In our earlier post we reviewed a recent US lawsuit against (the now-famous) Jammie Thomas involving filesharing and copyright infringement allegations south of the border.  That fight is continuing and lawyers at the Electronic Frontier Foundation have decided to assist on the appeal.    

In Canada, the filesharing site Demonoid closed its doors last month after cease-and-desist letters from the Canadian Recording Industry Association.  Their site now contains the simple greeting: “The CRIA threatened the company renting the servers to us, and because of this it is not possible to keep the site online.”  CRIA succeeded in shutting the site down, but filesharing sites are like prairie dogs – the moment one pops down a hole, another is emerging somewhere else. 

It appears that the real fight is brewing in Quebec over the filesharing site QuebecTorrent.  Last month, 31 members of the recording industry (including Sony BMG Music Canada, Universal Music Canada and EMI Group Canada) launched a lawsuit against the site, seeking a preliminary injunction to shut it down.  QuebecTorrent managed to defeat that application and keep its doors open for the time being. This case may represent the first opportunity in Canada to test — or make — the law in this area, so both sides are preparing for the fight.  At the moment, filesharing is not specifically legal in Canada although no court has had an opportunity to review the specifics of a filesharing case.

This is one to watch.

 

Calgary – 11:22 MST

The lawsuit Andersen and Landley v. Monsoon Multimedia Inc, (No. 07-CV-8205) which promised to tackle the enforceability of the GPL head-on has settled, with Monsoon agreeing to appoint an Open Source Compliance Officer to monitor its use of open source software. Flush with this success, the lawyers at the Software Freedom Law Center promptly filed two new lawsuits, this time against Xterasys Corporation and High-Gain Antennas, LLC, also for violation of the terms of GPL in connection with the use of BusyBox open source code.

Calgary – 20:35 MST

Last week’s Throne Speech made it clear that copyright reform is on the Canadian government’s legislative agenda.  Given the political landscape in Canada at the moment, many speculate [stories here and here] that the Conservative government may be preparing the way for US-style copyright laws to introduce digital-rights management protection and anti-circumvention provisions. In our earlier post,  we noted that the issue was already on the radar in the spring session, and now that Parliament is back to work, we can expect copyright law to come back into the spotlight.  We hope that the Canadian legislators will learn from US missteps in this area and achieve a balanced approach to copyright law in Canada.  We will continue to monitor this issue.

Calgary – 10:00 MST

The US recording industry finally had its day in court.  After suing thousands of individuals for copyright infringement (most settled out of court), one of the cases finally made its way through trial and resulted in a damage award of $220,000 against Jammie Thomas, a now famous Minnesota woman.  An award of $220,000 for filesharing 24 songs works out to about $9,000 a song.  The verdict on October 4th has generated headlines around the world.  Thomas has indicated she will appeal.

The recording industry wanted to send a message and it definitely achieved that goal. However, it’s a pyrrhic victory: the industry’s legal fees far outstrip any amount recovered; the industry comes away looking like an unreasonable bully; and filesharing continues unabated. 

In Canada, the recording industry has not had the same “success” in court. The first attempt in BMG Canada Inc. v. John Doe (F.C.A.), 2005 FCA 193, [2005] 4 F.C.R. 81 hit a brick wall when the record company failed to obtain the identities of the particular customers alleged to have infringed copyright. 

Even worse for the recording industry, the judge in the BMG case actually said “downloading a song for personal use does not amount to infringement” which has been widely interpreted as judicial blessing for filesharing.  Never mind that this line was challenged by the Federal Court of Appeal ; in some ways the judicial cat is already out of the bag.

Lastly, the Canadian copyright levy on digital media has generated millions for the recording industry, arguably providing a de-facto license for personal copying when using “audio recording medium” as defined by the Copyright Board. 

It will be interesting to see whether this will be a high water mark for the legal adventures of the recording industry, or whether this judgement will simply encourage more enforcement suits.

 

Calgary – 13:30 MST 

 

In what appears to be the first US case to test the limits of the GPL (General Public License), an organization known as the Software Freedom Law Centre (SFLC) has spearheaded a lawsuit against Monsoon Multimedia for alleged violation of the terms of the GPL. 

Monsoon uses an open source software application known as BusyBox, which is subject to the GPL, but it is alleged that Monsoon has failed to make the source code available to its customers.  Such a failure would violate the terms of the GPL.  By breaching the GPL Monsoon would lose its rights to use the BusyBox software.  The suit seeks an injunction preventing Monsoon from using the BusyBox software in its own products.  BusyBox is a popluar component included in Linux-based devices and applications developed by Nokia, IBM, Sharp, HP and others.

The case may settle if Monsoon releases the code.  If it proceeds to trial, the lawsuit will test the enforceability of the GPL and will provide much-needed guidance in this area.  So far in Canada and the US the GPL has been enforced informally but has never been directly tested in court.  It also serves as a reminder for businesses using open source software:

• When developing software (in-house or out-sourced) be sure to have clear guidelines and policies regarding the use of open source applications;
• Get advice on the license terms which apply to open source applications: not all open source licenses are the same;
• Determine what the impact will be for proprietary software and what disclosure will be required to comply with the open source license terms.

Calgary 11:45 MST

RIM has dealt with its share of intellectual property infringement claims.

In this latest chapter, iconic video-game maker Atari has accused the Blackberry maker of infringing copyright in two video games: Breakout and Asteroid. Both games first went to market in the 1970s. Atari alleges that the copyright in these games was infringed in the creation of RIM’s games BrickBreaker and Meteor Crusher, both of which were created for bored executives on their handhelds…executives who probably used to play Atari’s Breakout in 1977.

Atari’s lawyers issued a series of threats last year, and RIM decided to take the initiative by suing Atari in Ontario in October 2006. Atari quickly registered copyright in the two games and responded by trying to move the case the US.

In an Ontario decision released earlier this month Research in Motion Limited v. Atari Inc., 2007 CanLII 33987 (ON S.C.) Atari suffered a set-back when the court sided with RIM in this initial skirmish. The case will likely proceed and will be interesting to watch.

Calgary -  23:10 MST

In our earlier post about open-source software, we made reference to the SCO Litigation, a sprawling nest of lawsuits entangling SCO, IBM, Novell, Red Hat, and licensees of the Unix software system such as DaimlerChrysler. 

The central issue was SCO’s contention that IBM had, without SCO’s authorization, contributed proprietary Unix code to the open-source Linux system.  If Unix was owned by SCO and the code was contributed without SCO’s consent, then this allegation threw doubt on the legal status of Linux and in turn the entire open-source service industry that has grown up around Linux.

Last Friday, a US court ruled that the copyright in the Unix system belongs to Novell, not SCO.  This deflates SCO’s central claims for relief for copyright violations and breach of contract.  The litigation has taken on a life of its own, so I’d be surprised if Friday’s ruling wasn’t appealed.  But it does provide some measure of relief for proponents of open-source.

Calgary – 11:50 MST

In an earlier post we discussed the use of copyright to control product distribution.  In the 2005 case of Euro Excellence, Inc. v. Kraft Canada Inc., the Federal Court of Appeal upheld an injunction against an unauthorized distributor of “grey market” Toblerone chocolate bars, based on an innovative claim of copyright infringement.  Under that decision, copyright seemed to provide a useful tool against parallel importers, where legitimate products are imported into a territory outside the official manufacturer’s supply chain.  Trade-mark law does not provide any help in this area after the decision in Coca-Cola v. Pardhan, another Federal Court of Appeal decision.  Copyright however seemed suitable to the task.

The case was appealed up to the Supreme Court of Canada and in its convoluted decision (Euro-Excellence Inc. v. Kraft Canada Inc., 2007 SCC 37), the Court now appears to have removed copyright as a tool in parallel importation cases.  The majority agreed that copyright protection should extend to product labels and agreed that if a work is entitled to copyright protection, then it should be protected like any work, without an analysis of whether the work is “incidental” or whether the copyright holder has a “legitimate economic interest”.  But the majority decision also made it clear that copyright is no longer a viable option for manufacturers in parallel import or “grey market” cases in Canada where the local distributor relies on an exclusive license to prevent importation. 

 

Calgary – 12:30 MST

Canada gained two new intellectual property laws in June: the Olympic Marks legislation, (officially Bill C-47, the Olympic and Paralympic Marks Act) which provides a new species of “super-protection” for Olympic trade-marks, and a new anti-camcording law, which amends the Criminal Code to prohibit unauthorized recording of a movie (officially Bill C-59).

Calgary – 11:00 MST 

Law Professor Eric Goldman has picked up on an interesting twist in an otherwise commonplace trade-mark infringement case that went to the US Seventh Circuit Court of Appeals (Central Manufacturing, Inc. v. Brett, 2007 WL 1965673 (7th Cir. July 9, 2007). 

The case involved famous baseball player George Brett and it’s clear that the judge was a serious baseball fan. On page 3 of the decision, Judge Evans recounts a scene from a 1983 Yankees game and indicates that:

“The whole colorful episode is preserved, in all its glory, on YouTube, at http://www.youtube.com/watch?v=4Cu1WXylkto (last visited June 6, 2007).”

If you link there now, you’ll find the standard warning that “This video is no longer available due to a copyright claim by MLB Advanced Media.“  It was taken down after a complaint by the copyright owner.  In other words, the Court of Appeals has encouraged readers to access infringing content, something warned about in the Perfect 10 case.  Applying the analysis regarding contributory infringement, did the Court know of infringing activities and fail to take “reasonable and feasible steps” to refrain from providing access to infringing content? If so, they might be liable for contributory infringement!

This case shows a couple of things:

• Judges and courts are becoming more technologically savvy (imagine a link to a YouTube video in a judgement from 5 years ago);
• Even the most well-meaning links can raise questions about infringement.  Infringing links can usually be taken down if challenged, although this link is now immortalized in a Court of Appeals decision.

 

Calgary – 11:10 MST

Australian software hacker Hew Griffiths was sentenced last week to over 4 years in prison on one count of “conspiracy to commit criminal copyright infringement” ending his long-running battle to avoid extradition and sentencing in the US. This is on top of the nearly three years he spent incarcerated at a detention center in Australia while fighting the US extradition bid.

Seven years jail time for copyright infringement? Seems a bit over the top, but Mr. Griffiths found himself the new poster-boy for the US Department of Justice in their effort to make an example of a notorious code-cracker, and one who made the mistake of boasting that he would never be caught.

Calgary – 19:44 MST

An Australian man has been extradited to the US  to face sentencing for copyright infringement.  Hew Griffiths, a ringleader in an undergound software piracy network, was a resident of Australia who never set foot in the US to commit copyright infringement.  Nevertheless, the US doggedly pursued extradition against Griffiths.  Earlier this year he admitted to his role in an international ring engaged in the illegal reproduction and distribution of more than $50 million worth of pirated software, movies, games and music.  Griffiths is not alleged to have personally profited from the copyright infringement. 

This case is one of the first ever extraditions for an intellectual property offense and represents a growing aggressiveness on the part of software publishers to defend against international piracy.  Sentencing is scheduled for later in June, 2007 and Griffiths faces a possible 10-year jail term.

 

Calgary  – 12:45 MST

 

Microsoft’s acquisition last week of aQuantive for $6 billion in cash shows the lengths that technology companies will go to muscle into the online advertising market.  Microsoft paid a substantial premium at $66.50 per share, compared with aQuantive’s closing price on Thursday of $35.87 per share.  The deal follows on the heels of Google’s $3.1 billion acquisition of DoubleClick Inc. in April.  A pair of recent US decisions considered the law relating to search engines and online advertising:

In Site Pro-1, Inc. v. Better Metal, LLC (E.D.N.Y. May 9, 2007), the court decided that keyword triggering and metatag usage in online advertising does not qualify as trademark use and therefore cannot constitute infringement.  For the court, the question was whether the trademark was placed visibly on any goods, displays, containers, or advertisements – if the trademark was not displayed to consumers, no infringement could take place.  This analysis differs from decisions elsewhere in the US, so the debate continues. 

In Perfect 10, Inc. v. Amazon.com, Inc. (9th Cir. May 16, 2007), the Court of Appeal decided that Google’s display of thumbnail images in search results should be considered “fair use” and therefore did not constitute copyright infringement.  While this decision is generally considered good for search engines, the court also left open the question of contributory infringement, and when search engines can take advantage of the defences available under the DMCA .

 

Calgary – 11:45 MST

There are reports that the Conservative government is planning to introduce long-anticipated amendments to Canada’s copyright laws this spring (barring another Federal election which seems to be an annual occurrence). Controversial amendments such as US-style DRM (digital rights management) protection provisions will certainly generate opposition and the progress of the legislation will be closely watched.  The Liberals’ attempt at copyright reform came in Bill C-60 which died before the government changed hands.  We will be monitoring the proposed legislation when it is introduced.  

Calgary – 16:45 MST 

In Perfect 10 Inc. v. CCBILL LLC, the US Ninth Circuit Court of Appeal issued an important new decision considering the (US) Digital Millennium Copyright Act (DMCA). The case involved allegations of copyright infringement by Perfect 10. While the case considered a complex range of issues, there are a few practical points to highlight: the Court was clear that that ISPs who rely on the DMCA safe harbor must maintain records on which subscribers are allegedly “repeat infringers” under the DMCA, but ISPs do not need to go so far as to “actively police” their users for evidence of infringement. Where ISPs receive “direct financial benefit” from infringing conduct, they cannot take advantage of the safe harbor provisions.

In considering the notice-and-take-down regime, the Court stipulated that copyright holders must “substantially comply” with all requirements under the DMCA in order for their notices to trigger the take-down procedures. ISPs can ignore notices which fall short of substantial compliance.

Canadian copyright holders who are considering action against copyright violations taking place through US-based ISPs should seek advice on ensuring their DMCA notices comply with the requirements.

A few more DMCA cases are making their way up to the appeal level and decisions are expected soon.

Calgary – 9:20 MST

 

In a case involving three computer game makers, a UK Court of Appeal decision (Nova Productions Limited v. Mazooma Games Limited & Others [2007] EWCA Civ 219) has confirmed that the general ideas and structures underlying a computer game do not enjoy copyright protection.  The decision, handed down last week, confirms that as long as the source code and graphics are not copied, the ideas and structures may be copied without infringing copyright. 

The law is very similar in Canada. One of the leading cases analyzing the question of copyright infringement in software is Delrina Corporation v. Triolet Systems Inc., a 2002 Ontario Court of Appeal decision.  Generally, Canadian copyright law is clear that ideas and structures are not protectable by copyright.  To arrive at that conclusion however often requires an exhaustive analysis of the code and the underlying structures.  Courts will consider whether one work is a “substantial” copy of another.  In measuring what is “substantial” the court will disregard elements of the work that either have no originality, are dictated by functional considerations (such as underlying structures) or are otherwise not protectable by copyright (such as ideas).

 

Calgary – 10:32 MST

 

Digital music has come a long way since the revolutionary CD was first introduced in 1983. Now a computer company – Apple Inc. – dominates the music market and the Copyright Board of Canada has just decided that 7.9 cents on every 99-cent iTunes download must make its way back to the copyright collective.

The Board issued its decision on Friday on the tariff covering online music in Canada. The Board ruled that in the case of permanent downloads, 7.9% of the price of a song must be paid back to copyright holders as a royalty. For subscription-based downloads, the tariff is 5.9% of the cost of a month’s subscription, and for on-demand streaming music, the rate is 4.6% of the monthly subscription cost. This brings to an end several years of debate on the tariff and represents a compromise between the music stores and representatives of copyright holders.

Calgary – 21:00 MST

What is the scope of intellectual property protection for two- and three-dimensional articles or images? 

A recent US case (Eliya Inc. v. Kohl’s Department Stores, S.D.N.Y., No. 06 Civ 195 (S.D.N.Y. Sept. 13, 2006)) determined that making a three-dimensional object (in this case, a designer shoe), based on a two-dimensional image of that object, did not constitute copyright infringement.  This was the case despite the registration of the two-dimensional image under the Copyright Act.  The court concluded that the scope of protection under copyright law only extended to the reproduction of the 2-D image or drawing of the shoe, not the creation of a functional 3-D shoe which was copied from the 2-D image.  However, the plaintiff also claimed trade dress infringement under the US Lanham Act, and this claim survived.

In another recent US decision (Meshwerks Inc. v. Toyota Motor Sales U.S.A. Inc., D. Utah, No. 2:06 CV 97), the court decided that animated three-dimensional digital images of car designs did not enjoy copyright protection since they lacked the creative spark required for copyright to apply.  In this case Meshwerks was hired by Toyota to create the 3-D digital replicas of cars for use in advertisements.  Meshwerks went so far as to register copyright in their 3-D images and then they turned around and sued Toyota for copyright infringement.  The court denied that the images enjoyed copyright protection since they were merely “product-accurate representation without the introduction of new creative elements.”

In Canada, Pyrrha Design Inc. v. 623735 Saskatchewan Ltd., 2004 FC 423, (2004), 30 C.P.R. (4th) 310 dealt with a claim for infringement based on the defendant’s copying of certain jewellery designs.  The plaintiff sued under copyright.  The defendant argued that the Copyright Act didn’t apply since, because of the exceptions and stipulations under Section 64 of the Act, the jewellery designs were covered by the Industrial Design Act, not the Copyright Act.  The court agreed and since the lawsuit was founded solely on copyright infringement, the claim was dismissed.

The lessons for business?  Several things come to mind:

(1) There may be concurrent protection under both copyright and industrial design.  Determine where you can get the best protection and, if necessary, obtain a registration.  To obtain an industrial design registration, certain conditions need to be satisfied, so ensure that you have reviewed your options in advance.

(2) Where you are entering into an agreement (like the one between Meshwerks and Toyota), ensure that ownership of copyright in the resulting images or designs is clearly dealt with.  Even though Toyota won the case, the lawsuit might have been avoided altogether if the agreement was clear on copyright ownership.

Calgary – 14:28 MST

Any owner who has tried to stop copyright and trade-mark infringement can attest to the difficulty of pursuing an effective practical remedy; websites come and go, distributors of pirated software disappear and rematerialize under a different name, and servers are taken down merely to pop up in a different jurisdiction.

Microsoft Canada can chalk up a win in a recent Canadian Federal Court decision (Case name: Microsoft Corporation v. 9038-3746 Quebec Inc., 2006 FC 1509).  In the decision, the Federal court slapped a Quebec-based distributor of pirated Microsoft software with a $700,000 damage award for copyright and trade-mark infringement.  The award was based on the maximum statutory damages under the Copyright Act of $20,000 per infringement, for a total of half a million dollars, plus punitive damages of $200,000.  Cerrelli, the director of the corporate defendant was personally liable with the corporation, due to his personal involvement and knowledge of the infringement.  The total damages may not come close to Microsoft’s actual loss in sales, nor the infringer’s profits, but the number is enough to drive a point home.

This case underscores two points: there can be a practical and effective remedy for copyright infringement, with a carefully prepared case. Secondly, directors can and will be held personally liable with their corporations, when the circumstances are right.  

 

Calgary – 11:20 MST

Every once and while a story comes along that seems to capture an essential quality of the times. This is one of those stories: In December, CNET News.com interviewed Second Life entrepreneur Anshe Chung, the virtual identity of real-life entrepreneur Aillin Graef.

The interview took place in CNET’s virtual Second Life studio in front of dozens of virtual audience members. Video taken during the interview was sabotaged by digital hecklers who harrassed both Anshe Chung and her real-life owner, Ailin Graef. Afterward (like any other video taken in the real world), a video of the harrassment was posted on YouTube.  Real-life company Anshe Chung Studios filed a complaint against YouTube, claiming that real-life Graef’s copyright in the virtual character Anshe Chung had been infringed because the images had been used in the video without her permission. YouTube removed the offending video. (Link to story)

A news report in the (real-life) Syndey Morning Herald was also the subject of a complaint by Graef, since the news story reproduced a screen shot of the offending video image. However, in the real world, fair-use or fair-dealing exceptions allow reproduction of copyright-protected content for the purpose of news reporting.

It seems that the more distortion we see in layers of reality (the digital alter-ego of a real person is digitally harrassed in a digital world and a digital video of the harassment is digitally posted in the real world, prompting the real person to complain to the real-life company that hosts the digital video), the more fascinating the intellectual property issues become. At its most basic level, the (virtual) Anshe Chung character is merely a string of code protected by (real-world) copyright.  In the Second Life, however, was it copyright that was infringed, or were the personality rights of Anshe Chung infringed? If Ms. Chung can’t bring an action for defamation of character in the virtual world, I’m sure those days aren’t far in the future.

Calgary – 09:13 MST