TechLaw

If file swapping tops Hollywood list of copyright woes, skirmishes with service providers over portability of content is fast becoming a close second. Companies responding to consumer demand for simple ways to shuttle lawfully acquired content between one device and another have come up with ingeniuous solutions that sometimes sidestep established licensing models.

But content owners got an early Christmas gift from the Librarian of Congress. The Librarian addressed space shifting in his third triennial rulemaking on proposed exemptions to the Digital Millennium Copyright Act. The Librarian rejected a proposal that would have permitted consumers to escape DMCA liability for bypassing security measures that prevent them from moving lawfully purchased content between devices.

The Librarian endorsed the view of the Register of Copyrights, who concluded that "the reproduction of those works onto new devices is an infringement of the exclusive reproduction right unless some exemption or defense is applicable."

Hollywood is hard at work trying to keep the portability issue in check. The recording industry has sued XM Radio over a portable device that allows users to save songs played over the program stream. Several cable networks have sued Cablevision over a virtual DVR service that allows consumers to save programs to a remote server. And TiVo has disabled its TiVoToGo feature (which allows subscribers to easily move content between a PC and their TiVo) on its new, HD set top box. EFF conjectures that this came about in response to pressure from Hollywood over piracy concerns.

Now, fights over portability are moving to a new frontier... video sharing sites, such as YouTube and Google Video. The content of these sites are ideally suited for portable devices. The modest file size of the video clips combined with their short duration make them great filler for down time while commuting. So, it was natural enough that a few clever people would come up with a way to peel the videos off the Internet and onto their portable media players.

One such workaround, created by Michael Arrington of TechCrunch, prompted a cease and desist letter from YouTube. The video sharing site alleged that the software tool violated its terms of use (which, according to YouTube, forbids downloading of content), tortiously interfered with its business relationships, and amounted to an unfair business practice.

YouTube elaborated in its letter that "[d]ue to Techcrunches video download tool, content creators and owners are less likely to upload or otherwise license content to YouTube due to their fear that the content can and will be copied and downloaded against their will."

Perhaps. But it is hard to see how that fear would not already be agitated by language in the YouTube Terms of Service that grants to each user a non-exclusive license "to use, reproduce, distribute, prepare derivative works of, display and perform such User Submissions as permitted through the functionality of the Website and under these Terms of Service."

Equally likely, services such as YouTube want to control migration of their content to other devices not just because of copyright infringement concerns but also so they can license user-created content to service providers. The New York Times has reported that YouTube is expected to announce a deal to provide select video clips for use on Verizon cell phones, through Verizon's Vcast network.

Of course, licensing deals like this depend on YouTube's ability to prevent users from easily porting the content to their cell phones and media players on their own.

Just like with P2P, it's all about distribution.

When the 110th Congress gets underway next year, it is a good bet that Rep. Rick Boucher will reintroduce his digital fair use bill. Hollywood has long resisted the measure, which excuses from DMCA liability the circumvention of digital locks where the underlying use is noninfringing. Proponents of the bill have often cited consumers' desire to make backup copies of fragile CDs and DVDs as an example of a legitimate use that would be tolerated by the legislation.

That example came under scrutiny in the Librarian's Nov. 22 rulemaking, a triennial review process in which the Library of Congress considers proposals for niche exemptions to the DMCA. In rejecting a proposed exemption for backup copies, the Librarian emphasized the risk of piracy inherent in an any such exemption:

The unauthorized reproduction of DVDs is already a critical problem facing the motion picture industry. Creating an exemption to satisfy the concern that a DVD may become damaged would sanction widespread circumvention to facilitate reproduction for works that are currently functioning properly.

The Librarian further stated that the Register of Copyrights found "no authority" (apart from a provision dealing with software) that supported the proposition that making backup copies is a fair use.

Of course, Boucher's bill does not rise or fall on this one example. But the Librarian's remarks do diminish the force of an argument that has proven somewhat effective in rallying support for the digital fair use bill.

What do you get when you cross reverse consumer confusion with initial interest confusion? Utube.com.

A recent trademark dispute involving the YouTube video aggregation service could be the false dawn of the reverse initial interest confusion doctrine.

Universal Tube & Rollform Equipment Corp. sells used pipe-making equipment, which it promotes on its site, utube.com. It has held the domain since 1996. But recently, tens of thousands of consumers seeking out YouTube have inundated utube.com, forcing the Ohio-based company to incur significantly higher Web hosting fees to keep the site from crashing. Universal Tube sued YouTube under various trademark theories as well as trespass and nuisance.

Professor Edward Lee of the Moritz College of Law at Ohio State University has an interesting post on the dispute at his blog on the video sharing industry. He argues that the plaintiff is making what is essentially a reverse initial interest confusion argument: a senior user's Web site receives a greater number of visitors because of the popularity of the junior user's mark. Given that the Sixth Circuit does not recognize the initial interest confusion doctrine as an independent basis for trademark infringement, this novel twist to the doctrine would be a stretch, Lee argues.

Might a common law dilution claim fare better? Universal Tube alleged one under Ohio common law. Lee mentioned in a follow-up post that he has not come across an Ohio case that recognizes common law dilution. Our own research revealed only one reported case that addresses the subject, United States Playing Card Co. v. Bicycle Club, No. C-960265, 1997 Ohio App. LEXIS 2143 (Ohio Ct. App. May 21, 1997). There, the plaintiff brought a trademark dilution claim "grounded in Ohio common law," in the words of the court. But the court never reached the merits, determining that the claim was time barred.

Dilution has the advantage of getting Universal Tube out of having to prove likelihood of confusion, a tough task given the disparity between used tube-making equipment and a site that hosts home videos. Then again, trying to establish "utube" as highly distinctive for a company that sells tube-making machinery is no cake walk either.

What showing must a plaintiff in an online defamation case make to unmask the identity of an anonymous poster? Two district courts have taken up that question in recent months and have adopted different standards: one applying summary judgment, the other using failure to state a claim.

Unlike plaintiffs in copyright disputes, who can rely upon the DMCA subpoena procedure, plaintiffs alleging defamation must contend with unsettled common law standards if they want to issue a subpoena to force a service provider to reveal the identity of an anonymous poster.

This past July, the U.S. District Court for the District of Arizona held that the First Amendment interests of anonymous posters require that the plaintiff present sufficient facts for its claim to be able to withstand a theoretical motion for summary judgment. Best Western Int'l Inc. v. Doe, 2006 U.S. Dist LEXIS 56014, No. 06-1537 (D. Ariz. July 25, 2006). It drew its inspiration from the Delaware Supreme Court, which elaborated that "the defamation plaintiff must introduce evidence creating a genuine issue of material fact for all elements of the claim that are within the plaintiff's control." Doe No. 1 v. Cahill, 884 A.2d 451, 465 (Del. 2005).

But more recently, the district court in Massachusetts questioned the usefulness of that approach. McMann v. Doe, No. 06-11825 (D. Mass. Oct. 31, 2006). The Cahill court's decision to not require a defamation plaintiff to show actual malice (because it involves facts not known to the plaintiff) creates a problem, the court observed:

Under this approach, a public figure could unmask anonymous critics without meeting an essential step in the prima facie case, a showing of actual malice. At the same time, requiring a preliminary showing of fault would mean no subpoenas would ever issue, and character assassins would be free to trumpet harmful lies from all corners of the internet.

Judge Joseph Tauro concluded that while there are "problems with the mechanics of a summary judgment test," it is ems.bna.comtheless "reasonable to apply some sort of a screen to the plainitff's claim before authorizing the subpoena."

The "screen" Tauro applied was the plaintiff's failure to state a claim. The alleged defamation consisted of statements that the plaintiff "turned lives upside down" and the suggestion "to be afraid, very afraid" of him. Tauro found that these statements were "bland, vague, and subjective" and amounted to nothing more than mere opinion; neither of them support a claim for defamation.

The court declined to authorize the subpoena.

The Czech Arbitration Court, the alternative dispute resolution provider for domain name disputes in the .eu top-level domain, is looking for qualified panelists to support its bid to become an ADR provider under ICANN's Uniform Domain Name Dispute Resolution Policy. Screening is being handled by the Central European Advisory Group, a Prague-based law firm. Statements of interest, along with a curriculum vitae, should be sent to CEAG at ceag@ceag.cz, with "UDRP" in the subject line.

Just days before a scheduled hearing on a fully-briefed motion for summary judgment, the Northern District of California issues an order questioning whether it has jurisdiction to adjudicate a class action dispute between Google and its advertisers. CLRB Hanson Indus. LLC v. Google Inc., No. C 05-03649 (N.D. Cal. Oct. 30, 2006).

The court expressed doubt about whether the dollar value of the individual claims -- less than $5 in the case of one of the named plaintiffs -- could possibly meet the $5,000,000 threshold for federal jurisdiction of class action lawsuits under the Class Action Fairness Act of 2005.

"If such claims are typical of other class members, even with a class comprised of thousands, the amount in controversy requirement is not satisfied," said Judge Elizabeth Garcia, who ordered the parties to show cause why the case should not be remanded to state court.

The class action lawsuit alleges that Google billed advertisers for clicks that exceed the "daily budget amount" specified by the advertiser. CLRB Hanson originally filed the case in state court, but then Google removed it to the Northern District of California. CLRB did not contest the removal.

As far as we know, Internet access providers don't guarantee uninterrupted or quality service. Here in the Washington, D.C., area, the most subscribers can expect is a modest credit on the next month's bill when service is entirely unavailable for more than 24 hours.

Apparently the situation is different when the balky connection is caused by a hacker. The Seventh Circuit, in a criminal case brought under the Computer Fraud and Abuse Act, affirmed a $6,014  restitution award to compensate a business for "lost productivity" attributable to the defendant's disruption of the company's wireless Internet connection.

The court's opinion is not clear on how this sum was calculated. The victim was a small manufacturing company that accessed the Internet through a wireless provider. The defendant, a recently fired computer technician, made unauthorized use of the company's wireless account, preventing the victim's employees from accessing the Internet at the same time. The victim's loss is twice described as "lost productivity” and once as "lost productivity for approximately five days." The court remarks elsewhere that the defendant's conduct “adversely affected their productivity.”

The victim's characterization of its loss, submitted in the form of an affidavit by the president of the company, mentions just $164 in actual losses. However, the affidavit also claims 144 hours (@ $65/hour) of lost productivity. These lost hours are attributed to the need to burn files to disc and overnight them to customers, plus "customer visits," "loss of customer confidence," and "unable to communicate with customers." None of these losses were quantified or documented. 

The case appears to be first to treat this sort of "loss" as something protected by the CFAA. The statute, at 18 U.S.C. 1030(e)(11), defines "loss" as

any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service;

The federal Sentencing Guidelines, Section 2B1.1, Application Note 3, advise that for CFAA offenses, "actual loss" means

pecuniary harm, regardless of whether such pecuniary harm was reasonably foreseeable: any reasonable cost to the victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other damages incurred because of interruption of service.

While it is certainly possible to make a reasoned argument that "lost productivity" is a valid CFAA loss -- for example, by building on the expansive language used by the court in EF Cultural v. Explorica Inc., 274 F.3d 577 (1st Cir. 2001), the trial court and the Seventh Circuit clearly seem to be breaking new ground here.

Unlike lost revenue, which is mentioned in the CFAA, lost productivity,  which is not, is very difficult to substantiate. Did the victim have an alternative means of accessing the Internet? Did the victim pay overtime to compensate for the diminished productivity of its workers? Did the defendant's conduct affect the victim's revenues or expenses at all?

Consideration of "lost productivity" in this case yield a 15-month prison term for the defendant plus $6,014 restitution for the victim. The same harm, if caused by an Internet access provider, would have been worth about $20 off the next month's bill.

The case is United States v. Schuster, No. 05-4244 (7th Cir., Oct. 27, 2006).

A trademark dilution claim might not be much more helpful than an infringement claim in going after a gripe site, or so it seems from a recent decision by the district court of Arizona. Best Western Int'l Inc. v. Doe, No. 06-1537 (D. Ariz. Oct. 24, 2006).

Best Western International hoped that its dilution claim against a gripe site frequented by its franchisees might succeed where BWI's infringement claim failed. Section 1125(c)(1), the section of the Lanham Act dealing with dilution, does not explicitly require that the mark be used in connection with goods or service. Instead, what is required is "use in commerce."

BWI sought to establish use in commerce by pointing to the competitive injury it suffered as the result of anonymous, allegedly defamatory postings featured on the gripe site. That was apparently the best argument it could muster; there was no allegation that the anonymous posters benefited financially from the site or that they otherwise used the BWI marks on any goods or services.

"The dangers the Lanham Act was designed to address are not at issue in this case," Judge David G. Campbell concluded.

While acknowledging that the dilution claim is a "closer question" than the infringement claim, the court held that the dilution claim failed because competitive injury is not a use in commerce. BWI's reliance on PETA Inc. v. Doughney, 263 F.3d 359 (4th Cir. 2001) ,to support its theory is "misplaced," said the court. Both Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002 (9th Cir. 2004), and Bosley Med. Inst. Inc. v. Kremer, 403 F.3d 672 (9th Cir. 2005), have rejected the proposition that harm to the plaintiff's business is use in commerce.

The court granted H. James Dial's motion to dismiss the common law trademark infringement and dilution claims; it denied BWI's motion to amend the complaint to allege use in commerce.