JOLT Digest

By Lauren Henry

Music Industry Disputes the Legality of Amazon’s Media Storage Locker

Last week, Amazon debuted a new music storage storing and streaming service, which enables users to store their music in the cloud and view their content on other devices using an Android app. Ars Technica reports that the music content industry disputes Amazon’s right to offer this service without securing additional licenses. While Amazon has declares its right to provide the service without further licensing, Engadget reports that Amazon might be negotiating licensing agreements behind closed doors. The Guardian suggests that this innovation could change and liberate the way consumers interact with media, and positions Amazon to remain an industry leader in cloud computing. Musicweek notes that since Amazon’s user experience is technically imperfect, other companies with similar models — including Apple and Google — threaten to encroach upon the new ground Amazon broke.

Google to Implement Privacy Program under Google Buzz Settlement

On Wednesday, the FTC announced that it reached a settlement with Google regarding the company’s privacy practices during its rollout of Google Buzz, a social network and microblogging web application. FindLaw discusses the major elements of the settlement agreement, including the implementation of a privacy program dedicated to consumer privacy risk identification and fixes, which will be subject to third-party audits every two years for the next two decades. In an editorial, the Los Angeles Times suggested that this settlement “defines for the industry what the FTC expects of all companies,” and should be heeded by other companies engaged in social networking. Google’s director of privacy issued an apology and promised to improve the company’s privacy practices via the official Google blog.

Facebook Hit with $1 Billion lawsuit over “Third Intifada” Page

TechCrunch reports that Mark Zuckerburg and Facebook have been sued for $1 billion under allegations of assault and negligence, after Facebook removed a page calling for a third Palestinian intifada too long after the page was created. Facebook commented that its policy of permitting free speech led it to permit the page to remain until it became dominated by calls for violence; the page had initially been a forum for peaceful protest. The complaint accuses the defendants of acting tortiously to “further their revenues and the net worth” of the company. TechCrunch and Slate note that the lawyer behind the lawsuit, Larry Klayman, is no stranger to high profile, controversial litigation, having sued Hilary Clinton, the so-called Ground Zero Mosque, Venezuelan President Hugo Chavez, and his own mother.

By Emily Hootkins

FTC Proposes ‘Do Not Track’ System for the Web

CNET reports that the Federal Trade Commission is endorsing a “Do Not Track” mechanism for the web, reminiscent of its popular “Do Not Call” list. David Vladeck, director of the FTC’s Bureau of Consumer Protection, envisions the concept as “a setting similar to a persistent cookie” that would signal whether the consumer is willing to be tracked or receive targeted advertisements. PC Magazine highlights some potential technical difficulties of such a proposal, such as the absence of a persistent, individualized identifier: unlike telephone numbers, a person’s IP address can change, and computers are often operated by multiple users. The FTC is currently asking stakeholders to submit comments on this proposal.

Federal Authorities Drop Charges in Xbox-Modding Suit

PCWorld reports that the first criminal trial for game-console modding has been dismissed. The prosecution dropped the case “based on fairness and justice,” after conceding its error in not disclosing to the defense important facts that would be presented in the first witness’ testimony. As Wired reports, federal authorities charged Matthew Crippen with modifying Xboxes to enable them to play pirated games. Crippen was prosecuted under untested provisions of the Digital Millennium Copyright Act; it remains to be seen whether the government will make another attempt at pursuing criminal charges for game-console modding.

Congress Approves Legislation to Regulate Sound Volume of Television Advertisements

The Wall Street Journal reports that Congress has approved legislation prohibiting television advertisements from being played at volumes louder than regular television programming. The bill, known as the Commercial Advertising Loudness Migration (CALM) Act, will require advertisers to adopt industry technology that modulates sound levels. Ars Technica notes that loud commercials are consistently one of the most common consumer FCC complaints about television. If President Obama signs the bill into law, advertisers will have one year to come into compliance with the Act.

Senate Judiciary Committee Passes Fashion Design Protection Bill

The Wall Street Journal reports that the Senate Judiciary Committee has unanimously passed the Innovative Design Protection and Piracy Prohibition Act. If enacted, this bill will give clothing designers intellectual property rights in their fashion designs. The bill provides a three-year term of protection for designs that demonstrate novelty and originality. According to Reuters, the bill contains important exceptions that address controversial aspects of previous bills providing for fashion copyrights. There is an “independent creation” defense, which a designer can assert if an independently-created design happens to overlap with a copyrighted design. The bill also includes a home sewing exception, and establishes a strict standard that requires designs to be “substantially identical” to support claims of infringement.

By Kassity Liu

Judge Orders Copyright Plaintiff to Justify Joining Thousands of Defendants in a Single Lawsuit

Ars Technica reports that Federal Judge Rosemary Collyer ordered the US Copyright Group to explain why joining thousands of anonymous “John Does” into one lawsuit is permissible under the Federal Rules of Civil Procedure (FRCP). The judge, after encountering one case that was filed against 4,577 anonymous P2P defendants, issued the order requiring the Group to “convince [her] within two weeks that jamming 4,577 people into a single lawsuit is a proper use of the court system.” In an amicus brief filed by the ACLU and EFF, the two organizations argued that this type of joinder is improper according to FRCP 20, which states that a plaintiff may only join a defendant in a lawsuit if the plaintiff is able to “assert . . . relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences.” If it permits this suit, the court runs the risk of denying a fair trial to a large number of defendants; however, forcing the plaintiff to pursue a case against each individual defendant may result in undue delay and expense.

Ninth Circuit Decision may Swallow the Protections Afforded by the First Sale Doctrine

Ben Sheffner reports in his blog that the Ninth Circuit recently posted the oral arguments given by the opposing parties in UMG Recordings, Inc. v. Augusto. The case will address the scope of the first sale doctrine, which places limitations on the control of copyright owners over the reselling or distribution of their products. The Electronic Frontier Foundation provides an overview of the case. In 2007, Universal Music Group (UMG) sued Troy Augusto for reselling its promotional CDs, alleging that the reselling violated “its exclusive right to distribute its works under 17 USC § 106(3)” because these CDs were only licensed “for a limited purpose to a limited group.” The district court had relied upon an obscure postal statute that “characterize[d] unordered merchandise as a gift” (internal quotations omitted) to find that the reselling was protected by the first sale doctrine and thus did not violate U.S. copyright law. If the Ninth Circuit rules for UMG, then copyright owners would gain the power to limit the distribution of their products using limited license labels.

FTC to Launch Investigation in Apple’s Exclusionary Practices with its Mobile Operating System

Ars Technica reports that the FTC is investigating whether Apple’s decision to allow only certain third-party compilers to place software and data on its mobile operative system constitutes a violation of U.S. antitrust law. The investigation is still in its early stages and has not become public, but inside sources suggest that the FTC and the U.S. Department of Justice settled their rumored debate over which agency would investigate Apple’s practices. Last month, Ars Technica reported on the discussions between the two agencies regarding “which one [would] launch the antitrust inquiry” that preceded the current FTC investigation. It is unknown which companies are behind the complaint to the FTC; both Adobe and Google are listed as potential parties.

By Chinh Vo

Spyware Vendor Settles Suit with FTC, Promises To Take Steps To Reduce Misuse

Ars Technica reports that software company Cyber Spy has agreed to cease marketing its keystroke-logging spyware in a way that attracts malicious users. The company’s promise is part of a settlement with the FTC, which charged Cyber Spy in 2008 with unfair selling and advertising because its Remote Spy product provided customers with instructions for attaching spyware to emails in order to track a target’s keystrokes and online activities. The district court in the case issued an injunction, temporarily banning Cyber Spy from selling Remote Spy. Under this settlement, Cyber Spy promises to stop promoting its Remote Spy application as a “100% undetectable” way to “Spy on Anyone. From Anywhere.” The company must also warn purchasers that using the software improperly may violate the law and take other steps to prevent malicious use of its product.

Lawyers Claim Google Deliberately Collected Data from Wi-Fi Networks

Wired reports that lawyers suing Google have claimed that a 2008 patent application demonstrates that the company deliberately programmed its Street View cars to collect private data from open Wi-Fi networks. Google is facing several class action lawsuits following its disclosure that its Street View cars intercepted Wi-Fi traffic, an action that the internet giant attributes to coding error. According to the lawyers, the patent application describes a method for increasing the accuracy of location-based services by intercepting data. Google spokeswoman Christine Chen stated that, despite the lawyers’ claims, the patent application “is entirely unrelated to the software code used to collect Wi-Fi information with Street View cars.” She added that not all of the patent applications that Google files “mature into real products or services,” but did not comment on whether Google has actually used the methods described in the particular patent application in question.

USPTO Proposes Fast Track To Expedite Patent Application Review

The Wall Street Journal reports that the U.S. Patent and Trademark Office is proposing a new three-track system that would allow applicants to pay an undisclosed premium, on top of the $1090 filing fee, to expedite review of their applications. Currently, the USPTO reviews patent applications mostly on a first-come, first-served basis. In a press release, USPTO Director David Kappos stated that “traditional ‘one-size-fits-all’ examination timing may not work for all applicants” and emphasized a goal of promoting efficiency. The USPTO has faced growing complaints from businesses due to its increasing backlog; last year it took 34.6 months on average for patent applications to be reviewed. The proposal could go into effect next year following a public comment period.

Ninth Circuit Affirms Injunction Against Online Check-Issuer Qchex
By Leocadie Welling – Edited by Chinh Vo

Federal Trade Commission v. Neovi, Inc., No. 09-55093 (9th Cir. May 14, 2010)
Slip Opinion

On May 14, 2010, the Ninth Circuit affirmed a grant of summary judgment in favor of the Federal Trade Commission (FTC) and an injunction granted by the Southern District of California against appellant Neovi, Inc (“Neovi”). The FTC had brought claims alleging that Neovi, through its online Qchex service, had engaged in “unfair methods of competition” by issuing unverified checks through its website. The court agreed with the FTC, finding that appellant did not take sufficient measures to prevent and address fraud. The injunction prohibits Qchex from continuing to operate without following a court-specified verification process. It further orders Qchex to disgorge its total revenues, which the district court found to be in the amount of $535,358.

Eric Goldman provides an overview of the case and its factual background, and criticizes the opinion’s failure to discuss the relevance of the statutory protection for Internet services found in 47 U.S.C. § 230. Digital Society has a brief discussion of the decision. Ars Technica has two posts from 2009 (February and November) that provide useful background on the case. (more…)