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Yin Huang May 13, 2010
1 Patents 1.1 Diamond v. Chakrabarty . . . . . . . . . . . . . . . . . . . . 1.2 Parke-Davis & Co. v. H. K. Mulford & Co. . . . . . . . . . . 1.3 State Street Bank & Trust Co. v. Signature Financial Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 In re Bilski . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3 4 5 6
2 Copyright 7 2.1 Feist Publications v. Rural Telephone Service . . . . . . . . . 7 2.2 Baker v. Selden . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.3 Morrissey v. Proctor & Gamble . . . . . . . . . . . . . . . . . 9 2.4 CCC Information Services v. Maclean Hunter Market Reports, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.5 Assessment Technologies of Wisconsin, LLC v. WIREdata, Inc. 11 2.6 Sparaco v. Lawler, Matusky & Skelly Engineers LLP . . . . . 12 3 Trademark and Trade Dress 3.1 Qualitex Co. v. Jacobson Products Co., Inc. . . . . 3.2 Zatarain’s, Inc. v. Oak Grove Smokehouse, Inc. . . 3.3 Two Pesos, Inc. v. Taco Cabana, Inc. . . . . . . . . 3.4 Kohler Co. v. Moen Inc. . . . . . . . . . . . . . . . 3.5 In re General Electric Broadcasting Company, Inc. . 3.6 In re Clarke . . . . . . . . . . . . . . . . . . . . . . 4 The 4.1 4.2 4.3 4.4 Right of Publicity Midler v. Ford Motor Co. . . . . . . . . . . White v. Samsung Electronics America, Inc. Wendt I . . . . . . . . . . . . . . . . . . . . Wendt II . . . . . . . . . . . . . . . . . . . . 13 13 14 16 17 18 19 19 19 20 22 23
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5 Term Limits 23 5.1 Eldred v. Ashcroft . . . . . . . . . . . . . . . . . . . . . . . . 23 6 Fair 6.1 6.2 6.3 Use 25 Harper & Row, Publishers, Inc., v. Nation Enterprises . . . . . 25 Sony Corp. of America v. Universal City Studios, Inc. . . . . . 27 Campbell v. Acuﬀ-Rose Music, Inc. . . . . . . . . . . . . . . . 28 2
UMG Recordings, Inc. v. MP3.com, Inc. . . . . . . . . . . . . 29 Anderson v. Stallone . . . . . . . . . . . . . . . . . . . . . . . 30 31 31 33 34 35 37 37 39
7 Remedies 7.1 eBay, Inc. v. MercExchange, LLC . . . . . . . . . . . 7.2 Sony Corp. of America v. Universal City Studios, Inc. 7.3 MGM Studios Inc. v. Grokster, Ltd. . . . . . . . . . . 7.4 Dickinson v. Zurko . . . . . . . . . . . . . . . . . . . 7.5 Harrods Ltd. v. Sixty Internet Domain Names . . . . 7.6 RealNetworks, Inc. v. Streambox, Inc. . . . . . . . . . 7.7 Universal City Studios, Inc. v. Reimerdes . . . . . . .
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Diamond v. Chakrabarty
Chakrabarty appeals the denial of a patent for a man-made microorganism. 1.1.2 Facts
Chakrabarty had developed a new kind of bacterium, which could metabolize hydrocarbons. This metabolism was accomplished through two biochemical pathways hitherto unknown in nature. Because such a feature might well prove useful in the treatment of oil spills, Chakrabarty applied for a patent. In addition to patents on the process for producing the bacteria and the inoculum on which it could be grown, he also applied for a patent on the bacteria themselves. The ﬁrst two patents were granted, but the third was denied. 1.1.3 Issue
Are bacteria with entirely man-made biochemical pathways patent-eligible? 1.1.4 Holding
Such bacteria are patent-eligible.
The standards for granting patents have historically been interpreted broadly, so that a wide range of inventions may qualify as “manufactures” or “compositions of matter” within the deﬁnition of the Patent Act. Here, Chakrabarty has created bacteria with features not existing in nature. This is diﬀerent from the case in which a scientist discovers an existing phenomenon, such as the discovery that two types of bacteria can coexist without interference. Diamond has argued that the Plant Patent Act and related statutes bar patents on living things. This argument is without merit because even those statutes recognized the distinction between naturally occurring things and artiﬁcial things. Diamond’s fears of the consequences of unrestrained research are also unjustiﬁed. Even if research might produce dangerous knowledge, the courts are powerless to regulate the progress of science. Justice Brennan, dissenting. The majority has misread the relevant statutes. The Plant Act and related statutes should be read to prohibit the patenting of living things.
Parke-Davis & Co. v. H. K. Mulford & Co.
Parke-Davis & Co. (P) sued on the theory that H. K. Mulford & Co. (D) had infringed on its patent for adrenaline extracted from animal glands. 1.2.2 Facts
Parke-Davis & Co. (“Parke-Davis”) had developed a new way to isolate adrenaline from the glands of animals. This new isolate was considerably purer than those that had been available and therefore medically superior. Parke-Davis was granted a patent for any substance which possess the physiological characteristics of the isolate. Parke-Davis now sues on the theory that a similar product made by H. K. Mulford & Co. (“Mulford”) infringes on that patent. 1.2.3 Issue
May Parke-Davis patent its form of isolated adrenaline? 4
Parke-Davis may patent its form of isolated adrenaline. 1.2.5 Reasoning
The isolate produced by Parke-Davis is qualitatively diﬀerent from older isolates. Although one might regard Parke-Davis’s product as merely a better puriﬁcation, its isolate diﬀers from previous ones in that Parke-Davis has managed to remove salts and other unwanted components from the crude animal glands. The line between new substances and diﬀerent purities of existing substances should be drawn on the basis of common usage rather than technical distinctions.
State Street Bank & Trust Co. v. Signature Financial Group, Inc.
A dispute arose as to whether Signature could patent a business method tied to a particular machine. 1.3.2 Facts
Signature had developed a system for managing the portfolios of institutional investors. The system, known as “Hub and Spoke,” allowed institutions to pool their resources to facilitate management of funds. When Signature tried to patent the system, the Patent and Trademark Oﬃce (PTO) denied the patent. 1.3.3 Issue
Was the PTO correct in denying the patent? 1.3.4 Holding
The PTO was not correct in denying the patent.
Insofar as the process described in the patent application is tied to a particular machine, the process should not be automatically invalidated for falling under the “mathematical algorithm exception” or the “business method exception” of patent law.
In re Bilski
Bilski appealed the denial of a patent for a business method. 1.4.2 Facts
Bilski had developed a method for hedging risk in the market for commodities. The method essentially created a middleman between buyers and sellers. The middleman’s role was to oﬀer commodities to buyers and sellers at ﬁxed prices, there by insulating those parties from price ﬂuctuations. The Patent and Trademark Oﬃce denied a patent for the method. 1.4.3 Issue
Did the PTO correctly deny the patent? 1.4.4 Holding
The PTO correctly denied the patent. 1.4.5 Reasoning
A claimed process is eligible for a patent only if it (1) is tied to a particular machine or apparatus or (2) transforms an article into a diﬀerent state or thing. Bilski has failed to structure his claim as to fall under either category. Bilski claims nothing more than a method of hedging risk. The method does not form some part of a larger concrete process.
Feist Publications v. Rural Telephone Service
Rural Telephone Service (P) sued for copyright infringement after Feist Publications (D) copied some of the listings from its telephone directory. 2.1.2 Facts
Rural Telephone Service (“Rural”) had published an annual telephone directory in compliance with state law. Feist Publications (“Feist”) was a publisher of a regional telephone directory, which covered a much larger geographic area than directories like those published by Rural. Feist had already obtained licenses to use listings from the directories in much of the area it intended to cover. Rural remained the sole holdout. Unable to negotiate a license, Feist copied the listings it needed without Rural’s permission. After Rural’s investigation revealed that Feist’s directory contained several ﬁctitious listings that Rural had inserted to detect copying, Rural sued for copyright infringement. 2.1.3 Issue
Does Rural hold a copyright over the listings in its telephone directory? 2.1.4 Holding
Rural does not hold a copyright over such listings. 2.1.5 Reasoning
A basic principle of copyright law is that facts are not copyrightable while compilations of facts are. The distinction rests on the presence of originality. Originality exists when independent creation is coupled with a modicum of creativity. This hurdle is low, but it does exist. Facts themselves are not copyrightable because they were not created by any particular person. Compilations of facts are copyrightable only to the extent that the producer of the compilation exercised some creativity in assembling the facts. Here, Rural’s listings are so uncreative as to fall below even the low standard of 7
originality. Rural’s argument that it exercised creativity in selecting the information to be listed fails because such information is required by state law. Rural also cannot argue that alphabetization of the listings constitutes creativity, as alphabetization is so common and standard as to leave no room for discretion.
Baker v. Selden
Selden (P) sued after Baker (D) used a system of bookkeeping that had been set out in a book whose copyright was held by Selden. 2.2.2 Facts
Selden had acquired the copyright to a book that described a system of bookkeeping. The system amounted to a common method of bookkeeping modiﬁed so as to take up less space. Selden subsequently discovered that Baker was using a system substantially similar to the one set out in his book and sued on the theory that Baker’s system infringed on his copyright. 2.2.3 Issue
May a system of bookkeeping be protected solely through the copyright to a book describing that system? 2.2.4 Holding
A system of bookkeeping may not be so protected. 2.2.5 Reasoning
Selden has confused the domain of copyright with that of patent. Copyright can protect only particular expressions of ideas, not the ideas themselves. It would have been proper for Selden to sue if someone had copied his book, but he has no recourse against someone who has merely used the idea the book describes. If Selden wants to protect his system of bookkeeping from use by others, the only way to do so is by obtaining a patent.
Morrissey v. Proctor & Gamble
Morrissey (P) sued after Proctor & Gamble (D) copied the instructions for a sweepstakes organized by Morrissey. 2.3.2 Facts
Morrissey had organized a sweepstakes, providing instructions on how entrants should enter. The instructions stated that entrants should provide their social security numbers, phone numbers, and other basic information. Proctor & Gamble (“P & G”) held a sweepstakes and used similar instructions. Morrisssey then sued P & G for copyright infringement. 2.3.3 Issue
May the instructions for a sweepstakes, which permit of little variation in their expression, be copyrighted? 2.3.4 Holding
Such instructions cannot be copyrighted. 2.3.5 Reasoning
Although copyright generally attaches to any expression that passes muster under the standard of originality, an exception has been carved out in cases where the idea to be expressed allows so few forms of expression that allowing copyright over such expressions would exclude all but a few copyright holders from expressing the idea at all. Instructions for sweepstakes fall into this category.
CCC Information Services v. Maclean Hunter Market Reports, Inc.
Maclean Hunter Market Reports (P) sued CCC Information Services (D) for copyright infringement. 9
Maclean Hunter Market Reports (“Maclean”) publishes the Red Book, a guidebook setting forth the values of used cars throughout the nation. The Red Book gives estimates of the values of many types of vehicles according to make and model as well as geographic region. Values are also adjusted according to the condition of the car, including mileage and certain optional features. The values are not calculated using mathematical formulas. Rather, they reﬂect the editors’ judgment as to how much each kind of car is worth. CCC Information Services (“CCC”) has eﬀectively incorporated the entirety of the Red Book into its own computerized listing of used-car values. 2.4.3 Issue
(1) Does the Red Book have enough originality to qualify for copyright? (2) Is CCC’s use of the information protected by the merger doctrine? (3) Is the information contained in the Red Book part of the public domain? 2.4.4 Holding
(1) The Red Book has enough originality. (2) CCC is not protected by the merger doctrine. (3) The Red Book’s information is not in the public domain. 2.4.5 Reasoning
The court below erred in holding that the Red Book consists of copyrightineligible facts. The evidence plainly points toward the opposite conclusion. The listings in the Red Book are not produced in a formulaic or mechanical way. Rather, each listing involves the discretion of the editors in estimating how much that particular car is worth. Such discretion manifests suﬃcient originality to give rise to copyright protection. Originality also exists in the Red Book’s breakdown of car values by geographic region. The merger doctrine should not be applied to the Red Book listings as these listings are not “ideas” within the meaning of the doctrine. The merger doctrine is intended to protect only “building block” ideas that are essential to the advancement of science and similar pursuits. It is not intended to protect broader ideas, like the listings, which may reﬂect individual tastes and opinions. Expanding the merger doctrine to cover the Red Book listings would leave very little under copyright protection. 10
The mere fact that the government has adopted the Red Book as a standard for insurance payouts does not mean that the Red Book has thereby entered the public domain. Such a holding would be constitutionally problematic under the Takings Clause.
Assessment Technologies of Wisconsin, LLC v. WIREdata, Inc.
Assessment Technologies of Wisconsin (P) sued WIREdata (D) for copyright infringement. 2.5.2 Facts
WIREdata (“Wire”) wanted to obtain data regarding real property for use in real-estate listings. These data included facts such as the owner, address, and valuation of each house. This information was routinely collected by tax assessors and made available by the government. Under Wisconsin’s “open records” law, Wire had already obtained access to the vast majority of data it needed. The exceptions consisted of a few areas where tax assessors used software produced by Assessment Technologies (“AT”) to gather and store the data. Wire sued to compel disclosure of these records. Alarmed by the eﬀorts of Wire, AT brought suit against it for copyright infringement. 2.5.3 Issue
May data that is otherwise publicly available be subject to copyright protection simply by virtue of being stored within proprietary software? 2.5.4 Holding
Such data may not be subject to copyright protection. 2.5.5 Reasoning
Sequestering copyright-ineligible facts within a copyrightable program does not bar others from copying those facts. Wire is not seeking to duplicate AT’s software. Rather, it seeks only to duplicate the facts stored and organized 11
by that software. The facts themselves are not copyrightable, so AT has no basis for a claim. AT also cannot argue that the requisite data are available from handwritten sources. The tax assessors in areas where AT’s software is being used no longer take notes by hand.
Sparaco v. Lawler, Matusky & Skelly Engineers LLP
Sparaco (P) sued Lawler, Matusky & Skelly Engineers (D) after the latter copied the plans he had developed for the construction of a building. 2.6.2 Facts
Sparaco had been hired by a developer to create a city-mandated “site plan” for the construction of an assisted-living facility. Essentially a map detailing the plot of land to be developed, the site plan consisted of information such as the topography of the land, the intended location and footprint of the building, and other landscaping details. Following the completion of the plan, Sparaco registered it as a copyrighted map and technical drawing. Sparaco also executed an agreement with the developer to the eﬀect that the plans would not be used by architects than those originally hired unless Sparaco was additionally compensated. Sometime thereafter, logistical problems evidently forced the developer to hire Lawler Matusky & Skelly Engineers (“Lawler”) to replace the original architects. Sparaco oﬀered to draft a new site plan for Lawler, but the developer refused. Lawler then used a modiﬁed version of Sparaco’s site plan in its own work. The modiﬁed plan was eventually ﬁled with the city. 2.6.3 Issue
May Sparaco claim copyright over the site plan? 2.6.4 Holding
Sparaco may claim copyright over the site plan to the extent that it contains information beyond basic facts.
Although the factual elements of a map, such as the layout of the land, are not copyrightable, elements requiring the discretion of the mapmaker are. These elements include the level of detail, color-coding, and the placement of legends. Although the court below analogized the site plan to an idea that was too general to be copyrighted, this analysis is ﬂawed. Sparaco’s site plan provides suﬃciently concrete detail to facilitate the development of the land. It contains enough speciﬁc expression to fall under copyright protection.
Trademark and Trade Dress
Qualitex Co. v. Jacobson Products Co., Inc.
Qualitex (P) sued Jacobson Products (D) for using a color over which it had claimed trademark. 3.1.2 Facts
Qualitex (“Qualitex”) manufactures pads for use on dry-cleaning machines. The pads have a distinct green-gold color. Jacobson Products (“Jacobson”), a competing maker of dry-cleaning pads, started using the shade on its own products. Qualitex sued Jacobson for trademark infringement. 3.1.3 Issue
May a trademark consist solely of a color? 3.1.4 Holding
A trademark may consist solely of a color. 3.1.5 Reasoning
The essential function of trademark is to identify the source of a product. In doing so, it helps consumers to make purchasing decisions and allows a manufacturer to beneﬁt from its reputation. The courts have allowed trademarks for features such as the shape of a Coca-Cola bottle and the smell 13
of fragrant sewing thread. There is no reason to exclude color. Although color itself does not immediately signify a product’s source, over time it may acquire secondary meaning. When such secondary meaning has attached to a color, it qualiﬁes for trademark protection. Furthermore, color in the current context does not fall under the functionality doctrine, which states that trademark cannot be extended to features that properly fall under the rubric of patents. There is no suggestion that the green-gold color used by Qualitex is peculiarly suitable for the uses to which dry-cleaning pads are put. Jacobson’s arguments against trademarking Qualitex’s color lack merit. Jacobson has argued that the trademarking of colors might lead to color confusion, which might cause consumers to be confused by diﬀerent shades of the same color. This contention fails because courts have regularly allowed trademarks on similar-sounding product names. Courts are competent to evaluate whether one trademark is so similar to another as to cause confusion. Jacobson also argues that colors are in limited supply. This argument fails because color would be protected by the functionality doctrine if such were the case. Finally, Jacobson argues that alternatives other than color exist. This contention begs the question; in some cases, it may not be feasible to use anything other than color as an identiﬁer.
Zatarain’s, Inc. v. Oak Grove Smokehouse, Inc.
Zatarain’s (P) sued Oak Grove Smokehouse (D) for trademark infringement. 3.2.2 Facts
Zatarain’s manufactures prepackaged batter for use in the preparation of fried foods. Among its products are those known as “Fish-Fri” and “Chick-Fri.” Oak Grove Smokehouse (“Oak Grove”) manufactures similar products and designates them by the names “ﬁsh fry” and “chicken fry.” Zatarain’s sued Oak Grove on the theory that the naming of Oak Grove’s products infringed upon Zatarain’s trademarks. 3.2.3 Issue
(1) Does Zatarain’s hold a trademark for the terms “Fish-Fri” and “ChickFri”? (2) If so, does Oak Grove have a fair-use defense against Zatarain’s 14
claims of trademark infringement? 3.2.4 Holding
(1) Zatarain’s holds a trademark for “Fish-Fri” but not “Chick-Fri.” (2) Oak Grove has a fair-use defense. 3.2.5 Reasoning
Whether a term may be trademarked depends on its classiﬁcation. A term may be (1) generic, (2) descriptive, (3) suggestive, (4) arbitrary, or (5) fanciful. Generic terms are categorically barred from trademark protection, as they are essential to the identiﬁcation of a particular type of product. Descriptive terms are usually not eligible for trademark unless they have acquired secondary meaning. The trademark-seeker bears the burden of proving that such secondary meaning exists. Suggestive, arbitrary, and fanciful terms are generally granted trademark protection. The lower court was correct in holding that “Fish-Fri” is a descriptive term with secondary meaning while “Chick-Fri” is not. Both “Fish-Fri” and “Chick-Fri” are descriptive terms, as they are closely connected to the products they describe. There are a limited number of ways to described fried ﬁsh and fried chicken. The existence of other possible terms for describing such food does not elevate either of Zatarain’s terms above the status of descriptive terms. The evidence shows that Zatarain’s has spent considerable amounts of money in promoting Fish-Fri. Surveys show that the term “Fish-Fri” has consequently come to be associated with Zatarain’s product in particular. These facts establish secondary meaning for the term “FishFri.” The evidence, however, does not allow a similar conclusion as to any secondary meaning surrounding “Chick-Fri.” Oak Grove has a fair-use defense in the case of Fish-Fri. Zatarin’s has no claim to the use of “ﬁsh fry” in the purely descriptive sense. Oak Grove used the term in good faith and packaged its products in such a way as to avoid confusion with those of Zatarain’s. Confusion at the point of purchase would be nearly impossible.
Two Pesos, Inc. v. Taco Cabana, Inc.
Taco Cabana (P) sued Two Pesos (D) for infringing its trade dress. 3.3.2 Facts
Taco Cabana operated a chain of Mexican restaurants in the San Antonio area. The restaurants had Mexican-themed decor, which consisted of bright colors, paintings, awnings, and Mexican artifacts. Two Pesos, a newer restaurant chain, operated restaurants with similar decors in Houston and other cities, though its market has never included San Antonio. Sometime thereafter, Taco Cabana expanded into Two Pesos’s market and sued Two Pesos for infringement of trade dress. The jury found that Taco Cabana had a trade dress that was inherently distinctive but without secondary meaning. 3.3.3 Issue
May a trade dress that is inherently distinctive receive protection under the Lanham Act even though it lacks secondary meaning? 3.3.4 Holding
Such a trade dress may receive protection. 3.3.5 Reasoning
The Lanham Act says nothing about secondary meaning in relation to trade dress. It would be improper to read such a requirement into the Act, for doing so might place a burden on upstart businesses. Such businesses would be unable to protect their trade dress until they had operated for long enough for that trade dress to acquire secondary meaning. Denying protection for inherently distinctive trade dress would also allow competitors to copy such trade dress without consequence.
Kohler Co. v. Moen Inc.
Kohler objected to Moen’s attempt to obtain trademark protection for the shape of its faucet handles. 3.4.2 Facts
Moen sought trademark protection for the distinctive design of its faucet handles. In support of its request, Moan produced voluminous evidence showing that the design of the faucet handles were distinctive and non-functional. The evidence included a survey showing that a vast majority of respondents identiﬁed the design of the handles with Moen. Kohler thereafter sued, arguing that the granting of a trademark would give Moen advantages normally available only through patent. 3.4.3 Issue
May the design of a faucet handle receive protection as a trademark? 3.4.4 Holding
The design of a faucet handle may receive such protection. 3.4.5 Reasoning
Kohler contests the trademark on the theories (1) that the trademark would eﬀectively grant a perpetual patent and (2) that it would be anticompetitive. Both contentions lack merit. Trademark law is distinct from patent in that it does not address functional elements. Trademark is not anticompetitive because the supply of distinctive names and symbols for use as identifying marks is practically inﬁnite. Granting a “monopoly” in the use of one particular trademark has no eﬀect on competing businesses. Cudahy, Circuit Judge, dissenting. The particular conﬁguration of a product, such as a faucet, should be considered generic. In granting a trademark over such a feature, the Patent and Trademark Oﬃce has eﬀectively oﬀered protection that should only be available through a patent.
In re General Electric Broadcasting Company, Inc.
General Electric Broadcasting Company (“General Electric”) sought to register as a service mark the sound of a ship’s bell. 3.5.2 Facts
General Electric operates a radio station. At each half hour, the station tells listeners the time by playing a recording of a ship’s bell with the appropriate number of rings. The sound is then followed by a verbal announcement of the time. General Electric applied for protection of the sound as a service mark, but protection was denied. 3.5.3 Issue
May the ringing of a ship’s bell act as a service mark? 3.5.4 Holding
The ringing of a ship’s bell may not act as a service mark absent evidence that it indicates to listeners the producer of the sound. 3.5.5 Reasoning
The Lanham Act expressly states that no trademark should be refused registration on account of its nature. Under this standard, a variety of sounds have been registered as service marks. These include the sound of a creaking door, the ringing of the Liberty Bell, and a series of musical notes. There is, however, a distinction between “distinctive” and “commonplace” sounds. While distinctive sounds are registered without additional evidence, a commonplace sound must be shown to have acquired secondary meaning. Because General Electric has produced no evidence of such secondary meaning, the service mark must be denied.
In re Clarke
Clarke sought trademark protection for scented sewing thread and embroidery yarn. 3.6.2 Facts
Clarke sells scented sewing thread and embroidery yarn. Clarke has submitted declarations and evidence showing that no other businesses sell scented yarn and that the scent has come to identify her products. 3.6.3 Issue
May a scent be protected as a trademark? 3.6.4 Holding
A scent may be protected as a trademark. 3.6.5 Reasoning
The Examining Attorney below has argued that a smell cannot qualify as a trademark because it is merely a pleasant feature of the product rather than an identiﬁer of its source. This contention lacks merit in light of the evidence. Fragrance is not a natural characteristic of thread or yarn. Clarke has spent considerable resources and eﬀort promoting this peculiar aspect of her products. That she has not adverted to a particular smell as the trademark should not prevent the scent from serving as such.
The Right of Publicity
Midler v. Ford Motor Co.
Midler (P) sued Ford Motor Company (D) for using a likeness of her voice without permission.
Ford Motor Company (“Ford”) had proposed to hire Midler to sing for a commercial, but Midler refused. Ford, which held a license to use the intended song itself, then hired a diﬀerent singer to imitate Midler’s voice. The result was so convincing as to be virtually indistinguishable from Midler’s own singing. The commercial made no explicit references to Midler; only the likeness of her voice was used. 4.1.3 Issue
May a famous singer recover from a party that uses a likeness of her voice without permission? 4.1.4 Holding
Such a singer may recover. 4.1.5 Reasoning
It is important to realize that this case does not fall under the scope of copyright or conventional deﬁnitions of the unauthorized use of one’s identity. Copyright law oﬀers no protection against imitations of a particular singer’s rendition of a song. Likewise, Midler cannot claim that Ford used her identity improperly since the commercial does not make use of her name, voice, signature, or other identifying features. Nonetheless, Midler should recover for Ford’s unauthorized use of a likeness of her voice. A voice, just like a face, is an identifying feature protected by the law. Ford itself admitted that payment would be appropriate when it ﬁrst sought to hire Midler and, when eﬀorts failed, to replace her with a sound-alike.
White v. Samsung Electronics America, Inc.
Vanna White (P) sued Samsung Electronics America (D) for evoking her identity in an television commercial.
Samsung Electronics America (“Samsung”) produced a television commercial that showed a robot standing in front of the Wheel of Fortune game board. White sued Samsung for “appropriating her identity.” 4.2.3 Issue
Does Samsung’s commercial infringe White’s right of publicity? 4.2.4 Holding
The commercial infringes White’s right of publicity. 4.2.5 Reasoning
Kozinski, Circuit Judge, dissenting. The majority has erred by granted celebrities a sweeping right that drastically expands the protections normally aﬀorded by intellectual-property laws. Samsung has not used an actual likeness of White in its commercial. In fact, the eﬀectiveness of the commercial depends not on the robot itself but the fact that it is standing in front of the Wheel of Fortune game board. Without the game board, no one would recognize the robot as a parody of White. The majority has eﬀectively granted White an exclusive right to what she does for a living. The majority’s decision also runs afoul of the Copyright Act by hindering the production of parodies protected by the Act. Under the decision, even a copyright holder might be prevented from licensing his work for use in a parody because he may have to obtain the consent of every actor or celebrity appearing in the work. In the worst case, the producer of a parody in one might ﬁnd himself sued by some minor celebrity from another state even though the producer in all likelihood knew nothing of the celebrity before. Finally, the majority’s decision is a breathtaking infringement of the First Amendment. It tries to limit the very process of reminding the public of a celebrity. The limitations imposed by the majority will tend to impoverish the public domain and hinder the future development of artistic works.
Wendt v. Host Int’l, Inc., 125 F.3d 806 (9th Cir. 1997) 4.3.2 Overview
Wendt (P) sued Host International for improper use of his likeness. 4.3.3 Facts
George Wendt (P) and John Ratzenberger, actors on the television show Cheers, sued Host International (“Host”) for improper use of their images. Host had created animatronic robots resembling the two actors and placed them outside airport bars. The robots were displayed in a setting similar to the bar shown in Cheers. The trial court granted summary judgment in favor of Host on grounds that Wendt had failed to establish any genuine dispute as to whether the robots actually looked like their real-life counterparts. 4.3.4 Issue
Has Wendt raised a genuine dispute as to a material fact in claiming that the robots resemble Ratzenberger and him? 4.3.5 Holding
Wendt has raised such an issue. 4.3.6 Reasoning
The trial court should have submitted the question of whether the robots resembled Wendt and Ratzenberger to a jury instead of ruling as a matter of law. The robots, however, should be viewed independently of the context in which they are displayed. The common-law right of publicity protects an individual from all forms of improper exploitation of his or her image, including infringement through animatronic robots. Host cannot claim that is actually producing a likeness of the actors’ respective characters in the show as opposed to the actors themselves; an actor does not give up his right to publicity by portraying a ﬁctional character. 22
Wendt v. Host Int’l, Inc., 197 F.3d 1284 (9th Cir. 1999) 4.4.2 Holding
The Ninth Circuit declined to rehear Wendt I. 4.4.3 Reasoning
Kozinski, Circuit Judge, dissenting. A scenario feared in White v. Samsung has come to pass. Here, a copyright holder is struggling with actors over who may ultimately permit the creation of derivative works. Under the Copyright Act, there would be no question that Host, having permission from Paramount Studios to use the characters from Cheers, is entitled to set up the animatronic robots. The drastic extension of publicity rights in White v. Samsung, however, has allowed Wendt and Ratzenberger to challenge what would otherwise be a completely legitimate use of their characters. The majority’s decision here makes it very diﬃcult for a copyright holder to dictate any way in which its copyrighted work might be used, as there is often no meaningful distinction between exploiting the likeness of a character and exploiting the likeness of the actor portraying that character.
Eldred v. Ashcroft
Eldred seeks to invalidate the Copyright Term Extension Act (“CTEA”). 5.1.2 Facts
Eldred and other petitioners make use of copyrighted works that entered the public domain. They challenge the CTEA on several constitutional grounds.
(1) Does the extension of the term of copyright protection violate the constitutional provision of a “limited” term of copyright? (2) Does the CTEA “promote the Progress of Science”? (3) Does the CTEA amount to an unconstitutional regulation of free speech? 5.1.4 Holding
(1) The extension of copyright does not violate any constitutional provisions. (2) The CTEA does “promote the Progress of Science.” (3) The CTEA is not an unconstitutional regulation of free speech. 5.1.5 Reasoning
Congress has historically enacted copyright extensions without question as to the constitutionality of its measures. Eldred does not argue that the new copyright term granted by the CTEA violates the constitutional requirement of a “limited” term. Rather, he argues only that retroactive application of the term to existing works would be unconstitutional. Congress has explicitly stated that the uniform application of copyright extensions is intended to preserve fairness, so that authors are not aﬀorded greater or lesser protection depending on when they happen to publish their works. In any case, the length of copyright term lies generally within the discretion of Congress. It is also within the discretion of Congress to decide what is the best way of advancing the objectives of the Copyright Clause. Eldred argues that the Copyright Clause is intended to secure a quid pro quo: the author receives copyright protection now in exchange releasing the work to the public domain later. The history of copyright legislation, however, shows that this quid pro quo should be understood to include extensions of copyright. Congress is at liberty to write a guarantee of future extension into legislation. It also has the power to achieve the same eﬀect through historical precedent. Eldred also contends without merit that the CTEA amounts to an unconstitutional restriction on free speech. To the contrary, the purpose of the Copyright Clause is to promote the creation and publication of free expression. To that end, copyright law already contains provisions to guarantee free speech. Ideas are not copyrightable, and the free-use defense allows the copying of works for purposes like academic research and parody.
Justice Stevens, dissenting. Although early congressional decisions should be aﬀorded deference on the grounds that they reﬂect the intentions of the framers, later decisions are not entitled to such judicial leeway. The Copyright Act of 1831 in no way reﬂects the intentions of the framers, who were long dead by then. It does not establish the constitutionality of copyright extensions. Under the majority’s analysis, Congress would have the power to extend copyright indeﬁnitely. Justice Breyer, dissenting. The majority has given Congress the leeway to grant an eﬀectively perpetual copyright that beneﬁts private parties. From the standpoint of the author, there is nor real diﬀerence between a copyright of the current length and a perpetual copyright. Because royalties tend to decay as a work gets older, the regime established by the CTEA already grants more than 99% of the value that can be expected to be derived from a perpetual copyright in any case. It is absurd to suggest that extension of copyright beyond the death of an author would somehow encourage an author to produce more works during his or her lifetime. Rather, the primary eﬀect would be to make it diﬃcult for the public to make use of the work, even after its commercial value has long since disappeared. In fact the “limited time” provision was intended speciﬁcally to avoid the sort of situation that the CTEA has created.
Harper & Row, Publishers, Inc., v. Nation Enterprises
Harper & Row (P) sued Nation Enterprises (D) for making unauthorized use of excerpts from the memoir of Gerald Ford. 6.1.2 Facts
Harper & Row (“Harper”) was about to publish a memoir written by former president Gerald Ford. It had reached an agreement with Time magazine, under which Time would pay for permission to publish excerpts from the memoir before the release of the book. Nation Enterprises (“Nation”), the 25
publisher of Nation magazine, apparently obtained a leaked copy of the memoir. Nation then proceeded to lift excerpts from the copy and to incorporate those excerpts into a story of its own. The Nation story was designed to “scoop” (i.e., preempt) the story that Time had been planning. When the Nation story was published, Time refused to pay Harper the full fee for access to the memoir. Harper then sued Nation. 6.1.3 Issue
Does Nation’s use of the excerpts qualify as “fair use”? 6.1.4 Holding
Nation’s use does not qualify as fair use. 6.1.5 Reasoning
Although the doctrine of fair use was intended to protect First Amendment free speech, its applicability is especially narrow when unpublished works are at issue. The right to control publication is an essential right aﬀorded by copyright law. Without the ability to control the release of a work and to market the work beforehand, authors would have little incentive to create works in the ﬁrst place. Nation should not be permitted to carry out infringement of a soon-to-be-published work under the guise of news reporting. If every memoir by a public ﬁgure could be appropriated by non-paying publishers, then no such memoir would ever be able to earn its author a proﬁt. Congress has provided four factors for evaluating whether a particular use is fair use: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the substantiality of the portion used in relation to the copyrighted work as a whole; (4) the eﬀect on the potential market for or value of the copyrighted work. Here, Nation has made (1) a blatant attempt to proﬁt from the leaked manuscripts. It does not even pretend to have any innocent motive. Nation has also (2) copied a manuscript of significant expressive value. Employees of Harper and Time were required to sign conﬁdentiality agreements prior to accessing the material. Although Nation copied only a small portion of the manuscript, it lifted (3) the most powerful passages. Finally, there is a (4) real possibility that Nation’s unauthorized publication will prove detrimental to sales of the actual book. 26
Sony Corp. of America v. Universal City Studios, Inc.
Universal City Studios (“Universal”) (P) sued Sony Corporation of America (“Sony”) (D) for facilitating copyright infringement. 6.2.2 Facts
Sony had just introduced its Betamax VCR. Users of these new VCRs began to record shows for the purpose of “time-shifting,” or viewing the said shows at times other than their broadcast times. The trial evidence showed that the majority of users owned ten or fewer tapes and that more than half of users did not plan to re-watch recorded shows. Universal sued on the theory that Sony was liable for indirect infringement of its copyright on TV shows. 6.2.3 Issue
(1) Are there substantial non-infringing uses of Sony’s VCRs? (2) Does unauthorized time-shifting qualify as fair use? 6.2.4 Holding
(1) There are substantial non-infringing uses of Sony’s VCRs. (2) Unauthorized time-shifting qualiﬁes as fair use. 6.2.5 Reasoning
(1) Indirect liability exists only if there are no substantial non-infringing uses of the VCRs. Here, the facts show that non-infringing uses do exists. Universal’s programs account for less than 10% of all programming on the air. The relief requested by Universal would be too broad because it would categorically bar the use of VCRs for recording TV shows, even if the copyright holders to those programs consented to such recording. The record shows that a substantial fraction of content owners would not object to the recording of their shows. (2) Time-shifting, even if unauthorized, nonetheless qualiﬁes as fair use. The Copyright Act requires courts to weigh factors such as the commercial or non-commercial nature of the use and the potential impact of the use on 27
the market for the copyrighted work. Here, time-shifting is plainly a noncommercial use. The non-commercial nature of time-shifting the burden of proving probable harm onto Universal. Universal, in turn, has failed to carry this burden. Although Universal contends that time-shifting runs afoul of “a point of philosophy,” it has not adverted to any factual basis for fears that time-shifting would erode its market.
Campbell v. Acuﬀ-Rose Music, Inc.
Acuﬀ-Rose Music (“Acuﬀ-Rose”) (P) sued Campbell (D) for writing a parody of a song. 6.3.2 Facts
Campbell and his band, 2 Live Crew, had written a parody of the song “Pretty Woman,” whose copyright had been assigned to Acuﬀ-Rose. Prior to releasing the parody, Campbell requested permission from Acuﬀ-Rose to market the parody. The request made it clear that Campbell would credit AcuﬀRose for the original song. After Acuﬀ-Rose refused, Campbell nonetheless released the parody, which became a success. Acuﬀ-Rose then sued Campbell for copyright infringement. 6.3.3 Issue
Does the parody qualify as fair use? 6.3.4 Holding
The parody qualiﬁes as fair use. 6.3.5 Reasoning
The Copyright Act requires the courts to evaluate four factors when deciding whether a particular use qualiﬁes as fair use: (1) the purpose and character of the use, (2) the nature of the copyrighted work, (3) the amount and substantiality of the portion used in relation to the copyrighted work as a
whole, and (4) the eﬀect of the use upon the potential market of the copyrighted work. For a parody, it is important under criterion (1) whether the work makes a suﬃcient attempt to ridicule the original. It does not matter whether the parody is artful or in good taste. Here, the alteration of the lyrics of the original amounts to a suﬃcient “transformation” of the original that Campbell’s work may be said to ridicule, rather than copy, the original. Criterion (2) is of little help in the current case because it contemplates derivative works other than parodies. Criterion (3) entails some of the factors considered under criterion (1) since the context of the derivative work is important. Parody, by deﬁnition, must copy enough of the original to be recognizable. As long as the copying is not excessive, fair use should be found. Here, Campbell copied only the opening lines, changing the lyrics drastically as the song progressed. In all, he copied no more than was necessary. It is unlikely for the purposes of criterion (4) that the parody would signiﬁcantly reduce the market for the original work.
UMG Recordings, Inc. v. MP3.com, Inc.
UMG Recordings (“UMG”) (P) sued MP3.com (D) for copyright infringement. 6.4.2 Facts
MP3.com had introduced a new service that allowed users to stream copyrighted music from the Internet to their computers. MP3.com had evidently obtained copies of the songs in question by converting thousands of recordings into MP3 format. Although UMG held the copyright to the music in question, MP3.com required users to verify that they owned a copy of the album by inserting the CD containing the album into the computer for a few seconds. Immediately upon veriﬁcation, the user was allowed to stream the music from the Internet. When UMG sued for copyright infringement, MP3.com argued that its service was fair use. 6.4.3 Issue
Does the service oﬀered by MP3.com qualify as fair use?
The service does not qualify as fair use. 6.4.5 Reasoning
MP3.com’s service fails every factor the four-factor test for fair use stated in the Copyright Act. With regard to (1) the purpose and character of the use, MP3.com has simply copied the recordings owned by UMG. There is no attempt to “transform” the music. Although MP3.com contends that oﬀering the music online should be considered transformative, simply shifting the content from one medium to another has never held to be an adequate defense against an infringement claim. With regard to (2) the nature of the copyrighted work, there is no question that MP3.com has infringed the copyrighted “core” of the works in question. With regard to (3) the amount and substantiality of the portion copied in relation to the original work, there is again no question that MP3.com has carried out a wholesale copying of UMG’s music. With regard to (4) the eﬀect of the use upon the potential market for the copyrighted work, MP3.com has taken actions detrimental to any such market. MP3.com cannot argue that it is operating in a market as yet unexplored by the copyright holder. The copyright holder has the sole prerogative of entering new markets. In any case, the record shows that UMG has already made eﬀorts to distribute its music online by entering into various licensing agreements.
Anderson v. Stallone
Anderson (P) sued Stallone (D) for copying an idea for a movie. 6.5.2 Facts
Stallone had already starred in the movies Rocky I, II, and III. Stallone was ﬂeshing out the idea for Rocky IV when Anderson wrote out his own idea for the movie. Anderson subsequently met with studio executives, who apparently promised that Anderson would receive payment if his idea was used in connection with the movie. Sometime thereafter, Stallone revealed that Rocky IV would indeed revolve around Anderson’s ideas. Anderson, 30
however, learned that he would receive no payment after all. Anderson sued Stallone for infringing the copyright on the treatment of Rocky IV. 6.5.3 Issue
Is Stallone liable for infringing any copyright protecting Anderson’s treatment? 6.5.4 Holding
Stallone is not liable for any such infringement. 6.5.5 Reasoning
Anderson is not entitled to relief because his treatment essentially copies characters created by Stallone. The copying of material created by Stallone is so pervasive throughout Anderson’s treatment that it is entitled to no copyright protection at all. As shown by the facts determined at trial, the characters in Anderson’s treatment were not merely similar to those created by Stallone; they were wholesale copies. Furthermore, Anderson has advanced no basis in precedent for his extraordinary claim that the creator of an unauthorized derivative work is entitled to recover against the original copyright holder for making use of part of that derivative work.
eBay, Inc. v. MercExchange, LLC
MercExchange (P) sued eBay (D) for infringing a patent on online auctions. 7.1.2 Facts
MercExchange had obtained a patent for an electronic marketplace in which a centralized authority facilitated the sale of goods between individuals. Although MercExchange attempted to license the technology to eBay, eBay apparently declined to accept any licensing agreement and instead launched its own auction site. MercExchange then sued for patent infringement. The 31
district court held that an injunction against eBay should automatically issue. The Court of Appeals held that an injunction should be granted only in extraordinary cases. 7.1.3 Issue
What should be the standard for granting injunctions in patent cases? 7.1.4 Holding
The courts should use the traditional four-factor test in determining whether an injunction should issue in a case of patent infringement. 7.1.5 Reasoning
It is settled law that the a plaintiﬀ must demonstrate (1) that it has suﬀered an irreparable injury; (2) that remedies available at law are inadequate; (3) that a remedy in equity is warranted after considering the balance of hardships between plaintiﬀ and defendant; and (4) that an injunction would be consistent with the public interest. The district court and the Court of Appeals both erred by applying broad rules instead of engaging in the traditional four-factor analysis. The district court erred by holding that injunctions should not issue absent special circumstances while the Court of Appeals erred in the opposite direction by holding that injunctions should issue as a matter of course. In particular, the district court incorrectly suggested that non-practicing patent-holders were subject to a presumption against harm. There exist many patent holders, such as university researchers, who because of ﬁnancial limitations or other reasons may prefer to license their inventions rather than develop them directly. Such individuals should not be denied the protection of patents. This Court has consistently has consistently rejected attempts to replace equitable principles with inﬂexible rules. Chief Justice Roberts, with whom Justice Scalia and Justice Ginsburg join, concurring. Although the Court reaches the correct conclusion, it should have given more consideration to issue arising uniquely in the context of patents. If earlier cases have consistently granted injunctions after applying the four-factor test, then such precedent may suggest that an injunction is indeed the appropriate remedy for the majority of patent
disputes. The Court should take into account the peculiar nature by which some patent holders might choose to proﬁt from their patents. In particular, a growing number of ﬁrms now acquire patents with the sole intention of extracting licensing fees from the actual producers of the patented technologies. The Court should be careful to prevent injunctions from becoming a means of extracting exorbitant payments from licensees.
Sony Corp. of America v. Universal City Studios, Inc. (cont’d)
Please see the facts stated above. 7.2.2 Issue
Has Sony incurred indirect liability for copyright infringement through its sale of VCRs? 7.2.3 Holding
Sony has not incurred indirect liability. 7.2.4 Reasoning
Universal has failed to carry its burden of proving that Sony should be held responsible for any infringement committed by the users of Betamax VCRs. It is insuﬃcient merely to allege that a particular piece of equipment could conceivably be used for infringement. Rather, it is necessary to show that Sony had actual or constructive knowledge that the buyers of its VCRs would be likely to engage in copyright infringement. The record shows that no such knowledge exists. Sony had no direct contact with customers aside from the actual sale of each VCR itself. No Sony employee participated in the infringing activities of its consumers, and there is no evidence to suggest that any infringing consumer acted on the suggestions of Sony’s advertisements. Furthermore, the rule that should be applied in the current case should be analogized to the “staple article of commerce doctrine” long used in patent law. That doctrine states that a product should not be considered to facilitating infringement unless it is capable only of infringing uses. 33
MGM Studios Inc. v. Grokster, Ltd.
MGM Studios (“MGM”) (P) sued Grokster (D) and StreamCast Networks (“StreamCast”) (D) for facilitating copyright infringement by distributing Kazaa ﬁle-sharing software. 7.3.2 Facts
Grokster and StreamCast distributed similar peer-to-peer ﬁle-sharing software. Although the software was capable of being used for non-infringing purposes, the trial evidence showed that more than 90% of the ﬁles shared using the software were unauthorized copies of songs and movies, including those owned by MGM. The evidence also showed that both companies had developed their software in the wake of the litigation surrounding Napster and that their aim was to capture as many Napster users as possible. To this end, StreamCast developed Napster-compatible software for the purpose of inducing Napster users to switch to its service. Grokster promoted itself to Napster users through similar means. In addition, both companies openly acknowledged that substantial numbers of their users were committing copyright infringement. Both companies responded to e-mails from users asking about copyright issues, and on one occasion legal counsel remarked that a lawsuit would be good for publicity. 7.3.3 Issue
Should Grokster and StreamCast be secondarily liable for copyright infringement? 7.3.4 Holding
Grokster and StreamCast should be liable. 7.3.5 Reasoning
The Court of Appeals erred in holding that Grokster and StreamCast may escape liability simply because their products are capable of non-infringing uses. In reaching this conclusion, the court below has interpreted the rule established in Sony far too broadly. There, the court addressed the extent to 34
which secondary liability could be based on an inference that the technology in question allowed no substantial uses other than infringement. Where the outcome turns on such inferences alone, a court is not allowed to ﬁnd liability when signiﬁcant non-infringing uses exist. By contrast, the case here turns on direct evidence rather than inferences. The Sony rule does not limit liability when direct evidence of knowledge of infringement exists. The record establishes beyond dispute that Grokster and StreamCast knew of the infringing activities of its users and that both companies in fact encouraged that infringement. Both companies attempted to position themselves as Napster substitutes, directly oﬀering users advice on the potential legal ramiﬁcations of ﬁle-sharing. That both companies derive most of their revenue from advertising, as opposed to the shared content itself, and their failure to actively restrain the sharing of copyrighted content strongly suggests that they are turning a blind eye to infringement. Justice Ginsburg, with whom the Chief Justice and Justice Kennedy join, concurring. There was no evidence to permit any serious suggestion that appreciable levels of fair use were taking place. The absence of fair use strongly suggests that secondary liability should be found. Justice Breyer, with whom Justice Stevens and Justice O’Connor join, concurring. It is unnecessary to reinterpret the Sony standard as the Court suggests. Rather, it is enough simply to hold that the mere 10% of shared ﬁles that do not infringe copyright is insuﬃcient to meet the criterion of “substantial” non-infringing uses.
Dickinson v. Zurko
A dispute arose as to the standard of review to be applied when the Court of Appeals for the Federal Circuit (“CAFC”) reviews the decisions of the Patent and Trademark Oﬃce (“PTO”). 7.4.2 Facts
Zurko applied for a patent, but the PTO denied the patent on the ground that the invention was obvious in light of prior art. Zurko then sought review 35
by the CAFC, which concluded that it should apply the court/court standard of review. 7.4.3 Issue
What standard should the CAFC use in reviewing decisions of the PTO? 7.4.4 Holding
The CAFC should use the court/agency standard. 7.4.5 Reasoning
The Administrative Procedure Act (“APA”) set forth a standard for appellate review of the decisions of executive agencies. The APA speciﬁes that appellate courts are to use a court/agency standard of review as opposed to the court/court standard used in reviewing the decisions of trial courts. The court/agency standard is predicated on whether a “reasonable mind” would accept the evidence supporting a certain conclusion whereas the court/court standard requires the reviewing judge to have a “deﬁnite and ﬁrm conviction” that the lower judge has created a factual error. The former is generally considered to accord greater deference to the agency under review. Although Dickinson argues that precedent has established the court/court standard as an “additional requirement” as deﬁned in the APA, he has failed to produce suﬃcient evidence to support this view. In particular, the APA expressly states that any such requirement should be recognized “by law” as opposed to common usage alone. A survey of the case law reveals that no consensus actually exists as to use of the court/court standard in reviewing agency decisions. Ruling in favor of Dickinson would tend to create rather than to resolve problems surrounding the standard of review. Chief Justice Rehnquist, with whom Justice Kennedy and Justice Ginsburg join, dissenting. The practice of the patent bar and the CAFC does support the contention that the court/court standard should be viewed as an ‘additional requirement” as deﬁned in the APA.
Harrods Ltd. v. Sixty Internet Domain Names
Harrods (P) commenced an in rem action for domain names that allegedly infringed its trademark. 7.5.2 Facts
Harrods had formed several subsidiaries in South America. Eventually, Harrods severed its ties with subsidiaries, leaving them to operate as independent businesses. When the subsidiaries registered domain names similar to those used by Harrods, Harrods sued under the Anticybersquatting Consumer Protection Act (ACPA). 7.5.3 Issue
Is bad faith in registering domain names a prerequisite to in rem liability under the ACPA? 7.5.4 Holding
Bad faith is a prerequisite to in rem liability. 7.5.5 Reasoning
The text and legislative history of the ACPA makes it clear that a plaintiﬀ must allege bad faith, even in an in rem action. Indeed, the ACPA is intended to protect consumers against purposeful attempts to proﬁt from the goodwill of established businesses, not to prevent persons from registering domain names for legitimate uses. The plaintiﬀ’s concerns that the bad-faith rule would make it diﬃcult to prevail in an in rem action are unfounded. The very fact that an in rem action is necessary points to bad faith on the part of the registrant.
RealNetworks, Inc. v. Streambox, Inc.
RealNetworks (P) sued Streambox (D) under the DMCA for distributing a circumvention device. 37
RealNetworks had established a system for streaming multimedia ﬁles from content providers’ servers to users’ computers. The system consisted of RealServer software, which content providers used to serve content, and RealPlayer software, which allowed end users to access content arriving from RealServers. The system contained two measures designed to prevent users from making unauthorized copies of streamed content. First, RealServer and RealPlayer engage in an authentication process known as the “Secret Handshake,” by which RealServer ascertains that it is indeed communicating with RealPlayer. Following the Secret Handshake, RealPlayer then detects a “Copy Switch” in the streamed content, which speciﬁes whether the consumer may download a separate copy of the content. The facts showed that many content providers had chosen to distribute their content through RealPlayer because of the copy protection it aﬀorded. Streambox produced Streambox VCR software, which masquerades as RealPlayer and ignores the Copy Switch. By this means, Streambox VCR allows users to make unauthorized copies of streamed content. 7.6.3 Issue
Does the DMCA prohibit the distribution of Streambox VCR? 7.6.4 Holding
The DMCA prohibits the distribution of Streambox VCR. 7.6.5 Reasoning
The Secret Handshake and Copy Switch plainly constitute a “technological measure” that “eﬀectively controls access” to content under the DMCA. Streambox VCR “circumvents” these measures by masquerading as RealPlayer and ignoring the Copy Switch. It is important to note that “eﬀective” protection need not provide ironclad or even signiﬁcant protection against eﬀorts to bypass restrictions on copying. Rather, all that is required is for the measure to prevent copying in the ordinary course of use. Streambox has violated the DMCA because its software is (1) primarily designed to facilitate circumvention and (2) has limited signiﬁcant purposes beyond circumvention. This case diﬀers from Sony. There, some copyright holders had at least implicitly 38
consented to copying. Here, copyright holders have chosen RealNetworks speciﬁcally because it disallows copying.
Universal City Studios, Inc. v. Reimerdes
A dispute arose as to whether the software DeCSS violated the DMCA. 7.7.2 Facts
DeCSS was a computer program that bypassed the encryption scheme that normally rendered DVD video inaccessible to devices that failed to provide the correct decryption key. Manufacturers of DVD players were required to pay movie studios, such as Universal, for licenses to the decryption keys. After being enjoined from distributing DeCSS, the defendants engaged in “electronic civil disobedience” by urging other websites to distribute DeCSS and providing links from its website to those sites. 7.7.3 Issue
Did the defendant’s actions violate the DMCA’s prohibition on traﬃcking in circumvention devices? 7.7.4 Holding
The defendant’s actions so violate the DMCA. 7.7.5 Reasoning
The defendant ﬁrst argues that that “eﬀective” control of access under the DMCA necessitates resistance against attempts at circumvention. This construction of the statute is ﬂawed because it would prevent the courts from enforcing its anti-circumvention provisions precisely where those provisions are needed. The defendant has not shown that DeCSS was undertaken with any legitimate research goals, so it does not fall under the DMCA’s reverseengineering exception. Furthermore, the doctrine of fair use does not protect the defendant here; the defendant is being sued for circumvention, not for the copying of any content.
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