Intellectual Property Update
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INTELLECTUAL PROPERTY UPDATE FALA WINTER MEETING 2008 By Gregory A. Piccionelli Piccionelli & Sarno Introduction I. Copyrights Destruction Of Evidence Is A Significant Factor In MPAA Victory In Torrentspy.Com Copyright Infringement Action Columbia Pictures Industries, et al v. Justin Bunneli, et al, U.S. District Court for the Central District of California, Case No. CV 06-1093 FMC (JCx) The Motion Picture Association of America (MPAA) has prevailed in a significant ruling against the operators of the website “TorrentSpy.com”, largely based upon the judge’s determination the defendants tampered with evidence. In a ruling that could have implications for the privacy of website users, Judge Florence- Marie Cooper of the U.S. District Court for the Central District of California, ruled that that TorrentSpy.com infringed plaintiff’s copyrights in a default judgment against the operators of the bit torrent site. The judge agreed with the plaintiff that the defendants had destroyed important evidence after another judge had ordered them to preserve server logs, user IP (Internet Protocol) addresses and other information. Defendants have described the TorrentSpy technology as a means to find files distributed on BitTorrent peer-to-peer networks. According to the Judge Cooper, the defendants' conduct was “obstreperous”. In her opinion, she wrote that the defendants “engaged in widespread and systematic efforts to destroy evidence and have provided false testimony under oath in a effort to hide evidence of such destruction.” The judge also noted that “[d]efendants were on notice that this information would be of importance in this case.” TorrentSpy had located its servers in the Netherlands and argued that Dutch law protected them from having to turn over server logs and other information. In May, U.S. Magistrate Judge Jacqueline Chooljian ruled that TorrentSpy must preserve server data logs held in random access memory, or RAM. That decision was widely criticized as being an unreasonable standard because some of the information subject to the order © Gregory A. Piccionelli (2008) Page 1 of 20 would only be held in random access memory (“RAM’) and such RAM storage is temporary. But, in her ruling, Cooper said TorrentSpy destroyed or altered several other types of evidence, not typically stored in RAM, including user IP addresses, discussion forum postings about the trading of movies and moderator identities. GATT Implementing Legislation Extending Copyright Term Requires First Amendment Scrutiny Golan v. Alberto Gonzales, No. 05-1259 (10th Cir. Sept. 4. 2007)(Appeal from the United States District Court, for the District of Colorado, D.C. No. 1:01-cv-01854 LTB-BNB) At the intersection of copyright and first amendment law comes an interesting case out of Colorado. In Golan v. Alberto Gonzales, the Tenth Circuit affirmed the district court's ruling that GATT implementing legislation could provide retroactive protection for public domain works of foreign origin pursuant to 17 USC 104A. Golan v. Ashcroft, No. 05-1259 (10th Cir. Sept. 4, 2007). Despite that fact, the Court remanded the case to determine if the statute could survive First Amendment scrutiny. The plaintiff’s principal arguments were that (1) the congressional revival of copyrights extended existing copyrights in violation of the “limited times” provision of the Constitution’s Copyright Clause, (2) such revival shrinks the number of expressive works in the public domain in violation of the limitations on congressional power inherent in the Copyright Clause, and (3) such removal of works from the public domain violates the First Amendment by adversely impacting free expression rights. The Appeals Court, like the district court, was not persuaded by the first two arguments. But as to the third argument the Court held that “plaintiffs have shown sufficient free expression interests in works removed from the public domain to require First Amendment scrutiny of § 514 [the implementing legislation]. On this limited basis, we remand for proceedings consistent with this opinion.” The 10th Cir denied the government’s petition for en banc rehearing. File Sharer Must Pay $222,000.00 For Sharing 24 Songs Capitol Records, et al v. Jammie Thomas In one of the largest private file sharing cases to date, Jammie Thomas was ordered to pay damages of $9,250 for each of 24 songs that she illegally shared online, for a total of $222,000. This is actually much better than it could have been for Jamie, as the plaintiffs had alleged she shared 1,702 songs online and the $9,250 is far below the statutory limit of $30,000 per infringement (see 17 U.S.C. 504(c)(1)), which exposed her to potential damages of $51 million. In fact, as the jurors found the infringement was willful, the actual statutory limit of $150,000 per willful infringement could have applied in this case and Ms. Thomas was actually facing a little over a quarter of a billion dollars © Gregory A. Piccionelli (2008) Page 2 of 20 in potential liability. (Does anyone know if Romney’s, Trump’s or Gate’s kids engage in unlawful file sharing?) Ninth Circuit Reverses Perfect 10’s Injunction Against Google and Amazon Perfect 10, Inc. v. Amazon.com, Inc., 487 F.3d 701, 82 USPQ 2d 1609 (9th Cir. 2007) In 2005, Perfect 10 persuaded a California federal district court to issue a preliminary injunction against Google and Amazon, preventing them from “copying, reproducing, distributing, publicly displaying, adapting or otherwise infringing, or contributing to the infringement of Perfect 10’s photographs.” Last year, the Ninth Circuit reversed the district court’s ruling stating: “We conclude that Perfect 10 is unlikely to succeed in overcoming Google's fair use defense, and therefore we reverse the district court's determination that Google's thumbnail versions of Perfect 10's images likely constituted a direct infringement. The district court also erred in its secondary liability analysis because it failed to consider whether Google and Amazon.com knew of infringing activities yet failed to take reasonable and feasible steps to refrain from providing access to infringing images. Therefore we must also reverse the district court's holding that Perfect 10 was likely to succeed on the merits of its secondary liability claims. Due to this error, the district court did not consider whether Google and Amazon.com are entitled to the limitations on liability set forth in title II of the DMCA. The question whether Google and Amazon.com are secondarily liable, and whether they can limit that liability pursuant to title II of the DMCA, raise fact intensive inquiries, potentially requiring further fact finding, and thus can best be resolved by the district court on remand. We therefore remand this matter to the district court for further proceedings consistent with this decision.” Communications Decency Act Provides Merchant Credit Card Processors With Broad Federal Immunity From Online Infringement Perfect 10, Inc. v. CCBill, LLC , 481 F.3d 751, 82 USPQ 2d 1161( 9th Cir. 2007) In another defeat for Perfect 10, the Ninth Circuit ruled that the Communications Decency Act provides services providers, such as CCBill, with broad federal immunity for information originating with third-party users of the provided service. The Court held that the merchant processing company was immunized from plaintiff’s state claims arising out of alleged misuse of photos by websites linked to the processor’s billing service. The Court also rejected Perfect 10’s arguments that by providing processing services to clients CCBill knew operated websites with domain names such as “illegal.net” and “stolencelebritypics.com”, CCBill had notice of apparent infringement. The Court stated that such titles might be merely attempts by defendant’s clients to increase the salacious appeal of titillating photos on their websites. The Court further opined that a service provider is not required to hack passwords to get into websites with © Gregory A. Piccionelli (2008) Page 3 of 20 such names and investigate whether actual infringement or other illegality is occurring therein. Merchant Banks And Credit Card Processors Acting As Such Not Directly Or Vicariously Liable For Copyright Infringement By Their Customers Perfect 10, Inc. v. Visa Int’l Serv. Assoc. 494 F.3d 788, 83 USPQ 2d 1144( 9th Cir. 2007) In yet another defeat for Perfect 10, the Ninth Circuit affirmed the district court’s dismissal of Perfect 10’s complaint against Visa and MasterCard for contributory and vicarious copyright infringement. The Court’s opinion clearly expressed a concern that adoption of Perfect 10’s theories of liability would open the floodgates to potentially endless claims of liability against a wide range of potential defendants who simply do business with infringers. The Court’s opinion also addressed the potential applicability of Fonovisa v. Cherry Auction, a case that adopted broad definitions of third party liability. In doing so, the 9th Circuit rejected the implications in Fonovisa that any facilitation of infringement satisfies the material contribution prong of the contributory infringement test and that a party’s mere ability to influence and infringer satisfies the control prong of vicarious liability. The Court also held that that there was no vicarious liability for trademark infringement because there was no joint ownership or control of the websites or any symbiotic relationship between the defendants and the operators of the websites. Perfect 10 Claims Microsoft’s MSN Search Engine Infringes Its Copyrights Perfect 10, Inc. v. Microsoft Inc. et al. U.S. District Court for the Central District of California Civil Action No. CV07-05156 MMM Apparently undeterred by numerous recent defeats, last August Perfect 10 filed yet another copyright infringement lawsuit against a search engine service provider. This time the target was Microsoft's MSN search engine which, like Google’s and Amazon.com’s similar search tools, makes thumbnail images available in search results.