The protracted copyright infringement class action by freelance writers seeking compensation for pieces published without authorization in various online databases has hit another roadblock.

In re Literary Works in Electronic Databases Copyright Litigation involves claims for infringement of works as to some of which the copyrights are registered and the vast majority are unregistered. This detail – the registered/non-registered distinction – keeps stymieing resolution of the case. In 2007, after the parties had spent years negotiating a settlement and gaining district court approval, the Second Circuit threw out the settlement, holding that the district court lacked subject matter jurisdiction to approve the settlement because many of the claims to be resolved were based on unregistered works, and registration is a jurisdictional predicate to a copyright infringement suit. The Supreme Court finally reversed in 2010, and the parties went back to the district court and again gained approval of the settlement.

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Well, this result seemed almost inevitable.  After all, who gets away with misleading a court?  Right?  But is the amount of the sanction sufficient?  Righthaven was ordered to pay a measly $5,000.  Is that amount really going to punish Righthaven in any significant way?

Righthaven LLC is a copyright holding company, founded in March 2010, which acquires the rights to newspaper content from its partner newspapers (most notably, Stephens Media, which owns the Las Vegas Review Journal). Upon finding that content has been copied to online sites without permission, Righthaven initiates litigation against the site owners, alleging copyright infringement.
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It seems Righthaven hasn’t been able to catch a break since my December 2010 post.  Righthaven LLC is a copyright holding company founded in early 2010, which acquires newspaper content from its partner newspapers after finding that the content has been copied to online sites without permission, in order to engage in litigation against the site owners for copyright infringement. 

Just last week, in a suit filed against Democratic Underground (“D.U.”), Righthaven sought damages because D.U. used four paragraphs of a 34 paragraph Las Vegas Review Journal article (recall that the Journal and its contents belong to Stephens Media).  The post included a link to the full article, as well as citing the Journal. 

U.S. District Court Judge Roger Hunt dismissed the lawsuit, holding that a “copyright owner [here, Stephens Media] could not assign a bare right to sue.”  In addition, the court came down hard on Righthaven because it failed to advise, as required by law, that Stephens Media had a pecuniary interest in the lawsuits (Righthaven and Stephens Media were sharing the profits received from these lawsuits).  Judge Hunt seemed disgusted with Righthaven’s behavior and gave Righthaven two weeks “to show cause … why [Righthaven] should not be sanctioned for this flagrant misrepresentation to the court.”  Judge Hunt accused Righthaven of trying to “manufacture standing” in all of its cases.  (Click here for the Court’s full decision.) Read the rest of this entry »

Following the publication of our original post on the implications of a cyber attack on investors’ securities portfolios (see here), we have been asked by scores of readers whether securities fraud litigation arising from cyber crime has ensued. Not surprisingly, the answer is “yes.”

Indeed, we have located at least two such cases, one a putative securities fraud class action against a payment processing company and the second an SEC initiated action against a private investor. The results may (or may not) surprise you, depending on your perspective of trial courts’ levels of judicial activism and willingness to render substantive decisions at early stages of litigation.

 In re: Heartland Payment Systems, No. 09-1043 (D.N.J. Dec. 07, 2009) remains the paradigm for such litigation. To facilitate its payment processing services, Heartland Payment Systems (“Heartland”) stored millions of credit and debit card numbers on its internal computer network. In December 2007, hackers launched a Structured Query Language Attack (“SQL attack”) on Heartland’s payroll management system. To its credit, Heartland was able to successfully avert the attack before any personally identifiable information was stolen. At the same time, however, the company failed to detect malicious software (“malware”) which had been placed on the network by the SQL attack.  The malware infected Heartland’s payment processing system, ultimately enabling the hackers to steal 130 million consumer credit and debit card numbers.  Heartland did not discover the breach until January 2009, at which time it notified government authorities and publicly disclosed the event.  Over the course of the following month, Heartland’s stock price dropped over $15 per share. Perhaps not surprisingly, shareholder class actions ensued.

In their complaint, plaintiffs alleged that Heartland and its officers and directors had made material misrepresentations and omissions about the December 2007 SQL attack. Specifically, plaintiffs claimed that the defendants concealed the SQL attack and misrepresented the general state of Heartland’s data security.  Plaintiffs further alleged that the defendants’ conduct was fraudulent because they were aware that Heartland’s network had been breached, yet they had not fully remedied the problem Read the rest of this entry »

Cyber crime is costing the United Kingdom more than £27  billion a year ($43.5 million), according to a recent study published by Britain’s Office of Cyber Security and Information Assurance.  The report, entitled “The Cost of Cyber Crime,” concluded that digital crime was a widespread, pervasive threat to U.K. businesses.

Theft of intellectual property, such as designs, formulas and other company secrets from businesses costs £9.2 billion, with firms specializing in pharmaceuticals, biotechnology, electronics, IT and chemicals being hit hardest.  The pharmaceutical industry loses about £1.8 billion a year in IP theft, followed by electronics and electrical equipment makers and the software sector.  In terms of non-IP industrial espionage, financial services are the biggest loser, with yearly losses of more than 2 billion, followed by mining and aerospace. 

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Whether you own a website where you allow blogs and comments to be posted, or if you are the blogger/poster, listen up. 

For those of you who haven’t heard of Righthaven LLC, they are to the blogging world what editors are to the Law Review world…cite-checking and anti-plagiarism “proponents” (let’s call ‘em that, for argument’s sake).  Righthaven’s been making quite a splash and has gained popularity among news chains since its coming into existence in the spring of 2010.  According to David Kravets’ article, “Righthaven Expands Troll Operation With Newspaper Giant”[1], Righthaven has filed over 180 lawsuits and has settled over 70 of them already.  Its major suppliers of copyrighted material include Stephens Media (owners of Las Vegas Review-Journal), MediaNews Group (owners of San Jose Mercury News and the Denver Post), and WEHCO Media (owners of Arkansas Democrat-Gazette and Chattanooga Times Free Fress), to name a few.[2] Owned by Net Sortie Systems LLC and SI Content Monitor LLC, Righthaven is the brain-child of Las Vegas-based IP attorney, Steven Gibson.[3] Righthaven’s clients assign their rights in the content to Righthaven, who then sues for copyright infringement.[4] 

In order to analyze the problems faced by the parties to such lawsuits, we’ll have to discuss the U.S. Copyright Act, as well as the Digital Millennium Copyright Act (“DMCA”).

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Apparently feeling that they’ve resolved the longstanding issue of illegal immigration and can move on to the next crisis, Immigration and Customs Enforcement (“ICE”) and the U.S. Justice Department have identified a new enemy in their ongoing stuggle to protect truth, justice and the American way: Internet sites that sell counterfeit goods and pirated movies.

Indeed, just this month, government officials announced that they have shut down nine websites as part of their newly announced initiative, “Operation In Our Sites,” which is intended to protect Hollywood’s intellectual property. Officials estimated that nearly 7 million pirated movies and shows per month were downloaded from the offending websites.

The announcement was held on a soundstage at The Walt Disney Studios in Burbank, CA. Neither Johnny Depp nor Captain Hook reportedly was present.

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In this short video, Margaret Gould Stewart, YouTube’s head of user experience, talks about how YouTube works with copyright holders and creators to foster (at the best of times) a creative ecosystem where everybody wins.

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Within the last week, two separate intellectual property search engines were launched, each of which has the potential to significantly palliate searches for patents, trademarks and other IP. http://www.wipo.int/wipogold/en/

Specifically, on June 1, 2010, the World Intellectual Property Organization (“WIPO”) introduced a free online public resource, “WIPO GOLD”  which aims to facilitate universal access to IP information. It promises “quick and easy access to a broad collection of searchable IP data and tools relating to, for example, technology, brands, domain names, designs, statistics, WIPO standards, IP classification systems and IP laws and treaties..” The site also includes a helpful translation option, should users wish to search results in a language other than the default, English. The news report can be viewed here: http://www.wipo.int/pressroom/en/articles/2010/article_0018.html

Meanwhile, the United States Patent and Trademark Office (USPTO) separately announced on June 2, 2010 that it has entered into a “no-cost, two-year agreement with Google to make bulk electronic patent and trademark public data available to the public in bulk form.” Under the agreement, USPTO will provide Google with “existing bulk, electronic files, which Google will host without modification for the public free of charge.” Examples of searchable items include: patent grants and applications; trademark applications and Trial and Appeal Board (TTAB) proceedings; and patent classification information. The USPTO and Google also will work together to make additional data available in the future, such as patent and trademark file histories and related data, the office said. The bulk data can be accessed at http://www.google.com/googlebooks/uspto.html.

In other words, as technology moves forward, so too does the ability to research and guard intellectual property ownership and interests… at least in the Western Hemisphere and other WIPO member countries. Now, if only the remainder of the world could come together to unify owners’ capabilities to globally protect their IP rights.

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This topic angers me.  Fines for infringement under the Copyright Act range from $750 to $150,000 per infringement.  That’s a wide spectrum!  More disturbing is that the Act leaves the pricing decision in the hands of the judge, without any real guidelines for them to follow.

This week, a judge ordered Whitney Harper to pay $27,500 for illegally downloading 37 songs…I’ll do the math for you – that’s $750 a song, i.e., the minimum allowed.  Earlier this year, Joel Tenenbaum was held liable for $675,000 for file sharing 30 songs – that’s $22,500 per song.  It gets better.  Nearly a year ago, Jammie Thomas-Rasset was ordered to pay $1.92 million by a jury for downloading 24 songs…$80,000 per download!  How does the court conclude how much to, for lack of a better word, charge per song?  Is it based on the popularity of the song?  Does Lady Gaga or Jay-Z rank higher than Skid Row or Journey because the former are currently more mainstream?

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We all know that it’s illegal to download and distribute copyrighted digital music without paying for it. But can this sort of file sharing ever constitute “Fair Use”? Why or why not?

Last Monday, as part of our feature on the Top 10 Cyber Law Cases Pending Before Courts Today, we discussed The File Sharing Trials. We mentioned that on December 7, 2009, Judge Gertner of the District Court of Massachusetts issued a decision in Sony BMG Music v. Tenenbaum which considered whether a college student’s sharing of digital music for the personal enjoyment of himself and his friends constituted “fair use” of the copyrighted songs. The decision can be viewed Here.

Here’s a quick recap of the facts:  the defendant, Joel Tenenbaum, was a college sophomore who was accused of using file-sharing programs like KaZaA to download and distribute 30 copyrighted songs. Tenenbaum’s file sharing was not for profit; it was for his own private enjoyment and that of his friends. He had downloaded songs, but not entire albums of music, and he did not make any changes to the music (i.e., turn them into his own creative work). Unfortunately, he had continued to file share notwithstanding changes in the case law which made it clear that his conduct was not protected, and after digital music was lawfully available (the iTunes Music Store debuted in April 2003, approximately 15 months before Tenenbaum’s computer was detected on the Kazaa network). Justice Gertner concluded that “fair use” was not a defence. Here’s why.

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“Only one thing is impossible for God: To find any sense in any copyright law on the plant” - Mark Twain.

What Are the File Sharing Trials?

The file sharing trials are copyright infringement actions dealing with the distribution and downloading of digital music. The Recording Industry Association of America (RIAA) is the trade organization that supports and promotes the major music companies.  Over the past few years, the RIAA has deployed investigators in cities across North America to track down individuals who pirate digital music, and has brought resulting lawsuits against music fans for sharing music over peer-to-peer networks.

For many people, these cases bring to mind the old saw “but for the grace of God, there go I.” Generally speaking, the RIAA has settled these lawsuits for relatively modest amounts. In a couple of cases, however, the defendants have opted instead to ‘roll the dice’ and go to trial. Under the U.S. Copyright Act, juries have discretion to award damages of anywhere between $750 and $150,000 per copyrighted work, but they are provided with little or no guidance in how damages are to be assessed. As a consequence, these file sharing trials have resulted in jury verdicts for shocking sums of money that would seem to dwarf any actual damages that have actually been suffered by the copyright holders. The fact that these damage awards may be grossly disproportionate to the harm actually incurred has generated constitutional concerns which will likely be tested in the courts in the near future.  In particular, two cases have recently received a significant amount of media attention:

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A pub owner in the U.K. has been fined £8,000 because someone used its open wireless hotspot to download copyrighted material unlawfully.

The managing director of the hotspot provider The Cloud, Graham Cove, told ZDNet UK that the case, brought in the civil courts, is believed to be the first of its kind in the UK. He would not identify the pub concerned, however, because the pub had not yet given permission for the case to be publicized. Cove did advise that the fine had been levied in a civil case “sometime this summer”. The Cloud’s pubco clients include Fullers, Greene King, Marsdens, Scottish & Newcastle, Mitchell & Butlers and Punch Taverns.

The law surrounding open Wi-Fi networks and the liability of those running them is a grey area. Although copyright owners have brought infringement cases against individuals before in the UK, this case is believed to be the first where the operator of a hotspot – a place where people can buy or get free access to a high-speed wireless internet connection – has been successfully sued.

Based on the facts made known to date, this decision appears to be somewhat anomalous. As Professor Lilian Edwards, a professor of internet law at Sheffield Law School, told ZDNet UK, businesses operating a hotspot for customers or visitors should be “not responsible in theory” for users’ unlawful downloads, under “existing substantive copyright law”.  Anomalous or not, however, this must be a real cause of concern for businesses that provide their customers with wireless access (as well as their liability insurers). “You’re probably OK for now in terms of data retention,” Edwards said, “but watch out for the pile of copyright infringement warnings coming your way.”

This decision may have implications for the U.K.’s upcoming and controversial Digital Economy Bill, with measures that could include disconnection of the account holder, and could make matters worse for businesses with open Wi-Fi hotspots. At a wireless hotspot, it is not possible to determine the IP address of an individual who has downloaded infringing material because the IP address that is recorded will be that of the hotspot. A rights holder who seeks to identify an infringer of a copyright is therefore not able to distinguish the hotspot operator from the end user of the downloaded copyrighted material. Referring to the fact that it is currently not yet clear as to whether those facing disconnection would get their chance to appeal before or after being cut off, Edwards said businesses should “lobby for the upcoming Code of Practice to allow an early appeal against [warnings] before rather than after you get disconnected”.

Read More: CNET-News; The Guardian

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