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11 CLASS 4 Torts and Civil Wrongs; Overview of the Variety of Business Formats; Copyright Law pt. 2 Legal Environment Randy Canis.

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Presentation on theme: "11 CLASS 4 Torts and Civil Wrongs; Overview of the Variety of Business Formats; Copyright Law pt. 2 Legal Environment Randy Canis."— Presentation transcript:

1 11 CLASS 4 Torts and Civil Wrongs; Overview of the Variety of Business Formats; Copyright Law pt. 2 Legal Environment Randy Canis

2 2 Torts and Civil Wrongs

3 3 Torts An action arises under torts when one party’s allegedly wrongful conduct causes injury to another Intentional – from intentional acts Unintentional – often as a result of carelessness

4 4 Basis of Tort Law Basis –Wrongs –Compensation –Compensate those who have suffered a loss or injury due to another person’s wrongful act

5 5 Protected Interests Remedies for: Acts that cause physical injury or that interfere with physical security and freedom of movement Acts that cause destruction or damage to property Acts that violate intangible interests including personal privacy, family relations, reputation, and dignity

6 6 Compensatory Damages Compensate or reimburse a plaintiff for actual losses Special Damages – quantifiable monetary losses including medical expenses, lost wages, and benefits, and the cost of replacing damaged property General Damages – compensate individuals for nonmonetary aspects of harm (e.g., pain and suffering)

7 Special Damages Example “It is well-established that claims for attorneys' fees constitute special damages, which must be specifically pleaded in order to be recovered. …The only mention of attorneys' fees in Respondent's Petition, and in fact in any pleading prior to trial, is in the prayers following each count in the Petition. There, Respondent simply included a general request for attorneys' fees without citation to a contract, a statute, or any other alleged basis for the request. As a matter of law, these general requests are insufficient to satisfy Rule 55.19 and preserve Respondent's claim for attorneys' fees.” 25699f0079eddf/642a3ff40f85ddca8625776100564308/$FIL E/SC90771_Landau_brief.pdf 7

8 8 Punitive Damages Punish the wrongdoer and deter others from similar wrongdoing Appropriate when Defendant’s conduct was particular egregious or reprehensible Intentional torts or gross negligence

9 Punitive Damages MO Statute Limitations on punitive damages in certain cases. 510.265. 1. No award of punitive damages against any defendant shall exceed the greater of: (1) Five hundred thousand dollars; or (2) Five times the net amount of the judgment awarded to the plaintiff against the defendant. Such limitations shall not apply if the state of Missouri is the plaintiff requesting the award of punitive damages, or the defendant pleads guilty to or is convicted of a felony arising out of the acts or omissions pled by the plaintiff. 2. The provisions of this section shall not apply to civil actions brought under section 213.111 that allege a violation of section 213.040, 213.045, 213.050, or 213.070, to the extent that the alleged violation of section 213.070 relates to or involves a violation of section 213.040, 213.045, or 213.050, or subdivision (3) of section 213.070 as it relates to housing 9

10 10 Intentional Tort Must intend to commit an act, the consequences of which interfere with the personal or business interests of another in a way not permitted by law. Actor intended the consequences of his or her act or knew with substantial certainty that specific consequences would result from the act.

11 11 Assault and Battery Assault – any intentional, unexcused act the creates in another person a reasonable apprehension of immediate harmful or offensive contact Battery – an unexcused and harmful or offensive physical contact intentionally performed

12 Assault Mo Statute Assault in the third degree. 565.070. 1. A person commits the crime of assault in the third degree if: (1) The person attempts to cause or recklessly causes physical injury to another person; or (2) With criminal negligence the person causes physical injury to another person by means of a deadly weapon; or (3) The person purposely places another person in apprehension of immediate physical injury; or (4) The person recklessly engages in conduct which creates a grave risk of death or serious physical injury to another person; or (5) The person knowingly causes physical contact with another person knowing the other person will regard the contact as offensive or provocative; or (6) The person knowingly causes physical contact with an incapacitated person, as defined in section 475.010, which a reasonable person, who is not incapacitated, would consider offensive or provocative. … 12

13 13 Defenses to Assault and Battery Consent – when a person consents to the act that is allegedly tortuous, there may be a complete or partial defense to liability Self-Defense – an individual who is defending her or his life of physical well-being can claim self- defense. Defense of others – an individual can act in a reasonable manner to protect others who are in real or apparent danger Defense of property – reasonable force may be used in attempting to remove intruders from one’s home

14 Example Self Defense Mo Statute Justification generally. 563.026. 1. Unless inconsistent with other provisions of this chapter defining justifiable use of physical force, or with some other provision of law, conduct which would otherwise constitute any crime other than a class A felony or murder is justifiable and not criminal when it is necessary as an emergency measure to avoid an imminent public or private injury which is about to occur by reason of a situation occasioned or developed through no fault of the actor, and which is of such gravity that, according to ordinary standards of intelligence and morality, the desirability of avoiding the injury outweighs the desirability of avoiding the injury sought to be prevented by the statute defining the crime charged. … 3. The defense of justification under this section is an affirmative defense. 14

15 15 False Imprisonment Intentional confinement or restraint of another person’s activities without justification

16 16 Intentional Infliction of Emotional Distress An intentional act that amounts to extreme and outrageous conduct resulting in severe emotional distress to another 1)Conduct was intentional or reckless 2)Conduct was extreme and outrageous 3)Conduct caused the plaintiff’s emotional distress 4)Emotional distress was severe

17 17 Defamation Defamation occurs when one's words reflect negatively upon another person's integrity, character, good name and standing in the community and those words tend to expose the other person to public hatred, contempt or disgrace. … Defamation includes both libel and slander. Libel – writing or other permanent form Slander – orally See Missouri Bar’s News Reports Handbook.

18 Libel Requirements 1.Libel was published, 2.Words were of and concerning plaintiff, [Identification] 3.Material is defamatory, 4.Material is false, and 5.Defendant was at fault. 18

19 19 Publication Requirement Defamatory statements are communicated to persons other than the defamed party. Court will presume communication from inclusion in the newspaper, on television, or on the Web Distributors of the final product ordinarily cannot be held liable

20 Communications Decency Act Immunizes online service providers from postings, e-mails, and other Internet contributions made by others Section 230 of CDA “No provider … of interactive computer services shall be treated as the publisher or speaker of any information provided by another information content provider” 20

21 Identification Plaintiff may be explicitly named Use of a similar name that suggests the plaintiff’s name Descriptive circumstances where a sufficient number of people will understand that the person being referenced is the plaintiff 21

22 Defamatory Material Focus on words –Words that are libelous on their face –Innocent on their face but becomes defamatory by knowledge of other facts Are the particular words capable of conveying a defamatory meaning, and would a reasonable person interpret the words as being a defamatory comment? 22

23 Falsity Public Person v. Private Person –Public – must prove the statement is untruthful –Privacy – must prove falsity only when the statement of the subject is a matter of public concern Evidence provided to court must go to the heart of the charge 23

24 24 Public Figures Public figures are “fair game” and false and defamatory statements about them that are published in the press will not constitute defamation unless the statements are made with actual malice Actual malice – with either knowledge of its falsity or a reckless disregard of the truth

25 25 Damages for Libel General damages are presumed Need to prove actual injuries

26 26 Damages for Slander Plaintiff must prove special damages- actual economic or monetary loses

27 27 Slander Per Se 1.Statement that another person has a loathsome disease 2.Statement that another has committed improprieties while engaging in a profession or trade 3.Statement that another has committed or has been imprisoned for a serious crime 4.A statement that a person is unchaste or has engaged in serious sexual misconduct

28 28 Defense Truth is normally an absolute defense Privilege –Absolute – judicial proceedings and certain government proceedings –Conditional – certain statements made in good faith and the publication is limited to those who have a legitimate interest in the communication

29 29 SLAPP and Anti-SLAPP SLAPP –Strategic lawsuits against public participation –Purpose of the lawsuit is to block defendant from making further criticism Anti-SLAPP –Ask the judge to dismiss the lawsuit quickly on two-step basis

30 30 Invasion of Privacy Appropriation of identity – using a person’s name, picture or other likeness for commercial purposes without permission Invasion into an individual’s affairs – eavesdropping by wiretap, unauthorized scanning of a bank account, compulsory blood testing, and window peeping False light – publication of information that places a person in false light Public disclosure of private facts – publicly discloses private facts about an individual that an ordinary person would fine objectionable or embarrassing

31 Public Disclosure of Private Facts Publicizing private information about a person if the matter being publicized 1)would be highly offensive to a reasonable person, and 2)is not of legitimate public concern or interest 31

32 32 Fraudulent Misrepresentation Intentional deceit for personal gain Elements 1)A misrepresentation of material facts or conditions with knowledge that they are false or with reckless disregard of the truth 2)An intent to induce another party to rely on the misrepresentation 3)A justifiable reliance on the misrepresentation by the deceived party 4)Damages suffered as a result of that evidence 5)A casual connection between the misrepresentation and the injury suffered

33 33 Abusive Litigation Malicious prosecution – a party that initiated a lawsuit and did so out of malice and without probable cause and losses the suit Abuse of process – applies to a person using a legal process against another in an improper manner or to accomplish a purpose for which the process was not designed

34 34 Wrongful Interference with a Contractual Relationship 1)A valid, enforceable contract must exist between two parties 2)A third party must know that this contract exists 3)This third party must intentionally induce a party to the contract to breach the contract

35 35 Wrongful Interference with a Business Relationship Defendant used predatory methods to intentionally harm an established business relationship or prospective economic advantage

36 36 Intentional Torts against Property Trespass to Land Trespass to Personal Property Conversion Disparagement of Property

37 37 Trespass to Land Any time a person, without permission, enters onto, above, or below the surface of land that is owned by another Causes anything to enter onto the land Remains on the land or permits anything to remain on it

38 38 Trespass Criteria, Rights, and Duties Must establish that a person is a trespasser (e.g., by notice) Enter onto another’s property to commit a crime

39 39 Trespass to Personal Property When an individual, without consent, takes or harms the personal property of another or otherwise interferes with the lawful owner’s possession and enjoyment of personal property

40 40 eBay v. Bidder's Edge Factual Background Parties –eBay – online auctioneer –Bidder’s Edge – “BE is an auction aggregation site designed to offer on-line auction buyers the ability to search for items across numerous on-line auctions without having to search each host site individually.” “The current version of the User Agreement prohibits the use of "any robot, spider, other automatic device, or manual process to monitor or copy our web pages or the content contained herein without our prior expressed written permission." (Id.) It is not clear that the version of the User Agreement in effect at the time BE began searching the eBay site prohibited such activity, or that BE ever agreed to comply with the User Agreement.”

41 41 eBay v. Bidder's Edge Factual Background “A software robot is a computer program which operates across the Internet to perform searching, copying and retrieving functions on the web sites of others. A software robot is capable of executing thousands of instructions per minute, far in excess of what a human can accomplish. Robots consume the processing and storage resources of a system, making that portion of the system's capacity unavailable to the system owner or other users. Consumption of sufficient system resources will slow the processing of the overall system and can overload the system such that it will malfunction or ‘crash.’ A severe malfunction can cause a loss of data and an interruption in services.”

42 42 eBay v. Bidder's Edge Factual Background “The eBay site employs ‘robot exclusion headers.’ A robot exclusion header is a message, sent to computers programmed to detect and respond to such headers, that eBay does not permit unauthorized robotic activity. Programmers who wish to comply with the Robot Exclusion Standard design their robots to read a particular data file, ‘robots.txt,’ and to comply with the control directives it contains.” “eBay identifies robotic activity on its site by monitoring the number of incoming requests from each particular IP address. Once eBay identifies an IP address believed to be involved in robotic activity, an investigation into the identity, origin and owner of the IP address may be made in order to determine if the activity is legitimate or authorized. If an investigation reveals unauthorized robotic activity, eBay may attempt to ignore ("block") any further requests from that IP address. Attempts to block requests from particular IP addresses are not always successful.”

43 43 eBay v. Bidder's Edge Factual Background “The information available on the BE site is contained in a database of information that BE compiles through access to various auction sites such as eBay. When a user enters a search for a particular item at BE, BE searches its database and generates a list of every item in the database responsive to the search, organized by auction closing date and time. (Id. P 5.) Rather than going to each host auction site one at a time, a user who goes to BE may conduct a single search to obtain information about that item on every auction site tracked by BE. (Id. P 6.) It is important to include information regarding eBay auctions on the BE site because eBay is by far the biggest consumer to consumer on-line auction site. (Id.)

44 44 eBay v. Bidder's Edge Factual Background In early 1998, eBay gave BE permission to include information regarding eBay-hosted auctions for Beanie Babies and Furbies in the BE database. In early 1999, BE added to the number of person-to- person auction sites it covered and started covering a broader range of items hosted by those sites, including eBay. On April 24, 1999, eBay verbally approved BE crawling the eBay web site for a period of 90 days. The parties contemplated that during this period they would reach a formal licensing agreement. They were unable to do so.”

45 45 eBay v. Bidder's Edge Factual Background In late August or early September 1999, eBay requested by telephone that BE cease posting eBay auction listings on its site. BE agreed to do so. In October 1999, BE learned that other auction aggregations sites were including information regarding eBay auctions. On November 2, 1999, BE issued a press release indicating that it had resumed including eBay auction listings on its site. On November 9, 1999, eBay sent BE a letter reasserting that BE's activities were unauthorized, insisting that BE cease accessing the eBay site, alleging that BE's activities constituted a civil trespass and offering to license BE's activities. eBay and BE were again unable to agree on licensing terms. As a result, eBay attempted to block BE from accessing the eBay site; by the end of November, 1999, eBay had blocked a total of 169 IP addresses it believed BE was using to query eBay's system. BE elected to continue crawling eBay's site by using proxy servers to evade eBay's IP blocks.

46 46 eBay v. Bidder's Edge Analysis “eBay asserts that it will suffer four types of irreparable harm if preliminary injunctive relief is not granted: (1) lost capacity of its computer systems resulting from to BE's use of automated agents; (2) damage to eBay's reputation and goodwill caused by BE's misleading postings; (3) dilution of the eBay mark; and (4) BE's unjust enrichment. n7 (Mot. at 23:18-25.) The harm eBay alleges it will suffer can be divided into two categories. –The first type of harm is harm that eBay alleges it will suffer as a result of BE's automated query programs burdening eBay's computer system ("system harm"). –The second type of harm is harm that eBay alleges it will suffer as a result of BE's misrepresentations regarding the information that BE obtains through the use of these automated query programs ("reputational harm").”

47 47 eBay v. Bidder's Edge Analysis “If BE's activity is allowed to continue unchecked, it would encourage other auction aggregators to engage in similar recursive searching of the eBay system such that eBay would suffer irreparable harm from reduced system performance, system unavailability, or data losses. … BE does not appear to seriously contest that reduced system performance, system unavailability or data loss would inflict irreparable harm on eBay consisting of lost profits and lost customer goodwill. Harm resulting from lost profits and lost customer goodwill is irreparable because it is neither easily calculable, nor easily compensable and is therefore an appropriate basis for injunctive relief. … Where, as here, the denial of preliminary injunctive relief would encourage an increase in the complained of activity, and such an increase would present a strong likelihood of irreparable harm, the plaintiff has at least established a possibility of irreparable harm.”

48 48 eBay v. Bidder's Edge Trespass to chattels "lies where an intentional interference with the possession of personal property has proximately cause injury." … In order to prevail on a claim for trespass based on accessing a computer system, the plaintiff must establish: (1) defendant intentionally and without authorization interfered with plaintiff's possessory interest in the computer system; and (2) defendant's unauthorized use proximately resulted in damage to plaintiff. … Here, eBay has presented evidence sufficient to establish a strong likelihood of proving both prongs and ultimately prevailing on the merits of its trespass claim.

49 49 eBay v. Bidder's Edge “BE argues that it cannot trespass eBay's web site because the site is publicly accessible. BE's argument is unconvincing. eBay's servers are private property, conditional access to which eBay grants the public. eBay does not generally permit the type of automated access made by BE. In fact, eBay explicitly notifies automated visitors that their access is not permitted. "In general, California does recognize a trespass claim where the defendant exceeds the scope of the consent." Baugh v. CBS, Inc., 828 F. Supp. 745, 756 (N.D. Cal. 1993).”

50 50 eBay v. Bidder's Edge “eBay is likely to be able to demonstrate that BE's activities have diminished the quality or value of eBay's computer systems. BE's activities consume at least a portion of plaintiff's bandwidth and server capacity. … eBay's claim is that BE's use is appropriating eBay's personal property by using valuable bandwidth and capacity, and necessarily compromising eBay's ability to use that capacity for its own purposes. See CompuServe, 962 F. Supp. at 1022 ("any value [plaintiff] realizes from its computer equipment is wholly derived from the extent to which that equipment can serve its subscriber base.").

51 51 eBay v. Bidder's Edge Ruling –“[T]he court preliminarily enjoins defendant Bidder's Edge, Inc. from accessing eBay's computer systems by use of any automated querying program without eBay's written authorization.” Holding –The court concludes that under the circumstances present here, BE's ongoing violation of eBay's fundamental property right to exclude others from its computer system potentially causes sufficient irreparable harm to support a preliminary injunction.

52 52 Conversion When a person wrongfully possess or uses the personal property of another as if the property belonged to her or him

53 53 Disparagement of Property Economically injurious falsehoods are made about another’s product or property

54 54 Negligence and Strict Liability

55 55 Negligence Acts that depart from a reasonable standard of care and create an unreasonable risk of harm to others Factors 1)That the defendant owed a duty of care to the plaintiff 2)That the defendant breached that duty 3)That the plaintiff suffered a legally recognizable injury 4)That the defendant’s breach caused the plaintiff’s injury

56 56 Duty of Care People are free to act as they please so long as their actions do not infringe on the interests of others Courts consider the nature of the action (outrageous or commonplace), the manner in which the act is performed (heedlessly or cautiously), and the nature of the injury (serious or slight) in determining whether a duty of care has been breached.

57 57 Reasonable Person Standard How would a reasonable person have acted in the same circumstances? Objective standard

58 58 Duty of Landowners Duty to Warn Business Invitees of Risks –Retailer and other firms that explicitly or implicitly invite persons to come onto their premises are usually charged with a duty to exercise reasonable care to protect business invitees Obvious risks provide an exception

59 59 Duty to Rescue If a person fails to come to the aid of a stranger in peril, that person will not be considered negligent under tort law

60 60 Injury Requirement and Damages To recover damages, the plaintiff in a tort lawsuit must prove that she or he suffered a legally recognizable injury

61 61 Causation If a person breaches a duty of care and someone suffers injury, the wrongful activity must have caused the harm for a tort to have been committed. 2 Questions for the court 1)Is there causation in fact? 2)Was the act the proximate, or legal, cause of the injury?

62 62 Causation in Fact Did the injury occur because of the defendant’s act, or would it have occurred anyway? Causation in fact – injury would not have occurred without the defendant’s act But for test – but for the wrongful act, the injury would not have occurred

63 63 Proximate Cause Proximate cause exists when the connection between an act and an injury is strong enough to justify imposing liability

64 64 Foreseeability It would be unfair to impose liability on a defendant unless the defendant’s actions created a foreseeable risk of injury

65 65 Defenses to Negligence 1)Assumption of Risk 2)Superseding cause 3)Contributory and comparative negligence Or Plaintiff failed to prove the existence of one or more of the required factors for negligence

66 66 Assumption of Risk A plaintiff who voluntarily enters into a risky situation, knowing the risk involved, will not be allowed to recover. Requirements 1)Knowledge of the risk, and 2)Voluntary assumption of the risk

67 67 Superseding Cause An unforeseeable intervening event may break the casual connection between a wrongful act and an injury to another. Superseding cause – relieves a defendant of liability for injuries because by the intervening event

68 68 Contributory and Comparative Negligence Contributory Negligence – a plaintiff who was also negligent (failed to exercise a reasonable degree of care) could not recover anything from the defendant Comparative Negligence – enables both the plaintiff’s and the defendant’s negligence to be computed and the liability for damages distributed accordingly.

69 69 Res Ipsa Loquitur Presumption of defendant’s negligence Different from the normal burden that plaintiff has the burden to show that the defendant was negligent Applies only when the event creating the damage or injury is one that ordinarily does not occur in the absence of negligence

70 70 Negligence Per Se May occur when an individual violates a statute or an ordinance providing for a criminal penalty and that violation causes another to be injured. The injured person must prove: 1)That the statue clearly sets out what standard of conduct is expected, when and where it is expected, and of whom it is expected; 2)That he or she is in the class intended to be protected by the statute; and 3)That the statute was designed to prevent that the type of injury that he or she suffered

71 71 Danger Invites Rescue Doctrine A person who is injured while going to someone else’s rescue can sue the person who caused the dangerous situation.

72 72 Special Negligence Statues Good Samaritan statutes – persons who are aided voluntarily by others cannot turn around and sue the “Good Samaritans” for negligence Dram Shop Acts – a tavern owner or bartender may be held liable for injuries caused by a person who became intoxicated while drinking at the bar or was already intoxicated when served by the bartender. Social hosts…

73 73 Strict Liability Liability without fault A person who engages in certain activities can be held responsible for any harm that result to others even if the person used the utmost care

74 74 Abnormally Dangerous Activities Activities that involve a high risk of serious harm to persons or property that cannot be completely guarded against by the exercise of reasonable care

75 75 Product Liability Liability of manufacturers and sellers for harmful or defective products Liability is a social policy and is based on two factors: 1)The manufacturing company can better bear the cost of injury because it can spread the cost throughout society by increasing prices of goods and services, and 2)The manufacturing company is making a profit from its activities and therefore should bear the cost of injury as an operating expense

76 76 Overview of the Variety of Business Formats

77 77 Sole Proprietorship Owner is the business When a separate business organization is not created

78 78 Advantages of the Sole Proprietorship Owner owns business Owner receives all profits More flexibility SP only pays personal income taxes and reports income as personal income

79 79 Disadvantages of the Sole Proprietorship Proprietor bears the burden of losses and liabilities Unlimited liability Lacking continuity on death Limited to personal funds or loans

80 Comparison Comparison of other types of organizations… 80

81 81 Limited Liability C-Corp – Yes, unless thin capitalization or alter ego LLC – Yes, all members GP – No, all partners jointly and severally liable LP – Yes for limited partners

82 82 Organizational Rules C-Corp –No limitation on the number of shareholders –Multiple classes of stock allowed LLC –By default, a multi-member LLC is taxed as a partnership. It may elect to be taxed as a C Corporation. –By default, a single-member LLC is disregarded as a separate entity from its owner for tax purposes. It may elect to be taxed as a C Corporation.

83 83 Organizational Rules GP –No limitation on number of partners. –Taxed as a partnership. LP –No limitation on number of partners. –Taxed as a partnership.

84 84 Transferability/Liquidation C-Corp –Ownership freely transferable (subject to any expressed stock restrictions). –States may require certain voting thresholds for forced liquidation. LLC –Transferability may be limited by statute and/or LLC agreement. –Dissolution can be caused by death, withdrawal, or bankruptcy of a member. –Transfer of 50% or more of total member interests in capital and profits in 12 month period causes termination for tax purposes.

85 85 Transferability/Liquidation GP –No transferability of interest to a third person to make third person a partner unless agreed by all partners. Free transferability of right to profits. –Dissolution can be caused by agreement, death, withdrawal or bankruptcy of any partner or by court decree. –Transfer of 50% or more of total capital and profits interests in 12 month period causes termination for tax purposes.

86 86 Transferability/Liquidation LP –Same as General Partnership except partnership may continue despite death, bankruptcy or withdrawal of General Partner if Partnership Agreement allows

87 87 Treatment of Income, Losses, and Credits C-Corp –Double taxation - income taxed at corporate level and again at shareholder level upon dividend distribution LLC –Income, losses, and credits pass through to member GP –Income, losses, and credits pass through to member LP –Income, losses, and credits pass through to member

88 Copyright Law pt. 2 88

89 89 Copyright Law What rights are afforded by Copyright protection?

90 90 EXCLUSIVE RIGHTS § 106. Exclusive rights in copyrighted works Subject to sections 107 through 121, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

91 Public Performance “[W]e find that the transmit clause directs us to identify the potential audience of a given transmission, i.e., the persons "capable of receiving" it, to determine whether that transmission is made "to the public.“ Because each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber, we conclude that such transmissions are not performances "to the public," and therefore do not infringe any exclusive right of public performance. We base this decision on the application of undisputed facts; thus, Cablevision is entitled to summary judgment on this point. The Cartoon Network, LLP v. CSC Holdings, Inc., 536 F.3d 121(2 nd Cir. 2008) 91

92 92 Public Performance Performing a Work Publicly to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances are gathered, or to transmit or otherwise communicate a performance or display of the work to a place previously specified or to the public, by means of any device or process, regardless of the place and time received by the public.

93 American Broadcasting Cos. v. Aereo, Inc. Issue –“We must decide whether respondent Aereo, Inc., infringes [the exclusive right to perform a work publicly] by selling its subscribers a technologically complex service that allows them to watch television programs over the Internet at about the same time as the programs are broadcast over the air.” 93

94 American Broadcasting Cos. v. Aereo, Inc. Supreme Court History –D.C. denied preliminary injunction –Divided panel of second circuit affirmed 94

95 American Broadcasting Cos. v. Aereo, Inc. What did Aereo do? –Provided nearly live broadcast television over the Internet –Did not obtain a license from the broadcasters –Provided collection of tiny antennas to enable subscribers to watch selected shows –Broadcast content was saved and then personal recorded copy was streamed to viewer 95

96 American Broadcasting Cos. v. Aereo, Inc. Two questions –Does Aereo perform? “Does Aereo ‘transmit... a performance’ when a subscriber watches a show using Aereo’s system, or is it only the subscriber who transmits?” –If Aereo performs, does it do so publicly? 96

97 American Broadcasting Cos. v. Aereo, Inc. History –Community antennas did not originally infringe –The statute was amended so that “perform” of an audiovisual work now meant “to show its images in any sequence or to make the sounds accompanying it audible.” –Now broadcaster and viewer both perform –The new transmit clause specified that an entity performs publicly when it “transmit[s]... a performance... to the public.” 97

98 American Broadcasting Cos. v. Aereo, Inc. “Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach.” “Given Aereo’s overwhelming likeness to the cable companies targeted by the 1976 amendments, this sole technological difference between Aereo and traditional cable companies does not make a critical difference here.” “We conclude that Aereo is not just an equipment supplier and that Aereo ‘perform[s].’” 98

99 American Broadcasting Cos. v. Aereo, Inc. “Next, we must consider whether Aereo performs petitioners’ works ‘publicly,’ within the meaning of the Transmit Clause. Under the Clause, an entity performs a work publicly when it ‘transmit[s]... A performance... of the work... to the public.’” 99

100 American Broadcasting Cos. v. Aereo, Inc. “The fact that each transmission is to only one subscriber, in Aereo’s view, means that it does not transmit a performance ‘to the public.’ In terms of the Act’s purposes, these differences do not distinguish Aereo’s system from cable systems, which do perform ‘publicly.’ Viewed in terms of Congress’ regulatory objectives, why should any of these technological differences matter?” 100

101 American Broadcasting Cos. v. Aereo, Inc. “[W]e conclude that when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes.” 101

102 American Broadcasting Cos. v. Aereo, Inc. “We do not see how the fact that Aereo transmits via personal copies of programs could make a difference… So whether Aereo transmits from the same or separate copies, it performs the same work; it shows the same images and makes audible the same sounds. Therefore, when Aereo streams the same television program to multiple subscribers, it ‘transmit[s]... a performance’ to all of them.” 102

103 American Broadcasting Cos. v. Aereo, Inc. “We agree that Congress, while intending the Transmit Clause to apply broadly to cable companies and their equivalents, did not intend to discourage or to control the emergence or use of different kinds of technologies. But we do not believe that our limited holding today will [create copyright liability on other new and developing technologies].” 103

104 American Broadcasting Cos. v. Aereo, Inc. Dissent by Scalia “I share the Court’s evident feeling that what Aereo is doing (or enabling to be done) to the Networks’ copyrighted programming ought not to be allowed. But perhaps we need not distort the Copyright Act to forbid it. … It is not the role of this Court to identify and plug loopholes. It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes. Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude “looks ‐ like ‐ cable ‐ TV” solution the Court invents today.” 104

105 105 Distribution General Rule - Copyright owners are provided with the exclusive right to distribute copies or phonorecords of their works Exception - limited to the first transfer of ownership

106 106 First Sale Doctrine “The whole point of the first sale doctrine is that once the copyright owner places a copyrighted item in the stream of commerce by selling it, he has exhausted his exclusive statutory right to control its distribution.” Quality King Distributors, Inc. v. L'anza Research Int'l, Inc, 523 U.S. 135, 152 (1998)

107 Kirtsaeng v. John Wiley & Sons Supreme Court History –D.C. Kirtsaeng could not assert the 'first sale” defense because, in its view, that doctrine does not apply to “foreign ‐ manufactured goods” –2 nd Cir - split panel agreed with the District Court. 107

108 Kirtsaeng v. John Wiley & Sons Issue –“[I]f [a] copy of [a book] was printed abroad and then initially sold with the copyright owner’s permission … [d]oes the ‘first sale’ doctrine still apply?” –application of first sale doctrine internationally 108

109 Kirtsaeng v. John Wiley & Sons Section 109(a) sets forth the “first sale” doctrine as follows: –“Notwithstanding the provisions of section 106(3) [the section that grants the owner exclusive distribution rights], the owner of a particular copy or phonorecord lawfully made under this title... is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” (Emphasis added.) 109

110 Kirtsaeng v. John Wiley & Sons “[E]ven though §106(3) forbids distribution of a copy of, say, the copyrighted novel Herzog without the copyright owner’s permission, §109(a) adds that, once a copy of Herzog has been lawfully sold (or its ownership otherwise lawfully transferred), the buyer of that copy and subsequent owners are free to dispose of it as they wish. In copyright jargon, the ‘first sale’ has ‘exhausted’ the copyright owner’s §106(3) exclusive distribution right.” 110

111 Kirtsaeng v. John Wiley & Sons “Importation into the United States, without the authority of the owner of copyright under this title, of copies... of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies... under section 106....” 17 U. S. C. §602(a)(1) (2006 ed., Supp. V) (emphasis added).” 111

112 Kirtsaeng v. John Wiley & Sons What did Kirtsaeng did? –“While he was studying in the United States, Kirtsaeng asked his friends and family in Thailand to buy copies of foreign edition English language textbooks at Thai book shops, where they sold at low prices, and mail them to him in the United States. … Kirtsaeng would then sell them, reimburse his family and friends, and keep the profit.” 112

113 Kirtsaeng v. John Wiley & Sons “We must decide whether the words ‘lawfully made under this title’ restrict the scope of §109(a)’s ‘first sale’” doctrine geographically. … In our view, §109(a)’s language, its context, and the common ‐ law history of the ‘first sale’ doctrine, taken together, favor a non ‐ geographical interpretation.” 113

114 Kirtsaeng v. John Wiley & Sons “Congress enacted a copyright law that (through the “first sale” doctrine) limits copyright holders’ ability to divide domestic markets. And that limitation is consistent with antitrust laws that ordinarily forbid market divisions. … Whether copyright owners should, or should not, have more than ordinary commercial power to divide international markets is a matter for Congress to decide. We do no more here than try to determine what decision Congress has taken.” 114

115 Kirtsaeng v. John Wiley & Sons “We hold that the ‘first sale’ doctrine applies to copies of a copyrighted work lawfully made abroad.” 115

116 116 Derivative Work “A ‘derivative work’ is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a whole, represent an original work of authorship, is a ‘derivative work’.” A derivative work is a work based upon one or more preexisting works where the original work is recast, transformed, or adapted. The derivative work copyright protects only new materials contributed by the author, and does not affect or enlarge the scope, duration, ownership, or subsistence of any copyright protection in the preexisting material.

117 117 Copyright Infringement A person commits copyright infringement when he/she violates any one of the author’s exclusive rights. Infringement may be for intentional and unintentional acts Possibility of injunction and actual or statutory damages Statute of limitations for civil action – 3 years

118 Test for Infringement A plaintiff bringing a claim for copyright infringement must demonstrate (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original. Absent evidence of direct copying, proof of infringement involves fact-based showings that the defendant had access to the plaintiff's work and that the two works are substantially similar.

119 Registration Precondition “Subject to certain exceptions, the Copyright Act requires copyright holders to register their works before suing for copyright infringement. 17 U.S.C.A. §411(a) (Supp. 2009).” Reed Elsevier, Inc. v. Muchnick, 559 U. S. ____ (2010) 119

120 Substantially Similar The substantial-similarity test contains an extrinsic and intrinsic component. At summary judgment, courts apply only the extrinsic test; the intrinsic test, which examines an ordinary person's subjective impressions of the similarities between two works, is exclusively the province of the jury. Funky Films, Inc. v. Time Warner Entertainment Company, 462 F.3d 1072 (9 th Cir. 2006)

121 121 Infringement § 501(a). Infringement of copyright Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122 or of the author as provided in section 106A(a), or who imports copies or phonorecords into the United States in violation of section 602, is an infringer of the copyright or right of the author, as the case may be. … As used in this subsection, the term "anyone" includes any State, any instrumentality of a State, and any officer or employee of a State or instrumentality of a State acting in his or her official capacity. Any State, and any such instrumentality, officer, or employee, shall be subject to the provisions of this title in the same manner and to the same extent as any nongovernmental entity.

122 122 Injunction § 502. Remedies for infringement: Injunctions (a) Any court having jurisdiction of a civil action arising under this title may, subject to the provisions of section 1498 of title 28, grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright. (b) Any such injunction may be served anywhere in the United States on the person enjoined; it shall be operative throughout the United States and shall be enforceable, by proceedings in contempt or otherwise, by any United States court having jurisdiction of that person. The clerk of the court granting the injunction shall, when requested by any other court in which enforcement of the injunction is sought, transmit promptly to the other court a certified copy of all the papers in the case on file in such clerk's office.

123 123 Impounding § 503. Remedies for infringement: Impounding and disposition of infringing articles (a) At any time while an action under this title is pending, the court may order the impounding, on such terms as it may deem reasonable, of all copies or phonorecords claimed to have been made or used in violation of the copyright owner's exclusive rights, and of all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be reproduced. (b) As part of a final judgment or decree, the court may order the destruction or other reasonable disposition of all copies or phonorecords found to have been made or used in violation of the copyright owner's exclusive rights, and of all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be reproduced.

124 124 Damages § 504. Remedies for infringement: Damages and profits (a) In General. - Except as otherwise provided by this title, an infringer of copyright is liable for either - (1) the copyright owner's actual damages and any additional profits of the infringer, as provided by subsection (b); or (2) statutory damages, as provided by subsection (c).

125 125 Actual Damages (b) Actual Damages and Profits. - The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages. In establishing the infringer's profits, the copyright owner is required to present proof only of the infringer's gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.

126 126 Statutory Damages (1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

127 127 Statutory Damages (2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200. The court shall remit statutory damages in any case where an infringer believed and had reasonable grounds for believing that his or her use of the copyrighted work was a fair use under section 107, if the infringer was: (i) an employee or agent of a nonprofit educational institution, library, or archives acting within the scope of his or her employment who, or such institution, library, or archives itself, which infringed by reproducing the work in copies or phonorecords; or (ii) a public broadcasting entity which or a person who, as a regular part of the nonprofit activities of a public broadcasting entity (as defined in subsection (g) of section 118) infringed by performing a published nondramatic literary work or by reproducing a transmission program embodying a performance of such a work.

128 128 Costs and Attorney’s Fees § 505. Remedies for infringement: Costs and attorney's fees In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs.

129 129 Fair Use § 107. Limitations on exclusive rights: Fair use Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include — –(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; –(2) the nature of the copyrighted work; –(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and –(4) the effect of the use upon the potential market for or value of the copyrighted work. The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

130 Authors Guild, Inc. v. HathiTrust 2 nd Cir History –District Court granted the Libraries' and Intervenors' motions for summary judgment on the infringement claims on the basis that the three uses permitted by the HDL were fair uses. 130

131 Authors Guild, Inc. v. HathiTrust “HathiTrust currently has 80 member institutions and the HDL contains digital copies of more than ten million works, published over many centuries, written in a multitude of languages, covering almost every subject imaginable. This appeal requires us to decide whether the HDL's use of copyrighted material is protected against a claim of copyright infringement under the doctrine of fair use.” 131

132 Authors Guild, Inc. v. HathiTrust Permitted Uses 1.General public search “Unless the copyright holder authorizes broader use, the search results show only the page numbers on which the search term is found within the work and the number of times the term appears on each page.” 2.Disabilities access to full text of works 3.Replacement copy of work 132

133 Authors Guild, Inc. v. HathiTrust “[T]he doctrine of “fair use,” … allows the public to draw upon copyrighted materials without the permission of the copyright holder in certain circumstances.” “A fair use must not excessively damage the market for the original by providing the public with a substitute for that original work.” 133

134 Authors Guild, Inc. v. HathiTrust Full text search “[T]he HDL simply permits users to “word search”—that is, to locate where specific words or phrases appear in the digitized books. Applying the relevant factors, we conclude that this use is a fair use.” 134

135 Authors Guild, Inc. v. HathiTrust 1 st Factor – “we conclude that the creation of a full ‐ text searchable database is a quintessentially transformative use.” 2 nd Factor – Not dispositive 3 rd Factor – Not excessive because full copying was necessary to enable full-text search 4 th Factor – No harm to any existing or potential traditional market 135

136 Authors Guild, Inc. v. HathiTrust Access to print disabled “Weighing the factors together, we conclude that the doctrine of fair use allows the Libraries to provide full digital access to copyrighted works to their print ‐ disabled patrons.” 136

137 Authors Guild, Inc. v. HathiTrust Preservation Remanded back to district court because no live case or controversy. 137

138 Authors Guild, Inc. v. HathiTrust “[W]e conclude that the doctrine of fair use allows the Libraries to digitize copyrighted works for the purpose of permitting full-text searches” “[W]e conclude that the doctrine of fair use allows the Libraries to provide full digital access to copyrighted works to their print- disabled patrons” Authors Guild, Inc. v. HathiTrust 138

139 139 Image Search Fair Use Search engine displays results as ‘thumbnail’ images. “Arriba developed a computer program that ‘crawls’ the web looking for images to index [by] … download[ing] full-sized copies of the images onto Arriba's server. The program then uses these copies to generate smaller, lower-resolution thumbnails of the images. Once the thumbnails are created, the program deletes the full-sized originals from the server. Although a user could copy these thumbnails to his computer or disk, he cannot increase the resolution of the thumbnail; any enlargement would result in a loss of clarity of the image.” “We hold that Arriba's reproduction of Kelly's images for use as thumbnails in Arriba's search engine is a fair use under the Copyright Act.” Kelly v. Arriba Soft

140 Fox News Network, LLV. V. TVEyes, Inc. D.C. NY 140

141 Fox News Network, LLV. V. TVEyes, Inc. TV Eyes –“Using closed captions and speech ‐ to ‐ text technology, TVEyes records the entire content of television and radio broadcasts and creates a searchable database of that content.” –Enables tracking of the news on particular events 141

142 Fox News Network, LLV. V. TVEyes, Inc. “Each individual [search] result includes a portion of transcript highlighting the keyword and a thumbnail image of the particular show that used the term. When the user clicks the thumbnail image of the show, the video clip begins to play automatically alongside the transcript on the Transcript Page, beginning 14 seconds before the keyword is mentioned.” 142

143 Fox News Network, LLV. V. TVEyes, Inc. “Subscribers can save, archive, edit, and download to their personal computers an unlimited number of clips generated by their searches. The clips, however, are limited to ten minutes, and a majority of the clips are shorter than two minutes. TVEyes enables subscribers to email the clip from its website to anyone, whether or not a TVEyes subscriber.” 143

144 Fox News Network, LLV. V. TVEyes, Inc. “TVEyes admits also that it copies, verbatim, each of Fox News‘ registered works. These concessions constitute copyright infringement unless TVEyes shows that its use is fair use.” 144

145 Fox News Network, LLV. V. TVEyes, Inc. 1 st Factor – is the use transformative? –“Unlike the indexing and excerpting of news articles, where the printed word conveys the same meaning no matter the forum or medium in which it is viewed, the service provided by TVEyes is transformative. By indexing and excerpting all content appearing in television … TVEyes provides a service that no content provider provides. Subscribers to TVEyes gain access, not only to the news that is presented, but to the presentations themselves, as colored, processed, and criticized by commentators, and as abridged, modified, and enlarged by news broadcasts.” 145

146 Fox News Network, LLV. V. TVEyes, Inc. “I find that TVEyes' search engine together with its display of result clips is transformative, and ‘serves a new and different function from the original work and is not a substitute for it.’ … In making this finding, I am guided by the Second Circuit's determination that databases that convert copyrighted works into a research tool to further learning are transformative.” 146

147 Fox News Network, LLV. V. TVEyes, Inc. 2 nd Factor – does not weigh for or against 3 rd Factor – entirety of copying is necessary 4 th Factor –“No reasonable juror could find that people are using of TVEyes as a substitute for watching Fox News broadcasts on television.” 147

148 Fox News Network, LLV. V. TVEyes, Inc. “I therefore find that TVEyes' copying of Fox News' broadcast content for indexing and clipping services to its subscribers constitutes fair use. However, I do not decide the issue of fair use for the full extent of TVEyes' service, TVEyes provides features that allow subscribers to save, archive, download, email, and share clips of Fox News' television programs. The parties have not presented sufficient evidence showing that these features either are integral to the transformative purpose of indexing and providing clips and snippets of transcript to subscribers, or threatening to Fox News' derivative businesses.” 148

149 Discussion 1.Will watching an uploaded video, that is subject to copyright rights that prohibit its uploading and redistribution, cause the viewer to infringe any copyright rights? 149

150 Moral Rights Protect artist investment in a creative work –Ensuring proper attribution of authorship [attribution] –Protecting the work from derogatory treatment [integrity] Rights persist even after work is sold 150

151 151 Program Completed All course materials - Copyright 2010-2015 Randy L. Canis, Esq.

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