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Together Online Distribution of Content Trenton Computer Festival College of New Jersey Ewing, New Jersey April 24, 2009 Frederic M. Wilf Morgan, Lewis.

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Presentation on theme: "Together Online Distribution of Content Trenton Computer Festival College of New Jersey Ewing, New Jersey April 24, 2009 Frederic M. Wilf Morgan, Lewis."— Presentation transcript:

1 together Online Distribution of Content Trenton Computer Festival College of New Jersey Ewing, New Jersey April 24, 2009 Frederic M. Wilf Morgan, Lewis & Bockius LLP

2 The Challenge Digital files cannot be made uncopyable, any more than water can be made not wet. Bruce Schneier, The Futility of Digital Copy Prevention, Crypto-Gram Newsletter (May 15, 2001)

3 Online Distribution Often called a network of networks, the Internet is also a medium that incorporates all prior media Prior, independent communications technologies each become an application on the Internet Television, movies, radio, newspaper, magazines, books, newsletters, etc., are all bits in files Redistribution of pre-existing works Re-purposed text, graphics, video, etc. Concurrent distribution of new works in multiple formats Internet-specific media such as web sites, blogs, etc.

4 Gregerson v. Vilana Financial Photographer sued real estate company for infringement of photos copied from web site Gregerson v. Vilana Financial, Inc., Civil No. 06-1164 (D. Minn. Feb. 15, 2008) Held, actual damages awarded in the amount of $4462 for one image, $10,000 in statutory damages for another image $5000 in damages awarded for removal of copyright management info 17 U.S.C. § 1202 No attorneys fees awarded Plaintiff appeared pro se

5 Grokster Effects Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd.,125 S. Ct. 2764 (2005) Distributor of software or device with the intention of promoting its use to infringe copyright is liable for infringing acts by third parties Must prove purposeful, culpable expression and conduct File-sharing, P2P distribution of third party content continues, but more quietly BitTorrent and other P2P technologies may be used by motion picture vendors to distribute movies online Members of the MPAA may find the technology to be a cost-effective way to distribute licensed copies of movies –After all, we know the technology works… But some networks allegedly break BitTorrent by slowing down the transmission of files

6 Cablevision Cablevision developed a remote-storage digital video recorder (RS DVR) system Subscribers could use the cable system like a personal Tivo device Twentieth Century Fox Film Corp. v. Cablevision Sys. Corp., No. 06 Civ. 3990, 478 F. Supp. 2d 607 (S.D.N.Y. March 22, 2007), reversed and remanded sub nom. Cartoon Network LP v. CSC Holdings, Inc., Nos. 07-1480-cv & 07-1511-cv (2d Cir. Aug. 4, 2008). Held, copies produced by the RS-DVR system are made by the RS-DVR customer, and Cablevisions contribution to this reproduction by providing the system does not warrant the imposition of direct liability. –It looks more like a Tivo than it does video on demand

7 Warning: Protecting IP Rights via Spyware Software vendors and web site owners are using technology to determine whether copies of their software have been paid for E.g., Microsoft Windows Vista and World of Warcraft End user license agreement allows monitoring Backlash on privacy issues See, e.g., A New Gaming Feature – Spyware (Oct. 20, 2005) See also discussion of the Sony BMG Rootkit debacle and the declaratory judgment action in MDY Industries, LLC v. Blizzard Ent. Inc.

8 Copyright: Formalities Copyright notice is optional, but still recommended © 2008 Bea Jones Copyright registration Free forms at Copyright Office –202/707-3000 for hard copy – (.pdf) $45 filing fee per application ($35 if you participate in the online beta) Copy of work (e.g., program or web site) on disk or hard copy Registration required: For U.S. citizens, to file a copyright infringement action in court For any copyright owner, file prior to infringement to qualify for the best remedies –Attorneys fees –Statutory damages ($200 - $150,000)

9 Digital Millennium Copyright Act (DMCA) DMCA © (DMCA is not necessarily copyright law) Several discrete pieces, including Online Copyright Infringement Liability Limitation Act Copyright Protection and Management Systems Vessel hull design Not discussed here

10 DMCA: Online Service Provider (§ 512) Online Service Provider designation File a form with the Copyright Office $80 filing fee No liability if take-down provisions followed Hendrickson v. eBay, Inc., No. CV 01-0495, (C.D. Cal., Sep. 6, 2001) (§ 512 protects eBay against liability for sale of allegedly-infringing copies of videos) In Viacom v. YouTube, Viacom argues that YouTube has not complied with § 512 and is liable to Viacom for over $1 billion

11 § 512: Perfect 10 v. CCBill Perfect 10 alleged that CCBill and CWIE were vicariously and secondarily liable for hosting web sites that contained allegedly-infringing copies of Perfect 10s copyright-protected photographs »Perfect 10, Inc. v. CCBill, LLC, No. 04-57143 (9 th Cir. March 29, 2007) Held, § 512 safe harbor requires that a hosting company meet all requirements of § 512 including filing the designation of agent form, and reasonably implementing a policy of terminating repeat infringers, including tracking each complaint and each termination Held, take-down notices under § 512(c) must substantially comply with all of the elements listed in the statute

12 DRM in Streaming Media Real Networks, Inc. v. Streambox, Inc. 2000 WL 127311 (W.D. Wash. 2000) Real uses an authentication sequence (Secret Handshake) to insure that media will only be streamed from a RealServer to a RealPlayer (e.g., the right users) Real uses embedded data (Copy Switch) to determine whether the media may be copied by the recipient (e.g., the right uses) Streamboxs software mimics a RealPlayers Secret Handshake so that media streamed to it behaves as if it were a RealPlayer, and it allows the user to copy media even though the Copy Switch may be set to off Held, mimicking of Secret Handshake violates §1201(a)(2), while bypassing Copy Switch violates §1201(b)

13 DRM: DMCA Violation Involves a Copyright Right There is no violation of the DMCA, 17 U.S.C. § 1201 without proof that a technological protection method was circumvented for the purpose of infringing a right protected by the Copyright Act Nordstrom Consulting Inc. v. M&S Technologies, Inc., No. 06 C 3234 (N.D. Ill. March 4, 2008) Defendants apparently circumvented password protection to access plaintiffs software for the purpose of repairing or replacing a licensed copy of the software, which is expressly permitted under the Copyright Act Thus, no DMCA violation

14 DeCSS Cases Content Scramble System (CSS) is a TPM that protects movies on DVDs CSS cracked, and the cracking program (DeCSS) distributed online, obsoleting CSS programs in DVD players worldwide In each case, defendants web sites distribute copies of DeCSS and link to other web sites that distribute DeCSS 2600 Case (Universal City Studios v. Reimerdes/Corley) Universal City Studios, Inc. v. Reimerdes, No. 00-Civ-0277, 111 F. Supp. 2d 294 (S.D.N.Y. Aug. 17, 2000)

15 2600 DeCSS Case Permanent injunction granted CSS is an ACT designed to protect copyrighted movies DeCSS has no commercially significant purpose, other than to crack CSS ACT Distribution of DeCSS violates prohibition on trafficking in devices that circumvent ACT Courts turn away all First Amendment and reverse engineering (§1201(f)) arguments Lessons: (1) Where reasonable steps are used to protect copyright-protected content, distribution of cracking tools is actionable (2) Expect the ACT to be cracked, and plan accordingly

16 DVD CCA DeCSS Case Can a TPM/ACT be a trade secret? DVD Copy Control Assn, Inc. v. Bunner, No. S102588 (Cal. Aug. 25, 2003), on remand, No. H021153 (Cal. App. Feb. 27, 2004) Cal. Supreme Court upholds injunction CSS may be a trade secret under UTSA Reverse engineering not an improper means to discover a trade secret After remand, the plaintiff dismisses, but Cal. App. Ct. holds reverse engineering is a proper way to learn a trade secret, so injunction should never have been granted in the first place Lesson: A TPM/ACT may be protected as a trade secret, but the use of reverse engineering to discover how it works is still not a violation of trade secret law

17 BnetD Case Davidson & Assocs v. Jung, No. 04-3654 (8 th Cir. Sept. 1, 2005) Plaintiffs sold games and an online service ( Defendants reverse-engineered the games and created an online emulation ( of that allowed both licensed and unlicensed versions of the games to play Held, plaintiffs use of a secret handshake to validate use of the games was an ACT that was circumvented because works with both licensed and unlicensed versions of the games

18 BnetD (continued) Is the decision right, wrong or confused? is an alternative service that does not directly circumvent the ACT, but allows both circumvented and non-circumvented copies of the games to play together If the games have been directly modified to play with, then both the modifications of the games and any distribution of the modifications may very well be a violation of Sec. 1201

19 BnetD (continued) However, if the games have not been modified, and if bnetd emulates plaintiffs without copying it, then there may have been no violation of Section 1201 because is not an infringing copy of the software owned by plaintiff –Section 1201(f) allows reverse engineering for software interoperability –8th Circuit confuses circumvention of the games with emulation of the online environment

20 Lexmark v. Static Control Lexmark Intl, Inc. v. Static Control Components, Inc., No. 03-5400, 387 F.3d 522 (6th Cir. 2004), rehearing and rehearing en banc denied No. 04-CV-84-KSF (E.D. Ky. Feb. 23, 2006) (joint stipulation of summary judgment with regard to DMCA claims) Lexmark adds microchips and software to some of its toner cartridges, which the printer queries on start-up and other times

21 Lexmark v. Static Control (continued) Toner Loading Program (TLP) –Small programs (37-55 bytes) »Case caption in ASCII is larger –Estimates amount of toner left in cartridges Printer Engine Program (PEP) –Larger program (equates to 20 pages of source code –Handles various functions of the printer, including checksum on TLP

22 Lexmark (continued) Authentication sequence Are you a Lexmark cartridge? Authentication, using 6 codes stored in each cartridge chip If authentication succeeds, TLP downloaded to printer and checksum performed LXK ticker symbol (ASCII 4C 58 4B) embedded (salted) in TLP in chips attached to toner cartridges Static Control Components makes remanufactured toner cartridge components, including parts to remanufacture Lexmark cartridges SCCs chip includes copies of Lexmarks chip-based software

23 Lexmark Case Holding Lexmarks TLP software probably not protected by copyright Lack of originality Limited number of alternative ways to prepare competing works TLP probably used as a lock-out code, so it may not be protectable under the Copyright Act Lexmarks authentication sequence does not control access to PEP Buying the printer provides access to PEP Authentication sequence does not prevent anyone from reading the PEP code Authentication sequence used to keep out non-Lexmark cartridges

24 Lexmark Case Lesson Lesson 1: To obtain the benefits of Section 1201 The content must be protected under the Copyright Act The TPM/ACT must control access to the content The TPM/ACT must control use of the content to the extent that such use is reserved to the copyright owner (e.g., one or more the copyright exclusive rights) Lesson 2: Under these facts, a rights owner may use a TPM to reduce copying by competitors, but Section 1201 will not serve as the basis for a claim if the TPM is circumvented

25 Chamberlain v. Skylink Chamberlain Group, Inc. v. Skylink Technologies, Inc. No. 02-C-6376 (E.D. Ill. Aug. 29, 2003), affd, No. 04-1118, 381 F.3d 1178 (Fed. Cir. 2004), petition for review denied No. 04- 997 (Sup. Ct. March 21, 2005) Chamberlain makes garage door openers (GDOs), with rolling code technology, which change the code each time the transmitter button is pressed Reduce the likelihood that a burglar will use a code grabber to learn a fixed code and open the garage door Make it harder for third parties to make universal replacement transmitters Skylink makes replacement transmitters, including one that replaces rolling code transmitters (mimics resynchronization of rolling codes)

26 Chamberlain Holding Plaintiff fails to allege that defendants transmitter circumvented an ACT for the purpose of infringing plaintiffs copyrights Under §1201(a)(2), plaintiff must prove: ownership of a valid copyright effectively controlled by a TPM/ACT that has been circumvented

27 Chamberlain Holding (continued) that third parties can now access in a manner that infringes or facilitates infringing a right protected by the Copyright Act because of a product that defendant either –designed or produced primarily for circumvention, or –primarily used for circumvention, or –marketed for use in circumvention of TPM/ACT A copyright owner seeking to impose liability on an accused trafficker must demonstrate that the traffickers device enables either copyright infringement or a prohibited circumvention.

28 Healthcare Advocates Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey No. 2:05-CV-03524-RK (E.D. Pa. July 20, 2007) Plaintiffs web site was copied by, which maintains a library of web sites as published from time to time, and viewed by defendant using the Wayback Machine Plaintiff sought to block access to historical copies of its web site by adding a robots.txt file containing a denial text string Held, Copying a web site for litigation purposes is a fair use Robots.txt is a TPM No circumvention of a TPM when there is no attempt at circumvention, and theTPM malfunctions, so no DMCA violation

29 Sony Rootkit In re Sony BMG CD Technologies Litigation, No. 1:05-cv-09575-NRB (S.D.N.Y. Jan. 6, 2006) Sony BMG used two different DRM software packages on different audio CDs to restrict consumer uses of the CDs, report customer listening of the CDs, and condition use of the music on accepting terms in an accompanying end user license agreement (EULA) Like a rootkit, the software concealed its presence through the use of hidden files, maintained connections with Sony BMGs servers, and introduced substantial security vulnerabilities After substantial negative publicity, Sony BMG offered an uninstaller, but the uninstaller introduced new vulnerabilities

30 Sony Rootkit (continued) Sony BMG eventually acknowledged both the DRM software and the problems it caused, and recalled all of the discs Sony BMG had refused to refund the amounts paid for the discs Under the settlement, Sony BMG provides a menu of remedies based on the particular DRM software encountered on a disk-by-disk basis For example, consumers who bought CDs with First4Internets Extended Copy Protection (XCP) DRM software packages may exchange them for copies of the same CDs with no DRM, and download MP3 copies of the music; and Sony BMG provides each consumer with a choice of –a check for $7.50 plus one free download from a 200-title list, or –three free downloads from the list

31 Sony Rootkit (continued) Other cases are still pending Sony BMG has sued Amergence Group (f/k/a SunComm Intl), one of the TPM providers For more information, see Electronic Frontier Foundation at Halderman & Felten, Lessons from the Sony CD DRM Episode, (Feb. 15, 2006) Unintended Consequences: Seven Years Under the DMCA, (4 th ed. April 2006)

32 Macrovision v. Sima Products Macrovision v. Sima Products Corp. No. 05 Civ. 5587 (RO) (S.D.N.Y. April 20, 2006). Macrovisions Analog Copy Protection technology (ACP) makes it more difficult to copy the analog signal generated by a DVD player when playing a movie or other digital content Effect is that copies of the analog signal are degraded Simas products, called CopyThis! and GoDVD, eliminate ACP from the analog signal, thus allowing higher quality copies to be made from the analog signal Held, injunction granted as Simas products violate 1201(a)(2) prohibition on trafficking in technology that circumvents a technological measure that controls access to copyrighted content

33 Storage Technology Storage Technology Corp. v. Custom Hardware Eng. & Consulting, Ltd. –421 F.3d 1307 (Fed. Cir. 2005), rehg denied 431 F.3d 1374, on remand Civil Action No. 02-12102 (D. Mass. June 28, 2006) Storage Tech makes data storage silos of data cartridges, and which are controlled by a password-protected maintenance program Custom found a way to circumvent the password protection so that Custom may provide maintenance for the Storage Tech silos Held, maintenance of software permitted under 17 U.S.C. § 117(c)

34 Storage Technology (continued) Held, since maintenance is permitted under Title 17, then circumvention to perform maintenance does not violate § 1201 Held, some of the code plaintiff claims was protected under the Copyright Act and circumvented by Custom, was already being given out for free by plaintiff, so defendant had not circumvented any of the plaintiffs rights Held, attorneys fees may be awarded under 17 U.S.C. § 1203(b)(5)

35 WoW Glider Glider is add-on software that allows a user to automate the actions of the users World of Warcraft (WoW) characters The user walks away from the computer; the character keeps going Declaratory judgment action seeks declaration that Glider does not infringe copyrights in WoW and does not circumvent WoWs Warden software, which looks for violations by WoW users MDY Industries, LLC v. Blizzard Ent. Inc., No. CV 06-0255 (D. Az.) (complaint filed Oct. 25, 2006, order issued Jan. 28, 2009) Court held that WoWs Warden is a TPM that protects dynamic nonliteral elements of WoW, and Glider circumvents Warden Court enters a $6.5 million judgment against MDY Industries

36 Jacobsen v. Katzer Jacobsen v. Katzer, No. 2008-1001 (CAFC Aug. 13, 2008) ( 1001.pdf visited Aug. 13, 2008) 1001.pdf visited Aug. 13 Jacobsen and Katzer wrote competing software for model trains Jacobsens software was distributed under the Artistic License 1.0 Katzers employees or predecessor copied Jacobsens code into Katzers software, but failed to comply with the provisions of the Artistic License

37 Jacobsen v. Katzer: Federal Circuit Federal Circuit vacates and remands to trial court Broad distribution to the general public does not equate to an unlimited license In other words, free distribution does not equate to public domain The Artistic License as used by Jacobsen required Katzer to do certain things Failure to comply with the terms of the license means that Katzer violated conditions of the copyright license, rather than breach of contractual terms or covenants Irreparable harm may be presumed as violations of the conditions of the license means that Katzers uses of the Jacobsen software were not authorized

38 Jacobsen: Conclusion Held, terms in the Artistic License violated by Katzer were conditions, not covenants Any use of the software without complying with the terms in the Artistic License were outside the scope of the license granted by Jacobsen Cites Nimmer that distribution of copies without a copyright notice pursuant to a license that required copyright notice equates to copyright infringement Once again, copies distributed in compliance with the conditions are fully licensed, while copies not distributed in compliance are infringing copies

39 Jacobsen: Implications Confirms that free/open source licensors may pursue full set of copyright remedies against those who fail to comply with their license Injunctive relief Presumption of irreparable harm Actual damages (if any) Statutory damages Attorneys fees (!) Licensor must still comply with Copyright Act requirements, including copyright registration

40 Other Recent Cases Software Law Freedom Center has been busy Reached a settlement with SuperMicro over alleged violation of open source license for Busybox utilities Andersen v. Super Micro Computer, Inc., No. 1:08-cv-05269-RMB (S.D.N.Y. filed June 9, 2008) Filed cases against Extreme Networks and Hammer Storage over their alleged use of the Busybox utilities in violation of the open source license Andersen v. Extreme Networks, Inc., No. 08-CV-6426 (S.D.N.Y., filed July 17, 2008) Andersen v. Bell MicroProducts, Inc. d/b/a Hammer Storage, No. 08-CV-5270 (S.D.N.Y., filed June 9, 2008)

41 Lessons Learned Technology is not the enemy, but is an enabler of each of the parties who have skin in the game Section 512 can be a powerful safe harbor for ISPs, web site owners and other online providers, if you dot the Is and cross the Ts Content owners who want to sue online providers must similarly dot the Is and cross the Ts

42 Lessons Learned Where appropriate, use of a TPM may be a good way to protect content, regardless of whether any circumvention of that TPM can serve as the basis for a claim under Section 1201 To enforce a claim under Section 1201, courts are requiring a connection between the circumvention and the protection of a right under the Copyright Act Circumvention enables copyright infringement Circumvention enables uses not permitted by the copyright owner –Types of copying –Use in connection with plaintiff s software Section 1201 does not apply where TPM/ACT used solely to protect against competitors Section 1201 should be amended to allow circumvention for fair uses permitted under 17 U.S.C. § 107

43 Lessons Learned Decreased use of digital rights management Since the Sony Rootkit debacle, fewer music publishers have used DRM Book publishers are using DRM less than they used to Publishers Phase Out Piracy Protection on Audio Books, N.Y. Times (March 3, 2008) Publishers should continue to use digital watermarking and other passive techniques to identify copies of their works Publishers should be cautious about using technological protection measures that actively control access and use unless they have been fully vetted

44 Our Team Frederic M. Wilf Morgan, Lewis & Bockius LLP 502 Carnegie Center1701 Market Street Princeton, NJ 08540Philadelphia, PA 19103 609.919.6646 215.963.5453 Fred Wilf practices business, technology and intellectual property law, with a focus on information technology and the Internet worldwide Beijing Boston Brussels Chicago Dallas Frankfurt Harrisburg Houston Irvine London Los Angeles Miami Minneapolis New York Palo Alto Paris Philadelphia Pittsburgh Princeton San Francisco Tokyo Washington

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