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.
In case you have not been following the story, Apple has found itself in the middle of a trademark dispute in China over the use of its mark “iPad,” as MSNBC reported on its website yesterday.
You might wonder how in the world this happened, given Apple’s large, IP savvy legal department and the fact that China was such a large potential market. Apple surely started focusing on the protection of its worldwide rights in the “iPad” mark the moment it conceived the concept and the name itself.
Well, according to MSNBC’s report, a Chinese company reserved the mark originally back in 2000 and in 2009, Apple purchased the company’s worldwide rights in the mark from the company’s Taiwanese subsidiary. However, the Chinese company maintains that it still owns the rights in the mark in the Chinese mainland, and that the subsidiary never had those rights to license. Unfortunately for Apple, the Chinese company is now having financial problems, and so, the Chinese company is diligently pursuing this issue, no doubt in order to procure a large settlement from Apple that can keep the company in business.
The facts of this particular legal dispute provide a variety of lessons to Silicon Valley companies.
First and foremost, if you come up with novel business product that you plan on marketing worldwide, you need to devote resources before you launch to protecting your mark in all of your key markets and you need to work with qualified local counsel in each country to ensure that your mark is actually protected in each of those key markets. Then, when you have to enter into agreements with with foreign companies, make sure that both your local and your U.S. counsel are experts in the relevant areas of law, so that they can confirm that the English and foreign language versions of your agreements give you the correct rights that you need to proceed. When I negotiate agreements with China, for example, the agreements typically have one line in Chinese and another line in English, so it is important to confirm that both sentences read as intended.
Second, when you enter into agreements regarding IP, do due diligence on the IP in advance to confirm ownership rights in the IP and also procure warranties and indemnifications regarding the ownership of the IP from any third party who is transferring rights in IP to you, so that you don’t find out down the road that you didn’t actually get what you paid for and have to absorb the losses directly yourself, when those losses are inevitably going to be far more expensive.
Finally, if you are launching a product for the worldwide market, make certain that the marks you want to build your brand around are protectable on a worldwide basis. So many clients that I work with do it backwards and select a name and develop their brand before they even stop to consider whether they can even protect the brand they are developing. Far too often I see companies have to start over 2 to 3 years into their business with rebranding everything because they discover that a third party is already using their mark. Even if they are successful in avoiding a lawsuit for trademark infringement, they run the risk of losing all of their Internet history for their old brand and having to spend thousands and thousands of dollars recreating all of their branded materials such as their website, business cards, landing pages, brochures, stationery and everything else. It can be a very costly mistake, even when the companies escape the worst case scenario of litigation.
The bottom line is that trademark protection planning needs to start on the day that you conceptualize a brand, and when you are trying to protect the brand off-shore, you need to make sure you are coordinating your U.S. and foreign representation to ensure that you are definitely protecting your brand in both locations.
The Silicon Valley cyberspace community is currently preparing for tomorrow’s observation of SOPA Blackout Day. Organizers are requesting that participants make their websites go black for at least 12 hours tomorrow in observation of the blackout.
As I reported on the Silicon Valley Software Law Blog, Mozilla, Reddit, Word Press, Boing Boing and the English language version of Wikipedia have confirmed that they will participate in the blackout.
In addition, Politico is now reporting that Google will be joining in tomorrow’s protest, but will not be participating in the Internet blackout. Instead, Google will reportedly be posting a link on its homepage explaining its opposition to the Stop Online Piracy Act and the Protect IP Act.
The nonprofit organization Fight for the Future has posted a comprehensive list of the participants who have currently committed to tomorrow’s online strike.
In case you have not been following the SOPA controversy, the purpose for tomorrow’s blackout is to express online opposition to the proposed SOPA legislation. I discussed the controversy in the Silicon Valley Software Law Blog as follows:
[T]he Stop Online Privacy bill was introduced in late October, 2011 by the Republican Congressman Lamar Smith of Texas, which would allow the Attorney General of the United States to seek a court order against internet service providers to cause them to make a website disappear from the Internet. . . . The bill was designed to allow U.S. companies to shut down offshore infringers, and as you might expect is being championed by the Motion Picture Association of America and the Recording Industry Association of America, which of course, are highly invested in stopping the loss of profits to online privacy.
While few in the Internet world would disagree that online privacy is bad, the controversy over SOPA is over the concern that large companies are going to be able to censor or blacklist smaller Internet players and simply be able to “erase” their very existence from the Internet. Net Coalition.com has assembled a list of parties who oppose SOPA. The list includes companies, prominent individuals and educators, public interest groups, industry associations, websites and online services, cybersecurity and engineering groups, and international human rights advocates.
In case you are wondering what my position is on the issue, I am absolutely against infringement but am very concerned about the potential impact of this bill. As I wrote in the Silicon Valley Software Law Blog:
Like most attorneys who represent clients in the Internet space, I have found myself on both sides of this issue. It is not unusual to have a client come to me with a complaint about a third party infringing my client’s copyright on the Internet, and to find myself in the frustrating position of having to advise my client of the limited options available for dealing with the infringement. It is particularly frustrating when I am talking to a client who has limited resources and cannot afford the investment of resources that is going to be required to really go after the infringer.
In fact, even I have run into situations where my copyrighted works were being infringed on the Internet and I had to make a decision about how to best deal with the infringement.
At the same time, however, I am very concerned by the fact that Congress wants to further legislate in this area. I agree with many of my fellow Internet law experts that we should oppose in general the encroachment of government regulation of the Internet, and this bill appears to be very serious encroachment. Moreover, I am concerned about how a bill like this would be used. It is almost certain that the small content publisher on the Internet would be at a serious disadvantage in defending itself against SOPA-based actions. Large companies with large teams of lawyers would be in a position to effectively censor smaller entities on the Internet, since the accused would not be financially able to defend themselves. It is highly likely that a bill like this which would allow parties to “erase” websites from the Internet would be misused for the economic benefit of one party over another.
Of course, there is another issue. Given the fact that the very nature of Cyberspace is borderless, should a U.S. attorney general really be able to police websites offshore? If so, shouldn’t the equivalent officials for other governments be able to do the same thing? What kind of standard are we setting for the rest of the world to follow? I’m not sure we want certain countries’ political leaders to start erasing American websites from the Internet.
The bottom line is that the implications of this bill go beyond the intent of just getting offshore infringers that cannot be shut down off the Internet. The effects of this bill could be very far-reaching, and take us a step closer to the day when virtually every activity on the Internet is subject to government oversight and regulation–not only by the U.S. but also other governments around the world.
For any companies interested in supporting tomorrow’s protest by participating in the blackout, you still have time to get involved. Wired.com has republished Google’s recommendations for how to participate in the blackout in a “web-friendly” way. Fight for the Future has also published instructions on its website on how to get involved.
The recent passage of the long-awaited Patent Reform bill was heralded by many around the country as great accomplishment; however, the bill was not without controversy, particularly in the Silicon Valley, where many who work with start-ups and tech companies expressed concern about the new legislation.
In my recent blog posting on the California Biotech Law Blog, I raised concerns about whether or not this bill was really good for the biotech industry. As you might expect, my concerns about the bill go beyond its effect on the biotech community–my concerns are relevant to the Silicon Valley start-up community as well.
It has yet to be seen as to whether or not the legislation will really improve the operations of the USPTO as promised, but the passage of this legislation has an immediate effect on inventors and start-ups, who now have to race to gather the capital necessary to file a patent on their invention, so that they can ensure that they are the first to file a patent on the invention. Like many who work with start-ups, I worry that this hurdle will now discourage innovation, particularly in these challenging economic times, since investors and loans are so difficult to come by. Why make the effort to invent at all if it is going to be such a challenge to protect your invention?
In truth, despite my concerns about this new legislation, I have faith that Silicon Valley entrepreneurs will overcome this hurdle as they do so many others. The Silicon Valley is a resilient place where people are used to overcoming challenges and setbacks. However, I remain puzzled as to why Congress chose to finally pass this bill, which had been introduced and debated by many prior Congresses. Why impose this new hurdle on inventors at this point in history during this economic crisis? Shouldn’t our policy be to encourage innovation at every opportunity so that we can get new businesses going that create new jobs? Placing new hurdles on cash-strapped inventors and start-ups in this economy just seems to defy common sense.
To see the full text of the American Invents Act of 2011, click here.
Moves by Amazon, Google, and the Wall Street Journal today to modify their applications on the Apple App Store suggest that Apple is taking steps to enforce its new royalty policies on companies selling on its App Store.
In my recent posting to the Silicon Valley Software Law Blog, I report on this new move and what it should signal to all companies–even the start-ups and sole proprietorships–selling on the App Store.
The bottom line: if you are distributing an application on the Apple App Store which links to a website where you offer additional products for sale, you should definitely take note of today’s news and anticipate what it will mean for your business. Clearly, large companies doing business on the Apple App Store are concerned about the impact that these new policies are going to have on their profits. If they are concerned, you should be too.