Articles Posted in DMCA

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Yesterday a NY court again dismissed Viacom’s $1 billion suit against Google/YouTube for copyright infringement. The court found that the DMCA shielded YouTube from liability after an appellate court (see prior blog post) vacated the prior dismissal.

This decision reaffirms the fact that, subject to certain exceptions, the burden of policing copyright infringement falls squarely on the copyright owners, not online service providers who host content uploaded by users. One of the potential exceptions at issue here is if the online service provider has actual knowledge of specific infringing content. The court found that even if YouTube knew generally that there was a lot of infringing content, the exception did not apply because there was no evidence that they knew of specific clips that were infringing.

This decision again confirms the power of the DMCA for online service providers who host user uploaded content. But the DMCA protections do not automatically apply. You must take proactive steps to benefit from the protection. If you have any questions about the DMCA please contact us.

Here is a copy of the decision.

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The U.S. Copyright Office recently issued its exemptions to the Digital Millennium Copyright Act of 1998 (“DMCA”). The exemptions, effective as of Oct. 28, 2012 define the limited circumstances that users are allowed to circumvent technology that prevents access to copyrighted works, e.g., content encryption schemes.  The exemptions are reviewed and issued anew every three years, so what was allowable prior to the ruling may not be anymore, and new exemptions, primarily directed to assistive technologies for the blind, are available.

Companies that relied on previous exemptions should take heed that many are no longer lawful, and the Copyright Office affirmatively denied the universal legality of jailbreaking devices. For our complete client alert on the topic, please click here.

The following are the newly issued exemptions:

Literary works distributed electronically – Assistive Technologies: This exemption allows blind people or those with “print disabilities” to work around circumvention measures on lawfully obtained copies of an electronic book (“eBook”) for the purpose of enabling “read aloud” functionality in the eBook.  The only catch is that the author must be paid for the work as he or she would be if the book had been purchased through other channels.  This caveat though should not be an issue for any eBook that is purchased from an established eBook seller.

Motion Pictures and Other Audiovisual Works – Captioning and Descriptive Audio: This exemption allows users to circumvent access control mechanisms to access the playhead and time codes in a motion picture or audiovisual work so that assistive technologies can be developed to render descriptions of the visual portions of the content.  The exemption was made so that that visually or hearing impaired users can enjoy a lawfully obtained copy of the work.

The following are alterations to prior exemptions:

Wireless Telephone Handsets – Software Interoperability: This exemption allows users to circumvent access control schemes on cellular telephones for the purpose of executing lawfully obtained software programs that the cell phone provider has not provided (e.g., “jailbreaking” a phone).  A request to extend this class of works to tablet computers was rejected. 

Wireless Telephone Handsets – Interoperability with Alternative Networks:  This exemption allows users to circumvent access control schemes for the purpose of “unlocking” a cell phone and using it on a network that it was not originally purchased for (e.g. purchasing a phone at a T-Mobile store and then unlocking the phone so it may be used on AT&T’s network).  The change in this exemption is that owners of legacy phones may still circumvent the control schemes to unlock previously purchased phones, but for phones purchased more than 90 days after the effective date of the exemption, the exemption does not apply.       

Motion Picture Excerpts – Commentary, Criticism, and Educational Uses: This exemption allows users to excerpt portions of motion pictures, lawfully obtained on DVDs or online where the use is for the purposes of commentary or criticism, provided the use must also be: in noncommercial videos, in documentary films, in nonfiction eBooks offering film analysis, or in educational classes such as film study or that require close analysis of media excerpts.  The alteration is that excerpts from motion pictures obtained online are now allowable.

Various Proposed exemptions that were not adopted relate to:

·        Digital Access to Literary Works in the Public Domain
·        Software Interoperability of Video Game Consoles
·        Software Interoperability of Personal Computing Devices
·        Space Shifting of Motion Pictures and Others Works on DVDs and Other Media

Various Prior exemptions that are no longer available:

·        Circumvention of technological protection measures to control access to video games accessible on a personal computer provided the circumvention is accomplished solely for the purpose of good faith testing for, investigating, or correcting security flaws.
·        Computer programs protected by dongles that prevent access due to malfunction or damage and which are obsolete

 

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viacom.bmpIn one of the most closely followed cases involving the  digital millennium copyright act (DMCA), an appeals court punted one of the key issues back to the lower court. The key issue left open relates to what constitutes actual knowledge for purposes of the DMCA. In light of this decision there are some interim steps companies should take in the event that the lower court rules in favor of the copyright owner.  

On April 5th, 2012 the U.S. Court of Appeals for the Second Circuit issued an order in the ongoing case Viacom International Inc. et al. v. YouTube Inc. et al., vacating a lower court’s summary judgment in YouTube’s favor and remanding the matter back to the district court for consideration of whether YouTube had actual knowledge of the infringement alleged by Viacom.  The underlying ruling by the district court in June of 2010 had granted summary judgment and found that YouTube was not liable to Viacom for copyright infringement relating to various videos that were available on its site due to the safe harbor language in the Digital Millennium Copyright Act.

The current opinion by the Second Circuit based its decision in part on and referenced an internal YouTube report noting that clips of certain Viacom shows were available on the site, and that such content was “blatantly illegal”.  The Second Circuit’s opinion stated that “[o]n these facts, a reasonable juror could conclude that YouTube had actual knowledge of specific infringing activity, or was at least aware of facts or circumstances from which specific infringing activity was apparent”.

Moreover, while the Second Circuit agreed with underlying district court’s decision that only actual knowledge of specific and identifiable infringements bars a service provider from protection under the DMCA’s safe harbor, it felt that the lower court erred by not addressing whether YouTube had engaged in “willful blindness”.  The ruling directed the district court to consider if YouTube (1) made a “deliberate effort to avoid guilty knowledge,” (2) had the ability to control the infringing activity, and (3) received a financial benefit from the infringing activity.

Ultimately, the Second Circuit opined that “we hold that summary judgment to YouTube on all clips-in-suit, especially in the absence of any detailed examination of the extensive record on summary judgment, was premature.”  Given the online technology industry-wide reliance on the protections available under the DMCA, this case will continue to be one to watch.  Its impact could be far-reaching whichever way it is finally decided.   

Given the uncertainty regarding how this case will ultimately be decided, companies hosting user posted content should take reasonable steps to minimize any liability in the event the decision ultimately favors copyright owners. Contact us for more insights on how to do this.

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Pinterest is one of the fastest growing social media sites. Pinterest enables users
to “pin” interesting things to a virtual pinboard to share with others. A pinboard is largely a collection of images organized by topic (home decorating, wedding planning, etc.).

A recent article calls into question the potential risks that users face by “pinning” third party content. As pointed out in the article:

YOU ACKNOWLEDGE AND AGREE THAT, TO THE MAXIMUM EXTENT PERMITTED BY LAW,
THE ENTIRE RISK ARISING OUT OF YOUR ACCESS TO AND USE OF THE SITE,
APPLICATION, SERVICES AND SITE CONTENT REMAINS WITH YOU.

Additionally, Pinterest wants you to indemnify them if your posts create a liability for them.

You agree to defend, indemnify, and hold Cold Brew Labs, its officers,
directors, employees and agents, harmless from and against any claims,
liabilities, damages, losses, and expenses, including, without
limitation, reasonable legal and accounting fees, arising out of or in
any way connected with (i) your access to or use of the Site,
Application, Services or Site Content, (ii) your Member Content, or
(iii) your violation of these Terms.

Sites hosting user uploaded content can shield themselves from liability by leveraging the Digital Millennium Copyright Act. Does this leave users holding the bag if there is infringement?

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

 

Could Social Media Flub Cost You $4.3 Million?

What can a social media mistake cost your company in fines, litigation, or loss of customer trust? A new survey reveals some interesting data points.

Gamification: How Competition Is Reinventing Business, Marketing & Everyday Life

The word “gamification,” much like the phrase “social media” a few years back, is being lobbed around in technology circles as the next frontier in web and mobile. Just as nearly every application, website, brand and marketer now employs social media in some capacity, so too will these entities gravitate toward game mechanics in the years ahead.

Avoid Social Media Meltdown: Create a Strategy Take Back Control

Everyone said that you and your business needed to be on Facebook, Linked-In, Twitter, and every other new social media site or service that has made its debut since then. You linked your webpage and your blog and made sure you had the right apps on your mobile devices to post on the go. You have profiles and pages on multiple services and…. now what?

Nixon bans Teacher-Student Friendships on Social Networking Sites

A new Missouri law is forbidding friendship between teachers and students, at least on Facebook. It’s part of a bill Governor Jay Nixon just signed designed to more clearly define teacher-student boundaries.

Qualcomm Releases Augmented Reality Game SDK

According to TechCrunch, Qualcomm has released its ARG SDK, which was originally intended for Android devices with Snapdragon chips, for iOS-compatible devices. This initial release has support for, specifically, the iPhone 4, iPad 2, and even the fourth-generation iPod Touch.

Virtual World Usage Accelerates

Virtual worlds gained 214 million new users in the second quarter of 2011, according to virtual worlds research firm KZero Worldwide. It was the largest quarterly increase since the company began tracking these numbers in 2008.

Lawsuits Against Grooveshark Continue; Music Publishers Seek To Redefine The DMCA

Grooveshark has been involved in a series of lawsuits
from the recording industry and, as with the Limewire lawsuits, it looks like the music publishers are piggybacking on the labels by suing later. We’ve already explained why Grooveshark appears to follow
the rules set out by the DMCA, but I would imagine that Grooveshark is the sort of site where judges simply won’t like the idea of it, and will thus figure out a way to rule against it. That could be very problematic.

 

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The Digital Millennium Copyright Act, 17 U.S.C. § 512 provides many benefits to copyright holders. Add one more to the list. In Xcentric Ventures LLC v. Karsen Limited et al (2011), the court refused the let the Russian Defendant play hide-and-seek to avoid service of process and authorized the Plaintiff to effect service by email due to a provision in the DMCA.

Plaintiff XCENTRIC VENTURES is the operator of a consumer complaint website. It discovered that a website owned and operated by defendant allegedly contains certain copyrighted material. Pursuant to the DMCA, it sent a series of DMCA take-down notices to non-party Google, Inc. to remove the infringing content from its search index and inform defendant that it is infringing on plaintiff’s copyrights. Google complied. Pursuant to the DMCA, defendant responded by serving a counter-notice on Google to contest the accuracy of the initial notice. To be effective, the counter-notice must contain certain things including: “the subscriber’s name, address, and telephone number, and a statement that the subscriber consents to the jurisdiction of the Federal District Court . . . and that the subscriber will accept service of process from the person who provided notification under subsection (c)(1)(C)
or an agent of such person.” §
512(g)(3)(D).

Plaintiff filed a suit alleging copyright and trademark infringement. See §
512(g)(2)(C) (stating that unless a party files an action seeking a court order to prohibit the infringing activity, the service provider can restore the removed material). Plaintiff attempted to serve defendant a copy of the summons and complaint via Federal Express delivery to the address provided in St.
Petersburg, Russia and via email. Delivery at the Russian address was unsuccessful because the address was “incorrect” according to FedEx.
On June 13, 2011, defendant emailed plaintiff in response to plaintiff’s emailed service of process. Defendant generally objected to the lawsuit and included a response, which it asked plaintiff to file with the court. In a later email correspondence, defendant argued that it never waived service of process and any service must be in compliance with the Hague Service Convention.

Plaintiff moved for an order determining whether it has effectively accomplished service of process on defendant Karsen or for leave to perform alternative service. Defendants did not respond or otherwise appear in the case.

The court found:

It is clear to the court that defendant has notice of the lawsuit and is evading service of process. By filing the counter-notice, defendant expressly agreed to accept service of process at its Russian address. Plaintiff attempted to perform service there but was unsuccessful. Defendant also purports not to understand the English language or the American court system, yet it corresponds sufficiently in English and appears capable of drafting a responsive pleading, as evidenced by the response it emailed plaintiff. Plaintiff has made other diligent, but unsuccessful, efforts to locate an alternative mailing address. In the absence of a correct address, plaintiff cannot personally serve defendant in Russia. It seems the only medium effective at reaching defendant is email.

We cannot, however, find that plaintiff has already accomplished service of process. While defendant did agree to accept service of process when it filed the counter-notice, plaintiff was unsuccessful in serving defendant by conventional means at its Russian address. [*3] Service by alternative methods, such as email, is only effective after court approval. See Rio Props., Inc. v. Rio Int’l. Interlink,
284 F.3d 1007, 1018
(9th Cir. 2002) (stating that email service is not available absent a Fed R.
Civ. P. 4(f)(3)
court decree); see also Fed.R.Civ.P. 4(h)(2)
(authorizing service of process on a foreign business in the manner prescribed by Rule 4(f)).

The court granted plaintiffs leave to serve defendant via email, stating “Service by email in circumstances where the defendant is evading service of process and it is the only method reasonably calculated to appraise defendant of the pendency of the action is permissible. See Rio Props., 284 F.3d at 1017 (approving an order granting leave to serve by email under similar circumstances); see also Liberty Media Holdings, LLC v.
Vingay.com
, No. CV-11-0280-PHX-LOA, 2011 WL 810250 (D. Ariz. March 3, 2011) (permitting service by email). Moreover,
alternative methods of service in Russia, even those not required under the Hague Service Convention, are permissible, since Russia unilaterally suspended all judicial cooperation with the United States in 2003. See Nuance Commc’ns., Inc. v. Abby Software, 626 F.3d 1222, 1237-38
(9th Cir. 2010) (holding that a district court erred in requiring service upon a Russian corporation to be in compliance with the Hague Service Convention).
As the Ninth Circuit stated, “when faced with an international e-business scofflaw, playing hide-and-seek with the federal court, email may be the only means of effecting service of process.” Rio Props., 284 F.3d at 1018.

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As we previously posted, Viacom is appealing to the Second Circuit its summary judgment loss to YouTube (and its parent Google) of a billion-dollar copyright infringement suit.  Last June, the U.S. District Court for the Southern District of New York ruled that YouTube is entitled to safe harbor protection under the Digital Millennium Copyright Act (“DMCA”) and granted YouTube’s motion for summary judgment on the basis that it did not have sufficient notice of the specific infringements at issue.  

At the crux of the court’s decision was “whether the statutory phrases ‘actual knowledge that the material or an activity using the material on the system or network is infringing,’ and ‘facts or circumstances from which infringing activity is apparent'” in 17 U.S.C. § 512(c)(1)(A)(i) and (ii) mean “a general awareness that there are infringements” as argued by Viacom, or instead mean “actual or constructive knowledge of specific and identifiable infringements of individual items,” as argued by YouTube.  The court agreed with YouTube’s interpretation, ruling it was supported by both the DMCA’s legislative history and recent case law.

Both sides have submitted their appellate briefs, and the Second Circuit has received 28 briefs filed by amici curiae.  Oral argument will likely be scheduled between late August and late September.   

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Microsoft Corp. has recently won a bid to force Datel Holdings Ltd.
to produce documents and sample products in an action involving Datel’s Xbox 360
accessories.  The Judge has ruled in favor of
Microsoft and ordered that certain documents must be produced on behalf of Datel relating to allegations that it hacked the Xbox security system in order to produce its line of Xbox accessories.  Datel must also produce information and
materials concerning its inventory of current and past product samples and any
offers to sell its technology.  In certain
circumstances, the Judge said, Datel will be able to let Microsoft inspect
Datel’s products at its counsel’s office in San Francisco or charge Microsoft
for the products.

The underlying suit, Datel Holdings Ltd. et al. v. Microsoft
Corp.
, case number 09-cv-5535, is currently pending in the United States
District Court for the Northern District of California.  In it Datel is alleging
that Microsoft reconfigured its Xbox system to
allow only the use of Microsoft memory cards, which Datel claims pushed it out
of the market for Xbox accessories in violation of, among other claims, the
Sherman Act.  Additionally, Microsoft has filed counterclaims alleging that
Datel breached its contractual obligations as a subscriber to the Xbox Live
service and violated the Digital Millennium Copyright Act. 

Previously, Microsoft’s bid to dismiss Datel’s
antitrust case failed when the presiding Judge ruled against its motion to
dismiss the tying, unfair competition and intentional interference with
prospective economic advantage allegations.  The ruling was based on the Judge’s
determination that the Xbox license agreement was somewhat ambiguous.  However,
Microsoft was able to obtain a partial dismissal of Datel’s Sherman Act claims
as the court found that Datel was not a direct participant in the
respective market. 

The mater is currently
scheduled to go to trial in or about October 2011.

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In Amaretto Ranch Breedables v. Ozimals, Inc., Case No. 10-05696, the Northern District of California granted a temporary restraining order enjoining Second Life from honoring Defendant’s take down notice under the Digital Millennium Copyright Act (“DMCA”). Defendant sells “ozimals” which are breadable “living” bunnies that users can purchase and take care of in the Second Life virtual world. Defendant sent Second Life a take down notice under Section 512(c)(3) of the DMCA, requesting that Second Life remove Plaintiff’s virtual horses based on the allegation that such horses infringed Defendant’s copyrights in its virtual bunnies. Plaintiff filed suit, alleging that it did not violate Defendant’s copyrights. Plaintiff also filed a request for a temporary restraining order, seeking to enjoin Second Life from removing its virtual horses from the virtual world, rather than enjoining Defendant from sending allegedly improper DMCA take down notices.

The court granted Plaintiff’s request for an injunction under Section 512(f) of the DMCA, which permits an injunction against complying with a take down notice if a party knowingly misrepresents that the material is infringing. Defendant’s take down notice alleged that the act of having a “live” virtual animal that needed food to “live” was protected by its copyright and was thereby infringed by Plaintiff’s virtual horses which needed virtual food to live. The court reasoned that Defendant was likely trying to protect the functionality of the virtual animal via copyright. However, copyright does not protect functionality. Because Plaintiff submitted declarations supporting that it did not copy Defendant’s code, which would have been a valid copyright violation, the court held that Plaintiff had “raised serious questions” as to whether Defendant materially misrepresented the likelihood of an actual infringement in the take down notice sent to Second Life. Thus, the court held that Plaintiff would likely be irreparably harmed if Second Life did take down its virtual horses, as Plaintiff would lose customers and income.

What is interesting about this case is the fact that the court enjoined Second Life, who was not a party and did not have a chance to litigate on behalf of itself in the proceedings. Thus, Second Life is apparently subject to an order to which it did not have a chance to weigh in on. The preliminary injunction hearing, to decide whether to maintain the injunction, is set for January 11, 2011.

This case also highlights the need for companies to understand the limits of the DMCA. Making overreaching statements in a DMCA takedown notice can lead to the copyright owner being liable.

 

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The Court of Appeals for the 9th Circuit ruled on the Blizzard v. MDY case, largely affirming the district court’s finding that MDY’s bot (“Glider”) for playing World of Warcraft (WOW) violates the WOW Terms of Use and violates anti-circumvention provisions of the DMCA. However, the 9th Circuit found that the violation was breach of a contractual covenant not a breach of a condition of the license and applied a somewhat different analysis to the DMCA claims. The net result still largely favors Blizzard and a permanent injunction was affirmed.

We previously prepared an advisory on the District Court decision.

The Court found that the use of Glider violated the Terms of Use prohibition on bots. However, unlike the district court, the 9th Circuit ruled that this was a breach of a contractual covenant not a breach of a condition of the license. One significance of this is the different remedies available for breach of contract and copyright infringement.
 
The DMCA claims related to whether Glider violates DMCA sections 1201(a)(2) and (b)(1) by circumventing WOW’s Warden, which is intended to detect bots. The Court ruled in Blizzard’s favor with respect to “dynamic non-literal elements” of WOW.
 
In reaching its decision, the Court refused to follow a Federal Circuit decision (in the Chamberlain case) interpreting the DMCA. The 9th Circuit ruled that Section 1201 (a) creates a new anti-circumvention right distinct from copyright infringement while section (b) strengthens the traditional prohibition against copyright infringement.  In contrast, the Federal Circuit in Chamberlain found that the DMCA coverage is limited to a copyright owner’s rights under Section 106 of the Copyright Act, and required a “nexus” to infringement. The 9th Circuit refused to adopt any requirement for an infringement nexus. The tension between these appeals courts may set up a show down in the Supreme Court.

The Court went on to find that MDY did violate Section 1202 (a)(2) of the DMCA with respect to the dynamic non-literal elements of WOW.  But the Court found that Glider does not violate DMCA Section 1201(a)(2) with respect to WOW’s literal and individual non-literal elements, because Warden does not effectively control access to these WOW elements.

The Court also found that the tortious interference with contract claims were not preempted by the Copyright Act, but that factual issues prevented a proper summary judgment finding. As a result, it vacated the district court’s summary judgment ruling on this issue and remanded the issue of personal liability for MDY’s CEO.

Perhaps serendipitously, the decision was handed down just days after Blizzard’s release of Cataclysm the third expansion of WOW. More than 3.3 million
copies as of Cataclysm were sold in the first 24 hours of release, which according to Blizzard, makes it the
fastest-selling PC game of all time.

Here is a copy of the 9th Circuit decision.