An interesting confluence of events brings us back to my new favorite question: can the rights of copyright owners survive in the era of BitTorrent? Stated even less elegantly, if “content yearns to be free” (which is some silly phrase I must’ve heard somewhere that, nonetheless, succinctly sums up this whole dichotomy between copyright owners and on-line content thieves), what is to become of that precious right held by the content creator to actually make money from his or her creations?
Slight digression: as some of you know, I am a cartoonist. I like to say “I was syndicated before I went to law school.” I like to say it because it’s true, and well it also sounds pretty cool when delivered in an off-hand way. Try it, you’ll see. It certainly beats “I worked at the Dairy Queen.” Try that one too and you’ll see what I mean. Suave, cool and artsy vs. solid, clear-cut loser. So where was I going with this? Only that, as a content creator, I understand the desire to make some dough off of your art. Don’t get me wrong, I’d give my stuff away – and have (and still kick myself for not giving it to the National Lampoon when they said, “We love it, but we’re out of money thanks to Sam Gross over paying for everything”) – but when it comes down to it, I’d much rather get paid. It’s like getting paid to eat ice cream. So the point that I’m taking way to long to make is that wrong, uncool and just plain wicked to deprive a creator of the right to profit from his or her creation by downing-loading, copying, “sharing” or stealing it off of, over or through the Web. If you disagree, just let me know when you wouldn’t mind my stopping by to take anything of your that I might like for free.
Ok, back to our program. . . . So the interesting confluence of events are: (1) the illegal copying by a California Congressional candidate of a Don Henley song (and his vehement assertion that he had a right to copy based on the First Amendment); (2) a ruling in the Pirate Bay case (involving a P2P site not entirely dissimilar to Napster) and the political fall out from that ruling; and (3) the technology on the horizon that will make all this copying even easier.
The Wacky Politician – I am generally distrustful of politicians. I suppose that I’m of the opinion that they are self-serving, disingenuous and a-moral until proven otherwise. That said, I am nonetheless constantly surprised by what scumbags some of these people are (although generally so very, very nice when you meet them in person). Enter Republican (it figures) candidate for the U.S. Senate, Charles DeVore. According to the former Eagles rock star, Don Henley (free association: I once saw them in concert), the Republican (it figures) used Henley's songs "The Boys of Summer" and "All She Wants to Do Is Dance" in two campaign videos without Henley’s authorization. Note to would-be Republican (it figures) Senator: that’s copyright infringement, bucko.
DeVore (Republican; it figures) responded by claiming he had a First Amendment right to use the work. Huh? What, does he think no one’s listening to him? Maybe that’s how the Republicans do it. (Another digression: is it just me, or does it seem like a lot of Republicans went to USC? And why do those people from USC think it’s something to be proud of? And why do they buy those flags and hang them from their house and act as if they’re – well, Republicans all the time?) Anyway, so Henley sues, and DeVore plans to counter-claim and – even better – now apparently intends to use Henley’s music as part of a parody song, which you will recall may then entitle him to a fair use defense. Maybe it’s just me, but I bet that was his lawyer’s idea and not DeVore’s (the Republican; it figures).
For those of you who don’t remember much about the fair use doctrine, it permits short quotations used “for purposes such as criticism, comment, news reporting, teaching … scholarship or research [are] not an infringement of copyright.” 17 U.S.C. § 107. Courts evaluate fair use by considering four factors: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the amount and substantiality of copying, and (4) the market effect. The most significant is the last one. If the copy lessens the demand for the original work, it’s difficult to claim fair use. On the other hand, if the copy is used strictly for purposes of parody, criticism, or news reporting, it’s more likely to be deemed “fair.”
The Pirate Bay Ruling -- The Pirate Bay is a Swedish website that indexes and tracks bittorrent (.torrent) files. Since its humble beginnings in 2003 (it was created by the Swedish anti-copyright organization Piratbyrån – translated “The Piracy Bureau”), it has been involved in a number of lawsuits as both plaintiff and defendant (although not at the same time). The L.A. Times described the site as "one of the world's largest facilitators of illegal downloading", and "the most visible member of a burgeoning international anti-copyright—or pro-piracy—movement". By the end of 2008, it claimed to have over 25 million unique peers, meaning users who upload torrent files which link to the copyrighted material. With success like that, it will come as no surprise that several days ago, it’s principals were found guilty of criminal copyright infringement and sentenced to one year in a Swedish prison. (Which I imagine is filled with furnishings from Ikea, and serves those spicy ginger cookies to the prisoners.)
Surprisingly, this ruling has caused mass demonstrations against the jailing of these “pirates,” and moreover, the has apparently caused many young Swedes to affiliate with ‘The Pirate Party', a new political party that supports free file sharing for non-commercial use. According to press reports I have read, support for the Pirate Party had now surpassed that of the Swedish Green Party. (Huh, here we are, back on politics.) I find this fascinating because it strongly suggests that those who so firmly believe that “content is yearning to be free” (even if – surprisingly -- the contents of their own homes does not), will seek such homeostasis through political change. And why not? If people so strongly believe that the content created by others should belong to all – and not to those who created it alone – let’s put this thing to a vote. We know how Charles DeVore would vote.
Technology On the Horizon – And now for the coup de grace: Bittorrent tracking sites such as the Pirate Bay are on the verge of obsolescence. The technology poised to overtake them includes applications such as the Tribler, which – unlike those bittorrent file sharing applications that need to be pointed at torrent tracking sites such as the Pirate Bay, conducts its searches over a network of fellow bittorent users, thereby avoiding the centralized tracking sites entirely. Moreover, with applications such as iPredator, downloading can happen anonymously, meaning that copyright owners and prosecutors will have an even more difficult time locating the infringement and the infringers. Chuck DeVore, party of one? Your table is ready.
One last note: We’ll be discussing the inconvenient mismatch between the real world of P2P file sharing and copyright jurisprudence at the next meeting of BC Edge, April 29, 2009 at 12 noon Pacific Time. If you’d like to opine on whether copyright owners can survive in an era of fast evolving, dynamic, disruptive innovation, and whether the fair use doctrine should apply to file sharing, just send me an email and I’ll respond with the call-in number and pass code. My email is jonathan.pink@bryancave.com.
Monday, April 20, 2009
Tuesday, April 7, 2009
Second Circuit Revisits Key Word Debate
Breaking News (if you consider it still “breaking” when in fact it occurred a couple of days ago).
The Second Circuit – the only court to firmly hold that key word advertising does not constitute trademark infringement – has overturned a lower court’s decision to dismiss Rescuecom Corp.’s trademark infringement claim against Google based on precisely such facts (e.g. selling the term Rescuecom as a keyword to Rescue’s competitors), and remanded the case for further proceedings. (Rescuecom Corp. v. Google Inc., case number 06-4881).
In making this ruling, the Second Circuit stated that, by selling the Rescuecom’s mark as a keyword to advertisers, Google’s conduct was likely to cause confusion, at least with respect to search-engine users who searched for Rescuecom’s trademark on Google. This, the Court found that Rescuecom had adequately alleged a Lanham Act claim. The Court however did not express any opinion as to whether Rescuecom could prevail on that claim.
You will recall, the Second Circuit previously ruled in 1-800 Contacts Inc. v. WhenU.com Inc. that WhenU’s triggered pop-up adds touting 1-800s competitors did not constitute trademark infringement because it was not a “use in commerce” as required under the Lanham Act. To a large degree, that case turned on the fact that WhenU did not use, display, or sell the 1-800 trademark to competitors. Here, however, Google is alleged to do all this and more.
We’ll see where this goes. It will be particularly interesting given the fact that the Second Circuit has been in the minority with respect to key word cases.
The Second Circuit – the only court to firmly hold that key word advertising does not constitute trademark infringement – has overturned a lower court’s decision to dismiss Rescuecom Corp.’s trademark infringement claim against Google based on precisely such facts (e.g. selling the term Rescuecom as a keyword to Rescue’s competitors), and remanded the case for further proceedings. (Rescuecom Corp. v. Google Inc., case number 06-4881).
In making this ruling, the Second Circuit stated that, by selling the Rescuecom’s mark as a keyword to advertisers, Google’s conduct was likely to cause confusion, at least with respect to search-engine users who searched for Rescuecom’s trademark on Google. This, the Court found that Rescuecom had adequately alleged a Lanham Act claim. The Court however did not express any opinion as to whether Rescuecom could prevail on that claim.
You will recall, the Second Circuit previously ruled in 1-800 Contacts Inc. v. WhenU.com Inc. that WhenU’s triggered pop-up adds touting 1-800s competitors did not constitute trademark infringement because it was not a “use in commerce” as required under the Lanham Act. To a large degree, that case turned on the fact that WhenU did not use, display, or sell the 1-800 trademark to competitors. Here, however, Google is alleged to do all this and more.
We’ll see where this goes. It will be particularly interesting given the fact that the Second Circuit has been in the minority with respect to key word cases.
Another Opinion Copyright Ownership In the Era of BitTorrent
I recently wrote about an artist who tried to gather support for a national day of “dining and dashing” to promote what he considered to be the injustice copyright owners face in the era of BitTorrent. There is no doubt that there currently exists an inconvenient mismatch between the real word of P2P file sharing and copyright jurisprudence, and that this inevitably leads to the question: can copyright ownership survive in an era of fast evolving, dynamic, disruptive innovation and should it?
Now a new book tackles this very question. Entitled Against Monopoly, and written by two econ professors at Washington University, David K. Levine and Michele Boldrin argue that intellectual property rights may stifle – rather than encourage – innovation, claiming that competition requires some degree of imitation.
Maybe.
As I argued in my last post on this issue, Professors Levine and Boldrin would seem to agree that even with P2P file sharing, musicians for example have an ancillary ability to make money off of their work, for example by using their increased popularity (that comes from easy access – read no coast – to their music) to sell more concert tickets, tee-shirts, etc.
While I wouldn’t go as far as they by suggesting we abandon the Copyright Act (far from it), I do think it needs some revision in order to allow for the reality of easy access to material in the Digital Age. Maybe the solution is to levy significant taxes on file-sharing companies such as BitTorrent, and use those proceeds to the artists whose works fuel these P2P sites. OK, that sounds pretty unworkable, even as I write it. But then again, what’s your bright idea?
Now a new book tackles this very question. Entitled Against Monopoly, and written by two econ professors at Washington University, David K. Levine and Michele Boldrin argue that intellectual property rights may stifle – rather than encourage – innovation, claiming that competition requires some degree of imitation.
Maybe.
As I argued in my last post on this issue, Professors Levine and Boldrin would seem to agree that even with P2P file sharing, musicians for example have an ancillary ability to make money off of their work, for example by using their increased popularity (that comes from easy access – read no coast – to their music) to sell more concert tickets, tee-shirts, etc.
While I wouldn’t go as far as they by suggesting we abandon the Copyright Act (far from it), I do think it needs some revision in order to allow for the reality of easy access to material in the Digital Age. Maybe the solution is to levy significant taxes on file-sharing companies such as BitTorrent, and use those proceeds to the artists whose works fuel these P2P sites. OK, that sounds pretty unworkable, even as I write it. But then again, what’s your bright idea?
Thursday, March 26, 2009
Blog Bites -- A Few More Words on Micro-Blogging
Not long ago I wrote a long, detailed piece on the potential pitfalls involved in blogging. What is not mentioned in that article in any detail is mico-blogging.
Micro-blogging is defined by Wikipedia as a form of blogging “that allows users to send brief text updates or micromedia . . . to be viewed by anyone or by a restricted group. . . .” Think Twitter or Facebook, MySpace, LinkedIn or Xing: Micro-blogging typically consists of short pieces, almost like “sound bites” or “blog bites,” if you will. They provide short, immediate commentary, and often related to such important, breaking news as “What I’m doing now is . . . .”
Because one often uses micro-blogging only with respect to one’s close friends (or expanded circle of friends), one’s micro-blogged persona may differ from one’s professional persona. Ask yourself this: would I “friend” my boss on Facebook and let him or her see everything that’s going on in my personal life? If the answer is “no,” you’ll understand why a number of companies no insist that job applicants “friend” them so they can check out the what isn’t on the resume.
Is this legally acceptable? Seems that it. I put the question to one of my colleagues who practices in the firm’s Labor & Employment Group, and her response was that it would seem to pass legal muster. (I’m omitting a slew of caveats, but that was the general idea.)
What’s more, a colleague in our Atlanta office chimed in with an anecdote about having found the “smoking gun,” which allowed his team to prevail on a lawsuit, on the plaintiff’s Facebook page. Hey, an admission is an admission no matter where you find it. But with the advent of the Internet, and the proliferation of micro-blogging sites, there are more opportunities to make potentially case-killing statements, and a greater chance that, once made, they won’t simply disappear into the ether.
Add into this mix, the Federal (and California, etc.) rules on electronic discovery, and you can see a storm brewing. In a nutshell, the Federal Rules explicitly incorporate e-discovery as subject to disclosure requirements. While certain “safe harbors” exist, for example where the e-information sought is automatically deleted as part of good-faith, routine system operations (and not as part of a plan to destroy evidence), the fact is that most of what we create in cyberspace (micro-blogs included) would be subject to such discovery, and we – and our clients – would have a duty to preserve such data, search for it and (gulp!) disclose it (provided it is relevant, not privileged and "reasonably accessible" of course).
So, what happens when Web 2.0 (social networking, Twitter, Facebook, etc.) meet e-discovery? The answer may depend on how – and if – such data can be archived. In other words, is it there when the opposing counsel asks for it? Certainly one could ask for a print out of everything available as of the date of the request.
Moreover, if the data resides on the Twitter, Facebook or LinkedIn server, it may be obtainable by subpoena, and if it has been stored on the responding party’s internal computer RAM, there seems to be no question that it is subject to discovery.
While this area of law is sure to evolve in the coming months, it is something to remember when seeking discovery, or representing a company in their hiring issues. After all, you don’t a blog bite to come back and bite you in the . . . .
Jonathan Pink is a member of the Intellectual Property Service Group at Bryan Cave, LLP. He can be reached at jonathan.pink@bryancave.com
Micro-blogging is defined by Wikipedia as a form of blogging “that allows users to send brief text updates or micromedia . . . to be viewed by anyone or by a restricted group. . . .” Think Twitter or Facebook, MySpace, LinkedIn or Xing: Micro-blogging typically consists of short pieces, almost like “sound bites” or “blog bites,” if you will. They provide short, immediate commentary, and often related to such important, breaking news as “What I’m doing now is . . . .”
Because one often uses micro-blogging only with respect to one’s close friends (or expanded circle of friends), one’s micro-blogged persona may differ from one’s professional persona. Ask yourself this: would I “friend” my boss on Facebook and let him or her see everything that’s going on in my personal life? If the answer is “no,” you’ll understand why a number of companies no insist that job applicants “friend” them so they can check out the what isn’t on the resume.
Is this legally acceptable? Seems that it. I put the question to one of my colleagues who practices in the firm’s Labor & Employment Group, and her response was that it would seem to pass legal muster. (I’m omitting a slew of caveats, but that was the general idea.)
What’s more, a colleague in our Atlanta office chimed in with an anecdote about having found the “smoking gun,” which allowed his team to prevail on a lawsuit, on the plaintiff’s Facebook page. Hey, an admission is an admission no matter where you find it. But with the advent of the Internet, and the proliferation of micro-blogging sites, there are more opportunities to make potentially case-killing statements, and a greater chance that, once made, they won’t simply disappear into the ether.
Add into this mix, the Federal (and California, etc.) rules on electronic discovery, and you can see a storm brewing. In a nutshell, the Federal Rules explicitly incorporate e-discovery as subject to disclosure requirements. While certain “safe harbors” exist, for example where the e-information sought is automatically deleted as part of good-faith, routine system operations (and not as part of a plan to destroy evidence), the fact is that most of what we create in cyberspace (micro-blogs included) would be subject to such discovery, and we – and our clients – would have a duty to preserve such data, search for it and (gulp!) disclose it (provided it is relevant, not privileged and "reasonably accessible" of course).
So, what happens when Web 2.0 (social networking, Twitter, Facebook, etc.) meet e-discovery? The answer may depend on how – and if – such data can be archived. In other words, is it there when the opposing counsel asks for it? Certainly one could ask for a print out of everything available as of the date of the request.
Moreover, if the data resides on the Twitter, Facebook or LinkedIn server, it may be obtainable by subpoena, and if it has been stored on the responding party’s internal computer RAM, there seems to be no question that it is subject to discovery.
While this area of law is sure to evolve in the coming months, it is something to remember when seeking discovery, or representing a company in their hiring issues. After all, you don’t a blog bite to come back and bite you in the . . . .
Jonathan Pink is a member of the Intellectual Property Service Group at Bryan Cave, LLP. He can be reached at jonathan.pink@bryancave.com
Monday, March 16, 2009
An Italian Fling
So I’m sitting in my office the other day, generally depressed about the depression, when my phone rings and (trumpets sound) a new case lands on my desk.
Now, I love the thrill of a new case. It’s like a new love (as best I can remember from way back when). Everything is new, and bright and interesting. And get this: this one was Italian. Actually, an Italian copyright case, to be exact.
Seems that my client – located in Italy -- had been accused by an American company of hacking into the Yank’s computer (located in the U.S.), and then copying software code (from Italy) that is covered by a valid, U.S. Copyright registration. And, of course, the U.S. company was threatening a parade of nasties all covered by the U.S. Copyright Act.
But that really begs the question, doesn’t it: if this was infringement, is it governed by the U.S. Copyright Act? Or is this a dispute that would have to be litigated in Italy?
In general, “United States copyright laws do not have extraterritorial effect, and therefore, infringing actions that take place entirely outside the United States are not actionable.” Subafilms, Ltd. v. MGM-Pathe Comm’ns Co., 24 F.3d 1088, 1091 (9th Cir. 1994) (en banc); Peter Starr Prod. Co. v. Twin Continental Films, Inc., 783 F.2d 1440, 1442-1443 (9th Cir. 1986). In other words, even if the plaintiff is a U.S. based company, and the method of copyright violation occurs by internet connection (as would have been the case if my clients had infringed as alleged), “[a]t least one alleged infringement must be completed entirely within the United States.” Allarcom Pay Television, Ltd. v. Gen. Instrument Corp., 69 F.3d 381, 387 (9th Cir. 1995); see also Danjac, LLC v. Sony Corp., 1998 U.S. Dist. LEXIS 22231, at *22 (C.D. Cal. 1998) (scope of injunction limited to domestic activities).
In Allarcom, the plaintiff was the authorized Canadian distributor of certain television and movie rights, while defendant, Showtime, had U.S. rights to some of the same material. 69 F.3d at 383-384. Co-defendant, General Instrument, manufactured a descrambling device that allowed unauthorized users to receive protected television signals from companies such as Showtime (e.g. they received the content for free by stealing it with the use of the descrambling device). The plaintiff sued for copyright infringement, filing its claim in a U.S. district court. The court held that the Copyright Act did not apply to infringement at issue, as it had occurred in Canada. Id. at 387. Specifically, the court held that although the signal was from the United States, it had been received and decoded in Canada, and thus “the potential infringement was only completed in Canada once the signal was received and viewed.” Id.
So bringing this back to my case, these facts will weigh heavily when negotiating a settlement. That is, while the plaintiff has asked for a boatload of money, I’ve pointed out that if she wants to litigate this case, she’d better brush up on her Italian (where, by the way, the penalties for alleged infringement are not as steep as they are in the U.S.). I’ll let you know haw this goes.
Jonathan.pink@bryancave.com
Now, I love the thrill of a new case. It’s like a new love (as best I can remember from way back when). Everything is new, and bright and interesting. And get this: this one was Italian. Actually, an Italian copyright case, to be exact.
Seems that my client – located in Italy -- had been accused by an American company of hacking into the Yank’s computer (located in the U.S.), and then copying software code (from Italy) that is covered by a valid, U.S. Copyright registration. And, of course, the U.S. company was threatening a parade of nasties all covered by the U.S. Copyright Act.
But that really begs the question, doesn’t it: if this was infringement, is it governed by the U.S. Copyright Act? Or is this a dispute that would have to be litigated in Italy?
In general, “United States copyright laws do not have extraterritorial effect, and therefore, infringing actions that take place entirely outside the United States are not actionable.” Subafilms, Ltd. v. MGM-Pathe Comm’ns Co., 24 F.3d 1088, 1091 (9th Cir. 1994) (en banc); Peter Starr Prod. Co. v. Twin Continental Films, Inc., 783 F.2d 1440, 1442-1443 (9th Cir. 1986). In other words, even if the plaintiff is a U.S. based company, and the method of copyright violation occurs by internet connection (as would have been the case if my clients had infringed as alleged), “[a]t least one alleged infringement must be completed entirely within the United States.” Allarcom Pay Television, Ltd. v. Gen. Instrument Corp., 69 F.3d 381, 387 (9th Cir. 1995); see also Danjac, LLC v. Sony Corp., 1998 U.S. Dist. LEXIS 22231, at *22 (C.D. Cal. 1998) (scope of injunction limited to domestic activities).
In Allarcom, the plaintiff was the authorized Canadian distributor of certain television and movie rights, while defendant, Showtime, had U.S. rights to some of the same material. 69 F.3d at 383-384. Co-defendant, General Instrument, manufactured a descrambling device that allowed unauthorized users to receive protected television signals from companies such as Showtime (e.g. they received the content for free by stealing it with the use of the descrambling device). The plaintiff sued for copyright infringement, filing its claim in a U.S. district court. The court held that the Copyright Act did not apply to infringement at issue, as it had occurred in Canada. Id. at 387. Specifically, the court held that although the signal was from the United States, it had been received and decoded in Canada, and thus “the potential infringement was only completed in Canada once the signal was received and viewed.” Id.
So bringing this back to my case, these facts will weigh heavily when negotiating a settlement. That is, while the plaintiff has asked for a boatload of money, I’ve pointed out that if she wants to litigate this case, she’d better brush up on her Italian (where, by the way, the penalties for alleged infringement are not as steep as they are in the U.S.). I’ll let you know haw this goes.
Jonathan.pink@bryancave.com
Trade Secret Cloak and Dagger: the Economic Espionage Act of 1996
As if getting hit with a claim for misappropriation of trade secrets were not enough, many people do not realize (OK, it came as a surprise to me) that there is a criminal component to misappropriation. That is, at least where the theft is done for purposes of passing off the secrets to a foreign government.
Cloak and dagger: the Economic Espionage Act of 1996 (18 U.S.C. § 1831–1839) criminalizes the theft or misappropriation of a trade secret. Moreover, the offense applies even where the information taken is not top secret. (Although it makes the story so much more interesting if it is highly classified). The EEA involves any commercial information that is neither classified nor related to national defense (in which case it is falls under the run-of-the-mill espionage act).
This EEA in a nutshell: The Act is broken into two parts. The first, 18 U.S.C. § 1831(a), criminalizes the misappropriation of trade secrets (including conspiracy to misappropriate trade secrets and the subsequent acquisition of such misappropriated trade secrets) with the knowledge or intent that the theft will benefit a foreign power. The second, 18 U.S.C. § 1832, criminalizes the misappropriation of trade secrets related to or included in a product that is produced for or placed in interstate (including international) commerce, with the knowledge or intent that the misappropriation will injure the owner of the trade secret.
So far as I can tell, the EEA isn’t used all that often, and when it is, the cases seem to look to the Uniform Trade Secret Act for guidance as to what is -- or isn’t – a trade secret. There was one fairly high profile case decided in August, 2007 in the Northern District of California (before District Court Judge Jeremy Fogel). In that case, Judge Fogel sentenced a Canadian citizen, Xiaodong Sheldon Meng, to 24 months in federal prison "for stealing military software from a Silicon Valley defense contractor and trying to sell it to the Chinese military."
According to my sources, another case is poised to go to trial this May in the Central District of California. That case also involves efforts to sell (or at least deliver) to the Chinese government material that was gleaned by an employee of a military contractor.
Like most criminal conduct, the penalties for violation of the EEA are steep. Penalties for violation of Section 1813(a) include fines of up to $500,000 and imprisonment of up to 15 years. (Organizations can also be guilty of this Act, and while they won’t do any prison time, they will pay a fine of up to $10 million.) Penalties for violation of section 1832 are imprisonment for up to 10 years for individuals (no fines) and fines of up to $5 million for organizations.
jonathan.pink@bryancave.com
949-223-7173
Cloak and dagger: the Economic Espionage Act of 1996 (18 U.S.C. § 1831–1839) criminalizes the theft or misappropriation of a trade secret. Moreover, the offense applies even where the information taken is not top secret. (Although it makes the story so much more interesting if it is highly classified). The EEA involves any commercial information that is neither classified nor related to national defense (in which case it is falls under the run-of-the-mill espionage act).
This EEA in a nutshell: The Act is broken into two parts. The first, 18 U.S.C. § 1831(a), criminalizes the misappropriation of trade secrets (including conspiracy to misappropriate trade secrets and the subsequent acquisition of such misappropriated trade secrets) with the knowledge or intent that the theft will benefit a foreign power. The second, 18 U.S.C. § 1832, criminalizes the misappropriation of trade secrets related to or included in a product that is produced for or placed in interstate (including international) commerce, with the knowledge or intent that the misappropriation will injure the owner of the trade secret.
So far as I can tell, the EEA isn’t used all that often, and when it is, the cases seem to look to the Uniform Trade Secret Act for guidance as to what is -- or isn’t – a trade secret. There was one fairly high profile case decided in August, 2007 in the Northern District of California (before District Court Judge Jeremy Fogel). In that case, Judge Fogel sentenced a Canadian citizen, Xiaodong Sheldon Meng, to 24 months in federal prison "for stealing military software from a Silicon Valley defense contractor and trying to sell it to the Chinese military."
According to my sources, another case is poised to go to trial this May in the Central District of California. That case also involves efforts to sell (or at least deliver) to the Chinese government material that was gleaned by an employee of a military contractor.
Like most criminal conduct, the penalties for violation of the EEA are steep. Penalties for violation of Section 1813(a) include fines of up to $500,000 and imprisonment of up to 15 years. (Organizations can also be guilty of this Act, and while they won’t do any prison time, they will pay a fine of up to $10 million.) Penalties for violation of section 1832 are imprisonment for up to 10 years for individuals (no fines) and fines of up to $5 million for organizations.
jonathan.pink@bryancave.com
949-223-7173
Sunday, February 1, 2009
I'm Just Copying for a Friend
Here’s an interesting one to watch. The Supreme Court issued a one-line order yesterday in the Cable News Network vs. CSC Holdings case indicating that the solicitor general “is invited to file a brief in this case expressing the views of the United States.”
This case involved Cablevision Systems Inc.’s plan to copy its broadcasts for its customers. In other words, rather than copying the program yourself, at home (via Tivo or video, for example), Cablevision would do it for you. Not a bad offer, sort of a customer-centric, friendly service. Except that the movie studios and networks didn’t see it that way. They regarded this as copyright infringement pursuant to 17 U.S.C. § 106.
Section 106, as you will recall, gives the owner of the copyrighted work the right to prepare derivative works based on the copyrighted work, and to display and distribute copies of it to the public. 17 U.S.C. § 106 (1), (4) and (5). But under Sony Corp. of America v. Universal City Studios, Inc. (aka the “Betamax” case), 464 U.S. 417 (1984), the Supreme Court ruled that the making of individual copies of complete television shows for purposes of time-shifting does not constitute copyright infringement. The Court said this was fair use, and ruled that manufacturers of home video recording devices, such as Betamax or other VCRs, cannot be liable for infringement. In short, the case created a legal safe haven for the copying of content for personal use.
At trial, Cablevision argued that its copying was akin to the individual copying that is permitted under the holding in Sony. The studios and networks argued that it was nothing of the sort; that it was a violation of Section 106 as Cablevision received a benefit from this service, even if it did not directly charge for it. The trial court sided with the studios, but on appeal, the Second Circuit agreed with Cablevision. It held that this conduct was more akin to one’s own personal copying (e.g. with a home videocassette recorder and therefore the ruling in Sony), and thus not infringement at all.
While I like Cablevision’s argument, I’m not sure that I really buy it. That is, while it was not an issue at the time, I think it is fair to say that Sony stood for the proposition that the copying was fair use when it was done by the individual, not by a licensed content distributor who offered the copying service – albeit on the individual’s behalf — as a customer “perk.” Is this really that much different than a VCR just because someone else is pushing the “record” button? If it’s not, why can’t I walk into any Blockbuster, show them my cable bill (thus proving that I’m a subscriber), and demand a free copy of the Sopranos, Season II? And if they won’t hand over one for free, how about just letting me copy it? That is, if Cablevision can make a copy for me and that isn’t infringement, why is it infringement for me to copy of the disk I pick up at Blockbuster?
So, not surprisingly, the Supreme Court granted cert to slap somebody – it just remains to be seen who. Infringement or fair use . . . any bets on this? Given the current make-up of the Court, I’m going with a finding of infringement. Stay tuned.
This case involved Cablevision Systems Inc.’s plan to copy its broadcasts for its customers. In other words, rather than copying the program yourself, at home (via Tivo or video, for example), Cablevision would do it for you. Not a bad offer, sort of a customer-centric, friendly service. Except that the movie studios and networks didn’t see it that way. They regarded this as copyright infringement pursuant to 17 U.S.C. § 106.
Section 106, as you will recall, gives the owner of the copyrighted work the right to prepare derivative works based on the copyrighted work, and to display and distribute copies of it to the public. 17 U.S.C. § 106 (1), (4) and (5). But under Sony Corp. of America v. Universal City Studios, Inc. (aka the “Betamax” case), 464 U.S. 417 (1984), the Supreme Court ruled that the making of individual copies of complete television shows for purposes of time-shifting does not constitute copyright infringement. The Court said this was fair use, and ruled that manufacturers of home video recording devices, such as Betamax or other VCRs, cannot be liable for infringement. In short, the case created a legal safe haven for the copying of content for personal use.
At trial, Cablevision argued that its copying was akin to the individual copying that is permitted under the holding in Sony. The studios and networks argued that it was nothing of the sort; that it was a violation of Section 106 as Cablevision received a benefit from this service, even if it did not directly charge for it. The trial court sided with the studios, but on appeal, the Second Circuit agreed with Cablevision. It held that this conduct was more akin to one’s own personal copying (e.g. with a home videocassette recorder and therefore the ruling in Sony), and thus not infringement at all.
While I like Cablevision’s argument, I’m not sure that I really buy it. That is, while it was not an issue at the time, I think it is fair to say that Sony stood for the proposition that the copying was fair use when it was done by the individual, not by a licensed content distributor who offered the copying service – albeit on the individual’s behalf — as a customer “perk.” Is this really that much different than a VCR just because someone else is pushing the “record” button? If it’s not, why can’t I walk into any Blockbuster, show them my cable bill (thus proving that I’m a subscriber), and demand a free copy of the Sopranos, Season II? And if they won’t hand over one for free, how about just letting me copy it? That is, if Cablevision can make a copy for me and that isn’t infringement, why is it infringement for me to copy of the disk I pick up at Blockbuster?
So, not surprisingly, the Supreme Court granted cert to slap somebody – it just remains to be seen who. Infringement or fair use . . . any bets on this? Given the current make-up of the Court, I’m going with a finding of infringement. Stay tuned.
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