MVS Filewrapper® Blog: The Role of DVRs in Copyright Infringement

In Fox Broadcasting v. Dish Network, Fox Broadcasting Company ("Fox") appealed a ruling by the District Court of Central District of California that Fox did not demonstrate a likelihood of success on most of its copyright infringement and breach of contract claims, and that Fox was not entitled to a preliminary injunction against Dish Network.  The United States Court of Appeals for the Ninth Circuit affirmed the district court's ruling.

Fox owns copyrights to such television shows as Glee, Bones, The Simpsons, and Family Guy.  Fox contracts with cable and satellite television providers to retransmit these shows for customer viewing.  Fox also separately licenses its shows to companies such as Hulu, Apple, Netflix, and Amazon, which then sell or stream the shows over the internet.

In 2002, Fox and Dish Network entered into a contract that allowed Dish Network to retransmit Fox's shows to their customers.  The contract provides that Dish Network shall not "distribute" Fox programs on an "interactive, time-delayed, video-on-demand or similar basis."  It also provided that Dish Network will not "record, copy, duplicate and/or authorize the recording, copying, duplication or retransmission" of any part of Fox's signal.  An amended version of the 2002 contract stated that Dish Network could provide Fox Video-on-Demand to its subscribers, but Dish Network had to disable the fast forward function during all advertisements.

Dish Network offers two devices that Fox claims constitute copyright infringement:  the "Hopper" and "Joey."  In pertinent part, the Hopper allows the customer to "hop" over commercials.  The Hopper has a feature called PrimeTime Anytime, which allows the user to record prime time shows on their Hopper.  Another added feature to the Hopper is the Autohop that allows users to automatically skip commercials.  Autohop is only available online, and the morning after the prime time show had aired.  To create the Autohop function, Dish Network has technicians manually watch the program each night and mark the beginning and end of each commercial.

Fox sued Dish Network alleging copyright infringement and seeking a preliminary injunction.  The district court denied the preliminary injunction, concluding that Fox did not demonstrate a likelihood of success on either its copyright claims or its breach of contract claims. 

To establish direct copyright infringement by reproduction, "the plaintiff must show ownership of the copyright and copying by the defendant."  The district court concluded, and the parties did not dispute, that Fox did own the copyrights to the programs.  The focus of the court was on the second prong, "copying by the defendant."  The court noted that the user is "the most significant and important cause of the copy."   

On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court.

The Ninth Circuit explained that infringement of the right of reproduction required copying by the defendant.  Thus, the court dismissed Fox’s assertion that Dish was responsible for infringement because Dish’s program creates recordings only in response to the user’s command.  The court concluded that "operating a system used to make copies at the user's command does not mean that the system operator, rather than the user, caused copies to be made."  Thus, Fox failed to show that it had established direct copyright infringement.

Next the appellate court addressed the district court’s conclusion that Fox was unlikely to succeed in its contention regarding secondary liability.  To establish secondary liability the party must first establish direct infringement by a third party.   Fox established a prima facie case of direct infringement by Dish Network customers because Fox owns the copyrights to its shows and the users make copies.  Dish Network had to rebut this by showing that their customers' copying was a "fair use."  In affirming the district court, the Ninth Circuit stated "if recording an entire copyrighted program is a fair use, the fact that viewers do not watch the [commercials] not copyrighted by Fox cannot transform the recording into a copyright violation."  Thus, any analysis of harm to Fox should exclude consideration of Autohop because ad-skipping does not implicate Fox's copyright interests.  Since the alleged harm to Fox is from the automatic commercial skipping and not copying the programs, Fox failed to established secondary liability.

Finally, the Ninth Circuit addressed whether Fox could get a preliminary injunction based upon Dish Network allegedly breaching the 2002 and amended 2002 contract.  The appellate court again affirmed the lower court's decision that a preliminary injunction was improper because the district court had not abused its discretion.  

MVS Filewrapper® Blog: New and Useful - July 8, 2013

·         The Federal Circuit in Ultramercial, Inc. v. Hulu, LLC held that the district court erred in holding that the subject matter of U.S. Patent No. 7,346,545 ('545) is not a "process" within the language and meaning of 35 U.S.C. § 101.  The Federal Circuit reversed and remanded this case stating the claims were not abstract and were patent eligible.

The '545 patent claims a method for distribution of copyrighted products over the Internet where the consumer receive the product for free in exchange for viewing an advertisement, and the advertiser pays for the copyrighted content.  In other words, it is a method for monetizing and distributing copyrighted products over the Internet.

Ultramercial originally sued Hulu, LLC ("Hulu"), YouTube, LLC ("YouTube"), and WildTangent, Inc. ("WildTangent"), alleging infringement of the '545 patent.  Hulu and YouTube were later dismissed from the case.  WildTangent then moved to dismiss for failure to state a claim under Rule 12(b)(6).  The United States District Court for the Central District of California granted the dismissal holding that patent '545 did not claim patent-eligible subject matter.  The Federal Circuit had previously reversed the district court's holding and remanded the case, but that earlier decision was vacated by the United States Supreme Court. 

The district court’s grant of the motion to dismiss was based on its conclusion that there was no reasonable construction that would render the subject matter patent-eligible.  The Federal Circuit took issue with this approach, and explained that inquiries into patent-eligibility under § 101 would often involve factual questions, and that claim construction would often be necessary.   In this case, the Federal Circuit determined that the factual determinations were key to deciding eligibility, and that a construction most favorable to the patentee should be applied. 

In its analysis, the Federal Circuit reiterated that under the “abstract ideas” limitation to patent-eligibility of 35 U.S.C. § 101, a claim is not patent eligible only if, instead of claiming an application of an abstract idea, the claim is instead to the abstract idea itself.  A claim may be premised on an abstract idea and, indeed, the abstract idea may be of central importance to the invention—the question for patent eligibility is whether the claim contains limitations that meaningfully tie that abstract idea to an actual application of that idea through meaningful limitations.  In determining if the claim is abstract or not, the court must look at the claim as a whole and "cannot go hunting for abstractions by ignoring the concrete, palpable, tangible limitations of the invention the patentee actually claims."

The Federal Circuit looked to the Supreme Court for guidance on discerning whether or not a claim is an abstraction.  First, the Supreme court in Prometheus stated that a claim is not meaningfully limited if it merely describes an abstract idea or in essence simply adds the words "apply it."  Second, a claim is invalid if the subject matter preempts all practical uses of an abstract idea.  In other words, a claim is invalid if it covers every practical application of that abstract idea.  Finally, the Supreme Court in Prometheus stated "that a claim is not meaningfully limited if its purported limitations provided no real direction, cover all possible ways to achieve the provided result, or are overly-generalized."

With this guidance in mind, the Federal Court held that the claims of '545 were patent eligible and not invalid under § 101.  The court noted that by its terms, patent '545 invokes computers and applications of computer technology.  Even without claim construction, several of the steps require that the method be performed though computers, on the internet, and in a cyber-market environment.  Further, if the products are offered for sale on the internet, they must be restricted by complex computer programming as well.  Viewing the subject matter as a whole, the invention recites a process, it does not pre-empt all use of the abstract idea, the recited steps are not all pre- or post-solution steps, and the claim is not overly generalized.  The claims also do not involve a mathematical algorithm, a series of purely mental steps, or any similarly abstract idea.  Thus the claims of patent '545 were found to be patent-eligible.  

  

·         In Authors Guild v. Google Inc., the Second Circuit vacated a class certification by the United States District Court for the Southern District of New York, and remanded the case back for further consideration, without prejudice to any renewal of the motion for class certification.

The suit commenced in 2005 when The Authors Guild, an association of authors, and several individual authors sued Google alleging copyright infringement by Google Books.  Google Books would scan and index books and make short snippets of the books available for public viewing without payment to the authors.

Following a course of discovery and settlement agreements, both parties moved for an approval of an amended proposed class settlement agreement.  After the court refused the motion, the plaintiff moved to certify a proposed class of "[a]ll persons residing in the United States who hold a United States copyright interest in one or more books reproduced by Google."  The district court allowed the certification.  Google opposed the motion for class certification and appealed the District Court's grant of class certification to the Second Circuit.  In its appeal, Google stated they intended to raise a "fair use" defense, which might moot the litigation.  Google also raised the defense that the class representatives do not adequately protect the interests of the class as a whole.

The appellate court set aside Google's second defense and chose to just focus on the fair use argument, stating "the resolution of Google's fair use defense in the first instance will necessarily inform and perhaps moot our analysis of many class certification issues."  The court believed that Google's fair use defense should be fully resolved before questions regarding class certification are decided on.  The court vacated the District Court's decision to allow certification of the proposed class and remanded the case back for consideration of the fair use issues, without prejudice to any renewal of the motion for class certification.

·         In Fresenius USA v. Baxter Inter'l, the Federal Circuit decided whether the cancellation of the asserted claims by the United States Patent and Trademark Office ("PTO"), pursuant to the agency's statutory reexamination authority, must be given effect in pending infringement litigation.  The Federal Circuit held that it did, and dismissed the district court's decision and remanded with instructions to dismiss.

The case commenced when Fresenius USA and Fresenius Medical Care Holdings (collectively, "Fresenius") brought a declaratory judgment action against Baxter International and Baxter Healthcare Corporation (collectively "Baxter") alleging that claims of U.S. Patent No. 5, 247, 434 ('434) were invalid and not infringed.  Baxter counterclaimed for infringement.  The district court found in favor of Baxter that Fresenius infringed the claims and that the claims were not invalid.  The Federal Circuit affirmed the district court's ruling, but remanded to reconsider its injunction and post-verdict damages.

While the litigation was pending on remand to the District Court, the PTO completed a reexamination of the patent and determined that all asserted claims were invalid.  After the PTO made its determination, the district court entered judgment against Fresenius in the pending infringement proceeding.  On appeal, Fresenius argued that Baxter no longer had a cause of action because the PTO gave its ruling before the district court gave theirs.

The reexamination statute of 1928 authorized the PTO to reconsider patents of "doubtful" validity, and to cancel "defectively examined and therefore erroneously granted patents."  Looking at the language and legislative history, the court noted that reexamination is supposed to occur concurrently with litigation, and that cancellation of claims during reexamination would be binding on concurrent infringement litigation.  After looking at all applicable precedent, the court concluded that if the PTO confirms the original claim in identical form, a suit based on that claim may continue, but if the original claim is cancelled or amended to cure invalidity, the patentee's cause of action is extinguished and the suit would fail.

Baxter contends that this rule does not apply to the present case because their case was conclusively decided before PTO gave their decision.  The Federal Circuit disagreed. The court stated that their original decision was not sufficiently final as to immunize it from the PTO's decision.  The court's original decision left open many aspects that still needed to be decided upon by the lower court.  The court explained "it is well-established that where the scope of relief remains to be determined, there is no final judgment binding the parties or the court."  For the PTO's decision to have no effect, a final decree must have been given, leaving nothing further to be done except the execution of it.  Since the PTO invalidated the claims before the lower court decided the injunction and post-verdict damages issues, Baxter no longer had a cause of action and the suit would fail.

Fourth Circuit: Plagiarism detection service is fair use of students' copyrighted papers

In a recent decision by the Court of Appeals for the Fourth Circuit, the court decided that the anti-plagiarism service provided by iParadigms at turnitin.com, did not constitute copyright infringement of high school students' papers submitted via the service.  Instead, the court held the service was a fair use of the copyrighted works and therefore not infringement under § 107.  However, the court reversed and remanded to a district court on the issue against a student for liability under the Computer Fraud & Abuse Act for allegedly unauthorized access to its servers based on one student's use of a password meant for students from another school obtained via the internet.

More on A.V. v. iParadigms, LLC after the jump.

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Eleventh Circuit: Laches presumed not to apply in copyright case filed during limitations period

In a decision last week, the Eleventh Circuit affirmed in part and vacated in part a district court decision granting summary judgment in a copyright infringement action.  The central disagreement between the parties was over the scope of copyright protection in a book about sales techniques.  The district court granted the defendant's motion for summary judgment, finding fair use and laches precluded recovery.  

The Eleventh Circuit affirmed in the district court's decision as to whether instructional courses constituted derivative works.  However, the court vacated and remanded in part the district court's application of the fair use doctrine and laches.  Regarding laches, the court held, as a matter of first impression in the circuit, that laches may be raised as a defense in a copyright infringement action, even when the statute of limitations has not yet run.  However the court stated there is a "strong presumption" against laches when a claim is filed within the limitations period, only applying in "the most extraordinary circumstances."

Regarding fair use, the court criticized the district court's use of a so-called fifth fair use factor, specifically the consent of the copyright owner.  The court stated analyzing consent in the context of fair use was "incorrect, both in terms of logic and precedent," because "the existence of actual consent negates the necessity of conducting a fair use analysis in the first place."  Ultimately, there were sufficient questions of fact for one of the plaintiff's four claims to survive summary judgment, and the court remanded that claim for further consideration.

More on Peter Letterese & Assocs., Inc. v. World Institute of Scientology Enters. after the jump.

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Ninth Circuit: Karaoke is audiovisual work, so not fully covered by § 115 compulsory license

In a decision yesterday, the Ninth Circuit affirmed a district court's dismissal of a complaint for declaratory judgment by a karaoke device manufacturer without leave to amend for failure to state a claim.  The complaint sought a declaration that a compulsory license under § 115 of the Copyright Act was a sufficient license for a karaoke device to not only play music, but also display the lyrics in real time in coordination with the music.

The Ninth Circuit affirmed the dismissal of the complaint, finding that the § 115 license was insufficient.  The § 115 license applies to "phonorecords," but karaoke, because of the lyrics and other content displayed in connection with the song, is an "audiovisual work," specifically excluded from the definition of phonorecords.  The court also held that the use of the lyrics also could not constitute fair use based on its commercial nature, aggreeing with a Sixth Circuit decision (blogged here).

More details of Leadsinger, Inc. v. BMG Music Publ'g after the jump.

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Sixth Circuit affirms copyright infringement award against karaoke disc maker

In a decision today, the Sixth Circuit affirmed an award of $806,000 in statutory damages plus attorney fees in a copyright case.  The case was brought by a copyright holder against a manufacturer of karaoke discs incorporating the compositions to which the plaintiffs held the copyright.

The court upheld the award and finding of willful infringement over the defendant's challenges under the Due Process Clause of the Fifth Amendment and the Eighth Amendment, as well as its contention that it was engaged in fair use.

More details of Zomba Enters., Inc. v. Panorama Records, Inc. after the jump.

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Preliminary injunction against Google image search's display of copyrighted images reversed

In a lengthy and tech-heavy opinion [Update (12/4): the court has released an amended opinion, available here], the Ninth Circuit this week reversed a preliminary injunction against Google restricting its image search from displaying thumbnails of images copyrighted by Perfect 10, Inc.  There are several aspects of the ruling of interest, such as:

  • Holding that Perfect 10 failed to show Google would not likely prevail on its fair use defense based on its display of copyrighted thumbnail images.  At the preliminary injunction stage, this places the burden on the copyright holder to disprove fair use, instead of the reverse at trial.
  • Affirming that Google was not directly liable for providing links to sites displaying the full copyrighted images
  • Remanding the issue of contributory infringement, because there was a factual dispute as to whether Google knew of the infringement, and whether there were "reasonable and feasible means for Google to refrain from providing access to infringing
    images"

The determination on remand of the contributory infringement claims (assuming they do not settle) will likely provide useful guidance for the potential liability of search engines for copyright infringement on the Internet.

Click below for other media and blog coverage of the decision.

 

Media: 

Law.com (a second article)

Washington Post

Associated Press (via Forbes)

Reuters

Sydney Morning Herald (Australia)

Blogs:

Eric Goldman

John Ottaviani

EFF deep links (the EFF also has many of the court documents available here)

How appealing

43(b)log

Academy of Motion Picture Arts and Sciences sues Oscarwatch.com for trademark infringement

The Academy of Motion Picture Arts and Sciences (AMPAS) has sued the operator of the website oscarwatch.com for trademark infringement based on the use of "Oscar" in the website's address.  AMPAS holds several federal trademark registrations for "Oscar" for various goods and services, such as "telecasts in connection with recognition of distinguished achievement in the motion picture industry" (reg. no. 1096990), "prerecorded videotapes featuring entertainment relating to motion pictures and award ceremonies" (reg. no. 2021582), and "sweatshirts, jackets, t-shirts and caps" (reg. no. 1996585).

The complaint alleges that oscarwatch.com's use of "Oscar" constitutes trademark infringement, dilution, false designation of origin, and a violation of the anticybersquatting consumer protection act.  A copy of the complaint is not yet available on the court's website, but Moviecitynews.com has made a portion of it available online (page 1, 2, 3, 4).  Oscarwatch.com has countered that its use of "Oscar" constitutes fair use under trademark law, stating that the website offers commentary that directly addresses the Oscars awards, a topic of great interest to the general public, and therefore the Oscarwatch to describe commentary about the Oscars constitutes fair use. 

This fair use argument appears to be the "nominative fair use" argument the Ninth Circuit Court of Appeals (the court whose law applies to this case, as it was filed in California federal court) found compelling in New Kids on the Block v. News America Publishing, Inc.   There, the court found that a newspaper's use of the name "New Kids on the Block" to describe the musical group was fair use, because the New Kids trademark was being used to refer to the New Kids on the Block themselves, rather than for a competing group or products.   The court held that:

where the defendant uses a trademark to describe the plaintiff's product, rather than its own, we hold that a commercial user is entitled to a nominative fair use defense provided he meets the following three requirements: First, the product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.

It is uncertain whether such a defense will be successful under these facts, but this case illustrates an issue commonly faced by trademark owners when members of the public use a mark.  On one hand, a mark owner must police use of the mark in order to maintain rights in the mark, but on the other hand, enforcement cannot be so zealous as to wrongfully pursue fair uses of the mark.  Striking the appropriate balance is the key, but is often difficult even for experienced trademark practitioners.

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