artfully, and I think correctly, couched the question as one involving the doctrine of “implied license.”

One of the leading cases on implied copyright licenses is Effects Associates, Inc. v. Cohen, 908 F.2d 555 (9th Cir. 1990). The court held that the defendant horror movie producer was not an infringer when he used some footage he’d commissioned from the plaintiff special effects company, because the defendant had an implied license. But there was a real relationship between the parties — the allegedly infringed content was not merely appropriated from a source at large (like the Web). The special effects company “created a work at defendant’s request and handed it over, intending that defendant copy and distribute it.” It was that kind of situation that gave rise to an implied license. And the relation of the parties, along with their actions, was critical.

For this situation, Eric Berlin hits the nail on implied license’s coffin right on the head when he states that:

[A]n RSS feed still has elements of control. Publishers can advertise on their RSS feed for one, readers can click back to the original story to comment, and importantly publishers can track RSS feed subscribers and count those numbers against their overall “reach” in the blogosphere and on the Internet.

Those aspects underlie the intent that an average feed publisher will have when he or she puts content out there in a feed. It’s this intent that drives and defines the conduct of the publisher. Use of a full feed by another that eliminates these aspects of control is contrary to the publisher’s conduct, and in my book could hardly be defensible on an implied license basis.

But it’s a tempest in a teapot. Shyftr has announced on its blog that it is backing off from republishing full feeds. Wise move. Not all of us agree there should be an invitation to steal our content. Copyright protection, regardless of how antiquated some may want to characterize it as, provides some great peace of mind and gives a valuable means of control.

Shyftr’s change in course has probably been due in part to rumblings of DMCA takedown notices on the way. Interestingly, though, Shyftr doesn’t look like it has cared to try to put itself in the DMCA safe harbor. As of the time of this post, it does not provide any information on its site about a designated agent for receiving DMCA takedown notices. (See its Terms of Use and About pages.) Cavalier or just precarious?

April 3, 2008 Section 230, Uncategorized

How the Roommates.com decision is good for Section 230

Earlier today the Ninth Circuit, en banc, issued its opinion in the case of Fair Housing Council of San Fernando Valley, et al v. Roommate.com, LLC. It is a long and detailed opinion, authored by Judge Kozinski, and as characterized by my friend Michael Erdman, leaves Roommates.com largely unprotected by immunity under 47 U.S.C. 230. To learn everything you need to know about the majority opinion without actually reading the case, read Michael’s post here. There’s no need for me to duplicate efforts in summarizing the case, as there’s little I could add in that regard.

This case is pretty big news in Internet law circles, and more than one person has asked me today what my take on it is. I actually don’t have much to say about whether the Ninth Circuit got the legal analysis right. They probably did. Judge Kozinski and his colleagues in the majority are brighter hungover than I am at full stride, so I’m in no real position to critique their analysis. Instead, my take on the case is a pragmatic, and I shudder to say, a political one.

I hope you’ve taken my suggestion and read Erdman’s summary of the case before getting to this point in this post, because you need to know what the facts are. The subject matter dealt allegations of violation of the fair housing laws. That’s a touchy issue, involving race, religion, sexual orientation, family status, etc. Smart people don’t touch those kinds of issues with a ten foot pole.

Had the Ninth Circuit ruled in Roommates.com’s favor, think about the ways that outcome could have been spun. Imagine, shall we say, a “progressive” Congressman standing up in Washington and saying, hey, with this Section 230 scheme, we give a license to Web site operators to run hate mills, build up bastions of bigotry, and sanctuaries for racism. In short, a Roommates.com victory could have given a battalion’s worth of ammunition — in the form of emotional, irrational rhetoric — to Section 230’s critics. Some in Congress would have called for its head.

This didn’t dawn on me until the other day when I was talking with a very liberal colleague. He knew nothing of Section 230 other than what I had explained to him in the previous five minutes (including a mention of the Roommates.com 3-judge panel decision), and he said something to the effect of, “wow, when it starts touching on issues like fair housing, Congress is bound to step in and not give the Web sites a free ride.”

So maybe you see where I’m going with this. Whether it’s right or wrong from a legal analysis standpoint, today’s decision stands for the proposition that online systems alleged to facilitate the violation of some touchy rights don’t always get a free ride.

The real irony, and for me the “take” on the case, is that although Section 230 immunity appears to be diminished a bit by the decision (look at how few circuit court opinions there are where the defendant lost), the defense loss is really a bullet dodged. By declining to hold that Section 230 provided immunity, the Court kept Section 230’s neck off the political chopping block. What a tragedy it would be, indeed, for political issues to cause our Congress to roll back a provision that has been so integral to the development of the Internets.

March 17, 2008 Uncategorized

Seventh Circuit sides with Craigslist in Section 230 case

The legal blogosphere is abuzz with last Friday’s ruling in the case of Chicago Lawyers’ Committee for Civil Rights Under Law, Inc. v. Craigslist, Inc., — F.3d —-, 2008 WL 681168 (7th Cir. March 14, 2008). In a highly-anticipated opinion, Judge Easterbrook upheld the district court’s opinion, holding that under 47 U.S.C. 230, Craigslist could not be treated as the “publisher” of third party postings that allegedly violated the Fair Housing Act.

With life outside of blogging staying in the way of much of my activity here, I’m not going to be able to give the case any substantive analysis for awhile. And there’s a lot of quality information out there already on the case. Here are some links to just about everything you need to know about the opinion:

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