Written By: Gillian Kassner
Edited By: Matt Gelfand
Editorial Policy

In a 2009 Los Angeles Times article, “Beijing Loves IKEA – But Not for Shopping,” reporter David Pierson offered a humorous account of the weekend excursions of Beijing families to their local IKEA where they enjoyed free soda and Swedish meatballs, snapped family photographs, surveyed the merchandise, and went home. Pierson noted that purchasing anything at the Beijing IKEA “can seem like an afterthought.” What Pierson failed to include was an epilogue: chances are most of these Chinese consumers would later purchase knockoff IKEA furniture online or at a local store.

A combination of cultural and economic factors underlies the current attitude of the Chinese towards the protection of intellectual property. As China has propelled itself onto the global stage by its fast-paced economic growth, external pressures from the United States and other nations and internal tensions between traditional Chinese values and the desire for economic prosperity have earmarked intellectual property as a key issue that will determine China’s economic and political trajectory. The Chinese Communist Party’s recent focus on IP protection signals that while China may continue to condone certain levels of infringement in the interim, in the long term, China’s continued economic growth and the survival of the CCP will require the serious reform of China’s IP enforcement. To be effective rather than cursory, it is evident from China’s history and political structure that such reform must be the natural product of China’s internal weighing of incentives rather than a response to external pressures.  (more…)

Supreme Court Expands Generic Drug Manufacturers’  Right to Challenge Scope of Patents
By Elettra Bietti – Edited by Lauren Henry

Caraco Pharmaceutical Laboratories, Ltd. v Novo Nordisk A/S, No. 10–844 (U.S. April 17, 2012)
Slip opinion

The Supreme Court reversed the Federal Circuit Court of Appeals’ ruling that denied a generic manufacturer the right to compel a brand manufacturer to correct misstatements regarding uses covered by a patent when those corrections would have allowed the generic manufacturer to market their generic drug.

The Court held that a generic manufacturer may rely on 21 U.S.C. § 355(j)(5)(C)(ii)(I), which grants a statutory counterclaim to generic manufacturers sued for patent infringement, to compel a brand manufacturer to modify a use code if it wrongly describes a patent as covering uses which it does not in fact cover. In so holding, the court slightly shifts balance of power in the pharmaceutical industry away from patentees and toward generic manufacturers.

Patently-O provides an overview and describes it as an example of a “nuanced” Supreme Court case. Alison Frankel, writing for Reuters, notes that the decision represents a slight victory for generic manufacturers over the brands. (more…)

By Brittany Horth

Oracle v. Google Trial Begins

The Oracle v. Google trial began on Monday, April 16, 2012 in the Northern District Court of California in San Francisco by swearing in twelve jurors for what is expected to be eight weeks of testimony, reports Ars Technica. According to an overview by All Things D, Oracle alleges that Google’s Android mobile operating system violates both copyright and patents on Java, which Oracle acquired from SunMicrosystems in 2010. The New York Times reports that both Google CEO Larry Page and Oracle CEO Larry Ellison appeared as witnesses in the first week of trial, as Google argued that Java is free and Oracle argued that Google knew it needed to get a license to use Java. The case is likely to address the issue of whether application programming interfaces (APIs) can be copyrighted in general.

FCC Says Google’s Wi-Fi Sniffing Did Not Violate Wiretapping Laws

The Federal Communications Commission (FCC) stated that Google did not violate federal wiretapping law when its street view cars collected data such as e-mails, passwords, and text messages from unencrypted Wi-Fi networks, reports Wired.  The FCC’s conclusion is in direct contrast to the holding of the Northern District of California in 2011. In support of its decision not to take enforcement action, the FCC cited the fact that the unencrypted Wi-Fi networks are accessible to the public, which has broader implications for customers who use the free, unencrypted Wi-Fi networks provided by businesses such as coffee shops. But the FCC also explained that it was “impossible” to uncover whether Google had accessed the encrypted data that it collected from the unencrypted Wi-Fi networks because a Google engineer who developed the relevant program refused to share information with the FCC.

Teller of Penn & Teller Alleges Violation of His Copyrighted Magic Trick

Raymond Teller of Penn & Teller is suing Gerard Dogge for copyright infringement of his magic trick entitled Shadows after Dogge posted a YouTube video of a magic trick called The Rose & Her Shadow and offered to reveal the secret for $3,050, reports The Hollywood Reporter. Teller sent YouTube a Digital Millennium Copyright Act (DMCA) takedown notice and attempted to pay Dogge not to reveal the secret but initiated a lawsuit when negotiations failed. Teller registered the trick with the U.S. Copyright Office, which requires that magic tricks be “fixed in a tangible medium of expression,” back in 1983. The success of the claim will depend on whether Teller can demonstrate that Dogge’s trick is a “substantially similar expression” of Shadows.

Second Circuit Holds that Goldman Sachs’s Proprietary Source Code Is Intangible Property under the NSPA
By Laura Fishwick – Edited by Lauren Henry

United States v. Aleynikov, No. 11-1126, 2012 WL 1193611 (April 11, 2012).
Slip Opinion

The Second Circuit reversed the holding of the District Court of the Southern District of New York, and found that source code is not a good, ware, or merchandise under the National Stolen Property Act (“NSPA”), a criminal statute that applies to anyone who “transports, transmits, or transfers in interstate or foreign commerce any goods, ware, merchandise, securities or money … knowing the same to be stolen, converted or taken by fraud.” 18 U.S.C. § 2314. The district court had found that because the source code was related to Goldman Sachs’s high-frequency trading (“HFT”) system, and this system contained confidential trade secrets that would be highly valuable to other firms, the source code was a “good” that was “stolen” within the meaning of the NSPA and Aleynikov had violated the statute.

Wired provides an overview of the case. While agreeing with the Second Circuit’s holding, Techdirt admonished the court for incorrectly calling the charges against Aleynikov “theft,” when should be more accurately described as “infringement.” (more…)

Ninth Circuit Creates Circuit Split by Narrowly Construing the Computer Fraud and Abuse Act
By Abby Lauer – Edited by Charlie Stiernberg

United States v. Nosal, No. 10-10038 (9th Cir. April 10, 2012)
Slip Opinion

The Ninth Circuit affirmed the Northern District of California in an en banc decision construing the scope of the Computer Fraud and Abuse Act (“CFAA”). The court held that a person who violates an employer’s computer use policy is not criminally liable for federal penalties under the Act.

The Ninth Circuit held that the provision of the CFAA that prohibits a person from “exceed[ing] authorized access” to information on the Internet does not extend to violations of use restrictions, such as an employer’s computer use policy or a website’s terms of service. In so holding, the court applied the rule of lenity to this provision of the CFAA. The court expressed concern that adopting a broader interpretation of “exceeds authorized access,” which appears five times in the first seven subsections of the statute, would inadvertently criminalize innocuous activity that was not intended to be captured. For example, the court noted that “lying on social media websites is common,” and concluded this is not the type of behavior that Congress intended to punish by passing the CFAA.

Ars Technica provides an overview of the case. The Volokh Conspiracy provides further commentary and excerpts from Chief Judge Kozinski’s majority opinion. (more…)