In a Venn diagram of my interests, this story falls into the very narrow intersection of technology, digital media rights and showtunes.
Christina Mulligan, in a guest post on Balkinization, talks about the lack of copyright discussion on the hit TV show Glee. Mind you, this is not a discussion of the rights involved with the making of the show, which has been done legally by negotiating the rights to make cover versions. Rather, in the fictional reality within the TV show, would the RIAA or ASCAP file a lawsuit against the Glee club for their shot-for-shot recreations of copyrighted music videos and their cover versions and mashups of unlicensed songs? And would the plucky teenagers be dragged into a courtroom, only to have their case dismissed by the judge, guest star Nathan Fillion?
There’s a range of arguably infringing activities going on in the Glee club. The worst is probably the music videos they create outside of the Glee club (see Glee’s version of Single Ladies compared to Beyonce’s original). These use the original recordings of the songs, which Mulligan points out has been troublesome in the past, even for amateur non-commercial videos. Then there’s the covers of songs (for example, “Don’t Rain on My Parade”) that are reproduced without rearrangement (i.e. are performed with roughly the same notes and instruments/voices as the original), and, therefore is, arguably, not a derivative work. Next would be the derivative arrangements of the songs (“Don’t Stop Believing”, “Hello, Goodbye”, both of which have been arranged for the Glee club with extra vocal harmony), most of which constitute public performances. Lastly, there are the songs that are clearly not public performances (“Can’t Fight This Feeling”, sung alone in the shower, “Like a Virgin”, a fantasy sequence), which the RIAA probably would not pursue in court. I think there’s a reasonable expectation of privacy in your shower, and failing that, in your imagination.
Despite the glaring instances of infringement in the Glee club, they could still argue their actions constitute fair uses of the copyrighted works. The strongest argument supporting this is that these songs are used for nonprofit educational use, which is one of several factors considered under the fair use doctrine in the US Copyright Act. The fair use doctrine also takes into account whether an allegedly infringing activity was use for commercial purposes and what affect the use has on the market for the copyrighted work. This is why the Glee club found themselves trouble in the episode “Mattress” for performing “Jump” in a mattress commercial, because they received compensation for their performance.
Ultimately, most of the songs performed by the Glee club fall into a nebulous gray area, and it would be up to a judge to determine if the use was a fair use. It really could go either way. On the one hand, the RIAA and ASCAP have been known to prosecute for much less. On the other hand, there are real life groups like The PS22 Chorus which are essentially doing the same thing and presumably not being prosecuted.
Comments Off Posted in: Commentary on June 11, 2010
At Technically Legal we’re all waiting with bated breath for the Supreme Court’s ruling on In re Bilski. The SCOTUS Blog is covering the release of opinions from the Court on their website, but today wasn’t the day for Bilski. <insert anxious IP lawyer faces here>
The ruling may entirely change the doctrinal scope of “patentable methods or processes”. Although the Bilski case deals with controversial business method patents, the doctrines at issues will affect a wide range of other patents, including the ability to patent computer software. If you haven’t been following the case, the issues stem from the Federal Circuit’s recent adoption of the “machine or transformation test” which was developed in the Bilski case in 2008.
We are now in the pipeline for Supreme Court decisions. The Supreme Court is in session from early October until the end of June, across a calendar year (i.e., October 2009 – June 2010). Oral arguments for Bilski were heard before the Supreme Court last November and a decision is expected any week now. According to the SCOTUS Blog’s calendar for May and June, which tracks events at the D.C.-based Court, rulings are expected to be released on the following Mondays:
May 17 & 24th
June 7, 14, 21, & 28th
Assuming this time line is correct, we are anticipating the Bilski ruling on one of those days. Of course, we’ll provide links, coverage and analysis on our blog and podcast as soon as the ruling is released. Stay tuned until then.
Comments Off Posted in: Commentary on May 17, 2010
This morning, the Chicago Sun-Times is reporting that Walgreens plans to sell genetic testing kits to consumers “that can tell people whether they’re likely to get breast cancer, Alzheimer’s Disease, become obese, or suffer from a range of other maladies.” According to the article, the U.S. Food and Drug Administration is probing Pathway Genomics, the company who manufacturers the tests, over concerns of “test accuracy.”
Over the last several months, I’ve been working on a research project at the Berkman Center that focuses on the genomics and proteomics sectors of the biotechnology industry. A large portion of this research is directed at genetic and genomic diagnostic testing. These days, it’s an extraordinarily interesting field in terms of intellectual property law and proposed regulatory actions like this. I found this to be a good opportunity to share some of my research findings and why the FDA would be interested in implementing more restrictive regulations for over-the-counter genetic testing services.
First, the FDA does regulate certain aspects of genetic and genomic diagnostic testing. Under the Federal Food, Drug, and Cosmetic Act, the FDA has the authority to regulate “medical devices,” including “instrument[s], apparatus[es] . . . [and] in vitro reagent[s]” that are “intended for use in the diagnosis of disease or other conditions.” (see 21 U.S.C. § 321(h)). The FDA’s regulations, further include “in vitro reagent diagnostic products” as “medical devices.” (see 21 C.F.R. § 809.3). “Class III” medical devices are subject to very stringent regulation and require approval before they can be sold, but “Class I and Class II” do not require any pre-market approvals prior to sale, but must meet certain standards for quality assurance purposes. (21 C.F.R. § 814). In short, the FDA can step in and require certain accuracy standards for tests that fall within this category.
Nonetheless, some laboratories have been taking advantage of an apparent gap in FDA regulation based on distinctions between genetic testing “kits” and “services.” Device manufacturers of genetic”testing kits” sell a set of reagents and instructions for collecting a sample specimen. These usually qualify as either Class II or Class III medical devices and may require pre-market approval by the FDA. However, sometimes laboratories develop their own “in-house” or “home brew” tests which are known in industry-speak as “laboratory developed tests” or “LDTs.” Instead of including the necessary reagents in a “kit”, laboratories are obtaining the reagents from external resellers or manufacturing entities. Although the purchase of reagents is still subject to FDA regulation, once separated from the LDT, the LDT is no longer regulated as a diagnostic medical device. The distinction here is that laboratories believe that LDTs are testing services, not medical devices, and therefore do not need to meet pre-market approval or quality assurances requirements under FDA regulations. Interestingly, the FDA’s position is that they can regulate LDTs just like medical devices. It seems likely that further regulatory clarification will be needed down the road to establish clear standards for LDTs if the FDA continues to push regulatory standards on LDT providers.
The FDA is not the only regulatory agency in the room, either. The Centers for Medicare & Medicaid Services (or “CMS”) have some regulatory authority over laboratory testing though the Clinical Laboratory Improvement Amendments of 1998 (or “CLIA”). CLIA basically sets up a regulatory scheme that requires laboratories to meet certain standards of quality control and proficiency of testing, which vary depending on the complexity of specific testing conducted on site. LDTs, which are otherwise not covered by as “medical devices” by the FDA, are covered under CLIA. However, because certain genetic LDTs do not have established proficiency standards, CLIA only requires the laboratories to establish their own procedures to verify the accuracy of testing results. It’s a bit like letting the inmates run the asylum.
I don’t mean to say that LDTs are categorically less accurate than the “testing kits” that fall under FDA regulation. However, the FDA is clearly concerned with closing some potential loopholes that might give rise to questionable product marketing practices. And, really, we’re not just talking about products on the shelf at Walgreens. A simple Google search yields a swath of websites that offer genetic testing services for sale to the public.
Finally, another vector of concern beyond testing “accuracy” is how results are ultimately reported back to consumers. Many genetic tests are marketed as a services that provide health risk assessments based on genetic sequencing and correlating results with propensities to develop certain diseases. It’s not the same as a diagnosis by a physician or other medical professional. Undoubtedly, the FDA is interested in ensuring that marketers are explaining the limitations of certain genetic testing as well as how test results are translated into disease development probabilities in a consumer-comprehensible manner. For instance, look at this post on Gizmodo where the anonymous-author shares his genetic test results from multiple well-known companies and remarks that “it’s a game of percentages stacked on percentages, all various levels of true based on research all confounding.”
Comments Off Posted in: Commentary on May 12, 2010
Yesterday, Myriad Genetics expressed their disappointment and announced their plans to appeal Monday’s ruling which invalidated seven patents related to BRCA1 and BRCA2 genes and diagnostic testing for breast and ovarian cancer.
Given the highly contentious nature of patents related to human genetic material, it’s not really surprising that Myriad plans to appeal. I would even expect this litigation to be drawn out over the next several years–potentially to the point of Supreme Court review.
Another thing to keep in mind is that because these patents involve claims over methods of diagnostic processes (which arguably consist of mental steps) and gene isolation techniques, these types of patents may be subject to the Bilski case, which is still pending before the Supreme Court. The highly anticipated Bilski ruling is expected in the coming months.
Keep in mind we’ll be covering this case on this week’s podcast!
Comments Off Posted in: Commentary on March 31, 2010
After nearly three years of litigation in ACLU v. Myriad Genetics, the Southern District of New York issued a landmark ruling today in favor of the ACLU and declared several human gene patents to be invalid.
The patents claimed ownership to methods and materials related to the isolation of BRCA1 and BRCA2, which are part of the tumor suppressor gene family in humans. The patents further claim ownership over methods of comparing these genes to healthy genes for the purposes of detecting abnormalities or genetic mutations in DNA sequences . A skilled clinician can then determine the presence of breast and ovarian cancer, or if a person has a strong likelihood of developing those cancers in their lifetime (somewhere around 70%, if memory serves).
Collectively, Myriad owns or has the exclusive rights to seven patents which deal with the DNA sequencing of BRCA1 and BRCA2 genes. The effect from this ownership, the ACLU argues, is that Myriad Genetics owns a legal monopoly on all diagnostic processes, which hurts women’s public health at large and restricts cancer research and development.
We’ve yet to read the lengthy 152-page court ruling (read it here at the New York Times), but we’ll get through it over the next several days. In the meantime, you can also find multiple articles on the ruling circulating in the media, including: TechDirt, LATimes, Newsweek, Wired
Make no mistake, this is a huge case and a highly significant ruling. Stayed tuned. We’ll cover it on our next podcast with detailed analysis.
Yesterday, we recorded a special edition of our podcast and devoted approximately 2/3 of the show to discussing the Viacom v. YouTube/Google arguments which were presented in their respective cross-motions for summary judgment. One of the most important pieces of the litigation is whether the DMCA section 512(c) safeharbor will apply to Google and whether Google might be secondarily liable for copyright infringement. I felt it would be helpful to provide a quick and dirty guide to some of the liability principles at stake in the case.
Secondary liability, or “indirect liability,” attaches liability to certain intermediary entities and other persons who are not participating in an infringing act, but are somehow contributing, profiting, or inducing another person’s act of infringement. For example, this might apply to a person who owns and operates a website for the sole purpose of facilitating copyright infringement of song recordings–that operator is not downloading or uploading the sound recordings herself, and therefore is not directly infringing any copyrights, but is providing a medium for others to participate in infringing activities. For you legal history afficionados, secondary liability dates has been recognized in various forms by courts at least as far back as the late 19th century (see e.g., Fishel v. Lueckel, 53 F. 499 (S.D.N.Y. 1892) (recognizing liability for profiting from infringement as a joint tortfeasor)). Despite this, secondary liability has still not been codified in the Copyright Act. Consequently, across federal jurisdictions the standards of secondary liability vary a little from court-to-court. Nonetheless, secondary liability can be parsed into two categories: (1) contributory liability and (2) vicarious liability.
Scholars and practitioners devote hundreds of pages to discussing contributory and vicarious infringement. I’m not here to make your eyes bleed. So, please consider the following points a very broad overview:
Contributory Infringement: When a person, who has knowledge of a direct instance of infringement (e.g., another person uploading a unauthorized video), materially contributes to, *or*, actively induces the infringing conduct.
By a Materially Contribution: The contribution generally needs to add something to the original act of infringement. For example, some courts have ruled that adding either software, hardware, and webspace, to provide a conduit to unlawfully exchange copyrighted works is enough. In another case, the Ninth Circuit held the operators of a swap meet where independent vendors sold unauthorized copies of copyrighted works was sufficient to survive a motion to dismiss. Note, however, that under a contributory liability theory, a defendant must have knowledge that an act of infringement is occurring to be liable.
Or, by Inducement: In 2005, the Supreme Court held in MGM v. Grokster that a person is liable for contributory infringement when she “distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement.”
Vicarious Infringement: When a person has the right and ability to supervise an infringing activity and derives a direct financial interest from the infringing activity. Some courts have interpreted that this does not necessarily mean earned revenue, merely deriving some form of financial interest or financial incentives for tolerating unlawful from the infringing activity may suffice. For example, check out the Napster litigation from 2001: A&M v. Napster, 239 F.3d 1004 (9th Cir. 2001).
As a final note, it’s important to remember that both the contributory and vicarious liability theories require there to be an original act of direct infringement. In other words, there has to be another individual who violates the Copyright Act by directly misappropriating the exclusive rights of a copyright owner.
Enter Google, YouTube, and Viacom. Among the most interesting factoids which have surfaced from the summary judgment motions in the Viacom v. YouTube case, is that prior to Google’s acquisition, the founders and executives at YouTube were aware that the website was being used to upload unauthorized copyrighted content. Viacom’s motion quotes email excerpts from the executives who discuss the importance of allowing users to upload arguably infringing content because it was driving up website traffic, making the site an attractive acquisition target based on traffic metrics. Along one line of reasoning, the executives were inducing users to upload infringing content and may have actually participated in some of this. This would be the “smoking gun” argument. See, once YouTube was acquired by Google, Google has arguably assumed liability from actions which took place before the closing date–this is a very common occurrence in any corporate acquisition, but is often subject to the language in the agreement (buyer and seller can negotiate for certain terms and indemnity of liabilities).
What remains unclear, to some extent, is the amount of knowledge needed by the operators to impute secondary liability beyond the DMCA safeharbor. For instance, just because the YouTube executives knew that some videos were likely to have been uploaded without authorization that doesn’t mean they *actually* knew they were unauthorized. Consider this theory plausible deniability. Unless the executives took the time to check with the actual copyright owners, or unless they received a takedown notice or cease and desist notice, they arguably didn’t know with certainty that a particular upload was expressly unauthorized.
Here’s where the DMCA section 512 safeharbor comes into play. In the past on our podcast and blog (here’s a more thorough overview I wrote), we’ve beaten to death the 17 U.S.C. 512(c) language, but it’s helpful to take a fresh look to see how the precise wording of the statute comes into play:
(1) In general.— A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider—
(A)(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or(B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and
(C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.
Note 512(c)(1)(A)(i)-(iii), in bold above. That’s the statutory language concerning the level of knowledge that potentially implicates a service provider with infringement by a user. Of particular interest to me is (ii), which states that if a service provider is aware of “facts or circumstances from which infringing activity is apparent,” the service provider cannot take advantage of the safehabor. Depending on how the court applies this language, Google might find themselves in hot water based on the email exchanges of the previous YouTube executives. However, it’s not black and white. Just last year, we saw the UMG v. Veoh case, in which a California Federal Court ruled that a “blanket notice” for the purposes of DMCA takedowns was insufficient to shift the burden of copyright policing to Veoh. This is important, because if the Viacom and YouTube court decides to follow this reasoning, it gives YouTube some of the aforementioned plausible deniability– if there were no notices specifically indicating the exact uploads which were infringing, it might be insufficient to impute actual knowledge on YouTube.
Google has separately argued in their motion that Viacom participated in stealth marketing tactics which would have made it very difficult to determine whether an upload was in fact authorized by Viacom but uploaded by another person. Additionally, Google points to evidence that Viacom had disparate internal policies under which they allowed certain unauthorized videos to remain on YouTube, without flagging or sending any notices to YouTube. This obviously would make it much more difficult for the YouTube executives to independently determine an upload to be infringing without notice. You simply can’t act as a filter if you don’t actually know who is responsible for a particular file.
I do think this is a factually fascinating case and it’s too close to speculate what the court is likely to do. There’s also more detail worthy of discussion on this case that would make this post pages and pages long. Check out the plethora of commentary from the legal blogosphere for additional takes on this case. It’s also worth listening to our show (which will post tonight, around 12AM EST) and hearing myself, Ben, and Dominik debate the merits from different points of view. We dove into much deeper detail on the specifics.
Other Bloggers’ takes:
Ben Sheffner (Copyrights & Campaigns)
Eric Goldman (Technology Law and Marketing)
Mike Masnick (TechDirt)
Nate Anderson (Ars Technica)
Why?! The answer, it turns out, starts with an “S” superimposed with a vertical line (or two, if you’re like me). According to the New York Times, the pull is the result of failed negotiations and the culmination of a contract term. Translation: Colbert and Stewart weren’t worth their weight in Hulu’s advertising currency.
Given the rising popularity of Hulu, I was pretty shocked that Colbert and Stewart weren’t making the bucks. However, even more disturbing is a post I came across on THR, Esq., which quotes Tony Fox, a Viacom/Comedy Central PR rep, with a rather pointed remark when asked “whether [Comedy Central] will now target websites and bloggers who post unauthorized clips from the show”:
“Yes, we intend to do so. My feeling is if (websites) are making money on our copyrighted content, then that is a problem.”
Too bad that fails to take into account that little thing called Fair Use, the same principle which allows comedy shows interlaced with news to take swipes at popular culture and media from other networks. Fox’s statement does sounds somewhat unintentionally overinclusive–surely he didn’t mean all embedded video clips are instances of infringement. Even the players on www.thedailyshow.com and www.colbertnation.com allow embedding. Either way, the words were definitely provocative.
“We have always tried to be as permissive as possible when looking at what might be fair use, and we haven’t changed our approach at all. Frankly, fair use works for us. I can’t recall a time we’ve ever sued a blogger for the use of a Comedy Central clip, and there’s no reason to believe that would be more likely to today.”
This answer is much more along the lines of what I would have expected from a PR representative. But does that make this PR fluff? Time will tell, I suppose. In the meantime, we’ll keep our eyes peeled for takedowns, nastygrams, and suits.
Comments Off Posted in: Commentary on March 4, 2010
This week, court documents were posted online indicating that Jammie Thomas-Rasset’s third trial is set for next October. Hat tip to Ben Sheffner for reporting this on Monday on his Copyrights & Campaigns blog.
A few weeks back on our Podcast and blog (see here, here, and here), we covered the first part of this story when Judge Davis granted a remittitur reducing the damages in the case from $1.92M ($80,000 per song infringed) to $54,000 ($2,250 per song infringed). As we noted, once a remittitur has been granted, the opposing party has the option to either accept the reduction in damages or have a new trial. They opted for the new trial, which will only concern the issue of damages.
A bigger question, as we (and Sheffner), have noted is whether the ultimate amount of damages will be capped in the new trial at $54,000 (based on the remittitur) or whether the plaintiffs will be able to cover any amount within the spectrum of statutory damages under the copyright act.
While some laws have been easily applied our new technology-laden world, others either provide complications or simply have not yet been applied–making the legal significance of a piece technology unknown. In his post, Goldman points out several recent decisions concerning the application (or potential application) of 4th Amendment privacy rights to technology in both civil and criminal litigation, including: cell phone and text message privacy; expectations of privacy in documents or data held by a third party; and GPS tracking devices and a right to privacy. Read his post for the full recap.
You might not think the particularities of search and seizure law matter much to you (I don’t commit crimes anyways! Why should I care what the police can search?!). However, you may find the fundamental concepts which support these laws today might influence future policies that affects our electronic data and online activity privacy rights–especially when it comes to how online service providers can handle our private information, whether it’s demographics, physical mailing address, phone numbers, e-mail, social security numbers, and the list goes on. It’s very much a subject worth following as it develops.
Basic Background of the 4th Amendment “Right to Privacy”
If you are not already a lawyer, law student, or US constitutional aficionado, you probably recall the 4th Amendment from your high school (or college) civics classes. Embodied as part of the Bill of Rights, the 4thAmendment affords a right to the “people to be secure in their persons, houses, papers, and effects, against unreasonable search and seizures.” Additionally, the text provides a method for authorities to conduct what would be otherwise “unreasonable searches and seizures” if they obtain a warrant, “upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. “ Side note: the 4th Amendment applies to the States through the 14th Amendment, hence why we see _state_ courts grappling with the application of the U.S. Constitution to local matters. (See Mapp v. Ohio, 367 U.S. 643 (1960)).
You’ll notice there is no mention of the word “privacy” within this Amendment, but we’ve all come to know this section of the Constitution to afford a general right to privacy. In fact, the modern notion of a “right to privacy” was articulated into both criminal and civil law through judicial decisions interpreting the meaning of the textual language of the 4th Amendment.
The 4th Amendment is commonly invoked in criminal matters. Even if you’re not especially familiar with criminal law, you probably know that a police office can’t just walk into your home and seize a piece of evidence. Absent certain exigent circumstances, an officer would need to have a warrant to conduct such a search for contraband or evidence. Similarly, if you are stopped on the street by an officer, absent probable cause, if that you have not committed a crime witnessed by the officer, you cannot be arrested nor have your purse or backpack searched without a warrant. Note here that the concept of “seizure” also extends to a person– if you are arrested, you are effectively seized–in addition to search of belongings. In the law, this prohibition on search and seizure was articulated into a test which is still applied today in Katz v. United States, 389 U.S. 347 (1967). The right extends to tangible and intangible property where a person has an ” reasonable expectation of privacy”– the expectation must be one that is generally accepted by society, not subjectively by an individual. E.g., just because I consider the open trunk area of my SUV which is visible to to the public to be a private area, doesn’t automatically deem it so.
The effect of the 4th Amendment is profound in criminal proceedings. Importantly, a rule known as the “exclusionary rule” prohibits the introduction of unconstitutionally obtained evidence into the record on trial (a jury should never see it). Thus if that “expectation of privacy” was violated when an officer searched an individual, in most circumstances it will not be permitted into evidence at trial. Of course, like with almost everything in the law, there are a number of exceptions and the law is incredibly nuanced.
Beyond criminal proceedings, the notion of an “right to privacy” is a subject in civil law too. A number of torts recognized in the U.S. legal system which have evolved from the “expectation of privacy” concept. In other words, should a person find themselves the victim of a civil privacy injury, they can sue another person (or legal entity) for damages and sometimes equitable relief (e.g., an injunction). The most universally recognized throughout the 50 states are: “intrusion on solitude” (e.g., physical intrusions on private areas); “false light” (e.g., wrongly portraying someone in a news report on purpose, or defaming someone); “public disclosure of private facts” (e.g., publishing or disseminating certain private facts about a person); and, “misappropriate on likeness” (e.g., using a person’s picture in a commercial advertisement without permission). A number of other laws governing privacy rights have also been legislated, including the handling of electronic data (see Electronic Communications Privacy Act and the Stored Communications Act) and certain protections on sensitive health care information (HIPAA).
Both from the Constitutional and civil standpoints, these laws regulate the everyday privacy we enjoy and sometimes take for granted. As societal norms evolve, it’s important to ensure the law properly reflects what we think of as privacy.
Comments Off Posted in: Commentary on January 19, 2010
On December 22, 2009, the Federal Circuit ruled all issues on appeal in favor of i4i. The Federal Circuit reestablished the effective date of the injunction to January 11, 2010. Microsoft is left with few avenues in terms of the litigation. They can appeal to the Federal Circuit (again) and ask for a rehearing en banc. Another viable option maybe to appeal the Circuit court’s ruling to the Supreme Court. Finally, they can always wait and see what happens will the Bilski case, which was argued before SCOTUS earlier this fall, and hope the ruling affects the underlying validity of i4i’s patent (not an attractive option).
We covered the first part of this saga on our podcast back in August. In short, i4i Limited Partnership sued the 800 lb gorilla, Microsoft, for patent infringement based on its Patent # 5,787,449. The patent claims “a system and method for the separate manipulation of the architecture and content of a document, particularly for data representation and transformations.” The target of i4i’s litigation was Microsoft’s XML document editing software which is integrated into Microsoft Word (primarily affecting Word 2003 and 2007). More specifically, i4i claimed Microsoft willfully infringed the ’449 patent. After a jury found Microsoft guilty of infringement, the district court awarded i4i $200M for the infringement, an additional $40M because the infringement was willful, and pre- and post-judgment interest. Ouch.
Here’s the kicker though. In August, i4i filed a post-judgment motion seeking to permanently enjoin Microsoft from supporting, using, or selling editions of MS Word that contained the infringing technology. The motion was granted; and, Microsoft was dealt a serious blow to the gut. This sparked a fury of speculation in the blogopshere and media as everyone tried to figure out the fate of MS Word. As you might imagine, Microsoft did not lay down in defeat– instead they filed an emergency motion to stay the injunction. The stay was granted and Microsoft filed an appeal before the Federal Circuit challenging the ruling, arguing the District Judge erroneously construed a claim– in lay-speak, Microsoft argued that the Judge incorrectly applied meaning to a portion of the invention which made the patent broader than what was actually claimed. Additionally, Microsoft argued that the patent should be invalidated and injunction lifted through other precedent (KSR and EBAY) and pandered about with some other evidentiary arguments that occurred during the trial.
Most importantly, the injunction became effective this week, and Microsoft was forced to comply with it. Since the appellate decision, sources are reporting that Microsoft has indeed made changes to the software to comply with the ruling. The changes will apparently allow Microsoft to continue selling versions of Word without violating the injunction. Fear not! Word is here to stay– in some form. No word yet if it is technically feasible for Microsoft to redevelop the XML editor in a way which prevents them from violating the ’449 patent. However, I suspect Microsoft will do something to reincorporate the lost XML functionality back into future versions of Word.
Something that I have not seen covered on other blogs is how this injunction is affecting Microsoft’s corporate clients. I’ve already received a handful of phone calls from friends and even a family member asking about the Federal Circuit’s ruling. Each of these people are employed at the executive or senior executive levels of Fortune 500 companies and all expressed concern about how the ruling was going to affect their company’s future revenue streams. Undoubtedly, a large number of companies who develop products that depend on certain functionality (like XML manipulation) or proprietary file formats (DOCX and DOCM come to mind) might have just been hurt in a previously unanticipated way. Depending on what Microsoft changes, this might end up being the focus of more lawsuits from large corporate licensees. On a brighter note, maybe the litigation will turn around the economy? <kidding>
Stay tuned for more updates. I’m sure they are coming.
Comments Off Posted in: Commentary on January 14, 2010