Copyright and Trademark Issues on the Internet

8/2/2019 Copyright and Trademark Issues on the Internet

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www.gesmer.com

Copyright and TrademarkIssues on the Internet

Rossdale CLEApril 25, 2012

Lee Gesmer

Gesmer Updegrove LLP

Boston, Massachusetts

Copyright Gesmer Updegrove LLP 2012


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www.gesmer.com4.25.2012

Topics:

Digital Millennium Copyright Act (DMCA)

Copyright First Sale Doctrine

Keyword Advertising/Trademark

Computer Fraud and Abuse Act (CFAA)

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Digital Millennium Copyright Act

- UMG Recordings, Inc. v. Shelter

Capital Partners LLC, 667 F.3d 1022(9th Cir. 2011)

- Viacom Int'l, Inc. v. Youtube, Inc.,

2012 U.S. App. LEXIS 6909 (2d Cir.N.Y. Apr. 5, 2012)

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17 USC 512 Safe Harbors

512 immunizes Internet intermediaries for usersupplied infringing content but service provider -

Must: comply mechanics: agent, notice/take

down, repeat infringer policy

Must: provide storage at direction of a user

Must not: Have actual knowledge or facts/

circumstances

Must not: Derive financial benefit + right/ability to control

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By Reason of Storage at Direction of User

A service provider shall not be liable . . .

by reason of the storage at the direction of

a userof material that resides on a system

or network controlled or operated by or for

the service provider . . . 512(c)

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By Reason of Storage - Veoh

language and structure of the statute . . . [and]legislative intent clarify that 512(c) encompasses

the access-facilitating processes that automatically

occur when a user uploads a video to Veoh

web hosts, like Veoh, . . . store user-submitted

materialsin order to make those materials

accessibleto other Internet users. . . . if the web

host only stored information for a single user, it

would be more aptly described as an online back-up

service

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By Reason of Storage - Youtube

Agrees with Veoh regarding scope of storage safeharbor transcoding, playback and related

videos (automated algorithm) fall within safe

harbor

Third-party syndication Youtube licensed videos to

Verizon. Manual selection of copyrighted material

for licensing to a third party

=> Remanded to determine whether clips-in-suit

were licensed

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Actual Knowledge/Facts-Circumstances

[the service provider is not liable if it] . . .

does not have actual knowledge that the

material . . . is infringing;. . . in the absence of such actualknowledge, is not aware offacts orcircumstances from which infringing activityis apparent (Red Flag)

512(c)(1)(a)

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Veoh - Actual Know./Facts-Circumst.

Actual knowledge/facts and circumstances bothrequire specific knowledge of infringing conduct, notgeneralized knowledge

Email from Disney CEO to Veoh investor inadequatebecause the copyright holderdid not comply withnotice requirements - deficient notice "shall not beconsidered under paragraph (1)(A) in determining

whether a service provider has actual knowledge or isaware of facts or circumstances from which infringingactivity is apparent"

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Youtube - Actual Know./Facts-Circumst.

the actual knowledge provision turns on whetherthe provider actually or subjectively knew ofspecific infringement, while the red flag provisionturns on whether the provider was subjectivelyaware of facts that would have made the specific

infringement objectively obvious to areasonable person

=> Upon a review of the record, we arepersuaded that the plaintiffs may have raised amaterial issue of fact regarding YouTubesknowledge or awareness of specific instancesof infringement

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Youtube - Willful Blindness Doctrine

Safe harbor not conditioned on service providermonitoring its service or affirmatively seeking factsindicating infringing activity . . . [DMCA] isincompatible with a broad common law duty to

monitor or otherwise seek out infringing activitybased on general awareness . . . . . . [therefore]willful blindness cannot be defined as anaffirmative duty to monitor. . . . [But the statutedoes not] abrogate the doctrine. . . . the willful

blindness doctrine may be applied, in appropriatecircumstances, to demonstrate knowledge orawareness of specific instances of infringement

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Financial Benefit ... Ability to Control

Service provider is eligible for the 512(c)safe harbor only if it -

"does not receive a financial benefit

directly attributable to the infringingactivity, in a case in which the serviceprovider has the right and ability tocontrol such activity" 17 U.S.C. 512(c)(1)

(B)

=> Financial Benefit + Control Safe Harbor

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Veoh - Financial Benefit/Control

Service provider must be aware of specificinfringing material to have the ability tocontrol that infringing activity . . . Onlythen would its failure to exercise its abilityto control deny it a safe harbor . . . "rightand ability to control" . . . requires controlover specific infringing activity the providerknows about . . . Of course, a serviceprovider cannot willfully bury its head inthe sandto avoid obtaining such specificknowledge . . .

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Youtube - Financial Benefit/Control

importing a specific knowledgerequirement into [control/benefit] rendersthe control provision duplicative of [theactual knowledge provision]. Any service

provider that has item-specific knowledgeof infringing activity and thereby obtainsfinancial benefit would already be excludedfrom the [control/benefit] safe harbor . . .for having specific knowledge of infringingmaterial and failing to effect expeditiousremoval.

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Perfect 10 v. Cybernet Ventures, 213 F. Supp. 2d1146 (C.D. Cal. 2002) - service providerinstituted a monitoring program by which userwebsites received detailed instructions regarding

issues of layout, appearance, and content, andalso forbade certain types of content and refusedaccess to users who failed to comply with itsinstructions

=> exerting substantial influence on theactivities of users, without necessarilyoreven frequentlyacquiring knowledge ofspecific infringing activity

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the right and ability to control infringing activityunder 512(c)(1)(B) requires something more thanthe ability to remove or block access to materialsposted on a service providers website . . . The

remainingand more difficultquestion is how todefine the something more that is required . . .we think it prudent to remand to the District Courtto considerin the first instance whether theplaintiffs have adduced sufficient evidence to allow

a reasonable jury to conclude that YouTube had theright and ability to control the infringing activityand received a financial benefit directlyattributable to that activity

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Attempt to graft GroksterontoDMCA

Metro-Goldwyn-Mayer Studios Inc. v.Grokster(U.S. 2005)

... one who distributes a device with the

object of promoting its use to infringecopyright, as shown by clear expression or

other affirmative stops taken to foster

infringement, is liable for the resulting actsof infringement by third parties

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Viacom: YouTube is a Video Grokster

- [W]e need views, [but] Im a little concernedwith the recent [S]upreme [C]ourt ruling oncopyrighted material

- [S]ave your meal money for some lawsuits!- concentrate all of our efforts in building upour numbers as aggressively as we can throughwhatever tactics, however evil

- our dirty little secret . . . is that we actuallyjust want to sell out quickly

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Both courts reject application ofGrokster

Veoh - In light of the DMCA's language,structure, purpose and legislative history, weare compelled to rejectUMG'sargument thatthe district court should have

employedNapster's vicarious liabilitystandard . . .

Youtube - a finding of safe harbor applicationnecessarily protects a defendant from allaffirmative claims for monetary relief

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Veoh - Investor Liability (secondary liab.)

The Investor Defendants argue that it would beillogical to impose greater liability on them than onVeoh itself. Although we agree that this wouldcreate an anomalous result, we assume without

deciding that the suit against the InvestorDefendants can properly proceedeven though Veohis protected from monetary liability by the DMCA

. . . were we to hold that Veoh was protected, but

its investors were not, investors might hesitate toprovide the necessary funding to companies likeVeoh, and Congress' purpose in passing the DMCAwould be undermined

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Veoh: Prevailing Def. Denied Atty Fees

FRCP 68 If the judgment that the offereefinally obtains is not more favorable than the

unaccepted offer, the offeree must pay thecosts incurred after the offer was made

Copyright statute - court "may . . . award areasonable attorney's fee to the prevailing

party as part of the costs" 17 U.S.C. 505

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Capitol Records v. Redigi First SaleDoctrine and Digital Recordings

Sell your old songslegally The worlds firstused digital music marketplace -Buy usedmusic insanely cheap

Store, Stream, Buy and Sell Pre-Owned

Digital Music

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Redigi (2) ....

Step One: file is space shifted to musiclocker, verified, fingerprinted, owners localcopy deleted

Step Two: Owner designates file for sale -purchased file is retitled to the new owner

Step Three:The new owner can leave the file onRedigi or download

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Redigi (3) ....

Capitols Argument -- first sale doctrine limited to owner of aparticular copy (a material object) in whicha copyrighted work is fixed, to dispose of the

possession of that copy- Digital transmissions do not involve the physicaltransfer of a material object

- Digital resale requires reproduction of the

original file and creation of a new copy=> Ergo, first sale does not apply

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First Sale Doctrine

. . . the owner of a particular copy orphonorecord lawfully made under this title,or any person authorized by such owner, isentitled, without the authority of the

copyright owner, to sell or otherwise disposeof the possession of that copy orphonorecord 17 US.C. 109(a)

Copy owners rights, as opposed tocopyright owners rights

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Vernor v. Autodesk (9th Cir. 2010)

Garage sale purchaser of software bound bylicense prohibiting resale?

First, we consider whether the copyright

owner specifies that a user is granted alicense. Second, we consider whether thecopyright owner significantly restricts theusers ability to transfer the software.

Finally, we consider whether the copyrightowner imposes notable use restrictions

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F.B.T. Prods., LLC v. Aftermath Records(9th Cir. Cal. 2010)

where a copyright owner transfers a copy

of copyrighted material, retains title, limitsthe uses to which the material may be put,and is compensated periodicallybased onthe transferees exploitation of the

material, the transaction is a license

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MDY v. Blizzard (9th Cir. 2010)

EULA for WoW restricted use of BOT thatplayed through game levels

Yes, but:

Yes - WoW players are licensees

But - the anti-BOT restriction was acovenant rather than a copyright -

enforceable condition

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UMG Recordings, Inc. v. Augusto (9th Cir.2011)

Unsolicited promo CDs - license or transfer?

No agreement in place

Resale or transfer of possession is notallowed ...

Unordered merchandise statute

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K W d Ad i i /T d k


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Key Word Advertising/Trademark

Rosetta Stone v. Google, Inc. (4th Cir. 2012)

Intent:

< 2004 - Google did not allow the use of trademarks askeyword search triggers for unauthorized advertisers orin the body or title of the text of an advertisement

> 2004 Loosened restrictions, but continued toprevent advertisers from using trademarks in ad text orad titles unless authorized; recognized increase in risk.

>2009 Permitted use of trademark terms in ad text

even if advertiser doesnt own the mark or haveexplicit approval from the trademark owner to use it(resellers, components, compatible parts, info/reviews)

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Rosetta Stone (2) ....

Viewing the evidence and all reasonableinferences in a light most favorable to

Rosetta Stone . . . a reasonable trier offact could find that Google intended tocause confusion in that it acted with theknowledge that confusion was very likely to

result from its use of the marks

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Actual Confusion:

5 depositions, confusion as to sponsorship (vssource) sufficient

Rosetta over 250 complaints Google admissions - the only effectivetrademark policy is to allow trademark usage forkeywords but not allow trademark usage in ad

text - title or body Googles internal studies probative as to actualconfusion

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Sophistication of Consuming Public:

internal Google study reflect[s] that even well-

educated, seasoned Internet consumers areconfused by the nature of Google's sponsoredlinks and are sometimes even unaware thatsponsored links are, in actuality,advertisements

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Functionality Defense:

Reversed district courts holding thatGoogles use of keywords was functional

Contributory Infringement:

Remanded question of fact as to whether

Google continued to supply services toknown infringers

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Network Automation v. Advanced SystemsConcepts (9th Cir. 2011)

Trademark owner lawsuit against keywordadvertiser(compare Rosetta Stone, suingsearch engine)

Network Autos ads did not use plaintiffstrademark

Buying keyword ads constitutes a use incommerce (accord: Rescuecom Corp. v.Google Inc., 562 F.3d 123 (2d Cir. 2009)(selling keywords is use in commerce)

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http://www.ca2.uscourts.gov/decisions/isysquery/3655e4ac-c860-4bc2-8c61-68a117af23ee/1/doc/06-4881-cv_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/3655e4ac-c860-4bc2-8c61-68a117af23ee/1/hilite/http://www.ca2.uscourts.gov/decisions/isysquery/3655e4ac-c860-4bc2-8c61-68a117af23ee/1/doc/06-4881-cv_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/3655e4ac-c860-4bc2-8c61-68a117af23ee/1/hilite/http://www.ca2.uscourts.gov/decisions/isysquery/3655e4ac-c860-4bc2-8c61-68a117af23ee/1/doc/06-4881-cv_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/3655e4ac-c860-4bc2-8c61-68a117af23ee/1/hilite/http://www.ca2.uscourts.gov/decisions/isysquery/3655e4ac-c860-4bc2-8c61-68a117af23ee/1/doc/06-4881-cv_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/3655e4ac-c860-4bc2-8c61-68a117af23ee/1/hilite/http://www.ca2.uscourts.gov/decisions/isysquery/3655e4ac-c860-4bc2-8c61-68a117af23ee/1/doc/06-4881-cv_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/3655e4ac-c860-4bc2-8c61-68a117af23ee/1/hilite/http://www.gesmer.com/http://www.gesmer.com/


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Network Automation (2) ...

Most relevant factors to likelihood ofconfusion:

(1) strength of the mark;

(2) evidence of actual confusion;

(3) type of goods/ degree of care likely to beexercised by the purchaser; and

(4) labeling and appearance of theadvertisements and the surrounding context onthe screen displaying the results page

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Demise of Initial Interest Confusion?

Internet users on the whole exercise a lowdegree of care. Brookfield Commcns v. WestCoast Entmt Corp.,174 F.3d 1036 (9th Cir.1999)

the owner of the mark must demonstratelikely confusion, not mere diversion . . .

[initial interest limited to] misleading anddeceptive. Network Automation, 2011

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Similar marketing channels:

it would be the rare commercial retailer

that did not advertise online, and theshared use of a ubiquitous marketingchannel does not shed much light on thelikelihood of consumer confusion

=> Preliminary injunction vacated

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Louis Vuitton v. Akanoc (9th Cir. 2011)

Web host liability/counterfeiting retailers

- $32M damages at trial

-"providing direct infringers with server space"qualifies as a material contribution forcontributory copyright infringement.

De facto notice/takedown for trademarks?

See also Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93 (2nd Cir. 2010)

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Computer Fraud and Abuse Act (CFAA)

18 U.S.C. 1030(a)(4):

(a) Whoever

(4) knowingly and with intent to defraud,

accesses a protected computer withoutauthorization, or exceeds authorizedaccess, and by means of such conductfurthers the intended fraud and obtains

anything of value . . .

shall be punished . . . .

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CFAA - U.S. v. Nosal (9th Cir. 2011) (panel)

Company policy "restricted the use anddisclosure of all such information, exceptfor legitimate [company] business

"an employee 'exceeds authorizedaccess' ...when he ...violates theemployer's computer access restrictions --including use restrictions

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CFAA - U.S. v. Nosal (9th Cir. 2012) (en banc)

we hold that the phrase exceeds authorizedaccess in the CFAA does not extend to violations ofuse restrictions (Majority, Judge Alex Kosinski)

This case has nothing to do with playing sudoku,checking email, fibbing on dating sites, or any ofthe other activities that the majority rightly values.It has everything to do with stealing an employersvaluable information to set up a competing business

with the purloined data, siphoned away from thevictim, knowing such access and use were

prohibitedin the defendants employmentcontracts (Silverman, dissenting)

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CFAA - U.S. v. Tolliver (3rd Cir. 2011)

Upheld CFAA conviction of former bankteller who provided confidential accountinformation to "check runners" who cashedfraudulent checks against the accounts of

bank customers

No reference to bank policies, but "therewas sufficient evidence" that "Tolliver

exceeded her authorized access" because"she did not have a business purpose" toaccess the customers' accounts

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CFAA - U.S. v. Teague (8th Cir. 2011)

8th Cir. upheld CFAA conviction whereemployee viewed Obama student loan data,but did not remove/use it

Compare: U.S. v. Czubinski (1st Cir. 1997)(merely viewing data insufficient - theremust be a "showing of some additional end --

to which the unauthorized access is a means)

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CFAA - Pulte Homes v. Laborers' InternlUnion (6th Cir. 2011)

Labor union "bombarded" employerscomputer systems with emails andvoicemails disrupting communications withits customers/ vendors

Liable for "knowingly caus[ing] thetransmission of a program, information,code, or command, and as a result of such

conduct, intentionally caus[ing] damagewithout authorization, to a protectedcomputer"

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Documents

Copyright and Trademark Issues on the Internet