IP/Internet/New Media Blog

By George M. Borkowski

A pending development in the Copyright Office will result in significant changes in the way an online service provider must designate an agent to receive notice of claimed copyright infringement under the Digital Millennium Copyright Act (DMCA).  As you will recall, an ISP that wants to invoke safe harbor protection under the DMCA for claims of copyright infringement by its users must, among other things, designate an agent to receive notice of claimed copyright infringement from content owners.  Failure to designate such an agent will make an ISP ineligible for DMCA safe harbor protection.

The current method of designating a DMCA agent is based on interim regulations that were promulgated by the Copyright Office when the DMCA was enacted in 1998.  Under the current rules, an ISP submits the name and contact information for its DMCA agent in a paper filing with the Office, which then maintains the information.  There is no enforceable requirement that this information be updated or maintained in a current state.  That obviously can create problems when designated agents change, or companies are bought or sold, or other changes occur at the ISP.

In recognition of these issues, the Copyright Office is proposing to amend its practices governing the designation of a DMCA agent by online service providers.  The proposal is to implement an electronic process under which service providers would designate DMCA agents to receive infringement notices.  If these new regulations are implemented, all online service providers would need to file new designations of agents within one year of the implementation of the new regulations.

The major proposed changes include the following:

• Implementation of an electronic (not paper) process, including an online submission form, by which service providers may designate agents to receive notice of claimed infringement, and the creation of an electronic database to search for designated agents.  ISPs that have already designated an agent under the current regulations will be required to file new designations.  The Office will no longer accept paper submissions.
• Any service provider that has filed an online designation of agent will be required periodically (most likely, every two years) to validate the information in its designation to keep the directory accurate.  Should an ISP fail to validate or amend its designation within the allotted time, the designation would expire and be removed from the directory.  This is significant, given that failure to have a designated DMCA agent will make an ISP ineligible for DMCA safe harbor protection.
• In addition to providing information about its designated agent, a service provider also would need to state its full legal name, physical address, and email address (in addition to that of its agent) so that the Copyright Office can send validation notifications to both the ISP and its designated agent.  Part of the reason for this proposal is to make it harder for rogue companies to hide from content owners who accuse them or their users of engaging in copyright infringement.
• The requirement of an actual signature would be eliminated.  The thinking is that, because all online filings will require the creation of an online account as well as payment of the accompanying fees with a credit card, checking account, or Copyright Office deposit account, the online system will reasonably be able to verify and authenticate the identity of the person submitting or amending the agent designation information.

There are additional proposals on more minor points that I have not mentioned here.  Whatever final regulations are implemented, it will be important for online service providers to submit and update DMCA agent information as required by the Copyright Office so as not to lose eligibility for the DMCA’s safe harbors.

The time for comments and reply comments closed on December 27, so we should expect new, final regulations in the not too distant future.  The proposed rules, plus comments from interested parties, can be found at the Copyright Office at this link:  http://www.copyright.gov/onlinesp/NPR/.

Mr. Borkowski is a partner at Freeman Freeman Smiley, LLP.  He  represents leading entertainment, video game and software companies and industry associations, as well as technology companies.

By Azita Mirzaian

Recently, representatives from the MPAA and The Net Coalition debated the merits of the proposed Stop Online Piracy Act (SOPA) legislation on Los Angeles public radio station KPCC’s AirTalk. Michael O’Leary, senior executive vice president of the Motion Picture Association of America, exchanged heated comments with Markham Erickson, executive director of The Net Coalition, an organization that represents leading global internet and tech companies such as Google and Amazon. While at times, the discussion devolved into snarky, off-topic accusations of who makes more profits and who is behaving in a more self-serving manner, the discussion was a good representation of the dichotomous positions of the tech industry and the film industry when it comes to SOPA.

The proposed SOPA legislation aims to aggressively protect copyrighted content on the internet by allowing the government to shut down and block access to offshore sites that enable online piracy of copyrighted content. During the discussion on AirTalk, the MPAA’s O’Leary insisted that the legislation is necessary to protect American jobs. He stated that the legislation not only protects creative communities such as the movie and music industries, but also protects consumers by ensuring that the pharmaceuticals, electronics, and fashion items that they purchase online are legitimate and safe.

The Net Coalition’s Erickson countered that although he is not opposed to stopping online piracy, the proposed SOPA legislation is an over-reaching, ineffective piece of legislation that will do little to stop online piracy while at the same time dangerously diminishing internet freedom. Erickson cited the example of Wikileaks to illustrate his point that that stopping payment processors and advertisers from working with offshore sites is an effective solution to the online piracy problem. But, he said, the SOPA legislation goes way beyond that by also having the government impose technological measures that would block users’ access to offshore sites. He stated his concern that this kind of over-regulation would damage the internet’s infrastructure, limit internet freedom, and hamper innovation.

You can listen to the full piece here

(http://www.scpr.org/programs/airtalk/2011/12/21/21848/online-privacy-act/).

Azita Mirzaian earned her J.D. from the University of Southern California Gould School of Law.  Her areas of interest include copyright protection, trademarks, and other intellectual property matters

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By Galen Gentry

As the sales of game consoles have waned, online games have gained popularity. Recently, Zynga Gain Network, Inc. was sued  in the Northern District of California (San Francisco).  Zynga is alleged to have shared personal information about Facebook users who play its online games.  Michael Aschenbrener, a Chicago based attorney has filed the complaint and he seeks to have the case certified as a class action.  The lawsuit claims Zynga violated federal law and Facebook’s own policy by causing the names of the users of its popular online games such as Farmville to be transmitted to advertisers and internet marketing companies.

Farmville allows members of Facebook to manage a “farm.”  Planting, growing and harvesting virtual crops, harvesting trees and bushes, and raising livestock. Farmville  has grown to be the social network’s most popular application, with over 62 million active users and over 24.6 million Facebook application fans as of September 2010 according to Wikipedia.org.

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.

By Galen Gentry
PC Magazine reported that two law firms have filed a class action law suit against Yelp for allegedly extorting advertising payments in exchange for removing or modifying negative reviews appearing on the site. The named Plaintiff is a veterinary hospital in Long Beach, California. The plaintiff claims it asked Yelp to remove a false and defamatory review and in response the company sales representatives repeatedly contacted the hospital and requested that it advertise with Yelp in exchange for hiding or removing the negative review.

What is interesting is that the allegations in the complaint are not new. On February 18, 2009 The East Bay Express, a free weekly publication, based in Oakland, California published an article entitled “Yelp And The Business Of Extortion 2.0”

In the article The East Bay Express stated that interviews with dozens of business owners revealed several people were promised that negative reviews would be moved or removed if the business would advertise by Yelp sales reps. Further in another six instances positive reviews disappeared after owners declined to advertise.

Web 2.0 is all about user generated content. That business model, pioneered by Google, is used more and more as the cornerstone of the marketing efforts of businesses large and small. Yelp is a popular website which posts user generated content in the form of reviews of small businesses such as restaurants, dry cleaners, nightclubs, tire stores, and the like. Yelp attempts to monetize the content by obtaining advertising contracts from businesses which have been reviewed on the site. Yelp’s business model is not unique (Avvo.com has a somewhat similar site for lawyers) but it is one of the biggest players. Negative reviews on Yelp, particularly if a business has a small number of reviews, can really impact sales.

Last year Yelp’s CEO Jeremy Stoppelman responded to the article in the East Bay Express saying that claims of manipulation of reviews result from the fact that the businesses do not know how Yelp’s proprietary review algorithm works.

Yelp is hugely popular. It seems unlikely it would engage in wholesale extortion. It doesn’t need it. User generated content is the key to Web 2.0 and Generation X likes Yelp. Perhaps individual Yelp employees in their zeal to make a sale may have promised more, much more, than they could deliver.