Month: September 2016

Categories
Copyright Licensing DOJ Uncategorized

Rejection of DOJ Consent Decree Interpretation is a Win for Songwriters

Cross-posted from the Mister Copyright blog.

sheet musicEarlier this month, a federal judge in the Southern District of New York issued an order rejecting the Department of Justice’s (DOJ) interpretation of a consent decree governing the way the performance rights organization Broadcast Music Inc. (BMI) licenses its songs. The ruling was in response to a DOJ statement that the consent decrees controlling BMI and ASCAP should be interpreted to include a “full-work” licensing agreement that would require any entity that controls part of a composition to offer a license for the whole composition. The implications of the DOJ’s evaluation would be disastrous for both artists and the organizations that represent them, and while the judge’s order is likely not the final say in the debate, it represents a strong endorsement of the rights of publishers and songwriters to control their creative works.

PROs and the Consent Decrees

Performance rights organizations (PROs) act as intermediaries between songwriters and parties who wish to perform their copyrighted works publicly. Pooling compositional copyrights and offering “blanket licenses” to users such as bars, stores, gyms, radio and television stations, and Internet music distributors, PROs facilitate access to millions of songs while eliminating the need for individualized negotiations and licensing agreements. PROs also collect royalties from their licensees and distribute them among their member songwriters, composers, and music publishers, providing a workable solution to an otherwise impossibly complex system of individual agreements.

ASCAP and BMI are governed by consent decree agreements that have been in place for over 75 years and were introduced by the Department of Justice to promote competition in the marketplace for musical works. Under the decrees, PROs are encouraged to compete with one another to recruit songwriters and must offer licenses to venues and users on equivalent terms. It’s a system intended to benefit both emerging, unknown songwriters and established artists in order to prevent any one PRO from leveraging undue market influence.

Full v. Fractional Licensing

But even with the support of PROs, complicated licensing issues arise when a musical composition has more than one author or rights owner. In 2014, the Antitrust Division of the DOJ initiated an inquiry into the effectiveness of the consent decrees, soliciting comments from various stakeholders on whether the decrees obligate ASCAP and BMI to offer licenses to an entire work when not all owners of the composition are members of the organization. “Full-work” licenses allow for a song to be licensed provided that one owner consents by way of membership in a PRO, regardless of how much of the composition that party owns or whether the co-owners have conflicting contractual agreements.

Default copyright law treats joint authors of a single work as tenants-in-common, with any co-owner retaining the right to grant a nonexclusive license to the entire work without the consent of other owners, so long as the licensor compensates the other co-owners. As this rule is strictly the default, co-owners are free to agree to alternate arrangements with regard to licensing the underlying work, including one in which an author may only offer a license to the partial interest it holds in the work. This type of agreement, known as “fractional” licensing, requires that a licensee obtain additional licenses from all other rights owners or the PROs representing them.

The comments received by the DOJ as part of its consent decree investigation showed conflicting views on the treatment of multi-owner works. Rightsholders claimed that PROs had never offered full licenses and urged the DOJ to add language to the decree that would confirm this understood feature of the agreement. Music users and licensees, by contrast, argued that full licensing was always part of the deal and also pressed the DOJ to amend the decree to reflect their opinion. These differing opinions were never addressed in past revisions of the decrees because most licensees would obtain blanket licenses from both BMI and ASCAP, which would then charge fees based on their respective market shares, accounting for songs to which they represented only a partial interest.

DOJ Gets it Wrong

With new licensees entering the market in the form of streaming internet services, the DOJ decided it was time to clarify this neglected, but important, part of the decrees. In a statement issued last month, the Department concluded that it would not be in the interest of the public to modify the decrees to permit fractional licensing, insisting that full-licensing was the intent of the decrees and would not upset the rights of co-authors. But despite positioning its statement as an interpretation of the existing decrees, the DOJ statement actually modified a decades-old industry standard while trampling on the rights of creators and rights owners.

Instead of explaining how full-licensing doesn’t violate copyright law, the statement focuses on the “immediate access” to works that would be threatened by fractional licensing. The DOJ repeatedly warns of the consequences of having to secure licenses from multiple owners or authors, claiming it will result in licensees “simply turning off the music.” But the statement seems to confuse the original intent of the decrees with the creation of a system that guarantees immediate access to any song a licensee might want to play. While licensing efficiency is important, respect for the rights of all those responsible for creating a work shouldn’t be discarded for a haphazard licensing mechanism.

The statement goes on to argue that fractional licensing would force licensees and music users to carefully track song ownership and rights information to avoid potential infringement, a process that would be nearly impossible due to the lack of a reliable source of ownership data. But as Register Pallante explains in her response to a request for the Copyright Office’s insight on the licensing of jointly-owned works, full-licensing would impose a much more extreme burden on PROs that would have to ascertain, song-by-song for millions of songs, whether they have the right to grant a full license. These logistical challenges would surely result in higher operational costs that would have to be recouped through higher commissions to PRO members.

In addition to logistical problems, Register Pallante warns of the legal complications that would inevitably result from a full-licensing scheme: “Such an approach would seemingly vitiate important principles of copyright law, interfere with creative collaborations among songwriters, negate private contracts, and impermissibly expand the reach of the consent decrees.”

Songwriters and PROs Strike Back

Not surprisingly, the songwriting community was outraged by the DOJ’s disregard for artists’ rights and criticized the statement for its betrayal of long-accepted and practical licensing mechanisms. Just weeks after the statement was issued, the Songwriters of North America (SONA) – an advocacy group founded by and made up of artists and composers – sued the DOJ, claiming the agency overstepped its authority and that its ruling violated the property rights of songwriters by potentially invalidating private contracts between co-authors and collaborators.

PROs also joined forces to fight the Justice Department’s interpretation of the consent decrees, with ASCAP pursuing legislative reform while BMI took legal action to challenge full-licensing in federal court. In a pre-motion letter to Judge Louis Stanton, BMI warns of the disastrous consequences of the DOJ’s interpretation and urges the court to determine that its consent decree allows for the long-standing industry practice of fractional licensing.

On September 16th, Judge Stanton issued an opinion and declaratory judgment unequivocally rejecting the Justice Department’s interpretation of BMI’s consent decree. The opinion makes clear that “nothing in the consent decree gives support to the Division’s views,” and that because infringements and remedies are not addressed, the decree “neither bars fractional licensing nor requires full-work licensing.”

The decision was celebrated by songwriters and PROs as a sensible and informed response to the DOJ’s misguided understanding of the decrees. But while Judge Stanton’s order is now the controlling interpretation of the BMI decree, the Justice Department may appeal the decision, and it’s likely that music licensees will push back with their own lawsuits and legislative efforts. Regardless of future developments, the unprecedented unified effort of PROs, mobilization of artist organizations such as SONA, and clear message by an informed federal court bode well for the protection of creators’ rights and the preservation of sound copyright law.

Categories
Copyright Internet Uncategorized

Professors Mislead FCC on Basic Copyright Law

U.S. Capitol buildingIn a letter submitted to the FCC late last week defending the Commission’s deeply flawed set-top box proposal,[1] a group of professors make an incredible claim: Everyone is perfectly free to distribute copyrighted works online however they please. No license? No problem! According to these professors, many of whom teach copyright law, copyright owners have no distribution right in cyberspace. If you think this sounds wrong, you’re right! This claim sounds ridiculous because it is ridiculous, and it’s simply amazing—and troubling—that professors would mislead the FCC in this way.

The professors argue that a copyright owner’s “right to distribute encompasses the distribution of physical copies of a work, not electronic transmissions.” In support, they cite no case law whatsoever. There’s a good reason for this: None exists. The reality is that every single court that has ever considered this argument on the merits has rejected it. Time and again, this argument has been summarily dismissed by the courts. As the Nimmer on Copyright treatise puts it: “No court has held to the contrary on this issue[.]” Yet, the professors present this to the FCC as an accurate description of the law, with no equivocation whatsoever.

In their defense, one can make a plausible argument that this follows from certain parts of the Copyright Act. And the professors do in fact cite these parts. They quote Section 106(3), which gives copyright owners the exclusive right “to distribute copies . . . of the copyrighted work to the public,” and Section 101, which says that “copies are material objects.” At first blush, one could question how it’s possible to distribute a “material object” online. Indeed, many academics have questioned this very thing. For example, one professor wrote in 2001 that “transmitting copyrightable works over a computer network such as the Internet do[es] not involve any transfer of such material objects.” On this view, transfers over digital networks are not distributions of material objects.

While some academics may insist that this is the only way to interpret the Copyright Act, the reality is that the courts have uniformly interpreted it differently. Many courts have explicitly rejected the textual argument that there are no digital distributions, and many others have just assumed that such digital distribution rights exist. As the district court in Arista Records v. Greubel noted in 2006, despite “scholarly articles reflecting debate over the scope” of the distribution right, “the courts have not hesitated to find copyright infringement by distribution in cases of file-sharing or electronic transmission of copyrighted works.” The district court then cited opinions by the Supreme Court in New York Times v. Tasini, the Seventh Circuit in In re Aimster, and the Ninth Circuit in A&M Records v. Napster that applied the distribution right in cyberspace without even flinching.

Perhaps the most in-depth analysis of the issue comes from London-Sire v. Doe, where District Judge Nancy Gertner held in 2008 that it “makes no difference that the distribution occurs electronically[.]” Judge Gertner reasoned that “[w]hat matters in the marketplace is not whether a material object ‘changes hands,’ but whether, when the transaction is completed, the distributee has a material object.” Even though the “distributee” has a different “material object”—the hard drive or other storage media where the file resides—Judge Gertner held that a digital distribution has taken place nonetheless. She warned that “an overly literal definition of ‘material object’ . . . ignores the phrase’s purpose in the copyright statutes.”

Other courts have adopted this reasoning. For example, the district court in Capitol Records v. ReDigi cited London-Sire approvingly: “[T]he Court agrees that ‘[a]n electronic file transfer is plainly within the sort of transaction that § 106(3) was intended to reach [and] … fit[s] within the definition of ‘distribution’ of a phonorecord.’” The court then held that the distribution right exists in cyberspace: “Accordingly, the court concludes that . . . the sale of digital music files on ReDigi’s website infringes Capitol’s exclusive right of distribution.” Likewise, just last year, the district court in BMG v. Cox relied on London-Sire in holding that, “[n]ot only can electronic files be ‘material objects,’ but transferring files using a BitTorrent protocol satisfies the transactional element of distribution.”

The fact is that courts have not wavered in finding that the distribution right applies online. As one district court said in 2012, “[i]n the electronic context, copies may be distributed electronically.” The point is so well-settled that it defies logic to claim otherwise, and it’s certainly consistent with other parts of the Copyright Act. For instance, Section 506(a)(1)(B) makes it a crime to “willfully” infringe by “distribution, including by electronic means[.]” And Section 115(c)(3)(A) creates a compulsory license “to distribute . . . by means of a digital transmission[.]” If digital distributions didn’t implicate the public distribution right, it wouldn’t be a crime to distribute “by electronic means,” and one wouldn’t need a license to distribute “by means of a digital transmission.”

To claim that the “right to distribute encompasses the distribution of physical copies of a work, not electronic transmissions,” as the professors do, is simply wrong. There’s certainly an argument that can be made, but it’s not an accurate description of the law—which is how the professors present it. Everyone knows the distribution right exists online, and it’s industry practice to license digital distributions. Do you think iTunes and Amazon pay for distribution licenses because they just feel like it? It’s disturbing that professors would state without any qualification that electronic transmissions don’t implicate the distribution rights of copyright owners. And if they’re willing to say that, it makes you wonder what else they’re willing to say.

[1] My colleagues and I have written extensively about the copyright concerns with the FCC’s set-top box proposal. See, for example, here, here, here, and here. The FCC now claims that a revised version of its proposal addresses these concerns, but the new language has not yet been released. Despite this fact, these professors claim that the yet-to-be-released proposal “does not interfere with any legitimate copyright interests of programmers, and that it is within the Commission’s authority to implement.” We’ll save our analysis of the new proposal for when the text itself is made available.

Categories
Biotech Economic Study Patent Licensing Uncategorized

UNITAID’s Request for Suggestions on Breaking Down IP Barriers Ignores Harmful Patent Delay

dictionary entry for the word "innovate"Last month, global health initiative UNITAID launched an appeal for suggestions on breaking down barriers that frustrate the progress of public health. UNITAID is a multilateral partnership hosted by the World Health Organization whose mission is to develop systematic approaches to identifying challenges in the treatment of devastating diseases such as HIV, TB, and malaria. The call for suggestions comes as UNITAID launches a renewed effort to improve access to health products for “the needy and vulnerable.”

Unfortunately, UNITAID’s request takes a narrow view of the obstacles to a better public health system, choosing to blame intellectual property and patents for blocking access to life-saving medicines. The call for suggestions posits that while patents reward innovation, they also hamper access to drugs by limiting competition. After promoting several controversial mechanisms that would strip patent owners of their intellectual property rights, UNITAID urges responders to submit ideas that would further weaken patent systems around the world.

In response to UNITAID’s request, CPIP’s Mark Schultz and Kevin Madigan submitted comments that call attention to a serious and underappreciated problem detailed in the forthcoming white paper, The Long Wait for Innovation: The Global Patent Pendency Problem. Excessive patent application processing delays and inefficient patent systems are obstructing the distribution of ground-breaking new drugs by deterring both home-grown startups and foreign companies from investing in innovation. The following comments stress that effective property rights are critical to delivering health products to patients and that without a competent patent system, the market for medical innovations cannot function.

High-Level Suggestions to UNITAID on Intellectual Property Rights
Mark Schultz & Kevin Madigan[1]
September 15, 2016

We submit these comments in response to UNITAID’s call for high-level suggestions on intellectual property rights (IPRs). UNITAID’s request for suggestions observes that IPRs can pose a barrier to health products reaching “the needy and vulnerable.” However, the suggestions received will be incomplete if they fail to account for how effective IPRs are critical to delivering health products to patients.

An effective IPR system is essential to a well-functioning market in health products. It’s not just that patents secure investment in inventing a new cure; they also secure the investment made to bring that cure to patients in each market. A country’s ineffective IPR system can deter companies from making the substantial investments necessary to build a market in that country—these investments can include regulatory compliance, securing and negotiating reimbursement, building a distribution system, and educating health care providers about the benefits and administration of the drug. In fact, recent studies have shown a link between weak patent protection and delayed availability of drugs.[2]

In a forthcoming white paper for the Center for the Protection of Intellectual Property at Antonin Scalia Law School, The Long Wait for Innovation: The Global Patent Pendency Problem, we illuminate an under-appreciated obstacle to bringing new drugs to patients. (The paper will be available soon at http://cip2.gmu.edu.) While debates and headlines focus on issues of patentable subject matter and exclusive property rights, the problem of patent pendency has been largely overlooked and under-examined. The reality is that in many countries, it simply takes too long to get a patent, thus deterring both home-grown startups and foreign companies from creating or even distributing ground-breaking new drugs.

Graph: Figure 1: Average Granted Pharmaceutical Application Age for Selected Countries 2011-2015 (in years). Argentina, 3.04. China, 3.1. USA, 3.8. Australia, 3.97. Korea, 4.37. Japan, 6.33. EPO, 6.51. India, 6.73. Egypt, 8.14. Brazil, 13.01. Thailand, 14.91.

As Figure 1 shows, our study found that in 2011-2015, average time from application to grant for pharmaceutical patents ranged from Argentina, at 3.04 years, to Thailand at 14.91 years. The averages mask even worse problems—in 2015, Thailand issued 10 pharmaceutical patents with less than a year of term left. Five of them had 3 months or less of term left.

A long patent pendency period can deter a drug-maker from entering a market. Until a patent grant confirms that it can protect its investment in building a market, it is less likely to enter the market. If a company takes a wait-and-see approach, then consumers are in for a very long wait in countries such as Thailand and Brazil.

Causes of patent delay include a number of factors, many of which simply call for good governance. They include a simple lack of patent examiners and duplication of work already done by other capable patent offices. Our study suggests accelerated examination procedures, hiring more and better-qualified examiners, and work-sharing and recognition programs.

UNITAID is to be lauded for its innovative, market-based solutions, but well-functioning markets are founded on effective property rights. Without a competent patent system, the market for medical innovations cannot function. There should be a functioning market before one seeks to identify and correct market failures.

[1] Mark Schultz is Co-Founder and Senior Scholar at the Center for the Protection of Intellectual Property (CPIP) at Antonin Scalia Law School at George Mason University. Kevin Madigan is Legal Fellow at CPIP. The views of the authors are their own and not those of CPIP or GMU.

[2] Iain M. Cockburn, Jean O. Lanjouw, & Mark Schankerman, Patents and the Global Diffusion of New Drugs, NBER Working Paper 20492, http://www.nber.org/papers/w20492 (2014); Ernst R. Berndt & Iain M. Cockburn, The Hidden Cost of Low Prices: Limited Access to New Drugs in India, 33 Health Affairs 1567 (2014); Joan-Ramon Borrell, Patents and the Faster Introduction of New Drugs in Developing Countries, 12 Applied Econ. Letters 379 (2005).

 

Categories
Copyright Infringement Trademarks Uncategorized

Criminal Copyright Infringement is Crime of "Moral Turpitude"

Cross-posted from the Law Theories blog.

sheet musicThis past Friday, the Board of Immigration Appeals held that criminal copyright infringement constitutes a “crime involving moral turpitude” under immigration law. The Board reasoned that criminal copyright infringement is inherently immoral because it involves the willful theft of property and causes harm to both the copyright owner and society.

The respondent, Raul Zaragoza-Vaquero, was indicted in 2012 for selling illicit CDs of popular artists including Justin Bieber, Lady Gaga, and Jennifer Lopez over a five-year period. After a three-day trial, the jury found Zaragoza-Vaquero guilty of criminal copyright infringement under Section 506(a)(1)(A), which makes it a crime to “willfully” infringe “for purposes of commercial advantage or private financial gain.” The crime was a felony under Section 2319(b)(1) because it involved the “reproduction or distribution, . . . during any 180-day period, of at least 10 copies or phonorecords, of 1 or more copyrighted works, which have a total retail value of more than $2,500.” Zaragoza-Vaquero was sentenced to 33 months in prison and ordered to pay $36,000 in restitution.

Under immigration law, an alien who has been ordered removed from the United States may ask the Attorney General to cancel the removal order. However, there is an exception for “any alien convicted of . . . a crime involving moral turpitude,” in which case the Attorney General is powerless to cancel the removal. Zaragoza-Vaquero was ordered removed in early 2015, and the Immigration Judge pretermitted his application to have the removal order cancelled by the Attorney General. The Immigration Judge held that criminal copyright infringement is a “crime involving moral turpitude,” thus making Zaragoza-Vaquero ineligible for such cancellation. On appeal, the Board agreed, rejecting Zaragoza-Vaquero’s bid to have the Attorney General consider his removal.

Even though crimes of “moral turpitude” have been removable offenses since 1891, Congress has never defined what the phrase means nor listed the crimes that qualify. That job instead has been left to immigration judges and the federal courts. In 1951, the U.S. Supreme Court noted that “crimes in which fraud was an ingredient have always been regarded as involving moral turpitude.” Indeed, many property crimes have been held to involve “moral turpitude” when committed willfully because there is the criminal intent to defraud the property owner of its rights. “Moral turpitude” has thus been found to exist in numerous crimes against property, including arson, burglary, embezzlement, extortion, blackmail, bribery, false pretenses, forgery, larceny, receiving or transporting stolen goods, and check or credit card fraud.

Crimes against intellectual property have likewise been found to involve “moral turpitude.” For example, the Ninth Circuit held in 2008 that the use of counterfeit marks, in violation of state law, is “a crime involving moral turpitude because it is an inherently fraudulent crime.” The Ninth Circuit reasoned: “Either an innocent purchaser is tricked into buying a fake item; or even if the purchaser knows the item is counterfeit, the owner of the mark has been robbed of its value. The crime is really a species of theft. . . . The commission of the crime necessarily defrauds the owner of the mark, or an innocent purchaser of the counterfeit items, or both.”

Similarly, the Board of Immigration Appeals held in 2007 that trafficking in counterfeit goods, in violation of federal law, is a crime of “moral turpitude.” The Board reasoned that the conviction required the federal prosecutor to prove that the defendant “intentionally trafficked” and “knowingly used a spurious trademark that was likely to confuse or deceive others.” Even though the statute did not require proof that the defendant had the specific intent to defraud, the Board held that such trafficking involved “moral turpitude” because it is “inherently immoral” to willfully exploit the property owner and the public.

Turning back to Zaragoza-Vaquero, the Board defined “moral turpitude” as “conduct that shocks the public conscience as being inherently base, vile, or depraved, and contrary to accepted rules of morality and the duties owed between persons or to society in general.” The Board then noted that trafficking in counterfeit goods has been held to be a crime of “moral turpitude” because it involves (1) “theft of someone else’s property,” (2) “proof of intent to traffic,” (3) “societal harm,” and (4) “dishonest dealing and deliberate exploitation of the public and the mark owner.”

Reasoning by analogy to these trafficking cases, the Board ultimately held that criminal copyright infringement “must also be a crime involving moral turpitude.” Criminal copyright infringement statutes “were enacted to protect a form of intellectual property,” and offenses “must be committed willfully, meaning that a defendant must voluntarily and intentionally violate a known legal duty not to infringe a copyright.” The Board noted that criminal copyright infringement “also involves significant societal harm,” since “piracy” has “harmed the film and recording industries, including actors, artists, and musicians.” It pointed to a recent report by the Government Accountability Office, which found that “intellectual property crimes cause negative effects on health, safety, and lost revenue.”

The Board’s holding that criminal copyright infringement is a crime of “moral turpitude” thus extends the long line of cases finding that crimes against property are inherently immoral when the criminal intentionally defrauds the owner of its rights. While many will surely balk at the suggestion that there’s anything immoral about criminal copyright infringement, I think the Board reached the right conclusion—both in the moral and legal sense. A defendant such as Zaragoza-Vaquero, who for years willfully infringed for profit, has acted in a way that shocks the conscience and has shown a conscious disregard for the rights of others. And while prosecutors need not show the specific intent to defraud in securing such a conviction, the element of willfulness suffices to establish the intent to defraud the copyright owner of its property.

Categories
Innovation Internet Patent Law Patentability Requirements Software Patent Uncategorized

Federal Circuit Again Finds Computer-Implemented Invention Patent Eligible

dictionary entry for the word "innovate"In Tuesday’s McRO v. Bandai decision, the Federal Circuit has once again reversed a district court’s determination that a computer-implemented invention (aka “software patent”) was not patent eligible under Section 101 of the Patent Act. This continues the Federal Circuit’s recent trend of clarifying the Supreme Court’s two-step patent-eligibility test under Mayo and Alice. The first step asks whether the invention is “directed to” a patent-ineligible concept, such as an abstract idea. If so, the second step then asks whether there is an “inventive concept” that transforms the concept into a patent-eligible invention. While the Supreme Court gave little guidance on what “directed to” and “inventive concept” mean in practice, the Federal Circuit’s recent decisions have made the Mayo-Alice test far less abstract—rather ironic, given that the test itself assesses abstractness.

This past May, the Federal Circuit held in Enfish that, in the software context, the “directed to” inquiry looks at whether “the plain focus of the claims is on an improvement to computer functionality itself.” Since the database claims at issue focused on specific improvements to computer capabilities, they were not “directed to” a patent-ineligible concept under Section 101. Two months later in Bascom, the Federal Circuit stated that an “inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces.” And even though each software claim, related to filtering content on the internet, was “known in the art” when taken individually, the Federal Circuit held that the claims, in combination, were patent eligible because they transformed “the abstract idea of filtering content into a particular, practical application of that abstract idea.”

Adding to this recent line of cases upholding the patent-eligibility of computer-implemented inventions, the Federal Circuit’s new opinion in McRO v. Bandai sheds even more light on the Section 101 analysis under the Mayo-Alice test. The invention at issue involved automated lip-syncing for computer-generated animation, which the district court held was drafted too broadly to be patent eligible. The Federal Circuit reversed, noting that courts “must look to the claims as an ordered combination,” even under the first step of the Mayo-Alice test. The Court of Appeals thus found that the proper analytical centerpiece was “whether the claims in these patents focus on a specific means or method that improves the relevant technology.” Since the invention constituted a “combined order of specific rules that renders information into a specific format that is then used and applied to create desired results,” the Federal Circuit held it patent eligible under Section 101.

Several commentators have praised the Federal Circuit’s decision. Bob Sachs, who specializes in patentable subject matter as a partner at Fenwick & West, points out that the Federal Circuit, for the first time, has used preemption to find that the invention was not “directed to” patent-ineligible subject matter. The Federal Circuit here looked at preemption as part of the first step of the Mayo-Alice test, finding it relevant to whether the invention was “directed to” a patent-ineligible concept in the first place. As Sachs explains, the Federal Circuit “confirms Enfish’s holding that the improvement provided by the specific claim limitations can be considered” under the first step of the Mayo-Alice test. Moreover, Sachs notes that the “panel here makes clear that a demonstration of meaningful non-preemption is sufficient to establish that a claim is not ‘directed to’ an abstract idea, and thus eligible at step 1.”

Other observers, including Erich Andersen, VP and Deputy General Counsel at Microsoft, and Gene Quinn of IPWatchdog, have applauded the Federal Circuit for making the patent-eligibility analysis even more concrete in light of the Supreme Court’s rather abstract abstractness test in Mayo and Alice. If anything, the Federal Circuit here has not only built upon its prior precedents in Enfish and Bascom, it has tied them together by explaining that ordered combinations are relevant to both the first and second steps of the Mayo-Alice test. In the end, the patent eligibility of a computer-implemented invention appears far more settled than ever before–a great result for inventors of so-called “software patents.” The Federal Circuit’s decision is certainly a far cry from the supposed death-knell for “software patents” predicted by several commentators after the Supreme Court’s opinion in Alice.

Categories
Copyright Copyright Licensing Copyright Theory Infringement International Law Internet Legislation Uncategorized WIPO

European Union Draws a Line on Infringing Hyperlinks

Cross-posted from the Mister Copyright blog.

a gavel lying on a table in front of booksLast week, the European Court of Justice—the judicial authority of the European Union—issued an anticipated decision in the Sanoma hyperlinking case, declaring that commercial linking with knowledge of unauthorized content constitutes copyright infringement. The opinion comes after years of similar cases in Europe stirred debate over whether linking to pirated works was a ‘communication to the public’ and therefore infringing, and provides a sensible test that protects the works of authors and creators while ensuring the internet remains a bastion of free speech.

Sanoma involved the popular Dutch news and gossip site GeenStijl, which ran an article in 2011 that included links to an Australian website where copyrighted Playboy magazine photos were made available. The photos were published on the Australian website without the consent of Sanoma, Playboy’s editor and copyright owner of the photos at issues, but taken down after the site was notified of their infringing nature. Despite similar notifications, GeenStijl refused to remove the hyperlinks and actually provided links to another website hosting the unauthorized photos after the Australian website took them down.

Sanoma brought a copyright infringement claim against GS Media, which operates the GeenStijl website, and the Supreme Court of the Netherlands sought a preliminary ruling from the European Court of Justice on whether hyperlinks represent the communication of a work to the public. According to an earlier EU directive, any communication to the public of works protected by copyright must be authorized by the copyright owner. Due to the ubiquity of links and hyperlinks on the Internet, a ruling classifying them as communications to the public would have major ramifications for anyone linking to unauthorized content.

In its judgment, the European Court of Justice found that the concept of ‘communication to the public’ requires individual assessment and laid out the following three factors that must be considered when determining whether a link or hyperlink qualifies.

1) The deliberate nature of the intervention – According to the Court, “the user makes an act of communication when it intervenes, in full knowledge of the consequences of its actions, in order to give access to a protected work to its customers.”
2) The concept of the ‘public’ covers an indeterminate number of potential viewers and implies a large number of people.
3) The profit-making nature of a communication to the public – The Court explains that when hyperlinks are posted for profit, “it may be expected that the person who posted such a link should carry out the checks necessary to ensure that the work concerned is not illegally published.”

Applying these criteria to Sanoma, the Court found that because GS Media runs a commercial website that makes money from advertising, it is undisputed that they posted the hyperlinks for profit, and that it is also undisputed that Sanoma had not authorized the publication of the photos. It also found that because they were notified by Sanoma and continued to repost links after the original source website took down the content, GS Media was aware of the infringing nature of the photos and “cannot, therefore, rebut the presumption that it posted those links in full knowledge of the illegal nature of that publication.” The Court concluded that by posting the links, GS Media therefor effected a ‘communication to the public.’

The Court goes on to detail its desire to maintain a fair balance between the interest of copyright owners and authors and the protection of the interests and fundamental rights of Internet users, “in particular their freedom of expression and of information, as well as the general interest.” After providing the criteria for assessing whether a link qualifies as a communication to the public, the opinion emphasizes the important role hyperlinks play in the exchange and free flow of information over the internet, and clarifies that linking—even to unauthorized content—is not a communication to the public if there is no profit motive or knowledge of the infringing nature of the linked-to works. Even so, it’s important to note that not-for-profit hyperlinking may still be considered a communication to the public if the person posting the link knew or should have reasonably known that the content was posted without authorization.

Perhaps most surprising about the Court’s decree is the relative approval by both copyright owners and supporters of the rights of those posting links. While it speaks to the reasonable approach the Court has taken in determining what qualifies as a communication to the public, it may also represent a hesitation to condemn or praise the order due to a significant ambiguity. It’s not entirely clear who carries the evidentiary burden of proving whether an individual knew or should have reasonably known certain content was posted on the Internet without authorization. If copyright owners and authors are forced to prove a user knew or should have known content was unauthorized every time they attempt to remove links that can appear online incessantly, it could render the new directives ineffectual in protecting creative works.

Regardless of the uncertainly surrounding this burden of proof, the current test seems to strike a balance that holds commercial websites more accountable, while allowing for some flexibility for the general public. With debates over the effectiveness of notice and takedown intensifying in the United States, the EU’s decision on communications to the public should be recognized as workable approach to dealing with infringing hyperlinks. As the United States Copyright Office admits in its 2016 study on the making available right, jurisprudence in the US regarding offering access to content hosted elsewhere on the Internet through hyperlinking is less developed as some foreign jurisdictions. But the study acknowledges the progress made in the EU, and emphasizes the need to include ‘offers of access’ in the crucial making available right.

Despite semantic differences, the EU and the US are both moving towards systems that will impose greater accountability for posting links to unauthorized works. The EU’s directive makes clear that commercial hyperlinking to unauthorized content is indeed a communication to the public and therefor copyright infringement, while ensuring that the free flow of information through general public linking will not be threatened and the Internet will remain unbroken. It’s an approach that represents the greater goals of copyright law around the world, and other jurisdictions should follow the lead of the EU when crafting copyright policies that address the intricacies of the Internet.

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Copyright Patent Law Trade Secrets Trademarks Uncategorized

Scalia Law Alums Help Arts & Entertainment Advocacy Clinic Draft Influential Amicus Brief

jennifer-atkins
Jennifer Atkins of Cloudigy Law

Last spring, the Arts & Entertainment Advocacy Clinic at Scalia Law School filed an amicus brief on behalf of intellectual property law scholars in the Fox News v. TVEyes copyright infringement case. Assisting the students on the project was practicing IP attorney and Scalia Law alum Jennifer Atkins, who volunteered her time—and the time of her firm, Cloudigy Law—to work closely with the Clinic to craft a professional and influential brief.

Cloudigy Law is a boutique intellectual property law firm located in Tysons Corner, Virginia, that was founded by Antigone Peyton, another Scalia Law alum. Expanding the firm’s reach into all areas of IP law, Antigone recruited other Scalia Law alums including Clyde Findley and Jennifer Atkins to build a “cloud-based” intellectual property and technology firm that stresses client communication and offers an innovative service model that big law firms can’t match. Cloudigy’s attorneys stay on top of current developments in IP law through their Decoding IP blog, which includes podcast discussions of the issues important to their clients.

As a result of its unique approach and dedication to the client, Cloudigy has grown to eleven attorneys and technologists who offer high quality strategic advice to help identify and protect IP and realize its value. The firm uses sophisticated enterprise collaboration technology to effectively share knowledge and deadlines within its litigation team and with its clients. Cloudigy values the relationships it has built with smaller clients, and it has adapted and responded to changes in the legal services market to suit their needs.

Jennifer got involved with the Arts & Entertainment Advocacy Clinic through her Scalia Law alumni connections, partnering with Clinic Director and CPIP Senior Scholar Sandra Aistars and meeting with students to discuss project strategy. Because of her background as an appellate clerk for the Honorable E. Grady Jolly at the United States Court of Appeals for the Fifth Circuit and her extensive appellate practice experience as a partner with Kirkland & Ellis, Jennifer was a perfect match for the Clinic—according to Professor Aistars, Jennifer was an “ideal and impressive partner.”

Emphasizing the role of an amicus brief in litigation, Jennifer encouraged the students to assume perspectives different than those of the parties and to utilize effective writing techniques to produce an outstanding brief that would be useful to the court. As the students worked through drafts, Jennifer made valuable suggestions that helped them get at the underlying policy issues and flesh out a persuasive argument. Working alongside a seasoned professional through the amicus brief process was a truly invaluable experience for the Clinic students and something that they’ll draw on as they begin their legal careers. Jennifer also expressed her appreciation for the opportunity to guide the students through the process, saying it was a “great way for us to give back to our law school.”

As the Arts & Entertainment Advocacy Clinic begins another semester of work, connections with Scalia Law alums and IP professionals* will continue to provide the students with unique opportunities and to foster the mutually beneficial relationships that represent Scalia Law’s esteemed IP law program.

*Lawyers and IP professionals who would like the Clinic to weigh in on a pro-artist copyright case or who would like to explore other volunteer opportunities with the Arts & Entertainment Advocacy Clinic may contact Sandra Aistars at saistars@gmu.edu.