IP Law Blog

By: Matthew G. Massari

On August 10, 2010, the United States District Court for the Central District of California granted Blizzard Entertainment, Inc., the publisher of the online computer game World of Warcraft, $88.5 million in a copyright-infringement case against a Georgia resident. The game publisher filed suit in federal court in Los Angeles in October 2009 against Alyson Reeves of Savannah, Georgia, and five unidentified defendants.

By: Scott Hervey with summer associate James Brannen

Recently the 9th Circuit heard an appeal involving the network and producers of the TV program “Ghost Hunters” and two individuals who claimed that the network stole their idea. Parapsychologist Larry Montz and publicist Daena Smoller maintain that in 1981 they conceived of and created written materials, including a screenplay, about a new reality television program featuring a team of investigators who use high tech equipment to study and occasionally debunk paranormal activity.

By: Scott Cameron

Copyright law protects authors and artists who create original works from those who might copy their works. A work may be registered with the United States Copyright Office, but the creator is protected by copyright law even if the work is not registered. As has been said, copyright protection attaches as soon as the pen leaves the page. Thus, copyright law provides a private right of action in federal court against anyone who copies, distributes, or makes derivative works without the permission of the creator of the work. Before the copyright owner can bring a suit for infringement of her copyright, however, the Copyright Act places a requirement that the copyright be registered with the Copyright Office.

By Zachary Wadlé

On April 19, 2010, the United States Supreme Court granted certiorari in Costco v. Omega, in which the Ninth Circuit found that the first sale doctrine in copyright law only applied to goods manufactured or sold in the United States with the copyright owner’s authority. The Supreme Court will decide whether the first sale doctrine also applies to the “one-way” gray market sale of goods –goods that are manufactured and first sold abroad and then imported to the United States without the authorization of the copyright owner.

by Zachary Wadlé

Earlier this year, I wrote of an impending legal battle between Shepard Fairey, the artist of the iconic Barack Obama “Hope” painting and the Associated Press who owns the photograph upon which the painting was based. I questioned whether any artist could commandeer the President’s likeness, and whether President Obama could stop the use of his likeness if he was so inclined. As discussed in my previous article, the answer likely depends on how “transformative” of President Obama’s likeness the work of art is.

by W. Scott Cameron

Section 505 of the Copyright Act provides that the court may, in its discretion, award full costs, including reasonable attorneys’ fees, to the prevailing party in a claim arising under the Copyright Act.  17 U.S.C. § 505.  In 1941, the Ninth Circuit ruled that when a party voluntarily dismisses her claim without prejudice after the court ordered a more definite statement, the defendant is the prevailing party, and therefore entitled to attorneys’ fees.  Corcoran v. Columbia Broadcasting System, Inc., 121 F.2d 575, 576 (9^th Cir. 1941).  The Corcoran court expressly rejected the plaintiff’s contention that the dismissal without prejudice does not confer prevailing party status on the defendants. 

by Zachary J. Wadlé

J.D. Salinger, author of the seminal teen angst novel “The Catcher in the Rye,” recently filed a lawsuit in United States District Court in Manhattan for copyright infringement against the author of a purported “sequel” to Salinger’s classic work entitled “60 Years Later: Coming Through the Rye.” Salinger’s lawsuit sought a permanent injunction against publication of the new work in the United States.

by Jeff Pietsch

In April 2009, the Fourth Circuit upheld a summary judgment granted in favor of an online technology system designed to prevent plagiarism in a copyright infringement action. (A.V. v. iParadigms, L.L.C., (4th Cir. Apr. 16, 2009)). The plaintiffs, four high school students who were required to use the system by their schools, sued iParadigms’ for using their written works through the company’s “Turnitin Plagiarism Detection Service.” The plaintiffs argued that Turnitin’s archiving of the students’ works in its system constituted a violation of their copyrights under the Copyright Act, 17 U.S.C. §101 et seq. The court, however, disagreed with this assessment and ruled that the archiving of students’ works falls under the fair use doctrine, which allows the use of copyrighted works for the purposes of criticism, comment, news reporting, teaching, scholarship, or research.

by W. Scott Cameron

Most everyone knows that federal copyright laws protect an author’s expression of an idea. When someone infringes a protected work, either by copying or distributing it without permission, the copyright owner is generally entitled to damages. In Dream Games of Arizona v. PC Onsite, --- F.3d --- (April 2, 2009), the Ninth Circuit addressed a question of first impression in the circuit: Whether illegal use or operation of a work by the copyright owner precludes the award of actual or statutory damages for copyright infringement. 

By Scott Hervey 

Have you ever been into a used record store (remember those) and picked up a used CD that had the following language either on the CD case or on the CD itself:

FOR PROMOTIONAL USE ONLY

This CD is the property of the record company and is licensed to the intended recipient for personal use only. Acceptance of this CD shall constitute an agreement to comply with the terms of the license. Resale or transfer of possession is not allowed and may be punishable under federal and state laws.

Have you ever wondered how on earth can the record label control the sale of these CDs. (An obvious question given the fact that the CD in question is for sale in a used record store.) According to a recent federal court case, they cant.

by Zachary Wadlé 

Recent news reports tell of an impending legal battle between the artist of the painting at left and the Associated Press who owns the photograph upon which the painting was based. The legal battle will determine whether the ubiquitous painting of the 44^th President is an original piece of artwork, or one that improperly misappropriated a photograph protected by copyright laws.

But what of President Obama’s rights in his own likeness? Can any artist commandeer the President’s likeness for his/her own commercial purposes without fear of legal repercussions? Could President Obama stop such commercial use of his likeness if he was so inclined? The answer depends on how “transformative” of President Obama’s likeness the work of art is.

By Audrey A. Millemann

The beginning of the year is a good time to review your clients’ intellectual property needs. The first and most important thing to do is to determine what intellectual property the client has. Once the intellectual property has been identified, the means of protecting it can be analyzed and a plan for establishing protection set up. 

What is Intellectual Property?

Almost anything can constitute intellectual property. IP may fall into one or more of the following categories: inventions that can be patented, expression that is copyrightable, names or logos that are trademarks, and information that is a trade secret.

By Dale C. Campbell

The 2008 presidential election is just two weeks away. The candidates have discussed everything from foreign policy, the economy, the war in Iraq, washed-up homeland terrorists, and where you find the “real” America. But where do the candidates stand with respect to intellectual property protection?

For those of you who are interested, and the mere fact that you are continuing to read this article means that you are, a little-publicized conference sponsored by the IP section of the Colorado Bar was held in August 2008, during which two surrogates for Senator McCain and two circuits for Senator Obama discussed their respective candidates’ positions on topics of interest to the IP bar. A video presentation of the discussion can be if you search: IP Policy and the Presidential Debate Video Replay.

By James Kachmar

On September 9, 2008, the Ninth Circuit issued its opinion in the case Asset Marketing Systems, Inc. v. Kevin Gagnon and clarified the law concerning implied licenses to use and modify computer software programs. In doing so, the Ninth Circuit adopted an approach previously utilized by the First and Fourth Circuits’ Court of Appeals.

By Sarra Ziari

On August 20, 2008, in Lenz v. Universal Music Corp., Judge Fogel of the United States District Court, N.D. California ruled that copyright owners must consider fair use before issuing takedown notices under the Digital Millennium Copyright Act (“DMCA”), and issued a warning against the misuse of takedown notices by overreaching copyright owners. 

By  Scott Cameron

United States copyright law saves for the copyright owner the exclusive right to distribute copies of his copyrighted work. That is, of course, unless an exception applies. There are many exceptions, some of which can be confusing. Among the confusing exceptions is the First Sale Doctrine. According to the First Sale Doctrine, once a copyright owner has made an authorized sale of a copyrighted product, the copyright owner no longer has any rights to that copy of the product. The First Sale Doctrine sounds simple enough so far. Enter the Ninth Circuit.

By Dale C. Campbell

A copyright holder has the right to specify the terms under which others may use his or her work. How the terms under which a third party may use a copyrighted work are described can dramatically affect the remedies available to the copyright holder when the terms are breached.

By Scott Cameron

The United States Government, which created the courts and a legal system to provide an avenue to seek redress for injury, is immune from suit in that system unless the Government agrees to be sued by waiving its immunity. This is commonly known as “sovereign immunity,” and allows many lawsuits to be dismissed at the pleading stage. On July 25, 2008, the U.S. Court of Appeals for the Federal Circuit issued an opinion regarding the scope of sovereign immunity as applied in a copyright infringement case. 

The Federal Government has waived its immunity for suits based on its infringing the rights of copyright owners. It is a rather limited waiver, however, and allows the Government to infringe much more freely than a private party. Last week’s Federal Circuit decision, Blueport Co., LLC v. United States, shows how easy it can be for a government employee to lose his rights to work he has created.

By: Dale C. Campbell and Serena Crouch, Third Year Law Student at McGeorge School of Law

Internet users and privacy advocates across the nation fear they are losing the continuing battle to protect internet privacy rights.  A court decision in a lawsuit between Viacom and YouTube.com is the most recent battlefield regarding data likely to provide the video viewing habits of millions around the world.  

In March 2007, Viacom sued YouTube and Google, Inc. in the United States District Court, Southern District of New York, seeking at least $1 billion in damages for alleged copyright infringement.  Viacom claims that YouTube built its business by willfully offering Viacom’s copyright protected material such as episodes of “The Daily Show with Jon Stewart” and the cartoon “SpongeBob SquarePants.”  Viacom claims that neither YouTube nor its users are licensed to upload its material in the manner it is being used.

By Scott M. Hervey

On March 26, 2008, the District Court for the Central District of California issued an order closing one chapter to a long running battle between the heirs of one of the original creators of the iconic comic book superhero, Superman, and DC Comics. The court’s order addressed the heirs’ attempt to exercise their rights under the termination provision contained in the Copyright Act of 1976; a formalistic and complex statutory scheme which allows authors and their heirs to terminate a prior grant of copyright in a creation. 

At issue in the case was a 1938 grant (and other purported grants) by Jerome Siegel and his creative partner Joseph Shuster, of the copyright in the first edition of Superman published by DC Comics. The court’s order is a detailed 72 page ruling which devotes great consideration to the story behind the creation of Superman. As the court notes, “any discussion about the termination of the initial grant to the copyright in a work begins with the story of the creation of the work itself.”

By Scott Cameron

The Ninth Circuit just doesn’t like karaoke. At least, that’s what plaintiffs, manufacturers of karaoke machines, in two recent opinions involving copyright law would likely say. In both decisions, the Ninth Circuit affirmed the district courts’ dismissal of the complaints without leave to amend. Both of these decisions discussed the various copyrights that are implicated in a karaoke device, including the copyright of the performance of the song itself, the song lyrics, and the synchronization of the two. Both decisions also involved the licenses required by karaoke device manufacturers.

By Scott Hervey

Last October I had the good fortune of being invited to attend my friend’s “man shower” in Las Vegas. What made this trip interesting was the fact that this all guy’s version of a baby shower would be the subject of an episode of the VH1 reality TV show “Scott Baio is 46 and Pregnant.” While there are a number of interesting stories that came out of this first and only man style baby shower, the “what happens in Vegas stays in Vegas” rule prohibits me from telling you any. However, the tales fit for this article comes from my observations of the numerous, IP issues that came up during our two days of shooting.

As regular readers of my articles may know, part of my practice includes representing independent motion picture and reality television producers. While I have been production counsel for a number of movies and reality television shows, most of my work occurs before the cameras ever roll. Part of this work involves working with the production staff and preparing them to deal with those issues that may arrive when shooting in an environment you don’t entirely control. However, being on set and having to identify issues on the fly (especially when the person identifying the issues is not a lawyer) is very different from engaging in theoretical and hypothetical discussions.

By Scott Hervey

As 2008 gets underway, its time for companies to take a fresh look at how they manage intellectual property assets. This applies to companies that have never taken serious steps to protect intellectual property, and those companies that have an understanding of the value of intellectual property and take active steps to secure and protect these assets.   The three steps below are a good starting point for companies addressing this issue for a first time, and are a well needed refresher for companies that already have IP management protocols in place.

By Andrea Anapolsky

The "work made for hire" doctrine is a major exception to the fundamental principle that copyright ownership vests in the person who created the work. The significance of this doctrine is that, as the copyright owner of the work, an employer will own all exclusive rights to the work and may freely commercialize the property to its fullest extent. This article examines the provisions and case law underlying the "work made for hire" doctrine and provides some practical advice for employers when hiring an independent contractor or an employee who may create an original work during the course of the parties' relationship.

By Jeff Pietsch

Last week, a judge for the United States District Court in Arizona has granted a summary judgment in favor of recording companies. The judgment finds the defendant, Jeffrey Howell, liable for copyright infringement for illegally sharing music files. Even though there was no evidence that the defendant actually distributed the music files, the judge found the defendant violated copyright laws by making the files available for distribution. This case is significant because it is the first case that specifically states that “making available” equates to distribution under copyright laws.

By Dale Campbell

Intellectual property litigation relies heavily upon the use of expert testimony. The Ninth Circuit Court of Appeals recently analyzed the intersection of Federal Rules of Evidence, Rule 702 and the ruling in Daubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) (“Daubert”) concerning the admissibility of expert testimony and Federal Rules of Civil Procedure, Rule 56 for summary judgment. Stillwell v. Smith & Nephew, Inc., 482 F.3d 1187 (9^th Cir. 2007). Admissibility of expert testimony must be carefully evaluated for reliability and helpfulness, but that is different than the analysis for whether a triable issue of fact is established.

By Scott Hervey

Under contemporary Copyright Law, a database is a “compilation.” A compilation is defined under the Copyright Act as “a work formed by the collection and assembling of preexisting materials or of data….” While the inclusion of a compilation as a protectable work was statutorily introduced in The Copyright Act of 1976, compilations were protected as “books” as early as the Copyright Act of 1790.

In 1991 in Feist Publications, Inc. v. Rural Tel. Serv. Co, the Supreme Court resolved a split among the circuits regarding the elements of a compilation that entitle it protection under the Copyright Act. Certain circuits had adopted what was known as the “sweat of the brow” doctrine which looked at the compiler’s effort – his own expense, skill, labor or money - as the critical contribution justifying protection. Other circuits moved away from the labor/investment approach of the sweat of the brow doctrine, and granted protection to those compilations that were sufficiently original to be considered protectable works of authorship.

By Andrea Anapolsky

On May 16, 2007, the 9^th U.S. Circuit Court of Appeals sent a mixed message to search engines everywhere – publishing thumbnail images is legal, but a search engine may still be liable if it links customers to other sites that publish certain thumbnail images without authorization.  (Perfect 10, Inc. v. Amazon.com, Inc., CV-05-04753-AHM (9th Cir. May 16, 2007) With this ruling, what’s next in the battle between advocating for the free flow of information on the Internet and protecting copyrighted material?

Perfect 10, Inc. (“Perfect 10”) an adult entertainment company that allows subscribers access to nude photos on-line, sued Google, Inc. (“Google”) in 2004 for publishing its photos as tiny images known as “thumbnails” which appear in a user’s search results. When a Google user types in a search and clicks on the resulting thumbnail, the page splits into two frames – the top of the page has the thumbnail with a warning it may be subject to copyright, and the bottom of the page has a full-size image from a third-party website. Perfect 10 alleged Google infringed its copyrights by using its images in thumbnails and by linking users to websites that re-published their photos without authorization.

By Dale Campbell

Custom and customized computer programs create unique challenges under the Copyright Act. More and more companies have custom software written by outside programmers to automate the company's unique business processes. Great care should be taken when a company uses outside vendors, rather than its own employees, to create the custom computer programs. Written agreements are essential. Many companies have been surprised to discover, after spending dearly for a custom software program, that the outside programmer retained the copyrights in the software and could repackage the software for sale to others simply because there was no written copyright assignment. Custom programming contracts must be carefully negotiated in order to protect a company's investment in the newly created computer program as well as its proprietary business processes and trade secrets.

By James Kachmar

In Jarvis v. K2 Inc. (April 30, 2007), the Ninth Circuit held that a retailer’s use of collage advertisements containing copyrighted photos was not covered by the “collective works” privilege and, thus, the retailer could be liable for copyright infringement. 

          Jarvis, a professional photographer, and K2, a sporting goods maker, entered into a series of agreements from 1999 to 2002. Under these agreements, Jarvis submitted photographs to K2 in exchange for compensation. K2 could publish the images provided by Jarvis in its marketing materials and on its website so as to market its business. The agreement called for K2 to include an attribution credit for each use of Jarvis’ images. Under the last agreement between Jarvis and K2, K2’s rights to use the photos expired in May 2003.

By Scott Hervey

Its that time again; time to upgrade your computer operating system and associated programs. Microsoft’s new operating system, Vista, is coming pre-installed on new computers and laptops, along with new versions of Microsoft Word, Excel and Outlook. Along with Vista, other business software manufactures are taking this opportunity to roll out upgrades and offer entirely new programs. Anytime a company decides to upgrade or purchase a new program which has to be rolled out to a significant number of users, the company’s IT department faces a very big task – to install numerous copies of the program in as time efficient manner as possible. The IT department may face even greater challenges where users of a particular program are not assigned to one specific computer workstation but need to have access to the program on multiple computer work stations. To deal with this situation, instead of individually installing the program onto each machine, the IT department may use hard drive imaging-copying the complete content of a master hard drive on to the hard drive of individual computers. Where a company has purchased a limited number of licenses to a program, but must install it on a larger number of computer stations, an IT department may configure access to the program such that only a particular number of users have access to it at any one time. Depending on the type of software license the company acquired, this could be the prelude to a Copyright infringement lawsuit.

By Scott Hervey

The United States District Court for the Southern District of New York rules that the downloading of a digital music file embodying a particular song does not constitute a "public performance" of that song within the meaning of the Copyright Act.  Thus, on-line music retailers need not negotiate a license with performance rights organizations like ASCAP and BMI in order to offer downloadable music files to consumers.

The opinion is available here

By James Kachmar

On March 29, 2007, the Ninth Circuit issued its opinion in the case Perfect 10, Inc. v. CCBill LLC, et al. in which it attempted to clarify when immunity is available to internet service providers for copyright infringement under the Digital Millennium Copyright Act (“the DMCA”), 17 U.S.C §512. Perfect 10, the publisher of an adult magazine and a related subscription website, brought a lawsuit claiming that CCBill and CWIE violated copyright laws by providing services to other websites that posted images stolen from Perfect 10’s magazine and website. CWIE provides web hosting and related internet connectivity services to the owners of various websites. CCBill allows customers to use credit cards or checks to pay for subscriptions or memberships to various websites. The U.S. District Court granted summary judgment in favor of CCBill and CWIE as to the copyright claims finding that they qualified for the “safe harbor” provisions from copyright infringement liability under the DMCA. 

By Scott Hervey

By now, everyone has heard about the One Billion dollar copyright infringement lawsuit Viacom filed against YouTube and its owner, Google. The lawsuit stems from the fact that clips from a number of Viacom’s programs are regularly appearing on the YouTube website. 

YouTube allows its users to post video clips onto the YouTube website, and categorize the clip by providing terms which enable the clip to be displayed when a viewer conducts a search. While some users post videos clips they themselves create, other users are posting clips from television programs and motion pictures, including programs owned by Viacom such as Sponge Bob Square Pants, The Daily Show with Jon Stewart, The Colbert Report, South Park, and MTV Unplugged.

One of Viacom’s chief complaints is  that YouTube has not instituted filtering technologies to prevent the uploading of clips from Viacom’s programs despite promises from its executives. Viacom also complains that because YouTube users are able to re-post removed clips almost as soon as they come down. This and other factors cause Viacom to lament that “no matter how much a copyright owner expends to protect their rights, there will always be a vast collection of infringing videos available on YouTube to draw users to its site.”

As an attorney who regularly represents content owners, I understand Viacom’s concerns. Viacom believes that if clips from one or more of its programs are available to users for free on YouTube, this may lessen the demand for those programs on either Apple’s iTunes or on one of Viacom’s own sites. Is YouTube taking advantage of some loopholes in the now 9 year old Digital Millennium Copyright Act (“DMCA”), or is the DMCA doing what its supposed to do and content owners are trying to run rough shot over what may be fair use.

By Scott Hervey

Last year’s Ninth Circuit’s decision in Funky Films, Inc. v. Time Warner Entertainment is a reminder just how complex and complicated it can be proving copyright infringement. Funky Films  involved a claim that the award winning Home Box Office mini-series “Six Feet Under” infringed Funky Films’ screenplay “The Funk Parlor.” At issue on appeal was the district’s court conclusion that “The Funk Parlor” and “Six Feet Under” were not substantially similar.

By W. Scott Cameron

Last month, in a lawsuit filed in the U.S. District Court for the Southern District of New York, the Motion Picture Association of America (MPAA) companies[1] sued Load ‘N Go Video, a small company that loads customer purchased DVDs onto their personal iPods, for copyright infringement and violating the Digital Millennium Copyright Act (DMCA).

By Scott Hervey

On October 16 the Register of Copyrights issued an interpretation of Section 115 of the Copyright Act that will make it easier for record labels and cellular phone services to offer ringtones to consumers. The question, whether compositions used for ringtones [monophonic (single melody line) or polyphonic (melody and harmony)] or for master ringtones (ringtones taken from a master recording) fall under the compulsory license provisions of Section 115 of the Copyright Act, was referred to the Register of Copyrights by the Copyright Royalty Board (“CRB”) acting on a request from the RIAA. The decision – that ringtones (including monophonic and polyphonic ringtones, as well as mastertones) may be subject to a compulsory license – marks a major victory for record labels and cellular phone services looking to fuel the ringtone hungry market.

By Audrey A. Millemann

            A business's intellectual property may be its most valuable asset. Whether it is biotechnology, trade names, business methods, or computer software, intellectual property should be protected to the greatest extent possible in order to maximize the value of the business. This article summarizes the types of intellectual property protection that are available.

By Andrea Anapolsky

Once perceived as just a means for personal expression, blogs have grown into a mainstream form of communication used by business entities, the media, political campaigners and individuals alike. Just last month, Yahoo!® News reported that approximately 40 million blogs have been created, with more than 75,000 blogs added every day. The act of blogging, however, is not exempt from traditional defamation claims, and like any other form of communication, can be both false and defamatory and cause damage to one’s reputation. However, due to the complexity and nature of the Internet, the courts are still feeling their way through two central issues: first, whether to characterize the content publicized in a blog as opinion or fact, and second, who may be held liable for publicizing defamatory statements on a blog. This article briefly reviews trends in case law regarding defamation claims against bloggers, with a specific focus on whether operators and/or owners of network providers who publish or edit and then republish allegedly defamatory statements may be held liable for defamation.

By Scott Hervey

Real estate lawyers take head. Waiting in the tall grass of your client's real estate development project may be a thorny copyright issue that could cost your client all of the profit it earned on the project, and would probably buy you a serious malpractice claim.

By Andrea Anapolsky

The "work made for hire" doctrine is a major exception to the fundamental principle that copyright ownership vests in the person who created the work. The significance of this doctrine is that, as the copyright owner of the work, an employer will own all exclusive rights to the work and may freely commercialize the property to its fullest extent. This article examines the provisions and case law underlying the "work made for hire" doctrine and provides some practical advice for employers when hiring an independent contractor or an employee who may create an original work during the course of the parties' relationship.

By Dale Campbell

Companies that remove "objectionable" content from mainstream movies failed in their attempt to add a new public policy test to the fair use defense to copyright infringement. The United States District Court of Colorado issued summary judgment in favor of several big-name producers and movie studios and against several "clean movie" companies in the business of creating sanitized versions of movies. (Clean Flicks of Colorado LLC, et al. v. Stephen Soderbergh, et al., Case No. 1:02-CV-01662, in the United States District Court of the District of Colorado.)

By Scott Hervey

A class action lawsuit filed this past May by a small group of independent music publishers against major online music services for failing to secure licenses to sell downloadable versions of certain songs brought to light what could be a crack in the way labels, digital content distributors and online music services clear music for digital distribution. The publisher's copyright infringement lawsuit names as defendants Apple, AOL Music Now. Buy.com, Microsoft, Napster, Real Networks, Yahoo and others.

By: April Hiroshima Gatling

Last Wednesday, the Ninth Circuit issued an opinion addressing the interplay between the state statutory right of publicity and the Copyright Act, 17 U.S.C. § 101-1332. In Laws v. Sony Music Entertainment, Inc., the Ninth Circuit ruled that the state law "right of publicity" claim of a recording artist who gave her record company the sole and exclusive copyright to a song recording, was preempted by the Copyright Act.

By Scott Hervey

XM's introduction of a new service called XM + MP3 that allows its subscribers to listen to XM's service on a portable player and record up to fifty hours of programming. In addition, the new service and player (called Inno) allows users to isolate and save perfect digital copies of songs for unlimited replay as long as they maintain their XM subscription. The service also allows XM users to create custom playlists which trigger automatic recording and storage of songs on the playlist when broadcast over one of the many XM stations

By Scott Hervey

A Federal district court jury in Nashville levied a $4.3 million dollar verdict against Sean Combs' (Puffy) Bad Boy Entertainment, Bad Boy, LLC and Universal Records/UMG Recordings for infringing copyright owned by Bridgeport Music and Westbound records. The suit resulted from the use of a six second sample from the Ohio Player's Singing in the Morning used by producer Easy Money in the title track to the Universal released Notorious B.IG.'s 1994 album "Ready to Die."

By Scott Hervey

Picking an Errors and Omission policy can be an extremely important undertaking, especially for a technology focused company. When legal costs for defending a complex intellectual property infringement claim can exceed half a million dollars, the right E&O policy can mean the difference between the life and death of a company just starting to find traction in the market place. But more often than not, the decision on what policy to buy is left to an inexperienced company employee who only has a broker's advice to rely on. This arrangement is probably fine for workers compensation and general commercial liability policies, but non-lawyers and lawyers are not familiar with technology companies and all the issues they encounter are out of their league when it comes to determining which E&O policy shifts the most risk.

By Scott Hervey

Just how valuable are baseball statistics? Apparently very valuable. In fact, baseball statistics are so valuable that CBC Distribution and Marketing, which has run the CDM Fantasy Sports leagues since 1992, has decided to sue Major League Baseball and challenge its copyright claim over player statistics. CBC agues that baseball statistics become historical facts as soon as a game is over, and that it shouldn't have to pay for the right to use them. Major League Baseball claims that intellectual property law makes it illegal for fantasy leagues to commercially exploit the statistical profiles of its players.

By Scott Hervey

Intend to infringe - go to jail. That's what the United States Attorney General proposed at a recent anti-piracy summit hosted by the U.S. Chamber of Commerce. United States attorney general Alberto Gonzales said the Department of Justice recently submitted to Congress the Intellectual Property Protection Act of 2005 aimed at toughening up intellectual-property enforcement.

By Julie Garcia

Indemnification is generally a subject that is important, yet easily overlooked during business transaction negotiations. Although the scope and purpose of the indemnification can take on many different appearances, the underlying theme always remains the same, who will be held liable in the event that a problem arises. Once the parameters of the indemnification are established between the parties, there are a number of logistical details that should be considered which may prove to be important in the event indemnification is sought at a future time by one of the parties. Companies that own or license intellectual property generally focus on the scope of the indemnification, which may include infringement and ownership issues. The process by which one party may assert a right for indemnification and the process by which any defense will be conducted should be carefully considered by the parties and incorporated into the agreement between the parties.

By Scott Hervey

On June 27, 2005, the United States Supreme Court handed down its decision in MGM v. Grokster.#160 That case involved an appeal from the Ninth Circuit by MGM, various record labels and other content owners of an adverse decision in their attempt to hold Grokster and other peer-to-peer network companies liable for copyright infringement.#160 MGM and the other content owners had initially filed a lawsuit against Grokster and other peer-to-peer network technology companies to hold them liable for damages resulting from their supplying the technology that enabled users to trade online copyrighted works.#160 The Ninth Circuit, upholding the District Court's finding, held that the technology companies could not be held either vicariously liable or liable for contributory copyright infringement.#160 In coming to its conclusion, the Ninth Circuit interpreted the Sony v. Betamax case in holding that the distribution of a commercial product capable of substantial noninfringing uses could not give rise to contributory liability for infringement unless the distributor had actual knowledge of specific instances of infringement and failed to act on that knowledge.#160 Because the Ninth Circuit found the technology company's software to be capable of substantial noninfringing uses and because respondents had no actual knowledge of infringement resulting from the software's decentralized architecture, the court held that they were not liable.#160 (The architecture of the defendant's file trading network is an open network.#160 That is, it does not have a central server like the old Napster network but rather uses nodes and supernodes; computer systems that are owned by users of the software and have no relationship to the defendants.)#160 The Ninth Circuit also held that the defendants did not materially contribute to their user's infringement because the users themselves searched for, retrieved and stored the infringing files, with no involvement by respondents beyond providing the software in the first place.#160 Finally, the court held that the defendants could not be held liable under a vicarious infringement theory because the defendants did not monitor or control the software use and had no agreed upon right or current ability to supervise its use and had no independent duty to police infringement

By Scott Hervey

Podcasting is a way of publishing sound files to the Internet, and delivering the files to users who subscribe to a feed.#160 Podcasting uses a distinct content delivery protocal that has enabled many producers to create self-published "radio shows" that users can subscribe to and have delivered directly to their computer via one of a number of content aggregators.#160

Podcasts are technologically unlike webcasting or streaming. Webcasting is an Internet stream of a live broadcast, or an online simulcast of a broadcast signal.#160 Streaming is a technological means for accessing a stream of electronic information at the same time it is delivered to a user's computer.#160 Neither webcasting nor streaming result in the creation of an audio file on the Internet user's computer.#160 Podcasting however, involves the downloading of a single complete audio file to a user's computer to be listened to at a later time.

Like blogs, podcasting has been adopted both by amatures who want to host their own "radio show" and by professionals who see podcasting as an inexpensive way to distribute content.#160 Podcasting is not the realm of techno geeks or Internet extremists.#160 Mainstream broadcasting and media companies have realized the benefit of podcasting.#160 National Public Radio offers podcasts of most of its shows, and Infinity broadcasting network announced plans to launch a pure podcast radio station.#160 ABC is even offering podcasts of Nightline and Good Morning America.#160 Despite Corporate America quickly embracing this new technology, the majority of podcasts being offered today are from individuals and small businesses.

One of the quickest ways for a podcaster to get into hot water is to infringe a third party's copyright.#160 #160A number of music podcasts are produced by DJ's or independent record labels that use their podcast programs as a means of promoting other artists.#160 Most of these podcasts have a "mixed tape" quality to them, especially in the dance, hip-hop and rap genres.#160 Other podcasts are produced by music fans who may be interested in a certain style or type of music.#160 For example, one more popular podcast, Coverville, focuses entirely on covers songs.#160 If a podcast includes music and the podcaster has not obtained all the necessary rights, copyright infringement will result.#160 The real problem is for podcasters who want to stay out of the RIAA's crosshairs, determining exactly what type of license to get can be challenging.

Copyright law implications in music can become very confusing, very quickly.#160 Copyright law provides the copyright owner with the following rights:#160 the right to control the public performance of its copyrighted work; the right to control the production and distribution of a sound recording embodying a copyrighted work; and the right to create a copy of a sound recording.#160 Each of these rights may be implicated in podcasting.#160

Performance right organizations (PRO), such as BMI, ASCAP and SESAC license the public performance of copyrighted work.#160 Usually a license from all three is recommended because each organization represents different publishers of musical works.#160 #160Performance rights organizations have staked a claim to the right to license music for podcasting.#160 On its website, BMI claims that it has "been licensing podcasters for nearly a year covering the public performance rights to the BMI repertoire" and lists Coverville as one of its licensees.

The right to produce and distribute a sound recording which embodies a copyrighted composition is controlled by music publishers, who have abdicated the responsibility to the Harry Fox Agency.#160 HFA collects mechanical license fees (a mechanical license covers the right to reproduce and distribute copyrighted musical compositions [i.e. songs], including uses on CDs, records, tapes, and certain digital configurations) on behalf of publishers.#160 This includes full permanent downloads, whether or not charged for.#160 Since podcasting technology results in the creation of a single digital audio file to a user's computer, HFA could rightfully claim that it is the proper agency to control licensing for podcasts.#160 While HFA has yet to make this claim, given what occurred when PROs and HFA were trying to determine who controlled the right to issue licenses for webcasting and streaming, it is only a matter of time.

It is important to note that HFA licenses cover the right to make and distribute recordings of musical compositions, and not the use of existing sound recordings.#160 In order to clear those rights, a podcaster would have to obtain permission from the owners of each sound recording, which in most cases are record labels.#160

In 1995 and again in 1999, the Copyright Act was amended to create a statutory license mechanism for the digital transmission of sound recordings and musical works.#160 The 1995 legislation covered uses like the commercial sale of MP3s, while the 1999 amendment covered webcasting and streaming.#160 The 1999 amendments allowed webcasters the right to webcast or stream copyrighted music, and required them to pay certain pre-set royalties to SoundExchange, a performance rights organization that was designated by the U.S. Copyright Office to collect and distribute statutory royalties.#160

The 1999 amendments to the Copyright Act do not provide coverage for podcasting because the statutory license only covers the transmission of a sound recording, not the distribution of a copy of it.#160 Podcasting involves the reproduction of a sound recording and results in the creation of an audio file on a user's computer.#160 As stated above, clearing the right to create a reproduction of a sound recording, not just the musical composition, necessitates approval from the record label that owns the sound recording.#160

Although BMI and ASCAP are offering performance licenses, podcasters who want to remain on the right side of the law may also need to clear rights from other parties.#160 Because there is no industry wide standard and no central clearance mechanism like SoundExchange, clearing rights to the sound recording can be rather expensive and time consuming.#160 The music industry and our lawmakers need to devise a mechanism that allows podcasters to easily comply with the law and a licensing scheme that is not financially daunting.#160 Most non-corporate podcasters, such as Coverville, fund their operation entirely out of their own pocket, or by donations from listeners.#160 There is a desire for this type of alternative music programming; a desire that is not being fulfilled by commercial radio.#160 It would be shame if red tape and licensing costs silenced these unique and interesting programs emanating from the left of the radio dial.

By Scott Hervey

If a sound recording produced before 1972 falls into the public domain in a foreign nation, is that sound recording still entitled to protection in the United States?#160 Recently, in Capitol Records, Inc. v. Naxos of America, the New York Court of Appeals (the State's highest court) issued an opinion addressing this question; a question that is substantially more complex than it first appears.#160 One reason for its complexity is that Congress, when amending the Copyright Act in 1972, provided protection for sound recordings produced after February 15, 1972, but did not extend statutory protection to recordings created before that date.

Capitol Records v. Naxos involved a dispute between two music recording companies over the right to manufacture and distribute certain sound recordings.#160 Capitol Records was the owner of the rights in several classical recordings made in the 1930s of three world-renowned artists: Yehudi Menuhin's July 1932 performance of Edward Elgar's "Violin Concerto in B minor, Opus 61"; Pablo Casals' performances of J.S. Bach's cello suites, recorded between November 1936 and June 1939; and Edwin Fischer's performances of Bach's "The Well Tempered Clavier, Book I," recorded between April 1933 and August 1934, and of Bach's "The Well Tempered Clavier, Book II," recorded between February 1935 and June 1936.#160 The rights to these sound recordings were originally owned by The Gramophone Company Limited, which later became know as EMI Records Limited.#160 All of the above-performances were recorded by Gramophone in England. At that time, the United Kingdom provided statutory copyright protection to sound recordings for only 50 years.#160 As such, all of these recordings entered the public domain in the United Kingdom by 1990.

In 1996, EMI entered into a series of agreements with Capitol granting Capitol exclusive licenses to exploit a variety of recordings in the United States, including the Gramophone recordings.#160 Capitol remastered the original recordings, improving their audio quality, and manufactured them in CD format and distributed them to record stores.

Naxos was also in the business of remastering and re-releasing historical recordings, and, as circumstances would have it, grew very interested in the Gramophone recordings. Naxos located copies of the original 1930 recordings and undertook its own restoration and remastering process in the United Kingdom. These remastered CDs were distributed for sale in the United States beginning in 1999, competing with Capitol's CDs.

Despite receiving cease and desist letters from Capitol, Naxos continued with the manufacture and sale in the United States of its CDs.#160 Naxos believed that because the sound recordings had entered into the public domain in England it was free to manufacture and sell in the United States its remastered versions.

Capitol sued Naxos for copyright infringement, unfair competition, misappropriation and unjust enrichment, all of which were premised on New York law.#160 Naxos moved to dismiss, arguing that the recordings had entered the public domain in the United Kingdom and, hence, the United States as well.#160 The District Court granted summary judgment to Naxos, concluding that Capitol did not have intellectual property rights in the original recordings because its copyrights had expired in the United Kingdom.#160 The Appeals Court upheld the District Court's hearing.#160 Capitol ultimately appealed to the State's highest court.

Before engaging in an analysis of the issues on appeal, the Court discussed the evolution of copyright protection in England and the American adaptation of copyrights.#160 The Court's discussion is not only enlightening, but helpful in understanding and appreciating the complexity of the issues it was facing.#160 The Court noted that when examining copyright law, "a page of history is worth a volume of logic" New York Trust Co. v Eisner, 256 US 345, 349 (1921)

Modern copyright law was born in England in the 15^th century, primarily as a result of the development of the printing press.#160 At that time it was printers and publishers, not the authors who initially sought to control the right to publish literary works.#160 At the same time, the Crown wanted to maintain censorship authority over the press.#160 As such, establishing a system to grant exclusive rights to reproduce printed materials served the government's desire to control and the printers' desire to limit competition.

In the mid 1600s, English law began to recognize an author's natural property right to control the dissemination of a literary creation.#160 Parliament's passage of the Statute of Anne in 1709 broadened the concept of copyright to include the ability of an author to decide whether a literary work would be published and disseminated to the public (referred to as the "right of first publication") and, if distributed, how the work would be reproduced in the future. The Statute of Anne vested an author or publisher of a literary work with statutory copyright protection for specified time periods - new works received 14 years of copyright protection (with a 14-year term renewal) and previously published works were entitled to 21 years of protection.

As America transformed itself from British colonies into independent states and commonwealths, the law makers and the courts looked to colonial common law, derived from English law, as the basis of national law as long as it was consistent with the acts of the colonial legislatures.#160 This included English common-law copyright protection.

Eventually, new states began adopting statutory protection for copyright, using the Statute of Anne as a guideline.#160 However, as the drafting of the national Constitution was underway, the Founders decided that federal copyright protection would be more effective and desirable than leaving the matter to the states.#160 The first Congress, having been granted the constitutional power to "promote the Progress of Science and useful Arts, by securing for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries" enacted America's first federal copyright statute - the Copyright Act of 1790. The Act provided the author "of any map, chart, book or books," or the author's assignee, the exclusive "right and liberty of printing, reprinting, publishing and vending such map, chart, book or books" for up to 28 years.

At the dawn of the 20^th Century, America was facing the challenge of applying the Copyright Act to new forms of technology not anticipated in previous versions of the Act.#160 Although musical compositions were covered by the Act at that time, courts in that day were wrestling with the application of the Copyright Act to a new technology in music field - piano player rolls.#160 #160

In the early 1900's federal copyright protection was extended only to written works that could be "seen and read."#160 This did not bode well for the new piano player roll.#160 A Supreme Court case addressing the federal protectability of music rolls held that because they were incapable of being read by a person, federal statutory protection for "copies or publications of the copyrighted music" did not extend to music rolls.#160 Following this case, Congress passed the Copyright Act of 1909. Since the Supreme Court had declared that player piano rolls and, by implication, sound recordings could not be "published" (i.e., read by a person), Congress did not include protection for audio musical works in the new Act.#160 However, Congress acknowledged that sound recordings were eligible for state common-law protection and explicitly stated that the Act should not be construed to limit common law copyright interests.

The dual system of copyright protection resulted in court decisions that were difficult to harmonize.#160 In 1971, Congress amended the Copyright Act of 1909 to expressly include sound recordings within the classes of artistic and intellectual works entitled to federal copyright protection.#160 However, the amendment was a prospective only, so recordings created before February 15, 1972 - the effective date of the amendment - were not protected by federal law.#160 The states would have jurisdiction over pre-1972 sound recordings until February 15, 2047 - 75 years after the effective date of the 1971 amendment.

The court in Capitol, having determined that New York common law is not pre-empted by federal Copyright with respect to pre-1972 works, then turned its attention to whether the works being in the public domain in the United Kingdom would have an affect on the protectability of the works in the United States.#160 Naxos' entire defense relied on the presumption that the expiration of the works' copyright term in the United Kingdom terminated any copyright protection in the United States.

Naxos' position was not without support.#160 The Berne Convention and the Universal Copyright Convention both recognize the "Rule of the Shorter Term," which generally provides that the term of copyright in the nation where a work is first published should be applied by other nations that would grant a longer period of protection.#160 These treaties have the force and affect of federal law. However, neither treaty applies the Rule of the Shorter Term to sound recordings; sound recordings fall under the Phonograms Convention.#160 And then, this provision applies only to recordings fixed after March 10, 1974, the date this treaty became law in the United States.

The Capitol court came to the reasoned conclusion that neither federal statutory nor Constitutional law prohibits the states from providing common-law protection to artistic works that are in the public domain in the country of origin.#160 The Court found no justification under New York law for substituting the British copyright term in place of New York's common-law protection, which would continue until federal preemption occurs in 2047.#160 As such, although the works had fallen into the public domain in the United Kingdom, Naxos sale of the recordings in the United States infringed Capitol's copyright.

By Joshua Deutsch

On February 1, 2005, the Senate unanimously passed the Family Entertainment and Copyright Act (FECA).#160 The Act is being hailed as bipartisan, significant anti-piracy legislation and a reaffirmation of congressional intent to protect copyrighted material from new technological means of theft and infringement.#160 FECA has been referred to the House of Representatives and is awaiting further action there.

FECA is comprised of four independent bills introduced as a package.#160 The most notable provisions are found within the Artists' Rights and Theft Prevention (ART) Act.#160 In particular, the ART Act aims at curbing Internet piracy by increasing the criminal penalties for the illegal distribution of copyrighted works before they are released.#160 It also establishes civil remedies by which copyright owners may be compensated for their losses in such a situation.

In addition, the ART Act makes it a federal crime to record a film as it is shown in a theater, with a penalty of up to 3 years in prison for the first offense or up to 6 years for a second offense.#160 Furthermore, theater owners or their agents, with reasonable cause for doing so, may detain, "in a reasonable manner and for a reasonable time," suspected violators of the Act "for the purpose of questioning or summoning a law enforcement officer."

Representatives from online peer-to-peer companies, collectively acting as P2P United, find the bill to be suspect.#160 Adam Eisgrau, executive director of P2P United, stated that "this package seems to be another point on a very distressingly long line of actions that ratchet up enforcements and penalties at times out of proportion with the law.#160 To camcord a movie is wrong, certainly, but the penalty (of three years in jail) and the entitlement of theater ushers and owners to physically detain people makes you have to ask whether the copyright industry is having more sway than it should over the legislative process."#160 William Triplett, "Piracy Bills Pass Muster," Daily Variety (Feb. 2, 2005).

FECA also includes the Family Movie Act.#160 The controversial Family Movie Act is aimed at permitting the use of technology to skip or mute content that may be objectionable to certain viewers when watching a DVD movie at home.#160 Opponents of the Act contend that it permits copyright infringement.#160 However, the Act makes clear that the technology can be used so long as no fixed copy of the edited work is made.#160 Motion picture studios further object to the Act because the technology could be used to skip over commercials inserted on DVD movies.#160 The current version of the Act does not ban use of the technology for the commercial-skipping purpose but it has been suggested that it should not be used for that purpose.

The Family Movie Act is a congressional attempt to address a lawsuit for copyright infringement filed by the seven major studios, sixteen prominent directors, and the DGA against ClearPlay, Inc., one of several companies manufacturing and selling software and services that remove language and scenes from DVDs.#160 ClearPlay contends that its technology is equivalent to a fast forward or mute button, and does not constitute copyright infringement because it never alters the actual DVD or create a fixed version of the alternate movie-watching experience.

The Family Movie Act is part of the current administration's indecency crusade.#160 On February 17, 2005, the House of Representatives overwhelmingly passed legislation substantially increasing the penalties for broadcast indecency.#160 The Broadcast Indecency Enforcement Act of 2005 raises the maximum fine from $32,500 to $500,000 per incident, and makes artists personally liable beginning with a first offense (currently, the Federal Communications Commission is limited to issuing only a warning for a first offense).#160 The Act also permits the revocation of broadcasting licenses from repeat offenders.#160 The Senate is currently considering its own version of the bill.

The White House, believing that there is a shared view of public morality, stated that "[t]his legislation will make broadcast television and radio more suitable for family viewing by giving the FCC the authority to impose stiffer penalties on broadcasters that air obscene or indecent material over the public airwaves."#160 Critics of the Act argue that the government's standard for indecency is ambiguous and that the bill will indiscriminately threaten a variety of programming.

At the same time that Congress is offering additional protections for copyrighted works in response to new technologies, it is weakening traditional copyright and First Amended protections by permitting the alteration of those works and limiting the ability of the public to enjoy them via public broadcasts.#160 This current round of lawmaking evidences the problems inherent in morality-based copyright legislation.

Joshua I. Deutsch is an attorney with Weintraub Genshlea Chediak Sproul in Sacramento, California.#160 His practice#160 focuses on entertainment and intellectual property matters.#160 Mr. Deutsch can be contacted via telephone at (916) 558-6077 or by electronic mail at jdeutsch@weintraub.com.

In 2004, the Ninth circuit heard the case Metro-Goldwyn-Mayer Studios Inc. v. Grokster; an appeal from the District court's granting of motions for summary judgment by Grokster and StreamCast Networks and finding that their products include substantial non-infringing uses and therefore, under the decision in Sony Corp v. Universal City Studios (more commonly known as Sony-Betamax), do not constitute contributory infringement.#160 #160

The Motion Picture Studios and Recording Companies, in petitioning the Supreme Court for review of the Ninth Circuit's decision, argue that the Ninth Circuit misread the holding of the Sony-Betamax case.#160 They claim that the Ninth Circuit's decision emptied all meaning from Sony-Betamax's concept of "commercially significant noninfringing uses."#160 Specifically, the petitioners claim that the court did not attempt to ascertain whether there is a substantial market for a#160 non-infringing use of Grokster's or StreamCast's services that could commercially support their advertisement-dependent business.#160 #160The petitioners claim that this case presents the issue expressly left open in Sony-Betamax; whether noninfringing uses can be "commercially significant" when the defendant's business depends on infringing uses and is not sustainable without them.

The Sony-Betamax case found the 1984 US Supreme Court facing the question whether the betamax video tape recorder subjected its manufacturer, Sony Corp., to contributory copyright infringement.#160 The court acknowledged that uses of the video tape recorder include acts of copyright infringement. However at least some of the uses by the public were noninfringing, such as time shifting or copying public domain works that were broadcast over the air.#160 Based on these non-infringing uses, the court found that Sony could not be held liable for secondary copyright infringement.#160 In#160 doing so, the court set forth a new standard for determining secondary copyright infringement when it held that:#160 " the sale of copying equipment, like the sale of other articles of commerce do not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes.#160 Indeed, it need merely be capable of substantial noninfringing uses."

The Ninth Circuit's decision in Grokster relied on its interpretation of Sony-Betamax as set forth in#160 A&M Records v. Napster.#160 Namely, if a defendant could show that its product was capable of substantial or commercially significant noninfringing uses, then constructive knowledge of the infringement could not be imputed and there would be liability for contributory copyright infringement.#160 Grokster was able to show that 10% of its use was for a non-infringing purpose.#160 The Ninth Circuit found that this usage was "substantial" and, therefore, Grokster could not be liable for contributory copyright infringement.

The Movie Studios and Recording Companies contend that the Ninth Circuit misread or misapplied the Sony-Betamax test. They point to the Seventh Circuit's decision in In re Aimster Litigation which held that a court must assess a system's actual and probable potential infringing uses, and then must balance the costs and benefits to accommodate the interests of copyright holders in preventing infringement while protecting the right of the public to use products specifically for noninfringing uses.#160 #160While acknowledging that the Aimster system was capable of at least five different types of noninfringing uses, the court noted that the controlling issue was the ratio of legitimate use to unlawful use.#160

The Ninth Circuit specifically rejected the approach taken by the Seventh Circuit in deciding Grokster, stating that the Seventh Circuit has read Sony-Betamax differently.#160 In petitioning the United States Supreme Court for review, the Movie Studios and Record Companies claim there is a split between the Seventh and Ninth Circuit, that the Ninth Circuit is incorrect in its analysis, and that the Court should adopt the Seventh Circuit's balancing test.

Grokster and StreamCast argue that the Movie Studios and Record Companies have misread Aimster, and that it does not apply to this case.#160 They point out that the Aimster court found that Aimster had failed to introduce any evidence whatsoever that its technology was capable of noninfringing uses and therefore could not avail itself of the Sony-Betamax defense.#160 Also, they point out that the Seventh Circuit made it clear that evidence of either "present or prospective" noninfringing uses would satisfy the requirements of Sony-Betamax.

However, the primary argument made by Grokster and StreamCast is that finding the proper accommodation between new technology and copyright is a task best left for Congress.#160 They point out that the primacy of Congress in our federal intellectual property system was at the heart of Sony-Betamax:#160 "In a case like this, where Congress has not plainly marked out a course, we must be circumspect in construing the scope of rights created by a legislative enactment that never contemplated such a calculus of interests."#160 They point out that Congress has not failed to adjust copyright laws when faced with new technologies, and that Congress has the resources and institutional ability to weigh the competing concerns of the technology and copyright industries, as well as the interests of society in general.

During the last legislative session, various Senators sponsored the Inducing Infringement of Copyright Act of 2004.#160 This act was in direct response to the Ninth Circuit's decision in Grokster.#160 #160Senator Hatch, one of the Bill's main sponsors, asserted that the Bill is supposed to be "technology-neutral," focusing instead on the circumstances under which the technology is deployed.#160 Second, the Bill should provide copyright owners with the ability to bring causes of action against#160 P2P services that enable massive copyright infringement, but also be adaptable to new, unforeseen technological developments.#160 Third, the Bill should not unnecessarily chill technology innovators, through fear of liability.#160 Finally, the Bill should not preempt the decision in Sony-Betamax and related common law doctrines with regard to secondary liability for copyright infringement.

This Bill has been the subject of much debate and lobbying.#160 The U.S. Copyright Office was invited to mediate the conflicting opinions and positions, and as a result of these consultations, the Copyright Office proposed a different version of the Bill.#160 At the close of the 108^th Congress, the Bill was still in the Senate's Judiciary Committee.

In granting certiorari to Grokster, the United States Supreme Court has taken on a number of issues.#160 It could decide to address the claimed split between the Circuits with regard to the standard for contributory infringement liability; this is the approach favored by the American Intellectual Property Law Association.#160 However, even if the Supreme Court decides that substantial non-infringing uses must be probable (7^th Circuit) rather than requiring that a device be capable of substantial noninfringing uses (9^th Circuit), this would not necessarily mean a reversal of the Grokster decision.#160 (The evidence inferred ten percent (10%) of Grokster's product's use was for a noninfringing purpose.)#160 The Supreme Court could also defer to Congress.#160 After all, the Betamax test is judge-made law; the Court could find that expanding its scope from analogue to digital is too far to stretch.

By Scott Hervey

Real estate lawyers take heed.#160 Waiting in the tall grass of your client's real estate development project may be a thorny copyright issue that could cost your client all of the profit it earned on the project, and would probably buy you a serious malpractice claim.

In the course of developing a real estate project, whether it is a residential community or a commercial project, a central component of the project is the architectural plan.#160 Unless the developer (and the developer's counsel) are aware of how the Copyright laws affects what the developer can (and more importantly, can't) do with the plan, the developer may find itself on the receiving end of a Copyright infringement lawsuit.#160 Why?#160 Because an architectural plan, as well as other architectural works, are protected under Copyright laws, and these laws govern who owns the plans and what can and can't be done with the plan.

Scope of Protection Granted Architectural Works

In 1990, Congress enacted the Architectural Works Copyright Protection Act (the "Act").#160 The Act increased the scope of protection architectural works are entitled to under United States Copyright laws.#160 The Act was passed in efforts to make United States Copyright laws more compatible with the Berne Convention For The Protection of Literary And Artistic Works.#160

According to a report prepared by the then Register of Copyrights, pre Act copyright laws provided adequate protection for architectural blueprints, plans, drawings and models.#160 However, the adequacy of protection under Berne Convention standards for the constructed design of architectural structures was in doubt.#160 Although the Act, when it was in Bill form, was intended to address this perceived gap, the legislative history provides us with insight into the intended scope of protection accorded to architectural works, including blueprints and plans.

The Act amended the definition section of the Copyright Act (17 USC 101) by adding the following definition of "architectural works:"

An ''architectural work'' is the design of a building as embodied in any tangible medium of expression, including a building, architectural plans, or drawings. The work includes the overall form as well as the arrangement and composition of spaces and elements in the design, but does not include individual standard features.

The House Report on the Copyright Amendments Act of 1990 (which includes the Act) (the "Report") provides a section by section analysis and discussion of the Act.#160 In discussing the definition of architectural works, the Report identifies the elements of a protected architectural work.#160 The Report states that "protection does not extend to individual standard features, such as common windows, doors and other stable building components."#160 The Report makes clear, however, that the provision is not intended to "exclude from copyright protection any individual feature that reflects the architect's creativity."

Commenting on the meaning of "arrangement and composition of spaces and elements in the design" the Report noted that this phrase recognizes that creativity in architecture frequently takes the form of selection, coordination or arrangement of unprotectable elements into an original, protectible whole, and that a architect may incorporate new, protectible elements into standard features that might not otherwise be protectable and create an original, protectible whole.

The Report sets out a two step analysis to be engaged in when determining the scope of protectability for an architectural work.#160

First, an architectural work should be examined to determine whether there are original design elements present, including overall shape and interior architecture.#160 If such design elements are present, a second step is reached to examine whether the design elements are functionally required.#160 If the design elements are not functionally required, the work is protectible without regard to physical or conceptual separability.

Protection would be denied for the functionally determined elements, but would be available for the nonfunctional elements.#160 The Report states that courts must be free to decide the level and scope of protection, and evidence that there is more than one method of obtaining a given functional result may be considered in evaluating the scope of protection.#160 The Report notes that the Act incorporates the general standards of originality applicable for all other copyrightable subject matter, and the determination of infringement is to be made according to the same standard applicable to all other forms of protected mater.

How Issues of Infringement Can Arise and How to Avoid Them

Poor planning and a lack of understanding can lead to a developer finding itself in hot water with regard to architectural plans.#160 Just because a developer paid an architect to come up with drawings does not mean that the developer can do whatever it wants with the drawings.#160 Granted, case law has held that in certain circumstances the developer may have an implied license to perform the acts that are the subject of the infringement suit.#160 However, defending an infringement claim can be quite expensive. Preventing the situation from arising will be much easier on the pocketbook.

Anytime your client is working with an architect, make sure that there is an engagement letter in place and it is clear on exactly what can and can't be done with plans or other drawings created by the architect.#160 #160Also, make sure that the engagement letter is crystal clear on exactly who owns the plans.#160 I have seen engagement letter from architects that state that the architect is the owner of the copyright in the plan and that any contributions by the developer to the plan is a work made for hire and made on the architect's behalf.#160 As long as the developer understands the implication of these provisions, major problems can be avoided.#160 Representing developers, I would rather have my client own the rights to its contributions.#160 I can just imagine the horror a developer would experience upon finding out that the architect he worked with in developing a completely unique floor plan is now selling the plans to all the other major builders in the area.

Developers can find themselves facing copyright infringement issues if they change architects mid project and continue to use the drawings created by the first architect.#160 To preserve the right to do this, the developer should make sure that this right is specifically reserved in the engagement letter.#160 Usually most reasonable architects will allow the developer this right in exchange for being indemnified against any claims related to work performed by the new architect.

Some engagement letters I have seen from architects allow a developer to freely reuse a plan or other drawing without having to pay a reuse fee as long as it is being used for the same development.#160 If a developer wishes to reuse a drawing for multiple developments, the developer should bring that up as soon as possible and make sure that it finds its way into the engagement letter.

The real estate developer and his counsel should give serious consideration of how to incorporate the requirements of the Copyright laws into the company's best practices.#160 While hand shake deals are still commonplace in the real estate and construction industries, they just won't cut as far as the Copyright laws are concerned.