The Software Lawyer

New York Times

2011-12-13T07:12:00.000-08:00

The New York Times recently printed a first page article and various editorial pieces about the state of education in US law schools. The New York Times claims that law schools are "in crisis" because they do not adequately prepare lawyers to enter the workforce. As I've noted elsewhere, I think the New York Times gets it all wrong. At least one of their columnists seems to agree with me.

http://opinionator.blogs.nytimes.com/2011/12/12/teaching-law/?hp

Facebook Settlement with FTC

2011-12-05T13:32:00.000-08:00

Last week Facebook settled claims brought against it by the Federal Trade Commission. The terms of settlement are the subject of commentary this week by consumer advocates and lawyers. But perhaps the most fascinating thing about the whole affair is the nature of the FTC's complaint. The complaint was not an enforcement of specific U.S. privacy law. Indeed, the FTC does not have much, if any, "privacy law" to enforce. Rather, here, in order to flex its muscle, the FTC resorted to claims that Facebook had made inaccurate statements in its privacy policies and elsewhere about information-control settings available to users of the Facebook site. These statements were, according to the FTC, false and misleading. On that basis the FTC has power to punish Facebook.

The bottom line is that Facebook got itself into a tangle by making broad statements to its users and by making promises that it arguably did not keep. Would Facebook have drawn the ire of the FTC if it had, from the beginning, consistently refused to make any user-friendly statements and promises about the way it gathers, analyzes, and shares information about users and about user behavior? Perhaps not.

Here's a summary of the complaint.

1. Profile Information Made Available to Applications Used by Friends. According to the FTC, Facebook represented to users that through use of its site's Profile Privacy Settings users could restrict access to user profile information (e.g., birthday, hometown, activities, interests) to specific groups, such as "Only Friends" or "Friends of Friends." This, according to the FTC, was false, misleading, or both. The truth being that Facebook made profile information that a user chose to restrict to "Only Friends" or "Friends of Friends" accessible to any third party Facebook platform application that the user's Friends used.

2. December 2009 Privacy Changes. According to the FTC, prior to December 2009, Facebook users could, and did, use Friends' App Settings to restrict third party Facebook platform applications from accessing profile information such as name, profile picture, gender, friend list, pages, and networks. In December 2009, Facebook made the decision to no longer make available settings to protect this information. And all prior user choices to protect this information were overridden. This information effectively became publicly available information ("PAI"). To implement these changes, Facebook required each user to click through a privacy wizard that told the user:

"We're making some changes to give you more control of our information and help you stay connected. We've simplified the Privacy page and added the ability to set privacy on everything you share, from status updates to photos."

"At the same time, we're helping everyone find and connect with each other by keeping some information - like your name and current city - publicly available. The next step will guide you through choosing your privacy settings."

"Facebook's new, simplified privacy settings give you more control over the information you share. We've recommended settings below, but you can choose to apply your old settings to any of the fields."

According to the FTC, the privacy wizard did not disclose adequately that users could no longer restrict access to their newly-designated PAI via Facebook settings. For example, the notice did not disclose that a user's existing choice to share his or her friend list with "Only Friends" would be overridden, and that this information would be made accessible to the public.

According to the FTC, Facebook's failure to adequately disclose that following the December 2009 privacy changes users could no longer restrict access to their name, profile picture, gender, friend list, pages, or networks by use of settings, and its failure to disclose adequately that the December 2009 privacy changes overrode existing privacy settings, constituted a deceptive act or practice. Further, by designating as PAI certain user profile information that had previously been subject to privacy settings, Facebook materially changed its promises that users could keep such information private. It changed these promises without adequate notice and consent. According to the FTC, Facebook's failure to disclose constituted an unfair act or practice.

3. Information Not Needed. According to the FTC, Facebook made numerous statements to users that third party Facebook platform applications used by a user would access only the profile information that "the application need[s] to operate." For example,

"Allowing [name of application] access will let it pull your profile information, photos, your friends' info, and other content that it requires to work."

"Applications you use will access your Facebook information in order for them to work."

The FTC argued that third party Facebook platform applications could in many instances access profile information that was unrelated to the application's purpose or unnecessary to its operation. Thus, Facebook's statements constituted false or misleading representations.

4. Sharing Information with Advertisers. The FTC complained that Facebook broke its promise to users that Facebook would not provide profile information to advertisers. According to the FTC, Facebook made many statements that it did not share information about users with advertisers, including:

"Facebook may use information in your profile without identifying you as an individual to third parties."

"We don't share information with advertisers without your consent . . ."

"[W]e never provide the advertiser any names or other information about people who are shown, or even who click on, . . . ads."

"We never share your personal information with advertisers. We never sell your personal information to anyone."

"The only information we provide to advertisers is aggregate and anonymous data, so they can know how many people viewed their ad and general categories of information about them."

According to the FTC, contrary to these statements, in many instances, Facebook has shared information about users with platform advertisers by identifying users to the advertisers when users click on ads. Specifically, through May 2010, Facebook in many instances provided User IDs to advertisers. User IDs can be used to obtain information that after December 2009 Facebook began to categorize as PAI (i.e., profile picture, gender, current city, friend list, pages, and networks and information about the online behavior of the user). On this evidence, the FTC alleged that the Facebook statements were false and/or misleading.

5. Verified Apps Program. It was alleged by the FTC that from May 2009 until December 2009 Facebook operated a Verified Apps program in which it designated certain third party Facebook platform applications as "Facebook Verified Apps." Facebook then made statements to its users that it had taken steps to verify the security of these Verified Apps, in excess of its review of other third party applications. The FTC argued that Facebook did not in fact take these steps, making its statements false or misleading.

6. Continued Display of User Photos. The FTC contended that Facebook made statements to users that users could restrict access to photos and videos that a user uploaded by deleting or deactivating his or her user account. For example:

"To deactivate your account, navigate to the "Settings" tab on the Account Settings page. Deactivation will remove your profile and content associated with your account from Facebook. In addition, users will not be able to search for you or view your information."

In fact, Facebook continued to display users' photos and videos to anyone who accessed the content URL for such photo or video, even after a user had deleted or deactivated their accounts. Thus, according to the FTC, the representations that this content would be removed was false and misleading.

7. Faulty Self-Certification of EU Safe Harbor Framework Principles. The FTC argued that from May 2007 until the time of its complaint, Facebook had stated in its privacy policy that it complies with the "EU Safe Harbor Privacy Framework as set forth by the United States Department of Commerce." In fact, in many instances, Facebook had not adhered to the U.S. Safe Harbor Privacy Principles of Notice and Choice, making its statements deceptive acts or practices.

Righthaven v. Leland Wolf

2011-10-02T15:52:00.000-07:00

On September 27, 2010, Judge John Kane of the District Court for the District of Colorado issued an opinion and order dismissing the matter of Righthaven v. Leland Wolf.

Late last year, the Denver Post published a photograph of a TSA agent performing an enhanced pat-down search at Denver International Airport. The photograph was originally owned by that newspaper, but at some point after its initial publication the copyright was purportedly transferred to Righthaven. Righthaven, an organization many are calling a "copyright troll," filed fifty-seven lawsuits against bloggers and others who had displayed the photograph without permission.

At issue was whether Righthaven had standing to bring a copyright infringement lawsuit against Wolf. The court said "no." According to the Court, Righthaven had obtained neither "legal ownership" nor "beneficial ownership" of an exclusive right in the copyrighted photograph and therefore lacked standing to sue under 17 U.S.C. 501. This is because Righthaven had obtained no interest from the newspaper other than the right to proceeds from infringement actions. According to the Court, Righthaven held no underlying copyright, rather it held only a "bare right to sue for infringement - no more, no less."

The Court refused to recognize the free assignment of the right to sue for infringement, as permitted by the Fifth Circuit in Prather v. Neva Paperbacks, Inc., 410 F.2d 698 (5th Cir. 1969), as to do so would "skew[] the delicate balance which underlies federal copyright law." The Court wrote:

"A third-party who has been assigned the bare right to sue for infringement has no interest in the legal dissemination of the copyrighted material. On the contrary, that party derives its sole economic benefit by instituting claims of infringement, a course of action which necessarily limits public access to the copyrighted work. This prioritizes economic benefit over public access, in direct contradiction to the constitutionally mandated equilibrium upon which copyright law is based."

On this basis, the court granted summary judgment in favor of Leland Wolf, and, in light of what Judge Kane stated is a need to discourage the abuse of the statutory remedies for copyright infringement, ordered Righthaven to reimburse Mr. Wolf's full costs in defending the action, including attorney's fees.

Google Reaches $500 Million Settlement With Government

2011-08-24T10:58:00.000-07:00

The government announced Wednesday that Google will pay $500 million to settle government charges that it has shown illegal ads for online Canadian pharmacies in the United States.

The fine, which the Justice Department said is one of the largest such penalties ever, covers revenue that Google earned from the illegal advertisers and revenue that the Canadian pharmacies received from United States customers.

New York Times:

http://bits.blogs.nytimes.com/2011/08/24/google-reaches-500-million-settlement-with-government/?scp=2&sq=google&st=cse

Dolby Sues RIM for Patent Infringment

2011-06-15T11:28:00.000-07:00

Dolby has sued RIM for infringement of Dolby patents by RIM smart phone and tablet products. According to Dolby, other manufacturers have licensed this technology.

Story here: http://www.washingtonpost.com/business/technology/dolby-sues-rim-over-patent-infringement-aims-to-halt-sales-of-blackberry-devices/2011/06/15/AGp9EtVH_story.html

BlackBerry App World

2011-05-20T11:06:00.000-07:00

I recently reviewed the agreements that Research in Motion makes application developer vendors accept prior to offering products on BlackBerry App World, which is RIM’s marketplace for BlackBerry applications. Depending upon whether the code to be distributed is a free application, a paid-for application, or a product or content offered from within a distributed application, the distribution on BlackBerry App World is governed by different terms. Here’s a brief review of key and otherwise interesting provisions of the agreements that apply to all distributions (as the agreements existed on the RIM website as of May 10, 2011).

All Vendors.

All developer vendors, regardless of the type of software to be distributed at BlackBerry App World, must agree to the terms of the BlackBerry App World Vendor Agreement, submit software that is compliant with the BlackBerry SDK License Agreement, and comply with the BlackBerry App World Vendor Guidelines.

Under the BlackBerry App World Vendor Agreement, the vendor must pay a registration fee and submit the latest version of its application for review by RIM and acceptance at RIM’s sole discretion. RIM may, or may not, distribute any application or content at its sole discretion, and may at any time and for any reason discontinue the distribution of any application or content on BlackBerry App World or on any user’s phone. The vendor is solely responsible for end user support. The vendor is required to make a long list of representations and warranties about its applications and content and is required to hold RIM harmless from a similarly long list of damages and liabilities that may result from the distribution. RIM accepts no liability for any bad things that may occur as a result of the distribution. The financial terms of the distribution are straightforward. RIM claims 30% of all revenue received by vendor with respect to any application or in-app product distributed through BlackBerry App World (and any updates and upgrades to the the application or content, whether or not distributed through he RIM portal). Importantly, however, the revenue to be shared does not include any fees paid by an end user to a third-party reseller (otherwise know as a merchant of record) to obtain a copy of the application or in-app product. This is important because currently all amounts paid by end-users for applications and in-app content are, by the nature of the portal, paid to such resellers and not RIM or the vendor. Each vendor must sign separate agreements with these resellers, which include Digital River and Bango.net.

The BlackBerry SDK License Agreement states the conditions and restrictions applicable to use of the BlackBerry SDK to build software operable on BlackBerry devices. They include specific restrictions on that software, including that the software not modify, delete, duplicate, or replace any device email functionality, synchronization server technology, or attachment service distillers. The software must not install, invoke, interpret, or execute interpreted software other than software interpreted by RIM native interpreters. RIM may refuse to code-sign any software, vendor is responsible for obtaining any required certifications of airtime service providers respecting compatibility with wireless networks, and any application offered in conjunction with location-based services or functionality must obtain consent of the end user before processing location data. RIM claims that the contents of its SDK are confidential information and that vendor must treat it as confidential until it enters the public domain. The SDK License Agreement includes vendor representations and warranties, indemnification provisions, and limitations of RIM’s liability similar to the BlackBerry App World Vendor Agreement.

The BlackBerry App World Vendor Guidelines is the final of the three base documents to which all distributed BlackBerry software must adhere. Of note, under these guidelines, all software must be functionally stable, each application must alert end users of potential airtime usage charges, any cryptographic functionality must be limited to authentication, digital signature, or copyright protection functions, and the software must comply with applicable SDK license agreements.

Vendors of Paid-for Applications and In-app Products.

In addition to the terms discussed above, a vendor that wants to distribute paid-for applications and in-app products on BlackBerry App World must enter into two different reseller agreements. One with Digital River and another with Bango.net Limited. These reseller agreements are largely identical and describe the terms under which these resellers will purchase copies of vendors paid-for apps and in-app products and resell them through the reseller’s commerce solution kiosk on BlackBerry App World. Under these reseller agreements, and the distribution structure used by BlackBerry App World, a reseller, and not the developer vendor, has the commercial relationship with the end user buyer of applications and in-app products. As a result, BlackBerry apps are distributed through a multi-link chain, and not directly by the developer-vendor. The reseller has no actual obligation to resell. Vendor is responsible for product support. The reseller promises to pay vendor for each copy of the paid-for application or in-app product an amount that is 70% of the suggested retail price of that application or product set by the vendor developer.

Vendors that want to distribute in-app products from within applications distributed on BlackBerry App World must also agree to the BlackBerry Payment Service SDK Terms, which supplement the BlackBerry SDK License Agreement discussed above. This supplement makes the legalistic point that, in the case of in-app products, the vendor developer acts as the fulfillment agent of the reseller. It is the vendor that hosts and delivers the in-app products, but the reseller retains the commercial relationship with the end-user as the merchant of record.

Here are the documents discussed above, found on the RIM website as of May 10, 2011.

Blackberry App World Docs

Harper Collins Ebooks

2011-02-28T10:10:00.000-08:00

Last Friday Harper Collins announced that lending libraries that purchase rights to e-book versions of its titles will be entitled to check those titles out to library members only 26 times per purchased title. Many book publishers make some or all of their titles available to lending libraries for check-out an unlimited number of times. Some big publishsers, such as Simon & Shuster and Macmillan, do not make e-books available to lenders at all.

Publishers do not have e-lending figured out yet. It seems to me that placing a limit on the number of check-outs is a valid way to go. I suppose that if we assume that e-books are made available to lending libraries at the same price as paperbacks, the limit number should be set at about the number of times a paperback version of the book can be checked out before it falls apart. To the extent that e-books offer lenders and/or borrowers a benefit over paper copies, the number would be lower than the fall-apart threshold. In the end, the market sets the price of the e-book given its particular set of license privileges.

Is this just a pricing issue, or is there some other principle at play?
How is convenience to be valued?

Related Links: Library Journal

Viacom v. Google

2011-02-02T15:31:00.000-08:00

Viacom v. Google is moving along in a way that I would have predicted. On June 23, 2010, Judge Louis Stanton issued a Summary Judgment Order that slammed Viacom. Viacom has appealed and, by the way, hired Ted Olson going forward. Here's a quick summary, some comments, and a prediction after reading the District Court Order and Viacom's opening brief to the Second Circuit.

SUMMARY

The case is about whether Google is entitled to avoid copyright infringement liability for hosting-- for its users --certain Viacom-owned content on YouTube.com without permission. Google is using 17 U.S.C. Section 512 to argue that it has no infringement liability because it has removed all Viacom content about which it has been notified under the notification provisions of that section, it had no actual knowledge of the specific identity or location of the content in-suit prior to being notified by Viacom, and it could not have known, prior to such notice, that upload or hosting was an infringement. Further, there was an absence of facts and circumstances from which the identity and location of such specific content would have been apparent. Moreover, according to Google, it did not receive "financial benefit directly attributable" to such specific content and had no "right or ability to control" any specific acts of infringement by its users, as those terms are used in Section 512. Since all this is true, Google argues, it enjoys safe harbor immunity under Section 512.

Viacom contends that Google misinterprets the law. Google need not have had knowledge of any specific content's identity, location, or infringing status. Nor need Viacom show that Google receives financial benefit from, or can control, specific acts of infringement. It is enough, says Viacom, that Google had, and has, a general awareness that many of its users post copyrighted content without permission. Because it does, it had the duty to remove the content in suit even before receiving a written notice of infringement from Viacom. According to Viacom, because it has general knowledge of widespread infringement by users, in order to avoid liability Google must employ technology and processes to independently prevent infringement by users and find infringing content that already exists on its site.

So, the case is largely about interpreting Section 512 to decide how "specific" an ISP's knowledge of infringement needs to be in order to disqualify it from Section 512 safe harbor immunity.

COMMENTS

Google's interpretation of the (internally inconsistent) statute makes the most sense to me. Section 512 was meant to create a safe harbor where an ISP can find immunity if takes certain easy to understand steps. To read Section 512 the way Viacom urges converts the law into a no-bright-line rule under which the parties, and the court, need to parse subtle distinctions of copyright law. Viacom's interpretation opens up an infringement analysis that can be second-guessed at no end. How many infringing posts does it take to give an ISP general knowledge of infringement by users of its site? How many red flags does it need to see? What about fair use? How many man-hours does it need to spend in deep thought about the subtleties, complexities, and vagueness of the United States copyright law as applied to the Internet? If anything, what Congress was trying to do with Section 512 is create some certainty. Under Viacom's interpretation, we are not much better off than we were before the law was enacted.

I also like Google's argument that it cannot, as practical matter, determine, for any given item of content, and on the face of that content, whether a user infringed copyrights when he or she posted the content on YouTube.com. For example, much of Viacom's expensive-to-produce and valuable content is often licensed to various parties for use on the web. Indeed, many content owners themselves use the powerful YouTube platform to syndicate their own content. How can Google be expected to know whether any particular upload infringes before it is told so by a content owner? And don't say the answer is digital fingerprinting. If anything is clear, Google has no obligation to employ that. Section 512 is not to be construed to require an Internet service provider to monitor its service or affirmatively seek facts indicating infringing activity before it enjoys safe harbor protection.

As an aside, and verging on a rant, it is not quite proper to talk about content, itself, as infringing copyrights. People, not content, infringe rights. And even if it is correct to say that content itself infringes copyrights, there is no way to determine infringement through an examination of the suspected content itself. To determine whether the act of uploading (by the user) or hosting (by Google) infringes requires an analysis that the ISP cannot make without research and information that it does not have without taking affirmative steps. And, again, the law does not require those affirmative steps.

PREDICTION

Viacom has filed its brief with the Second Circuit claiming that the District Court Order granting summary judgment to Google was in error. Interestingly, although I think Google interprets Section 512 more correctly and will, and likely should, win the war, I predict it will lose this intermediate appeal. Judge Stanton's Order is too light on facts. Too focused on the legal standard as a policy matter and not explicative enough about what Google actually knew and when it new it. Whether or not Google's knowledge, awareness, or financial benefit needed to be "specific," the Court of Appeals is not going to like Judge Stanton's failure to work through the pleaded facts.

I predict that whether or not the appellate court addresses the policy question arising from the interpretation of Section 512, it will kick the case back down to the District Court for further fact finding and consideration.

We'll see.

IP Colloquium

2011-01-24T20:05:00.000-08:00

After digging around on the Web a bit this winter for free MCLE units, I found the IP Colloquium site. They offer free participatory MCLE credit for listing to very smart discussions about copyright and patent law by law school professors. Very good quality. Much better than the self-serving marketing that usually passes for MCLE seminars.

Here's the link.

http://www.ipcolloquium.com/about.html

The Ethics of Legal Process Outsourcing

2010-04-12T07:08:00.000-07:00

Attorneys Virginia has posted a reasonably well-written and thoughtful entry about the ethics of legal process outsourcing. Read it here.

Most web commentary about the ethics of legal process outsourcing is written by outsourcing firms and their employees. Thus, a lot of what I see is neither authoritative nor especially illuminating.

I am not going to comment on any ethical issues related to legal outsourcing other than to say that I don't think that outsourcing to offshore destinations poses many (any) ethical questions that US lawyers have not faced in the past when using staff to accomplish certain tasks. Being a good lawyer has always required reliance upon lawyer and non-lawyer staff. Whether a lawyer relies upon employees or vendors, or a combination of both, he or she must choose wisely. Some things never change.

Lawyers' Role

2009-10-22T09:21:00.000-07:00

In my last post, I talked about the need for each in-house lawyer to really participate in the business of his or her company. Not only as a legal expert but also as a business executive. In-house lawyers need to be both. I take to task all lawyers who go only half way, by t-ing up legal analysis but then running away from business decisions.

In this post, I go the other direction. Here, I want to recognize how difficult it can be for in-house lawyers to really participate in certain aspects of business. For example, I recognize that it can be hard for lawyers working with business development and sales groups to take a leadership role. It often is difficult to stand shoulder-to-shoulder with executives who design business development and sales deals. Why is this so? The one word answer is: "customers."

Someone once told me that every successful executive within a company has at some point "carried the company bag." What he meant is that one cannot understand the business of a company unless one has represented that company on sales calls. In his opinion, until one has gone out, time and again, and had the door slammed in his or her face when pushing the company product or service, one can't understand the business well enough to lead it. This sounds right to me.

Unfortunately, this is bad news for in-house lawyers who would like to progress out of the role of lawyer and into the role of effective senior leader.

In my experience, in-house lawyers are seldom asked to make customer calls or to meet with their company's strategic partners in the early stages of any deal. Even in-house transactional lawyers, whose job it is to help close agreements, are usually excluded from the early and mid phases of sales and business development deals. In-house lawyers often find themselves stepping in only to take the deal through the necessary, but formalized and often somewhat adversarial, documentation process. Trust me on this one. A lot of lip service is paid to the idea that lawyers are integral to the business, but the reality does not live up to the talk. All of this is unfortunate because it means that we internal business lawyers are typically not set up to understand the human context of the deals we work on.

In-house lawyers who do not work on sales and business development deals have it even worse. They have skant exposure to customers at all. They may not need to have that customer-facing work in order to succeed perfectly well within the legal department, providing valuable service to the company. But I contend that every lawyer in a corporation, from securities lawyers to patent lawyers to litigators to human resource specialists and general counsel cannot rise the the level of leading executive without having represented a the company's products and without having built personal relationships with people who are customers and potential strategic partners.

So what can be done to break down this roadblock?

My advice to younger lawyers is to simply keep trying. Exploit every opportunity to get in front of customers and partners, and not only for purposes of negotiating. Be a part of the sales process in which personal relationships are built, the needs and desires of the customer/partner are heard, and your company's wares are pitched. Invite yourself along. Be greedy (but not too greedy). The experience you accumulate is invaluable and will serve you very well.

Recommendations

2009-10-15T13:53:00.000-07:00

I've been thinking recently about the role of in-house lawyers and what is expected of us by our business colleagues.

I find that members of corporate legal departements (and, indeed, lawyers generally) resist making decisions. Too often I see young lawyers serving up problems and then running away from decisions. As if they think lawyers have a special status that excuses them from the hard part of business.

One rule of thumb that I live by, and that I push upon the people that I manage, is that in most cases the legal guidance that we give to our colleagues should be accompanied by a recommendation about how to proceed with the business. As in-house professionals, we have the burden of wearing two hats, not only one. When we give legal guidance, we wear our lawer's hat. But inhouse legal professionals also wear the hat of a business executive, which requires that we make decisions ourselves, and, when we are not the decision maker, give real recommendations that help others decide.

For example, suppose an inhouse lawyer is asked by a senior technology executive to explain the process for running a patent clearance for a new product. The question calls for legal guidance of a factual sort. The guidance may be something like: "We would have an engineer work closely with an outside law firm that will research all issued patents that might be infringed by the product and then generate an opinion letter."

The next question from the technology executive might be: "Well, we don't have money for that kind of clearance. What is the likelihood that we will be sued for patent infringement if we just release the product without running it through a clearance process?" The likely legal guidance is something like: "I don't really know. In order to know, we must run a clearance analysis. If we roll the dice and just go for it, the company history of releasing new products without patent clearance tells us that we could see a patent lawsuit."

Obviously, this answer gives the technology executive nothing to work with. So, he asks: "What is the risk?" What is the likelihood that we will be sued?"

At this point, many lawyers will repeat what they said the first time: "I don't know. We need more information." I see lawyers get into this position often. We sometimes can't measure risk very well because we cannot reasonably determine the liklihood of a harm. The inexperienced lawyer stalls out there and can't move past the "I don't know the risk" answer. But this is not good enough.

The more experienced lawyer will acknowledge that it is difficult or impossible to measure the likelihood of a bad thing happening. But she will not stop there. She will move the conversation forward by taking off her lawyer's hat, put on her executive hat, and make a real recommendation. For example, by saying: "Look. I can't tell you the likihood of getting sued for patent infringement. I can tell you that we run those clearances as a matter of process and we still sometimes get sued. I can also tell you that I know that other companies in this industry do not run patent clearances of new products, so just going ahead without a clearance is not an unreasonable thing to do. Since I understand that the product you are going to release is an extension of an existing product line and that it fits within the core existing business, I recommend that you move ahead without a clearance."

The point here is not whether the lawyer gives the business executive the answer he wants to hear. The recommendation could have been to hold the product release until a clearance is run.

The point is that when you are an in-house legal professional you are two things. You are someone with a particular expertise, in the case above, a working knowlege of intellectual property law. You are also a businessperson who makes recommendations and decisions. It is far too easy for legal professionals to serve up the problem and then run from the decision that must be made. Everyone within a corporation must make decisions and make recommendations about how the business should be operated. No one individual in a corporation has complete wisdom. Everyone matters and should pay a role.

Scott v Scribd

2009-10-05T14:47:00.000-07:00

Here's another case by a copyright holder against the operators of a copyright infringement filter technology. I have not read the complaint, but it smells like fair use to me . . .

Scott v. Scribd Complaint

Principles of Software Licensing

2009-08-30T09:37:00.000-07:00

1. One way to define a contract is as an exchange of promises for which the law is willing to remedy a failure to perform. A contract is a state of affairs existing between parties. To call a document a contract is, strictly speaking, incorrect. But a document may be evidence of a contract.

2. A license is not a contract. A license is a permission granted by one party to another allowing the use of intellectual, personal or real property. Its sole purpose is to extinguish the fear of lawsuit for infringement or trespass. Stated another way, a license is a single party's promise not to sue. Since a license by itself does not involve any exchange (i.e., mutuality of consideration), it never alone creates a state of contract.

3. It is never correct to refer to a license as having beenbreached or violated by a licensee. Breach is a term of art under contract law doctrine, and it is just strange to say that a promise by one party has been violated by another party. Rather, a wrongdoing licensee may be said to haveexceeded the scope of a license, and, as a result, to have infringed a property owner's rights. Similarly, a license is never properly said to be enforced by the licensor. A license is a shield, not a sword, available to the licensee. It is used only to defend a licensee against an owner's claim of infringement. However, it can be said, somewhat colloquially, that a licensee may ask a court to enforce a license.

4. Despite the fact that a license is not itself a contract, a license might be an element of a contract. In other words, the license-- which is a promise not to sue-- can sometimes be given in exchange for a promise by another party, perhaps a promise to pay money or a return license. A contract that includes a software license as a party's promissory obligation is usually called a software license agreement.* This contrasts with a so-called bare license, which, as discussed above, does not include an element of return consideration.**

5. When a license is consideration in a contract, the license may be enforced under the law of contract. Generally speaking, as long as the licensee has not materially breached that contract, and it is not otherwise void or voidable, then the licensee is entitled to protection under the license. On the other hand, if a licensee under a license agreement materially breaches that agreement, then the contract may be terminated by the licensor, resulting in the licensee's loss of license.

6. A bare license-- which, by definition, is not a part of a contract-- must be enforced outside the rubric of contract law. A bare license is enforceable by the licensee under either equity concepts such as promissory estoppel or, alternatively, under property law that independently recognizes the effectiveness of licenses as a means for unbundling and sharing ownership interests.

* Software vendors like Microsoft and Intuit sell licenses to desktop software products. They often include in their products the terms of a software license agreement-- sometimes called an end user license agreement (EULA)-- to which a user must agree.

** The General Public License (GPL) and the Berkeley Software Distribution (BSD) license are examples of bare licenses.

Virtual Law Partners

2009-06-05T08:44:00.000-07:00

I met last week with a group of lawyers from Virtual Law Partners, a firm that is establishing itself as a provider of full legal services at discounted rates. They don't keep offices and allow each partner to establish a workspace independently. This, they say, keeps fees down.

DMCA

2009-05-06T21:21:00.000-07:00

Here's a pretty good article in Wired on the history and purpose of the Digital Millennium Copyright Act (DMCA).

http://www.wired.com/threatlevel/2008/10/ten-years-later/

Public Patent License: ISO 32000-1

2009-01-14T19:15:00.000-08:00

ISO 32000-1 (PDF 1.7), published by the International Organization for Standardization (ISO), describes a computer file format used to reliably view, print and share information, regardless of device operating system. Adobe has issued a public patent license granting all individuals and organizations the royalty-free right, under essential Adobe-owned patents, to distribute compliant implementations of that international standard. The license is offered by Adobe in order to encourage reliance upon PDF technology.

You can find the ISO 32000-1 (PDF 1.7) Public Patent License here.

Cablevision Case at US Supreme Court

2009-01-13T21:06:00.000-08:00

Yesterday the U.S. Supreme Court invited the Solicitor General to file a brief in the Cablevision case. The content owners are seeking Supreme Court review of the Second Circuit's holding that Cablevision would not directly infringe copyrights by offering an RS-DVR system to consumers. An invitation for a brief from the Solicitor General suggests that the Supreme Court is carefully considering accepting a case for review.

I blogged on the Second Circuit's opinion in this case last August. I disagreed with that court on only one important point. My position is that when Cablevision's RS-DVR system automatically pushes a copyrighted work into RAM buffer memory for 1.2 seconds, it creates an embodiment of the work that exists for a period of more than a transitory duration, as those words are use in the Copyright Act. One-point-two seconds is quite a short duration, but, for purposes of networked computing through RS-DVR, it is not transitory. The Second Circuit felt that in the case of RS-DVR, 1.2 seconds is a transitory duration, and, as a result, the reproduction into RAM buffer memory is not a copy under law. Perhaps the Supreme Court will clean up that one point by accepting my position! We'll see . . .

Free Software Foundation Sues Cisco: Some Criticism

2009-01-04T18:38:00.000-08:00

The Free Software Foundation (FSF) recently sued Cisco Systems for copyright infringement. The FSF alleges that Cisco distributed, and continues to distribute, the GCC Compiler and other FSF programs without permission. After looking through the complaint, it appears to me that one argument pushed by FSF could be the reason the matter has gone this far.

The FSF alleges that Cisco distributed its GPL- and LGPL-governed code within certain firmware included with Cisco Linksys routers. The FSF claims that because Cisco did not and does not make the corresponding source code available, Cisco is not licensed to make the firmware distribution. According to the FSF, the parties have had repeated and lengthy discussions in settlement but Cisco continues to make infringing distributions.

I know next to nothing about this dispute, but I suspect something is awry. Presumably, when faced with a claim of non-compliance, Cisco investigates. I'm sure that Cisco respects the copyrights of others and has a legal department that will take all reasonable steps to be compliant. If Cisco's products did in fact infringe, I can't help but believe that the company would have either taken effective steps to stop distributing any infringing code or simply come into compliance with any applicable licenses (i.e., make its source modifications available). What is going on here?

The answer, I suspect, is that the Free Software Foundation is not accepting compliance with the GPL as a solution. It wants more. Here's how it thinks it can do that.

According to the Free Software Foundation, under the terms of the GPL and LGPL, Cisco's right to distribute the programs "automatically terminated the instant that [Cisco] made non-compliant distribution of the [licensed program] in its [firmware]." The FSF claims that it, and only it, can reinstate that right. And here's the kicker: FSF thinks it can impose any obligations on Cisco that it likes, even in addition to the conditions of the GPL and LGPL. In this case, the FSF is saying that before Cisco may enjoy renewed benefits of the GPL/LGPL, the company must: come into compliance, appoint a free software compliance officer within Cisco, notify all past recipients of FSF code of their right to receive corresponding source code, and compensate FSF for Cisco's past distribution of FSF programs in a manner that did not comply with the free software license.

I know a little something about how large technology companies operate, and I can tell you with virtual certainty that Cisco will never, ever, agree to appoint a free software compliance officer as a part of a negotiated settlement of a licensing matter. If FSF is pushing this, then we've discovered the reason the parties are now in court. That's a shame.

The whole argument that the GPL/LGPL terminates the instant a licensee makes a non-compliant distribution and that only the FSF can, at its choosing, reinstate the license, is structurally unsound. The GPL is a public license granted to each party who obtains a copy of a software program governed by its terms. It makes little practical sense to say that the license terminates with respect to one licensee or another when the code remains available to everyone under the same broad license. It flies in the face of public licensing to say that a licensor may, for some licensees, reinvent the terms of the license as it chooses after an act of unwitting non-compliance. Does every licensor get to remake the rules, or does FSF think it has special powers?

How can the system founded upon the idea that software code should be collectively developed through the efforts of multiple developer-licensors be organized around a license that allows a single contributor to yank rights and refuse to reinstate them? Doesn't this potentially disrespect the desires of the other contributors?

I (personally, and not on behlaf of Adobe) urge the FSF leadership to reconsider this unprincipled argument. Its case works just fine without it, and the foundation loses legitimacy when it overreaches. The goal should be the enforcement of copyrights (through injunction and damages) to achieve the compliant distribution of code under the GPL, as written. Neither FSF or any other GPL licensor should be entitled to-- or interested in-- re-making the rules.

Here's the complaint.

Talking Open Source

2008-12-14T09:53:00.000-08:00

I recently attended a day of panel presentations at a forum in San Francisco titled Open Source Software 2008. The day was worthwhile primarily because it validated my understanding of open source licensing law. No surprises there. Whew.

There were a few standout speakers.

Gary Spiegel and Joyce Chow, of Sun Microsystems and Apple, respectively, gave a talk on open source business models. They spoke about the spectrum of choices available to a for-profit business when it wants to release its code on an "open" basis. Some well-known business models include, for example, the use of open source to lure web-traffic or drive hardware sales revenue. As another example, the tiered products model uses open source code to upsell closed versions.

The best presentation of the day was by Gabe Holloway of Leonard, Street and Deinard and Marc Visnick of Johnson-Laird Inc., a firm that does something called forensic software analysis. Their fresh presentation discussed how code is actually used; for example, whether it is distributed or not and whether it links statically or dynamically. These are, we think, important points of analysis when relying upon open source software. Gabe and Marc ran through slides explaining the difference between each form of linking from a software coder's point of view. Their piece-by-piece analysis probably makes them good resources for in-house departments looking for a way to determine (i.e., guess) whether its company's code is in compliance.

The other presentation I'll talk about here was by Richard E. Fontana of Red Hat, Inc. Richard's presentation was nominally about open source "best practices." It was well done--not so much because he described best practices but because he treated open source licensing philosophically while being realistic about how to advise large developers who rely upon open source. Richard describes open source as a "culture" and as a "community-led experimental law reform effort to build a new legal regime for software on top of (and manipulating) traditional software IP/licensing law." He made some very insightful and level-headed comments. According to Richard, lawyers dealing with open source often lack a familiarity with open source history and culture, adequate knowledge of the subject's technology, and an appropriately non-formalist perspective. I absolutely agree, not because I have perfectly achieved all of these things, but because these elements are critical to giving good advice. It is important that software lawyers who lack these elements, in at least moderate degree, to stay out of the way.

One of Richard's other points was that legislation, regulations, and case law provide little guidance when working with open source software. I would propose that the terms of open source licenses also provide only limited and unreliable guidance. Richard posits that open source principles are a sort of Lex Mercatoria founded more in the expectations of its participants than any written law. Cool stuff, Richard. I'm not one to drink gushing mouthfuls of open source Kool Aid, but your points made a lot of sense to me.

Finally, as Richard sees it, generally speaking, open source publishers do not enforce their copyrights. It is a small number of assertive GPL licensors who are proving the rule. Indeed, non-material non-compliance is largely ignored or worked out at the upstream level. According to Richard, whole provisions of the GPL2 and GPL2.x have been widely read out of that license. He also believes that most material GPL violations come not from a downstream publisher misusing code it knew (or easily should have known) is governed under a copy-left license; but, rather, result from use of what is believed to be appropriately licensed binaries. In other words, as I understand it, the real risk is difficult for a well-meaning downstream publisher to root out through diligent review.

XMP Public Patent License

2008-11-28T22:11:00.001-08:00

Last week I spoke to a meeting of the Open Source Committee of the Intellectual Property Owners Association about the Adobe Extensible Metadata Platform (XMP) Public Patent License. The XMP Specification describes a format for reading and writing metadata found embedded within computer files, usually digital image files. The license grants the public the right, under Adobe-owned patents, to distribute compliant implementations of the XMP Specification. The license is offered by Adobe in order to encourage the use of XMP technology as the de facto standard for metadata in digital content.

The XMP Public Patent License can be found here. Gunar Penikis has written about the license here. Here's a statement by the Creative Commons.

Cablevision Conclusions

2008-08-31T08:59:00.001-07:00

Last October I blogged about Twentieth Century Fox Film Corp. v. Cablevision Systems Corp., 478 F. Supp. 2d 607 (S.D.N.Y. 2007). I made five predictions about the case that I thought would be reflected in the Second Circuit decision that was then in the works. The appeals court's opinion was issued about a month ago, so it's time to examine whether the court and I are of like mind. For those of you who can't stand the suspense, I'll say that of my five comments on the case, four are generally consistent with the Second Circuit's treatment. On one point of law we disagree. This is not suprising. It is certainly a point on which reasonable minds can differ. But, as I discuss below, I believe the Second Circuit squirmed out of rigorously addressing that point of law.

1. Sony was Irrelevant. Last October I made the point that the Supreme Court's opinion in Sony Corp. of Amercia v. Universal City Studios, Inc., 464 U.S. 417 (1984) should be irrelevant to the decision in Cablevision. By the time the Sony case got to the Supreme Court, it was primarily about drawing lines around the definition of secondary (not direct) copyright infrigment. Although commentators who sided with Cablevision wanted to talk about Sony, the parties in the Cablevision matter effectively took Sony off the table by stipulating that the claim against Cablevision was for direct (not contributory) liability. My point was reflected in the Second Circuit opinion in Cablevision. Unlike the District Court, the Second Circuit kept the theories straight and did not let arguments about indirect liability infect its analysis. There was no need to discuss Sony, and the Second Circuit opinion did not do so. It mentioned Sony only to make the point that that case should be used to maintain a meaningful distinction between direct and contributory copyright infringement, and that to do so is consisent with congressional intent. The Second Circuit wisely wrote in Cablevision that "although Sony warns us that the lines between direct infringment, contributory infringement, and vicarious liability are not clearly drawn, that decision does not absolve us of our duty to discern where that line falls."

2. TiVo was Irrelevant. Cablevision and various amici in the case urged the Second Circuit to recognize that TiVo has been available to cable users for years and that this meant that Cablevision's RS-DVR is allowable. My comment in October was that TiVo was irrelevant to the case. It appears the Second Circuit agreed. Its opinion does not mention TiVo except to say that Cablevision's control of programming recorded with TiVo devices is less than its control of programming recorded with RS-DVR.

3. Fair Use was Irrelevant. I stated that fair use arguments were irrelevant to the Cablevision case because the parties stipulated that a fair use defense would not be heard in the matter. I only made this completely obvious point because I saw commentators discussing fair use before the case went before the Second Circuit. I saw arguments that because the Supreme Court had purportedly declared time shifting (of whatever sort and with whatever device) to be a fair use, the court in Cablevision had no choice but to allow RS-DVR. This is an incorrect reading of the fair use discussion in Sony. As predicted, fair use was not discussed by the Second Circuit in its opinion.

4. Human Participation. Prior to the Second Circuit's ruling I stated that because the element of human voilition in the act of copying is absent from Cablevision's actions, Cablevision should not be found directly liable for copyright infringement. While Cablevision could be found to contributorily infringe, it does not directly infringe. Of course, the parties took contributory liability arguments off the table, so we'll never know.

The Second Circuit saw it the same way I (and a lot of others) did. Here's a relevant portion of its opinion:

"When there is a dispute as to the author of an allegedly infringing instance of reproduciton, Netcom and its progeny direct our attention to the voilitional conduct that causes the copy to be made. There are only two instances of voilitional conduct in this case: Cablevision's conduct in designing, housing, and maintaining a system that exists only to produce a copy, and a customer's conduct in ordering the system to produce a copy of a specific program. In the case of a VCR, it seems clear-- and we know of no case holding otherwise-- that the operator of the VCR, the person who actually presses the button to make the recording, supplies the necessary element of voilition, not the person who manufactures, maintains or if distinct from the operator, owns the machine. We do not believe that an RS-DVR customer is sufficiently distinguishable from a VCR user to impose liability as a direct infringer on a different party for copies that are made automatically upon that customer's command."

5. Buffer Copies. Finally, in my comments last fall I stated that Cablevision should lose on the question of whether it makes "copies" of programming, as that term is defined in the Copyright Act, when it routes its programming into buffer memory prior to sending it to the Arroyo server at the direction of its users. I think that when Cablevision sends a data stream into RAM, even if for only 1.2 seconds, it makes "copies" as defined under law. The Second Circuit disagrees. It ruled that such data held in buffer RAM are not copies. I have two comments on my disagreement with the court of appeals.

a. Tough Call. The Copyright Act defines “copies” as “[m]aterial objects . . . in which a work is fixed . . . and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” 17 U.S.C. § 101. A work is “fixed” when its “embodiment in a copy” is “sufficiently permanent or stable to permit it to be perceived, reproduced or otherwise communicated for a period of more than transitory duration.” Id. (emphasis added). Whether the data sent into buffer memory for 1.2 seconds is there for only a "transitory period" is a difficult question of statutory interpretation. This is one of those cases where the court is asked to apply US copyright law in the context of networked digital communication. The copyright law was not written with these technological complexities in mind, so its application to the workings of RS-DVR is strained from the outset.

b. Please Address the Question. I don't care to quibble with the Second Circuit's ultimate conclustion that the RS-DVR buffer RAM copies are not "copies" because they exist for only a transitory duration. Given the statutory language and the facts at hand, this is reasonable (if ultimately incorrect) interpretation. I do, however, wish the court would have given us a more robust analysis of the question that concerns us all: "How long is transitory?" Rather than give us an analysis, the appeals court spent paragraphs running us through the uninteresting point that a reading of the definition of "fixed" should not ignore the "more than transitory duration" requirement. I believe it was wrong to say that the lower court ignored that requirement. It did not. The District Court did, however, believe that 1.2 seconds was not "transitory" in the context of RS-DVR. The Second Circuit disagreed, but did not tell us what "transitory" means or why 1.2 seconds is transitory in the case of RS-DVR. Or, importantly, whether 1.2 seconds is always transitory or whether other factors are at play.

In deciding that 1.2 seconds is a transitory duration, the Second Circuit says only:

"Given that the data reside in no buffer for more than 1.2 seconds before being automatically overwritten, and in the absence of compelling arguments to the contrary, we believe that the copyrighted works are not "embodied" in the buffers for a period of more than a transitory duration, and are therefore not "fixed" in the buffers. Accordingly, the acts of buffering in the operation of the RS-DVR do not create copies, as the Copyright Act defines that term."

The court took the easy road when it made the conclusory holding that 1.2 seconds is a transitory duration in the context of RS-DVR. It owed us a better policy discussion and some useful guidance on how the words "transitory duration" are to be interpreted and applied in the future.

Scrabulous

2008-08-22T15:36:00.000-07:00

A few weeks ago Hasbro sued RJ Softwares, the operators of Scrabulous, an online game that looks and plays like the Scrabble board game. Hasbro is claiming copyright infringment, trademark infringment, trademark dilution and unfair competition.

Great! A copyrightability case involving one of America's most loved and valuable franchises. And it looks like a close call. At issue will be which elements of the Scrabble board, if any, are entitled to copyright protection. The case, if it moves forward, will bring into play US cases like Feist and Selden, as well as a bunch of cases about games and game rules. This is really esoteric stuff.

It is said, according to Nimmer, that games are not copyrightable. But there seems to be about 1000 exceptions to that black letter rule, including some exceptions based on look and feel doctrine, something near and dear to the hearts of software lawyers. I started to delve into it all but then found an excellent three-part posting on the case and background law at prawfsblawg. Way better than anything I can say. Good stuff.

Here's the Hasbro complaint filed in the Southern District of NY.

Close Enough

2008-08-15T16:32:00.000-07:00

The Federal Circuit on Wednesday issued its decision in Jacobsen v. Katzer. The appellate court got to the right answer. The court ruled that a copyright holder who distributed his work under the Artistic License had the right to claim copyright infringement when a licensee failed to satisfy conditions on the license. The opinion is good for all software licensors.

In a ruling that many felt was cockeyed, the District Court in Jacobson treated the requirements placed on the licensee under the Artistic License as only return covenants by the licensee and not conditions on a license. The lower court saw the relationship between licensor and licensee under the Artistic License as one of contract and was unwilling to apply the strict injunctive remedies imposed by copyright law. In the District Court's view, under the Artistic License the licensor makes a broad promise to not sue for copying, modification or distribution of the licensed software and the licensee makes a return promise to take certain steps to keep the code open as it flows downstream. I think most people in the software licensing industry had a hard time with the lower court's way of seeing things. The relationship between open source licensor and licensee is generally not thought of as one of contract.

The Federal Circuit came to the more convential conclusion. It found that the Artistic License grants a copyright license that is subject to the condition that the licensee take certain steps to ensure openness. If this condition is not met, the licensor is entitled to claim copyright infringement and seek injunction under copyright law.

The Court of Appeals came to the right answer. Nonetheless, I do have a quibble with the precision of the opinion in places.

I've read the Artistic License a few times now. It seems to me that its author made great effort to ensure that it does not evidence a contract at all. It is a license, and a license only. A one-way promise to not enforce copyrights against users of the software, subject to certain conditions and restrictions. There are simply no promises (i.e., covenants) made by the user-licensee of the code. I believe the Federal Circuit should have been more clear on this point. Rather, the court tees-up the central question in the case as follows.

"[I]f the . . . [violated terms of] the Artistic License . . . are covenants and conditions, they may serve to limit the scope of the license and are governed by copyright law. If they are merely covenants, by contrast, they are governed by contract law."

These are confusing sentences. It is unclear why the Federal Circuit needed to mention covenants in these sentences. No other part of the opinion reasons that the violated terms of the Artistic License are covenants at all.

In my view, the Artistic License document evidences a bald license. The steps the licensee must take to enjoy the license are not set forth as covenants (i.e., return promises), only as conditions. Software licenses are sometimes baked into agreements, and, thus, terms are sometimes both covenants and conditions on license.* But not the Artistic License, which is not an agreement. The courts need to start parsing through these concepts more finely, unwinding the often misapprehended lines between agreements and licenses, contract law and property law. The interpretation of open source licenses gives them good opportunity to do this.**

Here's a link to the Federal Circuit Opinion.

_______________

*For example, most mass-marketed desktop software is distributed under an end-user license agreement (EULA) in which a license is conditioned upon the licensee's performance of return promises. Licensors enjoy both copyright and contract remedies for breach of most EULAs.

** For a characteristically multidimensional discussion of another bald license, the GPL, see Eben Moglen's essay Enforcing the GNU GPL. According to Moglen (author of the GPL), the GPL is a license, not a contract. Indeed, according to Moglen, no license is a contract. I agree.

License v. Contract --- Jacobsen v. Katzer

2008-01-09T21:04:00.000-08:00

A license is not a contract. This much I know.

Rather, a license is a permission granted by one party to another allowing use of a property without fear of lawsuit brought by the granting party. A license does not include a return promise (i.e., consideration) from the licensee. So, as we all learned in law school, a license cannot be a contract under law. This is not to say that a license cannot be an element of a contract under which two parties trade promises, one of such promises being a license. This is commonly known as a "license agreement." But a bald license, a one-way promise, is enforceable outside of contract law. It is something apart. It exists and is enforceable under property law doctrine.

What makes things difficult is that the scope of a license's grant, and the conditions and restrictions on the license (or all of them together) can make what is intended to be a one-way license look a lot like a contract. The precise wording used becomes critical. As an example, consider a situation in which the owner of software wants to give another party the right to copy, modify and distribute the software, but the owner does not want the software disributed in France. This can be accomplished with a license (with or without conditions and restrictions), a contract, or something ambiguously in-between.

Look at the following language sets, each of which accomplishes the software owner's primary goal in a different way.

1. License. "Owner grants to Licensee the right to copy, modify and distribute the software in any nation outside of France."

2. License with Condition. "Owner grants to Licensee the right to copy, modify and distribute the software, so long as the Licensee does not distribute the software in France."

3. License with Restriction. "Owner grants to Licensee the right to copy, modify and distribute the software. Licensee may not distribute the software in France."

4. Contract. "Owner grants to Licensee the right to copy, modify and distribute the software. In return, Licensee promises to not distribute the software in France."

5. Ambiguously Between a License and a Contract. "Owner grants to Licensee the right to copy, modify and distribute the software, but Licensee shall not distribute the software in France."

So what? Why does it matter whether the relationship between the licensor and licensee is characterized as "license" or "contract?" The answer is that if characterized as a contract, all those elements of contract, like offer, acceptance, mutuality of consideration (and its substitutes), performance, breach, termination and forfeiture need to be analyzed under established contract law doctrine. If the arrangement is characterized as a license, then property law doctrine-- which, wouldn't you know it, favors property owners-- applies. Perhaps most importantly, the appropriate remedy to which an aggrieved party is entitled can depend on whether you are talking about a license or a contract, or an arrangement that includes both.

Those of us who concern ourselves which such things have read with interest the recent District Court opinion in Jacobsen v. Katzer, which characterized the Artistic License-- a document generally thought of as a conditional public software license-- as a contract rather than a conditional license.

In the case, plaintiff software owner Robert Jacobsen sued Matthew Katzer, a software developer, on a grab-bag of actions including copyright infringement. Jacobsen had made his software available to the world under the Artistic License which, according to Jacobsen, grants everyone in the world the right to copy, modify and distribte the software so long as certain conditions are satisfied, including the licensee placing notices in any distributed copies. Jacobson argued that Katzer, by failing to comply with these conditions, enjoys no protection from the Artistic License and is liable for infringing copyrights in the software after distributing the software incorporated into his own product. According to Jacobsen, Katzer must be enjoined and is liable for damages, both under copyright law.

The district court saw it another way, reading the Artistic License as defining a contract that included a return promise from the licensee rather than a one-way conditional license offered by licensor. According to the district court, under the terms of the Artistic License, Jacobsen broadly promised everyone in the world he would not sue them for copyright infringement for copying, modifying or distributing his software. He did this in return for a promise to include an attribution to the owner in the code. Under this reasoning, Jacobsen may have a claim against Katzer for breach of a contract, but not for copyright infringment. According to the District Court, Katzner may not be enjoined from further distribution under copyright law because Jacobsen has promised to never bring a claim of copyright infringment against anyone. Katzer is liable for damages and Jacomsen can find injunctive relief only under contract law doctrine.

The case has been briefed by Jacobsen for appeal at the Federal Circuit. The Creative Commons and others who want the US courts to apply a consistent approach when interpreting public softare licenses have filed an amicus brief.

Here are some links:

1. Artistic License

2. Source Forge Page with Pleadings

3. Jacobsen's Appeal Brief

4. Creative Commons Amicus Brief

5. Mark Radcliffe's Blog

6. District Court opinion

This is Big

2008-01-05T19:49:00.000-08:00

I had dinner this week with one of my cousins, Angela Sierra, Deputy Attorney General for the State of California. She updated me on a case she has been supervising for quite a while now, Chamber of Commerce of the US v. Brown. Turns out that since we last spoke, she has argued and won in front of the Ninth Circuit, sitting en banc (that's 15 judges!). The United States Supreme Court has now granted certiorari. So, she will argue the case in front of the US Supreme Court in 2008. Way to go, Angela.

The case is about federal preemption and First Amendment doctrine. About as far away from software law as you can get.

The question in the case is whether a California law controlling the use of state funds conflicts with national labor policy as expressed in the National Labor Relations Act. Specifically, two provisions in a California statute forbid employers who receive state grant or program funds in excess of $10,000 from using those funds to assist, promote or deter union organizing. The Ninth Circuit held that California’s grant and program fund restrictions do not undermine federal labor policy, are not preempted by the NLRA and do not violate the First Amendment.

This is one of those state's rights cases that put conservative Supreme Court justices between a rock and a hard place. If a justice affirms the power of California to make the law, he or she is voting in favor of a pro-labor statute. On the other hand, to strike down the statute would be a vote against state's rights.

Maybe I can to get some tickets to watch in Washington, or maybe I'll just show up on the courthouse steps and rush the door!

Here's a page with some more information, including some papers.

http://www.lawmemo.com/supreme/case/Chamber/

Who Dunnit?

2007-10-09T21:33:00.000-07:00

Owners of entertainment and other content got a win in March 2007, when a District Court in New York issued its ruling in Twentieth Century Fox Film Corp. v. Cablevision Systems Corp. (2007 WL 867093). In the case, the trial court enjoined Cablevision, a cable television provider, from making a television recording system available to its subscribers because use of that system would result in the infringement of copyrights in the recorded shows. The case was appealed to the Second Circuit. It’s been briefed up by the parties and assorted amicus, and is, I’m told, scheduled to be heard on October 24, 2007.

Here’s my short explanation of the case and how I am thinking about it.

Cablevision wants to release a system called Remote Storage DVR (RS-DVR). Although Cablevision and its supporters tend to not think so, the technical details of this system end up being important. RS-DVR is something like TiVo. Unlike the TiVo system, however, which offers the viewer a set-top hard drive used to record programming, the RS-DVR system records programs on a server located at a Cablevision facility. More precisely, as an initial step, RS-DVR loads all of Cablevision's programming into buffer memory. Then, when a viewer presses "record" on her remote control at home, a copy of a show is made from that buffer memory onto the viewer’s own little area of server space managed by Cablevision. Later, when the viewer presses "play," the content is transmitted from the server to her television. To be clear, it is a three step process. First, the RS-DVR system loads into buffer memory all of the shows offered by Cablevision; second, upon the initiation of the viewer, a recording of a particular show is made on a slice of Cablevision-maintained server space; third, also upon initiation by the viewer, the recorded show is transmitted to the viewer’s television set. Content owners claim that the two copies and the transmission infringe their copyrights.

Critically, the parties stipulated that only claims of direct copyright infringement could be made against Cablevision and that Cablevision would not assert a fair use defense. Thus, the usual arguments made against a technology provider in a copyright infringement case, those of indirect (i.e., contributory) infringment, were taken off the table. Cablevision defends itself against claims of direct infringement by arguing that it is a technology provider, and that while it might contribute to infringement by the viewer, it does not directly infringe because it does not do the copying of any particular work. What about Cablevision’s loading of all shows into buffer memory before any viewer initiates a recording? Cablevision says that storage of a work in buffer memory does not constitute a “copy” of that work under the Copyright Act.

Is the RS-DVR system a dumb product used by home viewers who themselves do the copying of television shows? Or, is RS-DVR a copying service offered by Cablevision who, by designing, operating and maintaining a complicated and interdependent system (and, who, by the way, delivers all the content that is recorded with the system), does the copying on behalf of viewers? Much to the agitation of network service providers and assorted free thinkers, the District Court found the latter. According to that court, Cablevision does the copying, albeit at the request of its subscribers. As to the question whether a buffer copy is a “copy” for purposes of the copyright law, the court looked at the definitional language in the Act and decided that in this case the buffer copies are in fact “copies.” RS-DVR is on ice until after the appeals process completes itself.

Thoughts:

1. Sony is Irrelevant. At least one commentator who participated in an amicus brief filed in support of Cablevision has stated that Hollywood is using the Cablevision case to render useless the Sony decision that says, according to the commentator, that “if a technology is capable of substantial non-infringing uses then its manufacturer cannot be held liable for copyright infringement.” I certainly agree that Hollywood lost the Sony case and, generally speaking, would like to see that case read narrowly. But any decision in Cablevision should not be influenced by the tenets of Sony, nor should it affect Sony. Sony addressed the possibility of indirect liability for the mere manufacture and distribution of a staple article of commerce; in that case, a Betamax machine. Sony was not about direct infringement, nor did it address the possibility of copyright infringement liability for the creation, operation and maintenance of a centrally-housed multi-user information recording and transmission network. RS-DVR is not a VCR, and Sony, while a very important copyright case, is not important in deciding the Cablevision matter.

2. TiVo is Irrelevant. The workings of the TiVo system are not relevant to Cablevision. In briefs to the Second Circuit, Cablevision and various amici urge the court to recognize that TiVo has been available to cable television subscribers for years without dispute, and that since RS-DVR is, for practical purposes, identical to TiVo, RS-DVR must be allowed. This is an ineffective argument. This case is about RS-DVR, and, in any event, no court has ever ruled that the operators of TiVo do not directly infringe copyrights when that system is used.

3. Fair Use is Irrelevant. Whether the copying by viewers through RS-DVR is a “fair use” of programming content is also not at issue. Cablevision and commentators would love to make the argument that viewers’ recording of cable programs is time shifting, a “fair use” of those copyrighted works; and that Cablevision should not be held to directly infringe the copyrights in those works when it enables that time shifting. One commentator has stated that “the Supreme Court has already ruled that consumers have a fair use right to time-shift TV shows. It should not make a difference whether the copies are stored inside their set-top boxes or back at Cablevision headquarters.” This statement is more pandering to cable television users scared of losing their Sopranos-on-demand than a statement of the case or the law. The parties stipulated that a fair use defense would not be made. Even if fair use arguments had been accepted, no court has decided that the digital recording of paid-for cable programming by subscribers using a system provided by the programming distributor itself is a “fair use” of the content.

4. Human Participation. Cablevision is bad actor. They’ve created a video-on-demand system and called it RS-DVR. Nonetheless, Cablevision should not be found directly liable for the recording of content onto servers by RS-DVR, nor for the transmission of recorded shows to subscribers. As a part of the operation of RS-DVR, no individual humans at Cablevision participate in the decision to copy a particular work. Although copyright is a strict liability statue, there is some element of volition or causation which is lacking where a defendant’s system is merely used by a consumer to create a copy. Religious Technology Center v. Netcom On-Line Communication Services, Inc., 907 F. Supp. 1361 (N.D. Cal. 1995). Although taken off the table in this case, the best and most appropriate path to Cablevision liability is that of indirect infringement.

5. Buffers and RAM. Cablevision loses on the buffer memory issue.

The Copyright Act defines “copies” as “[m]aterial objects . . . in which a work is fixed . . . and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” 17 U.S.C. § 101. A work is “fixed” when its “embodiment in a copy” is “sufficiently permanent or stable to permit it to be perceived, reproduced or otherwise communicated for a period of more than transitory duration.” Id. (emphasis added). Cablevision and various amici argue that RS-DVR holds a copy of content in buffer memory for a fleeting period, in some cases as little as one tenth of a second. For Cablevision, this is a transitory duration, and therefore the data in buffer memory is not fixed under the definition of that term.

The District Court found this argument unpersuasive and so do I. In his opinion, Judge Chin wrote that the portions of programming residing in buffer memory are used to make permanent copies of entire programs, and that, clearly, the buffer copies are capable of being reproduced. The judge cited a number of cases in which transmission of information through a computer’s random access memory (RAM), similar to buffering, was found to be a “copy” for purposes of the Copyright Act. Finally, the court cites a 2001 US Copyright Office report that says that buffer copies are “copies” within the meaning of the Act so long as they exist for a sufficient amount of time to be capable of being copied, perceived or communicated.

Cablevision and amici respond to this primarily by saying that the District Court and the Copyright office ignore the last portion of the definition of “fixed,” i.e., “for a period of more than a transitory duration.” In order to satisfy the definition of “fixed,” a work must be copyable and it must be copyable for more than a transitory duration. According to Cablevision, buffer copies made by RS-DVR do not satisfy this second element and the District Court inappropriately ignored this second element in order to come to its conclusion. I disagree.

The opinion of the District Court and the Copyright Office should not be read as disregarding the “more than a transitory duration” language, but, instead, read as recognizing that that language must be considered in the particular context of the case at hand. What the District Court and the Copyright Office are correctly saying when they say that because buffer copies can be copied, they are fixed, is that in the realm of electronic computing we must read “transitory duration” as meaning a very very short period of time. With this understanding, the buffer copies made by the RS-DVR are “copies” for purposes of the Act.

Those are my thoughts and opinions on the case, and I don’t promise I’ll stick with them! Let’s see if the Second Circuit agrees with any of them in its upcoming ruling.

Links

Patry Blog

Electronic Frontier Foundation Writeup and Links to Briefs

Online Contracts and Online Offers

2007-08-23T16:03:00.000-07:00

Last month the Ninth Circuit issued a per curium opinion in Douglas v. United States District Court for the Central District of California ex rel Talk America Inc. that is getting some attention from those who counsel online information and service providers. Any opinion of the Ninth Circuit relating to the enforceability of online agreements is worthy of some review. The courts have not done enough to evaluate web-based contracting mechanisms. But, after consideration, this opinion offers little guidance on the mechanics of contracting (i.e., assent/acceptance) over web-based services.

In the case, Joe Douglas contracted with Talk America (assignee of AOL) for long distance telephone service. The opinion does not state whether the original contract was entered into online or on paper, nor does it tell us the service terms of the contract or what the contract said, if anything, about its amendment. After Douglas had used the service for some time, Talk America posted, among other terms, an arbitration provision on one of its webpages. Talk America did not call those terms to Douglas's attention, and he did not see them during the next four years; during which time he continued to use the phone service without ever going to Talk America's website. Douglas brought a consumer class action lawsuit against Talk America, and, predictably, Talk America argued that its service agreement with Douglas, by virtue of its posted arbitration provision, required the case to be arbitrated. The District Court agreed and ordered arbitration.

The Ninth Circuit disagreed with the lower court. According to the Court of Appeals, "a party cannot unilaterally change the terms of a contract; it must obtain the other party's consent before doing so." Because Douglas was not even given notice of the changed terms, he could not have given the required assent to them. This is a completely unsuprising conclusion given the facts as stated.

The case does not move the law of contracting mechanics much and, in my opinion, does not provide generalizable conclusions interesting to a software lawyer giving advice to a web-based service provider. For example, it does not help us understand a more common situation in which changed terms of service are posted on a web portal page that must be passed through in order to acess information or services found on the other side of that portal page. Nor does it help us understand how to handle contracting over the provision of information or services when the provider makes no promises to a visitor that such provision will continue for any period of time after his visit. This case is about a telephone service that as far as I can tell, has very little to do with the web.

Websites that offer free information and services on an as-available basis should include terms of service that are not posed as contracts at all. But, if posed as an agreement, the terms should read as offers that must be accepted separately each time a user visits the site. Thus, on any given day, when new terms are posted by a provider, an offer, not a contract, is updated. Such online terms of service can be worded to make clear that a visitor's use is governed by the terms found on the site during such use, and need not even address a mechanism for revising any existing contract. Terms should be reasonably and conspicuously presented to website visitors and should be actively or passively agreed to upon each and every visit, through a click-thru or browse-wrap mechanism, respectively. If they are, then contract law says that they may be unilaterally revised by the website owner at any time.