Monday, May 08, 2006

Apple, Beatles, iTunes...

For anyone interested in the Apple Computer/Apple Corps dispute over Apple Computer's reach into the music market, a British court decided that Apple Computer may use its logo in connection with its iTunes store. Article here.

Sunday, April 23, 2006

Fibonacci Poems Reach new level of popularity

If you are like me, when exams come around you choose to surf the web instead of studying. For those of you like this, you may be interested in reading about a form of poetry that is gaining some popularity over the web. Fibonacci, the mathematical based poetry that most of us did in middle school, has become popular as a result of one blogger. To read the article click here.

Google's Entrepreneurial Chinese Endeavor - Part 47

Just kidding about the title. I just happened to see an article in today's N.Y. Times Magazine that goes into a lot of detail about what's driving Google's ongoing growth in the far East. If you are very interested (i.e., it's really long) and you're not tired of discussing or thinking about the issue in the first place, the article is found here.

If nothing else, the title is clever: Google's China Problem (and China's Google Problem). I'd like to write an article someday entitled: OSU Law's Beazley Problem (and Beazley's OSU Law Problems). Actually, maybe it'd have to be a treatise, rather than an article. Cheers everybody, happy exam studying!

Monday, April 17, 2006

Ohio, broadband access, election considerations...

Ken Blackwell mentioned in his noon-time speech today that he supports universal broadband access (Ohio as the universe, of course) as part of his vision to revitalize Ohio's economy.

Thursday, April 13, 2006

noon talk on municipal wifi

Wednesday, April 12, 2006

Angela's presentation:

Angela’s presentation: Ringtones and the Copyright Act – striking the balance between the rights of copyright owners and the needs of the users in the digital world.

The current market for ringtones is a lucrative one. At present, ringtone companies charge users between $1.99 and $5.00 to download their favorite song. Ringtones funneled 3.5 billion into the music industry last year, there are over 180 million cellphones ringing in the U.S alone.
What is a ringtone/ringback/realtone?
A ringtone is a simple series of tones that sound like a favorite song. A realtone is a 20-30 second snippet of an actual sound recording. Ringbacks are the sound heard when making a call while the other party receives a ringing signal
Currently there is a controversy between music publishers, artists, performance rights organizations, ringtone vendors, and record labels over how the laws that govern the sales of its products apply to ringtones.
Section 115 of the Copyright Act governs compulsory licensing of the reproduction and distribution rights for nondramatical musical works by means of physical phonocards and digital phonorecord deliveries. Section 115 states that “reproduced works subject to compulsory fees cannot be fundamentally altered.” According to music publishers, if one takes just a 30 second snippet of a song (a ringtone) - that is a fundamental alteration. A mechanical compulsory license is not available unless the licensee records the entire composition not just a few seconds. Thus a ringtone is a derivative work and section 115 does not currently grant a licensee the right to create a derivative work instead ringtones ought to be subject to licensing negotiations.
For the purpose of paying music publishers, record labels would like to rely on the digital phonorecord delivery provisions of the Copyright Act, which would result in mechanical license fee payments of 8.5 cents per ring tone download. Record labels observe that ring tone distribution is accomplished by “distribution of a phonorecord of a nondramatic musical work by means of a digital transmission” which is just what the statute defines as a “digital phonorecord delivery.” (17 U.S.C. Section 115(c)(3)(A)).
Currently, any licensee who sells a ringtone has only to notify the Harry Fox Agency( a New York based collecting agency that acts as a clearing house for much of the licensing monies flowing to music publishers), of a sale and pay the 8.5 cents compulsory licensing fee per ringtone sold. Section 115 of the copyright act forces music publishers to accept relatively small “compulsory license” fees for their copyrighted works.
If, on the other hand ringtones are reproductions that make a significant change in a songs composition or consumer use Harry Fox and its clientele can refuse to license copyrighted work for ringtone use. And they can charge much more that 8.5 cents per unit sold for the right to do so.
Music publishers and artists control or own the copyright in any musical composition that is made into a ringtone. The owner of a copyright has the exclusive right to reproduce, distribute or copy the work as well as the right to perform the work.
Publishers insist on being paid because they have the exclusive right under Section 115 of the Copyright Act to distribute the work (the right to make ones work available to the public). The record companies and artists want to be paid because of their exclusive right under section 115 to reproduce the work. Record companies also claim that a ringtones most valuable property lies in the underlying master recording of the music that makes up the ringtone.
The artists and performance rights organizations such as ASCAP claim that when a ringtone provider takes a copyrighted work and allows the consumer to try out the ringtone, the right of public performance under Section 114 of the Copyright Act is being violated. They point to the performance of the ringtone itself and its intent to attract attention. This argument hinges on whether actually hearing the download being transmitted to the receiving device is necessary to constitute a public performance. If it is not a performance, then ringtone downloads are the same as digital phonorecord deliveries and the PRO’s receive no fee.
When dealing with Digital transmissions such as realtones it is difficult to determine which rights are implicated and therefore to whom a licensee should pay in order to secure the necessary rights. Ringtone companies are being faced with demands for payment from multiple representatives of the same copyright owner such as record label, music publishers, and performance rights organizations. Each of these groups are purporting to license a different right that is involved in the same transmission. Licensees end up paying twice for the right to make a digital transmission of a single work. This makes it extremely inefficient and unfair to require a licensee to seek out three separate licenses from three separate sources in order to compensate the same copyright owners for the right to engage in a single transmission of a single work. This can take up to six months to get all the licenses for just one song. Sometimes there are difficulties in locating the various copyright owners.
We need to get the song in the marketplace as quickly as possible- songs are not popular forever especially in the case of ringtones. The ringtone companies complaint is that the current system impedes their ability to get access to as broad a collection of songs as they need. We need a new system that makes it possible quickly and efficiently to clear the necessary exclusive rights for large numbers of works.
The compulsory license is 96 years old. It was originally implemented to combat the potential monopoly that record labels could have on the music industry. However, the means to provide music to the public have changed dramatically in the last decade. It is in need of reform especially in regard to the use of new digital technology to deliver music to the public.
I propose that section 115 compulsory license be repealed and replaced with a designated collective licensing structure. Most countries such as Great Britain, Germany, and France have repealed their compulsory license schemes in exchange for private negotiations and collective licensing organizations to license both the public performance right and the reproduction and distribution rights for a musical composition. This essentially will create a one stop shop for obtaining licenses for one copyrighted work and streamline the royalty processing for copyright owners.. While nevertheless permitting each publisher to set its own rates. We already have ASCAP for performance rights which does not require a statutory license, why not offer the same for distribution and reproduction rights?
Congress should not set the mechanical license prices, the participants within the music industry should decide because they know the marketplace. Without the statutory 8.5 cents per unit payment the more popular songwriters would receive greater payments than the less popular ones. The more desired an item is, the higher the price should be commanded. The compulsory license is putting a ceiling on the royalty rate in privately negotiated licenses; it is placing a limit on the marketplace
Presently, the songwriters are hurting because royalties are not being distributed while a debate among publishers continues as to the proper royalty rate. These organizations will provide a more competitive environment in favor of the individual songwriter because they will have more of a choice in who administers their musical works. I understand the nature of the industry and would still require that these same organizations are subject to some type of governmental oversight.

Monday, April 10, 2006

Christine's presentation

Christine’s Presentation: Trademarks as Metatags – Is This Trademark Infringement?

This issue is whether or not the use of a trademark as a metatag for a website of someone other than the trademark owner constitutes infringement.

Some background on Metatags and Search Engines: Metatags are HTML code used to describe the contents of web pages. The user can not see them but, they can be scanned by search engines. They are important for internet marketing strategy because many users will not look beyond the first 20 sites that are returned by a search. Thus, some designers use competitor trademarks as metatags in an attempt to lure the competitors’ customers to their site. However, metatags are not the sole factor in determining which pages are returned by a search. Rather search engines use a number of other factors. For example, Google uses over 100 factors including a PageRank algorithm. The single biggest factor on google is the number of other sites that link to a particular URL. Nevertheless, there have been a number of cases in which designers have been able to successfully manipulate metatags in order to alter search results and possibly confuse customers. By renouncing all responsibility in such cases, the search engines have provided little assistance to trademark owners. Google at least has a complaint procedure and claims it will conduct a “limited investigation of reasonable complaints.” I was not even able to find a procedure for Yahoo.

Metatag cases are different from other trademark infringement cases because metatags are invisible to the user. Thus, courts have found it difficult to apply traditional tests, such as the strength of conflicting marks and the degree of similarity between conflicting marks, for establishing likelihood of customer confusion (as required by the Lanham Act). A few courts have taken notice of the fact that the Internet market operates differently and have followed the “initial interest doctrine” in deciding such cases. In Playboy, the district court explained this doctrine as follows: Initial interest confusion, as coined by the Ninth Circuit, is a brand of confusion particularly applicable to the Internet. Generally speaking, initial interest confusion may result when a user conducts a search using a trademark term and the results of the search include web sites not sponsored by the holder of the trademark search term, but rather of competitors. The Ninth Circuit reasoned that the user may be diverted to an unsponsored site, and only realize that she has been diverted upon arriving at the competitor's site. Once there, however, even though the user knows she is not in the site initially sought, she may stay. In that way, the competitor has captured the trademark holder's potential visitors or customers.” Playboy Enters v. Netscape Communs. Corp., 55 F. Supp.2d. at 1074 citing (Brookfield Communs. Inc. v. West Coast Entertainment Corp., 174 F.3d at 1062-64).

Brookfield was the first case to deal directly with the metatag issue. The court concluded that West Coast improperly benefited from the goodwill in Brookfield's trademark by placing the mark in its metatags for the sole purpose of diverting customers to its own web site. The court reasoned that "web surfers looking for Brookfield's 'MovieBuff' products who are taken by a search engine to '' will find a database similar enough to 'MovieBuff' such that a sizeable number of consumers who were originally looking for Brookfield's product will simply decide to utilize West Coast's offerings instead." Even if the initial confusion is dispelled and the misdirected cus-tomers do not make a purchase, the act of purposefully generating pre-sale confusion by attracting or diverting potential customers by using another's trademark is sufficient to constitute trademark infringement. Paylago article from the IDEA: Journal of Law and Technology citing (Brookfield Communs. Inc. v. West Coast Entertainment Corp., 174 F.3d at 1062-64).

On the other hand, the 6th circuit has recognized the doctrine of initial interest confusion but, has never analyzed the metatag issue separately and even in other contexts has not applied the doctrine so broadly. The court has continued to look at other more traditional factors and has been primarily concerned with "whether the defendant's use of the disputed mark is likely to cause confusion among consumers regarding the origin of the goods offered by the parties." Gibson Guitar Corp. v. Paul Reed Smith Guitars, 423 F.3d 551 citing (Paccar Inc. v. Telescan Techs., 319 F.3d 243).

The broad view of the 9th circuit appears to be the majority. I would like to propose a more narrow view – similar to the 6th circuit requiring confusion as to source or possibly even confusion at the point of sale rather than pre-sale. I would like your opinions as to which doctrine you think is the best and why.

Sunday, April 09, 2006

Milton's Presentation: Legal/Policy Analysis of the NSA Domestic Spying Program

Was the secret NSA surveillance program legal? My research has led to the conclusion that there is a good argument supporting the constitutionality of the program, but it most likely violated the Foreign Intelligence Surveillance Act (FISA). The difficulty surrounding this issue is due to the details of how the surveillance was done being classified.

Here is what we know - On December 16, 2005 the New York Times reported that months after the Sept. 11 attacks, President Bush secretly authorized the National Security Agency to eavesdrop on Americans and others inside the United States to search for evidence of terrorist activity without the court-approved warrants ordinarily required for domestic spying.

Under a presidential order signed in 2002, the intelligence agency has monitored the international telephone calls and international e-mail messages of hundreds, perhaps thousands, of people inside the United States without warrants over the past three years in an effort to track possible ''dirty numbers'' linked to Al Qaeda.

The previously undisclosed decision to permit some eavesdropping inside the country without court approval was a major shift in American intelligence-gathering practices, particularly for the National Security Agency, whose mission is to spy on communications abroad. As a result, some officials familiar with the continuing operation have questioned whether the surveillance has stretched, if not crossed, constitutional limits on legal searches.

President Bush's rationale for eavesdropping on Americans without warrants rests on questionable legal ground, and Congress does not appear to have given him the authority to order the surveillance. The analysis, by the Congressional Research Service, a nonpartisan research arm of Congress, was the first official assessment of a question that has gripped Washington for three weeks: Did Mr. Bush act within the law when he ordered the National Security Agency, the country's most secretive spy agency, to eavesdrop on some Americans?

The report, requested by several members of Congress, reached no bottom-line conclusions on the legality of the program, in part because it said so many details remained classified. But it raised numerous doubts about the power to bypass Congress in ordering such operations, saying the legal rationale ''does not seem to be as well grounded'' as the administration's lawyers have argued.

The Legal Arguments. A full legal analysis of this issue encompasses the law under FISA, the Authorization to Use Military Force, and the inherent authority under the 4th Amendment.

Foreign Intelligence Surveillance Act. Congress enacted FISA in response to the Keith case. Specifically, 50 U.S.C. 1809 prohibits "electronic surveillance" except as authorized by statutory law: "A person is guilty of an offense if he intentionally . . . engages in electronic surveillance under color of law except as authorized by statute."

So what statutory authorization is there? Congress made clear back in 1978 that there are two, and only two, statutes that authorize wiretaps within the United States. One is “Title III,” which gives the rules for wiretaps for law enforcement. The other is the Foreign Intelligence Surveillance Act, which gives the rules for wiretaps for foreign intelligence purposes.
Since 1978, 18 U.S.C. Sec. 2511(2)(f) has said that Title III and FISA “shall be the exclusive means by which electronic surveillance ... and the interception of domestic wire and oral communications may be conducted.”

So that is why the NSA wiretaps appear illegal. Government officials can only wiretap “as authorized by statute” and the only statutes that count are Title III and FISA. The NSA wiretaps did not use the judicial procedures of either Title III or FISA. (Swireblog)

Authorization to Use Military Force (AUMF). The authorization states in relevant part:

AUTHORIZATION FOR USE OF UNITED STATES ARMED FORCES.(a) IN GENERAL.--That the President is authorized to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.

The Administration's claim is that the AUMF counts as a "statute" that authorizes the surveillance: 50 U.S.C. 1809 states that "A person is guilty of an offense if he intentionally . . . engages in electronic surveillance under color of law except as authorized by statute," so if the AUMF authorized the electronic surveillance, then the NSA program didn't violate FISA.The Supreme Court considered the legal effect of the AUMF in Hamdi v. Rumsfeld, which I plan to discuss because it is too lengthy to post here. Does the AUMF authorize the surveillance? The answer is not entire clear.

The Fourth Amendment. There are two arguments under the 4th Amendment - the border search exception and a national security exception.

The border search exception permits searches at the border of the United States "or its functional equivalent." United States v. Montoya De Hernandez, 473 U.S. 531, 538 (1985). The idea here is that the United States as a sovereign has a right to inspect stuff entering or exiting the country as a way of protecting its sovereign interests, and that the Fourth Amendment permits such searches. Courts have applied the border search exception in cases of PCs and computer hard drives; if you bring a computer into or out of the United States, the government can search your computer for contraband or other prohibited items at the airport or wherever you are entering or leaving the country. See, e.g., United States v. Ickes, 393 F.3d 501 (4th Cir. 2005) (Wilkinson, J.). (The Volokh Conspiracy)

The second argument is question of whether there is a national security exception to the Fourth Amendment that permits the government to conduct searches and surveillance for foreign intelligence surveillance. The Supreme Court left this question open in the so-called "Keith" case, United States v. United States District Court, in 1972. Justice Powell's opinion in the Keith case concluded that there was no national security exception to the Fourth Amendment for evidence collection involving domestic organizations, but expressly held open the possibility that such an exception existed for foreign intelligence collection. (The Volokh Conspiracy)

My conclusion and proposal: The NSA wiretapping is illegal under law but may be constitutional. If it is indeed constitutional, I believe that the president would have the authority to enact this program even if it is illegal under the law. I would propose keeping the program intact but allow for oversight by both the FISA court and the House and Senate Intelligence Committees. Since the program is done in secret, any objections would be ruled on by the FISA court only after an objection is made in either the House or Senate.

Issue I would like discussed:
1. I would like to know your views on the legal arguments presented. Are they persuasive? If not, what should be the proper response considering that the nation is at war?

2. What kind of oversight should this program have? Should it be evaluated only by the FISA court? Should the full Intelligence Committees in Congress by briefed? Should only the “gang of eight” by notified?

Thursday, April 06, 2006

A better DRM?

Sun Microsystems has proposed an open sourced DRM called DReaM (clever huh). The idea sounds odd at first, but it is interesting, basically it would be DRM to make companies happy, but to have it run across platforms so that once you buy your song you could use it on any device. (don't worry companies will figure out how to sell you a copy again somehow)
Even Larry Lessig (Stanford Law prof) likes the idea:

"In a world where DRM has become ubiquitous, we need to ensure that the ecology for creativity is bolstered, not stifled, by technology. We applaud Sun's efforts to rally the community around the development of open-source, royalty-free DRM standards that support 'fair use' and that don't block the development of Creative Commons ideals."

It isn't perfect though, and some still question if it is just an alternative to Play For Sure by Microsoft or Apple's DRM. However, one difference is the idea that devices able to play DReaM would be certified by an independent board, rather than by any company.

(see Wired article "Reasons to Love Open-Source DRM")

Wednesday, April 05, 2006

Users of Facebook, etc. beware

This won't surprise many, but it is common for employers to scour the internet for any digital history of indiscretions. See article from Netscape/BusinessWeek about "You are what you post." And, according to students here at Moritz, our administration surveils Facebook and the like when considering giving references. I swear I don't have a tin-foil hat.

Unfortunate Effects of Easy Access

Yesterday, Justin Berry, who was a porn star in the child pornography industry (and I call it an industry because that's what it is, whether you like it or not), testified in a Congressional hearing. He started doing webcam porn when he was 13. The irony is that his mother, whom he lived with at the time, works as a counsellor for sexually abused children or something related. NYTimes reporter, Eichenwald, first broke the story ("Through his webcam, a boy joins the sordid online world") last year. Apparently, the child porn industry is huge, conservatively estimated at $2 billion/year. One of the favored methods is to utilize various directory/blog services (such as to seek out young kids who have webcams and convince them, with words, cash, or presents, to perform sexual acts on the webcam. Typically, money is exchanged via paypal and credit cards. Alternatively, Amazon wish lists allow for "fans" to purchase gifts for the "stars" directly.

Mostly, the companies that make this process so easy with their helpful tools/products/services do it unwittingly. Although the child pornography industry has always been around, with the advent of easy-to-use technology, it has exploded (and continues to grow alarmingly). Justin turned in to the FBI records of his subscribers, amounting to about 1500 people, along with IP addresses and credit card numbers, including the Intel engineer primarily responsible for the P4 processor.

On several blogs, heated debates have erupted, (Here) (Here) (Here) mostly centered on Justin's culpability as a 13-year-old who "should have known better." That the adults who played a role in propogating child pornography should be prosecuted is a fairly unanimous concept, although the FBI/Department of Justice has done very little in this regard. Tomorrow, the DOJ will go in front of the same Congressional committee to answer some questions.

Monday, April 03, 2006

Edward's Presentation: Google Book Search: Fair use?

Some of this may be a repeat for folks as we touched on some of this earlier in class. However, to refresh, Google Book Search (formerly Google Print) aims to allow people to search utilizing a full text search inside every printed book that is inside the collections of the contributor libraries that Google is in the process of scanning. From the scanned books there are going to be three categories of books, those in the public domain (and have no controversy over), those that the publisher has authorized to be searched (again no controversy), and a third category of books, including out of print books that are under copyright. Copyright owners have the option to opt-out, but part of the controversy comes from this choice, as Google has chosen not to do an opt-in system as they feel this would devalue the project greatly.

Google Book search presents the fascinating copyright question, that is for the first time being dealt with as the technology to develop such a collection is only being realized. The copyright question is where to draw the line for fair use and whether the Google Book Search falls under fair use despite copying and storing a complete copyrighted work that was published in print.

There are essentially two different questions that can be discussed, one of them is whether Google Book Search is legal under existing law, a secondary question is whether we want the law to allow them to or not.

In fall 2005 two different lawsuits were filed against Google for the Google Book Search, one is a class action lawsuit brought by the Author’s Guild and several authors and a second lawsuit was filed by a group of publishers including McGraw-Hill, Penguin, Simon & Schuster and John Wiley. The lawsuits allege “Massive copyright infringement” and request an injunction to stop and in the class-action suit they request damages.

Google’s copying of the full text of copyrighted books has two points of copyright violations as alleged in the lawsuits against them. The first violation (stage 1) occurs when Google scans the book which they didn’t purchase into their database and the book then resides in zeros and ones in a server farm. The second violation (stage 2) occurs when a user submits a search request to Google and Google scan through the database on its server through the full text and pulls up and displays a small segment of text a few sentences at most, on its website for the user.

The author’s and publishers state that either stage (although you can’t have stage 2 without stage 1) is a violation of copyright law.

Is it legal?

Field v. Google (District Court NV 2006)

Field alleged that Google violated his copyrights to 51 works he created by storing them in an online repository (cached in order to facilitate searching and other uses, including keyword highlighting) The court held for Google. In holding this they cited an implied license theory (posting on the web invites others, there was a meta tag established opt-out ability that Field knew about) a fair use theory (four factors from Copyright act)

Kelly v. Arriba Soft (336 F.3d 811, 9th Circuit 2003)

Arriba Soft operated an internet based search engine that in its ‘crawl’ of the net copied photographs and converted them to ‘thumbnails’ displaying them later on a page of search results, with links to their original location. The 9th Circuit held that this was fair use. This was despite the commercial nature of the use, Arriba Soft was not “trying to profit by selling Kelly’s images” which would have been a distinct difference. The court also found that the nature of the fair use was transformative in that it “improved access” as an indexing tool.

UMG Recordings v. had a database of songs, which came from CDs it copied. Users of’s “Beam-it Service” placed their copy a CD to authenticate their ownership. Following the authentication users were able to stream that album over the internet, essentially allowing them to “space shift” music that they already owned. The court held that this was a copyright violation as they were merely repackaging the same music and there was no claim for transformation.

Under the case law it seems that there is an argument for Google, by following the Kelly case. The argument under that case is that Google has partaken in fair use, when applying the four factor test. However, Google Book Search doesn’t have the implied license theory that was present in Kelly and it is debatable how much this weighed in, as in terms of the medium transformation aspect is more on point, however didn’t add functionality (the search function) and also was providing a full copy to users, whereas here they are not. The case found the initial copying of the 50,000 CDs to be the violation, so here a court could get wrapped up the stage 1 aspect. Lastly in predicting the outcome of the lawsuit, the plaintiffs have chosen to sue not in the Ninth district, but in the Southern District of NY instead which is felt to be less likely to grant fair use.

Should it be legal:
Ignoring for the moment of how a court would rule in the US, it is interesting to debate the issue of whether such usage should be legal or should be fair (The legislature could declare it fair). The arguments for the search are numerous as anything that can advance ‘human knowledge’ is potentially a great tool for a society. Further such a research device potentially increases the market for books (a few studies show that sales have increased for books after being entered into the Google Book Search, Also which has a search inside feature has found that sales increase 9% for books that have the feature) Despite arguments that book publishers will create this functionality, as has begun to occur on Amazon, it is unrealistic to expect this due to the enormity of the task, nor is likely that this will be able to be put into one database, which is at the heart of the value of this project.

Closing Notes:

I will acknowledge that I am biased on this issue, therefore I hope that the class discussion will be useful in poking holes, providing new insights, or getting me to look at the issue in a new way.

Brian's Presentation: Awarding Injunctions Once Infringement is Found.

My research paper will discuss when injunctions should be awarded after infringement is found. The two sides of the argument have surfaced in MercExchange LLC v. eBay, inc. 401 F.3d 1323 (Fed. Cir. 2005). The Supreme Court recently heard oral arguments in this case and the decision could have a huge impact on patent law.

The history of the case is as follows. In May of 2003, a jury found eBay liable for willful infringement and awarded damages in the range of $10-20 million (it is hard to say the exact number because on appeal many of the amounts were adjusted, dropped, or remanded). In August of 2003, MercExchange’s motion for a permanent injunction was denied by the District Court. The judge recognized he had discretion and identified four factors to consider before awarding an injunction. The factors were: (1) whether the patent holder would be subject to irreparable injury without an injunction, (2) whether the patent owner had an adequate remedy at law, (3) whether an injunction would be in the public interest, and (4) whether the balance of hardships tipped in the patent owner’s favor.

On appeal the Federal Circuit reversed and held that a permanent injunction should issue once infringement is found, except in exceptional circumstances (e.g., need to protect public health). The court noted that this was not an exceptional circumstance and awarded a permanent injunction. Subsequently, the Supreme Court granted eBay’s petition for certiorari. Below I’ll briefly present some arguments for the two views. Although eBay calls the current Fed. Cir. rule an “automatic injunction” rule, I am reluctant to use this label because both the Fed. Cir. and MercExchange acknowledge that the court does have some discretion. Until I come up with something better I will refer to eBay’s rule as the “high-level of discretion” rule and MercExchange’s rule as the “near-automatic” injunction rule.

“High-Level of discretion” rule (eBay)
- 35 U.S.C. § 283 contains permissive language: “may” grant an injunction.
- Prevent opportunistic behavior by trolls who extract disproportionate royalties to the detriment of innovation without practicing the patent.
- Problem because technology products are complex and may have hundreds of patents that read on them. A patent for a small part could cause large complex products to be pulled from the market due to one small infringing piece, regardless of the level of infringement.
- The above problem is multiplied by the fact many companies bought up lots of patents inexpensively, often in bankruptcy auctions, after the dotcom bust.
- eBay also argues that the field of technology should effect the likelihood of injunction, and in this case the patent is a business method, which is a less favored technology for patents.

“Near-automatic” injunction rule (MercExchange)
- Agrees four-factor test should apply, but states that the third and fourth factors (public interest and balance of hardships) strongly favor the patent owner.
- Right to exclude and not a right to damages that defines the essence of a patent owner’s rights as stated in 35 U.S.C. § 154.
- Right of exclusivity means nothing if court won’t enforce it.
- Constitutional argument: to provide the “exclusive right” to their discoveries. Article I, Clause 8.
- Denial of injunction would diminish the value of the incentive to innovate, need injunctions to attract capital. Expectation of injunction encourages investment in unproven and risky technologies that are expensive to develop.
- Possibility of injunction drives parties to settlement, and in some cases may serve as an equalizer for small company trying to fend of larger competitors.
- Too much discretion could result in compulsive license system.

I expect many more arguments to arise during our class discussion, but I hoped to provide an example of some of the arguments on each side. I can not comfortably side with either party as of right now. I initially backed eBay because I just felt trolls seemed to be cheating the system, then I was beginning to think that the right to exclusive use is the backbone of patent law and giving judges too much discretion would result in a compulsory license system. Right now I am in the middle, I hope the class discussion may push me one way or the other. If I wrote my paper right now I would probably support a rule with a presumption towards an injunction, but would work on creating a list of circumstances when they shouldn’t issue (and this case may be one of them). I also plan to present some solutions not presented by either party in the case.

Saturday, April 01, 2006

reminder: paper presenters need to post by Friday of week before

The spring break may have screwed people up. But we have to get back on track. If you still have a presentation to make, you must post your entry on this blog by the Friday in the week before your presentation.

Also, you need to turn in your outline on the Monday before the week of your presentation. If you forget these deadlines, you do so at your own risk to your grade.

Thursday, March 30, 2006

Kirk's Presentation: Liability for Negligent Software Design

The FBI conducted a survey in which they determined that approximately 87% of respondents had experienced a computer security incident, such as viruses or denial of service attacks. From the results of the survey, the FBI calculated that business lose approximately $67 billion dollars each year due to computer security incidents. Not only does this problem cause significant economic damage, but it also leads to loss of consumer confidence in the Internet (which itself leads to economic damages).

One way to stop cybercriminals is to punish them. In 1986, Congress enacted the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030. This act provides both criminal and civil penalties against the cybercriminal. In addition to this act, there are state laws. However, these laws have not been effective. The rate of cybercrime continues to increase. In addition, although businesses can recover from the cybercriminal under CFAA, 18 U.S.C. § 1030(g), this right isn’t very valuable unless the cybercriminal is able to pay for the damage.

Another way to stop cybercriminals is to limit their ability to attack by creating better software. To encourage better software development, software developers should be held liable for poor software development that cybercriminals are able to exploit to carry out an attack on a business.

Under current law, software developers are easily able to avoid liability. To start with, CFAA specifically states that “no action may be brought under [this act] for the negligent design or manufacture of computer hardware, software, or firmware.” Tort law is inapplicable due to the superseding intentional act of the cybercriminal. In addition, the economic loss rule would limit recovery to physical and property damages, pure economic damage is generally not recoverable (based on the theory that pure economic liability should is covered by contract law). Related to tort law is product liability. Product liability is also limited by the economic loss rule. Another aspect of product liability law is the definition of a product. Some courts have held that software is not a product. Wilson v. Midway Games, Inc., 198 F.Supp.2d 167 (2002) (Plaintiff claimed the design and marketing of a game, Mortal Combat, caused Plaintiff’s son’s death. The court held the game was not a product.)

The definition of product is construed similarly to the definition of goods in UCC Article 2. Courts are split as to whether software is a good and therefore whether UCC Article 2 is applicable. Assuming software is a good, most software developers, particularly mass-market software, disclaim the implied warranty of merchantability and the implied warranty of a particular purpose. The express warranty cannot be disclaimed, but it can be easily limited to the terms of the license agreement through the parol evidence rule. The warranties in UCITA (which does apply to computer software) are similar to the UCC warranties.

My proposition is to create liability for negligently designed software. I know that it is impossible to create perfect software (in computation theory terms determining whether software meets specifications is undecidable), therefore strict liability would not be appropriate. Two possible methods of determining liability include: (1) foreseeable risks of harm posed by the software could have been reduced or avoided by the adoption of a reasonable alternative design by the software developer (this is similar to the Restatement (Third) of Products Liability § 2 approach); or (2) something along the lines of the Hand formula, balancing cost of damage times risk against the cost of developing software a better way.

Recovery would be allowed for purely economic damage (as well as physical and property damage). The liability would be limited by comparative or contributory negligence (software developers should not be held liable for the company that has lax network security or the user who opens the e-mail with the virus). Since the liability could be so great, the liability would simply be several liability; each negligent actor responsible for his or her own part.

There are two possible ways to implement this liability. The first is through federal legislation, enacted under the commerce clause. The benefit of federal legislation is uniformity. However, a federal right would pre-empt state tort law.

The biggest problem with this solution is that it might be difficult for a plaintiff to prove that the software was negligently designed. In addition, I am not sure what type of chilling effect it would have on the software industry.

Wednesday, March 29, 2006

Joe's Presentation on Athletes' Right of Publicity in their Names & Stats

Attorneys and law students often refer to an area of law called “Sports Law,” which essentially means lawyers working for professional athletes, leagues, teams, advertisers, and others in engaged in the exhibition or promotion of sports. Many lawyers—even those who use the term—also call the concept of “sports law” a misnomer, because what it really involves is the intersection of various legal disciplines all at once. It’s probably not difficult to imagine the areas of law that impact sports on a regular basis—antitrust, labor, contract, insurance, real estate, and even criminal law. One area that sometimes gets overlooked when talking about sports law is its intersection with Intellectual Property law; namely copyright, trademark, and the all-but-forgotten right of publicity. Perhaps a reason that IP gets excluded from sports law is that patents aren’t generally a large factor.

A current battle in sports and IP law is being fought right now in a federal district court, where an online fantasy baseball operator has sued Major League Baseball and the MLBPA (Players’ Ass’n) to enjoin them from charging a licensing fee to any service making commercial use of players’ statistics.

First, a little background on fantasy sports is necessary. The Fantasy Sports industry trade group believes that 6 million people played fantasy baseball last year, and spent almost 15 days worth of time on it, and the industry is still growing at a rate of roughly 7% annually (and fantasy football is even more popular). Fantasy baseball—Rotisserie baseball—involves a group of people drafting players onto their “own” teams, and then keeping track of their team's statistics over the course of the season to see who wins. In today’s day of Internet communication the service provider does all the calculating and scoring, but before fantasy sports were online, contestants had to keep track of the stats themselves: They had a fantasy league "commissioner" who entered the stats weekly from the U.S.A. Today, and then mail reports to the team “managers.” Professor Michaels recall playing this way in the mid 1980s, when he discovered" such players as Edgar Martinez, Frank Thomas and Cecil Fielder.

The licensing fee being demanded by the League and Players’ Association is essentially being compelled so that the fantasy operators can use the players’ stats. Statistics of course are more or less facts, which are not copyrightable. See Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340 (1991). Compilations of facts can be entitled to copyright protection, however the players’ names and statistics do not seem to supply the requisite "originality" necessary to warrant copyrightability. See Jack F. Williams, Who Owns the Back of a Baseball Card?: A Baseball Player’s Rights in his Performance Statistics, 23 Cardozo L. Rev. 1705, 1710–12 (May 2002).

While the copyright claim doesn’t seem to hold much water, more plausible is the claim that fantasy leagues violate the players’ right of publicity. The players’ right of publicity creates a substantive right in their names and “likenesses,” and prevents them from commercial exploitation without their own consent. See id. at 1713. There is one case that goes against the League in which some old-timers sued baseball for printing their names and stats in a program (since 1947, the uniform player contract has authorized such publication, but this claim was based on stats from earlier years). See Gionfriddo v. MLB, 94 Cal. App. 4th 400, (2001). MLB won and the players lost in that case, but now the League has come over to the player's side.
Although a right of publicity claim is colorable, there are a number of obstacles in the League’s way regarding the defense of the claim:

1. Right of Publicity is a state law claim (in most states). This is important for a couple of reasons--each state can have different elements that must be proven before the court will grant relief; and perhaps more importantly, since it's a state law claim there is no federal question jurisdiction. Therefore, a plaintiff would have to assert an alternative independent jurisdictional basis to get into federal court.

2. Assignment of Right of Publicity. How would the League sue for Right of Publicity in the first place? Right of Publicity is not like a trademark, in that it is not registrable per se. Also, Right of Publicity is not assignable in the same manner as a Patent, Copyright, or Trademark. To be sure, the right of publicity is assignable, but this type of assignment would be strictly scrutinized by the courts, because it is analogous to an "assignment in gross." In Trademark law, for example, an assignment in gross is considered abandonment. See, e.g., Hat Corp. v. D.L. Davis Corp., 4 F. Supp. 613 (D. Conn. 1933) (assignment of personal name by the son of the president of a famous hat mfr. was an assign. in gross, since the son had not been involved in the business); cf. Rick v. Buchansky, 609 F. Supp 1522 (S.D.N.Y.), dism'd 770 F.2d 157 (2d Cir. 1985) (musical act's mgr. is the owner of group's TM despite the turnover of members).

Part B, if you will, of bringing these suits is standing: Although the assignment of a right of publicity generally grants ownership to the assignee, this ownership is limited to offensive uses of the right (i.e., the right to exploit commercially). The personal interests protected under the right of privacy are usually untransferable, thus defensive uses of the right (i.e., asserting a claim for invasion of those rights against a 3d party) are only actionable by the assignor. See Restatement (Third) Unfair Comp. § 46(g).

3. Assuming no. 2 is correct, meaning the League could not assert itself as a plaintiff, each player would have to file his own suit against each alleged infringer. There is another possibility, however. See Allen v. Nat'l Video, 610 F. Supp. 612 (S.D.N.Y. 1985) (celebrity brought Lanham Act § 43(a) suit against defendant for using his look-alike in their TV commercials). The Woody Allen case is a good example of why Right of Publicity cases are difficult to win. The State of New York did not have a common law claim for Right of Publicity, so Allen brought a Lanham Act claim--because defendant's advertisements created a likelihood of consumer confusion as to the sponsorship of its goods.

Ordinarily, 43(a) is a broad section in the Lanham Act that is intended to provide relief when a defendant's goods or services are likely to cause consumer confusion about their source or origin. The district court found that the store’s advertisements were likely to cause consumer confusion as to whether Woody Allen was actually in the ads or not, and consequently whether Allen was endorsing the store. Along these lines, if the League could assert a claim that Fantasy players are likely to think that the Fantasy leagues they play are sponsored by MLB, then MLB could use 43(a). It's a stretch, but it worked for Allen.

Obviously, litigation of these claims will become convoluted, because of the way right of publicity is somewhat derived from privacy rights. See, e.g., J. Thomas McCarthy, Trademarks & Unfair Competition § 28:1, at 28–3 (1996); Prosser on Torts. Privacy seems a very unsettled area of law, and compounded with all the other legal issues, the League could have a difficult time defending these cases as they progress.

Apple having problems with iTunes musice store

Apple is being sued by the Beatles' record company for violation of an agreement between the two companies over a trademark "field of use" conflict. Due to the WSJ being a paid subscription site I have copied and pasted the article below.

Apple, Beatles Face OffOver iTunes Music Store
Associated PressMarch 28, 2006 10:36 a.m.

LONDON -- Two legendary companies in the music industry are to meet Wednesday in a London courtroom to fight it out over what might be the world's most recognizable logo: A simple piece of fruit.

Apple Corps Ltd., the Beatles' record company and guardian of the band's musical heritage and business interests, is suing Apple Computer Inc., claiming the company violated a 1991 agreement by entering the music business with its iTunes online music store.

The case will be heard by Judge Martin Mann, who said during pretrial hearings that he was the owner of an iPod digital music player, which is used with the iTunes music store.
At issue is a 1991 pact that ended a long-running trademark fight between the two Apples in which each agreed not to tread on the other's toes by entering into a "field of use'' agreement over the trademark.

Apple Computer said in a statement that "unfortunately, Apple and Apple Corps now have differing interpretations of this agreement and will need to ask a court to resolve this dispute."
Apple Corps -- founded in 1968 and owned by surviving Beatles Paul McCartney and Ringo Starr, the widow of John Lennon and the estate of George Harrison -- is seeking both an injunction to enforce the 1991 agreement and monetary damages for the alleged contract breach.

The computer company's logo is a cartoonish apple with a neat bite out of the side; the record company is represented by a perfect, shiny green Granny Smith apple.
Apple Computer had asked to have the case heard in California, where it is based, but Judge Mann rejected that application in 2004 and ordered the case be heard at the stately Royal Courts of Justice in central London.
The iTunes music store first opened for business in the U.S. in April 2003; it is now available across Europe, in Australia, Japan, and Canada. About three million songs are downloaded every day from the service. In the U.S., most songs costs 99 cents; in the U.K, they fetch 79 pence ($1.38). Not available on the service are Beatles' songs, which haven't been licensed for downloading.

Presentation by Scott W.: US stance on internet gambling and the problem of money laundering

Many foreign nations view gambling as a legitimate form of business and have therefore erected no barriers to the formation of websites which provide residents the chance to gamble for profit. As a result, many US residents have been able to access and bet on these offshore sites. Internet gambling has furthermore become a multi-billion dollar industry over the last decade. Due mainly to low start-up costs, high profit margins, few barriers to entry, and limited direct competition, it is likely more and more internet gambling sites will emerge.
Although there is no federal statute which directly addresses wagering on the internet, US v. Cohen established internet wagering as a wire communication. US v. Cohen, 260 F.3d 68 (S.D.N.Y. 1998). The Interstate Wire Act has been used as a federal platform upon which to prosecute internet gambling site providers. The language of the Act sets forth the following conditions: any business (1) engaged in the business of betting, who (2) knowingly use a wire communication facility to transmit bets, to (3) transmit bets in interstate commerce, as long as (4) one of the two parties (bettor or receiver of the bet) receive either money or credit from the outcome of the bet. 18 USC 1084. Furthermore, individual states have asserted jurisdiction over site operators, for example, in New York, the State Supreme Court found that a resident placing a bet on website had created a virtual casino, and thus, brought the casino operator within the jurisdiction of the State. The site’s operator had thereby violated Article 1 §9(1) of the New York Constitution. People v. World Interactive Gaming Corp., 185 Misc. 2d 852.
Last year, the WTO ruled in favor of Antigua (small island state in the Caribbean) against the United States for discriminatory treatment between foreign and local operators of horse betting. This was the fourth ruling on approximately this same complaint since 2003. The US has until April 3, 2006 to pass legislation which complies with the WTO’s ruling. Currently, the only bills on this subject appear to have a purpose contrary to the WTO ruling; essentially, they attempt to further restrict any form of gambling over the internet.
Due to the large amount of money being transmitted to and from these unregistered foreign websites, tracking funds is essentially impossible. Although most instances of money laundering occur through the formation of the internet casino, there are additional alternative ways to launder funds. As a result, money laundering has become too easy for sophisticated criminals through these sites. Money laundering is the act of making illegitimate cash into legitimate funds through hiding the cash’s origin. This is done in a three step process, (1) the placement stage, (2) the layering stage, and (3) the integration stage. Money laundering can be extremely complicated because the objective is to create a “paper trail.” This can be easily done for originators of online casinos as well as by gamblers who do not use certain methods to establish their account.
My proposal goes something like this…I think internet gambling should be legalized and regulated in the United States. I believe there should be federal licensing fees required for internet gambling sites who offer games of chance to US residents. Coupled with licensing fees, the federal government should require ISPs to prevent US gamblers to have access to unlicensed internet casinos. In conjunction, these two laws would greatly complicate, if not entirely bar, money launders from effectively laundering large amounts of cash. This would also protect US citizens from fraudulent websites, and bring in considerable revenue to the government.
I would like to hear the class’s input on whether these changes could effectively reduce the problems of money laundering today’s internet casinos produce.

Friday, March 24, 2006

No Problem, Mon

I just got back from Jamaica this morning, and as a result I am completely clueless as to what's been going on in the world for the past week, but I caught these two IP/Internet articles in the New York Times from a few days ago that seem pretty interesting:

1. Justices Reach Out to Consider Patent Case

2. A Guest Blogger, and an Unwritten Law

Friday, March 17, 2006

Presentation by Jeong Ho: Reconsidering Diamond v. Chakrabarty in the Context of Business Method Patents

My paper will discuss the problems involved in business method patents and propose reform of patent law to address them. Although the term “business method patents” is not precisely defined in any jurisdiction, it may be broadly defined as “a utility patent whose subject matter is a method of doing or conducting business.”

Courts initially recognized that methods of doing business could not be patented, creating the so-called “business method exception.” For example, in Hotel Security Checking Co. v. Lorraine Co., 160 F. 467 (2d Cir. 1908), the Second Circuit held that a patent on a “method of and means for cash-registering and account-checking” was invalid. The court also said that “[a] system of transacting business disconnected from the means for carrying out the system” is not a patentable subject matter.

However, as the Supreme Court held, in Diamond v. Charkrabarty, 447 U.S. 303 (1980), that “anything under the sun that is made by man” should be patentable except for law of nature, natural phenomena, and abstract ideas, the courts began to narrow the business method exception. In State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), the Federal Circuit emphasized that business methods should be “subject to the same legal requirements for patentability as applied to any other process or method.”

State Street has significantly changed the way of doing business. Companies that had practiced novel business methods mainly relying on trade secret protection began to try to protect their business methods under the regime of patent law and have been flooding the PTO with business method applications. This has arguably resulted in some problems: backlog of patent examinations and issuance and enforcement of bad (or weak) business method patents against competitors.

As sued its competitor,, for infringement of its patent directed to “1-Click ordering” system, the Internet community complained that the patent was granted without adequate review of prior art, was too broad, and failed to meet the requirement for novelty and non-obviousness. Further, vehement controversies have arisen as to whether Internet-related business method patents are appropriate.

As to such concerns, the American Inventors Protection Act of 1999 is expected to assist Examiners in finding prior art. The PTO is required to publish patent applications after 18 months from the earliest filing date of the patent application. Upon the publication, any interest persons may interfere with the PTO prior to the issuance of a patent on the ground of anticipation and obviousness. Further, the PTO revised the Examination Guidelines, which includes a mandatory search for all applications in Class 705 (business practice class), second review of all allowed application in Class 705, and expansion of sampling size for quality review. Although these approaches would work to some extent, they would not seem to completely address the concerns.

Under the European Patent Convention, “Schemes, rules and methods for … doing business” are not regarded as being inventions and are not patentable. But if a new method solves a technical, rather than a purely administrative, problem, then it may be patentable. In Japan, business methods are well recognized and accepted as patentable subject matter. Inventions must be “a highly advanced creation of technical ideas by which a law of nature is utilized.” Thus, patents are not grated solely for business methods—they must contain a technical aspect that is both tangible and real. However, this requirement may be satisfied simply by specifying that the method is implemented using a computer or through the Internet.

I would like to propose revising the Patent Act to restrict patentable subject matters to those which involve technical features—e.g., to solve technical problems, to contain technical characteristics, and so on. Examiners are allowed to reject business method applications if they are regarded as lacking technical features. Then, the burden is shifted to the applicants who must show that the invention involves technical features to overcome the rejection.

If necessary, I would also propose establishing sui generis protection for “pure” business methods. Under this scheme, an applicant has to conduct a prior art search, and the subject matter must satisfy a higher standard of non-obviousness. And, the term for protect would be shorter than that of patent law—e.g., 5 years from issuance.

I would appreciate your comments and thoughts on the following:

(1) Should patents be granted only on subject matters that involve technical features?

(2) Should Internet-related business methods be regarded as involving technical features and be protected under patent law?

(3) Should “pure” business methods that do not involve any technical features be entitled to protection at all?

Thursday, March 16, 2006

American Inventor

Since we've been discussing so much patents, I thought everyone should be made aware of a great new TV show: American Inventor

Next Episode:
Thursday, March 16 at 8/7c

"Episode 101"

This exciting series from Simon Cowell and the producers of American Idol about the biggest search ever for America's best new invention will premiere with a two-hour special, with coverage of open casting calls in Los Angeles, San Francisco and New York. Viewers will see inventors all of all ages present their most prized inventions, featuring everything from the wacky to the heart warming. Check it out at:

Can you patent a stick?

If you have doubts about the subject matter the examiners at the PTO allow to be patented, visit From the menu on the left side, click "Crazy Patents." Enjoy reading about inventions such as inclining coffins, a method for exercising your cat, a beerbrella (to keep the sun off your beer), etc. If you want to read the entire text of the patent, you'll need to register (which is free).

Nanobull is full of bull, it's not "nano"

"Nanobull" is actually 10 micrometers by 7 micrometers, which is 10,000 nm by 7,000 nm. Regardless, it is still very small and provides a frame of reference for scale. Considering that a human hair is roughly 80 microns wide, you could fit 8 bulls across the diameter of a piece of hair. (i.e. bull-bull-bull-bull-bull-bull-bull-bull)

Is this a real Picasso?

Costco sold this crayon drawing for $39,999 last year, with a putative certificate of authenticity by Picasso's daughter Maya Widmaier-Picasso. But is this really a Picasso? The daughter now says the certificate was forged. As for the print, it may be a fake, too. (More here)

I visited the Picasso museum in Paris last summer. Even if this crayon print were a Picasso (I have serious doubts), it would not be on my favorite Picassos list. And I love his body of work.

Wednesday, March 15, 2006

Google Privacy Case

In a decision from US District Court, Google is forced to turn over 50,000 searches and 5,000 search queries to the Justice Department. The government hopes this information will help in protecting children under the Child Online Protection Act. The federal judge stated, "What I've been trying to balance is the interest society has in the litigation with the interest of a private company." See WSJ article here.