May 2013

Rent-A-PC Fails to Enforce Restrictive Covenants Against Former Employees

May 30, 2013

In this May 28th, 2013 decision by Massachusetts Federal District Court Judge George O’Toole, Rent-A-PC unsuccessfully sought to obtain a preliminary injunction against two former employees, and to enforce a confidentiality agreement against a third. As to two of the employees, Rent-A-PC attempted to enforce a one year covenant not to compete. Judge O’Toole denied that motion, finding that the employees underwent several material changes to their employment, making it likely that their agreements had been abrogated. In analyzing this issue Judge O’Toole relied heavily on F.A. Bartlett Tree Expert Co. v. Barrington, a hallowed chestnut in Massachusetts noncompete case law dating back to 1968, but one that had been largely ignored until it was revived by a series of Superior Court cases in 2004.* Judge O’Toole’s reliance on F.A. Bartlett reinforces the impression that this doctrine has come full circle. *These cases held that when the employment itself was the consideration for a noncompetition provision but the employee’s job had substantially changed, the provision was no longer enforceable. The third employee had only a confidentiality/non-disclosure agreement, and the court found there was insufficient evidence to show he had violated it. Rent-A-PC, Inc. v. Robert March, et al. (D. Mass., May 28, 2013)    

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Aereo, Antenna Farms and Copyright Law: Creative Destruction Comes to Broadcast TV (Part 3)

May 29, 2013

Click here for Part 1 in this series of posts, here for Part 2. In Parts 1 and 2 of this series of posts I discussed how Aereo designed its broadcast-TV-to-Internet system to fit within the ruling established by the Second Circuit in the Cablevision case anticipating that it would be sued for copyright infringement by a group of broadcasters. The broadcasters did file suit against Aereo, and in the Second Circuit, the very circuit in which Cablevision is controlling law and the circuit in which Aereo, not coincidentally, first offered its service. Home territory, in a manner of speaking. As expected, Aereo wrapped itself in Cablevision, and the district court ruled that Aereo’s “one antenna-one viewer” system did not violate the broadcasters’ public performance right under the Copyright Act. On this basis the district court denied the broadcasters’ request for a preliminary injunction that would have forced Aereo to stop operations in the Second Circuit, at the very least. The broadcasters appealed this ruling to the Second Circuit, which upheld the district court. The Second Circuit held that its holding in Cablevision controlled the outcome in Aereo, and set out four conditions that needed to be considered in evaluating a challenge to a rebroadcast system such as Aereo’s based on the copyright public performance right: First and most important, the Transmit Clause [of the statutory definition of public performance]…

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Aereo, Antenna Farms and Copyright Law: Creative Destruction Comes to Broadcast TV (Part 2)

May 21, 2013

Only one thing is impossible for God: to find any sense in any copyright law on the planet. – Mark Twain’s Notebook, 1902-1903 __________________ Click here to see Part 1 of this series of posts. In part 1 of this series I described how Aereo’s technology allows users to watch, record and access broadcast TV over the Internet. At the heart of this system is the use of a set of dime-sized antennas assigned to each subscriber, short buffering in RAM for retransmission and the creation of a unique per-subscriber copy of each broadcast the user wants to record for later viewing. Why did Aereo construct its system this way?  Why not one antenna and one copy of each broadcast? Aren’t the thousands of antennas and thousands of personal copies expensive and unnecessary? The answer is that they may be expensive and technically unnecessary, but they are essential to Aereo’s ability to avoid broadcaster claims of copyright infringement. In fact, this Rube Goldberg system was designed to fit the legal parameters of a case decided by the Second Circuit in 2008. And, it is no accident that Aereo first released its service in New York, which falls in the Second Circuit, drawing a lawsuit by the broadcasters in the same circuit that had decided the 2008 case. The case that Aereo based its design on is the Second Circuit’s famous (or,…

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Aereo, Antenna Farms and Copyright Law: Creative Destruction Comes to Broadcast TV (Part 1)

May 17, 2013

Whenever a copyright law is to be made or altered, then the idiots assemble. – Mark Twain’s Notebook, 1902-1903 ______________________ Aereo is coming to Boston, and to 20 other cities before the end of the year. Aereo is a company that has developed a system that captures over-the-air television (broadcast TV) and retransmits it to subscribers over the Internet. Subscribers are able to watch broadcast TV on their computers, tablets and smart phones. Even better, Aereo acts as a remote digital video recorder (a remote DVR) so subscribers can record programs and stream them at another time. Aereo launched in New York City in early 2012, but it has announced that it is expanding to 21 other cities in 2013. Is this a problem for broadcasters? You bet it is. Cable companies pay broadcasters such as CBS, ABC, NBC and FOX for the right to retransmit their shows to cable subscribers. If people can access broadcast TV at Aereo’s rates (which are far less costly than cable rates), it may mean fewer cable subscribers and reduced network revenues. According to the New York Times, the use of Aereo and copycat services has the potential to cost the networks retransmission fee revenues of more than $2 billion/year, an amount projected to grow to $6 billion/year by 2018. The broadcasters are not taking this lying down. Claiming copyright infringement they sued Aereo in…

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Does Second Circuit Decision Determine Copyright Legality of Aereo “Antenna-Farm” System Nationwide?

May 15, 2013

Aereo captures over-the-air television broadcasts and streams them to Aereo subscribers over the Internet. While the broadcasters claim this is copyright infringement (unauthorized public performance), Aereo has created an “antenna-farm” system designed to avoid allegations that its rebroadcast is a public performance under U.S. copyright law. CBS Broadcasting and other broadcasters brought suit for copyright infringement in federal court in New York.  However, Aereo convinced both the federal district court and the Second Circuit Court of Appeals that Aereo does not violate copyrights in the broadcasts. (Aereo shows “how it works” here). Aereo rolled out its first implementation in New York, and the Second Circuit “test case” was decided there. Now, Aereo plans to launch its service in 22 cities before year end. Boston is scheduled to launch on May 30th. Apart from the legalities of the underlying copyright claim, this raises the question whether the broadcasters can re-challenge the Aereo service as it launches in new locations outside the Second Circuit (which is comprised of New York, Connecticut and Vermont). Unfortunately, federal law in the U.S. is not always uniform. For example, Aereo may have prevailed in the Second Circuit (i.e., New York), but the broadcasters may be able to successfully challenge Aereo in the First Circuit (Boston) when it launches here, and perhaps get a different result. In fact, according to Aereo CBS has threatened to do just that, stating…

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“Yet Another Hierarchical Officious Oracle” Is Unable to Create an Enforceable Online Agreement

May 14, 2013

“Yet Another Hierarchical Officious Oracle” is Yahoo!, of course. And, its lawyers should be embarrassed by Yahoo!’s inability to create enforceable online Terms of Service (TOS). The issue arose in Ajemian v. Yahoo!, decided by the Massachusetts Appeals Court on May 7, 2013. In this case the plaintiffs were the administrators of a decedent’s estate. They wanted access to the decedent’s email account to let his friends know of his death and memorial service, and later to locate assets of his estate. Yahoo! refused to provide the online password, and the administrators filed suit in Massachusetts to compel access. Yahoo!, in turn, argued the suit should have been brought in California and, in any event, it was too late. These arguments were based on Yahoo!’s terms of service which provide, in part, as follows: You and Yahoo agree to submit to the personal and exclusive jurisdiction of the courts located within the county of Santa Clara, California…. You agree that regardless of any statute or law to the contrary, any claim or cause of action arising out of or related to use of the Service or the TOS must be filed within one (1) year after such claim or cause of action arose or be forever barred.” The decedent in this case had opened his account in 2002, and he died in 2006. In the interim Yahoo! had updated its…

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For Lawyers Turned Video-Porn Mass Copyright Plaintiffs, Litigation May Not Pay

May 10, 2013

I didn’t think I’d have a chance to write another “what were they thinking” post only two weeks after the last one. But, here goes …. I’ve written about Bittorrent swarm mass copyright suits in the past, but Monday’s decision by California federal district court judge Otis D. Wright tops everything that has come before. A lot of people have followed this case and similar cases filed by so-called “Prenda Law”—Ingenuity 13 v. John Doe. In other words, the plaintiffs in this case have made a lot of people mad.* *Techdirt is at or near the top of this lengthy list. The Ingenuity 13 case has been dismissed, but on Tuesday the judge issued a withering sanctions decision in the case. Here is some of what he had to say. The opening paragraph of the opinion sets the stage for the indictment that follows: Plaintiffs have outmaneuvered the legal system. They’ve discovered the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs. And they exploit this anomaly by accusing individuals of illegally downloading a single pornographic video. Then they offer to settle—for a sum calculated to be just below the cost of a bare-bones defense. For these individuals, resistance is futile; most reluctantly pay rather than have their names associated with illegally downloading porn. So now, copyright laws originally designed to compensate starving artists allow, starving attorneys in this electronic-media era to plunder the citizenry. Their…

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Professor William Fisher’s edX “CopyrightX” MOOC

May 9, 2013

Let me begin with the bottom line: this was a excellent course. If Professor Fisher offered another course (such as trademark or Internet law, two areas identified on his online bio), I would not hesitate to take it or audit it. Background edX is a collaboration formed by Harvard and MIT to produce “Massive Online Open Courses,” or “MOOCs.”  (I will use the phrase “online courses” as well as “MOOC”). edX is something of a latecomer to the still-new world of MOOCs. The leaders to date (with the most courses), are Coursera and Udacity. However, there are many “smaller” and legacy offerings. (See 750 1150 Free Online Courses From Top Universities). My impression is that until edX, Coursera and Udacity arrived, most online courses were nothing more than hit-or-miss video recordings of classroom lectures. They were not produced with an online audience in mind, and often suffered from poor production quality. Listening to the professor discuss homework assignments, papers, exams, office hours and teaching assistants–none of which are relevant to viewing the lectures online–was frustrating. Until recently online courses tended to focus on the hard sciences, and I hadn’t come across any legal courses. This changed when, late last year, I received an edX email notice for “HLS1x Copyright.” Or, as it came to be known, “CopyrightX.” Here are some excerpts from the course description I received: HLS1x Copyright, an experimental…

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D. Mass. Judge Stearns: Advertising Claims Create Express Warranty Despite Disclaimer in EULA

May 6, 2013

Assume a software vendor makes advertising clams regarding its product’s functionality. However, its end-user license agreement (EULA) is very narrow – it provides a 30 day  express warranty that (i) “the medium (if any) on which the [s]oftware is delivered will be free of material defects” and (ii) that “the software will perform substantially in accordance with the applicable specification.” Assume further that that software performs in a manner consistent with the “applicable specification” (the user manual) but inconsistent with advertising claims for the product. In fact,  not surprisingly given that this case is in federal court, it malfunctions and wipes out the data on the purchaser’s hard drive.  You might think that the EULA would prevent a purchaser from claiming breach of express warranty, but under Delaware law (and the law of most states) you would be incorrect. AVG Technologies is the seller of PC TuneUp. In Rottner v. AVG Technologies, Massachusetts U.S. District Court Judge Richard Stearns, applying Delaware law (as stipulated in the EULA) ruled on this issue in the context of AVG’s motion to dismiss. He held that AVG’s advertising claims must be viewed as part of the express warranty for PC TuneUp, despite the EULA’s attempt to disclaim them: I am confident that the Delaware courts would consider PC TuneUp’s claimed functionality as an express warranty separate and apart from the EULA’s content-less warranty provisions.  … Here, although the EULA disavowed…

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Judge Stearns to Take on Wrongful DMCA Takedown Notice Based on Fair Use – Maybe

May 2, 2013

The Digital Millennium Copyright Act (DMCA) allows a copyright holder to send a takedown notice to an online service provider that is hosting a copyright-protected work posted by a third party. But, lest the law be used to suppress lawful speech, the DMCA requires that a takedown notice contain (among other things) a “statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law,” and certify, under the penalty of perjury, that the information in the notification is accurate. What if someone sends a takedown notice that is authorized by the law, and does so in bad faith? The law provides that – [a]ny person who knowingly materially misrepresents under this section . . . that material or activity is infringing . . . shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer . . . as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing . . .. But there is a hidden nuance to the law: what if the takedown notice demands takedown of a work that the complaining party owns, but where the use that is the subject of the notice is protected by the copyright fair use doctrine?  In other…

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California Court Refuses to Dismiss Craiglist’s Data Scraping Case Against 3Taps

May 1, 2013

Yet another “data scraping” case is percolating in the Northern District of  California. Craigslist has sued the online aggregator 3Taps, Inc. (and others), claiming that they illegally copied Craigslist’s classified apartment listings. In effect, 3Taps was attempting to disintermediate Craigslist—to insert itself between Craigslist and its users. 3Taps filed a motion to dismiss the multiple claims asserted in the suit, most of which was denied in the decision linked below. Of particular interest is the court’s refusal to dismiss Craigslist’s claim that 3Taps violated the Computer Fraud and Abuse Act (CFAA), a controversial federal “anti-hacker” statute that has been interpreted in conflicting ways by the federal courts (see an earlier post on this topic here), and which was the law Aaron Schwartz was accused of violating (contributing, many believe, to his suicide earlier this year). The CFAA permits a civil cause of action against any person who “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains . . . information from any protected computer.” 18 U.S.C. § 1030(a)(c).  Craigslist has alleged that 3Taps’ use of Craigslist’s listings violated a cease and desist letter Craigslist sent to 3Tap prohibiting it from republishing the listings. The court found that 3Taps’ continued use was a potential violation of the CFAA as the Ninth Circuit has interpreted that statute, and denied 3Taps’ motion to dismiss that claim. This ruling is consistent with…

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