The Richardson Sixth firm made a visit to the Atlanta Tech Village yesterday.  The gathering was sponsored by the Buckhead Club, which shares valuable real estate with the Village as part of the “Buckhead Super-block.”

ATV is a very significant development in the Atlanta and national start-up ecosystem; its organizers have the express goal of “fueling Atlanta’s rise to a top-five tech start-up center in the U.S.”

The Village is a 103,000 square-foot commercial center designed for technology and technology-related companies.  Eighty percent (80%) of the companies with a presence in the Village are tech companies, with the remaining twenty percent (20%) service providers.  Generally speaking, the companies’ number of employees is between one and 30.

Participating companies pay membership dues and fees, and Richardson likes the fact that the Village does not take equity positions in its members.

Best wishes to all involved in the movement!

ReDigi, started in late 2011, holds itself out as a legal means for consumers to sell their digital music files online, giving them the same ability to re-sell as they possess with their CDs or vinyl. ReDigi proponents argue that the historical lack of a re-sale market has encouraged consumers to (a) view MP3 files as devoid of economic value, and (b) participate in pirate peer-to-peer services. The ReDigi user may upload iTunes songs and sell them to for, generally, $0.49 to $0.79.

ReDigi technology differs from file-sharing services, which allow the same track to be downloaded by innumerable users, each of whom creates a new copy. ReDigi’s platform never increases the total number of existing copies, instead deleting the sold file from the seller’s hard drive. It also requires the subscriber to use ReDigi sale proceeds to purchase files uploaded to ReDigi by other users.

There is some concern, however, about ReDigi’s ability to provide assurance that its users lawfully possess the media they are offering for sale. Further, some elements in the music industry oppose enabling the re-sale of digital files, arguing that technology permitting consumers to sell “used” digital files would enable the same media to be endlessly transferred, killing the initial-sale market for it.

On the other hand, some say ReDigi is creating a windfall to the music industry derived solely from changing technology. In the past, re-sale of an original record or CD earned the copyright holder no profit. They ask why the copyright holder should now reap a profit from essentially the same secondary market transfer (as long as the seller does not keep a copy of the file after selling it) just because its subject is a digital file?

Obviously disagreeing, Capitol Records filed a 2012 copyright infringement suit against ReDigi in federal court in the Southern District of New York. The case is winding its way through the judicial system. In April, the court ruled for the plaintiff on the theory that ReDigi infringed Capitol’s copyrights, regardless of whether sold files were deleted from uploaders’ computers.

The primary copyright law premise at issue is the first-sale doctrine, established by the U.S. Supreme Court in 1908, which provides that copyright owners cannot prevent consumers who purchased copyrighted material from reselling it (e.g., selling used CDs at a flea market). Record labels contend that ReDigi creates unauthorized copies that cannot be sold, even if first-sale doctrine applied to the article initially sold.

Capitol successfully argued it is impossible to transfer digital files without copying them, saying the first-sale doctrine allows only the owner of a particular copyrighted item to sell that exact item. That would make it legal to resell vinyl albums, CDs or even hard drives containing legitimately downloaded music, but not copies of files that are uploaded to the Internet. Under traditional copyright theory, the reproduction right held by the copyright holder is infringed when a copy is made unless a license to create the copy has been granted.

The rationale behind the prohibition on copying is to enable the copyright owner to control the total number of copies of a creative work in existence. Some argue, however, that the whole notion of copies and their condition is anachronistic as to digital media. Additionally, some observers’ rationale with regard to these issues is based on the notion of media materials being licensed, as opposed to actually sold.

Following initial bouts in the Capitol Records suit, ReDigi has apparently recently disabled prior functionality that permitted its users to transfer music from their computer to ReDigi’s cloud marketplace. It has not, however, disabled its 2.0 service, which, in effect, directs all new digital purchases to the cloud before any personal use copies can be made to the user’s computer, mobile devices, etc.

In economic terms, the person buying a used CD for $1 is not likely to purchase a new one for $15-$30, but the distributor is unlikely to sell original material for less than perhaps $9.99. Thus, we may be discussing distinct markets with little to no overlap. Even if ReDigi’s concept may require community improvement, it’s better for copyright owners than file-sharing services, which don’t generate any revenue for the music industry because people can both distribute and download files for free without also deleting their copies.

Access may be supplanting ownership as the primary model for monetizing media. Paid subscription to services that stream media may be headed to the forefront. In these systems, it is much easier for rightsholders to track what is being consumed by whom, and proceeds are much more easily distributed to the deserved recipients.

In the meantime, Amazon and Apple are busy securing patents for marketplace transfer of “used” digital goods.

The U.S. District Court for the Northern District of California has ruled that website owners have the right to selectively block user access, and any intentional circumvention of those access restrictions may violate the Computer Fraud and Abuse Act (the “CFAA”).

Craigslist made a 2012 demand that 3Taps (an ad aggregator whose business is republishing online ads posted by other parties) cease accessing Craigslist. Taking matters into its own hands, Craigslist simultaneously configured its site to block access from any 3Taps-associated IP address.

3Taps, however, responded by using IP-rotation technology and proxy servers to bypass the blocks, continuing to harvest and repost Craigslist content. Craigslist thus initiated a legal proceeding against 3Taps for copyright infringement and “unauthorized access” to its website under the CFAA, alleging that 3Taps had not only violated Craigslist’s Terms of Service but also deliberately circumvented its IP-blocking measures.

While acknowledging that it intentionally evaded the blocking mechanism, 3Taps asserted that Craigslist had authorized access to and use of its content by publicly providing it. 3Taps also made a public-policy argument that site owners’ blocking of publicly accessible websites is dangerous to the preferable existence of a free-and-open World Wide Web.
The District Court gave little credence to these arguments and instead said, “Store owners [on private property] open their doors to the public, but occasionally find it necessary to ban disruptive individuals from the premises. That trespass law has enforced those bans with criminal penalties has not, in the brick and mortar context, resulted in the doomsday scenarios predicted by 3Taps in the Internet context.”

The court determined there is nothing in the CFAA prohibiting a site owner from blocking other parties from its site on an individualized basis. 3Taps was, however, “without authorization” under the Act when it continued its business practices despite Craigslist’s cessation demand.

Ultimately, that demand was not as significant to the ruling as the fact that Craigslist had purposefully employed specific IP-blocking technology to exclude 3Taps.

Final note:

Some commentators believe the CFAA is being applied to prosecute people for crimes beyond the intended scope of the Act. Enacted in 1986, it makes it illegal to knowingly access a computer without authorization or to exceed authorized use of a computer system. In practical terms, the Act is the virtual equivalent of an anti-trespassing law targeting criminal hackers.

Technology Association of Georgia President and CEO, Tino Mantella, gave a recent State of the Technology Industry report to the Buckhead Business Association.  Tech jobs in Georgia earn an average of $81,000, with the sector increasing by 16,000 employees to 260,000 in the past decade.  In that period, $2 billion was invested in such positions. Seven percent (7%) of Georgia’s gross domestic product is technology-related, with an aggregate annual economic impact of $113.1 billion.

With companies like AirWatch (a major provider of mobile device management, mobile application management and mobile content management solutions) bringing large numbers of jobs to the Atlanta area, Georgia has become one of the top five (5) technology employers in the U.S.  The healthcare IT and financial services technology sectors are particularly strong in Georgia (an impressive fact as to the latter is that fully seventy percent (70%) of payment processing transactions flow through the state).

An area for improvement in the state is the attraction and retention of venture capital resulting in technology jobs, where California continues to hold a dominant fifty-one percent (51%) of that funnel.  Organizations like Venture Atlanta are making strides in shoring that up, and there are many solid investment opportunities here.

Overall, a great place to be!

There has always been discord between the domain name registration system (which awards the universal right to a domain name to a singular owner) and the world’s patchwork trademark registration systems. The latter protects a mark solely in national, regional, or treaty-created geographic areas, and only insofar as it is registrable in relation to narrowly tailored classes of goods and services. Recent developments will cause the two worlds to continue to converge or, depending on your viewpoint, conflict.

On March 26th, the Trademark Clearinghouse (TMCH) came into being. Its primary purpose is to protect trademark holders against potential infringement upon the arrival of multiple new generic Top-Level Domains (gTLDs) in the Internet ecosystem later this year. The TMCH is the sole database of validated trademarks under the auspices of The Internet Corporation for Assigned Names and Numbers (ICANN), the California-headquartered institution formed in 1998 that oversees all domain names.

Ninety-six percent (96%) of major consumer brands indicate they believe the new gTLDs present a risk to their online intellectual property, yet twenty percent (20%) of the top 200 consumer brands surveyed as of last month still had little or no awareness of the new domains. This, no question, creates an atmosphere ripe for significant trademark infringement exposure.

The TMCH will perform two primary functions: (1) authentication and verification of contact information and trademark records; and (2) maintenance of those records in a database available to the new gTLD registries to support the provision of “Notifications of Registered Name” (“NORN”). One thing the TMCH does not do is create new rights in the marks or domain names.

Recording a mark in the TMCH provides the trademark holder with the opportunity, during the “Sunrise Period,” to pre-emptively register domain names which match its trademark in advance of general public availability of the new gTLDs. Between sixty percent (60%) and eighty-eight percent (88%) of major consumer brands (depending on the research cited) have expressed an interest in obtaining such registrations.

Sunrise Periods were utilized when new TLDs were introduced 10 years ago to allow trademark owners to pre-empt domain name pirates. The primary difficulty at that time was the registries’ inexperience in verifying the validity of the marks submitted. This time around, more than 100 personnel have been trained to evaluate the validity of marks in many countries.

It is possible that a rightsowner could confront many entries in the TMCH for the same mark when it explores its holdings. Some watching the developments believe that an auction system might be the most equitable way to determine who will be able to register a name during the Sunrise Period.
Additionally, for the ninety (90) days following the launch of each respective new gTLD web extension, a trademark holder with a TMCH registration will receive a warning when any other party registers domain names that match the registrant’s marks. This “Trademark Claims Service” is reportedly in demand and supported by sixty percent (60%) of major consumer brands, but there is concern among commentators that trademark violators may just be under scrutiny for the 90 days, with less challenged infringement occurring thereafter.

Recent proposals thus include a thirty (30)-day notice period before the Sunrise Period and an extension of the Trademark Claims Service timetable. The first thirty (30) non-Latin gTLDs have completed ICANN’s evaluation process. New gTLDs (particularly those domains for which there are no competing applications or objections) could start their Sunrise Period and be introduced to the root zone this summer.

If the TMCH recognizes a conflict, the domain name applicant can still continue with registration, but will have been provided constructive notice of the potential adverse trademark protection. If the domain becomes registered, the trademark rightsowner is notified and can then make an informed election about monitoring the usage and whether to initiate (a) a complaint under established uniform domain name dispute resolution protocol, or (b) a trademark infringement action.

The TMCH does not have any geographical limitation. Fifty-two percent (52%) of brands surveyed are interested in securing geographic domains relating to their trademarks, such as .SCOTLAND or .AFRICA. The opportunity to reach new markets via international domains presented in foreign language scripts is an attraction to sixty percent (60%) of the surveyed brands.

The price of TMCH registration will range from US$95 to US$150 per year per trademark, depending on the number of marks submitted and the length of registration period selected. If another registry provider commenced provision of services to an easy-to-validate segment of the market, the price of registration in developed countries might be reduced while it concurrently rises for applicants in jurisdictions where authentication is more difficult to achieve.

A pricing discount will be offered when one thousand (1,000) “status points” are obtained, which could mean 1,000 registrations in a year or less if the trademarks are registered for three or five years (more status points are given for longer registrations). Establishment of a TMCH record is prerequisite to eligibility for Sunrise Period pre-registration. That said, there is a possibility that registries could also acknowledge pre-registration rights for marks not recorded in the TMCH.

Law firm clients should be advised that having a TMCH registration does not secure the subject mark in every single trademark or domain name registry. Each registry will have its own policy, which may limit registration on the basis of, e.g., presence in a geographic zone or a designated native language or community group.

The Clearinghouse will be jointly operated (but under separate contracts) by IBM and Deloitte, with IBM administering the database and Deloitte providing the authentication services. Later, ICANN may allow competitive parity by permitting trademark owners to choose from a variety of trademark clearing services. With the database of recorded trademarks under direct contract, ICANN has paved the way for opening up competition for the authentication services component of the regime.

Nearly eighty percent (80%) of brands polled believe that the introduction of the TMCH will help protect their intellectual property online. Trademark attorneys and their clients certainly hope that it will.

Survey results cited here are from Deloitte and Vanson Bourne.

More information is available at the TMCH website, www.trademark-clearinghouse.com.

The Atlanta Business Chronicle reports that Atlanta Internet telephony company Vocalocity Inc. plans to use $10 million of funding secured to grow its presence and add up to 100 new employees.

Vocalocity provides Internet-based phone systems to small businesses, enabling them to make and receive calls via its voice over Internet protocol (VoIP) technology.  Vocalocity also offers data analytics, data mining and call monitoring software to increase margins and the effectiveness of customer service personnel.  For example, managers can see statistics on the quantity and duration of calls made by a given salesperson.

Last month, Vocalocity won INTERNET TELEPHONY’s 2012 Product of the Year award for its call monitoring service, which enhances the capability to improve client engagement, training processes, and productivity measures.  This add-on works by giving authorized users the ability to listen in on calls and speak directly to the host without other callers hearing.  A supervisor can silently observe a client call with a new employee, assist the employee without anyone overhearing (“whisper”), or elect to personally join the conversation (“barge”).  Of significant legal import for Georgia attorneys and their clients, users have the option to notify call attendees, via a built-in announcement, that the call may be recorded.

Vocalocity garnered the same Product of the Year award from the editors of the trade publication in 2010 and 2011, as well.  Additional recognition has come to the Atlanta upstart from being selected for the Deloitte Technology Fast 500 (the fastest growing technology companies in the U.S.), and its second appearance in a row in the Inc. 5000, an exclusive ranking of the nation’s fastest-growing private companies.  Georgia’s Vocalocity was also recognized as a leading private company creating American jobs by Inc.’s inaugural Hire Power Awards.

The Atlanta company’s CEO, Wain Kellum, was the prior chief executive of Alpharetta, Georgia-based Omnilink, which specializes in markets for end-to-end location-based services utilized by enterprises, consumers and governments.

An unfair competition suit against an Atlanta-area garage door company has taken on another dimension, with claims that purported trademark violations that were effectively halted in the physical world are now taking place via the defendant’s Internet and keyword advertising.

The claims, including unfair competition and deceptive trade practices in relation to the plaintiff’s (and its licensor’s) registered trademarks and logos, are being litigated in the Federal District Court (Northern District of Georgia), which sits in Atlanta.  A settlement agreement was entered, in which the defendant agreed not to use:

  1. “Overhead” in a trademark or trade name that also includes an Atlanta-related name;
  2. “Overhead Garage Door[s]” as a trademark or trade name;
  3. a trademark or trade name that emphasizes the word “Overhead,” “Overhead Door[s]” or “Overhead Garage Door[s]”;
  4. any Atlanta-related name along with the word “Overhead” in any domain name; and
  5. the phrases “Overhead Garage Door[s]” or “Overhead Door[s]” in any online or print advertisement, except in a purely descriptive sense.

Portion (4) concerning the domain names is fairly easy to police, but at issue now are sponsored advertisements appearing in Google results and other potential breaches of the settlement agreement that can be more clandestine.  The plaintiff submits that trademark infringement and unfair competition are recurring, and has now asked the Court for a permanent injunction to prevent the defendant’s continued use of plaintiff-related trademarks.  The motion also seeks multiple forms of monetary damages, attorneys’ fees, and disgorgement of profits.

Evidence of the complete usurpation of the world by the Internet resides in the fact that two garage door companies are fighting about trademark infringement ocurring via use of branding marks on the Web.  At what point in time did things like this stop being unfathomable?

 

Thanks to all for their support of the Sixth Sense Law concept and the Richardson Sixth law firm.

Additional content regarding significant legal developments related to Internet law is forthcoming right here!

In the meantime, happy Thanksgiving and peace to all.

 

 

 

Mark Richardson

Attorney and Founder

Richardson Sixth, LLC

www.SixthSenseLaw.com

www.GeorgiaInternetLaw.com

 

Further recent decision related to most recent post:

This time, the Second Circuit upholds a preliminary injunction enjoining the defendant from live Internet streaming of television programs, holding that the defendant is not entitled to a compulsory license to stream plaintiffs’ copyrighted programming because it is not a “cable system” under §111 of the Copyright Act.

WPIX, Inc. v. IVI, Inc.

 

 

 

In March of this year, major American television broadcasters brought a preliminary injunction motion in the U.S. District Court for the Southern District of New York, attempting to immediately stop Aereo, Inc. from transmitting real-time Internet access to their copyrighted programming contemporaneously with their over-the-air broadcasts.

On July 11, 2012, the federal court denied the broadcasters’ and content owners’ request, relying on the Second Circuit’s (New York federal appellate court’s) decision in the “Cablevision” case [Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008)]. Both the Cablevision and Aereo cases interpret the “public performance” clause of the Copyright Act in light of emerging technologies that facilitate new means of delivering television programming.

In Cablevision, the court held that the cable operator’s RS (Remote Storage) DVR did not infringe the public performance right of the cable networks whose content was being recorded. The analysis was that a unique transmission was essentially being made to a single subscriber. Unlike traditional DVRs, which record programs on a hard disk in the home like old-time VHS, the Cablevision customer’s dedicated disk resided at the cable system’s head-end, reducing deployment expense.

Aereo’s system uses dime-sized antennas to pick up over-the-air television signals at subscriber request. Programming is copied in a server that performs DVR functions, and is then sent to the subscriber via Internet. The subscriber may view the programming on a variety of devices. For the user, Aereo’s system is like a DVR where playback may be elected to be nearly real-time or delayed. Unlike other DVR services, however, Aereo did not obtain copyright or retransmission licenses to provide the broadcasts.

The Aereo court found that a given Aereo antenna can be used by only one user at a time, each antenna functioning independently. The opinion’s rationale was that, under the unique and limited Aereo fact set, unique copies created by Aereo subscribers do not differ substantively from those made by the remote-storage DVRs approved in Cablevision. The court thus far has found that Aereo copies do not constitute performances made “to the public” under the Copyright Act, because only the individual subscriber is capable of receiving a particular downstream transmission of a performance. Aereo’s system thus falls within the “one-copy-per-transmission” test (as opposed to one copy of the content being the source basis of many transmissions), though many viewers can see the same underlying work through the system at different times and places.

The Aereo case has deep policy and economic ramifications. Ninety percent (90%) of viewers today get programming from cable or digital broadcast service distributors rather than over-the-air signals, generating enormous retransmission consent fees for broadcasters. Some cable operators see the Aereo technology as a way to circumvent tedious and costly battles over this pot of money (to reiterate, unlike a cable operator’s relay of content under color of broadcaster consent, Aereo does not seek permission to use the broadcaster’s signal). At the same time, online video distributors may see Aereo’s effort as a means of circumventing cable by providing popular DVR-enabled programming and supplementary Internet-based content.

The District Court in Aereo actually agreed that the plaintiff broadcasters had demonstrated irreparable harm arising from Aereo’s service (and that a public interest would be served by issuing an injunction against Aereo), but did not believe that harm outweighed the economic peril faced by Aereo if the preliminary injunction was issued. The case will thus proceed on the merits.

This early lower-court ruling is viewed as an advancement for interests seeking to expand access to copyrighted materials without requirement of traditional licensing. At a minimum, it preliminarily and potentially recognizes the legitimacy of a means of streaming broadcast signals over the Internet without obtaining copyright permission or retransmission consent.

In terms of copyright law and Internet law, of course, the battle has no more than commenced. The Second Circuit (the same court that decided Cablevision) is next to speak. After that guidance issues, it is a certainty that similarly situated parties will seek to have their respective stances confirmed by courts in other jurisdictions.