1. 1 CPTWG MEETING #101 January 11, 2007 Legislative/Litigation Update Jim Burger jburger@dowlohnes.com CPTWG MEETING #101 January 11, 2007 Legislative/Litigation Update Jim Burger jburger@dowlohnes.com

2. 2 Legislative/Regulatory Issues

3. 3 OverviewOverview n Legislative/Regulatory Issues u UK Gowers Report u EU Copyright Levy u Australian Copyright Reform u New Zealand Copyright Reform u China-MPAA Anti-Piracy Agreement n Litigation u Universal Music Group v. MySpace u Paramount Pictures v. Load ‘N Go Video u Auto Inspection Services v. Flint Auto Auction u Tracfone Wireless v. Billington u Perfect 10 v. Visa u Union Fédérale des Consommateurs v. Sony n Legislative/Regulatory Issues u UK Gowers Report u EU Copyright Levy u Australian Copyright Reform u New Zealand Copyright Reform u China-MPAA Anti-Piracy Agreement n Litigation u Universal Music Group v. MySpace u Paramount Pictures v. Load ‘N Go Video u Auto Inspection Services v. Flint Auto Auction u Tracfone Wireless v. Billington u Perfect 10 v. Visa u Union Fédérale des Consommateurs v. Sony

4. UK: Gowers Report n British government commissioned Andrew Gowers (former editor of Financial Times) to conduct independent review of UK’s IP laws n Key Recommendations for UK: u Do not support extension of copyright term u Increase penalties for online piracy u Enact private use exception to allow format shifting u Allow for use of “orphan works”

5. EU Copyright Levy n Copyright levy is a special sales tax on electronics, books and other media. u Fees distributed by collection agencies u Rationale: to compensate artists for private copying of their works n 20 of 25 EU countries have levy; levy amounts vary greatly: u German levy on sale of iPod: 2 euros u French levy on sale iPod: 51 euros n Dec. 13—European Commission delays consideration of copyright levy reform proposal indefinitely n Copyright Levy Reform Alliance vows to move issue to the courts

6. Australian Copyright Reform n Parliament passed legislation Dec. 5.; law fully in effect as of Jan. 8, 2007 n Extensive overhaul to Australia’s copyright laws; key provisions include: u Technological protection measures u New criminal penalties and “on-the-spot” fines u Time-shifting and format-shifting ² Individuals may record television and radio programs in the home to watch or listen to at later time ² Owner of book, newspaper or periodical may make a reproduction in a different form for private/domestic use u Exceptions for non-commercial activities of libraries, educational institutions, cultural institutions u “Fair dealing” uses for parody and satire

7. New Zealand Copyright Reform n Copyright (New Technologies and Performers' Rights) Amendment Act 2006 n Key Provisions u Circumvention only prohibited if undertaken to infringe copyright u Criminal penalties for prohibited circumvention activities u Protection for copyright management information u Format-neutral space-shifting and time-shifting permitted u Limits on ISP liability

8. China-MPAA Anti-Piracy Agreement n China has second largest number of internet users n China signed MOU regarding IP piracy with four trade associations (including MPAA) n Trade groups will: u Provide lists of copyrighted works that they seek to protect to China’s National Copyright Administration (NCA) u Notify NCA of piracy involving Chinese servers n NCA will coordinate information and vows to increase enforcement n RIAA did not sign MOU

9. LitigationLitigation

10. Universal Music Group v. MySpace n UMG filed suit against MySpace (Nov. 17, 2006) u UMG filed similar suits against file sharing companies Grouper and Bolt in Oct. 2006 (cases pending) n Complaint alleges : u MySpace allows users to post copyrighted music and videos on its site without authorization from copyright owner u MySpace reformats illegally posted materials to facilitate further distribution over its network n MySpace claims: u Shielded from liability under DMCA safe harbor u It does nothing to induce or encourage users to post copyrighted materials without authorization n MySpace plans to launch new digital flagging tool to reduce infringement on its network

11. Paramount Pictures v. Load ‘N Go Video n Load ‘N Go Video offered to copy movies onto iPods and other portable video players for consumers who purchased relevant DVD n Motion picture studios filed suit (S.D.N.Y.) claiming copyright infringement and violation of the DMCA n EFF response: u It claims that Hollywood is using DMCA to deny consumers fair use rights u MPAA responded that suit is against a business, not a consumer

12. Auto Inspection Services v. Flint Auto Auction n Background u AIS licenses vehicle inspection software; software contains user identification feature that allows AIS to track users of the software u Feature alerted AIS to allegedly unauthorized use involving licensee Flint; AIS terminated Flint’s license, but Flint went on to design a similar program as a replacement u AIS sued, claiming violations of DMCA and Copyright Act n Decision (E.D. Mich.) u User detection feature not technological protection measure because it does not control access to copyrighted material u Feature simply alerts AIS as to identity of user; feature does not prevent access to copyrighted source code

13. Tracfone Wireless Inc. v. Billington n Librarian of Congress recognized 6 new exceptions during DMCA 2006 triennial review u One exception allows users to legally circumvent software locks on mobile phone handsets for purposes of connecting to a wireless network n Tracfone, pre-paid phone manufacturer, sued Librarian of Congress and Register of Copyrights (S.D. Fla.), claiming: u Exemption is vague and overbroad u Its comments were improperly ignored during rulemaking proceeding ² Library of Congress claims that comments were extremely late with no sufficient justification for delay

14. Perfect 10 v. Visa n Perfect 10 sued credit card companies for copyright infringement arising out of illegal sale by third party websites of its copyrighted images u Suit alleges that defendants are secondarily liable for processing payments for such sales n Credit Card Companies respond that they: u Do not promote or control infringing activities u Do not have a duty to police the Internet n Oral arguments were heard Dec. 4 (9th Cir.)

15. Union Fédérale des Consommateurs v. Sony n Sony sells a line of “Net WM” players and offers music downloads (in its proprietary ATRAC 3 format) on its “Connect” site. n Net WM player line does not support downloads from rival music download sites n French consumer group Union fédérale des consommateurs (UFC) filed suit against Sony (Feb. 2005) u Suit alleges that Sony’s DRM policies are unfair trade practices n French court ruled against Sony (Dec. 15.): u Sony’s bundling of Net WM player with Connect music download site is an illegal tying arrangement u Sony misled purchasers of Net WM players by not disclosing that player does not support music downloads from other sites

16. Union Fédérale des Consommateurs v. Sony (cont.) n Remedies: u Sony pays UFC 10,000 euros u Sony must clearly label music players to disclose lack of support for music downloads from rival commercial sites u Sony must post copy of the decision on its homepage n UFC filed similar suit against Apple for its iTunes/iPod DRM scheme; decision expected later this month