Federal Prosecutors Launch New Attack Against Online Gamblers in the United States

On June 9, the New York Times reported that federal prosecutors asked four American banks to freeze accounts containing money believed to be used for distributing winnings to online poker players. Wells Fargo, one of the contacted banks, received a court order requiring that the funds be frozen. Professor I. Nelson Rose of Whittier Law School described the move as “surprising” and as a “gamble” by the prosecutors. Professor Rose also said that it is unclear what laws apply to the seizure of individuals’ money.

Canadian Government Decides Not to Regulate Internet Video and Audio Broadcasts

Canadian radio and television broadcasters are required by the Canadian Radio-television and Telecommunications Commission (CRTC) to broadcast a minimum amount of Canadian content. On June 9, Ars Technica reported that the CRTC issued a report saying that although internet audio and video do count as “broadcasting” for the purposes of their regulatory schemes, they will retain a regulatory exemption from providing Canadian content. The CRTC’s decision, while currently supported by major providers of online audio and video such as Google, leaves open the possibility that the CRTC will impose future regulations.

Electronic Frontier Foundation Urges Court to Hold Email Protected Under the Fourth Amendment

On June 10, the Electronic Frontier Foundation (EFF) filed an amicus brief in the Sixth Circuit’s ongoing case Warshak v. United States. The brief argues that the Justice Department violated Warshak’s Fourth Amendment expectation of privacy in his email. The EFF reports that “the government acquired over 27,000 emails spanning over six months from Warshak’s email provider, all without probable cause.” The basis of EFF’s position is that email should receive the same protection against unlawful search and seizure as is given to phone calls, postal mail, and private papers kept at home.

Court Abused Discretion by Failing to Apply eBay Factors

On June 9, Patently-O reported that the Federal Circuit remanded a patent dispute case back to the district court because it failed to consider the eBay factors in its refusal to grant a permanent injunction to the patent holder. In the eBay case, the Supreme Court required a patentee seeking injunctive relief to “demonstrate (1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.”

Jones v. Blige
United States Court of Appeals for the Sixth Circuit, March 9, 2009
Slip Opinion

On March 9, 2009, the US Court of Appeals for the Sixth Circuit affirmed a Michigan district court’s grant of summary judgment for defendant, Mary J. Blige in a copyright infringement case. Plaintiffs Leonard Jones and James E. White had filed suit against Defendants Mary J. Blige, Andre Young (aka “Dr. Dre”), Universal Music Group (“UMG”), and others for copyright infringement.

The Court of Appeals affirmed the lower court’s decision, holding that the songs were not substantially similar and that the Plaintiffs had not provided sufficient evidence to establish Defendants’ access to their work under the “corporate receipt” doctrine. Exclusive Rights offers commentary, focusing on the distinction made in this case between the corporate receipt doctrine and “bare corporate receipt.” The Michigan Messenger briefly summarized the opinion here.

Music producers Leonard Jones and James White claimed that the Mary J. Blige’s 2001 hit song “Family Affair” infringed on their own work “Party Ain’t Crunk.” “Family Affair” was released in August 2001 as the second song in Blige’s album, No More Drama, which sold over two million copies. Blige wrote the lyrics with her brother and a team of writers and recorded her vocals over music created by Dr. Dre. “Party Ain’t Crunk” was created by Jones and White and recorded by an aspiring rap artist named Tim Acker (aka “Benevolence”). White submitted the CD to several companies, including Blige’s publisher, UMG. Andy Mckaie, Senior Vice President of Artists and Repertoire for Universal Music Enterprises, allegedly received the package, decided to pass on the CD, and returned the contents to White. When White heard Mary J. Blige’s song “Family Affair” on the radio, he believed that it infringed his own song “Party Ain’t Crunk” and filed this lawsuit.

In 2006, the district court held that there was no infringement because the Plaintiffs failed to show that Blige had access to “Party Ain’t Crunk.” The district court also concluded that the melodies were not so similar that they were necessarily copied. They also held that no reasonable jury could find that the lyrics in the two songs were similar.

Judge R. Guy Cole wrote the opinion for the Court of Appeals. The opinion began with the basic legal standard for copyright infringement, which requires that the plaintiff has proof of ownership of a valid copyright and proof that the defendant copied original elements of the allegedly infringed work.

White’s ownership of the copyright was undisputed, and therefore the main dispute was whether there was any evidence that Blige had copied the song. The court found no direct evidence of copying, and noted that when there is no such evidence a plaintiff may “establish an inference of copying by showing (1) access to the allegedly–infringed work by the defendant(s) and (2) a substantial similarity between the two works at issue.”

Arguing that Blige and Dr. Dre had access to their work, Jones and White relied on the “corporate receipt” doctrine, under which “possession of a work by one employee of a corporation implies possession by another corporate employee who allegedly infringed the work.” Jones and White asserted that because they had delivered a demo CD of “Party Ain’t Crunk” to McKaie prior to the release of “Family Affair,” under the doctrine, it could be inferred that the creators of “Family Affair” had access to their work. The court rejected this argument, stating that such “bare corporate receipt” was not sufficient proof of access. The court itself had not previously ruled on the matter, but it cited opinions from other circuits requiring plaintiffs to introduce evidence that there was a “close relationship” through which the infringers had a “reasonable possibility” of viewing the allegedly infringed work. Jones and White did not show that Mary J. Blige or Dr. Dre knew McKaie or worked with him, or that their relationships with Universal employees supported an inference that McKaie transferred the CD to them through intermediaries.

The court noted that the failure to offer proof of access can be excused if the two works are so strikingly similar that there is no possibility of independent creation. The melodies and beats bore a “passing resemblance” to each other, but court held that the similarity was not so striking as to excuse Plaintiffs from failure to prove access. Furthermore, Dr. Dre offered sufficient evidence showing that he and Mary J. Blige had independently created “Family Affair” before “Party Ain’t Crunk” was in Universal’s possession.

United States v. Teh
Sixth Circuit, July 31, 2008, No. 06-2371 
Slip Opinion 

On July 31, the 6th Circuit affirmed the conviction of Thiah Teh, who was indicted after airport officials searched his luggage and found what appeared to be 756 counterfeited DVDs and 284 counterfeited DVD sleeve packages.  Teh was found guilty and sentenced to one year of probation under 18 U.S.C. § 545, which imposes fines and up to twenty years imprisonment for “knowingly import[ing] . . . merchandise contrary to law.”  Although the government did not indicate at trial what statutory provision provided the basis for the “contrary to law” element of the § 545 violation, it asserted on appeal that Teh’s actions violated 18 U.S.C. § 2318, which provides felony  penalties for up to 5 years for importing counterfeit labels, documentation, or packaging. 

Teh argued on appeal, inter alia, that a copyright violation could not serve as the basis for a § 545 offense under Dowling v. United States, 473 U.S. 207 (1985), which held that distribution of bootleg sound recordings could not be prosecuted under the National Stolen Property Act (”NSPA”).  The Supreme Court reasoned that, by enacting the Copyright Act, Congress intended to address copyright violations with more precision than the NSPA would allow.  In addition, the Court also expressed concern that civil copyright violations might otherwise come within the ambit of the criminal trafficking statute, which carries significantly more serious penalties. 

Nonetheless, the Sixth Circuit held that Dowling’s reasoning did not apply in Teh because the government’s use of § 545 did not give rise to same concerns as prosecution under the NSPA.  First, the court noted that in Dowling, the application of the NSPA would have allowed the government to entirely avoid application of the more precise and relevant Copyright Act.  In Teh, however, such circumvention did not occur – to prove the “contrary to law” element of § 545, the government necessarily needed to prove that Teh violated § 2318 of the Copyright Act.  Second, the court distinguished § 2318 from the NSPA, as the former was amended after Congress had enacted the Copyright Act to “specifically address the trafficking of counterfeit labels affixed to motion pictures by providing felony penalties for this offense.”  Third, the combination of § 545 and § 2318 did not result in the criminalization of an otherwise civil offense because § 2318 itself criminalizes counterfeiting activity.  For all of these reasons, the Sixth Circuit held that the district court’s decision was in error. However, the court concluded that, even if the district court’s decision had been in error, it would not have substantially affected Teh’s rights.  Given that Teh was only sentenced to one year probation under § 545, which was far less than the maximum five-year prison penalty imposed by § 2318, the court found Teh’s claim could not survive plain error review. 

Before shutting down his blog on August 1st of this year, Senior Copyright Counsel of Google Inc., William Patry commented on the case, writing

“In the end, the court of appeals confirmed the conviction, as a kind of harmless error, but there is nothing harmless in this type of counterfeiting: it is a cancer on the motion picture industry, and a quite appropriate use of government resources to stop it. Hopefully, in light of the Teh case, some of those resources will be allocated to proper drafting of indictments.”   

By Evan Kubota — Edited by David Lawson

Lambert v. Hartman et al.
Sixth Circuit, February 25, 2007, No. 07-3154
Slip Opinion
District Court Order

On February 25, the Sixth Circuit affirmed a ruling of the U.S. District Court for the Southern District of Ohio dismissing a § 1983 claim brought against the Hamilton County Clerk of Courts and Board of City Commissioners by a victim of identity theft, after the clerk published the victim’s Social Security number and other identifying information on a publicly accessible website. The court held that potential financial harm alone was insufficient to implicate the “fundamental liberty interest” necessary to trigger a right to informational privacy.

Online commentary on the appellate decision has been light, despite its potentially serious implications.
The Stanford Law School Center for Internet and Society elucidated the district court opinion.
The circuit court cited Helen L. Gilbert’s interesting Chicago Law Review Comment on informational privacy.

Cynthia Lambert received a traffic citation for speeding which included her name, signature, home address, birth date, driver’s license number, and Social Security number. The citation was published on the Clerk of Courts’ publicly accessible website. A woman then purchased approximately $20,000 of merchandise using a driver’s license with Lambert’s information. Both the citation on the website and the forged license contained the same incorrect driver’s license number, proving that the thief obtained the information from the clerk’s website.

In affirming the district court’s ruling, the circuit court maintained its narrow construction of the holdings in Whalen v. Roe, 429 U.S. 589 (1977) and Nixon v. Adm’r of Gen. Servs., 433 U.S. 425 (1977): the right to informational privacy exists only where the interest at stake implicates a “fundamental liberty interest.” Bloch v. Ribar, 156 F.3d 673, 684 (6th Cir. 1998). The presence of this constitutional dimension satisfies the first prong of the Sixth Circuit’s two-part test; the second prong involves balancing “the government’s interest in disseminating the information against the individual’s interest in keeping the information private.”

The court noted that it has only twice recognized a constitutional dimension to interests in informational privacy: once where the release could lead to serious bodily harm, and once where graphic, humiliating details of a rape were released. As a result, the court agreed with the court below that Lambert’s claim, predicated only on the harm to her credit rating, failed to implicate the necessary fundamental liberty interest. As her claim lacked the requisite constitutional dimension, the balancing test was not applied.

Lambert argued that the disclosure of her Social Security number implicated both liberty and property interests by, respectively, affecting her credit rating (and therefore her reputation) and her property interest in her personal information. The court, citing its holding in Bloch, limited its recognition of the right to informational privacy to “implicat[ion of] a fundamental liberty interest,” excluding indirect financial harm.

The Sixth Circuit’s position that disclosure of Social Security numbers is not subject to Fourteenth Amendment protections diverges from the stance offered by the Ninth Circuit in In re Crawford, 194 F.3d 954, 958 (9th Cir. 1999) (“[T]he indiscriminate public disclosure of SSNs, especially when accompanied by names and addresses, may implicate the constitutional right to informational privacy.”). The Ninth Circuit in Crawford also suggests that the Sixth Circuit’s position is in the minority, citing Second, Third, and Fifth Circuit holdings for their broader interpretations of Whalen and Nixon.