WTO Finds China’s Media Laws Violate International Trade Laws

On August 12, Ars Technica and the New York Times reported that the World Trade Organization ruled against China in a complaint by the United States regarding China’s limitation on imports of songs, movies, and books. The Chinese laws constituting trade violations require that many forms of imported media must be distributed by a single, state-owned company. The laws also limit foreign ownership of Chinese media companies and allow domestic companies to bypass trade censors. Ron Kirk, the US trade representative at the WTO conference in Geneva, said that the “decision promises to level the playing field for American companies working to distribute high-quality entertainment products in China so that legitimate American products can get to market and beat out the pirates.”

Hollywood Group Secures Preliminary Injunction against DVD Copying Software

On August 11, U.S. District Court Judge Marilyn Patel issued a preliminary injunction against RealNetworks, barring the company from selling its RealDVD copying software until a jury can decide the issue, CNET News reports. She stated that RealNetworks cannot use fair use as a defense under the Digital Millennium Copyright Act or the company’s license with the DVD Copy Control Association, but noted that “[i]t may well be fair use for an individual consumer to store a backup copy of a personally owned DVD on that individual’s computer.” While the decision is seen as a major victory for the Motion Picture Association of America, the Electronic Frontier Foundations views it as a setback for innovators and consumers.

David Kappos Sworn in as New Director of USPTO

Patently-O reports that on August 13, David Kappos was sworn as Director of the United States Patent and Trademark Office. Kappos addressed USPTO employees at the ceremony, pledging to work on “reducing the backlog of unexamined patent applications, cutting pendency dramatically, working off the mounting appeals backlog, [and] improving re-exam processing.” He also projected his goals to secure more stable financial backing or the USPTO, hoping there will be no need to utilize the Office’s new authority to use trademark funds to pay for patent operations. A video of Kappos’s swearing in ceremony is available on the blog Anticipate This!

By Tyler Lacey – Edited by Amanda Rice
Sedgwick Claims Management Services, Inc. v. Delsman, No. C 09-1468 SBA, July 17, 2009

The United States District Court for the Northern District of California granted the defendant blogger’s motion to dismiss a copyright infringement lawsuit following its determination that the blogger’s use of unaltered copyrighted photos is fair use and therefore not violative of copyright laws. The court held that Delsman’s use of two photographs of Sedgwick’s upper management, although unaltered, was fair use because Delsman’s use of the photographs was transformative insomuch as the images were used for a critical purpose, rather than Sedgwick’s original promotional purpose. Also important to the court’s fair use analysis was the fact that Delsman’s use of the images did not affect the commercial market for the original images in a legally important manner, since no market existed for the images anyway.

Eric Goldman has posted a summary of the order on his Technology and Marketing blog. Loeb & Loeb provides a thorough description and analysis of the order. Eugene Volokh notes that the court’s “fair use analysis strikes [him] as quite right” on his blog, “The Volokh Conspiracy.”

The controversy began when Delsman posted blog entries that criticized Sedgwick’s management. The alleged copyright violations occurred when Delsman mailed postcards featuring two copyrighted images of Sedgwick’s upper management personnel, taken from Sedgwick’s promotional materials, stylized as an old-fashioned “Wanted” poster, which included more comments critical of Sedgwick.  In holding that the use of these images in the mailings constituted fair use, the court analyzed four fair-use factors that allow for the use of copyrighted materials as established by the Copyright Act. The four factors are: “(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107. The court found that the first factor weighed strongly in Delsman’s favor because his use of the pictures was transformative, as the pictures served an entirely new purpose in the context that he gave them. The court found the second factor to be neutral because neither party made an argument based on the nature of the copyrighted work. The court also found the third factor to be neutral because although Delsman used the copyrighted works in their entirety, it was reasonable to do so because it served Delsman’s intended purpose. The court found that the fourth factor weighed in Delsman’s favor because there was no market value for the photographs, since they had merely been used in promotional materials. The court also pointed out any loss in market value caused by the alleged infringement and its critical depiction of Sedgwick would have been irrelevant because Delsman’s use was transformative.

This case is significant because it provides a framework for fair use analysis that is especially relevant for photographs and for use of copyrighted materials that is critical of the copyright holder. This case is also significant because it demonstrates that courts may be sympathetic to individual defendants such as Delsman, who represented himself pro se in his motion to dismiss, in the face of aggressively litigious copyright holders. The judge hearing the case was willing to liberally construe Delsman’s filings in order to avoid chilling his right to fair use of copyrighted works.

Lori Drew “Cyberbullying” Conviction Thrown Out

The Los Angeles Times reports that on July 2nd, a federal judge dismissed the case against “cyberbully” Lori Drew, saying that the clear terms of the Computer Fraud and Abuse Act (CFAA) preclude a guilty verdict. The Lori Drew case received widespread media attention eight months ago when the 50 year-old mother was found guilty of “unauthorized computer access” under the CFFA for aiding her daughter in creating a fake MySpace account that led to another girl’s suicide. The guilty verdict was ardently criticized for criminalizing violations of websites’ terms of service, which few users actually read when creating accounts, essentially allowing websites to make their own law.

China’s Mandatory Client-Side Censoring Program Delayed

Only a day before the previously announced July 1st deadline, the Chinese government announced, through official news agency Xinhua, a delay in the requirement that PC makers pre-install a web-filtering program called “Green Dam Youth Escort.” The Wall Street Journal reports that the project is not abandoned, but merely delayed. Green Dam was first released several months ago as a pornography-filtering program and didn’t evolve into a requirement until the beginning of June, much to the chagrin of PC manufacturers. After the University of Michigan discovered serious security holes, which would open computers to remote code execution, PC manufacturers began to worry about liability issues and possibly acquiring reputations for supporting censorship. So far, only Sony has shipped computers with the software pre-installed in advance of the July 1st deadline.

Supreme Court Allows Remote Storage DVR

Ars Technica and Wired both report that the Supreme Court declined to hear a final appeal in the Cablevision DVR case on the final day of its term. The Second Circuit had allowed Cablevision to continue offering its customers a recording system that is different from traditional recording only in that it stores the customers’ recordings of copyrighted content remotely on Cablevision’s servers. Because the consumer maintains control over the recordings, rather than accessing an on-demand library provided by Cablevision, the court ruled that the recordings were still fair use. Television networks called the case the most important since the 1984 ruling that consumer VHS recording of copyrighted movies falls under fair use. The Supreme Court’s silence aligns with the filing by the Obama administration suggesting that this case was not the appropriate forum to “clarify” the legal issues of fair use.

Another Nesson-RIAA Continue to Clash over File-Sharing

As reported by Ars Technica, Harvard Law professor Charlie Nesson is once more facing off against the RIAA’s MediaSentry in the illegal file-sharing suit against Joel Tenenbaum. Tenenbaum, like Jammie Thomas-Rasset before him, is accused of sharing songs illegally on KaZaa. Nesson and his associates aim to try the same legal tactic that has failed them in the past, namely attempting to discredit the evidence brought by the RIAA as being gathered illegally. The high-profile cases, including controversial high damage awards and internal defense disputes, have been part of a larger attempt to establish solid legal precedent, or prompt a legislative solution, for future file-sharing disputes.

By Sharona Hakimi – Edited by Stephanie Weiner
A.V. v. iParadigms, L.L.C., April 16, 2009, No. 08-1424
Opinion

On April 16, the US Court of Appeals for the Fourth Circuit affirmed a summary judgment ruling by the US District Court for the Eastern District of Virginia, holding that archiving of student works by commercial plagiarism detection website TurnItIn.com is a “fair use” under the Copyright Act, and therefore does not violate the students’ copyrights in their work. Additionally, Circuit Judge Traxler remanded the case to lower court to reconsider the defendant’s counterclaim for monetary damages under the Computer Fraud and Abuse Act, 18 U.S.C. 1030, based on one plaintiff’s unauthorized access to the site.

The case arose when the plaintiffs were forced by their high school teachers to electronically submit their written work and assent to an online agreement with TurnItIn.com. The website compares student papers to a database of other essays to find instances of plagiarism. At issue was whether the website, operated by defendant iParadigms L.L.C., violated the students’ copyright rights to their work when it archived them for future comparison with other student works.

David Kravets of Wired summarizes the opinion. Nate Anderson, writer for Ars Technica (and a former teacher), analyzes the case and its potential revolutionary effects on education. A recent magazine interview with John M. Barrie, CEO of iParadigms, expresses Barrie’s goals for plagiarism detection services. A 2007 news article discusses the original filing of the case.

The Fourth Circuit held that TurnItIn’s use of the papers was “fair” under the exception provided in 17 U.S.C. § 504. The court considered each of § 504’s four factors, finding: 1) Commercial use can be fair use, and, citing Perfect 10 Inc. v. Amazon.com Inc., use can be transformative “in function or purpose without altering or actually adding to the original work.” TurnItIn transformed the work by using the papers to prevent plagiarism and not for factual knowledge; 2) The website’s use does not diminish or discourage the author’s creativity or supplant the students’ rights to first publication; 3) Using the entirety of the papers did not preclude fair use; and 4) TurnItIn’s use does not affect marketability.

Though the lower court also held that the use was legal because students entered into a binding agreement with TurnItIn.com by assenting to a “clickwrap” contract, the Court of Appeals declined to address that issue because the website was protected under fair use.

A more contentious holding in the case concerned the defendant’s counterclaim. iParadigm alleged that one student made an unauthorized access to TurnItIn.com in violation of the Computer Fraud and Abuse Act, 18 U.S.C. 1030, offering evidence that plaintiff A.V. submitted a work to the website as a student of a university he did not attend. Unaware that the plaintiff had found the username and password posted on the internet, iParadigms underwent an investigation, fearing a technical glitch in the TurnItIn system. iParadigms sued for loss of man-hours spent responding to this concern. While the District Court dismissed this counterclaim on the ground that any damages were merely “consequential,” the Fourth Circuit remanded the case for further investigation, finding consequential damages to be recoverable under CFAA.

Thomas O’Toole of E-Commerce and Tech-law critiques the decision on the counterclaim: “If mere fear about the possibility of a technical glitch can put a defendant on hook for a week’s worth of technical assistance, CFAA claims will become even more attractive.”

Thousands of educational institutions in about 90 countries use the California-based plagiarism detection service, and perhaps now that the service is protected under fair use, iParadigm’s Jim Barrie may be right that an educational “revolution” against cheating students is underway.

Bourne Co. v. Twentieth Century Fox Film Corporation
S.D.N.Y, March 16, 2009, 07 Civ. 8580
Opinion (hosted by Exclusive Rights)

On March 16, 2009, Judge Batts of the Southern District of New York granted summary judgment for the defendants in a copyright infringement suit against the creators, producers and broadcasters of the television series Family Guy. Plaintiff Bourne Co. is the sole owner of the copyright to the popular song “When You Wish Upon a Star.” The plaintiff claimed that defendants had copied “When You Wish Upon a Star” in a “thinly veiled” manner in their song “I Need a Jew,” which appeared in an episode entitled “When You Wish Upon a Weinstein.”

Judge Batts first determined that “I Need a Jew” was parody, not satire, with a correspondingly greater need to borrow from source material. The court then established that the song satisfied the four-prong test for fair use forth set forth by the 1976 Copyright Act, 17 U.S.C. § 107, which, as developed by case law, places emphasis on the purpose and character of the use and the effect of the use on the potential market for the copyrighted content. The court therefore held that the importation of the melody was protected fair use. 

Reuters provides the basic facts. Exclusive Rights offers an overview of the opinion, examining the court’s treatment of the parody versus satire distinction and providing a brief video excerpt of “I Need a Jew.”
Legal Geekery also covers the opinion, characterizing it as a victory for fair use, and comments upon society’s willingness to depend on fair use as a shield against aggressive copyright enforcement. 
The animated film site suite101 hosts an article providing background on the Family Guy spoof from an industry perspective. 

Both parties in this case agreed that the defendants’ use of “When You Wish Upon a Star” would be copyright infringement but for a finding of fair use.  Notably, defendants initially approached Bourne Co. and asked for permission to use the song, but were denied.

Judge Batts opened her discussion of fair use by citing the Supreme Court’s seminal discussion of parody in Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994), which cautioned against the “rigid application” of the copyright statute when it would “stifle creativity.” She then determined that “I Need a Jew” was a parody rather than a satire under Campbell because its intent was at least in part to comment on its source material.  The defendants justified their song as a parody on two fronts: (1) as a contrast to the “saccharine sweet” worldview of the original and (2) as a pointed comment on Walt Disney’s reputation as an anti-Semite. Judge Batts pointed to evidence produced by defendants that awareness of both the sweetness of the song and Disney’s reputation were widespread, and noted that a parody does not have to be successful in order to be protected by fair use.

After looking at the four factors of the fair use test – (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used; (4) the effect of the use on the market for or value of the copyrighted work – Judge Batts found that the Family Guy parody was sufficiently “transformative” to satisfy the first prong.  Following Campbell, she gave little weight to the second prong. She found that the third prong weighed in the defendants’ favor since they had intentionally used enough of “When You Wish Upon a Star” to conjure up the original. She also resolved the fourth prong in the defendants’ favor in spite of plaintiff’s claim that this use would compete with licensed uses and that the anti-Semitic lyrics would harm the value of the song. She stated that the plaintiffs’ interpretation of the fourth prong would “swallow the prong completely” and that “I Need a Jew” is so different from “When You Wish Upon a Star” that it cannot be a market substitute for the original.

RDR Books withdrew its appeal to the Second Circuit on Thursday, December 4th.  The trial court, in an opinion by Judge Patterson, had permanently enjoined its publication of a Harry Potter Lexicon book, along with awarding statutory damages to plaintiffs Warner Brothers and J.K. Rowling.

Anthony Falzone, of the Stanford Fair Use Project and counsel for the defendant, released a blog post entitled “Lexicon Resurrected,” noting that RDR plans to publish a new Lexicon.  The new manuscript addresses concerns expressed by J.K. Rowling at trial as well as those expressed in Judge Patterson’s opinion.  According to Mr. Falzone, both RDR and the author of the Lexicon, Steven Vander Ark, like the new manuscript much more than the old one.

As reported by the Associated Press, Neil Blair, a lawyer for J.K. Rowling’s literary agency, stated that he was “delighted that this matter is finally and favorably resolved and that J.K. Rowling’s rights – and indeed the rights of all authors of creative works – have been protected.”  “We are also pleased to hear that rather than continue to litigate, RDR have themselves decided to publish a different book prepared with reference to Judge Patterson’s decision.”

Previously: Harry Potter Lexicon Found to Infringe J.K. Rowling’s Copyright

On November 7, 2008, defendant RDR Books filed a notice of appeal to the Second Circuit from the September 9, 2008 decision of the S.D.N.Y., which permanently enjoined its publication of the Harry Potter Lexicon book and awarded plaintiffs Warner Brothers and J.K. Rowling statutory damages of $6,750.

Previously: Harry Potter Lexicon Found to Infringe J.K. Rowling’s Copyright

Authors Guild, Inc. v. Google Inc.
S.D.N.Y., No. 05 CV 8136
Settlement Agreement

On October 28, 2008, the Authors Guild, Association of American Publishers, and Google reached a settlement that, pending approval by the court, will end a lawsuit that began three years ago when the Authors Guild filed a class action against Google on behalf of more than eight thousand authors in the U.S. District Court for the Southern District of New York. The Authors Guild alleged that Google infringed many authors’ copyrights by scanning and indexing their works as part of Google’s Library Project in order to display parts of these works in search results on Google’s Book Search product.

The settlement provides benefits to all major stakeholders.  If approved, it will allow Google to continue to scan copyrighted, out-of-print works and make them easily available to readers, furthering Google’s stated mission to “organize the world’s information.” Google will also be allowed to display advertisements alongside the books when they are displayed to readers, a strategy that is most likely key to Google’s monetization of the Book Search product, although rightsholders will receive the majority of the revenue from the advertising on web pages for specific books.

Google will continue to provide free access to full-text public domain works.  Google will also offer for purchase an Institutional Subscription, allowing organizations such as libraries, corporations, schools, and government organizations to obtain online access to collections from some of the world’s most renowned libraries.  These subscriptions will allow users to search, read online, and print books.

U.S. authors and publishers will also benefit from Google’s payment of more than $125 million, most of which will be used to create the Book Rights Registry, as well as ongoing revenue-sharing provisions administrated through this registry. The independent and not-for-profit registry’s primary purpose will be to identify the copyright holders for works and ensure that they receive proper compensation for Google’s use of their works.

Readers will also benefit from access to the copyrighted works through Book Search, although these benefits will only be fully realized by users accessing the site in the U.S. In addition to the substantial benefits provided by a searchable full-text index of print books, individual readers will be able to preview out-of-print works as well as purchase access to view entire works online from home.  Readers will also be able to view in-copyright, out-of-print works for free at designated U.S. public and university libraries.

More information about the settlement agreement is available on the Authors Guild’s Settlement Resources page and on Google’s equivalent page. Although the complexity of the agreement makes it difficult to fully appreciate its long-term effects, early analysis of the agreement are mixed. Ars Technica’s John Timmer believes that “it’s hard to find fault with the spirit of the agreement,” noting that the “big winners” are readers. The Laboratorium’s James Grimmelmann is concerned about the agreement because he says that it gives too much power to Google at the expense of competing search engines. Grimmelmann believes that the agreement should be modified, at a minimum, to allow other search engines to participate under the same terms as Google before being granted approval by the court. David Drummond, Google’s Chief Legal Officer, believes the agreement is groundbreaking. The University of California, University of Michigan and Stanford University, all of which were consulted by Google during the lawsuit, praised the agreement in a jointly issued press release.

The settlement agreement is significant not only because it resolves a three-year lawsuit involving Google and more than eight thousand authors and publishers and provides readers with access to millions of books, but also because of the larger implications that the litigation might have had if it had gone to trial. The plaintiffs alleged that Google was violating fair use by copying, indexing, and reproducing books without permission of the copyright holders. Similarly, Google, as well as many other search engines, already copies, indexes, and displays parts of billions of web pages without the explicit permission of their authors. A judgment against Google in this case might have forced search engines to fundamentally change how they index the Internet, although Google has so far been successful in defending its Internet search engine mechanism through defenses such as fair use and implied license in lawsuits such as Field v. Google and Parker v. Google.

On Monday, October 14, President Bush signed into law the Prioritizing Resources and Organization for Intellectual Property Act, also known as the PRO-IP Act, S. 3325. The PRO-IP Act steepens penalties for IP infringement and increases resources to the DOJ to coordinate state and federal efforts against counterfeiting and piracy.

Although opposed by the DOJ, the Act also provides for a “U.S. Intellectual Property Enforcement Coordinator” position within the Executive Office of the President, which commentators are referring to as a “Copyright Czar.” However, another controversial provision, which would have authorized the Attorney General to seek civil copyright infringement remedies for private copyright owners, was removed from the final bill.

5th Circuit Ruling May Endanger Patent “Rocket Docket” in the Eastern District of Texas
In Re: Volkswagen of America Inc.
5th Circuit, October 10, 2008, No. 07-40058
Slip opinion

In a 10-7 en banc decision, the Fifth Circuit issued a writ of mandamus ordering the transfer of a product liability case from the U.S. District Court for the Eastern District of Texas to the U.S. District Court for the Northern District of Texas.  The court held that the district court judge John Ward had abused his discretion when he denied a motion to transfer from the Eastern District, which had no connection to the parties, witnesses, or facts of the case, to the Northern District, which had extensive connections to the parties, witnesses, and facts of the case.  The dissent argued that the majority was misusing mandamus in violation of Supreme Court precedent, characterizing the district court judge’s order as nonappealable.

Commentators note the ramification of the court’s order on the common practice of filing patent suits in the notoriously plaintiff-friendly “rocket docket” Eastern District.  Under the majority’s reasoning, it may become easier for defendants to seek changes of venue.

German Courts Rule That Google Image Thumbnails Infringe on Copyright

Google has recently lost two copyright suits in Germany, where the courts have ruled that Google’s use of thumbnails of copyrighted images in its image search engine constitutes infringement.  Google plans to appeal.

These rulings stand in contrast to U.S. precedent, such as the Ninth Circuit’s holding, in Perfect 10 v. Amazon, that Google’s use of image thumbnails was a fair use.  Similarly, eBay has seen divergent international outcomes with respect to trademark infringement claims. The S.D.N.Y. ruling in Tiffany v. eBay held that eBay did not have to increase its efforts to police trademark infringers, while courts in Germany and France instead ruled in favor of luxury brands Rolex and Louis Vuitton.

Lennon v. Premise Media Corp. (S.D.N.Y.)

The suit filed by Yoko Ono and the children of John Lennon against the producers of Expelled, a motion picture that used a clip of the song “Imagine” without permission, was withdrawn and dismissed last month.  However, Anthony Falzone, Executive Director of Stanford’s Fair Use Project and counsel for defendants, notes:

[T]he right result came far too late. The mere pendency of these cases caused the film’s DVD distributor to shy away from releasing the full film — the version that includes the Imagine segment. So the film goes out on DVD on October 21 in censored form, illustrating the damage that even an unproved and unsupported infringement claim can do.

Previously: District Court Denies Yoko Ono Lennon’s Motion for Injunctive Relief