Source: http://www.techlawjournal.com/alert/2010/12/08.asp
Timestamp: 2019-04-20 11:02:02+00:00

Document:
TLJ Daily E-Mail Alert No. 2,172, December 8, 2010.
December 8, 2010, 7:00 AM, Alert No. 2,172.
12/7. The Republican Steering Committee selected Rep. Fred Upton (R-MI) to be Chairman of the House Commerce Committee (HCC) in the 112th Congress, which meets in January of 2011.
The Chairmen of the HCC's Subcommittee on Communications, Technology and the Internet (SCTI) and the Subcommittee on Commerce, Trade and Consumer Protection (SCCP) for the 112th Congress have not yet been named.
Rep. Upton (at right) stated in a release that "I look forward to standing shoulder to shoulder with Speaker Boehner, Leader Cantor, Whip McCarthy and the entire Republican Conference as we repeal Obamacare, fight rampant job-killing regulations, cut spending, and help put folks back to work."
He also released a memorandum to House Republicans in which he stated that "We have a clear mandate to cut the size of government, reduce spending, and reverse costly job-killing regulations."
He also said that HCC "policy will not be dictated out of the Chairman's office as we have seen in the past. ... Every member of the Committee will play an active role".
He said that his vision for the HCC "is a conservative agenda that focuses on cutting spending, removing the regulatory burden, restoring freedom, keeping government accountable through rigorous oversight, and jobs."
He said little about communications or technology related issues in his memorandum. However, he wrote that "I have fought to curb indecency in public broadcasting with the passage of the Brownback/Upton Broadcast Decency Enforcement Act of 2005, protect our kids from online predators, ..."
Also on December 1, 2010, he responded to FCC Chairman Julius Genachowski's proposal to adopt rules at a December 21 meeting that would regulate broadband internet access service (BIAS) providers.
Rep. Upton stated in a release that "The relentless push towards net neutrality reveals this administration and the FCC remain tone deaf to the will of the American people. First it was cap-and-trade, then health care, and now they have launched an all out assault to regulate the Internet."
"After 15 months of near double-digit unemployment, it is astonishing that the administration continues to believe government regulation is the answer to everything. More government red tape will only further thwart our economic recovery and derail future job growth." Rep. Upton concluded that "The Internet has flourished without needless government intervention -- we should step aside and allow the staggering innovations of tomorrow to proceed."
Rep. Joe Barton (R-TX), the current ranking Republican, had also sought the position of Chairman in the 112th Congress. He stated in a release that "Now I want to offer my congratulations to Fred, who is taking over the best committee in Congress. He has an enormous job ahead, and I'm going to do everything I know how to make his chairmanship the kind of success that the American people want and expect."
The HCC has jurisdiction in the House over many technology related issues, and oversees several agencies that are involved in technology related matters. The HCC has jurisdiction over telecommunications, broadcasting, spectrum, and universal service. It also oversees the Federal Communications Commission (FCC). It also has jurisdiction over consumer protection issues, such as only privacy, and oversees the Federal Trade Commission (FTC).
12/7. Members of Congress and President Obama announced an agreement on a bipartisan framework for extending certain expiring tax provisions. It includes a two year extension of the research and development (R&D) tax credit, which expired on December 31, 2009.
The White House news office issued a release that describes the agreement. It states that "The framework agreement also includes a 2-year extension of the R&D tax credit and other tax incentives to support business expansion."
Sen. Mitch McConnell (R-KY), the Senate Republican Leader, stated in a release that "I appreciate the determined efforts of the President and Vice President in working with Republicans on a bipartisan plan to prevent a tax hike on any American and in creating incentives for economic growth. Their efforts reflect a growing bipartisan belief that a new direction is needed if we are to revive the economy and help put millions of Americans back to work. Members of the Senate and House will review this bipartisan agreement, but I am optimistic that Democrats in Congress will show the same openness to preventing tax hikes the administration has already shown."
John Engler, head of the National Association of Manufacturers (NAM), stated in a release that "Manufacturers commend the President and congressional leaders for the economic agreement announced yesterday. It includes many important provisions for manufacturers, including tax relief for small businesses, 100-percent expensing, estate tax reform, preferential tax rates for investment income, the R&D tax credit and other business extenders."
See also, story titled "Research Credit Remains Unextended" in TLJ Daily E-Mail Alert No. 2,114, July 29, 2010, and story titled "Senate Considers One Year Extension to R&D Tax Credit" in TLJ Daily E-Mail Alert No. 2,054, March 3, 2010.
12/7. The Securities and Exchange Commission (SEC) filed a civil complaint [48 pages in PDF] in U.S. District Court (DDel) against Jeffrey Temple and Benedict Patro alleging violation of federal securities laws in connection with their trading in securities, using material nonpubic information that they obtained from their employer, a large Delaware law firm that handles mergers and acquisitions.
Temple was the Information Systems and Security Manager at the firm. The complaint alleges he used his position at the firm to access information, and then traded for himself in advance of public announcements of mergers and acquisitions. The complaint also alleges that he shared information with his brother in law, Pastro, who also traded.
The law firm, which is not named in the complaint, handled acquisitions of Google, Xerox, Cisco, and other companies.
The complaint alleges violation of Sections 10b5 and 14(e) of the Securities Exchange Act.
The SEC's Daniel Hawke stated in a release that "Temple abused his position of trust and violated serious duties owed to his law firm and its clients. Law firm employees, especially those with information technology responsibilities, must safeguard confidential information entrusted to them. This is critical to maintaining investor confidence in the fairness of the markets".
This case is SEC v. Jeffrey J. Temple and Benedict Pastro, U.S. District Court for the District of Delaware, D.C. No. 10-cv-1058.
12/3. Viacom filed is appeal brief [72 pages in PDF] with the U.S. Court of Appeals (2ndCir) in Viacom v. YouTube, a copyright infringement case involving the scope of the safe harbor protection of the Digital Millennium Copyright Act (DMCA), codified at 17 U.S.C.§ 512(c).
Proceedings Below. Viacom International Inc. and other content companies filed a six count complaint [PDF] in the U.S. District Court (SDNY) against YouTube, and its owner, Google, on March 12, 2007, alleging copyright infringement in connection with the operation of a commercial web site that permits users to publish copies of copyrighted works, without license. See, story titled "Viacom Files Complaint Against Google and YouTube Alleging Violations of Copyright Law" in TLJ Daily E-Mail Alert No. 1,551, March 13, 2007.
The complaint alleges direct infringement by public performance, direct infringement by public display, direct infringement by reproduction, inducement of copyright infringement, contributory copyright infringement, and vicarious copyright infringement.
Viacom is a large television, movie and digital media content company whose copyrighted works are copied and published in the YouTube web site. The plaintiffs are Viacom, and its affiliates, Comedy Partners, Country Music Television, Inc., Paramount Pictures Corporation, and Black Entertainment Television, LLC.
On June 23, 2010, the District Court issued its opinion and order [30 pages in PDF] granting summary judgment to the defendants. It held that the activities of YouTube at issue in this action fall within the Section 512 safe harbor. See, story titled "District Court Grants Summary Judgment to YouTube in Copyright Infringement Case" in TLJ Daily E-Mail Alert No. 2,100, June 23, 2010.
The District Court reasoned that "the critical question is whether the statutory phrases ``actual knowledge that the material or an activity using the material on the system or network is infringing,´´ and ``facts or circumstances from which infringing activity is apparent´´ in § 512(c)(1)(A)(i) and (ii) mean a general awareness that there are infringements (here, claimed to be widespread and common), or rather mean actual or constructive knowledge of specific and identifiable infringements of individual items."
Following a lengthy review of the legislative history of the statute, the District Court concluded that "the phrases ``actual knowledge that the material or an activity´´ is infringing, and ``facts or circumstances´´ indicating infringing activity, describe knowledge of specific and identifiable infringements of particular individual items. Mere knowledge of prevalence of such activity in general is not enough."
Then, subsection 512(c)(2) pertains to service providers' designation of agents to receive notifications of claimed infringement. Finally, subsection 512(c)(3) lists the requisite elements of claims of infringement.
Viacom Statement. Viacom also issued a statement in which it wrote that "America's economic future will be largely built on innovation, information and the growth of trade in intellectual property. However, an information-based economy cannot exist if the products and ideas developed are not protected under U.S. law."
"The record in this case is clear. As the lower court acknowledged, YouTube 'welcomed' infringement in order to build traffic on its site. In doing so, it violated the law. Actively encouraging and facilitating rampant infringement is clearly illegal and is not protected by the DMCA -- a law intended to provide safe harbor against liability where online services providers take reasonable steps to prevent infringement."
"In enacting the DMCA, Congress expressly sought to achieve a balance between protecting content and encouraging the development of new forms of online distribution. It's a sensible approach that benefits all parties who work in good faith. The intentional theft of copyrighted works not only undermines that balance; it destroys the value of the very works Congress sought to protect along with the businesses of online distributors who honestly comply with the law."
Viacom argues that the District Court's construction of "actual knowledge" is incorrect. Viacom wrote that "If affirmed by this Court, that construction of Section 512(c) would radically transform the functioning of the copyright system and severely impair, if not completely destroy, the value of many copyrighted creations. It would immunize from copyright infringement liability even avowedly piratical Internet businesses. Even the very piratical businesses held to account in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), could be immune with just minor tweaks to their business models."
See, Supreme Court's June 27, 2005, opinion [55 pages in PDF] in MGM v. Grokster, regarding vicarious copyright infringement by the distributors of peer to peer (P2P) systems. The Supreme Court held that "one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties." See also, story titled "Supreme Court Rules in MGM v. Grokster" in TLJ Daily E-Mail Alert No. 1,163, June 28, 2005.
Viacom continued that "Nothing in the text or history of the DMCA even remotely suggests that Congress intended such absurd, disquieting, and disruptive results. In fact, the text of the DMCA compels the opposite conclusion: Internet service providers that not only are aware of pervasive copyright infringement, but actively participate in and profit from it, enjoy no immunity from the copyright laws and may be held to account for their theft of artists’ creations."
Viacom not only requests that the Court of Appeals reverse the District Court's summary judgment for YouTube on the Section 512 defense, but that it also hold that the plaintiffs are entitled to summary judgment on their copyright claims.
Viacom is represented by the law firms of Jenner & Block, Gibson Dunn & Crutcher, and Shearman & Sterling. Ted Olson (at right), a former Solicitor General of the U.S., signed the brief.
This case is Viacom International, Inc., et al. v. YouTube, Inc., et al., U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 10-3270, an appeal from the U.S. District Court for the Southern District of New York, D.C. Nos. 07 Civ. 2103 (LLS) and 07 Civ. 3582 (LLS), Judge Louis Stanton presiding.
See also, Viacom's web page with hyperlinks to pleadings in this case.
12/6. The Public Knowledge (PK) released a paper [14 pages in PDF] titled "A Copyright Office for the 21st Century: Recommendations to the New Register of Copyrights". See also, PK release.
The head of the Copyright Office (CO) is the Register of Copyright. The current Register, Marybeth Peters (at right), has served since 1994. She will retire at the end of this year. The PK proposes a 10 year term limit for the position.
Other senior officials at the CO include David Carson, its General Counsel, and Robert Kasunic, its Principal Legal Advisor.
The original core responsibility of the CO has been copyright registration. However, the CO also now functions as a source of studies and advice for the House Judiciary Committee (HJC) and Senate Judiciary Committee (SJC). It also participates in meetings regarding copyright protection internationally.
It also obtained significant rulemaking authority under the 1998 Digital Millennium Copyright Act (DMCA). It conducts triennial rulemaking proceedings to designate exemptions to the anti-circumvention provisions of the DMCA.
On July 26, 2010, the CO published a notice in the Federal Register that contains its fourth triennial rules. See, Federal Register, July 27, 2010, Vol. 75, No. 143, at Pages 43825-43839. See also, CO's short summary titled "Statement of the Librarian of Congress Relating to Section 1201 Rulemaking", and detailed memorandum [256 pages in PDF] of Marybeth Peters, dated June 11, 2010. See also, story titled "Copyright Office Releases 4th Triennial DMCA Exemptions" in TLJ Daily E-Mail Alert No. 2,115, July 30, 2010.
The PK's paper recommends that "the first priority of the next Register of Copyrights must be to redesign the registry" to minimize processing delay, bring all entries online, make the registry searchable, and create a visual registry.
With respect to a "visual registry", the paper states only that "Until it is as easy to find the registration for a visual work as it is to find the registration for a written work, both visual artists and the public are disadvantaged."
The paper also recommends that the CO "reach out affirmatively to various stakeholder groups and the public at large". It argues that "Copyright policy is no longer the exclusive concern of large media conglomerates. Large copyright holders cannot be allowed to control copyright policy while smaller rightsholders and the general public are forced to beg for indulgences at the margin."
It concludes that "The Register must hear from Internet companies, device manufacturers, Internet service providers, and small, independent creators who do not have a history of consultation with the Copyright Office."
11/18. The Public Knowledge (PK) released a paper [47 pages in PDF] titled "Copyright Abuse and Notice". This is another in a series of PK papers that advocates changes to the Copyright Act, and proposes draft language for a "Copyright Reform Act" (CRA).
The authors are Pan Lee, Daniel Park, Allen Wang, and Jennifer Urban. Urban is a professor at the UC Berkeley law school. Lee, Park and Wang are law students.
First, this paper proposes that the Federal Trade Commission (FTC) regulate deceptive copyright notices. The PK stated in a release that "Those range from notices on works which have been part of the public domain for years, including by William Shakespeare and Charles Dickens, to today's warnings issued by the National Football League".
Second, this paper proposes a requirement that digital products that employ technological measures that limit copying also carry warning labels, and that the FTC be given rulemaking and enforcement authority.
The PK proposes giving copyright related authority to the FTC, rather than the Copyright Office (CO). The PK also released a separate paper that proposes reforms at the CO. See, paper [PDF] "A Copyright Office for the 21st Century: Recommendations to the New Register of Copyrights", and related story in this issue titled "PK Proposes Changes to Copyright Office".
Third, this paper proposes that defendants in copyright infringement actions be afforded broad new grounds to move to strike infringement claims at the outset of litigation.
It is unlikely that the Congress would enact any of these proposals. Support for the copyright based industries is wide and bipartisan in both the House and Senate, and especially on the House Judiciary Committee (HJC) and Senate Judiciary Committee (SJC), which have jurisdiction over copyright law and the CO. Even on the House Commerce Committee (HCC) and Senate Commerce Committee (SCC), which have jurisdiction over consumer protection and the FTC, there is likely little support for such proposals.
Moreover, the transition to the 112th Congress may provide further setbacks for proponents of such legislation. For example, Rep. Rick Boucher (D-VA), who is a member of both the HJC and HCC, and has long been a leading proponent of digital fair use rights, and notices on copyright based products, lost in the November 2 election. Also, Rep. Joe Barton (R-TX), who has cosponsored legislation in this area with Rep. Boucher, lost his bid to be Chairman of the HCC in the 112th Congress. See, related story in this issue titled "Rep. Upton to Chair House Commerce Committee".
The proposals in this paper, and in the other papers in this series, reflect the goals of policy advocates at entities like the PK and UC Berkeley regarding what the law should be, rather than any realistic expectation of what the Congress would actually enact.
Deceptive Copyright Claims. Section 4 of the PK's proposed CRA would give the FTC (not the CO), authority to regulate deceptive overstatements of copyrights.
The draft CRA language provides that the FTC "shall promulgate rules to prohibit, as an unfair and deceptive act or practice, any person from issuing warning notices that unfairly or deceptively overstate a person's rights with respect to a work protected under copyright law".
The FTC, which is now chaired by Jonathan Leibowitz, a former lobbyist for the Motion Picture Association of America (MPAA), has already declined to use its existing Section 5 authority to address this matter.
On August 1, 2007, the Computer and Communications Industry Association (CCIA) submitted a complaint to the FTC in which it alleged that Major League Baseball, National Football League, NBC/Universal, and others violated Section 5 of the FTC Act, which is codified at 15 U.S.C. § 45, in connection with their alleged use of deceptive and threatening copyright notices.
The FTC sent the CCIA a letter [6 pages in PDF] on December 6, 2007, stating that "the FTC staff has determined not to recommend that the Commission take any formal action against the companies named in the CCIA's complaint at this time". See also, story titled "CCIA Comments on FTC Letter Regarding Copyright Notices Complaint" in TLJ Daily E-Mail Alert No. 1,723, February 26, 2008.
Warning Labels. Section 5 of the CRA would require notices on products that employ technological measures that limit copying.
It provides that "copyright holders and those acting under their authorization shall provide notice of any technological restrictions on consumers' ability to make uses of their products or services that would otherwise be lawful under copyright law"
Also, the FTC (not the CO) would write implementing regulations, and enforce this section.
Moreover, the CRA would provide that "Failure to provide such notice shall be a defense against a claim of circumvention under section 1201(a), provided such technological control measures limit the ability of consumers to make noninfringing uses of said protected work."
The PK proposes to add these provisions to the 1975 Act titled "Magnuson-Moss Warranty -- Federal Trade Commission Improvement Act"
Motion to Strike Infringement Claims. Section 5 of the CRA would impose broad new limitations on copyright holders' actions in the District Court for infringement of their copyrights.
It provides that "In any civil action for infringement under this title, the respondent shall have the right to file a motion to strike on the grounds that the claim misrepresents exclusive rights as defined in section 106 of this title, copyrightable subject matter as defined in sections 102 through 105 of this title, or copyright ownership; or that the claim, if upheld, would have a significant harmful effect on competition or free expression."
Moreover, it provides that discovery shall be stayed when such a motion to strike is filed.
litigation process at an early stage. Because they must anticipate a long, expensive fight, defendants are thus too likely to succumb to a misleading threat, ceasing the allegedly infringing activity or settling -- even when the threatened suit lacks merit."
With respect to motions to strike claims that would have a "harmful effect on competition", the paper sites as an example Lexmark v. Static Control Components. In 2004 the U.S. Court of Appeals (6thCir) ruled against the party that brought the copyright claim. See, 387 F.3d 522, and story titled "6th Circuit Vacates Preliminary Injunction in DMCA Case" in TLJ Daily E-Mail Alert No. 1,012, November 5, 2004.
This language would also enable defense attorneys to turn any simple copyright action into a complex competition law proceeding. Moreover, it would undermine the purpose of copyright, which is to preclude competition in offering the copyrighted work.
With respect to motions to strike claims that would limit "free expression", the proposed language would do nothing to limit the most significant litigation threat to free expression -- frivolous defamation actions. Defamation is a matter of state law, and beyond the reach of the Congress.
In contrast, if enacted, this language might be construed as if it created an additional exemption to the exclusive rights of copyright.
Paper [15 pages in PDF] released in February of 2010 titled "Introduction to the Copyright Reform Act".
Paper [37 pages in PDF] titled "Report 1: Updating Fair Use for Innovators and Creators in the Digital Age: Two Targeted Reforms". See also, story titled "Public Knowledge Proposes Changes to Copyright Law" in TLJ Daily E-Mail Alert No. 2,045, February 16, 2010.
Paper [71 pages in PDF] released in May titled "Report 2: Updating 17 U.S.C. § 1201 for Innovators, Creators, and Consumers in the Digital Age". See also, story titled "Public Knowledge Urges Anti-Circumvention Exceptions" in TLJ Daily E-Mail Alert No. 2,091, June 3, 2010.
Paper titled "Copyright Abuse and Notice", which is the subject of this article.
The PK's first paper -- the introduction -- identified an additional topic to be addressed in the CRA -- reform of licensing musical work rights.
9:00 - 11:00 AM. The Copyright Clearance Center will host a panel discussion titled "Copyright and the Economics of Creativity". The speakers will include Stan McCoy (Assistant U.S. Trade Representative) and Jon Baumgarten (Proskauer Rose). See, notice. Location: Congressional Meeting Room South, Capitol Visitors Center.
POSTPONED. 10:00 AM. The Senate Judiciary Committee (SJC) will hold an executive business meeting. The agenda includes consideration of numerous judicial nominees: Robert Chatigny (USCA/2ndCir), Max Cogburn (USDC/WDNC), Marco Hernandez (USDC/DOre), Michael Simon (USDC/DOre), and Steve Jones (USDC/NDGa). The SJC rarely follows its published agendas. The SJC will webcast this event. See, notice. Location: Room 226, Dirksen Building.
12/7. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) published a notice in the Federal Register that announces that it seeks applications for membership on its Spectrum Management Advisory Committee (SMAC). The deadline to submit applications is January 10, 2011. See, Federal Register, December 7, 2010, Vol. 75, No. 234, at Pages 75967-75968.
12/7. Anthony Melone was named EVP and Chief Technology Officer at Verizon. See, release.
12/7. The CTIA announced the selection of 2011 officers and members of its Executive Committee. Dan Hesse (CEO of Sprint Nextel) was selected Chairman. Pat Riordan (P/CEO of Cellcom) was selected Vice Chairman. Mary Dillon (P/CEO of U.S. Cellular) was selected Secretary; and Bret Comolli (Chairman of Asurion) was selected Treasurer. See, CTIA release.
12/7. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) published a notice in the Federal Register that announces that its Spectrum Management Advisory Committee will meet on January 11, 2011, at 9:00 AM - 1:00 PM. See, Federal Register, December 7, 2010, Vol. 75, No. 234, at Page 75968.
12/6. The Copyright Royalty Judges (CRJ) published a notice in the Federal Register that announces a cost of living adjustment (COLA) of 1.2% in the royalty rates paid by satellite carriers under the satellite carrier compulsory license of the Copyright Act. See, Federal Register, December 6, 2010, Vol. 75, No. 233, at Pages 75624-75625.
12/6. The Executive Office of the President's Office of Science and Technology Policy (OSTP) published a notice in the Federal Register that requests comments on the draft National Nanotechnology Initiative (NNI) Strategy for Nanotechnology-Related Environmental, Health, and Safety Research. Comments are due by 11:59 PM on January 6, 2011. See, Federal Register, December 6, 2010, Vol. 75, No. 233, at Pages 75707-75708.
12/6. Google announced in a release that it now sells digital books online. It stated "We designed Google eBooks to be open. Many devices are compatible with Google eBooks -- everything from laptops to netbooks to tablets to smartphones to e-readers. With the new Google eBooks Web Reader, you can buy, store and read Google eBooks in the cloud." Google has named this business "Google eBookstore". It added that "When Google Books first launched in 2004, we set out to make the information stored in the world’s books accessible and useful online. Since then, we’ve digitized more than 15 million books ... This deep repository of knowledge and culture will continue to be searchable through Google Books search in the research section alongside the ebookstore."

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