Copyright Law Blog: Exclusive Rights

Ninth Circuit overturns 68 year old precedent defining prevailing party under the Copyright Act

Posted by admin on 2 July 2009 – 9:00 am

Filed under: attorneys' fees

Cadkin v. Loose, 2009 WL 1813263 (9th Cir. 2009).

Plaintiff brought a complaint against a Defendant for, inter alia, copyright infringement. After extensive settlement discussions, an amended complaint, and a denied motion to remand, the Defendant moved to dismiss the complaint without leave to amend. The Plaintiff opposed the motion and lodged notice of voluntary dismissal of its claim under FRCP 41(a)(2). The Central District of California granted voluntary dismissal.

17 U.S.C. 505 of the Copyright Act states that a court may award reasonable attorneys’ fees to the “prevailing party.” The district court found that the Defendant was a prevailing party even though the complaint was dismissed without prejudice and the Plaintiff was free to refile. The Court relied on the Ninth Circuit’s World War II era precedence, Corcoran v. Columbia Broadcasting System, Inc., 121 F.2d 575, 576 (9th Cir.1941).

On appeal, the Ninth Circuit found (Fletcher, Gould, Fisher writing) that the sixty-eight year old case was no longer good law. The Circuit found that for a party to be prevailing, there must be a “material alteration of the legal relationship of the parties.”:

The Supreme Court, in the context of the Fair Housing Amendments Act (FHAA), has since held prevailing party status turns on whether there has been a “material alteration of the legal relationship of the parties,” Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 604, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001) (internal quotation marks omitted), and we have held dismissal without prejudice does not alter the legal relationship of parties for the purposes of entitlement to attorney’s fees under a comparable fee shifting statute, see Oscar v. Alaska Dep’t of Educ. & Early Dev., 541 F.3d 978, 981 (9th Cir.2008).

We conclude Corcoran is clearly irreconcilable with Buckhannon and no longer good law. We therefore overrule Corcoran and hold Buckhannon’s material alteration test applies to § 505 of the Copyright Act. See Miller v. Gammie, 335 F.3d 889, 893 (9th Cir.2003) (en banc) (holding thee-judge panel can reject prior panel opinion that is “clearly irreconcilable” with intervening Supreme Court authority). Because the plaintiffs in this lawsuit remained free to refile their copyright claims against the defendants in federal court following their voluntary dismissal of the complaint, we hold the defendants are not prevailing parties and thus not entitled to the attorney’s fees the district court awarded them.

Reasons Affecting Frequency of File-Sharing among Finnish Internet Users

Posted by admin on 30 June 2009 – 9:15 am

Filed under: Academia

Ever wonder how socio-demographic variables, moral condemnation and legal knowledge correlate with the likelihood that a person is an active P2P user in Finland? Professors Herkko A. Hietanen, of the Helsinki Institute for Information Technology, and Pekka Räsänen, of the University of Turku, have posted an interesting study at SSRN that uses main-effect logistic regression models to answer just this question:

The article examines file-sharing behavior on illegal file-sharing services. We build on an Internet survey (N=6,083) we conducted to Finnish users in 2007. Using the survey data we examine how the respondents’ socio-demographic characteristics associate the file-sharing. We also examine whether knowledge of law has any impact on file-sharing behavior. We find that the frequent and the infrequent P2P-users share several common attributes with each other. Frequent users are clearly more often male than female, are younger, and possess lower educational qualifications than infrequent users. The results also indicate that the people who are active in P2P-users have weaker legal knowledge about digital copyright issues. The findings and the use of the survey method carry implications for legal and social science scholar work that examines the illegal file-sharing phenomenon.

Supreme Court docket roundup of copyright cases

Posted by admin on 30 June 2009 – 9:00 am

Filed under: supreme court

There was quite a bit of movement over the past few weeks on many of the Supreme Court cases that we’ve discussed. I thought it was time for a quick update.

Cable News Network, Inc., et al. v. CSC Holdings, Inc., et al.

The Supreme Court denied cert yesterday following on the heels of the Department of Justice’s brief arguing that the case wasn’t a suitable vehicle for review.

Reed Elsevier v. Muchnick

I’ve completed the document collection thanks to the ABA, which hosts merits and amicus briefs for all pending Supreme Court cases. The new documents are:

Costco Wholesale Corporation v. Omega, S.A

There were a series of amicus briefs filed in Costco before the deadline, none of which were from organized labor. So, it shows you what I know. The briefs are courtesy of Public Knowledge.

Free Enterprise Fund and Beckstead and Watts, LLP, Petitioners v. Public Company Accounting Oversight Board, et al.

Petitioner’s brief is due on July, 27 2009. Anyone who is following the Appointments Clause challenge to the Copyright Royalty Board, or considering potential ramifications for a challenge to the Register of Copyrights should be anxiously awaiting the filing from the Solicitor General. The DOJ has a tough sell in Free Enterprise Fund, given that the appointments at issue were made by a group of people, instead of an individual. At the same time, the case will likely establish a new standard of review for Appointments Clause challenges. It’ll be interesting to see what standard the DOJ suggests, both for the case at bar, and future Appointments Clause challenges.

On whether a work merits copyright protection is a question of law or fact

Posted by admin on 29 June 2009 – 9:00 am

Filed under: Originality, Useful Article

Jonathan Browning, Inc. v. Venetian Casino Resort LLC, 2009 WL 1764652 (N.D. Cal. 2009)

There was an interesting decision last week in the Northern District of California over the question of whether a work warrants copyright protection is of one of law, appropriate for a judge, or fact, appropriate for a jury. The Plaintiff brought suit for among other things infringement of its copyrights in two lighting fixtures. The Defendant challenged whether the works merited protection. An examiner at the Copyright Office had rejected registration of the fixtures finding that they were “‘useful articles’ which do not contain any separable features that are copyrightable.” Post rejection, the Plaintiff submitted hand drawings of the light fixtures to the Copyright Office that were registered.

At issue on this motion was a request by the Plaintiff to strike an expert report and to preclude the Defendants from offering the expert’s testimony in opposition to Plaintiff’s motion for summary judgment or at trial. The Plaintiff objected to the testimony on the grounds that the expert was set to speak about a pure issue of law, whether a work merits copyright protection. As a pure question of law, the Plaintiff argued, the issue must be reserved for the judge to decide as a matter of law, sans expert testimony. (The Defendant, perhaps as a tactical decision, elected not to challenge the characterization of the issue as a question of law.)

The Court agreed that the question of whether a work is copyrightable is a question of law, citing Pivot Point International, Inc. v. Charlene Products, Inc., 932 F.Supp. 220, 225 (N.D.Ill.1996) (holding that there is no need for expert testimony on the subject of what constitutes copyrightable subject matter as the issue is determined by the judge, not the jury). The Court excluded the expert testimony in regards to the whether specific light fixtures at issue warranted copyright protection, but allowed the expert’s testimony on the general practices of the Copyright Office and history of design protection:

The subjects of Mr. Oman’s testimony, as represented in his report, are: (1) the practices and procedures of the Copyright Office; (2) the history of design protection in the United States; and (3) the decisions of the Copyright Office as to the light fixtures at issue here. To the extent Mr. Oman wishes to testify generally about the practices and procedures of the U.S. Copyright Office regarding the registration of useful articles, or the procedures for special handling requests, or the history of design protection in the United States, Mr. Oman is entitled to so testify. However, to the extent Mr. Oman is proffered to testify about the copyrightability of the specific light fixtures in this matter or the particular decision on those fixtures, that testimony does indeed pertain to an ultimate issue of law to be decided by the Court, and not by the jury.

Notes:

Patry on Copyright takes the position that the question of whether a work is a useful article, that doesn’t contain independent features that merit copyright protection, is a question of fact that may be resolved by a jury with expert testimony. Citation to Poe v. Missing Persons, 745 F.2d 1238 (9th Cir. 1984); Kikker 5150 v. Kikker 5150 USA, LLC, 2004 WL 1837926 (N.D. Cal. 2004). Patry at 3:147. More generally, the Treatise states that the “vast majority” of courts have held that “creativity is a question of fact.” Patry at 3:39.

Brazil, Paraguay & Ecuador’s proposed treaty for access to works for the visually impaired

Posted by admin on 25 June 2009 – 9:00 am

Filed under: WIPO

Late last month, the Standing Committee on Copyright and Related Rights (SCCR), WIPO’s “top copyright negotiating forum,” agreed to continue working towards an international treaty that would facilitate access to works for the visually impaired and reading-disabled. After the forum, the United States and other Group B nations garnered controversy for reportedly seeking to block further negotiations.

I thought it’d be worthwhile to spend a day examining the treaty proposal submitted by Brazil, Paraguay and Ecuador. The proposal is aggressive, requiring that signatories implement compulsory licensing regimes and that WIPO play an active role as a centralized record keeper.

The basics

The proposal suggests mandating an exception from liability for copyright infringement for people to make an accessible format of a work or database and distribute it to the visually impaired. The treaty would deny content owners the ability to contract around the right or prohibit circumvention of DRM. The proposal also would allow works for the visually impaired to be imported and exported without constraints.

The exception would only be available for works that aren’t “reasonably available” in a format enabling access for the visually impaired. In addition, for signatories with developed economies, the exception would apply unless the accessible versions were available at a similar or lower price than the price the works are regularly sold at. For signatories with developing economies, the exception would apply unless accessible versions of the works are “affordable, taking into account disparities of incomes for persons who are visually impaired.”

A continued role for WIPO?

The treaty would require that “reasonable efforts” be made to provide notice to copyright owners if a person elected to reproduce or distribute the work for the visually impaired. The notice would include information regarding the right of copyright owners to obtain remuneration for the use, or to challenge the use on the grounds that it isn’t sufficiently restricted to persons who are visually impaired, or that the work is already available in a format for the visually impaired.

WIPO would be entrusted to create an internet accessible database that would allow copyright owners to identify works for purposes of facilitating notice, and to provide information regarding the availability of works in formats for the visually impaired.

Compulsory license

The treaty would ask contracting nations to establish a mechanism for determining adequate compensation for copyright owners, apparently some sort of compulsory license. The system would grant rights holders remuneration that is “reasonable for normal commercial licensing of works,” taking into account the country, population and purposes of the use. The proposal specified that in developing countries, the rates would take into account disparities of incomes for persons who are visually impaired. The agreement would also carve out exceptions from payment for certain formats, such as Braile, and “certain qualified entities.”

Conference of parties

The proposed treaty would create a Conference of Parties that would meet every five years, and in extraordinary session if agreed upon by a quarter of the contracting parties. The Conference would be designated to develop measures to further the implementation and objectives of the treaty.

Conley & Yoo: Nonrivalry and Price Discrimination in Copyright Economics

Posted by admin on 24 June 2009 – 9:00 am

Filed under: Academia

John P. Conley, a professor of economics at Vanderbilt University, and Christopher S. Yoo, a professor of law at the University of Pennsylvania, have released a new paper on SSRN titled “Nonrivalry and Price Discrimination In Copyright Economics.” The article further explores some of the ideas first addressed in Professor Yoo’s 2008 paper “Copyright and Public Good Economics: A Misunderstood Relation.” The abstract:

The literature on the economics of copyright proceeds from the premise that copyrightable works constitute pure public goods, which is generally modeled by assuming that such works are nonexcludable and that the marginal cost of making additional copies is essentially zero. A close examination of the foundational literature on public goods theory reveals that the defining characteristic of public goods is instead the optimality criterion known as the “Samuelson condition,” which implies that the systematic bias toward underproduction is the result of the inability to induce consumers to reveal their preferences rather than the inability to exclude or price at marginal cost. Reframing the analysis in terms of the Samuelson condition also contradicts the hostility toward price discrimination reflected in much of the literature by implying that price discrimination is a necessary condition for optimality. At the same time, it implies that the producer need only appropriate the marginal benefits created by the public good, which in turn provides a basis for determining an optimal level of price discrimination that still permits consumers to retain some of the surplus. Moreover, broadening public good models to reflect the fact that copyrighted works often serve as imperfect substitutes for one another allows the number of works to be determined endogenously. In such impure public goods models, the systematic bias toward underproduction disappears, and price discrimination once again may (but need not necessarily) promote optimality.

Court finds it has jurisdiction to hear counterclaim seeking a declaratory judgment of noninfringement after granting plaintiff’s request for dismissal of copyright claim

Posted by admin on 23 June 2009 – 9:00 am

Filed under: Jurisdiction

Optimal Markets, Inc. v. FTI Consulting, Inc., 2009 WL 1704665 (N.D. Cal. 2009)

There was a fun civil procedure issue addressed in the Northern District of California last Wednesday. The Plaintiff provided software for electronic auctions. The Defendants were two of the Plaintiff’s former employees who were employed by a rival company at the time of the suit. The Plaintiff brought a claim for, among other things, copyright infringement. The Defendants filed counterclaims including one for a declaratory judgment of noninfringement.

The Plaintiff moved to voluntarily dismiss its copyright claim, and argued that the dismissal would result in a lack of subject matter jurisdiction because the rest of its claims were based on state law. Thus, the Plaintiff moved for dismissal of the case with the intention of refiling in state court.

Federal Rule of Civil Procedure 41(a)(2) provides that “[i]f a defendant has pleaded a counterclaim before being served with the plaintiff’s motion to dismiss, the action may be dismissed over the defendant’s objection only if the counterclaim can remain pending for independent adjudication.”

The Plaintiff first asked the Court to dismiss its claim for copyright infringement without prejudice. After the Defendants argued that the Court would still have federal jurisdiction under their counterclaims for a declaratory judgment of noninfringement, the Plaintiff expressed a willingness to dismiss the claim with prejudice on the condition that it wasn’t considered an adjudication on the merits. In the alternative, the Plaintiff asked the Court to dismiss the claim without prejudice but stated that it would be willing to covenant not to sue on the copyright claim.

The Court rejected these two suggestions, noting that a dismissal with prejudice is “tantamount to a judgment on the merits,” Zenith Ins. Co. v. Breslaw, 108 F.3d 205, 207 (9th Cir.1997), and that even if Plaintiff’s covenant not to sue on the copyright claim eliminated the copyright controversy between the parties, the Court still had jurisdiction over Defendants’ counterclaims because they were compulsory; the counterclaims were derived from the same common nucleus of operative facts and remained pending, with or without the Plaintiff’s infringement claim. The Court dismissed the Plaintiff’s claims without prejudice and allowed the counterclaims to proceed.

Why is this case fun?

It’s hornbook law that a federal court doesn’t have jurisdiction to hear a case when a plaintiff files a complaint and then voluntarily amends the complaint removing the claim or claims over which the court had original jurisdiction. Rockwell Int’l Corp. v. United States, 127 S.Ct. 1397, 1409 (2007). And federal jurisdiction cannot rest exclusively on a counterclaim. Holmes Group, Inc. v. Vornado Circulation Systems, Inc. 535 U.S. 826 (2002). A federal court may, however, assert jurisdiction over a case where a plaintiff brings a claim over which the court has original jurisdiction, which the court later dismisses. F.R.C.P. 1367(c)(3).

For the Court in Optimal Markets v. FTI Consulting, Inc. to meet it’s obligations under 41(a)(2) (not to deprive the Defendants the opportunity to adjudicate their counterclaim) and under Rockwell (a federal court has no jurisdiction if a plaintiff amends its complaint removing all claims that would provide a basis for original jurisdiction), it had to dismiss the copyright claim, and not just allow the defendant to amend it’s complaint removing the claim. Civil procedure fun!

Commercial misappropriation, unjust enrichment, breach of non-exclusive license claims held not preempted by the Copyright Act

Posted by admin on 22 June 2009 – 9:09 am

Filed under: Preemption, Registration

Salestraq America, LLC v. Zyskowski, 2009 WL 1652146 (D. Nev. 2009)

The plaintiff compiled content about residential property in the greater Las Vegas area. The content contained information on seventeen thousand proprieties, including floor plans, measurements, architectural features, as well as general highlights about the property. The plaintiff distributed the content via a subscription website and monthly CD-ROMs.

The defendant allegedly signed up for the plaintiff’s service and then began to offer the content on a competing subscription website. The plaintiff brought claims for copyright infringement, violation of the Computer Fraud and Abuse Act, and a series of state law claims including commercial misappropriation, unjust enrichment, and breach of a nonexclusive license.

Preemption of state law claims

The defendant moved to dismiss claims for commercial misappropriation, unjust enrichment, and breach of a nonexclusive license on the basis that the claims were preempted by 17 U.S.C. § 301(a). The Court cited the Ninth Circuit’s holding in G.S. Rasmussen & Associates, Inc. v. Kalitta Flying Serv., Inc. for the proposition that while a state law claim for improper copying is preempted, a claim for improper use of the content is not preempted:

In the present case, [The Plaintiff's] state claims allege, not only that Defendants copied the [it's content], but also that Defendants used the Murphy IP for their own commercial benefit in violation of state law. Thus, under Rasmussen, [The Plaintiff's] allegations change the nature of its state claims so that they are qualitatively different from a copyright infringement claim. [The Plaintiff's] state claims are therefore not preempted by the Copyright Act.

The Court didn’t explicitly address the claim for breach of a nonexclusive license but held that it wasn’t preempted. The Court also addressed a registration and CFAA issues.

“Backwards-looking” registration

The defendant moved to dismiss the copyright claim on the grounds that the court lacked jurisdiction because the registration was defective. The defendant argued that plaintiff failed to comply with Section 411(a) because it had registered a 2008 version of its content, but not the 2007 version that the plaintiff alleged was infringed. The court found that the plaintiff’s registration of the 2008 derivative work satisfied the Section 411(a) for purposes of bringing suit on the 2007 version of the work because the allegedly infringed preexisting content was included in the registration.

This situation is essentially the reverse of the forward-looking registration we saw in Facebook v. PowerVentures a couple of weeks ago. Facebook registered an older version of its website but brought suit for infringement of the current version. In both backwards-looking and forwards-looking registration situations, a plaintiff’s infringement claim can only extend as broadly as the content incorporated in the registration.

Violation of the Computer Fraud and Abuse Act

The Plaintiff claimed that the Defendant breached the CFAA because while it had obtained a license to access the Website, it exceeded its “authorized access by copying content from the Website and using that content for Defendants’ commercial use.” This court distinguished situations where a person misuses information that was properly accessed from situations where a person exceeds their authorized access to obtain restricted info, and granted the Defendant’s motion to dismiss:

There is a crucial difference between misusing information properly accessed and exceeding one’s authorized access to obtain restricted information. This case falls into the former category, as SalesTraq acknowledges in its complaint that Defendants paid to access the content on SalesTraq’s Website. ( See id. ¶ 20); see also U.S. Bioservices Corp. v. Lugo, 595 F.Supp.2d 1189, 1192 (D.Kan.2009) (“[A]ccess to a protected computer occurs ‘without authorization’ only when initial access is not permitted, and a violation for ‘exceeding authorized access’ occurs only when initial access to the computer is permitted but the access of certain information is not permitted.”).

Anyone want to help with a website redesign?

Posted by admin on 20 June 2009 – 4:52 pm

Filed under: News

Dearest readers who are students, web designers, graphic artists, knowledgeable in the ways of the intertubes:

If you have any interest in redesigning the theme of this site please shoot me an email at exclusiverights [at] gmail.com. I would like the site to be usable, fun, professional, but most of all, I’d like it to not look like it was designed by a six year old who just figured out HTLM, id est my current work. I run Wordpress.

I may be able to grossly, grossly underpay you with a small, small honorarium. Plus, you’d be able to claim you’ve designed THE MOST POPULAR WEBSITE IN THE HISTORY OF CIVILIZATION!!!!!!1!!!1!!-TM. I know, not exactly the most enticing proposition.

Cheers,

The Management

AIPLA files amicus in Reed Elsevier v. Muchnick

Posted by admin on 19 June 2009 – 8:52 am

Filed under: Jurisdiction, Registration, supreme court

The American Intellectual Property Law Association filed an amicus brief in Reed Elsevier on June 8. The AIPLA’s brief appears to act, to a certain extent, as the opposition brief to the Department of Justice’s filing that we discussed on Wednesday. Both the AIPLA and the Solicitor General argued that 411(a) is a claim processing rule and not a jurisdictional requirement. But the central reach of the AIPLA’s brief is that the 411(a) shouldn’t be read rigidly as to bar claims from proceeding before the Copyright Office grants or rejects a registration application. Indeed, the AIPLA’s brief takes an additional step and forwards that a plaintiff shouldn’t even need to mail a registration before filing suit:

What is less clear is from the text and legislative history of the statute is whether Section 411(a) permits a copyright owner to file an infringement action before the Copyright Office has acted to either issue or deny a certificate of registration, or even before the copyright owner has filed an application.

Although courts are divided on the question, the correct view is that the registration requirement is akin to a procedural condition precedent to prosecuting a lawsuit that may be satisfied “along the way.” This broader view of the requirement conforms to general proposition argued by Judge Walker in his dissenting opinion below that the registration requirement is more of a “claims processing rule.” The narrow view of the requirement improperly introduces a subject matter jurisdiction character into the statute by measuring compliance with the requirement only at the moment the action is commenced.

Documents

Brief of American Intellectual Property Law Association as Amicus Curiae in Support of Petitioners

Prior writings on Reed Elsevier v. Muchnick