IP/Internet/New Media Blog

By Galen Gentry

On July 22nd the Ninth Circuit Court of Appeals overturned almost all of a Riverside federal court judge’s rulings and jury’s findings in the $100 million Bratz v. Barbie case. Judge Stephen Larson presided over the trial which ultimately found that Mattel Inc. had the rights to the Bratz dolls produced by rival MGA Entertainment Inc.

The appeals court ruled that most of the jury instructions and conclusions reached during the 2008 trial between Mattel and MGA were incorrect. “Because several of the errors we have identified appeared in the jury instructions, it’s likely that a significant portion – -if not all — of the jury verdict and damage award should be vacated, and the entire case will probably need to be retried,” said the appellate panel in an opinion written by Chief Judge Alex Kozinski. See our orgininal blog post on this topic here. 

The panel stated in the opinion“Even assuming that MGA took some ideas wrongfully, it added tremendous value by turning the ideas into products and, eventually, a popular and highly profitable brand.”   And went on to say “It is not equitable to transfer this billion-dollar brand, the value of which is overwhelmingly the result of MGA’s legitimate efforts, because it may have started with two misappropriated names.”

Wow. Talk about a difference of opinion. The trial judge and the appeals court saw this one very differently.

Quoting Statement of the Librarian of Congress Relating to Section 1201 Rulemaking:

Section 1201(a)(1) of the copyright law requires that every three years I am to determine whether there are any classes of works that will be subject to exemptions from the statute’s prohibition against circumvention of technology that effectively controls access to a copyrighted work. I make that determination at the conclusion of a rulemaking proceeding conducted by the Register of Copyrights, who makes a recommendation to me. Based on that proceeding and the Register’s recommendation, I am to determine whether the prohibition on circumvention of technological measures that control access to copyrighted works is causing or is likely to cause adverse effects on the ability of users of any particular classes of copyrighted works to make noninfringing uses of those works. The classes of works that I designated in the previous proceeding expire at the end of the current proceeding unless proponents of a class prove their case once again.

This is the fourth time that I have made such a determination. Today I have designated six classes of works. Persons who circumvent access controls in order to engage in noninfringing uses of works in these six classes will not be subject to the statutory prohibition against circumvention.(emphasis added)

The fifth class would seem to bear on the 5th Circuit ruling mentioned in our previous post.

(5) Computer programs protected by dongles that prevent access due to malfunction or damage and which are obsolete. A dongle shall be considered obsolete if it is no longer manufactured or if a replacement or repair is no longer reasonably available in the commercial marketplace…

Judge Garza of the New Orleans based 5th Circuit has ruled that circumventing software protection is not per se a violation of DMCA. Courthouse News reports:

General Electric did not infringe on a power supplier’s digital copyrights when it used protected software unlocked through a hacked security key, the 5th Circuit ruled.

“Merely bypassing a technological protection that restricts a user from viewing or using a work is insufficient to trigger the (Digital Millennium Copyright Act’s) anti-circumvention provision,” Judge Garza wrote for the New Orleans-based court.

“The DMCA prohibits only forms of access that would violate or impinge on the protections that the Copyright Act otherwise affords copyright owners.”

The ruling represents a parting of the way with the current prevailing view in most of the nation’s courts, according to author and digital rights activist Cory Doctorow. Such a split, says Doctorow, is often the precursor to seeing the ruling challenged in the Supreme Court. Doctorow also points out that Judge Garza’s ruling, which might otherwise be viewed as a victory for proponents of a less rigid enforcement of the DMCA, is nonetheless a victory not of an underdog hacker but instead is an example of a large and powerful corporation prevailing. Quoting Doctorow’s July 25th post at boingboing.net,

What’s more, the defendants here are General Electric, not hackers in black t-shirts or sketchy offshore Xbox-modchip vendors (theoretically the law shouldn’t care if the defendant is a hobo or a billionaire, but in practice, billionaires usually get better precedents, and not just because they can afford better lawyers).

Galen Gentry

In an article in the Wall Street Journal yesterday, Justin Scheck, described the short lived trademark category for marijuana.  The article reports that the USPTO plans on ’shutting things down’ by the end of the month, but apparently there was a brief period in which  the U.S. Patent and Trademark Office created a new trademark category dedicated to medical marijuana, spurring a hoards of applications from people and businesses in the 14 states where the drug is legal for medicinal purposes.  Among the trademarks: Chronic, Mellow Yellow, and Maui Wowie.  

The trademark agency said it was “highly unlikely” that the office would grant a medical marijuana trademark anytime soon because a product must be legal for interstate trade to be eligible for trademark protection…and so it goes.  An interesting but at least for now academic argument is whether whether long-used names for the drug could be trademarked if..uh it was legal it sell it.

The justices agreed with an appeals court that the method was too abstract to be patented. The Supreme Court used a different analysis to reach that conclusion, disagreeing with the legal test used by the lower court.   Read the Wall Street Journal article on the court decision.

By Galen Gentry

In City of Ontario, California v. Quon. The court held that a public employer’s examination of an employee’s personal text messages on a government-issued pager did not violate the Fourth Amendment. Justice Kennedy’s opinion for the Court remarked that a review of messages on an employer-provided device would similarly be regarded as “reasonable and normal in the private-employer context.”

A police sergeant was using a work-issued pager to send sexually explicit texts. The Supreme Court ruled Thursday that under the circumstances the police department was entitled to read his messages. In a unanimous decision, the high court said that even if police Sgt. Jeff Quon had an expectation that his pager messages would remain private, a police department audit of his messages was nonetheless reasonable.

“Because the search was motivated by a legitimate work-related purpose, and because it was not excessive in scope, the search was reasonable,” Justice Anthony Kennedy wrote for the court.

Quon’s employer asked its wireless service provider for details about the text messages sent and received by the city’s police officers, when their texts regularly exceeded the monthly limit for which the city had contracted. Quon was disciplined for violating police department rules when the city discovered that he sent numerous personal messages. He and the individuals with whom he communicated and who communicated with him sued the city, arguing that the city engaged in an unreasonable search in violation of the Fourth Amendment of the US Constitution, the privacy clause found in Article I, section 1 of the California constitution, and also the federal Stored Communications Act (SCA).

This is good news for employers and the case gives them guidance on the issue of employee privacy in this context:

Employers should establish the level of privacy expectations with a written policy that covers all the gizmos the company uses–telephones, cellular phone, sms text, and email.

Employers should avoid reviewing the content of sms messages, or emails or asking their service providers to do so, unless the employer has a clear work-related purpose such as an investigation of suspected wrongdoing or a non-investigative financial or administrative objective.

Content review should be done in a manner that limits privacy intrusions. The Quon decision states that this does not mean “least intrusive search practicable” but instead it must be a search reasonably limited to the employer’s legitimate, work related objectives.

A reasonable review of employee communications with realistic work related objectives can also serve as a defense against privacy claims by non-employees who communicated with the employee.

According to Rachel M. Zahorsky of the ABA  Journal Blog in the past five months, Virginia-based law firm Dunlap, Grubb, & Weaver has filed suits against thousands of individuals accused of illegally downloading independent films—an operation that could yield the firm and its clients over $15 Million.

Under the operative the U.S. Copyright Group, the lawyers seek out indie filmmakers and offer to sue anonymous movie pirates for no charge. The firm then subpoenas Verizon, AT&T and other ISPs to identify each John Doe user, and threatens to sue each person for $150,000 unless they agree to a $1,500 to $2,500 settlement fee, according to Ars Technica’s Law & Disorder blog and Techdirt. Defendants can pony up the cash on a website set up to accept checks and credit cards.

To identify illegal file-sharing, the firm uses a program that captures IP addresses based on the time stamp that a download has occurred and then checks it against a spreadsheet to make sure the downloaded content is the copyright-protected film and not a misnamed film or trailer, according to the Hollywood Reporter’s THR, Esq. blog

These are likely to be two of the best posts you will read regarding the recently released ACTA text, filed at Balkinization by Margot Kaminski of the Yale Information Society Project:

• The Anti-Counterfeiting Trade Agreement
• The Anti-Counterfeiting Trade Agreement, Part II

From Kaminski’s more recent post:

The big picture issues are unchanged: 1) ACTA establishes a new institution outside of existing international law; 2) ACTA pushes the international standard for IP law to an IP-maximalist’s dream; and 3) when you establish the information-sharing and investigative infrastructure, bad things (civil liberty violations) will follow.

In keeping with the letter of the video on transformative works, if perhaps not in the tone:

The proposed text of the much touted “Anti-Counterfeiting Trade Agreement” is available in pdf form, here. ArsTechinca and slashdot have more.

By Galen Gentry

On April 6^th  the District of Columbia Court of Appeal ruled that the Federal Communications Commission has no authority to determine how internet services providers manage traffic to their customers.  The case, Comcast v. FCC , is a blow to proponents of net neutrality.  In 2008 the FCC ruled that Comcast improperly discriminated against certain internet content when it blocked some of its customers from using the popular BitTorrent Inc. technology which allows users to download large files such as videos more easily.

Comcast appealed and the three judge panel unanimously found that the FCC overstepped its bounds in the 2008 ruling.  The court stated the FCC lacks direct authority from Congress to regulate internet traffic.  The ruling brings the issue of net neutrality back to the fore.  Some government and business leaders seek legislation which would prevent internet providers from curbing or charging higher prices for use of selected applications or access to certain websites. 

At issue is whether telecommunications companies should be allowed to manipulate how fast or slow websites pages load on customers computers.  Companies like Google support net neutrality which would prevent internet providers from curbing or charging higher prices for use of selected applications or access to certain websites.  The telecom giants such Verizon and Comcast are against such legislation.  President Obama supported previous efforts to enact net neutrality legislation and FCC chairman Julian Genachowski has made net neutrality a top priority. 

The issue of net neutrality is a partisan one.  It may take a long time for Congress to act.  In the interim the FCC may appeal the ruling or it may seek to reclassify high speed internet service so that it would be regulated like telephone services under existing laws.  The same companies which oppose net neutrality, the giant telecoms, would oppose such a move.  If the FCC makes an effort to reclassify high speed internet service the telecom companies are sure to challenge the action in court. 

 America needs competition among its high-speed internet providers. Open access has proved to be an effective way to do this in other countries. The FCC’s rules on net neutrality were an adequate substitute.  But with the Court’s ruling the United States now has neither.

The United States Patent Office issued a press release today stating that henceforth it would seek patent examiners by running ads in Playboy.  The Office went on to state that rumors that everything worth inventing had been invented now that the ipad was a reality were in fact true.

By Galen Gentry

Yesterday, Mayor Villaraigosa signed a measure to cut business taxes for internet based firms. Last year internet firms were reclassified from multimedia to business and professions. It’s an important distinction because the former pay a city tax rate of $1.01 of gross receipts and the latter pay $5.07 (yes, fellow attorneys you are unfortunately in the $5.07 category). The change was approved without dissent by the city council. The rate change is retroactive. The fact that it is retroactive will cost the city at least $3.4 Million in revenue according to an article today’s Los Angeles Times Business Section by Phil Willon.

The mayor and the city council were clear as to the reasons for the change of heart–they believe internet based companies are easy to move and that the drastic increase in city tax would result in an exodus which would ulitmately cost Los Angeles more revenue in the long run.

By Galen Gentry

The AP reported that Google stopped censoring the Internet for China by shifting its search engine off the mainland today, March 22, 2010. Google is acting on its statement, made Jan. 12th, that it would no longer adhere to China’s requirement that it keep some Internet results out of its citizens’ view. Visitors to Google’s old service for China, Google.cn, are now being redirected to the Chinese-language service based in Hong Kong, where Google does not censor the search results; however, it cannot be accessed inside China, because the mainland government filters restrict the links that can be clicked by mainland audiences.

Google plans to keep its engineering and sales offices in China so it can keep a presence in the country and continue to sell ads for the Chinese-language version of its search engine in the U.S. Google is unlikely to sever all ties with China in the future. It would not make economic sense. China’s explosive growth has created a market that is hard to pass up.