Gamer Appeals Ban from Sony’s Playstation 3 Network

On September 22, 2009, the United States District Court for the Northern District of California dismissed Erik Estavillo’s lawsuit against Sony. Fox40.com reports that Estavillo was banned from Sony’s Playstation 3 Network after allegedly uttering “racial and homophobic slurs to other online gamers.” Estavillo alleged that his freedom of expression was abridged, and likened Sony’s network to a company town. The district court dismissed Estavillo’s First Amendment claims, stating: “Sony’s Network is not similar to a company town. The Network does not serve a substantial portion of a municipality’s functions, but rather serves solely as a forum for people to interact subject to specific contractual terms.” Estavillo recently appealed the dismissal to the Ninth Circuit and has also filed a second lawsuit against Sony.

German Government Pledges to Protect Online Journalism in Germany with a “New Kind of Copyright”

On October 29, 2009, the New York Times reported that Germany’s governing coalition “has pledged to create a new kind of copyright to protect online journalism” with the goal of “level[ing] the playing field with Internet companies like Google.” German publishers fear that Google may be “exploiting their content to build lucrative businesses without sharing the rewards.” Google aggregates news from many news outlets on its Google News website; however, Google News operates in Europe without collecting any advertising revenue. Although “[d]etails of how the proposal would work have not been spelled out,” analysts believes that the new copyright scheme may allow online journalists to “claim royalties for the use of their content by Google or other online ‘aggregators’ of news.” In support of the new scheme, counsel for the German Newspaper Publishers Association argues that there is “no fundamental right to information for free on the Internet.”

United Kingdom to Crack Down on Online Piracy; Could Lead to Outright Disconnection of Pirates

On October 28, 2009, the BBC reported on new legislation that will come into force in the United Kingdom in April 2010. Although “the details of it would need to be hammered out at European level,” the legislation will impose bandwidth restriction on suspected pirates. If necessary, more restrictions will be introduced in the spring of 2011 that could completely disconnect the suspected pirates from the Internet. The legislation already faces challenge from ISP TalkTalk, which has created a “Don’t Disconnect Us” campaign and threatened litigation. Although the legislation is designed to protect the United Kingdom’s creative content industries, legislators emphasize that the long-term solution is for “the industry to educate users and to offer new and cheaper ways to download content.”

In re: In the Matter of the Application of Cellco Partnership d/b/a Verizon Wireless, Case Nos. 09-cv-07074 & 41 Civ. 1395 (S.D.N.Y. Oct. 14, 2009)
Opinion (Hosted by EFF)

The Southern District of New York has ruled that cell phone ringtones do not constitute a public performance, and thus mobile phone carriers do not need to pay performance royalties under the Section 110(4) of the Copyright Act.  The court also dismissed the argument that cell phone carriers publicly perform when they reproduce and download a ringtone to a phone.

United States District Judge Denise Cote dismissed the music industry argument that a ringtone is like a concert hall when it begins ringing/playing in public, instead determining that playing music in public, when done without any commercial purpose, does not infringe copyright.   In so holding, the court ruled that cell phone users are not liable for royalty payments and that carriers are not secondarily liable.  Judge Cote reasoned that the exemption Section 110(4) applies because cell phones announce phone calls and are not sources of commercial public entertainment.

Ars Technica and Wired.com provide an overview of the case.  Both EFF and CDT applaud the decision as a major win for consumers and fair use.

The American Society of Composers, Authors and Publishers (“ASCAP”), which collects royalty payments for public performances of songs, argued that the wireless cellular companies engage in public performance of musical works when they download ringtones to customers’ phones, and should be directly and secondarily liable when customers play ringtones on their telephones.  It requested additional royalties for these performances under Copyright law.  In a different strategy from the RIAA’s lawsuit campaign against individual users, the ASCAP instead went after AT&T and Verizon for revenues above those already paid for download rights.

The court reasoned that downloading a ringtone to a customer’s cellular telephone does not “transmit” a performance of the work to the public because only one subscriber is capable of receiving the transmission and it is not made available to the larger public.

ASCAP also argued that cellular companies engaged in a public performance of copyrighted musical works when ringtones play in public on customers’ cellular telephones.  The court ruled, however, that the cellular companies do not “recite, render, play, dance, or act [the ringtone] either directly or by means of any device,” and thus do not “perform” the music, as that term is defined in the Copyright Act.

The court held that secondary liability depends upon a finding of direct or primary infringement, and that Verizon “has shown that the cellular telephone user is not liable for copyright infringement even when the telephone rings in a public setting.”  Moreover, the court reasoned that without a commercial purpose in the playing of the ringtone, the public performance exemption in 110(4) applies.

The ruling is a win for consumers because it expands the public performance right and preserves the ability of consumers to make private uses of the music they legally purchase.  It also expands a 2007 ruling that likewise concluded that a download is not a public performance.

Interactive Media Entertainment and Gaming Association Inc. v. Attorney General of the United States, No. 08-1981 (3d Cir. Sept. 1, 2009)
Opinion (Hosted by wired.com)

On September 1, 2009, the U.S. Court of Appeals for the Third Circuit affirmed the United States District Court for the District of New Jersey decision, which upheld the Unlawful Internet Gambling Enforcement Act of 2006.

Wired.com provides an overview of the case. The Wall Street Journal features an analysis of the decision and its potential effects on online gambling. Additional analysis can be found on ZDnet and Law.com.

The appellate court held that the Act, which bans credit card companies or other institutions from processing payments for unlawful online betting, was not impermissibly vague and did not violate an individual’s privacy rights, the two primary arguments raised by Interactive.

With regard to Interactive’s vagueness argument, the court stated that the law “clearly provides a person of ordinary intelligence with adequate notice of the conduct that it prohibits.” The court also noted that “the Act itself does not make any gambling activity illegal.” Rather, the underlying state law governing gambling determines whether a particular bet is illegal. Accordingly, any vagueness problem is not with the Act, but with the state law governing the application of the Act.

Additionally, the court noted that Interactive’s privacy argument cited Lawrence v. Texas, 539 U.S. 558 (2003), and Reliable Consultants, Inc. v. Earle, 517 F.3d 738 (5th Cir. 2008), both of which prohibited forms of sexual conduct between consenting adults in the privacy of their homes. The court found that gambling “simply does not involve any individual interests of the same constitutional magnitude,” so Interactive’s reliance on Lawrence and Earle was misplaced.

The Act and this decision upholding it are undoubtedly blows to Internet gambling sites, which will not be able to receive payment via credit cards.  Nevertheless, many gambling sites already are able to collect payments through other methods.  Additionally, the Wall Street Journal reports that Joe Brennan Jr., chairman of Interactive Media, is hopeful that “language in the decision appearing to place the issue under state jurisdiction” could be “a silver lining,” as it opens the door for state regulation of online gambling.

Paris Hilton Obtains Small Victory in Ninth Circuit

WSJ Blogs reports that the Ninth Circuit gave Paris Hilton the green light on August 31 to proceed in her lawsuit against Hallmark for its use of her image and the phrase “That’s Hot” in a birthday greeting card. The court made note of the similarities between the card and Hilton’s appearance on the television show “The Simple Life.” In support of Hilton, the court stated that she “has at least some probability of prevailing on the merits before a trier of fact.” The case name is Hilton v. Hallmark Cards.

Cable Companies No Longer Capped at 30% Market Share

The Washington Post reports that on August 28, the Court of Appeals for the D.C. Circuit in Comcast v. FCC invalidated an FCC rule that capped the market share of cable companies at 30%. The FCC supported the rule because it believed that cable companies with market share larger than 30% would harm consumers. The court rejected the FCC’s rule in part because it failed to show how consumers would be harmed by the large cable companies in the current market, given the competition between cable, satellite, and fiber optic providers.

Texas Links DNA to Criminal Records

WSJ Blogs reports that on September 1, a new law took effect in Texas will link DNA evidence to sexual assault suspects’ criminal records. The link will be maintained regardless of whether the statute of limitations has passed or the suspect has been tried. The law’s supporters want to ensure harsher penalties to these suspects should they face legal troubles in the future, as the record would be available to parole boards and prosecutors. Critics of the law, including the ACLU, fear the potential abuse of due process rights.

Florida Bar Wants Access to Certain Applicant Facebook Profiles

The Florida Board of Bar Examiners will now be requesting access to the Facebook profiles of certain applicants on a case-by-case basis. The Board has identified a number of categories of applicants that it will require access from, including persons with a history of certain types of legal experience or substance abuse. The Citizen Media Law Project notes many of the privacy concerns related to the Bar’s decision.

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!

Class Action Seeks Compensation for Use of Likeness of Former NCAA Players

By Ian B. Brooks – Edited by Sarah Sorscher
Class Action Complaint, O’Bannon v. NCAA, No. CV 09-3329 (N.D. Cal. July 21, 2009)
Complaint

Former National Collegiate Athletic Association (NCAA) player Edward C. O’Bannon, Jr. filed a class action lawsuit on behalf of former NCAA student-athletes in the US District Court for the Northern District of California against the NCAA, the Collegiate Licensing Company (CLC), and multiple alleged co-conspirators for unlawful use of class member’s images. The complaint seeks unspecified damages and injunctive relief for violations of the Sherman Act and unjust enrichment of the defendants as well as accounting of licensing revenues. In support of his complaint, O’Bannon cites sources of NCAA licensing of players images for which the players receive no direct compensation including DVDs, rentals of game films, on-demand sales of game footage, cable and network broadcasts of games, photographs, action-figures, posters, and video games. The complaint further seeks injunctive relief on behalf of current students with respect to their rights to control the use of their image and likeness.

Sports Illustrated provides an overview of the case and Projo Sports Blog provides background. Kevin Arnovitz and Rush the Court have weighed in their support in favor of the athletes.

The plaintiff, O’Bannon, is a former NCAA basketball national champion who played for the University of California, Los Angeles (UCLA) between 1991 and 1995. O’Bannon alleges that his image has been featured without his consent in various media over the last four years preceding the filing of the complaint. Defendant, NCAA is an unincorporated not-for-profit educational organization responsible for many aspects of collegiate athletics. To participate in NCAA athletics, the NCAA requires each student-athlete to sign Form 08-3a, which grants the NCAA the right to use the athlete’s name or picture to “promote NCAA championships or other NCAA events, activities or programs.” The complaint alleges that Form 08-3a has been utilized by the NCAA to prevent current and former athletes from receiving compensation. The complaint notes that the retail market resulting from college athletes has grown from $100 million per year in the 1980s to its current level of approximately $4 billion per year. With the increase in deals made by the NCAA and CLC, the complaint alleges that in recent years the NCAA has “unlawfully utilized the images of Class members.” Television deals in the billions of dollars, DVD sales and rentals, rebroadcasts of classic games, as well as video games from alleged co-conspirator Electronic Arts, Inc. are examples of deals that contribute to this growing market. The video games are particularly a target for their use of the player’s likeness and jersey numbers without use of the player’s pictures or name. Electronic Art’s games also feature players that are no longer in the NCAA as part of “classic teams” in the game. The complaint alleges that the use of player’s likeness in the games has not been authorized by the players.

This case is not the first against the NCAA seeking to end the practices of denying compensation to student-athletes for the use of their likeness. This case differs in focusing on seeking compensation only for players that no longer play for the NCAA. As noted by Sports Illustrated, a favorable decision for the athletes could change the market for the use of athlete images.

The complaint provides further support for these athletes by noting the sacrifices the players make in their education to support their athletic programs, the debt that “full-scholarship” players can carry upon leaving their schools, and medical bills and injuries that plague the players after their college years are over. If this case proceeds to trial, it will be left to the jury to decide whether the arguments in favor of the athletes have merit.

By Sharona Hakimi – Edited by Anthony Kammer
Arista Records LLC v. Usenet.com, Inc., June 30, 2009, No. 07 Civ. 8822
Opinion

On June 30, 2009, a New York District Court granted summary judgment for the Recording Artist Association of America (RIAA) in its case against Usenet.com.  Judge Harold Baer of the Southern District of New York held the website liable for direct, contributory, and vicarious copyright infringement.  Additionally, Judge Baer issued discovery sanctions against Usenet.com for engaging in a wide array of litigation misconduct that included wiping hard drives, sending witnesses to Europe to avoid depositions, and stonewalling legal questionnaires.  A magistrate judge will soon determine the appropriate remedies.

Ars Technica summarizes the litigation, providing background to the case and the history of the website.  Greg Sandoval of cnet news offers a short recap of the case.  Billboard.biz writer Ben Sheffner outlines the potential precedential impact of the decision.  The RIAA released a statement regarding the victory on its Music Notes Blog.

In a suit that arose in October 2007, the RIAA sued Usenet.com, Inc., Sierra Corporate Design, Inc., and the companies’ director and sole shareholder, Gerald Reynolds.  The RIAA accused the company of allowing and encouraging users to pay up to $19 a month to gain access to their copyrighted material.  Usenet.com is a commercial provider of access to Usenet newsgroups, which offer “binaries” groups that are used to share music, movies, and pictures without paying labels or publishers.  At trial, the RIAA offered evidence that the Usenet.com marketers had targeted young people who use file-sharing programs, promising that Usenet.com was “a safe alternative to peer-to-peer file sharing programs [record companies] were getting shut down.”

The District Court held that Usenet.com satisfied the Cablevision test of direct infringement because the company took active steps and routinely exercised control over its servers and customers’ ability to obtain copyrighted music files.  Significantly, Judge Baer held that Usenet.com was guilty of secondary infringement (vicarious and contributory) and could not claim protection under the Sony Betamax decision, which allowed companies to avoid liability for contributory infringement if the device they create is “capable of significant non-infringing uses.”  While Sony had no control over what its buyers did with its products, Usenet.com maintains an ongoing relationship with its customers.  

During litigation, the RIAA accused Usenet.com of withholding evidence such as emails, as well as destroying seven hard drives that held employee-generated data.  Usenet.com was also accused to providing false information and sending employees to Europe to avoid depositions.  The judge made a point of noting that there was “strong evidence of extreme wrongdoing,” and he refused to allow the defendants to assert an affirmative defense under the Digital Millennium Copyright Act’s (”DMCA”) safe harbor provision. 

The DMCA safe harbor provision protects Internet service providers from being held responsible for criminal acts committed by users.  Without the safe harbor defense, Usenet.com had no case to make, and Judge Baer therefore issued summary judgment for the recording industry.  A magistrate judge will determine an injunction and damages in the next few weeks. 

In a statement released on its Music Notes Blog, RIAA spokeswoman Cara Duckworth stated, “We’re pleased that the court recognized not just that Usenet.com directly infringed the record companies’ copyrights but also took action against the defendants for their egregious litigation misconduct. 

While peer-to-peer networks like BitTorrent account for far more pirated downloads than Usenet services, copyright owners are particularly concerned about Usenet.com.  Usenet users demonstrate a willingness to pay for online content, and therefore these downloads are more likely to represent lost sales.  Although Usenet.com is only one portal to Usenet services, this can be seen as the biggest blow to the Usenet network to date.

By Anthony Kammer-Edited by Amanda Rice
RIAA/Capitol v. Thomas-Rasset

On Thursday, June 18, 2009, a federal jury in Minneapolis, MN returned a $1.92 million verdict against Jammie Thomas-Rasset for willfully infringing the copyrights of twenty four songs she had made available for download on Kazaa, a file-sharing program. The suit, brought by the Recording Industry Artists of America (”RIAA”), involved copyrights owned by subsidiaries of four major recording companies, Warner Music Group, Universal Music Group, EMI, and Sony Music Entertainment.

ArsTechnica provides a full account of the trial. IT Blogwatch provides a compilation of some of the blog coverage of this case. As reported by Wire, several copyright academics have suggested that the ‘make available’ standard was not met in this case.

The jury had previously awarded a verdict of $222,000 in October, 2007, but Judge Michael Davis granted a retrial after acknowledging that he had wrongly instructed the jury. At the time of the first trial, Judge Davis called the verdict “wholly disproportionate” and urged Congress to alter the current copyright laws.

The suit was one of over 30,000 initiated by the RIAA since December 2003 and the only of these cases to have been heard before a jury. The majority of the alleged infringement cases were settled out of court, with an average in the range of $3000 to $5000 per song.

Current copyright laws allow recording companies to recover between $750 to $30,000 for each copyright infringement, and this can be elevated to $150,000 if a jury determines the infringement was willful. The jury in Thomas-Rasset’s case’s award of $1.92 million comes to $80,000 per violation. The 1.92 million dollar playlist can be viewed at Wire.

RIAA spokesperson Cara Duckworth stated after the trial that the RIAA remains willing to settle the case. Ben Scheffner reported that Thomas-Rasset’s attorneys are also interested in the possibility of settling.

Thomas-Rasset’s defense team attempted to portray the RIAA as a team of rich executives who can “come after you like the Terminator.” Additionally, the defense denied that Thomas-Rasset had shared the files, despite overwhelming evidence that her home computer and Kazaa account were involved in transmitting the files. According to Kiwi Camara, one of Thomas-Rasset’s attorneys, the jury probably returned such a large verdict because they thought Thomas-Rasset was lying about not sharing the files in question. 

Kiwi Camara, Joe Sibley, and Tim Nyberg, who provided pro bono defense were all classmates at Harvard and students of Charles Nesson. According to ArsTechnica, Camara and Nesson will be joining together to file a class action suit against the RIAA later this summer to attempt to recover the money the association has collected from file-sharers. 

By Jad Mills – Edited by Caitlyn Ross
AFL Philadelphia LLCl v. Krause, June 4, 2009, No. 09-614.
Slip Opinion hosted by Exclusive Rights.

On June 4, 2009, Judge Baylson of the Eastern District of Pennsylvania denied Philadelphia Soul’s motion to dismiss defendant Joe Krause’s counterclaims for trademark infringement and misappropriation of name in AFL Philadelphia LLC v. Krause. The judge allowed both counterclaims to go forward because Krause had sufficiently alleged that his name had acquired the necessary “secondary meaning” for trademark protection under the Lanham Act.

Ex©lusive Rights and Shannon Duffy provide summaries of the case, paying particular attention to Judge Baylson’s inclusion of Bon Jovi song references in the opinion. An earlier post by Ex©lusive Rights summarizes the ongoing Pennsylvania State Court litigation between the same parties. 

Philadelphia Soul, an arena football league (AFL) team partially owned by Jon Bon Jovi, sued Joseph Krause in federal court after Krause filed suit in state court for almost $125,000 in unpaid commissions. Philadelphia Soul had terminated Krause and other staff members after AFL suspended the 2009 season. Among other things, Philadelphia Soul alleged that Krause infringed its copyright and trademark by making and selling championship rings using the team’s logo. Krause counterclaimed for Lanham Act violations and for misappropriation of his name based on an email sent out to season ticket holders by Philadelphia Soul discussing the season suspension. The email indicated that it came from “Joe Krause [mailto: jkrause@philadelphiasoul.com].”

Before analyzing the elements of the Lanham Act claim, the court applied the 5 factor Conte test to determine whether Krause had prudential standing under the Lanham Act. The court held that 4 of the factors favored prudential standing and that the fifth factor was neutral. Although the court recognized that “the nature of [Krause's] injury [was] somewhat remote from the type of injury that Congress sought to protect in the Lanham Act,” it found that Krause’s pleadings justified prudential standing because the Act protects against harm to one’s commercial reputation and goodwill. Judge Baylson found that Krause pled damage to his commercial reputation by alleging that Philadelphia soul had “diverted some of their reputational damage to Defendant by associating him with their actions.”

The court held that Krause had sufficiently pled all three elements of the Lanham Act claim. First, Krause’s name was a protectable mark because it had acquired “secondary meaning” by becoming synonymous in the public mind with the sports and entertainment industry. The secondary meaning was evidenced by the length of time in which Krause’s favorable reputation was used, the extent and number of sales under Krause’s directorship, Philadelphia Soul’s use of his name to send the email, and because the email caused actual confusion among recipients. Second, Philadelphia Soul admitted that Krause owned his own name. Third, the court found that Krause had sufficiently pled a likelihood of confusion because consumers viewing the email would probably assume that the email was associated with Krause. 

The court also held that Krause had sufficiently pled misappropriation of name. Although Judge Baylson found that Krause did plead that Philadelphia Soul appropriated Krause’s name for commercial benefit, he held that misappropriation of name, in contrast with the right of publicity, does not require commercial benefit. Misappropriation of name takes place even when the defendant “makes use of the plaintiff’s name or likeness for his own purposes and benefit, even though the use is not a commercial one, and even though the benefit sought to be obtained is not a pecuniary one.”

This case suggests that an individual may demonstrate that her name has achieved legally protected distinctiveness through secondary meaning by being publicly viewed as synonymous with a specific industry, as opposed to being synonymous with a specific business. 

Wiki Operator Seeks Right to Host Discussions About Circumvention of iPhone’s DRM System

Wired reports that on April 27, BluWiki operator OdioWorks filed a declaratory judgment lawsuit against Apple in order to “clarify the rights of the parties.” Last November, Apple threatened OdioWorks with legal action over a thread discussing how to use unapproved software on both the iPod and iPhone. Apple claimed that the content was “designed to circumvent Apple’s FairPlay digital rights management system” in violation of the Digital Millennium Copyright Act. OdioWorks initially complied with Apple’s takedown demands, but is now being supported by Keker Van Nest and the Electronic Frontier Foundation in its lawsuit.

Ontario to Propose New Legislation Banning Ticketmaster from Reselling Tickets Through Its Subsidiaries

On April 29, The Toronto Star reported that Ontario’s Attorney General Chris Bentley plans to introduce a bill that would outlaw ticket sales companies such as Ticketmaster from reselling their tickets on subsidiary websites. Although ticket scalping is already illegal in Ontario, Bentley says the proposal is in response to complaints from customers upset with Ticketmaster’s practice of reselling tickets at prices above face value on its subsidiary TicketsNow. Ticketmaster had previously agreed to voluntary limitations on its use of TicketsNow in the United States.

European Union Votes to Extend Music Copyright by 20 Years

The European Parliament voted on April 23 to extend the length of musical copyright protection from 50 years to 70 years. If the proposal is approved by the European Council, artists will be able to continue receiving royalties for up to 70 years after the first release of their songs. Ars Technica reports that several groups have criticized the extension because most of the new royalties will go to record labels rather than the original performers of the songs.