Category Archives: Uncategorized

Veoh eligible for DMCA Safe Harbor

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

Io Group, Inc. v. Veoh Networks, Inc., 2008 WL 4065872 (N.D.Cal. Aug. 27, 2008)

The U.S. District Court for the Northern District of California ruled that Veoh’s hosting of user-provided content is protected by the DMCA safe harbor provision, and that it does not have a duty to police for potential copyright infringement on behalf of third-parties, but rather must act to remove infringing content when so put on notice.

IO produces adult films; Veoh hosts, inter alia, its own “Internet TV channels” and user-posted content (much like YouTube). In June 2006, IO discovered clips from ten (10) of its copyrighted films ranging from 6 seconds to 40 minutes in length hosted on Veoh. Rather than sending Veoh a “DMCA Notice & Takedown” letter, IO filed the instant copyright infringement suit. (Coincidentally, Veoh had already removed all adult content sua sponte — including IO’s prior to the suit). Had Veoh received such a notice, so the story goes, it would have removed the content, and terminated the posting individual’s account.

When a user submits a video for posting, Veoh’s system extracts certain metadata (e.g., file format and length), assigns a file number, extracts several still images (seen on the site as an icon), and converts the video to Flash. Prior to posting, Veoh’s employees randomly spot check the videos for compliance with Veoh’s policies (i.e., that the content is not infringing third-party copyrights). On at least one occasion, such a spot check revealed infringing content (an unreleased movie) which was not posted.

Veoh moved for summary judgment under the DMCA’s Safe Harbors which “provide protection from liability for: (1) transitory digital network communications; (2) system caching; (3) information residing on systems or networks at the direction of users; and (4) information location tools.” Ellison, 357 F.3d at 1076-77. Finding that Veoh is a Service Provider under the DMCA, the Court had little trouble in finding that it qualified for the Safe Harbors. IO admitted that Veoh “(a) has adopted and informed account holders of its repeat infringer policy and (b) accommodates, and does not interfere with, “standard technical measures” used to protect copyrighted works”, but took issue with the manner in which Veoh implemented its repeat infringer policy.

Veoh clearly established that it had a functioning DMCA Notice & Takedown system:

  • Veoh has identified its designated Copyright Agent to receive notification of claimed violations and included information about how and where to send notices of claimed infringement.
  • Veoh often responds to infringement notices the same day they are received.
  • When Veoh receives notice of infringement, after a first warning, the account is terminated and all content provided by that user disabled.
  • Veoh terminates access to other identical infringing files and permanently blocks them from being uploaded again.
  • Veoh has terminated over 1,000 users for copyright infringement.

The Court held that Veoh did not have a duty to investigate whether terminated users were re-appearing under pseudonyms, but that as long as it continued to effectively address alleged infringements, it continued to qualify for the DMCA Safe Harbors; moreover, it did not have to track users’ IP addresses to readily identify possibly fraudulent new user accounts.

The Court further noted that: “In essence, a service provider [Veoh] is eligible for safe harbor under section 512(c) if it (1) does not know of infringement; or (2) acts expeditiously to remove or disable access to the material when it (a) has actual knowledge, (b) is aware of facts or circumstances from which infringing activity is apparent, or (c) has received DMCA-compliant notice; and (3) either does not have the right and ability to control the infringing activity, or – if it does – that it does not receive a financial benefit directly attributable to the infringing activity.”

The Court found that (1) there was no question that Veoh did not know of the alleged infringement — since IO did not file a DMCA Notice (2) it acted expeditiously to remove user-posted infringing content, (3) it did not have actual knowledge of infringement, (4) it was not aware of infringing activity, and (5) it did not have the right and ability to control the infringing activity (the Court did not address any financial benefit).

In sum: the Court “[did] not find that the DMCA was intended to have Veoh shoulder the entire burden of policing third-party copyrights on its website (at the cost of losing its business if it cannot). Rather, the issue [was] whether Veoh [took] appropriate steps to deal with [alleged] copyright infringement.”

There is much speculation as to how, if at all, this case will affect the Viacom / YouTube case. YouTube praised the decision, Viacom noted the differences. Each case turns on its own facts, but to the extent there are similarities, this decision is wind in YouTube’s sails.

Case is: IO Group Inc.(Plaintiff), v. Veoh Networks, Inc. (Defendant)

Listen to yours truly on This Week in Law

This Week in Law (TWiL) episode 16 is up, and it’s an interesting one. I was really happy to be part of a super deluxe panel comprised of host Denise Howell, Nicole Black, Marty Schwimmer and Ernie Svenson. We talked about a number of interesting topics like the DMCA anticircumvention provisions, ediscovery, Viacom v. Google and other subjects. Hope you’ll have a listen.

Wouldn’t Privnote be better if it had a privacy policy?

Update (added 7/10): Privnote now has a Privacy Policy: https://privnote.com/privacy/

Last week ReadWriteWeb profiled Privnote, which provides a service that purportedly allows you to send messages that will self destruct upon being read by the recipient. Great for back channel communications or the transmission of other private or sensitive information.  Intriguing, to say the least.

So I checked it out, scrolling to the bottom of the page to read the site’s privacy policy. You’d think a site touting a service like this would let you know exactly what happens to the data sent through its system. But unfortunately it doesn’t. Can it go into its database and retrieve the “destroyed” information? Is it compiling a profile on me? Would Privnote turn the info over to the feds or anyone else armed with a subpoena? Inquiring minds would like to know.

Court tosses abuse of process claim brought by former file sharing defendant

Chan v. Priority Records, LLC, No. 07-15449, 2008 WL 2447147 (E.D. Mich. June 18, 2008)

Priority Records sued Candy Chan for copyright infringement, claiming she used iMesh to download and trade music files. The record company withdrew the suit when Ms. Chan told them it was her daughter that traded the files. The daughter became a defendant too, but that case was thrown out on a procedural issue.

Ms. Chan tried to recover her attorney’s fees in the copyright lawsuit against her, but the court denied the request. So she filed her own lawsuit against Priority Records, its law firm, and Settlement Support Center, alleging abuse of process and violation of the Racketeer Influenced and Corrupt Organizations Act (RICO).

The defendants moved to dismiss. The court granted the motion.

It held that Ms. Chan’s claims could have — and, pursuant to Fed. R. Civ. P. 13(a) should have — been brought as compulsory counterclaims. Ms. Chan had raised these issues (but did not file the counterclaim) in the underlying copyright suit. Most of the allegations in this suit alleged illegal conduct occurring prior to the filing of the underlying copyright suit. And many of the allegations involved only Ms. Chan’s daughter, not Ms. Chan herself.

Ben Stein’s “Expelled” film permitted to use clip from Lennon’s “Imagine”

Judge Stein of the U.S. District Court for the Southern District of New York ruled last week that use of portions of the song “Imagine” in the film “EXPELLED: No Intelligence Allowed” were protected as fair use. Plaintiffs Yoko Ono and record label EMI sued Defendants (the producers of the film) for copyright infringement seeking an injunction to stop the use. After hearing oral arguments and viewing the movie, the Court found that the Plaintiffs failed to meet the burden of showing irreparable harm since “on the basis of the current record, defendants are likely to prevail on their affirmative defense of fair use.”

“Expelled”, a full-length movie on intelligent design narrated by Ben Stein uses a 15-second clip of the song with the words “nothing to kill or die for, and no religion too” transposed on the screen over black and white archive sequences (including a military march and a close up of Stalin). Immediately preceding the excerpt several speakers express the hope that science will diminish religion. In a voiceover, Stein notes the speaker “would like you to think he’s being original but he’s merely lifting a page out of John Lennon’s songbook.”

According the one producer, “the film undertakes to inspire viewers to participate in the scientific, political, cultural, and religious debates surrounding [intelligent design].” Defendants obtained permission to include every song in the movie except Imagine. Defendants timed the films release to coincide with state “Academic Freedom” bills (which permit teachers to criticize the theory of evolution.)

The Court first determined that Plaintiffs established a prima facie case of copyright infringement by showing (1) ownership of a valid copyright and (2) unauthorized copying. Accordingly, absent the injunction there is a presumption of irreparable harm. Turning next to Defendants defense of fair use, the Court held that (quoting Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 and U.S. Const. art. I, § 8, cl. 8), that “some opportunity for fair use of copyrighted materials [is] necessary to fulfill copyright’s very purpose, ‘[t]o promote the Progress of Science and useful Arts. . . ‘.”

Taking the fair use factors into consideration, the Court held that: (1) the use of Imagine is not merely exploitative, and since the movie stimulates debate, the commercial purpose of “Expelled” weighs weakly against fair use (Defendants’ use is transformative and for purposes of criticism and commentary, i.e., “what the filmmakers see as the naïveté of John Lennon’s views [in that] ‘Imagine’ is a secular anthem caught in a loop of history recycling the same arguments from years past through to the present,” thus “it is not necessary that defendants [transform] the music or lyrics of the song”, nor that Defendant’s could have made the film without the clip, moreover, the failure to seek permission did not weigh against fair use (2) the film comments on the song, and does not exploit its creative virtues, (3) “both quantitatively and qualitatively, the portion of ‘Imagine’ that defendants copy is reasonable in light of their purpose for doing so [, and thus] weighs in favor of fair use”, and (4) there is absolutely no evidence that the film’s use will usurp the market for “Imagine.”

Balancing the potential hardships to the parties if an injunction were issued, the evidence favored Defendants, especially since Plaintiffs were not likely to lose any licensing revenue. Unless Yoko and EMI expel this decision on appeal, they will not Win Ben Stein’s Money.

Case is: Lennon v. Premise Media, No. 08-3813

Court reconsiders “making available” in file-sharing case

A U.S. District Court judge in Minnesota presiding over the case of Capitol Records Inc. v. Jammie Thomas has issued an Order breathing new life into the Defendant’s case.

Thomas was found liable for copyright infringement for activities over the KaZaA network, and had moved for either a new trial or lowering of damages on the ground that the amount of the jury award ($220,000 for 24 songs at $9,250 each) was excessive and a violation of due process. The Court’s Order however, stated that it was “contemplating granting a new trial for a different reason”, because Jury Instruction No. 15 which stated that that “[t]he act of making copyrighted sound recordings available for electronic distribution on a peer‐to‐peer network, without license from the copyright owners, violates the copyright owners’ exclusive right of distribution, regardless of whether actual distribution has been shown” was contrary to prevailing case law. Specifically, the Court noted that binding Eighth Circuit precedent from National Car Rental System, Inc. v. Computer Associates Int’l, Inc., required that “[i]nfringement of [the distribution right] requires an actual dissemination of either copies or phonorecords…”

The order notes that this precedent appears to require “actual dissemination” but that neither party brought this to the Court’s attention. The Order goes on to state that “at least one authority relied upon by Plaintiffs…Atlantic Recording Corp. v. Howell [blogged here], has since been vacated, and, on reconsideration, that court has now held that making sound recordings available for distribution is not actionable under the Copyright Act and that ‘actual distribution’ is required.” The Court invited amicus briefs on the issue, and will hear arguments in the case on July 1, 2008.

Case is: Civil File No. 06‐1497 (MJD/RLE)

A look at some keyword cases and a PPC class action suit

Court orders use of “negative keywords”

Orion Bancorp, Inc. v. Orion Residential Finance, LLC, No. 07-1753, 2008 WL 816794 (M.D. Fla., March 25, 2008)

Plaintiff Orion Bancorp, Inc. is a bank operating under the ORION name and registered trademark since 2002. Defendant Orion Residential Finance, LLC provides financial and real estate related services, and used the term “Orion” in interstate advertising and in the domain name “orionresidentialfinance.com” without Orion Bancorp’s authorization or consent.

The court entered an agreed permanent injunction, ordering Orion Residential Finance to refrain from any and all use of the term “Orion”. The defendant was prohibited from purchasing the word “Orion” as a keyword to trigger sponsored advertising. Moreover, it was required to activate “Orion” as a “negative keyword” (specifically preventing Orion Residential Finance’s ads from appearing when one searches using the terms “Orion”).

N.D. Cal.: Competitor’s trademark as keyword causes initial interest confusion

Storus Corp. v. Aroa Marketing Inc., 2008 WL 449835 (N.D. Cal. Feb. 15, 2008).

Plaintiff Storus Corporation (“Storus”) sued Defendants Aroa Marketing, Inc. (“Aroa”) and Skymall, Inc. (“Skymall”) for trademark infringement based on the defendants’ use of Storus’ mark “Smart Money Clip” to trigger sponsored listings. Storus sells its patented Smart Money Clip, and Aroa sold competing products under its Steinhausen mark which were marketed as the “Smart Money Clip”. Aroa tried unsuccessfully to argue that Storus’ mark was a descriptive term not entitled to protection (but offered no evidence of lack of secondary meaning, i.e., it did not prove consumers do not think of Storus when they see the Smart Money Clip mark).

The Court found that Aroa’s use of Storus’ mark in the sponsored ad caused initial interest confusion. In 11 months, the ad was displayed 36,164 times in response to a search for “smart money clip,” resulting in 1,374 clicks on Aroa’s ad. The court found that the marks were identical, were used on the same type of product, and were marketed via the Internet. (Even though Aroa’s mark appeared in the ad, Storus’ mark appeared first, was larger, and was underlined).

11th Circuit: Competitor’s Trademark as Keyword Likely to Cause Confusion

North American Medical Corp. v. Axiom Worldwide, Inc., 2008 WL 918411 (11th Cir. April 7, 2008)

Eric Goldman has a thorough report on his Technology & Marketing Law Blog of a case where the defendant’s use of the plaintiff’s ACCU-SPINA and IDD THERAPY trademarks in metatags constituted use in commerce, and thus trademark infringement where a Google search listed the defendant as the second most relevant organic search result (below the plaintiff). In a footnote, the court did hint that if the defendant’s website included an explicit comparative advertisement, things might have come out differently.

Possible Class Action Suit against Google and PPC Groups

Finally, Sarah Bird reports on SEOmoz.org that a class action trademark and ACPA lawsuit against Google and other domain parking agencies will move ahead. (Goolge’s adsense program contributes to the pay-per-click links on “parked”, i.e., recently acquired, or tasted domain names). The Plaintiff’s are seeking to hold them liable for these PPC links which may offer competing goods. Though for Google’s part, it notes on its FAQ that it is not responsible for the domain names on which its adsense ads appear, it seems disingenuous to suggest that their algorithms are not behind the PPC links that appear. Google’s method for trademark owners to object to sponsored links places the burden for policing this practice on mark owners.

Distribution under the Copyright Act requires more than merely making copies available

Atlantic Records v. Howell, No. 06-2076 (D. Az. April 29, 2008)

Several record companies, including Atlantic Records, sued Pamela and Jeffrey Howell after the record companies learned, through their private investigator, that the Howells used KaZaA to share files. After discovery in the matter closed, the record companies moved for summary judgment, asserting that the Howells infringed the copyright in the sound recordings merely by making them available for the public to copy. The court found in favor of the Howells and denied the motion.

The Copyright Act provides that an owner of a copyright enjoys certain exclusive rights in connection with the work including, among other things, the exclusive right to distribute copies of the work. The record companies case was a bit problematic on this point, as the only evidence of record was that the allegedly infringed files were in KaZaA’s shared folder. There was no indication that actual copies of the files had been transferred.

In support of the argument that making the sound recordings available was an unauthorized distribution, the record companies relied heavily on Hotaling v. Church of Jesus Christ of Latter-Day Saints, 188 F.3d 199 (4th Cir. 1997). In Hotaling, the court held that a library which created a number of unauthorized copies of a work and made those copies available in its various branches could be liable for infringement, despite the absence of evidence that any member of the public had viewed the unauthorized copies.

The Hotaling decision was based largely on policy grounds. The library kept no records of who had viewed the unauthorized copies, thus the plaintiff could not provide direct evidence that the works were distributed to the public. The court opined it would be against sound policy for defendants to avoid liability through the omission of record keeping.

The court in this case rejected and criticized the Hotaling decision, holding that evidence of making a copy available “only shows that [a] defendant attempted to distribute the copy, and there is no basis for attempt liability in the statute, no matter how desirable such liability may be as a matter of policy.”

The recording companies argued that although the term “distribution” is not explicitly defined in the Copyright Act, it is synonymous with the term “publication,” which the statute defines to include “[t]he offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display.” 17 U.S.C. § 101. In other words, if the Howells offered to distribute the copyrighted works to the public for purposes of further distribution, they distributed the works within the meaning of the Copyright Act.

But the court looked to the plain meaning of statutory provision granting an exclusive right to distribute, which requires an identifiable copy of the work to change hands in one of a number of prescribed ways (e.g., sale or lease) for there to be a distribution. The court found it untenable that the definition of a different word in a different section of the statute was meant to expand the meaning of “distribution” and liability to include offers to distribute.

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.