Law 261: IP and Innovation Policy

Tiffany v. eBay: Post-trial briefs filed

2007-12-17T18:30:00.000-08:00

As we discussed in class, the combatants in the Tiffany v. eBay case, which may set an important precedent on the question of secondary trademark liability for Internet intermediaries, were set to file their post-trial briefs on December 7. They've now done so.

Here is Tiffany's brief, in which it characterizes eBay as a "rat's nest" of counterfeiters.

Here is eBay's brief, in which Tiffany is characterized as a lazy trademark owner trying to shift the entire burden of policing to eBay.

A ruling could come any time, and I'd predict sometime before the law clerks leave next summer.

UPDATE: Prof. Eric Goldman has a nice summary of some of the interesting facts from the briefs.

Tiffany v. eBay in the Times

2007-11-27T09:53:00.000-08:00

Just in time for our class on the subject this week, the New York Times has a story today about the Tiffany v. eBay trial that concluded last week. Unfortunately, closing briefs from both sides aren't due until December 7 -- I imagine those will lay out all the arguments in detail. But since it was a bench trial, and since both sides appear to want a ruling on the law, I think we'll get a published precedent out of this that will have an important impact on the law of contributory trademark infringement online (unlike a jury trial, which generates no written ruling).

Veoh v. UMG Suit Dismissed

2007-11-22T18:29:00.000-08:00

Veoh is a video hosting service (like YouTube). After being threatened by Universal Music Group (UMG), Veoh filed a preemptive declaratory judgment suit in San Diego seeking to clarify its qualification for the DMCA safe harbors.

On Nov. 15, the district court dismissed Veoh's lawsuit. Here's the heart of the court's reasoning:

Although Plaintiff's Complaint suggests disagreement between the parties, the nature and extent of the controversy has not been adequately defined to support federal jurisdiction. Plaintiff's Complaint generally discusses their video hosting operation, that Defendant owns unspecified copyrights, and that Defendant has made unspecified threats of copyright infringement litigation. From these general allegations, Plaintiff seeks a far-reaching declaratory judgment that it is not liable for infringing any of Defendant's rights and is entitled to the Section 512(c) safe harbor.

However, because Plaintiff does not reference any specific copyright, even by way of example, the relief requested would necessarily take the form of an advisory opinion. Succinctly, the Court cannot determine whether a safe harbor for copyright infringement exists without knowing which rights are at stake.

So it seems that copyright owners can hang the threat of litigation over the head of a start-up (which will likely interfere with its fund-raising efforts), but the start-up can't get a court to decide whether its business qualifies for the DMCA safe harbors. Tough spot.

The good (?) news for Veoh is that UMG ultimately filed its own suit a few weeks after Veoh filed, so we'll find out one way or another. But UMG got to pick the forum (Los Angeles, rather than San Diego).

The BoomShuffle Way

2007-11-15T15:31:00.000-08:00

BoomShuffle: Noninteractive Webcast? Something Else?

2007-11-14T02:56:00.001-08:00

OK, could someone please tell me how this is properly licensed?

BoomShuffle enables users to create 15-song "mixes" that can be embedded as a widget on any webpage (target: Facebook, bloggers, etc). There are restrictions that require that the songs "shuffle", that the listener cannot choose a particular track, and cannot skip more than a few tracks, and that they cannot have more than one artist represented. Does this qualify under the 114 statutory license, or does it require voluntary licenses from all the relevant rightsholders? It makes me dizzy to think about it.

This is a product of Snocap, founded by Shawn Fanning (who was the founder of the original Napster), and a company that has reinvented itself several times. For a while, they were going to be the "filtering+rights repository" for legit P2P services. Then they became the online store for myspace artists. Now this.

Read this article for a quick overview of how this works (the site doesn't make all this clear immediately).

I'm constantly amazed at the creativity of engineers and lawyers working in concert.

UPDATE: Apparently BoomShuffle isn't the only one trying this approach -- FineTune got there first. Their FAQ strongly suggests that they are relying on the 112/114 statutory licenses. I think I'll start class tomorrow by asking you all whether that's going to fly in court or not.

Royalties Set for Satellite Radio + TV Bundles

2007-11-14T02:11:00.000-08:00

As we discussed last week, the satellite radio services are covered by the 114 statutory license for sound recordings (because they are making digital transmissions), but abide by a lesser set of restrictions and are subject to a different statutory rate (because they can't count individual recipients, since they just have a one-way broadcast technology).

In 2005, XM Radio asked the CRB to set a new rate for a new service -- satellite radio bundled with satellite TV channels. As reported by the Broadcast Law Blog, the CRB just announced that the main parties (XM, SoundExchange, Sirius, MTV) reached a settlement and decided on 15% of revenues. This appears to be exactly twice what "existing services" (i.e., digital music services already being broadcast by cable companies, like MusicChoice) are required to pay. Why the difference? Perhaps because the satellite radio companies were afraid what the "willing buyer, willing seller" standard might have yielded if the CRB was forced to decide the issue? I don't know.

MP3Tunes Gets Sued by EMI

2007-11-12T11:29:00.000-08:00

Looks like the "music locker wars" have now officially begun. EMI has sued Michael Robertson, the founder of MP3Tunes.com. MP3Tunes.com offers both LockerSync and Sideload, which are both different takes on "music lockering." If it doesn't settle, it would be another test of the outer bounds of 512.

Note that Michael Robertson is one tough customer, having been sued by the major labels (for MP3.com) and Microsoft (for Lindows, now Linspire). He's got good lawyers, and knows how to run a company in a "minimize discovery costs" manner.

Kaleidescape Update

2007-11-06T11:12:00.000-08:00

As you may recall from class last week, Kaleidescape found a loophole in the DVD-CCA licenses that govern the DRM used on DVDs and built an impressive, expensive DVD jukebox product. DVD-CCA sued for contract breach (they had a license for the CSS keys, so DMCA circumvention was off the table), but lost at trial (they have appealed).

Now DVD-CCA is poised to amend the CSS license agreement to make Kaleidescape illegal. See my post today on EFF's Deep Links blog for details. As Monika pointed out, doesn't all of this raise antitrust concerns?

Qloud: SeeqPod for Facebook?

2007-11-04T11:25:00.000-08:00

From the Webware review:

For some reason, I had never heard of Qloud until getting a release yesterday about it celebrating the registering of more than a million users via its Facebook application, which launched three months ago. The service hooks up with your iTunes library and scrapes together any versions of the songs it can find hosted online, while taking advantage of your iTunes XML file to include such niceties as play counts and the last time you listened a song.

It manages to do this with a plug-in that installs itself on whatever machine your iTunes library resides in. It will periodically keep tabs on your iTunes XML file, which is the one that has all your track names and metadata for playlist organization, play counts, and song data. It then cross references this list with any legally hosted versions of the songs online, and will play them with an embedded player right in the app.

The company says that after installing the plug-in, it takes 15 to 20 minutes for your library to appear. My 50GB library managed to make it in about 12 minutes, and to my surprise, a great deal of it made the cut from metadata to music--although nearly every song was a video from YouTube.

I'm sure their copyright story is that they merely host information on behalf of users (i.e., metadata information from your iTunes library) and provide automated information location tools (i.e., links to places online that appear to be hosting the songs in your list). All safely within 512(c) and (d), their lawyers will say.

Wow. It's like a shared music locker, without the locker.

Anti-circumvention Instructions?

2007-11-03T12:34:00.000-07:00

Here's another mystery for you: when do instructions regarding activity that would violate section 1201(a)(1) themselves constitute "trafficking" prohibited by 1201(a)(2)? Consider this article on Wired's website, provocatively entitled "Cheat DVD Regional Encoding."

Does your legal analysis change when you read that this article is part of Wired's "How To Wiki," where content is contributed and edited by readers, rather then written by Wired reporters?

Anyone can contribute new items or edit an existing item. After you register, your user ID will be associated with information you post or modify. So don't put anything on the site that you don't want everyone to see. Want a How To that we haven't provided? Create a new page and ask for contributions.

For a discussion of anti-circumvention liability arising from linking to circumvention tools, you may consult Universal v. Corley, where the Second Circuit struggled to square 1201 with the First Amendment (not terribly successfully, in my view). The Court does not reach the question of whether instructions, alone, could ever violate 1201(a)(2).

Albumbase: hosting + links + index + reward

2007-11-02T12:06:00.000-07:00

Here's the new service I mentioned last night, Albumbase, which is premised on users uploading links to complete albums that are hosted elsewhere (generally on free hosting sites). Users are rewarded with cash prizes if they upload enough links. All this is not obvious from the site itself, but Wired has a description.

Why Startups Should See Lawyers ASAP

2007-10-31T17:03:00.000-07:00

Some may be interested in an essay posted by Alex Macgillivray, a senior lawyer for Google and recent guest in our class, to his personal blog. In it, he explains why start-ups need to secure competent legal counsel as early in their development as possible:

No one wants to have invested in a company bankrupted by legal bills. The people doing the deal are also likely to be the ones that will have to clean up your mess. No-one likes cleaning up messes. It is not sexy work and it is much easier to prevent a mess than clean it up afterwards.

Yet Another Music Lockering Site: Ezmo

2007-10-30T13:45:00.000-07:00

This is one called Ezmo, as described by LA Times reporter Jon Healey. This one permits up to 10 friends to listen to music that you upload. How does it compare to LaLa.com, LockerSync, and the others mentioned in earlier blog posts? You decide...

TiVoToGo Arrives for CableCard TiVos

2007-10-25T08:38:00.000-07:00

As you'll read for next week, TiVo was not able to offer its "TiVoToGo" feature for its latest TiVo units, because those units include a "CableCard" -- a digital tuner for cable access that includes numerous DRM requirements. So TiVo had to ask permission before deploying the TiVoToGo feature on these units.

Well, TiVo got permission and has just rolled out the feature in its latest software update to TiVo units in the field (aside: consider what the ability to forcibly "update" all existing TiVo units means for vicarious liability), according to PVR Blog. Although files that are transferred from the TiVo to a computer are supposed to be protected, according to the early reviews, the DRM has already been broken, allowing users to transfer the files in simple MPEG2 format.

LaLa and the Music Quagmire

2007-10-23T09:20:00.001-07:00

Just to start us thinking about the digital music licensing quagmire, which we'll enter in a few weeks, consider LaLa.com's new plan: let people listen to anything they like (streaming) for free, in order to lure them into buying it (downloads, CDs, vinyl). This shouldn't be controversial -- it's the online equivalent of what music retailers have been doing for decades (Amoeba Music, for example, allow customers to listen to any CD in the store).

But since we're online, the rules are a hopeless mess, putting LaLa into the position of having to negotiate for permission to do this, potentially with every record label (and the international issues will doubtless create even more problems).

Compare this to LaLa.com's other business -- facilitating CD swaps by mail in exchange for a $1.75 fee. Thanks to the first sale doctrine (Section 109 of the Copyright Act), LaLa.com didn't have to ask anyone's permission to launch this service.

Susan Crawford Explains the Internet

2007-10-22T16:49:00.000-07:00

In a recent post, Prof. Susan Crawford comments on Comcast's recently uncovered practice of interfering with certain file sharing protocols (including Bit Torrent and gnutella). In the course of her post, she does a delightful job describing what the Internet actually is (a better job than I did last week):

... When you go online and click a link, what you’re doing is sending packets (think individual pages taken from a long, handwritten letter) to a machine connected to the internet. What we call “the internet” is a very simple agreement: machines agree to chunk things into packets and label those packets with unique numbers (think return address and sender’s address). Then those packets travel the best available route to the machine they’re addressed to, and that machine reassembles them.

This agreement to chunk things into packets that self-describe their destination (at a unique global address) is known as TCP/IP. IP, or Internet Protocol, is the addressing scheme — the numbers.

IP doesn’t do anything about accuracy - it doesn’t provide any way to check that all the packets have gotten where they’re supposed to go or that they’re in the right order. That job (roughly speaking) is carried out by the TCP part of this — the Transmission Control Protocol. TCP receives a stream of information from an application (say, your web browser) and divides it into packets. It gives each packet a sequence number. TCP then hands packets to the Internet Protocol for delivery through the network. TCP also opens a “window” for the number of packets that will be sent out - you wouldn’t want to send a zillion packets without acknowledgement that they had been received.

The TCP module at the receiving end of the communication does this acknowledgement job, noting that a particular number of packets have been successfully received. All of this is done very politely, quickly, and electronically — the conversation between the home TCP and the remote TCP is established, an acknowledgement is received, the conversation begins, and sequences of packets are sent. If packets are lost along the way, they’re retransmitted. When an endpoint wants to stop, it lets the other endpoint know that it’s done. ...

So, when someone asks you what the Internet is, you can answer "it's a network of interconnected computer that speak a common language, a language called TCP/IP."

"UGC Principles" Announced

2007-10-19T16:03:00.000-07:00

Disney, Viacom, CBS, NBC Universal, Fox, Microsoft, MySpace (a unit of Fox), Veoh, and Soapbox (a unit of Microsoft) have announced a set of "UGC Principles" -- guidelines that, if met by online services that host user generated content ("UGC"), would prevent such services from being sued. Prominently absent from the list of endorsers are Google (YouTube) and Yahoo.

It's interesting to contrast these principles with the requirements of the DMCA Safe Harbors. What do these sorts of privately negotiated principles tell us about the Safe Harbors? Is it evidence of their success, or their failure? (There's a paper topic in here somewhere.)

SeeqPod Embed

2007-10-18T17:22:00.001-07:00

SeeqPod Music beta - Playable Search

Possible "R" Topic: Foreign IP Claims in US Court

2007-10-17T15:57:00.000-07:00

As I mentioned in class last week, there is an interesting set of questions that arises when a work that is in the public domain in the US is posted on the Internet. If that work is not in the public domain abroad, can the person who posted it in the US be held liable for infringement of that foreign copyright? Let's assume the alleged infringer has no assets in the foreign jurisdiction -- can the foreign copyright owner sue in US court for infringements that occur overseas?

The case law is not entirely clear, but there are cases that suggest that such a lawsuit can be brought in US federal court, asking it to apply foreign copyright law to foreign infringements, reasoning that such infringements are "transitory torts" over which federal courts can assert diversity jurisdiction.

Here's the interesting issue that I don't believe has been written about: does CDA 230 bar those claims? This issue is currently being litigated (for the first time, I believe) in an EFF case called Sapient v. Geller. There is definitely an "R" paper in all this: what are the merits of the "transitory tort" theory, how does it interact with CDA 230, and what are the implications for the public domain?

Inducement and Injunctions: MGM v. Grokster

2007-10-17T15:10:00.000-07:00

The district court in MGM v. Grokster issued its long-awaited permanent injunction order yesterday. The opinion is very interesting, with Judge Wilson ordering StreamCast to make use of "filtering" technology to prevent further infringements by Morpheus users. The ruling attempts to answer the question of how courts should craft injunctions in inducement cases, especially where free standing software is at issue (rather than centralized services).

There are the seeds for an interesting "R" paper in this order, examining what the proper scope for injunctive relief should be in these kinds of cases. And what about futility -- the Court can only bind StreamCast, and can't control how other gnutella software works. In addition, to what extent is this a side show, in light of the crushing threat of statutory damages?

YouTube Adds Copyright Filter

2007-10-16T00:29:00.000-07:00

For any who missed today's news, YouTube has announced "video identification" technology that is aimed at identifying copyrighted works that are uploaded without authorization. Copyright owners will be required to upload content to Google, which will then create a "fingerprint" of the content. Rightsholders will be able to choose one of three options when the filter detects a match: block, track, or monetize.

I'm sure Google will maintain that this is a voluntary effort, above and beyond the requirements of the DMCA safe harbors. But now that Google has taken this step, it is very likely that Yahoo and Microsoft and most other major commercial video hosting sites will feel the pressure to add similar features.

What does this development say about the DMCA safe harbor regime? Does this mean that private ordering is working? Has the DMCA struck the perfect balance -- protections adequate to encourage innovation for early stage companies, but not so robust as to permit these companies to flout copyright when they have attained a certain size? But what does this mean for late-comers to these innovation markets -- is the price for entering the video hosting business the development of a sophisticated video filtering system? If so, then this business belongs to the Googles/Yahoos/Microsofts now, and these copyright enforcement systems have become barriers to entry for competitors. But perhaps that's the right outcome, as it may encourage strong incentives to develop new, less expensive video filtering tools. And if these systems placate rightsholders, does that mean that future litigation will be limited to "renegade" hosting services that refuse to put these systems in place? What impact would a spate of these cases have for the shape of 512(c) and secondary liability jurisprudence?

Anyhow, I suspect there is an "R" paper in there somewhere.

Wuala: File Hosting 2.0?

2007-10-16T00:00:00.000-07:00

In light of last week's discussion of the 512(c) DMCA safe harbor for hosting, consider Wuala, a Swiss company that offers free file hosting services. Here's how it works: you designate up to 1gb of files to store "in the cloud", your computer encrypts and chops up the files, and the pieces are distributed for redundant storage on the computers of other Wuala users. This is accomplished (I assume) by combining a P2P software client with a central Wuala server to distribute chunks and keep track of which users are currently connected to the Internet (like all P2P systems, redundancy is critical as resources will come and go as users turn their computers on and off).

Here's an interesting "W" topic: compare this approach to the more traditional "free hosting" services online, like Rapidshare, Box.net, and YouSendIt (these services are widely used for music sharing). Does 512(c) discriminate between pure server-style hosting and Wuala's next-generation P2P approach? What about a completely client-side solution, with no central server, like AllPeers? Should the law distinguish between these different approaches to solving the same problem?

Sometimes the DMCA Safe Harbor Doesn't Fit

2007-10-11T10:19:00.001-07:00

Consider this:

In March 2006, Cablevision announced its intention to deploy a "remote DVR" to its subscribers. Rather than recording cable programming on hard drives contained inside a "set-top DVR" located in the subscriber's home (which is the typical solution offered by both TiVo and cable-company provided DVRs), Cablevision would allow the subscriber to record the program on hard drives maintained in Cablevision's own central offices. To the subscriber, the remote DVR would work just like the traditional set-top DVR -- the subscriber would choose what to record, when to watch, and when to delete programs.

The motion picture and television industries responded by suing Cablevision for copyright infringement. Although the Supreme Court in its famous "Betamax" decision had ruled that time-shifting by consumers was a noninfringing fair use, the plaintiff argued that Cablevision, not its subscribers, were making the copies. Therefore, argued the plaintiffs, Cablevision was a direct infringer of copyright, not able to rely on the same defenses that Sony used to defend its Betamax VCR before the Supreme Court.

On March 22, 2007, the district court in New York agreed with the plaintiffs and found that Cablevision would itself directly infringe copyrights if it launched the remote DVR service. Cablevision has appealed to the Second Circuit Court of Appeals. EFF joined a host of other public interest and industry groups in supporting Cablevision in the appeal.

Now some may say, "Hey, Cablevision is just storing information on behalf of users, so why isn't this covered by 512(c)?" Answer: imagine implementing "notice-and-takedown" for a product like this. Customers set their "remote DVR" to record the latest episode of Mad Men, only to find that it was "taken down" by a notice from the copyright owner. Yikes, that's not going to work for this product.

So, instead, you have litigation on the underlying infringement question. This case turns squarely on an issue I haven't had time to cover, namely, the interesting doctrine that there must be some "volitional act" by the defendant before direct infringement can be found (RTC v. Netcom and Costar v. Loopnet are the leading cases). This doctrine is in some tension with the traditional rule that direct infringement is a strict liability tort (i.e., it doesn't matter whether you knew you were infringing, which means the bookstore is automatically responsible for every infringement contained between the covers of every book it sells).

There's plenty of good writing topics here. For a preview of the issues, you can start by reading the briefs in the Cablevision case.

Sling Media Acquired by Echostar

2007-09-25T11:44:00.000-07:00

Sling Media distributes the Slingbox, a family of products that lets you send any video source from your home to you over the Internet. You attach your Slingbox to your TiVo, then to your broadband Internet connection, and suddenly you can access your TiVo recordings on your laptop or cell phone. Believe me, to see this technology is to want it.

Apparently Echostar has recognized this, in light of their just-announced $380 million acquisition of Sling Media.

Take a look at the product features described on the Sling website and consider which ones were dictated by secondary liability considerations. For example, I believe only one person at a time can watch (no sharing!) and programs cannot be "recorded" on the receiving end. Despite their efforts to appease rightsholders, Sling has been threatened from time to time. But they have escaped litigation and now have been absorbed by a very large company with deep pockets and strong Hollywood ties.

And remember that nearly all of these "fair use enabling" technologies depend on digitizing analog video outputs (aka using "the analog hole"). Digital outputs are increasingly encumbered with DRM, which adds a layer of DMCA liability to the mix.

This Week's Reading: Applications of Copyright Secondary Liability

2007-09-25T11:04:00.000-07:00

I hear Coursework is down, yet again. So here is the reading for this week's class, along with links.

1. Perfect 10 v. VISA, 2007 WL 1892885 (9th Cir. July 3, 2007) (majority and dissent)
2. Perfect 10 v. Amazon.com, 487 F.3d 701 (9th Cir. 2007) (sections I and IV)
3. MGM v. Grokster, 454 F.Supp.2d 966 (C.D. Cal. 2006) (section V)
4. MGM v. Grokster, (C.D. Cal. Feb. 14, 2007 unpublished order)

Our guest for the last hour will be David Hayes, a senior partner at Fenwick & West and one of the top IP counseling lawyers in Silicon Valley. His clients have included, among others, the original Napster, Apple, Google, Sling Media, and ReplayTV.

"W" Writing Topic: PhoneZoo or Xingtones?

2007-09-24T15:55:00.001-07:00

Shifting gears from online music lockers to ringtones, what do you make of these two different ways to skin the ringtone cat: PhoneZoo (upload sound file of your choice, edit, make results available for download to your phone) and Xingtone (free standing application that allows you to turn any sound file into a ringtone).

If a potential investor came to you to ask your legal opinion regarding these alternative business models, what advice would you give? What are the relevant risks and benefits of these two different approaches to ringtone creation? Would a hybrid model (client-side editor, server-side hosting and sharing) be more or less attractive from a copyright liability point of view?

More Music Lockers

2007-09-20T12:02:00.000-07:00

I mentioned LockerSync already, but I thought folks might be interested in a number of other "music lockering" services that I discovered recently: Anywhere.FM, LaLa.com, and Deezer. I'm sure there are many others, each with a slightly different mix of features (particularly whether you can share your locker with others). iMeem was recently sued for doing something similar.

This is an old idea on the Internet -- MyPlay was an early category leader, until it was displaced by MP3.com's "BeamIt" service, which dispensed with the tedium of having to upload your collection. MP3.com was then sued out of existence by the record labels.

By the time we get through the DMCA safe harbors, you should understand what distinguishes all these services (which, to users, look very similar).

"W" Paper Topic: SeeqPod

2007-09-20T10:53:00.000-07:00

Here's a business that is redolent with copyright aromas: SeeqPod. Billed as "playable search," it's a search engine optimized for finding (and playing) music found around the web. You search for music, then arrange results in a playlist, where they will all play one after the other without needing further attention from you. In essence, you can use this to create an on-demand "interactive webcast" (but SeeqPod doesn't pay any royalties to anyone).

There are a variety of ways you could approach this in a client counseling memo. One possibility would be to imagine that you've been retained by a venture capitalist to evaluate the legal risk for SeeqPod as compared to some similar competitors (take a look at The Hype Machine as one potential competitor). Evaluate SeeqPod's vulnerability against other similar companies in the same field, and identify the key factual questions that the VC should be asking when undertaking "due diligence" on the company.

And don't miss SeeqPod's blog, which includes this interesting revelation:

We realize that even an intelligent algorithm needs a human touch. We’ve just hired a team of musicologists and music fans to interact with our algorithims. They will be looking at what our engine turns up, analyzing the results and making connections to reveal better discoveries. Have you searched for Discoveries for your favorite song and found that our engine comes up short? Have you found a favorite new artist using SeeqPod’s Discoveries? We want to know about it: feedback@seeqpod.com.

eBay Sued for TM Infringement (Again)

2007-09-18T16:01:00.000-07:00

We won't be getting to trademark law issues for some time, but intermediaries who facilitate sales of physical goods (some of which may be counterfeit) are feeling the heat. eBay has already been sued by Tiffany's and LVMH Moet Hennessy Louis Vuitton on trademark theories. Now, according to Reuters, L'Oreal has joined the fun:

L'Oreal, the world's largest cosmetics group, has launched legal action against eBay, alleging the online auctioneer does not do enough to combat the sale of counterfeits, the company said on Monday.

"W" Paper Topic: Remix Tools Go Online

2007-09-18T11:30:00.000-07:00

Denise Howell gives an interesting report from the TechCrunch40 conference, where she highlights the copyright issues raised by the new generation of "user-generated content" sites (StoryBlender, AOL's BlueString, musicshake). These sites move edit/remix tools onto the web, where users can use them to make their own works. How should these sites be designed to fit within the DMCA safe harbors (which we'll be getting to soon)?

Some very competitively interesting Web companies are being launched and/or featured today and tomorrow at TechCrunch40. In the wrap-up portion of the Community Collaboration session, former Napster executive Don Dodge was quick to note that many of these companies depend on user submissions and uploads to populate their services, and they need to be managing the IP considerations on the front end.

Have a good flyback week, see you next week!

Inducing with Words Alone?

2007-09-14T10:04:00.000-07:00

Do the secondary liability theories we've discussed (contributory, vicarious, inducement) reach instructions, standing alone? What if the instructions are part of a news story, posted by an advertising supported news site? Consider this article, posted today by CNET:

NBC's recent withdraw from the iTunes store leaves the millions of users of Apple iPods without a legitimate way to purchase and watch NBC's content. Could this be the push that brings easy-to-use 'piracy' to the masses? This article discusses the issues, and then provides step-by-step instructions to setup a computer to automatically download any of hundreds of TV shows as soon as they are broadcast and put online.

Can copyright's secondary liability doctrines reach this? If so, does the First Amendment have something to say about it?

[Note: this could make a good paper topic -- I'm not aware of papers addressing whether instructions alone can be the basis for secondary liability in copyright.]

"W" Paper Topic: Simplify Media or LockerSync

2007-09-12T17:53:00.000-07:00

Here's a company that doubtless called in some legal advice before launching its product: Simplify Media. Their software allows you to access your iTunes library at home from any Internet-connected computer. And you friends can access it, too.

In contrast, consider LockerSync, the new offering from Michael Robertson's MP3Tunes.com (here's an article that provides some context on Mr. Robertson and LockerSync). LockerSync also promises remote access to your entire music library (as well as a backup), but this time all the music is hosted by MP3Tunes.com.

Over the next several weeks, you may want to keep these two models in mind as you do your reading. An interesting "W" paper topic might be to compare and contrast these two approaches for a hypothetical client who is considering entering this market segment.

[UPDATE: And now there is AOL's announcement of the upcoming revision to Winamp, which will apparently also enable you to listen to your music collection remotely.]

Reading for Tomorrow (9/13)

2007-09-12T17:01:00.000-07:00

I'm told that Coursework is down, so in hopes that some will check here, I've posted the reading for tomorrow's class:

1. Sony v. Universal City Studios, 464 U.S. 417 (1984) (sections II and III of majority opinion)

2. A&M Records v. Napster, 239 F.3d 1004 (9th Cir. 2001) (sections I, II, IV, V)

3. In re Aimster, 334 F.3d 643 (7th Cir. 2003)

4. MGM v. Grokster, 545 U.S. 913 (2005) (majority opinion and Section II of Breyer’s concurrence)

5. Wikipedia entry for Bit Torrent.

Willful Infringement

2007-09-10T18:52:00.000-07:00

Shireen asked what makes you a "willful" copyright infringer for purposes of the increased ceiling for statutory damages (from $30,000 to $150,000 per work infringed). I looked it up in Prof. Goldstein's 4 volume copyright law treatise (there are three major copyright law treatises, each taking different approaches to the topic, by Goldstein, Nimmer, and Patry). Here's what he has to say:

[W]illfulness will include situations in which the defendant knew, had reason to know, or recklessly disregarded the fact, that its conduct constituted copyright infringement. As one court observed, "in determining whether the violation was willful, the trier of fact may consider evidence that the defendant ignored the plaintiff's notices about copyright protection, did not seek advice of an attorney, and passed the matter off as a nuisance."

See 2 Goldstein on Copyright sec. 14.2.1.2.

"R" Paper Topic: The Future of First Sale?

2007-09-10T16:54:00.000-07:00

I mentioned in our first class that the copyright exception known as "first sale" (aka "exhaustion," set out in Section 109 of the Copyright Act) is the reason that libraries and used bookstores are legal, despite the exclusive distribution right.

Of course, in the digital age, copyrighted works are now increasingly turning into hybrids of service and product. Consider a recent videogame entitled "The Ship," where the combination of technical measures (presumably backed by the DMCA) and license agreements conspire to eliminate secondary markets. According to the game's FAQ:

Can I buy the game second hand?

No, you cannot buy the game second hand. The game will be registered to the person's Steam account who first bought the product and cannot be registered to a new Steam account. This means that if you buy the game second hand you will not be able to play the game. Please do not buy the game second hand as we cannot assist you with this problem and we cannot give you a new CD key. Valve will also not offer you a new CD key. Our best advice if you have already purchased the game is to return it to the shop where you bought the game and ask for your money back, explaining that the game is unplayable as a second hand product.

This is also the dilemma that faces music fans who purchase DRM-restricted music from iTunes. One customer tried selling off an iTunes download on eBay in 2003, only to face a host of difficulties.

The consequences of eliminating secondary markets in videogames and digital music are not entirely obvious. It might be interesting to examine how widespread this is, how customers view it, and whether this trend is a cause for concern. Many economists would argue that there is little here to worry about. I'm not so sure.

Note: there has been quite a bit written on this general topic, but I think there is more to be said.

iPod Video Output Locked to "Unauthorized" Accessories

2007-09-07T18:24:00.000-07:00

The latest iPods will not output video unless they are docked with "authorized" accessories.

Apple may be playing a little DMCA game here, trying to see if they can use a dash of "DRM" to lock out third part competitors and force more iPod accessory vendors into its "Made for iPod" licensing program (where Apple gets 10% of the wholesale price of licensed accessories). The iPod accessories market reportedly tops $2 billion in annual sales.

This is just one example of the use of DRM + DMCA to reduce competition, rather than to ward off "piracy" of entertainment products.

More in my post at EFF's Deep Links blog. For many more examples of anti-competive uses of DRM + DMCA, see EFF's "Unintended Consequences" report, which collects reported stories from the past 7 years.

DIVX Sues UMG, Arguing DMCA Safe Harbor

2007-09-07T09:00:00.000-07:00

Universal Music Group, the world's largest record label (~30% of the market) has been threatening various video hosting sites over the use of music in user-posted videos. A few weeks ago, Veoh preemptively filed a declaratory judgment action against UMG, to establish that it complies with the DMCA safe harbors. UMG has counter-sued. Now DIVX, which runs a site called "Stage 6," has also preemptively sued UMG:

DivX, Inc. DIVX announced today that it has filed a lawsuit in Federal District Court to protect its Stage6 online video hosting service from unreasonable threats and demands made by Universal Music Group ("UMG"). DivX seeks the court's affirmation that UMG's claims of copyright infringement are without merit and that DivX is in full compliance with the requirements of the Digital Millennium Copyright Act ("DMCA").

UMG has reportedly struck an interesting license with YouTube, where it retains the option to either take down videos that use UMG music, or to share in the ad revenues generated by the video. The deal presumably included a big up-front payment to UMG. Apparently, UMG is now going to other hosting sites, demanding similar terms, and the smaller sites appear to be balking.

If you were the in-house counsel for a company like DIVX or Veoh, what would you do? If you agree to UMG's terms, you can be sure the other labels will soon be demanding payments, as well. At the same time, many of your competitors will continue to operate without licenses.

iToner: iPhone Ringtone Software

2007-09-06T21:43:00.000-07:00

Earlier this week, Apple announced that it would begin allowing iPhone users to create custom music ringtones out of certain songs purchased from the iTunes store (for an additional 99 cent fee over and above the cost of purchasing the song).

Just a few days before the announcement, however, Ambrosia software announced iToner, a $15 piece of software that allows iPhone users to use any AAC or MP3 file as a ringtone, without having to pay any additional fees.

Apparently, the latest version of Apple's iTunes software now automatically erases all iToner ringtones each time it syncs an iPhone. Ambrosia is reportedly working on a "fix" that will preserve your iToner ringtones.

And so it begins. Pay special attention to the screenshots Ambrosia uses in describing how the product works and instructing users how to use it.

Is it Legal to Unlock Your iPhone?

2007-09-06T21:38:00.000-07:00

The best legal analysis of this question was done by Jennifer Granick in her WIRED column.

In 2006, with the assistance of several Stanford Law School students, she successfully convinced the Copyright Office to issue a DMCA exception for phone unlocking. Nevertheless, there are numerous complex issues remaining, as described in her article.

BTW, Jennifer recently left Stanford Law School to join EFF.

"R" Paper Topic: Statutory Damages

2007-09-06T13:34:00.002-07:00

What's up with statutory damages?

Statutory damages may have a chilling effect on certain kinds of innovators, particularly where secondary liability is involved. What were the policy goals that originally motivated the adoption of statutory damages in U.S. copyright law? Do they still obtain today? If not, do they serve other important policy goals? Do/should courts have the authority to mitigate their sting in particular cases? How do statutory damages interact with other copyright remedies?

Other relevant developments: Rep. Rick Boucher (D-Va) has introduced legislation (HR 1201) that would eliminate statutory damages in secondary liability cases in certain circumstances.

NOTE: Stephanie has put dibs on this topic.

"R" Paper Topic: Does the DMCA Enable New Business Models?

2007-09-06T13:34:00.001-07:00

During the legislative debates leading up to the passage of the anti-circumvention provisions of the DMCA, advocates for the measure argued that legal protection for TPMs was necessary to enable new business models that rely on market segmentation. That argument has remained a popular one, echoed in both mainstream media accounts justifying the "necessity" of DRM (see, e.g., Jon Healey of the LA Times) and in scholarly accounts defending the anti-circumvention provisions from critics (see, e.g., Jane Ginsburg of Columbia Law School).

Has the argument been borne out by 9 years of experience? How would we evaluate the argument? What empirical evidence would be necessary?

My instincts tell me that there are some serious flaws with this argument. First, look at the DVD market. Despite the widespread availability of DVD copying technology, the DVD market has remained robust, suggesting that DRM is not a relevant "enabler" in that market. Second, just because a segmented market exists with DRM does not mean that it wouldn't exist anyway without DRM. In other words, how can we know whether a subscription service like Rhapsody "needs" DRM + DMCA to succeed, or whether the segmented market would exist even without DRM + DMCA? How do you empirically evaluate the counter-factual of what would be possible in a world without the DMCA?

Relevant resources: EFF's 2006 reply comments to the Copyright Office DMCA rule-making regarding the DVD market.

Alienware High Definition Media Server

2007-09-06T13:24:00.000-07:00

Alienware has just announced a HD home media server:

The ultimate media server for the digital home of tomorrow, Alienware's new HD Media Server comes loaded with up to four terabytes of hot-swappable hard drive storage. The system enables the recording and playing back of high definition content at up to 1080p via an HDMI output, supports internal cable card (OCUR), and features a Dolby Digital 7.1 preamp output.

What is this product for? Remember, according to the MPAA, ripping DVDs violates that DMCA (even for personal use purposes). Ditto for all HD pre-recorded media. I suppose you could use it only to record the HD broadcasts of Monday Night Football and other broadcast content (HBO content will likely have mechanisms to restrict copying). At the same time, there is plenty of free software out there that enables DVD ripping. And plenty more that allows unauthorized downloading of HD movies ripped from optical disc.

So every installer who sells one of these megabuck units will have to answer the question: "you mean to tell me I can't copy my DVDs/HD-DVDs onto this thing?" How do you think Alienware will answer these questions? Its sales force? Its customer service reps? What about the independent installers who are front-line with the customers?

Secondary copyright liability? DMCA circumvention liability? What's the best legal strategy for a company like Alienware? Discuss.

First Post

2007-09-06T13:15:00.000-07:00

Welcome to the blog for Stanford Law School's Law 261: IP and Innovation Policy. I will be posting interesting items that are relevant to the course, as well as ideas for paper topics. I encourage students to contribute additional ideas in the comments, or by simply emailing them to me.