In case you missed the headlines late last year, freelance photographer Daniel Morel was awarded a $1.2 million damage verdict against Agence France-Presse (“AFP”) and Getty Images after it was found that they willfully infringed Mr. Morel’s photos of the 2010 earthquake in Haiti. The verdict caught my attention given the fact so many clients have received demand letters from Getty in recent years alleging copyright infringement of a Getty photo.
The case is noteworthy primarily because the maximum statutory penalty available under the Copyright Act was awarded by the jury. Also noteworthy were the facts of the case, which involved an initial Twitter posting of the photos and subsequent commercial media distribution of the same photos. See a report by Law 360 of the verdict here; and a report by Reuters of the verdict here. To see Daniel Morel’s website, where a transcript from the trial is posted, click here.
Several news outlets reportedly settled with the photographer for undisclosed amounts, but AFP and Getty went to the jury with the damages question, which in hindsight was probably not the best tactical move, given the outcome.
As you might expect, AFP and Getty have already filed an appeal in the case, arguing that the verdict “constitutes a miscarriage of justice.” See the appeal filing here.
It is hard not to see the irony in the circumstances of a company, who in my opinion, is an aggressive enforcer of copyrights in photos, now finding itself on the wrong side of a verdict against a photographer also enforcing his copyrights in photos. Moreover, it is ironic to see Getty raising outrage over the calculation of damages made by the jury, given the fact I often hear the same outrage voiced over the damage calculation Getty uses in its demand letters.
Clearly, this case serves as a cautionary tale to all who have ever taken photos off social media or the Internet and distributed them to third parties, or been tempted to do so. Also, it serves as a good reminder to respect the rights of photographers in their photos, as they perform a valuable service in getting the news and images out to the world in a crisis, and they deserve to be able to make a living for their work. Apparently even big media companies need to be reminded of this from time to time. I think the jury verdict in this case probably gave them quite the wake up-call.
The U.S. Supreme Court recently issued a decision in the licensing dispute case of Medtronic Inc. v. Mirowski Family Ventures, LLC, where the Court held that the patent owner had the burden of proving infringement when the licensee files a declaratory judgment action in a patent licensing dispute.
What are the facts in this case?
Medtronic was a sublicensee of a patent license between Mirowski and Eli Lilly. The original sublicense agreement provided that, upon receipt of a notice from Mirowski that a new Medtronic product infringed a Mirowski patent, Medtronic would have the choice of either accepting Mirowski’s claims and curing the nonpayment of royalties or challenging Mirowski’s claims by filing a declaratory judgment action while still paying the disputed royalties. A subsequent agreement amended this procedure, enabling Medtronic to accumulate disputed royalties in an escrow account in the event that it decided to challenge Mirowski’s claims and file a declaratory judgment action.
In 2007, Mirowski notified Medtronic that seven of its products violated two of its patents. Medtronic disputed the claims and filed for declaratory judgment in the Federal District Court in Delaware while continuing to pay the disputed royalties in an escrow account in accordance with the terms of the sublicense agreement.
The District Court found that Mirowski had not proved infringement but had the burden of proof to prove infringement. The case was appealed to the Court of Appeals for the Federal Circuit, which concluded that a different rule applied, and that the party seeking the declaratory judgment of noninfringement bore the burden of persuasion.
The Supreme Court held that the same rule applied whether the patent owner filed an infringement suit against the sublicensee or the sublicensee seeks a declaratory judgment after being accused of patent infringement by the patent owner: the patent owner must prove that the infringement exists.
From my perspective, the Supreme Court reached the right conclusion: the declaratory judgment procedure and escrow option was put in place to allow the sublicensee to challenge the patent owner’s claims while continuing to otherwise meet the terms of the license. The fact that the sublicensee disputed the patent owner’s claims should not have shifted the burden to the sublicensee to prove that it had not infringed–it is logical to expect that the patent owner should have to prove its claims of infringement.
What is the significance of this case? The Supreme Court has now resolved the uncertainty that existed over who bears the burden of proof in a declaratory judgment action in a patent licensing dispute. The elimination of uncertainty on this issue may prompt more patent licensees and sublicensees to take the step of challenging licensors’ interpretation of their patent licenses in lieu of paying the royalties demanded of them. In light of this development, licensors who become aware of royalty dispute with a patent licensee or sublicensee should consider the merits of taking a more proactive approach to seeking a commercial resolution of such a dispute with their licensee before the licensee decides to escalate the issue to filing for declaratory judgment. Moreover, this decision may impact the negotiating dynamic in situations where a patent owners seek to enforce its patent rights on a less than enthusiastic licensee, since a heavy-handed negotiating approach by the patent owner may be more likely now to prompt the licensee to file for declaratory judgment after the ink dries on a newly executed license agreement. Patent owners engaging in such licensing negotiations should perhaps give more consideration to reaching an agreement with the reluctant licensee that is not so one-sided that the licensee will feel compelled to challenge the agreement after its execution.
If you are in the marketing/advertising business, your success depends largely on coming up with innovative new ways to promote a customer’s product or event offering. Thus, when a milestone event arises in the sports, music, or film worlds, you may be inspired to try to capitalize on those events by tying your marketing efforts to the milestone event.
There is only one problem: the names and marks associated with those milestone events are likely protected trademarks. Thus, if you launch a marketing campaign without first procuring the necessary license from the trademark owner to use the trademarks, you will likely be the recipient of a stern cease and desist letter. . . .or worse.
What kinds of marks am I talking about? Marks surrounding awards events and sport events are just some of the major events that come to mind that likely have a number of registered trademarks protecting the use of the names. I recall, for example, not too long ago that a client came to me with a cease and desist letter regarding the alleged use of the word “Grammy” in conjunction with a publicized party. According to attorney Gonzalo Mon who recently wrote an article on this issue, he has clients contemplating the use of ring-based marks and reference-based marks to the Olympics right now, any of which could be problematic if the client is not an official sponsor of such event specifically authorized to use the marks in question. While I know from my own practice that marketing professionals have a tendency to grab and use third party marks without giving much consideration to whether or not they have the right to do so, and they often fly under the radar screen in engaging in such actions, it is not an advisable practice and it may catch a third party’s attention, particularly where the third party is charging a premium rate for the use of that mark.
So, as we come up on milestone events, if you are inspired with a great marketing or advertising idea, you should always assume that the marks surrounding such an event are going to be protected and engage in some research before making use of a event-related mark or mark that might be confusingly similar to an event-related mark. How do you confirm that this is the case? Well, a simple search of the USPTO database for the name of the event in question would be a good starting point for your research. While you can absolutely run a question like this by a trademark attorney, searching the USPTO database does not require legal credentials, and I encourage all my clients to learn how to run searches themselves, as it is an easy skill to learn as a non-lawyer. Typing in the word “Olympics” for example, brings up a long list of marks, and should alert you fairly quickly to the fact that there are in fact registered trademarks surrounding the event in question that you need to be aware of. The same type of search should work for other events.
Of course, even if there are no federal trademarks in place surrounding a particular event mark, there still may be common law rights in a trademark that you might be infringing on if you use the mark without first obtaining a license, so just because your search of the database is clear, does not mean that you are free to use a particular mark. Also, you should remember that the database only searches U.S. trademarks, so there are trademarks all around the world that potentially could be a problem if the mark in question may have a worldwide platform.
The bottom line is that you should be cautious in marketing around events to ensure that you stay clear of legal problems in conjunction with those events. The success you achieve with such a marketing campaign could easily backfire and result in legal woes that far outweigh any benefits you received from your marketing efforts.
Like many cable and satellite TV consumers these days, I have been closely following the new options on the market for streaming TV service and hoping that the day will soon come when I can significantly reduce my monthly subscription costs without cutting off my access to live TV. With the cost of living and working in Silicon Valley running so high already, expensive TV service is one of those expenses I just can’t help but resent each month, especially in light of the fact I have so little time to spend watching television programming anyway. So, when I happened to come across the start-up Aereo, their business model caught my attention, as you could access a number of channels with their service for a very low monthly price. I remember thinking to myself that it was only a matter of time before there would be litigation challenging the Aereo model. I did not have to wait long before that in fact happened. As you might expect, a group of broadcasters quickly filed for injunctions. They lost in cases filed against Aereo in New York and Boston, as well as in an appeal to the Second Circuit. However, they had more success in an injunction filed against an Aereo competitor, FilmOn, in the D.C. Circuit. Due to the split circuit decisions, the dispute has already made its way to the Supreme Court and will be heard later this year.
At issue is the question of whether or not Aereo’s service publicly performs copyrighted television programs Petitioners argue that the Aereo model “would seem to be an obvious copyright violation–an entire business model premised on a massive for-profit unauthorized exploitation of copyrights where competitors’ prices are undercut because they seek authorization and pay fees” and that “Aereo offers precisely the kind of service Congress sought to prohibit when it revised the Copyright Act to define public performance to include retransmissions of over-the-air broadcasts to the public.” The other side of the argument, which the Second Circuit Court of Appeals found compelling, is the argument that the Aereo model does not infringe Petitioners’ public performance right since the transmission under the Aereo model is to a single subscriber and therefore is not a public performance. In reaching this decision, the Second Circuit looked to prior precedent interpreting the public performance right and the transmit clause of the Copyright Act in Cartoon Network LP, LLLP v. CSC Holdings, Inc., 5369F.3d 121 (2d Cir. 2008), stating that in that case the same Court had found that “in determining whether a transmission is to the public, it is important to discern who is capable of receiving the performance being transmitted” and held that a transmission of a recorded program to an individual subscriber was not a public performance.
I don’t have much of a track record in predicting how the Supreme Court will rule on a particular case, but as a technology attorney, I am more persuaded by the Aereo argument than the broadcasters’ position. I think that given all the other relevant copyright decisions in this space over the years, there is reason to anticipate that the Supreme Court should decide in Aereo’s favor. Whether they will or not, however, is another question entirely.
Obviously, the Aereo model has the major networks concerned. It has been reported that CBS and Fox are already threatening to turn their broadcast channels into cable channels, asserting that they cannot afford to provide the type of content that they are currently providing from an advertiser-supported-only business model. Professional sports leagues such as the National Football League and Major League Baseball have been reported to have also threatened to move their high-profile broadcasts such as the Super Bowl and World Series to cable, and certain cable and satellite TV companies are already exploring building services to compete with Aereo.
With all the ways to view and consume content now on the market, it was almost inevitable that we would be seeing streaming TV companies emerge on the market and that there would be litigation in an attempt to put any of the more successful models out of business. I personally have been eager to see some changes in the marketplace on how I can access live TV programming, and I’ve been frustrated at the snail’s pace that such change has seemed to occur, as so many other new technologies flooded the marketplace. Without question, a decision in this case has the potential to disrupt and transform the broadcasting landscape as it now exists. Whether or not any such disruption will be beneficial to consumers remains to be seen. As an interested consumer, I am hopeful that any change in the television marketplace that arises because of Aereo will be for the better.
As an attorney who largely represents small businesses and entrepreneurs, I have often found myself in the tough position of explaining to someone with limited resources just how difficult it was going to be to go after an infringer. Either it is simply too cost-prohibitive to go after an infringer, or the client has the resources to pursue litigation, but the damage amount makes litigation difficult to justify.
Apparently the issue is getting some new consideration by Congress and the Copyright Office, as the Copyright Office has been asked by Congress to conduct a study to:
(1) assess the extent to which authors and other copyright owners are effectively prevented from seeking relief from infringements due to constraints in the current system; and
2) furnish specific recommendations, as appropriate, for changes in administrative, regulatory and statutory authority that will improve the adjudication of small copyright claims and thereby enable all copyright owners to more fully realize the promise of exclusive rights enshrined in our Constitution.
If you are a small business or an individual who has been faced with a small copyright claim matter and has any feedback on obstacles that you encountered in dealing with the matter, or if you have any thoughts on how the current system might be changed to better address copyright small claims matters, then the Copyright Office wants to hear from you. You should submit your comments to the Copyright Office by October 19th at the submission link.
I personally would like to see changes made to better address small copyright claims matters, because I think that most copyright infringement at this point in time goes unaddressed because so little can be done about it. I feel confident that many of you feel the same. If you have any thoughts to share on this issue, please take the time to write the Copyright Office and share those thoughts, and make certain you do it in time to meet the deadline.
Google has reached a settlement with several major American publishing companies, including but not limited to McGraw-Hill, Pearson Education and Penguin, John Wiley & Sons and Simon & Schuster in a copyright infringement case challenging Google’s decision to scan the book collections of many major universities. The Los Angeles Times is reporting that the settlement affirms the rights of copyright owners, who will now have the right to decide whether or not their books are scanned by Google. According to the Los Angeles Times, up to 20% of the content of any book included in the project will be viewable on the Internet. All other terms of the agreement are confidential. Attached is a copy of the press release issued by The Association of American Publishers.
The Authors Guild has also been involved with litigation against Google over the same issue, and the terms of that settlement may shed some light onto what might have been agreed to in the new settlement. A copy of original settlement agreement reached in that case is posted at the Author’s Guild website, as well as a full description of the litigation history. The current amended settlement terms from 2010 in that case are posted here, which as in the new decision, allowed for the removal of books from the scanning project but also provided revenue sharing terms for sales made by Google on the scanned content to third parties.
Google has just made a controversial announcement that it will now be factoring the number of “valid” DMCA notices that it receives on a particular website into how it ranks that website in its search results.
The Wall Street Journal reported:
Google’s move comes as Google itself is attempting to become a major seller and distributor of professional video and music content through a variety of services, from its YouTube video site to the Google Play online-media store to its pay-TV service in Kansas City, which required deals with cable-channel networks. It is pursuing such initiatives partly in a bid to compete with Apple Inc. and Amazon Inc. among other tech companies that distribute media.
As you might expect, the announcement has been met with controversy. Some observers are accusing Google of censorship, and others are accusing Google of caving into pressure exerted by the powerful recording industry and motion picture industry lobbies.
Those accusations are not exactly baseless, given the fact that Google itself reports that a high percentage of the removal requests each month are received from the recording industry and various media corporations, and certainly those groups are looking for removal results. Moreover, it is clear with Google’s purchase of YouTube and its development of Google Play that Google is looking to build a better media platform, and obviously the company is likely to meet less resistance in this space if it is seen as working with these companies rather than against them. Anyone who follows copyright legal developments knows that these lobbies are powerful and aggressive in going after alleged infringers, regardless of their size or financial resources, and it doesn’t require much of a leap to imagine how those same lobbies could utilize those resources to cause the “censorship” of such companies on the Internet.
I would argue, however, that Google’s new policy may be beneficial to many companies in Silicon Valley who simply do not have the resources to pursue infringers in a court of law but want to do something about the fact that their copyright is being infringed. I’ve represented many companies in recent years who have fallen into this category, and they are always very frustrated when I explain to them the limitations of a DMCA notice. They always want to more but just can’t afford it, and they usually hang up in disbelief that the U.S. system doesn’t better protect copyright owners.
Now, I’ll be able to suggest to those clients that they file a DMCA notice directly with Google before they throw in the towel on taking action against the infringer. Since what irritates such clients the most is having those infringers competing with them on the Internet, I think most clients will be very pleased with having a new tool in their arsenal against infringers.
So, all in all, while I agree with the concerns voiced by Internet observers and agree that the potential exists for abuse, I am on the whole pleased with this new Google policy development.
PayPal Launches New Internet Controversy over Decision to Censor Erotica Content Sold through Platform
PayPal has set off a new controversy on the Internet by advising e-book sellers that they must remove all erotica content off their websites or PayPal will stop doing business with them. In particular, PayPal is apparently concerned with content dealing with erotica fiction containing rape, incest, and bestiality, reported Technolog on MSNBC’s website.
According to a report by Tech Crunch, e-book publisher Smashwords received a notice from PayPal on Feb. 18th giving the publisher only a few days to achieve compliance with the “ultimatum.” In response to the Paypal demands, Smashwords has posted this press release on its website advising authors, publishers, and literary agents of the new Smashwords position.
Zdnet is reporting that AllRomance, Excessica and Bookstrand received similar notices.
As you might expect, the uproar over the Internet is on the fact that a payment processor is trying to “censor” obscene content sold over the Internet by third parties. The concern is over the slippery slope of censorship and how dangerous this is for society as a whole.
On the other hand, PayPal is definitely not the only payment processing option available over the Internet, so these e-book publishers do have other options besides working with Paypal. Moreover, PayPal is a privately owned company, and despite recent acts by the President and Congress to force particular behavior on privately owned companies, as far as I know, there are still laws in this country recognizing the right of privately owned companies to make their own decisions about how to run their businesses, including what customers to work with and what terms and conditions to operate under. We may be on a slippery slope of private companies losing their autonomy to make their own business decisions, but at the moment, we still live in a country where private companies have some autonomy to make their own individual decisions.
Furthermore, we still have obscenity laws in this country, which are local in nature. Can’t an international company like PayPal take the position that running payments to purchase obscenity would be a violation of the laws somewhere in this country?
According to many of dissenter voices over the Internet, the answer is a clear “no.” Constitutional rights to free speech are at risk when censorship is involved, say these dissenters.
In considering this issue, I must say that I am a strong proponent of free speech; however, at the same time, I personally see no value in this type of content, other than to law enforcement who might want to know who is reading it. I would contrast this type of content with pure adult pornography in the sense that it is actually depicting criminal activity against a non-consenting third party or a third party who is not capable of consenting, whereas pornography does not by its very nature depict something that is of a criminal nature. That puts this type of content, in my opinion, in a different category from mere obscene content.
I would also argue that companies like PayPal have the right to make business decisions based on their own conscience and morals, provided that those decisions do not violate any laws themselves. I worry about the direction our society is going in, if private companies are no longer the afforded the opportunity to make business decisions for themselves and the public good starts dictating private business behavior motivated by morality and conscience. Isn’t that how our society and other societies have gotten themselves in trouble in the past?
It will be interesting to see how this controversy develops. The Silicon Valley IP Licensing Law Blog will continue to follow the story and keep you posted on any new developments.
Apple’s trademark dispute with Proview is now being fought on two fronts: at the local level in China and here in Silicon Valley.
The Wall Street Journal is reporting that Proview has filed a lawsuit in Santa Clara County Superior Court claiming that Apple committed fraud when it used a company called IP Application Development Ltd., to purchase the iPad trademark from Proview on Dec. 23, 2009. According to The Wall Street Journal, there are emails in which a representative of IP Application Development told Proview “that it wanted to acquire the iPad name because it was an abbreviation of its company’s title, and that its future products wouldn’t compete with Proview’s products.”
Reuters is reporting that the strategy of filing now in the U.S. increases the likelihood that the dispute will disrupt Apple’s supply of iPads to China, and puts additional pressure on Apple to settle the matter quickly.
At the same time, Proview also likely needs this dispute resolved quickly, given its current financial situation. According to Reuters, Proview will be de-listed by the Hong Kong stock exchange this summer unless it comes up with a viable plan to deal with its debt. Going after Apple would appear to be its strategy for dealing with its current debt load.
As an outsider looking in on this dispute, it seems highly likely to me that a settlement in this matter will be reached at some point this year, since Apple stands to lose a significant amount of money in sales if its supply chain is disrupted and Proview is reported to be desperate for cash. The primary impediment to settlement is likely to be emerely the amount of money on the table, since Proview requires a certain amount of money as a business necessity to get out of its current financial problems and a settlement for less than that amount will not resolve its problems. Of course, if Proview is in such dire straits, Apple may be able to just drag out the dispute until Proview runs out of money; however, whether or not that makes sense as a legal strategy depends on how much money Apple is losing by not resolving the dispute. Thus, as with most things in business, reaching an agreement is all about the bottom-line.
What can be taken away from these recent developments in this dispute? Well, this story is full of lessons for Silicon Valley businesses, some of which I’ve raised in my prior blog posting regarding this matter. I think you can add to the list, though, tying up loose ends with your business before they cost you money. In my practice, I regularly work with start-ups who often neglect a long list of legal matters in their early years in order to keep expenses at a minimum, and they often what I would call “loose ends” that I identify for them as matters that might need to be “tied up” in order to avoid a dispute down the road. This is a good example of what can happen when a “loose end” for a business is left unaddressed–the other side can get into financial trouble and then the “loose end” may become a big headache for your business. When you identify loose ends, the temptation is always to let them slide because they aren’t a problem for you at the moment, but you have to weigh that preference against the cost that the price of tying up the loose end goes up down the road. It is unclear at the moment on the outside as to what extent this dispute developed out of a “loose end” or what the exact facts are in this dispute, but in my role in advising clients, many disputes often do evolve this way and this is certainly an example of what can happen when the stakes go up for the other side.
To follow up on my blog posting about the SOPA blackout, the SOPA blackout protesters achieved their desired result: SOPA and its companion bill PIPA were tabled after its co-sponsors withdrew their support of the bills, as the L.A. Times reported.
The focus of Congress will now shift to consideration of the Online Protection and Enforcement of the Digital Trade Act (the “OPEN Act”), H.R. 3782, which was introduced by Rep. Darrell Issa (R-California) on the day that the SOPA blackout was held. In a blog posting to the Silicon Valley Software Law Blog I explored whether the OPEN Act was a more viable alternative, writing as follows:
Obviously, the OPEN Act provides a far less drachonian approach to dealing with infringing foreign websites than what was contemplated by SOPA, which would have allowed full websites to be completely “erased” from the Internet. Instead, the OPEN Act’s approach goes to the heart of the problem: cutting off the ability of infringers to make a profit off of their infringement. So, in that respect, the OPEN Act is definitely improvement over SOPA. Also, there is an argument that the ITC is a more appropriate body to hear these kinds of disputes, since the agency already has been tasked with the job of addressing unfair import disputes, where intellectual property violations are involved. Furthermore, this bill focuses on the problem of infringement by foreign websites, so it targets the real source of concern over infringement as opposed to usurping existing methods of dealing with domestic infringers. . . . All in all. . . I think the OPEN Act is a much more palatable proposal for dealing with infringers, and that this bill is a far better working document than what we had on the table with SOPA and PIPA. At the same time, I think that the whole concept of adopting new legislation to deal with online infringers is still a work in progress warranting further consideration before any new legislation is adopted.
A working text of the OPEN Act has been posted for comment, and I would encourage all members of the Silicon Valley IP community to check out the website and provide your feedback to the proposed legislation. Unlike SOPA and PIPA, this particular piece of legislation is receiving support from some prominent online companies such as Google, Facebook, LinkedIn, and Twitter. As you might expect, it is not receiving the same kind of fanfare from the entertainment world.
The Silicon Valley IP Licensing Blog will continue following this story as it develops and keep you updated on any news.