Pro-DRM decision under DMCA

Actuate Corp. v. IBM Corp., No. 09-5892 (N.D. Cal. April 5, 2010) [Scroll down for opinion]

Distribution of software license keys on the internet may constitute trafficking in circumvention technology, which is prohibited under the Digital Millennium Copyright Act (“DMCA”)

Plaintiff software licensor sued defendant for, among other things, violation of the anticircumvention provisions of the DMCA found at 17 USC 1201. Plaintiff alleged that defendant posted license keys on the internet, which purportedly would enable plaintiff’s software to be “installed on an unlimited basis.”

Defendant moved to dismiss, pointing to a line of cases including I.M.S. Inquiry Management Systems, Ltd. v. Berkshire Information Systems, Inc. and Egilman v. Keller & Heckman, LLP [see this old blog post about Egilman].

The I.M.S. line of cases hold that the use of a password issued by the copyright holder does not amount to “circumvention” under the DMCA. Under this thinking, the use of an issued password, even if done without authority, does not result in the “avoiding, bypassing, removing, deactivating, or otherwise impairing [of] a technological measure.”

But another line of cases, headed by 321 Studios v. MGM Studios, Inc. suggests differently. The court in 321 Studios reasoned that unauthorized use of a decryption code (the same one issued by the manufacturer) to bypass the encryption on a DVD served to avoid and bypass the encryption.

In this case, despite both parties’ attempts to show the compatibility of the lines of cases, the court found them to be irreconcilable. It sided with the thinking behind the 321 Studios line, finding no support for a distinction between passwords and other types of code that might be used for decryption.

Here’s the opinion:

Skeleton key photo courtesy Flickr user theogeo under this Creative Commons license.

Emails held sufficient to amend employment contracts in NY

[Brian Beckham is a contributor to Internet Cases and can be contacted at brian.beckham [at] gmail dot com.]

The New York Court of Appeals, 1st Division recently upheld a lower court ruling that a series of “signed” emails is a sufficient writing to modify a contract.

Plaintiff Stevens sold his business (L-S) to Defendant Publicis under two contracts: a stock-purchase agreement including an initial up-front payment, and an employment contract whereby Plaintiff would continue as Chairman and CEO of the new company (PDNY) for three years with additional contingent fees based on earnings. Shortly after the acquisition, problems arose, including loss of a major client and failure to meet revenue and profit targets. Approximately halfway into the three-year term, Plaintiff was removed as CEO and presented 3 options for continued employment. The then-acting CEO of PDNY (Bloom) exchanged a series of emails with Plaintiff. The culmination of this exchange was an email from Bloom on behalf of PDNY describing his understanding of the parties’ terms regarding Plaintiff’s new role at PDNY that Plaintiff’s time would be allocated 70% towards new business development, 20% in maintaining former L-S clients, and 10% devoted to management/operations of PDNY.

Plaintiff responded the next day by email stating: “…I want to thank you again for helping me…That being said, I accept your proposal with total enthusiasm and excitement…” Bloom for PDNY replied the same day: “I am thrilled with your decision…all of us will continue to work in the spirit of partnership to achieve our mutual goal.”

The bottom of each email had the typed name of the sender.

The lower court held, and the Court of Appeals sustained that the parties had agreed in writing (by their emails) to modify Plaintiff’s duties under his employment contract, specifically because both sides expressed their unqualified acceptance of the modification to the contract. (Bloom’s email set forth the terms of the proposed contractual modification, Plaintiff accepted those terms by his email, and Bloom’s reply memorialized that acceptance). Plaintiff also confirmed his acceptance of the modified contract terms in another email to PDNY’s COO.

The Court of Appeals held that Plaintiff’s (and Bloom’s) emails “constitute ‘signed writings’ within the meaning of the statute of frauds, since plaintiff’s name at the end of his e-mail signified his intent to authenticate the contents.” Moreover, the signed writings (the emails) satisfied a requirement of the original employment contract that any modifications must be signed by all parties, i.e., the several emails served as counter-signatures. The same result may not have been reached in a different state, but at least in NY, “signed” emails can be valid for contract purposes.

Case is: Stevens v. Publicis, S.A., 602716/03.

Court finds CAPTCHA likely protectible under DMCA

Ticketmaster L.L.C. v. RMG Technologies, Inc., — F.Supp.2d —-, 2007 WL 2988403 (C. D. Cal. Oct. 15, 2007)

RMG Technologies developed an application that allowed its users to automatically access to search for tickets and buy them up by the dozens. Ticketmaster sued RMG, alleging, among other things, copyright infringement, breach of contract, and violation of the anticircumvention provisions of the Digital Millennium Copyright Act found at 17 U.S.C. 1201.

Ticketmaster moved for preliminary injunction on several of the counts in the complaint, and the court granted the motion. It held that Ticketmaster was likely to succeed on its claims of copyright infringement, in that RMG’s access to the Ticketmaster website exceeded the scope of the license to do so granted by the site’s browsewrap agreement. The court also held that under Grokster, Ticketmaster was also likely to succeed in showing that RMG was indirectly liable for inducing infringement through the promotion of the application.

On the DMCA claim, Ticketmaster claimed that by providing the ability for users to get around the CAPTCHAs that have to be solved in order to purchase tickets, RMG trafficked in technology that circumvents a technological measure used to prevent access to a work protected by copyright. (CAPTCHAs are the little challenge-response tests that appear frequently on websites requiring login or authentication, used to help ensure that it’s really a human and not a bot trying to access the website.)

One of RMG’s primary arguments against the preliminary injunction on DMCA grounds was that the CAPTCHAs were not “technological measures” used to circumvent the access protection, but were merely images. The court rejected this argument, looking to the language of the DMCA which provides, in relevant part, that “a technological measure ‘effectively controls access to a work’ if the measure, in the ordinary course of its operation, requires the application of information, or a process or a treatment, with the authority of the copyright owner, to gain access to the work.”

In this case, the court found that CAPTCHAS meet these criteria, because in their ordinary course of operation, they require the application of information before access to the work being protected is allowed.

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