by Lee Gesmer | Jun 13, 2014 | Copyright
While The Author’s Guild copyright suit against Google Books has received most of the attention on the copyright law front, its smaller sibling – the Author’s copyright suit against HathiTrust – has been proceeding on a parallel track. HathiTrust is a consortium of more than 70 institutions working with Google to digitize the books in their libraries, but a smaller number of books than Google Books (only ten million), and for academic use (including an accommodation for disabled viewers), compared with Google Books’s commercial use.
On June 10, 2014, the Second Circuit upheld the federal district court, holding that HathiTrust is protected from copyright infringement under the fair use doctrine. With respect to full-text search (the most legally problematic aspect of HathiTrust), the Second Circuit held:
- “[T]he creation of a full‐text searchable database is a quintessentially transformative use” because it serves a “new and different function.”
- The nature of the copyrighted work (the second factor under fair use analysis) is “of limited usefulness where as here, ‘ the creative work … is being used for a transformative purpose.’”
- The copying was not excessive since “it was reasonably necessary for [HathiTrust] to make use of the entirety of the works in order to enable the full‐text search function.”
- And lastly, “full‐text‐search use poses no harm to any existing or potential traditional market” since full-text search “does not serve as a substitute for the books that are being searched.”
Citing HathiTrust’s “extensive security measures,” the court rejected as speculative the Author’s argument that “existence of the digital copies creates the risk of a security breach which might impose irreparable damage on the Authors and their works.”*
*note: In an earlier post I discussed the Guild’s argument that Google Books creates the ”all too real risks of hacking, theft and widespread distribution.” As I noted in that post, in describing that risk the Guild leaves nothing to the imagination: “just one security breach could result in devastating losses to the rightholders of the books Google has subjected to the risk of such a breach by digitizing them and placing them on the Internet.” In response to similar arguments in HathiTrust the Second Circuit found that there is “no basis in the record on which to conclude that a security breach is likely to occur.”
HathiTrust is distinguishable from Google Books in one significant respect. Non-disabled users can search the HathiTrust database for content, but unlike Google Books, which displays “snippets” of copyrighted works, unless the copyright holder authorizes broader use the results only show page numbers where search terms appear in a given work.
HathiTrust offers additional features to users with disabilities, who can access complete copies if they can show that they are unable to read a work in print. However, the Second Circuit made short shrift of this issue, holding that “the doctrine of fair use allows the Libraries to provide full digital access to copyrighted works to their print-disabled patrons.”
Even taking into consideration the fact that the non-disabled-access HathiTrust library can be distinguished from Google Books on the grounds that it does not provide “snippets,” it is difficult to see how the outcome will be different in the Guild’s appeal of Google Books. The Second Circuit’s central rationales in support of fair use in HathiTrust — that full-text search is transformative and that the database does not serve as a substitute for the books being searched (the latter factor being true in snippet-enabled Google Books as well as in HathiTrust) — likely foretell the fate of the Google Books case* (link), where the federal district court ruled in favor of Google on similar grounds. (For a full discussion of district court decision in the Google Books litigation, click here).
*note: The Author’s Guild suit targeting Google Books is on appeal to the Second Circuit.
Author’s Guild v. Hathitrust, 755 F.3d 87 (2nd Cir. 2014)
by Lee Gesmer | Jun 11, 2014 | Copyright
The idea behind statutes of limitations is usually straightforward. If someone commits an illegal act, after a certain period of time they can no longer be liable (or prosecuted) for that act. In civil cases the statute of limitations usually begins to run when the injured party knew or should have known of the illegal act. Once that period has passed, the injured party is barred from filing a lawsuit. For example, in Massachusetts the statute of limitations for most tort actions is three years. If you are the victim of a tort (for example, medical malpractice), you must file suit within three years of the act that caused you harm, or you likely are barred by the statute of limitations.*
*note: Like almost everything in the law, there are exceptions and nuances to this.
The U.S. Copyright Act contains a three year statute of limitations (17 U.S.C. Section 507),* but the way in which the statute is applied is different. A copyright holder may know that a defendant has been selling an infringing product for more than three years, but that doesn’t bar an action for copyright infringement – the defendant may still be liable for any infringing conduct taken during the three year period before the suit was filed. This is described as a “three-year look back,” a “rolling limitations period” or the “separate-accrual rule.”**
*note: The statute provides that “No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.”
**note: A new statute of limitations “accrues” (commences) with each new infringement.
In theory, therefore, a copyright owner can become aware of an infringing use of her work and do nothing for an indefinite period of time – more than just three years – until, for example, she concludes that the infringer has earned profits that could be recovered as damages and therefore justify the cost of a lawsuit. At that point the copyright owner can file suit and the statute of limitations will come into play, but only to limit damages to the preceding three year period. However, if the copyright owner wins her case and the defendant doesn’t settle there is the possibility that the copyright owner will wait three years and then file another infringement suit based on infringing actions taken during the second three year period. And so on, ad infinitum (or so it will seem to the defendant, given the length of copyright protection).
Until recently infringers were not wholly at the mercy of this strategy. They were able to raise the common law legal doctrine of “laches,” a doctrine which may bar a lawsuit based on an unreasonable, prejudicial delay in commencing suit. In many cases defendants successfully arged that a copyright owner should not be permitted to wait beyond three years before filing an infringement suit.
These two legal principles — the three-year copyright statute of limitations and the laches doctrine — came into collision when Paulla Petrella brought a copyright suit against MGM. Since 1981 Petrella has been the heir to her 
father Frank Petrella’s copyright interest in a book and two screenplays about the life of Jake LaMotta, the central character portrayed in the film Raging Bull. She asserts that Raging Bull is a derivative work of the book and screenplays, and that she is entitled to royalties based on MGM’s distribution of the film during the three years preceding her suit.
Ms. Petrella had threatened MGM with a suit for copyright infringement as far back as 1998, but she didn’t actually file suit until 2009. In fact, Raging Bull was released in 1980, and there is evidence that Ms. Petrella was aware of her copyright infringement claim as far back as 1981, in which case she delayed for almost 30 years before filing suit for copyright infringement.
MGM raised the defense of laches, and the Ninth Circuit Court of Appeals agreed, dismissing the suit. The Supreme Court took the case and reversed in a 6-3 decision, holding that, except in “extraordinary circumstances,” laches cannot be invoked to preclude a claim for damages that falls within the three-year window. However, this was not a clear win for Petrella or others in her position: oddly, the Court held that delay is relevant to equitable relief which (the Court stated), includes not only an injunction against further public display or distribution of the copyrighted work, but also damages based on the infringer’s profits that are attributable to the infringement.
Whether this decision leads to a flood of hitherto dormant copyright suits remains to be seen, and may be influenced by how the lower 
courts interpret and apply the decision. For example, given the Supreme Court’s comments it is uncertain that Ms. Petrella will be able to obtain an injunction against future sales of Raging Bull, and the Court’s statement that a delay in bringing suit is relevant to determining damages based on MGM’s profits during the three year period may limit any recovery by allowing MGM to use its investment in the film prior to the three-year look-back period to offset profits earned during those three years. Therefore, the extent of any potential monetary recovery is unclear.
*note: Although, as discussed above, assuming Petrella establishes liability (an issue yet to be addressed in this case) and MGM continues to distribute the film, in theory Petrella could file a series of lawsuits every three years seeking MGM’s profits for the preceding three year period. After the first suit MGM would be on notice that it is exploiting a copyright-protected work, and would likely have little choice but to to settle the case, rather than have this sword of Damocles hanging over its head.
Many observers in the copyright community think that Petrella may lead to a wave of lawsuits by copyright holders who had assumed, until now, that their claims might be barred by laches. A prominent example suggesting this may be the case is the May 31, 2014 lawsuit filed by the Randy Craig Wolfe Trust against the members of Led Zeppelin. Wolfe, the deceased founder and creative force behind the band Spirit, had believed since the mid-’90s (and perhaps as far back as 1971) that the intro to Stairway to Heaven had been copied from Taurus, a song on a Spirit album released in 1968. It seems unlikely that this case, filed less than two weeks after the Petrella decision, was not encouraged by the outcome in Petrella.
Petrella could also have implications for application of the laches doctrine under patent law. As the Supreme Court noted in Petrella, the Federal Circuit has held that laches may be used to bar patent damages prior to the actual commencement of suit. The courts may conclude that the rationale of the Supreme Court in Petrella applies under the patent statute as well, making it easier for patent plaintiffs to take advantage of the full six year statute of limitations under the patent statute.
Petrella v. Metro-Goldwyn-Mayer, Inc., No. 12-1315 (May 19, 2014)
Scotusblog page on Petrella
by Lee Gesmer | Jun 4, 2014 | Patents
In September 2012 I wrote a post titled Why Can’t We All Get Along? CAFC Fractures Over Divided Infringement. The post discussed an August 31, 2012 Court of Appeals for the Federal Circuit (“CAFC”) en banc decision in two cases consolidated on appeal, Akamai v. Limelight and McKesson v. Epic Systems (link). As I described in that post, the 11 judges on the CAFC, were unable to agree on whether patent infringement occurs when separate entities perform the steps of a patented method.
Six of the CAFC judges — a bare majority — formulated a new doctrine of “induced infringement”: a party can be liable for inducing infringement if it either (1) induces several parties to jointly carry out the steps necessary for infringement, or (2) performs some of the steps of the claimed method itself and induces a third party to perform the remaining steps claimed. In other words, the CAFC held that all the steps of a claimed method must be performed in order to find induced infringement, but all the steps need not have been performed by a single entity.
The losing parties before the CAFC appealed to the U.S. Supreme Court, which accepted review of the case, and which had no trouble holding (unanimously) to the contrary. A defendant cannot be held liable for inducing infringement of a patent method claim when no single entity has directly infringed the claim, and direct infringement is not established unless all steps of the claim are performed by a single entity (subject to the “control or direction” exception discussed briefly below). The Court noted that the Federal Circuit’s approach would “deprive [the inducement statute, 35 U.S.C] §271(b) of ascertainable standards,” and would have led to “two parallel bodies of infringement law: one for liability for direct infringement, and one for liability for inducement.” The Court was not persuaded otherwise by the argument that its holding would permit “a would-be infringer to evade liability by dividing performance with another.”
The Supreme Court’s decision was based, in large part, on the CAFC’s 2008 decision in Muniauction, Inc. v. Thomson Corp., where the CAFC held that where different steps of a method claim are performed by different entities, direct infringement requires a defendant to exercise “control or direction” over the steps the defendant itself does not perform. As the Supreme Court pointed out, the CAFC is free to revisit Miniauction in the future, but the Court declined to review it in the current appeal.* Until the CAFC revisits (and reverses or modifies) Miniauction, direct infringement will continue to require that every step of a claimed method be attributable to one actor (or satisfy the “control/direction” test), and no inducement can be found when no direct infringement has been committed. Until then, “divided infringement” will remain a defense to a claim of patent infringement, as well as a potential “design around” strategy for companies that can avoid a single actor performing, directing or controlling all of the steps of a method patent.
*[Note:] In its discussion of Muniauction the Court suggested the “possibility that the Federal Circuit erred by too narrowly circumscribing the scope of [direct infringement under] § 271(a).”
by Lee Gesmer | May 10, 2014 | Copyright
On November 26, 2013 I wrote a post titled “Oracle v. Google: How Google Could Lose on Appeal” (link). After oral argument before the CAFC a couple of weeks later I wrote a follow-up post, “Oral Argument in Oracle v. Google: A Setback for Google?” (link).
I thought I was being a bit paranoid on Google’s behalf, but I was wrong – if anything, I was being too optimistic. The CAFC reversed California federal district court judge William Alsup, upholding almost every argument made by Oracle.
Interoperatibility Goes To Fair Use, Not Copyrightability
In the “How Google Could Lose” post I noted that Oracle had a good argument that interoperability is properly raised in connection with a copyright fair use defense, not to determine whether the plaintiff’s work is copyright-protected in the first instance. The CAFC agreed, stating
Whether Google’s software is “interoperable” in some sense with any aspect of the Java platform … has no bearing on the threshold question of whether Oracle’s software is copyrightable. It is the interoperability and other needs of Oracle—not those of Google—that apply in the copyrightability context, and there is no evidence that when Oracle created the Java API packages at issue it did so to meet compatibility requirements of other pre-existing programs.
Filtration for Interoperatility Should be Performed Ex Ante, Not Ex Post
In “How Google Could Lose” I noted that:
under Altai it is the first programmer’s work (in this case Oracle) that is filtered, not the alleged infringer’s work (in this case Google), and the filtration is performed as of the time the first work is created (ex ante) not as of the date of infringement (ex post). When Oracle created the Java API it did not do so to meet compatibility requirements of other programs. Thus, copyright protection of the Java API was not invalidated by compatibility requirements at the time it was created.
The CAFC agreed, stating:
[W]e conclude that the district court erred in focusing its interoperability analysis on Google’s desires for its Android software … It is the interoperability and other needs of Oracle—not those of Google—that apply in the copyrightability context, and there is no evidence that when Oracle created the Java API packages at issue it did so to meet compatibility requirements of other pre-existing programs.
Lotus v. Borland Is Not the Law in the Ninth Circuit
In the “How Google Could Lose” post I noted that
“a close reading of Judge Alsup’s decision in Oracle/Google could lead one to conclude that this was the sole basis on which Judge Alsup found the structure of the Java API declaring code to be uncopyrightable, and therefore affirmance or reversal may depend on whether the CAFC concludes that Judge Alsup properly applied Lotus in Oracle/Google. . . . The CAFC could even reject Lotus outright, and hold that a system of commands is not a “method of operation” under §102(b). Both the Third and Tenth Circuits have indicated that the fact that the words of a program are used in the implementation of a process should not affect their copyrightability, and the CAFC could conclude that this is the appropriate approach under Ninth Circuit law.
In fact, this is exactly what the CAFC concluded:
[T]he Ninth Circuit has not adopted the [First Circuit’s] “method of operation” reasoning in Lotus, and we conclude that it is inconsistent with binding precedent. Specifically, we find that Lotus is incompatible with Ninth Circuit case law recognizing that the structure, sequence, and organization of a computer program is eligible for copyright protection where it qualifies as an expression of an idea, rather than the idea itself.
The only consolation that Google can take from this decision is that the court rejected Oracle’s argument that Google’s adoption of the Java declaring code did not qualify for fair use. Instead, the CAFC sent the case back to the federal district court for reconsideration (summary judgment motions and perhaps a trial) on that issue. Or, actually, a retrial, since the first jury trial on fair use resulted in a hung jury. However, as I read the decision, it seems to favor Oracle’s position on fair use, and I predict that Google will be hard pressed to justify its copying of the Java API declaring code based on fair use.
Perhaps the case will settle now, but Larry Ellison is not one to back down when he has the advantage. I suspect there are intellectual property damages experts across America dreaming of the case of a lifetime this weekend.
I gave an extensive presentation on Oracle v. Google at the Boston Bar Association on November 13, 2013. To see the slides, click here.
Oracle America, Inc. v. Google, Inc. (CAFC, May 9, 2014)
by Lee Gesmer | Apr 7, 2014 | Copyright
Can a state court order assignment of a defamatory posting on Ripoff Report to a prevailing plaintiff?
That may be the central question in Small Justice LLC, et al. v. Xcentric Ventures LLC, pending the U.S. District Court for the District of Massachusetts.
Here are the basic facts.
A Boston attorney* was defamed by a litigation adversary on the Ripoff Report (a website owned by Xcentric Ventures). The former adversary party, Richard Dupont, claimed that the lawyer was a perjurer with “a history of persecuting the elderly, especially, wealthy elderly women.” The lawyer was accused of filing “baseless lawsuits in order to seize assets from clients, from adversaries and even from his own family.” The posting urged readers to contact the FBI and the Securities and Exchange Commission with similar complaints, and claimed that the attorney had “a history of child abuse, domestic violence and bi-sexuality,” as well as an “addiction to illicit substances.” None of this is true.
*note: The lawyer is not named in this post, to minimize further negative publicity.
The lawyer brought suit against Dupont in Massachusetts state court, where he obtained a default judgment. However, this did him no good as far as the defamatory post was concerned. Ripoff Report is infamous for refusing to remove third-party postings, and the Communications Decency Act (“CDA”) (47 USC § 230) renders it almost impervious to suit by victims of third-party defamation, such as the lawyer victimized in this case.
The lawyer, however, attempted a clever work-around to avoid what he knew would be Ripoff Report’s CDA defense. As part of the remedy in state court the judge assigned to an LLC created by the lawyer — Small Justice LLC — the copyright in the defamatory posting. Small Justice, the copyright owner, then demanded that Ripoff Report take down the copyrighted material. Ripoff Report refused, and Small Justice sued Ripoff Report in federal court in Boston for copyright infringement (and libel, interference with contract, and violations of Massachusetts’ unfair competition statute).
Ripoff Report moved to dismiss (memo in support here), and Judge Denise Casper issued a decision on the motion on March 24, 2014 (Order here).
As the decision implies, however, Ripoff Report may have anticipated Small Justice’s copyright strategy. Ripoff Report’s terms of service required Dupont to check a box before posting his report, granting Ripoff Report an irrevocable license to display the post, as follows:
By posting information or content to any public area of www.RipoffReport.com, you automatically grant, and you represent and warrant that you have the right to grant, to Xcentric an irrevocable, perpetual, fully-paid, worldwide exclusive license to use, copy, perform, display and distribute such information and content and to prepare derivative works of, or incorporate into other works, such information and content, and to grant and authorize sublicenses of the foregoing.
Relying on this license, Ripoff Report argued that whatever rights Small Justice acquired from Dupont by reason of the state court transfer of ownership were subject to the license Dupont granted to Ripoff Report.
Judge Casper did not totally buy this argument, at least at the motion to dismiss stage. Relying on Specht v. Netscape Comm’ns Corp., 306 F.3d 17 (2d Cir. 2002) and Craigslist Inc. v. 3Taps Inc., 942 F. Supp. 2d 962 (N.D. Cal. 2013), Judge Casper held that:
Whether [the quoted paragraph] . . . was sufficient to transfer the copyrights in the Reports from Dupont to Xcentric depends on whether it was reasonable to expect that Dupont would have understood he was conveying those rights to Xcentric. … the Court cannot resolve the issue of the ownership of the copyrights on the present record. Although the process by which users posted to the Ripoff Report appears to be similar to the … context in Specht, the Court cannot say, on this record now before it, what a reasonably prudent offeree in Dupont’s position would have concluded about license.
Accordingly, the motion to dismiss the copyright claim was denied.
Admittedly, the outcome in this case is offensive.* The fact that a person can be defamed in this manner, and that Ripoff Report can use the CDA and contract law to render itself immune from suit, is appalling, at least on first impression (whether the defamed attorney would want to represent anyone naive enough to believe Dupont’s obviously bogus post might be a question worth asking).
*note: An editorial in Massachusetts Lawyers Weekly opined, “[the lawyer] is unquestionably pushing the envelope, but the Ripoff Report’s response to his libel suit makes clear that it’s time for a fresh approach to the growing problem of gratuitous attacks in online reviews. Casper should reject the defense’s motion to dismiss and allow his suit to go forward.”
Hopefully, Judge Casper’s decision will lead to a settlement in which the offending post is removed. However, Xcentric may feel it needs to litigate this case to conclusion to maintain the integrity of the (thus far successful) legal barrier it has created against liability. If that proves to be the case, the law and the facts in this case seem, unfortunately, to favor Xcentric.
Small Justice LLC, et al. v. Xcentric Ventures LLC, 2014 WL 1214828 (D. Mass. Mar. 24, 2014).
Update: Click here for the court’s 2015 summary judgment decision in this case.
