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…)

Federal Circuit Reverses Dismissal of Ultramercial Patent Infringement Claim
By Amy Rossignol – Edited by Michael Hoven

Ultramercial , LLC v. Hulu, LLC, No. 2010-1544 (Fed. Cir. Sept. 15, 2011)
Slip Opinion

The United States Court of Appeals for the Federal Circuit reversed and remanded the U.S. District Court for the Central District of California’s dismissal of Ultramercial’s patent infringement claim against Hulu, LLC and Wildtangent, Inc.. The District Court had found that U.S. Patent No. 7,346,545 did not claim patent-eligible subject matter.

The Federal Circuit held that the ‘545 patent claims a “process” that is patent-eligible under 35 U.S.C. § 101. The ‘545 patent consists of a method of distributing copyrighted material, such as movies, television shows, music, or books, through a website to consumers who view or interact with advertisements in exchange for free access. The revenue generated from the advertisers would then pay for the copyrighted material. The court did not consider this process abstract, finding that it went beyond mere “mental steps.” Following the Supreme Court’s decision in Bilski v. Kappos, 130 S.Ct. 3218 (2010), the court rejected the machine-or-transformation test, noting its waning application to the “inventions of the Information Age.”

Patently-O provides an overview of the case. JOLT Digest previously reported on the District Court’s 2010 decision. JOLT Digest also reported on the Bilski decision.  (more…)

By Adam Lewin

Damages Reinstated by First Circuit in Tenenbaum / RIAA Suit

The United States Court of Appeals for the First Circuit reinstated a $675,000 jury verdict entered against Joel Tenenbaum for copyright infringement of 30 sound recordings accomplished using file-sharing software. At trial, the jury determined that Tenenbaum was guilty of willful infringement and awarded the plaintiff record companies statutory damages of $22,500 for each song as permitted under 17 U.S.C. § 104(c). Judge Nancy Gertner of the United States District Court for the District of Massachusetts reduced that amount by a factor of ten to $67,500, holding that anything more would be unconstitutionally excessive. The First Circuit reinstated the original jury verdict because Judge Gertner had failed to consider a motion for remittitur prior to reaching the constitutional issues. The case has been remanded to the District of Massachusetts for reconsideration of the motion for remittitur.

FCC Publishes New Net Neutrality Rules

When the FCC attempted to enforce its net neutrality rules, the United States Court of Appeals for the District of Columbia Circuit ruled that it had not adequately established its regulatory authority to promulgate them in the first place. Ars Technica reports that the FCC has finalized new net neutrality rules in response to this ruling and published them in the Federal Register. Verizon and MetroPCS are expected to renew their challenges to this set of regulations, with the support of some Congressional Republicans, who have vowed to overrule the new rules by legislation.

Senate Antitrust Panel Holds Hearings on Google with Chairman Eric Schmidt

As the New York Times reports, a Senate antitrust panel heard testimony last week from Google’s Chairman, Eric Schmidt. Because of its size and dominance in online search, Google has come under antitrust scrutiny. Perhaps motivated by complaints from Google’s competitors, the Senate panel focused on whether Google was leveraging its power in search to promote its newer or less popular products by artificially ranking them higher. Schmidt, for his part, emphasized that Google is faced with intense competition in many of its products, including search, and that it maintains its market position by offering superior products rather than through anticompetitive behavior. Google has outlined its positions in its “Guide to the Senate Judiciary Hearing.”

Righthaven May Face Bankruptcy

So-called copyright troll Righthaven’s model of buying rights to sue from copyright holders is under siege. Earlier in the summer, the United States District Court for the District of Nevada dismissed a Righthaven suit, holding that one cannot acquire “a bare right to sue” without any ownership rights in a copyright. Citizen Media Law Project reports that in separate litigation, Righthaven was defeated and ordered to pay attorneys fees of approximately $34,000. But it is now asking for a stay of judgment pending appeal, lest it fall into bankruptcy. Ars Technica speculates that the copyright troll business model may have been doomed from the beginning.

Written by Raquel Acosta
Edited by Albert Wang and Vicki Blohm
Editorial Policy

I. Introduction

The current copyright framework is becoming obsolete as we try to make a digital world run on an analog legal system. The Copyright Act covers “original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be visually perceived, either directly or with the aid of a machine or device.” 17 U.S.C. § 401. The ability of the digital medium to interact dynamically with a user or generate unique visualizations along predefined parameters has enabled many novel forms of art which could not have been foreseen by the drafters of the Copyright Act of 1976.[1] Terms of art such as “fixed” or “copy” have lost much of their meaning, and the law’s notion of a tangible medium is becoming less relevant.[2] The digital arts are a misfit medium within current copyright categories as the underlying software and possible Internet platform add dynamic and collaborative elements which were previously absent from intellectual property. This Comment will address the disconnect between traditional copyright law and the realities of the digital age, using emerging forms of digital art as archetypal examples.  (more…)

Second Circuit Rules First Sale Doctrine Only Applies to Goods Manufactured Domestically
By Heather Whitney – Edited by Chinh Vo

John Wiley & Sons v. Kirtsaeng, No. 09-4896-cv (2d Cir. Aug. 15, 2011)
Slip Opinion

After the Supreme Court’s non-precedential decision in Costco v. Omega, 131 S.Ct. 565 (2010), it is no surprise that the nexus of the first sale doctrine and works manufactured outside of the United States remains in flux.  In Wiley, the Second Circuit affirmed the judgment of the District Court for the Southern District of New York, awarding statutory damages to book publisher John Wiley & Sons for copyright infringement after a jury trial. In a case of first impression, the Second Circuit held that defendant Kirtsaeng, a Thai student studying in the United States, was not entitled to a “first sale doctrine” defense under the Copyright Act when he resold  books imported from abroad, finding the doctrine inapplicable to copyrighted works produced outside of the United States.

The Library Journal provides an overview of the case and commentary on its significance to libraries. TechDirt criticizes the decision, arguing it makes reselling items lawfully purchased overly risky when the place of manufacture is uncertain because, under the opinion, the first sale doctrine would not apply to goods made overseas.  (more…)