Winter 2010 News Briefs

This month, our team members have been consumed with outlines, papers, and finals, and now the holidays are upon us.  Although we won’t be able to write full posts on all of the recent developments in technology law, we wanted to offer some quick updates on some of the biggest and most interesting stories in recent weeks.  Below the fold are summaries of cases and other developments in patent, copyright, and trademark law, as well as several proposed laws and regulations.

Patent

§ 101 Abstractness of Process Patents Post-Bilski: Research Corp. Techs. v. Microsoft

A three-judge Federal Circuit panel reversed an earlier finding of ineligible subject matter, clarifying the test for evaluating abstractness in the recent Research Corporation Technologies v. Microsoft Corp. decision (PDF).  Research Corporation Technologies (RCT) held patents on a process for performing “halftoning” on digital images in preparation for display or printing.  The district court found the subject material of these patents too abstract to meet 35 U.S.C. § 101‘s patentability requirements.  Following the Supreme Court’s recent guidance in Bilski v. Kappos (PDF), the Federal Circuit focused on whether the invention’s subject matter was abstract.  Without defining the term “abstract,” the court held that “this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act.”  Since RCT’s patents offered “functional and palpable” applications in their field, and their claims referenced physical components such as film and a printer, their incorporation of algorithms did not render them too abstract to be patentable.

Sham Re-examination Requests: Lockwood v. Sheppard Mullin

Lockwood claimed that attorneys at Sheppard Mullin made deceptive misrepresentations in order to file Requests for Reexamination with the intent of gaining litigative advantage and causing harm to Lockwood.  Since the Patent Act provides no remedy for such acts, Lockwood filed claims for malicious prosecution, interference, and fraud in California state court.  The court dismissed these claims as preempted by federal patent laws, and Lockwood appealed to the Federal Circuit.  The Federal Circuit affirmed the lower court’s dismissal in a nonprecedential entry of judgment without opinion.  Finding this move strange considering the lack of precedent in the area, Dennis at Patently-O believes this move may “open[] the door to some amount of bad-behaviour in the filing of reexamination requests.”

Copyright

U.S. v. Crippen: Xbox mod chip DMCA trial

Prosecutors brought criminal charges against Matthew Crippen for allegedly installing mod chips in Xbox 360 video game consoles in violation of the DMCA’s anticircumvention measures in 17 U.S.C. § 1201(a).  By design, Microsoft’s consoles only play licensed games burned to protected and region-encoded discs.  But if a user installs a mod chip, the console will run unlicensed homebrew software, copied software, software from other regions, and so on.

Crippen argued a fair use defense, comparing his actions to jailbreaking an iPhone, an activity granted a fair use exemption in the most recent DMCA anticircumvention rulemaking proceeding.  The judge barred this defense before trial.  Once the trial began, the prosecution suffered several setbacks.  Judge Gutierrez took issue with the prosecution’s jury instructions that seemed to conflict with the government’s manual regarding the DMCA, and with two prosecution witnesses who had committed crimes–one who admitted installing mod chips in Xboxes in college, and one who obtained video evidence in Crippen’s home in violation of the California Privacy Act.  After three days of trial, the government dismissed the case.  As a result, the question of whether the installation mod chips constitutes fair use remains open.

Peer-to-peer filesharing cases

(Note: Margaret Grazzini wrote a summary of the events leading to the most recent Thomas-Rasset trial for the Bolt, available here.)

Thomas-Rasset: A District of Missouri court issued a verdict (PDF) in the most recent Capitol Records v. Thomas-Rasset trial.  Following Judge Davis’s grant of remittitur earlier this year, this trial was limited to the issue of damages.  According to Ars Technica courtroom reports, Thomas-Rasset testified about the financial burden that a high damages award would place on her family, while the RIAA’s attorneys stressed that giving away copyrighted music online for free does more damage than selling counterfeit copies, and that Thomas-Rasset must take responsibility for her actions.  The jury awarded the plaintiffs $1.5 million in statutory damages, a total in between the previous two awards but still much higher than the $54,000 previously held by Judge Davis to be the maximum award that would not qualify as “monstrous and shocking.”  Thomas-Rasset filed another motion (PDF) to remove or reduce the award.

Harper: The Supreme Court declined to review the Fifth Circuit’s decision (PDF) in Maverick Recording Co. v. Harper, leaving open the question of when an online infringer may be able to claim innocent infringer status.  The defendant, a high schooler at the time of investigation, claimed that she understood her downloading of copyrighted music online to be “equivalent to listening to an Internet radio station.”  The plaintiffs argued that the notice limitation in 17 U.S.C. § 402(d) made the innocent infringer defense unavailable to Harper, since the albums featuring the infringing songs displayed proper copyright notice.  The district court held (PDF) that Harper’s innocent infringer status was a triable issue, because although proper notice appeared on the copyrighted albums themselves, there was no notice on the digital files Harper downloaded.  The Fifth Circuit court reversed, not directly addressing the lack of notice on the digital files, but holding that a defendant’s “purported legal naivety” regarding the copyright status of downloaded music could not overcome the § 402(d) limitation.

Questioning Peer-to-Peer Litigation Strategies: A former target of a mass peer-to-peer investigations is fighting back against former copyright plaintiffs for their choice of litigation tactics.  When the RIAA sued Tanya Andersen for distributing copyrighted music online, she was able to win summary judgment on the basis of evidence that the actual infringer the plaintiffs sought was someone else entirely.  She filed a countersuit with over a dozen claims against the RIAA, including negligence, fraud, malicious prosecution, and libel and slander.  The court dismissed almost all of her claims, but she plans to move forward with a claim for abuse of legal process.

Meanwhile, a series of lawsuits filed by the US Copyright Group (USCG) has come under criticism for two reasons.  First, a D.C. District Court set a December 6 deadline for USCG to name plaintiffs in its suits.  Although USCG identified 6,230 allegedly infringing IP addresses, ISPs limited the monthly total of subscriber IP lookups that they would perform, slowing USCG’s progress in identifying all plaintiffs.  When the deadline arrived, USCG had to drop 5,362 of its defendants.  Second, one USCG defendant seeks to commence a class action against the law firm representing USCG, claiming that they used fraudulent litigation tactics.  The class plaintiff alleges that USCG’s attorneys misrepresented the date of American publication on copyright registration documents so that statutory damages would be available at trial, and that most of the alleged infringements predate the registration date.

Finally, the UK Solicitors Regulation Authority (SRA) has scheduled disciplinary proceedings next year against two solicitors who issued more than 6,000 letters to suspected online infringers based on their IP addresses.  The SRA argues that an IP address alone is insufficient to identify an individual, since IP addresses can change between sessions or be hacked and otherwise accessed by third parties.

Trademark

Supreme Court denies appeal in Tiffany & Co. v. Ebay Inc.

Tiffany & Co., a jeweler whose products are among the most frequently counterfeited, sued eBay for contributory trademark infringement, among other claims.  Tiffany argued that the vast majority of goods claiming to be Tiffany products sold on eBay are counterfeit, and that eBay facilitated the sale of these goods.  On appeal from the Southern District of New York, a Second Circuit court rejected Tiffany’s claims.  The court held that, although eBay was aware that some were using its auctions to sell counterfeit Tiffany goods, this “generalized knowledge” was insufficient to meet the required level of knowledge.  Moreover, in light of the $20 million eBay claims to spend annually on anti-counterfeiting measures, the court found that eBay was not “willfully blind” to infringement of Tiffany’s trademarks.

On Nov. 29, the Supreme Court denied Tiffany’s appeal, allowing the Second Circuit’s decision to stand.  Consequently, the responsibilities owed by online retailers to prevent trademark infringement remain unclear.  Laura Strachan at FindLaw notes that this status quo hurts the brand, the retailer, and the customer, and that “[b]etter control and regulation are essential to curbing the problem.”  But on the same date of the Supreme Court’s decision, the Department of Justice announced that it seized 82 domain names belonging to commercial sites “engaged in the illegal sale and distribution of counterfeit goods” as part of its Operation In Our Sites v. 2.0.

Legislation/Regulation

SHIELD Act

In response to the publication by the New York Times and other major newspapers of American diplomatic cables submitted to Wikileaks, Sen. Joseph Lieberman introduced a bill called the Securing Human Intelligence and Enforcing Lawful Dissemination Act, or SHIELD Act.  The bill proposes to amend the Disclosure of Classified Information offense codified in 18 U.S.C. § 798.  The analysis in Wired’s Threat Level blog indicates that the amendments would make it a crime to publish information regarding the identities of classified sources or informants, or otherwise “concerning the human intelligence activities of the United States or any foreign government.”

COICA

On Sep. 20, Sen. Patrick Leahy introduced a bill titled the Combating Online Infringement and Counterfeits Act, or COICA.  The bill would allow the Attorney General to initiate an in rem action against any domain name used by a web site believed to be “dedicated to infringing activities.”  That category includes websites primarily designed or marketed for copyright or trademark infringement, as well as sites where “such activities are the central activities of the Internet site.”  Under such an in rem action, service providers would be required to suspend operation of the domain, and financial transaction providers would have to prevent the completion of financial transactions between American citizens and the site in question.

Content providers such as the RIAA came out strongly in support of COICA, arguing that in its absence “foreign sites that put Americans at risk [would be] allowed to flourish.” Other groups voiced concerns over the bill.  The Center for Democracy and Technology feared that the First Amendment would be implicated by takedowns of sites including substantial amounts of legal content, and that allowing the government to unilaterally take down websites would set a bad precedent for other nations.  The Electronic Frontier Foundation stressed that the bill would have a chilling effect on the development of future sites like YouTube.

Nevertheless, the Senate Judiciary Committee passed COICA by a unanimous vote last month.

FTC Do-Not-Track Mechanism

The FTC released a staff report entitled “Protecting Consumer Privacy in an Era of Rapid Change,” (PDF) recommending that web sites and browser developers work together to establish a “do not track” mechanism that would allow users to opt out of information collection for online behavioral advertising.  As noted by Matthew Lasar at Ars Technica, the FTC lacks regulatory authority to force the implementation of such a system, urging instead for the creation of industry standards, but calling for legislative action as a fallback measure.

Responses to the proposal have been mixed.  CNET’s chief political correspondent downplayed privacy concerns over the information collected, and argued that users should take protective measures themselves, or avoid visiting sites that share information.  An author at BusinessWeek claimed that consumers would suffer from the loss of targeted advertising, and that smaller websites might fail.  Nevertheless, a recent Gallup poll showed that two-thirds of consumers supported the bill, with 67% saying “advertisers should not be allowed to present ads based on their Internet use,” and 61% saying “free access was not worth the loss of privacy.”

Cite as: Will Moseley, Winter 2010 News Briefs, Berkeley Tech. L.J. Bolt (December 23, 2010), http://btlj.org/?p=744.
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