JOLT Digest

Ninth Circuit Holds that Apple did not Engage in Copyright Misuse
By Laura Fishwick – Edited by Michael Hoven

Apple Inc. v. Psystar Corp., No. 10-15113 (9th Cir. Sept. 28, 2011)
Slip Opinion

The Ninth Circuit affirmed the Northern District of California’s holding that Psystar infringed Apple’s federal copyrights, and vacated and remanded the district court’s grant of Apple’s motion to seal summary judgment papers. The district court had rejected Psystar’s defense of copyright misuse, in which Psystar had argued that Apple’s Software Licensing Agreement (“SLA”) requiring users to run Mac OS X only on Apple computers “impermissibly extend[ed] the reach of Apple’s copyright.”

The Ninth Circuit held that Apple did not engage in copyright misuse by restricting the use of its software to Apple computers because this restriction did not prevent other companies from developing competing products. The court upheld the district court’s grant of an injunction on the grounds that it did not abuse discretion, even though Psystar did not contest the ruling that the enjoined use of Apple’s software did in fact constitute infringement. Finally, the court vacated and remanded the district court’s sealing orders, finding that the district court did not adequately provide reasons underlying its decision given that there is a presumption in favor of access.

The Wall Street Journal provides an overview of the case and notes that Psystar has shut down its operations. Internet Cases criticizes the decision for reaffirming Apple’s long-standing policies of distributing software and hardware as a “closed ecosystem,” which limits third parties from creating valuable technologies in this space.  (more…)

Fifth Circuit Reverses Summary Judgment for Plaintiffs’ Breach of Contract Claim
By Nathan Lovejoy – Edited by Avis Bohlen

The Compliance Source, Inc. v. GreenPoint Mortgage Funding, Inc., __ F.3d __, 2010 WL 4056112, No. 09-10726 (5th Cir. Oct. 18, 2010)
Slip Opinion

In Compliance Source, Inc. v. GreenPoint Mortgage Funding, Inc., the United States Circuit Court for the Fifth Circuit reversed and remanded the decision of the United States District Court for the Northern District of Texas, which had granted summary judgment in favor of the defendant, a software licensee, on the plaintiffs’ claim for breach of contract. The court also affirmed the district court’s grant of summary judgment to the plaintiffs on the defendant’s counterclaim for breach of their settlement agreement.

The Fifth Circuit held that the license agreement for licensor’s database technology did not permit the licensee to authorize third-party use, even if such use was on behalf or for the benefit of the licensee. In so holding, the court took a narrow approach to its interpretation of the agreement, distinguishing the license in GreenPoint from earlier cases in light of its clear withholding of rights not expressly given.

The Internet Cases blog provides a brief overview of the case. WTN News features an analysis that discusses how the decision might leave open the possibility that a breach claim could extend to situation where third parties merely access software or technology licensed under similar terms. (more…)

By Kassity Liu JD ’12
Edited by Joey Seiler
Editorial Policy

On October 6, 2009, Eolas Technologies Inc., a research and development company specializing in web solutions, filed a federal lawsuit in the Eastern District of Texas against 23 prominent companies in the software and Internet industry. Eolas claims that these companies are infringing two of its patents, U.S. Patent No. 5,838,906 (’906 Patent) and U.S. Patent No. 7,599,985 (’985 Patent). These two patents cover technology that enables websites to act as platforms for fully integrated embedded applications. The ’906 Patent was granted in November 1998. It defines a system that would allow Internet users to access and execute an embedded program. The ’985 Patent, which was granted on the same day that the company filed its present lawsuit, extends the reach of the older patent to AJAX (asynchronous JavaScript and XML) applications.

The present suit is not Eolas’ first. In a previous patent infringement suit, Eolas targeted Microsoft, claiming that the company had infringed its ‘906 Patent. Eolas alleged that its invention, which was first demonstrated at a SIGWEB meeting in 1994, was the “first instance where interactive applications were embedded in Webpages.”[1] The district court sided with Eolas, and the jury awarded Eolas $521 million in damages.[2] Microsoft appealed this decision, but after unsuccessful attempts at moving the case to the Supreme Court and invalidating the patent, the software giant chose to settle with Eolas. (more…)

Court Rules That Software License Transfers Ownership
By Kate Wevers – Edited by Anthony Kammer

Vernor v. Autodesk, Inc., No. C07-1189RAJ (W.D. Wash., Sept. 30, 2009)
Opinion

On September 30, the United States District Court for the Western District of Washington granted, in part, Vernor’s motion for summary judgment against Autodesk.After Autodesk became aware of Vernor’s attempts to sell copies of its copyrighted software, AutoCAD, on eBay, it invoked the takedown provisions of the Digital Millennium Copyright Act, causing Vernor to be barred from selling anything on eBay for a month. Vernor sued, seeking, among other remedies, declaratory judgment that these sales were not in violation of copyright. In granting summary judgment for Vernor, the Court held that a customer who had acquired AutoCAD packages pursuant to Autodesk’s software license agreement (“License”) became an owner of the physical copies of the software with the right to resell the AutoCAD packages under the first sale doctrine (17 USC § 109(a)).

The Court also accepted that the owner was protected from claims of contributory copyright infringement by 17 USC § 117. The Court had previously considered very similar issues in the context of Autodesk’s earlier motion to dismiss. See Vernor v. Autodesk, Inc., 555 F. Supp. 2d 1164 (W.D. Wash. 2008)).

A selection of briefs and relevant court documents are available here. The Technology & Marketing Law Blog provides a useful overview and analysis of the case. The outcome was heralded as pro-consumer by the Electronic Frontier Foundation, but Blog Nauseum suggests that the decision is not much of a win for consumers. (more…)

By Sharona Hakimi

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!