Addressing legal issues with the latest technological developments and social media trends.
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Augmented reality (sometimes referred to as Mixed Reality) will likely get a boost from Canon’s vision for the future of imaging. The following is an excerpt from an announcement about Canon’s upcoming EXPO in NY.

 

Canon EXPO 2010 New York will feature the “Imaging for Tomorrow” exhibit
showcasing new technologies that will enhance people’s lives and offers a
preview of Canon’s vision for the future of imaging. Capitalizing on the
significant developments in display technology and cameras, the exhibit will
include Canon’s mixed-reality initiative, which uses computers to combine the
real and virtual worlds in real-time, creating a visual experience in which
users can not only “see” images in a visual space, but also control and create
them. Canon’s Mixed Reality system utilizes a head-mounted display with built-in
cameras and a computer that processes video to blend real and virtual realities.

 

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In the real world (at least in the US), the 5th Amendment to the Constitution states, “No person shall … be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” A host of jurisprudence has determined what the government is, and is not, allowed to do affecting property owned by private citizens. With an announcement from Linden Labs that the Teen Grid in Second Life will be shutting down on Dec. 31, a number of users are discovering that there’s no such protection in a privately owned virtual world.

According to this article, those who have invested in developing content and educational tools for use in Second Life Teen are faced with the question of whether to transfer to another platform or give up using the tools they’ve developed. The situation illustrates the catch-22 facing those who want to invest significant time, energy and resources into developing virtual world real estate when the owner of the platform has the right to take away that real estate without compensating the members of the community for “taking” their property rights in the virtual world away.

As discussed further in this post, Linden Research Inc. and its CEO Philip Rosedale have already been named as defendants in a class action lawsuit relating to the ownership status of virtual property in Second Life. Interestingly, the home page for Teen Second Life still includes, “Click here for a FREE Lifetime Basic account.” It isn’t clear what Linden plans to do with all of its teen members, since Second Life includes more adult interactions and content and currently requires users to be over 18. The Teen Second Life page also still advertises the monthly rental pricing for virtual land on the Teen Second Life grid.

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Thumbnail image for blizzard.pngA California Court ruled last week in favor of Blizzard, finding that Scapegaming (a.k.a. Alyson Reeves) ran an unauthorized secondary market that handled microtransactions in violation of the World of Warcraft terms of service. Blizzard sued Scapegaming last October for copyright infringement. The court awarded about $88 million dollars, including about $64,000 in attorney’s fees and over $85 million in statutory damages.

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Thumbnail image for Thumbnail image for logo1w.pngA federal court dismissed on summary judgment most of the copyright infringement claims against Google, ruling, in part, that Plaintiff’s notices were not compliant with the requirements of the Digital Millennium Copyright Act (“DMCA”). As a result, the court found that Google was entitled to “safe harbor” protection under various sections of the DMCA.

This is another in a string of DMCA rulings that favor online service providers, place the burden of policing infringement on content owners and demonstrate the courts’ inclination to strictly construe the DMCA requirements. We previously posted about the $1 billion damage claim that Google (and its YouTube subsidiary) avoided in its lawsuit with Viacom by reliance on the DMCA. These cases continue to highlight the business need for ensuring that companies have and comply with effective DMCA policies.

In framing some of the issues, the court stated:

In order to be eligible for any of these three safe harbors under the DMCA, a party must satisfy three threshold conditions. First, the party must be a service provider as defined under 17 U.S.C. § 512(k)(1)(B). Second, the party must have “adopted and reasonably implemented, and inform[] subscribers and account holders of the service provider’s system or network of a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers.” 17 U.S.C. § 512(i)(1). Third, the party must “accommodate[] and . . . not interfere with standard technical measures” used by copyright owners to identify or protect copyrighted works. 17 U.S.C. §§ 512(i)(1)-(2).

The court found that Perfect 10 did not dispute that Google met the first and third prongs, but rather it argued that there were issues about whether Google implemented a suitable policy for repeat infringers. But for some of the technologies at issue (e.g., Google’s Web Search, Image Search and caching feature”), Google does not have account holders or subscribers. Even Perfect 10 did not contend that Google must, or even can, have a repeat infringer policy for those services. See 17 U.S.C. § 512(i)(1)(A) (requiring a repeat infringer policy for those services with “subscribers and account holders”). Thus, the court summarily found in Google’s favor on these issues.

The court also addressed issues relating to the “Information Location Tools” safe harbor under Section 512(d) of the DMCA. Here the court found that Google, in many cases, did not have “actual notice” of infringement, despite receiving numerous notices from Perfect 10. The court stated:

As the Ninth Circuit explained in CCBill, “The DMCA notification procedures place the burden of policing copyright infringement–identifying the potentially infringing material and adequately documenting infringement–squarely on the owners of the copyright.” CCBill, 488 F.3d at 1113. P10’s Group C notices do not “identif[y] . . . the copyrighted work claimed to have been infringed . . . .” 17 U.S.C. § 512(c)(3). To refer Google to more than 15,000 images appearing on the entirety of P10’s website falls far short of identifying what may have been infringed. Nor is a reference to the totality of the P10 image collection “a representative list” of “multiple copyrighted works” appearing without authorization at a single infringing site. See 17 U.S.C. § 512(c)(3). Thus, all of P10’s Group C notices lack the identification of the copyrighted work required by section 512(c)(3)(A)(ii).

P10’s Group C notices are additionally defective because they do not contain all of the required information in a single written communication.

The court also addressed the Safe Harbor for caching under Section 512(b) of the DMCA and various other issues.

The case is Perfect 10, Inc. v. Google, Inc. Here is a  copy of the Decision

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A patent infringement suit targeting a multiplayer, networking feature of Microsoft’s Xbox video game console was dismissed because the court found that, based on how the patent claims were written, the Xbox’s network connectivity mechanism differed from that required in the patent. This case, like many patent infringement cases, turned on the Court’s interpretation of the patent claim language and highlights the importance of the patent attorney’s wording of the patent claims. It is one thing to get a patent. It is another to get one that is commercially significant and can be viably enforced. A patent attorney who understands a range of alternatives can add significant value to a patent.

Interestingly, Sony previously settled a patent infringement suit involving the same patent relating to its PlayStation video game console.

The case, which was filed in the Eastern District of Michigan, alleged infringement by Microsoft of  U.S. Patent No. 5,292,195, entitled “Apparatus and method for electrically connecting remotely located video games” (“the ‘195 Patent”). The ‘195 Patent issued way back in March 8, 1994.  The court stated:

The ‘125 Patent involves an invention that allows “for two or more players playing the same video game to compete with each other without using the same physical video game which alleviates the necessity of proximity of the players.” ‘125 Patent col. 2 ll. 39-43. The ‘125 Patent describes a system where a video game player can talk and play with a remote opponent at the same time over a telephone line.

The Court ruled that Microsoft did not infringe the asserted claims because micro-processor to modem coupling in the Microsoft Xbox was accomplished via inductive coupling, while the court found that the claims require that the components be electrically
connected.  A Special Master had recommended that the claims should be interpreted to include inductive coupling.  However, the Court did not follow the Special Master’s recommendation, holding that the Special Master had improperly relied on extrinsic evidence, rather than relying on “the ordinary meaning of [the] claim language” which, as the Court indicated “may be readily apparent even to lay judges” [quoting Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005)].  Along with the plain meaning of the term “electrically connected”, the Court relied on the fact that the term “electrically connected” was used in the ‘195 Patent description to refer only to connections accomplished via conductive electrical wires.

Because the Court’s interpretation is a legal determination, it is subject to review on appeal. Stay tuned to this blog for further developments should an appeal proceed.

Click here for a copy of the Decision.

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On July 23, 2010, Judge William Alsup of the U.S. District Court for the Northern District of California entered an order denying Facebook Inc.’s motion to dismiss a second amended complaint alleging that Facebook is guilty of contributing to the copyright infringement of a video game. Judge Alsup denied Facebook’s argument that, as the Plaintiff had failed to properly allege direct infringement by its Co-Defendant, no claim against Facebook for contributory infringement could be made. A copy of the decision can be found here: Miller v Facebook

Background

The pleadings allege that Plaintiff, Daniel Miller, created the video game Boomshine in 2007 and was granted a copyright registration by the U.S. Copyright Office. Boomshine is a game in which players click on floating circles which cause them to expand resulting in the expansion of any other circles which come into contact. Miller’s second amended complaint accuses Defendant,Yao Wei Yeo, of direct infringement by arguing a similar “look and feel” between his video game, ChainRxn, and Boomshine but provides no further evidence of copying. According to the allegations in Miller’s filings, “ChainRxn copies the look and feel of Boomshine by incorporating almost every visual element of the game”. Moreover, the second amended complaint accuses Facebook of contributing to the infringement of the video game by allowing Yeo’s game to remain on its website after being notified that it infringed the copyright of Boomshine.  Miller alleges that “[a]fter defendant Yeo published ChainRxn on defendant Facebook’s website, members of the public were deceived regarding the origin of ChainRxn.”

The Court’s Denial

Facebook filed a motion for dismissal of the suit on June 21, 2010. Its argument was founded on the position that, as Miller had not properly first pled direct infringement by Yeo, he could not sustain a claim for contributory infringement by Facebook. The basis for Facebook’s argument was that Miller’s mere allegation that ChainRxn “looks and feels” identical to Boomshine without further proof of copying was insufficient to allege direct copyright infringement of Boomshine’s source code. Moreover, Facebook argued that the copyright registration Miller had obtained for the source code was limited to its literal elements and not audiovisual elements of Boomshine. Judge Alsup denied the first element of Facebook’s motion as premature noting that a “plaintiff can rarely examine the underlying source code of an accused infringing software program without resorting to discovery.” Specifically, Judge Alsup said it would be “unreasonable, if not impossible” for Miller to know with “exacting detail” how Yeo copied the Boomshine source code so early in the case. Additionally, Judge Alsup denied the second portion of Facebook’s motion by clarifying that the Court’s earlier order “did not hold that copyright protection for source code was limited to the literal elements of the work” but rather that “plaintiff’s copyright appears to be limited to the source code rather than the audiovisual aspects” and further determination is necessary to decide if the audiovisual elements of the game were also protected.

Finally, the court reminded Miller to address the disputed service of the second amended complaint on Yeo by the July 30, 2010 deadline or suffer a “potentially fatal defect” to his case.

Comments

The above action is interesting for several reasons. Platform companies like Facebook generally rely on the “safe harbor” protections the Digital Millennium Copyright Act provides when an infringement claim is made for the postings of a third-party. In fact,YouTube recently obtained a favorable decision providing it with DMCA protection in a potentially billion-dollar copyright infringement suit brought by Viacom. Moreover, while the Courts may differ on copyright protection for audiovisual “screen displays” in video games, the Copyright office’s consistent position is that “a single registration is sufficient to protect the copyright in a computer program and related screen displays, including videogames, without a separate registration for the screen displays or a specific reference to them on the application for the computer program.” For further discussion you can review the Copyright office’s Circular 61

That said, this case continues to demonstrate that social networking platforms and other websites displaying user generated content must be ever vigilant or potentially face suits arguing various copyright theories. As technology advances (as well as the means of infringement) it is likely the pleading requirements will remain relatively low and defer the need to demonstrate the how, when and why of the alleged infringement until the completion of discovery. Since this will likely increase the cost of litigating these matters, Platform operators and creators of user generated content need to understand and avail themselves of copyright (and other IP) protection, enforcement techniques and available defenses.

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According to a press release today, the Walt Disney Company has agreed to acquire Playdom Inc., one of the leading
companies in the fast-growing business of online social gaming for $563 million plus an earn out of up to $200 million more.

According to the release, in just two and a half years of operation, Playdom has established itself as
a pacesetter in building popular games for social networks enjoyed by consumers
around the globe. Through well-known titles like Social City, Sorority Life,
Market Street
and Bola, Playdom engages an estimated 42 million
active players each month.

Disney President and
CEO, Robert A. Iger stated:

“We see strong growth potential in bringing together Playdom’s talented team
and capabilities with our great creative properties, people and world-renowned
brands like Disney, ABC, ESPN and Marvel.” said Robert A. Iger, President and
CEO, The Walt Disney Company.

This deal is just the latest in what has been a rapidly growing and evolving industry segment.

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hermes.jpgInternet businesses that are more that passive host sites should take note that a French court found that eBay is a “publisher of online brokering services” because it goes beyond “purely
technical, automatic and passive [site host] services.” As a result it ruled that eBay did not qualify for the host services infringement liability exception.

For example, the court found that eBay suggests purchases based on
visitors’ previous purchases, and it enables sellers to employ
cross-merchandising and to obtain litigation settlement services for payment or
delivery disputes.The court found that eBay profited from the sale of counterfeit Hermès bags because it received commissions on such sales amounts and that its site did not  have a passive
and automatic role. The court highlighted the fact that eBay “exercises a determining action on the content
of advertisements, in that it reuses, on its own initiative, information aimed
at attracting buyers” and that it misused Hermès trademarks by allowing users to list items, present them in an attractive way
and route potential buyers to other Hermès offers.

The court found that as a publisher, eBay did not ensure the site was not used for unlawful sale of
counterfeit products.

This decision could have significant ramifications for other site operators that are proactive in assisting sellers such that they are deemed to be a service publisher rather than just a internet host.

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We recently reported on the Facebook v. Power Ventures case, in which Facebook alleged, among other things, that Power.com using automated tools to populate a portal that aggregates a user’s social networking profiles violates its terms of service and the Computer Fraud and Abuse Act and an analogous provision of the California Penal Code. On July 20, 2010, the court said it was unclear whether Power.com was a “user” for purposes of the terms of service, but even if it was, feared that finding all user violations of a terms of service as access “without permission,” would create
constitutional problems with the statute. The Court added that terms of service are not well equipped to inform users of what activities might subject them to criminal penalties. The court, in part, relied on the fact that site operators can unilaterally change the terms of service at anytime.

The court did find that Facebook has a potential claim under the California law based on Power.com accessing Facebook’s site by circumventing technical or code-based measures. That claim will go forward.

The court rejected Power.com’s argument that Facebook did not even have standing to bring the suit because it did not incur any damage or loss. The court found that because Facebook took steps to prevent access, even “a few clicks of a mouse” was sufficient to satisfy the requisite damage or loss for it to have standing, noting that the statute authorizes claims if there is “any amount of damage or loss.”

This decision could have significant ramifications for social media platform providers. It highlights the need for a comprehensive strategy, including both legal and technical measures to prevent unwanted activity on their sites.

Here is a copy of the Facebook Decision

 

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An appellate court ruled that an employee’s agreement to assign “inventions” to Mattel may not cover “ideas” the employee had for the Bratz line of dolls. This ruling may impact many companies ownership of certain rights if their IP or invention assignment agreements are not clear enough.

In vacating the lower court ruling, the court stated:

Prior to trial, the district court held that Bryant’s employment agreement assigned his ideas to Mattel, and so instructed the jury. What was left for the jury to decide was which ideas Bryant came up with during his time with Mattel. It found that Bryant thought of the names “Bratz” and “Jade” while he was employed by Mattel, and that MGA committed several state law violations by interfering with Bryant’s agreement as well as aiding and abetting its breach. After trial, the district court imposed a constructive trust over all Bratz-related trademarks….

The appellate court added that:

A constructive trust would be appropriate only if Bryant assigned his ideas for “Bratz” and “Jade” to Mattel in the first place. Whether he did turns on the interpretation of Bryant’s 1999 employment agreement, which provides: “I agree  to communicate to the Company as promptly and fully as practicable all inventions (as defined below) conceived or reduced to practice by me (alone or jointly by others) at any time during my employment by the Company. I hereby assign to the Company . . . all my right, title and interest in such inventions, and all my right, title and interest in any patents, copyrights, patent applications or copyright applications based thereon.” (Emphasis added.) The contract specifies that “the term ‘inventions’ includes, but is not limited to, all discoveries, improvements, processes, developments, designs, know-how, data computer programs and formulae, whether patentable or unpatentable.” The district court held that the agreement assigned Bryant’s ideas to Mattel, even though ideas weren’t included on that list or mentioned anywhere else in the contract.

In its legal analysis the appellate court stated:

Mattel points out that the list of examples of what constitutes an invention is illustrative rather than exclusive. Ideas, however, are markedly different from most of the listed examples. Cf. People ex rel. Lungren v. Superior Ct., 926 P.2d 1042, 1057 (Cal. 1996) (courts avoid constructions that would make “a particular item in a series . . . markedly dissimilar to other items on the same list”). Designs, processes, computer programs and formulae are concrete, unlike ideas, which are ephemeral and often reflect bursts of inspiration that exist only in the mind. On the other hand, the agreement also lists less tangible inventions such as “know-how” and “discoveries.” And Bryant may have conveyed rights in innovations that were not embodied in a tangible form by assigning inventions he “conceived” as well as those he reduced to practice.

As a result the court concluded that the agreement could be interpreted to cover ideas, but the text doesn’t compel that reading and that therefore the district court thus erred in holding that the agreement, by its terms, clearly covered ideas.

This case will get sent back to the District Court for further determination. However, regardless of the result, it may be a good “idea” to consult with an IP attorney to make sure that your IP assignment agreements give you the maximum benefit and ownership of all rights that you want to own.

Mattel Bratz Decision