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.

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.”

Supreme Court to Consider Business Method Patents

Patently-O reports that the Supreme Court granted certiorari on Bilski v. Doll. The Court will address whether a patentable “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing. The Court will also consider whether this “machine-or-transformation” test, which effectively forecloses meaningful patent protection to many business methods, runs counter to the intent of Congress in enacting 35 U.S.C. § 273 establishing special rules for “method[s] of doing or conducting business. JOLT Digest covers the earlier en banc decision by the Federal Circuit here, and Patently-O offers a detailed summary of the earlier decision here.

Review of NASA Security Regulations Denied

The Metropolitan News-Enterprise reports that on Thursday the Ninth Circuit declined to review en banc a privacy case involving employees at the Jet Propulsion Laboratory (JPL), a part of NASA. A three-judge panel of the appellate court had previously ruled that NASA’s mandatory background checks threatened workers’ constitutional right to privacy. The petition for rehearing generated a plethora of concurring and dissenting opinions, including an opinion by the appellate court concurring in the denial that referred to the background check as a “free-floating, wide-ranging inquiry with no standards, limits, or guarantee of non-disclosure to third parties.” Three opinions dissenting from the rehearing en banc are available here, here, and here. The JPL employees have also created a website voicing their opposition to the background checks.

Court Dismisses Eavesdropping Lawsuits

Wired reported on Wednesday’s decision by a judge for the Northern District of California to dismiss more than three dozen lawsuits aimed at telecommunication companies for assisting in a Bush administration eavesdropping program. The judge ruled that the companies were entitled to immunity based on legislation passed over the summer, which purports to immunize the telecommunications firms from liability. The Electronic Frontier Foundation plans to appeal the decision.

Wyeth v. Levine
Supreme Court of the United States, March 4, 2009, No. 06-1249
Slip Opinion

On March 4th, the Supreme Court of the United States affirmed the judgment of the Vermont Supreme Court, holding that federal drug labeling regulations do not preempt state failure-to-warn lawsuits.  The Supreme Court held that compliance with FDA labeling requirements did not preempt Levine’s failure-to-warn claim based on what she alleged was defective labeling of Wyeth’s anti-nausea drug Phenergan. In so holding, the Court concluded that Congress did not intend to preempt state-law failure-to-warn actions.  It also rejected Wyeth’s claim that the Court should defer to an FDA statement, made in the preamble to a 2006 regulation, that state tort suits threatened the FDA’s statutory mandate.

Briefs and relevant court documents are available here at the SCOTUS wiki.  The SCOTUS Blog provides an overview of the case. Drug and  Device Law Blog suggests that the decision does not eliminate preemption alcims, but does make them far more difficult to win.  The Wall Street Journal Law Blog features an analysis of the decision.  The Volokh Conspiracy notes a decrease in deference to agencies.

The Court upheld a $6.7 million jury award to musician Diana Levine, who lost most of her right arm to gangrene after an IV-push injection of Wyeth’s anti-nausea medication Phenergan.  Levine settled her claims against the health center and clinician who administered the Phenergan.  She then sued Wyeth in state court, arguing that the pharmaceutical company should have revised its FDA-approved label to warn clinicians not to use the higher-risk IV-push method of injection for administering the drug. A jury ruled in Levine’s favor, determining that Wyeth was negligent and Phenergan was a defective product as a result of inadequate warnings and instructions.   On appeal, the Vermont Supreme Court affirmed, holding that the jury’s verdict was not preempted by federal labeling requirements because Wyeth could have warned against IV-push administration without prior FDA approval, and because federal labeling requirements create a floor, not a ceiling, for state regulation.

Justice Stevens wrote the majority opinion, joined by Justices Kennedy, Souter, Ginsburg and Breyer.  The majority reasoned that drug companies remain primarily responsible for keeping their warning labels up to date and complete despite federal labeling requirements.  It also concluded that Congress did not intend FDA oversight to be the exclusive means of ensuring drug safety and effectiveness.

Based on a statement made in the preamble of a 2006 FDA regulation, Wyeth had argued that the FDA’s statutorily prescribed role as an expert federal agency responsible for evaluating and regulating drugs preempted conflicting state requirements.  The majority acknowledged that agency regulation with the force of law can preempt conflicting state requirements, but it maintained that in each case the Court would perform its own analysis of the substance of state and federal law and not rely on agency proclamations of preemption.  The majority concluded that the FDA’s statement that state law frustrated the agency’s implementation of its statutory mandate did not merit deference.  Based on its reading of the regulatory history and background, the majority concluded that there was a longstanding coexistence of state and federal law and the FDA’s traditional recognition of state-law remedies was in place each time the agency reviewed Wyeth’s Phenergan label.

Justice Breyer concurred, emphasizing the narrow reach of the holding and clarifying that the FDA may still promulgate lawful specific regulations with preemptive effect.  Justice Thomas wrote a separate concurrence supporting the majority’s conclusion but not its reasoning.  Thomas expressed his skepticism of the Court’s current preemption doctrine, arguing that it lead to expansion of federal statutes and unconstitutional results.  He would only preempt state law where Congress explicitly provided for such preemption.

Justice Alito dissented, joined by Justice Scalia and Chief Justice Roberts.  Alito argued that the FDA was ultimately responsible for regulating warning labels for prescription drugs.  He would not have disturbed the FDA’s judgment that the approved label was sufficient to render the use of Phenergan safe.  Arguing that the FDA is better suited than juries to consider the interests of all potential users of a drug over a long period, Scalia emphasized that state tort law could not be used to impose a different labeling requirement than that required under federal law. Because a jury’s cost-benefit analysis in a single case could differ from that of the FDA’s, Scalia expressed concern that juries in all fifty states could contradict the FDA’s expert determinations, reducing the incentives for medical manufacturers to develop new medical products.

The Supreme Court reversed a decision by the U.S. Court of Appeals for the Ninth Circuit and vacated in part a preliminary injunction that had restricted sonar training operations by the US Navy. The training operations were alleged to damage marine life in violation of the National Environmental Policy Act of 1969 (“NEPA”). The Court applied an equitable balancing test, determining that the likelihood of irreparable injury to the environment was outweighed by the public interest and the Navy’s interest in “effective, realistic training of its sailors.”

Mainstream reporting on the Supreme Court decision can be found at New York Times and the Associated Press.  Further commentary following the case is available at Slashdot and ScotusBlog.

The District Court had issued a preliminary injunction restricting the U.S. Navy from conducting mid-frequency active (“MFA”) sonar training exercises that the plaintiffs assert cause serious injury to marine mammals. The MFA sonar is used by the Navy to locate nearly silent diesel-electric submarines.  The contested measures would have required the Navy to shut down its MFA sonar if a mammal was found within 2,200 yards of a vessel and to power its sonar down by 6 decibels in the case of particular weather conditions known as “surface ducting.” 

In response to the injunction, the Navy had sought relief from the Council on Environmental Quality (“CEQ”), an executive agency, which found “emergency circumstances” authorized the Navy to continue its training exercises without the restrictions imposed by the District Court. The district court, however, declined to vacate the injunction in response to the CEQ’s emergency authorization, and the Ninth Circuit affirmed.

Chief Justice Roberts delivered the majority opinion, joined by justices Scalia, Kennedy, Thomas, and Alito. The majority concluded that “the balance of equities and consideration of the overall public interest in this case tip strongly in favor of the Navy.”  While recognizing that military interests “do not always trump other considerations,” the opinion stated that great deference is to be given to military authorities in matters regarding critical military interests. 

The opinion also noted that the standard employed by the Ninth Circuit in issuing a preliminary injunction was too lenient and emphasized that a plaintiff seeking preliminary relief must demonstrate that irreparable injury is likely in the absence of an injunction.  The Court found it unnecessary to address the likelihood of irreparable harm, concluding that any possibility of harm was outweighed by the public interest in military training.

In evaluating the public interest, the Court relied on statements from senior Navy officials who emphasized that “realistic training” could not be accomplished under the restrictions imposed by the district court. The Court affirmed that such training was “clearly of the utmost importance to the Navy and the Nation,” without going into detail as to the nature of the military necessity.

Justice Ginsburg, joined by Justice Souter, dissented, stating that the CEQ lacked authority as an executive agency to “short circuit” the district court’s judgment. THe dissent pointed out that the Navy had other options, namely requesting congressional authorization to proceed without fulfilling NEPA’s environmental requirements. Justice Ginsburg characterized the course used by the Navy as a “rapid, self-serving resort to an office in the White House” that ran counter to Congressional intent in establishing NEPA. Examining the record, Justice Ginsburg would have held that the plaintiffs made the required showing of harm to warrant injunctive relief.

Justice Breyer, joined in part by Justice Stevens, concurred in part and dissented in part. While agreeing with the majority in vacating those portions of the preliminary injunction challenged by the Navy, Justice Breyer would have remanded to the district court for consideration of a new set of restrictions that would protect the marine wildlife while also enabling the Navy to carry out its exercises. 

On Monday, October 6, 2008, the Supreme Court denied Dish’s (formerly EchoStar) appeal of TiVO, Inc. v. EchoStar, 516 F.3d 1290 (Fed. Cir. 2008), bringing the long patent infringement suit to a close.  By refusing to hear argument, the Court upheld both the district and Federal Circuit decisions, which found Dish had infringed TiVO’s patented DVR software and awarded TiVO $74 million in damages. Dish will be forced to pay TiVO $104 million – the amount of the 2006 judgment plus interest.

Dish Network had successfully argued for a stay of the district court injunction pending appeal; the Court’s actions this week would restore the order against operating or selling the infringing DVRs. Earlier this year, Dish claimed to have developed a non-infringing workaround which would allow the company to continue providing DVR service to customers.

Jacqui Cheng of ars technica provides commentary, noting that litigation is likely to continue as TiVO has a pending motion for contempt which will effectively subject the workaround to a noninfringement test.

Previously: Federal Circuit Upholds Damages Award Against EchoStar

Quanta Computers, Inc. v. LG Electronics, Inc.
Supreme Court of the United States, June 9, 2008, No. 2006-937
Slip Opinion

The Supreme Court reversed the Federal Circuit, which had held that patent holders could seek infringement damages from subsequent purchasers further “downstream” provided that the initial transfer had imposed some type of restriction on the initial purchaser. The Federal Circuit’s ruling, had it been upheld, would have effectively extinguished the doctrine of patent exhaustion and allowed patent holders the ability to control the use of their patents far beyond traditional limits.

Justice Thomas delivered the unanimous decision, holding that the 155-year-old doctrine of patent exhaustion limits the patentee’s power to dictate the terms of use through the first level of sales only. In an opinion steeped in tradition, the Court held that the reasoning of United States v. Univis Lens Co. 316 U.S. 241 (1942) controlled the case. The Univis Court held that a patentee’s rights were extinguished because the finished product (cut eyeglass lenses) embodied essential features of the patented product (unfinished eyeglass lens blanks). While this has long been the standard for process patents, the Court for the first time here extended that same logic to method patents. The Court also stated that a use “substantially embodying” the patent, rather than fully practicing it, was sufficient to exhaust the patent-holder’s rights.

Overviews of the case are available at Patently-O, the SCOTUS Blog and Law.com.

The full transcript of the oral argument is available here.

Professor Mark R. Patterson of Fordham University authored an article last November advocating a broad overruling of the Federal Circuit decision on Patently-O, which outlined the negative implications of allowing the lower court’s decision to stand.

The facts of the case are fairly straightforward – LG Electronics (”LGE”) purchased patents describing techniques for efficient communication between computer components and then licensed them to Intel Corporation to use in the manufacture and resale of microprocessors. Included in the license was a restriction that prohibited third parties from combining LGE patents with non-licensed items. Quanta, among others, purchased microchips from Intel under a license restricting them from breaching the Intel/LGE agreement and combined them with other parts in order to produce computers. LGE then sued Quanta, alleging the combination infringed their patents and breached the terms of the licensing agreement.

The Court concluded the original license did not restrict Intel’s right to sell their microprocessors at all, but instead “broadly permit[ted] Intel to ‘make, use, [or] sell’ products free of LGE’s patent claims.” Applying Univis, the Court reasoned that chipsets and microprocessors substantially embody LGE’s patents, concluding that Intel’s products “had no reasonable noninfringing use and included all the inventive aspects of the patented methods.” Given both this and the fact that Intel was authorized to sell to whomever it pleased, “the doctrine of patent exhaustion prevents LGE from asserting its patent rights with respect to the patents substantially embodied by those products.”

Of note is the fact that Justice Thomas’s opinion explicitly raised the possibility that Quanta might have been susceptible to contract-based theories of liability had they been advanced. This leaves open the possibility that parties might be able to recover under contract even where patent exhaustion has eliminated their patent damages.

Major League Baseball Advanced Media v. C.B.C. Distribution and Marketing
8th Circuit, Oct 16, 2007, cert. denied June 2, 2008
Eighth Circuit Opinion, Supreme Court Order

On June 2, the Supreme Court denied petition for a writ of certiorari from Major League Baseball Advanced Media (“MLB”). MLB had sought to appeal the Eighth Circuit’s decision, which held that the First Amendment interests in public information about baseball and baseball players outweighed the players’ state law right of publicity.

The Eighth Circuit affirmed the district court, which had granted summary judgment to CBC, a producer of fantasy major league baseball games. CBC sought a declaratory judgment that it may use, without license, the names of and information about major league baseball players in connection with its for-profit fantasy baseball products.

The Eighth Circuit found that MLB had provided sufficient evidence to establish a cause of action for violation of players’ rights of publicity under Missouri law. It held, however, that under Supreme Court precedent, a state law right of publicity must be balanced against First Amendment considerations. The court found that the CBC’s First Amendment rights superseded the players’ rights of publicity. The majority noted that information meant only to provide entertainment still enjoys First Amendment protection, and it reasoned that the significant public value of information about “the national pastime” entitles it to substantial protection. It noted also that as the information used by CBC was already available in the public domain, it would be “strange law” if CBC did not have a First Amendment right to use information available to everyone else. The court was not persuaded that CBC had violated the economic interests of the players which the right of publicity seeks to protect, noting that the players were already adequately compensated for their participation in games. It also rejected the argument that the non-economic interests protected by the right of publicity, such as rewarding celebrity labors and avoiding emotional harm, were violated, finding that none of these interests were implicated in the context of fantasy baseball.

Judge Colloton dissented. He agreed with the majority’s analysis of the right to publicity and the application of the First Amendment to fantasy baseball, but disagreed as to its resolution of the contractual dispute between the parties.

The Supreme Court’s denial of certiorari lets stand a decision securing strong First Amendment protection for information available in the public domain, even where such information is used for commercial, for-profit purposes. In its First Amendment analysis, the Eighth Circuit purported to use a balancing test, with free speech interests on one side and the players’ rights to publicity on the other. However, the test does not appear to be neutral, as the majority started with the supposition that restricting access to information available in the public domain would be “strange law,” which suggests that denial of access to publicly available information should be the exception rather than the rule. The logic of the decision can almost certainly be extended to other popular fantasy sport games, as it is unlikely that courts can draw principled distinctions between fantasy baseball and, for example, fantasy football. It is also possible that the majority’s reasoning can be extended to other public domain information, such as works of art whose copyright protection has lapsed, works created by the U.S. government or its agencies, or software and code placed into public domain by its author. It remains to be seen, however, whether other circuit courts will find the Eight Circuit’s expansive holding persuasive, and whether the logic of its opinion will be expanded or curtailed in future litigation.

Mainstream coverage of the Supreme Court decision can be found at the New York Times and the Wall Street Journal

A recent New York Times editorial welcomed the Supreme Court decision as a win for fans and free speech.

Above the Law comments that this decision will encourage more affordable fantasy sports games by removing licensing requirements that previously inhibited new parties seeking to compete in the fantasy game market.

Although supportive of the Eighth Circuit ruling, Mark Conrad of Sports Law Blog was surprised by the Supreme Court decision to deny cert, which he points out leaves unresolved confusion over the right of publicity standard and the nature of its interaction with the First Amendment.

Further discussion of the Eight Circuit decision can be found at Concurring Opinions, Sports Law Blog, and the Silicon Valley Media Law Blog