Wednesday, December 22, 2010

More First Sale News

Last week the Ninth Circuit ruled on the second of three first sale cases - MDY v. Blizzard. The opinion can be found here.

The case is about the use of bots (made by MDY) to assist in advancing in the World of Warcraft video game owned by Blizzard. For more facts about the case, see my previous blog entry.

Relying on the earlier decision in Vernor v. Autodesk, the first decision in the trio of first sale cases before the Ninth Circuit this term, the Court finds that the players of Blizzard are licensees and not owners of the World of Warcraft software. Blizzard’s World of Warcraft End User License Agreement specifically prohibits users from creating or using third party software to modify Worlds of Warcraft including bots.

However, the Ninth Circuit differentiates between a contract covenant which is a breach of the license agreement and not copyright enforceable conditions. Because the Ninth Circuit reversed the district court decision and determined that the MDY bot did not alter or copy any of Blizzard’s software, it was not a copyright enforceable condition and thus no copyright infringement occurred.

Next the Ninth Circuit had to decide whether MDY committed copyright infringement under the DMCA when it modified its bot to circumvent Blizzard’s Warden technology to prevent bots from connecting to the World of Warcraft servers.

In its interpretation of the DMCA (17 U.S.C. Section 1201(a)), the Court finds that the statute is meant to protect from circumvention of access controls to copyrighted works including decrypting and descrambling works. This does not necessarily affect the exclusive rights under Section 106 of the Copyright Act. The Court notes that this is a departure and differing view from the Chamberlain decision in the Federal Circuit requiring that the circumvention interfere with one of the exclusive rights under Section 106.

Based on this interpretation, the Court finds that MDY does not violate Section 1201(a)(2) for the literal elements and individual non-literal elements of Worlds of Warcraft because the Warden technology does not control access to the Worlds of Warcraft elements. The Warden technology does not prevent access to Worlds of Warcraft on an individual user’s computer but only to the Worlds of Warcraft servers.

However, the Court finds that MDY violates Section 1201(a) for the dynamic non-literal elements of Worlds of Warcraft. The Ninth Circuit explains the dynamic non-literal elements as analogous to the audiovisual display of a computer game which is independently copyrightable from the software program code. Because Warden does prevent access to the audiovisual display of the Worlds of Warcraft from its servers, MDY’s efforts to restructure its bots to circumvent the Warden technology is an infringement.

The Court reversed summary judgment for Blizzard for tortuous interference with contract because there were triable issues of fact.

Tuesday, December 21, 2010

Supreme Court Splits on First Sale

Last week the Supreme Court issued a split 4-4 ruling in the Costco v. Omega lawsuit. The opinion can be found here.

The split affirms the decision of the Ninth Circuit that the first sale doctrine does not apply to copyrighted works manufactured and sold abroad. The case has been reported in many news outlets, including the New York Times and Wall Street Journal.

Monday, December 20, 2010

50 Cent Sued for Copyright Infringement

A Federal lawsuit for copyright infringement in the Eastern District of New York was filed last week over the instrumental track for the 50 Cent song “I Get Money” by Tyrone Simmons. Simmons claims that he purchased the exclusive rights for the instrumental track which was used without his permission.

Defendants also include the song producer and records companies associated with the single.

Wednesday, December 15, 2010

Viacom Appeals

As widely expected, Viacom has appealed the June 2010 district court ruling in Viacom v. YouTube to the Second Circuit. (I previously discussed the district court's decision granting summary judgment to YouTube in a 3 part post: Part I, Part II, Part III.) Viacom has a full text of the appeal as filed on their website.

Interestingly, Viacom has primarily focused on the factual findings of the district court in granting summary judgment for YouTube as an internet service provider under Section 512(c). Section 512(c) provides a defense to copyright infringement for certain activities carried out by internet service providers. (Further explanation available here.)

Viacom has stated three reasons why Section 512(c) should not apply to YouTube:

  1. YouTube had knowledge that the content on YouTube was infringing or were aware of facts and circumstances that the content was infringing and did nothing to stop infringement. Viacom claims that YouTube’s general knowledge of infringing activity on its website should be sufficient to prevent YouTube’s service provider defense under Section 512(c).

    Viacom alleges that YouTube selectively enforced against copyright infringement when YouTube had programs available to weed out infringing works and ignoring community flagging systems that would have pointed out infringing works. Viacom also claims that YouTube was aware of the predominant amount of infringing works that were available on its site and encouraged these videos because YouTube received more “hits” from these videos.

    The court found that YouTube took appropriate action when advised of the alleged infringing web posts by Viacom. The court found specific knowledge was needed in order for the Section 512 defense to not apply.
  2. YouTube had the ability and control over the infringing content and received a direct financial benefit. Viacom claims that YouTube gained financial benefits from advertising revenue due to the increased audience at its website. Viacom points to certain facts that YouTube realized that a major part of its success were videos that infringed on copyrights.

    Viacom also reiterates that YouTube could have taken action against infringing activities but did not. The district court found that YouTube must have specific knowledge of the infringing content in order to be able to control the infringing activity.
  3. YouTube’s activities went beyond the storage function of a service provider under Section 512(c). Viacom claims that YouTube’s actions in posting user content includes more than just storage – including display, reproduction, performance and licensing content to others.

    The district court found that YouTube’s activities in placing the user’s content on its website was incidental to the acts of storage and thus was within the parameters of the Section 512(c) defense.
Viacom also seeks that summary judgment be reversed and granted in its favor. A number of amici have filed briefs on Viacom’s behalf including Business Software Alliance, Motion Picture Association of America, Microsoft, and members of the publishing and music industries.

For the first 2 reasons set forth by Viacom, it would seem heavily reliant on Grokster and general principles from the case. Based on the district court decision, Viacom would argue a couple of small changes and Grokster would not have been guilty of infringement. (This may be true.)

It will be interesting to see how the Second Circuit handles the issue of the district court’s finding regarding specific knowledge of infringement is necessary, not general knowledge.

I think the best that Viacom may be able to hope for from the Second Circuit is that there are triable issues of fact and summary judgment for YouTube was unwarranted. (Based on the number of facts presented by Viacom, this seems to be its strategy.)

The third reason set forth by Viacom is by far the more interesting legal argument. While Viacom is surely unhappy with the result of district court under Reasons 1 and 2 above and would like a ruling in its favor based on the facts it presents, it seems that Reason 3 would be the best argument to obtain summary judgment in Viacom’s favor. The more interesting questions facing the Second Circuit are not argued fully until nearly 50 pages into the Opening Brief.

Friday, December 3, 2010

IDPPPA passes Senate Judiciary Committee

The recently proposed legislation protecting fashion design has been approved by the Senate Judiciary Committee.

For a summary of the bill, see the Chronicle's earlier post discussing the IDPPA and whether fashion should be protected by copyrighted.

A new question now remains: Because there is a “lame duck” session currently in Congress, will the bill pass before Congress ends its session?

There seems to be some question as to whether Congress will move forward with any legislation before the new year (other than tax-related legislation).

I do not know how much of a priority the IDPPPA is to members of Congress. Similar legislation, such as the Design Piracy Prohibition Act, has previously been introduced near the end of a Congressional term and the bill never passes before the Congressional term ends. I suspect that this will be the case again given the short time left before the Congressional session ends.

Following the November elections and the anticipated gridlock when the new Congress begins in January 2011, will the IDPPPA be made into law? What do you think?