Finally, someone uses “IP Troll” properly

Lee Cheng, Chief Legal Officer of online retailer Newegg, said:

“A troll is a type of entity that doesn’t sell a product, or transfer value of any sort. All they offer is the right to not be sued. It’s protection money. To put it bluntly, it’s extortion.” (source)

Righthaven produced nothing but lawsuits. The term is properly applied to them. Porn companies, record companies, and other companies trying to stop infringement, or trying to recoup losses from infringement are not properly so-labeled.

Primer On the Law of User-Generated Content

This blog often features articles on developments in § 230 of the Communications Decency Act, or the Digital Millennium Copyright Act, but the significance – and nuance – of such rulings may not be immediately appreciable to many readers.  Hopefully such posts are helpful to lawyers.  However, they are important to non-lawyers and even only casual users of the Internet.  In order to provide retroactive context to those articles and background for future ones, we provide this brief history of Internet-related laws.

…

In the two decades since the Internet reached large-scale consumer adoption, its role in business, recreation and every facet of life has been largely taken for granted.  However, it interacts with the law in a number of ways that some might not expect.  With services such as Google, Facebook and YouTube thoroughly integrated with every facet of life – with established brands as banal as Tide laundry detergent vying to be “liked” by you on facebook, to political campaigns posting videos directly to the user-generated video site – that it is easy to overlook the patchwork of federal law that allows the internet to operate.

Federal law embraced the internet with some of its existing measures, such as the Cable Privacy Act of 1984, 47 U.S.C. § 551 (requiring cable companies – which have today become internet service providers including Time Warner and Comcast – to provide notice to subscribers before turning over personally identifying information pursuant to a lawful subpoena).  This law remains particularly significant in protecting anonymous activity and speech online, ranging from blog comments to the use of BitTorrent – all of which can be done without behind an IP address until the user’s internet service provider is subpoenaed and provides notice to its customer that his or her personally identifying information will be produced unless the subpoena is quashed.

Criminal law has also been instructive in shaping the law of the internet.  The Stored Communications Act, 18 U.S.C. §§ 2701-2712, prohibits service providers such as Google and Facebook from turning over users’ passwords and internal messages (such as messages and chat logs from one Facebook user to another) without a court order.  Additionally, hacking – a topic given great attention in the 1990s, but still persisting today – was made punishable with both criminal and civil penalties by 18 U.S.C. § 1030.

Perhaps the greatest tool of all for the internet, though, has been Section 230 of the Communications Decency Act, 47 U.S.C. § 230.  Section 230 immunizes service providers like Yahoo and Google for the acts of its users.  When someone opens a blogspot blog that allegedly defames someone, it is not Google’s fault – rather, liability falls on the shoulders of the blog’s author.  Similarly, message board operators are not liable for the torts of their users who may post tortious material to the website.  If they were, services such as Yahoo’s finance message boards and (unintentionally hilarious) Yahoo Questions would have never taken off.  This protection is not vitiated if a web service edits or deletes a user’s submission. 47 U.S.C. § 230(c)(2).

While courts have consistently upheld § 230’s protections for online service providers, the law has not been an absolute shield.  Where a site creates its own content that is tortious, then the service can be held liable.  Similarly, if the site requires a user to post tortious material as a condition of using its service, then the site is not afforded § 230 protections. Fair Housing Counsel v. Roommates.com LLC, 521 F.3d 1157, 1166 (9th Cir. 2008)  (“By requiring subscribers to provide the information as a condition of accessing its service, and by providing a limited set of pre-populated answers, Roommate becomes much more than a passive transmitter of information” and thus not entitled to § 230’s immunity).  For pure social media sites, § 230 provides valuable immunity against litigation from angry parents and the thin-skinned.  In states with strong anti-SLAPP statutes, § 230 has worked in tandem with these laws to create a fortress around internet companies, protecting them from common law claims and requiring parties with attorneys foolish enough to bring these claims to pay the companies attorney’s fees in most cases. (California and Seattle, where numerous social media companies are based, allow defendants to recover attorneys’ fees incurred in successful anti-SLAPP motions).

There is, however, one hole in § 230 – it expressly does not apply to intellectual property claims. 47 U.S.C. § 230(e)(2).  Thus, online service operators were potentially liable for hundreds of thousands of dollars in damages if their users copied and distributed copyrighted content on their sites.  In 1998, however, Congress enacted the Digital Millennium Copyright Act (“DMCA”) to combat this problem. 17 U.S.C. § 512.  Within this legislation, Congress granted certain entities, such as internet service providers, immunity from infringement as transitory networks where the infringing data does not reside – but it imposed burdens onto both web hosts, web sites and even right holders.

For most self-hosting bloggers and other internet users, the DMCA is fairly straightforward.  The service provider must register an agent to receive DMCA notices with the U.S. Copyright Office for $105, which is listed in an online registry of DMCA agents.  When receiving a proper DMCA take-down notice under 17 U.S.C. § 512(c)(3)(A), the service operator must remove the infringing content within a reasonable period of time, or risk being held liable for infringement.  The DMCA take-down process requires rights holders to seek out instances of infringement and send notices to infringers, but unlike a lawsuit for infringement, does not require the right holder to obtain a copyright registration certificate (or, in some circuits, merely an application).

While many small website operators do not comply with the DMCA, rights holders often send DMCA-compliant take-down notices, which are honored with the removal of allegedly infringing content.  For large services that stake their entire existence on user-submitted content, however, complying with the DMCA becomes remarkably more complicated.  For a service such as YouTube (or, more in your author’s practice area, a “tube site” containing pornography) the DMCA takes no complex new dimensions that are still unsettled despite the DMCA being more than a decade old, and the user-generated segment of web entertainment not being significantly younger.

For instance, the Second Circuit’s recent decision in Viacom v. YouTube, vacating many of the Southern District of New York’s 2010 conclusions about how the DMCA operates,  has created significant uncertainty about the meaning of 17 U.S.C. § 512(c)(1).  For a service such as a large “tube” site, particularly one that monitors its submissions to avoid unlawful or inappropriate content, there is a question as to what is required in addition to a DMCA take-down notice to constitute “actual notice” of infringement, or “facts or circumstances from which infringing activity is apparent.” Id.  The Second Circuit’s decision also re-opens the question of what constitutes the “right and ability” to control infringing material: Namely, whether this standard is contiguous with the same standard articulated in the doctrine of vicarious copyright infringement, or subject to a different, DMCA-specific standard as previously found by the Southern District of New York (requiring “specific knowledge” of infringement in order to have the right and ability to control it).

The DMCA contains additional twists and turns for both service operators and rights holders.  If a service provider has users who consistently engage in copyright infringement, it must ban them in accordance with an established, publicized policy to terminate these repeat infringers. 17 U.S.C. § 512(i).  Additionally, there is a question as to what constitutes an effective termination – while banning by e-mail address may satisfy the procedural requirements of this provision, the ease of creating new e-mail addresses ensures that this action would fall short of substantively fulfilling it.  Service operators must also act as an ombudsman for counter-notifications seeking the reinstatement of non-infringing content under § 512(g)(3).

For right holders, fair use of the copyrighted work must be considered before sending a takedown notice. § 512(c)(3)(A) (requiring “good faith belief” of infringement and signing of notice under penalty of perjury).  Failing to satisfy this requirement, or sending a DMCA take-down notice that is otherwise improper – such as to remove critical, non-infringing material, or to assert the rights of a third party who the notice-sender does not represent – makes the misrepresenting notifier liable for the uploader’s damages, costs and attorneys’ fees under § 512(f). (Similarly, a misrepresentation in a § 512(g) counter-notification also triggers the penalties of § 512(f)).  Counterbalancing this restriction, though, is the right holder’s power to issue a federal subpoena under § 512(h) – again, without even a copyright registration – in order to identify an infringer.  While this provision of the DMCA is infrequently used, the jurisprudence of § 512(h) is a fascinating sub-topic for another time.

However, the DMCA provides no protection for trademark infringement committed by a third party.  While proposed laws like PIPA and SOPA addressed the full theater of potential intellectual property infringement, the DMCA protects only against copyright infringement liability.  Thus, a novel theory from plaintiff’s attorneys is that a third party’s use of a trademarked name in an internet posting constitutes trademark infringement and unfair competition under 15 U.S.C. §§ 1114 and 1125.  While this is a frivolous claim to bring against a service provider, it can be pled to avoid a motion to dismiss in jurisdictions without robust anti-SLAPP statutes that allow for the inclusion of evidence in anti-SLAPP motions.  This leads to summary judgment and, in many cases, settlement – a detriment to the companies falling prey to these questionable suits.

Acting in conjunction, federal criminal, telecommunications and copyright law has created an ecosystem ripe for enormous online commerce.  Without these laws, the multi-billion dollar companies that dominate the internet likely would not exist.  While the ecosystem is still in flux, and will be as both technology and IP laws change, services such as Facebook, YouTube, Pinterest and Tumblr are here to stay.

ABA Journal Magazine Tackles Righthaven in May 2012 Issue

Remember Righthaven?  While it has been stripped of its intellectual property and claims against it keep piling up, the fat lady has not yet sung – and the ABA has noticed.

The May 2012 ABA Journal’s cover story is the aftermath of Righthaven.  Eriq Gardner, who Righthaven once sued for posting an image of an exhibit from one of its court pleadings, examined both sides of the copyright enforcement equation.  Marc Randazza and Ron Coleman are quoted in the lengthy piece, which centers on Righthaven but touches on the RIAA’s litigation campaign, the mass-joinder suits brought by porn studios, and the realities of plaintiff-side copyright enforcement.

Righthaven’s CEO, Steven Gibson, is quoted with the following observation:

“One of the questions for the article is why is it so difficult for copyright owners to hire competent copyright litigation counsel?” he said. “There’s not a lot across the country. Definitely not like personal injury lawyers. You can’t go into the phone book and find a listing. Why is it this difficult? Why isn’t there more copyright litigation?”

Yet, even with Righthaven.com no longer belonging to Nevada’s Righthaven LLC, he is optimistic about the venture’s future.

“Righthaven remains the vehicle for dealing with infringements on the Internet,” Gibson told me recently.

A motion by the EFF seeking personal sanctions against Gibson at a rate of $500 per day is still pending as of this writing.

The problems of online copyright infringement and enforcement are real, and few would argue that there is not some useful role of copyright in society.  These controls, however, cannot and should not completely gobble up protected speech – especially since the 1976 Copyright Act codified fair use in 17 U.S.C. § 107.  Even allowing breathing space for hilarious derivative works, much work needs to be done with respect to fighting infringement, even as the law for doing so remains in flux.

Potential DMCA Game Change in 2d Circuit Ruling on Viacom v. YouTube

By J. DeVoy

The Second Circuit released its opinion in Viacom v. YouTube today, partially vacating  the Southern District of New York’s order granting summary judgment in favor of the online video service.  Ultimately, the case is to be remanded to the district court for fact-finding on whether YouTube had knowledge of infringement, had the right and ability to control infringing content, and YouTube’s willful blindness.

Almost as soon as the Court starts writing, it delivers the gut punch:

Although the District Court correctly held that the § 512(c) safe harbor requires knowledge or awareness of specific infringing activity, we vacate the order granting summary judgment because a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website. We further hold that the District Court erred by interpreting the “right and ability to control” infringing activity to require “item-specific” knowledge. (Opinion at 2)

While the Second Circuit held that YouTube qualified for DMCA protections under § 512(c), the easy work of the opinion ends there.  What follows are a range of questions that the Second Circuit believed needed to be supported by more facts – potentially changing the landscape for user-generated content.

The Second Circuit is not interested in relegating the operators of user-generated content services to constantly policing their sites for infringement, and believe that § 512(c)(1)(A) does not require this conduct:

Under § 512(c)(1)(A), knowledge or awareness alone does not disqualify the service provider; rather, the provider that gains knowledge or awareness of infringing activity retains safe-harbor protection if it “acts expeditiously to remove, or disable access to, the material.” 17 U.S.C. § 512(c)(1)(A)(iii). Thus, the nature of the removal obligation itself contemplates knowledge or awareness of specific infringing material, because expeditious removal is possible only if the service provider knows with particularity which items to remove. Indeed, to require expeditious removal in the absence of specific knowledge or awareness would be to mandate an amorphous obligation to “take commercially reasonable steps” in response to a generalized awareness of infringement. Viacom Br. 33. Such a view cannot be reconciled with the language of the statute, which requires “expeditious[ ]” action to remove or disable “the material” at issue. 17 U.S.C. § 512(c)(1)(A)(iii) (emphasis added). (Opinion at 16)

However, this does not absolve YouTube for potential liability for red flag knowledge.  Since the internet has changed much since the DMCA’s enactment, the examples of red-flag knowledge articulated by Congress are largely inapplicable now.  Those availing themselves of these protections hold up the examples of red-flag knowledge described by the Senate (e.g., domain names with words like “illegal,” “stolen” or “pirate” in them), while copyright enforcers have advocated for a broader standard of red flag knowledge, along the lines of “I know it when I see it.”  Seeing this hole in the law, the Second Circuit tried to reconcile a question a question that has befuddled many a copyright lawyer: What the hell, exactly, is red flag knowledge?

The difference between actual and red flag knowledge is thus not between specific and generalized knowledge, but instead between a subjective and an objective standard. In other words, the actual knowledge provision turns on whether the provider actually or “subjectively” knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement “objectively” obvious to a reasonable person. The red flag provision, because it incorporates an objective standard, is not swallowed up by the actual knowledge provision under our construction of the § 512(c) safe harbor. Both provisions do independent work, and both apply only to specific instances of infringement. (Opinion at 17-18)

Actually proving red flag knowledge is a factual question.  It is also part of the reason the case is remanded to the S.D.N.Y.  Indeed, the Court of Appeals spends pages reviewing and discussing the record evidence it believes creates a question of fact as to whether YouTube had actual knowledge of infringement on its service. (Opinion at 19-22)  The same is true of willful blindness, the equivalent of knowledge in copyright cases. (Opinion at 19-24)

As to the “right and ability” to control user-uploaded content under § 512(c)(1)(B), the Second Circuit also remanded this issue to the District Court for further fact-finding.  The Court of appeals rejected both interpretations of this standard as advanced by the parties – for Viacom, a codification of common law vicarious liability standards; and for YouTube, a requirement that the provider must know of the particular case before it can control the infringement. (Opinion at 19-25)  The court agreed that the right and ability to control under § 512(c)(1)(B) requires more than the mere ability to remove or block access to materials on the defendant’s website – but how much more, or what that “more” might be, is unclear – other than the fact that it does not require specific knowledge.

Another issue remanded to the District Court is the question of YouTube’s syndication of its videos to others:

In or around March 2007, YouTube transcoded a select number of videos into a format compatible with mobile devices and “syndicated” or licensed the videos to Verizon Wireless and other companies. The plaintiffs argue—with some force—that business transactions do not occur at the “direction of a user” within the meaning of § 512(c)(1) when they involve the manual selection of copyrighted material for licensing to a third party. The parties do not dispute, however, that none of the clips-in-suit were among the approximately 2,000 videos provided to Verizon Wireless. In order to avoid rendering an advisory opinion on the outer boundaries of the storage provision, we remand for fact-finding on the question of whether any of the clips-in-suit were in fact syndicated to any other third party. (Opinion at 31-32)

The court rounds out its opinion by considering YouTube’s repeat infringer policy and other software tools used to avoid the posting of infringing content.  Neither are sufficient to exclude YouTube from the safe harbor provisions of § 512(c).  Because more fact-finding is needed, the Court of Appeals declined to determine whether the trial court erred in denying Viacom’s cross-motion for summary judgment.

While not likely to become an Alameda Books, this litigation is far from over.  Even if Youtube had won, Viacom likely would have petitioned the Supreme Court for certiorari.  Based on the Grokster case, there is some likelihood the Supreme Court would have granted it.  But by sending the case down to the S.D.N.Y. yet again, another appeal to the Second Circuit is all but ensured.

All Righthaven’s Intellectual Property Are Belong To Us

So sayeth the Honorable Philip Pro of the District of Nevada. (source)

Righthaven loses in Colorado

By J. DeVoy

Yesterday, the District of Colorado dismissed Righthaven LLC’s copyright infringement lawsuit against Leland Wolf and the It Makes Sense Blog in Righthaven LLC v. Wolf et al., Case Number 1:11-cv-00830.  The Wolf case was the only active matter in Righthaven’s 57 cases filed in the District of Colorado, as the more than 35 cases that were ongoing when Wolf moved to dismiss Righthaven’s lawsuit were stayed pending the outcome in Wolf. (The approximately 25 other suits presumably settled.)  Leland Wolf and the It Makes Sense Blog were represented by Randazza Legal Group and Contiguglia / Fazzone P.C.

The Court’s Order, authored by Judge Kane, is available here.  Judge Kane summarizes his Opinion and Order in this opening paragraph:

The issue presented in this case, whether a party with a bare right to sue has standing to institute an action for infringement under federal copyright law, is one of first impression in the Tenth Circuit. After considering the parties’ written and oral arguments and analyzing the constitutional underpinnings of federal copyright law, the legislative history of the 1909 and 1976 Copyright Acts, and the meager precedent available from analogous situations in other Circuits, I hold that the answer to that question is a forceful, yet qualified, “no” and GRANT summary judgment to Defendant Leland Wolf. Furthermore, pursuant to 17 U.S.C. § 505, Righthaven shall reimburse Mr. Wolf’s full costs in defending this action, including reasonable attorney fees.

Apparently Judge Kane has ordered Righthaven to show cause by October 7 why its other cases should not be dismissed in the wake of this ruling. (Source.)

More coverage available at:

Vegas Inc.

Ars Technica

the EFF’s DeepLinks Blog

Techdirt

Technology & Marketing Law Blog

 

 

I.P. Links Loot and Righthaven Roundup

So apparently we are sick of China stealing our intellectual property. (source) Human rights abuses, meh, not our problem.

You think you know from Intellectual Property? Bah. Beth Hutchens pwns you. (source)

This guy could learn a bit from Hutchens. He thinks that he has a new business model of registering a common phrase and then demanding money from people who use it. (source)

Patent system out of control? Evidence needed? Patent on making a snowman. Booyah. (source)

And if you missed the recent round of Righthaven Follies:

Copyright Troll’s Assets Targeted for Seizure, Wired.

Defense attorneys say Righthaven missed deadline to pay legal fees, Vegas Inc.

Lawyer wants US Marshals to seize copyright troll’s bank account, Ars Technica.

Righthaven Fails To Pay Attorneys Fees Ordered By The Court, Court Asked To Declare Righthaven In Contempt, Techdirt.

Righthaven, King Of Suing Without Notification, Whines To Judge About Motions Filed Against It Without Enough Notification, Techdirt.

Copyright Troll Righthaven Says It’s Nearing Bankruptcy, Wired.

USS Righthaven hits another iceberg

By J. DeVoy

Today, U.S. District Court Judge Roger Hunt held a hearing regarding the Order to Show Cause he previously issued in Righthaven LLC v. Democratic Underground LLC et al, Case No. 2:10-cv-01356 (D. Nev.).  Righthaven, represented by Las Vegas attorney Shawn Mangano and national law firm Kirkland & Ellis in this matter (though only Mangano was at the hearing on behalf of Righthaven LLC), received the following sanctions:

• $5,000.00 in sanctions, payable within 2 weeks.  This is in addition to Righthaven’s $3,815.00 due in Righthaven LLC v. Leon et al, Due July 25th. (Order available here.)  To date, thats $8,815.00 worth of water taken on, with approximately $34,000 and $119,000 sought in other cases. (source.)

• Righthaven must provide copies of Judge Hunt’s order dismissing Righthaven’s complaint for lack of standing in Democratic Underground in all pending cases. (discussed here.)

• Righthaven must provide its Strategic Alliance Agreement with Stephens Media LLC to all defendants sued for infringement of Stephens Media LLC copyrights. (Strategic Alliance Agreement available here.)

• Righthaven must provide copies of the transcript of today’s hearing to every Court in which there is a pending Righthaven case.  During the hearing, Hunt said Righthaven made misleading statements to the court – for which Hunt said a stronger word would be appropriate – and that its conduct was “not negligence,” but part of a “concerted effort to hide Stephens Media’s role in this litigation.”  Moreover, Hunt described Righthaven as a law firm masquerading as a company. (source.)

As Randazza Legal Group is involved in numerous open Righthaven matters, no further comments shall be made.  Additional information can be found via Steve Green at the Las Vegas Sun, who has comprehensively covered this saga from its inception, and at MAL Contends,  the blog of Michael Leon, former defendant in Righthaven LLC v. Leon et al.

New federal web laws will confiscate wealth from adult, other industries

By J. DeVoy

Pat Leahy seems to actually know a bit about intellectual property law, if you listen to him speak long enough.  Based on the failed introduction of COICA in the fall, he’s clearly aware of the ravages piracy has caused on the broader recording and entertainment industries, as well as the harm of fraudulent goods being sold over the internet.  Leahy is now renewing his call for tough new internet laws to rein in “rogue websites” that sell counterfeit goods and are at the heart of the piracy epidemic that has sent adult entertainment revenues tumbling.

On the surface, government intervention is a good thing – an entity with tremendous resources and power is stepping in to preserve the market for IP holders’ goods.  If you think the government is doing this for the benefit of the adult market – or that these efforts will in any way aid adult – think again.  As always, the beneficiaries of these policies are the groups that weren’t hurting too badly in the first place.  For example, the RIAA and MPAA spend tons of money pursuing infringers just to preserve the markets for their respective works, as they have the resources to do so, and simply meting out high-profile punishments without regard for what recovery they can actually obtain is sufficient to serve their ends.  For example, the movie industry posted massive profits for 2010.  Then there are brands like Gucci and Louis Vuitton that love government intervention so that the market for their overpriced products is kept free from cut-rate counterfeiters.

The adult entertainment industry lacks this kind of centralized, well-funded activism apparatus.  While the sums at stake for the industry as a whole may rival those sought – and spent – by the RIAA and MPAA, a patchwork approach to litigation, including undisclosed settlements, keeps outsiders from seeing the full scope of piracy’s damages.  In just one case, Evil Angel and Jules Jordan won a $17.5 million award against various defendants for DVD piracy – an activity that seems almost quaint in the current climate of BitTorrent litigation.  While that’s a huge award, too, it still pales in comparison to the amount of money the RIAA will spend to fight pirates in a single year.  Especially after Citizens United, money talks, and its the mainstream recording industries that are spending more of it to influence legislative activity.

So, evidently, this legislative push is not made with the intent of making life easier for adult content producers.  In practice, it will not behoove them either.  Here’s why:

Destruction of evidence

When the government shuts down a site, it doesn’t preserve and disable it – it throws its logos up and tells the world that it has been taken over by the Feds.  For those in the process of building a case, or considering one, the information needed for that prosecution is gone, certainly as far as you’re concerned, if not from the potential defendant’s servers.  Some of these sites will reemerge on alternate domains, but then the facts underlying a producer’s case may have changed.  A view count on a pirated video, which has probative worth with respect to damages, may reset from hundreds of thousands of views to zero.

Confiscation of assets

Shutting down sites like channelsurfing.net isn’t enough.   The government is now pursuing those sites’ operators, such as Bryan McCarthy, for criminal copyright infringement.  “Hang ’em high!” May be the rallying cry of some producers, but the funds used for criminal legal defense and assets forfeited to the government in a plea deal or upon conviction are all things that copyright holders won’t get in civil damages.  Servers, real property, and anything else used in running a site that the government confiscates under its ill-defined conception of rogue websites all go to the government – and there are a lot of ways the government ensures it receives this property.

In essence, these actions become a hidden tax on adult content producers who are robbed of a means to pursue litigation and the damages to which they may be entitled for copyright infringement.  While keeping one’s business afloat on copyright infringement lawsuits is a poor model, recouping lost sales by going after pirates makes a hell of a lot of sense, and can be pretty damn moral, too.  But if Congress gets its way, any potential gains studios may realize become government property.

…

This doesn’t even begin to address the free speech concerns of what would constitute a too-infringing website, and where that line would be drawn.  The threats to collaboration and innovation should be obvious.  And while many believe something should be done to aid in the fight against piracy, this probably isn’t the answer, as government intervention is money out of studios’ and producers’ pockets.

Market regulation is something the government should have some hand in, due to its reach and resources.  If all antitrust and market enforcement action were private, no group or groups would have the resources to find and police every instance of market abuse and cure them in an even-handed way free of self-interest.  It’s a good thing that the FTC and DOJ exist to fight antitrust violations (to the extent they can in the wake of Iqbal and Twombly), but for ICE to get involved by unilaterally shuttering websites goes far beyond the market-policing role and delves into something much more sinister.

Penny Arcade Turns Traitor: Says Used Game Purchasers “Pirates”

by Christopher Harbin

I’m stark raving mad right now.  I’ve never been much of a hot head.  And over the years my old age has tempered my immediate reactions, but I went from Calmsville to Livid City after reading Penny Arcade’s latest comic without so much as a stopover at Smoldering Anger Junction.

The comic was commenting on a new trend in video games.  Recently, game publishers have locked more and more content that was traditionally included in a game behind an online pay wall.  For example, earlier this year, EA Sports started preventing those purchasing used games from playing online by including a one-time use code inside new packages.  Some publishers have even put content included on the physical media behind a pay wall.  So you have to pay someone to get at content on the disc.  I have no doubt that you will soon see console publishers putting the entirety of their content behind a one-use code.  For years, PC gamers have had to engage in various workarounds to sell their games.

Copyright – particularly the first-sale doctrine – looms over and informs every part of this discussion.  See, when you buy a work, under the Copyright Act, you own it.  You’re entitled to do what you please with it.  You can burn it, resell it, keep it, devise it, trade it, or gift it.  Just like the rest of your personal property.  Underpinning every publisher’s shady little move with respect to digital goods is the veiled threat of bringing down the mighty beast of copyright infringement upon those that defy them.  I have pounded the table on this subject before, but copyright owners view copyright law as an understanding only between themselves and the government – consumers, that is the public, be damned.  Remember, just three years ago the RIAA maintained — in court — that consumers have no right to rip their CDs onto their MP3 players.

And Penny Arcade buys into this paradigm hook, line, and sinker.  The gist of their latest comic – and the narrative that accompanies it — is that purchasers of used video games are not customers of the publishers.  While this is sort of correct – used games don’t put money directly into publishers’ coffers – it’s not actually correct.  Which we all know is the best kind of correct.  Let’s get at this from another industry:  auto sales.  One reason people buy Hondas, Toyotas, and Volvos is that they hold their resale value better than other comparable vehicles.  Thus, at the original sale, they command a premium price.  So it’s obvious that producers do in fact see value in used car sales.  DeVoy sums up the criticism to Penny Arcade’s shoddy argument best: “Only idiots think they buy products from their producers, LOL!”  Indeed, DeVoy.  If game publishers are worried that they aren’t getting a “fair” cut of used game sales, they can do what every other industry does.  Price it up front.  Let the market decide.  They should not be able to wield the mighty sword of copyright law in a way other industries don’t get to do.

Tycho even goes so far as to say that those who buy used games are pirates.  I find this kind of rhetoric wholly disingenuous – especially coming from Tycho who often prides himself on distilling substantive wheat from the rhetorical chaff.  But here Tycho has completely failed and comes off looking like an industry shill.  When one buys a used car, have they burned and pillaged the auto industry?  Why should video games be treated any differently?  Don’t even bring up the fact that digital goods don’t physically degrade:  1) even MP3s degrade after many copies; 2) under copyright law you aren’t allowed able to keep a copy and transfer a new one to another – that’s infringement and; 3) books that are kept well physically degrade far after the economic value has been extracted.

Tycho and Gabe are by far some of the smartest and most engaging commentators on the games industry, but their latest comic is a prime example of what happens when quasi-journalists become too close to their industry.  Tycho even admits it:  “You meet one person who creates games for a living, just one, and it becomes very difficult to maintain this virtuous fiction [that buying a used game isn’t piracy.]”  They start putting faces to products and thinking of the little beating hearts in cribs inside the homes of developers.  It’s certainly a noble thought.  But in propagating this logically-flawed and rhetorically-misleading argument they cosign big media’s efforts to erode our rights.  Shame on you, Penny Arcade.

Update:  The always brilliant Bill Harris takes a more tempered view

Cyberblogging soulmate Mike Masnick hit this issue about 9 seconds before I did.

Ninth Circuit Hears Critical First Sale Doctrine Case

By Christopher Harbin

Once again the record industry is attempting to prop up their failing business model by redefining consumer rights in heinous fashion. This week, the Ninth Circuit heard arguments in a crucial case that may substantially alter first sale rights.  For those that aren’t up on their copyright law, the “first sale” doctrine dictates that once a copyright owner sells or gives away a work, the owner of the work may dispose of it as she sees fit.   When you buy a book at a store, you may resell the book to another without restriction.  If you buy it, you own it.

In this case, Universal Music Group is suing Roast Beef Music for copyright infringement for auctioning  on Ebay promotional CDs that it bought at a used record store.  UMG sends these CDs out to radio stations and music retailers.  Each promo CD bears a marking that prohibits their resale. Courts have generally held that where physical possession of a copyrighted work is transferred to another without an expectation of return, the transfer is a “sale” and first sale rights attach.  UMG’s argument, made time and time again by copyright owners to no avail, is that these CDs are merely licensed and thereforeno first-sale rights attach. Should UMG win, copyright holders would be able to restrict secondary sales and uses completely.   Bottom line:  no more Netflix, no more selling used books on Amazon, no more used-record stores.

Let’s be clear here.  UMG is not concerned about promo copies of The Killers “Sam’s Town” being sold on Ebay.  Their actual plan is to use a favorable decision in this case as a forward position to erode consumer rights and use copyright infringement lawsuits, or threat of suit, to prop up a dying business.  Let’s hope Koz and his cohorts on the Ninth put the final nail in the music business’s coffin.

Court Allows Copyright Infringement Free For All On File Hosting Sites

by Christopher Harbin

Right now, it appears that courts are willing to let file-hosting sites like Rapidshare, Hotfile, and Megaupload live in the void in the law between Grokster, Limewire, and Napster.  Recently, Judge Huff of the Southern District of California denied Perfect 10’s request for a preliminary injunction against Rapidshare holding that P10 could not prove a likelihood of success on the merits.   A couple of notes from the decision:

1.  Judge Huff finds that Rapidshare is not violating the 106(3) distribution right because their activity is distinguishable from Hotaling and Napster. Judge Huff reasons that because Rapidshare does not index its files, it is not making the files available in the same way that Hotaling and Napster were.

2.  Judge Huff affirms the general principle that Plaintiffs bears the burden of identifying the location of the infringing files on Defendant’s server to prove the requisite knowledge  for contributory infringement.   Merely providing filenames or copies of the infringing material and expecting Defendants to ferret out infringement  on their site.

3.  Rapidshare’s affiliate program:  The Court seemed more willing to accept that Rapidshare’s  affiliate program may be materially contributing to infringement.  However, it appears P10 did not offer enough evidence to get a TRO at this stage.

4.  The WTF Moment:  Court notes in the balance of equities analysis that P10 refused to take use Rapidshare’s take down tool to automatically delete infringing material.

5.  DMCA:  Rapidshare hasn’t designated an agent under 512 and therefore cannot take advantage of the service provider liability exception.   The court did not reach whether charging for access or the affiliate program would remove 512 immunity, likely because there was no need to reach this question because of Rapidshare’s failure to designate an agent.

I’m not the most pro-copyright guy on the block, but I think it’s pretty clear that Rapidshare and its ilk are clearly liable for  contributory infringement.

First, although Rapidshare does not index its files, it basically punts indexing to third-party websites.  It’s trivial to find infringing material hosted on Rapidshare and other file-hosting sites and I’m not sure why dicing up storage and indexing into separate entities which obviously have a symbiotic relationship should be able to avoid liability.

Second,  I’m not at all convinced that in all cases plaintiffs should be forced to ferret out all infringement on a defendant’s website.  As the law stands right now, copyright holders have to employ an army of people to constantly monitor defendant’s site for infringement.

Third, these affiliate programs — and the fact that these sites charge for download access rather than storage space — clearly indicates to me that they are actively trying to induce infringement.  Before these sites wised up, one of these sites actually encouraged users in its affiliate program to upload popular movies, songs, and images.  Some of these affiliate programs pay out in cold hard cash or in download credits.   Even though there is some measure of plausible deniability here, I don’t need a weatherman to tell me which way the wind blows.

Fourth, Plaintiffs should not have to avail themselves of self-help measures to take down copyrighted material to get a TRO to stop infringement.  It’s like a pawn shop saying that although they are  pretty sure most of the merchandise  in the shop is stolen that if you can come down and identify your stolen goods  they’ll be glad to give them back to you.  Additionally, these take down regimes usually use MD5 hashtags which are pretty frickin’ useless.  Hashtags are useful in identifying whether the particular file on the server IS the exact same as the original file, but they are not useful as a location device.  In other words,  if the hashtag of a copyrighted file is found on another’s server, it is almost certain that the files are the same.  But a failure to match hash tags does not mean that the file is not located on the server because hashtags are easy to circumvent.  For example, the hash tag of a word document containing the collected works of Shakespeare would be different from the same document with an extra punctuation mark.  So uploaders just add in a couple extra seconds of music or video to circumvent the hash tag.   So in the pawn shop analogy, you’d have to be able to identify your merchandise to the nearest micron in order to get your stolen goods back.

So as it stands currently, it appears that file-hosting sites have found a hole in copyright law and are free to actively exploit it.  Until courts or Congress plug the hole, it seems that file-sharing sites are an infringement free for all.

Attention Trademark Professors: I Found Next Year’s Trademark Exam Question

You’re welcome in advance.

Williams-Sonoma Brownie Pan

Delicious Hershey Bar

IOC Uses DMCA to Suppress Luge Accident Video

by Jason Fischer

The opening day of the 2010 Winter Olympics was marked with tragedy when 21-year-old Georgian luger, Nodar Kumaritashvili, was involved in a fatal crash during a training run. The horrific event dampened the spirit of the international competition and colored the mood at the opening ceremonies later that night. As anyone would expect, the International Olympic Committee (IOC) sprung into action, responding to the accident with a multi-point plan:

• Shut down the luge track to prevent any more deaths… check.
• Conduct an internal investigation… check.
• Let an “independent” authority do its own investigation… check.
• Make immediate modifications to the luge track to stop future accidents… check.
• Make a press release, expressing regret, but denying all responsibility… check.

All perfectly acceptable anticipated responses. So why is this an IP story, you ask? Well, when the above-described actions failed to push this embarrassing catastrophe under the rug, the IOC turned to their attorneys, asking what else could be done to hush the whole thing up. Video clips of Kumaritashvili losing control of his sled and crashing into a steel pole were popping up all over the internets, repeatedly showing the world what happened. The answer from their legal team: Those people are violating our copyright in that clip! We can use the Digital Millennium Copyright Act (DMCA) to have that material removed from the web — so no one else will see it!

Now, giving the IOC the benefit of the doubt, I’m sure their intentions in suppressing the accident footage were honorable. Don’t misunderstand me. I recognize that what happened was horrible, and Kumaritashvili’s family and teammates are likely still reeling from the impact of it all. If they have to see that clip everywhere they turn on the web, that’s not ideal — especially if any of the commentary employing the clip was in poor taste, which I’m sure some of it was.

Even where all of this is true, U.S. copyright law was not implemented to choke off the flow of facts and news reporting. In fact, § 107 of the Copyright Act specifically limits a copyright owner’s rights in these kinds of situations. The IOC cannot use DMCA takedown notices to silence the speech it does not like. In fact, sending those notices may end up costing the IOC, unless they can successfully make the case that they considered whether use of the clips could be fair use before making their demands. Just ask the artist currently known as Prince. This will be tough argument for the IOC, considering this isn’t the first time they’ve tried to misuse their copyrights.

Unfortunately, groups like the IOC don’t recognize that the appropriate response to inappropriate speech is not to look for the most expedient suppression mechanism — it’s more speech. The marketplace of ideas is perfectly capable of recognizing which commentary is a legitimate dissemination of news about the tragedy and which ones are morbidly childish. Sending out demand letters that essentially state “you have to pay if you want to show our Faces of Death video” is equally deplorable, no matter what the IOC’s intentions actually were.

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The article was originally published on The Tactical IP Blog

She obviously doesn’t know Dick about intellectual property law

The awesome-as-fuck movie, Blade Runner is based upon the novel “Do Androids Dream of Electric Sheep?”, by Philip K. Dick. In the novel, the “artificial humans” that the protagonist is tasked with “retiring” are the “Nexus-6” models.

The Google phone launched this week is the “Nexus One.”

And Isa Dick Hackett, Philip K. Dick’s daughter thinks that this is an infringement upon her late father’s intellectual property rights. (source) Obviously, she needs to fire her lawyer, because whoever told her that doesn’t know Dick about intellectual property law.

Hackett believes that Google was referencing “Do Androids Dream of Electric Sheep?” when naming the phone. And they probably were. So what? First off, Dick didn’t even coin the word “Nexus.” It happens to be a common English word. (definition) Even if it was not, even if Ol’ Phil did “invent” the word, which intellectual property rights would Google have infringed upon? Patent? Not even arguably relevant. Copyright? What? In a single word? Nice try. Trademark? What products did the Dicks sell under the “Nexus” mark? None.

Of course, if some court is dumb enough to even hear her claim, I’m going to start requiring that anyone who uses the term “asshat” or “douchetastic” pay me $50.