Entertainment Law Update on Aereo June 26, 2014
In addition to the cellphone opinion we already covered, on June 25th, the Supreme Court decided the Aereo case in favor of the major broadcasters.
We’ve been a little tied up, but our friends at the Entertainment Law Update did a quick podcast discussing the opinion. It’s some of the best analysis of the opinion we’ve seen. Hopefully we’ll be able to chime in with a few thoughts soon.
The Supreme Court handed down an opinion in two related cases relating to searching cell phones. Both cases involved defendants who were searched incident to arrest. Those defendants had cellphones on their person, and, without first obtaining a warrant, the police officers searched the cellphones for evidence of unrelated crimes.
When someone is arrested, police may conduct a limited search of that person and the immediate surroundings for the safety of the police officer. This often includes emptying pockets, or searching the inside area of a car where the person was sitting. This kind of search is also justified due to a risk of defendants destroying evidence on their person.
The Court held that neither of these justifications come into play with a cellphone. The device is not dangerous, and there is no reason to think that, when seized by the police, there is any risk of destruction of evidence. While data on phones may be encrypted or remotely wiped, neither justifies a warrantless search of the phone. The concern about destroying evidence is typically about evidence in the possession of the defendant: that he would flush drugs down a toilet, or shred papers. The concern is not that a third party would find out about his arrest and instigate a remote wipe.
Like all cases involving the Fourth Amendment, the Court was careful to state that there may be exceptions to this rule. If, for instance, the police had specific information that data on the phone implicated public safety, or there was another pressing need (based on reliable information), the warrant requirement could be waived.
Importantly, the Court put a lot of weight on cellphones containing a large amount of personal information — information that would not otherwise be readily available to police officers. This strikes me as a solid win for digital privacy.
I leave you all with this quote from the Chief Justice’s opinion:
In 1926, Learned Hand observed . . . that it is “a totally different thing to search a man’s pockets and use against him what they contain, from ransacking his house for everything which may incriminate him.” United States v. Kirschenblatt, 16 F. 2d 202, 203 (CA2). If his pockets contain a cell phone, however, that is no longer true. Indeed, a cell phone search would typically expose to the government far more than the most exhaustive search of a house: A phone not only contains in digital form many sensitive records previously found in the home; it also contains a broad array of private information never found in a home in any form—unless the phone is.
Judges in the Federal Circuit and Supreme Court appear to know an abstract claim when they see it, but they don’t seem to be able to delineate any guidance for the rest of us mere mortals.
At least, that’s the feeling a lot of folks are getting from the most recent patent case out of the Supreme Court. The case, that involved structured settlements, continues to blur the line between patentable computer processes and unpatentable business methods.
The case only came out an hour ago (as of writing this). I’m sure there will be insightful analysis over time, but meanwhile many of us are feeling a bit lost.
Posted in: Commentary by Ben Snitkoff.
Second Circuit Limits Scope of Data Retention June 18, 2014
On June 17, 2014, the Second Circuit Court of Appeals addressed the question of:
whether the Fourth Amendment permits officials executing a warrant for the seizure of particular data on a computer to seize and indefinitely retain every file on that computer for use in future criminal investigations.
The Second Circuit held that the Fourth Amendment does not permit that conduct. The court relied on underlying principles of the Fourth Amendment in finding that the government may not seize and retain all documents, regardless of whether they were responsive to a warrant.
The Fourth Amendment requires that a warrant specify the documents and things to be seized. While modern technology allows for police officers to easily copy the entire contents of a hard drive, that does not permit them to retain those documents indefinitely, or search documents that were not covered by the warrant through which they obtained the hard drive.
In this case, the government obtained a narrow warrant in 2003. That warrant did not include certain personal records. Despite separating the personal records from the business records, the government retained the personal records until 2006. The government then obtained a second warrant, and searched those personal records, which led to the charges from which this case arose.
Because the government had no basis for retaining those personal records for so long, that they obtained a warrant several years later did not cure the underlying problem: that they still had the documents long after they should have been destroyed.
This is certainly a win for the public, albeit a limited one. We’ll continue to closely watch the development of case law surrounding the Fourth Amendment with relation to technology.
In an opinion in an appeal from a criminal case, the Third Circuit Court of Appeals has held that, under the circumstances presented, a defendant had no expectation of privacy in the WiFi signal coming from his home.
The facts are these: in 2010, a police officer was conducting an investigation into the sharing of child pornography on the Gnutella network. After determining the IP address of the user sharing the materials, the officer obtained a warrant. Upon executing the warrant, the officer found no illegal materials on the target’s computers, but found an unprotected WiFi router. With permission, the office attached a computer to the router that would allow him to remotely monitor the network.
Eventually, the WiFi router was accessed, and the illegal materials were once again shared on Gnutella. Accessing the router remotely, the officer obtained the MAC address of the sharing computer. Using that MAC address, a directional antenna, and a program called MoocherHunter, the officer determined which house the signal originated from, resulting in the defendant’s arrest.
The defendant argued that this constituted an illegal warrantless search. The court disagreed, first asking:
(1) whether the individual demonstrated an actual or subjective expectation of privacy in the subject of the search or seizure; and (2) whether this expectation of privacy is objectively justifiable under the circumstances.
The defendant argued that this case was similar to Kyllo, in which police used thermal imaging to determine whether someone was using heat lamps: commonly used in the cultivation of marijuana. The court noted that here, the defendant made no attempt to keep his actions to within in home. Indeed, in order to access the unprotected router, the defendant had to send radio signals outside his home. This would have been a fine place to end the discussion however, the court continued:
Here, the presence of [the defendant's] unauthorized signal was itself “wrongful.” When [he] deliberately connected to the Neighbor’s unsecured wireless network, he essentially hijacked the Neighbor’s router, forcing it to relay data to Comcast’s modem and back to his computer, all without either the Neighbor’s or Comcast’s knowledge or consent. [The defendant] was, in effect, a virtual trespasser.
It does not appear that this particular finding was necessary to determine this case, and the idea that merely using someone else’s unprotected network without permission is unauthorized or illegal is worrying. The court stopped short of saying that “wireless mooching” is per-se illegal, but the dicta clearly shows the court’s opinion of using unprotected networks.
The court did take a moment to chide the district court for making a common mistake in Fourth Amendment analysis. The district court found that because the defendant broadcast his signal to a third party, the police did not need a warrant. This comes from a common misreading of Fourth Amendment case law, which states that you don’t have an expectation of privacy in things you willingly turn over to a third party. However, that only means that if that third party has possession of those things, the third party can feely turn them over to the police. It does not mean, as district courts often find, that police can obtain information also held by third parties by any means, regardless of the implications to the Fourth Amendment.
Overall, I think the court got this right. If I’m sending data to a neighbor’s house, and the officer, with permission from the neighbor, and readily available software and hardware, can determine where that data is coming from, he hasn’t violated the Fourth Amendment. However, predicating this finding on the access to the network being “unauthorized” or “likely illegal” seems to go too far.
In a terse opinion, the Sixth Circuit reaffirmed that someone who has the right and ability to supervise infringing conduct, and has a direct financial interest in that infringement, can be vicariously liable for copyright infringement, despite committing no direct acts of infringement themselves.
In this case, Roy Barr owned 95% of an LLC that ran a restaurant that offered music and dancing. Over the course of several years, BMI sent the restaurant more than twenty letters informing them of infringement and offering a license. No response was given.
Roy Barr, who represented himself, argued that because he did not perform the copyrighted music, he could not be liable. The court conducted a vicarious liability analysis and found that this case “falls within the heartland of vicarious liability,” and was essentially “the canonical illustration of the doctrine.”
This case serves as a stark reminder to owners and operators of venues that publicly perform music that the music must be properly licensed, or the owner may be liable for the infringing acts of the restaurant and its employees.
Architect Draws on DMCA in Copyright Case June 5, 2014
Yesterday the Second Circuit handed down an interesting opinion testing the boundaries of copyright law in protection of architectural works, with a DMCA count thrown in for good measure.
Plaintiff, an architect, sued construction companies for copying his designs for colonial homes in excess, and after the expiration of, a license granted for the use of such plans. Traditionally, works of architecture were not protected by United States Copyright Law. In 1990, after the US became signatory to the Berne Convention, Congress passed a law that added “architectural works” to those works protected by copyright.
The defendants hired additional designers to modify the plans after they were created by the plaintiff, and those modified plans were subsequently used in the construction of homes. Plaintiff alleges that the plans were copied in violation of his copyright, and that, in copying, defendants removed certain markings that constituted “copyright management information” under the DMCA.
The court quickly dealt with the DMCA argument, stating that it had not been fully developed below. “Copyright management information” is broadly defined in 17 U.S.C. 1202, and it seems like the plaintiff may have been able to make out a claim if it were properly pursued below, but it is speculative at best.
The claims of copyright infringement were the focus of the majority opinion, which was well-analyzed by the court. The analysis boiled down to this: there are certain hallmarks of a colonial design that were not original works of this plaintiff. There are other elements of architectural design that are functional and demanded by consumers: countertops on kitchen walls, a closet in each bedroom. What original elements remained, essentially small flourishes, were either not modified from the original plans, or not substantial. So, those elements that may have been copied were not protected, and those that were protected were not copied.
Somewhat surprisingly, case law on copyright in architectural design is still in its infancy, but this opinion is likely to be a guiding force in the years to come. Interestingly, the case also sets up a potential circuit split with regard to how architectural cases are considered: with the Second Circuit treating them like normal creative works, while the 11th Circuit treating them more as compilations.
Posted in: Analysis by Ben Snitkoff.
SCOTUS Hands Down Two More Unanimous Patent Opinions June 3, 2014
The opinions are in the hotly anticipated Akamai case, where the Court rejected the Federal Circuit’s expanded induced infringement doctrine, and in the less anticipated Nautilus case regarding certainty in patent claims. We’ve linked to some solid analysis by the folks at Patently-O, above.
District Court Awards Fees In Patent Dispute June 2, 2014
I believe the opinion is the first to award fees under a new standard that the Supreme Court handed down in April. That case was not unusual in that it told the Federal Circuit that the test it was using, here to determine whether fees should be awarded, was too restrictive (a common theme in Supreme Court patent opinions).
This case is important because it has a lot of the features that people most associate with so-called patent trolls: settlement offers from plaintiff well-below the cost of litigation, limited or absent pre-suit diligence, weak infringement claims, and weak patents. This case is less important because those cases make up a relatively small percentage of patent litigation. Further, the conduct that the plaintiff engaged in was arguably independently sanctionable, even without the need of 35 U.S.C. 285 to shift fees.
Notably, nothing in this opinion reach patent trolls who send demand letters, but never file a case. If anything, this opinion will encourage trolls to send more demand letters to companies, but avoid reaching a court room.
Bill to Reform ITC Introduced in House May 30, 2014
Two Representatives have introduced a bill in the House aimed at preventing non-practicing entities (NPEs) from using the International Trade Commission (ITC) as a venue for patent disputes.
First, some background. The ITC is an administrative body charged with holding hearings and making adjudications regarding imports into the United States. In addition to its other duties, it may prevent the importation of items that infringe US patents, trademarks, or copyrights. However, in order to prevent importation of infringing articles, a complainant (or plaintiff) in the ITC must prove that there is a domestic industry protected by that IP.
Before 2006, injunctions were regular in patent cases in Federal District Court. If an NPE won a case against an operating company, the NPE would almost certainly get an injunction, causing substantial damage to that company. The risk of facing an injunction was a powerful force in driving operating companies to settle cases. If the alternatives are pay money or shut down, many companies would opt to pay.
After the eBay v. MercExchange case, obtaining an injunction in District Court became more difficult, particularly in cases where the plaintiff was an NPE. However, the ITC is a creature of statute, and doesn’t play by the same injunction rules. If a complainant wins a case in the ITC, they automatically get an importation ban against at least the parties found to infringe. However, in order to win the case, you must prove that there is a domestic industry in products protected by the patents the other parties infringe. The most obvious case is that the complainant makes a product protected by a patent, and the respondents are importing devices that infringe that same patent.
After revisions to the statutes that govern the ITC in 1998, complainants could prove that there was a domestic industry by showing that they made substantial investments to license other parties to their patents, or that people who have licenses also have products that practice the asserted patents.
In recent years, investigations filed by NPEs have accounted for a growing percent of investigations before the ITC, and the call for reform has been growing.
The bill introduced in the House purports to be that reform. However, whether the bill would be effective is questionable, particularly because there is no word yet of a corresponding bill introduced in the Senate.
There are several immediate problems with the bill. First, the bill attempts to modify the ability to rely on licensing by replacing the word “licensing” with:
substantial investment in licensing activities that leads to the adoption and development of articles that incorporate the patent, copyright, trademark, mask work, or design
This provision is, at best, inartfully drafted. “Articles that incorporate the patent” has no clear meaning in case law. Similarly, with “incorporate the . . . copyright.” This invites litigation over the meaning of the term when it could be more clearly stated as:
substantial investment in licensing activities that leads to the adoption and development of articles that practice the patent, embody the copyrighted work, or incorporate the trademark, mask work, or design
It is also not very clear what the drafters mean by “adoption and development” and why both actions are necessary, as long as there is “substantial investment” in those articles.
The bill proceeds to put in statute, with some modifications, some recent rule making changes in the ITC which allowed a preliminary investigation with respect to domestic industry. However, the short-description of the bill and the bill itself disagree on the timing. The 1-pager says that “once a preliminary investigation in initiated, requiring [sic] an early initial determination as to the DI standing of a complaint within 45 days.” However, the bill requires that “The Commission shall render its determination in the preliminary investigation under this paragraph not later than 45 days after the filing of the complaint.”
Typically, in ITC practice, an investigation is not initiated until thirty days after the complaint is filed. Additionally, forty-five days is less than half the time the Commission has previously allotted for these preliminary investigations. It seems virtually impossible to allow the parties to conduct discovery, submit briefing, hold a preliminary hearing, and issue a written opinion within either forty-five days of filing, or even forty-five days after a preliminary investigation was initiated.
Finally, even in cases where a complaint fully proves their case, the ITC may choose not to exclude certain articles for importation if it was not in the public interest. Those rare cases were traditionally limited to cases where public safety and welfare were endangered by an importation ban. This bill expands the public interest to include competitive conditions in the United States. This section appears to accomplish what it sets out to do, though the ITC’s Administrative Law Judges may be reluctant to hold that the importations of consumer luxury goods rise to a level of public interest so important as implicate these new guidelines.