Aspen Law & Business, 3rd ed., 2006
Introduction to Computer Technology, Network Economics and Intellectual Property, Chp. 1 (.pdf, 1.7 MB)
You are welcome to use this chapter as a supplement to Software and Internet Law.
I. Software Law
1. Trade Secret Protection
2. Copyright Law
3. Patent Protection
4. Trademark and Trade Dress
5. Sui Generis Protection of Computer Technology
6. Software Licensing
7. Antitrust in the Computer Industry
8. International Protection of Computer Technology
II. Internet Law
1. Jurisdiction and Choice of Law
2. Intellectual Property in Cyberspace
3. Content Regulation
4. Computer Crimes
5. Privacy, Anonymity and Encryption
6. Electronic Commerce
7. Internet Governance
I. Software Law
Trade Secret Protection
1. The Secrecy Requirement
2. Disclosure of Trade Secrets
3. Misappropriation4. Reverse Engineering
In Norway (Sunde) v. Johansen, Case No. 02-507 M/94 (1 Jan. 2003, Oslo first instance court), Jon Johansen was acquitted of charges stemming from his development of DeCSS, a DVD decryption program. At the behest of the United States’ DVD-CCA (DVD Content Control Association), Norway had filed chargesunder penal code 145 against Johansen for both his development and distribution of DeCSS. Penal code 145 forbids “breaking a protection or similarly gain[ing] access to data stored or communicated by electronic or other technical means, and having caused damage by availing himself of or use of such unauthorised knowledge.” A 3-judge panel unanimously found lawful both Johansen’s development of DeCSS and his distribution of DeCSS on the Internet. In Norway, the prosecutor can appeal an acquittal.
The court first found that Johansen’s development of DeCSS was lawful, since he developed a program to view content which he legally owned. The court interpreted penal code 145 to mean that gaining access was critically related to “unauthorised knowledge.” Since Johansen had lawfully purchased the DVDs he accessed with DeCSS, access to the content was not unauthorised. Although his access was in a different way than presumed by the producer, it was not unlawful. The court specifically included as a factor in its holding the fact that “it has not been proved that Johansen participated in developing” the decryption algorithm, and merely assembled two algorithms developed by two other parties and developed a user interface. The court held that since there was no proof of DeCSS used by anybody for illegally acquired DVDs, Johansen was also not liable for “completed cooperation” for the distribution of DeCSS. Finally, the court held that Johansen was not liable for “attempted co-operation” for the distribution of DeCSS, since DeCSS could serve lawful as well as unlawful purposes. “Attempted co-operation” required intent to contribute to unlawful copying or accessing unlawfully acquired content, Johansen was not proven beyond a reasonable doubt to have such intent.
The court considered whether breaking the encryption algorithm through reverse engineering or in violation of the licensing agreement constituted a violation. The court found that reverse engineering object code was not a violation. The court reasoned that it was not proven that “the objective of distributing a computer program in object code is that the producer of the program has wanted to protect the source code.” The objective might easily be that the program in object code could easily be executed by the computer. As to the license agreement, although manufacturers were required to implement technical protection measures, the player which was reverse engineered did not actually contain such protections. Finally, although Johansen’s collaborators had “broken a protection” in a later decryption of part of the encrypted keys, that did not give unauthorised access to data, since the DVDs were not illegally produced or acquired.
Case summary based on unofficial translation by Professor Dr Juris Jon Bing, Norwegian Research Center for Computers and Law (firstname.lastname@example.org), available at http://www.eff.org/IP/Video/DeCSS_prosecutions/Johansen_DeCSS_case/20030109_johansen_decision.html . The Norwegian language original is available at http://www.domstol.no/archive/Oslotingrett/Nye%20avgjorelser/DVD-jon.doc or from Lovdata, PO Box 41 Sentrum, NO-0101 Oslo, Norway.
- Origins of Copyright protection for Computer Software
- Scope of Software Copyright
- Exclusive Rights in Computer Programs
- Fair Use
In Kelly v. Arriba Soft Corporation (PDF file) — F.3d—, 2002 WL 181351 (9th Cir. 2002), the Ninth Circuit ruled that the use of miniaturized images of photographs by a search engine was fair, but that the importation of full-sized versions of the photographs was not, affirming-in-part and reversing-in-part the district court’s grant of summary judgment. The subject of litigation was defendant Arriba’s search engine, unconventional in that it displayed search results in the form of thumbnail sketches of websites, rather than as text. In the contested version of the search engine, users could reach a webpage containing the original full-sized image imported directly from the originating website. The suit was brought by defendant Kelly whose photographs of the American West were reproduced and displayed by the search engine.
The court was careful to distinguish the two actions carried out by the search engine that implicated copyright interests: 1) the making of copies in creating the thumbnail sketches, and 2) the public display of the images through the inline linking process. (The latter of which did not involve making any copies of the images.) The first action, the court held, constituted fair use, because the purpose of the copies – to attract people to the originating website – was sufficiently transformative as to prevent harm to Kelly’s websites. The lower resolution of the thumbnail sketches prevented them from acting as substitutes for the original or harming the market for licensing, the court concluded. On the contrary, the court found, the display of the images through inline linking might well deter visitors away from the original website and usurp sales and licensing opportunities because users could get the full benefit of the images without visiting Kelly’s site. The full-sized images on Arriba’s website did not transform but merely replicated the artistic purpose of the images on Kelly’s website, and therefore were not entitled to fair use.
- Reverse Engineering
- Copyright Misuse
- First Sale
- Is Software Patentable Subject matter?
- Examination and Validity of Software Patents
Trademark and Trade Dress
- Protecting programs through trademark
- Compatibility and Standardization
- Trademarks as Lockout Devices
Sui Generis Protecion of Computer Technology
- Semiconductor Chip Protection Act
- Sui Generis Protection for Databases
- Proposals for Sui Generis Protection for Software
- License Versus Sale
- Contract Formation, Enforcement and Warranties
- The National Conference of Commissioners on Uniform State Laws (NCCUSL) offers information about the status of UCITA and UETA.
- McBride, Baker & Coles provides an excellent summary of developments in the U.S. and internationally in UCITA/UETA type legislation.
- The Contract-IP Boundary
- In Bowers v. Baystate, F.3d 1317 (Fed. Cir., 2003), the Federal Circuit enforced a shrinkwrap license prohibiting reverese engineering. The court found that under First Circuit caselaw, Bowers’ shrinkwrap license, which prohibited reverse engineering, was not preempted by federal copyright law, which permits reverse engineering as fair use.
The Federal Circuit held that “under First Circuit law, the Copyright Act does not preempt or narrow the scope of Mr. Bowers’ contract claim.” While recognizing that federal regulation may preempt private contract, the court found that “[t]he First Circuit does not interpret [the Copyright Act] to require preemption as long as a state cause of action requires an extra element, beyond mere copying, preparation of derivative works, performance, distribution or display.” The court relied in part upon Data General v. Grumann, 36 F.3d 1147 (1st Cir. 1994), which held that the Copyright Act did not preempt state trade secret claims. The court also relied upon other Circuit cases, including ProCD v. Zeidenburg, 86 F.3d 1447 (7th Cir. 1996) which resolved shrink-wrap licenses and questions of Copyright Act preemption of “contractual constraints on copyrighted articles.”
The court briefly mentioned two reverse engineering cases, with very little discussion. The court merely noted that Atari Games v. Nintendo, 975 F.2d 832, 24 USPQ 1015 (Fed. Cir. 1992), which held that reverse engineering is a fair use defense to copyright infringement, did not conflict with the current holding. The court also noted that Vault v. Quaid, 847 F.2d 1488 (5th Cir. 1988), which expressly found that the Copyright Act preempted a state law prohibiting copying of computer programs, did not affect “private contractual agreements supported by mutual assent and consideration.” The court added that the First Circuit allows contractual parties to waive their affirmative defenses.
The court did not reach the merits of Bowers’ copyright infringement claim, since it found that the contract infringement claim was valid, and it was reasonable for the judge to award only once where the underlying behavior was the same. Finally, the court held that the patent claims were invalid.
- In Bowers v. Baystate, F.3d 1317 (Fed. Cir., 2003), the Federal Circuit enforced a shrinkwrap license prohibiting reverese engineering. The court found that under First Circuit caselaw, Bowers’ shrinkwrap license, which prohibited reverse engineering, was not preempted by federal copyright law, which permits reverse engineering as fair use.
Antitrust in the Computer Industry
- Principles of Antitrust Law
- Agreements to Restrain Trade
- Mergers and Acquisitions
International Protection of Computer Technology
- Trade Secrecy
- Semiconductor Chip Design Protection
- Database Protection
- Trademark Protection
- Contracts and Licensing
- Antitrust and Competition Policy
II. Internet Law
- Jurisdiction and Choice of Law
In Toys’R’Us, Inc., v. Step Two, S.A., 318 F.3d 446 (3d Cir. 2003), the Third Circuit reversed the District’s court dismissal of a trademark and cybersquatting case against a Spanish retailer. The Third Circuit ruled that although Toys’R’Us had not established personal jurisdiction, it had established enough of a reasonable claim to allow jurisdictional discovery to go forward.
Toys’R’Us and Step Two both hold trademarks established in “Imaginarium,” selling them in free-standing stores; since the mid-1990s both have established websites selling scientific and educational toys. Step Two markets entirely to customers in Spain, but does purchase toys from US vendors and attends US toy shows. Moreover, Toys’R’Us engineered two US sales on Step Two websites. Citing Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997), the Third Circuit examined Step Two’s activities to determine whether Step Two’s commercial web site interactivity was sufficient to demonstrate purposeful availment of the forum, and accordingly, personal jurisdiction. The activities already stated–occasional business trips, vendor relationships, and two engineered sales–did not by themselves constitute purposeful availment. The court also considered the absence of US-friendly forms on the website a favorable factor supporting a finding of no personal jurisdiction. However, the court ultimately determined that jurisdictional discovery should go forward. It based this determination on the two occasional sales, which showed that while Step Two may not actively solicit US business, and no evidence of non-engineered sales existed, such sales might exist. And in light of Toys’R’Us’ allegations that Step Two copied its marketing strategies and logos, the court found that this was a non-frivolous claim that warranted further investigation.
In Pavlovich v. Superior Court and DVD Copy Control Association, Inc., No. S100809, 2002 WL 31641714 (Cal.) (Cal., Nov. 25, 2002), [PDF] [MS Word] the California Supreme Court reversed the lower courts’ exercise of personal jurisdiction over a non-resident defendant based on a posting on his website of a program allegedly based on an infringed trade secret. Upon certification to the Supreme Court of the United States, Justice O’Connor denied the application for stay of the California Supreme Court judgment, after vacating a previous stay order. 2003 WL 466660.
Defendant Matthew Pavlovich ran a website dedicated to LiVid, an open source video project, on which someone posted a copy of DeCSS. DeCSS is a short string of code which enables the decrypting of the Content Scrambling System (CSS), encryption software for DVDs.
The appellate court had affirmed the exercise of personal jurisdiction, holding that Pavlovich had actual or constructive knowledge that the posting of DeCSS would harm the movie and computer industries in California. Under the Calder “effects test,” a state may exercise personal jurisdiction over a defendant whose actions are aimed at the forum state and have an effect in that state. Calder v. Jones, 465 U.S. 783 (1984). Such a defendant has “purposefully availed” himself of the benefits of the forum state.
The California Supreme Court held that mere foreseeability of harm is not enough to justify personal jursisdiction, requiring “additional evidence of express aiming or intentional targeting.” Pavlovich at 6. The Court found that Pavlovich had not expressly targeted his actions at DVD CCA, since that organization had not begun licensing CSS until two months after the posting on Pavlovich’s website. Furthermore, the Court found that Pavlovich’s knowledge that the posting might harm industries centered in California, “by itself,” could not establish purposeful availment under the effects test. The Court did find that such knowledge would be relevant to a finding of jurisdiction, but that knowledge of industry-wide effects in the forum state was not sufficient. To do otherwise “would effectively eliminate the purposeful availment requirement” since “in most, if not all” intentional tort cases the defendant would be aware that some conceivable industry-wide harm might occur.
The dissent found it reasonable that DVD CCA as the licensing entity ought to be able to sue in California. The dissent reasoned that since the movie industry is located in California, the effects are largely felt in California and it was more efficient for the lawsuits to be handled within California. [blurb by BKS]blurb by
- Intellectual Property in Cyberspace
- Trademark Law
In U-Haul International, Inc. v. WhenU.com, Inc., 2003 U.S. Dist. LEXIS 15710 (E.D. Va. Sept. 5, 2003), the district court granted summary judgment for WhenU holding that WhenU’s pop-up advertising does not constitute trademark or copyright infringement, or unfair competition because the pop-up advertisement does not copy or use U-Haul’s trademark or copyrighted material. WhenU distributes a downloadable pop-up advertisement software program called “SaveNow” that is bundled with other software programs such as “free” screensaver programs. As such, when an individual computer user accepts the license agreement, SaveNow is delivered and installed on the user’s computer. The SaveNow program scans the user’s internet activity and matches the user’s activity with a pop-up advertisement that is selected at random from WhenU’s clients. Thus, when a user who has downloaded the SaveNow program accesses U-Haul’s website a pop-up advertisement shows up in a separate window. U-Haul contends that WhenU’s pop-up advertisement infringes U-Haul’s trademark and copyright.
Regarding U-Haul’s trademark claims, the court concluded that WhenU’s pop-up advertisement do not infringe U-Haul’s trademark because the pop-up advertisements do not constitute “use in commerce” of U-Haul’s trademark for the following four reasons. First, the pop-up advertisements are not part of U-Haul’s website, but appear as a separate window. Second, “use” cannot be established merely because two different trademarks are visible to a user at the same time. Third, “use” is also not established by WhenU’s incorporation of U-Haul’s URL and “U-Haul” marks in SaveNow program where WhenU is using the marks for the “pure machine-linking function” and is not advertising U-Haul through its SaveNow directory. Fourth, the pop-up advertisements do not hinder or impede users from accessing U-Haul’s websites given that the SaveNow program does not interact with U-Haul’s servers or computer systems, and SaveNow is installed by the user.
As to the copyright claims, the court found that WhenU’s pop-up advertisements do not infringe U-Haul’s exclusive right to display or make derivative work because the advertisements neither altered nor displayed U-Haul’s website. The court determined that the pop-up advertisements did not modify U-Haul’s website and thereby create derivative work because the pop-up advertisements do not incorporate U-Haul’s copyrighted material; they were transitory in nature; and they do not alter computer display, a display that is under the control of the user. The court also distinguished the facts of the instant case from Tasini stating that unlike Tasini there was no reproduction of U-Haul’s copyrighted material in the pop-up advertisements.
- Copyright Law
In re AIMSTER Copyright Litigation, the Northern Dist. of Illinois granted a preliminary injunction against AIMster (presently known as Madster). In an order issued Oct. 30, 2002, the court allowed AIMster to continue operations, but ordered it to refrain from allowing any downloading of the record company plaintiffs’ works, and to post a $500,000 bond. No. 01 C 1425, 2002 WL 31443236 (N.D.Ill. Oct. 30, 2002). In a follow-up order issued Dec. 3, the court ordered AIMster to disconnect its website and servers entirely, and gave the RIAA permission to request AIMster’s ISPs to disconnect service if AIMster did not do so voluntarily.
AIMster provides a file-sharing service over the instant messaging (IM) networks of AOL, ICQ, and Yahoo!. The IM networks allow users to share files with select lists of “buddies,” by providing connections to openly available files and by allowing users to send specific files to one another. AIMster builds upon this capability by allowing users to designate all AIMster members as “buddies,” thus allowing users to search for files available on any AIMster member’s open space. In 2001, AIMster began offering an additional fee-based service that provided lists of popular downloaded songs without any additional requests by the user. Following the Napster decision, AIMster filed for declaratory relief in 2001; and the RIAA and record companise filed suit for copyright infringement. All actions were consolidated in November 2001. AIMster filed for bankruptcy in May, 2002, and the bankruptcy court ordered an immediate decision on the preliminary injunction motion.
The district court found a likelihood of success on all copyright infringement claims and granted a preliminary injunction. The court found that Aimster’s users were “unequivocally” engaged in direct copyright infringement. The district court found that the Audio Home Recording Act (AHRA) did not immunize AIMster from liability. The court also found that the plaintiffs were likely to prevail on their claim of contributory infringement.
The court distinguished Sony from AIMster, finding that in Sony, the VCR’s “principal” use was non-infringing; while by contrast, AIMster’s primary use was infringement. The court also held that where a device was “specifically manufactured for infringing activity, even if [it] ha[s] substantial non-infringing uses,” that Sony’s protections were not available. The court also found that Sony had not “influenced or encouraged” the unlawful copies. Of particular note, the court also found that Sony was inapplicable because AIMster is a service, not a “stable article of commerce.” Finally, the court held that Sony did not apply to distribution of infringing works.
The court further found that AIMster would likely succeed on their vicarious infringement claim, again citing Fonovisa. The court dismissed AIMster’s defense that AOL provided the IM functionality and thus had unclean hands. The court further found that AIMster had not adequately implemented a repeat infringer policy, and thus was not eligible for the DMCA’s safe harbor for ISPs.blur
* In .Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 259 F. Supp. 2d 1029 (C.D. Cal. 2003), the district court granted summary judgment for Defendants internet software distributors holding that Defendants were not liable for contributory or vicarious copyright infringement since there was no showing that Defendants were materially contributed to the user’s conduct or had any right or ability to supervise the users’ conduct. Plaintiffs Motion Picture Studios and Record Companies sued Defendants Grokster, Ltd. and StreamCast Networks, Inc. for liability stemming from copyright infringement committed by users of Defendants’ software. Grokster and Streamcast distribute software, Grokster and Morpheus respectively, which users can download for free from servers operated by Defendants. The software connects the user to a peer-to-peer network (FastTrack in Grokster’s case and Gnutella in Morpheus’s case) and thereby allows the user to access “shared files” of other users currently connected to the same peer-to-peer network.
The court first examined whether users of Defendants’ software had in fact engaged in direct copyright infringement. To establish copyright infringement, the plaintiffs must show that: 1) they owned the copyright to the allegedly infringing material; and 2) the users had violated at least one exclusive right of copyright holders. The court found that the plaintiffs had met both prongs of copyright infringement. The Record Company and Motion Picture Studio plaintiffs stipulated to their copyright ownership and the court assumed that the Music Publisher plaintiffs could show copyright ownership. The second requirement was met by undisputed showing that at least some of the individuals had used Defendants’ software in order to download copyrighted material and had thereby violated the plaintiffs’ rights of reproduction and distribution.
Having found that the users of Defendants’ software had directly infringed the plaintiff’s copyright, the court then examined whether Defendant’s conduct gave rise to liability for contributory infringement. To be liable for contributory infringement, a defendant must have actual knowledge of infringement and should have materially contributed to the infringing conduct of a user. Constructive knowledge of infringement based on the mere retail of products is insufficient because some products, such as Defendant’s software, are capable of both infringing and “substantial non-infringing” uses. Regarding the knowledge prong, the court determined that although Defendants knew that many of their users downloaded their software to subsequently infringe copyrighted works, the critical question was whether Defendants had actual knowledge of specific infringement “at a time when a defendant materially contributes to the alleged infringement, and can therefore do something about it.”
Turning to the material contribution prong of contributory infringement, the court concluded that Defendants had no control over the users and therefore did not materially contribute to the users’ infringement. Distinguishing Grokster and StreamCast from Napster, the court stated that unlike Napster, neither Grokster nor StreamCast operated a centralized file-sharing network, a factor critical in retaining control over users. Grokster distributes free software that is powered by FastTrack networking technology, a technology not owned by Grokster and which Grokster therefore cannot alter, while StreamCast’s software, Morpheus, employs the open-source Gnutella technology, which is controlled by no one. Napster, by contrast, “served as the axis of the file-sharing network’s wheel.” Grokster’s de-centralized file-sharing network consists of “nodes” (typically a user’s computer) and “supernodes” (a node that accumulates “information from numerous other nodes”). The nodes and supernodes are not fixed–a user’s computer may be a node one day and supernode another day. When a user starts the Grokster software, the user’s computer self-selects a supernode and thereby accesses the network. As such, the court stated, Grokster has no control over the process of locating and connecting to a supernode. Unlike Grokster, StreamCast’s software, Morpheus, does not even use supernodes. Instead, a user connects to the Gnutella network by contacting another user through one of the many publicly available directories of those currently connected to the Gnutella network. Since StreamCast neither operates the directories nor pays those who operate the directories, the court concluded that StreamCast also had no control over its users’ access to the network. Napster, by contrast, owned and operated a supernode. In addition, the court found that Grokster and StreamCast did not control their users’ search for or transfer of files either. In the Grokster system, the users’ queries and results are relayed among supernodes “without any information being transmitted to or through any computers owned by Grokster.” In the StreamCast system, search requests are passed from user to user and file transfer occurs between two users. By contrast, Napster’s central servers indexed files from users and passed search queries and results among all Napster users. Thus, the court stated, neither Grokster nor StreamCast facilitated the exchange of files between users. Rather, “[i]f either Defendant closed their doors and deactivated all computers within their control, users of their products could continue sharing files with little or no interruption.” The court also dismissed the plaintiff’s contention that technical assistance and other incidental services provided by Defendants materially contributed to the infringement. The court stated that the technical assistance was “routine and non-specific,” was provided after the alleged infringement and in most cases dealt with other companies’ software. As for Defendant’s ability to communicate with users regarding software update, the court stated that such an ability was irrelevant to Defendant’s facilitation of copyright infringement.
The court then addressed the issue of Defendant’s liability for vicarious infringement. To demonstrate vicarious infringement, the plaintiffs must show Defendant’s: 1) financial benefit, and; 2) right and ability to supervise the infringing conduct. Financial benefit exists where the infringing activity “enhances the attractiveness of the venue to potential customers” or “acts as a ‘draw’ for customers.” The court found that Defendants derived financial benefit in the form of a large user base of tens of millions, who were drawn to the software by its ability to access copyrighted material and through substantial advertising revenues. The court, however, concluded that Defendants did not have the ability to supervise and control the user’s infringing activities since all of the infringing activities occurred after the copyrighted material had passed to the end-users. As to the plaintiff’s argument that Defendants could have policed the network by altering the software to prevent users from swapping copyrighted material, the court rejected it stating that Defendants’ obligation to “police” the network also did not arise since Defendants did not have the “right and ability” to supervise the infringing conduct. [blurb byKKby MS
* In Chamberlain Group, Inc. v. Skylink Technologies, Inc., 2003 U.S. Dist. LEXIS 15298 (N.D. Ill. Aug. 29, 2003), the district court denied Chamberlain’s motion of summary judgment on the ground that there was factual disputes concerning copyright protection of the Chamberlain’s garage door opener’s rolling code and whether Skylink’s garage door opener provided unauthorized access to Chamberlain’s software. Chamberlain and Skylink are competing manufacturers of garage door openers. Chamberlain manufactures a line of garage door opener systems (“GDOs”) called “Security +” that incorporates a copyrighted computer program called “rolling code” that constantly changes the activating signal needed to actuate the garage door. Skylink distributes universal remote control devices one of which, Model 39, although does not utilize a rolling code, can be used in place of Chamberlain’s Security + GDO as well as other GDOs. Chamberlain alleged that Skylink violated § 1201(a)(2) of the DMCA by primarily designing the transmitter to circumvent the protective measure, the “rolling code,” to gain access to its copyright protected software program; by having only limited use other than circumventions; and by marketing for circumvention of Chamberlain rolling code program. Skylink, in turn, contends that its transmitter serves functions unrelated to circumvention, Chamberlain’s rolling code program is not copyrighted and that Chamberlain has consented to consumer’s use of Model 39 to operate Chamberlain’s GDOs.
Addressing Skylink’s first contention, the court concluded that Skylink’s demonstration of alternative uses for its transmitter was not sufficient to deny Chamberlain’s motion of summary judgment. Analogizing to RealNetworks decision which found violation of the DMCA even though the product had both a legitimate purpose and also circumvented the protective measure, the court noted that the Model 39 transmitter had one setting which served the only purpose of operating Chamberlain’s GDO. Nonetheless, the court did not grant Chamberlain’s summary judgment motion because a violation of § 1201(a)(2) of the DMCA cannot be established unless the circumvented measure controls a protected measure and is circumvented without the authority of the copyright owner and the court found disputed issues of fact concerning both the requirements. The court found that disputed facts existed as to whether Chamberlain’s rolling code program was protected by copyright. The computer program used in Security+ GDOs was not the same program that was copyrighted and it was unclear whether the computer program was protected as a derivative work. Similarly, the court concluded that there were disputed facts as to whether Model 39 provides unauthorized access to Chamberlain’s software. Chamberlain does not restrict a homeowner from purchasing any type of transmitter to use with its GDOs. Moreover, there is history of use of universal transmitters in the garage door opener industry. Finally, the court noted that Skylink itself may be entitled to summary judgment on the DMCA cause of action.
Responding to the court’s invitation, Skylink moved for a summary judgment under the DMCA in Chamberlain Group, Inc. v. Skylink Technologies, Inc., 2003 U.S. Dist. LEXIS 20351 (N.D. Ill. Nov. 13, 2003). Granting summary judgment, the court held that Skylink was not liable under the DMCA in so far as Skylink was authorized to circumvent Chamberlain’s GDOs. The court began its analysis by noting that consumers have authorized access to Chamberlain’s GDOs. First, the consumer must store the Model 39’s signal into the GDO’s memory in order to operate the Model 39 and as such can access Chamberlain’s GDO. Second, Chamberlain does not impose any restrictions on the consumer’s use of the transmitter. Chamberlain, however, claimed that its webpages impose restrictions by mentioning only its own products as compatible and its manuals provide warranty only when used with its own products. Additionally, Chamberlain contended that it did not warn its consumers because it did not anticipate that Skylink would be able to circumvent its rolling code mechanism. The court, however, rejected these arguments as unpersuasive because none of Chamberlain’s actions prevented consumers from using the Model 39. Furthermore, the court reasoned that since there was a history of use of universal transmitters in the GDO industry, consumers would expect to exchange their original product with a universal transmitter akin to a remote control device. For the same reasons, the court also dismissed Chamberlain’s argument that authorized access to consumers does not equate with authorized access to sellers.[blurb by bks]
- Patent Law
- Trademark Law
- Content Regulation
Reversing a lower court’s decision, the California Court of Appeals in Barrett v. Rosenthal, 112 Cal. App. 4th 749 (2003) held that appellant Polevoy’s defamation suit was not barred by § 230 of the Communications Decency Act. Appellants Barrett and Polevoy are physicians and consumer advocates who maintain websites to expose “health fraud and quackery.” Respondent Rosenthal participates in Internet newsgroups that focus on alternative medicine and had posted libelous statements about the appellants. Appellants sued. Rosenthal filed a motion to strike the complaint on the ground that it was a strategic lawsuit against public participation under the anti-SLAPP statute. Finding that the anti-SLAPP statute applied and that appellants could not establish a probability of success on their claims as required by the statute because Rosenthal’s statements were not “demonstrably false statement of facts,” the trial court granted Rosenthal’s motion to strike the complaint. On appeal, the appeals court affirmed the trial court’s findings that the anti-SLAPP applied and that Barrett could not prevail on his claim of defamation, but reversed as to Polevoy’s claims. The appeals court found that Rosenthal’s statement “accusing Dr. Polevoy of stalking women and urging health activists” to file complaints against Polevoy, although originally penned by co-defendant Bolen and thereafter republished by Rosenthal, nevertheless conferred liability on Rosenthal under the common law principle that one who republishes defamatory originated by third person is subject to liability if the person knows or has reason to know of its defamatory character. Rosenthal had been notified by appellants and as such had knowledge of the defamatory character of the statements.
In finding liability, the court established that § 230 does not abrogate liability of distributors for transmitting defamatory material of third parties and rejected the Zeran court’s interpretation of § 230 as conferring immunity from liability to both publishers and distributors of defamatory material. Stating that “a statute must speak directly to the question addressed by the common law” in order to abrogate the common law principle, the appeals court noted that the term distributor, unlike the term publisher, is not expressly included in a statute even though Congress was aware of the common law distinction between a publisher and a distributor and that if Congress had desired to extend immunity to distributors, it could have added the term distributor to the statute. Given the different possible constructions of the term publisher, the appeals court found the term ambiguous and therefore “too flimsy a basis” to reject the common law principle. Turning next to the legislative history of the statute, the court reasoned that the purpose of the statute—to remove disincentives to self-regulation by immunizing providers or users of interactive computer services who take action to restrict access to offensive material—would be thwarted by extending immunity to distributors who take no action to restrict access to offensive material despite knowledge of the offensive content of the material. Additionally, the court cited to statements by the authors of § 230 to show support for its construction of the statute.
The court also rejected the Zeran court’s conclusion that the purpose of the statute was “to promote unfettered speech on the Internet” and that imposing liability on distributors would chill online speech. Maintaining that the possibility of a chilling effect was speculative at best, the appeals court referred to the ongoing debate regarding the effect of liability on online speech. The court noted three points made by the critics of the Zeran decision. First, the distributor is unlikely to remove postings unless the content is found defamatory because the market will probably not tolerate arbitrary removal of postings. Second, defamation claims are not a significant threat to distributors because it is hard to prevail on a defamation claim. Third, the anti-SLAPP statute in California allows the distributors to dismiss unmeritorious suit at the complaint stage itself. Finally, the appeals court addressed the Zeran court’s concern that imposing distributor liability would require screening of millions of postings reasoning that because the common law imposes a knowledge based liability, a distributor is required to act only if it has knowledge, not screen all postings for defamatory content.
- First Amendment.
Reversing a lower court’s denial of summary judgment for plaintiffs–companies involved in making, selling and renting video games and related software—the Eighth Circuit, in Interactive Digital Software Association v. St Louis County, 329 F.3d 954 (8th Cir. 2003), held that violent video games are protected by the First Amendment and a St Louis ordinance that bans the rental or sale of graphically violent video games to minors is unconstitutional. The Eighth Circuit remanded the case directing the lower court to craft an injunction consistent with its opinions.
Rejecting the lower court’s finding that video games are not a protected form of speech, the Eighth Circuit reasoned that “[i]f the first amendment [was] versatile enough to ‘shield [the] painting of Jackson Pollock, music of Arnold Schoenberg, or Jabberwocky of Lewis Carroll,’” there was no reason why the pictures, music, stories, and narrative of video games could not be similarly protected. As to the St. Louis County’s contention that a player could skip the expressive parts of a video games and move directly to the action part, the court refused to disqualify video games stating that one could also fast-forward a movie and yet movies are protected by the First Amendment. Finally, the court found irrelevant the notion that violent video games may not add anything of value to society.
In its analysis of the ordinance’s constitutionality, the Eighth Circuit first rejected the County’s argument that graphically violent video games are obscene to minors and therefore entitled to less protection. The court declared that “depictions of violence cannot fall within the legal definition of obscenity for either minors or adults” and distinguished the present case from the Supreme Court decision recognizing the Government’s legitimacy in regulating sexually explicit materials that are obscene to minors but not to adults. Since the ordinance regulated the contents of video games, the Eighth Circuit reviewed the ordinance under the strict scrutiny standard—the County must show that the ordinance is necessary to serve a compelling state interest and is narrowly tailored to meet that end. The County put forth two compelling state interests—“psychological well being of minors” and “assisting parents to be the guardians of their children’s well-being.” The Eighth Circuit rejected the “psychological well-being of minors” justification based on the lack of substantial empirical evidence demonstrating that violent video games cause psychological harm to minors. Refusing to recognize the second compelling interest under the circumstances of the present case, the Eighth Circuit held that the government could not “silence protected speech by wrapping itself in the cloak of parental authority.” Citing to the Supreme Court’s opinion that “the values protected by the First Amendment are no less applicable when the government seeks to control the flow of information to minors,” the Eighth Circuit cautioned that recognizing the justifications presented by the County as compelling state interest could result in legislations undermining “the first amendment rights of minors willy-nilly under the guise of providing parental authority.”
In Intel Corp. v. Hamidi, 30 Cal. 4th 1342 (2003), a divided California Supreme Court reversed 4-3, a Court of Appeals’ decision affirming summary judgment for Intel and held that Intel was not harmed by Hamidi’s electronic communication and that the tort of trespass to chattel does not extend to harmless communications. Hamidi, a former Intel employee, had on six occasions over a period of two years sent emails criticizing Intel’s employment policies to many of Intel’s current employees on Intel’s email system. The communications did not damage Intel’s computers or deprive Intel of the use of its computers, although it engendered discussions among the employees.
Holding that trespass to chattels is actionable under California law only if actual injury has occurred, the majority found that Hamidi’s actions had caused no harm to Intel’s computers or to Intel’s legal interests in the computers. There was no physical or functional damage to the computers and the economic loss suffered by Intel in the form of lost employee productivity was not an injury to Intel’s interest in its computers, the majority stated. Distinguishing the present case from prior decisions where trespass to chattels was found, the majority noted that in the present case the injury stemmed from the contents of the emails rather than the volume of emails. The majority also declined to extend the tort of trespass to chattels to cover harmless electronic communications that have objectionable content. After describing the debate among proponents and opponents of complete propertization of the Internet, the majority refused to recognize a property rule to the Internet, leaving the issue instead to the legislature. Stating that injury arising from the content of a communication is not an injury to a real property or an interest in property, such as a computer, the majority concluded that the appropriate tort in such a situation was not trespass.
Dissenting, Justice Brown determined that trespass was the appropriate tort. Recognizing the right of a person not to receive an unwanted message after objecting to the message, Justice Brown reasoned that Intel had the right to exclude an unwanted speaker from its property. Unlike the majority, Justice Brown also concluded that harmless trespass to chattel is actionable. Citing CompuServe, Justice Brown stated that the CompuServe court’s analysis supports the conclusion that Hamidi’s intentional use of Intel’s computer system after repeated demands to cease is an actionable trespass to Intel’s chattel. In any event, Justice Brown found that Intel had suffered harm in the form of lost employee time– lost by reading and deleting email and by Hamidi’s expropriation of Intel’s computer system for his own use.
In his dissent, Judge Mosk distinguished Intel’s computer system as a private intranet distinct from the “public commons of the Internet” and thereby concluded that like owners of other private property, Intel has the right to prevent others from using its property against Intel’s interests. As such, Judge Mosk reasoned, Intel is entitled to relief if it is unable to prevent Hamidi from expropriating its computer system.
*Indecent or Obscene Communication8 U.S.C. § 2252B.18 U.S.C. § 2252B.
On April 30, 2003, President Bush signed into law the Prosecutorial Remedies and Other Tools to End the Exploitation of Children Today Act, Pub. L. 108-21, to prevent sexual exploitation and other abuses of children. Added as a rider with minimal debate was a section on misleading domain names on the Internet, now codified as 18 U.S.C. § 2252B.
The new section regulates the use of misleading domain names which deceive a person into viewing obscene material or a minor into viewing material harmful to minors. A material is harmful to a minor if it contains nudity, sex or excretion that primarily appeals to the prurient interest of minor, is patently offensive to the prevailing norms as to what is suitable for a minor and lacks “serious literary, artistic, political, or scientific value for minors.” A person who knowingly uses such a misleading domain name will be fined and/or imprisoned for not more than 2 years if the viewer is a person and fined and/or imprisoned for not more than 4 years if the viewer is a minor.
The new section characterizes a domain name as not misleading if it contains words indicating sexual content of the site. As such, a domain name including words such as “sex” or “porn” is not misleading.
- Computer Crimes
*In EF Cultural Travel BV v. Zefer Corp., No. 01-2001, 318 F.3d 58 (1st Cir. 2003), the First Circuit narrowed an injunction granted under the Computer Fraud and Abuse Act (CFAA) against a programmer who had used a “scraper” program to pull information off a publicly accessible website. “Exceeded authorized access”: The trial court had granted an injunction against Zefer, the programmer’s company, using a “reasonable expectations” test to determine EF’s reasonable expectations as to the security of their information. Although posted on a publicly available website, the trial court had determined reasonable expectations were met by the copyright notice on EF’s home page; EF’s provision of information to Zefer under a confidentiality agreement, and a security measure that allowed a user only one page-access at a time. The First Circuit, by contrast, held that “in general a reasonable expectations test is not the proper gloss on subsection (a)(4)” of the CFAA. The appellate court held that the reasonable expectations test was vague, and website provideres should specifically state which information and access means are permitted or restricted. “[I]n this circuit…public website providers ought to say just what non-password protected access they purport to forbid.” Since EF had no such reasonable expectations as to the security of this information, therefore, it could not get an injunction based solely on this test. However, the appellate court held that Zefer was bound by the terms of the preliminary injunction, as would any uninvolved third party would be. First Amendment defense: The appellate court held that the First Amendment was not implicated by the narrowed constraint of forbidding Zefer from exploiting confidential information.
* The Department of Justice hosts a cybercrime web site with a lot of useful information.
- Privacy, Anonymity and Encryption
In In re Pharmatrak, Inc., 329 F.3d 9 (1st Cir. 2003), the First Circuit reversed a lower court’s grant of summary judgment for defendants Pharmatrak, Inc. and pharmaceutical companies holding that Pharmatrak “intercepted” electronic communications between internet users and pharmaceutical companies within the meaning of the Electronic Communications Privacy Act (ECPA). The First Circuit also held that the lower court had incorrectly interpreted the “consent” exception to the ECPA and remanded the case, in particular the issue of intentional requirement, for further proceedings.
Pharmatrak provided a service called “NETcompare” to pharmaceutical companies, which allowed a pharmaceutical company to compare traffic and usage in its website with that in other pharmaceutical companies’ websites. To provide this service, NETcompare collected information about internet users who visited the websites of pharmaceutical companies. Most of the pharmaceutical companies, however, contracted with Pharmatrak to not collect personal or identifying information about the users visiting their websites. Pharmatrak, nevertheless, collected user identifying information primarily because one of Pharmatrak’s clients had employed the “get” method to transmit information entered by users. When the “get” method is used, information entered by users into the online form gets appended to the next URL. Thus, NETcompare, which routinely recorded the full URLs of the web pages accessed by a user before and after visiting a client pharmaceutical company’s website, also recorded personal information appended to the next URL. By contrast, NETcompare did not record personal information if the “post” method was used to transmit information since personal information does not get appended to the next URL when using the “post” method. Pharmatrak did not instruct its clients to refrain from using the “get” method to transmit information, although it provided its clients with detailed installation instructions.
Plaintiffs, on behalf of internet users whose data Pharmatrak had collected, sued Pharmatrak and pharmaceutical companies, alleging, inter alia, interception of electronic communications without consent in violation of the ECPA. The lower court granted summary judgment for defendants on the ground that the pharmaceutical companies had consented to interception by Pharmatrak by contracting with Pharmatrak. Plaintiffs appealed. Dismissing all ECPA claims against the pharmaceutical companies, the plaintiffs appealed only the claim that Pharmatrak violated Title I of the ECPA. To establish a claim under Title I of the ECPA, the plaintiffs must show that a defendant intentionally intercepted, endeavored to intercept or procured another person to intercept or endeavor to intercept the contents of an electronic communication using a device. Thus, the elements of the claim are intention, interception, electronic communication, contents and device. Pharmatrak did not contest three of the elements of the claim–electronic communication, contents, and device. As such, the only contested elements were the interception and intention requirements.
Before addressing the interception and intention requirements, the First Circuit first examined whether the pharmaceutical companies or the users had consented to Pharmatrak’s interception. 18 U.S.C. § 2511(2)(d) provides that a party is barred from a claim under the ECPA “where one of the parties to the communication had given prior consent to such interception…” After holding that the defendants bore the burden of showing consent, at least in civil cases, the First Circuit reviewed the lower court’s application of the consent exception. The First Circuit stated that the lower court, by only inquiring whether the pharmaceutical companies had consented to using NETcompare, without considering how NETcompare had eventually operated, had not followed the first circuit standard. As to the two district court opinions on which the lower court had relied upon, the First Circuit distinguished the facts of those cases from that of the present case, stating that the lower court had misread those two opinions. Unlike the case at hand, the defendant clients in those cases had specifically wanted individual user profiles in order to target those users for advertisement purposes. Finally, the First Circuit ruled that pharmaceutical companies had not consented to the interception on the ground that the pharmaceutical clients had specifically asked Pharmatrak not to collect users’ personal information, had “explicitly conditioned” their purchase of NETcompare service on Pharmatrak not collecting users’ personal information and upon realizing that Pharmatrak had collected such information, had immediately canceled the service. Moreover, the court noted, a contrary finding would “lead to results inconsistent with the statutory intent” and “lead to irrational results.” The First Circuit also found that the users had not consented to interception since the pharmaceutical companies’ websites had provided no notice to users that by using the website, they were consenting to collection of personal information by a third party. Rejecting Pharmatrak’s argument that users had consented by providing personal information on online forms, the court stated that “under that theory, every online communication would provide consent to interception by a third party.”
Having found the consent exception to the ECPA inapplicable, the court then addressed the interception requirement of the ECPA. “Intercept” is defined as the “aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device.” 18 U.S.C. § 2510(4). After a brief reference to the debate over the interpretation of the ECPA as limited only to acquisitions of a communication contemporaneous with transmission, the First Circuit concluded that it need not enter the debate since Pharmatrak’s acquisition of information was contemporaneous with its transmission by the users. Stating that “NETcompare was effectively an automatic routing program”—it automatically duplicated a part of the communication between a user and a pharmaceutical client and sent it to Pharmatrak– the First Circuit held that Pharmatrak’s acquisition was an interception even under a narrow reading of the term interception. As for Pharmatrak’s argument that there was no interception because there were always two separate communications: one between the user and the pharmaceutical client and another between the user and Pharmatrak, the First circuit ruled that “[s]eparate, but simultaneous and identical, communications satisfy even the strictest real-time requirement.” In rejecting the separate communications argument, the court reasoned that under the Wiretap Act, acquisition need not be the same communication as the transmission, but merely occur at the same time as the transmission. In any event, Pharmatrak had acquired at least a part of the same communication between the user and the pharmaceutical client in the form of an appended URL string.
Finally, the First Circuit addressed the intent requirement under the ECPA. Remanding this issue because it was not adequately briefed by both parties, the First Circuit, nevertheless, provided pointers on the intent requirement. In 1984, Congress had amended the state of mind requirement in 18 U.S.C. § 2511 from “willful” to “intentional.” Referring to the legislative history of the amended statute, the First Circuit noted that Congress’s purpose in amending the statute was to emphasize that “inadvertent interceptions are not a basis for criminal or civil liability under the ECPA.” The First Circuit further observed that while liability for intentional engagement in prohibited conduct does not turn on the party’s motive, motive may not be entirely irrelevant. [blurb by BKSrb b
- Electronic Commerce
- Online Contracts and Payments
- Internet Taxation
- Making Policy for Electronic Commerce
- Internet Governance
In Bonneville International Corp. v. Peters, 347 F.3d 485 (3rd Cir. 2003), the third circuit affirmed a lower court’s grant of summary judgment for the U.S. Copyright Office (“Office”) holding that the Office had correctly interpreted 17 U.S.C. § 114(d)(1)(A) in its rulemaking that webcasting of radio broadcast program is not exempt from digital audio transmission performance right. The lower court found the Office’s rulemaking to be reasonable and hence entitled to deference under Chevron. The third circuit, however, refrained from deciding which standard of deference, whether Chevron or Skidmore, was applicable because it agreed with the Office’s interpretation of the statute.
The third circuit began its statutory interpretation by examining the plain meaning of the text. Because the parties did not dispute that AM/FM webcasting would be exempt under § 114(d)(1)(A) if it was non-interactive, non-subscription broadcast and that webcasting is non-interactive, non-subscription transmission, the only issue before the court was whether AM/FM webcasting is a “broadcast” transmission. Looking to § 114(j) which defines “broadcast transmission” as “a transmission made by a terrestrial broadcast station licensed as such by the FCC,” the court interpreted broadcast station as referring to the physical broadcasting facility rather than the broadcasting business entity. The court reasoned that the alternative interpretation would result in absurd results such as permitting unlimited authority to transmit recordings in any medium and rendering the modifier “terrestrial” meaningless. Further, the court noted that the Federal Communications Act which determines the FCC’s licensing regime and thereby defines “licensed as such” also reinforces the physical facility interpretation.
Turning next to other tools of statutory interpretation, the court found support also from other sections of § 114 as well as from the statute’s legislative history. According to the court, § 114(d)(1)(B) is also consistent with physical facility interpretation, for otherwise the terms “translator” and “repeater,” which constitute physical facilities, would be redundant. The court further noted that the alternative interpretation would distinguish between the original broadcaster and a third party retransmitter, a distinction not expressed in the statute. The original broadcaster would be able to unconditionally webstream a radio broadcast program while a third party webcaster would be restricted to transmitting to only within a 150 miles radius because of § 114(d)(1)(B)’s limitation. Examining the legislative history of the § 114(d)(1)(A) amendment in the DMCA, the court noted that Congress when deleting two of the exemptions under § 114(d)(1)(A) specifically stated that non-subscription digital audio services such as webcasting is not exempt from digital audio transmission performance right. The court then looked to the legislative history of the DPRA and concluded that Congress did not intend to exempt webcasting. The court pointed out that § 114(d)(1)(A) created an exemption for traditional “over the air” broadcasting, whether digital or non-digital, but not for non-traditional transmissions. The court also noted that the exemption was created to maintain the mutually beneficial relationship between the broadcasters and the recording industry, a relationship that is altered by technological change and therefore not requiring an exemption.
* In Doe v. GTE Corp., 347 F.3d 655 (7th Cir. 2003), the Seventh Circuit affirmed a lower court decision holding that Internet Service Providers (“ISPs”), GTE Corp. and Genuity Inc., are not liable to college athletes for hosting websites that offered for sale videotapes of unclothed images of the athletes recorded secretly in locker rooms.
The Seventh Circuit determined that the college athletes did not have a claim under the Electronic Communications Privacy Act. First, the ISPs did not intercept or disclose any communication by the athletes and as such were not liable under § 2511 and § 2520 of the Act. Second, the ISPs do not face liability for “aiding and abetting” Franco where the statute does not specify secondary liability. Comparing ISPs to phone companies and postal services, the court reasoned that ISPs do not become liable for a customer’s activities merely because the customer conducted its activity through access to the Internet. Finally, the court concluded that § 230(c)(2) does not require ISPs to filter offensive content and the ISPs therefore cannot face liability for not filtering out the secretly derived nude images of the athletes. The court however did not decide whether a state law that requires ISPs to protect third parties from possible harm stemming from their services would survive § 230(c).
The Seventh Circuit also dismissed the athletes’ theory of “negligent entrustment of chattel” stating that the ISPs did not entrust their chattel, i.e. computers, network or other hardware, but rather furnished a service. According to the court, such a theory does not require a service provider to investigate its customer’s activities or protect third parties from harm. Again comparing ISPs to phone and postal services, the court noted that just as a phone or postal company has not been found liable for furnishing services that caused harm, neither should the ISPs face liability unless there are state statutes that require ISPs to exercise a standard of care. Further, the court observed that the doctrine of contributory infringement also does not establish liability because the ISP’s services were put to lawful use by the majority of its customers.
Finally, the court commented that the athletes may have a better claim under the theory that the ISPs had assumed a duty to protect them when it entered into a contract with Franco pursuant to which Franco would refrain from using the ISP’s services for illegal activities or for distributing obscenity. Because the athletes did not raise such an argument, the court did not address the issue.
In Recording Industry Association of America, Inc. v. Verizon Internet Services, Inc., 2003 U.S. App. LEXIS 25735 (D.C. Cir. Dec. 19, 2003), the appeals court reversed a lower court’s order to disclose to the RIAA the names of two of Verizonn’s Internet service subscribers holding instead that § 512(h) of the Digital Millennium Copyright Act (DMCA) requires that a subpoena may be issued only to an ISP which is engaged in storing material that is the infringing or is the subject of the infringing activity. Because Verizon acted only as a conduit for data transfer between two internet users and did not store the infringing material on its servers, the court ordered the lower court to grant Verizon’s motion to quash the subpoena and to vacate the lower court’s order enforcing its subpoena.
The court began its analysis with the text of § 512(h). Noting that § 512(h) requires the fulfillment of § 512(c)(3)(A) as a condition precedent to issuing a subpoena, the court examined the provisions of § 512(c)(3)(A). Observing that § 512(c)(3)(A)(iii) requires a subpoena requestor to identify material “to be removed or access to which is to be disabled,” a requirement that is impossible to meet if the ISP does not store infringing material or if the material is stored in the user’s computers, the appeals court determined that § 512(h) is inapplicable to an ISP who acts as a mere conduit of information exchange. As for the RIAA’s contention that the ISP could disable the infringing material by disconnecting the user to the internet, the court rejected it stating that Congress likely did not intend such a remedy in this situation because Congress had established the remedy of disconnecting access to the Internet in other sections of the Act. Similarly, the court dismissed RIAA’s argument that the notification requirement of § 512(c)(3)(A) is met if it includes “substantially” the required information. The court reasoned that since in the legislative history “substantially” only indicates that technical errors do not render the notification requirement ineffective, lack of information was not what Congress had in mind when it added the term “substantially.” The court also rejected RIAA’s final argument that the definition of an ISP in § 512(k)(1)(B) renders § 512(h) applicable to an ISP regardless of the ISP’s action concerning the infringing activity. Stating that the argument “borders upon the silly” the court maintained that applicability of § 512(h) depends upon the fulfillment of the § 512(c)(3)(A) requirements.
The court also found support for its interpretation from the structure of provision. According to the court, § 512(h) cross-refers to § 512(c)(3)(A) on three separate occasions, but not to § 512(a), which deals with ISPs engaged in transmission of data, and therefore indicates that § 512(h) applies only to ISPs engaged in storing infringing material. The court also concluded that § 512(h) applies to any type of storage activity by the ISP, whether as a temporary cache, website information, or an information locating tool, because the other safe harbor sections also cross-refer to § 512(c)(3)(A). Turning next to legislative history, the court reasoned that since the statute was clear, there was no need to resort to legislative history. Nonetheless, the court examined the legislative history, but found it be to be of no use since there is no indication that Congress was even aware of the possibility of peer-to-peer file exchange when it crafted the statute. Finally, the court noted the RIAA’s policy argument that the court’s interpretation would defeat the purpose of preventing copyright infringement. Although sympathetic to the RIAA’s predicament, the court stated that it was not its province but Congress’s to rewrite the DMCA.
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