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Supreme Court Grants Stay of Web Broadcast of Proposition 8 Trial

Hickman, Benjamin

1/19/2010 1:23 PM

The Supreme Court's opinion is split 5-4, with Justices Scalia, Roberts, Kennedy, Alito, and Thomas in the majority, and Justices Breyer, Ginsburg, Sotomayor, and Stevens in the dissent. The majority opinion is unsigned and the dissent is written by Justice Breyer.

The majority claimed that its opinion had nothing to do with its substantive view on the broadcasting of trials. Rather, the Court said, its decision is based on whether the District Court properly amended its local rules to allow the proposed broadcast. Many observers, however, are searching for deeper meaning in the opinion, speculating that it is Freudian read on the Justices' views on cameras in the courtroom or even on same-sex marriage.

Regardless of whether the observers are correct, it is hard not to notice how the Justices drafted their statements of facts in the respective opinions. The majority painted Judge Walker's approval as an eleventh-hour attempt to fast-track a controversial rule amendment without a chance for public comment. The dissent portrayed the rule amendment as one that had been publicly anticipated for years, and pointed out that thousands of people had already submitted comments on the proposed amendment.

In any event, it appears that the Courrt has quashed broadcasting of the Proposition 8 trial.

District Judge Allows Broadcast of Proposition 8 Trial on YouTube; Supreme Court Temporarily Stays Order

Hickman, Benjamin

1/11/2010 6:08 PM

The landmark trial testing the constitutionality of Proposition 8, California's ban on same-sex marriage, might also turn out to be a test of whether trials may be streamed on the Internet.

In an order issued on January 8, Chief Judge Vaughn Walker of the U.S. District Court for the Northern District of California allowed the trial, which started today, to be streamed on YouTube on a time-delay basis: Each day's proceedings could be broadcast after proceedings concluded for the day. Judge Walker also permitted the trial to be simulcast at several federal courthouses around the country, including those in Los Angeles, Portland, Oregon, and Brooklyn. Judge Walker relied on a recent decision from the Judicial Council of the Ninth Circuit to allow a pilot program for the limited use of cameras in courtrooms in the Ninth Circuit.

The Supreme Court, however, ordered a temporary stay of Judge Walker’s order this morning. The Supreme Court’s stay remains in effect until Wednesday at 4 p.m. eastern time “[t]o permit further consideration in this Court,” which suggests that the Supreme Court will be weighing in with a more thorough treatment of the issue. Justice Breyer, the only Justice to dissent from the temporary stay, stated that while he supported the limited duration of the stay, he believed the stay should not foreclose broadcasting of proceedings at other courthouses and that the papers filed “do not show a likelihood of irreparable harm.”

At its outset, the trial is already playing out in true California style, with celebrity lawyers representing the challengers of Proposition 8 (Ted Olson and David Boies) and Judge Walker, known for his maverick style, behind the bench.

Cyber Security; Legislation and Policy; Internet Law

President Appoints Howard Schmidt as White House Cybersecurity Coordinator

Hickman, Benjamin

12/22/2009 5:45 PM

After a months-long search for the new White House Cybersecurity Coordinator, President Obama has chosen Howard Schmidt, a cybersecurity veteran in public and private sectors. Read more about the appointment and listen to Schmidt's video greeting here. Cnet provides analysis on the Schmidt appointment here.

When the White House completed its cybersecurity review earlier this year, President Obama proclaimed that the country--both private and public sectors--are inadequately prepared to deal with the multitude of threats to the cyber-infrastructure. He acknowledged that the inadequacy stems, in large part, from a lack of coordination and turf wars among government agencies and between the public and private sectors. He promised to create a position for a person to better coordinate the public and private sectors' approach to cybersecurity.

Schmidt's background appears to be ideal for the task: His CV includes service in the Air Force, the George W. Bush White House, Microsoft, and eBay. Schmidt has his work cut out for him, though. Coordinating government agencies is always a tall order, and businesses have already expressed concern about the government's proposed involvement in the private sector, including requiring private network operators to report cybersecurity incidents to the government.

Indeed, Schmidt's title is telling. People in similar positions have been called "czars" in the past. As a "coordinator," Schmidt is likely to have a full plate simply persuading others to work with one another on the same page.

Intellectual Property; Legislation and Policy

Countries Are Still Negotiating ACTA, Still Keeping It Secret

Hickman, Benjamin

11/20/2009 9:20 AM

The Washington Post's personal technology columnist, Rob Pegoraro, provided an update this week on negotiations of the Anti-Counterfeiting Trade Agreement ("ACTA"), a multilateral agreement that we have chronicled in this blog before. The update, however, is that we do not have an update because the terms of the agreement are still secret.

Obama Administration officials are negotiating ACTA as an executive agreement rather than a treaty, which means that the Senate does not have to ratify it. The Obama Administration, like the Bush Administration, has kept the terms of the agreement and the negotiations secret on national security grounds.

Electronic Frontier Foundation has attempted to learn more about ACTA through FOIA requests. But despite the Obama Administration's claim that it intends to move toward more transparent governance, little is still known about the agreement. As the Post's Pegoraro writes, it is believed that ACTA would incorporate the anti-circumvention provisions in the Digital Millennium Copyright Act, thereby exporting the DMCA's owner-friendly paradigm abroad. What remains to be seen, however, is whether ACTA could result in an importation of even more draconian law.

Ninth Circuit Applies National Standard to Regulation Under Miller of Obscenity Transmitted By E-mail

Hickman, Benjamin

11/17/2009 1:09 PM

In a recent opinion, the United States Court of Appeals for the Ninth Circuit applied a national standard to assess whether the CAN-SPAM Act is unconstitutional when applied to the sending of obscene content by e-mail. The case is United States v. Kilbride, No. 07-10528.

Under the Supreme Court's holding in Miller v. California, 413 U.S. 15 (1973), government regulation of obscenity is subject to a more relaxed review than that of other types of speech. The Miller Court applied a three-element test to determine whether speech is obscene: (1) whether the average person, applying contemporary community standards, would find that the work taken as a whole appeals to the purient interest; (2) whether the work depicts or describes sexual conduct in a patently offensive way; and (3) whether the work lacks serious literary, artistic, political, or scientific value. In Hamling v. United States, 418 U.S. 87 (1974), the Supreme Court explained that the "contemporary community standard" in element (1) of the Miller test, when applied to obscene material sent through the mail, is determined by the "knowledge of the community or vicinage" from which the jurors come -- in other words, a local community standard.

In Kilbride, however, the Ninth Circuit concluded that when it comes to e-mail, the local community standard is too burdensome. People who send e-mail messages cannot ultimately control where they will be received. As a result, the most restrictive local community standard would apply nationwide.

The Ninth Circuit looked to the Supreme Court's plurality opinion in Ashcroft v. ACLU, 5335 U.S. 564 (2002), in which the plurality came to an analogous conclusion in deciding whether the Child Online Privacy Act ("COPA") was unconstitutional.

Separately, the Ninth Circuit held in Kilbride that the definition of a "materially falsified" e-mail header withstood a constitutional challenge on the ground of vagueness.

Amended Google Books Settlement Agreement Goes Public

Hickman, Benjamin

11/16/2009 1:42 PM

Late Friday night, the plaintiffs in the Google Book Search case filed the parties' proposed Amended Settlement Agreement. A redline copy of the Amended Settlement Agreement, provided by The Public Index, and the plaintiffs' memorandum in support of approval are available here and here.

The court will review the Amended Settlement Agreement. The court may grant preliminary approval pending further public comment and a fairness hearing. The court will probably take a few months to review the agreement before issuing a ruling. Until then, commentators will parse the nearly 400-page agreement and try to make sense of the new copyright order that the document could create.

We will be doing our own parsing and posting our impressions. For now, we note a couple items of interest that we came across during a brief review of the Amended Settlement Agreement.

First, many have wondered how the parties would handle antitrust concerns raised by the Department of Justice. In their memorandum in support of the Amended Settlement Agreement, the plaintiffs contend that they believe the agreement can withstand antitrust scrutiny. Nevertheless, the parties have made several amendments to please the government, including removing "Most Favored Nation" status to Google and making several clarifications that ensure that the pricing algorithm cannot uniformly raise prices for a particular type of work. The parties also agreed to amend the proposed final judgment and order of dismissal to make clear that the settlement does not provide immunity from the antitrust laws, such as via the Noerr-Pennington doctrine. It remains to be seen whether these amendments satisfy the government.

Second, the geographic scope of the Amended Settlement Agreement has been considerably narrowed. Works are covered by the settlement agreement only if, by January 5, 2009, they were registered with he United States Copyright Office, or published in Canada, the United Kingdom, or Australia. This, to be sure, is a significant class of works, but Google seems to be leaving itself open to exposure from rights holders in many other countries even after the ink dries on this settlement agreement.

District Court Judge Denies Motion to Tweet from Courtroom

Hickman, Benjamin

11/13/2009 12:40 PM

United States District Judge Clay D. Land of the Middle District of Georgia has denied a motion by the Columbus Ledger-Inquirer to allow one of its reporters to send live twitter messages to the newspaper's website during the criminal trial of Georgia lawyer John Mark Shelnutt.

The case has generated considerable media attention in Georgia; the government obtained a 40-count indictment against Shelnutt stemming from his alleged involvement in a Columbus, Georgia drug organization. In filing its motion, the newspaper sought the ability to have its reporter provide live updates of the trial from the courtroom. Shelnutt opposed the motion, but the government took no position.

In denying the motion, Judge Clay relied on the text of Rule 53 of the Federal Rules of Criminal Procedure, which prohibits "broadcasting" of judicial proceedings from the courtroom. Judge Clay held that "broadcasting" encompasses tweeting. He relied on the dictionary definition of "broadcasting," which means "casting or scattering in all directions." He also noted that past revisions to Rule 53 broadened the restriction from "radio broadcasting" to simply "broadcasting."

Judge Clay also held that Rule 53, as applied to tweeting, does not improperly limit the media's right of access to court proceedings under the First Amendment. Judge Clay noted that the media would still have full access to the trial, and that the court planned to set up a media room immediately outside the courtroom from where reporters could transmit update.

Notwithstanding his ruling, Judge Clay dropped a curious footnote in which he stated, in essence, that his interpretation of Rule 53 did not evidence his own views on whether Rule 53 makes for good policy. Federal judges hold widely diverging views on what the media should be allowed to do in the courtroom. Without reading too much into Judge Clay's footnote, this blogger wonders whether Judge Clay would really have a problem with tweeting if the decision were up to him.

Judge Clay's order in United States v. Shelnutt, No. 4:09-cr-14, is available here.

Court Halts Photographers' Attempt to Intervene in Google Books Case

Hickman, Benjamin

11/5/2009 2:22 PM

Judge Denny Chin yesterday put an end to an attempt by the American Society of Media Photographers and other photographers' organizations to intervene in the Google Books case when he denied the photographers' motion for reconsideration.

The plaintiff class in the Google Books lawsuit only encompasses copyright holders in textual materials, not photographs. Four years after the lawsuit was filed, the photographers made a late-hour attempt to enter into settlement negotiations by intervening in the case. Judge Chin would have none of it. In the order denying reconsideration, he stated that the prospective class settlement, which is to be submitted to the court for approval by November 9, "represents thousands of hours of discussion, compromise, and legal draftsmanship. Yet, the movants propose to intrude at the very end of this long process, and to add the question of millions of pictoral materials to the question. Intervention could destroy the parties' settlement and send them back to the drawing board."

Sixth Circuit Affirms District Court's Judgment in "Atomic Dog" Case

Hickman, Benjamin

11/5/2009 1:21 PM

George Clinton's 1982 funk standard Atomic Dog was the subject of an opinion handed down by the U.S. Court of Appeals for the Sixth Circuit yesterday in Bridgeport Music, Inc., et al. v. UMG Recordings, Inc., et al., No. 07-5596.

The appeal stemmed from a copyright infringement action in the U.S. District Court for the Middle District of Tennessee. Bridgeport Music, which owns the copyright in the sound recording of Atomic Dog, sued UMG Recordings, the parent company of A&M Records, which released the album All Work, No Play and the song D.O.G. in Me by the rap group Public Announcement. Bridgeport alleged that D.O.G. in Me infringed Atomic Dog because Public Announcement incorporated three elements from Atomic Dog in D.O.G. in Me: the use of the word "dog" in a low voice as musical punctuation, rhythmic panting, and the refrain "bow wow wow, yippie yo, yippie yea," referred to by the court in abbreviated form as the "Bow Wow refrain."

UMG lost at trial and faced liability for $88,980 in statutory damages to Bridgeport. On appeal, UMG's primary assignment of error focused on the District Court's jury instruction with respect to substantial similarity. UMG claimed that the District Court erred because it failed to filter out the use of "dog" as musical punctuation and rhythmic panting, because those two elements were not original. Moreover, UMG claimed, the jury should have considered the two songs at issue as a whole rather than comparing individual elements in isolation.

The Sixth Circuit affirmed the District Court, relying on the principles of "fragmented literal similarity," which means that even a small degree of copying may support a finding of substantial similarity when the copied material is an integral part of the work.

The Sixth Circuit also rejected UMG's claims that the District court erred in its jury instructions on UMG's fair use defense and on willful infringement.

Cyber Security; Internet Law; Legislation and Policy

Former employer’s claims under CFAA and SECA survive motion to dismiss the complaint

Covitz, Philip

11/3/2009 3:21 PM

The following discussion is from an NP Alert and follows up on our prior exploration in this blog of Lasco Foods, Inc. v. Hall and Shaw Sales, Marketing & Consulting, LLC, et al. (E.D. Mo., No. 4:08-cv-1683).

There are two competing lines of cases relating to the Computer Fraud and Abuse Act (CFAA) and Stored Wire and Electronic Communications Act (SECA). One line of cases seeks to limit civil actions to corporate hackers (e.g., electronic trespassers). See, e.g., Int’l Ass’n of Machinists & Aero Workers v. Werner-Matsuda, 390 F.Supp.2d 479, 495 (D.Md. 2005). A contrary line of cases, exemplified by International Airport Centers, LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006), focuses on computer misconduct by employees acting “without authorization.” Based upon these competing lines of cases, the United States District Court for the Eastern District of Missouri opted to follow the “without authorization” line of cases involving insiders and disloyal employees in Lasco Foods, Inc. v. Hall and Shaw Sales, Marketing, & Consulting, LLC.

Ronald N. Hall is the former regional sales manager for Lasco Foods, Inc. Charles Shaw is the former national and regional sales manager. Hall and Shaw terminated their employment at Lasco and formed a new company, Hall and Shaw Sales, Marketing & Consulting LLC (HSSMC), in direct competition with Lasco Foods, Inc.

A lawsuit ensued for alleged violations of the Missouri Uniform Trade Secrets Act, violations of the Computer Fraud and Abuse Act (CFAA), violations of the Stored Wire and Electronic Communications Act (SECA), and other state causes of action.

A forensic analysis of a USB storage drive revealed that Defendant Shaw had accessed, printed, and/or copied Lasco’s information from the USB drive after his authorization to access this proprietary information had been revoked. Further, it was alleged that Shaw sent proprietary Lasco documents to his home computer. In turn, Lasco alleged that, after Hall resigned, Lasco sent Hall a letter demanding that he preserve the electronic information on the company laptop computer and return the computer to Lasco. A subsequent forensic analysis performed on Hall’s laptop showed that Hall had accessed and deleted Lasco files after the termination of Hall’s employment and after Hall’s authorization to access the information had been revoked by Lasco.

The issue before the court on a third amended complaint was whether the alleged facts were sufficient to withstand a motion to dismiss the two federal statutory causes of action for the alleged violations of the CFAA, 18 U.S.C. § 1030 et seq., and the SECA, 18 U.S.C. § 2701 et seq. Specifically, defendants argued that Lasco had not pled sufficient facts to demonstrate that defendants’ actions were “unauthorized” because they were permitted electronic access to the computers as Lasco employees.

Upon consideration of the competing contentions, Judge Jean C. Hamilton of the United States District Court for the Eastern District of Missouri denied the motion to dismiss the CFAA claim because Lasco sufficiently alleged that Hall and Shaw acted “without authorization” when they obtained Lasco’s proprietary information for their own personal use and in contravention of their fiduciary duties owed to Lasco.

Likewise, the district court denied the motion to dismiss the SECA claim because the allegations showed that both Hall and Shaw intentionally accessed Lasco’s electronic files “without authorization” after they breached their duty of loyalty to Lasco and after the termination of their employment relationship with Lasco.

E.D. Mo.: Access By Employees May Be Unauthorized Under CFAA, SECA

Hickman, Benjamin

10/29/2009 4:22 PM

The United States District Court for the Eastern District of Missouri held in a recent opinion that an employer suing a former employee can state a cause of action under the Computer Fraud and Abuse Act and Stored Wire and Electronic Communications Act. The case is Lasco Foods, Inc. v. Hall and Shaw Sales, Marketing & Consulting, LLC, et al., No. 4:08-cv-1683 (Memorandum and Order Oct. 26, 2009).

In Lasco, two former employees of the plaintiff planned a new business venture using the plaintiff's computers and then deleted information related to their plans and other company information before leaving the plaintiff's employment.

A requisite element of a cause of action under both the CFAA and SECA is unauthorized access. Courts have divided on whether "unauthorized" access comes from an outsider to a company (i.e., a hacker) or whether a company's employees could gain unauthorized access.

The Eastern District of Missouri concluded that employees can perpetrate unauthorized access. The court reasoned that the "Defendants had authorization only to further the interests of Lasco, and did not have authorization to act in furtherance of their own business interests while employed by Lasco."

The same court issued an opinion in Lasco earlier this year in which it held that the costs an employer incurs in taking remedial measures satisfies the loss element under the CFAA. See our earlier post in the case here.

Internet Law; Legislation and Policy

FCC Votes to Move Forward With Net Neutrality Rules

Hickman, Benjamin

10/22/2009 1:27 PM

The Federal Communications Commission voted today to proceed with rulemaking on Net Neutrality, endorsing the desire of Chairman Julius Genachowski. The Washington Post has more here.

Intellectual Property; Patentable Subject Matter (35 USC Section 101)

The Government Briefs Bilski

Schlaifer, Jonathan

10/14/2009 2:46 PM

In its Brief as respondent in Bilski v. Kappos, the Government has taken the position before the Supreme Court that the patentable subject matter must be tethered to technology, and that the Federal Circuit’s test, namely that a patent-eligible process must involve a machine or a transformation of matter. Activities such as means of performing “economic, social, or legal” tasks, are not, in the Government’s estimation, patentable subject matter unless they qualify under the “machine-or-transformation” test. Thus, the Government’s position is that Bilski’s claims are not patentable subject matter under this test.

However, an important position that the Government supports is that software when tied to a general-purpose computer should be in most cases patentable subject matter, basing this position off of the Federal Circuit case In re Alappat from 1994, which developed the legal theory that the installation of software itself onto a general-purpose computer transformed the computer into a specialized machine, thereby satisfying the requirements of the “machine-or-transformation” test.

Thus, as expected, the Government has argued against so-called “pure” business methods (and has generally supported the Federal Circuit’s test), and it will remain to be seen if Bilski’s attorneys and the amicus briefs can persuade the Court otherwise. However, it is extremely important to software companies who wish to patent their inventions that given neither side in the litigation seems to want to prevent software inventions which are patented in association with a general-purpose computer, even if patentable subject matter is restricted to exclude “methods of organizing human activity” (as the Government would prefer), Bilski v. Kappos will almost certainly leave a significant safe harbor for software inventions and most likely business methods which can be reduced to software as well. Thus, the decisions made by the government in the brief may make some inventors considerably more confident about concerns about successfully overcoming 35 U.S.C. § 101 challenges when submitting applications to the USPTO.

Google Books Fairness Hearing On Hold

Hickman, Benjamin

9/28/2009 2:08 PM

Judge Denny Chin of the United States District Court for the Southern District of New York has issued an order scuttling the Google Books case fairness hearing scheduled for early October. The parties to the case consented to a postponement after the Department of Justice filed a brief that made clear that the parties still have a lot of work to do before the government will support the settlement.

In the order, Judge Chin opined that "[t]he current settlement agreement raises significant issues, as demonstrated not only by the number of objections, but also by the fact that the objectors include countries, states, non-profit organizations, and prominent authors and law professors. Clearly, fair concerns have been raised." But Judge Chen went on to say that "the proposed settlement would offer many benefits to society, as recognized by supporters of the settlement as well as DOJ."

It appears that Judge Chin is stepping into the mix and attempting to usher the parties toward an agreement. While he acknowledge that there is still much work to be done, Judge Chin seems to expect that the parties will walk away with some kind of agreement.

Judge Chin is scheduled to conduct a status hearing on October 7 and guage the parties' progress. More to come then.

Judge Chin's order is available here.

Justice Department Weighs In On Google Books Settlement

Hickman, Benjamin

9/23/2009 5:42 PM

The Justice Department has filed a brief as a party in interest to the Google Books settlement ahead of the fairness hearing scheduled for October. Read DOJ's brief here.

DOJ is conducting a separate investigation into whether the proposed settlement agreement would violate antitrust laws. A good portion of the brief discusses the antitrust ramifications.

DOJ also expressed concern as to whether the settlement agreement adequately represents the interests of certain members of the class, namely, orphan works owners:

The structure of the Proposed Settlement itself, therefore, pits the interests of one part of the class (known rightsholders) against the interests of another part of the class (orphan works rightsholders). Google’s commercial use of orphan works will generate revenues, which will b deposited with the Registry. Any unclaimed revenues, however, will inure to the benefit of the Registry and its registered rightsholders. Thus, the Registry and its registered rightsholders will benefit at the expense of every rightsholder who fails to come forward to claim profits from Google’s commercial use of his or her work. And, as noted above, the broad scope of the Proposed Settlement’s licensing provisions exacerbate this conflict. The greater the economic exploitation of the works of unknown rightsholders by Google and the Registry, the stronger the incentive for known rightsholders to retain the unclaimed revenues for themselves.

Brief at 13.

The Brief also raises the question -- which we have also raised in the past -- of whether the court's approval of the settlement agreement will be tantamount to a redifinition of copyright that should really be handled by Congress.

Internet Law; Legislation and Policy

FCC to Conduct Formal Rulemaking on Net Neutrality

Hickman, Benjamin

9/22/2009 12:44 PM

The chairman of the Federal Communications Commission announced Monday that the FCC will conduct formal rulemaking on the issue of "net neutrality." The FCC is scheduled to issue a Notice of Proposed Rulemaking at its October meeting.

The principle of net neutrality holds that the government should regulate Internet service providers so that they provide everyone equal access to the Internet, regardless of the type of content that they seek to transmit. Net neutrality proponents desire government intervention because they fear that network providers can stifle the marketplace of ideas by providing more bandwidth to preferred parties. An (over)generalized example would be network providers giving preferential treatment to big media at the expense of small, independent content creators.

On the other side of the debate, network providers claim that they are under pressure to control already crowded bandwidth. Government regulation, they say, will prevent them from stopping parties from consuming bandwidth with content that no one wants to see. Network providers also claim that the marketplace is competitive without government regulation and that regulation will only dampen the incentive to provide Internet services to consumers.

Until now, the FCC maintained a lukewarm position in favor of net neutrality with its four informal "open Internet principles." But in his speech at the Brookings Institution on Monday, the FCC chairman, Julius Genachowski, stated that the agency will now seek to implement rules and regulate net neutrality. Genachowski's press release is here.

The net neutrality issue has been simmering for years, so the rulemaking process promises to be a lively debate. A broad issue to keep an eye on is whether the government's concept of "neutrality" really turns out to be neutral. This could become a fight between whether big government or big business controls the Internet.

Annie Liebovitz Reaches Deal With Lender

Hickman, Benjamin

9/14/2009 7:58 AM

Photographer Annie Liebovitz reached a last-minute deal with a lender that she owed $24 million, allowing her to stave off a forfeiture of her copyrights and film negatives -- at least for the time being.

Liebovitz shot some of the most famous pop culture photographs of the 20th century, including the Rolling Stone cover photo of John Lennon and Yoko Ono hours before Lennon was killed. Liebovitz had taken out the loan from Art Capital Group to finance various aspects of her business. She put up the copyrights in her entire portfolio and her two homes as collateral. Liebovitz was set to default on the loan on September 8. She and the lender, however, negotiated for several days after the due date.

The parties issued a joint press release that stated that Liebovitz had "purchased from Art Capital its rights to act as exclusive agent in the sale of her real property and copyrights” and that she will “therefore retain control of those assets within the context of the loan agreement.” The New York Times, however, reports that the copyrights still remain as collateral.

While it appears that Liebovitz has lived to fight another day, as commentators in the Times piece note, all she might have gained was more time to pay off the debt.

Hickman, Benjamin

9/11/2009 9:12 AM

The Register of Copyrights, Marybeth Peters, told the House Judiciary Committee yesterday that the proposed Google Books settlement could trammel on the rights of copyright holders and usurp Congress' role in establishing copyright policy.

Google is attempting to strike a settlement agreement to end a class action brought by book publishers and the Authors Guild. The plaintiffs in that lawsuit sued Google because of its Google Books project, in which Google was working with libraries to reproduce millions of protected books in their entirety without permission of the copyright owners. The books were indexed electronically, allowing end users to search by title and other bibliographic information. Google returned hits to its customers that included the option of browsing snippets, except for public domain books, which could be viewed and downloaded in their entirety. The settlement agreement would allow the copying to go forward, with author representative groups and Google sharing the profits.

Judge Denny Chin of the U.S. District Court for the Southern District of New York was set to conduct a fairness hearing on the settlement agreement a few months ago, but he delayed the hearing until October because the Justice Department is conducting an antitrust review.

Register Peters' remarks could complicate the court's review of the settlement agreement even more. In essence, she believes that the parties are attempting to rewrite the copyright law and create a compulsory license for Google while conducting and end run around the legislative process. In the same regard, she worries that the settlement will vitiate the rights of rights holders in orphan works. Her written remarks can be found here.

Jury hits Internet service providers with $31.5 million verdict for contributory trademark infringement

Hickman, Benjamin

9/3/2009 2:56 PM

Last week, a jury awarded $31.5 million in damages against a group of Internet service providers (ISPs), for contributory trademark infringement. The verdict marks the first time that ISPs have been assessed damages under the federal Trademark Act’s potent statutory damages provision for contributory trademark infringement. The decision clearly signals that ISPs may face extensive exposure for trademark infringement committed by third parties that use their services.

In 2007, Louis Vuitton Malletier, S.A., a unit of luxury-goods maker LVMH Moët Hennessy Louis Vuitton, filed a lawsuit against Akanoc Solutions, Inc.; Managed Solutions Group, Inc.; and Steven Chen in the U.S. District Court for the Northern District of California (Louis Vuitton Malletier, S.A. v. Akanoc Solutions, et al., Case No. 5:07-cv-3952-JW). Akanoc and Managed Solutions Group, controlled by Chen, were ISPs that provided Internet protocol addresses, routers that linked Internet traffic to websites, and servers that stored Internet content and allowed the content to be accessed through the Internet. The defendants did not operate websites, but sold IP addresses and use of their servers to customers, who used the servers to host their own website content or sold the services to other parties.

Louis Vuitton discovered that a number of the defendants’ customers, or customers of the defendants’ customers, were operating websites that they used to sell counterfeit goods bearing Louis Vuitton trademarks. Louis Vuitton claimed that it sent multiple notices to the defendants about the infringement and requested that the defendants shut down the websites, but that the defendants failed to do so.

When it filed suit, Louis Vuitton alleged four causes of action, including contributory trademark infringement and vicarious trademark infringement. The Trademark Act allows a plaintiff to recover actual damages or lost profits for contributory trademark infringement. Alternatively, a plaintiff that claims a defendant is using counterfeit trademarks can elect to recover preset statutory damages ranging between $500 and $100,000 per counterfeit mark per type of goods or services sold. If the infringement is found to be willful, statutory damages can rise to $1 million. Statutory damages can prove lucrative for plaintiffs because, in many counterfeiting cases, actual damages and lost profits are negligible or difficult to prove.

Until the Akanoc case, no court had awarded statutory damages against a party for contributory trademark infringement.

Defendants cannot remain “willfully blind” to infringement

Before trial, the defendants filed a motion in which they requested that the court grant judgment in their favor on the contributory trademark infringement count. The defendants claimed, among other things, that they were only resellers of services and that they could not monitor every website that uses their services. The court denied the motion because it believed there were genuine issues of material fact that had to be resolved at trial.

In ruling on the summary judgment motion, the court set forth the test for contributory infringement that Louis Vuitton would have to prove to recover against the defendants: (1) The defendants had knowledge of the third parties’ direct infringement, and (2) the defendants exercised control over their customers’ websites or websites operated by their customers’ customers.

The court suggested that there was enough evidence to prove that the defendants knew of the infringement because they had received multiple notices from Louis Vuitton about the infringement. The court also suggested that the defendants had the ability to take down the infringing websites because there was evidence in the record that they could disable offending IP addresses in about 30 minutes. The court opined that the “[d]efendants cannot remain ‘willfully blind’ to trademark infringement taking place on their servers.”

The jury agreed, finding that the defendants committed contributory infringement because they knew, or should have known, that the defendants’ customers were using the defendants’ services to infringe or facilitate others to directly infringe Louis Vuitton’s marks. The jury further found that the defendants had reasonable means to withdraw their services so their services could not be used to directly infringe, but continued to provide the services. To top it off, the jury found that the contributory infringement was willful, thereby entitling Louis Vuitton to enhanced statutory damages to the tune of $31.5 million.

The way ahead

The law remains extremely unsettled as to whether ISPs should be liable when users commit trademark and copyright infringement on their networks. The Akanoc case, however, suggests that courts will not allow ISPs to willfully turn a blind eye to their users’ activities.

That raises the question, of course, of how much ISPs need to do to avoid liability. IPS must establish protocols for handling complaints from IP owners about infringement. Not only do protocols need to be in place, however; ISPs need to act on complaints quickly. The longer an ISP allows a user to conduct potentially infringing activities, the more damages the ISP could face.

On the other side of the coin, the Akanoc case demonstrates that trademark owners have a potent weapon in enforcing their rights. Those who own large trademark portfolios, such as Louis Vuitton, can potentially recover mammoth judgments under the per-mark/per-type formula. This prospect can provide trademark owners with significant leverage when they need to compel an ISP to take down offending websites.

Intellectual Property; Patentable Subject Matter (35 USC Section 101)

Responding to Bilski (For the Time Being): Interim Guidelines on Examining Statutory Subject Matter

Schlaifer, Jonathan

9/1/2009 1:44 PM

In order to determine how to respond to relevant Supreme Court precedent and In re Bilski’s approaches to 35 U.S.C. § 101, the USPTO has developed a series of instructions for its Examiners. Of course, these instructions have been released with the realization that more stable guidelines will be established once the Supreme Court rules on Bilski v. Kappos. In addition, these are guidelines, since they are only based off of rules and laws, so they are "neither appealable nor petitionable." Overall, they condense the 35 U.S.C. § 101 issues into manageable flowcharts which reflect the current state of the law, but next spring the Supreme Court is very likely to reject the Federal Circuit's “Machine-or-Transformation” test. Therefore, Examiner time will have been wasted which could have been spent on more meaningful prior art issues.

A link to the guidelines is:

http://www.uspto.gov/web/offices/pac/dapp/opla/2009-08-25_interim_101_instructions.pdf

The guidelines consist of a series of steps represented by flowcharts. The first step is to determine if the invention is directed to a statutory class (process, machine, manufacture, or composition of matter), excluding things like a signal or a computer program per se. Next, inventions which encompass a judicial exception, such pre-empting a law of nature or a natural phenomenon, or which consist of a mental process or abstract idea are excluded.

Third, machines, manufactures and compositions of matter must have a practical application. If the invention is a process, it must pass the “machine-or-transformation” test prescribed by the Federal Circuit. Also, it must be a particular machine or a particular article to be transformed, and field-of-use and extra-solution activities are insufficient.

The USPTO’s press release about the guidelines may be found at:

http://www.uspto.gov/web/offices/com/speeches/09-14.htm

The USPTO has requested comments, which may be submitted via e-mail at: AB98.Comments@uspto.gov on or before September 28, 2009.

These guidelines do provide some helpful guidance for the interim, but the ultimate fate of this issue remains to be settled.

Nixon Peabody LLP Represents AIPPI in the United States Supreme Court

Schlaifer, Jonathan

8/7/2009 9:12 AM

Background on the client--AIPPI

The initials "AIPPI" are taken from the French name of the International Association for the Protection of Intellectual Property (Association Internationale pour la Protection de la Propriété Intellectuelle).

The International Organization

AIPPI is an international organization comprised of business firms, executives, lawyers, educators, patent and trademark agents, intellectual property owners, and other persons interested in the worldwide protection of patents, designs, trademarks, trade names, know how, goodwill, copyright, and other intellectual property rights and the elimination of unfair trade practices.

The international organization is domiciled in Switzerland. AIPPI currently has over 8,000 members. It operates mainly through National Groups, of which the United States group, AIPPI-US, is one. In addition, AIPPI has two regional (multi-national) groups, as well as individual members in countries where no National Groups have yet been formed. The members of AIPPI represent more than 100 countries. The website for the international organization is www.aippi.org.

The US group has a separate website at www.aippi-us.org Nixon Peabody Partner R. Mark Halligan serves on the Executive Committee for the AIPPI-US group.

Team Effort to Obtain AIPPI and AIPPI-US as a Client

On June 1st, the United States Supreme Court granted Bilski's petition for a writ of certiorari in the In Re Bilski case decided by the Federal Circuit. This case involves the so-called "machine-or-transformation" test and the issue is whether the Federal Circuit erred by holding that that a "process" must be tied to a particular machine or apparatus, or transform a particular condition into a different state to be patent-eligible subject matter. The officers and Executive Committee of the AIPPI recognized the importance of filing an amicus brief in the United States Supreme Court before the upcoming deadline for filing of July 23.

Nixon Peabody LLP accepted the challenge and stepped forward in a team effort to prepare the amicus brief utilizing the resources of its stellar IP practice group. Nixon Peabody LLP was approved as counsel on June 26 and the Nixon Peabody team prepared the first draft for further discussions and review by July 3. Since that time the team---Mark Kaufman in Washington DC and Bill Pegg, David McKone and Mark Halligan in Chicago---have worked for weeks completing the amicus brief and obtaining the necessary approvals and sign-offs from both AIPPI-US and AIPPI. Finally, the AIPPI-US/AIPPI brief was filed in the United States Supreme Court.

Patentable Subject Matter (35 USC Section 101); Intellectual Property

Is the Board of Patent Appeals and Interferences Relaxing Its Interpretation of Bilski?

Schlaifer, Jonathan

7/28/2009 1:54 PM

According to In re Bilski, the Federal Circuit from decision which was handed down in an en banc decision in 2008, the appropriate test to decide whether a given claim in a patent is patent-eligible subject matter is the machine-or-transformation test, wherein the claim must be tied to a particular machine or apparatus or transform an article into a different state or thing.

Ex parte Dickerson, a decision handed down by the Board this month, has complicated the interpretation of the test. In the Bilski decision, the court said that insignificant post-solution activity was insufficient to allow a claim to pass the test. It based this position on Parker v. Flook. However, Dickerson presents a computerized method claim which generates a solution to a performance metrics problem whose final step is outputting the solution. On the basis of the outputting the solution feature, the Board decided that the claim was statutory subject matter.

Thus, Dickerson suggests that the Board may perhaps now be more lenient about allowing claims that involve an outputting step as a way of tying the rest of the claim language to a machine or apparatus. However, given the risk of having an outputting step dismissed as extrasolution activity, it may still be a good idea to reinforce the role of the machine or apparatus elsewhere in the claim.

Intellectual Property; Legislation and Policy

Computer software can be protected as a “compilation” trade secret

Covitz, Philip

7/28/2009 1:50 PM

Novelty is not required for trade secret protection. The crucial characterization of a trade secret is secrecy not novelty. Whether a trade secret exists is a fact-intensive question that usually must be resolved at trial. The question presented in Decision Insights, Inc. v. Sentia Group, Inc., 2009 U.S. App. LEXIS 2654 (4th Cir. 2009) was whether identification of the entire source code relating to a computer software program can qualify as a total “compilation” trade secret.

The Decision Insights litigation involves competing software applications implementing decision-making models using expected utility theories. Plaintiff (DII) alleged that former employees of DII who were hired by Sentia disclosed trade secrets to Sentia in violation of the Virginia Uniform Trade Secrets Act.

Discovery disputes arose regarding DII’s identification of the alleged trade secrets at issue. The magistrate judge determined that DII’s discovery responses were inadequate, in part, due to DII’s failure to identify its trade secrets with specificity. The magistrate judge ordered DII to produce:

[A] clear and express verified statement containing only those items which Plaintiff considers to be actual trade secrets and which Plaintiff has reasonable grounds to believe were misappropriated by Defendant. Plaintiff shall clearly differentiate between the material which is public knowledge from that material which is allegedly Plaintiff’s trade secret, proprietary, or confidential material.

In response, DII identified 12 specific components of its source code as trade secrets as well as the entire DII source code for its “EU Model” software program as a total compilation trade secret.

These efforts by DII to identify its alleged trade secrets were deemed insufficient by the district court. Other than source code, DII had no additional documentation relating to the development of its EU Model more than 15 years ago such as algorithms, block flow diagrams, or narratives explaining how the software worked.

The district court dismissed DII’s trade secret claims on summary judgment. The court found that DII could not provide an adequate identification of its trade secrets and confidential information to permit the court or the defendants to ascertain what aspects of DII’s software are trade secrets and what portions of the code are publically available.

On appeal, the Fourth Circuit Court of Appeals reversed the district court and remanded the case for further proceedings because the district court failed to address whether or not the software program, as a total compilation, qualifies as a trade secret citing its earlier decision in Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655 (4th Cir. 1993).

It is a well established principle in trade secrets law that a trade secret can exist in a combination or “compilation” of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design, and operation of which, in unique combination, affords a competitive advantage and is a protectable secret, Imperial Chemical Industries, Ltd. v. National Distillers & Chemical Corp., 342 F.2d 737, 742, 144 U.S.P.Q. (BNA) 695 (2d Cir. 1965).

The recent decision in Decision Insights, Inc. v. Sentia Group, Inc., 2009 U.S. App. LEXIS 2654 (4th Cir. 2009) reaffirms this important principle of trade secrets law. An entire software program, as a total compilation, can exist as an independent trade secret if reasonable measures have been taken to preserve the secrecy of the software program. It is not necessary to parse out specific portions of the source code in order to establish a trade secret claim in computer software.

Intellectual Property; Privacy

Interest Groups Weigh In On Google Book Search Settlement

Hickman, Benjamin

7/28/2009 9:43 AM

The U.S. District Court for the Southern District of New York is scheduled to conduct a fairness hearing October 7 on the proposed settlement agreement between Google and a class of rights holders concerning the Google Book Search tool.

Interest groups will weigh in on various aspects of the settlement as the hearing draws closer. One group, the Center for Democracy and Technology ("CDT"), released a report yesterday in which it urges Google to implement more robust privacy safeguards as part of the settlement agreement. As the report explains, Google will have to collect data about search habits of Google Book Search users to calculate the proper distribution of royalties between Google and rights holders. According to CDT, however, the proposed settlement contains little direction on how privacy will be safeguarded.

A copy of the report is available here.

Intellectual Property; Internet Law; Media Law

Associated Press to Implement Registry for Monitoring Infringement

Hickman, Benjamin

7/27/2009 10:44 AM

The Associated Press continues to take a hard line against websites and bloggers who republish its articles without permission. The AP announced last week that it will set up a registry to monitor infringing uses of its articles online. See the AP's press release for more.

The AP's announcement comes on the heels of a favorable settlement it struck with an online news service. In that case, the AP had sued the defendant in the U.S. District Court for the Southern District of New York and relied on the common law "hot news" doctrine. See our earlier post on the case here.

The irony of the AP's aggressive approach is that it could nothing more than dampen the AP's visibility and relevance in the news business. Some member newspapers have cancelled their memberships to the AP, and the trend could well continue as newspapers suffer intense financial woes. Websites and blogs, albeit unauthorized users of AP content, are one of the AP's biggest distributors.

Amazon's Kindle Kerfuffle Could Be Only the Beginning

Hickman, Benjamin

7/27/2009 10:12 AM

A new conflict on the frontier of digital media erupted last week. It began when online book retailer Amazon learned that the publisher of a certain book that Amazon offered for download on its Kindle device did not own the right to distribute the book in digital format. Amazon, in response, remotely deleted copies of the book from every Kindle that had downloaded it and issued a refund to customers. The book, by the way, was George Orwell's 1984.

Amazon's response prompted fury from libertarians, free speech advocates and many other constituencies. These people are concerned that Amazon's technology is yet another case in point that content providers are vitiating consumers' right to control individual copies of works they purchase after the first sale, a well-established right in the non-digital world. They also worry that governments could use the same technology to censor speech. The New York Times has more on the controversy here.

The negative publicity snowballed so quickly that Amazon CEO Jeff Bezos issued a statement on Amazon's website in which he apologized and called Amazon's response "stupid, thoughtless, and painfully out of line with our principles." But Bezos did not guarantee that it would not happen again, only providing a vague assurance that "[w]e will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission."

This blogger bets that this is not the last time retailers like Amazon will implement this kind of technology. The technology enables retailers to shift the risk of loss to their customers. If Amazon had no way to recall the disputed copies of 1984, it might have faced liability for contributory copyright infringement. With the touch of a button, however, Amazon significantly reduced its exposure to liability. This attribute of the technology will be attractive to content providers going forward, and it will be very hard for them to abandon it.

Barnes & Noble to Roll Out Mammoth E-Bookstore

Hickman, Benjamin

7/21/2009 1:19 PM

Barnes & Noble announced today that it will offer hundreds of thousands of book titles in e-book format on its website. The vast majority of titles -- to the tune of 500,000 -- will be available for free. The free titles, which are in the public domain, will be made available courtesy of Google.

Bestsellers and new releases will be available for $9.99.

The New York Times has more here.

Goldman Sachs Gripe Site Operator Will Post Disclaimer

Hickman, Benjamin

7/17/2009 6:19 PM

Michael Morgan, the owner of a Goldman Sachs sripe site, goldmansachs666.com, has entered into a settlement agreement with Goldman Sachs in which he agreed to post a disclaimer that he is not affiliated with Goldman Sachs.

Goldman Sachs sent Morgan a cease and desist letter several months ago, claiming that Morgan's operation of the website infringed Goldman Sachs' trademark rights. Morgan reacted by filing a declaratory judgment action in federal district court in Florida seeking a judgment of non-infringement.

The New York Times has more via Reuters here.

Internet Law; Cyber Security

Tenth Circuit: Provider of Phone Records Not Entitled to CDA Immunity

Hickman, Benjamin

7/17/2009 6:10 PM

The U.S. Court of Appeals for the Tenth Circuit recently held that an online database service that provided confidential phone records was not entitled to immunity under the Communications Decency Act. Federal Trade Commission v. Accusearch Inc., No. 08-8003 (June 29, 2009).

The FTC sued the defendant, Accusearch Inc., claiming Accusearch violated the FTC Act by hiring researchers to retrieve confidential phone records and making that information available for purchase. Accusearch asserted immunity under Section 230 of the CDA, claiming it was a provider of an interactive computer service, within the meaning of the CDA, and merely republished third-party content.

The Tenth Circuit disagreed, holding that Accusearch was "responsible" for the "development" of the content, two terms of art in the CDA that preclude immunity. The Tenth Circuit rejected Accusearch's argument that it could not be responsible for the development of the phone records in question merely because it hired third parties to retrieve the phone records.

D.C. Circuit Overturns Annual Fee for Webcasters, Affirms New Royalty Rates

Hickman, Benjamin

7/14/2009 6:14 PM

The U.S. Court of Appeals for the D.C. Circuit has ruled on an appeal webcasters brought against the Copyright Royalty Board's 2007 rate determinations. The full opinion is available here.

Webcasters took issue with two major aspects of the CRB's 2007 decision: a $500 minimum annual fee per channel, and royalty calculations that not only increased on an annual basis but were based on the number of songs broadcasted rather than a percentage of a webcaster's total revenues. Small and nonprofit webcasters especially took issue with the per-song royalty calculation, claiming that the rates could drive many of them out of business. The D.C. Circuit ruled that the CRB's assessment of the $500 fee was arbitrary and capricious, but not the new royalty scheme.

The D.C. Circuit's decision will provide limited solace for webcasters, who believe the per-song royalty scheme could kill Internet radio's chances for growth. Pandora, for instance, has suffered since the new rates went into effect. It remains to be see whether SoundExchange, Inc.'s alternative royalty schedule will be attractive to webcasters.

Associated Press Settles "Hot News" Case

Hickman, Benjamin

7/14/2009 5:57 PM

The Associated Press ("AP") has settled a copyright infringement case against All Headline News ("AHN") on undisclosed terms. See our earlier post on the case here.

The AP sued AHN for copyright infringement because AHN copied AP articles from third-party websites and re-posted them on AHN's website. The AP relied, in part, on the "hot news" doctrine, a common law doctrine that has origins going back to 1918. The hot news doctrine provides news organizations a kind of pseudo-copyright right in breaking news stories; facts in news stories are typically not protected by copyright.

In February, the United States District Court for the Southern District of New York denied AHN's motion to dismiss the AP's complaint, holding that the hot news doctrine is still alive and well.

The Southern District's ruling apparently provided the AP enough leverage to drive a settlement of the case. In a join press release with the AP, AHN acknowledged its activities were improper and agreed to stop.

Thoughts on the Cyberattacks and the White House Cybersecurity Report

Hickman, Benjamin

7/9/2009 1:19 PM

The wave of cyberattacks widely covered in the media during the past few days have struck both public and private servers in the United States and South Korea, from the White House's to The Washington Post's website.

This blogger has yet to see the Obama Administration hold out the cyberattacks as a case in point in support of its recent cybersecurity report (see our earlier post on the report here). The attacks, however, will no doubt provide support for the proposed policies in the report.

One of the most notable proposals is that the White House and wants the public and private sectors to share information about security risks. If, for example, a private business experiences security intrusions on its networks, it could (or might even be compelled to) report the intrusions to the government. The thinking is that information sharing will make everyone more aware of security risks thereby avert cyberattacks.

The business community has expressed concern about the information-sharing proposal, and it remains to be seen whether the White House and/or Congress will succeed in implementing it in legislation or regulations. But the events of the law few days will no doubt increase the Obama Administration's desire to advance the concept.

Ninth Circuit: CDA Immunity Applies to Maker of Filtering Software

Hickman, Benjamin

7/6/2009 1:13 PM

Cyber Security; Internet Law; Privacy

The U.S. Court of Appeals for the Ninth Circuit held recently that a maker of filtering software is entitled to protection under a Communications Decency Act ("CDA") safe harbor provision. Zango, Inc. v. Kaspersky Lab, Inc., No. 07-35800 (9th Cir. June 25, 2009).

In this case, Zango offered Internet users access to a catalog of online videos, games, music, tools, and utilities to consumers who agreed to view advertisements while they browsed the Internet. Kaspersky Lab marketed software that allowed users to detect and block malware, including adware.

Zango alleged that Kaspersky Lab's software identified Zango's content as adware and improperly blocked users from downloading and using it. Zango sued Kaspersky Lab and sought injunctive relief for tortious interference with contractual rights, violations of the Washington State Consumer Protection Act, trade libel, and unjust enrichment.

The U.S. District Court for the Western District of Washington Granted Summary judgment in favor of Kaspersky Lab. The District Court relied on Section 230(c)(2)(b) of the CDA, which immunizes a provider or user of an interactive computer service from liability on account of "any action taken to enable or make available to information content providers or other the technical means to restrict access to the material described in paragraph (1)." The material that can be blocked includes "material that the provider or user considers to be obscene, lewd, lascivious, flithy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected."

The Ninth Circuit (with Judge Pamela Ann Rymer writing the opinion) affirmed the District Court, holding that the plain language of the CDA provides for application of the immunity provision in the case of content that the provider or user considers improper.

Judge Raymond Fisher wrote a concurring opinion. Although Judge Fisher agreed with the outcome in this case, he believed that the case should be limited to its facts. He feared that the broad language of the CDA would provide immunity to any maker of filtering software even if the maker's objective were to block competitors' legitimate activities.

Michael Jackson's Copyrights Live On

Hickman, Benjamin

6/29/2009 12:50 PM

The media have reported extensively on the potpourri of litigation that will likely commence as various stakeholders do battle over Michael Jackson's estate. Many sources have reported that Jackson was several hundred million dollars in debt when he died.

It would not surprise us if the Jackson estate's most valuable assets are copyrights, both in Jackson's works and in other music properties. Sony/ATV Music Publishing, in which the Jackson estate owns a substantial share, boasts a catalogue that includes Beatles songs and has been valued by some in the neighborhood of a billion dollars. In 2002, Forbes magazine estimated Jackson’s share was worth around $450 million. The National Law Journal Reports on pending Jackson copyright actions around the country here.

Copyright protection lasts for the life of the author plus seventy years. When Jackson died last week, the final seventy years of protection began to run on the songs he authored. There are few works in the world that maintain their commercial value for the entire duration of their copyright terms. Jackson's songs could turn out to be some of those few.

Spam King Pleads Guilty, Will Spend 87 Months in Prison

Hickman, Benjamin

6/23/2009 5:34 PM

Cyber Security

"Spam King" Alan Ralsky, one of the world's most prolific and notorious spammers, has pleaded guilty to wire fraud, money laundering, and violations of the CAN-SPAM Act, in a deal with federal prosecutors.

The Washington Posts's Brian Krebs has more here.

RIAA Defendant Socked with $1.92 Million Judgment

Hickman, Benjamin

6/22/2009 12:45 PM

A jury in the United States District Court for the District of Minnesota Thursday awarded a group of record companies $1.92 million in damages for copyright infringement against Minnesota mother Jamie Thomas-Rasset. Thomas-Rasset's case is the first of thousands of cases brought by the Recording Industry Association of America to go to trial.

The jury's calculation was based on a finding of infringement of twenty-four songs at a rate of $80,000 per song.

Many observers have expressed concern that the $1.92 million verdict violates that Due Process Clause. The court might have the same concern as well. Thomas-Rasset originally lost in a trial several years ago, but the verdict was vacated because the court botched a jury instruction. The court expressed concern then that the $220,000 award in the first case was too high.

RIAA had offered to settle the case for $5,000 long before it went to trial, but Thomas-Rasset refused. RIAA is still offering to settle notwithstanding the jury verdict, apparently out of concern for negative publicity.

Nate Anderson at ars technica has a good piece on Thomas-Rasset's options going forward.

Intellectual Property; Patent Reform

White House Announces Next USPTO Director

Baker, Amanda

6/22/2009 10:22 AM

On Thursday, June 18, 2009, the White House announced its intent to nominate David Kappos as the next Director of the USPTO. Kappos, whose official title will be Under Secretary of Commerce for Intellectual Property, has over 20 years of patent experience and is currently serving as the Vice President and Assistant General Counsel for Intellectual Property Law and Strategy at the IBM Corporation. He is also on the Board of Directors of the Intellectual Property Owners Association, and is active within AIPLA.

Kappos has been a strong proponent of patent reform efforts and has recently testified before the Senate Committee on the Judiciary to voice his support of S. 515, the Patent Reform Act of 2009. Specifically, Kappos advocated for post-grant review, enhanced inter partes reexamination proceedings, and pre-issuance submission of information. He also proposed a balanced approach to damages valuation provisions that would incorporate Quanta's "essential features" standard and provide for strengthened judicial gatekeeping.

More on Sotomayor's IP Opinions

Hickman, Benjamin

6/16/2009 1:45 PM

NP Summer Associate Patrice Clair has taken a closer look at Judge Sotomayor's IP opinions. Her report can be found on the Wiki site or by clicking here.

While Judge Sotomayor has not handled an abundant number on IP cases on the bench, before she became a judge she was an IP litigator in New York City, where she represented corporate IP owners. Whether Judge Sotomayor's background would have any effect on how she handles IP cases on the Supreme Court is anyone's guess.

Bill Clinton Loses UDRP Arbitration

Hickman, Benjamin

6/16/2009 1:18 PM

Try typing the domain names <williamclinton.com>, <williamjclinton.com>, and <presidentbillclinton.com> in you web browser. You will not find a website operated by former President Clinton or his foundation, but the home page of the Republican National Committee. The domain name are registered to an entity named Web of Deception, which is controlled by Jospeh Culligan. Culligan has registered the names of other famous politicians, including President Obama and Senator John McCain.

President Clinton filed a complaint under the Uniform Domain Name Dispute Resolution Policy ("UDRP") against Web of Deception and attempted to seize control of the domain names. A panelist of the National Arbitration Forum, however, denied President Clinton's complaint in a recent opinion.

The panelist concluded that President Clinton failed to prove the requisite element of bad faith. The panelist believed that the only way in which President Clinton might have proved bad faith was by showing that Web of Deception registered the domain names to prevent President Clinton from registering them himself. That required proving a pattern of similar conduct. The panelist, however, would not consider Culligan's past conduct with respect to President Obama's and Senator McCain's names as part of a pattern here.

Intellectual Property; Legislation and Policy

Hickman, Benjamin

6/3/2009 9:09 AM

The U.S. Copyright Office has posted a press release on its website responding to a May 19 article in which the Washington Post chronicled the massive delays copyright applicants are experiencing as a result of the rollout of the new application filing system. See our earlier post on the article here.

In the press release, the Copyright Office clarifies that the backlog is almost exclusively affecting paper applications. Electronic applications with electronic deposits are being processed much faster (90% within five months and 33% within two and a half months).

The numbers suggest that once the public becomes comfortable with e-filing down the road, processing times should be dramatically reduced. But one cannot overstate the current problem; hundreds of thousands of paper applications are still backlogged. The Copyright Office clearly did not anticipate that problem would occur when it implemented the new system. A case in point that great ideas can go awry when not properly executed.

A final critique of the situation: It took the Copyright Office ten days to respond to the Post article. If the Copyright Office wants to be perceived as institution that can keep pace with the rapid changes copyright law is facing, it needs to be more responsive to the conversation that is going in the press and among the public.

Intellectual Property; Patentable Subject Matter (35 USC Section 101)

Bilski Certiorari Petition Granted...

Schlaifer, Jonathan

6/1/2009 5:30 PM

The Supreme Court has granted certiorari today in Bilski v. Doll, formerly In re Bilski, a significant case on whether business methods can be patentable subject matter. Despite opposition from the Solicitor General, the Court will hear the case and decide whether the Federal Circuit's holding that a "machine-or-transformation" test is the appropriate test to use to determine whether inventions in areas such as business methods, computer software, and related areas, constitute patentable subject matter. The appellate court held that a process claim must be tied to a particular machine, or must transform an article to a different state or thing.

The petition presents two questions:

Whether the Federal Circuit erred by holding that a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (“machine-or-transformation” test), to be eligible for patenting under 35 U.S.C. §101, despite this Court's precedent declining to limit the broad statutory grant of patent eligibility for “any” new and useful process beyond excluding patents for “laws of nature, physical phenomena, and abstract ideas.”

Whether the Federal Circuit's “machine-or-transformation” test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business.” 35 U.S.C. §273.

Now that the Supreme Court has granted certiorari, it will rule in due course and provide a more definite answer to which inventions are patent-eligible.

Law Blogs Provide In-Depth Coverage the Supreme Court and Sotomayor Nomination

Hickman, Benjamin

6/1/2009 9:22 AM

Media Law

In this morning's Washington Post, Howard Kurtz has a profile of Supreme Court practitioner Tom Goldstein. Goldstein runs SCOTUSblog, arguably the leading blog on Supreme Court practice.

As Goldstein demonstrates, bloggers are providing some of the richest content in the media today, especially on issues that require more than a generalist's knowledge that mainstream reporters typically provide. Although Goldstein makes regular appearances on cable news shows and feeds quotes to newspaper reporters, he offered Kurtz a blistering assessment of the job traditional media are doing with coverage the Court: "I talked to three reporters from Politico today. If they can find the Supreme Court, it's because it's across the street from the Capitol. It's not their beat, and they're highly open about that."

As the media head toward more convergence, this blogger would not be surprised to see more blurring of the lines between journalists and the fields they cover. This raises obvious ethical concerns. At the same time, though, this trend may well result in providing the public a better understanding of complex fields.

Cyber Security; Legislation and Policy

White House Releases Cybersecurity Review

Hickman, Benjamin

5/29/2009 1:12 PM

President Obama announced this morning that he will create a cybersecurity czar, who will be charged with coordinating security of government IT systems and other major IT infrastructure, such as stock exchanges and air traffic control systems. The New York Times has more here.

When President Obama made the announcement this morning, the White House also released a report on cyberspace policy, the product of a sixty-day review the President ordered shortly after taking office. The report sets forth the President's blueprint cybersecurity going forward.

The cybersecurity czar will report to the National Security Council and National Economic Council, although the President said he would personally select the czar and that the czar will have frequent access to the Oval Office.

In addition to creating the White House position, President Obama is expected to sign a classified Executive Order in the coming days that will direct the Pentagon to set up an arm that will equipped to wage war in cyberspace.

The coordination of cybersecurity at the highest levels is long overdue. It will also surely give rise to new controversies. Observers have already raised two concerns. First, they are concerned the White House czar will not have sufficient power because the position does not have direct access to the President. Second, civil liberties advocates are concerned that the plan will give rise to new government intrusions on privacy. During this morning's press conference, President Obama attempted to reassure the country that would not occur.

Assessing Sotomayor's Track Record on IP, Tech, and Media Cases

Hickman, Benjamin

5/27/2009 12:59 PM

Commentators are combing through Judge Sonia Sotomayor's past opinions in cases involving intellectual property, technology, and the media to assess her past performance on those issues. A surprising trend is emerging: Judge Sotomayor has not written many opinions in cases involving the aforementioned issues, despite the fact that she sat on the U.S. District Court for the Southern District of New York -- one of the most copyright- and media law-heavy dockets in the country -- and the U.S. Court of Appeals for the Second Circuit, which hears appeals from the Southern District of New York.

Nevertheless, Judge Sotomayor did pen the trial court's ruling in a leading copyright case, New York Times v. Tasini, when she sat in the Southern District of New York. That case was ultimately appealed to the Supreme Court, which reversed Judge Sotomayor's opinion and held that freelance photographers could demand additional royalties when publishers reprinted old newspapers and magazines in digital format. New York Times v. Tasini, 533 U.S. 483 (2001).

While on the Second Circuit, Judge Sotomayor authored an opinion in which the court held that in rem actions brought under the Anticybersquatting Consumer Protection Act must be brought in the judicial district where the registrar, registry, or other authority is located. The case is Mattel, Inc. v. barbie-club.com, 310 F.3d 293 (2d Cir. 2002).

Betanews has a rundown of more of Judge Sotomayor's cases here.

Cyber Security; Legislation and Policy

White House Appears Poised to Name Cybersecurity Czar

Hickman, Benjamin

5/27/2009 9:04 AM

Several sources are reporting that the White House will name a cybersecurity czar to oversee security issues related to both the nation's public and private computer networks. The position is expected to be created when the Obama Administration merges the Homeland Security Council into the National Security Council. A report is expected to be released any day.

We will continue to monitor developments on this story.

The Register has more here.

Intellectual Property; Interactive Entertainment; Internet Law; Media Law

Craigslist in Lawsuit Against South Carolina AG Over Prositution, Obscenity Allegations

Schlaifer, Jonathan

5/26/2009 10:16 AM

In Craigslist, Inc. v. McMaster, on May 20, 2009, Craigslist took legal action against the South Carolina Attorney General to prevent him from suing the website for violating obscenity or prostitution laws. Jim Buckmaster, CEO of Craiglist wants a restraining order and declaratory relief to protect itself.

While McMaster, the Attorney General, acknowledged that Craigslist was taking action to place erotic and potentially obscene content in an “adult” section and manually screening said content, McMaster said that the potential for prostitution and obscene content remained and thus law enforcement would continue to monitor the site to see if it operated legally.

This situation illustrates that in communities with strict obscenity and prostitution laws, the freedom of the Internet can make law enforcement difficult and can raise privacy and freedom of expression issues.

D.C. Circuit: White House Office of Administration Not Subject to FOIA

Hickman, Benjamin

5/19/2009 1:47 PM

The U.S. Court of Appeals for the D.C. Circuit held today that the White House Office of Administration is not subject to the Freedom of Information Act. The case is Citizens for Responsibility and Ethics in Washington v. Office of Administration, No. 08-5188. The opinion is available here.

The Office of Administration provides the Executive Office of the President with various administrative services. This lawsuit came about when the Office of Administration learned that e-mail messages created and sent during the Bush Administration years had gone missing, apparently the result of inadequate document retention policies. CREW filed a FOIA request seeking results of the Office of Administration’s investigation. The Office of Administration denied the request, claiming the office was exempt from FOIA.

The D.C. Circuit sided with the Office of Administration. In 1980, the Supreme Court held that FOIA does not apply to the immediate personal staff or units of the Executive Office of the President whose sole function is to advise and assist the President. Kissinger v. Reporters Committee for Freedom of the Press, 445 U.S. 136 (1980). FOIA, by its own terms, applies only to "agencies." The court concluded that the Office of Administration is not an agency, but part of the class described in Kissinger.

The U.S. Copyright System is Full of Mothballs (In More Ways the One)

Hickman, Benjamin

5/19/2009 1:24 PM

Today's Washington Post reports on the sclerotic backlog the U.S. Copyright Office is experiencing in processing applications for claims to copyright. The Copyright Office is currently sitting on a pile of 523,000 applications waiting to be examined. Processing time is running at eighteen months. If you submitted an application in late 2007, Copyright Office staff is probably getting around to examining it now.

The backlog, ironically, is a result of the Copyright Office's effort to roll out a new electronic filing system. The new system went live last year and the Copyright Office shut down its old paper-based filing system. But forty-five percent of applicants are still submitting paper applications, which Copyright Office staff have to enter by hand into the electronic system.

The most serious consequence of the problem is borne by copyright owners who need to register their works prior to bringing an infringement lawsuit. The Post article refers to a report from the Inspector General, which concluded that the backlog is threatening the integrity of the copyright system. It seems, however, that the problem is only getting worse, and the Copyright Office has failed to present a plan for getting out of the mess.

9th Circuit Holds That "Promissory Estoppel" claim not foreclosed by Section 230

Machado, Leslie

5/12/2009 12:02 PM

In an Opinion issued May 7, 2009, the U.S. Court of Appeals for the Ninth Circuit reversed a district court and allowed a suit to proceed against Yahoo alleging that Yahoo promised, but failed, to remove offensive material about the plaintiff from its website. Barnes v. Yahoo!, Inc., No. 05-36189 (9th Cir. May 7, 2009).

The court noted that 47 U.S.C. §230 prevents a plaintiff from imposing liability on companies like Yahoo that would treat Yahoo as the "publisher or speaker" of the content at issue. It accordingly held that the plaintiff had not stated a claim against Yahoo for "negligent undertaking" (i.e., failing to remove the offensive content) because this would treat Yahoo! as the "publisher or speaker." However, the court held that the plaintiff's "promissory estoppel" claim stated a viable cause of action because the liability imposed under this theory "would come not from Yahoo's publishing conduct, but from Yahoo's manifest intention to be legally obligated to do something." The decision suggested that, if Yahoo had refused to take down the offensive conduct, it would be protected by §230. However, having allegedly promised to take down the content, it changed the "baseline rules" and could not claim protection under §230. The bottom line: don't make promises to investigate an issue or remove material or you may lose your §230 defense.

Trademark Owners Submit Recommendations for New gTLD Plan to ICANN

Hickman, Benjamin

5/11/2009 1:19 PM

A coalition representing trademark owners has submitted a proposal to ICANN to improve the new generic top-level domain name (gTLD) scheme scheduled to take effect later this year.

The trademark owners are proposing that ICANN implement a number of institutional pillars that will put potential registrants on notice of prior-existing trademark rights and enable trademark owners to respond quickly if a potential registrant attempts to register a confusingly similar domain name. Among other things, the trademark owners propose that ICANN create an IP Clearinghouse, where trademark owners could pay for a watch service that would alert them when someone attempts to register gTLDs that might be of concern to them. The IP Clearinghouse would also feature a Globally Protected Marks List, which would block applications for famous marks.

The full report is available here. For background on the new gTLD scheme, see our earlier post here.

Supreme Court Sends "Fleeting Nudity" Case Back to Third Circuit

Hickman, Benjamin

5/4/2009 2:02 PM

Media Law

The Supreme Court of the United States today remanded the infamous case involving Janet Jackson's "wardrobe malfunction" during the 2004 Super Bowl halftime show back to the Third Circuit. The Third Circuit previously invalidated a $550,000 fine the FCC imposed against CBS airing the incident. The Supreme Court, however, is ordering further consideration below in light of the Court's ruling last week on the regulation of "fleeting expletives."

In last week's "fleeting expletives" case, the Supreme Court held that the FCC's decision to switch to a stricter policy on the use of curse words on television and radio was not arbitrary and capricious and, therefore, did not violate the Administrative Procedure Act. The Court, however, ducked the issue of whether the FCC's policy violated the First Amendment and sent the case back to the Second Circuit to review that issue.

In both Justice Thomas's concurring opinion and the dissenting opinion in the fleeting expletives case, there appears to be rumblings that the Supreme Court believes the policy does not pass constitutional muster. It will be interesting, however, to see whether the Court ultimately treats fleeting expletives and fleeting nudity equally under the First Amendment, or whether the Court decides tighter regulation of fleeting nudity is permissible.

Judge Delays Approval of Google Books Project Settlement

Mills, Laurin

5/2/2009 3:28 PM

The judge overseeing the lawsuit brought by the Author's Guild and others against Google concerning Google's audacious attempt to digitize and make available all the out-of-print "orphan" works has delayed approval of the settlement by four months. The judge did this in reaction to concerns of several interested parties that the settlement would give Google a de-facto monopoly over orphan works.

The concerns raised seem vastly overblown. This blogger does not understand how a monopoly can be gained on something for which, by definition, there is no current market. If a market is created it will be because Google spent the intellectual and monetary capital to create it. If Google does create a significant market for orphan works, and then somehow absuses legitimately gained market power (by charging monopoly rates or engaging in censorship), the antitrust laws will still be there.

Intellectual Property; Internet Law; Media Law

First Circuit Nixes Defendant's Motion to Admit the Internet in RIAA Lawsuit

Hickman, Benjamin

4/22/2009 12:46 PM

Several months ago we reported on defendant Jeffrey Tenenbaum's Motion to Admit the Internet in the Courtroom in a lawsuit the Recording Industry Association of America brought against him the U.S. District Court for the District of Massachusetts. The district court granted the motion, and Sony BMG, one of the RIAA defendants, appealed to the First Circuit for a writ of mandamus.

In an opinion released this month, the First Circuit ruled the district court abused its discretion in allowing webcasting of the trial. The court's ruling was based primarily on its interpretation of the District of Massachusetts' Local Rule 83.3, which provides that “no person shall take any photograph, make any recording, or make any broadcast by radio, television, or other means, in the course of or in connection with any proceedings in this court.”

In a concurring opinion, however, Judge Kermit Lipez wrote that while he agreed with the court's interpretation of Local Rule 83.3, he believed the underlying policy of keeping webcasting out of the courtroom was flawed.

Cyber Security; Internet Law; Intellectual Property

Fourth Circuit Affirms Fair Use Finding for Plagiarism Software, Construes CFAA Damages Provision

Hickman, Benjamin

4/20/2009 1:35 PM

The United States Court of Appeals for the Forth Circuit has weighed in on a copyright infringement case involving the plagiarism software program Turnitin. See our earlier post on the case here.

In the proceedings below, the United States District Court for the Eastern District of Virginia granted summary judgment in favor of the defendant, iParadigms, LLC, finding that iParadigms's archiving of students' papers constituted fair use. The Fourth Circuit endorsed the District Court's fair use analysis. Like the District Court, the Fourth Circuit reasoned that iParadigms's use of student papers was transformative and did not usurp any potential economic gain the students might have realized in their papers.

The Fourth Circuit, however, reversed the District Court's grant of summary judgment against iParadigms on its counterclaims under the federal Computer Fraud and Abuse Act ("CFAA") and the Virginia Computer Crimes Act ("VCCA"). iParadigms claimed damages under the CFAA and VCCA because it had to invest man-hours and other resources in determining how one of the plaintiffs in the case obtained a password to use Turnitin. The District Court concluded that iParadigms's claimed damages were consequential damages, which did not qualify as recoverable "economic damages" under the CFAA.

The Fourth Circuit, however, noted that the CFAA defines a loss as "any reasonable cost to any victim, including the cost of responding to an offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service." The Fourth Circuit believed iParadigms's claimed damages fell within this definition. The Fourth Circuit similarly found no limitation on damages in the VCCA.

The Fourth Circuit remanded the case to the District Court to determine whether iParadigms's damages claim could survive the summary judgment motion on the facts of the case.

Intellectual Property; Legislation and Policy; Patent Reform

Xconomy, "'Danger!' — The Need for Active Watch of Patent Reform," April 13, 2009

Moynihan, Brian

4/13/2009 11:19 AM

Xconomy.com

“Danger!” — The Need for Active Watch of Patent Reform

April 13, 2009

By David Resnick

http://www.xconomy.com/boston/2009/04/13/danger-the-need-for-active-watch-of-patent-reform/

“Danger, Will Robinson!” These immortal words uttered by the Robot in the 1960s television series “Lost in Space” are now part of our pop culture lexicon when warning of an impending, and sometimes unseen, threat. It’s too bad the Robot is just a fictional character, because as we’ve seen with recent economic and legislative happenings, there are times we could all use someone or something to give us an early warning.

Given the recent turbulence in the markets, imagine how prescient it would have been to have someone yell “Danger, Danger” last spring as you moved all your investment dollars, including the kids’ college money, from the relative safety of that conservative bond fund to the aggressive stock fund when it seemed like the right thing to do. After all, you were only following the advice of CNBC, the leaders in financial news. Oil stocks looked particularly good, and when the experts said stocks can only go up, who were you to second guess them. As you clicked to make that online trade, your warning Robot would have yelled “Danger, Danger! Stock Market Crash ahead!”

Similar warnings might also have been appreciated by many organizations as the Obama administration and a new Congress amends and creates new legislation and regulations. This “Danger” warning certainly would have been appreciated by those major biotechnology companies with local operations when the Patent Reform Act of 2009 was introduced in the Senate in March. The proposed bill provided a statutory methodology to be used in the calculation of damages in patent infringement suits. The methodology would limit damages valuation to the amount of value added by the invention’s improvements over the prior art. The invention’s entire market value would only be considered where the improvements alone constitute the “predominant basis” for market demand. This change, favored by large IT firms who rely on market dominance and not on patents, would severely diminish the value of patent protection. Limiting damages takes the teeth our of patent protection and, while it benefits a few select industries, industries that rely on strong patents to encourage innovation and investment, like the life sciences, would be severely impacted.

Two weeks ago the Senate Judiciary Committee’s approved a modified version of the reform bill that added a “gatekeeper” provision, giving judges more authority to determine how to assess damages. Unlike the original bill, the modified version included no mention of limiting or eliminating the “entire market value” rule or applying “prior art subtraction” before determining a royalty base. The bill, is now heading to a full Senate vote before the House takes up its version of the patent reform legislation.

The modified Senate bill is said to be good news for those who value patents as a means to encourage innovation, investment, and job creation. Indeed, the Biotechnology Industry Organization (BIO), which represents more than 1,200 biotechnology organizations worldwide, recently released a statement saying that “careful compromises on several key issues, including damages and post-grant review … [break] the logjam on the major issues that have held up patent reform for the past several Congresses and will clear the path for a bill to be completed without undue delay.”

If the news is so good, why the warning? It’s because proponents of more radical patent reform, like the supporters of the original bill are lurking, waiting to strike. The Coalition for Patent Fairness, a group representing those who want to weaken the patent system, including big IT and financial services, has been pushing patent reform for years, and it is not giving up. The Coalition is strongly advocating for the damages provision in the original version of the legislation, and it expects there will be a much stronger provision in the House version of the bill. If we could only hear the Robot now, its warning would be sounding for everyone in the Massachusetts life-sciences, cleantech, medical-device, university, and research-hospital communities. “Danger, Danger!” The Robot is right; trouble is ahead.

The danger is that of complacency. The danger is thinking the fight is over, and the fight is certainly not over. The House will be taking up its version of the patent reform bill, H.R. 1260, very soon. In a strange twist that can only happen in politics, Democrats, big banks, and IT giants like Microsoft and Google are on the side of “reform” or weakening the patent system, while opponents include Republicans and labor unions. Strange bedfellows, indeed!

This warning is something to be taken quite seriously. There are things that the Massachusetts innovation economy can and must do in order to see that H.R 1260 gets through the House in a form that helps, not hinders, the revitalization and growth of our economy. A first, and simple step, is contacting your representatives and business leaders. Recently, a contingent of Massachusetts biotech companies, along with MIT and the Massachusetts Biotech Council (MBC), met with Representative Bill Delahunt’s office to make their position clear. One of those in attendance, Donna T. Ward, vice president of , intellectual property at Alnylam Pharmaceuticals, told me afterwards via e-mail: “We were excited about the opportunity to discuss these very critical issues with Rep. Delahunt’s office and House staffers. It is a simple fact that without strong patents, the translation of fundamental knowledge toward innovative medicines will not occur. We hope that others who value strong patents will let their representatives know the importance of these issues.”

Donna is right. Such meetings are very important. As you can imagine, the patent system is typically not high on any congressman’s list, but community members can let their representatives know that it is of utmost importance to them. We need to let our representatives know that this is not an ideological issue between Democrats and Republicans, but rather a practical, business issue that transcends party lines.

In the past—recent years especially—a strong patent system has promoted the successful transfer of technology from our world class universities and hospitals to industries, leading to the treatment of diseases as well as the formation of new industries and jobs. This has been good news for research-rich Massachusetts, a state with many constituents who are employed in the biotech, cleantech, and medical device industries. We may not be as fortunate as Will Robinson to have our own Robot, but we can listen and pay attention to the early warning signs that are out there, and advocate for the right kind of patent reform. If the wrong kind of reform prevails, the strong patent system that is utilized for so much good in Cambridge, throughout Massachusetts, and elsewhere could be lost.

David Resnick is a partner and the co-team leader of the Biotechnology/Chemistry team at Nixon Peabody. David assists clients in obtaining and defending intellectual property protection in the life sciences, including stem cells, RNAi and personalized medicine. The views expressed in this column represent only those of the author and not of Nixon Peabody or its clients.

Second Circuit: Use of Trademark in Metatag May be Actionable Trademark Infringement

Hickman, Benjamin

4/7/2009 9:28 AM

The U.S. Court of Appeals for the Second Circuit has issued a remarkable opinion on whether use of a trademark in metatags can constitute actionable trademark infringement. The case is Rescuecom Corp. v. Google, Inc., No. 06-4881-cv.

In a prior case, the Second Circuit ordered dismissal of a complaint for failure to state a claim of trademark infringement. 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005). In that case, the defendant's program caused pop-up ads to appear when an Internet user entered the plaintiff's website address in a web browser. The court found, however, that the plaintiff did not properly claim infringement because the plaintiff failed to allege that use of the website address was use of its trademark.

Many people believed that the Second Circuit's holding in 1-800 Contacts stood for the proposition that metatag use of trademarks cannot constitute trademark infringement. In Rescuecom, the Second Circuit dispelled that notion. 1-800 Contacts, the court indicated, was based on specific facts that might not be applicable to other cases. The court even suggested that use of a website address could provide a basis for an infringement claim if the plaintiff alleges it.

The court's opinion appears to significantly limit the applicability of 1-800 Contacts. Litigants should assume that metatag use of trademarks can constitute trademark infringement in the Second Circuit.

The Resecuecom opinion also contains an lengthy appendix, consisting of dicta, in which the court questions whether use in commerce is a prerequisite for proving trademark infringement at all. This will surely spawn debate among commentators and courts down the road.

Advertising Through Social Media Could Present Pitfalls for Lawyers

Hickman, Benjamin

4/6/2009 6:27 PM

A recent issue of the Virginia Lawyers' Weekly recounts a interesting bar seminar in which a legal malpractice insurance carrier warned of the ethical and legal pitfalls lawyers could encounter when advertising through social media.

Lawyers, like many other professions, are getting their name out with social media tools such as LinkedIn, Twitter, and Facebook. But lawyers' rules of professional conduct, particularly those pertaining to lawyer advertising, apply to those forms of advertising. One example the article mentions: if a satisfied client posts a positive review about a lawyer on the lawyer's LinkedIn profile, Virginia's rules about endorsements and testimonials apply. As a result, lawyers need to make sure they know what is being posted on their profiles.

The article notes that no bar complaints or requests or legal ethics opinions regarding social media have been submitted in Virginia. But it seems to be only a matter of time before a novel issue arises.

Report: Libraries and Archives Are Probably Safe If They Disseminate Unpublished Pre-1972 Sound Recordings

Hickman, Benjamin

4/2/2009 9:04 AM

A report co-sponsored by the Library of Congress and the Council on Library and Information Resources concludes that libraries and archives are probably not liable, in most cases, under a patchwork of state laws if they disseminate unpublished sound recordings created before 1972. A link to the report is available here.

A wealth of material about the country's history is contained in unpublished sound recordings, such as interviews, performances, and oral histories. Many libraries and archives want to make these sound recordings available in digital format and available for public access on the Internet. According to the report, these institutions face a dilemma. Before 1972, federal copyright law did not protect sound recordings, so the applicable law was a patchwork of state laws, including anti-bootlegging and criminal statutes. Some of these laws may be applicable until 2067.

Although the report concludes that libraries and archives are probably safe in most situations, it refrains from creating categorical rules for dealing with all pre-1972 sound recordings. Instead, it advocates for greater certainty by bringing pre-1972 sound recordings into the federal copyright scheme.

Patent Reform; Legislation and Policy

Senators reach key agreement on patent reform

Baker, Amanda

4/1/2009 2:22 PM

On Thursday, key members of the Senate announced that an agreement has been reached on the widely disputed damages provision of patent reform bill S. 515. Senators Leahy, Specter, and Feinstein have begun drafting an amendment to the bill that would give the judge a "gatekeeper" role based on existing damages law.

Other key amendments the Senators have agreed upon include:

- Removal of the "public use or on sale" clause from the inter partes reexamination provision;

- Limiting the interlocutory appeals provision;

- Redrafting the patent venue provision to be consistent with the recent TS Tech decision;

- Addition of a provision prohibiting the failure to disclose the best mode as a ground for patent invalidity or unenforceability; and

- Codifying the willful infringement doctrine of judicial law.

The amendment is expected to be introduced, and could be approved, at the Senate Judiciary Committee meeting tomorrow.

Cyber Security; Legislation and Policy

Forthcoming Senate Bill to Federalize Cybersecurity

Hickman, Benjamin

4/1/2009 9:19 AM

The Washington Post reports this morning that a soon-to-be-introduced Senate bill would provide the federal government broad powers to regulate cybersecurity on private networks. Accoding to the article, the bill would establish a White House cybersecurity czar and grant the government power to shut down private networks in the event of a security threat.

The bill will be sponsered by Senators John D. Rockefeller IV (D-W.Va.) and Olympia Snowe (R-Me.), and the Post says that the bill has received favorable comments from the White House.

We will keep an eye out for the draft bill.

Supreme Court Might Review Data Mining Case

Hickman, Benjamin

3/31/2009 8:49 AM

Privacy; Media Law

Two healthcare data mining companies have filed a Petition for Writ of Certiorari with the Supreme Court of the United States, seeking to overturn a First Circuit ruling that data mining is not entitled to free-speech protection under the First Amendment. The case is IMS Health Inc. v. Verispan LLC v. New Hampshire.

The companies are challenging a New Hampshire law that bans the use of information about a doctor's prescribing history for profit. The companies collect data from pharmacies about the types of drugs doctors prescribe and the ailments doctors treat. The companies use that information to customize their sales pitches to doctors. They do not, however, have access to patient identities.

In a November 18, 2008 opinion, the First Circuit held that the New Hampshire law does not constitute a restriction on protected speech. The court rejected the companies’ argument that the data was analogous to information of public concern published in a newspaper. Rather, the court believed, the data was a commodity more like “beef jerky.”

The companies’ counsel, Thomas Goldstein, told the Blog of the Legal Times that the First Circuit’s opinion represents "an extremely narrow view of the First Amendment."

Google to Offer Free Music Downloads in China

Hickman, Benjamin

3/30/2009 9:37 AM

This morning's New York Times reports that Google has struck a deal with major music industry players, including Sony, Universal, and Warner Music, to provide free music downloads in China. In rolling out the plan, Google is seeking to gain a greater share of the Chinese search engine market, which is dominated by the Google-like website baidu.com. Baidu is popular among Chinese web users because it provides links to free music downloads, many of which are believed to be illegal.

Google will have some catching up to do. During a 2004 visit to China, this blogger remembers witnessing many people downloading music by searching on Baidu.

According to the Times article, the music industry is already attempting to stop Baidu's dominance by suing Baidu in the Chinese courts. It will be interesting to see whether the business solution provides a quicker and more profitable resolution.

Intellectual Property; Cyber Security

TQP Sues Everyone* for Patent Infringement

Crawford, Cindy

3/27/2009 1:24 PM

In a Complaint for Patent Infringement filed in the United States District Court for the Eastern District of Texas on Wednesday (March 25, 2009), TQP Development, LLC sued seventeen defendants,** claiming infringement of TQP’s patent entitled “Encrypted Data Transmission System Employing Means for Randomly Altering the Encryption Keys.” Civil Action No. 2:09-cv-00088.

The allegedly infringing activity involves transmission of customer data over the internet to and from the defendants’ websites using a methodology TQP asserts is covered by its patent (United States Patent No. 5,412,730). The alleged infringement occurs both on the defendants’ side of the transaction as well as being induced on the customer’s side because the methodology requires the client computer to agree to the encryption protocol to complete the transaction.

Plaintiff is seeking damages as well as injunctive relief. The impact of this suit could be far-reaching. Stay tuned for updates when Defendants answer the Complaint.

* In December TQP sued a host of banks for infringing the same patent.

** Barclays PLC, Barclays Bank PLC, Barclays Bank Delaware f/k/a Juniper Financial Management, Inc., Barclays Electronic Commerce Holdings Inc., Prudential Financial Inc., The Prudential Insurance Company of America, Pruco Securities, LLC, Pruco Securities Corporation, Amazon.com, Inc. Visa Inc,. Visa International Service Association, American Express Company, American Express Travel Related Services, Mastercard Inc, and Mastercard International, LLC

Fourth Circuit: Proof of Actual Damages Necessary to Obtain Statutory Damages under SCA

Hickman, Benjamin

3/27/2009 8:57 AM

Internet Law; Privacy; Cyber Security

The United States Court of Appeals for the Fourth Circuit held in a recent opinion that a plaintiff must prove he or she suffered actual damages as a prerequisite to obtaining statutory damages under the Stored Communications Act. The case is Van Alstyne v. Lenoard, No. 07-1892 (4th Cir., Mar. 18, 2009).

In this case, the plaintiff brought a claim under the SCA against her former employer, Scriptorium Ltd., and its co-owner, Edward Leonard, after she obtained evidence that Lenoard accessed her AOL e-mail account and read personal messages after she left the company.

The SCA, a criminal statute, creates a penalty against anyone who "intentionally accesses without authorization a facility through which an electronic communication service is provided" or "intentionally exceeds an authorization to access that facility," and by doing so "obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system." 18 U.S.C. § 2701(a)(1-2). The provides a private right of action where an individual is aggrieved by an SCA violation. 18 U.S.C. § 2707(a).

The SCA damages provision, 18 U.S.C.A. § 2707 (c), provides: "The court may assess as damages in a civil action under this section the sum of the actual damages suffered by the plaintiff and any profits made by the violator as a result of the violation, but in no case shall a person entitled to recover receive less than the sum of $1,000. If the violation is willful or intentional, the court may assess punitive damages. In the case of a successful action to enforce liability under this section, the court may assess the costs of the action, together with reasonable attorney fees determined by the court."

The plaintiff in this case did not plead actual damages in her Complaint, but the jury awarded her $175,000 in statutory damages. The defendants argued this stautory damages award was improper, because the a showing of actual damages was a prerequisite.

The Fourth Circuit agreed. The court noted that the Supreme Court has interpreted a nearly identical provision in the Privacy Act and concluded that proof of actual damages was a prerequisite to obtaining statutory damages. A plaintiff could elect to recover statutory damages in the event the statutory damages amounted to more than actual damages, but statutory damages did not replace the need to prove actual damages. The Fourth Circuit concluded that the language of the SCA was clear on this point.

Dueling Patent Bills

Kaufman, Marc

3/24/2009 11:18 AM

My colleague, Amanda Baker, has prepared the following chart comparing key provisions of the two patent reform bills currently before the Senate.

	S. 515 (Leahy)	S. 610 (Kyl)
Damages	· Apportionment · Codifies objective recklessness for willful infringement	· No such provision · Does not codify objective recklessness
Prior Art Citation	· Third party may submit public use/on sale evidence	· No such provision
Inter Partes Reexamination	· 3d party may submit written comments on any action on the merits by the office · Judge may conduct oral hearing at request of 3d party	· Repealed
Post-Grant Review	· Any party who is not the patent owner may petition	· Persons who have a substantial economic interest adverse to a patent may petition
Applicant Quality Submissions	· No such provision	· Director may offer incentives to applicants who submit a search report, patentability analysis, or other information relevant to patentability · Incentives may include prosecution flexibility, modifications to requirements for adjustment of a patent term, or modifications to fees
Inequitable Conduct	· No such provision	· Requires an administrative proceeding before the USPTO for all inequitable conduct determinations

Ninth Circuit Clarifies Laches Test for Injunctions in Trademark Infringement Cases

Hickman, Benjamin

3/24/2009 8:59 AM

In a newly issued opinion, the U.S. Court of Appeals for the Ninth Circuit held that a defendant asserting laches against a plaintiff's attempt to enjoin trademark infringement must demonstrate the defendant built goodwill in its allegedly infringing trademark. The case is Internet Specialties West v. Milon-DiGiorio, No. 07-55087 (Mar. 17, 2009).

To successfully assert laches and avoid injunctive relief in a trademark infringement case, a defendant must demonstrate that (1) plaintiff's delay in bringing suit was unreasonable, and (2) defendant was prejudiced by plaintiff's delay.

The Ninth Circuit had an intracircuit split on both parts of the test.

As to the first part, the question was when the limitations period for laches begins to run. The court concluded the period begins when a plaintiff knew or should have known likelihood of confusion exists.

As to the second part, the issue was whether a defendant can demonstrate prejudice merely by proving it had invested in using the allegedly infringing mark, or whether it had built goodwill in the mark. The court concluded that a showing of good will, or public association between the defendant's mark and business, is necessary.

This opinion appears to be at odds with the Seventh Circuit's view that investment in use of the allegedly infringing mark is sufficient to support a finding of prejudice.

Intellectual Property; Internet Law; Legislation and Policy

Obama Administration Sides With RIAA in Tenenbaum Lawsuit

Hickman, Benjamin

3/23/2009 9:26 AM

The Department of Justice has intervened in the Recording Industry Association of America's copyright lawsuit against Joel Tenebaum in the District of Massachusetts, filing a brief defending the constitutionality of the Copyright Act's statutory damages provision.

Tenenbaum's legal team, led by Harvard Law Professor Charles Nesson, moved to dismiss RIAA's suit. The defense team argued that applying the statutory damages provision of 17 U.S.C. Section 504(c) is unconstitutional because, among other thigns, it amounts to an impermissble delegation of the government's prosecutorial powers to individuals.

In its brief, the government argues, among other things, that the statutory damages provision is not an impermissible delegation of executive power and does not violate the Due Process Clause.

The Tenenbaum case has presented a plethora of novel legal issues. See our earlier post on Tenenbaum's motion to admit the Internet into the courtroom here.

Intellectual Property; Internet Law; Media Law

SXSW becomes a vibrant forum in which to debate fair use

Mills, Laurin

3/21/2009 10:51 AM

There is a fascinating article on the Los Angeles Times website discussing how the annual South-by-Southwest music happening in Austin is becoming a forum for debating some of the thorniest issues in copyright impacting digital media. http://latimesblogs.latimes.com/technology/2009/03/from-sxsw-panel.html The article recaps a lively debate, complete with video and music clips, between a lawyer representing shall we say "big entertainment," and an academic espousing a fairly expansive view of the fair use doctrine. Anyone interested in this topic should take more than a few minutes to consider the debate in the context of the clips featured. This blogger bets that no two competent copyright lawyers would agree on each of these clips. That is the problem. The underlying rationale behind the fair use doctrine is to protect First Amedment rights. Vague and overly broad laws almost always fail to withstand First Amendment scrutiny. Yet, that is precisely the problem with fair use and the uncertainly associated with it, which may be unavoidable, is unquestionably chilling some creative expression.

Patent Reform; Intellectual Property

USPTO Rules Get a Second Chance

Kaufman, Marc

3/20/2009 12:42 PM

BACKGROUND

On March 20, 2009, the Court of Appeals rendered a decision in Tafas v. Doll. As you may recall, the Patent Office Announced new Rules in August of 2007, which were to become effective in November of 2007. Shortly after the Final Rules were published, Triantafyllos Tafas, SmithKline Beecham Corporation, and Glaxo Group Limited (collectively,

“Appellees”) filed suit against the US Patent Office (USPTO}. On October 31, 2007, the district court preliminarily enjoined enforcement of the Final Rules. Appellees then moved for summary judgment that the Final Rules are invalid and sought a permanent injunction against their enforcement. The district court found that the Final Rules created limits on continuation applications, RCEs, and claims that were inconsistent with several sections of the Patent Act and case law. The district court concluded that because the USPTO lacks substantive rulemaking authority, the Final Rules exceed the USPTO’s statutory jurisdiction. Accordingly, the district court granted Appellees’ motion for summary judgment that the Final Rules are invalid. The USPTO appealed to The Court of Appeals for the Federal Circuit which has now reversed in part and remanded in part.

To refresh memory, there were four rules at issue.

Final Rule 75 limits the number of claims permitted in an application to 25, unless an ESD is provided.

Final Rule 265 defines the requirements of an ESD, an applicant must conduct a preexamination prior art search, provide a list of the most relevant references, identify which limitations are disclosed by each reference, explain how each independent claim is patentable over the references, and show where in the specification each limitation is disclosed.

Final Rule 78 requires that, if an applicant wishes to pursue more than two continuation applications, he must file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted during the prosecution of the prior-filed application.”

Final Rule 114 states that, an applicant is allowed one RCE as a matter of right. For each additional RCE, the applicant must file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted prior to the close of prosecution in the application.”

FEDERAL CIRCUIT DECISION

In summary, the Federal Circuit Opinion Stated.

“For the foregoing reasons, we conclude that the Final Rules 75, 78, 114, and 265

are procedural rules that are within the scope of the USPTO’s rulemaking authority. However, we find that Final Rule 78 conflicts with 35 U.S.C. § 120 and is thus invalid. Accordingly, we affirm the district court’s grant of summary judgment that Final Rule 78 is invalid, vacate its grant of summary judgment with respect to Final Rules 75, 114, and 265, and remand for further proceedings consistent with this opinion.”

Accordingly, Final Rule 78, limiting the number of continuations that can be filed as a matter of right, has been held to be invalid. However, Summary Judgment of the invalidity of Rules 75, 114, and 265 has been vacated and remanded. In other words, the district court will now hear the entire case with respect to these rules and make a decision and render a decision consistent with the Federal Circuit Opinion. Of course, more details will follow as we analyze this opinion.

Creators of "Family Guy" Win Copyright Suit Brought by Disney

Mills, Laurin

3/18/2009 8:34 AM

In Bourne Co. v. Twentieth Century Fox Film Corp., No. 1:07-cv-08580 (S.D.N.Y. Mar. 17, 2009), the court granted the defendant's motion for summary judgment, holding that a parody of the song When You Wish Upon a Star on the TV show The Family Guy constituted a fair use. The song was, in this blogger's view, clearly a parody and a fair use. The suit arose, however, because The Family Guy creators first sought a license to use the song. When the parties failed to reach an agreement on a license, the creators of The Family Guy used the song anyway. This is a very common litigation scenario. Unfortunately, it teaches that it is often better to beg for forgiveness than to ask permission and be refused when it comes to getting sued for copyright infringement.

WIPO Handles Record Number of Cybersquatting Cases in 2008

Hickman, Benjamin

3/18/2009 8:16 AM

The World Intellectual Property Organization's Arbitration and Mediation Center reported in its year-end report that it handled a record number of cybersquatting cases in 2008. WIPO handled 2,329 complaints last year, up 8% from the previous year. Of those cases, 30% were resolved without a decision and 85% of panel decisions favored the complainant.

Going forward, it appears that WIPO will play a role in ICANN's rollout of new generica top-level domain names. WIPO has advocated that ICANN implement a broad post-delegation dispute resolution procedure. Under such a procedure, WIPO envisions trademark owners being able to prevent registries from committing trademark infringement by improperly registering new TLDs.

Obama Administration Refuses to Release Details on ACTA, Citing National Security Concerns

Hickman, Benjamin

3/17/2009 8:49 AM

The Obama administration has followed in the footsteps of the Bush administration, refusing to release the details of negotiations about the Anti-Counterfeiting Trade Agreement ("ACTA").

ACTA is a prospective multilateral copyright treaty. The European Union and Japan are believed to be participating in negotiations. Little, however, is known about the substance of the agreement. See our earlier post about ACTA here.

The Bush administration had refused FOIA requests for information about the negotiations, citing Executive Order 12958, which protects government information from disclosure on the basis of national security concerns.

Shortly after President Obama took office, the nonprofit group Knowledge Ecology International submitted a new FOIA request. A few days ago, the United States Trade Representative's office denied the FOIA request, citing Executive Order 12958 again.

Declan McCullagh has a good article at CNET.

European Court of Human Rights Ducks Challenge to England's "Internet Publication" Rule

Hickman, Benjamin

3/15/2009 5:54 PM

The European Court of Human Rights has refused to strike down a longstanding English rule that effectively eliminates the statute of limitation in defamation cases that arise out of Internet speech.

Times Newspapers Ltd, which owns the Times of London newspaper, applied for a declaration that the so-called "Internet publication" rule violates Article 10 of the Convention for the Protection of Human Rights and Fundamental Freedoms, which safeguards freedom of expression.

The Internet publication rule is actually an English rule going back to the 1800s that restarts the statute of limitation every time a defamatory article is published. English courts have applied the rule to the Internet by holding that the statute resets every time a person views an article online. This contrasts with the American "first publication" rule, under which the statute runs from the date the article is published online but does not toll with each viewing.

The ECHR's opinion is available here.

Craigslist Touting Reduction in Erotic Ads

Hickman, Benjamin

3/12/2009 9:08 AM

Craigslist has posted a chart on its company blog that indicates it has reduced the volume of ads for erotic services by 90-95% in five major cities during the past year. The company is also claiming that it is exercising more control over the remaining erotic services ads by requiring a working phone number and valid credit card number to post an erotic ad.

CNET's Steven Musil says that the post appears to be a response to a federal lawsuit filed against Craigslist last week by the Cook County (Ill.) Sheriff. In the suit, the sheriff is seeking to compel Craigslist to remove the erotic section of the website and $100,000 in compensation for man-hours the Sheriff's Office spent investigating criminal activities facilitated through Craigslist. A copy of the complaint is available here.

D.C. Bar Goes After Avvo.com

Hickman, Benjamin

3/10/2009 9:51 AM

Internet Law; Privacy

The Washington Post reports this morning that the District of Columbia Bar sent a cease-and-desist letter to operators of the website Avvo.com. Avvo is a website that provides profiles of lawyers and allows users to rate lawyers. The Bar claims that Avvo is compiling the profiles by taking member information from the D.C. Bar's website. The Bar also believes Avvo.com is perpetuating misinformation because about lawyers because ratings could be false or outdated.

We will see whether this becomes the subject of litigation. According to the Post article, two Settle lawyers sued Avvo on similar grounds, but their suit was dismissed on First Amendment grounds.

Major Website Operators Sign on to Behavioral Advertising Best Practices

Hickman, Benjamin

3/9/2009 8:52 AM

Privacy

A number of major website operators, including Google, Yahoo! SARL, and AOL, have signed on to the Internet Advertising Buerau's ("IAB") new Good Practice Principles, which the IAB hopes will address the use of online behavioral advertising in the United Kingdom.

The Good Practice Principles set forth three guidelines: (1) signatories must notify users that they are collecting data for purposes of online behaivoral advertising; (2) users must be given an opportunity to decline online behavioral advertising; and (3) signatories must provide information to users about how their personal data is used. The Good Practice Principles are voluntary and to be self-regulated by signatories.

The Good Practice Principles appear to be a response to public outcry in the UK when it was revealed that ISPs, including British Telecom, were working with digital ad companies, such as Phorm, to run trials online behavioral advertising on users without users' knowledge.

It is unclear whether the signatories will apply the Good Practice Principles to their interactions with non-UK users.

Patentable Subject Matter (35 USC Section 101); Intellectual Property

Accenture and Pitney Bowes File Amicus Brief in Bilski Arguing for a New Test

Schlaifer, Jonathan

3/5/2009 4:30 PM

Accenture and Pitney Bowes filed on March 3, 2009 an amicus brief with the U.S. Supreme Court supporting the petition for certiorari in In re Bilski, a major Federal Circuit case affecting patent law with respect to standards for patentable subject matter. In that case, the appellate court decided upon a “Machine-or-Transformation” Test which placed new restrictions on patentable subject matter, especially affecting which business methods and computer software could potentially receive patents.

In the amicus Brief, Accenture and Pitney Bowes claim that the Federal Circuit’s decision is too restrictive and rigid and is based upon a worldview that predates the information age. Accenture would urge that the Supreme Court take up the case and adopt a broader, or at least more flexible standard. It is worth noting that this situation bears a certain resemblance to another recent major Supreme Court patent law case, KSR v. Teleflex, in which the Supreme Court chose to throw out the Federal Circuit’s “Teaching-Suggestion-Motivation” test and suggest a more holistic, broader approach to obviousness rejections. Apparently, Accenture and Pitney Bowes are hoping that the Supreme Court will agree with their argument and replace the Federal Circuit’s test with a more flexible test that will give more room for software and business methods innovators, as well as some life science innovators, to obtain patents on inventions that would not pass the “Machine-or-Transformation” Test. We can only watch and see how the continuing saga of Bilski continues to unfold.

Obama to Tap D.C. Chief Technology Officer as Federal Chief Information Officer

Hickman, Benjamin

3/5/2009 9:51 AM

Legislation and Policy

The Washington Post reports this morning that President Obama will name the District of Columbia's Chief Technology Officer, Vivek Kundra, as the new federal Chief Information Officer. As the first person to hold this new position, Kundra will be charged with integrating the technology infrastructures of federal agencies and implementing technology solutions to improve efficiency.

Obama is also expected to name a Chief Technology Officer in the near future.

Hickman, Benjamin

3/5/2009 9:44 AM

Copyright owners and Internet radio providers have reached agreements on royalties for streaming music on the Internet. The agreements were concluded between SoundExchange, Inc., which represents copyright owners, and the Corporation for Public Broadcasting, the National Association of Broadcasters, and Small Webcasters. A Federal Register notice about the agreements, which includes the full text of the agreements, is available here.

Supreme Court Grants Cert on Copyright Jurisdiction Issue

Hickman, Benjamin

3/3/2009 1:53 PM

The Supreme Court of the United States granted a writ of certiorari this week in a copyright case, agreeing to decide whether U.S. district courts have subject matter jurisdiction to approve settlements in copyright cases that involve unregistered works. The case is Reed Elsevier Inc. v. Muchnick, No. 08-103. The cert petition is availabe here.

This case traces its roots back to the Supreme Court's decision in New York Times Co. v. Tasini, in which the Court held that reproduction of freelance photographer's works in news databases was not a revision of a collective work within the meaning of the Copyright Act. After the Supreme Court's decision, the parties entered into a settlement agreement.

Some of the parties to the settlement agreement, however, were owners of unregistered works. The settlement agreement provided for a lower payment to them. Those parties objected to the settlement agreement, but the United States District Court for the Southern District of New York approved it. The Second Circuit reversed the settlement agreement, holding that the district court lacked subject matter jurisdiction to approve the settlement and certify the class action.

The case is scheduled to be heard during the Fall Term.

Legislation and Policy; Privacy

Civil Discovery and the Stored Communications Act

Hickman, Benjamin

3/2/2009 1:03 PM

Last year's legal saga involving former Detroit Mayor Kwame Kilpatrick provided plenty of fodder for the media, but also resulted in an interesting ruling on the intersection of the Stored Communications Act ("SCA") and the Federal Rules of Civil Procedure. Flagg v. City of Detroit, No. 05-74253 (Opinion and Order Regarding Defendants' Motions to Preclude Discovery of Electronic Communications Aug. 22, 2008).

The City of Detroit had a contract with SkyTel, Inc., for the provision of text messaging services to city officials and employees. In a civil action against Kilpatrick and other city officials and employees, the plaintiffs served a subpoena on SkyTel, pursuant to Fed. R. Civ. P. 45, seeking to compel disclosure of a number of messages sent from city accounts.

The city and Defendant Christine Beatty moved to quash the subpoena, arguing that disclosure would violate the SCA, which prohibits providers of "elecotronic communication services" and "remote computing services" from divulging communictions of users without authorization.

In a separate case, the U.S. District Court for the Eastern District of Virginia held in 2008 that the SCA does not exempt unauthorized disclosure even when a provider is served with a subpoena. The Eastern District of Michigan agreed with this conclusion.

The court, however, provided a workaround: the plaintiffs, it stated, could simply serve a request for production of documents pursuant to Rule 34. The city would be required to authorize SkyTel to release the text messages to the city, which would then produce the messages to the plaintiffs.

This tactic is a common solution litigants use when it is difficult or impossible to obtain discovery from a nonparty. In many cases, it may obviate the need for a court to interpret whether Congress intended carve out an exception for cases like this one. That said, the solution does not seem to be failsafe. The city in this case presumably had the authority to compel its employees to authorize SkyTel to release their messages. But that might not be the case in other scenarios.

Maryland Court of Appeals Endorses Dendrite Test in Anonymous Speaker Case

Hickman, Benjamin

2/28/2009 12:29 PM

Internet Law; Media Law; Privacy

Maryland's highest court has adopted the five-step test set forth in Dendrite Int'l, Inc. v. John Doe No. 3, 775 A.2d 756 (N.J. Super. Ct. App. Div. 2001), to determine whether to compel discolsure of anonymous speakers online. The case is Independent Newspapers, Inc. v. Zebulon J. Brodie, No. 63, September Term 2008. The opinion is available here.

The plaintiff in the case, a Dunkin' Donuts franchisee, sued Independent Newspapers, owner of the website NewsZap.com and three anonymous people who posted comments on the website. The plaintiff alleged one count of defamation and one count of civil conspiracy in connection with the posters' comments about the cleanliness of restaurant. The plaintiff attempted to compel disclosure of the identities of the anonymous posters. Independent Newspapers moved to quash, claiming such information was protected from disclosure by the First Amendment.

The trial court denied the motion to quash, and Independent Newspapers appealed. The Maryland Court of Appeals reversed, but on the ground that the plaintiff failed to identify the correct posters in his complaint.

Nevertheless, the court adopted the Dendrite test as a guide to parties in future cases. Under the Dendrite test, when a trial court is confronted with a defamation action in which anonymous speakers or pseudonyms are involved, it should, (1) require the plaintiff to undertake efforts to notify the anonymous posters that they are the subject of a subpoena or application for an order of disclosure, including posting a message of notification of the identity discovery request on the message board; (2) withhold action to afford the anonymous posters a reasonable opportunity to file and serve opposition to the application; (3) require the plaintiff to identify and set forth the exact statements purportedly made by each anonymous poster, alleged to constitute actionable speech; (4) determine whether the complaint has set forth a prima facie defamation per se or per quod action against the anonymous posters; and (5), if all else is satisfied, balance the anonymous poster’s First Amendment right of free speech against the strength of the prima facie case of defamation presented by the plaintiff and the necessity for disclosure of the anonymous defendant’s identity, prior to ordering disclosure.

Although courts are not in complete agreement, the Dendrite test is emerging as the leading test across jurisdictions in anonymous Internet speaker cases. That said, it would not surprise us if the Supreme Court of the United States reviews this issue in the near future.

Businesses Experiencing Widespread Theft of Data in Wake of Layoffs

Hickman, Benjamin

2/26/2009 1:48 PM

Cyber Security

Today's Washington Post has an interesting article, which reports that sixty percent of employees who quit their jobs or are asked to leave steal company data. Among the favorites are customer contact lists and financial data.

This problem surely is pronounced during the current recession, where employers around the country are reducing their workforces.

Vermont Court Rules in Encryption Self-Incrimination Case

Mills, Laurin

2/25/2009 7:58 AM

Cyber Security; Internet Law; Privacy

In a long-awaited decision in the case of Sebastian Boucher, In re Grand Jury Subpoena to Sebastian Boucher, 2009 U.S. Dist. LEXIS 13006, No. 2:06-mj-91 (D. Vermont Feb. 19, 2009), the court held that Mr. Boucher did not enjoy a Fifth Amendment right to refuse to provide the Government with an un-encrypted version of files seized by law enforcement agents and suspected of containing child pornography. The decision in this case is very narrowly drawn, but it could have wide-ranging implications.

On December 17, 2006, Mr. Boucher and his father crossed the Canadian border and entered the United States at Derby Line, Vermont. Their car was searched by border guards and found to contain a laptop computer. The computer was searched and found to contain many file names suggesting child pornography, such as "2yo getting raped during diaper change," but the border guards could not open the files to determine their contents because they had been encrypted using PGP (pretty good privacy). Boucher was arrested and a grand jury later issued a subpoena to him directing him to produce the password necessary to view the files in an unencrypted format.

The Fifth Amendment right against self incrimination is what is known as a "testimonial" privilege. The court held that there was nothing testimonial about the contents of a laptop. However, "the act of producing" such evidence could be testimonial (because by that act the witness would be admitting possession and authenticity of the information), and that is what makes this case interesting.

The court held that, in this case, the grand jury already knew of the existence and location of the material it was seeking. Thus, producing the password would not communicate any knew information about the existence or location of the information. Similarly, because Boucher cooperated with border guards and admitted possession of the computer, the Government contended it had all the information it needed to authenticate the unencrypted information. Accordingly, the court ordered Boucher to cough up the password or be held in contempt.

The case is interesting at many levels. Child porn is a scourge. Equally pernicious, however, is the view that there is nothing an individual can do to keep the prying eyes of the government and others away from intensely personal information. This case will almost certainly be appealed. So, stay tuned.

S.D.N.Y.: "Hot News" Doctrine Still Alive

Hickman, Benjamin

2/23/2009 8:51 AM

The U.S. District Court for the Southern District of New York ruled February 17 that the Associated Press's claim against a website for misappropriation under the "hot news" doctrine could survive a motion to dismiss. Associated Press v. All Headline News Corp., No. 08-cv-323 (Memorandum and Order, Feb. 17, 2009).

AP brought a copyright infringement suit against All Headline News Corp., a website that redistributes news articles. AP alleged All Headline News was redistributing AP articles in their entirety and passing them off as All Headline News articles.

In addition to copyright infringement, the AP brought a number of other claims, including misappropriation under the "hot news" doctrine, a New York common law doctrine. The Supreme Court of the United States upheld the "hot news" doctrine in the famous 1918 case International News Service v. Associated Press, 248 U.S. 215 (1918).

All Headline News moved to dismiss the misappropriation claim on the grounds that Florida law should apply and that the Copyright Act preempted the claim. The court rejected both arguments. The court followed the Second Circuit’s holding in National Basketball Ass’n v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997), that a valid claim for misappropriation under the “hot news doctrine” lies where a plaintiff pleads the following:

(i) a plaintiff generates or gathers information at a cost; (ii) the

information is time-sensitive; (iii) a defendant's use of the information

constitutes free riding on the plaintiff's efforts; (iv) the defendant is in

direct competition with a product or service offered by the plaintiffs; and

(v) the ability of other parties to free-ride on the efforts of the plaintiff or

others would so reduce the incentive to produce the product or service that

its existence or quality would be substantially threatened.

The remarkable aspect of the "hot news" doctrine is that we might see a revival after years on the books of it as applied to Internet news redistributors. Some observers believe the Supreme Court essentially cobbled together the "hot news" doctrine because AP needed a solution for a problem when it could prove outright copyright infringement.

Read the court’s opinion here.

Intellectual Property; Internet Law; Privacy

Internet Safety Act Making Its Way Through Congress

Mills, Laurin

2/21/2009 10:28 AM

A bill called the Internet SAFETY Act is making its way through Congress. If passed, it will force ISP's and wi-fi hot spots to keep records of Web usage for as long as two years. Protecting against kiddie porn is the purported policy reason behind the bill. There are, however, other supporters, such as the recording industry, which has been thwarted by short data retention practices in pursuing online pirates. Law enforcement has never liked the anonymity the Internet can sometimes provide.

As presently drafted, the bill would require millions of homes with wi-fi networks and routers to maintain logs as well. Good luck in enforcing that. Watch this space for future developments.

Rep. Issa Demands Retention of White House E-mail Messages Sent From Private Accounts

Hickman, Benjamin

2/20/2009 10:49 AM

Media Law

CNN's Political Ticker reports that Rep. Darryl Issa sent a letter to White House counsel Greg Craig demanding that the White House preserve all e-mail messages relating to official business, even if the messages were sent from private e-mail accounts.

According to the article, White House staffers used Gmail accounts during the opening days of the administration while they were waiting for their official accounts to be activated. The Presidential Records Act mandates the retention of all official White House communications. Most people believe the Act applies even if the messages were sent from private e-mail accounts.

Government officials' use of private e-mail accounts has become a concern to open government advocates, who fear officials are circumventing data retention laws by using private accounts instead of their official ones. The Washington Lawyer, the D.C. Bar's journal, has interesting piece on this a recent issue.

U.S. Chamber of Commerce Papers on Net Neutrality

Other posts on Net Neutrality:

Is Google Backing Out of Net Neutrality?

Patentable Subject Matter (35 USC Section 101); Intellectual Property

In re Comiskey Revisited (Fed. Cir. 2009)

Schlaifer, Jonathan

1/14/2009 12:03 PM

In re Comiskey, the predecessor to the now-famous In re Bilski case, has been finalized by an en banc rehearing of the case by the entire Federal Circuit. The main holding of the case, that the independent claims which claimed business methods which were not tied to a machine and did not perform a transformation remained in place. It was originally thought in this case that since the issue raised on appeal was an obviousness rejection, a conclusion of non-statutory subject matter would lead to a conclusion of obviousness. Instead, the en banc rehearing led to the conclusion that the method claims in the invention were not patentable subject matter and remanded to the USPTO for determination about whether the system claims were patentable subject matter. However, Judge Moore dissented, based on the idea that there was precedent of not considering new grounds of rejection on appeal. Clearly, the Federal Circuit has broken from this precedent. This decision is in keeping with a stricter, more legalistic interpretation of 35 U.S.C. § 101 which will require careful prosecution and litigation.

AT&T Takes Lead in Creating "Future of Privacy Forum" to Influence Privacy Decisions of the Obama Administration

Mills, Laurin

1/13/2009 8:52 AM

Privacy

The Washington Post reports today that AT&T, along with privacy officers from Facebook, IBM, Intel and Microsoft, created The Future of Privacy Forum last November and that this new group is pushing the Obama transition team to appoint a chief privacy officer to influence standards about the use of consumer data. http://www.washingtonpost.com/wp-dyn/content/article/2009/01/12/AR2009011203050_pf.html

We'll keep an eye on this new group. Standards would be good; it is about time that the U.S., rather than the EU, took the lead in this area. Which standards prevail, however, is even more important.

California Appeals Court: Zip Codes Not Personal Identification Information

Hickman, Benjamin

1/12/2009 8:59 AM

Privacy

The California Court of Appeal - Fourth Appellate District has ruled that zip codes are not personal identification information for purposes of California's Song-Beverly Credit Card Act of 1971.

In the lawsuit, the plaintiff attempted to bring an action for declaratory relief against Party City Corporation because a Party City cashier asked for the plaintiff's zip code before processing the plaintiff's credit card transaction. The Song-Beverly Act provides that a retailer may not "request, or require as a condition to accepting the credit card as payment . . . ., the cardholder to provide personal identification information."

Party City moved for summary judgment on the ground that a zip code does not constitute "personal identification information" for purposes of the statute. The trial court denied Party City's motion, and Party City appealed.

The appeals court reversed, on several grounds, namely, "on a plain language basis, with respect to related federal regulatory definitions of the meaning and purpose of zip codes, and with respect to the interpretation of legislative history that shows the Act's principal statutory purposes."

Read the court's opinion here.

Interactive Entertainment

Macworld Flash: Apple to Drop DRM from iTunes Songs

Hickman, Benjamin

1/6/2009 2:24 PM

Apple's Philip Schiller announced at the Macworld Expo today that Apple will remove DRM from song downloads on iTunes and move toward a more flexible pricing model. Most songs now are priced at 99 cents, but under the new plan older songs could go for as little as 69 cents, while top hits would be priced at $1.29.

The New York Times has a story here.

Warner Bros. Seeks to Shut Down One-Stop-Shops for Links to Copyrighted Material

Crawford, Cindy

1/2/2009 11:01 AM

In a set of related cases, Warner Bros. Entertainment, Inc. has filed suit against the owners and operators of two websites that provide a one-stop-shop for infringing copies of plaintiffs’ copyrighted works via defendants efforts to “post, organize, search for, identify, collect and index links to infringing material that is available on third-party websites.” Defendants in both cases are alleged to profit from the display of advertising adjacent to the infringing content. The first case relates to material from either Warner Bros. or Paramount Pictures Corporation, 2:08-cv-08479; the second relates to material from either Warner Bros. or Disney Enterprises, Inc., 2:08-cv-08484. The links provided by the sites allegedly include links to movies that are currently showing in theaters.

Both cases allege Inducement of Copyright Infringement under the Copyright Act. The Disney case also alleges Contributory Copyright Infringement a la Napster.

Clearly Napster was only the beginning. Like Sisyphus rolling the rock up the hill, only to have it roll down again, the rightful owners of copyrighted material seem to meet with success in their battle to keep their property from being replicated on the Web only to have to start the fight afresh when the issue arises anew under a different name. Entertainment companies may, like Sisyphus, be doomed to push the same rock repeatedly for eternity.

Intellectual Property; Cyber Security

United States District Court for the District of Minnesota takes Narrow Approach to Interpreting CFAA

Crawford, Cindy

1/2/2009 10:06 AM

The United States District Court for the District of Minnesota has ruled that a claim for misappropriation of employer data can not be brought under the Computer Fraud and Abuse Act, (“CFAA”), 18 U.S.C. § 1030, when the underlying data has not been damaged or compromised in any way. Condux International Inc. v. Haugum, D. Minn., No. 08-4824, 12/15/08 (“Decision”).

Condux International, Inc. (“Condux”) filed suit against former VP of Global Sales, John Haugum (“Haugum”), alleging that Haugum downloaded or otherwise obtained proprietary information stored on Condux’s computer systems, including customer lists, engineering drawings, and pricing and sales data, prior to his departure from the company in February 2008 in violation of the CFAA. The basis for the claim was Haugum’s apparent intention to use and subsequent use of the information to start a competing business. The suit also included an assortment of state law claims that piggybacked on the CFAA claim to make it into federal court.

The CFAA provides criminal liability for an assortment of activities that essentially amount to hacking. But it also provides a civil cause of action for “any person who suffers damage or loss by reason of violation of this section” of the CFAA. A previous line of cases, known as the Shurgard/Citrin cases, has held that an employee lost authorization to access a company’s proprietary information once he had begun to work against the company’s interest. International Airport Centers v. Citrin, 440 F.3d 418 (7th Cir. 2006). Shurgard Storage Centers Inc. v. Safeguard Self Storage Inc., 119 F. Supp. 2d 1121 (W.D. Wash. 2000). A conflicting line of cases, known as the Lockheed cases, has taken a more narrow approach, holding that the CFAA only comes into play when access or obtainment of information is unauthorized, not simply when the information is misused. Lockheed Martin v. Speed, 2006 WL 2683058 at *5 (M.D. Fla. Aug. 1, 2006).

Haugum argued that in his position as VP of Global Sates, he was “authorized” to access the information so no violation occurred, notwithstanding any subsequent misuse of the data. The court agreed, choosing to follow the Lockheed line of cases and stating: “The Court declines the invitation to open the doorway to federal court so expansively when this reach is not apparent from the plain reading of the CFAA.” Decision p. 11. The court also focused on the meaning of the term “damages” to find that damages only occur when the data that remains on the computer system has been impaired in some way, not simply when its confidentiality is lost. The data remaining on Condux’s system was still usable, therefore it was not damaged.

In dismissing Condux’s CFAA claim, the court also refused to exercise supplemental jurisdiction over the state law claims. But Condux lives to fight another day if it chooses to bring those claims in state court. More interesting will be the outcome of the growing split between the circuits regarding interpretation of the CFAA.

For further commentary and a link to the text of the decision, see: http://news.bna.com/ctln/CTLNWB/split_display.adp?fedfid=11175159&vname=ctlrnotallissues&fn=11175159&jd=A0B7R2E9X9&split=0

Defendant in RIAA Suit Asks Court to Allow Internet Coverage of Proceedings

Hickman, Benjamin

12/31/2008 9:21 AM

A defendant in an RIAA copyright infringement case pending in the U.S. District Court for the District of Massachusetts has filed a Motion and Memorandum to Admit the Internet Into the Courtroom.

The RIAA sued the defendant, Joel Tenenbaum, for allegedly sharing music on the peer-to-peer network Kazaa. Tenenbaum is now moving to allow a firm named Courtroom View Network to place cameras in the courtroom and webcast motion and trial proceedings. Tenebaum cites the same rules that govern allowing television cameras in the courtroom in support of his motion.

Tenebaum is represented by Harvard Law School Professor Charles Nesson.

Will 2009 Usher in a New Wild West for Domain Names?

Hickman, Benjamin

12/30/2008 9:02 AM

Next year the Internet Corporation for Assigned Names and Numbers ("ICAAN") will begin accepting applications for significantly broader strings of letters for generic top-level domain names (gTLDs). In the past, ICAAN allowed only about 200 varieties, such as .com, .org, .uk, and the like. Now, applicants will be able to register, for example, .ipod, .cola, and .law.

Chris Dannen at Fast Company predicts that the plan will lead to a new wave of cybersquatting. It appears the U.S. government has similar concerns. Reuters reports the Commerce Department sent a letter to ICAAN this month urging it to exercise caution in rolling out the new plan. The Commerce Department stated that "it is unclear that the threshold question of whether the potential consumer benefits outweigh the potential costs has been adequately addressed."

The cybersquatting concern is valid. Businesses that have gotten cybersquatting of their trademarks under control could face a potentially infinite number of new cases. Victims of pure, bad-faith cybersquatting can easily force a domain name transfer by filing a UDRP action, but that alone is not cheap. The minimum filing fee for a WIPO-administered UDRP proceeding is $1,500. Multiply that by several cases, add in attorney's fees, and a victim is looking at significant costs.

NSA's Apparent Use of Metadata From Domestic Calls at Heart of Wiretapping Controversy

Mills, Laurin

12/28/2008 10:52 AM

There is a fascinating article by Michael Isikoff in the December 22, 2008, edition of Newsweek. www.newsweek.com/id/174601/output/print The article reveals that former FBI agent Thomas Tamm was the government official who blew the whistle on the NSA's program of apparently eavesdropping on U.S. citizens. The article details the dramatic unraveling of the program, the threatened resignations of at least two high-ranking law enforcement officials, and the moral ambiguities associated with whistle blowing at this level.

The Newsweek article has been followed by an equally interesting blog posting by Matt Blaze. www.crypto.com/blog/metatapping/ Dr. Blaze is a computer science professor at the University of Pennsylvania. The thesis of his most recent blog entry is that the goal of the secret program, code named "Stellar Wind," was to collect metadata (call record information such as date, time, number, length of call) on millions of Americans suspected of nothing and aggregating this information into a central database for datamining about suspected criminal activity. Dr. Blaze also suggests that AT&T gave the Government access to AT&T's "Daytona" database of domestic and international calling records for datamining purposes.

The law in this area is extremely complicated, and it places many fewer restrictions on collecting metadata than it does on intercepting actual telephone communications or email transmissions. Nevertheless, the law still requires that even records requests be focused on specific targets and there is no argument that it permits the kind of wholesale data mining of domestic call records described in the pieces by Dr. Blaze and Mr. Isiskoff.

We recognize that the Constitution and the federal criminal code are not suicide pacts and we applaud the efforts of the Government to keep us safe from terrorism. Nevertheless, as in the case of torture, there are certain lines that should not be crossed, at least not without a national debate and a change in the law. If we ignore the rule of law in combatting terrorism or fighting crime, we are little better than terrorists or criminals ourselves.

NY Times Sued for Linking to Local Newspaper Stories on Web

Mills, Laurin

12/24/2008 11:57 AM

Gatehouse Media, which owns a chain of local Massachusetts newspapers, has sued the New York Times for copyright and trademark infringement in the United States District Court for the District of Massachusetts because a site owned by the NY Times, Boston.com, links to stories in Gatehouse papers. If successful, this suit would radically transform the reporting of news on the Internet for everyone from the lowly blogger to major media companies. The Web is all about linking. If you don't want people to link to your content, either password protect your site or get off the Web! This is a dogbite case and we hope the court gives it the mercy killing it deserves quickly.

Court dismisses Fraudulent Ringtone Ad Claims against Google

Anderson, David

12/23/2008 5:53 PM

A San Jose federal district judge has dismissed claims against Google that it should be liable for displaying allegedly fraudulent ringtone ads reports Mediapost.com.

The plaintiff alleged that an ad she found using Google's AdWords violated Google's stated policy of requiring the landing page to clearly display accurate pricing for services.

In dismissing the case without prejudice, the court stated that the Communications Decency Act immunized Google from liability. Noting that the provision of third party tools to create content falls within the protections of the CDA, "[e]ven if a service provider knows that thrid parties are using such tools to create illegal content . . ."

U.S. Chamber of Commerce Papers on Net Neutrality

Hickman, Benjamin

12/23/2008 1:09 PM

The U.S. Chamber of Commerce has released two papers (see here and here) advocating against Net Neutrality laws. From a glance at the papers, it appears the crux of the Chamber's argument is that regulation will discourage investment in the Internet, so much of which is responsible for making the Internet what it is today. The second paper focuses on the Internet's effect on senior citizens.

As we noted in a past post, it will be interesting to see whether a wave of anti-Net Neutrality hits Washington, since support from Google and others have apparently slackened.

YouTube Ad Revenue not Adequate for Warner Music?

Kaufman, Marc

12/22/2008 10:00 AM

Today, the Wall Street Journal reports that Warner Music Group Corp. and YouTube have not renegotiated their licensing deal. As a result, Warner will begin remooving music and video content from YouTube. The Wall Street Journal notes that, “the dispute reflects frustration within media companies over how little ad revenue is generated by their deals with YouTube.” Is the ad-based revenue model failing?

Intellectual Property; Interactive Entertainment; Internet Law

Warner Music Videos Removed From YouTube as License Negotiations Stall

Hickman, Benjamin

12/22/2008 9:55 AM

This morning's New York Times reports that Warner Music has begun removing music videos in which it owns rights from YouTube. Warner Music and YouTube previously had a licensing agreement that provided Warner Music royalties based on the number videos viewed and a share of YouTube's advertising revenue. That agreement recently expired, and negotiations over a new agreement have stalled.

It will be interesting to see which side can bring more leverage to bear in the negotiations. Warner Music and its artists surely cannot afford to keep their content off one of the most popular websites on the Internet. From YouTube's perspective, however, content is king, and the Times says that six of the top ten videos viewed of all time on YouTube are music videos.

Music Industry Changes Course re Copyright!

Kaufman, Marc

12/19/2008 10:26 AM

An article in the Wall Street Journal today indicates that the Recording Industry Association of America has decided to work with internet service providers to reduce piracy instead of filing mass copyright suits against individuals. Some might say, "it is about time!"

Canberra Supreme Court Rules that Subpoena Can by Served Via Facebook

Crawford, Cindy

12/17/2008 9:24 AM

The Sydney Daily Telegraph reports that The Canberra Supreme Court’s decision to allow service of a subpoena by “poking” the recipient on Facebook is a world-first. The decision, which allowed service of legally-binding papers on a couple who defaulted on a home loan came after 11 attempts to serve the couple had failed. Their Facebook profile was identified and once the judge was convinced that the profile actually belonged to the people sought, service was allowed.

Will service of process by “poking” come to the U.S.?

For further information, see: http://www.news.com.au/dailytelegraph/story/0,22049,24811525-5001021,00.html, http://www.news.com.au/couriermail/story/0,23739,24810905-5013016,00.html .

Virginia Files Cert Petition in Anti-Spam Law Case

Hickman, Benjamin

12/16/2008 10:00 AM

The Virginia attorney general has petitioned the Supreme Court of the United States to review a case in which the Virginia Supreme Court held that Virginia's anti-spam law is unconstitutional. See our earlier post on the case here.

In September, the Virginia Supreme Court ruled in Jaynes v. Commonwealth that the anti-spam law is unconstitutional because it prohibits the sending of anonymous bulk e-mail messages, even if the messages contain political or religious speech. Virginia authorities prosecuted Jeremy Jaynes, one of the world's most prolific spammers, under the statute. Although Jaynes was North Carolina resident, Virginia asserted jurisdiction because his spam was routed through America Online servers in Virginia.

This appeal is going to be a tough one for the Commonwealth. The Supreme Court has long recognized a right to anonymous political speech, and the Virginia statute makes no exception for political or religious speech. This blogger is wagering the Court will deny cert.

Is Google Backing Out of Net Neutrality?

Hickman, Benjamin

12/15/2008 10:03 AM

This morning's Wall Street Journal reports that Google has been quietly negotiating with cable and phone companies to create a "fast lane" for Google's content. This seems to indicate Google has jumped off the Net Neutrality bandwagon.

If the Journal article is correct, the concept of Net Neutrality may well have already met its death knell: Microsoft, Yahoo, and Professor Lawrence Lessig are said to have reconsidered their support as well.

We will be keeping a close eye on developments.

Possibly the Largest Privacy Breach Ever

Kaufman, Marc

12/12/2008 5:19 PM

Apparently, an unnamed parcel distribution company has recently announced that it has discovered a significant security breach. The company has discovered that millions of database records have been accessed, and in some cases deleted or changed. The records included personally identifiable information, such as consumer preferences and behavioral data, for millions of people. It is believed to be the most complete database of its kind in the world.

Class action suits on behalf of persons whose information may have been compromised are already being filed. According to one plaintiff’s lawyer, the database included data which could be very embarrassing, such as historic data regarding sleeping habits and personal behavioral traits. To complicate matters, much of the data related to minors and included precise GPS data of the location of their home. A press release from the company's North Pole headquarters noted that the extent of the security breach has yet to be determined.

Several states have initiated investigations into this matter. One can only speculate as to whether the records indicating who was naughty or nice have been compromised. We certainly hope not. Happy Holidays!

Internet Law; Cyber Security

Court Enjoins Spyware Producer Under FTC Act

Hickman, Benjamin

12/12/2008 10:29 AM

The U.S. District Court for the Middle District of Florida has issued a preliminary injunction against a producer of spyware under the Federal Trade Commission Act. Federal Trade Commission v. Cyberspy Software, LLC, et al., No. 6:08-cv-1872 (Preliminary Injunctive Order, Nov. 25, 2008).

The FTC sued the defendant company and its principal for unfair and/or deceptive trade practices under the FTC Act. According to the court's order, the defendants’ spyware is designed to be installed on a computer without the knowledge or consent of a computer’s user. The defendants provide instructions to customers which demonstrate how to disguise the spyware as an innocuous file. Once a user installs the spyware, the spyware tracks the user's keystrokes, passwords entered, and websites visited.

The court found the FTC was likely to succeed on the merits of the case, and that continued sale of the spyware was likely to cause substantial harm to consumers. Although the defendants argued that the spyware has some redeeming value, such as allowing a parent to track a child's Internet usage, the court noted that the defendants' marketing materials suggested that the spyware should be used for more harmful purposes.

Think Tanks Rolling Out Advice for Obama on IP and Cyberlaw Issues

Hickman, Benjamin

12/12/2008 9:58 AM

Think Tanks from across the ideological spectrum are publishing reports recommending priorities for the Obama administration on intellecual property and cyberlaw issues. We wrote about the Electronic Frontier Foundation's "wish list" recently. Two more organizations have issued reports for the incoming administration to consider: the Center for Democracy & Technology and the U.S. Chamber of Commerce. Net neutrality and appointment of the newly created IP Enforcement Coordinator under the Pro IP Act look to be hot issues.

Supreme Court Denies Cert in Greenberg v. National Geographic

Hickman, Benjamin

12/11/2008 1:21 PM

The Supreme Court of the United States has denied a petition for writ of certiorari in the Greenberg v. National Geographic case. (See our earlier post here.) The denial of cert lets stand an Eleventh Circuit decision which allows National Geographic to sell its entire archive in digital format without paying additional royalties to photographers who shot for the magazine. Read the National Press Photographers Association take on the denial of cert here.

Illinois Prosecutors Seek to Compel Disclosure of Anonymous Blog Posters

Hickman, Benjamin

12/9/2008 9:02 AM

Internet Law; Privacy

Another anonymous Internet speaker battle is pending in Madison County, Illinois. The St. Louis Post-Dispatch reports that prosecutors are seeking to enforce a subpoena they served on the Alton Telegraph. The subpoena would compel disclosure of five anonymous individuals who posted comments about a murder investigation on the Telegraph's website. According to the article, the Madison County court is the first in Illinois to address the issue. The Telegraph claims that the anonymous speakers are protected under the Illinois journalist shield law.

Stanford Law Launches IP Litigation Clearinghouse

Hickman, Benjamin

12/9/2008 8:45 AM

Stanford Law School is rolling out an online tool that provides public access to data about IP litigation. The Intellectual Property Litigation Clearinghouse ("IPLC") provides real-time data about IP cases pending across the country. It also includes real-time data summaries, industry indices, and trend analysis with a full-text search engine.

Stanford Law professor Mark Lemley, one of the brains behind the IPLC, says that the tool will enable lawyers to better evaluate the various factors they weigh when deciding whether to litigate and arrive at more rational decisions. Professor Lemley also says judges can use the tool to define patent terms based on precedent.

The first component of the IPLC, the Patent Litigation Module, was released this week. This module includes more than 23,000 cases filed in U.S. district courts since 2000. It appears that other modules will be released in the future, providing data in other IP litigation areas, including copyright and trademark.

Read more about the clearinghouse in a Stanford press release.

Maryland Court of Appeals Hears Argument in Right to Anonymous Speech Case

Mills, Laurin

12/9/2008 7:36 AM

Privacy; Internet Law

The Maryland Court of Appeals, which is the state's highest court, heard argument yesterday in Independent Newspapers v. Brodie, which addresses whether and to what extent there is a right to post anonymous, non-political speech on the Internet. This is an issue that, once it percs a bit more in the state courts, is destined for the U.S. Supreme Court.

Brodie involves a defamation action against an Internet poster who expressed an unfavorable opinion/observation about the relative cleanliness of a Dunkin Donuts franchise on Maryland's Eastern Shore. The franchise operator subpoenaed the site operator, and the site operator resisted the subpoena arguing right to anonymity.

There are many thorny issues that arise in such situations. As a practical matter, posters deserve some level of protection and it is very difficult to limit the Constitutional right to anonymous speech merely to political speech, whatever that is. There are also big problems with judges simply making up their own balancing tests and with legislatures making laws that might limit Constitutional rights. So, in short, there is no obviously right or easy answer here. Methinks that we are going to be left with judges making up their own balancing tests. The betting is that Maryland will follow the lead of a 2001 New Jersey case that requires "substantial evidence" of wrongdoing to expose an anonymous poster, as well as a judicial hearing and balancing test. All of this is, of course, awful. And probably necessary.

Internet Law; Interactive Entertainment

Egypt Bans iPhone GPS Capability

Hickman, Benjamin

12/8/2008 9:17 AM

The New York Times reports in an interesting article this morning that Egypt has compelled (tacitly, at least) Apple to disable GPS capability from iPhones it imports into the country. The Egyptian government's reasoning, apparently, is that GPS technology poses a national security threat because it can be used to find precise locations of military bases.

After the Mumbai attacks, this blogger anticipated that the debate about the extent to which governments should regulate individuals' use of new technology will only intensify in the future. The Egyptian situation is a case in point.

Bratz Dolls Maker Permanently Enjoined

Hickman, Benjamin

12/5/2008 9:48 AM

Some observers have predicted the demise of copyright law in the 21st century. Try telling that to MGA Entertainment, Inc., the maker of Bratz dolls.

Mattel, Inc. sued MGA in the U.S. District Court for the Central District of California for copyright infringement. Mattel's case centered on allegations that a former employee of Mattel designed the Bratz dolls while an employee of Mattel but later left Mattel to work for MGA. MGA lost the lawsuit in a jury trial in July.

This week, Mattel moved for a permanent injunction, which the court granted. The injunction prohibits MGA from producing and licensing the dolls. The order also compels MGA to surrender infringing goods and recall them from any channels of trade. This is the legal equivalent of a knock-out punch and will surely extinguish MGA's Bratz business.

Read the court's order here.

Public Interest Group Petitions FDA for Guidance on Online Drug and Medical Device Ads

Hickman, Benjamin

12/4/2008 9:27 AM

The Prescription Project, a public interest group, yesterday filed a series of citizen petitions with the FDA in which it claims that Abbott Laboratories, Medtronic, and Stryker failed to include required disclosures in video advertisements they posted on YouTube. The videos at issue advertise drugs and medical devices produced by the three companies.

FDA regulations require advertisements for drugs and medical devices to include brief statements about a drug or medical device's usage directions and any relevant warnings, precautions, potential side effects, and contraindications. The Prescription Project claims the videos at issue are subject to the regulations but do not include the required statements and is demanding that the companies withdraw them.

The Prescription Project is also asking the FDA to advise all major drug and medical device manufacturers that the regulations apply to Internet advertising, and to issue a Guidance on such advertising to clarify how federal law and FDA regulations apply to online drug and medical device promotions.

The citizen petitions and vidoes at issue are available here, and a Prescription Project press release is available here.

Craigslist Goes After Posting Agents

Crawford, Cindy

12/3/2008 7:07 PM

On November 5, 2008, craigslist filed separate suits in the United States District Court for the Northern District of California against three Posting Agents claiming copyright infringement, violation of the DCMA, violation of the CFAA, various contract claims, and fraud (as well as trademark infringement against one defendant).

Craiglist’s Terms of Use, to which all users are required to agree prior to posting an ad or creating an account on the craigslist website, include a prohibition against Posting Agents, as well as prohibitions against repetitive posting. A Posting Agent is defined within the TOUs as a third-party agent, service, or intermediary that offers to post content to craigslist on behalf of others. In addition, craigslist uses a variety of security measures to ensure that users comply with the TOUs.

Craigslist alleges that defendants: Realworks Group LLC (5:08-cv-05072), George Berz d/b/a adbomber.com (5:08-cv-05066), and Jeffray Szczodroski d/b/a craigslistpostingexperts.com (4:08-cv-05061) are Posting Agents who have developed software or other automated devices to circumvent craigslist’s security measures to post multiple ads for customers for a fee. As such, defendants have made unauthorized use of craigslist’s copyrighted material, have breached their contract with craigslist by violating the TOUs, have induced other users to violate the TOUs, and misrepresented to craigslist their intention to abide by the TOUs.

If craigslist is successful in their suits, and the liquidated damages terms of craigslist’s TOUs are applied, it could become very expensive for Posting Agents to try to operate within their space. On the other hand, if craigslist fails, the utility of the free posting service may fall victim to repetitious, automated posting, that clogs the space and renders it almost useless for those who comply with the TOUs.

Obama's Transition Website Content Is Subject to Creative Commons License

Hickman, Benjamin

12/3/2008 9:33 AM

CNET reports that President-elect Barack Obama's transition team has licensed use of content from its website, change.gov, under a Creative Commons Attribution 3.0 License. Read more here.

Korean Court Declines to Hold Website Liable for Sale of Fake Goods

Hickman, Benjamin

12/3/2008 9:25 AM

The Korea Times reports that a Korean court has absolved online marketplace interpark.com from copyright infringement over the sale of knockoff hiking goods. The plaintiff manufacturer, K2, sued Interpark after it discovered third parties were selling fake K2 goods on Interpark's website. According to the article, Interpark had banned sales of fake K2 products after K2 notified Interpark of the problem and monitored the site for knockoffs. Infringing goods still found their way on the site, however. The court believed that Interpark made reasonable efforts to stop the infringing sales and could not be expected to screen every item posted on the site.

Technology's Effect on the Mumbai Attacks

Hickman, Benjamin

12/3/2008 9:00 AM

Internet Law; Cyber Security; Privacy

This morning's Washington Post has a fascinating yet sobering article about how technology assisted the Mumbai attackers. According to the article, the attackers used GPS devices to navigate their boats from Karachi to Mumbai and carried multiple mobile phones with changeable SIM cards to avoid having their communications tracked. And when a group called the Deccan Mujahadeen claimed responsibility in an e-mail message to reporters, law enforcement officials traced the message back to an IP address in Moscow, and then determined that the message originated in Pakistan, where someone used voice recognition software to "anonymatize" the message.

Practically all household technology is dual-use technology. During the Rwanda genocide, for instance, radio stations spread hate speech about Tutsis, which most observers believe incited massive violence. The Mumbai attacks will only increase debate about the extent to which law enforcement should monitor people's use of technology. Should the police have free reign to discover IP addresses if doing so tracks down a perpetrator? Do people have a right to keep their locations private when using GPS devices? These are only a couple examples of issues that have yet to be settled.

Google as the Planet's Gatekeeper and Censor

Mills, Laurin

12/2/2008 12:27 PM

On November 28 the New York Times published an extraordinarily provocative and well-written article on the role that just a few in-house lawyers at Google play in determining what is seen and not seen in various parts of the world. http://www.nytimes.com/2008/11/30/magazine/30google-t.html?pagewanted=1&_r=1&ref=magazine

A short blog posting could not possibly do this article justice and the issues it raises will keep this and other blogs busy for months. While it is generally not a good idea to concentrate so much power in so few hands, at this stage of the Internet's development, this blogger believes that the in-house lawyers at Google are doing an exceedingly good job navigating some very rough and uncharted waters. Far better, indeed, than any government or regulatory regime would. Much more on this to follow.

Volkswagen Obtains Transfer of Domain Name under ACPA in In Rem Suit

Hickman, Benjamin

12/2/2008 9:56 AM

German auto maker Volkswagen successfully obtained transfer of the domain name volkswagentalk.com in an in rem lawsuit filed under the Anticybersquatting Consumer Protection Act in the United States District Court for the Eastern District of Virginia.

The defendant owner of the domain name was a Russian concern. Volkswagen attempted to obtain personal jurisdiction of the defendant by serving the summons and complaint via first-class mail, the e-mail address listed in the WHOIS database, and by advertisement in the Washington Times. The defendant never responded.

The court found that Volkwagen could file an in rem suit under the ACPA because Volkswagen demonstrated it could not obtain in personam jurisdiction of the defendant and established that the defendant committed trademark infringement.

Read the court's opinion here.

The Commerce Clause and the three-tier system: Advances in direct wine shipping

Keenan, Michael

12/1/2008 4:03 PM

In a significant decision for interstate wine retailers, the U.S. District Court of Eastern Michigan ruled on September 30 that the provisions of the Supreme Court’s 2005 decision in Granholm v. Heald apply to retailers, meaning that Michigan’s ban on wine shipments direct to consumers from out-of-state retailers constitutes site-based discrimination and is unconstitutional. This is the second such ruling this year; the first was a U.S. District Court ruling on a similar law in Texas.

In Granholm, the Supreme Court declared that it was unconstitutional for states to create site-based discrimination between in-state wineries and out-of-state wineries in the sale of wine direct to consumers. Legislation in both New York and Michigan was held to contravene the Commerce Clause by allowing domestic wine producers to ship to customers in the state, but preventing interstate producers from doing so. Each of these states had created laws bypassing the three-tier system to assist in-state interests in accessing consumers directly without going through the wholesale and retail tiers.

Following that decision, these and the many other states that had similar legislation were forced to make a choice: Either allow all wineries to ship to consumers or prevent even in-state wineries from doing so. In most cases, the market was opened to all wineries. In a number of cases, the legislature introduced creative measures, such as total production volume caps and mandatory consumer visits to the winery, to restrict the eligibility of wineries to direct ship. In a recent development, on October 24, the Court of Appeals for the Sixth Circuit in Tennessee gave its decision in Jelovsek v. Bredesen. It held that the local law was discriminatory in that, among other things, it gave only producers using 75-percent locally grown grapes the right to ship directly to consumers. There are also currently pending actions in states, including Arkansas, Delaware, Indiana, Kentucky, Maine, Massachusetts, New Jersey, and Pennsylvania.

Despite the fairly broad language used by the Supreme Court, where the majority opinion speaks of discrimination against “shippers,” the approach generally was to make changes only where wineries were concerned, as that was the limit of the legislation that had been enacted. Generally speaking, the states did not appear to consider the case as having any broader impact than on wineries, and similar restrictions concerning retailers were largely unchanged.

Fast-forward nearly four years and the same governor in Michigan is in court again, defending legislation in the case of Siesta Village Market v. Granholm. This time, the challenge was brought by an out-of-state retailer against protectionist legislation, allowing in-state retailers to ship to consumers but creating additional burdens for out-of-state retailers in doing the same. In a decision handed down by Judge Hood in the Eastern District Federal District Court, the plaintiff was successful in its motion for summary judgment against the state and the discriminatory legislation was held to be unconstitutional under the Commerce Clause. The judge ordered the state to cease its prohibition of out-of-state sales and to stop enforcing any of the provisions of the law against out-of-state retailers.

Before the decision, only Michigan retailers were able to ship wine directly to consumers once they were licensed as a “specially designated merchant” (SDM). An out-of-state retailer was not allowed to ship to Michigan consumers unless it established a physical presence in Michigan (thus becoming an in-state retailer) and obtained an SDM license. The judge found that these requirements were burdensome on out-of-state retailers because of the many costs associated with opening a new location in the state. The state’s arguments that allowing direct shipment by out-of-state retailers would make it difficult to collect taxes and control labeling were rejected.

Across the country, 31 states allow retailers to ship direct to consumers, but only 13 of them allow an out-of-state retailer the same privilege (not including Michigan). This second Granholm decision is one of three challenges that have now been decided among a crop of retailer suits brought following the first landmark Granholm case. It builds on and follows the result in the matter of Siesta Village Market v. Perry, brought by the same Florida retailer in the state of Texas, and decided in January of this year. That court also ruled that the challenged legislation was unconstitutional, but created some confusion when it still required an out-of-state retailer to buy from an in-state wholesaler. The Perry court specifically elected not to follow the first decided retailer challenge in New York of Arnold’s Wines, Inc. v. Boyle. In that case, the court held that the out-of-state retailer’s challenge was a direct challenge to the three-tier system itself and that the 21st Amendment rights of the states circumvented the Commerce Clause. It thus accepted the resulting discrimination as constitutional.

Both Arnold’s Wines and Perry are under appeal to their respective circuits and the Michigan Attorney General has also now filed notice saying that the latest Granholm decision will also be appealed. It will, however, be some time before we see whether the Supreme Court will weigh in on this issue.

Despite the current trend of acceptance of direct shipping, none of the decisions referenced in this article should be seen as challenging the inherent acceptance of the three-tier system and the 21st Amendment. Indeed, the Supreme Court in Granholm was very supportive of the continuing relevance of the three tiers in the control of alcohol distribution. It is the states that are opening these doors. By creating exceptions to the tiers for their domestic economic interests, they have come into conflict with the Commerce Clause and have had to extend direct shipping rights to interstate interests as well.

Notwithstanding, with wineries and, increasingly, retailers being able to ship direct to consumers in many states, the question becomes why importers and foreign wineries are not also benefiting from these increased markets. For example, a French wine producer cannot ship direct to a consumer in New York in the same way as his U.S. competitors. Even his importer—a U.S. company with all the appropriate licenses—cannot ship direct to consumers. That producer has no option but to go through the three tiers to gain access to consumers. Not only does this potentially raise Commerce Clause issues within this country, but it also suggests problems at World Trade Organization (WTO) level in the creation of technical barriers to free and equal trade. This, indeed, likely signals the potential future direction of challenges to the unequal treatment of the various players in the beverage alcohol industry that we are seeing now.

Louisiana Law Firm Sues Over Proposed Lawyer Advertising Rules

Hickman, Benjamin

11/28/2008 3:45 PM

The Wolfe Law Group, a Louisiana firm, has filed suit against the Louisiana bar over proposed lawyer advertising rules, which the firm claims would make it effectively impossible for lawyers to advertise online.

The proposed Louisiana Rules of Professional Conduct, set to take effect in the spring of 2009, would require lawyer advertisements to state the name of the lawyer behind the ads and at least one office location where the lawyer or firm offers the services advertised. The Wolfe Law Group advertises through online advertising, such as Google AdWords, and maintains a blog. The firm claims the information the new rules require would be impossible to fit into short text advertisements.

In the complaint, filed in the U.S. District Court for the Eastern District of Louisiana, the firm bases its claims on 42 U.S.C. Section 1983, because the firm claims the rules impermissibly restrict lawyers from speaking about their professions in violation of the First and Fourteenth Amendments.

We will keep tabs on the progress of this case. State bars invariably attempt to restrict the manner in which lawyers advertise their services. That said, it would seem that the rules need to be flexible enough to allow lawyers to advertise online.

The firm is keeping a blog on the case.

Spam on the Rise Again

Mills, Laurin

11/28/2008 12:01 PM

Two weeks after McColo was shut down, CNet reports that spam is on the rise again. http://news.cnet.com/8301-1009_3-10109148-83.html This article illustrates why combating spam is like squeezing a balloon. If you restrict it in one place (say the U.S.), it will pop out in another (like Estonia). Nevertheless, it is noteworthy that most spam is funnelled through a relatively small number of nogoodniks and taking steps that ultimately increase the cost of spamming will eliminate at least some of it.

DoD Networks Subject of Cyber Attack

Mills, Laurin

11/28/2008 9:03 AM

Shortly before Thanksgiving, senior military officials (specifically Adm. Michael Mullen, Chrmn. Joint Chiefs) took the rather exceptional step of briefing President Bush on a severe and widespread attack on Defense Department computers and computer networks. The speculation, and it is just that on all accounts, is that the attacks originated within Russia. Reports are that the attacks focused on U.S. Central Command networks. Central Command oversees the war effort in Iraq and Afghanistan. During the previous week, the Pentagon had taken the unusual step of banning all flash drives from DoD systems due to the threat. The threat comes from a type of malware or virus known as "agent.btz."

If the Russians are behind this, it would not be the first time. They are widely tagged with responsibility for sophisticated cyber attacks in Estonia in 2007 and in Georgia in 2008.

This is yet another reminder that our nation's governmental and business computer systems are likely much more vulnerable to attack than many realize. In an era of increasing connectivity and interdependence, the likelihood of a cascading failure of major systems due to an attack cannot be discounted away.

Mumbai Terrorist Attack Updates on Twitter

Hickman, Benjamin

11/27/2008 2:22 PM

The attacks in Mumbai are sad news on the Thanksgiving holiday in America. However, it is fascinating to watch the Twitter results for Mumbai (see here: http://search.twitter.com/search?q=%23mumbai). Users appear to be sharing news reports and firsthand accounts of the attacks. It will be interesting to see how accurate they are, especially since no one appears to have complete and accurate information about the attacks at this point.

Internet Law; Cyber Security

Facebook Wins $873 Million Judgment Against Spammer

Hickman, Benjamin

11/24/2008 9:29 PM

Facebook has won an $873 million default judgment against an individual who duped users into revealing their user names and passwords. The spammer, Adam Guerbuez, used the misappropriated data to send more than four million spam messages around the world. Facebook sued for violations of the CAN-SPAM Act, the Computer Fraud and Abuse Act, the Electronic Communication Privacy Act, and under California criminal law and breach of contract theories.

The judgment dwarfs Facebooks's revenues, which are predicted to fall in the range of $250 million this year. Guerbuez, however, has not been seen for quite some time, so it is doubtful whether Facebook will ever see the money.

Read the complaint in the case here.

Verizon Sacks Employees for Snooping in Obama's Phone Records

Hickman, Benjamin

11/24/2008 9:11 PM

Cyber Security; Privacy

CNN reports that Verizon has fired a number of employees for accessing records of a mobile phone account used by President-elect Barack Obama earlier this year. The employees, apparently, could not listen to voice mails on the account or view text messages sent or received, but it is believed they could see phone numbers the account called and the duration of the telephone calls.

This is not the first time this year a data breach like this has occurred. During the primaries, several State Department employees were fired after they improperly viewed passport records of Obama and (probable) incoming Secretary of State Hillary Rodham Clinton.

Businesses need to consider the records they keep on their customers and whether they provide temptation for employees to go snooping when they have no business accessing them. Policies and procedures on these issues are a must.

Intellectual Property; Patentable Subject Matter (35 USC Section 101)

Swifty to the Courthouse

Crawford, Cindy

11/21/2008 9:36 AM

The Society for Worldwide Interbank Financial Telecommunications SCRL, d/b/a SWIFT, a Belgian limited liability cooperative company, filed suit against Network Signatures, Inc., a California corporation, seeking declarations that the technology used by SWIFT does not infringe Network Signature’s patent for “Intermediate Network Authentication,” and that the claims included in the patent are invalid. The suit was brought in response to twelve patent infringement suits brought by Network Signatures against SWIFT members and customers, alleging that the technology referred to as SWIFTNet Public Key Infrastructure Service infringes the claims of Network Signature’s patent.

The complaint may be found under: 08-cv-5139 Northern District of California

The patent in question is: 5,511,122

Jones Day's Lawsuit Survives Motion to Dismiss

Hickman, Benjamin

11/21/2008 8:53 AM

Jones Day's lawsuit against Blockshopper.com has survived a motion to dismiss. In a November 13 opinion, Judge John W. Darrah of the U.S. District Court for the Northern District of Illinois ruled that Jones Day sufficiently pled every count in the complaint.

Jones Day sued Blockshopper after the website reported on two real estate transactions involving Jones Day lawyers and linked to the lawyers' biographies on Jones Day's website. (See our earlier commentary on the suit here.) Jones Day sued Blockshopper for service mark infringement, false designation of origin, service mark dilution, and state-law unfair business practices and unfair competition.

In addition to denying the motion to dismiss, the court also denied a request from a number of public interest groups for leave to file an amicus brief in support of Blockshopper.

It's very easy to survive a motion to dismiss. That said--and without knowing a lot about the factual background of this case--we think the case seems ripe for summary judgment if the parties cannot settle.

eHarmony Settles Discrimination Claim With New Jersey Attorney General

Hickman, Benjamin

11/20/2008 9:31 AM

Online dating website eHarmony has agreed to start a homosexual version of its service as part of a settlement agreement with the New Jersey Attorney General. Until now, eHarmony exclusively served heterosexual couples. Eric McKinley, a New Jersey resident who desired to find a same-sex partner, filed a complaint with the attorney general, alleging violations of New Jersey's anti-discrimination statute.

Read a press release issued by the New Jersey Attorney General's office.

This case demonstrates how website operators who target audiences in multiple states (as most do today) need to be aware of differences in state regulatory schemes. This is particularly true of state human rights laws; differences in culture state by state can lead to drastically different laws. Sometimes website operators find the safest route is to comply with the most restrictive state law.

Internet Law; Interactive Entertainment; Privacy

JuicyCampus Is In Hot Water

Hickman, Benjamin

11/19/2008 8:45 PM

JuicyCampus is one of the hottest social media websites to hit college campuses in the last couple years. But as is to be expected with many college-age activities, JuicyCampus is raising the ire of some college administrators and landing its creators in legal trouble.

Many observers describe JuicyCampus as an online version of a restroom wall overrun with grafitti. Users can post gossip about their classmates anonymously. No user name or password is necessary. Critics express outrage at the website for allowing people to post insults, defamation, and private information about others. Supporters say it is an exercise of anonymous speech protected by the First Amendment.

Courts may well end up addressing a number of JuciyCampus controversies. Tennessee State University has announced that is is blocking access to JuicyCampus from campus computers. The Nashville Tennessean has an article.

Meanwhile, a student at the University of Delaware has filed a defamation lawsuit against five unnamed defendants. The complaint alleges the defendants for posted "vulgar, scurrilous and false claims about [the plaintiff's] sexual history." The plaintiff will likely have to serve subpoenas on JuicyCampus and the defendants' ISPs to reveal their identities. Delmarvanow.com has an article.

Finally, the New Jersey and Connecticut attorneys general are investigating JuicyCampus for violations of state consumer protection laws. The basis for the investigations is that JuicyCampus allegedy violated its own policy to keep offensive content off the website. Read more at NJ.com and the Hartford Advocate.

Defendants, Interest Groups Seek Appeal of Kentucky Domain Seizure Case

Hickman, Benjamin

11/18/2008 8:52 AM

The defendants in the Kentucky domain name seizure case, which we have written about in the past (see here and here), have sought leave to appeal the trial court's ruling, which endorsed the state's attempt to seize 141 domain names it considered "illegal gambling devices" under state law.

The ACLU and the Electronic Frontier Foundation have filed an amicus brief urging the appeals court to grant review.

Stay tuned ....

Patentable Subject Matter (35 USC Section 101)

A Patent to Assert Against "Patent Trolls"?

Kaufman, Marc

11/17/2008 5:11 PM

Take a look at the patent application linked below. Apparently, Halliburton has filed a patent application directed a method of asserting patents! The claims in the application would appear to read on methodologies adopted by many parties asserting patents today. Not sure if this is intended to be "tongue in cheek" or if the applicant really desires to gain patent protection for such a method. Interesting stuff.

http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=/netahtml/PTO/search-bool.html&r=1&f=G&l=50&co1=AND&d=PG01&s1=20080270152&OS=20080270152&RS=20080270152

Patentable Subject Matter (35 USC Section 101); Intellectual Property

Pragmatic Advice in View of Bilski: Patentable Subject Matter

Kaufman, Marc

11/17/2008 4:44 PM

Smart Inventors in a Post-Bilski World

by Jonathan Schlaifer

As inventors, the patent bar, and the public at large react to the Federal Circuit’s recent decision in In re Bilski, one thing is extremely clear: Inventors of business methods and computer software will have to face increased legal hurdles to get patent protection for their inventions. Keep in mind that, in Bilski, the Federal Circuit again made it clear that there is no per se exclusion for business methods. However, the “useful, concrete, and tangible result” test that we have relied on in the past as the standard for patentable subject matter has been displaced by the “machine-or-transformation” test.

As the threshold test of whether an invention is the type of subject matter which can be patented, the machine or transformation test requires that a patent method claim set forth an invention that is tied to a specific machine or transforms an article to a different state or thing. With respect to what constitutes a “specific machine”, the court expressly declined to provide guidance in Bilski. With respect to “transformation” the court did indicate that transformation of data can be patentable if the data represents a tangible entity, such as a physical structure. However, it is not clear whether data representing less physical things such as monetary values or digital documents will pass the transformation aspect of the test.

It is worth noting that there appears to be a “safe harbor” for protecting software and business method inventions in the form of claims, known as a Beauregard claims. This type of claim recites a method as computer readable media having instructions recorded thereon, which when executed by a computer, carry out the method. The Patent Office Board of Appeals has affirmed the acceptable use of Beauregard claims in a recent post Bilski decision.

Keep in mind that the goal of a patent claim is to provide the owner the right to exclude others from practicing the invention. Let’s imagine an inventor, who has invented the concept of “buy low/sell high” for profiting from stock transactions. The method, if followed, guarantees a profit! The inventor’s attorney drafts the following three claims:

1. A computer implemented method for achieving profit through stock transactions, the method comprising:

purchasing a stock at a specific price;

retrieving pricing information of the stock at a time after purchase on a client computer;

determining with the client computer whether a current price of the stock is higher that than the specific price;

if the current price is higher than the specific price, selling the stock for a profit.

[This claim requires that the method be practiced on a computer and thus should satisfy the “specific machine” aspect of Bilski]

2. A method for achieving profit through stock transactions, the method comprising:

purchasing a stock at a specific price;

retrieving pricing data of the stock at a time after purchase, the pricing information representing the price that a buyer must pay for the stock at a specific time;

transforming the pricing data to create data indicating whether a current price of the stock is higher that than the specific price;

if the current price is higher than the specific price, selling the stock for a profit.

[This claim attempts to recite the method as transformation of data representing a physical entity and thus attempts to satisfy the “transformation” aspect of Bilski]

3. Computer readable media having computer readable instructions recorded thereon for achieving profit through stock transactions, the instructions comprising:

instructions for purchasing a stock at a specific price;

instructions for retrieving pricing information of the stock at a time after purchase;

instructions for determining whether a current price of the stock is higher that than the specific price;

instructions for, if the current price is higher than the specific price, selling the stock for a profit.

[This claim is in the form of computer software recorded on media and thus should be in the safe harbor of “Beauregard” claims ]

The patent attorney is wise to present claims in all three forms noted above. The Bilski decision does not provide much guidance regarding “specific machine” or “transformation”, and thus it is not clear whether the first two claims will be considered patentable subject matter by patent examiners. The third claim is likely patentable subject matter but requires instructions recorded on media. Some internet models might not be captured by media claims unless they are carefully drafted with all possible models in mind.

Only time will tell how the Bilski case affects patentable subject matter. However, now more than ever, patent applicants must claim their invention in multiple aspect and in multiple forms in order to gain allowance of commercially meaningful claims. Finally, patent applications must be drafted with a disclosure that supports new theories of patentable subject matter based on the test set forth in Bilski.

Will the President Ever Use a BlackBerry?

Hickman, Benjamin

11/17/2008 9:28 AM

Sunday's New York Times has an interesting article on President-elect Barack Obama's looming withdrawal from e-mail and his BlackBerry, which almost never left his belt during the presidential campaign.

The Presidency is probably the last office in the country where its occupant must shun e-mail, even in the Internet age. As the Times explains, the Presidential Records Act places most White House e-mail messages in the public records. Of equal concern is the reality that hackers could intercept e-mail messages sent by the President.

We wonder whether the current legal and technological architecture will impede the deliberative process in the White House if the President is restricted from using modern-day communication tools. On the other hand, e-mail burns up a lot of time; perhaps the President is better off spending his time on the most substantive matters possible and leaving e-mail to deputies.

Google Flu Trends Stirs Up Anxiety Among Privacy Advocates

Hickman, Benjamin

11/17/2008 9:07 AM

One of Google's latest inventions is Google Flu Trends, a tool that tracks flu cases across the country. The tool is based on Google search queries: When users enter search terms such as "flu symptoms," Google aggregates the searches and predicts where the flu is breaking out based on the location of the IP addresses where the searches were entered. Google officials say search term trends have historically paralleled actual flu cases. They believe the tool can predict flu cases about two weeks faster than traditional methods.

Privacy advocates, including the Electronic Privacy Information Center, have voiced concern that Google Flu Trends poses privacy risks for Google users. Although Google “anonymizes” search data, observers believe individual IP addresses could still be exposed. In a letter to Google CEO Eric Schmidt, EPIC and Patient Privacy Rights have urged Google to disclose the algorithm that powers Google Flu Trends so the public can examine it and determine how safe it is.

Spam Down 60% After Shut Down of Spam Hosting Company

Mills, Laurin

11/17/2008 8:22 AM

The Austin American Statesman reports that Internet spam is down approximately 60% after the shut down of McColo Corp., of San Jose, which was apparently the world leader in spam hosting. http://www.statesman.com/news/content/news/stories/nation/11/14/1114spam.html

While we applaud this development, it certainly raises the following question: What took so long? If one company was responsible for routing up to 75% of the world's spam, how hard could that have been to detect and where was law enforcement? More importantly, where were the the plaintiffs' attorneys?

This is not the end of spam, as the effort to stop such operations is like playing "Whack-a-Mole." Much spam has international origins and U.S. civil and criminal law in this area is something of a patchwork. All of this probably accounts for why it took so long to crack down on McColo. That, and some good old fashioned shoe leather investigating by a Washington Post reporter who first broke the story.

Volunteer Group Persuades ISP to Shut Down Illicit Operation

Hickman, Benjamin

11/14/2008 7:31 PM

Cyber Security

A consortium of volunteers who police Internet security have persuaded an Internet service provider to shut down an online operation that allegedly facilitated spam, botnets, malware, child pornography, and other seedy online activities.

HostExploit, a consortium of volunteers whose goal is to self-police the Internet, published a report accusing an online operation called McColo of, among other things, playing a key role in managing botnets and malware warehousing, which the report claimed amounted to 50%-75% of the world's spam. Internet security firms Trend Mircro and McAfee contributed to the report.

McColo is thought to be controlled by organized crime groups in Eastern Europe, but it was hosted by California-based ISP Hurricane Electric. After Hurricane Electric learned of the report, it shut down the McColo’s website based on McColo's failure to comply with its hosting contract.

What is fascinating about this story is that an ISP, which would one would expect to stick its head in the sand as a third-party conduit, decided to take an active role in policing Internet misconduct. As Hurricane Electric's director of infrastructure said in a San Jose Mercury-News article, "I'd rather have my existing clients happy than have one who is dirtying the water."

Where were the government authorities in this story? An official at Trend Micro told the Mercury-News that U.S. law enforcement was simply not able to deal with cross-border cybercrime as effectively an open-source movement. He told the newspaper: "There is a point where the community has to take action instead of waiting for the new sheriff to come in."

Intellectual Property; Interactive Entertainment

Ninth Circuit: Grand Theft Auto Spoof of Strip Club Is Entitled to First Amendment Defense Against Trademark Infringement Claim

Hickman, Benjamin

11/13/2008 9:57 AM

The U.S. Court of Appeals for the Ninth Circuit has held that a spoof of an East Los Angeles strip club in the video game Grand Theft Auto: San Andreas is entitled to a First Amendment defense against a claim of trademark infringement. E.S.S. Entertainment 2000, Inc. v. Rock Star Video Games, Inc., et al., No. 06-56237.

Grand Theft Auto: San Andreas takes place in a fictitious city named Los Santos, which is based on the neighborhoods of East Los Angeles. The real city is home to a strip club named the Gentlemen's Play Pen, which is operated by plaintiff E.S.S. Entertainment 2000. In the video game, players can visit a strip club called the Pig Pen.

E.S.S. sued Rock Star and its parent company, Take-Two Interactive Software, for trademark infringement in the U.S. District Court for the Central District of California. Rock Star asserted a defense of free speech under the First Amendment, and the court granted summary judgment for Rock Star on that basis. E.S.S. appealed.

The Ninth Circuit affirmed the District Court's ruling. In endorsing Rock Star's First Amendment defense, the court applied the Second Circuit's test in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). Under the Rogers test, a court first asks whether use of the accused mark by the infringer has no artistic relevance to the underlying work. If the answer is no, the court then asks whether the use explicitly misleads consumers as to the source of the content of the work.

The Ninth Circuit concluded that Rock Star's use of the Pig Pen mark satisfied the first step, which is a low hurdle. The court believed that Rock Star's desire to create a look and feel similar to East Los Angeles qualified as artistic value. As to the second step, the court concluded that the buying public could not reasonably believe that E.S.S. produced the video game based on the appearance of the Pig Pen mark in the game.

Courts have typically applied Rogers in cases where use of the accused mark occurred in the title of an artistic work. In this case, the Ninth Circuit extended application of Rogers to the body of a work.

Napster Judge Proposes Major Overhaul of Copyright Laws

Mills, Laurin

11/13/2008 9:15 AM

The Wired Blog carried excerpts of a very provocative discussion at Forham Law School by Judge Miriam Hall Patel, who is the judge who presided over the Napster trial. http://blog.wired.com/music/2008/11/napster-judge-s.html

In short, Judge Patel believes that copyright is broken. "Our copyright laws have become a patchwork of amendments that are adopted as emergencies arise" and as special interests can influence the direction of the law.

Judge Patel recognizes that in the digital age it is no longer practical for copyright owners of digital products to insist that they have the exclusive right to control the price and method of distribution of their works. She proposes, among many other things, adopting a new copyright clearance entity and compulsory licenses.

It is not clear that Judge Patel has any support for her proposals, but they could easily be a harbinger of things to come. Clearance and reasonable pricing are the big issues in copyright. The media industry has, frankly, done a terrible job on clearance. This is a warning to everyone in the industry either to cooperate and address the issue or have the government "fix" it for you.

Tax Court Bounces Claimed Tax Credit for Making Website ADA Compliant

Hickman, Benjamin

11/12/2008 9:24 AM

The United States Tax Court rejected a taxpayer's attempt to claim a tax credit for making his website compliant with the Americans With Disabilities Act, concluding the claim was nothing more than a sham tax avoidance scheme. The case is Good v. Internal Revenue Service, T.C. No. 08-245.

Section 44 of the Internal Revenue Code allows small businesses to claim a tax credit for expenditures made to comply with the ADA. The math works out to a maximum credit of $5,000.

As a general matter, it appears the Tax Court had no objection to a taxpayer claiming a credit for making a website ADA-compliant. This particular taxpayer, however, provided sketchy evidence, at best, to support his claim. Among other things, the evidence suggested that the taxpayer somehow made the expenditures before he hired a contractor to perform the work necessary to make the website compliant. The evidence also suggested that the website was already compliant.

Report: IT Spending In 2009 Will Grow, But At A Slower Pace

Hickman, Benjamin

11/12/2008 8:53 AM

Consulting firm IDC forecasts that businesses will continue to spend more on information technology in 2009, but at a much slower pace than predicted before the financial crisis.

According to a press release on IDC's website, worldwide IT spending will grow 2.6% year over year in 2009, down from IDC's pre-crisis forecast of 5.9% growth. In the United States, IDC predicts IT spending will grow 0.9% in 2009, compared to the 4.2% growth the firm forecasted in August.

Despite the gloomy economic outlook for 2009, the firm believes that businesses will still invest in information technology, if only to cut costs by improving efficiency.

Intellectual Property; Interactive Entertainment

Cert Petition Filed In Greenberg v. National Geographic

Hickman, Benjamin

11/11/2008 1:56 PM

Plaintiff and photographer Jerry Greenberg has filed a petition for writ of certiorari with the Supreme Court of the United States, seeking to overturn an en banc decision of the Eleventh Circuit against him.

Greenberg is a former freelance photographer for National Geographic. He retained the copyrights in the photographs he shot for the magazine over the course of several decades. He sued for copyright infringement after National Geographic issued a CD in 1997 archiving every issue of the magazine, including issues with Greenberg's photographs.

The Eleventh Circuit held that National Geographic was not liable for copyright infringement because the CD was a permissible "revision" under Section 201 of the Copyright Act.

If the Supreme Court grants cert, it will likely clarify its 2001 opinion in New York Times v. Tasini, 533 U.S. 483, in which the Court held that publishers committed copyright infringement by selling articles written by freelancers to online news databases without permission.

EFF's Wish List for the Obama Administration

Hickman, Benjamin

11/11/2008 8:45 AM

Internet Law; Cyber Security; Privacy

Among the plethora of issues political actors are going to expect President-elect Barack Obama to address, electronic privacy will rank high in the mix. The Electronic Frontier Foundation has begun posting a "wish list" of issues. Many of them are closely related to national security. We post the first installment of the wish list in full:

1. Repeal or repair the FISA Amendments Act (FISAAA). There are a great many flaws in FISAAA, which was passed last Spring after a long and difficult fight. Most significantly, the provisions granting retroactive immunity from litigation to telecommunications companies complicit in the Bush Administration's warrantless wiretapping program should be repealed so that the millions of Americans who have been illegally surveilled can have their day in court.

2. Reform the Electronic Communications Privacy Act (ECPA). ECPA is a major law restricting the government's ability to surveil citizens and is in desperate need of reform. It has become dangerously out-of-sync with recent technological developments and Americans' expectation of online privacy. In particular, the privacy of personal data should not depend on how long an ISP has stored that data or whether the data is stored locally or remotely.

3. Reform the State Secrets Privilege. The State Secrets Privilege has been radically abused by the Bush Administration, particularly to shield its electronic surveillance activity from judicial review. The new administration should voluntarily reduce its use of the privilege, and work with Congress to reform the privilege and insure that claims of state secrecy are subject to independent judicial scrutiny.

4. Scale back the use of National Security Letters to gag and acquire data from online service providers. The REAL ID Act, with its requirement that Americans carry a national ID card, has been rejected by many U.S. states and should be federally repealed. Large-scale government data collection and data-mining projects like Automated Targeting System (ATS) should be reduced or eliminated. Invasive border-searches of electronic devices should be stopped.

We make no judgment as to whether EFF is right on these issues, but we would not be surprised to see them receive prominent play as the next administration assumes power.

MySpace and MTV Agree on Means to Monetize Pirated Content

Mills, Laurin

11/10/2008 5:26 PM

MySpace and MTV seem to have found a solution to the problem of video piracy on social networking sites. Now, when a user uploads a pirated video, MySpace will use technology provided by Autitude to detect the pirated clip and automatically attach an overlay ad. Ad revenues will be split between Autitude, MySpace and MTV. This is yet another example of media companies finally waking up to the fact that existing copyright law is not particularly effective on social networking sites and they need to be creative in using technology and new business models to monetize their content. This appears to be a far more effective solution than copyright litigation or an endless series of DMCA notices. Bravo.

Commerce Department Publishes Updated Encryption Product Export Rules

Hickman, Benjamin

11/10/2008 9:22 AM

The Bureau of Industry and Security of the Department of Commerce has published an interim final rule updating the Export Administration Regulations (EAR). According to the Department, the updates make the treatment of encryption items more consistent with the treatment of other items subject to the EAR.

The EAR regulate the export of dual-use technology. The regulations require a government license, or a license exception, to export nearly all software containing encryption code. Various levels of clearance apply depending on the country to which the encryption code is exported, the code's application, and whether the code is in the public domain. Virginia Tech University has a good overview of the basics.

Among other things, the updated rule adds Bulgaria, Canada, Iceland, Romania, and Turkey to a list of countries that receive favorable treatment under License Exception ENC.

Read the Federal Register notice (73 Fed. Reg. 57,495).

E-Mail Snooping Violates Stored Communications Act, But Not Wiretap Act

Hickman, Benjamin

11/10/2008 8:33 AM

The United States District Court for the Middle District of Tennessee granted summary judgment against a defendant who accessed his former co-workers' e-mail accounts and read their e-mail messages after he was terminated.

The court held that the defendant's conduct violated the federal Stored Communications Act, which provides that whoever “intentionally accesses without authorization a facility through which an electronic communication service is provided; or intentionally exceeds an authorization to access that facility; and thereby obtains ... access to a wire or electronic communication while it is in electronic storage in such system shall be punished ...” 18 U.S.C. § 2701(a).

The court, however, declined to find liability under the Federal Wiretap Act and the Tennessee Wiretap Act. Both statutes provide that anyone who, without authorization, “intentionally

intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to

intercept, any wire, oral, or electronic communication” violates the acts. 8 U.S.C. § 2511;

Tenn. Code Ann. § 39-13-601. Although there is a some disagreement among courts, a majority have concluded that a person cannot intercept an e-mail message for purposes of the statutes unless a person acquires the e-mail message during the time it is transmitted. After the message is received in an e-mail inbox, transmission has terminated and no interception can occur. The court adopted the majority position.

The case is Cardinal Health 414 Inc. v. Adams, M.D. Tenn., No. 3:07-00691. Read the summary judgment opinion.