TechLaw

Lawyers love terms of art, especially ones that lend a veneer of simplicity to an otherwise complicated topic. Take, for example, RAND terms (reasonable and non-discriminatory). It's sort of the legal equivalent of bubblegum and rubber bands, used by technology standards groups to paste over jigsaw pieces that don't quite fit together—namely, meshing patented technology with a standard designed to be widely adopted.

The basic idea is that the patent owner agrees not to act like an extortionist when licensing the patented technology to those who need it in order to implement the standard. But what it means beyond that is anyone's guess.

"Nobody knows what it means," Timothy Simcoe, an assistant professor of strategic management at the University of Toronto, said at a recent symposium on technology standards sponsored by the National Academies ("Designing Cyberinfrastructure for Collaboration and Innovation," Jan. 29-30, Washington, D.C.).

Rather than wait years for courts to tell everyone the term's true meaning, Simcoe urged a new approach. Patent owners would agree not to assert their patents after a date certain, in what Simcoe refers to as NAASTy (non-assertion after specified time). That time period could be along a sliding scale from zero (free) to the life of the patent (RAND). This would get courts out of the messy business of figuring out what is "reasonable," he explained, and allow the dispute to be decided by the calendar. Once the specified time period lapses, the patent owner would, in a sense, give away the technology.

Simcoe's proposal was not greeted by cheers from the hundred or so patent lawyers, technology administrators, and government officials gathered at the meeting. But you have to admire him for trying something new. And judging by the statistics he shared, there is a real need to rethink the patents issue.

IPR disclosures to standards setting groups have sharply increased in recent years, he said, with an "overwhelming" majority of those disclosures occurring in the information technology sector. Nearly 10 percent of those disclosed IT patents end up in litigation, whereas the typical litigation rate for all other patents hovers at just under 1 percent, he added.

Maybe it's time for some new bubblegum.

It used to be that sending a take-down notice to an ISP was a fairly routine exercise, with little downside for the copyright owner. ISPs usually complied without much fuss, more concerned with preserving their safe harbor status under the DMCA than losing an angry infringer as a customer.

But take-down notices are becoming a riskier proposition these days, at least for copyright owners asserting inaccurate or highly improbable infringement claims.

Blame (or thank, depending upon your perspective) the EFF. The civil rights group has quite effectively exploited a provision in the DMCA that imposes liability upon copyright owners who "knowingly materially misrepresent" their claim of infringement in the course of invoking the take-down procedure. 15 U.S.C. 512(f).

The latest example of this is the dispute between an ABC affiliate radio station in San Francisco and a blogger who goes by the handle, Spocko. His blog included audio clip excerpts of broadcasts from KSFO-AM, which he used to criticize the indecent language used by the talk show hosts. ABC sent a take-down notice to the blogger's service provider, alleging that Spocko's "flagrant use of KSFO's material is a clear violation of KSFO's copyright." The service provider shut down the blog.

EFF got involved and, in a Jan. 25 letter, responded to the allegations, characterizing them as "false" and saying that the usage falls squarely within the bounds of fair use. "Far from being grounded in law, ABC/KSFO's complaints amount to nothing more than an attempt to silence an effective critic," said the EFF, adding that "further misrepresentation aimed at Spocko's protected speech online may subject KSFO and ABC to liability under 17 USC 512(f) . . . ."

It is a strategy that has worked before for EFF, most notably in Online Policy Group v. Diebold Inc., 337 F. Supp. 2d 1195 (N.D. Cal. 2004) (take-down notice directed to material that was clearly not copyrightable supports award of damages, attorneys' fees under Section 512(f)).

The prospect of section 512(f) damages may have influenced settlements in at least two other lawsuits, Marvel Enter. Inc. v. NCSoft Corp., 74  USPQ2d 1303 (C.D. Cal. 2005) (settled within a few months after court refused to dismiss defendant's Section 512(f) counterclaim for false notification) and Kopp v. Vivendi Universal Games, No. 06-01767 (C.D. Cal. complaint filed March 23, 2006) (video game publisher dropped allegations of infringement and declined to block further sales of unauthorized strategy book after accused infringer files declaratory judgment action asserting violation of Section 512(f)).

By their nature, cease and desist letters are often rife with bluster and bravado. But when that language is tied to a take-down notice, it can expose the copyright owner to a palpable risk of damages where the infringement claim has little substance to it.

Well, it certainly did not take long for content owners to try out the Supreme Court's inducement test of secondary liability, announced in Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., 125 S. Ct. 2764 (2005). The claim popped up in nearly a half dozen cases filed or litigated in 2006. But so far, apart from the remand in Grokster, only two other district courts have applied the test.

The first ruling came from Judge Marilyn Hall Patel of the Northern District of California, who held that the recording industry could proceed with an inducement theory of liability against investors in the former Napster file-sharing service. In Re Napster Copyright Litigation, No. C MDL-00-1369  (N.D. Cal. May 17, 2006).

The inducement theory, as explained by the Supreme Court, imposes secondary liability against "one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement."

This test does not require plaintiffs to show actual knowledge, Patel explained. She rejected an attempt by Napster's investors to limit their liability to just those works for which they received actual notice of infringement from the recording industry, noting that the Grokster test permits liability premised upon constructive knowledge. That the Grokster decision came down after this case was already in play is no impediment to its application here, Patel added.

The second ruling applying the inducement test originated from the District of New Jersey. An open-air flea market nabbed for hawking pirated CDs tried to use the inducement test to bolster its argument that "mere knowledge of actual or infringing uses" is not enough to subject a distributor of a product to secondary liability. The court did not give that argument any credence, observing that operating a flea market is not analogous to placing a copying device into the stream of commerce. Arista Records Inc. v. Flea World Inc., No. 03-2670 (D.N.J. March 31, 2006). The case settled in November 2006.

There is nothing surprising in either of these two holdings. But now, content owners are pushing to apply the test outside the traditional P2P context. One such lawsuit claims that XM Satellite Radio induces its subscribers to infringe the recording industry's copyrights by offering a service that lets those users build a digital library of their favorite songs recorded off of XM, all without paying any royalties for downloading. By advertising that the portable music player enables users to save huge collections of songs, XM has taken "affirmative steps" to promote infringement, the recording industry alleges. The court recently ruled that XM cannot escape liability by asserting immunity under the Audio Home Recording Act.

Two other lawsuits filed against social networking sites also cleave to the inducement test. Videographer Richard Tur has filed an infringement lawsuit against video streaming site YouTube, alleging that the company does not do enough to police its service for infringing copies of his videos (such as the Reginald Denny beating) that are uploaded to the site. Tur v. YouTube Inc., No. 06-4436 (C.D. Cal. complaint filed July 14, 2006). His complaint styles YouTube as the new Grokster and accuses YouTube of pursuing an advertising revenue model that directly benefits from the infringing activity. The court is scheduled to hear oral argument on cross motions for summary judgment on DMCA issues Jan. 29.

Finally, in UMG Recordings Inc. v. MySpace Inc., No. 06-07361 (C.D. Cal. complaint filed Nov. 17, 2006), the recording industry claims that the social networking site MySpace encourages rampant infringement by making it easy for its members to incorporate illegal copies of songs into their profiles. This, in turn, draws more traffic to the site, according to the complaint.

Of these three lawsuits, it is the XM case that probably has the riskiest liability exposure. Advertising materials used by XM to promote is XM+MP3 service, in which XM lauds the storage capacity of its device, could be problematic, particularly given the court's recent ruling that strongly suggested that the XM+MP3 service infringes the reproduction right. While the plaintiffs in the social networking cases will undoubtedly be able to show infringement occurs on YouTube and MySpace, they will have a tougher time showing that those services are designed with the aim of promoting infringement.

In two weeks, WIPO’s Standing Committee on Copyright and Related Rights will convene in Geneva to try to finalize the text to the proposed WIPO Broadcasting Treaty.

Webcasting is now off the menu. Many delegates lost their appetite for the contentious issue, concerned that the sideline topic threatened progress in more important areas, such as signal theft.

But as the SCCR’s chairman’s December 15 report illustrates, untangling webcasting from the treaty may not be a straightforward matter.

The definition of “retransmission,” a protected right under the proposed treaty, encompasses “any means of transmission.” Elsewhere in the text, the right of retransmission is said to include “over computer networks.” Further, the text refers to the right of reproduction as including “direct or indirect reproduction in any manner or form,” a phrasing that the delegation from India argued would likely be interpreted to include computer networks.

According to the report, the chairman took the view that while the draft treaty no longer embraced a new right protecting webcasts, the proposed treaty would, ems.bna.comtheless, empower broadcasters to prevent unauthorized webcasts of their transmissions.

“[T]here were several areas where acts and operations taking place by using computer networks were included as the defensive part of the traditional broadcasters’ rights, not as objects for protection. In those areas the traditional broadcasters should enjoy the possibility of authorizing or not authorizing certain exploitation or use of the protected subject matter. That did not make webcasting an object of protection.”

For example, the chairman explained in his report, a broadcaster in one country should have the authority to prevent a webcaster in an adjoining country from webcasting the signal to areas of the adjoining country that fall outside the broadcaster’s footprint.

“That would not bring that retransmission over the web within the scope of protection,” said the chairman. “[B]ut would place the retransmission over the web as a defensive element in the operative clauses on the protection of traditional broadcasters.”

Given the aim of the treaty to protect against signal theft, this perspective is certainly understandable. Yet, the difference between protecting webcasts themselves and preventing others from making unauthorized webcasts seems a rather fine point. The policy concerns that attend the granting of protections to webcasts seem no less relevant to the defensive use of the webcasting right than to its use offensively.