By Susanna Lichter

FTC Proposes Stricter Rules for Web Sites Visited by Children

The Federal Trade Commission recently proposed new regulations that would require third party advertising applications to comply with the Children’s Online Privacy Protection Act (COPPA), the New York Times reports. COPPA, which took effect in 2000, currently requires web site operators, but not website add-ons, to notify parents and obtain consent when personal information is collected from children under 13 years of age. In addition to extending COPPA to third parties, the proposed rule would change the present requirement that websites attracting both children and adults treat all visitors as children, allowing a web site to screen users by asking their age and applying COPPA privacy protections only to those who say they are under 13. Websites whose content is anticipated to attract primarily children would still be required to treat all users as children, however.

Appeals Court Says Embedding is Not Infringement in Flava Works, Inc. v. Gunter

On Thursday the Seventh Circuit Court of Appeals ruled that myVidster, a site that allows users to “bookmark” web videos by embedding them on its site surrounded by ads, was not liable to pornography producer Flava Works for copyright infringement when myVidster users embedded copies of Flava videos on myVidster. Flava Works, Inc. v. Gunter, No. 11-3190 (7th Cir. Aug. 2, 2012). Judge Richard Posner, writing for a unanimous three-judge panel, reasoned that because simply viewing an infringing copy of a video isn’t copyright infringement, and the underlying data is actually being streamed directly from third-party servers to user computers, myVidster was not guilty of direct copyright infringement. Posner also found that myVidster was not liable for secondary copyright infringement, comparing myVidster’s level of inducement of its user’s actions to a bookstore from which a thief steals a copyrighted book and reads it: a “bad thing to do,” but not one that violates the rights conferred by the Copyright Act. Posner further requested that Congress clarify how copyright law should be applied in the age of Internet video.

Jury Trial Begins with Testimony by Phil Schiller in Apple v. Samsung

Phil Schiller, Apple’s senior vice president of worldwide marketing, testified in the Apple Inc. v. Samsung Electronics Co. trial Friday that Samsung outright copied all of Apple’s patented design, according to Wired. Apple claims Samsung is infringing on design patents for the iPhone and iPad and utility patents while Samsung claims Apple is infringing on its patent holdings. During questioning by Apple’s legal team Schiller explained his reaction to Samsung’s product, saying “I was pretty shocked when I saw the Galaxy S phone and the extent to which it appeared to copy Apple’s products” and that his “first thought was they’re going to steal our whole product line.” Addressing the issue of consumer “confusion” on cross examination Schiller testified “I looked at this phone and it was my opinion that Samsung has ripped off a number of our design elements and in doing that may be causing confusion.” The two companies have been embroiled in court battles for over a year. The jury trial for the case commenced Monday.

Fourth Circuit Holds that Violating Employer’s Computer Use Restrictions Is Not a CFAA Violation

By Andrew Crocker – Edited by Michael Hoven

WEC Carolina Energy Solutions, LLC v. Miller, No. 11-1201 (4th Cir. Jul. 26, 2012)

Slip opinion

On July 26, the Court of Appeals for the Fourth Circuit affirmed the South Carolina District Court in holding that Willie Miller’s violation of his employer WEC’s use restrictions on its proprietary computer systems and information was not a violation of the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030. WEC Carolina Energy Solutions, LLC v. Miller, No. 11-1201, slip op. at 2 (4th Cir. Jul. 26, 2012).

With the decision in WEC, the Fourth Circuit adds to a split among the federal circuit courts over whether an employee’s violation of an employer’s restrictions on use of a computer or computerized information that the employee is otherwise authorized to access can serve as the required element of “access[] . . . without authorization” or access “exceeding authorized access” for proving a CFAA violation. § 1030(a)(1). In the CFAA, to “exceed[] authorized access” is defined as “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” § 1030(e)(6). The court held that this definition is best read literally, such that a CFAA violation must involve improper access to a computer or computerized information, and not its “improper use.” WEC, No 11-1201 at 9. This reading is related, although not identical, to the Ninth Circuit’s recent en banc holding in United States v. Nosal, No. 10-10038 (9th Cir. April 10, 2012), previously reported on by the Digest, and in direct conflict with other circuits’ construction of the statute, notably the Seventh Circuit in International Airport Centers, LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006).

Bloomberg BNA provides an overview of the case. Eric Goldman Blog has more context on the circuit split.
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The Eastern District of Texas Puts End to Eolas’ Patent Trolling
By Dorothy Du – Edited by Jeffery Habenicht

Eolas Techs. Inc. v. Adobe Sys., Inc., No. 6:09-cv-446 (E.D. Tex. July 19, 2012)
Slip opinion (hosted by Justia.com)

The United States District Court for the Eastern District of Texas denied plaintiff Eolas’s motion for judgment as a matter of law that its patents are valid or, alternatively, a new trial. Eolas Techs. Inc. v. Adobe Sys., Inc., No. 6:09-cv-446, slip. op. at 1 (E.D.Tex.July 19, 2012).

Judge Davis of the district court held that Eolas, a non-practicing entity, failed to show either that the jury had insufficient evidence to find the patents invalid or that they were entitled to a new trial under the Federal Rules of Civil Procedure. First, the court found that, as required under Rule 50(b), the evidence at trial, primarily the defendant’s expert testimony, was sufficient for a reasonable jury to find that the patents were anticipated and obvious. Id. at 11, 12, 15. Second, the court determined that there was no evidence that the jury was influenced by passion or prejudice and, therefore, no new trial was required under Rule 59. Id. at 16.

Ars Technica provides an overview of case. ZDNet strongly approves the decision and predicts that the Federal Circuit would deny an appeal by Eolas.
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Canadian Supreme Court Ends Royalties for Online Music Downloads

By Andrew Crocker — Edited by Michael Hoven

Entertainment Software Association (ESA) v. Society of Composers, Authors and Music Publishers of Canada (SOCAN), 2012 SCC 34; Rogers Communications Inc. v. SOCAN, 2012 SCC 35, SOCAN v. Bell Canada, 2012 SCC 36.

Opinions available at the Supreme Court of Canada.

In three copyright decisions on July 12, the Canadian Supreme Court interpreted the scope of rights in musical works under Canada’s Copyright Act. In Entertainment Software Association (ESA), the court overturned a finding of the Canadian Copyright board that when a user downloads a song from an online music store, it is not a communication to the public. In Rogers, however, it found that streaming a song from an online music service was “a communication to the public” requiring a royalty payment to the artist for a performance of the song. Finally, in Bell, the court held that the 30–90 second streaming previews of songs available from stores like iTunes do not require payment of a royalty to the artist. Together, the rulings significantly change the status quo for royalties collected by SOCAN (Society of Composers, Authors and Music Publishers of Canada) on behalf of artists for digital performances of their works.

Reuters has an overview of the decisions. Techvibes discusses the impact of the Entertainment Software Association decision on the video game industry.
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By Dorothy Du

Federal Circuit Reconsiders Myriad’s Gene Patents on Remand

This past Friday, July 20, the Federal Circuit heard 45 minutes of oral arguments for Association for Molecular Pathology v. Myriad on remand on whether isolated breast cancer genes are unpatentable products of nature, reports Bloomberg Businessweek. A year ago, JOLT Digest reported on the Federal Circuit’s decision to uphold the patent eligibility of isolated DNA. However, following a Supreme Court decision to strike down a diagnostic patent as an unpatentable law of nature in Mayo Collaborative Services v. Prometheus Labs., a case JOLT Digest summarized, Myriad was remanded to the Federal Circuit. Reuters reports that at Friday’s oral arguments, Myriad attorney Greg Castanias compared isolating the patented genes to creating a baseball bat out of a tree, while opposing counsel for the USTPO compared the process to mining coal from the ground. According to Wall Street Journal Law Blog, the panel of judges hearing the arguments appeared to remain steadfast in their original positions on the patents. Judges Lourie and Moore made comments expressing their approval of Myriad’s patents, while Judge Bryson, who dissented in the original ruling, reiterated his belief that gene sequences are unpatentable products of nature. The oral arguments can be heard at the website of the Federal Circuit.

Europe to Approve Its First Gene Therapy

According to Wall Street Journal Health Blog, the European Union’s European Medicines Agency (“EMA”) has recommended the approval of a gene therapy to treat a rare genetic disorder. The European Commission ordinarily follows the EMA’s recommendations. An approval would be groundbreaking, according to the New York Times, because it would be the first approval of a gene therapy in the Western world; China approved a gene therapy for cancer back in 2003. Gene therapy theoretically works by supplying the body with normal copies of defective genes, thereby targeting diseases at their source. Followers of this exciting technology, however, have been disappointed by experimental results until now. Creating successful gene therapies has been a struggle because of challenges associated with inserting the genes safely and preventing immune reactions to the inserted genes, reports the AP. The New York Times explains that the gene therapy awaiting approval is called Glybera, is manufactured by uniQure, and treats lipoprotein lipase deficiency, a condition caused by a mutation that prevents patients from producing an enzyme that breaks down fat particles in the blood.

ITC Ban on Importing Motorola’s Android Products Takes Effect

An International Trade Commission (“ITC”) exclusion order banning the importation into the United States of Motorola Android devices took effect this past Wednesday, July 25, reports Ars Technica. The order issued two months ago, pursuant to the ITC’s ruling that 18 Motorola Mobility products infringed a Microsoft patent related to Microsoft’s Exchange Active Sync technology, which allows users to accept invitations and add events to their Google calendar. David Howard, Microsoft’s deputy general counsel, has stated that “Microsoft brought this case only after Motorola stopped licensing our intellectual property but continued to use our inventions in its products,” PC Magazine reports. CNET notes that Microsoft has been “proactive” in pursuing licensing deals, currently receiving royalties from 70 percent of Android vendors. Motorola has promised users that it will keep its Android products on the U.S. market without infringing Microsoft’s patent, but has not yet disclosed how. Ars Technica and CNET speculate that Motorola will either remove or tweak the infringing technology in order to render the Android products non-infringing. Motorola has also filed an appeal of the ITC ban, according to the Seattle Times.