Intellectual Property

Tomorrow the Supreme Court will hear oral arguments in two intellectual property cases that could affect the technology sector: Commil USA, LLC v. Cisco Systems, Inc. and Kimble v. Marvel Enterprises, Inc. This blog attempts to summarize and preview the arguments for both cases. For disclosure purposes, CCIA filed an amicus brief in Commil in support of Cisco.

1. Commil USA, LLC v. Cisco Systems, Inc.

The issue the Supreme Court chose to focus on in Commil is “whether the Federal Circuit erred in holding that a defendant’s belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b).” Even though this is a patent law case, it may have implications for copyright as well because many patent standards for secondary liability are imported into copyright law (see Grokster). CCIA discussed this issue at length in its amicus brief supporting Cisco and argues that the culpable intent requirement in copyright law from Grokster should not be changed regardless of the holding in this case.

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Yesterday Austin-based Usenet provider Giganews was awarded more than $5.6 million in attorney’s fees and costs by a federal court in California, relating to its lengthy battle to exonerate itself of spurious infringement allegations from serial copyright litigant Perfect 10.  The court awarded fees in order to “discourage serial litigants from bringing unmeritorious suits and then unnecessarily driving up litigation costs in order to drive a settlement.”  (A statement by Giganews and link to the order are here.)

Represented by “high stakes” IP litigator Andrew Bridges of Fenwick & West, Giganews has been slugging it out with adult content purveyor Perfect 10 since 2011.

Perfect 10 is likely no stranger to copyright nerds; its litigation campaigns against a who’s-who of Internet properties in the previous decade yielded few victories for the company, but did lead to important precedents on intermediary liability and fair use, including search engines’ use of thumbnails.  (Some of these cases comprise the so-called Perfect 10 “trilogy”; including Perfect 10 v. Google, Inc., Perfect 10 v. Amazon.com, Perfect 10 v. VISA, Perfect 10 v. CCBill LLC.) MORE »

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An expert panel convened on Capitol Hill this morning, discussing new research on the detrimental effect that regulatory uncertainty has on Internet investment (as well as additional copyright law and policy challenges, which we live tweeted on @DisCo_Project).

The new research quantifies the impact of Internet regulations, including intermediary liability limitations, by showing their effect on early-stage investment.  A new report by Fifth Era and Engine finds that legal uncertainties for digital content intermediaries discourage early-stage investment around the world, reinforcing findings from a 2011 report that found early-stage investors in the United States were considerably less likely to invest in new online services exposed to legal risks.

In a similar vein, another 2011 paper found that changes in copyright policy changes could spur demonstrable investment in new online services.  Comparing investment in online services in the U.S. and Europe in the wake of the 2008 Cablevision case — a federal appellate court ruling widely heralded as giving additional legal certainty to online platforms — researchers found that U.S. investment increased considerably.  In contrast, a follow-up study by the same authors explored the impact of judicial decisions in Europe that increased legal exposure for online platforms, and found decreased investment when applying the same methods.

The Fifth Era report reinforces this conclusion, providing further evidence that additional risk and uncertainty in the online environment decreases investment.  This conclusion is not entirely surprising — but the authors’ specific findings provide impressive data on how severely risk can stifle early-stage investment.

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On two sides of the country yesterday two branches of the federal government engaged in legal processes likely to affect competition in the music industry.

As DisCo previewed, yesterday the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights considered the competitive challenges in the music publishing industry, and the effects on competition, innovation, and consumers.  Witnesses from across the music ecosystem discussed the continued need for the consent decrees.  Several urged that the consent decrees be strengthened with additional transparency safeguards, while others claimed they may no longer be necessary (at least in theory if you ignore all transaction costs and have a perfect marketplace).  Over the last year alone, four federal courts have found evidence that the same publisher behaviors that gave rise to the consent decrees in the first place still continue today, suggesting that the consent decrees remain necessary to curtail anticompetitive behaviors.

Just as the Senate hearing ended in D.C., jury deliberations in the Blurred Lines case (which we covered when Robin Thicke initiated the litigation by filing for a declaratory judgment) resumed in California, ultimately ending in a judgment against Robin Thicke and Pharrell Williams, for millions in actual damages plus profits.  Several observers have said that is “horrific” and “really dangerous”, as well as “a bad result” that is “bad for pop music” and “could make songwriting and recording a minefield for every artist”.

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At a hearing on Capitol Hill tomorrow, a Senate subcommittee will hear different perspectives on the degree to which competing music publishers should be permitted to coordinate licensing activities through performing rights organizations (“PROs”), such as ASCAP.  Music publishers have expressed a desire for fewer antitrust constraints on their coordinated behavior, while users and distributors of music will call for greater transparency in the music marketplace.

The hearing occurs during an ongoing Justice Department review of the consent decrees that govern PROs.[FN1] Music publishers and PROs are presently subject to oversight to the extent that PROs coordinate behavior among publishers who ostensibly should compete with one another.  Competitor coordination usually violates antitrust law, but because collective licensing also helps reduce the high transaction costs in music licensing, exceptions have been made for PROs.  A PRO can offer a single performance rights license to a user or distributor for all the works controlled by multiple publishers – one-stop shopping for a huge number of works.  But because one entity is nevertheless coordinating business transactions for a large group of companies that should be competing, antitrust oversight remains necessary.

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VulcanSaluteCopyrightWhat does Leonard Nimoy’s “Vulcan salute” have to do with European newspaper headlines? They both might one day be regulated by new international intellectual property rules, if some have their way. One might think that what constitutes “intellectual property” is set in stone, but it isn’t.  Around the world, different interests are lobbying for governments to create new types of intellectual property all the time.

As DisCo has covered before, news publishers in Europe and elsewhere are currently pushing for the creation of new IP rights in newspaper headlines, so that online sites can be forced to pay for the privilege of quoting or linking to news coverage. Spain and Germany have already created these rights, and there is pressure in Brussels for a pan-European rule.

At the same time, for more than a decade there have been efforts within the World Intellectual Property Organization to create rights in “traditional cultural expression” (which, as explained below, may include the hand gesture on which Leonard Nimoy based the Vulcan salute). Some indigenous communities are distressed about the commercial exploitation of their folklore and other forms of cultural expression by “outside” entities. In a desire to (a) prevent uses that they believe are disparaging and (b) regain control over an important part of their identity, these communities have lobbied for a treaty that would require the creation of intellectual property rights in “traditional cultural expression.”

Concerns have been raised about the scope of the draft treaty. If adopted in its current form, critics say, the treaty could interfere with cultural life around the world, pulling out of the public domain material that is incorporated in countless novels, paintings, films, sculptures, operas, and other musical compositions. This is because these works are based on stories, legends, dances, rituals and other forms of expression that the treaty could protect without a limitation on term.

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Last week, the House of Representatives adopted two inconsistent amendments to the Student Success Act, H.R. 5, the legislation reauthorizing the No Child Left Behind Act. The amendments are relevant to the topics we explore here because they illustrate different responses to the manner in which the Internet has changed education. One amendment, sponsored by Congressman Jared Polis (D-CO), would allow state agencies to use federal grants to develop open access textbooks and open educational resources. The other amendment, sponsored by Congressman Hakeem Jeffries (D-NY), would allow state agencies to use federal grants to develop educational materials for teachers, parents, and students “about the harms of copyright piracy.” The Polis amendment is forward looking and would introduce more competition and innovation in the K-12 textbook market. The Jeffries amendment is essentially a redundant subsidy for media companies’ advocacy efforts.

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Last week the American University Intellectual Property Brief hosted a symposium on 3D Printing at American University Washington College of Law (a topic previously examined in a variety of DisCo posts [1], [2], [3]). The speakers discussed many of the dominant policy and legal implications presented by this new technology.

The opening keynote speaker, Michael Weinberg of Public Knowledge, forecast some of the particular issues that the technology was sure to present. He began “3D printing is going to create legal and policy questions, to put it nicely; a lot of lawsuits to put it not so nicely.”  One of his main concerns was that people may begin to assume IP rights exist in objects where none may exist. He stated “the masses are now coming to patent,” and that the patent world should take note after watching their copyright counterparts “squirm” over very similar issues throughout the past decade. He warned against imposing copyright concepts concerning protectability onto patent, and that people should not inherently move to licensing when “maybe they don’t have to license at all.”

When Michael Carroll, the Director of the Program on Information Justice and Intellectual Property at WCL, introduced the first panel he stated from an IP perspective 3D printing was “Napster for patents.” Weinberg had earlier stated that “the lesson from recent history is the way you make money and succeed is to be the first person or first couple of people to come to terms with this new disruption.” He found the the best fiscal approach for companies moving forward might be to embrace the technology rather than file lawsuits. These statements forewarn against subjecting this new technology to the same knee-jerk overprotective reactions that new disruptive technologies have faced in the past. By embracing a more complacent and accepting approach all sides may be able to avoid costly litigation and prosper.

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The past few weeks have led to some interesting, and sometimes hilarious, news at the intersection of entertainment and IP. In case you missed it, Taylor Swift and Katy Perry may have bad blood in real life, but they seem to be aligned in their fierce IP enforcement strategy. Taylor Swift recently applied for several trademarks for lyrics from her recent album on various classes of goods. And even more recently, her fans have been receiving cease and desist letters on Etsy as she begins to claim these marks as her own. Katy Perry’s attorneys have sent a cease and desist to a man who is selling a 3D printed “Left Shark” model of Perry’s now famous background dancer from the Superbowl who had two left feet. There have since been a flurry of responses and claims in which Perry’s attorneys claimed several causes of action including copyright as well as misappropriation. The attorneys even filed a trademark for Left Shark, which they later abandoned (likely because they used a picture of the 3D sculpture, rather than the costume), but then instead of giving up they then filed several more with a new picture in the application.

These controversies have led to some really interesting questions on hot topics like 3D printing and how IP rights will be affected (a subject addressed in the space before). However, they also spark some other questions about the intersection of copyright and trademark protections and where the lines can get fuzzy. Can a musician use trademark law to protect otherwise uncopyrightable subject matter? There have been several articles discussing how costumes are not copyrightable, and it is well known that words and short phrases alone aren’t either. However, it appears these artists are reaching beyond the bounds of copyright to assert trademark rights in things that copyright has traditionally left unprotected. Left Shark, for example, derives much of its value not from its link to Katy Perry but its place as a cultural phenomenon created by the internet. In Swift’s case, she wrote the simple phrases “this sick beat” or “party like it’s 1989” in her lyrics to convey her artistic expression, not to market her brand.

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Jon Stewart’s announcement on February 10 that he will be retiring from The Daily Show later this year has been met with tributes to his comic genius and his impact on political discourse. But these tributes have overlooked the legal doctrine that has enabled Stewart to be so effective: fair use. (This is my second post this week about the importance of fair use to popular culture; on Tuesday I wrote about how the Fifty Shades of Grey trilogy was first written as fair use-dependent fan fiction based on the Twilight vampire series.)

Stewart’s most powerful critiques result from his juxtaposing clips of politicians and commentators on news broadcasts to demonstrate their hypocrisy. He’ll contrast a clip of a Fox News commentator expressing outrage at President Obama taking a particular action with a clip of the same commentator praising President Bush for taking a similar same action. Stewart also uses montages of clips from CNN and other news networks to demonstrate their simultaneously sensationalistic and superficial coverage of disasters and trials. But for fair use, Stewart’s rebroadcast of these clips would be willful copyright infringement, subject to statutory damages of up to $150,000 per clip.

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