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.

Google is threatening legal action against popular websites, such as YouTube-MP3.org and Music-Clips.net, that convert the audio portion of YouTube videos into MP3s. Google alleges these sites allow users to download content directly from YouTube for free, constituting a breach of YouTube’s Terms of Service.

Converting YouTube content to MP3s has become more popular since the demise of file host Megaupload in January 2012, which made free media more scarce. It is more difficult to identify and prosecute individuals using the YouTube conversion sites than “torrent” users downloading music and movies via services that aggregate small portions of the complete content from many different web sources concurrently.

Major record companies have pressured YouTube to do more to halt the proliferation of MP3 conversion services. The Recording Industry Association of America cited the issue in a December 2011 report on how well Google protects copyrighted material, also stating that, “YouTube hosts videos explaining how to ‘game’ the Content ID system, and how to rip the audio content to create an MP3 file from a music video.”

Google demands that the conversion sites cease using the YouTube Application Programming Interface (API) to allow users to “separate, isolate, or modify the audio or video components of any YouTube audiovisual content.” It has blocked YouTube-MP3.org’s servers from accessing YouTube.

YouTube-MP3.org’s owner responded with a statement claiming that the site does not actually utilize the API and that “German [c]ourts have ruled that an online recording tool is not different from any [TV] recorder or something [comparable].”

Google is, of course, the parent company of YouTube. YouTube has made major investments to license music videos and allow users to incorporate free music into their clips. It must now balance this proprietary interest in premium media with Google’s advocacy of free culture and an Internet free of censorship.

Boundless Learning, a Boston-based start-up (“Boundless”), has been sued by textbook publishers for copyright infringement in the important United States District Court for the Southern District of New York. The Boundless educational content is intended to be Open Educational Resources (“OER”) material publicly provided without intellectual property restrictions. This would allow students, teachers, and anyone else to freely use it in a manner similar to open source software. The primary allegation is that Boundless violated the Copyright Act by creating, advertising and distributing free “replacement copies” of several of the publishers’ most widely used collegiate textbooks.

Copyright protection expressly does not cover ideas, procedures, processes, systems, methods of operation, concepts, principles, and discoveries, regardless of the form in which they are described, explained, illustrated, or embodied. Also, facts are not copyrightable. This is essentially because, for societal progress and intellectual discourse to occur, everyone needs to be able to freely discuss ideas, concepts, etc. Of course, textbooks consist largely of these elements that do not attain copyright protection.

Copyright infringement can be shown by evidence of actual word-by-word copying (which the publishers do not claim happened), or by evidence that (a) the defendant had access to the copyrighted work and (b) the allegedly infringing work is substantially similar to the original. When determining substantial similarity, the court generally applies an “ordinary observer test” that considers whether the average reader would overlook any differences in the works and conclude that one was copied from the other. Where a work contains both copyright-protected and unprotected materials, as do traditional textbooks, the infringement inquiry does not consider the unprotected elements and compares only the original creative elements.

The Publishers, focusing on the access and similarity test, allege that Boundless has created shadow or alternative works that infringe these original creative elements of their textbooks. They assert that the Boundless versions mirror the organization, content selection, presentation and layout of the publishers’ texts. In contrast to the factual substance of the books, these are copyright-protected elements. Though the Boundless versions may use different words to convey the same themes, Boundless itself had earlier marketed its materials as free alternatives that were similar enough to the popular textbooks to include all the important elements of the originals, down to equivalent graphs and photos.

Are the protected elements of the publishers’ works sufficiently creative and unique to legally prevent Boundless from distributing free versions that merely paraphrase the original textbooks? The publishers claim that, over time and with great effort, they have identified, assembled, arranged, and presented the contents in the most teaching-effective way. Contrarily, Boundless will argue that any similarities between the information and structure of the respective textbooks merely reflect the common understanding of the order and importance of these well-studied topics.

This case, in combination with the recent Georgia State University case (discussed in the last post here), may have tremendous impact on the textbook industry and those businesses with similar copyright concerns.

Last month, the Federal District Court for the Northern District of Georgia issued a 350-page opinion in Cambridge University Press v. Becker, largely upholding Georgia State University’s “fair use” defense in a 2008 copyright infringement case brought by a coalition of textbook publishers. If upheld, the decision may allow academic institutions and others to avoid liability under U.S. copyright law for sharing portions of digital documents online.

Georgia State allowed its faculty to post excerpts (often an entire chapter) from copyrighted textbooks to an online “electronic reserves” system, making them available for free to students in their respective classes as long as the faculty member applied a checklist to determine whether the posting would qualify as fair use under copyright law.

The majority of the Court’s opinion focused on that doctrine of fair use, stemming from 17 U.S.C. §107, which provides that the fair use of a copyrighted work, including 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 include the:

1. purpose and character of the use, including whether such use is (a) “transformative” (i.e., adds something new or different), and (b) of a commercial nature or is for non-profit educational purposes;

2. nature of the copyrighted work (informational vs. creative, with the latter entitled to more protection);

3. amount and substantiality of the portion used in relation to the copyrighted work as a whole, which inquiry includes a qualitative element of whether the “heart” of the work was copied; and

4. effect of the use upon the potential market for or value of the copyrighted work, including whether a license to the copyrighted materials could have been purchased by the defendant through some readily available market.

The court sided with Georgia State with respect to counts on 69 out of 74 documents, generally finding that the university published only small excerpts online with no intent to profit. The court, however, found the “fair use checklist” policy deficient because it did not (y) limit copying to quantities of a single chapter or less, nor (z) require faculty members to evaluate the effect on the market for the copyrighted work.

Despite the defendants’ substantial wins, the plaintiffs now have a declaration that the Georgia State policy contributed to at least some copyright infringement. If upheld, the decision suggests that academic institutions may be permitted to post excerpts of copyrighted works so long as the publication is in compliance with written policies that: (i) prohibit publication of more than a chapter (or other relevant section identifier); and (ii) consider the publication’s effect on the market for the original work. Additional guidance on these matters is likely to come from the appellate courts.

The Technology Association of Georgia (TAG) named the following the top 40 innovative technology companies in the state for 2012:

• AirWatch
• Aptidata Corporation
• BrightWhistle
• CodeGuard
• CompliancePoint, Inc.
• Concurrent Computer Corporation
• Contact At Once! LLC
• CorFire
• CubeVibe
• DataOceans, LLC
• Digital Assent
• eFortresses, Inc.
• EyeLevel Interactive
• First Data
• FreebeePay, Inc.
• Implantable Provider Group (IPG)
• Innovolt
• Kabbage, Inc.
• Lancope
• Mowgli
• NCR
• Neurotic Media
• NextInput
• NexTraq
• Numerex
• Patientco
• Paymetric
• Pindrop Security
• PlayOn! Sports
• Podponics
• Proximus Mobility, LLC
• rappidApp
• Red Bag Solutions, Inc.
• SalesLoft
• ShopVisible
• TerraGo Technologies
• TripLingo
• Velocity Medical Solutions, LLC
• Vertical Acuity
• Whiter Image

The original TAG press release issuing the list is here.

Is it a tax increase if you begin taxing something new? A number of pundits suggest the answer is “yes.” Grover Norquist, who was recently featured on 60 Minutes and has been making prominent appearances in Atlanta, believes that the subject of this post is, in fact, a tax increase. This is creating some sweat for legislators asked by Norquist’s organization, Americans for Tax Reform, to pledge that they will never raise taxes.

The Georgia House of Representatives will soon be voting on House Bill 993, which would create or enforce, depending on your viewpoint, a sales tax for Georgia residents on certain e-commerce transactions. Federal law currently permits such a tax to apply only to sellers who have some physical nexus to the jurisdiction applying the tax, and the Georgia legislation would, in part, be based on local affiliates’ relationships with the largest retailers.

Georgia Governor Nathan Deal is in favor of the measure, suggesting that it is simply the enforcement of sales tax collection that should already be taking place. Supporters also say the tax measure will not produce additional revenue for the State, but will instead be offset by reinstatement of tax-free shopping holidays.

The Georgia Retail Association estimates that uncollected sales tax from all Internet sales to Georgia residents amounts to about one-half billion dollars per year, and about $20 million of that comes from Amazon.com transactions alone. The specific transactions that are the subject of the House bill would bring in about $18 million per year to the Georgia Department of Revenue.

Traditional businesses that do not rely on e-commerce are throwing significant backing behind the proposal, with Atlanta-based Home Depot the most important proponent. Home Depot, in fact, already collects the tax in question on its Internet sales. Traditional retailers argue that they are operating from a serious disadvantage when e-commerce retailers do not charge the tax and can thus provide the lower prices consumers are increasingly seeking.

It is of note that, on a general tax policy basis, a move in favor of an Internet sales tax in Georgia would, in effect, represent a move toward consumption taxes and a retreat from what have historically been property- and income-based tax revenues. Federal legislation of a uniform Internet sales tax has gone nowhere for years. In the coming month, we will see if the current attempt in Georgia gains traction.

The use of social media is omnipresent with respect to most companies now. Whether an enterprise is savvy enough to employ social media on its own behalf for marketing purposes, or whether it has social media exposure simply by virtue of its employees’ personal use of Twitter, Facebook and other applications, there is a very tangible impact created. Not only is this impact commercial and reputational, it can be legal in nature.

Recently, the National Labor Relations Board (NLRB or the “Board”) has developed a keen interest in employers’ attempts to regulate their employees’ social media use. Its primary tool in this effort has been the National Labor Relations Act (NLRA or the “Act”), a federal law passed in 1935 to protect employees’ right to organize unions and engage in collective bargaining.

Since the applicability of the Board and the Act to social media can be difficult to ascertain on first blush, the NLRB has recently issued specific guidance about how NLRA provisions govern here.

One of the primary purposes of the NLRA is to allow workers to freely communicate with one another regarding complaints about terms and conditions of employment and perceived instances of unfair treatment. Examples of covered topics include accusations of workplace racism, departmental complaints, complaints about unfair demands and duties, and other labor disputes. The fact that this communication is now increasingly taking place via social media has created the natural tie-in between social media and the Act.

In practical effect, if a particular communication has the above subject matter, the Act is now permitting employees to make public social media posts about a company or their workplace so long as more than the singular employee is involved (i.e., the post can be construed as part of a discussion with fellow employees and a potential motion toward labor organization around a workplace issue).

Some notes on the practical implications for employers:

1. Even a “like” from a fellow employee regarding a post may be enough to constitute such collaborative employee action! However, the gripes of an individual aggrieved employee that are not in some way approved or supported by fellow workers will not generally constitute a communication subject to the NLRA.

2. Application of the Act to social media doesn’t hinge on whether the employer is unionized or non-union – the protections are universal.

3. A company must be extremely careful about terminating an employee because of any work-related social media post, whether on Facebook, Twitter or elsewhere. One major tightrope to walk here occurs if the post somehow implicates a company’s proprietary information or trade secrets. If it does, the company must protect its confidential information, but its general social media use policy cannot impede the protected flow of labor-related communication about, e.g., wages or working conditions.

4. At present, an employer can, via its social media use policy, request that employees confine their social networking to matters unrelated to the company if necessary to ensure compliance with securities regulations and other laws (see earlier post about Groupon and securities law issues). A social media use policy may also include such restrictions as are necessary, for example, to address HIPAA or security regulations.

5. In connection with (4) above, the NLRB has also ruled that, since employees do not have a protected right to disclose “embargoed” information such as trade secrets or confidential information in the first place, employees would not reasonably interpret a legitimate social media use policy with proscriptions on posts with this subject matter as disallowing communications about the terms and conditions of their employment. This, of course, weighs in favor of an employer’s right to protect its trade secrets and confidential information, so long as the employer policy is sufficiently explicit about what is off limits for social media communications.

6. Based on current litigation described in a recent post here, employer policies for social media should also address the ownership of content in social media accounts that are purposed for the benefit of the employer.

While it would have initially seemed a fairly simple task, issues like the above are the reason that legal counsel is a must when drafting an employee social media use policy.

It used to be that a person’s activity on a given Internet application was monitored solely on, and for the purpose of, that platform. That day is quickly fading away, hastened by recent action by Google.

Google plans to create and maintain essentially a single pool of information regarding any given individual, which will contain information gathered from that person’s use of any Google application. This means that information from a user’s interaction with, for example, an Android phone, Gmail, Google Search, Google Analytics and YouTube will all be conflated into a single profile about that user. The benefits to Google (and its current and potential trade partners) of adopting this approach are readily apparent, most prominently existing in the possibility of delivering highly targeted advertising and “reminders.”

Additionally, by creating a universal privacy policy, Google will be able to dispense with the more than 60 different policies currently utilized across its products and services. That will address criticisms that Google’s various user data policies are a tangled and incomprehensible knot. Google’s director of privacy, product and engineering describes the change as one that will “. . . mean a simpler, more intuitive Google experience.”

The legal implications for the public and other like industry players, however, are unlikely to be regarded as favorably. At present, no opt-out from this system is contemplated. Regardless of your personal preference, you will be treated as a single user across all Google products — more importantly, one associated with a cross-disciplinary mine of valuable consumer information. This lack of opt-out choice is contrary to the privacy law rubric to which e-commerce has been increasingly subscribing for years.

If there is any party with the leverage to attempt this, it is Google, but there will certainly be significant push-back. In addition to Internet law privacy concerns, antitrust issues are also raised by Google’s proposed activity. The policy is set to take effect on March 1, so look out for imminent hand-throwing.

We in the U.S. tend to have a limited field of vision when it comes to nascent legal concepts. Other countries are dealing with many of the same matters in their jurisprudence, but our citizens and legislators are either unaware of their efforts or fail to see their relevance. A great recent example is the European analog of the American Stop Online Piracy Act (SOPA) and Protect Intellectual Property Act (PIPA). Known as the Anti-Counterfeiting Trade Agreement (ACTA), the measure was executed by Poland in Tokyo, Japan today, setting off anti-government hacking and massive protests.

Until the footage of uprisings in the streets hit American media, ACTA was not a known quantity to hardly anyone in the U.S. The Agreement is designed to set international standards for the protection of intellectual property and, as its name would imply, to address rampant counterfeiting. Of note is the fact that ACTA has less to do with copyright infringement prosecution than most hypothetical examples cited by those opposing the legislation. As with the U.S. legislation, detractors suggest enacting ACTA would amount to condonation of censorship and would shortcut due process in many cases of alleged infringement.

Other nations executing the Agreement this week included Finland, France, Ireland, Italy, Portugal, Romania and Greece. In what will come as a surprise to many, the U.S. executed the Agreement, as well – last year (as did Australia, Canada, Japan, Morocco, New Zealand, Singapore and South Korea).

The point: multiple nations are recognizing that they have aligned economic interests when it comes to intellectual property. They are centered on incenting creative activity by ensuring that the profit of such endeavors actually reaches the creator or rightsholder, rather than being diverted by intellectual property infringers. Proponents of the various anti-piracy legislative schemes suggest that many jobs and significant commerce across many industries are at stake.

Other nations are keenly aware of developments in U.S. lawmaking. Our collective intelligence and legislative efficacy would be enhanced if we would maintain like awareness of happenings in other global economies.