USS Righthaven hits another iceberg

July 14, 2011

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

April 6, 2011

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 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”

August 25, 2010

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

June 11, 2010

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

May 21, 2010

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

May 19, 2010

You’re welcome in advance.

Williams-Sonoma Brownie Pan

Delicious Hershey Bar

IOC Uses DMCA to Suppress Luge Accident Video

February 17, 2010

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.

resized_Nodar_Kumaritashvili_luger_olympic_death1All 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.

van_2010_logoEven 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.

The article was originally published on The Tactical IP Blog