Chapter 4: Intellectual Property in CyberSpace

CS 340

Key to understanding IP

• What’s being protected?– Intangible creative work– We’re buying a physical copy, but what’s valuable

are the ideas, characters, and the creative expression contained inside• Buying the right to use, for personal purposes

• Compare and contrast with physical property

Early Copyright law

• Inclusion in the Constitution• First copyright law, 1790, covering books,

maps, charts for 14 years• 1909 Copyright Act requirement that the item

must be able to be seen and read visually.– What does that leave uncovered?

Law chases, not leads, technology

• 70s game ROMS– 1976 & 1980 Copyright Act, revision to include

software• 60s bootleg tapes at swaps VHS Napster– 1982 high volume movie/record copying becomes a

felony– 1992 Title 18 US Code for criminal copyright

infringement:• Making 10+ copies w/ value of $2500 in 6 mo a felony (5

yrs jail, up to 250k fines)

Law Chases cont’d

• 1997 No Electronic Theft Act, criminalizes willful reproduction of copyrighted work and does not require showing that money was made or accepted.

• 1998 Digital Millennium Copyright Act– Anti-circumvention provision

• 5 yrs, 500k first offense

– Safe-harbor for site operators• 2005 federal law, Family Entertainment and Copyright

Act, Title 18, US Code, Section 2319B, making it a felony to record a movie in a theater– Ex. http://www.wired.com/threatlevel/2008/10/theater-movie-p/

Comparing Copyrights, Patents & Trade Secrets

• Patents:– Exclusive rights– Prohibiting others’ use w/o authorization

• Copyrights:– Exclusive rights– Fair Use exception

• Trade secrets:– Your secret may be reverse engineered, but you can

protect direct disclosure through non-competes, non-disclosures, and contracts

Fair Use

• Began as a judicial doctrine (from cases)• “Allows uses of copyrighted material that

contribute to the creation of new work and issues that are not likely to deprive authors/publishers of income for their work."

• Possible fair uses: "criticism, comment, new reporting, teaching, scholarship, or research."

The Challenges of Technology Advances and Copyright Protection

• Increasing challenges to maintain IP rights.– Factors:• Greater interconnectivity & bandwidth• Improved technology makes more possible at low costs

– Ease of using technology to copy protected IP– Ability of making a “perfect” copy– High volume, cheap storage– Free/inexpensive software that works– Excellent speakers, etc.

• Ease of finding the resource

Fair Use Balancing

Promoting production of useful work

Encouraging the use and flow if information

Four Factors to consider when deciding if something falls in the Fair Use exception:

1. Purpose of the use.– Ex. commercial, personal or non-profit education?– commercial purposes? Less likely to find fair use

2. Nature of copyrighted work.– fiction given more protection that non-fiction

3. Amount and significance of portion used4. Effect of the use of the market for the copyrighted work– Uses that reduce sales of original, a court willless likely to find

the new use as fair– This factor is given the most weight.

Aside: Satire and Fair Use

• Satire of Angry Birds: http://www.cnn.com/2011/09/12/tech/angry-birds-satire-politics/index.html?hpt=hp_bn6

• Parody and fair use: – Campbell v. Acuff-Rose Music, a commercial

parody can qualify as fair use. • http

://encyclopedia.thefreedictionary.com/_/dict.aspx?word=Campbell+v.+Acuff-Rose+Music%2c+Inc

Sony v. Universal Studios case

• 1984, the betamax• http://www.law.cornell.edu/copyright/cases/464_US_417.htm

• ISSUE: was Sony liable for contributory copyright infringement by distributing a device that is capable of copyright infringement?

• STD: looked at whether the device was capable of substantial non-infringing uses.

Sony cont’d

• Applied the 4 factor fair use test the situation of recording of a film broadcast on TV for later personal viewing.

1. Purpose and character of the use.– Private – Idea of mere time-shifting

2. Nature of copyrighted work– Usually creative

Sony cont’d

3. Amount and substantiality of portion used– Ideally whole

4. Effect of use on potential market – Not clear that there was a harmful effect– Seen as increasing audience and given bigger

market for ad revenues

RIAA v. Diamond Multimedia

• The Diamond RIO mp3 player case• RIAA sued for an injunction (sale and mfg)

against Diamond RIO as device did not prevent copyright infringement– RIAA claims unlawful device as consumers could

make & download illegal mp3 files and use them on the player.

• Ct denied injunction; affirmed “space shifting” as a fair use

The Napster case

• Who is Shawn Fanning?– Video resource: http://

www.youtube.com/watch?v=CSpzW8bkkPc

• How Napster worked?– Modified peer-to-peer– Revenue generation?– Success of Napster:

• Registered users after 1 yr of operation?

The Lawsuit

• RIAA (representing labels with 85% of mkt) & Metallic sue Napster seeking an inj. claiming– Contributory copyright infringement– Vicarious copyright infringement– Lars says “put Napster out of business”

Napster’s position

• DMCA safe harbor for search engines• Many songs traded were not copyrighted &

others fell under fair use– Sampling– Space-shifting

• Service was akin to the device in Sony, capable of substantial non-infringing use

• 4th factor, market: sales increased during Napster

RIAA’s burden

• For contributory or vicarious infringement must show direct infringement by 3rd party.– Shown 87% of files in violation– That the labels control 70% of files available

through Napster.• RIAA showed Napster tried to remain ignorant

of users’ identities. RIAA gave actual knowledge of 12000 infringing files.

RIAA’s position

• Napster is not a search engine• That Napster materially contributed to the

infringement• Napster had direct interest req.• First Amend challenge not relevant• Plaintiff’s shown irreparable harm

Opinion Pieces

• Dear Hollywood Studios: If You Hold Digital Downloads Hostage, the Pirates Win

• http://www.wired.com/entertainment/hollywood/magazine/16-03/st_essay

• Would the Bard Have Survived the Web?• http://www.nytimes.com/2011/02/15/opinion/15turow.

html?_r=2&emc=eta1

• The Music-Copyright Enforcers• http://

www.nytimes.com/2010/08/02/education/02cheat.html

Kelly v. Arriba Soft Corporation (9th Cir., 2003)http://openjurist.org/336/f3d/811

• Facts: Professional photographer sues search engine operator for indexing his images. In the process, thumbnails were created and stored on the Arriba Soft’s server.

• Issue: Do these unauthorized copies of his images violate Kelly’s copyright?

• Ct analysis: 4 factor fair use analysis

• Holding: transformative

Galoob v. Nintendo (9th Cir, 1992)

• Game genie case. Users can modify existing games (extra lives, invincible char., unlimited ammo, etc.).

• Issue: Is this a derivative work?• Ct Analysis:

• Holding:

MGM Studios, Inc., et. al. v. Grokster, Ltd., et. al.US S Ct 2005

case study in book: pp. 142-144• Grokster distributed free software that utilized peer to

peer networks to allow users to obtain files.– big use was to share unauthorized, copyrighted music and

video files • A group of copyright holders (led by MGM) sued for an

injunction on Grokster for their users' copyright infringement claiming that Grokster – "knowingly and intentionally distributed their

software to enable users to reproduce and distribute the copyrighted works in violation of the Copyright Act, 17 U.S.C. § 101"

Grokster cont’d (2)• Factual record of case showed that:• Grokster used "no servers to intercept content of requests" or to "mediate the file

transfers" • Grokster therefore does not "know when a particular file is copied" • MGM showed that "90% of files available for download on the . . . system were

copyrighted works." • Grokster stipulated that most downloads using the system involved unauthorized,

copyrighted works and that use was the "primary" use. • Grokster marketed its software as a "napster alternative"

– From ads: • "#1 alternative to Napster" • "[w]hen the lights went off at Napster ... where did all the users go?"

• Lots of facts in record showed that "principal object was use of their software to download copyrighted works."

• Grokster obtained ad revenue from ads that its users were exposed to • MGM claims Grokster should be liable as a contributory infringer and should have

vicarious liability for infringement.

Grokster cont’d (3)• Lower ct ruling: At the Court of Appeals, Grokster would be "found

liable as a contributory infringer when it had knowledge of direct infringement and materially contributed to infringement." But under Sony as their product was capable of "non-infringing uses", and that the "decentralized nature" of their product meant that Gokster had no actual knowledge as required.

• S. Ct issue & holding: "The question is under what circumstance the distributor of a product capable of both lawful and unlawful use is liable for acts of copyright infringement by third parties using the product. We hold that one who distributes a device with the objective of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties."

Reconciling Sony & Grokster• Supreme Court said that Sony case did not prohibit secondary

liability for infringement for the distribution of a commercial product – fair use exception in Sony granted for the time-shifting

• No evidence in Sony that Sony promoted unlawful use • "because the VCR was capable of commercially significant non-

infringing use, We held the manufacturer could not be faulted solely on the basis of distribution."

• Sony "barred secondary liability based on presuming or imputing intent to cause infringement solely from the design or distribution of a product capable of sustantial lawful use" – cannot impute intent from mere distribution – need "statements or actions directed to promoting infringement"

BMG MUSIC v. Gonzalez (7th Cir, 2005)

• *Case decided after MGM. Gonzalez download copyrighted stuff using KaZaA, and contends that her actions were fair use.

• Facts from opinion:– she got 1,370 songs during a few weeks – kept them on computer until caught – Gonzalez claims she was "sampling" the copyrighted works to

determine what to actually purchase. • Because this is a review of a summary judgment court must assume her

statements were true.

– She owned some of the music, later purchased some, but kept copies of it all.

– Some she never owned but kept these illegitimate copies – BMG is seeking statutory damages for 30 songs. ($22,500)

BMG v. Gonzalez holding

• Court of Appeals rejects claim and finds for BMG.

• Ct held:– "downloading full copies of copyrighted material

without compensation to authors cannot be deemed fair use"

– court likened her behavior to a shoplifter who takes "30 compact discs, and plans to listen to them at home and pay later for any he liked."

Capitol, Virgin Records v. Thomas

• Notable as first case w/ jury trial.• Facts: from class. • Judgments:– First trial, 2007, $222k fine for 24 songs

• New trial ordered for manifest error of law (the make available theory)

– Second trial, 2009, $1.9 million dollars against Thomas• Reduced to $54,000:

http://news.cnet.com/8301-31001_3-20081934-261/jammie-thomas-judgment-lowered-from-$1.5-million-to-$54000/

Other Music CasesRIAA, Sony BMG v. Tenenbaum (US District Ct Boston 2009)

– 2nd jury trial; 31 songs shared on KaZaA; $675,000 award; reduced to $67,500 (2010); Under appeal from both sides. http://www.pcworld.com/article/200850/judge_cuts_filesharing_fine_to_67500.html

The Pirate Bay Four• http://torrentfreak.com/the-pirate-bay-trial-the-verdict-090417/

– Compare with individual file sharer case in Sweden 2/20/11: $7 per songhttp://torrentfreak.com/file-sharer-cant-believe-his-luck-with-7-per-track-fine-110220/

The Harper case http://blog.wired.com/27bstroke6/2008/10/judge-rejects-m.html

– Now a college student, used KaZaa as a 14-16 y.o.– Innocent offender: $200 per song damages– http://www.wired.com/threatlevel/2010/09/supreme-court-riaa/

The LimeWire case– http://www.nytimes.com/2010/05/13/technology/13lime.html – Shutdown: http://www.nytimes.com/2010/10/27/technology/27limewire.html

New Strategy by the Music Industry

• In 2009, RIAA announced it would cease chasing after “new” individual infringers and instead work with ISP’s to stop the downloading. Current cases would continue.

• See case study: pp. 136-138• See:

http://www.foxnews.com/scitech/2012/03/17/us-isps-become-copyright-cops-starting-july-12/

Lotus v. Borland (1st Cir. 1995)

• Lotus 1-2-3 & Quattro Pro, Borland’s “knockoff”– Menus– Macros– No code was actually copied.

• Ct of Appeals: menus were an un-copyrightable “method of operation”– Emphasis on rights of users, undue burden– Similar cases involving Apple, HP, and Microsoft

• Apple v. Microsoft – apple unsuccessfully argued that the look and feel was protected.

• Compare to Apple’s gestures patent: – http://news.cnet.com/8301-13579_3-10150436-37.html

Sega v. Accolade (9th Cir. 1992)

• Facts: Sega was unhappy about unlicensed games for their Genesis console.

• Issue: does Accolade’s reverse engineering infringe Sega’s copyright.

• Ct Analysis: 4 factor test

• Holding: