Source: http://www.techlawjournal.com/alert/2004/09/07.asp
Timestamp: 2019-04-20 11:09:32+00:00

Document:
TLJ Daily E-Mail Alert No. 971, September 7, 2004.
September 7, 2004, 9:00 AM ET, Alert No. 971.
8/31. The U.S. Court of Appeals (FedCir) issued its opinion [46 pages in MS Word] in Chamberlain v. Skylink, a case involving the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA), and interoperability of after market products. In this case, the product is portable radio frequency transmitting devices that activate garage door openers (GDO). Chamberlain asserted that Skylink, by selling GDOs that interoperate with its equipment, is trafficking in devices that circumvent a technological measure that effectively controls access to a copyrighted work. The District Court rejected Chamberlain's claim. The Court of Appeals affirmed.
Following a lengthy and intricate examination of the Section 1201 of the DMCA, the Court of Appeals concluded that Chamberlain's DMCA claims fails because Chamberlain failed to prove that it had not authorized its customers to use devices such as Skylink's, and because Chamberlain failed to prove a nexus between the "access" and some protection of copyright.
The Appeals Court concluded that "A copyright owner seeking to impose liability on an accused circumventor must demonstrate a reasonable relationship between the circumvention at issue and a use relating to a property right for which the Copyright Act permits the copyright owner to withhold authorization -- as well as notice that authorization was withheld. A copyright owner seeking to impose liability on an accused trafficker must demonstrate that the trafficker's device enables either copyright infringement or a prohibited circumvention."
Introduction. § 1201(a)(1)(A) of the Copyright Act, which was added in 1998 by the DMCA, provides that "No person shall circumvent a technological measure that effectively controls access to a work protected under this title." Then, § 1201(a)(2)(A) provides that "No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that --- (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;"
Chamberlain Group, Inc. has sought to prevent Skylink Technologies, Inc. from selling GDO transmitters that interoperate with its systems, by asserting that Skylink has violated the DMCA by selling devices that circumvent a technology measure that effectively controls access to a copyrighted work -- namely, software in the garage unit that opens and closes doors.
The underlying purpose of the anti-circumvention provisions of the DMCA is to give copyright holders a cause of action against those who circumvent technological protections of copyrighted works, and those who traffick in devices that circumvent, in order to give copyright holders further means to protect their works from being infringed. There is no claim of infringement in this case. Skylink is not copying and selling Chamberlain's copyrighted program. Rather, Chamberlain seeks to use the DMCA for an altogether different purpose than that contemplated by the Congress -- to protect it from competition in the after-market for GDO transmitters.
More specifically, Chamberlain makes equipment for automatically opening garage doors. It makes electronically powered devices that raise and lower garage doors, the attached receivers that activate the device that raises or lowers the door, and the portable transmitters that signal the garage unit to open or close the door.
Skylink makes GDO transmitters that interoperate with Chamberlain's systems. That is, it makes after-market GDO transmitter devices that can serve as replacements of spares for the original GDO transmitter sold by Chamberlain.
Chamberlain, like many producers of electronic systems, wants to control the sale of replacement, spare, and associated parts for its systems.
This case involves Chamberlain's line of products named Security+. These incorporate a rolling code computer program that constantly changes the transmitter signal required to open the garage door. This computer program is copyrighted. Skylink makes a GDO transmitter that allows users to operate Chamberlain's Security+ systems. Chamberlain asserts that Skylink's transmitter allows unauthorized users to circumvent the security inherent in rolling codes.
This case is especially important because of the dearth of Appeals Court opinions construing the DMCA. The 2nd Circuit applied the DMCA in its opinion in Universal City Studios v. Corley, 273 F.3d 429 (2001), but only in the context of a First Amendment challenge. The 7th Circuit discussed the DMCA, but only very briefly, in its opinion [23 pages in PDF] in In re Aimster Copyright Litigation, 334 F.3d 643, 655 (2003).
District Court. Chamberlain filed a complaint in U.S. District Court (NDIll) against Skylink alleging patent infringement and violation of anti-circumvention provisions of the DMCA. The complaint did not allege copyright infringement, either directly or vicariously.
The District Court granted summary judgment to Skylink holding that it did not violate the anti-trafficking provisions of the DMCA. It reasoned that Chamberlain had authorized consumers to use Skylink's devices. The issue of authority is important because the DMCA defines circumvention with the words "without the authority of the copyright owner". The District Court reasoned that Chamberlain sold equipment to customers, without any restriction on use. Hence, customers had implicit authorization to use other companies' interoperating products with Chamberlain's products. See, opinions published at 292 F. Supp. 2d 1023 and 292 F. Supp. 2d 1040.
The District Court also dismissed the patent infringement claims.
The Statute. 17 U.S.C. § 1201 addresses circumvention of copyright protection systems.
§ 1201(a)(1)(a) provides, in part, that "No person shall circumvent a technological measure that effectively controls access to a work protected under this title."
(C) is marketed by that person or another acting in concert with that person with that person’s knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title."
§ 1201(a)(3)(A) provides relevant definitions. It provides that the phrase "circumvent a technological measure" means "to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner". It also provides that "a technological measure ``effectively controls access to a work´´ if the measure, in the ordinary course of its operation, requires the application of information, or a process or a treatment, with the authority of the copyright owner, to gain access to the work."
The Court of Appeals followed the District Court on the question of authorization. It wrote that "The essence of the DMCA's anticircumvention provisions is that §§ 1201(a),(b) establish causes of action for liability. They do not establish a new property right. The DMCA's text indicates that circumvention is not infringement, 17 U.S.C. § 1201(c)(1) (“Nothing in this section shall affect rights, remedies, limitations, or defenses to copyright infringement, including fair use, under this title.”), and the statute's structure makes the point even clearer. This distinction between property and liability is critical. Whereas copyrights, like patents, are property, liability protection from unauthorized circumvention merely creates a new cause of action under which a defendant may be liable. The distinction between property and liability goes straight to the issue of authorization ..."
The Court of Appeals continued that under "copyright law, a plaintiff only needs to show that the defendant has used her property; the burden of proving that the use was authorized falls squarely on the defendant." However, the DMCA "defines circumvention as an activity undertaken ``without the authority of the copyright owner.´´ 17 U.S.C. § 1201(a)(3)(A). The plain language of the statute therefore requires a plaintiff alleging circumvention (or trafficking) to prove that the defendant’s access was unauthorized -- a significant burden where, as here, the copyright laws authorize consumers to use the copy of Chamberlain’s software embedded in the GDOs that they purchased."
The Court next stated that "Congress crafted the new anticircumvention and anti-trafficking provisions here at issue to help bring copyright law into the information age. Advances in digital technology over the past few decades have stripped copyright owners of much of the technological and economic protection to which they had grown accustomed. Whereas large-scale copying and distribution of copyrighted material used to be difficult and expensive, it is now easy and inexpensive. ... Congress therefore crafted legislation restricting some, but not all, technological measures designed either to access a work protected by copyright, § 1201(a), or to infringe a right of a copyright owner, § 1201(b)."
The Appeals Court also noted that whenever the statute uses the term "access", it is used in connection with the term "protection".
Chamberlain argued on appeal that its garage unit and transmitter incorporate computer programs that are copyrighted. It further argued the rolling codes are a technological measure that controls access to these copyright programs within the meaning of § 1201(a)(2). And hence, it argued that Skylink violated § 1201(a)(2) by trafficking in device that circumvents a technological measure that effectively controls access to a copyrighted work. Chamberlain argued that there need not be any connection between the "access" and the "protection".
The Court concluded that "Chamberlain's proposed construction would allow any manufacturer of any product to add a single copyrighted sentence or software fragment to its product, wrap the copyrighted material in a trivial ``encryption´´ scheme, and thereby gain the right to restrict consumers’ rights to use its products in conjunction with competing products. In other words, Chamberlain’s construction of the DMCA would allow virtually any company to attempt to leverage its sales into aftermarket monopolies -- a practice that both the antitrust laws, ... and the doctrine of copyright misuse, normally prohibit."
Hence, the Court rejected Chamberlain's argument. It concluded that "17 U.S.C. § 1201 prohibits only forms of access that bear a reasonable relationship to the protections that the Copyright Act otherwise affords copyright owners. While such a rule of reason may create some uncertainty and consume some judicial resources, it is the only meaningful reading of the statute."
The Court applied this six part test, and found that Chamberlain failed both the fourth (authorization) and fifth (nexus between the access and the protection) elements.
This appeal only involves interpretation of the DMCA. Yet, this appeal was heard by the Federal Circuit. The Federal Circuit's jurisdiction was based upon 18 U.S.C. § 1295, which provides that the Federal Circuit has exclusive jurisdiction over "an appeal from a final decision of a district court ... if the jurisdiction of that court was based, in whole or in part, on section 1338 ..." In turn, 18 U.S.C. § 1338 provides that the District Court has jurisdiction over patent infringement claims. Chamberlain plead patent infringement in the District Court. While it did not appeal that portion of the judgment dismissing its patent claims, these patent claims nevertheless served as the basis for exclusive Federal Circuit jurisdiction. The consequence is that the appeal did not go to the 7th Circuit, which tends to randomly assign copyright cases to Judge Richard Posner. Posner has a strong interest in copyright law, and in developing the law of copyright misuse. See, for example, Posner's May 30, 2002 opinion in Ty v. Publications International.
This case is The Chamberlain Group, Inc. v. Skylink Technologies, Inc., U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 04-1118, an appeal from the U.S. District Court for the Northern District of Illinois, Judge Rebecca Pallmeyer presiding. Judge Arthur Gajarsa wrote the opinion of the Court of Appeals, in which Judges Richard Linn and Sharon Prost joined.
The House and Senate will return from the August recess.
The House will meet at 2:00 PM for legislative business. It will consider several non-technology related items under suspension of the rules. Votes will be postponed until 6:30 PM. See, Republican Whip Notice.
1:00 PM. Secretary of Homeland Security Tom Ridge will speak. Location: National Press Club, 529 14th St. NW, 13th Floor.
Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding the process for designation of eligible telecommunications carriers (ETCs) and the FCC's rules regarding high-cost universal service support. This NPRM is FCC 04-127 in Docket No. 96-45. See, notice in the Federal Register, July 7, 2004, Vol. 69, No. 129, at Pages 40839 - 40843.
Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding the rechannelization of portions of the 17.7-19.7 GHz band. This NPRM is FCC 04-77 in WT Docket No. 04-143. See, notice in the Federal Register, July 7, 2004, Vol. 69, No. 129, at Pages 40843 - 40850.
Deadline to submit comments to the Copyright Office (CO) in response to its notice of proposed rulemaking (NPRM) regarding amendments to the CO's regulations to permit the Library of Congress to record unpublished radio and other audio and audiovisual transmission programs. The CO stated that "regulations already provide for the Library of Congress to obtain copies of unpublished television transmission programs, either by recording fixations or by demanding copies in the form of a transfer, loan or sale at cost. This revised regulation makes similar provisions for audio transmission programs and includes transmission programs made available by radio broadcasts and by digital communications networks such as the Internet." See, notice in the Federal Register, August 5, 2004, Vol. 69, No. 150, at Pages 47396 - 47399.
10:00 AM. The House Judiciary Committee will meet to mark up several bills, including HR 4661, the "Internet Spyware (I-SPY) Prevention Act of 2004", and HR 4077, the "Piracy Deterrence and Education Act of 2004". HR 4661 is the spyware bill sponsored by Rep. Bob Goodlatte (R-VA), Rep. Zoe Lofgren (D-CA), and Rep. Lamar Smith (R-TX), of the Judiciary Committee. The House Commerce Committee has already approved its spyware bill, HR 2929, the "Safeguard Against Privacy Invasions Act" or "SPY Act", sponsored by Rep. Mary Bono (R-CA). See, story titled "House Commerce Committee Approves Spyware Bill" in TLJ Daily E-Mail Alert No. 926, June 25, 2004. The markup is scheduled to continue on Thursday, September 9 at 10:00 AM. Location: Room 2141, Rayburn Building.
10:00 AM. The Senate Judiciary Committee will hold a hearing on judicial nominations. Press contact: Margarita Tapia at 202 224-5225. Sen. Orrin Hatch (R-UT) will preside. See, notice. Location: Room 226, Dirksen Building.
10:00 AM. The House Financial Services Committee will hold a hearing titled "Protecting our Financial Infrastructure: Preparation and Vigilance". The witness will include Robert Liscouski (Department of Homeland Security) and Wayne Abernathy (Department of the Treasury). Location: Room 2128, Rayburn Building.
11:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "Law Enforcement Access to Communications Systems in a Digital Age". On August 9, 2004 the Federal Communications Commission (FCC) released a Notice of Proposed Rulemaking and Declaratory Ruling (NPRM & DR) [100 pages in PDF] regarding imposing Communications Assistance for Law Enforcement Act (CALEA) obligations upon broadband internet access services and voice over internet protocol (VOIP) services. See, notice of hearing. Location: Room 2322, Rayburn Building.
12:15 PM. The Federal Communications Bar Association's (FCBA) Mass Media Practice Committee will host a brown bag lunch. William Freedman, Deputy Chief of the Federal Communications Commission's (FCC) Enforcement Bureau's (EB) Investigations and Hearings Division, will discuss the FCC's policies and procedures for enforcement of indecency related complaints. No RSVP is required. Location: National Association of Broadcasters (NAB), 1771 N Street NW, Conference Rooms A&B.
2:30 PM. The Senate Commerce Committee will hold a hearing titled "Spectrum for Public Safety Users". The witnesses will be Michael Powell (FCC Chairman), Stephen Devine (Missouri State Highway Patrol), Gary Grube (Motorola), David Donovan (Association for Maximum Service Television), Robert LeGrande (District of Columbia), Bud Paxson (Paxson Communications Corporation). The hearing will be webcast by the Committee. Press contact: David Wonnenberg at 202 224-2670 or david_wonnenberg@commerce.senate.gov. Location: Room 253, Russell Building.
5:30 - 6:45 PM. The American Enterprise Institute (AEI) will host a lecture by Sam Peltzman (University of Chicago) titled "Regulation and the Natural Progress of Opulence". He will argue that some regulations make matters worse because of offsetting personal or market behavior, and discuss why some counterproductive regulations remain in place while others are repealed. The lecture will be followed by a reception. See, notice. Location: AEI, Twelfth floor, 1150 17th St., NW.
Deadline to submit comments to the Federal Communications Commission (FCC) in response to its further notice of proposed rulemaking (FNPRM) to determine whether mobile satellite service (MSS) operators using different technologies could share additional spectrum in the 1610-1626.5 MHz band (L-band). This FNPRM is FCC 04-134 in IB Docket No. 02-364 and ET Docket No. 00-258. See, notice in the Federal Register, August 9, 2004, Vol. 69, No. 152, at Pages 48192 - 48194.
9:30 AM. The Federal Communications Commission (FCC) will hold a meeting. See, agenda [4 pages in PDF]. The event will be webcast. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).
2:00 - 4:30 PM. The Federal Communications Commission (FCC) will hold an event titled "Discussion on the Debt Collection Improvement Act Rules and Rules Governing Applications or Other Request for Benefits by Debtors". See, original notice [PDF] and rescheduling notice [PDF]. Location: FCC, Commission Meeting Room, 445 12th Street, SW.
2:00 - 4:00 PM. The American Enterprise Institute (AEI) will host a demonstration titled "How NASDAQ's Electronic Market Works". The speakers will be Frank Hatheway and Peter Marlyn (NASDAQ) and Peter Wallison (AEI). See, notice. Location: AEI, Twelfth floor, 1150 17th St., NW.
Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding its notice in the Federal Register that it intends to withdraw Federal Information Processing Standard (FIPS) 46–3, which specified the Data Encryption Standard (DES), and the associated FIPS 74 and FIPS 81. The NIST has determined that "the strength of the DES algorithm is no longer sufficient to adequately protect Federal government information". See, Federal Register, July 26, 2004, Vol. 69, No. 142, at Pages 44509 - 44510. Send comments to descomments@nist.gov.
9:30 - 11:00 AM. The Progressive Policy Institute (PPI) will host a panel discussion titled "Telecommunications Reform: Is the “Network Layers” Approach the Right One?". The speakers will be Rick Whitt (Senior Director of Global Policy and Planning at WorldCom), Link Hoeing (Assistant Vice President, Issues Management and Technology Policy at Verizon), and Rob Atkinson (Director of the PPI's Technology and New Economy Project). Free. Breakfast will be served. Location: PPI, 600 Pennsylvania Ave., SE, Suite 400.
12:00 NOON. Dane Snowden, Chief of the Federal Communications Commission's (FCC) Consumer & Governmental Affairs Bureau, will hold a press briefing. RSVP to Rosemary Kimball at 202 418-0511 or rosemary.kimball@fcc.gov. Location: FCC, 445 12th St., SW, Hearing Room B/Conference Room, TW A-402/A-442.
10:00 AM. The Senate Judiciary Committee's Subcommittee on Terrorism, Technology and Homeland Security will hold a hearing titled "A Review of the Tools to Fight Terrorism Act". Sen. Jon Kyl (R-AZ) will preside. Press contact: Margarita Tapia at 202 224-5225. Location: Room 226, Dirksen Building.

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