Technically Legal

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More on the BMG v. Cox Complaint

Last week BMG sued Cox for copyright infringement by Cox’s customers. The complaint details the lengths to which BMG went to notify Cox of copyright infringement by Cox’s customers.

BMG monitored bittorrent swarms, and sent Cox at least 114,103 notices of copyright infringement, and potentially up to over seven million, depending on how you read the complaint. BMG sent individual notices to Cox, and set up a web portal through which Cox could view reported repeated infringers. It’s unclear from the complaint exactly how BMG is defining a repeat infringer: whether it’s sharing multiple songs, or a continually seeding a song over a few days.

BMG asked Cox to terminate these repeated infringes, but Cox declined to do so.

BMG alleges that because Cox did not terminate the users, it was not eligible for Safe Harbor protection under Section 512 of the Copyright Act. Therefore, Cox can be liable for contributory copyright infringement and vicarious copyright infringement due to Cox’s knowledge of the infringement, profits obtained from it, and refusal to take steps to cease the infringement or terminate the accounts.

It’s certainly a novel theory, and there are some serious facial weaknesses with sending a company (potentially) 7 million takedown notices and then demanding something be done. There are additional problems with BMG’s theory that Cox is liable under a theory of vicarious liability because it sells faster connections which can be used for faster pirating (part of the theory of vicarious liability), and another weakness regarding potential open networks and inability to reliably trace infringement to a single user, rather than infringement through an account.

At this point we’re unlikely to hear anything more on the case until Cox files a reply which could be several weeks to several months from now. We’ll be keeping a close eye on this case.

Comments Off Posted in: Analysis on December 1, 2014

Music Publishers Sue Cox For Users’ Copyright Infringement

The WSJ is reporting that music publishers BMG and Round Hill Music are suing Cox for copyright infringement. Details are sparse in the article and we haven’t been able to locate a copy of the complaint yet, but the gist of the suit appears to be that BMG and Roundhill notified Cox of repeat infringers, but Cox did not disconnect those users from the internet. One of the conditions for a service provider to be eligible for the DMCA safe harbor is that they:

(A) ha[ve] adopted and reasonably implemented, and inform[ed] subscribers and account holders of the service provider’s system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers

Presumably (and we’ll likely be following this story closely with updates as we get them), BMG is arguing that Cox, in failing in implement a termination policy, forfeited its safe harbor and is liable for primary or secondary copyright infringement.

UDPATE: Here’s the complaint.

Comments Off Posted in: Analysis, Links on November 28, 2014

“Program Recognition Device” Triggers Means-Plus-Function Analysis

Patent laws in the US have long allowed inventors to claim their invention using “means-plus-function” language. But, for the last two-decades or so it has generally been a bad idea to do so.

Means-plus-function language allows you to describe your invention using functional language: “a means for lifting a bar” or “a means for receiving a phone call.” If an inventor uses this language she is limited in what the claims cover to any corresponding structures in the disclosure of your patent. If she is claiming the means for lifting a bar, and only discloses a lever as a means for doing so in the patent – she is limited to just covering a lever – instead of any means for lifting a bar.

The Patent Office’s own guidance on this matter states:

[T]he broadest reasonable interpretation of a claim limitation that invokes [means-plus-function] is the structure, material or act described in the specification as performing the entire claimed function and equivalents to the disclosed structure, material or act. As a result [these] . . . limitations will, in some cases, be afforded a more narrow interpretation than a limitation that is not crafted in “means plus function” format.

In addition to potentially being more narrow than claims drafted with alternative language, Federal district courts regularly find patents using means-plus-function language invalid.

In a recent opinion, the Federal Circuit held that the phrases “program loading device” and “program recognition device” in the absence of explicit “means-plus-function” language still invoked this provision of patent law, and held the patent invalid as indefinite for failing to disclose a structure associated with the described functionality.

While this holding isn’t novel, it’s worrisome in that it further closes the gap between claims simply using functional language and “means-plus-function” claims. It is sometimes difficult to claim software without describing the functionality of that software. If describing the functionality, as the inventor did here, can trigger means-plus-function analysis, it opens another unpredictable avenue to invalidating software patents.

Comments Off Posted in: Analysis on October 14, 2014

Do You Believe In Magic?

Teller, of Penn & Teller, recently won a resounding victory in Federal District Court in Nevada.

This case has stretched on for about two years, due mostly to the foreign defendant avoiding participation in the case, and representing himself.

In 2012, Defendant Gerard Dogge posted a video on YouTube showing an improved version of Teller’s famous Shadows illusion (seen here with commentary). The improved routine consisted of the same effect, with nearly identical staging and progression. The main differences were that a clear vase was used, and water was poured from the vase after the illusion finished.

Generally, magic effects are not subject to IP protection. However, in the mid 80s, Teller had the foresight to copyright the pantomime presentation of his effect. While the effect itself cannot be copyrighted, the way in which the effect is presented may.

Teller initiated this copyright infringement and unfair competition (based on use of Teller’s name in marketing the knock-off illusion). In March the judge granted Teller summary judgment of copyright infringement, and in late-September the court granted Teller’s motion for default judgment on the unfair competition and willful infringement counts due to the Defendant’s continued lack of meaningful participation in the litigation.

There are a couple of worrying elements of the opinion. First, on page 8, the judge states the wrong standard for a permanent injunction. He includes the element “a likelihood of success on the merits,” which is an element of a preliminary injunction (before a decision on the merits of the claims). Here, the judge already decided that Teller succeeded, so it should be clear that the likelihood of his success should not factor into whether an injunction should issue.

Second, the judge, at least partially, based Lanham Act and Copyright Act counts on the same underlying work. It’s a nuanced issue, that due to the defendant representing himself likely did not get the attention it deserves. But the judge essentially held that you can infringe copyright by performing Teller’s trick, and that you can infringe trademark by performing Teller’s trick – because the trick is a “signature trick.” Typically you only get one kind of intellectual property protection per item.

Finally, the judge awarded Teller a strikingly broad injunction, which is worrisome in any case involving speech.

I point these out not to pick a fight with Teller, whom I deeply respect, but just to highlight some interesting issues in what is a serious win for magicians protecting their IP.

1 Comment Posted in: Analysis, Commentary on October 8, 2014

The Lighter Side of Patents

Every once in a great while you come across a patent opinion that contains a little whimsy (not for the losing party, but for everyone else). Today was one of those days.

In 2010, two inventors filed for a utility patent on a cover for a propane tank to be used during tailgating. Why, you ask, for such a specific purpose? Because it looked like this.

tank

The Patent and Trademark Office rejected the claims as obvious over prior art that included chemical tanks and a decorative beer koozie, as reproduced below.

koozie

The inventors appealed, and the Federal Circuit affirmed. The court held that the functional elements were clearly in the prior art, as were the claimed ornamental flourishes. This seems like a case that would be marginally better for a design patent than a utility patent (as the inventive portion – the helmet parts – was entirely ornamental). But, it doesn’t appear that the inventors were likely to get protection even if they had filed a design patent.

Comments Off Posted in: Analysis on September 25, 2014

Don’t Be Concerned About Being Served Papers Over Facebook

Slashdot, via the NY Post, have articles about a recent case from Staten Island where a judge allowed papers to be served over Facebook. The titles of the stories imply that this is a new day in service of legal papers. It is not.

The judge in this case made an exception to the traditionally accepted modes of service because those all failed. It is not likely, as the Post says, that your, “next Facebook ‘poke’ could be from a process server.” (Unless you are friends with a process server who likes to poke you on Facebook. Then it’s decently likely.)

More importantly, this isn’t new. Every few months there is a story about a judge allowing service over social media when the defendant has taken steps to make service difficult for the plaintiff. In March 2013, a Federal Judge allowed service of a foreign company over e-mail and Facebook. There are instances in the US and around the world dating back further than 2011 of allowing service via e-mail and social media.

This phenomenon is neither new or worrisome. Service by traditional means is preferred, but when that fails either due to the Defendant avoiding service, or being incredibly (and perhaps intentionally) hard to find, US Courts have long allowed service by other means.

Comments Off Posted in: Analysis, Commentary on September 21, 2014

Massachusetts Dealers Can’t Sue Tesla for Operating in MA

This morning, the Supreme Judicial Court (SJC) of Massachusetts held that unaffiliated automobile dealers in Massachusetts do not have standing to sue Tesla over alleged violation of Massachusetts Auto Dealer statutes.

For some background on this topic, listen to this great Planet Money story that outlines the common statutes. In a nut-shell: states have laws that prohibit automobile manufacturers from selling cars directly to consumers. Affiliated dealerships are set up in each state, and have certain agreements with the car makers. Those state laws often have protections baked in that protect the local dealerships from the car makers revoking the dealer’s right to sell that make of cars.

Tesla currently has one showroom in Massachusetts. It is not an independent dealership, nor is it licensed under Massachusetts dealership laws. The Massachusetts State Automobile Dealers Association and a few dealerships sued for injunctive relief, asking the court to shut the showroom down.

The SJC had previously held that the law did not allow dealerships to sue unaffiliated automakers. A Honda dealership can sue Honda, but a Kia dealership can’t sue Honda. There were some amendments to the law since the last time the SJC decided this issue, but the court ultimately held that the changes, like the rest of law, was meant to protect local dealership from their affiliated car makers, and not dealerships from other competition.

Comments Off Posted in: Analysis, Commentary on September 15, 2014

Video King Wins at Bingo

In 2002, based on a patent application filed in 2000, Melange Computer Systems was awarded a patent on a bingo playing machine (and method). The term “bingo playing machine” immediately evokes an image of an elderly person huddled over several bingo cards, stamping them manically or laying down plastic chips as the numbers are called. And therein was the problem for Planet Bingo, the current owner of the aforementioned, and another, patent.

Planet Bingo sued Video King for infringing two patents related to electronic bingo. After claim construction, the district court found that the asserted claims were drawn to an abstract idea, and were not patentable subject matter. On appeal, the Federal Circuit agreed.

The claims were drawn to “managing a bingo game while allowing a player to repeatedly play the same sets of numbers in multiple sessions. The district court correctly concluded that managing the
game of bingo ‘consists solely of mental steps which can be carried out by a human using pen and paper.'” There was no meaningful distinction between the method and system claims at issue, a common problem with software (and abstract) patents.

The Federal Circuit also held that there was no transformation sufficient to save the claims. That the invention allegedly included complex computer code was of no moment when the “claims recite[d] a program that is used for the generic functions of storing, retrieving, and verifying a chosen set of bingo numbers against a winning set of bingo numbers.”

This was an unpublished opinion, and there is no new guidance regarding whether a claim is drawn to an abstract idea, but it does enforce the idea that if the method and system claims are essentially identical, that the claims may be invalid – even if those claims contain printers, video screens, and input and output terminals, as some of the claims in this case did.

Comments Off Posted in: Analysis, Commentary on August 26, 2014

9th Circuit: Users Have to Agree to TOS to Be Bound By It

In 2011, retailers across the country steeply discounted the ill-fated HP Touchpad. After being inundated with requests for the short-lived WebOS device, retailers including Barnes & Noble cancelled many of the orders. One spurned customer filed a class action lawsuit against Barnes & Noble in state court, which then removed the case to federal court, and sought to compel arbitration, as required in Barnes & Noble terms of service.

But, as in many cases, there was a rub. Barnes & Noble’s website did not require users to assent to their terms of service at any time, nor do they require it to this day.

The Federal Circuit begins its opinion with a pair of apt quotes from the Second Circuit:

“While new commerce on the Internet has exposed courts to many new situations, it has not fundamentally changed the principles of contract.” Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 403 (2d Cir. 2004). One such principle is the requirement that “[m]utual manifestation of assent, whether by written or spoken word or by conduct, is the touchstone of contract.” Specht v. Netscape Commc’ns Corp., 306 F.3d 17, 29 (2d Cir. 2002) (applying California law).

The court distinguished this browsewrap agreement (through which assent is implied through continued use of the website, or sometimes a button click with a link to the terms) and clickwrap agreements (through which assent is affirmatively given through clicking a button accompanied by the terms of service themselves).

Thus far, courts have occasionally enforced browsewrap agreements where parties had knowledge of the terms of the contract. But in this case, there was no evidence on the record that the named plaintiff had any such knowledge, and Barnes & Noble’s argument that “the placement of the ‘Terms of Use’ hyperlink in the bottom left-hand corner of every page on the Barnes & Noble website, and its close proximity to the buttons a user must click on to complete an online purchase, is enough to place a reasonably prudent user on constructive notice,” was unavailing.

I would be curious to know if there was A/B testing on pages with “Click to button to indicate you agree to the TOS” against pages without a TOS to see if there’s a sales difference. Part of me has trouble imagining that the lost sales, if any, would weigh against the actual risk of your terms not being enforceable, but the continued and varied efforts to make their terms harder to find would indicate otherwise.

Comments Off Posted in: Analysis, Commentary on August 18, 2014

Inequitable Conduct Not Dead Yet

Unenforceability of a patent through inequitable conduct is a equitable defense to a claim of patent infringement. It exists when a defendant can prove that the patent they are being accused of infringing was obtained through misrepresentations or omissions to the Patent Office, intentionally committed by the patentee with an intent to deceive.

In 2011, the Federal Circuit Court of Appeals decided Therasense v. Becton, Dickenson, and Co., a case that was hailed by some as the death of inequitable conduct. There have been only a handful of cases since 2011 finding, or upholding findings of inequitable conduct.

The Federal Circuit held that in order to support a finding of inequitable conduct, the party raising the claim has to prove that an alleged bad act was material to patentability, and that the act was undertaken with intent to deceive. Intent to deceive would be difficult to prove, and the number of successful claims of inequitable conduct dropped.

Proving that the doctrine isn’t dead yet, the Federal Circuit affirmed a finding of inequitable conduct by a district court. But don’t hold your breath that the doctrine is revived, the facts in this case are absurd.

In and around 2000, Apotex filed a patent application in Canada for moexipril magnesium, a blood pressure medication. In 2001, Apotex filed a related American application. There were two other medications, Univasc and Uniretic, that used the same active ingredient and were on sale for several years before Apotex applied for a patent.

During the prosecution of the patent, the inventor, Dr. Sherman, became aware of facts that he should have disclosed to the Patent Office. Specifically, he became aware that Univasc was likely made by the same process that he claimed in his application, and withheld that information.

Sherman was familiar with patent prosecution and would have known of his duty to disclose this information to the Patent Office, but he did not. Sherman, in lab notes, indicated that he believed the prior art overlapped with his claimed invention, but submitted misleading test results to show otherwise.

When confronted with many of these allegations at trial, “Dr. Sherman selectively displayed. . . a lack of memory and responsibility that led the court to conclude he was not a credible witness.” There were several additional acts that violated his duty of candor to the Patent Office that I have not recounted here.

This is still a pretty high bar to reach, and a finding of unenforceability is likely possible without such overwhelming evidence of intent to deceive the patent office. Regardless, it’s good to know that such findings are still possible under the heightened standard.

Comments Off Posted in: Analysis, Commentary on August 16, 2014

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