Category: Copyright (page 1 of 18)

Three ways trade secrets can be more powerful than copyright

Copyrights and patents and trademarks usually come to mind when thinking about intellectual property. But trade secrets are a critically important and very useful form of intellectual property and are often overlooked. Here are three ways that trade secrets can be more powerful than copyright.

Three ways trade secrets can be more powerful than copyright

1 – Trade secrets protect ideas and facts (while copyright does not).

Something qualifies as a trade secret if it (1) has economic value because it is secret, and (2) has been the subject of efforts to keep it secret. So a trade secret can be an intangible idea – like the knowledge of how to do something. Or it can be a set of facts, like a list of customers. Copyright wouldn’t protect either of these things – ideas or facts – because copyright covers creative expression. You can’t look to copyright to stop others from using ideas you have or lists of facts you compile. But trade secrets, on the other hand, might cover you.

2 – You don’t have to register trade secrets.

Let me try to clarify one thing really quickly – you don’t have to register copyrights either to own them. But you do have to register that copyright if you need to sue anyone for infringement. With trade secrets, there’s not even any such thing as registration. You have trade secrets from possessing valuable information that you have actually kept secret. That’s it.

3 – Trade secrets can last forever.

Copyright lasts a long time, but trade secrets can last even longer. When an employee of a company creates a copyrighted work, the rights last for 95 years. But there is no expiration date for trade secrets. For as long as a company keeps its valuable trade secret information secret, it’s protected by trade secrets law.

Other ways?

There are other ways trade secrets are more powerful than copyright. Can you think of any? Leave a comment here or take to Twitter (I’m @internetcases there). 

See also: 

Question of who owns source code proceeds to trial in trade secrets case

Instagram’s terms of service gave ability to embed photo

Embedding Instagram photos on website not infringement
Be sure to follow @internetcases on Instagram. 

Plaintiff – a professional photographer – sued website Mashable and Mashable’s owner after the website used HTML Instagram provides to embed one of plaintiff’s photos on Mashable. Defendants moved to dismiss, claiming they had rights to embed the photo under Instagram’s terms of service. The court agreed and dismissed the copyright infringement claim. Embedding Instagram photos on the website was not infringement. 

Mashable embedded anyway 

Before the dispute began, Mashable had first tried getting a license from plaintiff to use one of her photographs is a story about female photographers. It offered plaintiff $50 for the rights, but plaintiff refused. A few days later, Mashable used Instagram’s embed code to display the image on Mashable anyway.  

Was this a server test question? 

The embed code on Mashable caused the image to appear when one would visit the Mashable page by pulling the image data off of the Instagram server. Other cases have referred to this and similar technologies as “inline linking”. Almost 13 years ago, in the case of Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007), the Ninth Circuit indicated strongly that inline linking did not cause copyright infringement problems because  the process did not involve making a copy of the image, but instead just called it from the original server. From this notion came the “server test” articulated in that case.  

A few months before the Perfect 10 v. Amazon decision, a district court in Texas (in the case of Live Nation Motor Sports, Inc. v. Davis, 2006 WL 3616983 (N.D.Tex., December 11, 2006)) had stopped a website owner from pulling in audio data from another server and appearing to stream it from his website. 

And just a couple of years ago, another court in the same district as this case involving Instagram declined to adopt the Ninth Circuit’s “server test,” instead finding that embedding an image of Tom Brady in a tweet on a website was an unauthorized infringement of that plaintiff photographer’s right under the Copyright Act to display the photo. See Goldman v. Breitbart News Network, LLC, 302 F.Supp.3d 585 (S.D.N.Y. 2018). 

Embedding Instagram photos on website was not infringement because of license

Though the underlying conduct in this case was very similar to that in Goldman v. Breitbart, the court’s decision here did not even cite that opinion. And it did not need to because the legal basis on which it decided this case was different.  

In this case, the court held that when plaintiff signed up for Instagram, she granted Instagram the right to allow others (via sublicensing) to embed photos that plaintiff uploaded and made publicly available. Even though plaintiff never directly authorized Mashable to use her photo, Mashable was granted rights via Instagram to embed the photo, Instagram having gotten the ability to grant those rights to Mashable from plaintiff when she agreed to Instagram’s terms of use.  

The message for Instagram users – your photos may end up on websites 

The simple message for users of Instagram (and there are a lot of them) is to be aware that by uploading photos to Instagram and making them publicly available, you are authorizing Instagram to let others display those photos on third party websites. Posting to Instagram and making photos publicly viewable is, quite possibly, posting them to be viewed by a much wider audience than the Instagram community.  Under the rule of this case, 
embedding Instagram photos on a website is not infringement. 

Sinclair v. Ziff Davis, LLC 2020 WL 1847841 (S.D.N.Y., April 13, 2020) 

Finding out who infringed copyright – identifying infringers

Need information about finding out who infringed your copyright? This video may provide some guidance. 

Copyright owners of video and photos may find their works have been copied and posted somewhere else online and therefore need to take action for copyright infringement. But the first challenge may be to identify who the unknown defendant is. This video discusses (1) filing a copyright infringement case in federal court, (2) showing good cause for early discovery to identify the unknown alleged infringer, and (3) sending subpoenas.  Finding out who infringed copyright can be a difficult task. 

The federal courts have exclusive jurisdiction for copyright infringement cases. That means a state court will not be able to hear a copyright infringement matter. A copyright infringement case filed in state court will get dismissed because state courts cannot hear cases that are exclusively the subject of federal jurisdiction.

When a party has filed suit, it usually knows who the defendant is. But sometimes it is necessary to file suits against “John Doe” defendants. In the online copyright infringement context, the copyright owner will need to take early discovery. This requires persuading the federal judge that good cause exists for taking early discovery. To show good cause, a party will need to show that an actual person has infringed, that it has taken as many steps possible to unmask the anonymous copyright infringer, and that its copyright infringement case is strong enough to survive a motion for summary judgment. 

Once these things are shown, the court will allow the plaintiff to send subpoenas to the host of the infringing content and to the internet service providers associated with the IP address that uploaded the copyright infringing content. Then, if the plaintiff is successful in unmasking the unknown defendant, the copyright infringement case can actually begin .

More information: Identifying unknown online copyright infringers: court gives guidance

finding out who infringed copyright

Identifying unknown online copyright infringers: guidance

unmasking online copyright infringers

A recent case addressed the problem of identifying unknown online copyright infringers. Plaintiff sued some unknown “John Doe” defendants who infringed plaintiff’s copyrights. To keep the lawsuit moving forward, plaintiff needed to serve the complaint on the defendants. But this presented a challenge, since plaintiff did not know to whom it should deliver the documents. So plaintiff filed a motion with the court, asking for permission to send interrogatories and to take depositions that would help unmask the anonymous infringers. Plaintiffs sought to get information from parties including PayPal, Cloudflare and various domain name registrars. The court’s response provides guidance to parties seeking to learn the identities of unknown parties.

To identify unknown online copyright infringers: early discovery

The rules of procedure in federal court do not permit discovery requests until the parties have had an initial conference with each other. But they cannot have that conference if the defendant is unknown. So the plaintiff needs to send discovery requests earlier than what the rules generally allow. It needs the court’s permission to do so.

A court will not permit early discovery in every instance. But courts have made exceptions, permitting limited discovery after a plaintiff files the complaint to permit the plaintiff to learn the identifying facts necessary to permit service on the defendant. Courts allow these requests upon a showing of good cause.

What constitutes good cause for early discovery?

This court applied the three part test for good cause set out more than 20 years ago in the case of Columbia Ins. Co. v. Seescandy.com, 185 F.R.D. 573 (N.D. Cal. 1999). The party seeking early discovery should be able to:

  • Identify the missing party with sufficient specificity such that the court can determine that the defendant is a real person or entity who could be sued in federal court;
  • Identify all previous steps taken to locate the elusive defendant; and
  • Establish to the court’s satisfaction that the suit against defendant could withstand a motion to dismiss.

Early discovery was appropriate in this case

Under the first prong of the test, the court found that plaintiff identified the missing parties with as much clarity as possible. Plaintiff stated that those missing parties were persons or entities, and that those parties had been observed and documented as infringing on plaintiff’s copyrights. Thus, as real persons or entities, those Doe parties could be sued in federal court.

As for the second prong, the only information plaintiff had regarding the defendants was the existence of accounts relating to the operations of the defendants’ websites. Therefore, there were no other measures plaintiff could take to identify the defendants other than to obtain their identifying information from the parties from whom it was sought.

Finally, on the third prong, for identifying unknown copyright infingers, the court found that plaintiff had pled the required elements of direct and contributory copyright infringement. Plaintiff claimed (1) it owned and had registered the copyrighted work at issue in the case; (2) defendants knew of the infringing activity and were conscious of their infringement; and (3) defendants actively participated in this infringement by inducing, causing and contributing to the infringement of plaintiff’s copyrighted work. Since plaintiff had alleged each of these elements properly, this cause of action could withstand a motion to dismiss.

MG Premium Ltd. v. Does, 2020 WL 1675741 (W.D. Wash. April 6, 2020)

Related: 

Copyright registration certificate was invalid because of inaccurate information provided to Copyright Office

Although the author of a work owns the copyright the moment that work is created, Section 411 of the Copyright Act (17 U.S.C. 411) provides that the copyright owner must register the copyright before the owner can bring suit for infringement. If there is no valid registration certificate, the lawsuit cannot move forward.  A copyright registration certificate that is invalid can cause problems. 

copyright registration certificate was invalid

In a recent case from the Ninth Circuit, the defendant challenged the validity of the plaintiff’s registration certificate, and the lower court dismissed the matter on summary judgment. Plaintiff sought review with the Ninth Circuit. On appeal, the court affirmed the summary judgment.  

The appellate court agreed with the district court that plaintiff’s certificate of registration was invalid because: 

  • There was no genuine dispute that plaintiff knew that it included inaccurate information in its copyright application. Plaintiff falsely represented that the copy of its website it submitted was not how it looked on the publication date listed in the application.
  • The Register of Copyrights told the court that it would have refused registration had it known about the inaccurate information.  

Because Plaintiff’s certificate of registration was invalid, plaintiff failed to satisfy the registration precondition under Section 411 to bring a copyright infringement claim. 

SellPoolSuppliesonline.com, LLC v. Ugly Pools Arizona, Inc., 2020 WL 1527774 (9th Cir. March 31, 2020) 

Related: 
http://blog.internetcases.com/2016/11/23/is-a-copyright-registration-required-before-filing-an-infringement-lawsuit/

Real estate brokerage may be liable for its agent’s copyright infringement

Case underscores reason why companies using independent contractors should consider negotiating provisions that require those independent contractors to indemnify the company in the event of third party intellectual property claims.

Plaintiff’s claims

Plaintiff photographer sued a real estate brokerage firm and the firm’s independent agent who published on her brokerage-branded website one of plaintiff’s photos without authorization. Plaintiff asserted a direct infringement claim against the agent, and a vicarious infringement claim against the brokerage. Defendant brokerage firm moved to dismiss for failure to state a claim. The court denied the motion.

vicarious copyright liability

Elements of vicarious copyright infringement

To state a claim for vicarious copyright infringement, in addition to stating a claim for direct infringement by the agent, the plaintiff had to successfully plead that the brokerage (1) had a direct financial interest in the appearance of the infringing photo on its agent’s website, and (2) had the right and ability to supervise the infringing activity.

The court’s decision

On the first element of vicarious copyright infringement, the court found that plaintiff adequately alleged that defendant brokerage had a direct financial interest in defendant agent’s use of the photo on her website. Defendant agent was defendant brokerage’s sponsored agent, and it was plausible that her use of the photo to enhance the appeal of her website provided both defendant agent and defendant brokerage with a direct financial benefit in the form of increased business.

As for the second element – right and ability to supervise – the court found that plaintiff’s undisputed allegation that defendant agent was a licensed real estate agent under defendant brokerage’s sponsorship, coupled with defendant brokerage’s statutory obligation to supervise defendant agent’s actions, were sufficient to state a plausible claim that defendant brokerage had the right and ability to supervise defendant agent’s infringing activity.

The parties disputed the level of supervision and control that defendant brokerage had, and the “right and ability” to exercise control over defendant agent’s activity on her website.

Plaintiff asserted that the website was one published by the defendant brokerage, while the defendant brokerage disclaimed all responsibility for the website. Yet regardless of which party actually exercised direct control over the website, the fact remained – in the court’s view – that defendant agent carried out the alleged copyright infringement on the website under the auspices of defendant brokerage’s sponsorship, and defendant brokerage had a statutory obligation to supervise her conduct as a sponsored agent.

Moreover, although defendant agent could hypothetically continue her alleged infringement in a different setting were defendant brokerage to terminate her sponsorship, the undisputed fact that defendant brokerage could have terminated her sponsorship lent further support to the inference that defendant brokerage had the right and ability to supervise defendant agent’s infringing acts.

Stross v. PR Advisors, LLC, 2019 WL 5697225 (N.D. Tex. October 31, 2019)

Does a plaintiff claiming unlawful removal of copyright management information have to own a registered copyright?

Plaintiff sued defendants for violation of the provisions of the Digital Millennium Copyright Act (“DMCA”) that prohibit one from intentionally removing or altering any copyright management information (“CMI”) with the knowledge, or having reasonable grounds to know, that it will induce, enable, facilitate, or conceal a copyright infringement (17 U.S.C. § 1202(b)).

Defendants moved to dismiss, asserting that the court should reject plaintiff’s DMCA cause of action for failure to state a claim for which relief may be granted because copyright registration, which plaintiff admits it lacks, was a prerequisite for bringing suit under this provision of the DMCA.

The court denied the motion. It held that copyright registration was not a prerequisite to this sort of action.

Defendants had argued that the provisions of 17 U.S.C. § 411(a) required registration. That section provides that “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” Defendants argued that this requirement applied to DMCA actions and tried to justify their position by asserting that (1) a plain reading of Section 1202(b) of the DMCA establishes that a claim brought thereunder constitutes a civil action for infringement, (2) the provisions of Title 17 of the United States Code, including 17 U.S.C. § 411(a), apply to the DMCA despite its silence as to those provisions, and (3) precedent shows that the registration requirement applies to the DMCA. The court rejected these arguments.

First, a plain reading of the DMCA did not establish that it is subject to the registration requirement found in 17 U.S.C. § 411(a). Such requirement pertains to “civil action[s] for infringement of the copyright.” However, a DMCA action under Section 1202(b) is not an action for infringement, but rather for the improper removal or alteration of CMI. Second, the court held that Section 411(a) need not apply to the DMCA merely because other provisions of Title 17 do. Finally, the case law defendants cited, including the recent Supreme Court case of Fourth Estate v. Wall-Street.com, did not indicate that registration is required for DMCA actions.

Diamondback Industries, Inv. v. Repeat Precision, LLC, 2019 WL 5842756 (N.D.Tex., November 7, 2019)

See also:

Suit under DMCA for concealing copyright management information failed because plaintiff did not properly allege defendants’ intent

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

Employee’s unauthorized conduct was not a DMCA prohibited circumvention

Plaintiff sued its former employee and alleged, among other things, that defendant violated the anticircumvention provisions of the Digital Millennium Copyright Act  (17 USC 1201). While defendant was still an employee, she used her username and password to access and download copyrighted material stored on plaintiff’s server after she had already accepted an employment offer from a competitor.

Defendant moved to dismiss the anticircumvention claim. The court granted the motion to dismiss.

The court’s holding centered on what the DMCA means by “circumvent a technological measure”. The statute requires that for there to be circumvention, one must “descramble a scrambled work . . . decrypt an encrypted work, or otherwise . . . avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner.”

In this case, the court followed the line of reasoning in prior cases, including Egilman v. Keller & Heckman LLP  to hold that defendant did not circumvent any measures because she validly accessed the system using her username and password.

The court found that even if the use that defendant made of that access was not something that plaintiff would have authorized her to do, i.e. copy the materials at issue, defendant’s alleged abuse of her logon privileges did not rise to the level of descrambling, decrypting, or otherwise avoiding, bypassing, removing, deactivating, or impairing anything.

R. Christopher Goodwin & Assoc., Inc. v. Search, Inc., 2019 WL 5576834 (E.D. Louisiana October 29, 2019)

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

Court denies porn company’s request to unmask anonymous copyright infringers

Serial copyright plaintiff Strike 3 Holdings filed a number of copyright complaints against defendants – known only by their IP addresses – for copyright infringement. Since plaintiff needed to know the identities of the defendants to move forward, it asked the court for leave to seek expedited discovery. In a consolidated matter – addressing a number of complaints – the court denied the motion.

The main reason for denying the motion was that, in the court’s view, as pleaded, plaintiff’s complaints were futile – they did not meet the standard for a motion to dismiss under Rule 12(b)(6).

Further, even if plaintiff had pled a cognizable copyright infringement claim, the court would still have denied the requests for expedited discovery. Good cause for the expedited discovery did not exist because:

  • plaintiff based its complaints on unequivocal affirmative representations of alleged facts that it did not know to be true
  • plaintiff’s subpoenas were misleading and created too great of an opportunity for misidentification of the unknown defendants
  • the linchpin of plaintiff’s good cause argument, that expedited discovery was the only way to stop infringement of its works, was wrong – plaintiff could have sent takedown notices under the Digital Millennium Copyright Act
  • plaintiff had other available means to stop infringement besides suing individual subscribers in thousands of John Doe complaints
  • the deterrent effect of plaintiff’s lawsuits was questionable
  • substantial prejudice may have inured to subscribers who were misidentified; and
  • plaintiff underestimated the substantial interest subscribers had in the constitutionally protected privacy of their subscription information.

On balance, therefore, the court found that the overall administration of justice and the prejudice to subscriber defendants outweighed plaintiff’s interest in expedited discovery.

Strike 3 Holdings, LLC v. Does, 2019 WL 5446239 (D.N.J. October 24, 2019)

Web design feature killed express license argument in copyright case

Plaintiff sued defendant for copyright infringement over unlicensed use of plaintiff’s musical works in advertisements that defendant created and uploaded to YouTube. Defendant argued that the language and structure of plaintiff’s website – from which the works were downloaded – resulted in an express license or at least an implied license to use the musical works for commercial purposes. The court rejected these arguments and awarded summary judgment to plaintiff. 

No express license

The basis for defendant’s argument that plaintiff’s website gave rise to an express license is not clear. In any event, plaintiff argued that a browsewrap agreement in place on the website established that the works could not be used for commercial purposes without the payment of a license fee. Citing to the well-known browsewrap case of Specht v. Netscape, 306 F.3d 17 (2d Cir. 2002), defendant argued that it did not have notice of the terms and conditions of the browsewrap agreement.

The court distinguished this case from Specht. In this case, plaintiff’s home page contained – similar to the case of Major v. McCallister, 302 S.W.3d 227 (Mo. Ct. App. 2009) – “immediately visible” hyperlinks that referenced terms of use and licensing information. A user did not have to scroll to find these links. So the terms and conditions of the browsewrap agreement were enforceable. Since the browsewrap agreement contained provisions requiring a license for commercial use, no reasonable jury could find that plaintiff had granted defendant an express license to use the musical works for commercial purposes free of charge. 

No implied license

Defendant argued in the alternative that plaintiff had granted defendant an implied license to use the musical works, based on (1) plaintiff’s company name “Freeplay,” and (2) the absence of any conspicuous warning that the works were not available for commercial use. 

The court found these arguments to be “easily disposed of.” Citing to I.A.E., Inc. v. Shaver, 74 F.3d 768 (7th Cir. 1996), the court noted that an implied license exists only when: 

  • a person (the licensee) requests the creation of a work,
  • the creator (the licensor) makes that particular work and delivers it to the licensee who requested it, and 
  • the licensor intends that the licensee-requestor copy and distribute his work.

The court found that defendant failed to prove any of these elements. Defendant never asked plaintiff to create any works. Nor did plaintiff make any works at defendant’s request to be used in defendant’s YouTube videos. Moreover, given plaintiff’s paid license requirements for business use of the copyrighted works available on its website, it could not be said that plaintiff intended that defendant download and distribute those works free of charge. Accordingly, the court found that no implied license existed.

Freeplay Music, LLC v. Dave Arbogast Buick-GMC, Inc., No. 17-42, 2019 WL 4647305 (S.D. Ohio, September 24, 2019)

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

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